"It's all about timing," Houston Mayor John Whitmire told City Council on Sept. 2, 2026, just before members approved the agreement that ends any chance of Houston annexing The Woodlands. "The legislature meets in January. I promise you it was a smart decision to get that $50 million today and not risk getting the [state] Legislature involved."
Houston covered its budget gap. The Woodlands secured permanent protection from annexation. Read past the headline, though, and the $50 million turns out to be mostly money that was already committed. The new money ends a payment that had no end date. It also protects The Woodlands against a future rewrite of state law, even though current law already requires voter consent for annexation. And it leaves several things exactly where they were. Anyone comparing The Woodlands with other Houston-area suburbs should know both halves.
Most of the $50 million was already committed
The agreement is formally the Third Amendment to the 2007 Regional Participation Agreement, usually shortened to RPA. Under the original agreement, the Township deposited 1/16 of 1% of the sales tax collected in the part of The Woodlands that sits in Houston's extraterritorial jurisdiction, or ETJ, into a Regional Participation Fund. Houston could spend that money only on qualifying regional capital projects, and only by matching it dollar for dollar. Community Impact reported that the fund had not been used since 2018.
The Township's Aug. 26, 2026 board presentation breaks the $50 million into three pieces:
| Component | Amount | Where it comes from |
|---|---|---|
| Regional Participation Fund balance | $22.6 million | Sales tax already deposited over nearly 20 years |
| 2027 to 2029 payments | $7.9 million | The same 1/16 of 1% deposits the Township already owed |
| New money | $19.5 million | Township cash reserves |
| Total to Houston | $50 million |
The money was already in the fund. What changes is the strings attached. The amendment drops the project restrictions and the matching requirement, so Houston can spend the $22.6 million on its top priorities without first finding another $22.6 million of its own. Community Impact reported that the fund balance goes into Houston's general fund and shrinks the city's $25 million gap to $3 million.
That leaves $19.5 million of new money from The Woodlands. The real question is what that money buys.
It ends a payment with no end date
Most coverage of the original agreement focuses on 2057, the year Houston's deferral of annexation was set to expire. The payment had no such limit. The Township's presentation says the obligation to fund the Regional Participation Fund "continues beyond the 2057 annexation moratorium with no specified end date." The 2007 agreement itself gave the fund an unlimited term, subject to law, of no less than 99 years.
The Township projects that payment, assuming 3% annual sales-tax growth:
- 2027 through 2029: about $2.6 million to $2.7 million a year, still paid to Houston under the amendment
- 2030: about $2.8 million, the first year the Township keeps it
- 2060: about $6.7 million in a single year
The Township expects to keep an average of $4.5 million a year over the next 30 years starting in 2030, and it calls that a conservative projection. On those numbers, the $19.5 million comes out of reserves once and buys back a revenue stream worth more than that every few years.
Township Vice Chairman Craig Eissler made the same argument to Woodlands Online the day after the board's 7–0 vote. When residents asked why the board was rushing, he said that "the sooner we do this deal, the sooner we get to start retaining a sales tax that we would have been paying the same to Houston."
Houston saw the same stream differently. Before the vote, City Controller Chris Hollins estimated Houston could give up as much as $173 million through 2057 and called the agreement a bad deal. Whitmire called that estimate "wild speculation," and Council approved the deal 13–1. District C Council Member Joe Panzarella cast the lone no vote. He objected to releasing fund money for uses other than infrastructure and parks.
Why pay for protection current law already gives
The second half of the deal looks redundant at first. Since the 2019 passage of HB 347, most annexations in Texas need consent from landowners or voters, either by petition or by election. The Township's own presentation says current state law prohibits annexation unless voters approve it.
There are two reasons the board wanted more than that. The first is in a 2018 memo from Township counsel, written after the Legislature's 2017 changes to annexation law:
"The risk of forced annexation of all or part of The Woodlands by Houston or Conroe has been reduced but not eliminated. Arguments exist that execution of the RPAs in 2007 bound the parties to terms for annexation based on the law then in effect, or that the RPAs constitute The Township's consent to annexation after 2057."
The memo calls this caution rather than a binding legal conclusion. It also notes that no court has ruled on how the annexation provisions in these agreements interact with the newer consent laws. Under that reading, the 2007 agreement protected The Woodlands until 2057 and might also have been argued afterward as the Township's consent to annexation.
The second reason is the one Whitmire raised. State law can change. The Township's announcement says so directly: current law protects The Woodlands from annexation without voter approval, but "State law may change in the future and leave The Woodlands exposed." The amendment rules out annexation by Houston even if the law changes.
The history explains why the board treats this as worth paying for. The Township's presentation starts its timeline with Houston's 1996 annexation of Kingwood. The Woodlands then entered a moratorium agreement with Houston in 1999 that blocked annexation through 2011. In 2007, the Legislature authorized the agreements with Houston and Conroe that pushed the deferral to 2057.
What stays exactly where it was
This list matters most to anyone comparing communities.
- The Woodlands is still in Houston's ETJ. If anything in the agreement changes or other circumstances come up, Houston would need approval from Woodlands voters.
- The Woodlands is still a township, not a city. In the Nov. 2, 2021 incorporation election, Proposition A lost 7,932 to 16,431.
- The Conroe agreement is unchanged. It separately defers Conroe annexation for 50 years in exchange for its own 1/16 of 1% deposits. Eissler said the Township "still" has that agreement and would talk about a similar deal if Conroe is interested. No Conroe amendment had been reported as of Sept. 30, 2026.
- The sales-tax benefit waits until 2030. The Township keeps paying the 1/16 of 1% deposits to Houston through 2029, and the revenue it gets to keep begins in 2030.
Township financial statements show how the payments have been split until now. Through October 2025, the Township recorded $2,064,677 in regional participation expense, covering payments to both Houston and Conroe without a city-by-city breakdown.
Parts of The Woodlands sit in Houston's ETJ and parts sit in Conroe's. Community Impact cited East Shore as an example on the Houston side. No published list assigns each village to one city or the other. The Township's political boundaries map includes separate Houston ETJ and Conroe ETJ layers, so you can check any address.
A few common questions
When does the money change hands? Community Impact reported this schedule: $22.63 million by Dec. 31, 2026, $9 million by the end of 2027, $9 million by the end of 2028 and a final $9.37 million by Dec. 31, 2029.
Who voted for it on The Woodlands side? The Township board approved the amendment unanimously at a special meeting on Aug. 26, 2026. The Township's release lists Chairman Brad Bailey, Vice Chairman Craig Eissler, Secretary Linda Nelson, Treasurer Richard Franks and Directors Cindy Heiser, Dr. Shelley Sekula-Gibbs and Adam Lamb.
Where can I read the details myself? The Township's announcement of the amendment and Community Impact's report on the Council vote cover the terms. Houston Public Media's coverage includes the city's side of the debate.
If you're weighing a home in The Woodlands and want to know which ETJ and agreement cover a specific address, The Merlo Team can look it up with you in English or Spanish before you write an offer. If you already own here, start with an Instant Home Valuation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
