HC MUD 341 is pleased to announce the tax rate for 2023 will be 0.3339 down from 0.3500 last year. This reduction is because of a slight increase in average property values. In accordance with Texas Senate Bill 2 from 2019, all developed MUDs in Texas are limited to no more than a 3.5 percent increase in the average homeowner tax bill in any given year. The new 2023 tax rate will increase revenue by 3.5% or an average increase to homeowners of $61.
The MUD is also pleased to announce there will be NO INCREASES in our water or sewer charges in 2024. There has only been 1 increase in those charges in the last 6 years. That was in 2022 when the MUD had to raise water and sewer charges to pay for the revised contract with the HOA. MUD 341 continues to focus on the reliable distribution of drinking water, sewage service, trash service and drainage at a reasonable cost.
Water costs from West Harris County Regional Water Authority have risen several times over the last few years. HC MUD 341 passes those costs on to our customers with NO ADDITIONAL charges or markup. If WHCRWA raises their rate again, the MUD will continue to pass the increase on to customers but without any additional increase or markup.
The MUD recognizes that it is advantageous to community members to pay funds in tax deductible dollars rather than after-tax dollars. However, due to Texas law, any increases in the amount of money that can be collected through taxation is severely limited to 3.5%. As everyone has personally experienced, inflation and core costs have been significantly higher than 3.5 percent. For example, the land management agreement with the HOA requires the MUD to increase its annual contribution to the HOA by the Consumer Price Index. Due to this agreement, the original agreement cost of $160,000 in 2022 has risen to $180,000 this year and is expected to rise to around $194,000 in March 2024. This is an example that illustrates that even at the maximum increase of tax revenue allowed by law, the MUD cannot collect enough revenue solely through taxation to stay current with inflation or its obligations. The only other source of funding for any MUD other than taxes is through the water and sewer charges on your water bill. Currently the MUD is taking advantage of higher interest rates on our financial reserves to generate additional income for Operations which, when combined with strict cost controls, enables us to operate at a lower overall cost than inflation.
The Board of MUD 341 also chose not to raise water and sewer charges this coming year because we realize there are a broad cross section of customers who have many personal and financial challenges. Some customers are retired and on a fixed income, others are sending their children to college, others are young and trying to make ends meet. Whatever the circumstances, the MUD believes cost control should always be an essential part of excellent management. Over the next year, the largest operational expenses for MUD 341 are: 1) the water cost from WHCRWA- $569,800, 2) TNG personnel, maintenance costs and operational repairs to our water and sewer systems including at our water treatment plant – $202,000 3) the annual contribution to the HOA for aesthetic maintenance of the lakes under the land maintenance agreement -$180,000 in 2023 and expected to rise to about $194,000 in March 2024 due to the CPI adjustment, and 4) the Garbage Service contract -$180,000. Our biggest expense, the cost of water from the WHCRWA, is passed directly to customers without a markup.
About 45% of tax revenue is used to make interest and principal payments on the debt (bonds) used for MUD related capital projects. In 2020, the MUD obtained permission from the TCEQ to offer $4MM in bonds for defined capital projects. The bonds have an average interest rate of 1.50 percent over 20 years making them a cost-effective way to continue to enhance reliability of water, sewer, and drainage facilities. Over the last few years, you have seen the MUD doing major construction projects to replace aged drainage lines leading into the lakes. This is part of a multiyear plan to replace original metal drains with concrete. What you haven’t seen is the extensive work done at our water treatment plant. We have rehabilitated the interior and exterior of our 3 water storage tanks extending their life by at least 15 years. We have upgraded our security system to protect against vandalism or theft. We have replaced all the switches in our electrical system to enhance water delivery reliability. We have also purchased additional emergency power generation capability to name just a few of our upgrades. Next year the MUD will continue major construction projects by replacing the primary drains into Turkey Creek. It is critical to realize that under state law, bond money allocated to capital projects cannot be transferred into routine operations. The same prohibition also applies to the portion of taxes used to pay for interest/principal of bonds. Only money from operation/maintenance taxes and water bills can be used to pay for operational expenses. As stated earlier, since tax revenue has been severely constrained by the State of Texas, any significant cost additions would require additional income from water bills.
The MUD is a highly regulated utility provider governed primarily by the State of Texas and the TCEQ. The Board of MUD 341 takes its responsibility for the reliable distribution of drinking water, sewage service, trash service and drainage very seriously. We recognize that we are an essential provider of services. Without water or sewer service or even trash pickup, our community would be unlivable quickly. If you have any questions, please feel free to contact us directly or through our website, http://www.hcmud341.org/contact/.