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McKinney staff outlines fallout from state ETJ reforms: fewer controls, more special‑district financing
Summary
Assistant city manager Jennifer Arnold told council state law changes since 2017 have shifted bargaining power to private developers, reduced local land‑use control in the ETJ, and opened avenues like MUDs and PIDs that can shift infrastructure costs to homebuyers; staff described decertification efforts and forthcoming cost‑benefit tools for annexation decisions.
Jennifer Arnold, assistant city manager, told the council that a string of state law changes since 2017 has materially altered how McKinney can manage growth and annexation. Arnold said the city has continued to secure voluntary annexations—24 since 2017—but recent legislation that allows property owners to release from the city's extraterritorial jurisdiction (ETJ) has led to about 57 tracts (roughly six square miles) released since 2023. "That ETJ release bill…gives a property owner the unilateral rights to release from the city's ETJ by operation of law," Arnold said.
Arnold described consequences the city faces when land leaves ETJ: lost planning and Platting authority, challenges to master planning and infrastructure sequencing, and mismatches between CCN (certificate of convenience and necessity) service obligations and planning control. She said the city has sought partial decertification of water/sewer CCN areas and expects a final administrative ruling later this year; meanwhile staff extended a cessation ordinance to limit new taps while the case proceeds.
The presentation also focused on financing tools available to developers outside the city's full control—including municipal utility districts (MUDs), municipal management districts (MMDs), public improvement districts (PIDs) and tax increment reinvestment zones (TIRZ/TIRS). Arnold warned these special districts can shift upfront infrastructure costs to homeowners via assessments or taxes and that developers increasingly seek multiple financing layers (e.g., a MUD plus a TIRZ). "They are leveraging the newly generated values on the property in order to finance those things in a different way and the homeowner at the end of the day is the one that pays for those," Arnold said.
Given those changes, Arnold and staff proposed developing a consistent cost‑benefit analysis tool for annexation decisions and scheduled work with an outside firm over the next 2–3 months to produce a prototype for council review. Councilmembers asked clarifying questions about North Collin service agreements, CCN decertification impacts, timing and whether the city can still negotiate pre‑annexation agreements. Council direction to staff was procedural: refine and return with the cost‑benefit prototype and additional policy options to protect long‑term fiscal and service priorities.
