HB5651

Regular Session

Relating to the creation of the Montgomery County Water Control and Improvement District No. 7; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.

LowStandard timeline

Medium Cost

Effective:2025-09-01

Enforcing Agencies

Texas Commission on Environmental Quality (TCEQ) • Montgomery County Water Control and Improvement District No. 7 Board of Directors • Texas Transportation Commission (regarding state-maintained road standards)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025.
Compliance Deadline: Landowners must file a petition for the appointment of temporary directors with the TCEQ on or immediately after September 1, 2025.
Agency Rulemaking: The TCEQ will not issue new general rules, but must administratively process the petition to appoint the initial Board of Directors (estimated Q4 2025).

Immediate Action Plan

Secure Land Rights: Immediately negotiate all necessary rights-of-way; the inability to condemn land is your primary operational risk.
Draft Petition: Prepare the petition for temporary directors now for filing on September 1, 2025.
Municipal Consent: Initiate discussions with any overlapping municipality to secure the required consent ordinance/resolution prior to the confirmation election.
Update Financial Models: Adjust project pro formas to reflect the 25% cap on road bond reimbursement.

Operational Changes Required

Contracts

Easement Agreements: You must secure voluntary easements for all water, sewer, and road infrastructure immediately. You cannot rely on condemnation clauses; revise land acquisition contracts to reflect this lack of leverage.
Reimbursement Agreements: Developers must draft agreements with the District to define how infrastructure costs will be reimbursed via bond proceeds.
Construction Contracts: Contracts must stipulate compliance with prevailing wage statutes and public bidding requirements under the Texas Water Code once the District is active.

Hiring/Training

Governance: Developers must identify five qualified individuals to serve as temporary directors and include their names in the TCEQ petition.
Professional Services: Retain bond counsel and a financial advisor specializing in special districts to structure the initial bond election and tax rate proposals.

Reporting & Record-Keeping

TCEQ Petition: Prepare a petition requesting the appointment of temporary directors. This must be signed by owners of a majority of the assessed value of real property in the District.
Road Standards: Maintain engineering records proving road projects meet Montgomery County or Texas Transportation Commission standards to ensure future conveyance and liability transfer.

Fees & Costs

New Tax Liability: Update pro formas to account for future ad valorem taxes (M&O and Debt Service) and "Contract Taxes" authorized by Section 9094.0403.
Impact Fees: Anticipate the imposition of impact fees under Local Government Code Chapter 395 to fund capital improvements; these must be factored into lot pricing.
Bond Cap: Road bonds are capped at 25% of the assessed value of real property; costs exceeding this must be covered by developer equity without reimbursement.

Strategic Ambiguities & Considerations

"Contract Tax" Scope: The legislation authorizes taxes to fund "contract payments" generally. The specific scope of services or assets funded via this mechanism (versus standard bonds) is undefined and will depend on the Board's interpretation and Attorney General review.
Interim Road Liability: The bill allows conveyance of roads to the state or county but does not define the liability window between construction completion and formal acceptance. Ensure insurance policies cover this "regulatory gray zone."

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsMontgomery County Special Districts & Authorities Special Districts & Authorities--water & Utility Special Districts & Authorities--water Control Improve Dist.Montgomery County Water Control and Improvement District No. 7

Official Analysis

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BILL ANALYSIS

H.B. 5651

By: Metcalf

Natural Resources

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that an area located within Montgomery County would benefit from the creation of a water control and improvement district. H.B. 5651 seeks to provide for the creation of such a district.

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. 5651 amends the Special District Local Laws Code to create the Montgomery County Water Control and Improvement District No. 7, subject to municipal consent and voter approval at a confirmation election, to provide certain improvements, projects, and services for public use and benefit. The bill provides for, among other provisions, water control and improvement district powers, road project authority, compliance with municipal consent ordinances or resolutions, and the issuance of bonds for recreational facilities. The district's powers and duties include, subject to certain requirements, the authority to issue obligations and impose property, operation and maintenance, and contract taxes. The bill 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.

H.B. 5651 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.

