Page 13 - ABHR MUD BOOK 2022

The Truth About MUD Taxes

• MUD tax rates decline. Over time, MUD tax rates decline dramatically resulting
in declining tax bills to individual homeowners.
• MUD tax rates generally start at the highest rate and then decrease.
• The reason is simple: as MUD bonds are paid off and infrastructure, homes, and
businesses are built on what was undeveloped land, tax rates and tax bills
decline.
• MUDs issue the bonds necessary to pay for water, sewer, drainage, parks, and
road infrastructure. Bonds are sold, usually in annual increments, as the MUD is
developing. After the MUD is developed, bonds begin to be paid off. As bonds
are paid off, tax rates and tax bills go down.

Key Data:

• The data proves that MUD tax rates go down.
• The weighted average of MUD tax rates in the Greater Houston Area has
1
declined significantly over the last three decades.

1 The weighted average tax rate is weighted by the taxable values in each of the districts for each tax year. There are
different types of averages. The weighted average is the most meaningful of the averages because it accounts for
varying property values among districts. A weighted average is correct when analyzing a mixture of MUDs with
high tax rates but low property values, and MUDs with low tax rates but high property values.

Association of Water Board Directors --Texas