Questions about Incorporation
Questions from the September 23, 2021 Informational Meeting
Is it legal for the Township Board to raise our taxes 3x without voter consent?
By law, whether as a Township or a city, once a property tax rate is adopted, any property tax rate in subsequent years that would exceed 3.5% of the previous year’s maintenance and operations rate would require voter approval.
Would an over 65 property tax freeze freeze the rate or the total tax?
The “tax freeze” is also called a “tax ceiling” because it establishes the maximum tax that can be charged on a property during the lifetime of an owner who is 65 or older or disabled, and in certain circumstances the lifetime of that person’s spouse. For example, if a person over 65 pays $1,024 in city property taxes at the time the tax freeze is enacted, that person will never pay more than that dollar amount during the person’s lifetime, or during the lifetime of certain surviving spouses. The total tax due can be lowered, but not raised above the frozen amount unless a major project, such as a pool or a home addition are added to the property. If enacted in a new city, the freeze would be based on the new city’s tax rate, not the Township’s most recent tax year.
Can the tax freeze be rescinded?
No. Per state law, a tax freeze is permanent once adopted by a city, and cannot be changed or rescinded once enacted.
Are any tax revenues currently collected by the Counties be shifted to the Woodlands if the Woodlands incorporates?
The counties are not required to reduce their tax rates if the community incorporates.
Who will appraise property values going forward?
Whether as a Township or as a City, property tax values are appraised by the Appraisal District where the property is located. For properties in Montgomery County, appraisals are handled by the Montgomery Central Appraisal District. For properties in Harris County (Creekside Park), appraisals are handled by the Harris County Appraisal District.
Why not establish the rules of incorporation before voting to incorporate? Why vote for incorporation first before all details on "how the city will operate” are known?
Based on state law, The Woodlands is required to incorporate first as a General Law City. Based on its population, the City of The Woodlands would immediately become eligible to become a Home Rule City. In order to become Home Rule, a Charter Commission must develop a city charter, which sets the “rules” for the city, and the charter must be adopted by the city’s registered voters in a general election.
Do the residents have the ability to re-elect City Council officials if The Woodlands becomes a city? How soon will this voting happen? If we incorporate, will Gordy Bunch be the Mayor?
If The Woodlands were to incorporate as a city this fall, based on state law, the Township Board will serve as the temporary city council until the first city council is elected. The Township Board could choose to call a special election for the first city council, with an election being called a minimum of 62 days prior to the election day, but the election must be held no later that the next general/uniform election date, which would be in May 7, 2022.
Would the size of the board grow to allow more discrete representation?
The Woodlands must first incorporate as a general law city. The proposition presented this fall is for a Type A General Law City, which would have a mayor and five council members. If the community were to decide to change to a home rule city, the charter can prescribe the number, terms and method of electing city council members.
Why wouldn’t we pay the city leaders? It seems it could lead to dependence/exposure to special interests down the road.
The Woodlands Township and its predecessor Boards have not paid its elected officials, so the Township Board chose to continue this practice for the assumptions in the financial model. This is also consistent with most cities that utilize the council-manager form of government, where the city council employs a city manager to handle the day-to-day operations of the city. This plan can be changed by future city councils or through a charter process, if the community changes to home rule; however, any change to the financial assumptions also changes the financial forecast.
Do the sales tax payments continue to the City of Houston and City of Conroe after incorporation?
Yes. The Regional Participation Agreements with the Cities of Houston and Conroe include a 50-year period during which The Woodlands can choose to incorporate and be automatically released from the cities extraterritorial jurisdictions (ETJs), also known as annexation areas; however, the agreements and their corresponding payments extend for a period of 99 years, regardless of whether The Woodlands becomes its own city.
If we incorporate, can we stop all the developing and tree clear cutting by voting?
Becoming a city does not in and of itself stop development or tree clearing; however, a city has the ability to pass tree preservation and other ordinances that the Township is not legally able to pass.
3. My neighbor continuously blows his leaves/debris from his front-yard onto the county’s ditch/drainage area. If becoming a city, will you be able to enforce and fine the ill-intent neighbor?
Becoming a city does not in and of itself stop this activity; however, a city has the ability to pass ordinances that may be able to impact this activity. The Township is not legally able to pass community-wide ordinances.
Will the village association boards remain if the Woodlands becomes a city?
The Woodlands Township considers the village associations to be an integral part of the community; however, they are not part of the Township governmental body. The village associations are fully separate and independent organizations. It is only through the service agreements that the Township has a legal relationship to each of the individual village associations.
Will the election process for the association Boards stay the same of will the positions and work be absolved into City Council?
See answer above.
Why add another layer of government? Less government is better!
Proposition A and Proposition B allow for The Woodlands to incorporate as a municipality and for the Township special district government to be dissolved and replaced by the City of The Woodlands government.
Who on the on the Board wants this on the ballot and why?
On August 13, the Board voted to place incorporation on the November 2, 2021 ballot. Five Directors voted in favor of placing it on the ballot: Chairman Gordy Bunch, Vice Chairman Bruce Rieser, Secretary Shelley Sekula-Gibbs, Director Bob Milner and Director Jason Nelson. Two Directors voted against placing it on the ballot: Treasurer John Anthony Brown and Director Ann Snyder.
What changes for residents if the vote on 11/2/2021 is a NO vote?
