Municipal Utility Districts; What are they?

When we moved to Texas in 1997  we kept hearing this term MUD district.  Coming from another state we thought well it must have something to do with mud.  No it actually doesn’t have anything to do with mud it stands for municipal utility district and it may not have anything to do with mud but it has a lot to do with water.

If you live in Texas, especially the  Houston area; it doesn’t take long to get acquainted with municipal utility districts.  A Municipal Utility District (MUD) is a political entity created under Texas State law, specifically, Chapter 54 of the Texas Water Code.  Since most of our subdivisions in Northwest Harris County and Southeast Montgomery County are in an unincorporated part of the county we typically get our water through MUD districts.  A MUD is similar to a small town however the MUD is limited to providing water, sewage, drainage and a few other services within the MUD boundaries.  There are over 1500 MUD districts in the state of Texas.

How does a MUD work?

The Board of Directors is publicly elected and they control all the affairs of the MUD.  The MUD is subject to the Texas Commission of Environmental Quality.  As a public servant the board establishes policies in the interest of its constituents.  A MUD may adopt and enforce all charges, fees and taxes to provide the district facilities and services.

How will I be taxed?

MUD tax rates vary according to property values and debt requirements.  MUD rates generally decline as the MUD area is built out.  I have found a large difference in MUD rates.  I have seen them as low as .25 per 100 house value and as high as $2.00 per 100 house value.  Typically the newer subdivisions are going to have a little higher MUD tax as they have not had the time to build out.  As the subdivision gets more established the tax starts coming down.  I have come to the conclusion that having a little higher MUD tax is part of the cost associated with being in a newer area.

Is there any way around being in a MUD?

You could buy out in the country and be on your own well and septic.  Another option would be to buy in a country subdivision that has community water and then have your own septic.  However then you have to deal with well and septic issues.

I have also learned recently that the community water fee is usually higher than the water charge in a MUD but the good news is there is no MUD tax with this option.  The other option is to buy in a town such as Tomball.   You won’t have a MUD tax in Tomball but you will have an extra city tax.  The extra city tax is normally quite a bit less than the MUD tax though.

I guess long story short you have to pay for your water somehow, whether through a MUD, city tax, community water or well & septic.

© 2017 Houston Association of Realtors All rights reserved. Information deemed to be reliable but not guaranteed. The data relating to real estate for sale on this website comes in part from the Broker Reciprocity Program. Real estate listings held by brokerage firms other than Results Realty are marked with the BR logo and detailed information about them includes the name of the listing brokers. Listing broker has attempted to offer accurate data, but buyers are advised to confirm all items. Information last updated on 2017-05-25.

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