The Board of Directors (Board) of Harris County Municipal Utility District No. 200 (HCMUD 200 or District) has called for a bond authorization election to be held on Tuesday, November 7, 2023. To ensure that District residents have accurate information regarding the proposed bond authorization and upcoming projects, we have prepared this Bond Election FAQ to provide answers to commonly asked questions.
What is HCMUD 200?
HCMUD 200 is a municipal utility district that provides water, sanitary sewer, and drainage infrastructure and services to over 14,000 residents in 1,122 homes and 13 apartment complexes located in the Cranbrook and the Glen Abbey subdivisions within the 754 acres of land within the District.
What type of facilities does HCMUD 200 own and operate?
HCMUD 200 currently owns, operates and maintains four (4) water plants, three (3) of which have on-site water wells, three (3) sanitary sewer lift stations, a wastewater treatment plant, over 22.6 miles of water lines, and 16.5 miles of sanitary sewer lines.
What is the election?
The District is requesting authorization to issue bonds in the maximum amount of $52,000,000, when needed, to pay for projects required to maintain, rehabilitate, and/or replace the District's aging 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 November 7, 2023 election, asking voters to select one (1) option of either FOR or AGAINST the following bond proposition:
PROPOSITION A – THE ISSUANCE OF UP TO $52,000,000 IN TOTAL PRINCIPAL AMOUNT OF BONDS FOR WATER, SANITARY SEWER AND DRAINAGE FACILITIES AND THE IMPOSITION OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS
What is a bond authorization?
A bond authorization is an authorization to sell bonds to fund District projects. It is similar to obtaining a loan to finance a large purchase or home repair. A bond 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 has authorized the following bonds: (i) $21,700,000 in November 1981, (ii) $5,000,000 in January of 1983, and (iii) $29,000,000 in November of 2015.
Since 1981, the District has issued $34,330,000 in water, sanitary sewer and drainage bonds in nine (9) separate bond issues. The District currently has $21,370,000 in remaining bond authorization, but the remaining authorization will not be sufficient to address the anticipated maintenance, rehabilitation and replacement projects over the next five to ten (5-10) years. This election will allow the District to continue to maintain its facilities over the next 15 years.
What will the bond authorization be used for?
The Bond Election Report submitted by the District engineer identifies the projects the Board anticipates will be necessary over the next 15 years to maintain, replace, or rehabilitate the aging water, sanitary sewer, and drainage infrastructure owned and operated by the District. Considering all information available today, the District’s engineer estimates that the cost for those projects will require approximately $73,370,000 in bond funds to be issued as needed. Because the District has $21,370,000 in existing bond authorization, the bond proposition to be submitted to voters is for the remaining $52,000,000 needed.
Key Bond Election Report projects include:
- Rehabilitation of two (2) of the District’s water plants;
- Rehabilitation of the water distribution system;
- Expansion and significant improvements and replacements to the Wastewater Treatment Plant; and
- Rehabilitation of the District’s sanitary sewer collection and transportation system.
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 and/or water and sewer rates could create significant delays and increase costs for the completion of projects.
Authorizing the District to issue bonds will allow the District to spreads the costs of the necessary projects over several years and avoids the increases in 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 used, together with water and sewer revenue, to pay operating and maintenance expenses of the District.
How does the District manage taxpayer dollars?
The Board has reduced the District's total tax rate by 3% between 2017 and 2022 (from $0.59/$100 assessed value to $0.5725/$100). For more details regarding tax rates, click here. As a result of prudent financial management, the District has earned an “A” underlying rating from Standard & Poor's.
Through careful supervision of expenses and planning for maintenance, the District currently has approximately 21 months of operating reserve funding and $21,370,000 in previous bond authorization. A common benchmark for Municipal Utility Districts is generally 12 months reserve. The District's reserve funds earn interest and are available for emergencies, but will be insufficient to fund the large-scale rehabilitation, repair, and replacement projects included in the District's capital improvement plan.
The Board anticipates selling a significant amount of the authorized bonds in 2024 and 2025 in order to complete the Wastewater Treatment Plant rehabilitation, replacement and expansion project in 2026. The anticipated bond issuances will likely result in debt service tax rate increases in 2025 through 2032, as needed, to manage the repayment of the bonds. The total tax rate increase could be mitigated by a number of factors (property value increases, lower project costs, etc.) and is difficult to forecast beyond 10 years. The Board is committed to being fiscally responsible and efficient with the bond authorization and planned projects, to minimize the impact to the total property tax rate each year.
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.