HB5658

Regular Session

Relating to the creation of the Craver Ranch Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments and fees; granting a limited power of eminent domain.

ModeratePlan for compliance

Medium Cost

Effective:2025-06-20

Enforcing Agencies

Craver Ranch Municipal Management District No. 1 Board of Directors • City of Denton (Development Agreement and Bond Consent oversight) • Texas Commission on Environmental Quality (TCEQ)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: June 20, 2025 (Immediate).
Compliance Deadline: Pre-Transaction. Title searches and lease negotiations must account for District jurisdiction immediately. Operational powers (issuing bonds/levying assessments) are paused pending the execution of a Development Agreement.
Agency Rulemaking: The District Board and City of Denton must execute a Development Agreement to activate District powers. If this is not signed by September 1, 2030, the District must dissolve.

Immediate Action Plan

1. Geospatial Audit: Immediately overlay the 2,800-acre Craver Ranch legal description against your current asset portfolio to identify affected parcels.
2. Lease Audit: Review all active LOIs and leases for properties in this zone; insert language ensuring "Assessments" are defined as recoverable operating expenses.
3. Monitor City Council: Track the City of Denton City Council agenda for the "Craver Ranch Development Agreement." This document will set the actual zoning and development rules.
4. Lender Notification: If you hold debt on land in this District, notify your lender of the new district creation to preempt technical default notices regarding superior liens.

Operational Changes Required

Contracts

Commercial Leases (NNN): Standard "Tax" clauses are insufficient. You must amend Triple Net leases to explicitly include "special district assessments" as a pass-through expense, as the District is legally barred from levying "taxes."
Loan Agreements: Lenders must update covenants. District assessments create a first and prior lien superior to mortgage liens (subordinate only to ad valorem taxes). Lenders should require assessment reserves.
Purchase & Sale Agreements: Sellers must provide statutory notice to buyers regarding the District’s existence and assessment authority under the Texas Water Code. Failure to disclose grants the buyer the right to terminate.

Hiring/Training

Title Review Teams: Staff must be trained to flag "Craver Ranch MMD No. 1" in title commitments immediately.
Project Managers: Must be briefed that infrastructure improvements (roads, drainage) now require a petition signed by owners representing a majority of the assessed value to trigger District financing.

Reporting & Record-Keeping

Lien Monitoring: Accounting departments must track District Board resolutions, as assessments become liens immediately upon adoption.
Petition Tracking: Developers must maintain precise records of assessed value ownership to calculate the threshold required to petition the Board for bond issuances.

Fees & Costs

Assessments: Variable. The Board will determine rates based on project costs. These are not capped by the legislation.
Ad Valorem Taxes: 0%. The District is prohibited from levying property taxes.
Impact Fees: The District may impose fees for connections to water/sanitary sewer systems if it assumes those functions.

Strategic Ambiguities & Considerations

The "Development Agreement" Scope: Section 4020.0108 requires a Development Agreement with the City of Denton before the District can act. The law does not define the limits of this agreement. The City may use this negotiation to impose stricter building codes, environmental standards, or exactions than standard city ordinances require.
Assessment Methodology: The statute allows assessments for "any purpose authorized" but does not dictate the formula (e.g., front-footage vs. square footage vs. valuation). The Board has broad discretion here, creating uncertainty in cost projections until the first assessment order is drafted.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsCraver Ranch Municipal Management District No. 1 Denton, City of Special Districts & Authorities Special Districts & Authorities--miscellaneous

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 5658

By: Patterson

Land & Resource Management

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that an area located within Denton County would benefit from the creation of a management district. H.B. 5658 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. 5658 amends the Special District Local Laws Code to create the Craver Ranch Municipal Management District No. 1 to provide certain improvements, projects, and services for public use and benefit. The bill provides for, among other provisions, the addition and exclusion of district land, the division and dissolution of the district, and the nonexemption of certain residential property. The district's powers and duties include, subject to certain requirements, including the execution of a certain development agreement, the authority to issue obligations and impose assessments. The bill prohibits the district from imposing a property tax.

H.B. 5658 does the following:

·if the bill receives a two-thirds vote of all the members elected to each house, authorizes the district to exercise the power of eminent domain in the manner provided under statutory provisions applicable to water districts generally; and

·expressly prohibits the district from exercising the power of eminent domain if the bill does not receive such a vote.

H.B. 5658 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. Jared PattersonRepublican · Primary Author

Senate Sponsor

Sen. Brent HagenbuchRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 5658

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

relating to the creation of the Craver Ranch Municipal Management

District No. 1; providing authority to issue bonds; providing

authority to impose assessments and fees; granting a limited power

of eminent domain.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle C, Title 4, Special District Local Laws

Code, is amended by adding Chapter 4020 to read as follows:

CHAPTER 4020. CRAVER RANCH MUNICIPAL MANAGEMENT DISTRICT NO. 1

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4020.0101. DEFINITIONS. In this chapter:

(1) "Board" means the district's board of directors.

