Author: HCMUD 341

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.

Background

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, https://www.hcmud341.org/contact/.

Thank you to all the residents that have contacted us with questions and comments.  We appreciate your support.  As part of these conversations, we understand there is confusion about the roles and responsibilities of a MUD and an HOA, so before we share an updated status, we first want to bring some clarity.

Role and Responsibilities of a MUD in Texas

When a subdivision in Texas is developed, it is very common for the developer to establish both a MUD and a HOA.  The MUD’s role is to be a water related utility.  Just as Centerpoint is a provider of electricity and natural gas service, a MUD provides drinking water and water related services.  Most MUD’s including MUD 341 operate a water treatment plant to ensure the treatment and delivery of quality drinking water.  A MUD is also responsible for sewage service and either directly owns or has a very long–term contract with a regional sewage treatment plant.  In the case of MUD 341, we use a regional sewage treatment plant and operate a lift station that accumulates and transports sewage to the regional plant.  MUD 341 also provides twice weekly trash service.  The final responsibility of all MUD’s is the installation and maintenance of the storm water drainage system.  This is the system that takes rainwater from each home and adjacent streets into stormwater drains at the edge of streets.  These drains feed into a series of underground pipelines which flow into the lakes of the community.  This system is designed to clear the streets quickly, preventing home flooding and allowing effective personal transportation.   In the case of MUD 341, when the water in the lakes reaches the design height, the excess water from the lakes flows into Turkey Creek and ultimately the Addicks Reservoir.  Because the lakes are part of this stormwater system, the developer puts the ownership of the lakes under a MUD to ensure there is no breakdown in the rainwater removal system.   Since the development of this style of stormwater removal system, developers saw the aesthetic value of lakes as another amenity of the subdivision which adds homeowner value.   In the case of our community, the visual value of the lakes was so great that it became the name of our subdivision – Lakes on Eldridge.

Role and Responsibility of an HOA in Texas

After a MUD is created and all the extensive pipelines for water, sewer and drainage are installed, the developer sets up a Homeowner Association or HOA.  The role of the HOA is to own and/or manage all the amenities of a subdivision with the goal of maintaining or enhancing the perceived property value of the community.  In simple terms, they are to keep everything beautiful and functional as well as to ensure compliance with governing documents.   Because the lakes must be owned by the MUD, the developer sets up an agreement where a nominal fee is paid by the MUD to the HOA to maintain the aesthetic value of the lakes and adjacent property as part of their responsibility to maintain the entire subdivision.   Most homeowners walk around the lakes and enjoy the beauty of the lakes without even considering their stormwater role on the few days of a rainstorm.  Because of this significant tilt toward aesthetic usage, MUD’s usually pay a fee that roughly coincides with about a third of the costs directly related to basic maintenance of the lakes and their adjacent property.  MUD 341 currently pays the HOA $180,000 per year to maintain the lakes of Lakes on Eldridge.

HOA’s are also typically allowed to use the water in the lakes for irrigation of common area property.  To ensure that the HOA balances the need for irrigation with the requirement to maintain aesthetics, the developer installs a water well used exclusively by the HOA to maintain an aesthetically pleasing water level in the lakes.  The billing for the water used by the HOA does not come from the MUD.  The water well is metered and costs are paid directly to the West Harris County Regional Water Authority.

The Current Drought and Impact to the Community

Now to the issue of the current drought.  A drive through our community indicates that most individual homeowners have chosen to maintain their grass and shrubbery through this drought by sufficient watering during the overnight hours.   While watering can be costly, the cost of plant and sod replacement is significantly greater.   Unfortunately, LOE’s HOA has made a very different choice.  An individual homeowner turns on their sprinkler system to water their property.  In hot weather as we are experiencing, the HOA would need to routinely turn on their well to provide water into the lakes to feed the common area irrigation system and to maintain the lake levels.  For the first time in LOE history, the HOA refused to fill the lakes.   Not only has that decision caused appearance issues, but it put the walls of the primary lakes in jeopardy of collapse.  The water level was more than 27” below the top of the wall.  Our 3^rd party structural engineer has said the safe water level should be no more than 18” below the top of the wall.  Replacement of the lake walls would cost residents an estimated $12 Million dollars.

