January 31, 2022

How Counties Can Manage Shifting Responsibilities for Growth and Services

In 2019, Texas lawmakers restricted cities’ power to annex territory outside their boundaries without the approval of landowners in those areas. That altered the relationship between cities and counties — and shifted more responsibilities to counties.

Counties increasingly are expected to keep up with the road, drainage and public safety needs of new developments – even when they are located in cities’ extraterritorial jurisdictions. To handle these expectations, counties need to understand and prepare for growing demands on their resources.

WHAT’S THE BACKGROUND?

For decades, Texas cities had broad annexation power, and they used it to control growth, plan for infrastructure expansions and ensure that new developments shared tax burdens. However, the Texas Legislature reined in that authority over several recent sessions.

Cities can only annex areas that are within the extraterritorial jurisdiction (ETJ) outside their municipal boundaries. Under state law, ETJ ranges from a half-mile for cities of fewer than 5,000 inhabitants to 5 miles for the largest cities, those with more than 100,000 inhabitants.

House Bill 347 now requires some form of property-owner approval for most annexations. Annexation is permitted only in the following scenarios:

• All property owners in an area request annexation.
• For an area with fewer than 200 residents, at least 50% of them sign a petition. OR
• For an area with 200+ residents, at least 50% approve annexation through an election.

WHAT DOES THIS MEAN FOR COUNTIES?

The change has substantially slowed the expansion of Texas cities in terms of territory, though the state’s population continues to grow, with people moving in and residents moving around. That means needs for services have not slowed.

Counties face these (and other) ramifications:

• Cities have less incentive to invest in infrastructure improvements in areas that might never contribute to the tax base.
• Residents are more likely to expect the county to provide the kinds of services and improvements that cities would have handled in earlier years.
• County roads can expect significantly more use by residents of new subdivisions in cities’ ETJs, and fire and law enforcement staffs could be overextended.

WHAT SHOULD COUNTIES DO NOW?

As a first step in addressing growth, counties would benefit from rethinking their approach to roads in the ETJ. The current model places the maintenance cost and responsibility for denser suburban or urban developments solely on the county taxpayers. While growth brings benefits including new homes and jobs, that also puts a substantial tax burden on county residents. Should they bear the cost of the state’s rapid growth outside of cities in the long run?

Counties should consider these questions:

• What is the role of the county road network? It was designed to transport people from rural areas to other areas, rather than to serve suburban and urban-style developments. Allowing developers to dedicate new roads for perpetual county maintenance will require reconsidering the county tax structure.
• What kind of road system should counties focus on? Ideally, counties should maintain a network of arterials, and possibly a few collectors, to promote safe and efficient travel along roads designed primarily to serve as thoroughfares, transporting people from large area to large area, rather than spending tax money on local streets that are designed to service only adjacent landowners.
• Should county taxpayers subsidize roads they’ll rarely use? Roads stretching for miles through new subdivisions are worth millions of dollars, but the roads will need constant maintenance and eventual replacement. In low-density developments with large acreage, a county’s property taxes will most likely never cover the cost to replace an adjacent road. The developer and the landowner benefit more from this arrangement than existing county residents do.
• Who should pay for infrastructure that benefits only a few people? For example, a cul-de-sac street in a county setting could serve largely as a private driveway that shifts the long-term cost from a developer onto county taxpayers.
• What options do counties have? For areas within the ETJ, counties should consider not accepting local roads on plats and designate local roads as private roads dedicated to homeowners’ associations or utility districts. Counties should only accept and maintain county roads that are arterials or are shown on the county thoroughfare plan.

WHAT’S THE LONG-TERM SOLUTION?

Further refinements in the law could help.

For instance, to ensure adequate resources for new developments, annexation could be required for higher-density developments in unincorporated areas at the time of plat approval. This would give landowners/developers both decision-making power and responsibility.

In addition, the state could give counties limited zoning authority to manage growth in areas where they are expected to provide services. Counties could adopt zoning ordinances that would help control density and give county residents a voice in how their communities develop.

How Freese and Nichols Can Help: Please contact Stan Lynch, SWL@freese.com, 817-735-7465