HB5696

Regular Session

Relating to the creation of The Reserve Municipal Management District; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.

ModeratePlan for compliance

High Cost

Effective:2025-09-01

Enforcing Agencies

The Reserve Municipal Management District Board of Directors • City of Mansfield (Consent required for bond issuance) • Texas Commission on Environmental Quality (TCEQ)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: Immediate lease review required. Financial compliance is triggered upon Board resolution for assessments or voter approval for ad valorem taxes (anticipated 2026).
Agency Rulemaking: The District Board will define assessment methodologies and tax rates via local resolution. Monitor Board agendas starting Q4 2025; no state-level agency rulemaking is required to activate these powers.

Immediate Action Plan

Verify property location against the metes and bounds in Section 2 of the Act to confirm jurisdiction.
Audit existing lease agreements to ensure pass-through mechanisms cover special district assessments.
Establish a monitoring protocol for the initial Board of Directors (Roby, O'Neal, White, Smolinski, Moore) regarding the first bond election and assessment petition.
Update property seller disclosure forms immediately for any assets listed within the District.

Operational Changes Required

Contracts

Leases: Amend standard Triple Net (NNN) leases for properties in the District to explicitly define MMD assessments as recoverable "Operating Expenses."
Lending: Review loan covenants regarding "permitted liens." MMD assessments create a first-priority lien that supersedes private mortgages; this may trigger technical default in senior financing if not carved out.
Construction: Vendor contracts with the District must adhere to Chapter 791 Government Code (public works) standards, not private commercial terms.

Hiring/Training

Tax Compliance: Accounts Payable teams must add "The Reserve MMD" to jurisdictional tracking systems. Failure to pay these specific assessments results in foreclosure risk superior to mortgage liens.

Reporting & Record-Keeping

Seller Disclosures: Real estate sales within the District must now include statutory notice of the District’s existence, tax authority, and potential assessments under Texas Water Code Sec. 49.452.
Lien Tracking: You must record and track Board resolutions levying assessments; these attach to the land immediately upon passage.

Fees & Costs

Ad Valorem Tax: New millage rate to be set by the Board (capped by election results).
Assessments: Variable costs for infrastructure improvements (roads, parking, drainage), levied per Board resolution.
Director Fees: Up to $7,200/year per director (paid from District funds).

Strategic Ambiguities & Considerations

Service Overlap: The statute requires District services to "supplement" not "replace" City of Mansfield services, but fails to define the operational boundary. Watch for the Interlocal Agreement (ILA) to ensure you are not taxed twice for the same maintenance (e.g., landscaping, street lighting).
Assessment Methodology: The Board has absolute discretion to calculate assessments based on square footage, front footage, or assessed value. This formula is not fixed in the statute and will be determined during Board meetings.

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Legislative Timeline

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TopicsSpecial Districts & Authorities Special Districts & Authorities--miscellaneous the Reserve Municipal Management District Mansfield, City of

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 5696

By: Cook

Intergovernmental Affairs

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that an area located within the City of Mansfield would benefit from the creation of a management district. H.B. 5696 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. 5696 amends the Special District Local Laws Code to create the Reserve Municipal Management District to provide certain improvements, projects, and services for public use and benefit. The bill provides for, among other provisions, disbursements and transfers of money, the addition or exclusion of land, the division of the district, and the dissolution of the district. The district's powers and duties include, subject to certain requirements, including request by petition, voter approval at a tax election, and municipal consent, the authority to impose assessments and liens for assessments, to issue bonds and other obligations, and to impose property and operation and maintenance taxes. The bill prohibits the district from exercising the power of eminent domain.

H.B. 5696 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. David CookRepublican · Primary Author

Senate Sponsor

Sen. Brian BirdwellRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 5696

relating to the creation of The Reserve Municipal Management

District; 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 4026 to read as follows:

CHAPTER 4026. THE RESERVE MUNICIPAL MANAGEMENT DISTRICT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4026.0101. DEFINITIONS. In this chapter:

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

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

(3) "Director" means a board member.