House Authors

Rep. William MetcalfRepublican · Primary Author

Senate Sponsor

Sen. Charles CreightonRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 5651

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Fiscal NoteView Original

	AN ACT
	relating to the creation of the Montgomery County Water Control and
	Improvement District No. 7; granting a limited power of eminent
	domain; providing authority to issue bonds; providing authority to
	impose assessments, fees, and taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subtitle I, Title 6, Special District Local Laws
	Code, is amended by adding Chapter 9094 to read as follows:
	CHAPTER 9094. MONTGOMERY COUNTY WATER CONTROL AND IMPROVEMENT
	DISTRICT NO. 7
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 9094.0101. DEFINITIONS. In this chapter:
	(1) "Board" means the district's board of directors.
	(2) "Commission" means the Texas Commission on
	Environmental Quality.
	(3) "Director" means a board member.
	(4) "District" means the Montgomery County Water
	Control and Improvement District No. 7.
	Sec. 9094.0102. NATURE OF DISTRICT. The district is a water
	control and improvement district created under Section 59, Article
	XVI, Texas Constitution.
	Sec. 9094.0103. CONFIRMATION AND DIRECTOR ELECTION
	REQUIRED. The temporary directors shall hold an election to
	confirm the creation of the district and to elect five permanent
	directors as provided by Section 49.102, Water Code.
	Sec. 9094.0104. CONSENT OF MUNICIPALITY REQUIRED. The
	temporary directors may not hold an election under Section
	9094.0103 until each municipality in whose corporate limits or
	extraterritorial jurisdiction the district is located has
	consented by ordinance or resolution to the creation of the
	district and to the inclusion of land in the district as required by
	applicable law.
	Sec. 9094.0105. FINDINGS OF PUBLIC PURPOSE AND BENEFIT.
	(a) The district is created to serve a public purpose and benefit.
	(b) The district is created to accomplish the purposes of:
	(1) a water control and improvement district as
	provided by general law and Section 59, Article XVI, Texas
	Constitution, including the collection, transportation,
	processing, disposal, and control of domestic, industrial, or
	communal waste and the gathering, conducting, diverting, and
	control of local stormwater or other harmful excesses of water; and
	(2) Section 52, Article III, Texas Constitution, that
	relate to the construction, acquisition, improvement, operation,
	or maintenance of macadamized, graveled, or paved roads, or
	improvements, including storm drainage, in aid of those roads.
	Sec. 9094.0106. INITIAL DISTRICT TERRITORY. (a) The
	district is initially composed of the territory described by
	Section 2 of the Act enacting this chapter.
	(b) The boundaries and field notes contained in Section 2 of
	the Act enacting this chapter form a closure. A mistake made in the
	field notes or in copying the field notes in the legislative process
	does not affect the district's:
	(1) organization, existence, or validity;
	(2) right to issue any type of bond for the purposes
	for which the district is created or to pay the principal of and
	interest on a bond;
	(3) right to impose a tax; or
	(4) legality or operation.
	SUBCHAPTER B. BOARD OF DIRECTORS
	Sec. 9094.0201. GOVERNING BODY; TERMS. (a) The district is
	governed by a board of five elected directors.
	(b) Except as provided by Section 9094.0202, directors
	serve staggered four-year terms.
	Sec. 9094.0202. TEMPORARY DIRECTORS. (a) On or after the
	effective date of the Act enacting this chapter, the owner or owners
	of a majority of the assessed value of the real property in the
	district may submit a petition to the commission requesting that
	the commission appoint as temporary directors the five persons
	named in the petition. The commission shall appoint as temporary
	directors the five persons named in the petition.
	(b) Temporary directors serve until the earlier of:
	(1) the date permanent directors are elected under
	Section 9094.0103; or
	(2) the fourth anniversary of the effective date of
	the Act enacting this chapter.
	(c) If permanent directors have not been elected under
	Section 9094.0103 and the terms of the temporary directors have
	expired, successor temporary directors shall be appointed or
	reappointed as provided by Subsection (d) to serve terms that
	expire on the earlier of:
	(1) the date permanent directors are elected under
	Section 9094.0103; or
	(2) the fourth anniversary of the date of the
	appointment or reappointment.
	(d) If Subsection (c) applies, the owner or owners of a
	majority of the assessed value of the real property in the district
	may submit a petition to the commission requesting that the
	commission appoint as successor temporary directors the five
	persons named in the petition. The commission shall appoint as
	successor temporary directors the five persons named in the
	petition.
	SUBCHAPTER C. POWERS AND DUTIES
	Sec. 9094.0301. GENERAL POWERS AND DUTIES. The district
	has the powers and duties necessary to accomplish the purposes for
	which the district is created.
	Sec. 9094.0302. WATER CONTROL AND IMPROVEMENT DISTRICT
	POWERS AND DUTIES. The district has the powers and duties provided
	by the general law of this state, including Chapters 49 and 51,
	Water Code, applicable to water control and improvement districts
	created under Section 59, Article XVI, Texas Constitution, and
	specifically including the powers and duties authorized under
	Subchapter H, Chapter 51, Water Code.
