On May 19, the Texas Legislature passed Senate Bill 2038. The bill allows property owners of land inside a city’s extraterritorial jurisdiction to petition to leave or disannex from a city.
The ETJ is a designated buffer area just outside the city limits, according to the city. Properties within the ETJ may receive certain services from the city like water and electricity, and must follow certain city ordinances, but do not pay city taxes or vote in city elections. ETJ is designated to cities by the Texas Local Government Code to help define potential growth and future service boundaries.
Rapidly growing cities like Georgetown — which is gathering more land into its ETJ as new developments apply to receive certain city services like water and trash — are seeing the real time impacts of the bill. Since going into effect September 1, over 80 acres of land have already left Georgetown’s ETJ.
To Georgetown Mayor Josh Schroeder and City Manager David Morgan, this new bill is detrimental to the efforts the city has put toward managing and controlling area growth.
“We have a lot of people concerned about how fast this community is growing and the way it's growing,” City Manager David Morgan said. “And so our concern is that a lot of the things that are going to be happening over the next few years won't be a decision made at our city council.”
Typically, development projects located in the ETJ face some development restrictions. Developers may also have to negotiate with the city for final approval, offering up development details that better align with the city’s overall visions in return for receiving some city services. By leaving the ETJ, developers can avoid many of the restrictions put in place by the city if they seek utilities elsewhere.
Mr. Schroeder said Georgetown elected officials and city staff are “at [their] wits end” and have no ability to stop sections of the ETJ petitioning for disannexation and leaving.
“We want to make it clear that this is not something that council has any discretion over,” Mayor Schroeder told the Sun earlier this fall. “If [developers or residents] submit a 2038 petition, and it meets the requirements of the statute, they are disannexed.”
Residents like Mark Wells — who own property in Georgetown’s ETJ and has neighbors who have left — are left to wonder what will happen on the newly disannexed plot of land next to his now that is not a part of the ETJ.
“One of the motivations for someone like myself to buy property and invest in that kind of a commercial development is it’s inexpensive because it's not in the city limits, it’s not in Austin, it’s not in Round Rock. It’s in the path of development,” he said at the September 26 City Council meeting. “Another motivation is it’s in the ETJ. So you have some assurance that what occurs around you has some level of control, some level of planning, some guidelines that have to be followed, it’s not the wild wild west.
“With this law that’s been passed in the legislature, it seems that we’re going to end up with ETJs that look like Swiss cheese [on the map] before long. How do you possibly invest in an ETJ when you do not know what can happen right next door to you?”
How SB 2038 came to be
Senate Bill 2038 started its journey in the Texas Senate on March 9. It migrated from the Senate to the House on April 27. The Senate and House signed the bill on May 9, and it was signed by Governor Greg Abbott on May 19.
According to Representative Terry Wilson, R- Marble Falls, ETJs were established in the 1960s with the idea that the land in the ETJ and its residents would eventually be annexed into its nearby city.
A 2017 annexation reform bill required cities to get permission from residents in order to annex the land into the ETJ . However, residents who had involuntarily been annexed before this bill passed had no way of leaving, Mr. Wilson said. SB 2038 answers that issue by allowing residents or developers who don’t want to be a part of the ETJ to leave.
Mr. Wilson has represented District 20 — which covers Georgetown, Cedar Park, Leander, Florence and Jarrell, — in the Texas House of Representatives since 2017. Although SB 2038 originated in the Senate, Representative Wilson voted on the item when it came through the House. Mr. Wilson said discussions around this bill were pretty cut and dry, with every Republican and a majority of the Democrats in the House voting in favor of the bill.
“I stay in close communication with all our local governments, especially during legislative session, and if they have concerns about a bill, they normally let me know well in advance so we can work on potential changes,” Mr. Wilson said in a statement to the Sun. “For this particular bill, I had not received any communications from the Williamson County Commissioners, nor had I heard from any other local governments, including the taxpayer funded lobbyists that represent county and city government associations.
“With no opposition or communication, and a solid principle of no taxation without representation behind it, the choice to support was clear.”
He added people living in the ETJ — who are subject to decisions made by city council, but cannot vote for city council members because they don’t pay city taxes— have a right to have decisions about their property made by people who actually represent them, in this case, Williamson County.
Georgetown planning impacts
Since SB 2038 was implemented in September, Mr. Wilson said there has not been time to see the full effects of the bill. He added many of the concerns raised by cities were based on what could happen rather than what has actually taken place.
