1. What is the MUD?

Harris County Municipal Utility District No. 359 (the “MUD”) is a political subdivision of the State of Texas, similar to the City of Houston and Harris County. It has limited governmental functions, related to the provision of water, wastewater, drainage and recreational services. The MUD is within the city limits of Houston, and includes the entirety of the Shadowlake development, plus some small bits outside the development.

2. How was it created?

The MUD was created by order of the State agency then known as the Texas Natural Resource Conservation Commission, now known as the Texas Commission on Environmental Quality (the “TCEQ”) in 1993. The City consented to the creation of the MUD, and entered into an agreement with the MUD in connection with the provision of services. The TCEQ continues to exercise oversight regarding some of the MUD’s finances and facilities constructed.

3. How is the MUD governed?

The MUD is governed by a five-member Board of Directors that serves staggered four-year terms. The MUD holds an election for either two or three of its positions in May of each even-numbered year. To serve, a person must be eligible to vote in Texas, 18 or over, and either reside in the MUD or own real property in the MUD. All five directors are residents of the MUD.

4. What does the MUD do, and not do?

The MUD issued long-term bonds to finance the infrastructure required to provide retail water, and wastewater and drainage services to the land within the MUD as it developed. It continues to pay down the bonds, and will continue to do so until 2023, when the bonds are paid off. In 2014, the MUD refinanced its debt to take advantage of lower interest rates, but the payoff date remains the same. The MUD owns the land on which the amenity lake is located, and is responsible for maintaining its ability to act as a stormwater detention facility. The MUD also works with the HOA to keep the lake attractive and functional.

The MUD does not own or operate the water and sewer lines, or bill and collect for water or sewer services, which are the functions of the City of Houston. Water leaks and other maintenance are the responsibility of the City. The MUD does not currently maintain the roads or walls, and does not deal with garbage, streetlights.

5. How does the MUD pay its way?

The MUD levies a debt service tax to pay its annual bond debt service costs, and levies a maintenance tax to pay MUD administrative and other non-bond costs. Pursuant to an agreement with the City, the MUD receives payments from the City that are dedicated to payment of the MUD’s bonds, and help to keep the debt service tax as low as possible.

6. What is the MUD’s tax rate?

The MUD levies a property tax on all taxable property in the MUD, which may change from year to year. Taxes are currently $0.16 per $100 of taxable value. This rate has declined substantially from the inception of the MUD.

7. What is the MUD’s bonded indebtedness?

As of June 2, 2018, the MUD will owe $3,570,000 in bonded indebtedness. The MUD continues to pay down this debt, and has taken advantage of lower interest rates when possible to refinance the debt. Outstanding bonds will be retired in 2023. The bonds were approved at an election held at the inception of the MUD. Additional bonds are authorized to be issued, but the Board has no current plans to sell more bonds.

8. What is the MUD’s relationship with the City of Houston?

The MUD is entirely separate from the City of Houston, although City laws and regulations apply in the MUD just like everywhere else in the City. The City could dissolve the MUD at any time, but would have to assume all the MUD debt, and take on responsibility for the lake and detention pond, so dissolution is very unlikely any time soon.

9. What could the MUD do that it isn’t doing now?

In addition to providing funds to the HOA to aid in the cost for security, the MUD has the power to provide for recreational facilities, garbage collection, and streetlights, but does not currently do so. Before the Board could spend money to provide park or other recreational facilities, it would need to develop a plan, and ask the MUD’s voters for approval to use tax revenues for that purpose, and possible to authorize issuance of MUD bonds for recreational facilities.

10. Does the MUD maintain the roads?

The MUD does not have the power or funds to maintain the roads in the MUD. Occasionally, the MUD will repair or maintain the drainage system that is within the right of way, on a limited basis. The private roads within the community are the responsibility of the homeowners’ association.

11. Can I attend MUD meetings?

All residents are welcome to attend the monthly MUD meetings held on the first Wednesday of each month, at Allen Boone Humphries Robinson, LLP, at 12:30 p.m.