The Woodlands Township Board voted 7-0 on Wednesday, Aug. 26, to approve a $27.4 million deal that would permanently end Houston's ability to annex the community. But the agreement isn't final: Houston City Council postponed its own vote after a council member raised concerns.

All seven board members approved the Third Amendment to the Regional Participation Agreement (RPA) at a special meeting at the Township offices on Technology Forest Boulevard, according to a Township press release.

Houston Council Member Ed Pollard asked that the city's vote be delayed while members review the financial implications, ABC 13 reported.

Township Chairman Brad Bailey told ABC 13 that Houston could use the money to address its short-term financial needs.

What the deal means for residents

Under the Third Amendment, The Woodlands would pay Houston $27.4 million in installments running through 2029. Of that, $7.9 million in sales tax revenue collected from 2027 through 2029 is already owed under the original RPA. The remaining $19.5 million would come from Township cash reserves.

The deal would also release about $22.6 million in sales tax revenue that has accumulated in the Regional Participation Fund over the past 20 years. That money would become immediately available to Houston. Together, the payments and the fund release total $50 million in near-term benefit to the city.

In return, Houston would give up its annexation rights over The Woodlands and stop collecting one-sixteenth of every sales tax dollar spent in The Woodlands, an amount currently worth about $4 million per year, according to KHOU.

Starting in 2030, those revenues would stay with the Township. Current projections estimate that at roughly $4.5 million annually.

Why Houston delayed

Pollard told KHOU he wanted council members to think beyond the immediate payout. "You can't just always think of the short term and grab what's there today, but you have to think about maybe some of the unintended consequences for the future," he said.

Houston's Budget and Financial Committee is expected to discuss the proposal before the full council votes.

Background

The original RPA dates to 2007. It created the Regional Participation Fund, financed by a share of Woodlands sales tax revenue, and provided long-term protection from annexation. The Woodlands' adopted 2025 budget included about $2.3 million in annual payments to Houston under that structure.

The Township's press release noted the amendment would not affect residents' ability to consider incorporation in the future. Voters rejected incorporation in 2021, with 67% voting against.

What's next

Houston City Council is expected to vote as early as Wednesday, Sept. 2. Houston's Budget and Financial Committee discussion has not been scheduled publicly. If Houston approves, the annexation threat ends and The Woodlands keeps its sales tax revenue starting in 2030.