Texas MUDs Find Firm Footing

Harris County Municipal Utility District's expansion of its wastewater treatment plant will allow the Bridgeland community to grow from its current 5,700 residents to up to 65,000. Bridgeland, a housing development of the Howard Hughes Corp., is served by one of 1,212 registered MUDs in the state. More than 70% of the districts created by the Texas Legislature are in the Houston area.

Image: Pepper Construction

Related Story: Texas MUDs Find Firm Footing in Thriving Economy

Rick Perry, then a Democratic member of the Texas House, addresses the 1989 session of the Legislature. Perry, who would later become Texas' longest-serving governor, took part in debates over new rules on Texas municipal utility districts after a series of defaults brought on by the collapse of the energy market and the savings and loan industry. In 1989, both houses of the Legislature were controlled by Democrats. Perry later switched parties, as did the Legislature

Chart shows that Texas home prices did not experience the bubble that affected other states. Texas MUDs suffered little damage in the 2008 market collapse.

The Timber Lane Utility District, created by the Texas Legislature in 1969 lies wholly within the extraterritorial jurisdiction of the city of Houston and is one of the older municipal utility districts in the region. The district, which includes commercial property, still has about 770 acres of developable land.

Image: Timber Lane MUD

The Texas World Speedway outside the town of College Station, Texas, will be converted to a municipal utility district, the first in Brazos County, officials said. The plan requires approval from the Texas Commission on Environmental Quality. The Brazos County Appraisal District values that land at $5.4 million, but the projected build out value is $514 million.

Image: Brazos County

The affluent Houston suburb of Sugar Land has become a major component of the metropolitan statistical area after annexing a number of municipal utility districts over the years. Founded as a sugar plantation, the town became the headquarters of Imperial Sugar. Sugar Land's population grew 158% in the last decade to 83,860.

Image: Sugar Land

The upscale Riverstone community in Fort Bend County is served by four municipal utility districts and lies within the extraterritorial jurisdictions of Sugar Land and Missouri City, Texas. More than 2 million Texans now live in MUDs, which have more than $6 billion of outstanding debt.

Image: Riverstone

The Central Unit of the Texas Department of Corrections became the first Texas prison to close without being replaced. The 102-year-old prison near Sugar Land is being redeveloped as a municipal utility district after the 2011 Legislature voted to close the unit, citing the state's fiscal straits and a declining prison population.

Image: Texas Department of Corrections

The site of the former Central Unit of the Texas prison system is undergoing redevelopment as the Telfair community in Sugar Land. A San Diego developer plans to build 4,000 to 4,500 houses where prisoners once served time. The developer turned a former housing facility of the Central Unit into a museum. In June, the Sugar Land City Council authorized the Fort Bend County Municipal Utility District No. 137 to issue $7.8 million of general obligation refunding bonds for MUD No. 137 that serves Telfair, named for a district in Savannah, Ga.

Image: Telfair

Attorney Joe B. Allen, founder of the law firm Allen Boone Humphries Robinson, was the principal author and lobbyist for legislation in 1989 that placed new restrictions on bond issuance for municipal utility districts. Allen said the new rules changed the MUD bonds from somewhat speculative investments to more reliable credits. Allen, who retired in 2013 after 45 years practicing law, was saluted by Fort Bend County as a "Texas Legend."

Harris County Municipal Utility District 148 demolishes an aging water tank to make way for a replacement. In a June 18 report, Moody's Investors Service said that most of the $1.93 billion of Texas MUD bonds it rates are in the A rating category.

Image: Harris County Municipal Utility District 148

Although most of the state's municipal utility districts are in the Houston area, the numbers in the Austin area are also noteworthy. The Lakeway MUD established in 1972, allowed for development of housing on Lake Travis on the outskirts of Austin. With the area facing severe drought, the MUDs are key players in conservation.

Image: Lakeway Municipal Utility District

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