The Woodlands approves proposed $50M deal to permanently block Houston annexation

THE WOODLANDS, Texas - 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.

If Houston City Council were to also approve the agreement, the City of Houston would 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.

Houston City Council still has to vote on the deal.

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 Wednesday, all seven members of The Woodlands Township Board of Directors voted to approve the Third Amendment to the Regional Participation Agreement.

If also approved by the Houston City Council, 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.

What comes next

What they're saying:

"Our responsibility as Township Board Directors is to protect the interests of The Woodlands and plan for a strong future for the generations that follow us," said Brad Bailey, Chairman of The Woodlands Township Board of Directors. "With today’s unanimous vote, we acted to protect our community, protect our future and put millions more dollars back in the hands of the people of The Woodlands. If approved by the City of Houston, this amendment will provide greater certainty around annexation, give the Township greater control over locally generated revenues and preserve our community’s ability to determine its own future. That is something worth celebrating. I appreciate Mayor Whitmire, Houston City Council and City staff for the work that has gone into developing an agreement that serves both communities."

What's next:

Although the Houston City Council was scheduled to consider the amendment on Wednesday, the item was postponed. Houston's leadership is expected to vote on the proposal next week.