Sources: notice requirements, timing and remedies via Texas Water Code Section 49.452 and Section 49.4521; district purposes via Water Code Section 54.012; 2024 adopted tax rates by taxing unit via the Fort Bend Central Appraisal District tax rate table; district background via the Texas Commission on Environmental Quality. Rates change every year and by section. This is general information, not tax or legal advice. Confirm the rate for any specific address with the district notice and the appraisal district.
If you are buying new construction anywhere in unincorporated Fort Bend County, in Richmond, on the Fort Bend or Waller edges of Katy, in Fulshear, at Evergrove, at Austin Point, at The George, you are buying inside a municipal utility district. There is no version of that purchase without one.
I have explained what a MUD is in the Sugar Land property tax guide, and I am not going to repeat the civics lesson here. This post is about the piece that guide does not cover: the specific document a builder must hand you before you sign, what each line on it means, why the number on a brand new district looks the way it does, and how to use it to compare two homes that look identical on price.
Because that is the real problem. Two homes, same builder, same floor plan, same $450,000 price, three miles apart, and one costs several hundred dollars a month more to own. The flyer will never tell you which one.
Key takeaways
- Texas Water Code Section 49.452 requires the seller to give you a written district notice before you sign a binding contract, and if they do not, you have the right to terminate the contract.
- The notice states the district's current or projected tax rate, the bonds voters approved, and the bonds actually issued, broken out for water, sewer and drainage, for roads, and for parks.
- Fort Bend County district rates in the 2024 appraisal district table ranged from $0.125 in First Colony MUD 10 to $1.05 in Sienna MUD 6, and that spread is the whole reason to read the notice.
- On a $450,000 home, the gap between a $0.125 district and a $1.05 district is about $4,160 a year, roughly $350 a month, before any exemptions.
- New districts typically carry the highest rates because the bonds that built the streets and pipes are freshly issued and the tax base is still mostly empty lots; rates generally fall as bonds amortize and homes fill in, but nothing guarantees the pace.
- A projected rate on a brand new district is an engineer's estimate, not a bill; ask what buildout assumptions sit behind it.
What the district is actually for
Answer first: a municipal utility district is a local government created under the Texas Water Code to finance and run water, wastewater and drainage for land a city does not serve, and in Fort Bend County it is how almost every new master planned community gets its streets, pipes and detention built before the first home sells. It is a government with a board, a tax rate and its own bonds.
The Water Code lists the purposes plainly: controlling and distributing storm water and floodwater, draining land that needs draining, protecting the sanitary condition of water, and the rest of the utility work a subdivision needs before it is a subdivision. The TCEQ, which oversees these districts, describes them as local governmental entities that provide limited services to their customers and residents. Limited is the key word. A MUD is not a city. It does not run police or a library. It runs the infrastructure, and in newer districts it often finances roads and parks as well.
The way the financing works is the part buyers should hold onto. The developer fronts the cost of the water plant, the sewer lines, the detention ponds and often the roads. Voters in the district, which at the start may be a handful of people, approve bond authority. The district sells bonds over time to reimburse the developer, and the property tax on every lot in the district pays those bonds back over decades. The rate is set each year to cover debt service plus operations.
That is why the rate is high when the district is new. The debt is fresh and the tax base is small. As homes are built and the taxable value grows, the same debt is spread across more value and the rate can fall. As bonds are paid off, it can fall further. In established Sugar Land districts like First Colony, that curve has mostly run its course. In a district that sold its first bonds last year, it has barely started.
The notice, line by line
Answer first: Section 49.4521 prescribes the exact form of the notice. It tells you the district's name, whether the district is inside a city or its extraterritorial jurisdiction, the current or projected tax rate per $100, the total bonds approved by voters by category, the total bonds actually issued by category, and any standby fee. You sign it to acknowledge receipt, and a copy is signed again at closing and recorded.
