Some bills passed by the state Legislature are more consequential than others. Some become law and then go more or less unnoticed. Others, like Senate Bill 2038, make a deep impact immediately.
SB 2038 allows landowners who live on the fringe of a city’s limits to remove themselves from that city altogether, allowing them to enjoy looser regulations when it comes to development.
This has proven to be popular in the Austin area, with more than 1,000 properties having already applied to annex themselves from Texas’ capital city.
Justin Sayers, a senior staff writer at the Austin Business Journal, said the types of properties that have applied runs the gamut.
“Everything from big developments like Tesla’s property and their Gigafactory, a film studio that’s popping up in Bastrop, east of Austin, to the Austin Executive Airport, to people’s houses,” he said. “Essentially what landowners can do is remove themselves from those development standards by applying to a city.
The city doesn’t have to approve that, and if they don’t, they’re allowed to take it to an election that will likely pass because the only voters on that will be the property that is slated to be de-annexed.”
Sayers said in order to understand how this law works, it’s important to understand what an extraterritorial jurisdiction is — sometimes called an ETJ.
“Basically, it’s areas around cities that the city wants to annex in the future. To back up about ten years ago, the state made it so that all annexation is voluntary. So cities don’t have that power anymore. So within these areas, they still hold minimum development standards on things like roads and environmental standards and floodplains, but they don’t have full development control over those areas,” Sayers said.
“There were already limited standards in the first place. But when you go into the county, there’s a lot less restrictions on what you can build out there. So essentially, (this law allows you to) remove yourself from those limited development standards and put yourself on the county development standards.”
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This change has big implications for developers who want to build new projects on the outskirts of Texas cities.
“Developers, as you can imagine, are very interested in this bill because it allows them to get out of that perceived red tape, going through development processes and zoning and all that type of thing that the county standards don’t have,” Sayers said. “They’re very happy about this because it can move projects along faster. And in the developing world, time is money.”
On the other hand, this change also impacts cities and their ability to control growth in their area.
“And that’s the argument that cities are making – whether it’s conservative cities, liberal-leaning cities – they’re just very concerned about having that control,” Sayers said.
“In Texas, in general, cities don’t have much control over their development standards. So they’re concerned that having these properties that are right next to their city limits are going to create incongruous development that’s going to remove their tax base that they were hoping to have in the future and kind of create these holes in the donut of development around their city limits.”
Some cities are concerned enough to have taken this law to court, claiming it is unconstitutional.
“About a year ago, the city of Grand Prairie near Dallas filed a lawsuit challenging the constitutionality of the law. The state has denied the claims in the lawsuit, and 20 cities have now joined that lawsuit, including two here in the Austin area — Lockhart and Hutto,” Sayers said. “That is going through the administrative process right now.”
Sayers said it also remains to be seen if or how lawmakers might tweak this law in the upcoming session, which starts in January.
“About a month ago, the Texas Senate Committee on Local Government met to discuss this law and to consider some tweaks to it,” he said. “It brought out a lot of testimony, mostly from cities complaining about the law and developers calling it the best thing to happen to them. But what tweaks might happen, that remains to be seen.
Sen. Paul Bettencourt is the chair of that committee, and he was actually the sponsor of the bill when it was passed. And his office said it’s too soon to make a determination on what those changes might look like.”