	Sec. 9094.0303. AUTHORITY FOR ROAD PROJECTS. Under Section
	52, Article III, Texas Constitution, the district may design,
	acquire, construct, finance, issue bonds for, improve, operate,
	maintain, and convey to this state, a county, or a municipality for
	operation and maintenance macadamized, graveled, or paved roads, or
	improvements, including storm drainage, in aid of those roads.
	Sec. 9094.0304. ROAD STANDARDS AND REQUIREMENTS. (a) A
	road project must meet all applicable construction standards,
	zoning and subdivision requirements, and regulations of each
	municipality in whose corporate limits or extraterritorial
	jurisdiction the road project is located.
	(b) If a road project is not located in the corporate limits
	or extraterritorial jurisdiction of a municipality, the road
	project must meet all applicable construction standards,
	subdivision requirements, and regulations of each county in which
	the road project is located.
	(c) If the state will maintain and operate the road, the
	Texas Transportation Commission must approve the plans and
	specifications of the road project.
	Sec. 9094.0305. COMPLIANCE WITH MUNICIPAL CONSENT
	ORDINANCE OR RESOLUTION. The district shall comply with all
	applicable requirements of any ordinance or resolution that is
	adopted under Section 42.042 or 42.0425, Local Government Code, and
	consents to the creation of the district or to the inclusion of land
	in the district.
	Sec. 9094.0306. LIMITATION ON USE OF EMINENT DOMAIN. The
	district may not exercise the power of eminent domain outside the
	district boundaries to acquire a site or easement for:
	(1) a recreational facility, as defined by Section
	49.462, Water Code; or
	(2) a road project authorized by Section 9094.0303.
	SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS
	Sec. 9094.0401. ELECTIONS REGARDING TAXES OR BONDS. (a)
	The district may issue, without an election, bonds and other
	obligations secured by:
	(1) revenue other than ad valorem taxes; or
	(2) contract payments described by Section 9094.0403.
	(b) The district must hold an election in the manner
	provided by Chapters 49 and 51, Water Code, to obtain voter approval
	before the district may impose an ad valorem tax or issue bonds
	payable from ad valorem taxes.
	(c) The district may not issue bonds payable from ad valorem
	taxes to finance a road project unless the issuance is approved by a
	vote of a two-thirds majority of the district voters voting at an
	election held for that purpose.
	Sec. 9094.0402. OPERATION AND MAINTENANCE TAX. (a) If
	authorized at an election held under Section 9094.0401, the
	district may impose an operation and maintenance tax on taxable
	property in the district in accordance with Section 49.107, Water
	Code.
	(b) The board shall determine the tax rate. The rate may not
	exceed the rate approved at the election.
	Sec. 9094.0403. CONTRACT TAXES. (a) In accordance with
	Section 49.108, Water Code, the district may impose a tax other than
	an operation and maintenance tax and use the revenue derived from
	the tax to make payments under a contract after the provisions of
	the contract have been approved by a majority of the district voters
	voting at an election held for that purpose.
	(b) A contract approved by the district voters may contain a
	provision stating that the contract may be modified or amended by
	the board without further voter approval.
	SUBCHAPTER E. BONDS AND OTHER OBLIGATIONS
	Sec. 9094.0501. AUTHORITY TO ISSUE BONDS AND OTHER
	OBLIGATIONS. The district may issue bonds or other obligations
	payable wholly or partly from ad valorem taxes, impact fees,
	revenue, contract payments, grants, or other district money, or any
	combination of those sources, to pay for any authorized district
	purpose.
	Sec. 9094.0502. TAXES FOR BONDS. At the time the district
	issues bonds payable wholly or partly from ad valorem taxes, the
	board shall provide for the annual imposition of a continuing
	direct ad valorem tax, without limit as to rate or amount, while all
	or part of the bonds are outstanding as required and in the manner
	provided by Chapter 51, Water Code.
	Sec. 9094.0503. BONDS FOR ROAD PROJECTS. At the time of
	issuance, the total principal amount of bonds or other obligations
	issued or incurred to finance road projects and payable from ad
	valorem taxes may not exceed one-fourth of the assessed value of the
	real property in the district.
	Sec. 9094.0504. BONDS FOR RECREATIONAL FACILITIES. (a)
	The district may develop recreational facilities and issue bonds
	for recreational facilities as provided by Chapter 49, Water Code,
	regardless of whether the district's territory overlaps with the
	territory of a political subdivision that is authorized to develop
	recreational facilities and issue bonds for recreational
	facilities under Chapter 49, Water Code.
	(b) The authority of the district to develop recreational
	facilities and issue bonds for recreational facilities under this
	section does not limit the authority of another political
	subdivision whose territory the territory of the district may
	overlap, wholly or partly, to develop recreational facilities and
	issue bonds for recreational facilities under Chapter 49, Water
	Code.
	SECTION 2. The Montgomery County Water Control and
	Improvement District No. 7 initially includes all the territory
	contained in the following area:
	BEING 480.79 acres of land in the Samuel Lindley Survey,
	Abstract Number 23, the William Hulon Survey, Abstract Number 262,
	the John Tong Survey, Abstract Number 39, and the George Lonis