Here is what each part of the form is telling you.
| Line on the notice | What it says | What it means for you |
|---|---|---|
| District name | "The real property that you are about to purchase is located in the (district) and may be subject to district taxes or assessments." | Which government's rate lands on your bill. Look it up by that exact name. |
| Current tax rate | "The current rate of the district property tax is $___ on each $100 of assessed valuation." | The rate in force today. Multiply by your taxable value divided by 100. |
| Projected rate | "The district has not yet imposed taxes. The projected rate is $___ on each $100." | Used when the district is too new to have levied. An estimate, not a promise. |
| Bonds approved | Amounts approved by voters for water, sewer and drainage; for roads; for parks and recreation. | The ceiling. How much debt the district is allowed to take on. |
| Bonds issued | The initial principal of bonds actually issued in each category. | The floor. How much of that ceiling is already borrowed and being repaid through your taxes. |
| Standby fee | Whether the district imposes a standby fee and how much. | A charge on undeveloped or vacant lots. Usually not a homeowner issue, but read it. |
| City status | Whether the district is inside a city's limits or its ETJ. | Inside a city, you may pay city tax too. In an ETJ, annexation is possible later. |
The two bond lines together are the most useful thing on the page. A district that has approved $80 million in bonds and issued $12 million has a long way to go, which means more bond sales ahead and less downward pressure on the rate for a while. A district that has approved $40 million and issued $38 million is near the end of its borrowing and the rate has mostly found its level. Same current rate on the front page, very different next ten years.
The law gives this document teeth. Under Section 49.452, if a contract of purchase and sale is entered into without the seller providing the required notice, the purchaser is entitled to terminate the contract. There are damages provisions on top of that. Builders know this, which is why the notice is in the contract packet. What they do not do is walk you through it, and what you do not do is ask for it before the packet, which is the whole point of this post.
Why the rate on a new build looks the way it does
Answer first: new districts in Fort Bend County commonly start near or above $1.00 per $100 because the bonds are freshly issued against a tax base that is still mostly lots, while districts in built out Sugar Land neighborhoods sit well under $0.50 because their debt is largely retired and their value is fully built. The 2024 appraisal district table shows the spread.
| District, 2024 adopted rate | Rate per $100 | Where |
|---|---|---|
| Sienna MUD 6 | $1.05 | Sienna, Missouri City |
| Pecan Grove MUD | $0.605 | Richmond, 77406 |
| Grand Mission MUD 1 | $0.569 | Richmond, 77407 |
| Cinco MUD 1 | $0.355 | Cinco Ranch, Katy |
| First Colony MUD 10 | $0.125 | First Colony, Sugar Land |
Those are 2024 rates from the Fort Bend Central Appraisal District, which publishes the table but does not set the rates. They move every year, so treat them as a snapshot of the shape, not a quote. The shape is what matters: newest at the top, oldest at the bottom, and almost a full dollar between them.
Run the math on a $450,000 taxable value. At $1.05 the district line is $4,725 a year. At $0.125 it is $562. The difference is about $4,160 a year, or roughly $350 a month, before any exemptions the district may offer. That is the payment gap between two homes with the same price, and it comes from one line the builder's website never shows.
Two things keep new district rates from being a simple "it will come down" story. First, the district can keep issuing bonds for later phases, roads and amenities for years, which is exactly what the approved versus issued lines are warning you about. Second, the rate only falls as fast as the tax base grows, and a community that builds out over eight to ten years spreads that relief over eight to ten years. I said this in the Del Webb post and it holds here: rates on new districts typically start high and decline over the decades as the bonds amortize and the tax base fills in. Typically. Not on a schedule you can bank on.
How to compare two homes on it
Answer first: put the two notices side by side, add each district's rate to the county, school and any city rate to get a total rate for each address, multiply by the taxable value, and divide by twelve. Then compare the bonds issued against the bonds approved to judge which rate is more likely to fall. Base price comes last.
- Get both notices before you tour twice. Ask the sales office for the district notice on the first visit. It exists, it is a legal requirement, and asking for it early tells the salesperson you are the kind of buyer who reads.
- Build the total rate. County plus drainage plus school district plus district plus city if any. For a Richmond address that usually means Fort Bend County, the drainage district, Lamar CISD or Fort Bend ISD depending on the exact lot, and the MUD. For a Katy address on the Waller County side, the county line itself changes. The adopted 2026 tax rates post has this year's county, school and Sugar Land numbers.
- Convert to a monthly number. Total rate times taxable value, divided by 100, divided by 12. Put it next to principal and interest and insurance. That is the payment.
- Read the bond lines. Approved versus issued, by category. Ask how many more bond sales the district expects. The district's engineer knows; the sales office may not.
