Fort Worth concerned new state law allows developers to ‘city shop’

dfwnewsa | February 21, 2024 | 0 | Fort Worth , Fort Worth News

Fort Worth concerned new state law allows developers to ‘city shop’

Fort Worth continues to grow and develop, but a new state law allowing property owners outside city limits to step out of a city’s growth boundaries could affect its long-range planning efforts. (Sandra Sadek | Fort Worth Report)
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The city of Fort Worth had plans to bring water and sewer services to 321 acres of Dean Ranch, a master-planned development in rapidly growing Parker County.But a new state law abruptly changed those plans for the development, which had been part of Fort Worth’s extraterritorial jurisdiction — an area adjacent to a city where property owners agree to abide by the municipality’s development rules in exchange for municipal services. 

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Eventually, the city anticipates annexing such areas.

Fort Worth’s role in this part of Dean Ranch development ended Sept. 15, 2023, because the new law allowed the property owner to leave the city’s control. 

Fort Worth had no choice but to let the site on the northwest border of Aledo go. 

Senate Bill 2038, which went into effect Sept. 1, 2023, allows property owners to be immediately released from a city’s extraterritorial jurisdiction simply through a valid petition signed by 50% of the registered voters — or a majority in terms of property value — of the landowners of the area. 

For fast-growing cities, this new law complicates long-range planning efforts and can create competition between cities for land. Fort Worth Assistant City Manager Dana Burghdoff described it as “city-shopping.”

What is extraterritorial jurisdiction?

Land legally designated for possible future annexation that is located within a specific distance from a city’s official boundaries. Fort Worth’s extraterritorial jurisdiction extends 5 miles from its official boundaries. A municipality has limited jurisdiction in those areas but usually is responsible for providing some municipal services, such as police and fire protection, garbage collection and water and sewer service. 

“Now, the property owners are in a position to cherry-pick which city they want to work with. So it creates competition, if you will, between the communities, but it also can kind of mess up your planning for infrastructure planning and land use planning if property owners can try to come and go,” Burghdoff said. 

Some cities have expressed concern about the impact of the legislative change. The city of Grand Prairie filed a lawsuit in Travis County against the bill, stating that it was unconstitutional. Since then, the cities of Lockhart, Navasota and Hutto have joined the lawsuit.

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Since September 2023, Fort Worth has released over 2,000 acres of extraterritorial jurisdiction. In the first month following the state bill’s passage, the city received 10 requests to be released, amounting to almost 1,600 acres.

The city currently has around 265 square miles, or 169,816 acres, in its official growth boundaries. Property owners’ requests to be released from Fort Worth’s jurisdiction amount to about 1% of the land so far.

As of publication deadline, the Fort Worth Report was unable to reach John Dean, the property owner at Dean Ranch, who petitioned for release from the city’s growth boundaries. The realty group managing the property said it and the owner are currently under a nondisclosure agreement and declined to talk.

What is Senate Bill 2038?

Provisions of the law require cities to immediately release an area from its extraterritorial jurisdiction if a valid petition is signed by 50% of the registered voters there. A single property owner can also request to release their individual property. 

Areas exempted from this are areas within 5 miles of an active military base, areas designated as an industrial district and those with a strategic partnership agreement.

The bill also prevents a city from expanding its extraterritorial jurisdiction for any annexation after Sept. 1, 2023, unless the owners request to be in the new extraterritorial jurisdiction.

Communities in a city’s extraterritorial jurisdiction are under limited municipal jurisdiction. That means a city has authority over that area’s regional planning services like water, sewer and transportation. Those areas are also eligible for annexation under the Texas Local Government Code. 

In the past, when a property owner wanted to pull out of an extraterritorial jurisdiction, they would have to apply to the city, which then could accept or reject the request. Now, the process is more like a notification, and cities can’t refuse. 

Travis Clegg with the Greater Fort Worth Real Estate Council said the idea for this law first stemmed from developments in Austin and San Antonio.

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“Some of these original ideas from these large lot developments, say 2 or 3 acres, would have to follow through city and county regulations … where the county or the city would apply a bunch of design standards. Then the timeframe for which it goes through just takes forever,” Clegg said. 

Development projects in Fort Worth’s extraterritorial jurisdiction are subject to the city subdivision ordinance, which dictates how developers can divide the land for projects.

State Sen. Paul Bettencourt, the Houston Republican who authored the bill, said the new law gives property owners a way out of a municipal government’s extraterritorial jurisdiction if they believe that the city is no longer serving them. 

“No government should be able to impose rules and regulations on your property when you have no say on the rules or regulations, no say on who’s creating the rules and regulations and no pathway to remove yourself from it until today,” Bettencourt said in a statement following the passage of the bill. 

The Texas Municipal League conducted a study in 2016 and found that there is a strong correlation between annexation and a city’s rapid growth and development. 

The organization, which works to empower Texas cities to serve their citizens, declined an interview with the Fort Worth Report because of the pending litigation.

One of the big concerns for Fort Worth is how this will impact the city’s long-range plans in areas slated for economic and urban development. Burghdoff said the city is currently looking at whether areas looking to be released are in the city’s 20-year planned service area — properties expected to receive city services in the future. 

So far, a lot of the releases have been from properties not in the planned service area and where the city did not anticipate major projects, she said. 

For larger properties in prime redevelopment areas that may have requested releases, the city was mostly in talks with owners and developers but no large investments had been made in those areas before they were released from Fort Worth’s control. 

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“The good news is that we’re not out any money, if you will, maybe just time in terms of having had meetings or negotiations over the last couple of years,” Burghdoff said. “There can be some disappointment there, that there is that opportunity cost, particularly for properties that might develop for commercial or other mixed-use ways that would have a financial benefit to the city in the future.”

Since SB 2038 took effect, Fort Worth has been working to mitigate the potential impact of the law. One way is working with adjacent cities to respect current boundaries and prevent “city-shopping.”

Fort Worth and the city of Haslet both passed a resolution preventing each from annexing the other’s extraterritorial jurisdiction land should a property owner decide to leave. Similar talks with Willow Park and Aledo are ongoing. 

Fort Worth is also working with Tarrant County to ensure the county can take over the street right of way in areas released from the extraterritorial jurisdiction. This helps ensure roads are not disconnected across boundaries, Burghdoff said. 

City staff is providing monthly reports to the City Council regarding the number of acres released because of SB 2038. 

Officials plan to bring up concerns about the unintended consequences of the law to state representatives with hopes of addressing it in the next session.

“Our thought is to try to modify the bill in some way, just to provide both for ourselves and other communities a little bit more protection,” Burghdoff said. 

At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here. 

Sandra Sadek is a Report for America corps member, covering growth for the Fort Worth Report. You can contact her at sandra.sadek@fortworthreport.org or @ssadek19. 

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