As many Pecan Grove residents are aware, the district has called for an election on May 4th, 2019, to obtain authorization for bonds and to raise the cap on the maintenance and operations tax rate.
The May 4, 2019 election will include two propositions that registered voters of the district will be asked to vote on, Proposition A and Proposition B.
- Proposition A provides the funding for the District’s plan for the rehabilitation and long term improvements to our aging water, sewer and drainage systems.
- Proposition B provides the district an option, if needed in the future, to increase the Maintenance and Operations (M&O) tax rate beyond the current 25 cents cap instead of raising water rates to generate revenue that might be required for operations.
The Board of Directors will be hosting a Resident Awareness Open House on Tuesday, April 16, 2019 at the Pecan Grove Plantation Country Club. We will be on the second (2nd) floor, from 6 p.m. to 8 p.m.; residents are encouraged to come at their convenience any time during that window to speak with resident directors and the district consultants and review the exhibits, regardless of whether they are registered to vote. There will be exhibits outlining the engineering plans for the district, drainage solutions, bond and financial details, and more. In addition to your 5 resident board members, district consultants will be on hand to answer your questions.
As this process has proceeded, many residents have asked a number of financial questions via the website. For those who may not be able to attend the open house, we have summarized the most frequently asked questions into this news post.
How much is the district asking to authorize in bonds with Proposition A?
- The bond proposal is set for $33,600,000. If so authorized, the bonds would be sold in phases to allow for continued paydown of existing debt while accomplishing priority engineering tasks.Currently, the district Board has discussed all possible scenarios with the financial advisor and their goals are: once authorized, the bonds would be sold in phases to allow for continued paydown of existing debt while accomplishing priority engineering tasks, starting with critical drainage improvements.
What is the impact to my bills?
- Current goals and assumptions are there be no planned impact to your water bill, and the anticipation is an initial 2.5 cents (0.025) increase in your annual taxes as a result of issuing approximately $5,450,000 principal amount of bonds in late 2019 to address critical drainage improvements. Assuming the best case with the information at hand, this would bring debt service to 39 cents (.039), which is roughly where it was 4 years ago. Assuming an average home value of $244,400, a 2.5 cent increase per $100 assessed value results in a capital increase of $61.10 to the tax bill annually, based on current assumptions and goals.The all-resident, PGMUD Board is dedicated to completing the projects in a timely fashion while managing existing bond debt efficiently, simultaneously being mindful of tax impact to all residents.
With Proposition B, is there a cap to increasing M&O tax rate?
- Short answer: There is no current plan to raise the M&O tax rate if the M&O authorization passes.
- Long answer: Currently, the cap is set at $0.25/$100 of your assessed property value. If the election were to pass, the cap would be raised to $0.75, giving the district the option to raise the M&O tax rate, if needed, in the future. However, at this time, the resident directors on the board do not intend or anticipate needing to raise the M&O tax; they are merely asking for the option to be able to raise it. The election is an authorization, not an actual increase. As residents, the directors are also impacted by tax rate increases and are committed to managing the rates and keeping them as low as possible to service the district needs.
Is the M&O tax rate applied as a tax on the taxable value of our property?
- The M&O tax is part of your ad valorem tax (or, property tax) assessed by the district. Pecan Grove MUD assesses both a debt service tax and the M&O tax. The combined amount right now for your tax rate from the MUD is $0.615/$100 of your assessed property value. With the first bond issuance (if approved by voters) addressing critical drainage concerns, the anticipated debt service increase would be less than 3 cents per $100 ($0.025/$100). Keep in mind this is based on conditional research and estimates, but it is the anticipation that will be presented at the open house.
What is the current indebtedness of the district?
- The current principal amount of the District’s outstanding debt is $51,515,000 and the associated debt service is 36.5 cents (0.365) per $100 assessed value. Thus, for the average home value of $244,400, that adds up to $892.06 per year. Over the last five years, the District has lowered the debt service tax rate through repayment and fiscal management from 41 cents (0.41) to the current rate of 36.5 cents.For more information on your tax rate and water rate, click here to view the EVO dashboard showing comparative tax and water rates.
What happens if the Propositions do not pass?
- The capital improvements to the district still need to occur to maintain the quality of water service and wastewater removal that exists now. Systems age, and rehabilitation needs to happen; further, as all residents are aware, there are severe drainage issues to consider. There are only three ways to fund projects for districts (from lowest impact to highest):
- Sell bonds, paid through debt service tax rate;
- Raise the Maintenance & Operation tax rate; or
- Raise water rates
As residents, the Board of Directors do not want to increase water rates or taxes beyond that which is necessary, and only then to service the needs of the district. As you can see via the answers above, the lowest impact on residents is funding through the sales of bonds.
Again, we encourage everyone to come out to the Open House on April 16th, 2019, and ask questions of the resident directors and their consultants. If you can’t make it, be sure to share this information with your neighbors through social media!