State Sen. Brandon Creighton, who represents Jefferson County, has co-signed a bill that city leaders worry could kill revenue for Beaumont and Port Arthur.
SB 715 would make annexation of business and industrial areas virtually impossible unless the majority of the land owners agree to the annexation. Both Beaumont and Port Arthur have longstanding agreements that they will not annex the refinery properties so long as the companies pay an annual fee. Other cities along the coast that have industrial properties just outside the city limits have similar arrangements.
“The City of Beaumont has approximately 30 industrial agreements with companies located in our extraterritorial jurisdiction and these companies will pay a total of $17.6 million to the city in fiscal year 2017,” Beaumont Mayor Becky Ames said in a released statement. “Industrial payments produce 15 percent of the city’s general fund revenue which helps pay for police, fire and emergency medical services.”
In Port Arthur, the situation is even more dire. Mayor Derrick Freeman said locally, the city has agreements with 17 refineries and those agreements equal half the city’s annual revenue, or $35 million dollars.
But that’s not all.
The Port Arthur agreements come due every three years and for years, Freeman said, the city only leveraged the threat of annexation to get annual payments. But recently Port Arthur has also included a provision that offered discounts to refineries that hired Port Arthur residents. With the threat of annexation off the table, actual jobs could be lost in addition to revenue.
“The only way we get taxes from them is if we do an in lieu agreement,” Freeman said. “In lieu of us annexing you, you’re going to give us some tax dollars.”
Freeman visited with Creighton last month to alert him to what was in SB 715.
“He didn’t even know what he had signed up for,” said Freeman. “In his defense, if I could throw him a line, he also represents Kingwood and Houston.”
Freeman explained that historically suburban developments outside of major metropolitan areas have been gobbled up by cities eager to expand their tax base but end up providing little of benefit to the suburbs.
Sen. Creighton said this history is exactly why he wants to limit annexations.
“I had first-hand experience in listening to hundreds of residents from the Kingwood area when the city of Houston annexed them without a public vote. Years later, after extremely high increases in water and emergency services, the city of Houston admitted that the annexation never made sound financial sense and it was essentially a mistake. Services could not be provided for a value that matched the increase in revenues from expanding the tax base,” Creighton wrote in an email.
Indeed, SB 715 would also make it harder to annex residential areas with a population under 200 people. In that situation, the majority of homeowners would have to sign off on annexation before it could go through. And the bill limits the reasons cities may annex residential areas.
“Beginning Sept. 1, 2017, a municipality may not annex an area for the limited purposes of applying its planning, zoning, health, and safety ordinances in the area,” the bill reads. As it stands, cities may annex suburbs to enforce certain zoning codes and for health and safety reasons.
Freeman also said SB 715 has a counterpart in the House, too.
However, after their February meeting, Freeman said he felt sure Sen. Creighton would roll back some of the more onerous parts of SB 715.
“I am confident that if our elected officials, Sen. Creighton and others, keep our best interest in mind, we’ll be OK,” he said. Specifically, Freeman said he hopes the bill and any other like it in the House, will get amended to protect cities.
For his part, Sen. Creighton said he has long wanted to reign in the powers of cities to annex.
“During our campaign for the Texas Senate, we were clear in our positions on annexation and illustrated a nine-year track record while in the House of Representatives consistent with allowing residential areas to have a vote when cities attempt to annex those areas. Additionally, I co-authored the same legislation, Senate Bill 1639, last session,” he said in an email.
Creighton explained that so far he’s not gotten any pushback form his position.
“My position on this issue has been consistent. I have not received any feedback attempting to change my mind on my long-held stance to allow the people to have a vote on annexation,” he wrote.
However, he added his primary focus is not protecting industry and business from annexation.
“I am aware that industry has certain contractual agreements with some municipalities and that these agreements should be honored. My focus is primarily on residential areas having a vote before being taken in by these municipalities,” he wrote.
But, at least as it stands, SB 715 is far broader than Creighton’s focus.