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Signed Into Law
Signed June 20, 2025Effective 2025-09-01
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.

Government Affairs & Regulatory Compliance Analysis

HB5677: Government Affairs Overview

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.

Rep. Sheryl Cole·House Bill·Regular Session

Moderate
High Cost
Effective:2025-09-01
Enforcing Agencies

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

Business Impact

Who HB5677 Affects

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

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.

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Water

Affected business types:

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

Estimated Cost Impact

highSignificant operational investment may be required.

Enforcing Agencies

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HB5677
Relating to the creation of the Pura Vida Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose asses...
Moderate Urgency
Heavily Contested
House Vote82 - 49
YEA
NAY
63% in favor131 voting
Senate Vote27 - 4
YEA
87% in favor31 voting
53
Total Opposition Votes
Cost Impact
High
Effective
2025-09-01
Enforcing Agencies
City of Mustang RidgePura Vida Municipal Management D...TCEQTexas Comptroller of Public Acco...
Primary Author: Rep. Sheryl Cole
89th Texas Legislature
jdkey.com
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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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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.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Apr 14, 2025
Passed House
May 16, 2025
Passed Senate
May 28, 2025
Signed
Jun 20, 2025
Effective
Sep 1, 2025
TopicsPura Vida Municipal Management District No. 1Special Districts & AuthoritiesSpecial Districts & Authorities--miscellaneousEnvironmental Quality, Texas Commission On
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House Authors

Rep. Sheryl ColeDemocrat · Primary Author

Senate Sponsor

Sen. Judith ZaffiriniDemocrat · Primary Sponsor

Bill Text(with markup)

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Related Legislation

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Related by Topic

View more Pura Vida Municipal Management District No. 1 legislation
Quick Reference

Frequently Asked Questions

Common questions about HB5677

Q

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.

Q

Who authored HB5677?

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

Q

When was HB5677 signed into law?

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

Q

Which agencies enforce HB5677?

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

Q

How significant are the changes in HB5677?

The regulatory priority for HB5677 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

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.

Q

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.

Q

What are the key dates for HB5677?

Key dates for HB5677: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

What are the penalties under HB5677?

HB5677 establishes the following penalties: civil penalty of Foreclosure/Lien for Failure to pay District assessments (Sec. 4013.0402). Liens are superior to all others except municipal/county/school ad valorem tax liens.. Consult with legal counsel for specific applicability to your situation.

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