Texas Legislature Gives Landowners a “Get Out of Jail Free” Card From Cities’ ETJ

On May 19, 2023, Texas Senate Bill 2038 (SB 2038) passed, granting property owners in most cities’ extraterritorial jurisdictions (ETJs) the ability to unilaterally release themselves from non-representative regulation. Before SB 2038, Texas law did not provide a straightforward path for getting out of a municipality’s ETJ. Now, starting on September 1, 2023, property owners may use petition and election procedures to release themselves from ETJs.

An ETJ is “the unincorporated area that is contiguous to the corporate boundaries of the municipality” and is located within a specified distance of those boundaries depending upon the municipality’s population.”[1] It’s an area outside a city’s boundary in which the city can exercise certain legal powers. Before SB 2038, there was no clear path for property owners to remove their land from a municipality’s ETJ. SB 2038, which goes into effect on September 1, 2023, amends current law by granting property owners the ability to unilaterally release themselves from an ETJ through either petition or election. As Senator Paul Bettencourt tweeted, SB 2038 fixes the issue that all ETJ residents faced—regulation without representation.

For additional information on SB 2038 itself, please see the full text of the bill published during the 88th Texas Legislative Session. For answers to common questions about living in a city’s ETJ, check out the following post.

Historical Context: Pre-SB 2038 Landscape

The number of people who call themselves Texans has increased dramatically over the last few decades. Between 2000 and 2022, Texas’s population grew by over 9 million people, pushing the Lone Star State’s total population over 30 million. During this boom, one of the most underreported stories has been the struggle between Texas cities and the Texas Legislature in protecting individual property rights.

On one hand, cities have attempted to extend their boundaries—a process called annexation—to subject new areas to municipal taxation and land-use regulation. On the other, the Legislature has passed multiple waves of annexation reforms to protect citizens against land grabs and power trips by Texas’s fast-growing cities.

This back-and-forth struggle began in earnest in 1963, when the Texas Legislature first required cities to provide newly annexed land with the same level of municipal services that they provided elsewhere. In the 1980s, 1990s, and early 2000s, the Legislature responded to new types of municipal annexation abuses by enacting more reforms to protect landowners. Predictably, some cities responded by ignoring—or trying to work around—those laws. So in 2019 the Texas Legislature seemingly gave firm control back to landowners by requiring cities to obtain landowner consent for most annexations.

But cities struck back by exerting more control over land in their ETJs—a perimeter zone just outside city limits. Directly violating state law, cities began killing land deals by telling landowners and developers that they could not develop land in ETJs for certain high-value uses. The cities, now unable to force annexations anymore, instead pressured landowners to consent to annexation or development agreements in exchange for the cities’ dropping objections to land development, which was a power that the cities actually never had under state law.

Landowners and their allies asked the Legislature to intervene. Concerned about rampant ETJ abuse, the Legislature and Governor responded by enacting SB 2038.

For additional information on the law governing the process of releasing ETJ prior to SB 2038’s passing, please see the following post. For additional information on annexation and disannexation procedures, please see the following post.

Sweet Release: SB 2038 Empowers ETJ Residents

Pursuant to SB 2038, as of September 1, 2023, property owners in an ETJ may release their property through either petition or election. Cities can also choose to release areas of their ETJs.[2]

Release via petition is possible with the signatures of either (1) more than 50% of the registered voters of the area described in such petition or (2) a majority in value of the holders of title of land in the area described in such petition. Because SB 2038 does not define “area,” this ability to petition for removal from an ETJ is possible on a residential block level, or even on a lot-by-lot basis. This means that property owners now have the unilateral ability to opt out of their ETJ without the consent of their neighbors. Release via election entails requesting that the municipality hold an election to vote on whether to release the area in question from the municipality’s ETJ. This request is made through a petition and requires at least 5% of the area’s registered voters’ signatures.

If the property owner or owners follow one of these two paths, petition or election, then the city must release the area from its ETJ.

Who should consider filing a S.B. 2038 petition? ETJ landowners who want to:

•                 develop their land;

•                 boost its value;

•                 sell all or part of it;

•                 escape city red tape; or

•                 gain easier access to utilities that the city refuses to provide.

If any of these factors apply to you, speak to a lawyer about your options and how filing an ETJ-removal petition could benefit you.

But act quickly. If history is a guide, Texas cities will do whatever they can to reassert control over the areas surrounding city limits, including by lobbying the Legislature to put future limits on a landowner’s ability to get out of ETJs.

[1] Tex. Loc. Gov’t Code § 42.021.

[2] Tex. Loc. Gov’t Code §§ 42.101–04, 42.151–53, 42.156.