The Woodlands Township is taking additional steps in the planning process to become a city.

During a Nov. 30 meeting, the township board of directors voted to reinstate a $2.5 million incorporation reserve and discussed the possibility of commissioning a new updated study on the topic. Economic & Planning Systems Inc. completed a study on incorporation in 2012, and township staff completed two brief updates to it this year. However, board members believe up-to-date information is needed before moving forward with additional planning initiatives.

“Over the past five-plus years, countless changes have occurred in our dynamic community,” township Director Ann Snyder said. “We, the township board members, must ensure the information that we have is the most updated to ensure for solid governing decisions.”

Incorporation planning

The $2.5 million set aside in the newly approved incorporation reserve could be used in the future for planning purposes, such as a new study, or for offsetting costs related to incorporation, board Chairman Gordy Bunch said.

“I think the board is aligned that planning and communicating to the public what is real around a very sensitive subject is prudent,” Bunch said. “I think setting aside funds, knowing they’re there to engage in [studies] when the time comes, is appropriate.”

If incorporation never materializes, Bunch said the fund could be used to pay down debt instead. 

During the Nov. 30 meeting, Snyder proposed a study to determine the fiscal effect of incorporation in 2017 after the conclusion of the state legislative session. However, the board tabled the discussion as some board members felt the study should be broader.

“There’s undoubtedly public interest in this topic and—with the passage of time—studies and analysis go stale,” township Director John McMullan said. “I think it would be instructive for this board and the public to know what changes when we become a city. I think our residents want to know, if we become a city, what suite of benefits do you get?”

Bunch said one of the fair criticisms of the 2012 EPS study is it only had one outcome. He suggested the board take part in a special workshop meeting in January to focus solely on incorporation matters.

“One of the things that really confounded me when I read the 2012 report was the lack of creative thinking that went into it,” Bunch said. “I do think having that workshop would allow those thoughts to come forward.”

The board also discussed researching prior to the January workshop which consultants or organizations may be best suited to conduct a new incorporation study. McMullan suggested the board should consider issuing a request for qualifications to a number of consultants, but added he would be interested to see what organizations, such as the Baker Institute at Rice University or the Bush School of Government and Public Service at Texas A&M University, may be able to provide.

“This is not the place where we should be pennywise and foolish,” McMullan said. “Let’s try and find out what would change if we become a city.”

The board has been researching the incorporation process throughout 2016. In September, the township hired two law firms to begin working on legislative initiatives. One of the firms has experience working with another special-purpose district, and the other firm specializes in municipal law. 

“There are things that we need to legally get done to even have a concept of incorporation,” Bunch said. “We’re at the very infancy stage of beginning a legislative initiative.”

The township’s 85th legislative agenda for the upcoming session that begins Jan. 10 is still being developed by the board of directors, Snyder said. However, additional work that may need to be done regarding incorporation preparation includes setting up a reserve fund to offset future costs, performing a tax rate study and public involvement with residents, Bunch said.

As of press time Dec. 1, no legislation related to incorporation had been filed by state Rep. Mark Keough, R-The Woodlands, or state Sen. Brandon Creighton, R-Conroe.    

Keough’s chief of staff Jason Millsaps said his office had not been working on legislation on behalf of the township because new board members were seated Nov. 30. However, Millsaps said Keough expects to be brought in to discussions with the township on any specifics in early December.

Cost to incorporate

The fiscal effects of incorporation have been the catalyst for much of the questions and debate surrounding the topic.

The 2012 EPS study—which several township directors believe is flawed in regard to the tax rate projection—stated the township’s property tax rate could increase by 70 percent to 55 cents per $100 valuation at the time of incorporation.

“There’s never been a tax impact study, so even a claim of a 70 percent increase is factually inaccurate,” Bunch said. 

However, an updated version of the study completed in April by township staff projected that incorporation may cause the rate to increase to 34.22 cents instead.

It is assumed the tax rate would increase due to the additional services the new city may be required take on at the time of incorporation. However, it is still unclear what services The Woodlands would be required to provide if it became a city. Examples include law enforcement; the cost of roadway operations, maintenance, signals and signage; and municipal court services, according to the 2012 study. Updated township research states the new city could consider contracts with the county for these services instead. 

“I want to know, do we have to have The Woodlands Police Department, or do we have to provide public safety,” township Director Laura Fillault said. “I want to understand what the minimum requirements are to become incorporated ... what is required by state law?”

The average home in The Woodlands is valued at approximately $440,000. Under the township’s existing property tax rate of 23 cents, the average homeowner would pay $1,051 in taxes this year to the township, according to township documents. If the rate were to increase to 34.22 cents, a homeowner would pay nearly $493 more in township taxes, according to the township’s updated research.

The difference in the tax rate projection between the two studies could be due to a number of changes, according to the updated 2016 data. For example, the township’s property tax base increased from $12.5 billion to $19.5 billion between 2011 and 2016.

Additionally, the 2012 study was completed when the township’s tax rate was 32.5 cents, compared to this year’s rate of 23 cents. Staff also said the analysis was not intended to be a tax rate study, and an update should be done prior to presenting more information to residents.

Incorporation basics

The Woodlands Township is a special-purpose district that was created by the Texas Legislature in 2007 through legislation, a referendum and regional participation agreements with the cities of Houston and Conroe. These agreements also released The Woodlands from potential annexation by Houston and Conroe until 2057 in exchange for a portion of the community’s sales tax revenue, according to township officials.

Furthermore, the legislation gave The Woodlands the option to choose its future form of governance—including the possibility of incorporating into a city—before the 2057 deadline.

If The Woodlands does not incorporate by 2057, Conroe and Houston would have the ability to annex portions of the community since it sits in the extraterritorial jurisdiction of both cities, according to the regional participation agreements.

Voters in The Woodlands will have the final say over whether to incorporate if the board of directors calls for an election in the future. The board must pass a majority vote first to place the decision on a ballot. However, there is no timeline for an incorporation vote at this time.

“As the township has always done, we will seek feedback from residents through public surveys, public forums and public comments,” Snyder said. “The residents are the decision-makers in this community. The township board members are simply their public servants.”