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BACKGROUND
In about 1975, Municipal Utility Districts (MUDs) were created by George Mitchell’s development team solely as a vehicle to finance local water, sewer, and drainage infrastructure. In contrast to most MUDs they were to have no employees, and all operations, maintenance, and repairs were to be performed by a central agency, then known as the Woodlands Joint Powers Agency (now the Woodlands Water Agency, or WWA). The WJPA was to be the retailer of water and wastewater services. The San Jacinto River Authority (SJRA) would be the wholesaler of water and wastewater services to the WJPA and own and operate major water distribution and wastewater collection lines and water and wastewater treatment plants.
Ultimately, eleven MUDs were created by various developers. It was George Mitchell’s intent that all of these MUDs be consolidated or dissolved once bonds are paid off, eliminating 11 tax districts and its 55 directors (five directors in each MUD) governing only about 33 employees. The ratio of about 1.5 directors per WWA employee makes no sense as the remaining MUD functions of budgeting and setting water and tax rates could easily and efficiently be performed by the WWA. A more sensible form of governance would be to establish a much smaller number of qualified directors to oversee WWA’s operations
MUDs 2 and 40 were first to consolidate in 2016, successfully forming MUD 1 and serving as a model for future consolidations.
In 2021, MUD 1 residents handily approved consolidation of MUD 1 and 6. For various reasons, MUD 6 residents defeated the measure by 20 votes out of 848 votes cast.
CONSOLIDATION ALTERNATIVES
In early 2026, two new consolidation studies were conducted – one looking at consolidating all remaining ten MUDs and the second looking to consolidate only MUDs that had no debt. The principal rationale for both studies was that The Woodlands is largely built out and that the MUDs primary purpose to finance local water, wastewater, and drainage ditches has been fulfilled.
Consolidate All Ten MUDs
The first study, to consolidate all ten MUDs, identified cost savings of around $1,000,000 per year and also the freeing up over 1,700 hours of WWA and SJRA staff time per year attending monthly MUD staff meetings that largely have very similar agendas. Without this excessive administrative burden, decision making would be faster and staff resources better applied to public services.
Three major problems were identified. The first was that a single tax rate to produce the same total tax revenue would be favorable to about half of the residents and unfavorable to the other half.
The second major problem is a conflict between the State constitution that requires a single district ax rate and the Texas Water Code that allows consolidated MUDs with different tax rates to maintain those tax rates as if the MUDs had never been consolidated.
The third problem is that it is unlikely that all MUDs would vote in favor of consolidation. MUD directors get paid $121 which, for many directors, is no more than an hour’s work (Some conscientious directors do put in much more time.) Aside from loss of almost $1,500 in annual income, there is the inertia of status quo and the perception that “if it isn’t broke, don’t fix it.” Some directors feel that their constituents will lose representation. Some directors feel that upcoming needs for renewals of major facilities and service lines require more heads to evaluate alternatives.
Ten people with legal, audit, financial, economic, MUD, and engineering backgrounds – all with deep experience in public service in The Woodlands – carefully reviewed the detailed, analytical study. It was agreed that these three problems make it unwise to pursue full consolidation at this time.
Consolidate MUDs with No Debt and Similar Characteristics
The second study focused only on consolidating MUDs 1, 6, and 36 as all three have no or very little debt. MUD 36 was removed from consideration at this time, however, as its tax rate and financial situation was too dissimilar to those of MUDs 1 and 6. Further, MUD 36 has higher water and sewer rates compared to the identical rates for MUDs 1 and 6.
Cost savings from consolidating MUDs 1 and 6 would be about $100,000 per year and would eliminate about 150 WWA and SJRA staff hours of time in largely duplicative meetings and meeting preparations.
Tax rates for MUDs 1 and 6 differ by only 3.5 percent ($.0648 and $0671 per $100 of assessed value, respectively) and financial reserves per property served are acceptably close (at $2,200 and $1,400 respectively). Most monthly MUD meeting agendas and actions taken are virtually identical.
Consolidating MUDs 1 and 6 totally avoids the first two problems associated with consolidating all ten MUDs. It does not avoid the third problem of personal opinions by MUD directors.
At MUD 1’s June 2026 board meeting a vote to consider consolidating with MUD 6 was defeated three to two by its directors, denying MUD 1 residents any and all input on its merits and dismissing its residents 2021 approval to consolidate with MUD 6. No supportable justification was given by this board, going completely against study recommendations and the support of its peer reviewers. MUD 6 directors voted to explore consolidation merits with its residents.
The most appropriate time for a vote by MUD 1 and 6 residents is in November 2027 elections, in advance of directors elections scheduled for May 2028, giving both MUDs plenty of time to educate its residents.
Though not studied in detail, the tax rates for MUDs 46 and 47 differ by nine percent and tax rates for MUDs 60 & 67 differ by eight percent, raising the possibility for consolidation of these two MUD pairs.
CONCLUSION
The merits of consolidating MUDs 1 and 6 are positive and similar to those reported in an earlier study conducted in 2021, when directors of both MUDs approved submitting the decision to its residents. There are no supportable justifications against consolidation that have been identified in this study.
The highly successful consolidation of MUDs 2 and 40 into MUD 1, concluded in January of 2016, supports the merits of consolidation and serves as a model for consolidating MUDs 1 and 6.
Directors of MUD 1 need to reconsider their dismissal of considering consolidation and need to learn from its residents how they feel about the subject. MUD 1 residents need to make their voices heard at public MUD 1 director meetings.
MUDs 46 and 47 should examine the merits of consolidation, as should MUDs 60 and 67.
Consolidating MUDs serves the original goal envisioned by George Mitchell and reduces the senselessness of duplicative MUD meetings, waste of staff resources, and unnecessary expenses.
