In the City of Montgomery, a new subdivision lot only becomes a house you can live in once it connects to the city's water and sewer lines. Under the city's Development Handbook, impact fees are assessed when the final plat is recorded and are due before that connection happens. So inside city limits, the pace of new homes depends on how many builders want to build, and also on a running ledger the city engineer keeps of every gallon already promised.
That ledger has been overbooked for a while. It is the reason Montgomery's construction timeline depends on a well, an elevated storage tank, and a wastewater plant, all of which are still on the way.
The capacity ledger, as of the city's last published snapshot
Each time a developer asks Montgomery for service, the city engineer writes a feasibility study that adds the request to everything the city has already committed. The most detailed one in our research is dated February 18, 2025. It was written for a small commercial tract and filed in a city council meeting packet. The figures below come from that February 2025 snapshot. We did not find a 2026 update with revised percentages.
On the water side, the city was using about 474,876 gallons per day on average. Its commitments at full buildout of existing developments, plus those in design or construction under a development agreement, came to about 950,000 gallons per day and 2,895 connections. Even after the Water Plant No. 2 improvements and the Water Plant No. 3 booster pump addition, the system was rated for 2,500 connections and 730,000 gallons per day. That left the city committed to roughly 130% of its average daily flow capacity and 116% of its connection capacity.
Sewer told the same story. The Stewart Creek Wastewater Treatment Plant holds a 400,000 gallon-per-day permit and was running at 230,167 gallons per day, or 58%. Full-buildout commitments came to about 568,000 gallons per day, which is 142% of that permit.
Commitments are counted at full buildout, and subdivisions fill in over years, so the promised total can run ahead of plant capacity for a while. The engineer also noted that the projections carry a cushion: projected flow that day was about 525,000 gallons per day, while actual flow was about 474,000. Still, the arrangement only holds if the new plants arrive before the homes do. The study's summary said so directly:
"In summary, the City is getting tight on water system capacity and must continue to aggressively push to proceed with the required expansion projects to meet all of the expected demand."
"Coming soon" has four tiers
The city engineer charts demand in four stacked scenarios:
- Ready to connect. Platted developments with accepted infrastructure that can tie in at any time.
- In design or construction with an agreement. Everything above, plus projects that have a signed development agreement with the city.
- In feasibility without an agreement. Projects still in due diligence. The February 2025 study listed BCS Capital, HEB, and Superior Properties in this group.
- Anticipated. Tracts inside city limits that aren't actively in the development process.
Add the third tier and the numbers climb fast. With in-feasibility projects counted, water commitments reached about 1,090,310 gallons per day and 3,308 connections. The engineer said Water Plant No. 4 "must be completed" to serve them all. Sewer commitments reached 684,000 gallons per day. That is 171% of the existing permit and 98% of the capacity the city will have after its next plant is built.
So the wastewater expansion still in the pipeline was almost fully spoken for before any fourth-tier tract filed a request. That is why the study says the city must keep designing further expansions, either another 0.3 million gallons per day at Town Creek or 0.4 million at Stewart Creek, depending on where development lands.
The schedule moved
All of this works if the plants arrive on time. Here is what the February 2025 study projected next to the latest public records we found.
| Project | February 2025 projection | Latest record |
|---|---|---|
| Water Plant No. 2 improvements | Restores capacity; under construction | Engineer reported it 93% complete by value as of Sept. 22, 2025, with substantial completion expected in late October 2025; acceptance appeared on the Jan. 13, 2026 council agenda |
| Water Plant No. 3 booster pump addition | Construction complete late 2025 | McDonald Municipal & Industrial recommended for award at $178,469 and 154 calendar days as of October 2025; no completion date found |
| Water Plant No. 4 | "Expected to be constructed in 2026" | Construction contract awarded Sept. 22, 2026, with 500 calendar days to substantial completion |
| Town Creek WWTP, 0.3 MGD | Construction completed late 2026 | March 24, 2026 agenda authorized additional services and a Halff Associates design revision |
Water Plant No. 4 is the one that matters most, because the engineer tied it to serving every existing and agreed development at full buildout. Community Impact reported that council awarded the job to Schier Construction for $8,354,190, and the vote passed without opposition. The plant includes Water Well No. 6, rated up to 1,000 gallons per minute, and a 500,000-gallon elevated storage tank. It sits on a roughly 1.1-acre site near Old Plantersville and Old Dobbin Plantersville roads.