Nothing. The Township will continue to provide the services in the same manner that they have historically been provided.
If we vote not to incorporate this election, can it be brought again for a vote in the future?
Yes. The Township Board can call a future vote to be held on any general/uniform election date through November 2057.
Would residents in a new city be able to choose the electric provider?
No. Incorporation does not impact electric utility service areas.
Who pays for the consultants and where is Novak from?
The Woodlands Township selected its consultants for the Incorporation Planning Study through a competitive process. The Township funded the contract with The Novak Consulting Group, now part of Raftelis. The Novak Consulting team is based out of Cincinnati, Ohio, while the Raftelis corporate offices are located in Charlotte, North Carolina. Raftelis has offices in 17 states, including one in Austin, Texas.
Is the City of the Woodlands bound by the Township 5-year plan proposed?
No. The financial model is based on service level assumptions. If the plan is implemented as proposed, it is sustainable. Whether continuing as a Township or changing to an incorporated city, the elected officials determine future tax rates and service levels.
Current governance is excellent. If becoming a city, how can we ensure to maintain or exceed the current excellent ways to meet service to residents, long-term?
Thank you. Whether as a Township or a City, elected officials set policy and adopt budgets for implementation by professional staff. The Township Board or new city council are expected to continue the process of adopting an annual budget in conjunction with a five-year plan.
Can Woodlands police cross county lines? There were references to confirmed services with Montgomery County but nothing said regarding Harris County
If incorporated, a City of The Woodlands Police Department would be able to provide uniform services to the entire Woodlands community, regardless of county boundaries. The Township currently contracts with Montgomery County Sheriff’s Office for additional services in Montgomery County portions of The Woodlands and contracts with Harris County Constable’s Office -Precinct 4 for additional services in the Village of Creekside Park.
Did they say there are 104 police officers working in The Woodlands?
The Township currently funds 104 law enforcement officers to patrol The Woodlands. The Township funds 92 through the Montgomery County Sheriff’s Office and 12 through the Harris County Constable’s Office – Precinct 4.
We support incorporation! Can we please advertise this to counter the unwelcome Hughes signs?
On August 13, 2021, The Woodlands Township Board of Directors called an Incorporation Election to be held on November 2, 2021. Now that an election has been called, State law prohibits political subdivisions, such as The Woodlands Township, from spending public money or using public property for “political advertising,” which is advocacy for or against a proposition on the ballot of a called election. The Township may provide factual information about incorporation and the election, but it may be a criminal offense if such information urges persons to vote in a particular manner.
Citizens of the Township are not subject to the same legal limitation and are not prohibited from advocating a particular result in the election, on their own and without Township involvement.
Who will handle the road maintenance on 11/3/2021 if the vote is a “for” vote on 11/2/2021?
If The Woodlands incorporates as the City of The Woodlands, the new city becomes responsible for road maintenance. The new city will not be able to set its first tax rate until August 2022, and the Counties will have assessed its tax for the 2021-2022 fiscal year for roadway maintenance. As such, the Township has discussed with the Counties a plan for the counties to continue to provide these services in the first year, until the first city tax is collected.
Has maintenance of annexed land, roadways and pavement been considered in finance model?
The financial model includes the maintenance for land, roadways, and pavement within the current Township boundaries. The Township or the new city’s annexation authority is very limited, as the majority of property surrounding The Woodlands lies within another city’s existing extraterritorial jurisdiction (ETJ), also known as annexation area.
Montgomery County currently maintains the roads – When the city starts taking over, does the county cost go down since they are no longer providing those services?
The County is not legally required to reduce its tax rate as a result of incorporation by The Woodlands.
I am hearing that if we become a city, who will clean up our streets?
While the counties provide base level services, the majority of streetscape maintenance is already funded by and performed through the Township. Under incorporation, this would become the city’s responsibility.
Will Pet waste management continue to be managed by public works?
Yes. The Township and the new city will continue to encourages pet owners to clean up after their pets. Pathway maintenance and pet waste receptacles will continue to be performed by Township or the new city.
Are the counties doing a bad job now? If not, why change?
Only the voters can make this determination.
Will there be new road bond?
No new road bond is included in the current financial model.
Has a decision been made to incorporate The Woodlands?
Who will decide if the Township incorporates?
The voters of The Woodlands.
When will incorporation be on the ballot?
The Woodlands Township Board of Directors has called for an incorporation election on November 2, 2021. Residents of The Woodlands can vote "for" or "against" the propositions shown below:
THE WOODLANDS TOWNSHIP – PROPOSITION A
Authorizing the Type-A city incorporation of The Woodlands Township District and the adoption of an initial property tax rate of not more than $0.2231 per one hundred dollars ($100) valuation of taxable property
THE WOODLANDS TOWNSHIP – PROPOSITION B
Upon incorporation of The Woodlands Township District into a Type-A General Law City to be called the City of The Woodlands, the transfer of the rights, powers, privileges, duties, purposes, functions, responsibilities, the authority to issue bonds, and the authority to impose taxes from The Woodlands Township District to the City of The Woodlands
Will a maximum tax rate at incorporation be required on the ballot?
Yes, see above.
Will the school district boundaries change at incorporation?
Will existing Township services continue at incorporation?
Is a study underway to determine potential cost impacts of incorporation?
When will this study be completed?
The study was completed in 2020.
