MUDs & Housing Affordability
- Tom Wolfe
- Jul 20
- 2 min read
Updated: 3 hours ago
Reforms that concentrate on simplification, transparency and standardization for permitting housing projects and MUD creation will allow homeownership to be more attainable and affordable.
House Committee Land & Resource Management
While they are a valuable financing tool, MUDs raise concerns due to rules on elections and bonding authority. In its early stages, a MUD typically has no (or very few) residents. When its (non-temporary) board of directors is first elected, and the issuance of bonds authorized, there may be only a handful of voters approving millions of dollars in bonds. Nothing prevents a developer from selecting a person to live on a trailer in the MUD and serve as the sole voter in the MUD. For example, a 2019 news story detailed how a young couple lived in a trailer in a MUD, receiving discounted rent, and were the only voters in an election that approved the issuance of more than $470 million in bonds.
There is no easy way to address this concern of one or two voters approving the MUD’s issuance of hundreds of millions of dollars in bonds. As a practical matter, under the status quo MUD residents retroactively accept the issuance of bonds and the associated property taxes when they move into the MUD.
Municipalities impose a variety of fees during the housing development process. Such fees include stormwater fees, parkland dedication fees, impact fees (these fees are for the construction of infrastructure that are required as a city grows, such as roadways), “tap” fees to connect to utility lines, and building permit fees.
There is, however, limited transparency around these fees. In a 2022 study, the Texas A&M University Real Estate Research Center observed that “There is a remarkable lack of comprehensive information on local government's role in Texas' housing development process."
That study estimated total per-unit fees charged by certain Texas cities for two types of developments: a 40-acre development yielding 200 single family homes, and a one-acre infill-style development yielding four single family homes.
Read the full testimony in the link above.
