foleyt said:
So you're saying the tax rate decreases slowly over time rather than stepping down at the end of that 25ish year period?
Going through the same struggle now. Hard to live with paying almost the same in tax per month as P&I.
Essentially, and not considering additional bond issuance for new developments within the district, yes...I'm saying your tax rate could slowly come down as more people move in, build homes, and add value to the district. Of course, at the end of the 25 year issuance, it will dramatically drop assuming they don't refinance and extend the debt, or add additional debt during that time.
Let's say there are 100 households in the MUD right now and the debt is $10mm. Each property is the same value. Each of those households is responsible for $100k in debt. Let's say 900 more move in. Now each home is responsible for $10k. Everyone's slice of that debt pie is now lower. Add the fact that the accessed value of the entire district is going up and you can see those rates decline further as 3.50% of higher values means more money. They can lower the tax rate with the new AVs and still service the debt. This is a very simplistic example for a new neighborhood.
Let's look at Ft Bend MUD #123. In 2012, the AV was $168mm and the tax rate was $1.15. Fast forward to 2016 and the AV was $330mm and the tax rate dropped 6 cents to $1.099. During that time it added $12.7mm in new money debt (there was other debt issuance but that was refunding bonds to get a better rate). So the AV grew tremendously, new bonds were issued for new projects, and the tax rate came down.
Another example: Ft Bend #142 had an Accessed Value of $403mm in 2011 with a $1.32 tax rate. The AV is now $750mm with a $0.77 tax rate.
Established neighborhoods that are maxed at buildouts, occupancy, and population probably won't see as much of a change. But the rates should be lower in those.
Again, these are all very simplistic views on my part. Each MUD is different.