(2) "City" means the City of Denton.

(3) "Director" means a board member.

(4) "District" means the Craver Ranch Municipal

Management District No. 1.

Sec. 4020.0102. NATURE OF DISTRICT. The Craver Ranch

Municipal Management District No. 1 is a special district created

under Section 59, Article XVI, Texas Constitution.

Sec. 4020.0103. PURPOSE; DECLARATION OF INTENT. (a) The

creation of the district is essential to accomplish the purposes of

Sections 52 and 52-a, Article III, and Section 59, Article XVI,

Texas Constitution, and other public purposes stated in this

chapter.

(b) By creating the district and in authorizing the city and

other political subdivisions to contract with the district, the

legislature has established a program to accomplish the public

purposes set out in Section 52-a, Article III, Texas Constitution.

develop, encourage, and maintain employment, commerce,

transportation, housing, tourism, recreation, the arts,

entertainment, economic development, safety, and the public

welfare in the district.

(d) This chapter and the creation of the district may not be

interpreted to relieve the city from providing the level of

services provided as of the effective date of the Act enacting this

chapter to the area in the district. The district is created to

supplement and not to supplant city services provided in the

district.

Sec. 4020.0104. FINDINGS OF BENEFIT AND PUBLIC PURPOSE.

(a) All land and other property included in the district will

benefit from the improvements and services to be provided by the

district under powers conferred by Sections 52 and 52-a, Article

III, and Section 59, Article XVI, Texas Constitution, and other

powers granted under this chapter.

(b) The district is created to serve a public use and

benefit.

and is essential to further the public purposes of:

(1) developing and diversifying the economy of the

state;

(2) eliminating unemployment and underemployment; and

(3) developing or expanding transportation and

commerce.

(d) The district will:

(1) promote the health, safety, and general welfare of

residents, employers, potential employees, employees, visitors,

and consumers in the district, and of the public;

(2) provide needed funding for the district to

preserve, maintain, and enhance the economic health and vitality of

the district territory as a community and business center;

(3) promote the health, safety, welfare, and enjoyment

of the public by providing pedestrian ways and by landscaping and

developing certain areas in the district, which are necessary for

the restoration, preservation, and enhancement of scenic beauty;

and

(4) provide for water, wastewater, drainage, road, and

recreational facilities for the district.

(e) Pedestrian ways along or across a street, whether at

grade or above or below the surface, and street lighting, street

landscaping, parking, and street art objects are parts of and

necessary components of a street and are considered to be a street

or road improvement.

(f) The district will not act as the agent or

instrumentality of any private interest even though the district

will benefit many private interests as well as the public.

Sec. 4020.0105. 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 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 bonds for the purposes

for which the district is created or to pay the principal of and

interest on the bonds;

(3) right to impose or collect an assessment; or

(4) legality or operation.

Sec. 4020.0106. ELIGIBILITY FOR INCLUSION IN SPECIAL ZONES.

All or any part of the area of the district is eligible to be

included in:

(1) a tax increment reinvestment zone created under

Chapter 311, Tax Code; or

(2) a tax abatement reinvestment zone created under

Chapter 312, Tax Code.

Sec. 4020.0107. APPLICABILITY OF MUNICIPAL MANAGEMENT

DISTRICTS LAW. Except as otherwise provided by this chapter,

Chapter 375, Local Government Code, applies to the district.

Sec. 4020.0108. PRECONDITION. (a) The district may not

exercise any powers granted to the district by this chapter or other

law unless a development agreement between the city and the primary

landowner in the district that establishes the standards that apply

to development in the district, in addition to those contained in

zoning, subdivision, and other applicable ordinances of the city,

has been executed.

(b) After September 1, 2030, if a development agreement

described by Subsection (a) has not been executed, the board shall

dissolve the district in the manner provided by Section

4020.0901(b) if the board receives a written dissolution request

from the city.

Sec. 4020.0109. CONSTRUCTION OF CHAPTER. This chapter

shall be liberally construed in conformity with the findings and

purposes stated in this chapter.

SUBCHAPTER B. BOARD OF DIRECTORS

Sec. 4020.0201. GOVERNING BODY; TERMS. (a) The district is

governed by a board of five elected directors who serve staggered

terms of four years.

(b) Directors are elected in the manner provided by

Subchapter D, Chapter 49, Water Code.

Sec. 4020.0202. COMPENSATION; EXPENSES. (a) A director is

entitled to receive fees of office and reimbursement for actual

expenses as provided by Section 49.060, Water Code.

