HB5677

Regular Session

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

ModeratePlan for compliance

High Cost

Effective:2025-09-01

Enforcing Agencies

Pura Vida Municipal Management District No. 1 Board of Directors • Texas Commission on Environmental Quality (TCEQ) • City of Mustang Ridge (Consent required for bond issuance) • Texas Comptroller of Public Accounts

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025.
Compliance Deadline: Q4 2025. Landowners must prepare petitions for Board appointment immediately post-effective date. Tax collection compliance for tenants/retailers triggers on the first day of the first calendar quarter after the Comptroller receives notice of a successful tax election.
Agency Rulemaking: The Texas Commission on Environmental Quality (TCEQ) does not need to write new rules, but the District Board of Directors will engage in quasi-legislative rulemaking to set assessment rates and tax policies starting late 2025.

Immediate Action Plan

Audit Property Boundaries: Confirm if your assets or development projects fall within the ~211 acres defined in the Act.
Update Lease Covenants: Revise NNN clauses immediately to ensure District assessments are classified as recoverable operating expenses, not capital improvements.
Monitor City Council: Track Mustang Ridge City Council agendas for the required "Consent Ordinance" regarding bond issuance.
Engage the Board: Attend the initial organizational meeting of the District Board (projected Q4 2025) to advocate for favorable assessment methodologies.

Operational Changes Required

Contracts

Commercial Leases (NNN): Landlords must immediately amend standard lease templates for properties within the District. "Operating Expenses" definitions must explicitly include "special district assessments" and "district ad valorem taxes" to ensure these costs can be passed through to tenants.
Lending Agreements: Lenders must update loan covenants. The law grants District assessments "first and prior lien" status (superior to mortgage liens). Loan agreements should require borrowers to provide proof of assessment payment annually.
Construction Contracts: Any infrastructure work contracted by the District is subject to public works requirements, including prevailing wage statutes, payment/performance bonds, and the Texas Prompt Payment Act.

Hiring/Training

Tax Accounting: Retailers operating within the District must update Point-of-Sale (POS) systems to recognize the new taxing jurisdiction. If voters approve a sales tax, the rate will increase (capped at the local 2% maximum).
Title Officers: Staff must be trained to identify the specific boundaries of Pura Vida MMD No. 1 to identify assessment liens during title searches.

Reporting & Record-Keeping

Petition Tracking: Landowners (Mustang Ridge, LLC) must retain certified copies of petitions submitted to TCEQ for the appointment of temporary directors and the authorization of bond issuances.
Division Orders: If the District exercises its authority to divide into multiple districts, legal teams must track and file "Orders of Division" in the Travis County real property records to establish which new entity holds taxing authority over specific parcels.

Fees & Costs

New Tax Liability: The District may impose an ad valorem tax (unlimited rate, subject to voter approval) and a sales and use tax (up to 2%, subject to local caps).
Infrastructure Assessments: The Board may levy assessments for project costs. These are mandatory and carry foreclosure risk for non-payment.

Strategic Ambiguities & Considerations

Assessment Methodology: The statute allows assessments for "any purpose authorized" but does not define the calculation method (e.g., front-foot vs. valuation-based). The Board has total discretion here. Stakeholders must engage early to influence this methodology before it is codified.
City Consent Bottleneck: The District cannot issue bonds without the consent of the City of Mustang Ridge by ordinance. This creates a political dependency; if the City withholds consent, the District’s ability to reimburse developers for infrastructure costs freezes.
District Fragmentation: The power to divide the District into multiple entities creates a risk of uneven tax burdens. One resulting district may be solvent while another is debt-heavy. Due diligence must confirm the specific financial health of the exact sub-district a property sits in.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsPura Vida Municipal Management District No. 1 Special Districts & Authorities Special Districts & Authorities--miscellaneous Environmental Quality, Texas Commission On

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

C.S.H.B. 5677

By: Cole

Intergovernmental Affairs

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee of the need for a management district to be created in Travis County for the benefit of certain undeveloped land and to deliver the essential infrastructurewater, wastewater, roadways, and drainagethat this area currently lacks. C.S.H.B. 5677 seeks to provide for the creation of the Pura Vida Municipal Management District No. 1.

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 rulemaking authority is expressly granted to the comptroller of public accounts in SECTION 1 of this bill.

ANALYSIS

C.S.H.B. 5677 amends the Special District Local Laws Code to create the Pura Vida Municipal Management District No. 1 to provide certain improvements, projects, and services for public use and benefit. The bill, among other provisions, grants the district the power to undertake certain road projects and provides for the addition or exclusion of land from the district, the division and dissolution of the district, and the creation of a nonprofit corporation and economic development programs. The district's powers and duties include, subject to certain requirements, the authority to issue obligations and to use proceeds from the hotel occupancy tax for a qualified project, impose assessments and sales and use tax, hotel occupancy, 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.

C.S.H.B. 5677 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.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 5677 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

While both versions authorize the district to use the proceeds from a hotel occupancy tax imposed under the bill's provisions for the purposes described by Tax Code provisions relating to use of revenue from county hotel occupancy taxes, the substitute does not include the specification from the introduced for the district to use those proceeds for any of the district's purposes and to the extent the board considers appropriate.

