Fort Bend County Municipal Utility District No. 162 Election FAQ
As many residents may already know, the Board of Directors (the "Board") of Fort Bend County Municipal Utility District No. 162 (the "District" or “FBCMUD 162”) has called for a bond authorization proposition to be on the election ballot for Saturday, May 4, 2024. To ensure that residents and other constituents of the District have accurate information regarding the proposed authorization, 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 Fort Bend County Municipal Utility District No. 162?
Fort Bend Municipal Utility District No. 162 is a municipal utility district and political subdivision of the State of Texas. It is authorized to purchase, construct, operate, and maintain water, sanitary sewer, storm sewer, drainage, and park and recreational facilities to serve the land contained within its boundaries. The District currently contains approximatley 1,921 single-family residences across 1,075 acres (Sunrise Meadow, Highland Meadows, Still Creek Ranch, Windstone on the Prairie and Arabella on the Prairie subdivisions). It also contains 1 gas station and 5 different school campuses.
FBCMUD 162 currently operates and maintains one (1) water plant with one (1) onsite water well and one (1) remote well, five (5) sanitary sewer lift stations, and one wastewater treatment plant. A second wastewater treatment plant is under construction with scheduled completion in July 2024. This infrastructure is connected by 16 miles of water lines, and 16 miles of sanitary sewer lines. Additionally, FBCMUD 162 has twelve (12) detention basins and two (2) stormwater pump stations.
What is the election?
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 4, 2024 election, asking voters to select one (1) option of either FOR or AGAINST on the following propositions:
PROPOSITION A – THE ISSUANCE OF $300,000,000 BONDS FOR WATER, SANITARY SEWER, AND DRAINAGE AND STORM SEWER SYSTEMS AND FOR REFUNDING WATER, SANITARY SEWER, AND DRAINAGE AND STORM SEWER SYSTEMS BONDS OF THE DISTRICT, AND THE LEVY OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS
PROPOSITION B – THE ISSUANCE OF $50,500,000 BONDS FOR RECREATIONAL FACILITIES AND FOR REFUNDING RECREATIONAL FACILITIES BONDS OF THE DISTRICT, AND THE LEVY OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS
These propositions are related to the bond authorization amounts the District is seeking to complete water, sanitary sewer, storm sewer, and drainage infrastructure (Proposition A) and park and recreational facilities (Proposition B) 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 repairs and maintenance or replacement.
The District currently has $64,605,000 in bonding authority for water, sanitary sewer, storm sewer, and drainage infrastructure and $2,325,000 in bonding authority for park and recreational facilities. The most recent bond authorization was in 2019, and the amount of bonds authorized by the District's voters in the 2019 election totaled $70,000,000 for the purpose of water, sanitary sewer, storm sewer, and drainage facilities. The authorized bond amounts were issued periodically, as needed, to fund necessary projects for the water, sanitary sewer and drainage infrastructure in the District.
What will 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 30 years to expand, maintain, replace, or upgrade the aging water, sanitary sewer and drainage infrastructure owned and operated by the District, as well as parks and recreational facilities. 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.
Why is it necessary to do these projects?
The District was created in 2005 and initially contained 305 acres. Between 2018 and 2024 the district has continued to annex land into its boundaries, and now contains approximately 1,075 acres. As the District has grown, the infrastructure has been expanded to meet the needs of the residents. Also, 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 30 years pursuant to the Bond Election Report in order to proactively maintain, and, if necessary, implement repairs or replacement to its facilities. This will enable the District to purchase, construct, acquire, own, maintain, operate, repair, improve, extend, and pay for the water, sanitary sewer, storm sewer, and drainage facilities as well as parks and recreational facilities to serve the District.
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. This could result in increases in the District’s maintenance tax rates and/or water and sanitary sewer rates in order to collect the required funds. Further, the law requires the District to have the necessary funds in hand before it can proceed with a qualified project. If the District is forced to raise the necessary money on an as-you-go basis, it could create significant delays in the completion of large projects. Much like a home equity loan for a major roof repair, when the District issues bonds, it spreads the costs of the necessary projects over several years with the goal of avoiding increases to the tax rate and/or water and sanitary sewer rates typically required by a "pay as you go" approach. Moreover, the interest rates for the District on the re-payments of its municipal bonds can be lower than the comparable rates for traditional construction loans; tax-exempt bonds are an efficient use of funding for District projects. Financing infrastructure through the issuance of bonds enables the District to complete projects timely quickly should the need arise.
How are my taxes determined?
The District levies a total tax rate each year that has two components:
1. The debt service tax rate, the proceeds of which can only be used to make payments on the District’s outstanding bonds; and
2. 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.
How does the District manage taxpayer dollars?
The Board has been able to maintain the Districts total tax rate since 2021 at a rate of $1.12/ $100. For more details regarding tax rates, click here. The District currently has a “Baa2” rating from Moody’s Investor Service.
The District currently has approximately fourteen (14) months of operating reserve funding. A common benchmark for municipal utility districts is generally 12 months. Reserve funds earn interest and are available for emergencies, but can prove to be insufficient if large-scale rehabilitation, repair, or replacement is required, as in the case of plant facility failure or compromise.
At this time, with all the information on hand, given the plan outlined in the Bond Election Report, the Board of Directors for the District does not anticipate an increase to the total District tax rate as a result of bond issuance for water, sewer, & drainage, and park & recreational projects.
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.