Will the Township continue to provide contract trash and recycling services as part of Township services?
What is the tax impact of incorporation?
The maximum initial tax rate of Incorporation as the City of The Woodlands was established at 22.31 cents per $100 valuation, which is what taxpayers are paying today in The Woodlands.
What happens to existing property covenants at Incorporation?
No change – covenants remain on the land.
What impact will incorporation have on Village Associations?
Will the 2007 legal agreement entered into by the Township to continue to enforce our covenants be binding on a future city, whether it be a General Law or Home Rule City?
1. Why is a study regarding potential incorporation occurring now if there is no possibility of annexation until 2057?
2. The current FAQ says very little as to the pros and cons of the three types of General Law Cities. At the Boards July 26, 2017 Meeting, the Board was told by the attorneys present that the type of city would have to be included as part of the Incorporation. If this is true, what type will be put forward by the Board?
Regional Participation Agreements (RPAs)
The Woodlands entered into a Regional Participation Agreement (RPA) with the City of Houston in 2007. What are the provisions of the RPA?
The Town Center Improvement District, now The Woodlands Township (“The Woodlands”), entered into a Regional Participation Agreement (RPA) with the City of Houston in November 2007. This RPA agreement provides that that the property within the boundaries of The Woodlands and within the extraterritorial jurisdiction (ETJ) of the City of Houston would be deferred from annexation until 2057. This RPA also provides The Woodlands the ability to incorporate at any time after May 29, 2014 during the term of the RPA, with the ability to incorporate guaranteed until 2057. The RPA provides a process for the release of the property within The Woodlands boundaries from the Houston ETJ at time of incorporation, with such release from the Houston ETJ guaranteed until 2057. A similar RPA agreement was executed between the Town Center Improvement District and the City of Conroe.
Per the terms of the RPA with the City of Houston,
· The Town Center Improvement District made a onetime payment of $16 million to the City of Houston and pays 1/16 of the one-cent general sales tax collection every year in the area of The Woodlands that lies within the city’s ETJ, which payment in 2018 was $1.6 million.
· The RPA provides for an annexation deferral period of 50 years and a RPA term of 99 years.
· The RPA was authorized by Texas Local Government Code Section 43.0754, which was enacted in the 2007 Legislative Session.
· The RPA guarantees The Woodlands the ability to incorporate (if approved by The Woodlands voters) at any time between 2014 and 2057 and provides for the release of the property within The Woodlands boundaries from the Houston ETJ, at time of incorporation.
Under Texas law, an area within the ETJ of an existing municipality cannot incorporate without the consent of that municipality. Prior to the RPAs, The Woodlands had no legal path forward to incorporation.
While legislation passed by the State may impact a city’s ability to annex an area within its ETJ, The Woodlands RPAs provide for a contractual moratorium on annexation and the method for release from the city’s ETJ if voters choose to incorporate between now and 2057.
Legislation was authorized in 2017 and 2019 which provided that cities may not annex property without the consent of the voters in the proposed annexation area. Do these annexation law changes (2017 and 2019) impact the Township’s Regional Participation Agreements (RPAs) with the cities of Houston and Conroe?
A resident of The Woodlands received a letter from Texas House of Representatives Dan Huberty in July, 2019. Representative Huberty was responding to an inquiry from such Woodlands’ resident regarding the impact of recent annexation legislation on The Woodlands. Representative Huberty stated that annexation legislation authorized in the 85th Legislative Session and the 86th Legislative Session, provides that “no community in Texas, including the Woodlands, may be annexed without approval at the ballot box by a majority of that community’s registered voters”.
This letter appeared to conclude that The Woodlands no longer faces the possibility of future annexation by the City of Houston or City of Conroe. While the procedures to annex were substantively changed in 2017 and 2019, the ability to annex was not completely eliminated from the law.
Following the receipt of the Huberty letter, The Woodlands sought advice from Monte Akers, The Woodlands’ contract legal counsel on municipal matters. Mr. Akers stated that “the conclusion of Representative Huberty’s letter is that forced annexation of all or part of The Woodlands by Houston or Conroe will not occur because of because of the recent legislative changes. While that may be correct, those laws are new and untested. An argument still exists that execution of the RPAs in 2007 established contracts that bound the parties to terms for annexation based on the law then in effect, and that the Constitutional prohibition against legislation that impairs a valid contract will control.”
The legislation that authorized and enabled the RPAs with the cities of Houston and Conroe was Texas Local Government Code Section 43.0754, which was enacted in 2007. The RPAs only become effective after an election held on November 6, 2007 before qualified voters of the expanded District (The Woodlands Township). Both of the election propositions required a majority approval of Woodlands voters living in the Expanded District. If a majority of voters had not approved the propositions at the November 6, 2007 election, the RPA agreement would have terminated. The two ballot propositions were to (1) authorize the expansion of the boundaries of the Town Center Improvement District and (2) change the makeup of the Town Center Improvement District board to seven elected members. The two ballot propositions were approved by a majority of Woodlands qualified voters who voted in the 2007 election and the RPA’s were enacted as authorized by state statute.
The statutory language enabling the RPAs, as contained in Texas Local Government Code Section 43.0754, states as follows:
Section (a) (1) states: "District" means a political subdivision created by general or special law that has the powers of a municipal management district under Chapter 375 and a conservation and reclamation district under Chapters 49 and 54, Water Code, a majority by area of the territory of which is located within a planned community and within the extraterritorial jurisdiction of one or more municipalities.
