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Houston Transfers Land Jurisdiction to Waller

Over the last three years, the City of Waller has negotiated with the City of Houston to receive a transfer of  2,278 acres into the Waller extraterritorial  jurisdiction.   This action was important to protect Waller’s sales tax potential as we grow in the future.

A Texas city’s extra-territorial jurisdiction (ETJ) is the area outside its city limits where additional limited powers are exercised by the city.  The additional power in this area includes  authority over land subdivisions, given to the city because of the assumption that the city limits will expand into the ETJ in the future. City ordinances do not apply, and building permits are not required, except for those pertaining to health and safety such as fire code.   For a general law city such as Waller (under 5000 population), a city is allowed one-half mile outside its city limits as the ETJ, unless  that conflicts with another city’s ETJ. 

Over the last 40 years or so, the ability for Waller to expand its own ETJ has been directly limited by the City of Houston (COH).   In the 1960s and 1970s when annexation law allowed it, the City of Houston greatly expanded its jurisdiction by running 10-foot annexation strips up the county roads in northwest Harris County. Because of its size, Texas law allow the COH ETJ to extended 5 miles beyond its annexation strip.    The result was that City of Houston ETJ totally surrounded Waller, went over to the Prairie View city limits, and even included the Field Store area.  Since that time Waller has not been able to expand its ETJ by simply extending its city limits  Negotiation with the City of Houston was required to transfer ETJ to Waller. 

The concept of ETJ is in the law to allow cities to grow normally, have some control over the area it expects to grow into, and avoid being hemmed in by other cities.  Houston expanded its ETJ to avoid problems encountered by other large cities where the central city has been hemmed in by suburban cities.  In other areas where this has occurred, the central city still had to provide services for employment,  streets, government buildings, etc, that service the entire region, while being unable to access the tax base and retail sales tax necessary to sustain those services in the outlying areas. 

This law that was very generous for large Texas cities was changed in the late 1990s to ensure that the city must provide utilities within a few years for the area that was annexed.    This has inhibited additional growth of the Houston city limits and ETJ.  In response, COH has used the technique of “limited purpose annexation” in recent years.  This involves a “strategic partnership agreement” that secures the cooperation of a MUD district within the ETJ.   The MUD district agrees to allow COH to annex only the retail portion of the district for the “limited purpose” of collecting its 1% retail sales tax, not to provide any city services.  In return the COH gives one-half of that sales tax to the MUD.

When done in an area of the COH ETJ that is not near any other city eligible to collect sales tax, it is a win-win for the COH and the MUD.   If this is done near another city, however, it can significantly affect that city’s retail sales tax in a very negative way.   The danger for Waller was that, as growth came our way, there could be large-scale retail operations just outside our city limits that would drain sales tax from Waller and send it to COH instead.  

The Waller EDC took the lead role with support of the council and then-mayor Dwayne Hajek and approached the City of Houston with a request to transfer ETJ to the City of Waller. The City had a developer who wanted to put retail near Waller (on a tract spanning both Waller and COH ETJ) and wanted City of Waller utilities.   The Waller EDC knew that if that property remained in COH ETJ, a limited purpose annexation would result in significant retail adjacent to, but outside, Waller jurisdiction.  This would result in not only a severe drain on Waller’s future retail sales tax potential, but could also draw away current sales tax revenues.  Other landowners were interested in developing in the future, and expressed a preference to work with Waller instead of COH. 

COH recognized that, with the current annexation laws, it would not likely annex land close to Waller because it cannot provide utilities as now required by law.  COH agreed to consider transfer of ETJ land if the land was adjacent to current Waller ETJ and the landowner requested the transfer in writing to both COH and Waller.   COH also asked Waller to coordinate its subdivision requirements for the transferred land with the COH Mobility Plan.  

Working with landowner requests, the Waller EDC and the City of Waller have now succeeded in two large transfers of land comprised of 8 tracts. Prior to these transfers, Waller’s city limits and ETJ consisted of 3125 acres.    In October of 2007, Waller received 973 acres in four tracts on the east, southwest, and north sides of town.  In March of 2010, Waller received a transfer of 1305 acres in four tracts on the west side of town.  This is a total increase of 2278 acres, or 73% in the last 3 years. 

This expansion of Waller ETJ positions the city to be able to grow normally and have better control over its own destiny.  It creates a larger buffer area to accommodate significant retail developments that will provide sales tax to provide for city services and help keep property taxes lower.   It also positions the city to upgrade, expand, and renew utility capacity as new developments pay for expansions of the system.  COH has proven to be a helpful partner in working with the City of Waller to expand our boundaries, thus enabling Waller to maintain more control over its own growth and vitality. 

The City of Waller will continue to work toward those goals.  If current landowners who are adjacent to the Waller ETJ desire to be in Waller ETJ rather than COH, they are invited to contact Waller City Hall (936-372-3880) or the Waller EDC (936-931-5151) to discuss the process. 

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