City Incorporation + Texas by yrf15732

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For several years, the Blue Lake POA Long Range Planning Committee has been
studying whether or not the Blue Lake Community should incorporate as a municipality
to manage and control the Hill County’s ever increasing growth in our neighborhood.
Blue Lake wasn’t alone in these concerns, because even the Horseshoe Bay POA Long
Range Planning Committee has studied the same issue regarding incorporation for
Horseshoe Bay.

In 2003, a Study Committee composed of permanent residents of Blue Lake and
Deerhaven began seriously to consider the incorporation of Blue Lake, Deerhaven, and
some of the territory extending alongside RR 2831 to Highway 71, as a town.

Expectedly, there are pros and cons about creating a municipality or “town” for Blue
Lake & Deerhaven and the other areas. Certainly, some folks have strong feelings, both
pro and con, about this issue of incorporation. Before “locking into” one side or the other
about incorporation for Blue Lake & Deerhaven, the educational information in this
mailing (and future mailings) hopefully will present some insight about the issue.

Let’s discuss these the impact on Blue Lake & Deerhaven of these 7 important topics: 1)
The Legal Requirements For Incorporation, 2) Eligible Voters, 3)“Extra Territorial
Jurisdiction”, 4) The Proposed Territorial City Limits, 5) The Hill Country’s Phenomenal
Growth & Its Effect on Blue Lake & Deerhaven, 6) Controlling & Managing Growth In
The Hill Country, and 7) Annexation. Understanding these important concepts is
necessary for an intelligent discussion about the pros and cons of Incorporation.

In the next mailing, we’ll discuss: “How Much Will A New Town Cost?”, an important
issue for the Property Owners in the new town. So, hold “your fire” until then!

Because the Issue of Incorporation will have important and perhaps far-reaching effects,
this Information Letter is very lengthy. Our apologies! But, every concerned resident
and property owner should have plenty of solid and accurate information about
Incorporation, both pro and con. Please, carefully review these 7 important topics AND
save this information. Thank you!

as a Class “B” City or Town, 1) at least 201 permanent inhabitants must reside within the
proposed territorial city or town limits, which must not exceed 2 square miles of
proposed surface area; 2) at least 50 registered voters permanently residing within the
proposed territorial city limits must petition the Llano County Judge to order an election
on the issue of incorporation for the proposed city; 3) if the County Judge finds all pre-
requisites have been met, the election date will be set; and 4) if more than 50% of
the voters approve, a new city or town is created, but if more than 50% of the voters
disapprove of incorporation, then the incorporation fails and another incorporation
election is prohibited for 3 years.
Additionally, NONE of the proposed surface area of the proposed city can be within the
“extra territorial jurisdiction” of another village, town, or city, UNLESS the other
municipality has agreed to allow the proposed incorporation to include part of the area
within that municipality’s “extra territorial jurisdiction”.
Note that there are different legal requirements as to the number of resident inhabitants
and as to maximum size of the surface area for the incorporation of different “classes” of

2) ELIGIBLE VOTERS: To vote in the incorporation election, an eligible person must
be a registered voter residing within the proposed city or town limits in Llano County.
Thus, even an eligible Llano County resident within the proposed city limits, who is NOT
registered to vote in Llano County, cannot vote in the incorporation election. Thus, a
property owner within the proposed city or town limits, but NOT an eligible registered
voter in Llano County, cannot vote in the incorporation election.
This denial to non-resident property owners of the right to vote in the incorporation
election might seem “unfair” at first glance. But NON-registered persons, whether Llano
County residents or not, do not have the right to vote in Llano County in ANY election,
not for the Llano County Independent School Board, not for the Llano County MUD #1,
not about any bond issue, or not for any person. Residing in Llano County but not being
a registered voter, though eligible, does not allow a person to vote.
Owning property in Llano County within the proposed city limits but NOT residing
within the proposed city or town limits, does not allow a person to vote, although such a
property owner might be a registered voter in Llano County. And, owning property in
Llano County by a NON-resident of Llano County does NOT allow such non-resident
property owner to vote in ANY election in Llano County, even if such Llano County
election concerns an increase in property taxes.
In summary, ONLY eligible registered voters residing within the proposed territorial city
or town limits can vote in the incorporation election.

