In an effort to further clarify the discussions between the HOA and the MUD, below you will find a summary of the major contractual items. As you can see below, the MUD has offered to assume responsibility for millions of dollars in capital improvements because the MUD can secure capital funding at a much lower cost than the HOA. The only remaining issue is the MUD’s contribution for operational maintenance and that discussion is now within $50,000 of resolution (Item 2b below). We look forward to the completion of this agreement with the HOA.
CURRENT STATUS OF NEGOTIATIONS
- Capital Improvements (Major Construction Projects) and Hydraulic Maintenance.
- The MUD has offered to assume 100% of the cost of capital improvements (major construction projects) to the lakes. Under the current contract, the HOA could be responsible for 64% of these costs. These projects often amount to many millions of dollars. The MUD is voluntarily offering to assume this responsibility because it makes the most financial sense for the community. This is because the MUD has a permanent engineering consultant who specializes in these types of facilities, and the MUD is able to fund large projects by issuing municipal bonds, which is significantly cheaper than the traditional loans the HOA would require. In 2020, the MUD issued $4,000,000 in bonds at an interest rate of approximately 1.5 percent. This money is earmarked for projects scheduled within the next 5 years.
- The MUD has offered to assume responsibility for 100% of the cost of capital improvements on the northern portion of Turkey Creek. Currently, this section of Turkey Creek is owned by the HOA and is not covered by the contract. As such, the HOA is completely responsible for all maintenance of the creek, including any major projects. The MUD is voluntarily offering to assume this responsibility because it makes the most financial sense for the community. Again, by transferring the capital responsibility to the MUD, the cost is lowered for the residents and it is estimated that the HOA would save almost $1,000,000 over the next 10 years.
- The MUD has offered to assume responsibility for 100% of the cost of capital improvements on the HOA reserve located near Indian Shores Lane and Summer Falls Drive. Currently, this section near Turkey Creek is owned by the HOA and is not covered by the contract. As such, the HOA is completely responsible for all maintenance, including any major projects. Again, the MUD is voluntarily offering to assume responsibility because it makes the most financial sense for the community. We do not have estimates for future projects on this property.
- The MUD will continue to be responsible for 100% of hydraulic (drainage) maintenance of MUD facilities. In addition to being beautiful, the lakes serve a critical drainage function in the community. Through hundreds of feet of pipelines, the lakes are interconnected with each other, with the storm drainage system from the streets, and eventually with Turkey Creek to form a drainage system. Under the current contract, the MUD is responsible for any maintenance of these facilities or to the lakes themselves, which is deemed necessary to ensure proper hydraulic function.
- Use and Aesthetic Maintenance.
- The HOA will continue to be allowed to treat all MUD lakes as HOA Common Area. The HOA will continue to be allowed to add any amenities it desires (such as fountains, lights, benches, trails, landscaping, fishing, signage, etc.), and to allow homeowners to utilize and enjoy the lakes pursuant to HOA rules.
- The HOA will continue to be responsible for all aesthetic maintenance of the lakes (mowing, maintaining the amenities it places on the lakes), and the parties will continue to share this cost. The MUD will continue to contribute toward the cost of this aesthetic maintenance. Currently, the MUD has offered to pay the HOA $120,000 annually and the HOA would like $170,000. This issue has not been resolved, but we are only $50,000 apart which should be easily reconciled.
- The MUD and the HOA will “true-up” the aesthetic maintenance contributions for prior years based on the amount determined in item #2b. To simplify long legal arguments, in the past the HOA has billed the MUD for a portion of the HOA’s costs of maintaining the entire subdivision, rather than the costs related only to the lakes. Because of this disagreement, the MUD has made partial payments of these invoices over the last 2 years. Once the annual contribution in item #2b is agreed upon, the parties will “true-up” these prior payments accordingly.
- The MUD has proposed to make this annual contribution a fixed number, rather than a complicated allocation of costs. Currently, the annual contribution from the MUD to the HOA is based upon a spreadsheet comprised of various allocations across several categories of costs. Making this a fixed number will ease the administrative burden on both parties. The MUD has offered to include a standard cost-of-living escalator to be based upon the consumer price index, so that the contract will not need to be amended as time moves forward.
Thank you.
HC MUD 341 Board of Directors