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HB 5654

Relating to the creation of the Montgomery County Municipal Utility District No. 263; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.

89th Legislature (2025) Introduced by Lois Kolkhorst and 1 co-sponsor

Texas creates new Montgomery County utility district with eminent domain, bonding, and taxing authority to finance water and wastewater infrastructure.

Effective on 1/1/26
#montgomerycountymunicipalutilitydistrictno.263(dm3sm) #specialdistricts&authorities--municipalutilitydistricts(i0009) #specialdistricts&authorities--water&utility(i0755)
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Bill Summary · HB 5654

Legislative bill overview

HB 5654 establishes Montgomery County Municipal Utility District No. 263, a new special-purpose government entity with authority to provide water, wastewater, and related utility services. The district is granted powers to use eminent domain (limited property seizure for public use), issue bonds for infrastructure financing, and levy assessments, fees, and taxes on property within its boundaries.

Why is this important

The creation of a new utility district directly affects property owners and residents in the designated Montgomery County area, as they become subject to new taxation and assessment authority. This mechanism is commonly used in Texas to finance infrastructure development in growing suburban areas, but it shifts governance and financial responsibility from the general county or municipal level to a specialized district structure.

Potential points of contention

  • Eminent domain scope: The "limited" power of eminent domain language could be ambiguous regarding what property seizures are permissible and how affected landowners are compensated
  • Tax burden on residents: New assessments, fees, and taxes will be imposed on properties within the district without necessarily requiring voter approval in advance, raising concerns about taxation without explicit consent
  • Debt obligations: Bond authority allows the district to incur long-term debt that district residents will ultimately repay through taxes and fees, potentially burdening future property owners

Compiled from official sources — confirm details with the bill’s official record.

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