LEAGUE CITY, Texas Residents in a section of the South Shore Harbour neighborhood will stop paying taxes to Municipal Utility District 3 in January.

City council members approved abolishing South Shore Harbour MUD 3 after the district paid most of its infrastructure bond debt.

The city will undertake repayment of the remaining debt since bond payments have fallen beneath the city s property tax rebate to the district.

League City formed the district in March 1981 with an agreement from South Shore Harbour Development to construct water distribution and sewage collection systems with drainage improvements for 500 acres on the city s east side.

The city has reimbursed the district 35 percent of property tax revenue generated from residents in the district.

District board members could use the rebate only to pay off bond debt, Mike Loftin, assistant city manager of management services, said.

Last fiscal year, the district paid $963,000 on debt service, and the city rebated $445,000 to the district.

The district s debt service payment dropped to $220,000 this year.

The MUD doesn t need to collect more tax dollars since the debt has fallen below the city s rebate, Loftin said. This is just balancing the books on the city s end.

An ordinance the city council approved for the dissolution requires the district to reserve remaining cash assets for water-related improvements in the district.

The city will use some of the district s $153,000 in unreserved money to clean a section of an old cooling canal between FM 2094 and South Shore Boulevard. The canal was a part of the former Texas Genco power plant in Webster.

Part of the canal running through northeast League City collects stagnant water and is a breeding ground for mosquitoes, Rich Oller, assistant city manager of public works, said.

Plans for clearing the South Shore Harbour section of the canal aren t complete, but Oller has proposed placing solar-powered aerators in the canal to move stagnant water. The city also will mow vegetation around the canal s bank.

This is an immediate fix, Oller said. The city has to critically look at what benefit the canal could bring to the community.

The city will petition the Texas Commission for Environmental Quality to abolish the municipal utilities district.

Annual city payments on the district s debt will range between $116,000 and $220,000 until the bonds mature in September 2016, Loftin said.

League City last year rebated $3.6 million to eight municipal utilities districts in the city. Some of the districts in League City have had trouble paying off infrastructure debt, including Municipal Utilities District 6 on the city s west side.

Residents of The Landing subdivision paid off the neighborhood s infrastructure debt Sept. 1 but will have to keep paying taxes to the district for at least another 14 years.

The Landing residents are legally bound to help retire debt incurred to develop newer parts of district that includes sections of the Brittany Bay and Magnolia Creek subdivisions.

This story was brought to you thanks to s partnership with The Galveston County Daily News.

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