The financial reasons The Woodlands, Texas does not want to incorporate

Many communities want to incorporate so they can control land use as well as fund and provide local services. But The Woodlands, Texas has resisted incorporation for financial reasons:

For one, The Woodlands is one of the nation’s best case studies when it comes to weighing the costs and benefits of incorporation. According to Bruce Tough, Chairman of the township’s seven-member Board of Directors, his community boasts an unprecedented level of success when it comes to governance, public services, and environmental excellence. Just 20 years after it was founded, the township had won a Special Award for Excellence from the Urban Land Institute and a LivCom Nations in Bloom Gold Award. Residents enjoy more than 190 miles of hiking and biking paths. A little over 20 percent of the township’s acreage is set aside for green space, greenbelts, and golf courses…

Unlike similarly successful (and now former) townships including Irvine, California, The Woodlands has reliably refused to incorporate as either a standalone city or part of Houston, even as the issue is raised every few years by developers, residents, or the city of Houston, which provides municipal services such as waste removal, water, and local law enforcement from the sheriff’s department. Tough points to the township’s one-of-a-kind public service provider agreement with Houston and the fact that the township is run more like a business than a municipal government as the primary reasons why The Woodlands doesn’t need to incorporate. Houston agrees not to annex The Woodlands during the next 50 years. In exchange, The Woodlands continues to make service payments to Houston.

Among residents, the question of incorporating is primarily a financial concern. Research indicates that becoming a standalone city could raise property taxes in The Woodlands from 32.5 cents up to anywhere from 58.14 cents to a staggering 81.5 cents per $100 valuation. (By comparison, the property tax rate in Houston hovers around 63 cents.) The costs would include road maintenance, setting up new sewage and water provisions, and establishing a separate police department. Estimates for just those few basic services reach into the hundreds of millions, costs residents fear would be added to their annual tax bills…

For now, The Woodlands residents can relax. For its population, the township has one of the lowest tax rates in the United States but more and better services than similar counterparts. There is no local income tax charged in The Woodlands, and Texas is one of seven states without state income tax. The bulk of their tax money comes from sales tax levied against visitors who flock to the downtown promenade and amphitheater.

This is an interesting case but it sounds like the primary reason The Woodlands has not incorporated is because it can afford not to. In other words, it can afford to contract with Houston for municipal services and it can rely on visitors to provide a lot of revenue rather than having to tax its residents at a higher rate. The community of over 93,000 residents has a median household income of $103,229, is 88.4% white, a poverty rate of 5.1%, and 59% of residents have a college degree. Many communities do not have this luxury.

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