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HOUSTON - Houston City Council approved an agreement on Wednesday that would block the city from ever trying to annex The Woodlands.
On Aug. 27, the Woodlands Township Board of Directors unanimously approved a proposed amendment to its long-standing agreement with the City of Houston that would permanently block Houston from annexing the community and end a sales-tax-funded regional project fund.
The Houston City Council has agreed to this amendment and will receive about $50 million in near-term funding. The Woodlands would still be protected from future annexation into the City of Houston and would no longer have to allocate a portion of sales tax revenue to the fund starting in 2030.
What is the Regional Participation Fund?
The backstory:
The Regional Participation Agreement was established in 2007 and created the Regional Participation Fund. The fund was to be funded through a portion of sales tax revenues generated in The Woodlands and could be used for regional projects. The City of Houston had to provide a dollar-for-dollar match of the Township's contributions in order to use the fund.
In exchange, the City of Houston agreed to defer annexation of The Woodlands through 2057.
What the new amendment would do
On Aug. 27, all seven members of The Woodlands Township Board of Directors voted to approve the Third Amendment to the Regional Participation Agreement.
With the Houston City Council's approval, the deal will eliminate any possibility of Houston annexing The Woodlands in the future, while keeping the Township within Houston's extraterritorial jurisdiction. It does not impact the community's ability to consider incorporation in the future, which remains a decision for the voters.
By the numbers:
Under the approved amendment, the structure of the Regional Participation Fund will end, freeing the Township from having to allocate sales tax revenues to it in the future. In return, the agreement provides a $50 million financial benefit to Houston:
- $27.4 million in payments from The Woodlands to Houston over the next three years, consisting of $7.9 million already obligated under the original agreement and $19.5 million funded from cash reserves.
- $22.6 million in existing sales tax revenue accumulated over the past 20 years in the fund, which will be released for Houston's immediate use.
Beginning in 2030, the sales tax revenues previously allocated to the fund will stay in The Woodlands. These revenues are projected to average $4.5 million annually.
City leaders speak on the amendment
What they're saying:
Houston City Controller Chris Hollins stated:
"Today, City Council voted to sell Houston’s future at a steep discount—and taxpayers will pay the price. This deal sacrifices $100-200 million in future revenue for $27 million to plug a deficit hole. It simply doesn’t add up. Trading a growing, decades-long revenue stream for pennies on the dollar is not sound financial management. It is a fire sale. No responsible CFO would make this trade. No member of Council would accept it with their own money. Houston taxpayers should not have been forced to accept it either. This deal does nothing to solve the City’s spending problem. It simply sells off Houston’s future to cover today’s bills."
The Source: Houston City Council meeting.