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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB5437

Regular Session

Relating to the validation of the creation of and certain acts of the Austin County Municipal Utility District No. 1.

Government Affairs & Regulatory Compliance Analysis

HB5437: Government Affairs Overview

HB5437 retroactively validates the legal existence, board actions, and bond authorizations of Austin County Municipal Utility District No. 1, eliminating legal risks regarding its formation. Stakeholders with assets, contracts, or development projects within the District must now treat its taxing and bonding authority as statutorily absolute and legally binding.

Rep. Stan Kitzman·House Bill·Regular Session

Low
Low Cost
Effective:2025-06-20
Business Impact

Who HB5437 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: low

Standard regulatory changes (effective 2025-06-20). Review during normal business planning.

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Water

Affected business types:

  • Water utilities
  • Wastewater treatment facilities
  • Municipal water districts
  • Agricultural water users
View all water legislation

Key Operational Considerations

  • 1Bond Covenants: Treat all bond authorizations resulting from the November 2, 2021 election as legally binding obligations.

Estimated Cost Impact

lowMinimal cost impact anticipated.

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HB5437
Relating to the validation of the creation of and certain acts of the Austin County Municipal Utility District No. 1.
Low Urgency
Heavily Contested
House Vote104 - 44
YEA
NAY
70% in favor148 voting
Senate Vote27 - 4
YEA
87% in favor31 voting
48
Total Opposition Votes
Cost Impact
Low
Effective
2025-06-20
Primary Author: Rep. Stan Kitzman
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Immediate effect).
  • Compliance Deadline: Immediate. The law is retroactive; all prior acts of the District are deemed valid as of the date they occurred.
  • Agency Rulemaking: None. This is a self-executing legislative validation; no TCEQ rulemaking will follow.

Immediate Action Plan

  • Verify Geography: Confirm if your real estate assets or development projects fall within the boundaries of Austin County MUD No. 1.
  • Docket Search: Conduct an immediate litigation search in Austin County and federal courts to ensure no pending suits trigger the Section 1(b) exclusion.
  • Greenlight Development: Proceed with infrastructure development and bond marketing, as the risk of "quo warranto" formation challenges is eliminated.
  • Update Tax Liabilities: Adjust property tax liability forecasts to reflect the confirmed taxing authority of the District.

Operational Changes Required

Contracts

  • Validation of Prior Acts: No amendments are required for existing contracts. The law validates all Master Service Agreements (MSAs), construction contracts, and reimbursement agreements executed by the temporary directors over the last five years.
  • Bond Covenants: Treat all bond authorizations resulting from the November 2, 2021 election as legally binding obligations.

Hiring/Training

  • Title & Tax Officers: Staff responsible for title commitments and tax assessments must update internal geographic databases. Remove any "provisional" flags associated with this District; policies may be underwritten without exception regarding the District's creation.

Reporting & Record-Keeping

  • Corporate Records: Update due diligence files for land holdings within the District. Replace "pending creation" documentation with a citation to HB5437 as definitive proof of the District’s status as a political subdivision.
  • Election Verification: You are no longer required to retain independent verification of the November 2, 2021 election procedures; the statute creates a legal presumption of validity for those results.

Fees & Costs

  • Tax Accruals: No new regulatory fees are introduced. However, accounting departments for landowners must accrue for ad valorem taxes based on the validated November 2, 2021 authorization.

Strategic Ambiguities & Considerations

  • Pending Litigation Exception: The validation is not absolute. Under Section 1(b), the Act does not validate any act or proceeding currently subject to litigation filed prior to June 20, 2025. If your organization is currently suing the District, this law does not moot your claim. If you are not in litigation, you are now statutorily barred from challenging these past acts.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 14, 2025
Passed House
May 7, 2025
Passed Senate
May 28, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsSpecial Districts & AuthoritiesSpecial Districts & Authorities--municipal Utility DistrictsSpecial Districts & Authorities--water & UtilityAustin County Municipal Utility District No. 1
03

House Authors

Rep. Stan KitzmanRepublican · Primary Author

Senate Sponsor

Sen. Lois KolkhorstRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about HB5437

Q

What does Texas HB5437 do?

HB5437 retroactively validates the legal existence, board actions, and bond authorizations of Austin County Municipal Utility District No. 1, eliminating legal risks regarding its formation. Stakeholders with assets, contracts, or development projects within the District must now treat its taxing and bonding authority as statutorily absolute and legally binding.

Q

Who authored HB5437?

HB5437 was authored by Texas Representative Stan Kitzman during the Regular Session.

Q

When was HB5437 signed into law?

HB5437 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

How significant are the changes in HB5437?

The regulatory priority for HB5437 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB5437?

The cost impact of HB5437 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB5437 address?

HB5437 addresses topics including special districts & authorities, special districts & authorities--municipal utility districts, special districts & authorities--water & utility and austin county municipal utility district no. 1.

Q

What are the key dates for HB5437?

Key dates for HB5437: Effective date is 2025-06-20. Consult with legal counsel regarding applicability.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026