Houston City Council approved a deal on Sept. 2 that will provide the city a total of $50 million over the next four years from The Woodlands Township in exchange for agreeing to not annex the township.
The vote
Houston City Council voted to amend a Regional Participation Agreement between the city and The Woodlands that requires the township to pay one-sixteenth of 1% of its sales tax to a Regional Participation Fund each year. The agreement, which began in 2007, also provided protection from annexation by Houston until 2057.
The amendment ends the annual sales tax payments and the long-term Regional Participation Fund payment structure between Houston and The Woodlands, providing for a total of about $27.4 million in payments from The Woodlands to Houston 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
The $22.6 million in the RPF will go to the city’s general fund, closing its gap of $25 million down to $3 million.
The fund had previously been used for regional public works projects "of mutual benefit" in exchange for annexation being off the table until 2057.
Since it was officially approved, the agreement now eliminates the possibility of future annexation by the city of Houston.
What they're saying
Brad Bailey, chair of The Woodlands Township board of directors, extended his thanks to the city after the decision.
“I would like to thank Mayor [John] Whitmire and Houston City Council for their willingness to work with us to reach an agreement that recognizes the needs and priorities of both Houston and The Woodlands," he said. "I also want to thank my fellow township board members and township staff for their hard work and commitment throughout this process. Our job as township board members has always been simple: protect The Woodlands and build a stronger future for the next generation. This agreement does both. We protected our community from future annexation by Houston, secured greater certainty for our future and kept millions more of our sales tax dollars right here at home. This is a huge win for The Woodlands and a day worth celebrating.”
Board member Cindy Heiser also provided a statement to Community Impact following the decision.
“We consider this agreement to be mutually beneficial to Houston and The Woodlands," she said. "The savings for our taxpayers will be significant and our guarantee to be free of annexation by Houston in perpetuity is one of the best things we can do for our residents."
Those opposed
The RPF had not been used since 2018, and no projects, which require approval from The Woodlands, have been suggested since then.
District C council member Joe Panzarella, who cast the lone “no” vote, said he was unaware of the fund until two weeks ago, when the amendment was added to the agenda. District K council member Martha Castex-Tatum said similarly that she was unaware of the fund.
“This is a fund that had previously invested in six different council districts,” he said. “It was a fund that was dedicated to infrastructure and parks. I was not necessarily opposed to the agreement, but opposed to unrestricting it and allowing it to go to anything outside of infrastructure.”
Whitmire said most council members were unaware of the RPF because it had not been placed on the agenda for years.
Houston City Controller Chris Hollins said he believed the amendment was a “bad deal.”
“It's $27 million in new money that we're throwing away in exchange for giving up this revenue stream,” Hollins said at the meeting before the vote. “This mayor has criticized past administrations for relying on one-time fixes like asset sales to solve problems that don't actually solve all the problems. That's exactly what this is.”
Hollins estimated that the fund, depending on sales tax, could generate a total between $100 million and $200 million if it were kept as is, through 2057.
Some background
Whitmire added that Bailey is up for election to the state legislature, and the city has to be smart about using its relationships to advance the city’s goals.
“It’s all about timing,” he said. “The legislature meets in January. I promise you it was a smart decision to get that $50 million today and not risk getting the [state] Legislature involved.”
The $50 million will go towards operating 24 departments and 23,000 employees, Whitmire said.
One more thing
While the agreement states Houston will not annex The Woodlands, which will remain in its extraterritorial jurisdiction, it does spell out that should anything in the agreement change or other circumstances arise, the city would have to obtain voter approval from The Woodlands.