Actions by the MUD and Current Status

In response to this critical situation, as of September 7, the MUD agreed to pay the HOA to turn on their well to add water to the lakes to try to prevent a catastrophe.   As of September 14^th, we have reached a level of 18” below the top of the wall and notified the HOA to stop pumping at the MUD’s expense.  The cost of the water will be approximately $26,000.  We believe most people would see that as a good investment compared to the risk of $12 Million dollars.  As stated in an earlier announcement, the MUD will absorb this cost.  The HOA remains responsible for maintaining the lake levels and even raising them to more aesthetically pleasing levels if the community does not get enough rain soon.

Lessons That Should Be Learned

This entire situation would have been easily avoidable if LOE’s HOA had followed the procedures used by Lakes on Eldridge- North.  That community was created by the same developer as ours and has the same arrangement for the lakes as we do.  Earlier this year, the water well for LOEN failed.  To aid the HOA since they couldn’t add water, the MUD associated with LOEN (MUD 370) added some water to the lakes to allow for irrigation and to protect the lake walls.  Once the new well went online, the HOA added a float (a device that detects water level) and set the float to ensure their lake levels never fall below 8” from the top.  The HOA pays the full cost of the regularly added water.  If you tour LOEN, their HOA’s commitment to aesthetics is very clear.  In particular, the lakes look nearly full and beautiful.

Final Thoughts

All the directors of MUD 341 are longtime residents of the community.  The five MUD directors have a combined residency of 110 years.  We have no desire to argue or create dissention.  We stepped in to stop a crisis.  If you have issues with the MUD or HOA, please let us or them know.

Below is contact information.  The MUD does not have a community manager, because the 5 directors work directly with our service providers.  Therefore, we have included the general contact link on our website.

HOA Directors – Bill Rainbolt, Jim Wynn, Julie Applegate, Dave Holzinger and Kevin White

Community Manager – Cheryl Vasquez (cvasquez@pmghouston.com)

MUD 341 Directors – Russell Rush, Carlon Thorpe, Christine Mink, Bob Wegner, and Warren Renkin (https://www.hcmud341.org/contact)

Thank you for your support.

Beginning September 7, HC MUD 341 has begun adding water to the lakes of our community to try to protect the lake walls from damage and potential collapse. This action was taken after significant consultation with the MUD’s engineering firm, as well as an independent 3^rd party  structural engineer.  The lakes are a significant asset to the appearance of the Lakes on Eldridge community, and the replacement cost of the walls, is currently estimated to be approximately $12 million.

This is the first time in our community’s history that the MUD has added water to the lake facilities.  Historically, the HOA has added any supplemental water needed to maintain the lake levels. The lakes provide two primary purposes:

1. For the MUD, the lakes receive rainwater runoff from the streets through an underground piping system.  Once the lakes are full, the rainwater transfers into Turkey Creek and the Addicks Reservoir.
2. For the HOA, the lakes are a source of irrigation water for the common areas and a beautiful amenity for the community, when the lakes are full of water.  i.e. “Lakes on Eldridge.”

Recent changes by the HOA to their irrigation pump system allows them to use more water out of the lakes for irrigation.  This change, combined with the harsh drought has driven the lakes to unprecedented low levels.

The MUD’s Land Maintenance Agreement with the HOA requires the HOA to “maintain (the lakes) for the purpose of enhancing and/or preserving the natural beauty and aesthetic quality of the property”.   The MUD is paying the HOA $180,000 this year for that purpose and to supplement the cost of maintaining the lakes and surrounding property.

The HOA added a small amount of water to the lakes in August, per the MUD’s request but is unwilling to spend any additional money to add the water necessary to meet normal aesthetic/beauty considerations, despite the fact that not doing so could result in damage to the lake walls.

Rather than continue to disagree about responsibility, the MUD has chosen to proceed with adding water directly to protect this valuable asset.  The MUD intends to use reserve funds for this expense.  The MUD will not completely fill the lakes but will attempt to bring them up to a level providing more wall stability, while leaving enough room in the lakes in the event of a major rainstorm.

If you have any questions, feel free to reach out to the MUD 341 Board members who are all residents of the community.  You can reach them through https://www.hcmud341.org/contact/.