Dear Valued Neighbor and Client,
After Hurricane Harvey in September 2017 when many homes flooded, many of you made it clear to us at many public meetings and town halls that you wanted the District to undertake major drainage improvements to prevent a reoccurrence of the property flooding and eliminate the ponding of water in the streets. Accordingly, I am pleased to inform you that your Water District has secured a $4.75 million matching grant from the Harris County Flood Control District (HCFCD) to undertake major drainage improvements within the District.
To implement these improvements the District performed the necessary research and engineering to develop a numerical model of the drainage within the District, which required an up to date elevation survey of the District. Once the initial model was completed, its accuracy needed to be verified. This was done over the course of several months by running many actual storm events such as Hurricanes Ike (2008) and Harvey (2017) among others. After verification was completed, the District used the verified model to make virtual infrastructure changes in the drainage system to determine if there were any cost-effective improvements that could be made that would serve to protect homes from flooding and mitigate the ponding of water in the streets well into the future. This was indeed the case and the estimated cost for these drainage improvements was approximately $9.5 million so the District pursued obtaining one of the many post-Harvey grants available to fund the improvements. These improvements would be in addition to the immediate improvement in drainage that was realized after a blockage to one of the District’s major outfalls by private parties was discovered and removed shortly after Hurricane Harvey when the District was trying to ascertain the causes for such in the aftermath of Harvey.
The District’s application for the matching grant was readily approved by HCFCD mainly because the District had done its due diligence and the requisite engineering and numerical modeling, and developed specific engineering plans that needed to be accomplished as opposed to the numerous entities throughout Harris County that made unsuccessful requests for grant funding but had done little to identify anything specific that would improve drainage as the District had done. This resulted in HCFCD’s quick approval of the District’s request and issuing the matching grant for $4.75 million for our community, the largest such grant for a joint project in Harris County.
As nothing comes without its cost, the District then had to come up with its share of the funding ($4.75 million) in order to take advantage of the matching grant. Accordingly, the District used its authority to issue bonds (borrow money) to fund the project. The series 2020 bonds were subsequently issued, most fortunately at an opportune time in the market at a historically low interest rate of 1.915331%, which would in turn require a debt service tax at a rate of $0.1050/$100 valuation to pay for the bonds apart from any existing taxes. Fortunately, this increase is lower than what was initially projected and presented at our public meetings and town halls.
The existing (2019) tax rates prior to the Drainage Improvement funding were $0.0950 to pay for the Series 2015 bonds, which funded now completed renovation or replacement of water and sewer plant and line infrastructure that was nearing the end of its useable service life, and $0.2327/$100 valuation for operations and maintenance for a total 2019 tax rate of $0.3277/$100 valuation.
Going forward the series 2015 bond debt service tax rate remains the same for 2020 at $0.0950/$100 valuation and the maintenance tax rate was increased by less than a penny ($0.0073/$100) to help avoid a budget deficit. The majority of the increase is therefore almost solely for funding of the drainage improvements as our community has demanded.
Both the 2015 and 2020 Series Bonds are 25-year bonds; however; the District will make every attempt to retire them as quickly as possible and return to lower tax rates.
The District has previously endeavored to keep tax rates as low as possible and indeed had lowered tax rates from 1999 to 2011 and then held tax rates level or increased them by no more than a maximum of $0.02 until the issuance of the series 2015 infrastructure bonds when there was a necessary debt service tax rate added to the existing maintenance tax rate.
We recognize this is not in keeping with our established trend; however, the breaking of the trend was in response to the extraordinary circumstances following Hurricane Harvey and was necessary to obtain the matching funding for the significant drainage improvements within our community that will be made in the near future.
In summary the total 2020 tax rate per $100 valuation including the matching grant, drainage improvement funding as compared to 2019 is shown in the table below.
Lastly, please note that even with these changes our water, sewer, and tax rates remain at the low end of the spectrum among similar entities and service providers in the greater Houston area.
On behalf of the Board of Directors* and the entire District staff, I would like to thank you for your understanding and continued support.
Sincerely and with many thanks to all of our veterans and active service men and women,
Mario Runco Jr.
President, Board of Directors
Sheila Brown, Vice President
Bernadette Eisenbarth, Secretary
J.L. Restivo, Assistant Secretary
George Shea, Director