MUD tax, can they add it to an existing neibhorhood due to urban sprawl (lawyers, buy)

[Bigmarky]

Say you live outside city limits, and you have a low tax setup due to no mud tax

well in 5yrs urban sprawl will hit that area at some point

do they just goto vote and add in an extra 1.5% MUD tax to your existing taxes randomly one day?

[Johnhw2]

For a MUD to be created a majority of the land owners in the area proposed for the MUD tax. Typically a developer will created a MUD while he owns essentially all the land parcel where the MUD applies along with a few hand selected property owners. For the MUD to tax you they have to provide something like water and/or sewers which the MUD taxes are used to allow the developer when enough taxable improvements are in place to sell tax free muni type bonds so he gets repaid for the investment in water and sewer for the land area.

It is a strict process created by the state of Texas. You will get to vote on it if it is proposed to include your land and to include land owned by someone un related to the parcel owner/developer would be most unusual.

Do you already have a well for water and a septic tank for sewer?

[jimmyev]

Originally Posted by Johnhw2

For a MUD to be created a majority of the land owners in the area proposed for the MUD tax. Typically a developer will created a MUD while he owns essentially all the land parcel where the MUD applies along with a few hand selected property owners. For the MUD to tax you they have to provide something like water and/or sewers which the MUD taxes are used to allow the developer when enough taxable improvements are in place to sell tax free muni type bonds so he gets repaid for the investment in water and sewer for the land area.

It is a strict process created by the state of Texas. You will get to vote on it if it is proposed to include your land and to include land owned by someone un related to the parcel owner/developer would be most unusual.

Do you already have a well for water and a septic tank for sewer?

This can't be the process. Only allowing property owners to vote is contrary to the Voting Rights Act.

[Johnhw2]

Originally Posted by jimmyev

This can't be the process. Only allowing property owners to vote is contrary to the Voting Rights Act.

You are correct, I should have said residents vote not property owners. The only people a MUD has jurisdiction over are those residing within its boundaries. So only those impacted but its decisions vote. Think of a MUD like a city, a city voter has to live in the City.

Thank you for the catch which reminded me to redefine it properly

[Bigmarky]

it's actually a brand new community being built by meritage out on fm359 in richmond
there's 1.8 tax due to no mud
so i guess ya whose paying for the water/drainage etc

[Bigmarky]

also just curious what do they folks that sit on the MUD board make - it's always lawyers /etc

[cheryjohns]

Double check this. I remember a regular CD poster that lives in the SE that had a hidden MUD tax. He didn't find out until later, and it was rather high. It did not register in the normal places. Ask the Meritage people.

[War Beagle]

Originally Posted by Johnhw2

You are correct, I should have said residents vote not property owners. The only people a MUD has jurisdiction over are those residing within its boundaries. So only those impacted but its decisions vote. Think of a MUD like a city, a city voter has to live in the City.

Thank you for the catch which reminded me to redefine it properly

John nailed the purpose of MUDs and the mechanisms by which they are created. They are a way to finance the construction of infrastructure so that the developer has to pay for less of it himself/herself since MUDs can levy taxes and take on debt. Essentially, it shifts the debt burden from the developer to future residents. I've read stories about how developers will plop a trailer on to the MUD land and have a poor college student live there so that he/she can vote to create the MUD. MUDs are generally dissolved once the MUD debt is paid off. At that point, there is a good chance the municipality that controls the extraterritorial jurisdiction the MUD is in will annex the MUD. MUDs are generally not annexed prior to the repayment of the debt because cities do not want to assume MUD debt.

While I am not aware of any legal reason why a MUD couldn't be created for redevelopment reasons, it seems to me like it wouldn't make a lot of sense. As John said, the majority of residents in the proposed MUD area would need to vote to create the MUD and levy additional taxes on themselves. At that point, the proposed MUD area is probably already in a city, which can finance infrastructure projects through taxation just like a MUD would do.

As for what MUD board directors do, in my experience they do it mostly to feel like they are important. They get free meals and get to vote on things but all of those trappings are mostly a facade for the fact that the developers and MUD attorneys really run the MUD show.

[Johnhw2]

A MUD is a governmental entity and the Board are considered elected public officials subject to the laws of Tx and the county concerning elected public officials. I dont know what they get paid. But as subject to the elected officials laws of Texas, the developer has to be careful what he does to get the results for which he hopes. I believe Board members must residents of the MUD geographic area as City officials must be residents of the city to run for that office. I wont go further as my expeirence with MUD's is dated.

The developer, who owns the land within the MUD pays the cost of MUD creation, he puts up Millions to pay for water and sewer lines and a plant and funds road construction, consistent with the area Master Road route plan. So the MUD is by a developer typically for recovery of some of his investment for things he spent money to create much as a city would (which the MUD is performing some of the services/providing infrastructure for the MUD current and future residents.)

There is a similar quasi public entity like a MUD, its called a TIF. (MUD=Municiple Utility District) (TIF=Tax Increment Financiing). TIF's are used to enhance existing development areas. The Energy Corridor is an example of a TIF. The area proposed as a TIF must vote to put a TIF in place as it's purpose will cause a new tax for that area if voted successfully. The money from the taxes is used to serve debt the TIF incurs to make improvements such as markers to set off the area, they can add pars, buy up blighted areas etc. TIF's are usually put in place on an area already pretty well developed rather than raw undeveloped land where MUD's are typically used. So a TIF is usually in an existing City where a MUD is typically where there is no incorporated city.

More than you wanted to know Im sure and may need revisions by others to be more accurate.

[Bigmarky]

thanks for the answers/information