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Signed Into Law
Signed May 24, 2025Effective 2025-09-01
SB2419

Regular Session

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

Government Affairs & Regulatory Compliance Analysis

SB2419: Government Affairs Overview

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.

Sen. Angela Paxton·Senate Bill·Regular Session

Low
Low Cost
Effective:2025-09-01
Enforcing Agencies

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

Business Impact

Who SB2419 Affects

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

Regulatory Priority: low

Standard regulatory changes (effective 2025-09-01). Review during normal business planning.

💧

Water

Affected business types:

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

Key Operational Considerations

  • 1Strategic 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.

Estimated Cost Impact

lowMinimal cost impact anticipated.

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SB2419
Low
Relating to the authority of a special district to exercise certain powers and duties following municipal disannexation of certain areas.
Low Compliance Urgency
Requires routine attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
Limited DistrictsMunicipalities
Primary Author: Sen. Angela Paxton
89th Texas Legislature
jdkey.com
01

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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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 13, 2025
Passed Senate
May 6, 2025
Passed House
May 12, 2025
Signed
May 24, 2025
Effective
Sep 1, 2025
TopicsSpecial Districts & AuthoritiesSpecial Districts & Authorities--water & Utility
03

Senate Authors

Sen. Angela PaxtonRepublican · Primary Author

House Sponsor

Rep. Jay DeanRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Angela Paxton

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Related by Topic

View more Special Districts & Authorities legislation
Quick Reference

Frequently Asked Questions

Common questions about SB2419

Q

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.

Q

Who authored SB2419?

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

Q

When was SB2419 signed into law?

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

Q

Which agencies enforce SB2419?

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

Q

How significant are the changes in SB2419?

The regulatory priority for SB2419 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

Q

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.

Q

What topics does SB2419 address?

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

Q

What are the key dates for SB2419?

Key dates for SB2419: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

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