Section (l) states: After due authorization, execution, delivery, and recordation as provided by this section, a regional participation agreement, including any related amendment, supplement, modification, or restatement, and a pledge of funds to make payments under an agreement shall be final and incontestable in any court of this state.
Section 6.5 of the RPA states that “Notwithstanding any defect, ambiguity, discrepancy, invalidity, or unenforceability of any provision of this Agreement, the parties acknowledge and confirm their mutual intent and purpose that this Agreement be governed by and be subject to the scope, terms and provisions of the Act, as in force and effect on the Effective Date hereof”.
When considering the letter from Representative Huberty, it is important to note that there are no guarantees that the current annexation laws will be left unchanged in future legislative sessions between now and 2057. Second, the existing RPAs were executed following legislative and voter approval in 2007. Texas Local Government Code Section 43.07454(l) states: “After due authorization, execution, delivery, and recordation as provided by this section, a regional participation agreement, including any related amendment, supplement, modification, or restatement, and a pledge of funds to make payments under an agreement shall be final and incontestable in any court of this state.”
Another consideration in evaluation of the Representative Huberty letter is Article 1, Section 16 of the Constitution of Texas. This constitutional provision states that no retroactive law, or any law impairing the obligations of contracts, shall be made. In cases before the Texas Supreme Court, the Court has held that the laws regarding the parties’ substantial rights and remedies, which exist when a contract is made, become a part of the contract. The question of how the impairment of contracts doctrine applies to the RPAs can only be definitively answered by a court of law.
In addition, under Texas law, an area within the ETJ of an existing municipality cannot incorporate without the consent of that municipality. Prior to the RPAs and without the RPAs, The Woodlands would have no legal path forward to incorporation.
Franchise Fee Questions Related to Incorporation
1. Must a newly imposed franchise fee be listed on an incorporation ballot measure?
No. There is no requirement that the issue of
franchise fees be on the incorporation ballot.
2. Can a newly imposed franchise tax be listed on the incorporation ballot measure?
Only if the Board interprets Sec. 43.0755(g), Local Government Code, to allow it. That subsection is part of the 2017 legislation related to incorporation of the Woodlands and allows the Board to include “any other measure the governing body considers necessary and convenient to effectuate the transition to a municipal or other form of local government . . . .” However, future collection of franchise fees would not effectuate such transition, and the intent behind that language is understood to have been to address transfer of existing district debt to the new city in the event current debt instruments do not allow transfer unless presented to the voters. (also see the answer to 5 below).
3. Is there a prohibition under state law that would prevent a newly imposed franchise fee from being listed on an incorporation ballot measure?
is less a prohibition than lack of clear authorization. Normally cities may call and conduct elections
only when permitted by state law or a Home Rule Charter. The procedure for incorporation of The
Woodlands is defined by state law and includes the subsection referenced above,
but a more traditional manner for placing a franchise fee issue on a ballot
would be through initiative and referendum following incorporation and adoption
of a Home Rule Charter that authorizes that process (which could not occur in
less than two cycles of uniform election dates, or at least one year, following
the incorporation election).
4. Is the franchise fee paid by a residential customer considered a deductible expense for federal income tax purposes?
No. It is not a tax and is not deductible.
5. Are cities required to impose franchise fees?
Art. III, Sec. 52 of the Texas Constitution prohibits the legislature
from allowing a city to donate money or use of things of public value solely
for the benefit of an individual, association, or corporation. Thus, cities
are expected to collect reasonable compensation for private use of public
rights-of-way and the legislature may not authorize a city to allow free private
or commercial use. Accordingly, application of a state law such
as Sec. 43.0755(g) in a manner that
allows such free use is arguably unconstitutional.
3. The Woodlands has over 40 years of quasi-governmental history resulting in many contracts and agreements being in place. If we incorporate, do any of these agreements impact the powers and authority of any new city?
Current Governance and Service Delivery
1. What type of local government is The Woodlands Township?
The Woodlands Township is a governmental unit called a special purpose district. The authority and responsibilities of The Woodlands Township are specifically authorized through its enabling legislation, as defined by the State of Texas.
2. Is The Woodlands Township a city?
No. The Woodlands Township is a special purpose district created by the state legislation. The purposes, authority, and responsibility provided through the Township’s special district enabling legislation allow the Township to provide certain community services and fund these services primarily through a property tax levy, sales tax, and room tax. Township funds enhance the County basic services and provide for additional services to Township residents.
3. How is the authority and responsibility of the Township (a special purpose district) different than a city government?
4. Will the Regional Participation Agreements (RPA) with the City of Houston and the City of Conroe remain in place if the Township incorporates?
Yes. The RPAs have a term of 99 years and were executed in 2007. The RPA includes funding provisions for regional projects and a provision that allows the Township to implement self-governance any time prior to 2057. Incorporation by The Woodlands would not impact the term of the RPA agreement, which would continue for its 99-year term.
5. How long can the Township government continue to operate as a special purpose district without being annexed by the City of Houston and/or the City of Conroe?
Per the RPA, the Township has until 2057 to determine its future form of governance.
