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TexasHB 565489th Legislature Regular SessionHouseWALLET

Relating to the creation of the Montgomery County Municipal Utility District No. 263; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.

Sponsored By: Lois Kolkhorst (Republican), Will Metcalf

Became Law

MONTGOMERY COUNTY MUNICIPAL UTILITY DISTRICT NO. 263Special Districts & Authorities--Municipal Utility DistrictsSpecial Districts & Authorities--Water & Utility

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 3 benefits, 1 costs, 1 mixed.

District property owners face voter-approved taxes

Beginning January 1, 2026, the district can tax property for operations and maintenance after voter approval. The board sets the rate but cannot exceed the rate voters approved. A separate tax can pay contract costs after a majority of voters voting approve the contract provisions. That contract can let the board make amendments without another election. These taxes add costs for taxable property owners, but the law sets no specific rates or household amounts.

District borrowing brings taxes and safeguards

Beginning January 1, 2026, district bonds and other debt can use property taxes, impact fees, revenue, contract payments, grants, or district money. Voters must approve property taxes and bonds backed by them; bonds using non-property-tax revenue or qualifying contract payments need no election. Property-tax-backed road bonds need approval from two-thirds of voters voting at an election held for that purpose. Total property-tax-backed road debt cannot exceed 25% of the district’s assessed real property value, measured when debt is issued. Bonds backed partly or fully by property taxes require an annual tax until fully paid, with no rate or amount limit.

District can build roads and drainage

Beginning January 1, 2026, the district can design, acquire, build, finance, improve, operate, and maintain roads and related storm drainage. It must follow municipal consent terms and applicable local construction, zoning, subdivision, and other rules. Roads can transfer to Texas, a county, or a city for upkeep, subject to required standards and approvals. The Texas Transportation Commission must approve plans when Texas will operate and maintain a road. The law bars eminent domain if it passed without support from two-thirds of all elected members in each legislative chamber.

Local voters choose utility district leaders

Beginning January 1, 2026, owners holding most of the district’s assessed real property value can petition for five temporary directors. The Texas Commission on Environmental Quality appoints them; required municipal consent must come before the confirmation election. Temporary directors must hold that election to confirm creation and elect five directors serving staggered four-year terms. Temporary terms end when permanent directors are elected or on January 1, 2030, whichever comes first. Successor temporary directors can serve until permanent directors are elected or four years after their appointment, whichever comes first.

New utility district for Montgomery County

Beginning January 1, 2026, the law creates Montgomery County Municipal Utility District No. 263, covering about 87.24 acres. The district has powers to provide water, wastewater, drainage, and related infrastructure. Minor errors in the land description do not invalidate the district, its bonds, its property tax powers, or its operations. Any district created by legally dividing this district receives the same powers and duties.

Sponsors & Cosponsors

Sponsors

  • Lois Kolkhorst

    Republican • Senate

  • Will Metcalf

    House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 161 • No: 0

Senate vote • 5/28/2025

Record vote

Yes: 0 • No: 0

Senate vote • 5/28/2025

Record vote

Yes: 0 • No: 0

House vote • 5/7/2025

Record vote

Yes: 148 • No: 0

Senate vote • Unknown

Committee vote: Local Government

Yes: 6 • No: 0 • Other: 1

House vote • Unknown

Committee vote: Land & Resource Management

Yes: 7 • No: 0

Actions Timeline

  1. Effective on 1/1/26

    6/20/2025House

  2. Filed without the Governor's signature

    6/20/2025House

  3. Sent to the Governor

    5/31/2025House

  4. Signed in the Senate

    5/31/2025Senate

  5. Signed in the House

    5/30/2025House

  6. Reported enrolled

    5/30/2025House

  7. Senate passage reported

    5/29/2025House

  8. Record vote

    5/28/2025Senate

  9. Passed

    5/28/2025Senate

  10. Read 3rd time

    5/28/2025Senate

  11. Record vote

    5/28/2025Senate

  12. Three day rule suspended

    5/28/2025Senate

  13. Vote recorded in Journal

    5/28/2025Senate

  14. Read 2nd time & passed to 3rd reading

    5/28/2025Senate

  15. Laid before the Senate

    5/28/2025Senate

  16. Placed on local & uncontested calendar

    5/28/2025Senate

  17. Committee report printed and distributed

    5/22/2025Senate

  18. Recommended for local & uncontested calendar

    5/22/2025Senate

  19. Reported favorably w/o amendments

    5/22/2025Senate

  20. Vote taken in committee

    5/22/2025Senate

  21. Considered in public hearing

    5/22/2025Senate

  22. Scheduled for public hearing on . . .

    5/22/2025Senate

  23. Posting rule suspended

    5/22/2025Senate

  24. Referred to Local Government

    5/21/2025Senate

  25. Read first time

    5/21/2025Senate

Bill Text

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