Joe Rodriguez
Joe Rodriguez is a resident of San Benito, a local citizen watchdog, and a former candidate for the San Benito City Commission.
PREFACE: I am not a real estate agent, realtor, nor an attorney.
I previously owned a home in a MUD, so I am familiar with the concept of owning a home in a MUD and the associated pros and cons.
This op-ed is for informational purposes only; it should not be taken as professional advice if you intend to purchase a home.
A MUD or Municipal Utility District can be established either by (1) passing a district creation bill through the Texas Legislature or (2) by the Texas Commission on Environmental Quality (TCEQ) following a petition and consent process outlined in the Texas Water Code.
The Texas Public Utilities Commission plays a significant regulatory role over MUDs.
During the last Texas Legislature’s 89th Regular Session, which ended on June 2, 2025, HB 5688 — titled “Relating to the creation of the San Benito Municipal Utility District No. 1; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.” — passed and became law on September 1, 2025. https://tinyurl.com/HB568889RMUD.
A MUD is a special district (Municipal Utility District) governed by an elected Board of Directors composed of residents living within the district.
MUDs issue bonds to help cover the costs of the initial infrastructure construction. The Board of Directors is responsible for allocating funding for neighborhood projects under the MUD jurisdiction.
A Municipal Utility District (MUD) is a political subdivision of the State of Texas authorized by the Texas Commission of Environmental Quality (TCEQ) to provide water, sewage, drainage and other utility-related services within the MUD boundaries.
In Texas, a political subdivision is a unit of local government (utility district) that has been granted authority by the state to provide public services within a limited geographic area and possess governmental powers like the authority to tax.
The size varies, but MUDs generally serve communities of a few hundred to a few thousand households. There are more than 1,000 MUDs in Texas with many of them sitting outside city limits in extraterritorial jurisdictions (ETJ) where municipal services are not provided.
Texas law requires that MUDs be annexed in their entirety.
A MUD relies on property and ad valorem taxes as well as water, sewer and other utility revenues to pay off bonds, which can take between 20 and 30 years. Typically, a developer will fund the initial cost to construct the roads, water, sanitary sewer, and drainage infrastructure necessary to complete a development.
Then, the developer must complete the necessary improvements to create a property tax value that covers the bond debt.
A MUD usually cannot issue bonds for infrastructure upgrades until the development has produced enough taxable value to cover the debt from the bonds. This developer reimbursement process typically happens in stages as the development continues to generate taxable value sufficient to pay off the remaining debt.
If a City annexes a MUD before its bonds are paid in full, the City must assume the balance of the MUD debt and reimburse the developer for any un-bonded facilities.
A MUD tax is a charge on a homeowner’s utility bill and is calculated based on the amount of debt that the City absorbs at the time of annexation.
MUD (Municipal Utility District) tax rates in Texas vary significantly by district, generally ranging from $0.25 to $1.40 per $100 of assessed property value, though this is a broad estimate. These taxes are an additional property tax paid directly to the MUD and are used to fund infrastructure like water, sewer lines, and roads within the district.
The MUD tax rate caps are not the same across the entire state but vary by county. MUD taxes are different from permanent property taxes and last only as long as it takes to pay off the MUD’s bonds and loans.
MUD tax rates are set yearly by the MUD Board of Directors and are limited to a voter-approved maximum that cannot be surpassed. The main point to remember is that only residents living within a MUD are required to pay the tax.
In an interview with a newspaper reporter, San Benito Commissioner Tom Goodman said, “Out of 28 MUD bills presented before lawmakers during the legislative session, only HB 5688 passed the House and Senate.”
“We had some very good lobbyists,” Commissioner Goodman said.
City Manager Fred Sandoval made a similar statement at Budget Workshop #2. I don’t know where either Commissioner Goodman or City Manager Fred Sandoval obtained their information from or who they got it from.
I conducted an advanced SQL (Structured Query Language) search of the TLO (Texas Legislature Online) database, which shows that 12 new MUDS were passed or created during the 89th Texas Legislature Regular Session. https://tinyurl.com/12NEWMUDS
Currently, there are a few existing MUDS in Cameron County. https://tinyurl.com/SouthTexasMUDS.
Incidentally, Texas Governor Greg Abbott did not sign HB 5688 or any other MUDs into law; instead, the bills were filed without his signature, and some will take effect on September 1, 2025, while others will take effect on January 1, 2026.
Governor Abbott does not have to sign all bills into law; he can choose to veto a bill or let it become law without his signature if he takes no action within the allotted time.
If he vetoes a bill, the legislature can override the veto with a two-thirds vote in both the House and the Senate. If he neither signs nor vetoes a bill within the specified timeframe, it becomes law by default.
HB 5688 did not receive the two-thirds vote of all the members elected to each house necessary for immediate effect, and therefore HB 5688 took effect on September 1, 2025, or 91 days after the legislative session ended.
Except for the comments to the news media, the San Benito City Commission, Mayor and City Manager have been rather quiet about this project. In my opinion, transparency and keeping the taxpayers updated is not exactly a priority for this administration.
Before the MUD can be approved/created three temporary directors must be appointed. Per the HB5688 enrolled bill, the temporary board consists of (1) Alma Gabriela Quiroga; (2) Mario A. Palomo; and (3) Joel Quiroga.
Per the Corporation Wiki web page, Ms. Quiroga and Joel Quiroga are associated with Komerco, LLC. https://tinyurl.com/KomercoLLC.
Interesting about this is that Mr. Mario Palomo is also the name of the Assistant Executive Director to the SB EDC Executive Director Fred Sandoval.
Per the House Committee Report of the Land & Resource Management Committee Ms. Marte Mireles from Komerco LLC and Fred Sandoval (City of San Benito) are listed as witnesses before the committee. However, Sandoval registered but did not testify. https://tinyurl.com/WitnessesHB5688
Where exactly is the San Benito Municipal Utility District #1 located? I believe and am pretty certain that it will be along the Rio Grande near the Los Indios area. See Section 2 of HB5688 for property locations and owner’s names. What this probably means is that the city will need to annex the area.
The problem the city may face is that The Texas Supreme Court issued a ruling on May 9, 2025 affirming that Texans may opt out of an ETJ.
Also interesting is how the city plans to transfer the surface water they talk about to the City of San Benito without a major dollar investment for the infrastructure required.
Also, Senate Bill 2038 (effective September 1, 2023), allows landowners in the ETJ to petition for their property to be released from a city’s ETJ, regardless of the city’s overall population. Owners in its ETJ could seek release, potentially reducing its ETJ area over time.
Per Section 4 of HB5688, since HB5688 did not receive two-thirds vote of all the members elected to each house Subchapter C, Chapter 802A, Special District Local Laws Code is amended by adding Section 802A.0307 to read as follows: Sec. 802A.0307 NO EMINENT DOMAIN POWER. The district may not exercise the power of eminent domain.
The city cannot take private property for public use.
There is also talk about a PPP or public-private partnership.
PPP’s have their own pros and cons. They can offer benefits like faster project completion, risk sharing, and cost savings by combining public resources with private sector efficiency.
However, they also have drawbacks, such as the potential for increased long-term costs, loss of public oversight, reduced transparency, and the risk of prioritizing profit over social needs.
My hope is that the San Benito City Commission and Administration become more transparent and keep the taxpayers informed—before and not after the fact—about what is ahead for local taxpayers and citizens.
Experts have predicted that the Rio Grande will dry up by 2050, and although some of us won’t be around, we need to stay prepared.
Keeping the public informed via ‘transparency in government’ is of utmost importance.