Houston and Conroe's share of the booty, actioned upon by Project Planning and Development Committee

By agreement with Houston and Conroe, we share 1/16 of 1% of sales taxes collected here with these two cities collectively in order to be "free". This has seemed reasonable from day one. There should be no big issue with it. The reasonableness comes from the fact that we enjoy the amenities of Houston and Conroe, using the roads they maintain, and other services (parks, garbage pickup at public sites, etc) that they provide. A city always uses some of their sales taxes for capital improvements, but they are restricted in what projects are eligible.¹. Houston's general sales tax is 1%. Ours is 2%. They also have a 1% transit sales tax, so their total tax is 2%, the state maximum - same as ours, 2%. So if Houston had annexed The Woodlands, we would be paying 1% sales tax from all stores to Houston for their improvement and use, which would include The Woodlands area, apportioned as they would have seen fit to whatever projects they see fit. We assume we would also be paying 1% transit tax also, but that was never determined. Conroe has a 2% general sales tax. So 1/16th of 1% does seem to be quite a reasonable cost for being free from annexation. We are The Woodlands and control our own destiny.

We have a committee in The Woodlands Township to administer our role in this part of the two municipal contracts. That is called the PROJECT PLANNING AND DEVELOPMENT COMMITTEE. That recommends which projects the Township supports to execute with the funds we provide. What seemed like a rubber stamp when the committee made its recommendation earlier this year, probably was just that, a rubber stamp to Houston's proposed projects.

This year, Houston listed projects directly from the eligible list as a starter to this process. We agreed to the list. We actually agreed as residents when we voted "yes" for the Township. We as a government agreed to them via this committee's recommendation. A few of the projects are a little obscure as to our benefit, but the scope of the expenditures does not have to include our specific interests. Benefactors are those who live in the region, not residents within The Woodlands, although we are of course direct benefactors from some projects such as the extension of Hardy Tollway. Houston does not in fact have to even seriously consider our thoughts on these regional projects. They do it as a courtesy but as a requirement of the contract. This makes me wonder why we even bother to review them and maybe we don't. Yet I cannot help but think if we came up with a reasonable project, the city would consider it amidst the others. If we are astute on this matter in the future, we would seek ideas to add to Houston's and Conroe's project lists that would influence the northern area's interests. Although at this time, we need not be very involved in choosing projects, the time will come when we should be participative.

For the time being, we can continue to agree to the cities' projects, being a rubber stamp, since the improvements will be made there, not here and we have actually agreed upon them anyway at the onset of a new government. All current eligible projects for the Houston/Township agreement were listed in an attachment to the agreement with Houston.

So the booty this year is $16 million to Houston and $320,000 to Conroe. This money has already been paid to those municipalities by financing a short-term bond at 5.25% that can be discontinued at any time, when we want to buy a long term bond at a better rate. The Township managed a good financial arrangement where it has excellent flexibility. Hopefully, our economic environment will become more stable within the year and money for long term bonds will be readily available again.

For your additional reference, I have included the pertinent text referencing these projects, extracted from the signed agreement with Houston. I thought about summarizing them since they are written in typical legal jargon, but decided not to "interpret" the text. Have fun of you want to go take a run through the text!

²Eligible Projects
Eligible Projects for purposes of this Agreement shall mean and include any program or project described in Section 43.0754(d) of the Act, and such other similar projects or programs as may now or hereafter be permitted by law and mutually agreed upon in writing by the Representatives. All of the Projects listed in Exhibit “B” attached hereto are Eligible Projects.
Section 3.2. Selected Projects. Except as otherwise provided in Section 2.10(b) above, and after giving consideration to the sufficiency of funds on hand in the Regional Participation Fund, and the likelihood that any alternative or additional sources of funding may be or may become available in the foreseeable future from gifts, grants or contributions or payments by others, the Representatives shall endeavor in good faith to periodically select one or more Eligible Projects (the “Selected Projects”) for funding and implementation pursuant to this Agreement, with priority given to the Projects listed on Exhibit “B”. If the Representatives are unable to agree upon the selection of Eligible Projects, then the selection proposed by the Representative of the City shall be deemed to have been adopted, subject to the right of any other Representative to invoke the dispute resolution procedures of this Agreement to determine whether such selection complies with Section 43.0754(d) of the Act. The Projects selected by the City Representative shall be conclusive unless the arbitrators determine that the City has abused its discretion by selecting a Project not included on Exhibit "B" or in Section 43.0754(d) of the Act.
Section 3.3. Project Reconsideration. If, for any reason, binding obligations in the amount of the lesser of $100,000 or 10% of the estimated Project Costs of a Selected Project (other than a Project listed on Exhibit “B”) have not been made or incurred within eighteen (18) months after the selection of the non-Exhibit “B” Selected Project, the Project Manager, upon request of a party, shall provide the Representatives with a report detailing the reasons for such delay and the anticipated constraints upon and time requirements for successful implementation of such Selected Project. Upon receipt and review of such report, the Project Representative for any party may request that such Selected Project be suspended and that the selection and continued implementation of such Selected Project be reconsidered. If implementation of such Selected Project in the foreseeable future is not reasonably expected, and if suspension and reconsideration of such Selected Project has been requested by any Representative, implementation shall be suspended by the Project Manager as soon as practicable pending such reconsideration. Within 30 days of suspension of implementation of a non-Exhibit "B" Selected Project, the Representatives shall apply the procedures set out in Section 3.1 and 3.2 to determine whether the Project will be reinstated as a Selected Project and with what priority.

Other References

• Handbook of Texas Online - History of Sales Tax in Texas
• ¹Texas Comptroller - Local Sales and Use Tax
• ²Houston/Township Agreement