HB5680

Regular Session

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

ModeratePlan for compliance

Medium Cost

Effective:2025-09-01

Enforcing Agencies

Bayou Belle Municipal Management District No. 1 Board of Directors • Texas Commission on Environmental Quality (TCEQ) • Liberty County Tax Assessor-Collector

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: Immediate upon effective date for updating "Notice to Purchasers" in real estate sales contracts. Financial liability (taxes/assessments) begins upon Board resolution or voter approval.
Agency Rulemaking: The initial Board of Directors will convene in Q4 2025/Q1 2026 to adopt bylaws and set assessment methodologies. There is a regulatory gray zone until the Board defines the specific formula for calculating assessments (e.g., per foot vs. per acre).

Immediate Action Plan

Audit Property Locations: Immediately verify if your assets fall within the Julianna Malley League, Abstract No. 71, to confirm jurisdiction.
Update Lease Templates: Revise standard NNN lease agreements to capture MMD assessments as recoverable costs before the September 1 effective date.
Monitor Board Formation: Identify the initial Board meeting date (Q4 2025) and designate a representative to attend. You must advocate for an assessment methodology that favors your property type before rules are adopted.
Review Loan Covenants: Check existing loan agreements for clauses regarding "superior liens" or "special assessments," as the creation of this District may trigger notification requirements to your lender.

Operational Changes Required

Contracts

Commercial Leases (NNN): Landlords must amend lease definitions of "Operating Expenses" or "Taxes" to explicitly include "special district assessments" and "MMD taxes." Without this specific language, landlords risk being unable to pass these new costs to tenants.
Real Estate Sales: Sellers must update sales contracts to include the statutory "Notice to Purchasers" (Texas Water Code § 49.452). Failure to disclose the District’s existence renders the contract voidable by the purchaser at closing.
Construction Agreements: Contracts with the District are deemed "governmental functions." Contractors must comply with Texas Government Code Chapter 2253 (Payment and Performance Bonds) and prevailing wage requirements.

Hiring/Training

Title & Closing Staff: Train staff to identify the "Julianna Malley League, Abstract No. 71" in Liberty County as a special taxing jurisdiction to ensure taxes are prorated correctly at closing.
Project Managers: Construction teams must be trained on public work compliance, as private development rules do not apply to District-funded infrastructure.

Reporting & Record-Keeping

Lien Tracking: Lenders must track District assessments as they constitute a first and prior lien superior to all other liens (except municipal/county/school taxes).
Petition Verification: Retain copies of any petitions signed by corporate agents. A petition signed by owners of a majority of assessed value triggers the Board's authority to levy assessments without an election.

Fees & Costs

Assessments: The Board may impose mandatory assessments at any time via resolution. These are personal liabilities of the property owner.
Ad Valorem Taxes: The District may levy property taxes for operations and maintenance, subject to voter approval.
Standby Fees: The District may impose fees on undeveloped property available for service but not yet utilizing connections.

Strategic Ambiguities & Considerations

Assessment Methodology: The statute allows the Board to determine how assessments are calculated (e.g., benefit basis, front-footage, or square footage). This is currently undefined. Risk: A "front-footage" calculation disproportionately impacts businesses with extensive road frontage but lower building value (e.g., logistics centers, warehouses).
Infrastructure Delays (No Eminent Domain): Because the District lacks eminent domain, it must negotiate for all rights-of-way. If a single landowner holds out, critical infrastructure projects (roads/drainage) may be stalled indefinitely, impacting development timelines.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsBayou Belle Municipal Management District No.1 Liberty County 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. 5680

By: Holt

Intergovernmental Affairs

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that an area located within Liberty County would benefit from the creation of a management district. C.S.H.B. 5680 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

C.S.H.B. 5680 amends the Special District Local Laws Code to create the Bayou Belle 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 district's authority to add or exclude land, the division of the district, and the dissolution of the district. The district's powers and duties include, subject to certain requirements, the authority to issue obligations and impose assessments and property and operation and maintenance taxes. The bill provides for the district's authority to exercise the power of eminent domain, contingent on the bill receiving a two-thirds vote of all the members elected to each house. If the bill does not receive such a vote, the district is expressly prohibited from exercising that power.

C.S.H.B. 5680 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. 5680 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.

The introduced required the dissolution of the district on petition by the owners of at least two‑thirds of the assessed value of the property subject to assessment by the district or at least two-thirds of the surface area of the district, with certain property excluded. The substitute changes both of those thresholds from at least two-thirds to a majority.