IS IT TIME TO CONSOLIDATE?
In about 1975, Municipal Utility Districts (MUDs) were created by George Mitchell’s development team solely as a vehicle to finance local water, sewer, and drainage infrastructure. In contrast to most MUDs they were to have no employees, and all operations, maintenance, and repairs were to be performed by a central agency, then known as the Woodlands Joint Powers Agency (now the Woodlands Water Agency, or WWA). The WJPA was to be the retailer of water and wastewater services. The San Jacinto River Authority (SJRA) would be the wholesaler of water and wastewater services to the WJPA and own and operate major water distribution and wastewater collection lines and water and wastewater treatment plants.
Ultimately, eleven MUDs were created by various developers. It was George Mitchell’s intent that all of these MUDs be consolidated or dissolved once bonds are paid off, eliminating 11 tax districts and its 55 directors (five directors in each MUD) governing only about 33 employees. The ratio of about 1.5 directors per WWA employee makes no sense as the remaining MUD functions of budgeting and setting water and tax rates could easily and efficiently be performed by the WWA. A more sensible form of governance would be to establish a much smaller number of qualified directors to oversee WWA’s operations
MUDs 2 and 40 were first to consolidate in 2016, successfully forming MUD 1 and serving as a model for future consolidations.
In 2021, MUD 1 residents handily approved consolidation of MUD 1 and 6. For various reasons, MUD 6 residents defeated the measure by 20 votes out of 848 votes cast.
CONSOLIDATION ALTERNATIVES
In early 2026, two new consolidation studies were conducted – one looking at consolidating all remaining ten MUDs and the second looking to consolidate only MUDs that had no debt. The principal rationale for both studies was that The Woodlands is largely built out and that the MUDs primary purpose to finance local water, wastewater, and drainage ditches has been fulfilled.
Consolidate All Ten MUDs
The first study, to consolidate all ten MUDs, identified cost savings of around $1,000,000 per year and also the freeing up over 1,700 hours of WWA and SJRA staff time per year attending monthly MUD staff meetings that largely have very similar agendas. Without this excessive administrative burden, decision making would be faster and staff resources better applied to public services.
Three major problems were identified. The first was that a single tax rate to produce the same total tax revenue would be favorable to about half of the residents and unfavorable to the other half.
The second major problem is a conflict between the State constitution that requires a single district ax rate and the Texas Water Code that allows consolidated MUDs with different tax rates to maintain those tax rates as if the MUDs had never been consolidated.
The third problem is that it is unlikely that all MUDs would vote in favor of consolidation. MUD directors get paid $121 which, for many directors, is no more than an hour’s work (Some conscientious directors do put in much more time.) Aside from loss of almost $1,500 in annual income, there is the inertia of status quo and the perception that “if it isn’t broke, don’t fix it.” Some directors feel that their constituents will lose representation. Some directors feel that upcoming needs for renewals of major facilities and service lines require more heads to evaluate alternatives.
Ten people with legal, audit, financial, economic, MUD, and engineering backgrounds – all with deep experience in public service in The Woodlands – carefully reviewed the detailed, analytical study. It was agreed that these three problems make it unwise to pursue full consolidation at this time.
Consolidate MUDs with No Debt and Similar Characteristics
The second study focused only on consolidating MUDs 1, 6, and 36 as all three have no or very little debt. MUD 36 was removed from consideration at this time, however, as its tax rate and financial situation was too dissimilar to those of MUDs 1 and 6. Further, MUD 36 has higher water and sewer rates compared to the identical rates for MUDs 1 and 6.
Cost savings from consolidating MUDs 1 and 6 would be about $100,000 per year and would eliminate about 150 WWA and SJRA staff hours of time in largely duplicative meetings and meeting preparations.
Tax rates for MUDs 1 and 6 differ by only 3.5 percent ($.0648 and $0671 per $100 of assessed value, respectively) and financial reserves per property served are acceptably close (at $2,200 and $1,400 respectively). Most monthly MUD meeting agendas and actions taken are virtually identical.
Consolidating MUDs 1 and 6 totally avoids the first two problems associated with consolidating all ten MUDs. It does not avoid the third problem of personal opinions by MUD directors.
At MUD 1’s June 2026 board meeting a vote to consider consolidating with MUD 6 was defeated three to two by its directors, denying MUD 1 residents any and all input on its merits and dismissing its residents 2021 approval to consolidate with MUD 6. No supportable justification was given by this board, going completely against study recommendations and the support of its peer reviewers. MUD 6 directors voted to explore consolidation merits with its residents.
The most appropriate time for a vote by MUD 1 and 6 residents is in November 2027 elections, in advance of directors elections scheduled for May 2028, giving both MUDs plenty of time to educate its residents.
Though not studied in detail, the tax rates for MUDs 46 and 47 differ by nine percent and tax rates for MUDs 60 & 67 differ by eight percent, raising the possibility for consolidation of these two MUD pairs.
CONCLUSION
The merits of consolidating MUDs 1 and 6 are positive and similar to those reported in an earlier study conducted in 2021, when directors of both MUDs approved submitting the decision to its residents. There are no supportable justifications against consolidation that have been identified in this study.
The highly successful consolidation of MUDs 2 and 40 into MUD 1, concluded in January of 2016, supports the merits of consolidation and serves as a model for consolidating MUDs 1 and 6.
Directors of MUD 1 need to reconsider their dismissal of considering consolidation and need to learn from its residents how they feel about the subject. MUD 1 residents need to make their voices heard at public MUD 1 director meetings.
MUDs 46 and 47 should examine the merits of consolidation, as should MUDs 60 and 67.
Consolidating MUDs serves the original goal envisioned by George Mitchell and reduces the senselessness of duplicative MUD meetings, waste of staff resources, and unnecessary expenses.
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