Understanding the 2024 Tax Rate Changes for Harris County MUD 502

Dear Residents of Harris County Municipal District No. 502,

The Board of Directors of MUD 502 understands that some residents of MUD 502 have expressed concerns regarding the District’s tax rate and homestead exemption. We are also aware of concerns regarding rising property values in the District. The Harris County Appraisal District is responsible for setting property values for all property in Harris County. The District has no control over the appraisal process, or over the determination of individual home values in the District. The Board is solely responsible for setting the District’s tax rate in order to maintain a sound financial footing and for adopting any homestead exemptions.

The District’s total tax rate for 2024 is $1.02 per $100 in taxable value, which is down from a total tax rate of $1.50 per $100 in taxable value in 2019. The board intends to continue to reduce the tax rate to the extent possible, while ensuring that it is able to continue to make debt service payments on outstanding District bonds as well as continue to provide quality water, sewer and drainage service in the District.

MUD 502’s tax rate is made up of three components – debt service tax, contract tax, and maintenance and operations tax.

The debt service component is used to fund MUD 502’s annual debt service requirements. For 2024 that rate was set at $0.32 per $100 taxable assessed value and will generate funds necessary to pay for the 2024 debt service requirements of approximately $2,307,861. This debt was used to pay for the installation of water, sewer, road and drainage facilities within MUD 502.

The contract tax component is used to provide funds to pay for MUD 502’s portion of the annual contract tax debt service requirements for the master district (MUD 500). For 2024 the contract tax rate was set at $0.56 and will generate funds necessary to pay for the 2024 contract tax debt service requirements of approximately $4,732,016. This debt was used to pay for MUD 500’s water plants, wastewater treatment plant, regional roads, the detention facilities, regional parks and landscaping, and other related facilities. MUD 500 provides services to all of Towne Lake.

The operation and maintenance tax component is used to provide funds to pay for the ongoing operations and maintenance of MUD 502. For 2024 that rate was set at $0.14, which will supplement the revenue generated by the MUD 502 from its monthly utility bills to pay for the estimated expenditures of $2,135,410 in 2024.

When setting the tax rate, the Board must weigh the District’s fiscal responsibilities against the desires of all taxpayers in the District for lower taxes. It is important to note that all members of the District’s board of directors are also residents and taxpayers in the District.

In addition to consistently lowering the tax rate, the MUD 502 board approved a $5,000 over 65 or disabled tax exemption in 2019 and has continued to adopt such an exemption in subsequent years, which generates extra tax savings for property owners in MUD 502 who qualify for such exemption. The Board considers the effects of implementing a general homestead exemption on an annual basis. However, it is important to note that the Board must adopt the homestead exemption before receiving taxable values from HCAD and that historically the vast majority of all taxable value in the District has been homestead value. As a result the Board has elected to further reduce the tax rate in lieu of adopting a general homestead exemption. Additional statutory exemptions, including exemptions for disabled veterans, are determined by statute, apply to District taxes, and are not determined by the Board.

MUD 502’s board has lowered the tax rate substantially, while at the same time continuing to maintain sufficient financial reserves. With the assistance of its general counsel, its financial advisor and its tax assessor/collector, the MUD 502 board considers all of the relevant information and sets the rate accordingly. The Board will begin to discuss the District’s tax rate at its August or September meeting. The Board invites interested residents to attend the District’s meeting on the first Wednesday of the month at 11:00 a.m. at 9955 Barker Cypress Road, Suite 250 Houston, TX 77433.

Very truly yours,

  • The HCMUD 502 Board of Directors

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