Permanent solutions needed to govern development in region

Patchwork system has worked in short run, but all future growth must be sustainable

Houston is one of the fastestgrowing metropolitan areas in the nation. But, as Hurricane Harvey reminded us, growth can’t just happen without consequence. Many aspects of urbanization have to be dealt with — from the subdivision of land and the design of infrastructure at the front end to the ongoing problems of providing a wide variety of services ranging from road maintenance to police protection and flood management.

Over the last 30 years, the original systems designed to manage Houston’s urbanization have gradually broken down. They’ve been replaced by a fragmented collection of rules and practices involving the city of Houston, Harris County and hundreds of municipal utility districts (MUDs). Up to now, this system has been effective in many ways. But as a new report, “Growing A Governing Region,” from Rice University’s Kinder Institute for Urban Research suggests, stresses and strains are becoming obvious:

The city of Houston, strained to provide services to its own residents, has stopped annexing new territory.

Harris County is hardpressed to maintain roads in unincorporated areas.

MUDs have been good service providers up to now, but many of them face enormous costs tied to upgrading their sewage treatment plants.

The 400,000 residents of unincorporated Harris County who live outside MUDs receive few services at all.

Under the system set up by Texas decades ago, the city of Houston was supposed to manage most of the region’s urbanization. The idea was that Houston would approve all development in its expansive “extraterritorial jurisdiction” (ETJ), then annex the newly developed areas into the city and provide a full range of municipal services to those areas.

And, indeed, Houston continues to control review of development projects over a vast area — almost 1,200 square miles in the Houston ETJ. The Houston city planning commission reviews and approves development plans deep into Waller and Fort Bend counties. But with the exception of Kingwood, Houston has engaged in virtually no annexations for the last 40 years. Thus Houston controls the front end of the develop-

ment process but does not provide services in the long term. Yet the city’s large ETJ makes it impossible for residents to consider incorporating or annexing to a different city.

As a result, more people live in unincorporated areas in Harris County than in any other county in the nation — close to 2 million, a 45 percent increase in just the last eight years alone. But Harris County itself has no power to pass ordinances and limited power to raise revenue. (For example, unlike cities and some MUDs, the county receives no sales tax.) That’s why MUDs have emerged as the leading service providers for new subdivisions in unincorporated areas.

It should be noted that much of the unincorporated area has been included in the city’s 200-odd “limited purpose annexations” — essentially, contracts between the city of Houston and special districts. Under such agreements, the city and the special districts (mostly MUDs) split the sales tax generated inside the district. The city agrees not to annex the district for 30 years and provides few services to those areas.

MUDs began as a form of water district, but now many of them provide or contract for a wide variety of services including water, wastewater, parks and law enforcement. (While the sheriff patrols unincorporated areas, many MUDs contract with either the sheriff or constables for additional patrol services.) MUDs in the Houston area have about $6 billion in bonded indebtedness, mostly for water and wastewater projects. In essence, they have become general government entities rather than special districts. Most residents have been happy with their MUDs up to now.

This situation is unique in Texas and perhaps the nation. More than 70 percent of all MUDs in Texas are in the Houston area. In the Dallas-Fort Worth area, most residents live inside cities. In Austin and San Antonio, the central city continues to annex most new developments — as was the original plan for Houston.

For now, most neighborhoods are in good shape. But in the long run, providing such services as road maintenance and sewage treatment equitably and in a cost-effective manner will not be easy. Especially under the current system, meeting the challenge would almost inevitably mean significant property tax increases. However there are many possibilities, including:

The state Legislature allows neighborhoods in the Houston ETJ to incorporate or be annexed by another city.

Neighboring MUDs join together to build facilities, especially for wastewater treatment.

The city of Houston and MUDs renegotiate their 30-year limited purpose annexation agreements so sales tax funds are used specifically to provide services in those areas.

Tax revenue is shared regionally to limit disparities. The state Legislature gives Harris County more power to deal with urban service challenges.

All too often in the past few decades, the Houston region has grown quickly without considering the long-term consequences. The regional governance patchwork has served Houston well in the short run. But it is time to think about more permanent solutions to governing the region so Houston’s existing neighborhoods — and its future growth — will be more sustainable.