SB2419

Regular Session

Relating to the authority of a special district to exercise certain powers and duties following municipal disannexation of certain areas.

LowStandard timeline

Low Cost

Effective:2025-09-01

Enforcing Agencies

Limited Districts (created via Strategic Partnership Agreements) • Municipalities (parties to original Strategic Partnership Agreements)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: Immediate upon the effective date of any municipal ordinance disannexing a Limited District. There is no statutory transition period.
Agency Rulemaking: None required. The statute is self-executing, creating a potential "regulatory gray zone" regarding the physical transfer of assets and data between the Municipality and the District.

Immediate Action Plan

Audit Land Bank: Identify all assets located within "Limited Districts" and cross-reference with Municipal disannexation agendas.
Verify Authority: In the event of disannexation, demand a formal resolution from the District Board confirming their resumption of services before remitting payments.
Secure Entitlements: If you are mid-permitting with a City in a Limited District, accelerate approval or execute a vesting agreement before September 1, 2025, to lock in current rules.
Review Insurance: Ensure liability policies cover operations within Special Districts, as sovereign immunity caps and notice requirements differ from Municipalities.

Operational Changes Required

Contracts

Development Agreements: Review all agreements tied to properties in municipal ETJs or Limited Districts. If your agreement relies on the Municipality for utility service or code variances, the contract may be frustrated upon disannexation as the City loses jurisdiction.
Strategic Partnership Agreements (SPAs): The law renders SPA provisions void regarding the limitation of district powers post-disannexation. Do not rely on SPA exit clauses; the statute now controls.
Vendor/Service Contracts: Maintenance contracts (mowing, lift station repair) executed with the City for these areas must be assessed for assignment clauses. You may need to re-bid or re-sign these with the District.

Hiring/Training

Project Management: Retrain development teams to redirect permit applications and inspection requests from Municipal Planning Departments to the District Engineer or Board immediately upon disannexation.
Accounts Payable: Update vendor master files. Utility payments previously sent to the City must be redirected to the District or its operator to avoid service interruption for non-payment.

Reporting & Record-Keeping

GIS & Asset Management: Update internal mapping to flag "Limited Districts." These are now high-volatility zones where regulatory authority can flip overnight.
Title Work: Ensure future title commitments reflect the potential for reinstated District taxing authority, which may differ from Municipal tax rates.

Fees & Costs

Taxation: Anticipate a shift from Municipal ad valorem taxes to District assessments. Districts may also impose standby fees or operation fees that were previously suppressed by the SPA.
Permitting Fees: Budget for potentially different fee structures under District jurisdiction; District engineering review fees often differ from Municipal flat rates.

Strategic Ambiguities & Considerations

Asset Ownership vs. Operational Power: The bill restores the *power* to operate but does not explicitly mandate the conveyance of physical assets (pipes, plants) if title was previously transferred to the City. Disputes over infrastructure ownership are likely.
Code Compliance Gap: The bill does not specify which building codes apply during the transition. If the District has not adopted a fire or building code, the area may revert to minimal county or state standards until the Board acts.
Debt Service: It is unclear how reinstated Districts will handle debt obligations if the City was previously servicing debt under the SPA.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsSpecial Districts & Authorities Special Districts & Authorities--water & Utility

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 2419
89R10534 JBD-F	By: Paxton
	Local Government
	4/25/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The 88th Legislature passed H.B. 3053 to help protect the property rights of residents in areas that had been forcibly annexed by providing for an election for the residents of that area to decide whether they wanted to remain annexed or to dissannex. By an overwhelming majority, voters decided to disannex.

S.B. 2419 builds upon H.B. 3053 by adding further clarification as it relates to disannexation for limited districts to help protect the rights of residents in limited districts that were forcibly annexed or have recently disannexed.

As proposed, S.B. 2419 amends current law relating to the authority of a special district to exercise certain powers and duties following municipal disannexation of certain areas.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 43.1463, Local Government Code, by adding Subsection (f-1) to authorize a limited district that was created by the conversion of a special district under a strategic partnership agreement and is located in and serving an area that is disannexed under Section 43.1463 (Disannexation of Areas Annexed During Transition From Nonconsent to Consent Annexation Model) to exercise all powers and duties granted to the former special district by law in the portion of the disannexed area located in the district, notwithstanding the strategic partnership agreement or other agreement executed by the district and the disannexing municipality before the disannexation.

SECTION 2. Effective date: upon passage or September 1, 2025.

Senate Authors

Sen. Angela PaxtonRepublican · Primary Author

House Sponsor

Rep. Jay DeanRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 2419

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the authority of a special district to exercise certain
	powers and duties following municipal disannexation of certain
	areas.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 43.1463, Local Government Code, is
	amended by adding Subsection (f-1) to read as follows:
	(f-1) A limited district that was created by the conversion
	of a special district under a strategic partnership agreement and
	is located in and serving an area that is disannexed under this
	section may exercise all powers and duties granted to the former
	special district by law in the portion of the disannexed area
	located in the district, notwithstanding the strategic partnership
	agreement or other agreement executed by the district and the
	disannexing municipality before the disannexation.
	SECTION 2. This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 25, 2025

TO:	Honorable Paul Bettencourt, Chair, Senate Committee on Local Government

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB2419 by Paxton (Relating to the authority of a special district to exercise certain powers and duties following municipal disannexation of certain areas.), As Introduced

No fiscal implication to the State is anticipated.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

LBB Staff:

JMc, SZ, BC, CWi

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Frequently Asked Questions

Common questions about SB2419

What does Texas SB2419 do?

SB 2419 mandates that upon municipal disannexation, "Limited Districts" (typically MUDs operating under Strategic Partnership Agreements) immediately regain full regulatory and operational authority, explicitly overriding any existing contract terms to the contrary. This shifts jurisdiction for utilities, taxation, and infrastructure permitting from the Municipality back to the Special District Board for all affected properties. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: Immediate upon the effective date of any municipal ordinance disannexing a Limited District.

Who authored SB2419?

SB2419 was authored by Texas Senator Angela Paxton during the Regular Session.

When was SB2419 signed into law?

SB2419 was signed into law by Governor Greg Abbott on May 24, 2025.

Which agencies enforce SB2419?

SB2419 is enforced by Limited Districts (created via Strategic Partnership Agreements) and Municipalities (parties to original Strategic Partnership Agreements).

How urgent is compliance with SB2419?

The compliance urgency for SB2419 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB2419?

The cost impact of SB2419 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB2419 address?

SB2419 addresses topics including special districts & authorities and special districts & authorities--water & utility.

Legislative data provided by LegiScanLast updated: November 25, 2025

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