(b) Sections 375.069 and 375.070, Local Government Code, do

not apply to the board.

Sec. 4020.0203. INITIAL DIRECTORS. (a) The initial board

consists of the following directors:

Pos. No.

Name of Director

Jessica Burton

Paul Aycock

Isabelle Holbrook

Ana Martin

Justine Spurgin

(b) Initial directors serve until the earlier of:

(1) the date permanent directors are elected under

Section 4020.0201; or

(2) the fourth anniversary of the effective date of

the Act enacting this chapter.

Section 4020.0201 and the terms of the initial directors have

expired, successor 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 4020.0201; 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 Texas Commission on Environmental

Quality requesting that the commission appoint as successor

directors the five persons named in the petition. The commission

shall appoint as successor directors the five persons named in the

petition.

SUBCHAPTER C. POWERS AND DUTIES

Sec. 4020.0301. GENERAL POWERS AND DUTIES. The district

has the powers and duties necessary to accomplish the purposes for

which the district is created.

Sec. 4020.0302. IMPROVEMENT PROJECTS AND SERVICES. (a) The

district, using any money available to the district for the

purpose, may provide, design, construct, acquire, improve,

relocate, operate, maintain, or finance an improvement project or

service authorized under a development agreement described by

Section 4020.0108, under this chapter, or under Chapter 375, Local

Government Code.

(b) The district may contract with a governmental or private

entity to carry out an action under Subsection (a).

governmental function or service for the purposes of Chapter 791,

Government Code.

Sec. 4020.0303. NONPROFIT CORPORATION. (a) The board by

resolution may authorize the creation of a nonprofit corporation to

assist and act for the district in implementing a project or

providing a service authorized by this chapter.

(b) The nonprofit corporation:

(1) has each power of and is considered to be a local

government corporation created under Subchapter D, Chapter 431,

Transportation Code; and

(2) may implement any project and provide any service

authorized by this chapter.

nonprofit corporation. The board of directors of the nonprofit

corporation shall serve in the same manner as the board of directors

of a local government corporation created under Subchapter D,

Chapter 431, Transportation Code, except that a board member is not

required to reside in the district.

Sec. 4020.0304. MEMBERSHIP IN CHARITABLE ORGANIZATIONS.

The district may join and pay dues to a charitable or nonprofit

organization that performs a service or provides an activity

consistent with the furtherance of a district purpose.

Sec. 4020.0305. ECONOMIC DEVELOPMENT PROGRAMS. (a) The

district may engage in activities that accomplish the economic

development purposes of the district.

(b) The district may establish and provide for the

administration of one or more programs to promote state or local

economic development and to stimulate business and commercial

activity in the district, including programs to:

(1) make loans and grants of public money; and

(2) provide district personnel and services.

and exercise the economic development powers provided to

municipalities by:

(1) Chapter 380, Local Government Code; and

(2) Subchapter A, Chapter 1509, Government Code.

Sec. 4020.0306. PARKING FACILITIES. (a) The district may

acquire, lease as lessor or lessee, construct, develop, own,

operate, and maintain parking facilities or a system of parking

facilities, including lots, garages, parking terminals, or other

structures or accommodations for parking motor vehicles off the

streets and related appurtenances.

(b) The district's parking facilities serve the public

purposes of the district and are owned, used, and held for a public

purpose even if leased or operated by a private entity for a term of

years.

necessary components of a street and are considered to be a street

or road improvement.

(d) The development and operation of the district's parking

facilities may be considered an economic development program.

Sec. 4020.0307. DISBURSEMENTS AND TRANSFERS OF MONEY. The

board by resolution shall establish the number of directors'

signatures and the procedure required for a disbursement or

transfer of district money.

Sec. 4020.0308. ADDING OR EXCLUDING LAND. Except as

provided by Section 4020.0309, the district may add or exclude land

in the manner provided by Subchapter J, Chapter 49, Water Code, or

by Subchapter H, Chapter 54, Water Code.

Sec. 4020.0309. DIVISION OF DISTRICT. (a) The district may

be divided into two or more new districts only if the district has

no outstanding bonded debt.

(b) This chapter applies to any new district created by the

division of the district, and a new district has all the powers and

duties of the district.

may not, at the time the new district is created, contain any land

outside the area described by Section 2 of the Act enacting this

chapter.

(d) The board, on its own motion or on receipt of a petition

signed by the owner or owners of a majority of the assessed value of

the real property in the district, may adopt an order dividing the

district.

(e) An order dividing the district must:

(1) name each new district;

(2) include the metes and bounds description of the

territory of each new district;

(3) appoint initial directors for each new district;

and

(4) provide for the division of assets and liabilities

between or among the new districts.

(f) On or before the 30th day after the date of adoption of

an order dividing the district, the district shall file the order

with the Texas Commission on Environmental Quality and record the

order in the real property records of each county in which the

district is located.