6. What services is The Woodlands Township currently providing that would continue upon incorporation?
7. What is meant by “enhanced law enforcement”?
The Woodlands Township enhances the services provided by Montgomery County Sheriff’s Office by directly funding 87 additional positions in the patrol division. As part of the contract services, the Township funds the purchase of patrol vehicles and equipment for the contracted positions. The Township also has contracts to fund additional law enforcement resources including an Internet Crimes Investigator and Safe Harbor Investigators through Montgomery County, and the Alpha and Omega Mounted Patrol. In Harris County, the Township contracts for 12 patrol deputies through the Constable’s Office.
8. What services and financial responsibilities would be statutorily required to shift from other governmental agencies to the new city at incorporation?
9. What are services that would be optional for the “new” city at incorporation?
10. Will the services that are currently provided by The Woodlands Township go away if the community incorporates?
11. If incorporated, what additional services would be provided through a City of The Woodlands?
12. Will the existing Municipal Utility Districts (MUDs) be merged into the new city at incorporation?
The new City would not be required to merge the MUDs into the City operation. If not merged into the new city, the MUDs would continue as separate governmental entities with elected boards/officials and the new city would have no authority over these entities. The new City would also have the option to incorporate the MUDs as part of the City operation at a future date.
4. If The Woodlands incorporates, how will emergency management be handled and what role will the County have, if any, in providing these services?
Incorporation Process and Timeline
1. What is the suggested factual information to be developed prior to presenting an incorporation option to voters?
2. What is the Township’s incorporation process as established by legislative changes in the 2017 State Legislative session?
3. Who would call the general election for incorporation and place the question on the ballot?
The Woodlands Township Board of Directors can call the incorporation election by a majority vote of the Board.
4. What is the projected timing for consideration of incorporation by The Woodlands voters?
The Woodlands Township Board of Directors has called for an incorporation election on November 2, 2021. The RPA and current statutory provisions allow the Township Board of Directors to call for an incorporation election at a general/uniform election (May or November).
5. If a ballot question regarding incorporation were placed on a future election ballot, what would voters be deciding in that general election?
The ballot question as required by statute, must be printed to permit voters to vote for or against the proposition to authorize incorporation and to adopt an initial maximum property tax rate to be set at incorporation (both of which must be stated on the ballot and approved by voters in order for incorporation to occur).
6. What are the differences between the Matrix study and the Novak studies? Are they both working from the same set of criteria when it comes to evaluating peer cities? How will the Board reconcile differences in findings between the Novak and Matrix reports?
In February 2018, The Woodlands Township engaged Matrix Consulting Group as the lead consultant for the Incorporation planning study. As the lead consultant, the Matrix consulting team managed all aspects of the incorporation planning study including public input opportunities, a financial and benchmarking/best practices analysis, a tax rate study, an assessment of law enforcement needs, a pavement management study, and a review of infrastructure management alternatives (such as the structure of MUDs and water services).
Also in February 2018, The Novak Consulting Group was retained to provide an independent financial analysis and benchmarking/best practices review. The Novak Consulting Group was not responsible for community outreach, conducting a law enforcement analysis, a pavement management study or infrastructure review but was given access to the reports developed by Matrix.
Both firms used data gathered from the same list of benchmark cities for their analysis. Based on benchmark data (including information gathered from the benchmark cities), information provided through Township staff and the Township legal team, feedback from the Township Board and industry knowledge of each of the consulting teams, Matrix Consulting Group and The Novak Consulting Group each independently developed a preliminary recommended operational, revenue, and financial plan for a new city government operation in The Woodlands.
In November 2018, the preliminary results of the two independent financial analyses were presented at the Township Board’s planning session. Following the November 28 public presentation of the independent reports, the Board direct the Township’s Finance Department to review the preliminary financial reports submitted by the consulting firms and provide an analysis of the major differences between the reports.
In December 2018, in preparation for a final financial model and a robust public outreach process, The Woodlands Township Board of Directors engaged the Novak Consulting Group as the lead firm for the remainder of the project.
The next phase of the incorporation study will involve a review of the major differences in the independent reports, preparation of a final financial model based on the two independent analyses, determination of a maximum initial tax rate that would be required if the Township Board were to call an incorporation election, and a public outreach program to provide information to educate and to survey the community.
7. As Matrix and Novak evaluate peer cities, how will they measure and compare the quality of life between The Woodlands and the peer cities or the biggest issues/concerns facing each community, such as crime, taxes, traffic, etc.?
The Woodlands Township Board has indicated that a base assumption for the study is to maintain existing service levels. The comparisons will note the differences in community characteristics where it is applicable to the decision being made by the Board.
8. Will the Matrix and Novak studies report the per household costs of services provided to residents of The Woodlands vs. services provided to residents of the peer cities? For instance, what is the combined MUD property tax and water/sewer fee per household in the Township compared to the combined utility property tax and water/sewer fees per peer city household? Law enforcement? Public works? Fire department? Parks and recreation? These figures will be very important to residents interested in understanding the impact of incorporation on their personal expenses.
No. We are going to demonstrate the direct impact to households in The Woodlands Township. There will be an online tax calculator developed as part of the study, once the final financial model is completed. It will enable residents to see the tax impact of incorporation compared to current amounts paid by residents.
9. Will the Matrix and Novak assessments provide the unique fees collected by each peer city and what share of the general revenue those fees account for? (i.e. franchise fees for cable, telephone and internet service, traffic fines, compliance fines)
The comparatives will compare the types of fees and revenues utilized by the benchmark cities including franchise fees, service fees, fines, compliance fees, etc. The decision on whether these will be imposed after incorporation has not been determined at this point.
