Sec. 43.203.  ALTERATION OF ANNEXATION STATUS.  (a)  Notwithstanding any other law, the governing body of a district by resolution may petition a municipality to alter the annexation status of land in the district from full-purpose annexation to limited-purpose annexation.
(b)  On receipt of the district's petition, the governing body of the municipality shall enter into negotiations with the district for an agreement to alter the status of annexation that must:
(1)  specify the period, which may not be less than 10 years beginning on January 1 of the year following the date of the agreement, in which limited-purpose annexation is in effect;
(2)  provide that, at the expiration of the period, the district's annexation status will automatically revert to full-purpose annexation without following procedures provided by Section 43.014 or any procedural requirement for annexation not in effect on January 1, 1995; and
(3)  specify the financial obligations of the district during and after the period of limited-purpose annexation for:
(A)  facilities constructed by the municipality that are in or that serve the district;
(B)  debt incurred by the district for water and sewer infrastructure that will be assumed by the municipality at the end of the period of limited-purpose annexation; and
(C)  use of the municipal sales taxes collected by the municipality for facilities or services in the district.
(c)  If an agreement is not reached within 90 days after the date the municipality receives a petition submitted by a district:
(1)  the district's status is automatically altered from full-purpose annexation to limited-purpose annexation for a period of not less than 10 years, beginning January 1 of the year following the date of the submission of a petition, unless the voters of the district have approved the dissolution of the district through an election authorized by this section;  and
(2)  on the expiration of the 10-year period of Subdivision (1), notwithstanding any other provision of law, the district may be restored to full-purpose annexation at the option of the municipality, provided that the municipality assumes all obligations otherwise assigned by law to a municipality that annexes a district;  and
(3)  the municipality may collect a waste and wastewater surcharge for customers in the district after restoration of full-purpose annexation provided that:
(A)  notice of such proposed surcharge is provided to the board of a district six months prior to restoration of full-purpose annexation;
(B)  the surcharge does not exceed the cost of a post-annexation surcharge to any other district annexed by the municipality;  and
(C)  the surcharge is in effect only during the period in which bonds issued by the district or refunded by the municipality are not fully retired.
(d)  Upon the request of any residents of a district subject to this section the municipality may conduct an election on a uniform election date at which election voters who are residents of the district may vote for or against a ballot proposal to dissolve the district.  If more than one district was created on the same date and the districts are contiguous, the election shall be a combined election of all such districts, with a majority of votes cast by all residents of the districts combined required for dissolution of the districts.  If a majority of votes are in favor of dissolution, the date of dissolution shall be December 31 of the same year in which the election is held.  Upon dissolution of the district, all property and obligations of a dissolved district become the responsibility of the municipality.
(e)  The municipality shall have no responsibility to reimburse the developer of the district or its successors for more than reasonable and actual engineering and construction costs to design and build internal water treatment and distribution facilities, wastewater treatment and collection facilities, or drainage facilities, whether temporary or permanent, installed after September 1, 1995.  Any obligation to reimburse the developer may be paid in installments over a three-year period.
(f)  During the period of limited-purpose annexation:
(1)  the district may not use bond proceeds to pay for impact fees but must comply with other items in its consent agreement with the municipality;
(2)  the municipality:
(A)  must continue to provide wholesale water and sewer service as provided by the consent agreement;  and
(B)  is relieved of service obligations in the district that are not provided to other territory annexed for limited purposes or required by the annexation alteration agreement between the municipality and the district;  and
(3)  retail sales in the boundaries of the district will be treated for municipal sales tax purposes as if the district were annexed by the municipality for full purposes.
(g)  This section does not allow a change in annexation status for land or facilities in a district to which the municipality granted a property tax abatement before September 1, 1995.
Added by Acts 1995, 74th Leg., ch. 787, Sec. 2, eff. Sept. 1, 1995.
Amended by: 
Acts 2017, 85th Leg., 1st C.S., Ch. 6 (S.B. 6), Sec. 40, eff. December 1, 2017.
Acts 2019, 86th Leg., R.S., Ch. 155 (H.B. 347), Sec. 2.16, eff. May 24, 2019.