(g) Municipal consent to the creation of the district and to

the inclusion of land in the district granted under Section

4020.0503 acts as municipal consent to the creation of any new

district created by the division of the district and to the

inclusion of land in the new district.

Sec. 4020.0310. CERTAIN RESIDENTIAL PROPERTY NOT EXEMPT.

Section 375.161, Local Government Code, does not apply to the

district.

Sec. 4020.0311. NO AD VALOREM TAX. The district may not

impose an ad valorem tax.

Sec. 4020.0312. EMINENT DOMAIN. Subject to the limitations

provided by Section 54.209, Water Code, the district may exercise

the power of eminent domain in the manner provided by Section

49.222, Water Code.

SUBCHAPTER D. ASSESSMENTS

Sec. 4020.0401. PETITION REQUIRED FOR FINANCING SERVICES

AND IMPROVEMENTS WITH ASSESSMENTS. (a) The board may not finance a

service or improvement project with assessments under this chapter

unless a written petition requesting that service or improvement

has been filed with the board.

(b) A petition filed under Subsection (a) must be signed by

the owners of a majority of the assessed value of real property in

the district subject to assessment according to the most recent

certified tax appraisal roll for the county.

Sec. 4020.0402. ASSESSMENTS; LIENS FOR ASSESSMENTS. (a)

The board by resolution may impose and collect an assessment for any

purpose authorized by this chapter in all or any part of the

district.

(b) An assessment, a reassessment, or an assessment

resulting from an addition to or correction of the assessment roll

by the district, penalties and interest on an assessment or

reassessment, an expense of collection, and reasonable attorney's

fees incurred by the district:

(1) are a first and prior lien against the property

assessed;

(2) are superior to any other lien or claim other than

a lien or claim for county, school district, or municipal ad valorem

taxes; and

(3) are the personal liability of and a charge against

the owners of the property even if the owners are not named in the

assessment proceedings.

resolution imposing the assessment until the date the assessment is

paid. The board may enforce the lien in the same manner that a

taxing unit, as that term is defined by Section 1.04, Tax Code, may

enforce an ad valorem tax lien against real property.

(d) The board may make a correction to or deletion from the

assessment roll that does not increase the amount of assessment of

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 17, 2025

TO:	Honorable Gary Gates, Chair, House Committee on Land & Resource Management

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB5658 by Patterson (Relating to the creation of the Craver Ranch Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments and fees; granting a limited power of eminent domain.), 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:

LBB Staff:

JMc, SZ, BC, CWi

Related Legislation

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Frequently Asked Questions

Common questions about HB5658

What does Texas HB5658 do?

Effective June 20, 2025, the Texas Legislature has established the Craver Ranch Municipal Management District No. 1 over approximately 2,800 acres in Denton, creating a new quasi-governmental entity with the power to levy assessments and exercise eminent domain. While the District is statutorily prohibited from levying ad valorem (property) taxes, it may impose mandatory assessments that function as super-priority liens against real property, directly impacting developers, lenders, and commercial tenants within the District boundaries.

Who authored HB5658?

HB5658 was authored by Texas Representative Jared Patterson during the Regular Session.

When was HB5658 signed into law?

HB5658 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB5658?

HB5658 is enforced by Craver Ranch Municipal Management District No. 1 Board of Directors, City of Denton (Development Agreement and Bond Consent oversight) and Texas Commission on Environmental Quality (TCEQ).

How urgent is compliance with HB5658?

The compliance urgency for HB5658 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB5658?

The cost impact of HB5658 is estimated as "medium". This may vary based on industry and implementation requirements.

What topics does HB5658 address?

HB5658 addresses topics including craver ranch municipal management district no. 1, denton, city of, special districts & authorities and special districts & authorities--miscellaneous.

Legislative data provided by LegiScanLast updated: November 25, 2025

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Relating to the creation of the Craver Ranch Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments and fees; granting a limited power of eminent domain.

Compliance Analysis

Implementation Timeline

Immediate Action Plan

Operational Changes Required

Contracts

Hiring/Training

Reporting & Record-Keeping

Fees & Costs

Strategic Ambiguities & Considerations

Need Help Understanding Implementation?

Legislative Timeline

Official Analysis

BILL ANALYSIS

House Authors

Senate Sponsor

Bill Text(with markup)

Fiscal NoteView Original

Related Legislation

More from Rep. Jared Patterson

Related by Topic

Frequently Asked Questions

What does Texas HB5658 do?

Who authored HB5658?

When was HB5658 signed into law?

Which agencies enforce HB5658?

How urgent is compliance with HB5658?

What is the cost impact of HB5658?

What topics does HB5658 address?

Need Strategic Guidance on This Bill?