How Does a MUD Operate?
A Municipal Utility District is governed by a board of five Directors. All Directors are elected by the residents of the District for 4-year, staggered terms.
The District Board must elect a president, vice-president, secretary, and other officers it considers necessary.
The Board of Directors manages and controls the District affairs, including financial management, employment and purchasing. The Board establishes policies in the interests of the District’s residents and customers to aid in this process. It establishes service charges and fees and has the authority to levy property taxes and issue bonds for maintenance and operations, infrastructure improvements (such as new water plants and sewage treatment plants), and recreational amenities.
These broad responsibilities are in the hands of the Board of Directors and cannot be delegated to employees, contractors and consultants.
The Board of Directors generally meets once per month. These meetings are always open to the public, per Texas law.
Most Districts have no employees and only some large districts have a General Manager. In lieu of a full time staff, a MUD will typically contract with a variety of consultants. Each consultant has technical expertise in one or more facets of a District’s operations. Most consultants have contractual relationships with several districts.
Primary consultants hired by a MUD district include the following:
- Operator: A water and wastewater service operator handles everyday issues that residents have related to their water services and bills. This includes setting taps, cleaning lines and repairing damaged facilities or leaking lines.
- Bookkeeper: is responsible for cash receipts and disbursements, including bond payments, maintains cash and accrual records, monitors investment, tax collections and other financial matters.
- Engineer: prepares design and specifications for the development project and make sure that developers, builders and contractors follow the development plans, oversees underground sewer and water line testing and other district facilities and other permits all in compliance with the TCEQ guidelines and other authorities. An engineer also helps determine when facilities need retrofit, upgrade or expansion and assists in determining when additional bond sales are needed.
- Financial Advisor: helps a district in managing its every day financial operations by providing yearly tax and reserve recommendations, reviewing water service rates preparing informational reports and other services; A financial advisor also helps structure and market bonds and prepares the bond sale documents.
- Attorney: serves as the district general legal counsel and, as such, handles all the legal work associated with the creation and ongoing operations of the district. The attorney prepares board resolutions, agenda and minutes of meetings and keeps the official records of the district. The attorney also should keep the board informed of all statutes, rules and regulations affecting district operations.
- Auditor: conducts the district’s annual audit according to the Commission rules and professional guidelines; The auditor also advises the district on improvements to be made in its accounting system and areas of noncompliance.
- Tax Assessor-Collector: manages the assessment and collection of taxes in the district and coordinates his work with the chief appraiser of the central appraisal district for the county in which the district is found.