The Woodlands Township Forum On Incorporation

The Woodlands Township Forum on Incorporation for residents was held at the Marriott Waterway September 25, 2018. FAQ hand-out from meeting.

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Has a decision been made to incorporate The Woodlands?

Who will decide if the Township incorporates?
The voters of The Woodlands.

Is legislation in place to allow The Woodlands voters to consider incorporation?

When will incorporation be on the ballot?
This has not yet been determined.

Will a maximum tax rate at incorporation be required on the ballot?

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?
Spring, 2019.

Will the Townshi p continue to provide contract trash and recycling services as part of Township services?

What is the tax impact of incorporation?
Unknown – study currently underway.

What happens to existing property covenants at Incorporation?
No change – covenants remain on the land.

What impact will incorporation have on Village Associations?
No change.

Current Governance and Services Delivery:

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.

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 allows the Townshi p 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.

How is the authority and responsibility of the Township (a special purpose district) different than a city government?

The Township (as a special purpose district) relies on County government to provide basic services within The Woodlands such as roads, law enforcement, traffic management, traffic regulation, traffic enforcement and court services. Basic land use planning and plat approval in The Woodlands is provided through the overlapping county governments and city governments with overlapping extraterritorial jurisdictions (ETJs).

Utility service and drainage system management in The Woodlands is provided through the Municipal Utility Districts.

Per its enabling legislation, the Township can only enhance (not supplant) these basic services provided by others. The Township is allowed to make and enforce rules on property that it owns such as parks and pathways but cannot pass ordinances or regulations to regulate or restrict activity within its boundaries on property not owned by the Township.

A city government does not rely on the county government to provide most basic local government services. A city government is responsible for providing law enforcement services, roads, traffic management, traffic regulation, traffic enforcement, municipal court, land use regulation, development approval, and develops community regulations (ordinances). These services can be provided by the city government or the city can contract with others (such as the county government) to provide the services. A city government can also pass ordinances and regulations as allowed by state statute or by their charter (if home rule).

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 was executed in 2007. The RPA includes funding provisions for regional projects and also includes 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.

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.

What services is The Woodlands Township currently providing that would continue upon incorporation?

• Law enforcement (currently provide enhanced law enforcement by contract, but would become responsible for all policing)
• The Woodlands Fire Department (Rated ISO 1)
• Community maintenance – right-of-way mowing, neighborhood entry maintenance, street lights, annual cul-de-sac island maintenance
• Covenant Administration (unless planning and zoning is implemented)
• Park and Pathway – operation and maintenance
• Recreational programming
• Swimming pool operation and maintenance
• Park Ranger I Town Center Ranger programs
• Town Center public facilities – operation and maintenance
• Environmental services – educational programs
• Residential waste and recycling – weekly pick up
• Streetlights
• Emergency management
• Funding for the Regional Participation Agreements
• Capital facility replacements
• Debt service – facilities

What is meant by “enhanced law enforcement”?

In addition to the base level of law enforcement provided by each County, The Woodlands Township has contracted to provide additional law enforcement personnel funded entirely by the Township.

Base level law enforcement provided by Montgomery County through the county tax levy includes communications (dispatch), detective division, K9 units, administrative support, special services, SWAT team, training, crime scene investigation, auto theft task force, hostage negotiation, mobile command unit, public information officer, fleet maintenance support and other county-wide services. The Montgomery County tax levy funds 23.75 positions for the patrol division that includes The Woodlands Township.

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 & Omega Mounted Patrol. In Harris County, the Township contracts for 12 patrol deputies through the Constable’s Office.

What services and financial responsibilities would be statutorily required to shift from other governmental agencies to the new city at incorporation?

• law enforcement services
• roadway maintenance: road construction and reconstruction
• traffic signals and traffic management
• planning and development services
• municipal court services

There are options that can be considered when determining how best to provide these services including contracting out to third parties or other governmental entities.

What are services that would be optional for the “new” city at incorporation?

• water, sewer and storm drainage services (optional I could allow MUDs to continue)
• zoning (optional I new city could continue to enforce Covenants and Deed Restrictions to serve this purpose)

Will the services that are currently provided by The Woodlands Township go away if the community incorporates?


If incorporated, what additional services would be provided through a City of The Woodlands?

The new city would have certain financial responsibilities whether directly by hiring personnel or contracting with others for the following:

• The new city would have ordinance making authority.
• The new city will have the responsibility for municipal court operations or these services may be contracted out.
• The new city would assume responsibility for most roadways and right-of-way within the Township including planning and design, construction and
reconstruction, and maintenance operations.
• The new city would have responsibility for traffic signal operation and management.
• The new city would have responsibility for roadway signage.
• The new city would have responsibility for providing basic local law enforcement services; this could be done through a city law enforcement department
or through contract services
• The new city will have responsibility for the issuance and management of building permits.
• The new city would have responsibility for planning and zoning, if zoning is implemented.
• The new city would have responsibility for · providing water, sanitary sewer and drainage, if the existing MUD’s are incorporated into the new
city operations.

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.


What is the suggested factual information to be developed prior to presenting an incorporation option to voters?

• Incorporation – increased abilities I restrictions I gap analysis
• Costs I benefits
• Financial analysis I Tax rate study
• Street condition analysis and projection of costs
• Public forums for community feedback
• Legal review

What is the Township’s incorporation process as established by legislative changes in the 2017 State Legislative session?
The 2017 legislation provides the Township Board of Directors with the sole authority to call an incorporation election.

The legislation allows the Township to consider incorporating as a Type A, Type B or Type C General Law Municipality (as determined by the Township Board) when an incorporation election is called.

