An election in Magnolia will decide the creation of a municipal utility district Nov. 7 as the city prepares for development along FM 1488. A municipal utility district, created by the Texas Commission on Environmental Quality, functions as an independent limited government entity that can levy a property tax to fund infrastructure and other improvements, according to the Texas Water Code.
The Magnolia East Municipal Utility District—slated for the southwest corner of FM 1488 at FM 149 in Magnolia—is expected to generate $127.4 million in annual taxable value at build-out, according to a memorandum from the TCEQ. As the proposed district lies within Magnolia city limits, the city consented to the creation of the MUD in September 2016.
“There’s no question it will bring us a lot of [financial] assistance, because the northern portion of that development is going to be all commercial—basically retail where it’s based on sales tax—and that will be helpful,” Magnolia City Administrator Paul Mendes said. “Not only will it be helpful to us but also to Emergency Services District No. 10. They get their share of it because [the MUD is] in the area where they’ll also be supporting for fire [service].”
The district’s proposed tax rate to fund development totals $1.45 per $100 valuation, according to the TCEQ memo. A property owner within the proposed MUD would pay about $3.80 in total per $100 valuation based on 2016 rates for all applicable taxing entities.
Future district residents would likely carry the increased tax burden if the creation of the MUD is approved in November, as Mendes said few current residents live within the proposed site.
According to the TCEQ memo, the proposed MUD—spanning 124 acres—would be developed by Magnolia East 149 LLC, which is managed by Austin-based development company Stratus Properties Inc. The proposed development will feature 600 apartments, 100 hotel rooms and 120 townhomes as well as retail, restaurant and commercial space. Development is set to begin in 2018, according to the memo.
Mendes said Stratus Properties petitioned the city for the creation of a MUD to offset the cost of drainage infrastructure in the area. Stratus did not return requests for comment before press time.
“The deal is they’re still going to buy their water and sewer from the city,” Mendes said. “[The tax revenue from this] MUD is going to be able to take care of the drainage and the installation of the utilities and pipes and so forth to handle the drainage in that area.”
The November ballot includes propositions for the creation of the MUD, the election of a board of directors, a maximum tax rate of $1.50 per $100 valuation and the issuance of bonds totaling more than $218 million for district improvements.
“This will be something that will be very good for all of us,” Mendes said.
Sample Ballot
The Nov. 7 ballot includes various propositions regarding the Magnolia East Municipal Utility District.
Proposition A
Confirming creation of Magnolia East Municipal Utility District
Magnolia East MUD Directors
Vote for none, one, two, three, four or five
- Douglas M. Dukes
- Phil Evans
- Mark Littlefield
- Milledge McConnico
- James Russell
Proposition B
An operation and maintenance tax for the District not to exceed $1.50 per $100 valuation of taxable property
Proposition C
The issuance of $69,000 bonds for water, wastewater and drainage system facilities and the levy of taxes in payment of the bonds
Proposition D
The issuance of $41,500,000 bonds for roads and road improvements and the levy of taxes in payment of the bonds
Proposition E
The issuance of $2,500,000 bonds for park and recreational facilities and the levy of taxes in payment of the bonds
Proposition F
The issuance of $104,850,000 refunding bonds and the levy of taxes in payment of the bonds
