SB3050

Regular Session

Relating to the creation of the Fannin County Improvement District No. 1; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.

ModeratePlan for compliance

High Cost

Effective:2025-09-01

Enforcing Agencies

Fannin County Improvement District No. 1 Board of Directors • 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 (unless immediate effect granted via supermajority vote).
Compliance Deadline: September 1, 2025. Landowners must be prepared to file petitions with the TCEQ immediately upon the effective date to ensure favorable Board appointment.
Agency Rulemaking: The TCEQ must process petitions to appoint the initial five temporary directors. Subsequently, the District Board will function as a regulatory agency, adopting rules for assessments and elections. The period between September 2025 and the first Board meeting is a "regulatory gray zone" where development financing is effectively paused.

Immediate Action Plan

1. Verify Geography: Confirm immediately if your assets fall within the Daniel Davis, John Nail, William Perrin, or William Lewis Surveys referenced in the Act.
2. Draft TCEQ Petition: Prepare the petition for the appointment of temporary directors now, so it is ready to file on September 1, 2025.
3. Secure Lender Consent: Contact mortgage holders to obtain written consent for the creation of the District and future imposition of superior liens.
4. Update Pro-Formas: Revise development financial models to account for the new District tax burden and the administrative costs of District management.

Operational Changes Required

Contracts

Commercial Loan Agreements: You must review all existing deeds of trust and loan covenants for property within the District. SB3050 allows for assessments that create a first and prior lien superior to private mortgages. Petitioning for such assessments without lender consent will likely trigger a "Default by Encumbrance" clause.
Triple Net (NNN) Leases: Future lease agreements within the District must explicitly define the pass-through of District-specific ad valorem taxes and infrastructure assessments.
Sales Contracts: All real estate sales contracts must now include the statutory Notice to Purchasers (Texas Water Code § 49.452), disclosing the District’s taxing power. Failure to include this allows the buyer to terminate the contract at closing.

Hiring/Training

Specialized Counsel: Retain legal counsel specializing in Texas Special Districts immediately. General real estate counsel is often insufficient for the specific "dirt bond" issuance process.
District Engineer: You must engage a civil engineer to prepare the "Petition for Improvements" required by the Board before any infrastructure projects can be authorized.

Reporting & Record-Keeping

Petition for Directors: Majority landowners must file a formal petition with the TCEQ to seat the initial Board.
Petition for Improvements: The Board is legally barred from financing projects until a specific petition requesting the improvements is filed by the landowners.
Voter Registration: You must track and manage the residency of qualified voters within the District to ensure quorums for the mandatory tax and bond elections.

Fees & Costs

Unlimited Tax Liability: The District is authorized to levy an ad valorem tax with no cap on the rate for bond repayment, subject to voter approval.
Personal Liability: Unlike standard property taxes, unpaid assessments under this District are the personal liability of the property owner, exposing corporate assets beyond the specific real estate to collection actions.

Strategic Ambiguities & Considerations

Assessment Methodology: The statute authorizes assessments but leaves the calculation method (e.g., front-foot vs. square-footage vs. assessed value) to the discretion of the Board. If you do not control the Board, you risk an assessment methodology that disproportionately burdens your specific asset class.
Navigation Powers: The Act grants "Navigation District Powers" (canals, docks, bulkheads) without defining the environmental regulatory scope. The Board may adopt rules regarding waterway usage that overlap with or exceed standard state regulations.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed

Filed

TopicsFannin County Improvement District No. 1 Special Districts & Authorities Special Districts & Authorities--miscellaneous

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 3050
89R21601 JTZ-F	By: Hughes
	Local Government
	4/23/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Currently, there is certain undeveloped land located in unincorporated Fannin County. The creation of a municipal management district over this property is proposed to promote development of the property and to provide infrastructure and supplemental services.

S.B. 3050 amends the Special District Local Laws Code relating to the creation of the Fannin County Improvement District No. 1 (district). The district will function as a political subdivision of the State of Texas to provide certain improvements, projects, and services for public use and benefit. The district's powers and duties include, subject to certain requirements, the authorization to issue obligations and impose assessments, fees, and property taxes. The bill prohibits the district from exercising the power of eminent domain. Municipal management districts operate pursuant to Chapter 375, Local Government Code.

