Relating to the creation of the Travis County Municipal Utility District No. 40; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.
LowStandard timeline
Low Cost
Effective:2025-06-20
Enforcing Agencies
Texas Commission on Environmental Quality (TCEQ) • Travis County Commissioners Court • Municipalities with ETJ/Corporate limits overlapping the District • Texas Transportation Commission (if state road maintenance is involved)
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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. Landowners must petition the TCEQ for the appointment of temporary directors to activate the District's governance structure.
Agency Rulemaking: No new agency rulemaking is required; however, the District must navigate existing TCEQ creation processes. The "regulatory gray zone" exists between the effective date and the finalization of the Municipal Consent Agreement with the local municipality.
Immediate Action Plan
File Petition: Majority landowners must submit the petition for temporary directors to TCEQ immediately.
Secure Insurance: Purchase D&O insurance and surety bonds for the appointed directors.
Draft Reimbursement Agreements: Execute agreements between the developer and the District before breaking ground on any infrastructure.
Initiate Municipal Consent: Begin negotiations with the overlapping municipality to define development standards and annexation timelines.
Schedule Election: Target the May 2026 uniform election date for District confirmation and tax authorization.
Operational Changes Required
Contracts
Reimbursement Agreements: Developers must execute formal reimbursement agreements with the District *prior* to infrastructure construction to ensure eligibility for future repayment via bond proceeds.
Public Works Contracts: All construction contracts issued by the District must comply with Texas Government Code Chapter 2258 (Prevailing Wage Rates) and require statutory performance and payment bonds.
Vendor Indemnification: Standard vendor contracts must be revised to remove broad indemnification clauses, as the District, a political subdivision, holds governmental immunity.
Hiring/Training
Board Appointments: Five temporary directors must be identified and appointed. These individuals must be qualified (residents or landowners) and require immediate Directors & Officers (D&O) liability insurance and surety bonds.
Conflict of Interest: Directors and vendors must be trained on filing Form CIQ (Conflict of Interest Questionnaire) and Form CIS (Conflicts Disclosure Statement) under Local Government Code Chapter 176.
Reporting & Record-Keeping
Governance Records: The District must immediately commence record-keeping (agendas, minutes, voting records) in strict compliance with the Texas Open Meetings Act and Public Information Act.
TCEQ Filings: A petition requesting the appointment of temporary directors must be filed with the TCEQ immediately.
Election Orders: The Board must issue orders for the confirmation election, director election, and tax authorization election, aligning with statutory Uniform Election Dates.
Fees & Costs
Election Costs: The District must budget for the administration of the confirmation election (ballots, polling locations, notices).
Bond Issuance Costs: Legal and financial advisory fees will be incurred to structure bond issuances.
Ad Valorem Taxes: Upon voter approval, the District will have unlimited authority to set tax rates for water/sewer debt service, and capped authority (max $0.25/$100 valuation implied by similar statutes, though strictly capped at 25% of assessed value for road bonds) for road projects.
Strategic Ambiguities & Considerations
Municipal Consent vs. Statutory Power: While the state law grants eminent domain and road powers, the local municipality (likely Austin or Creedmoor) may restrict these powers via the Municipal Consent Agreement. Developers must not assume full statutory powers until this agreement is finalized.
Road Jurisdiction: Section 8014A.0304 mandates compliance with municipal or county standards, but also requires TxDOT approval if roads connect to state highways (FM 1327/Hwy 183). The hierarchy of design approval between the City, County, and TxDOT is not explicitly defined and must be resolved in the engineering phase to prevent redesigns.
Assessed Value Cap: Road bonds are capped at 25% of the *assessed value* of real property at the time of issuance. If property valuations lag behind construction costs, the District will face a funding gap that the law does not provide a mechanism to bridge.
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The bill author has informed the committee of the need for a municipal utility district to be created in Travis County for the benefit of certain undeveloped land. H.B. 5650 seeks to provide for the creation of the Travis County Municipal Utility District No. 40.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 5650 amends the Special District Local Laws Code to create the Travis County Municipal Utility District No. 40, subject to applicable municipal consent and voter approval at a confirmation election. The bill, among other provisions, grants the district the power to undertake certain road projects. The bill authorizes the district, subject to certain requirements, to issue obligations and impose property, operation and maintenance, and contract taxes. The bill expressly prohibits the district from exercising the power of eminent domain if the bill does not receive a two-thirds vote of all the members elected to each house and establishes that this provision is not intended to be an expression of a legislative interpretation of the requirements of Section 17(c), Article I, Texas Constitution.
H.B. 5650 establishes that all applicable requirements relating to the following have been fulfilled and accomplished with respect to the bill:
·the legal notice of intention to introduce;
·governor action;
·Texas Commission on Environmental Quality recommendations; and
·the state constitution and laws and legislative rules and procedures.
EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
Honorable Gary Gates, Chair, House Committee on Land & Resource Management
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB5650 by Flores (Relating to the creation of the Travis County Municipal Utility District No. 40; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), As Introduced
No significant fiscal implication to the State is anticipated.
It is assumed that any costs associated with the bill could be absorbed using existing resources.
Local Government Impact
The fiscal implications of the bill to the district cannot be determined due to the circumstances relating to the district's exercise of eminent domain power, issuance of bonds, or imposition of assessments, fees, and taxes being unknown. No fiscal implication to other units of local government is anticipated.
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Related Legislation
Explore more bills from this author and on related topics
HB5650 immediately establishes Travis County Municipal Utility District (MUD) No. 40 as a political subdivision with the power to impose taxes, issue bonds, and exercise eminent domain. While localized to specific tracts near FM 1327 and US Hwy 183, this legislation triggers immediate governance obligations for district landowners and creates a new public procurement entity for engineering, legal, and construction firms.
Q
Who authored HB5650?
HB5650 was authored by Texas Representative Maria Flores during the Regular Session.
Q
When was HB5650 signed into law?
HB5650 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB5650?
HB5650 is enforced by Texas Commission on Environmental Quality (TCEQ), Travis County Commissioners Court, Municipalities with ETJ/Corporate limits overlapping the District and Texas Transportation Commission (if state road maintenance is involved).
Q
How urgent is compliance with HB5650?
The compliance urgency for HB5650 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB5650?
The cost impact of HB5650 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB5650 address?
HB5650 addresses topics including travis county municipal utility district no. 40, special districts & authorities, special districts & authorities--municipal utility districts and special districts & authorities--water & utility.
Legislative data provided by LegiScanLast updated: November 25, 2025
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