- Ask whether the projected rate is projected. If the notice uses the "has not yet imposed taxes" language, the rate is an estimate from a buildout model. Ask what absorption pace it assumes. A slow sellout keeps a projected rate high longer.
- Check exemptions. Some districts offer their own homestead or over 65 exemptions on top of the school district's. Some do not. It is a line item question, and it changes the math.
The Katy page and the Richmond page both describe the district trap in general terms because it is the single most common surprise I see at closing out there. This is the fix. It is one document and fifteen minutes with a calculator.
The questions I ask a sales office
Answer first: I ask for the district name, the current or projected rate and the reasoning behind it, the bonds approved and issued, the next planned bond sale, any district exemptions, and whether the district is inside a city's ETJ. If any answer is "I would have to check," that is fine, but I get it in writing before contract.
- What district is this lot in, and is the rate on the notice current or projected?
- If projected, what buildout timeline did the engineer assume?
- How much bond authority is approved, how much is issued, and when is the next sale?
- Does the district offer a homestead exemption or an over 65 exemption?
- Is the district inside a city's extraterritorial jurisdiction, and is there an annexation agreement?
- What were the district's rates the last three years, if it has levied that long?
None of that is adversarial. Every one of those answers exists somewhere in the district's records, and a good sales counselor will get them for you. The point is to have them before you have picked a lot and a cabinet color, because by then the rate is not going to change your mind, and it should still be allowed to.
Frequently asked questions
What is a MUD tax in Texas?
A MUD tax is the property tax levied by a municipal utility district, a local government created under the Texas Water Code to build and operate water, sewer, drainage and often road and park infrastructure for land outside a city's service area. The tax repays the bonds the district sold to build that infrastructure and funds its operations. It appears as a separate line on your property tax bill.
Does a builder have to tell me about the MUD?
Yes. Texas Water Code Section 49.452 requires a person selling real property in a district to give the purchaser a written notice before a binding contract is signed, either separately or as part of the contract. The purchaser signs it to acknowledge receipt, and a separate copy is signed at closing and recorded. If the notice is not provided, the purchaser is entitled to terminate the contract.
What is on the MUD notice?
The form prescribed by Section 49.4521 states the district's name, the current tax rate per $100 of assessed value or the projected rate if the district has not levied yet, the bonds approved by voters and the bonds actually issued for water, sewer and drainage, for roads, and for parks, any standby fee, and whether the district lies inside a city's boundaries or its extraterritorial jurisdiction.
Why is the MUD tax so high on new construction?
Because the district's bonds are freshly issued against a tax base that is still mostly undeveloped lots. The debt service has to be covered by the value that exists today. As homes are built and taxable value grows, and as bonds are paid down, the rate typically declines. In the 2024 Fort Bend Central Appraisal District table, rates ranged from $0.125 in an established Sugar Land district to $1.05 in a newer Missouri City district.
Will my MUD tax go down?
Usually over time, but not on a fixed schedule. The rate falls as the tax base grows and as bonds amortize, and it can hold steady or rise when the district issues new bonds for later phases. The notice's bonds approved versus bonds issued lines tell you how much borrowing is still ahead. A district near its authorized limit has less upward pressure than one that has issued a small fraction of what voters approved.
How much does a MUD add to a monthly payment?
It depends entirely on the rate. On a $450,000 taxable value, a $0.125 district adds about $47 a month and a $1.05 district adds about $394 a month, before any exemptions. Multiply the district rate by the taxable value, divide by 100 for the annual amount, then divide by 12.
Can I look up a MUD tax rate myself?
Yes. The Fort Bend Central Appraisal District publishes a table of adopted rates by taxing unit each year, and most districts post their rates and financial information on their own websites. The district name on the notice is the search term. For a brand new district that has not levied yet, only the notice's projected rate exists.
Bottom line
The MUD notice is the most important page in a new construction contract packet and the least read. It carries the district's name, its rate, and the debt behind that rate, and Texas law requires it to be in your hands before you sign anything binding.
The spread between districts in this county is close to a full dollar per $100 of value, which on a typical new build is a few hundred dollars a month. Base price will not show it. Two builders selling the same lot width in the same community will not show it. The notice will.
Send me the community and the lot you are considering, and I will pull the district notice, build the total rate, and give you the real monthly number before you spend a Saturday at the design studio.
