Population growth in the Lake Conroe area continues to challenge local developers and municipalities as they build the infrastructure needed to meet commercial and residential demand.

The Lake Conroe area population is projected to grow from about 180,000 residents in 2018 to 485,300 residents in 2050, according to a demographic study conducted this year by the Community Development Strategies consulting firm for the Montgomery Area Chamber of Commerce. The projected growth includes multiple communities that will add hundreds of additional homes to the area in the next few years.

“Things have really expanded here, and it is not only out west [of Conroe] on the beautiful lake anymore,” Conroe Community Development Director Nancy Mikeska said.

While both cities often borrow funds to pay for new infrastructure, the cost of developing the land, installing pipelines, building detention ponds and meeting the requirements of local tree ordinances is often paid by developers upfront, said Wade Nelson, owner of The Nelson Company, which brokers land in the Montgomery County area.

State Sen. Brandon Creighton, R-Conroe, said municipal utility districts are a financial tool developers use to pay for the cost of infrastructure, particularly in unincorporated areas. A MUD is a special district that helps developers finance infrastructure by using the infrastructure as collateral to sell bonds.

“MUDs provide reimbursements for infrastructure costs to builders and developers, but really there are very few developments that are possible or feasible without a MUD these days,” Creighton said. “It is just a very lean business to be in, profitwise.”

The city of Conroe recently authorized several expansions to the jurisdiction of several MUDs to pay for the cost of infrastructure for new homes.

The city of Montgomery does not allow in-city MUDs, and instead charges fees to fund half of the projected cost of infrastructure improvements in the city over the next ten years. Those fees decreased from about $4,500 for an average home  in 2017 to  $3,639 this year, Montgomery City Administrator Jack Yates said.

MUDs support Conroe development


Lake Conroe-area projects—such as the incoming Madison Bend residential development and the ongoing construction of the Water Crest on Lake Conroe community—as well as The Woodlands Hills community are creating a development hotspot in northwest regions of Conroe, Mikeska said.

Meanwhile, projects in southeast Conroe—such as the proposed Star Ridge Ranch and Granger Pines residential developments in Conroe’s extraterritorial jurisdiction, as well as the expansion of Barton Woods in the city limits—are breathing life into corners of the city that have largely remained undeveloped, Mikeska said. The ETJ is an area outside the city limits where cities can annex new property.

While MUDs are commonly used to provide municipal services outside of city limits, the city of Conroe allows MUDs to be created within the city to help developers recover the cost of development quickly through the sale of bonds. Residents and landowners then repay the bond over time through monthly MUD bills, and MUDs can be dissolved once the debt is repaid, Mikeska said.

During the March 22 Conroe City Council meeting, council members agreed to allow MUDs 1 and 132 to add 12.6 acres and 104 acres of land, respectively, to build new homes.

MUD 1 serves the Barton Woods community on Loop 336, and the addition will accommodate construction of 42 new single-family homes. MUD 132’s additional land will accommodate the construction of 104 homes in a new community named Madison Bend.

At the meeting, attorney Julianne Kugle—who represents MUD 132—said allowing existing districts to grow helps spread the cost over more residents.

“There is some economy of scale by annexing in another tract into an existing MUD rather than creating a new MUD,” she said. “We can lower our operating cost because we have a larger tax base and accelerate our debt service payments, and hopefully dissolve the MUD at a sooner point in time.”

Montgomery Infrastructure needs


Development has transformed the face of Montgomery in recent years. Major projects—such as construction of the Montgomery Summit Business Park in 2015, the Buffalo Springs Shopping Center last year and incoming retail strip The Shoppes of Montgomery this year—have attracted numerous new businesses to the city, Yates said.

With additional undisclosed development projects on the horizon, the city needs about $38 million in water, sewer and transportation improvements in the next 10-15 years, said Chris Roznovsky, district services department manager for Jones and Carter Municipal, which provides engineering services for the city.

“To fund the necessary improvements, the city of Montgomery uses a variety of sources, including impact fees on developers, agreements with developers, loans, grants, and partnerships with other entities, such as Montgomery County and [the Texas Department of Transportation],” Roznovsky said.

In January 2017, Montgomery City Council approved changes to its fee structure for developers. The city previously assessed a water and sewer tap fee at a rate of about $4,500 per home—a fee that is still assessed from any property platted before January, Yates said.

As of January, developers who plat their land in Montgomery are instead subject to a $3,639 impact fee per connection, Yates said. The fee is slated to increase to $3,842 in 2019.

Yates said the fees are necessary to pay for the projected infrastructure needs of the community if the city continues to grow.

“The biggest reason for the impact fees is so that future connectors and new growth pays for new improvements of the system,” Yates said. “In other words, we would not be expanding the system except for the new growth. So we feel like the new growth should help pay for that system.”

Despite the fee decrease, local developers have expressed concern about the cost of fees, said Michael Ogorchock, executive vice president for Summit Universal, the developer of the 96-acre Montgomery Summit Business Park.

“The city of Montgomery I feel is behind the curve in terms of long-term planning, and now they are trying to catch up,” he said. “If you start getting into these projects and you pay your impact fees, you pay your architect and your civil engineer, all of a sudden you are $30,000 or $40,000 into the project before you have even done anything.”