A few days after the bill had passed in both chambers of the Texas Legislature, city officials began calling Representative Wilson’s office with concerns about ramifications and potential costs of the bill.
“By that point it was already on the Governor’s desk,” he said. “I’m grateful that [Georgetown] Mayor [Josh] Schroeder brought these concerns to us, as it gives us the opportunity to work with our local governments and state agencies to find potential fixes to any unintended consequences in the 89th Legislative Session without violating the principles at the heart of the legislation.”
Georgetown has continued working with developers who want to be a part of the city’s ETJ. However, Mr. Schroeder said the city has already encountered developers who do not want to work with the city and prefer to break away from the city and possible city services.
As an alternative, developers can apply to the Texas Commission for Environmental Quality for things like wastewater permits to provide their own services to the area. The TCEQ is the environmental agency for the state and “strives to protect [the] state’s public health and natural resources consistent with sustainable economic development.”
Mr. Schroeder pointed to a mobile home development that is looking at a southeastern portion of Georgetown’s former ETJ. He said the city was not aware of the development and found out about it through a wastewater permit filed with TCEQ. The 60-acre project would have space for 2,000 mobile home units, and would not receive city waste water or police service.
“The developers' argument is that once they have disannexed from the ETJ, we no longer have standing as the city to make that argument that we are the regional wastewater [provider],” Mr. Schroeder said. “The efficacy of our objection at the TCEQ is diluted because [the land is] now outside of our ETJ. Now, we don't want to concede that point. But in practice that is probably how TCEQ is going to treat it.”
Victoria Cann, media specialist for TCEQ, said in an email “applicants seeking to authorize a new domestic wastewater treatment facility must evaluate regionalization for the proposed wastewater system. This includes requesting service from existing systems within three miles of the proposed facility.”
According to TCEQ’s Regionalization Guidance Document, wastewater regionalization is a consolidation of multiple service areas — like subdivisions — into a regional service facility or collection that serves a large portion of the population over a large geographic area.
Because the properties requesting services are no longer a part of the ETJ, they need a permit discharge for wastewater usage. Ms. Cann said regardless of whether a facility is located in a city’s ETJ, discharge permits are required if a facility intends to discharge into or adjacent to water in the state.
Still, Assistant City Manager Nick Woolery told Georgetown City Council on October 8 that SB 2038 is making it difficult for the city to plan for future city developments like wastewater treatment plants. The bill creates uncertainty with the city’s wastewater master plan, because city staff do not know when or where to build additional wastewater treatment plants and how large to make them, he said.
This will affect the number of wastewater package plants used by developers as an alternative to city services and, in turn, creates uncertainty with the city’s wastewater master plan.
City efforts
Through a wrinkle in SB 2038, the city can name a portion of the ETJ an industrial district. If the city designates an industrial district in the ETJ, that portion of the ETJ cannot disannex. The designation of an industrial district means the use of the land is currently being used or could be used in the future for industrial purposes.
Georgetown City Council began to designate four portions of the ETJ as industrial districts during their August 8 meeting. However, the city stopped pursuing the designation of these areas as industrial districts after the first city council reading. The official statement from the city said the items had been removed from city council agendas and there was no estimated time on when they would return.
“In the process of placing the item on the agenda, the city was made aware of a request to the Texas Attorney General to issue guidance to cities regarding the designation of industrial districts within the ETJ,” city spokesperson Aly Van Dyke previously told the Sun in an email. “City Council may use this guidance and other factors to determine if and how to proceed. As drafted, the city believes the proposed industrial district designations are in line with state law, but will wait on further guidance before deciding whether or not to proceed.”
For now, Mr. Morgan said the city is working on a Geographic Information System for the city website so residents can see for themselves which sections of the ETJ have been disannexed. Even if the city can’t vote down a valid petition, they continue to put them on city council agendas.
“We are tracking all of these, and I think the reason why these are on the agenda is so we have an official record and can go back for years and look back at who has petitioned to be outside of the ETJ,” Mr. Morgan said at a September 26 City Council meeting. “Because this is obviously a permanent thing until requested otherwise, until the law changes, if it ever does. So we just want to make sure there’s an official record for everyone to keep track of.”
Additionally, the city plans to try to work with developers so new ETJ additions like Parkside Peninsula can be incorporated into the city and receive city services.
Mr. Schroeder urged residents to speak to their state representatives if they are concerned about how the bill will impact local growth and development in the area.
“If the community feels strongly about this and feels strongly about growth and the type of growth and the speed and the pace of growth, they need to go address the folks who have the ability to actually do something,” he said