Municipal Utility Districts (MUDs) are political subdivisions of the State of Texas authorized by the Texas Commission of Environmental Quality (TCEQ) to provide water, sanitary sewer, drainage (WS&D) and other utility-related services within the MUD boundaries. Many of these, like Montgomery County Municipal Utility District (MUD) 94, are located outside of city limits where there are no such city services being provided.
Without these Districts, many neighborhoods could not exist and would never have been built. Through the authorization and sale of Bonds, the necessary water, sewer, and drainage infrastructure can be financed. The particular MUD or special district is then typically responsible to pay off the Bonds though tax revenues and manage/maintain the infrastructure for the benefit of the neighborhood.
MUDs and other special districts are often considered to be the most regulated of all forms of local government. The Texas Commission on Environmental Quality (TCEQ) is the primary agency responsible for oversight of MUDs. For example, the TCEQ has extensive rules regarding the design, construction, and financing of water, sewer, drainage, and park infrastructure. MUDs are required to follow these rules.
Additionally, MUDs are subject to a myriad of state and federal regulations, including the Texas Public Information Act, Texas Open Meetings Act, Texas Election Code, U.S. Voting Rights Act, Texas Public Funds Investment Act, Bond approval by the Texas Attorney General’s office, IRS and U.S. Treasury Department regulations, and other Texas laws regulating matters such as conflicts of interest and governmental transparency.
State law also imposes strict requirements on MUD bookkeeping, auditing, and financial reporting. MUDs must engage an accountant to annually audit the MUD’s fiscal accounts and records. The MUD’s Board of Directors manages and controls all of the affairs of the MUD subject to the continuing supervision of the TCEQ and other governmental agencies. To fulfill these obligations, the Board contracts with a wide range of specialist Consultants including Facility Operators, Engineers, Bookkeepers, Tax Assessor/ Collectors, Accountants and Auditors, Landscapers, Attorneys, and others as needed.
MUDs are managed by a five-member Board of Directors that serve staggered four-year terms. All Montgomery County MUD 94 Directors serve “at large”, meaning they represent the entire District equally without regard to which portion of the MUD they live in. To serve on a MUD Board in Texas, a person must be a United States citizen, must be eligible to vote in Texas, must be age 18 or over, and must either be a registered voter within the MUD or own taxable real property in the MUD.
In Montgomery County MUD 94, all five Directors are residents and/or property owners within the District. Besides these legal requirements, Montgomery County MUD 94 Directors need to be available for monthly meetings, special meetings as needed, meetings of related organizations, and often extensive meeting preparation.