Houston Strategies

The Woodlands' inevitable annexation

I've discussed Houston's potential annexation future before, including a short discussion of The Woodlands, but I wasn't very knowledgable about The Woodlands' specific situation until Justus Pang generously sent me an extremely thorough major project paper he co-wrote with L. Philip Baraldi last semester on exactly that topic, titled "Municipal Annexation and Governance in The Woodlands." The Woodlands has a no-annexation agreement with the City of Houston through 2011, but they are currently exploring their governance options after that date, especially because it is also expected that the development/build-out of The Woodlands will be complete around 2012, so the development corporation that has so strictly run things will be fading away. If you want the in-depth details of all their options (plus some details on the Kingwood and Clear Lake case studies), by all means read the whole 16 pages, but here are a few excerpts that caught my eye:

A little bit more land lie in the ETJs of these two cities (Shenandoah and Conroe), but the vast majority of the Woodlands are in Houston’s ETJ. George Mitchell strategically made this arrangement with Houston back in the 1970’s. He did not want the Woodlands to be fragmented by being annexed in a piecemeal fashion by various small municipalities. The original Woodlands development was completely located in Houston’s ETJ; only because of the subsequent expansion did the Woodlands enter into the ETJ’s of Shenandoah and Conroe. George Mitchell believed in the importance of liberal annexation laws to ensure the future vitality of Texas cities, and he intended to create a community that would one day be part of Houston. He wanted the Woodlands to help Houston rather than to be part of its problems.

Bravo for Mr. Mitchell's foresight and good citizenship, but I think it's safe to say that his "children" have pretty much disowned him at this point, and are actively resisting annexation into Houston. Fortunately, disincentives are currently in their favor.

Currently, it is understood that The Woodlands tax base Houston would gain if it annexes does not outweigh the debt of the MUDs it would also be assuming. Unlike Kingwood (with their rights over Lake Houston), the Woodlands does not possess any resource that would make it particularly attractive for annexation. However, as the Conroe’s recent actions illustrate, the political climate may suddenly change. Even though it is generally understood that Houston has no interests in annexation, the Woodland’s future is ambiguous at best.

Further reinforced later:

Both Stephen Fox and Imad Abdullah agree that it would not be in the economic interest of Houston to proceed with a wholesale annexation of the Woodlands in the near future. Annexation, particularly of residential areas is not usually profitable for Houston. Jerry Wood’s article “An Insider’s Look Outside the Loop” (Cite Magazine, summer 1985) reports that providing services to residential areas is often much more expensive than servicing commercial areas. This basic economic observation influenced events in 1974 when the newly formed City of Shenandoah claimed the Woodlands as part of its jurisdiction. In response, Houston sued Shenandoah but ultimately settled the suit out of court. Shenandoah renounced their claim to the Woodlands, and acknowledged it as part of Houston’s ETJ in exchange for Houston’s recognition of Shenandoah as a city. Houston was willing to allow a small bedroom community autonomy in exchange for uncontested rights over the potential commercial center of the Woodlands. Securing the option of one day annexing the Woodlands commercial center was a top priority.

Keeping annexation options open, and preventing surrounding municipalities from incorporating is self-preservation and economic security for Texas cities, which receive little to no state financial aid. Houston needs a wide base to protect its regional interests. The city does not want to annex bedroom communities that often drain more city money than they bring in, but at the same time it will if it will prevent the obstruction of, or permit the extension of its ETJ. In 1977, a bill passed that allowed Clear Lake to incorporate if Houston did not annex it. Houston responded immediately to annex. In this incident, one can see the long term strategic approach of Houston towards annexation issues. Houston was naturally reluctant to annex residential areas while the MUDs were still heavily in debt, but the short term expense is an investment in the long term security of the city’s manifest destiny. One of Houston’s most valuable assets its capacity for growth, and future growth depends on an unobstructed ETJ.

