As a homeowner, you hear a lot about MUDs and MUD taxes. But what exactly is that?
A Municipal Utility District, or "MUD", is a political subdivision of the State of Texas operated by a publicly elected Board of Directors, created to provide infrastructure and services (such as water, sewer, and stormwater drainage) in areas where standard city services are not available.
Here are the answers to some FAQs regarding MUDs and their taxes:
Are there benefits to a MUD?
Municipal Utility Districts are a very common way in Texas for new communities to be developed in areas where local city services are not yet available. MUDs have contributed greatly to the affordability of new homes in Texas and to the state's growth rate.
How are MUD fees calculated?
MUDs are typically financed through the sale of revenue bonds, which are paid off by the taxes and user fees that are levied upon residential and commercial property located in the municipal utility district.
How is the MUD tax paid?
The MUD tax is included in the annual property tax bill received by homeowners. If your taxes are escrowed, the MUD tax will be part of your monthly payment.
Does the MUD tax include my monthly water & sewer fees?
No, the MUD tax pays only for the cost of installing and operating the infrastructure, providing clean water, and disposing of wastewater. Your monthly usage fee is billed like any other utility bill.
Are MUDs permanent?
As a community grows, MUD tax rates typically decline as operating and debt service costs are shared by more homeowners. In some cases, such as when an area is annexed by a surrounding municipality, the municipal utility district is dissolved completely.
If you have any further questions about MUDs and how they affect homeownership, feel free to contact us. We're more than happy to answer any questions you may have!
Ronda's extensive business experience contributes a well-rounded dimension as the broker for Texas Living Company. Her passion for architectural design motivated her advancement from a career in marketing, business development and supply chain management in the oil and gas industry to residential real estate.