As many residents may already know, the Board of Directors (the "Board") of Harris County Municipal Utility District No. 215 (the "District" or “HCMUD 215”) has called for a bond authorization proposition to be on the election ballot for Saturday, May 4, 2024. To ensure that residents and other constituents of the District have accurate information regarding the proposed authorization and the Board’s goals for the District, we have put together answers for common questions. This page will be updated to address additional questions and provide additional information prior to the election.
What is the District?
The District is responsible for providing water, sanitary sewer, infrastructure, and services to approximately 843 multi-family residences across 3 properties and 44 buildings, as well as 2 banks
HC MUD 215 currently operates and maintains one (1) water plant with an onsite water well. This infrastructure is connected by 6,600 linear feet of water lines, and 4,700 linear feet of sanitary sewer lines. Additionally, HC MUD 215 owns capacity within the Harris County MUD 200 Wastewater Treatment Plant.
What is the election?
The language below will be on the ballot for residents of the District when they go to the polls or vote by mail for the May 4, 2024 election, asking voters to select one (1) option of either FOR or AGAINST on the following proposition:
PROPOSITION A – THE ISSUANCE OF $26,500,000N BONDS FOR WATER, SANITARY SEWER, DRAINAGE AND STORM SEWER FACILITIES AND THE LEVY OF AD VALOREM TAXES IN PAYMENT OF SAID BONDS
These propositions are related to the bond authorization amount the District is seeking to complete projects in the District.
What is a bond authorization?
A bond authorization is an authorization to sell bonds to fund district projects. It is similar to a line of credit that a business might use to fund its operations. An authorization is not immediate funding, nor is it a “blank check” to fund the entire amount of the authorization without meeting strict regulatory requirements. While an authorization may be for a large amount, bonds may only be sold once necessary projects are ready to begin or as needed for repairs and maintenance or replacement.
The District currently has $1,425,000 in bonding authority. The most recent bond authorization was in 1984, and the combined amount of bonds authorized by the District's voters in the 1984 election totaled $5,000,000 for the purpose of constructing water, and sanitary sewer. The authorized bond amounts were issued periodically, as needed, to fund necessary projects for the water, and sanitary sewer infrastructure in the District.
What will bond authorization be used for?
The Bond Election Report submitted by the District engineer identifies the projects the Board anticipates may be necessary over the next 20 plus years to maintain, replace, or upgrade the aging water and sanitary sewer infrastructure owned and operated by the District. As a proactive measure, the Bond Election Report outlines the potential cost for those projects (and required bond issuance costs), considering all information available today, to be approximately $26,500,000.
Key Bond Election Report projects include:
- Rehabilitation and expansion of the Joint Wastewater Treatment Facility
- Rehabilitation of the District’s water plant and water distribution system;
- Rehabilitation of the District’s sanitary sewer collection and transportation system;
- Emergency power system improvements;
- Additional projects, as needed and determined by the Board.
Why is it necessary to do these projects now?
The District was created in 1981 and much of the District’s water, sewer, and drainage infrastructure was put in place shortly after 1984. As such infrastructure ages, it requires maintenance, rehabilitation, and, sometimes, replacement as part of its lifecycle. On average, infrastructure lasts about 30-40 years with optimal maintenance and operations.
The District intends to issue bonds only as necessary over the next 20 plus years pursuant to the Bond Election Report in order to proactively maintain, and, if necessary, implement repairs or replacement to its facilities. This will enable the District to ensure reliable and continuous service by maximizing the life of its water and sanitary sewer infrastructure.
Municipal Utility Districts were originally created with the expectation they would eventually be annexed by a neighboring city, after which the city would pay for the costs of operating, maintaining, and repairing all District utility facilities. Under current circumstances and laws, annexation of the District by the City of Houston is unlikely, so the District must prepare to fund all necessary costs of maintenance for the water, and sanitary sewer facilities required to serve its residents.
Can’t the District just pay for projects without issuing bonds?
The primary alternative to authorizing the bonds is to fund all necessary projects on a "pay as you go" basis. Accordingly, utilizing this approach would likely require large increases in maintenance tax rates and/or water and sanitary sewer rates in order to collect the required funds. Further, the law requires the District to have the necessary funds in hand before it can proceed with a required project. If the District is forced to raise the necessary money on a "pay as you go" basis, it could create significant delays in the completion of large projects. Much like a home equity loan for a major roof repair, when the District issues bonds, it spreads the costs of the necessary projects over longer periods, typically thirty (30) years, and avoids the increases in tax rates and/or water and sanitary sewer rates typically required by a "pay as you go" approach. Moreover, the interest rates for the District on the re-payments of its municipal bonds are substantially lower than the comparable rates for traditional construction loans; tax-exempt bonds are an efficient use of funding for District projects. Finally, issuing these bonds on an as-needed basis enables the District to complete necessary projects quickly when the need arises.
How are my taxes determined?
The District levies a total ad valorem tax rate each year that has two components:
The debt service tax rate, the proceeds of which can only be used to make payments on the District’s outstanding bonds; and
The operations and maintenance tax rate (often referred to as O&M), the proceeds of which are deposited to the District’s General Fund and used, together with water and sewer revenue, to pay operating and maintenance expenses of the District.
These two components of the tax rate have changed over the years as the District’s debt service and operating expenses have changed.
How does the District manage taxpayer dollars?
The Board has maintained the District's total tax rate at $0.50 since 2013. For more details regarding tax rates, click here.
In an effort to limit the amount of bonds needing to be sold, the District has taken steps to generate approximately fifty-six (56) months of operating reserve that it plans to utilize in funding the contemplated future projects. The District must maintain sufficient reserve funds to cover its standard operating expenses. Although reserve funds can earn interest and are available for emergencies, they can prove to be insufficient in the case of large-scale rehabilitation, repair, or replacement projects. In such cases, the issuance of bonds is typically the source of funding.
The goal of the Board of Directors is to manage the maintenance tax rate to best offset increases in the debt service tax rate, to limit overall ad valorem tax rate increases as approved bonds are sold to fund future necessary projects.
I have more questions…
Good! The goal is for the residents to have all the information at their disposal when voting approaches. Additional questions can be fielded through the Contact Us form on the District’s website.