The contract terms show how the city weighed speed against cost. According to the same report, council first considered requiring completion in 420 days. Contractors indicated a tighter schedule would push bids up, so the city settled on 500 calendar days with $2,500 in liquidated damages for each day past the deadline. Six bids came in, ranging from about $8.3 million to $11.5 million, against the design engineer's estimate of about $9.1 million. The 2026 certificates of obligation pay for the project, and work can begin once the contract, insurance, and bonding are complete.
Counting 500 days from the September 22 award date lands in early February 2028. The clock starts only after the paperwork clears, so that date is the earliest possible finish, not a promise.
Wastewater runs on a regulatory clock as well. The Texas Commission on Environmental Quality requires a city to begin designing an expansion once average flow tops 75% of permitted capacity for three straight months. Construction has to begin after three straight months above 90%. The February 2025 study expected the first trigger in the third quarter of 2025 and the second in the fourth quarter of 2026, which is this quarter. We found no 2026 record showing whether either trigger has actually been reached.
New growth pays for its own capacity
Since capacity is the constraint, Montgomery charges growth for it. Community Impact reported that council approved an increase of about 17% to water and wastewater impact fees on Sept. 9, 2025. City officials said the goal was to have new development pay its share of utility improvements so the cost doesn't shift onto existing residents. The city attorney described it as the last chance to update fees before Senate Bill 1883 took effect on Sept. 1 and stretched the review cycle from two years to three. In practice, that rate is likely to stay in place longer than older fee schedules did.
The capital plan behind the fees expects 3,923 new service connections over 10 years. It projects more than $51 million in growth-related spending, with over $26.9 million for water and over $24.1 million for sewer. The city code lists Ordinance 2025-11 as the governing ordinance, effective 9/22/2025. We could not read the new per-connection dollar amounts from the scanned ordinance attachment, so this post doesn't quote them.
Fees cover only part of the cost. For Hills of Town Creek Section 5, the city engineer's 2021 feasibility study required the developer to build and pay for off-site water and sewer extensions and easements, along with on-site utilities. When the city does share costs, it sets a limit. Its April 2025 memorandum with BCS Capital for a 32.72-acre mixed-use project near Lone Star Parkway and SH 105 caps reimbursement for water, sewer, and road work at $4.8 million, limited to actual infrastructure costs. That's according to Community Impact's coverage.
Builders generally treat costs like these as part of the cost of a lot. A buyer comparing a new home inside city limits with one elsewhere is comparing two different cost structures, even when the floor plans look alike.
Outside city limits, a separate timeline
Much of the new-home activity people connect with Montgomery isn't on the city's ledger at all. Community Impact reported in July 2026 that Two Step Farm, outside Montgomery city limits, opened Phase 2 homesite sales on 156 acres, with builder lots expected starting in December 2026. Phase 2 names seven builders: Autograph Homes, David Weekley, Drees Custom Homes, McKinley Homes, Partners in Building, Trilogy by Shea Homes, and William David Homes. The full plan covers more than 1,800 acres and 4,000 homes, and a direct Superior Road to FM 1488 connection is expected by the end of 2026. The Houston Chronicle also listed Grand Lakes Estates in Montgomery adding Section 13, with 148 lots on 200 acres.
Our research did not confirm which utility provider serves those communities or what their 2025 or 2026 tax rates are. Those details belong on the list of things to ask a builder for in writing. Our Montgomery neighborhood page and our earlier piece on where new construction is growing around Conroe cover the wider picture.
How this fits the current market
Resale activity has cooled while the new plants are being built. Community Impact's August 2026 market report showed home sales down year over year in all eight of its Conroe and Montgomery coverage zones, with median prices slightly lower in six of the eight. In a July 2025 Community Impact report, Montgomery Mayor Sara Countryman described the city as about 40% built out. Most of the city's growth is still ahead, and the pace of that growth is tied to the capacity schedule above.
Questions buyers ask about this
Is there a building moratorium in Montgomery? None of the city records we reviewed show one. Conroe did adopt a temporary moratorium on part of its northern area in 2024 because of infrastructure limits, per Community Impact. Montgomery's approach has been to commit capacity in advance and build plants to catch up.
Does any of this affect an existing home inside city limits? Existing homes are already part of the city's current average daily flow. Impact fees apply to new development, and the city has said the purpose of the fee increase is to keep growth costs off existing residents.
How can I tell which tier a planned project is in? Look for a signed development agreement in council records. Projects that have one sit in the second tier of the engineer's charts. Projects still at the feasibility-study stage sit in the third tier, which needs Water Plant No. 4 before it can be served.
If you're weighing a new home inside Montgomery city limits against one in a community outside them, The Hometown Team can help you compare the utility setup, plat status, and timeline behind each lot before you sign. Let's find your next home together.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
