History And Function Of Travis County MUD No. 2

Travis County Municipal Utility District No. 2 (the “District”) is a conservation and reclamation district created by the Texas Water Commission, a predecessor to the Texas Commission on Environmental Quality (the “Commission”) on December 13, 1983.  Creation of the District was confirmed by the voters of the District on August 25, 1984.  The District was created for the purpose of providing water, wastewater and storm drainage facilities to serve development within its boundaries.  Subsequently on February 7, 2004, voters within the District approved the issuance of municipal debt to acquire or construct park and recreational facilities.

The District contains a total of 404.1 acres, of which approximately 384.1 acres is developable.  The current land plan includes the ultimate development of 1,247 single family lots, approximately twelve acres of commercial development and the amenity center which is located on four acres.  Development of single family lots commenced in May 2002 and to date, a total 648 lots have been developed with water, wastewater and storm drainage facilities.  Additionally, approximately 2.3 acres have been developed as the commercial/retail center located at the entrance to the development.

The District is one of four municipal utility districts including Cottonwood Municipal Utility District No. 1, Wilbarger Creek Municipal Utility District No. 1, and Wilbarger Creek Municipal Utility District No. 2 (collectively, the “Participants”) created to provide water, wastewater, and storm drainage to 1,514 acres (expected to be developed as 6,567 lots) located within Travis County.  The Participants have designated Wilbarger Creek Municipal Utility District No. 2 to act as the Master District, which is charged with the responsibility of being the regional provider of all major water, wastewater, and storm drainage facilities to serve the 1,514 acres.

In its role as Master District, Wilbarger Creek Municipal Utility District No. 2 has contracted with Metro H2O to provide potable water in amount sufficient to serve 6,010 connections.  The water is purchased on a wholesale basis from Metro H20 and sold to the Participants.  Each Participant, in turn, sells the water to its customers on a retail basis and uses the water revenue collected to pay the Master District.  Additionally, the Master District has purchased a 500,000 gallon-per-day wastewater treatment plant; which, according to the District’s engineer, is capable of serving 1,667 customers.  As with the expense of providing the water, the Master District operates and maintains the wastewater treatment plant and invoices the Participants based each Participant’s usage.

The water distribution lines which bring the water to each home and the wastewater collection lines which return the wastewater to the wastewater treatment plant, as well as the storm drainage facilities (the “Internal Facilities”) have all been constructed by the developer.  The District buys the Internal Facilities from the developer(s) through the issuance of bonds, which are repaid from ad valorem taxes levied on improvements within the District. 

In turn, the Master District has issued municipal bonds to purchase facilities, the wastewater treatment plant, and to pay certain LUE Fees to Metro H20 as required under the water supply contract.  The repayment of the Master District debt is paid from contract taxes levied and collected by each Participant based upon each Participant’s pro rata share of the combined assessed valuation of all four Participants.

Thus, the District’s tax rate is made up of three categories:

        Debt Service Tax – used solely to pay each Participant's debt for Internal Facilities
        Maintenance Tax – used to pay the costs of the day-to-day operations of the each Participant, and
        Contract Tax – used to pay each Participant’s pro rata share of the Master District debt.