10. Will pension liabilities for the peer cities be included in the assessments?
No. At the present time, the Township does not have an unfunded pension liability nor is it anticipated at the present time that any change will be made in The Woodlands Township’s approach to providing retirement benefits.
11. Will the assessments determine the annual average cost per lane mile for roadway maintenance in the five peer cities and apply that cost to the lane miles of roads in The Woodlands, so we can compare those figures?
No. The cost to maintain roadways, replace roadways, and maintain roadways is being assessed through a specific sub-study that includes a pavement condition assessment. This assessment will use actual condition of the existing infrastructure and project replacement and maintenance needs in accordance with industry standards to develop a specific cost projection for The Woodlands. The costs of other benchmark cities will not be used to develop the estimates regarding future estimated costs for The Woodlands; however, current service providers will be consulted to validate the assumptions of the study.
12. During a prior meeting, the Board discussed conducting a 2018 residential survey. The 2016/2017 survey asked specifically about residents' desire to incorporate within the next five years, as well as their willingness to incorporate if it meant their property taxes would go up. Would a 2018 survey ask these questions as well?
As part of the incorporation study, the Board will have a separate survey conducted to gather feedback from the community regarding incorporation. This survey will be conducted in 2019 after the conclusion of the incorporation study and financial model have been finalized and publicly presented. Questions regarding incorporation are not included in the Fall 2018 residential survey that is being conducted.
13. The Incorporation Study Website indicates that a survey specifically regarding incorporation will be conducted this fall. The website also mentions that visitors to the site will be able to access and complete the survey online. Will this be a separate survey from the "regular" 2018 community survey? If so, shouldn't that survey be conducted in the same way and with the same statistical reliability as the 2018 community survey? Is it possible to guarantee the accuracy of results from a survey available on a website?
The incorporation survey will be separate from the normal community survey that is conducted. The Board has indicated that it wants a statistically valid survey conducted and an approach will be developed with the Board later this year with the survey conducted after the completion of the incorporation study.
5. Did the prior agreement entered into by The Woodlands to enforce covenants (that was adopted as part of the formation of The Township) obligate future actions of the Township and/or the Board of Directors regarding covenant enforcement? Are there any limitations to The Township taking a different approach in the future?
Service Costs, Revenue, and Tax Rates
1. Will incorporation increase the cost of local government operations in The Woodlands?
The net local government cost associated with incorporation is unknown at this time. The ballot question is required by state statute to include the maximum tax rate that can be imposed at time of incorporation.
2. What existing Township revenue sources cannot be continued or transferred to the new city at time of incorporation?
No revenue will be lost at incorporation.
3. What, if any, of the Township’s current revenues would become restricted upon incorporation?
The current unrestricted hotel occupancy (HOT) tax of 7% would become restricted at time of incorporation and can only be used in the manner authorized for cities of similar size (to promote tourism and the convention and hotel industry within the city’s boundaries and fit into one of the statutorily-defined categories of uses). The Township is currently able to issue revenue debt with debt service secured by sales tax and room tax collections without these restrictions on uses.
After incorporation, the new city can only pledge sales tax and room tax for the repayment of new revenue debt only as allowed by state statute. However, pledged debt at the time of incorporation can continue to be paid through the revenue sources utilized prior to incorporation.
4. What “new” revenue sources may be available to The Woodlands at time of incorporation?
5. What will the projected tax rate be at time of incorporation?
The maximum initial tax rate of Incorporation as the City of The Woodlands was established at 22.31 cents per $100 valuation, which is what taxpayers are paying today in The Woodlands.
6. Will the county property tax rate decrease if the Township incorporates?
It is unknown if the County Commissioners would reduce the county tax levy as a result of Township incorporation; however, any reduction in the county tax rate would be countywide, not limited to properties located within the Township boundaries. The County Commissioners establish the property tax rate to support county-wide services provided through the county government. Most of the county taxes are used to support general county services and outstanding debt. The property owners within the new city of The Woodlands would continue to be required to pay the county property tax even though residents would receive a reduced level of services from the county government after incorporation.
7. What is meant by the “maximum tax rate” outlined in the enabling legislation?
When the vote to incorporate is held, the ballot measure must list the initial maximum property tax rate that would be imposed to ensure residents can make an informed vote. Any future changes in the property tax rate, increases or decreases, would be adopted annually by the elected officials of The Woodlands in accordance with Tax Code Chapter 26, Article VIII, Section 21 of the Texas Constitution. This section, commonly referred to as the “Truth-in-Taxation” provisions, requires local taxing units to make taxpayers aware of tax rate proposals, through public notifications and by holding two public hearings on a proposed tax rate that exceeds the lower of the effective tax rate or the rollback tax rate. The effective tax rate is the rate that produces the same amount of taxes as the previous year if applied to the same properties taxed in both years. The rollback tax rate is the maximum rate allowed by law without voter approval. The rollback rate generates about the same amount of tax revenue for day-to-day operations as the previous year, plus an eight percent increase for operations and sufficient funds to pay debt service.
8. What is the cost of Planning, Zoning, and Building (Covenant Enforcement) in The Woodlands compared to each of the five benchmark cities?
