Houston City Council members learned more about the city’s agreement with The Woodlands and how a proposed amendment could affect both municipalities.
During the Sept. 1 Budget and Fiscal Affairs committee meeting, Finance Director Melissa Dubowski explained to council how the changes could benefit Houston’s budget.
Some background
In 2007, Houston and The Woodlands Township entered into a Regional Participation Agreement, or RPA. Part of the agreement includes Houston agreeing not to annex The Woodlands for 50 years. The agreement also created the Regional Participation Fund, which is used to pay for shared projects between Houston and The Woodlands. The township provides sales tax revenue in the amount of 1/16 of 1% to the fund.
The city would receive $132 million over the life of the agreement if it were to go through 2057 as is. However, the proposed changes would give Houston $50 million, which would be equivalent to 10 years' worth of projected payments over the course of three years.
Dubowski said money in the RPF has not been used since 2018, and part of it is because the city had to request approval for a project from The Woodlands and the two entities could not agree on projects. The Woodlands also began requiring the city to match 50% of the project funding, she said.
“Let’s say we want to use $1 million for a project,” Dubowski said. “The Woodlands would say ‘Okay, good, but where is your $1 million matching fund?’”
Officials also said that there have not been any requests to use the funds since 2018.
What’s changing
The amendment would end the long-term RPF payment structure between Houston and The Woodlands, providing for a total of about $27.4 million in payments from The Woodlands Township to the city over the next three years, as well as releasing restrictions on the $22.6 million currently in the RPF to make those funds available to the city of Houston.
The payment schedule to Houston for the $50 million is proposed as:
- $22.63 million by Dec. 31 this year
- $9 million by the end of 2027
- $9 million by the end of 2028
- $9.37 million final payment by Dec. 31, 2029
If approved, the agreement would also eliminate the possibility of future annexation by the city of Houston.
Project funding
Since the creation of the fund, some of the projects include:
- Herman Brown Park
- Cambridge paving
- Almeda paving
- Lake Houston Park
- Holcombe reconstruction
- North MacGregor Way construction
Council member Edward Pollard also questioned whether the projects could technically be used for any part of the city.
“The funds have to be used for a mutual purpose, and I’m seeing things here like Almeda paving [and] Hermann Park. What do these have to do with The Woodlands?” he asked Dubowski.
Dubowski said the projects are for areas where people from The Woodlands may visit for work or leisure.
“It’s pretty open-ended,” Pollard said. “As long as both parties agree on the use of the funds, it could be allocated for a project. People from The Woodlands can drive anywhere in the city of Houston or go to any place.”
What officials are saying
Council member Joe Panzarella also said some of those projects were in District C, which would help fund infrastructure in the district.
“It feels like we’re leaving infrastructure dollars here on the table because we’re getting a 50% discount,” Panzarella said.
Brad Bailey, chairman of The Woodlands’ board of directors, said the proposed amendment is a "win-win" because the Township would be able to keep its sales tax within the Township.
“No requests have been made since 2018,” he said, noting that the last project was completed in 2020. “It’s not like The Woodlands is being a bad neighbor and saying, ‘Absolutely no, stop this.’ We’ve had nothing presented to us since the Hermann Park Clubhouse golf course.”
Pollard questioned how the proposed changes could benefit the city in the long run.
“It’s a short-term win [for Houston],” Bailey said. “The bigger deal is the sales tax opportunity that we [The Woodlands] have.”
One more thing
Houston City Council will officially vote on the changes at its Sept. 2 meeting. The Woodlands officials already voted on the agreement and passed it unanimously.