(4) "District" means The Reserve Municipal Management

District.

Sec. 4026.0102. NATURE OF DISTRICT. The Reserve Municipal

Management District is a special district created under Section 59,

Article XVI, Texas Constitution.

Sec. 4026.0103. 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. 4026.0104. 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. 4026.0105. 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. 4026.0106. 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. 4026.0107. APPLICABILITY OF MUNICIPAL MANAGEMENT

DISTRICTS LAW. Except as otherwise provided by this chapter,

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

Sec. 4026.0108. 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. 4026.0201. 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. 4026.0202. 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. 4026.0203. INITIAL DIRECTORS. (a) The initial board

consists of the following directors:

Pos. No.

Name of Director

Clay Roby

Jimmy O'Neal

Dan White

Joe Smolinski

Jason Moore

(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. 4026.0301. GENERAL POWERS AND DUTIES. The district

has the powers and duties necessary to accomplish the purposes for

which the district is created.

Sec. 4026.0302. 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, including a canal, waterway, bulkhead, or dock,

inside or outside the district's boundaries, that is necessary to,

incidental to, or in aid of the navigation of inland water for the

purposes of the district.

(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. 4026.0303. 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. 4026.0304. 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. 4026.0305. 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. 4026.0306. 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. 4026.0307. 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. 4026.0308. ADDING OR EXCLUDING LAND. Except as

provided by Section 4026.0309, 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. 4026.0309. 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) Municipal consent to the creation of the district and to

the inclusion of land in the district granted under Section

4026.0506 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. 4026.0310. NO EMINENT DOMAIN POWER. The district may

not exercise the power of eminent domain.

SUBCHAPTER D. ASSESSMENTS

Sec. 4026.0401. 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. 4026.0402. 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. 4026.0501. 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. 4026.0502. OPERATION AND MAINTENANCE TAX. (a) If

authorized by a majority of the district voters voting at an

election under Section 4026.0501, 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. 4026.0503. AUTHORITY TO BORROW MONEY AND TO ISSUE

BONDS AND OTHER OBLIGATIONS. (a) The district may borrow money on

terms determined by the board.

(b) The district may issue, by public or private sale,

bonds, notes, or other obligations payable wholly or partly from ad

valorem taxes, assessments, impact fees, revenue, including

contract revenues, contract payments, grants, or other district

money, or any combination of those sources of money, to pay for any

authorized district purpose.

Sec. 4026.0504.

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Fiscal NoteView Original

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


May 2, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB5696 by Cook (Relating to the creation of The Reserve Municipal Management District; 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 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 HB5696

What does Texas HB5696 do?

HB5696 establishes "The Reserve Municipal Management District" in Mansfield, effective September 1, 2025, granting a new board authority to levy property taxes and special assessments. Commercial property owners and developers within the 173-acre district must immediately account for increased holding costs and new super-priority liens on real estate assets. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: Immediate lease review required.

Who authored HB5696?

HB5696 was authored by Texas Representative David Cook during the Regular Session.

When was HB5696 signed into law?

HB5696 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB5696?

HB5696 is enforced by The Reserve Municipal Management District Board of Directors, City of Mansfield (Consent required for bond issuance) and Texas Commission on Environmental Quality (TCEQ).

How urgent is compliance with HB5696?

The compliance urgency for HB5696 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB5696?

The cost impact of HB5696 is estimated as "high". This may vary based on industry and implementation requirements.

What topics does HB5696 address?

HB5696 addresses topics including special districts & authorities, special districts & authorities--miscellaneous, the reserve municipal management district and mansfield, city of.

Legislative data provided by LegiScanLast updated: November 25, 2025

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Relating to the creation of The Reserve Municipal Management District; 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. David Cook

Related by Topic

Frequently Asked Questions

What does Texas HB5696 do?

Who authored HB5696?

When was HB5696 signed into law?

Which agencies enforce HB5696?

How urgent is compliance with HB5696?

What is the cost impact of HB5696?

What topics does HB5696 address?

Need Strategic Guidance on This Bill?