	Survey, Abstract Number 313 in Montgomery County, Texas, being a
	portion of the called 811.345 acre tract described under "Schedule
	1", a portion of the called 71.884 acre tract described under
	"Schedule 2", all of the 4.15 acre tract described under "Schedule
	4" and all of the called 4.15 acre tract described under "Schedule
	5" in the deed from William McComb Dunwoody to Esperanza Ranch LLC,
	recorded under Document Number 2024075466 of the Official Public
	Records of Montgomery County, Texas, said 480.79-acre tract being
	more particularly described by metes and bounds as follows with
	bearings based on the Texas Coordinate System of 1983, Central
	Zone:
	BEGINNING at an axle found for the north corner of a called
	2.872-acre tract described in the deed from Cynthia Ann Uhlenhop,
	et al. to Willis Conservation Partners LLC recorded under Document
	No. 2021144058 of the Official Public Records of Montgomery County,
	Texas, in the southerly line of said called 71.884-acre tract;
	THENCE North 63° 15' 50" East - 6,378.60 feet to a 5/8-inch
	iron rod with cap stamped "IDS" set for the beginning of a curve to
	the right, in the westerly right-of-way line of the International &
	Great Northern Railroad right-of-way (150'-wide at this section) as
	recorded under Volume 5, Page 108 of the Deed Records of Montgomery
	County, Texas;
	THENCE with the westerly right-of-way line of said railroad,
	the following courses, and distances:
	in a southerly direction, with said curve to the right,
	having a radius of 2,074.19 feet, a central angle of 48° 47' 22", a
	chord bearing and distance of South 07° 51' 36" East - 1,713.37 feet,
	and an arc distance of 1,766.25 feet, to a 5/8-inch iron rod with
	cap stamped "IDS" set for the end of curve;
	South 16° 32' 05" West - 1,140.45 feet to a 5/8-inch iron rod
	with cap stamped "IDS" set in a branch for an angle corner of the
	herein described tract, in the northerly line of a called
	24.4558-acre tract described in the deed from Charlie Richard Sump
	to Grey Turner recorded under Document Number 2008080381 of the
	Official Public Records of Montgomery County, Texas;
	THENCE, with the meanders of said branch, the following
	courses, and distances:
	South 78° 56' 01" West - 16.37 feet to an angle corner of the
	herein described tract;
	North 79° 21' 47" West - 13.09 feet to an angle corner of the
	herein described tract;
	North 50° 54' 23" West - 13.06 feet to an angle corner of the
	herein described tract;
	North 76° 07' 54" West - 16.22 feet to an angle corner of the
	herein described tract;
	North 66° 31' 55" West - 44.39 feet to an angle corner of the
	herein described tract;
	South 56° 30' 04" West - 15.70 feet to an angle corner of the
	herein described tract;
	South 25° 28' 20" West - 18.10 feet to an angle corner of the
	herein described tract;
	South 57° 37' 15" West - 15.60 feet to an angle corner of the
	herein described tract;
	North 47° 48' 54" West - 14.83 feet to an angle corner of the
	herein described tract;
	North 01° 52' 39" West - 10.35 feet to an angle corner of the
	herein described tract;
	North 14° 34' 17" West - 14.83 feet to an angle corner of the
	herein described tract;
	North 38° 04' 42" West - 30.67 feet to an angle corner of the
	herein described tract;
	North 77° 25' 52" West - 52.76 feet to an angle corner of the
	herein described tract;
	North 45° 12' 15" West - 4.96 feet to an angle corner of the
	herein described tract;
	South 79° 16' 54" West - 25.85 feet to an angle corner of the
	herein described tract;
	South 89° 04' 32" West - 14.57 feet to an angle corner of the
	herein described tract;
	North 75° 57' 36" West - 22.40 feet to an angle corner of the
	herein described tract;
	North 87° 58' 13" West - 8.64 feet to an angle corner of the
	herein described tract;
	North 75° 30' 21" West - 51.28 feet to an angle corner of the
	herein described tract;
	South 81° 28' 13" West - 21.81 feet to an angle corner of the
	herein described tract;
	North 77° 18' 46" West - 17.85 feet to an angle corner of the
	herein described tract;
	North 40° 59' 22" West - 22.21 feet to an angle corner of the
	herein described tract;
	South 76° 12' 26" West - 6.62 feet to an angle corner of the
	herein described tract;
	South 21° 51' 39" West - 19.71 feet to an angle corner of the
	herein described tract;
	South 51° 10' 57" West - 10.38 feet to an angle corner of the
	herein described tract;
	North 85° 39' 49" West - 10.10 feet to an angle corner of the
	herein described tract;
	North 54° 08' 34" West - 23.60 feet to an angle corner of the
	herein described tract;
	North 79° 52' 02" West - 16.42 feet to an angle corner of the
	herein described tract;
	North 59° 14' 01" West - 43.81 feet to an angle corner of the
	herein described tract;
	North 63° 43' 51" West - 55.52 feet to an angle corner of the
	herein described tract;
	North 47° 36' 10" West - 63.00 feet to an angle corner of the
	herein described tract;
	North 71° 47' 51" West - 67.00 feet to a 5/8-inch iron rod
	found for the northwest corner of said called 24.4558-acre tract
	and an angle corner of the herein described tract;
	THENCE South 17° 01' 54" West - 1421.65 feet, with the
	westerly line of said 24.4558-acre tract, to a bent 5/8-inch iron
	rod found for the most westerly southwest corner of said
	called-24.4558-acre tract and an angle corner of the herein
	described tract;
	THENCE South 29° 23' 58" East - 98.52 feet, continuing with
	the southwesterly line of said 24.4558-acre tract, to an angle iron
	found for the most southerly southwest corner of said called

