Harris County Municipal Utility District No. 43 Election FAQ
As many residents may already know, the Board of Directors (the "Board") of Harris County Municipal Utility District No. 43 (the "District") has called for a bond authorization proposition to be on the election ballot for Saturday, May 6, 2023. To ensure that residents and other constituents of the District have accurate information regarding the proposed authorization and the Board’s goals for the District, we have put together answers for common questions. This page will be updated to address additional questions and provide additional information prior to the election.
What is Harris County Municipal Utility District No. 43?
HCMUD 43 is a municipal utility district, which is a form of local government, and was created in 1981. The District is responsible for providing water, sanitary sewer, infrastructure and services to approximately 3,810 residents in approximately 1,732 homes within the Birnam Wood neighborhood sections 2-5 and Village of Spring Oaks neighborhood sections 1-4 within the 563.03 acres of land within the District.
HCMUD 43 currently operates and maintains two (2) water plants with onsite water wells, one (1) wastewater treatment plant, and two (2) remote sanitary sewer lift station. The District also has 25.75% ownership of Treschwig Regional Wastewater Treatment Facility.
What is the election?
The District is requesting that its voters give the District the authority to issue municipal bonds when needed to fund large projects required for the maintenance and rehabilitation of the District's water, sanitary sewer, and drainage infrastructure.
The language below will be on the ballot for residents of the District when they go to the polls or vote by mail for the May 6, 2023 election, asking voters to select one (1) option of either FOR or AGAINST on the following proposition:
PROPOSITION A – THE ISSUANCE OF BONDS IN THE AMOUNT OF $48,180,000 FOR WATER, SANITARY SEWER, AND DRAINAGE AND STORM SEWER SYSTEMS AND THE LEVY OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, IN PAYMENT OF THE PRINCIPAL AND INTEREST ON THE BONDS
This is the proposition related to bond authorization amounts the District is seeking to complete projects and finance ongoing development in the District.
What is a bond authorization?
A bond authorization is an authorization to sell bonds to fund district projects. It is similar to a line of credit that a business might use to fund its operations. An authorization is not immediate funding, nor is it a “blank check” to fund the entire amount of the authorization without meeting strict regulatory requirements. While an authorization may be for a large amount, bonds may only be sold once necessary projects are ready to begin or as needed for capital improvements or replacement.
The District currently has $8,725,000 in remaining bond authorization. When the District was formed in 1981, voters authorized $7,525,000 in bonds to construct and maintain the facilities. In the last 40+ years, the District has efficiently used those bonds, anticipating a potential annexation by City of Houston. As an annexation never occured, the District has periodically come back to the voters for additional authorizations to continue to maintain the infrastructure; in 2002, voters approved $2,600,000 for projects, and in 2004 voters approved an additional $14,000,000. The most recent bond authorization was in 2009, when the District's voters authorized a total of $3,000,000 for the purpose of rehabilitating water, sanitary sewer, and drainage facilities.
What will bond authorization be used for?
The Bond Election Report submitted by the District’s Engineer identifies the projects the Board anticipates will be necessary over the next 20-25 years to maintain, replace, or upgrade the aging water and wastewater infrastructure owned and operated by the District. As a proactive measure, the Bond Election Report outlines the potential cost for those projects (and required bond issuance costs), considering all information available today, to be approximately $46,885,000.
Key Bond Election Report projects include:
- Rehabilitation of the District’s water plants and water distribution system;
- Rehabilitation of the District’s wastewater treatment plant, collection system, and remote lift stations; and
- Additional projects, as needed and determined by the Board.
Additionally, a portion of this authorization will be utilized to pay for infrastructure to service developing areas within the District. The Developer reimbursement for these infrastructure costs is currently expected to be approximately $16,000,000 including non-construction “soft” costs of issuance. These Developer reimbursements will combine a portion of the remaining, previously authorized bonds and $10,000,000 from the 2023 proposition’s bond authorization, if so approved.
Why is it necessary to do these projects now?
The District was created in 1981 and much of the District’s water, sewer and drainage infrastructure has been in place for many years. As such infrastructure ages, it requires maintenance, rehabilitation, and, sometimes, replacement as part of its lifecycle. On average, infrastructure lasts about 30-40 years with optimal maintenance and operations.
The District intends to issue bonds only as necessary over the next 25 years pursuant to the Bond Election Report in order to proactively maintain, and, if necessary, implement capital improvements or replacement to its facilities. This will enable the District to ensure reliable and continuous utility service by maximizing the life of its water and sanitary sewer infrastructure.
Municipal Utility Districts were originally created with the expectation they would eventually be annexed by a neighboring city, after which the city would pay for the costs of operating, maintaining, and repairing all District utility facilities. Under current law and political circumstances, annexation of the District by the City of Houston in the future appears unlikely, so the District must prepare to fund all necessary costs of maintaining and, if necessary, expanding the water, sanitary sewer and drainage facilities required to serve its residents.
Can’t the District just pay for projects without issuing bonds?
The primary alternative to authorizing the bonds is to fund all necessary projects on a "pay as you go" basis, likely requiring increases in maintenance tax rates and/or water and sanitary sewer rates. The District must have funds in hand before it can proceed with a required project. Funding projects with maintenance taxes or water and sewer rates would likely require an increase in rates in the short-term in order to collect the required funds. This method places the financial burden for long term projects on current residents and could create delays and increase costs for the completion of projects.
Authorizing the District to issue bonds will allow the Board to spread the costs of the necessary projects over numerous years and avoid the increases in maintenance tax rates and/or water and sanitary sewer rates typically required by a "pay as you go" approach. This method spreads the cost for these projects among both current and future residents and businesses in the District and enables the District to complete necessary projects quickly and efficiently.
How are my taxes determined?
The District levies a total tax rate each year that has two components:
- The debt service tax rate, the proceeds of which can only be used to make payments on the District’s outstanding bonds; and
- The operations and maintenance tax rate (often referred to as O&M), the proceeds of which are deposited to the District’s General Fund and used, together with water and sewer revenue, to pay operating and maintenance expenses of the District.
These two components of the tax rate have changed over the years as the District’s debt service and operating expenses have changed.
I have more questions…
Good! The goal is for the residents to have all the information at their disposal when voting approaches. Additional questions can be fielded through the Contact Us form on the District’s website.