Many homeowners flooded by Hurricane Harvey are having to pay less in property taxes because the values of their homes went down after the flood.
But those located in municipal utility districts, or MUDs, could end up paying more.
That’s the concern raised by a report published in the Federal Reserve Bank of Dallas’ quarterly Southwest Economy.
MUDs provide water, sewage and drainage for homes outside incorporated cities. To pay for it, they issue bonds and levy taxes.
And that’s where the report’s authors say the concern lies after Harvey.
“Let’s say you live in a district that suffered some kinds of loss of valuation because it was flooded,” said Michael Weiss, who co-wrote the report together with Laila Assanie. “The bond is still there. The bond has to be repaid.”
And, he said, investors may increase the bonds’ risk premium in areas that flooded, which will likely lead to higher MUD taxes.
That’s especially a problem for the Greater Houston area, where the vast majority of the state’s MUDs are located.
Read the report below: Harvey Highlights Houston MUD Bond Development Funding