As provided by statute, the incorporation ballot initiative placed before voters must state the maximum property tax rate that can be imposed at time of incorporation and this maximum tax rate must be approved by a majority of the voters as part of the incorporation election.

The legislation provides that when the incorporation of the territory of the Township is approved by a majority of Township voters in an incorporation election that:

• The dissolution of the Township occurs when the new city is created.
• The new city government will assume all assets, liabilities, obligations, rights, powers, duties, purposes, bond and tax authorizations, functions and
responsibilities of the Township as the successor entity.
• The governing body of the Township will serve as the temporary governing body of the new city government.
• The temporary governing body (Township Board of Directors) shall order the election to elect the permanent governing body.

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.

What is the projected timing for consideration of incorporation by Woodlands voters?
No current timeline has been established. 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). This process could move forward at any future general/uniform election date, p’rovided that the statutory time provisions for calling the election are met. At the current time, that would require calling an election a minimum of 78 days prior to the uniform election date.

The determination of when an incorporation election is called will be determined by the Township Board of Directors.

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).

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?

The Woodlands Township engaged The Matrix Consulting Group as the lead consultant for the Incorporation planning study. As the lead consultant, the Matrix consulting team is managing 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 MUD’s and water services).

The Novak Consulting Group was retained to provide an independent financial analysis and benchmarking/best practices review. The Novak group will not be doing community outreach, conducting a law enforcement analysis, a pavement management study or infrastructure review but will have access to the reports developed by Matrix.

Both firms will be using data gathered from the same list of peer cities for their analysis. Based on benchmark data (including information gathered from the peer 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, the Matrix Consulting Group and the Novak Consulting Group will each independently develop and recommend an operational , revenue and financial plan for a new city government operation in The Woodlands.

Following the submittal of the independent “draft” financial studies by each firm, the Township Board will meet in open session with the consulting firms to evaluate the major differences in the independent reports. Following this review, the Township Board is expected to provide advice to the Matrix Consulting Group on the assumptions to be included in the final report. A final financial report will be issued by the Matrix Consulting Group which will include a proposed initial tax rate should the Board choose to place an Incorporation referendum on a general election ballot.

The board discussed conducting a 2018 residential survey. The 2016/2017 survey asked specifically about residents’ desire to incorporate within the next 5 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 2018 residential survey that is being conducted.

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.


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.

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.

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 atthe time of incorporation can continue to be paid through the revenue sources utilized prior to incorporation.

What “new” revenue sources may be available to The Woodlands at time of incorporation?

• Franchise fees
• Building permit fees
• Municipal court fees
• Traffic fines I ordinance violation penalties
• Any Federal or state grant funding specified for cities (that is not available to special districts)
• Any Federal or state grant funding specified for services or capital for which the Township is not currently responsible, but for which the new city
would become directly responsible

What will the projected tax rate be at time of incorporation?
The projected tax rate at incorporation is unknown at this time. A tax rate study will be done prior to developing a ballot initiative for consideration by the voters. As stated earlier, the ballot question required by state law must include the maximum initial property tax rate that can be imposed at time of incorporation.

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.

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.

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.

There will be an online tax calculator developed as part of the study, once the final financial model is completed, that will enable residents to see the tax impact of incorporation compared to current amounts being paid by residents.

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 peer 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.

Will pension liabilities for the peer cities be included in the assessments?

At the present time, only the Fire Department personnel are covered by a defined pension program. No decision has been made to change The Woodland Township’s approach to providing retirement benefits.

Will the assessments determine the annual average cost per lane mile for roadway maintenance in the 5 peer cities and then apply that cost to the lane miles of roads in The Woodlands so we can compare those figures?

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 actually 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 peer cities will not be used to develop the estimates regarding future estimated costs for The Woodlands.

What is cost of Planning, Zoning, and Building (Covenant Enforcement) in The Woodlands compared to each of the 5 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 peer 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.

As Matrix and Novak evaluate peer cities, how will they measure and compare the guality of life between The Woodlands and the peer cities or the biggest issues/concerns facing each community, such as crime, taxes, traffic, etc.?

The comparative survey with peer cities is not being utilized to establish service levels. The Woodlands Township Board has indicated that a base assumption for the study is to maintain existing service levels. . The comparisons will note where applicable the differences in community characteristics where it is applicable to the decision being made by the Board.


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 and then approve a charter at a future election in order to become Home Rule.

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 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.

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.

What are the characteristics of a General Law City?
There are three types of General Law City incorporations that can be considered by The Woodlands at initial incorporation. ·,

• Type A General Law City typically has a City Council with a Mayor and five Councitmembers (can be elected by district or at large)
• Type B General Law City typically has a Mayor and five aldermen elected at large.
• Type C General Law City typically has a Board of Commissioners and consists of a Mayor and two commissioners.

As a matter of reference, most General Law cities have populations under 5,000.

The legislation allows the Township to consider incorporating as a Type A, Type B or Type C General Law Municipality and the Township Board would designate the type of city when ordering the incorporation election.

What are the characteristics of a Home Rule city?
Home rule is the right of citizens at the grassroots level to manage their own affairs with minimum interference from the state.

• Home Rule Cities must have populations in excess of 5,000.
• The citizens of a Home Rule City can:
o decide on their form of municipal government (mayor – council form or council – city manager form)
o Choose between a large or small city council
o Provide for election at large or by single member district
o Fix the terms of office for councilmembers
o Choose if mayor is elected by residents or chosen by city council
o Provide for election or appointment of major administrative officials
o Determine creation of boards or commissions

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.

Important Links:

Governance Timeline

Incorporation Study Documents

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About the author

Michele Flory

Team Leader of Michele Flory Real Estate Team