What has transpired for the past 8 years with the water and wastewater service in Shady Hollow Municipal Utility District (SHMUD)?
A Municipal Utility District (MUD) is a political subdivision of the State of Texas authorized by the Texas Commission of Environmental Quality (TCEQ) to provide water, sewage, drainage, and other services within the MUD boundaries.
Shady Hollow MUD is made up of in-district customers and out-of-district customers. In-district customers pay taxes, vote, and can hold office. Out-of- district customers do not pay taxes. To offset not paying taxes, the MUD is authorized to charge higher rates for out-of-district customers. The increased rates are about the same as the average in-district homeowner’s taxes.
In 2013, the City of Austin (COA) and SHMUD signed a Strategic Partnership Agreement (SPA) that authorized annexation of Shady Hollow MUD and the surrounding areas in December 2020. Pursuant to the SPA, the water and wastewater system was transferred to the COA in April 2018, at which time the COA began billing customers for those services. As a result of the pending full annexation in December 2020, SHMUD decided to spend down the reserves which had been accumulated since the MUD was created in December 1980. These reserves, upon annexation, would have been transferred to the COA.
In 2017, SHMUD sued the COA due to excessive wholesale water rates. The settlement included a one-time payment of $850,000 (which was returned to customers in the form of monthly bill credits) and required the COA, upon assumption of the District’s water and wastewater system in April 2018, to maintain the water and wastewater rates charged by SHMUD. The water rates remained the same from 2015- April 2021.
In 2019, the Shady Hollow HOA was successful in passing SB 1468, which effectively prevented full annexation of SHMUD by the COA. SHMUD then negotiated with the COA for the return of its water and wastewater system. The new wholesale water contract with the COA included increased wholesale water rates charged to SHMUD.
I hope this is helpful to understand the increased water bills.