As proposed, S.B. 3050 amends current law relating to the creation of the Fannin County Improvement District No. 1, provides authority to issue bonds, and provides authority to impose assessments, fees, and taxes.

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 Subtitle C, Title 4, Special District Local Laws Code, by adding Chapter 4205, as follows:

CHAPTER 4205. FANNIN COUNTY IMPROVEMENT DISTRICT NO. 1

Sets forth standard language for the creation of the Fannin County Improvement District No. 1 (district) in Fannin County. Sets forth standards, procedures, requirements, and criteria for:

Creation, purpose, intent, and approval of the district (Sections 4205.0101-4205.0104);

Initial district territory, eligibility for inclusion in special zones, and applicability of other law to this chapter (Sections 4205.0105-4205.0108);

Initial size, appointment, election requirement, compensation of the board of directors of the district, including provisions related to initial temporary directors (Sections 4205.0201-4205.0205);

Powers and duties of the district (Sections 4205.0301-4205.0310 and Sections 4205.0401-4205.0402);

General financial provisions and authority to impose a tax and issue bonds, including taxes and bonds relating to designated areas (Sections 4205.0501-4205.0506); and

Dissolution of the district by the board of directors (Section 4205.0901).�

SECTION 2. Sets forth the initial boundaries of the district.

SECTION 3. Provides that all requirements of the constitution and the laws of this state and the rules and procedures of the legislature with respect to the notice, introduction, and passage of this Act are fulfilled and accomplished.

SECTION 4. Effective date: upon passage or September 1, 2025.

Senate Authors

Sen. Bryan HughesRepublican · Primary Author

House Sponsor

Rep. Shelley LutherRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 3050

AN ACT

relating to the creation of the Fannin County Improvement District

No. 1; 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 4205 to read as follows:

CHAPTER 4205. FANNIN COUNTY IMPROVEMENT DISTRICT NO. 1

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4205.0101. DEFINITIONS. In this chapter:

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

(2) "County" means Fannin County.

(3) "Director" means a board member.

(4) "District" means the Fannin County Improvement

District No. 1.

Sec. 4205.0102. NATURE OF DISTRICT. The Fannin County

Improvement District No. 1 is a special district created under

Section 59, Article XVI, Texas Constitution.

Sec. 4205.0103. 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. 4205.0104. 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. 4205.0105. 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. 4205.0106. 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. 4205.0107. APPLICABILITY OF MUNICIPAL MANAGEMENT

DISTRICTS LAW. Except as otherwise provided by this chapter,

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

Sec. 4205.0108. 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. 4205.0201. GOVERNING BODY; TERMS. (a) The district is

governed by a board of five voting directors elected or appointed as

provided by this chapter and Subchapter D, Chapter 49, Water Code.

(b) Except as provided by Section 4205.0203, voting

directors serve staggered four-year terms.

Sec. 4205.0202. COMPENSATION. (a) A director is entitled

to receive fees of office and reimbursement for actual expenses as

provided by Section 49.060, Water Code.

(b) Sections 375.069 and 375.070, Local Government Code, do

not apply to the board.

Sec. 4205.0203. TEMPORARY DIRECTORS. (a) On or after the

effective date of the Act enacting this chapter, the owner or owners

of a majority of the assessed value of the real property in the

district according to the most recent certified tax appraisal roll

for the county may submit a petition to the Texas Commission on

Environmental Quality requesting that the commission appoint as

temporary voting directors the five persons named in the petition.

The commission shall appoint as temporary voting directors the five

persons named in the petition.

(b) The temporary voting or successor temporary voting

directors shall hold an election to elect five permanent voting

directors as provided by Section 4205.0201.

(1) the date permanent voting directors are elected

under Subsection (b); or

(2) the fourth anniversary of the effective date of

the Act enacting this chapter.

(d) If permanent voting directors have not been elected

under Subsection (b) and the terms of the temporary voting

directors have expired, successor temporary voting directors shall

be appointed or reappointed as provided by Subsection (e) to serve

terms that expire on the earlier of:

(1) the date permanent voting directors are elected

under Subsection (b); or

(2) the fourth anniversary of the date of the

appointment or reappointment.