House Authors

Rep. Sheryl ColeDemocrat · Primary Author

Senate Sponsor

Sen. Judith ZaffiriniDemocrat · Primary Sponsor

Bill Text(with markup)

H.B. No. 5677

relating to the creation of the Pura Vida Municipal Management

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

authority to impose assessments, fees, and taxes; 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 4013 to read as follows:

CHAPTER 4013. PURA VIDA MUNICIPAL MANAGEMENT DISTRICT NO. 1

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4013.0101. DEFINITIONS. In this chapter:

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

(2) "City" means the City of Mustang Ridge.

(3) "Director" means a board member.

(4) "District" means the Pura Vida Municipal

Management District No. 1.

Sec. 4013.0102. NATURE OF DISTRICT. The Pura Vida

Municipal Management District No. 1 is a special district created

under Section 59, Article XVI, Texas Constitution.

Sec. 4013.0103. 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. 4013.0104. 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. 4013.0105. 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 tax; or

(4) legality or operation.

Sec. 4013.0106. 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. 4013.0107. APPLICABILITY OF MUNICIPAL MANAGEMENT

DISTRICTS LAW. Except as otherwise provided by this chapter,

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

Sec. 4013.0108. 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. 4013.0201. 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. 4013.0202. COMPENSATION; EXPENSES. (a) The district

may compensate each director in an amount not to exceed $150 for

each board meeting. The total amount of compensation for each

director in one year may not exceed $7,200.

(b) A director is entitled to reimbursement for necessary

and reasonable expenses incurred in carrying out the duties and

responsibilities of the board.

not apply to the board.

Sec. 4013.0203. 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 according to the most recent certified county tax

appraisal roll may submit a petition to the Texas Commission on

Environmental Quality 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) The temporary or successor temporary directors shall

hold an election to elect five permanent directors as provided by

Section 4013.0201.

(1) the date permanent directors are elected under

Subsection (b); or

(2) the fourth anniversary of the effective date of

the Act enacting this chapter.

(d) If permanent directors have not been elected under

Subsection (b) and the terms of the temporary directors have

expired, successor temporary directors shall be appointed or

reappointed as provided by Subsection (e) to serve terms that

expire on the earlier of:

(1) the date permanent directors are elected under

Subsection (b); or

(2) the fourth anniversary of the date of the

appointment or reappointment.

(e) If Subsection (d) applies, the owner or owners of a

majority of the assessed value of the real property in the district

according to the most recent certified county tax appraisal roll

may submit a petition to the Texas Commission on Environmental

Quality 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. 4013.0301. GENERAL POWERS AND DUTIES. The district

has the powers and duties necessary to accomplish the purposes for

which the district is created.

Sec. 4013.0302. 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 this chapter or 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. 4013.0303. 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. 4013.0304. LAW ENFORCEMENT SERVICES. To protect the

public interest, the district may contract with a qualified party,

including the city, to provide additional law enforcement services

in the district for a fee.

Sec. 4013.0305. 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. 4013.0306. 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. 4013.0307. 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. 4013.0308. 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. 4013.0309. ADDING OR EXCLUDING LAND. Except as

provided by Section 4013.0310, 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. 4013.0310. DIVISION OF DISTRICT. (a) The district may

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

(1) has no outstanding bonded debt; and

(2) is not imposing ad valorem taxes.

(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) Any new district created by the division of the district

must hold an election as required by this chapter to obtain voter

approval before the district may impose a maintenance tax or issue

bonds payable wholly or partly from ad valorem taxes.

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

the inclusion of land in the district granted under Section

4013.0506 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. 4013.0311. 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. 4013.0401. 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 county tax appraisal roll.

Sec. 4013.0402. 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 the

board 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

any parcel of land without providing notice and holding a hearing in

the manner required for additional assessments.

SUBCHAPTER E. TAXES AND BONDS

Sec. 4013.0501. TAX ELECTION REQUIRED. (a) The district

must hold an election in the manner provided by

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Fiscal NoteView Original

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 25, 2025

TO:	Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB5677 by Cole (Relating to the creation of the Pura Vida Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes; 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 HB5677

What does Texas HB5677 do?

HB5677 establishes the Pura Vida Municipal Management District No. 1 in Mustang Ridge, creating a new quasi-governmental entity with the authority to levy assessments, impose ad valorem taxes, and issue debt for infrastructure. Crucially, because the bill failed to receive a two-thirds supermajority, the District is statutorily prohibited from exercising eminent domain.

Who authored HB5677?

HB5677 was authored by Texas Representative Sheryl Cole during the Regular Session.

When was HB5677 signed into law?

HB5677 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB5677?

HB5677 is enforced by Pura Vida Municipal Management District No. 1 Board of Directors, Texas Commission on Environmental Quality (TCEQ), City of Mustang Ridge (Consent required for bond issuance) and Texas Comptroller of Public Accounts.

How urgent is compliance with HB5677?

The compliance urgency for HB5677 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB5677?

The cost impact of HB5677 is estimated as "high". This may vary based on industry and implementation requirements.

What topics does HB5677 address?

HB5677 addresses topics including pura vida municipal management district no. 1, special districts & authorities, special districts & authorities--miscellaneous and environmental quality, texas commission on.

Legislative data provided by LegiScanLast updated: November 25, 2025

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Relating to the creation of the Pura Vida Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes; 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. Sheryl Cole

Related by Topic

Frequently Asked Questions

What does Texas HB5677 do?

Who authored HB5677?

When was HB5677 signed into law?

Which agencies enforce HB5677?

How urgent is compliance with HB5677?

What is the cost impact of HB5677?

What topics does HB5677 address?

Need Strategic Guidance on This Bill?