Everything You Need to Know About Your Municipal Utility District (MUD)

June 18th, 2021

Like many master-planned communities in Texas, Mantua is located in a Municipal Utility District, or MUD for short. Residents who are unfamiliar with the term may have many questions. What does a MUD do? How is a MUD beneficial to me? What is a MUD tax? All of these are great questions, and we’ve got the answers you’re looking for! In fact, here’s everything you need to know about the benefits and costs of Van Alstyne MUD Tax and your new home in Mantua!

A MUD offers a number of direct and indirect benefits to homebuyers, and many of them are related to the cost of your home. By choosing a home that’s in a MUD, you can actually buy a bigger home in a better community for less money. How? Here are a few of the benefits that homeowners in a MUD enjoy:

  • Thanks to district financing, buying in a MUD means that builders pay lower prices for homesites than they otherwise would. That savings translates directly to you, allowing you to get more home for less, and in a great neighborhood.
  • Because the MUD partially covers the cost of infrastructure, developers can introduce a higher level of amenities within a community,  which translates to a better quality of life for those who live there.
  • As the community grows around the infrastructure that the MUD makes possible, it’s more likely to attract area retail shops and other conveniences, reducing your commute and giving you a variety of places to shop, eat and take care of everyday errands close to home.
  • In a market such as ours in Van Alstyne and Anna, Texas, where housing demand is high, having homesites developed more quickly helps keep supply and demand in check. This helps reduce market volatility and increases the availability of homes in a high-value master-planned community such as Mantua.

But what is a MUD tax really? And what does it do?

Simply put, a MUD is a political subdivision of the State of Texas, created by the Texas Legislature and operated by a board of directors. Its purpose is to help create infrastructure and critical services for communities operating outside the city limits of nearby towns and cities. This allows developers to more efficiently finance infrastructure, including roads, water and sewer systems, and stormwater drainage facilities. This serves communities like Mantua, and it also attracts new businesses to the area. In fact, MUDs have a lot to do with Texas’s vibrant economy and the relative affordability of housing here. (Source)

What does the MUD do for Mantua?

Since a MUD functions as an independent and local entity, it can address our needs and help make decisions that reflect the vision for the Mantua master-planned community, allowing us to quickly and effectively respond to concerns or emergencies if they should arise. The MUD helps to finance everything from roadwork and sewer and water systems to local police and fire departments and even landscaping of public areas such as the parks and other green spaces our residents enjoy.

What do I need to know about our MUD financing and taxes?

Most MUD infrastructure is financed through what’s known as an ad valorem tax bond. This is a tax levied by a municipality based on the value of the property. These bonds are paid off over time by taxes and user fees which are, in turn, paid by the property owners. Since Mantua is located in a MUD, our residents do not pay city property taxes. Instead, they receive an annual Van Alstyne MUD tax bill to pay for the MUD’s bonded indebtedness, general maintenance, and operating expenses. Many residents choose to escrow these taxes through their mortgage company

How much is the MUD tax for Mantua homeowners?

Mantua’s tax rate is only $1 per $100 of property valuation. For a $300,000 home, that comes to roughly $3,000 per year. While the Van Alstyne MUD tax will remain steady at $1 per $100 valuation until the infrastructure within the MUD has been financed and all phases of the community have been built, the tax rate is expected to slowly decline after that and should never increase. Note that while the MUD tax pays for infrastructure and other critical services, your monthly water and sewer fees are billed just like any other utility.

What if I have further questions about the MUD?

For questions regarding the MUD and what it means for you, including financial matters such as those related to bond issuances, district indebtedness, and tax rates, Mantua residents are encouraged to contact Mindy Koehne from Coats Rose, P.C., the district’s legal counsel, at (972) 982-8461. For questions about Mantua itself, you can reach out to us at any time.