Harris County Water Control and Improvement District No. 119 Election FAQ
As many residents may already know, the Board of Directors (the "Board") of Harris County Water Control and Improvement District No. 119 (the "District") has called for a bond authorization proposition to be on the election ballot for Saturday, May 7, 2022. To ensure that residents and other constituents of the District have accurate information regarding the proposed authorization and the Board's goals for the District, we have put together answers for common questions. This page will be updated to address additional questions and provide additional information prior to the election.
What is the District?
The District is responsible for providing water, sanitary sewer, infrastructure and services to approximately 7,500 residents in approximately 3,000 homes within the Brentwood Lakes, Glennloch, Memorial Chase, Memorial Creek, Memorial Creek Estates, Memorial Springs, and Stonebrook Estates neighborhoods, which help make up the more than 906 acres of land within the District. The District is governed by the Board, all of whom are District residents.
The District currently operates and maintains two (2) water plants with onsite water wells, a water transmission line from the North Harris County Regional Water Authority, one (1) wastewater treatment plant, and four (4) remote sanitary sewer lift stations. This infrastructure is connected by 29 miles of water lines and 24 miles of sanitary sewer lines.
What is the election?
The language below will be on the ballot for residents of the District when they go to the polls or vote by mail for the May 7, 2022 election, asking voters to select one (1) option of either FOR or AGAINST on the following proposition:
PROPOSITION A – THE ISSUANCE OF $72,500,000 BONDS FOR WATER, SANITARY SEWER, DRAINAGE AND STORM SEWER SYSTEMS AND THE LEVY OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, IN PAYMENT OF THE PRINCIPAL AND INTEREST ON THE BONDS
The District is seeking approval for the bond authorization amount above, so that the District can complete projects related to rehabilitation and maintenance of the District's aging infrastructure, including the rehabilitation/replacement of the District's wastewater treatment plant.
What is a bond authorization?
A bond authorization is an authorization to sell bonds to fund district projects. It is similar to a line of credit that a business might use to fund its operations. An authorization is not immediate funding, nor is it a "blank check" to fund the entire amount of the authorization. The District must meet strict regulatory requirements before it can sell any of the authorized bonds. While an authorization may be for a large amount, bonds may only be sold once necessary projects are ready to begin or as needed for capital improvements or replacement.
The District currently has $6,570,000 in remaining bond authorization. The most recent bond authorization was in 2004, when the District's voters authorized a total of $26,100,000 for the purpose of constructing water, sanitary sewer, and drainage facilities. $19,530,000 of the bonds authorized in the 2004 election were issued between 2006 and 2017 in five (5) bond issuances to fund necessary projects for the water, sanitary sewer and drainage infrastructure in the District. Additionally, since 2010, as a result of prudent financial oversight by the Board, the District has managed its annual debt service expenses by refinancing bonds at lower interest rates and generating approximately $5,038,605 in gross debt service savings through the issuance of refunding bonds. According to the District's Engineer, the remaining $6,570,000 bond authorization will not be sufficient to address the rehabilitation/replacement of the wastewater treatment plant and other anticipated projects over the next five to ten (5-10) years, in addition to the development of existing and future property within the District.
What will bond authorization be used for?
The Bond Election Report submitted by the District's Engineer identifies the projects the Board anticipates will be necessary over the next 15-20 years to maintain, replace, or upgrade the aging water and wastewater infrastructure owned and operated by the District. As a proactive measure, the Bond Election Report outlines the potential cost for those projects (and required bond issuance costs), considering all information available today, to be approximately $72,500,000.
Key Bond Election Report projects include:
- Rehabilitation/Replacement of the Wastewater Treatment Plant;
- Rehabilitation of the District's water plants and water distribution system;
- Rehabilitation of the District's and remote lift stations; and
- Additional projects, as needed and determined by the Board.
The District's Engineer has estimated the combined amount of bonds required to fund the above items, including inflation and net of the District's existing authorization, to be $72,500,000, reflecting that amount in the Bond Election Report and 20-Year Capital Improvement Plan.
Why is it necessary to do these projects?
The District was created in October, 1968 and much of the District's water, sewer and drainage infrastructure has been in place for many years. As such infrastructure ages, it requires maintenance, rehabilitation, and, sometimes, replacement as part of its lifecycle. On average, infrastructure lasts about 30-40 years with optimal maintenance and operations.
The District intends to issue bonds only as necessary over the next 20 years pursuant to the Bond Election Report in order to proactively implement capital improvements or replacement to its facilities. This will enable the District to ensure reliable and continuous utility service by maximizing the life of its water and sanitary sewer infrastructure.
Municipal utility districts ("MUDs") were originally created throughout the State with the expectation they would eventually be annexed by neighboring cities, which would then pay for the costs of operating, maintaining, and repairing such utility facilities. Under current law and political circumstances, annexation of the District by the City of Houston in the future appears unlikely, so the District must prepare to fund all necessary costs of maintaining, replacing, rehabilitating, and/or, expanding the water, sanitary sewer and drainage facilities required to serve its residents.
Can't the District just pay for projects without issuing bonds?
The primary alternative to authorizing the bonds is to fund all necessary projects on a "pay as you go" basis, likely requiring substantial increases in maintenance tax rates and/or water and sanitary sewer rates. The District must have funds in hand before it can proceed with a required project. Funding projects with maintenance taxes or water and sewer rates would likely require an increase in rates in the short-term in order to collect the required funds. This method places the financial burden for long term projects on current residents, creates significant delays while waiting for the required funds to accumulate prior to construction, and increases costs for the completion of projects.
Authorizing the District to issue bonds will allow the Board to spread the costs of the necessary projects over numerous years and avoid the increases in maintenance tax rates and/or water and sanitary sewer rates typically required by a "pay as you go" approach. This method spreads the cost for these projects among both current and future residents and businesses in the District and enables the District to complete necessary projects quickly and efficiently.
How are my taxes determined?
Each year, the Harris County Appraisal District assesses the value of your property. The District then levies a total tax rate per $100 of assessed value that has two components:
- The debt service tax rate, the proceeds of which can only be used to make payments on the District's outstanding bonds; and
- The operations and maintenance tax rate (often referred to as O&M), the proceeds of which are deposited to the District's General Fund and used, together with water and sewer revenue, to pay operating and maintenance expenses of the District.
How does the District manage taxpayer dollars?
The Board has reduced the District's total tax rate by more than 28% between 2013 and 2021 (from $0.59/$100 assessed value to $0.42/$100). For more details regarding tax rates, click here. As a result of prudent financial management, the District has earned an "A" (rating outlook stable) underlying rating from S&P Global Ratings.
Through careful supervision of expenses and planning for maintenance, the District currently has approximately 10 months of operating reserve funding and $6,570,000 in previous bond authorization. A common benchmark for MUDs is generally at least a 12-month reserve. Reserve funds earn interest and are available for emergencies, but can prove to be insufficient if large-scale rehabilitation, repair, or replacement is required, as in the case of plant facility failure or compromise.
At this time, with all the information on hand, and given the plan outlined in the Bond Election Report, the Board does not anticipate a total tax rate increase as a result of bond issuance for water, sewer, and drainage projects or development reimbursements over the next 5-10 years.
I have more questions…
Further, the District will host an in-person Resident Education Event on April 19th, 2022, at 7:00 p.m., to provide additional information and give residents an opportunity to ask any questions they have about the bond authorization process. This event will be held at the Klein Volunteer Fire Department Station 3, located at 9755 Landry Blvd, Spring, TX 77379, with more information posted to the District website.