Grand Prairie Sues Over Texas De-Annexation Law

Feuds between developers and local municipalities have intensified regarding a law that took effect Sept. 1, and a lawsuit from the city of Grand Prairie could make it to the Texas Supreme Court.

Several Texas towns are fighting back against Senate Bill 2038, which allows developers to remove themselves from a city’s extraterritorial jurisdiction, bypassing bureaucratic steps in de-annexation and minimizing regulations, the Austin Business Journal reported.

The law primarily affects rural towns on the outskirts of major cities, as they’re more likely to comprise unincorporated communities that are part of an ETJ — an area outside the city limits, where a municipality has some control.

Supporters of the law contend that it expedites development and allows fast-growing areas near major metros to keep up with surging housing demand. However, several developers have emphasized that de-annexation is a last resort, a tactic reserved for long-stalled projects with inadequate support from a municipality.

The city of Grand Prairie, a suburb of Dallas and Fort Worth, has filed a lawsuit challenging the law’s constitutionality. The city argues that SB 2038 represents an “unconstitutional delegation of legislative authority to private parties,” endangering its ability to regulate land slated for potential annexation.

The lawsuit, filed Oct. 25 in Travis County District Court, claims that the law fails to meet the stringent standards articulated by the Texas Supreme Court for delegating legislative decision-making to private entities. Grand Prairie claims that the mere filing of petitions triggers the automatic removal of properties from its ETJ, causing tangible harm, the outlet reported.

Joining the fray, Lockhart, a town southeast of Austin, unanimously rejected an affiliate of Houston-based Perry Homes’ petition to remove a 389-acre property and voted to participate in the legal challenge. Lockhart argues that SB 2038 unconstitutionally impedes its ability to plan for orderly development in its extraterritorial jurisdiction.

Since the law took effect, dozens of de-annexation requests, totaling tens of thousands of acres, have surfaced across Central Texas, including areas near Georgetown, Uhland, Taylor and Pflugerville.

Austin-based MileStone Community Builders has been one of the law’s most outspoken advocates, using it for projects in Hays County, south of Austin. The firm has requested to de-annex land for its 500-plus acre Hays Commons community and 775-acre Persimmon development in Buda.

MileStone CEO Garrett Martin credited SB 2038 for reviving discussions with Buda officials and putting the Persimmon project closer to fruition.

“For decades, housing supply has been delayed or eliminated as a result of stalled negotiations between developers and cities,” Martin told the outlet. “The dialogue, if any, has been stalled by polarized positions based on input from a vocal and very small contingent – while the greater good has been subject to skyrocketing housing prices as a result of lack of supply. SB 2038 brings the parties to the middle.”

As the legal battle intensifies, it remains uncertain how the Texas Attorney General’s Office will respond. Observers anticipate a protracted legal process that could ultimately reach the Texas Supreme Court.

—Quinn Donoghue