Over the past few weeks, residents may have heard discussion around a proposed consolidation of Hurst Creek Municipal Utility District (HCMUD) into the Village of The Hills (VOH). Given the long-term implications of such a move, The Hills Observer reviewed official documents released by HCMUD to help residents understand what is being proposed-and why the MUD Board has formally opposed it.
What is the Proposed Consolidation?
The proposal would dissolve Hurst Creek MUD and transfer its governance, assets, employees, and operations to the Village of The Hills. This process would require multiple legal agreements among HCMUD, VOH, and the City of Lakeway and is estimated to take 12–18 months to complete.
Why Did the HCMUD Board Oppose It?
After review, the HCMUD Board unanimously adopted a resolution opposing consolidation, stating that it would not serve the best interests of HCMUD residents and customers. The Board cited financial, operational, legal, and service-continuity risks as primary concerns.
Financial Impact: Costs vs. Savings
One of the key questions residents have raised is whether consolidation would save money.
According to HCMUD:
Estimated annual savings from reduced professional services are approximately $17,000
Expected legal and transaction costs exceed $100,000
HCMUD currently generates about $3.6 million annually, and consolidation would not materially improve financial stability
The Village of The Hills may need to issue new bonds at higher interest rates, potentially increasing costs for residents
The Board concluded that the cost-benefit balance does not favor consolidation.
Property Taxes and Revenue Stability
A significant portion of HCMUD’s tax base lies outside the Village of The Hills boundaries, including:
Three of HCMUD’s largest taxable properties
66 homes located outside VOH limits
These properties would be removed from the tax base if consolidation occurred, resulting in an estimated $130,000 annual loss in property tax revenue. The Board also noted that property taxes currently provide stability during drought-related water restrictions, which would be lost under a billing-only model.
Assets Outside Village Boundaries
HCMUD owns critical infrastructure outside VOH, including:
An elevated storage tower
An effluent storage pond
Water and wastewater pipelines within Lakeway city limits
Texas law does not provide for automatic transfer of these assets. Any transfer would require separate negotiations and could result in ownership shifting to the City of Lakeway, introducing uncertainty for customers.
Employees and Operational Continuity
HCMUD currently employs 11 full-time staff who manage water and wastewater operations. Under consolidation:
All employees would be terminated and offered positions with VOH
Pension and benefit plans would require restructuring
Specialized institutional knowledge could be lost, potentially affecting service quality
The Board flagged this as a meaningful operational risk.
Regulatory and Contractual Hurdles
Several critical permits and contracts would require transfer and third-party review, including:
TCEQ wastewater discharge permits
Effluent water contracts with The Hills Country Club
LCRA raw water contracts
Each transfer introduces regulatory complexity and risk.
The Board’s Official Position
On January 12, 2026, the HCMUD Board formally adopted a resolution opposing consolidation, concluding that it would introduce significant financial, operational, and legal risks without delivering meaningful benefits to residents.
Why This Matters
Water and wastewater services are among the most critical services a community relies on-often unnoticed when they work well, and deeply felt when they don’t. Decisions around governance changes deserve careful scrutiny, transparency, and resident awareness.
The Hills Observer will continue to monitor developments and provide fact-based reporting so residents can stay informed and engaged.
If you have questions or would like future coverage to explore specific aspects of this issue, reach out to The Hills Observer.