If a city annexes or incorporates district territory, it takes over the district’s powers and obligations and must handle related debt and taxes; if the whole district is annexed or incorporated, the district is dissolved.
Sec. 59.071. ANNEXATION OR INCORPORATION BY CITY. (a) If a city annexes all or any part of the territory within a district, or incorporates all or any part of any territory within a district, the city shall succeed to the powers, duties, assets, and obligations of the district as provided by this chapter. (b) On annexation of any part of the territory of a district by a city or incorporation by a city of any part of the territory of a district, the city shall assume a pro rata share of all debt of the district payable in whole or in part by ad valorem taxes incurred for water, sewer, or drainage purposes or any combination of the three purposes. The percentage of the assumption shall be determined by multiplying the total debt of the district payable in whole or in part from taxes incurred for the stated purposes by a fraction, the numerator of which is the assessed value of the property to be annexed or incorporated based on the most recent certified county property tax rolls at the time of annexation or incorporation and the denominator of which is the total assessed value of the property of the district based on the most recent certified county property tax rolls at the time of annexation or incorporation. (c) After annexation by a city of a portion of the territory of a district or incorporation over any part of the territory of a district, the district may not levy taxes on that territory, and the territory is no longer considered a part of the district for any purpose. (d) If any district's debt payable in whole or in part from ad valorem taxes is assumed by a city, the governing body of the city shall levy and cause to be collected taxes on all taxable property within the city or provide other funds sufficient to pay the city's pro rata share of the principal of and interest on that debt as it becomes due and payable. (e) If a city annexes or incorporates the entire territory of the district, the district shall be dissolved in accordance with Sections 43.074, 43.075, and 43.081, Local Government Code, if the district is located in one city or Sections 43.076 through 43.079, Local Government Code, if the district is located in more than one city. (f) Section 43.071, Local Government Code, does not apply to the annexation of a district created pursuant to this chapter. Added by Acts 1995, 74th Leg., ch. 715, Sec. 3, eff. Sept. 1, 1995.