SMUD Tax Exemptions – Letter to Homeowners

As the President of the Sagemeadow Utility District, I feel very strongly that our residents understand the facts surrounding the changes to the residential tax exemptions that we provide. I also want to share some important updates and clarifications regarding the history of our residential homestead exemption policies as well as my perspective on the financial health of our Residents.

First and foremost, the District has never adopted an order granting a general residential homestead exemption. Without a significant commercial base to offset the cost of providing such an exemption, we would never be able to offer our residents any meaningful homestead exemption.

Despite the belief by some that the change in exemption was done without any public scrutiny, I want to assure you that all notices and board votes to adjust the exemption have been properly posted and carried out in full compliance with the laws governing such actions. Anyone who is familiar with what is legally required will see that there has been no violation of laws relating to the reduction of these exemptions, or for that matter, any other significant decision made by the board.

Earlier this year, we were made aware that the Harris County Appraisal District (HCAD) notices of appraised value did not correctly reflect the District’s updated tax rates for the over 65 or disabled tax exemption. Even though HCAD is not obligated to revise these notices, we took it upon ourselves to inform you of their oversite through a letter mailed to all property owners within the District.

The history of District exemptions for the disabled and those over 65 has varied over the years. Starting at $200,000 between 1988 and 1997, when the median home values in Texas was between $113,000 and $140,000. Adjusting over the next few decades to our current exemption of $70,000 adopted in 2023. When you compare our District to others in the area, even at $70,000, we are still offering a relatively high exemption.

I cannot comment on the reasoning behind previous board members’ decisions to maintain such high exemptions or their reluctance to heed financial advisors’ recommendations to lower them. This, coupled with a growing number of homeowners qualifying for exemptions, has put a disproportionate financial burden on the remaining homeowners of our District.

Moreover, there has been historical neglect of our aging infrastructure. As our infrastructure approaches the 50-year mark, far beyond the typical 30-year lifespan of such infrastructure, we are forced to deal with systems that are increasingly vulnerable and unreliable. The decisions made years ago to defer necessary rehabilitation have unnecessarily escalated those costs, especially with soaring inflation and current interest rates, making the estimated Capital Improvement Plan (CIP) an approximately $26 million endeavor.

Periodic adjustments to our exemptions are essential to maintain our District’s fiscal health and to secure a reasonable tax rate as we issue bonds for these much-needed improvements. The current Board has been meticulous in planning out a CIP to address these needs with minimal financial impact on our residents.

Regarding EMS & Fire services, shifting from water bill funding to tax collection has imposed an uneven burden on taxpayers. It is something that this board is looking to address to ensure fair funding for these vital services.

On a more positive note, the board is actively negotiating with the Kirkmont MUD who receives its water through our District infrastructure, to recover some of our capital costs, proportional to the percentage of services their residents use, estimated to be several million dollars. This would be a significant financial recovery for our District facilities which have been capital-shared with Kirkmont over the past 30 years.

The board of the Sagemeadow Utility District understands that times are tough, inflation is high, and many are struggling. However, maintaining our infrastructure is critical for public health and safety, and requires a collective effort from all residents.

Your support and understanding is greatly appreciated as we continue to navigate these challenges and work toward a sustainable and prosperous future for our District.


Dean Baier

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