The comparison of Covenant Enforcement in The Woodlands compared to Planning, Zoning, and Building enforcement in other communities cannot be fairly compared. None of the benchmark cities rely solely on Covenant Enforcement, the approach utilized by The Woodlands. This is an entirely different approach than the utilization of Planning, Zoning, and Building with different enforcement processes and staffing requirements. These issues and the pros and cons of the two approaches were introduced at the July 19th Board of Director’s planning session and will be addressed again at a future Board Planning Session.
Future Governance Options
1. If The Woodlands votes to incorporate, would the new “city” of The Woodlands become a General Law City or a Home Rule City?
Per state constitution and statute, The Woodlands must first incorporate as a General Law City. The Woodlands may become a Home Rule City at some point in the future (after initial approval of incorporation by the voters as a General Law City). The Woodlands already meets the population requirements for a Home Rule City; however, under existing statutes, voters would have to first incorporate as a General Law City then approve a charter at a future election in order to become Home Rule.
2. If the voters approve an incorporation ballot initiative, when would the new elected officials for the City government be elected?
The Township Board of Directors would assume responsibility as temporary elected officials for the new city until an election can be held for the new City Council. The election of city officials could be called at any time after the Township Board completes the canvassing of the votes from the balloting initiative but must be completed no later than the next uniform election date. If a special election is desired, current statutory provisions require that the election must be called a minimum of 62 days in advance of the election date.
3. What is the difference in authority for a General Law City versus a Home Rule City?
A General Law city has no authority to act unless the State legislature gives them the specific authority to do so. A Home Rule City derives its authority via a charter approved by the voters and has authority to act on any matters unless specifically restricted by state constitution or state statute.
4. What are the characteristics of a General Law City?
5. How can the Township become a Home Rule City?
At the time of incorporation, the first step in the process is to become a General Law City. Once incorporated as a General Law City, the voters can then separately vote to become a Home Rule City and in so doing adopt a Charter. The Local Government Code dictates the process that must be followed in developing the initial city charter as well as amending it once approved by the voters. Developing a charter requires establishing a charter commission.
Recently Added FAQs
1. How will Council members be chosen – by district or at large? How many Council members will there be?
2. Will Council members be compensated?
At the present time, the existing Board of Directors is not compensated. During incorporation planning sessions, many of the current Board have indicated a desire to not include compensation for any City elected officials if a vote to incorporate is held and passes. Future compensation for Council members would be controlled by actions of the future Councils and/or the charter adopted through the home rule process.
3. What are the specific authority level differences between the type of general law cities?
General law cities are only allowed to operate in accordance with the specific authorization granted to them under the State of Texas Local Government Code which can be viewed at the following: https://statutes.capitol.texas.gov/Docs/SDocs/LOCALGOVERNMENTCODE.pdf.
4. Will the financial analysis include inflation costs to ensure future costs are reflective of reality?
The financial models will include inflation costs as a component of the comprehensive model to enable the Board to see the financial impacts of different scenarios.
5. Will projections go beyond the five-year period?
The financial models will project costs associated with incorporation and the transition over a five-year period. In addition, The Woodlands currently utilizes a five-year financial plan and a 30-year capital planning process to understand future costs associated with providing services.
6. What amount of money would The Woodlands have available if the existing incorporation reserves were invested and incorporation were not considered until nearer the end of the current agreements?
7. How do we ensure that costs are not being underestimated?
All costs utilized in the financial models have been and will continue to be reviewed by the Board of Directors during public incorporation planning sessions. Estimates are continually refined as new and better information becomes available. Each incorporation planning session has public comment periods enabling any member of the public to provide comment and input to the Board. The Board will be reviewing preliminary financial models at their November 28th Incorporation Planning Session. At a future date, the Board will provide specific direction regarding the final costs to be used in developing the final financial model.
8. Is a city income tax under consideration as one of the future revenue streams?
No. Local governments are not authorized to impose income taxes.
9. Would The Woodlands’ incorporation impact other areas such as Shenandoah?
If The Woodlands Township incorporates as a city, this would not impact Shenandoah.
10. One of the revenue streams discussed at the public forum related to fees and fines. Will there be a push to increase revenues from increased enforcement?
The financial models will estimate the existing revenues that are received by Harris and Montgomery County from tickets issued within the boundaries of The Woodlands. This amount would become available to The Woodlands as a revenue source if incorporation were to occur. The assumption being utilized in the incorporation planning model is that this revenue stream would be based upon existing levels of enforcement.
11. How can we develop a cooperative working relationship with the County to transition services rather than an adversarial approach?
The Woodlands Township currently has a positive working relationship with both Harris and Montgomery Counties and has many services that are provided through contractual arrangements with these entities. The largest contracts for service are related to law enforcement. The Township is currently discussing potential future contractual arrangements with the County regarding services.
12. Can we determine how much the County currently spends on maintenance and rehabilitation and include this within the Pavement Management report?
The County does not maintain data specifically regarding expenditures within The Woodlands boundaries. However, information on the total maintenance and rehabilitation expenditures for the precincts that include The Woodlands has been requested. Upon receipt, it will be shared with an update to this FAQ and other incorporation planning documents.
13. Would incorporation have an impact on my zip code or assigned post office?
Incorporation would not impact your zip code. The Woodlands Township officials have reached out to federal representatives to inquire about the process for having the Post Office change postal designations from Spring to The Woodlands to eliminate confusion regarding residency.