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 21, 2025

TO:	Honorable Cody Harris, Chair, House Committee on Natural Resources

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB5651 by Metcalf (Relating to the creation of the Montgomery County Water Control and Improvement District No. 7; 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.

Source Agencies:

582 Commission on Environmental Quality

LBB Staff:

JMc, TUf, BC, CWi

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Frequently Asked Questions

Common questions about HB5651

What does Texas HB5651 do?

HB 5651 creates the Montgomery County Water Control and Improvement District No. 7, establishing a new taxing and regulatory authority over approximately 480 acres. Crucially, because the bill failed to receive a two-thirds supermajority vote, the District is statutorily prohibited from exercising the power of eminent domain, meaning all infrastructure easements and rights-of-way must be acquired through voluntary negotiation.

Who authored HB5651?

HB5651 was authored by Texas Representative William Metcalf during the Regular Session.

When was HB5651 signed into law?

HB5651 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB5651?

HB5651 is enforced by Texas Commission on Environmental Quality (TCEQ), Montgomery County Water Control and Improvement District No. 7 Board of Directors and Texas Transportation Commission (regarding state-maintained road standards).

How urgent is compliance with HB5651?

The compliance urgency for HB5651 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB5651?

The cost impact of HB5651 is estimated as "medium". This may vary based on industry and implementation requirements.

What topics does HB5651 address?

HB5651 addresses topics including montgomery county, special districts & authorities, special districts & authorities--water & utility, special districts & authorities--water control improve dist. and montgomery county water control and improvement district no. 7.

Legislative data provided by LegiScanLast updated: November 25, 2025

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