And finally, their very prudent conclusion and strategy recommendation for The Woodlands:

Even though The Woodlands has negotiated a moratorium with Houston, stalling any annexation plans to 2011, the threat will loom large over the residents for the foreseeable future. As previously mentioned, Conroe suddenly began annexation proceedings over the parts of The Woodlands under its ETJ. At the meeting, The Woodlands residents have already begun spouting heated rhetoric, with Scott Singletary referencing the Revolutionary War and a call to [legal] arms for his Woodlands “brethren” at the Conroe city meeting (The Courier, 12/9/2005).

Even though The Woodlands Governance Steering Committee concedes that incorporation would require the permission from the city of Houston or an act of the state legislature, we think that they are acting irresponsibly by spending property owner fees on research into governance options that are unrealistic, i.e. those calling for the incorporation of The Woodlands. While the legislature may be willing to place restrictions on a city’s powers of annexation, it would be a monumental act to eliminate Houston’s right to annexation. To do so would entail providing other sorts of revenue streams for landlocked metropolises (as is the model in other states); an option that the tax-unfriendly state of Texas would be very unlikely to support.

We think that it is the responsibility of the Governance Steering Committee to educate misled residents of The Woodlands and try to direct the planning process to concentrate on the most promising governance options. Instead clamoring for a fight, the citizens of the Woodlands need to come to terms with the fact that eventual annexation is almost inevitable. They could begin to develop a creative plan for annexation that may alleviate the inefficiencies and wasted redundancies that typically burden such a process. Unlike Clear Lake or Kingwood, The Woodlands will have plenty of time, at least nine years, to negotiate a smooth transfer of services. The Government Steering Committee should use the threat of annexation to spur community action. They need to proactively create unique solutions to avoid the battles of Kingwood and Clear Lake. This could be the ambiguous “Woodlands Solution.”

Instead of supporting an oppositional stance that threatens Houston with incorporation, the Woodlands may have much to gain through negotiation. They have the advantage of time, money, and an affluent citizenry. Instead of squandering it on a hopeless fight, they should leverage their resources in negotiating with a politically battered Houston. With a level headed approach they could avoid the kind of animosity that characterized the process in Clear Lake, where volunteer firefighters would not share with city fire fighters maps that showed quickest routes throughout the municipality (Chronicle, 8/11/1996) With nine years to plan, The Woodlands may be able to resolve the bureaucratic overlaps that are found in Kingwood. They could also negotiate for provisions that would permit them increased control, better service, or lowered fees. For example, they may be able to negotiate the care of its extensive park and open areas into the care of the Houston park system.

The Woodlands should be particularly aware of the consequences of a pyrrhic victory (not to mention defeat). Sparky Nolan noted that the bitterness of the fight hurt Kingwood’s sense of community. After focusing so much on the fight with Houston, residents had little energy left to develop their community in positive ways. It has taken these eight years since the annexation for Kingwood to begin recreating the sense of community that residents thought they were trying to preserve in the fight. The residents of the Woodlands seem to assume that annexation will ultimately destroy the small town character they cherish, but Kingwood’s experience suggests that it is often the political battle itself that causes the damage rather than what follows.

They do not need to waste their resources fighting Houston because, as Kingwood has come to realize, community is developed through its residents regardless of their city status. It is possible to have a small town feel, a sense of community, and be part of the City at the same time. In the end, regardless of which governance option is adopted, “Houston” and “the Woodlands” will retain their unique characters. We think that the Government Steering Committee should concentrate on finding a permanent solution for the Woodlands, and should work closely with Houston to negotiate a solution based on regional interests. This most likely would involve annexation, but our findings suggest that an annexation plan that is well conceived, cooperatively negotiated, and carefully implemented could also uphold those core values Woodlands residents hold so dear.

I pretty much agree, and while I expect The Woodlands' commercial district and its tax base (including the Fortune 500 HQ of Anadarko) to be snapped up ASAP after the agreement expires in 2011, I think the residents may be able to work out a mutually satisfactory arrangement with Houston, with or without actual annexation. River Oaks successfully kept its identity and stayed "River Oaks" inside the City of Houston, and I'm sure The Woodlands can do the same.

posted by Tory Gattis @ 8:19 PM