14. If we become a city, will current residents of The Woodlands in Harris County and Montgomery County be able to purchase flood insurance from the National Flood Insurance Program (NFIP) without a lapse in coverage during the transition from being under the County to being under the City? What needs to be done to ensure that this coverage can continue?
A decision to incorporate will not have an impact on resident’s ability to acquire or maintain flood insurance from the NFIP.
15. Can the financial models please include estimates of what the effective tax rates would be assuming no incorporation and The Woodland’s subsequent annexation by Houston and Conroe?
16. I live in May Valley, The Woodlands, 77354. Due to my zip code, I receive the Magnolia/Tomball Impact Magazine and not The Woodlands version. With incorporation, would I be able to receive The Woodlands’ version?
The distribution of the Impact Magazines is not under the control of The Woodlands; however, this issue will be forwarded to the magazine to make them aware of residents’ desires regarding the version of the magazine received.
Additional Incorporation FAQs from November 2018 Board of Directors Meeting
1. Is there anything to be gained if we were to annex into the City of Conroe?
Conroe’s ETJ rights do not extend over the entire Woodlands boundaries. The City of Houston has greater ETJ rights to our community. Only a portion of The Woodlands could be annexed into the City of Conroe. There are no immediately perceivable benefits to being annexed by Conroe, which would split the community in two.
2. What is the cost of this study? What is driving the timing of the study?
This study will cost $800,000. The process started 22 years ago due to pressures of annexation. Seven years ago a study was conducted that had several faults in the methodology (it indicated that MUDs must be absorbed by The Township upon incorporation). By having this study conducted, the Board is seeking comprehensive, objective, and factual information available to the public that can guide discussions and future determinations regarding incorporation.
3. How much will county taxes go down if we incorporate?
Incorporation will not have any direct reduction on county taxes. However, the Board will be negotiating with the County regarding shared costs if incorporation were to occur.
4. What happens to the Regional Participation Agreement funds The Woodlands pays to Houston upon incorporation?
The regional participation agreement was a 99-year deal. Under the RPA, The Woodlands will continue to pay 1/16th of our sales tax to the Cities of Houston and Conroe until the expiration of the agreement.
5. If we don’t like the way the police arrangement is implemented after incorporation, can this be changed at a later date?
The initial model will be implemented during the transition to an incorporated community. Incorporation as a general law city will require the appointment of a city marshal. Later, the home rule charter commission, made up of residents, will develop the approach they want to propose and the residents will vote on it. The final determination will be by the residents. Home rule charters can provide a process for citizen initiatives that would enable future changes to the services provided.
6. Why doesn’t the study contain any analysis about taking more control of the schools or changing boundaries?
Incorporation will not impact school districts and state laws do not allow for methods to change school districts upon incorporation of a community.
7. What changed between the last resident survey in 2017 and now to trigger the study?
Woodlands Parkway extension and Hurricane Harvey relief were two events that brought to the forefront the limited control that the current form of government provides for the residents to control some aspects of governance. If The Woodlands were incorporated, the local government would have greater input into decisions that impact the community. This would include participation in decisions on regional transportation issues and access potentially to some additional federal and state funds that may be available following natural disasters. Roadways and rights transfer to The Woodlands upon incorporation which provides greater oversight on developments impacting those roadways.
8. Would the new City be obligated to enforce covenants?
Covenants would not go away and would continue to apply even if Planning and Zoning were implemented. There are two options for enforcement – it would either be done by the new City directly or relegated back to Homeowner Associations. The determination of whether to have covenants enforced by the City could be made by the Charter Commission. If it is not included with the Charter, the determination would fall to the elected officials. Please see the legal summary regarding the 2007 transition agreement and covenant enforcement for additional information.
9. Did the pavement management study include the $100 million dollars in road expansion projects that the South County study identified would be needed in the next 5 to 10 years?
The study focused on existing roadways only to identify the costs for maintenance and replacement of existing roadways.
10. Would the new City be able to collect franchise fees?
Franchise fees would be an available revenue source upon incorporation. These can be assessed against any utility that utilizes public rights of way (telecommunications, cable television, electric, gas, etc.).
11. When does the annexation moratorium end?
The current agreements end in 2057.
12. If we do go ahead and incorporate and determine that we don’t like being a city, can we go back to being a special purpose district?
No, the city would not have the option to revert to a special purpose district after incorporation.
13. Have the studies looked at the cost of benefits and pension plans for a police department?
Yes, the financial analysis has included all costs associated with benefits and retirement plans for new employees similar to those currently provided to all existing employees.
14. Will there be changes to the postal service upon incorporation?
Incorporation will have no direct impact on postal services. The request has been made to federal officials to change the mailing address to “The Woodlands” for all areas within the boundaries if incorporation occurs.
15. Have climate change risks been taken into consideration in the pavement study?
Specific risks associated with climate risks have not been included in the pavement maintenance costs. However, future maintenance costs, including roadway replacements, have been developed based upon expected pavement maintenance costs due to roadway deterioration over time.
16. Will the study and support materials remain online and where will the public access the information?
All materials regarding the incorporation study are available at the dedicated website – www.thewoodlandsincorporationstudy.com – that is focused only on providing information regarding the incorporation study. Additionally, much of this material is also available on The Woodlands Township website.