(e) If Subsection (d) applies, the owner or owners of a

majority of the assessed value of the real property in the district

according to the most recent certified tax appraisal roll for the

county may submit a petition to the Texas Commission on

Environmental Quality requesting that the commission appoint as

successor temporary voting directors the five persons named in the

petition. The commission shall appoint as successor temporary

voting directors the five persons named in the petition.

Sec. 4205.0204. NONVOTING DIRECTORS. The board may appoint

nonvoting directors to serve at the pleasure of the voting

directors.

Sec. 4205.0205. QUORUM. For purposes of determining the

requirements for a quorum of the board, the following are not

counted:

(1) a board position vacant for any reason, including

death, resignation, or disqualification;

(2) a director who is abstaining from participation in

a vote because of a conflict of interest; or

(3) a nonvoting director.

SUBCHAPTER C. POWERS AND DUTIES

Sec. 4205.0301. GENERAL POWERS AND DUTIES. The district

has the powers and duties necessary to accomplish the purposes for

which the district is created.

Sec. 4205.0302. 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. 4205.0303. LAW ENFORCEMENT SERVICES. To protect the

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

including the county, to provide law enforcement services in the

district for a fee.

Sec. 4205.0304. 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. 4205.0305. 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. 4205.0306. 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. 4205.0307. 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. 4205.0308. ADDING OR EXCLUDING LAND. 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. 4205.0309. NAVIGATION DISTRICT POWERS. (a) The

district has the powers provided by the general law of this state

applicable to navigation districts created under Section 59,

Article XVI, Texas Constitution, including Chapters 60 and 62,

Water Code.

(b) The district may purchase, construct, acquire, own,

operate, maintain, improve, or extend, inside and outside the

district, a canal, waterway, bulkhead, dock, or other improvement

or facility necessary or convenient to accomplish the navigation

purposes of the district.

Sec. 4205.0310. NO EMINENT DOMAIN POWER. The district may

not exercise the power of eminent domain.

SUBCHAPTER D. ASSESSMENTS

Sec. 4205.0401. 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. 4205.0402. 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. 4205.0501. 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. 4205.0502. OPERATION AND MAINTENANCE TAX. (a) If

authorized by a majority of the district voters voting at an

election under Section 4205.0501, 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. 4205.0503. 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 bonds, notes, or other

obligations payable wholly or partly from ad valorem taxes,

assessments, impact fees, revenue, contract payments, grants, or

other district money, or any combination of those sources of money,

to pay for any authorized district purpose.

Sec. 4205.0504. BONDS SECURED BY REVENUE OR CONTRACT

PAYMENTS. The district may issue, without an election, bonds

secured by:

(1) revenue other than ad valorem taxes, including

contract revenues; or

(2) contract payments, provided that the requirements

of Section 49.108, Water Code, have been met.

Sec. 4205.0505. BONDS SECURED BY AD VALOREM TAXES;

ELECTIONS. (a) If authorized at an election under Section

4205.0501, the district may issue bonds payable from ad valorem

taxes.

(b) At the time the district issues bonds payable wholly or

partly from ad valorem taxes, the board shall provide for the annual

imposition of a continuing direct annual ad valorem tax, without

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


May 2, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB3050 by Hughes (Relating to the creation of the Fannin County Improvement District No. 1; 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

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Frequently Asked Questions

Common questions about SB3050

What does Texas SB3050 do?

SB3050 establishes the Fannin County Improvement District No. 1, converting approximately 337 acres of land into a political subdivision with the authority to levy unlimited ad valorem taxes and impose assessments with superior lien status. This law immediately alters the financial liability and development requirements for landowners, lenders, and developers holding interests in the Johnson Family Trust tracts; failure to control the district’s formation will result in externally imposed taxation and regulation.

Who authored SB3050?

SB3050 was authored by Texas Senator Bryan Hughes during the Regular Session.

When was SB3050 signed into law?

SB3050 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB3050?

SB3050 is enforced by Fannin County Improvement District No. 1 Board of Directors and Texas Commission on Environmental Quality (TCEQ).

How urgent is compliance with SB3050?

The compliance urgency for SB3050 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB3050?

The cost impact of SB3050 is estimated as "high". This may vary based on industry and implementation requirements.

What topics does SB3050 address?

SB3050 addresses topics including fannin county improvement district no. 1, special districts & authorities and special districts & authorities--miscellaneous.

Legislative data provided by LegiScanLast updated: November 25, 2025

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