House Authors

Rep. Janis HoltRepublican · Primary Author

Senate Sponsor

Sen. Robert NicholsRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 5680

AN ACT

relating to the creation of the Bayou Belle Municipal Management

District No. 1; 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 C, Title 4, Special District Local Laws

Code, is amended by adding Chapter 4021 to read as follows:

CHAPTER 4021. BAYOU BELLE MUNICIPAL MANAGEMENT DISTRICT NO. 1

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4021.0101. DEFINITIONS. In this chapter:

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

(2) "County" means Liberty County.

(3) "Director" means a board member.

(4) "District" means the Bayou Belle Municipal

Management District No. 1.

Sec. 4021.0102. NATURE OF DISTRICT. The Bayou Belle

Municipal Management District No. 1 is a special district created

under Section 59, Article XVI, Texas Constitution.

Sec. 4021.0103. 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 county

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 county 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 county services provided in the

district.

Sec. 4021.0104. 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. 4021.0105. 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. 4021.0106. 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. 4021.0107. APPLICABILITY OF MUNICIPAL MANAGEMENT

DISTRICTS LAW. Except as otherwise provided by this chapter,

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

Sec. 4021.0108. 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. 4021.0201. 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. 4021.0202. 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. 4021.0203. INITIAL DIRECTORS. (a) The initial board

consists of the following directors:

Pos. No.

Name of Director

Dez Carlson

Remard Mason

Kye Sampson

Anthony Hernandez

Kyle Clarke

(b) Of the initial directors, the terms of directors

appointed for positions one through three expire June 1, 2027, and

the terms of directors appointed for positions four and five expire

June 1, 2029.

SUBCHAPTER C. POWERS AND DUTIES

Sec. 4021.0301. GENERAL POWERS AND DUTIES. The district

has the powers and duties necessary to accomplish the purposes for

which the district is created.

Sec. 4021.0302. 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. 4021.0303. 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. 4021.0304. LAW ENFORCEMENT SERVICES. To protect the

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

including the county or a municipality with territory in the

district, to provide law enforcement services in the district for a

fee.

Sec. 4021.0305. 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. 4021.0306. 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. 4021.0307. 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. 4021.0308. 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. 4021.0309. ADDING OR EXCLUDING LAND. Except as

provided by Section 4021.0310, 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. 4021.0310. 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

4021.0506 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. 4021.0311. 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. 4021.0401. 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. 4021.0402. 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. 4021.0501. TAX ELECTION REQUIRED. (a) The district

must hold an election in the manner provided by Chapter 49, Water

Code, or, if applicable, Chapter 375, Local Government Code, to

obtain voter approval before the district may impose an ad valorem

tax.

(b) Section 375.243, Local Government Code, does not apply

to the district.

Sec. 4021.0502. OPERATION AND MAINTENANCE TAX. (a) If

authorized by a majority of the district voters voting at an

election under Section 4021.0501, the district may impose an

operation and maintenance tax on taxable property in the district

in the manner provided by Section 49.107, Water Code, for any

district purpose, including to:

(1) maintain and operate the district;

(2) construct or acquire improvements; or

(3) provide a service.

(b) The board shall determine the operation and maintenance

tax rate. The rate may not exceed the rate approved at the

election.

Sec. 4021.0503. AUTHORITY TO BORROW MONEY AN

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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:	HB5680 by Holt (Relating to the creation of the Bayou Belle Municipal Management District No. 1; 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:

LBB Staff:

JMc, SZ, BC, CWi

Related Legislation

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Frequently Asked Questions

Common questions about HB5680

What does Texas HB5680 do?

HB5680 establishes the Bayou Belle Municipal Management District No. 1 in Liberty County, creating a new jurisdiction with the authority to levy ad valorem taxes and impose superior liens through assessments to fund infrastructure. Crucially, the legislation failed to pass with a supermajority, meaning the District is created WITHOUT eminent domain power.

Who authored HB5680?

HB5680 was authored by Texas Representative Janis Holt during the Regular Session.

When was HB5680 signed into law?

HB5680 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB5680?

HB5680 is enforced by Bayou Belle Municipal Management District No. 1 Board of Directors, Texas Commission on Environmental Quality (TCEQ) and Liberty County Tax Assessor-Collector.

How urgent is compliance with HB5680?

The compliance urgency for HB5680 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB5680?

The cost impact of HB5680 is estimated as "medium". This may vary based on industry and implementation requirements.

What topics does HB5680 address?

HB5680 addresses topics including bayou belle municipal management district no.1, liberty county, special districts & authorities, special districts & authorities--miscellaneous and environmental quality, texas commission on.

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

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. Janis Holt

Related by Topic

Frequently Asked Questions

What does Texas HB5680 do?

Who authored HB5680?

When was HB5680 signed into law?

Which agencies enforce HB5680?

How urgent is compliance with HB5680?

What is the cost impact of HB5680?

What topics does HB5680 address?

Need Strategic Guidance on This Bill?