3) “EXTRA TERRITORIAL JURISDICTION”: Every Texas village, town, or city has
a buffer zone (“extra territorial jurisdiction’) around the municipality’s city limits, within
which the city or town can control and manage growth AND also prevent another
municipality from annexing within that buffer zone, or prevent the creation or
incorporation of a new city within that buffer zone, or using part of the area within that
buffer zone as part of the required “surface area” needed for incorporation of another
municipality. Depending on the legal type or class of city, the State Legislature has
determined the size of the area of a municipality’s “extra territorial jurisdiction”, which
buffer zone varies from ½ mile to 5 miles from the city limits, in all outward directions.
If our incorporation was successful, the new city or town would have a ½ mile buffer
zone completely surrounding the new town’s city or town limits, and, none of this ½ mile
area could be annexed by another village, town, or city or could be a part of the surface
area of any other attempt to incorporate another new village, town, or city, WITHOUT
our city’s or town’s consent.

In the proposed incorporation for Blue Lake & Deerhaven, part of the proposed territorial
city limits does indeed lie within the “extra territorial jurisdiction” or buffer zone of
another municipality, namely the Village of Sunrise Beach, which has a ½ mile “extra
territorial jurisdiction” around its city limits. However, Sunrise Beach has agreed to
surrender its buffer zone in Blue Lake. WITHOUT THE WAIVER by the Village of
Sunrise Beach of it’s ½ mile of “extra territorial jurisdiction” over part of Blue Lake, this
part of Blue Lake could not be included in any proposed territorial town or city limits and
would be “protected” by Sunrise Beach and its “extra territorial jurisdiction” from
inclusion in any incorporation effort.

Since Horseshoe Bay is currently NOT a municipality, there is presently NO “extra
territorial jurisdiction” or buffer zone in favor of or for Horseshoe Bay. In other words,
Horseshoe Bay currently cannot annex any territory and currently cannot prevent our
Community from incorporating as a municipality.
In other words, CURRENTLY, Blue Lake & Deerhaven do NOT have to obtain any
permission from Horseshoe Bay because Horseshoe Bay is not entitled to have any “extra
territorial jurisdiction” since Horseshoe Bay is NOT a city, town, or village incorporated
under State law, even though Horseshoe Bay has a “post office”.

Obviously, if the proposed incorporation of our Communities succeeded, the newly
created city would obtain a ½ mile buffer zone around its newly created city limits and
part of Horseshoe Bay West and Applehead Island would be in the “extra territorial
jurisdiction” of the newly created city. WITHOUT a wavier from the newly created city
or town for our Communities, that part of Horseshoe Bay lying within the newly created
City’s “extra territorial jurisdiction” of ½ mile 1) would be barred from incorporating as a
municipality or as part of a new municipality of Horseshoe Bay and 2) would be barred
from being annexed by any newly created municipality of Horseshoe Bay.

Of course, if Horseshoe Bay were to incorporate as a municipality BEFORE our
Communities incorporated as a municipality, then part of our Communities would lie
within the ½ mile “extra territorial jurisdiction” of the newly created city of Horseshoe
Bay and (as pointed out above) part of Blue Lake would lie within the “extra territorial
jurisdiction” of the Village of Sunrise Beach). WITHOUT Horseshoe Bay’s CONSENT,
IF HORSESHOE BAY INCORPORATED FIRST, that part of our Communities (all of
Deerhaven & most of Blue Lake) 1) would be barred from incorporating as a
municipality or as part of a new municipality and 2) would be barred from being annexed
by any other newly created municipality. In other words, because of the “surface area”
requirements and “number of inhabitants” requirements necessary for any incorporation,
our Communities could not incorporate without a waiver from the newly created city of
Horseshoe Bay, if Horseshoe Bay began the incorporation process BEFORE our
Communities did so.

Many cities also expand their “extra territorial jurisdiction” to not only control and
manage growth, but also to prevent a neighboring city from annexing territory too close
by. Look at the City of Dripping Springs’ use of “extra territorial jurisdiction” against
the City of Austin; or, look at the City of Boerne and the City of Bulverde’s use of “extra
territorial jurisdiction” against the City of San Antonio as excellent examples of keeping
out the giants and also retaining the right to “annex” these territories for their property
evaluations when the time is ripe. Or, closer to home, look at Cottonwood Shores!

Presently, the municipality of Cottonwood Shores has expended its town limits so that the
“extra territorial jurisdiction” of Cottonwood Shores now includes part of Horseshoe Bay.
So, if Horseshoe Bay decided to include in its proposed territorial city or town limits that
part of Horseshoe Bay now included within the “extra territorial jurisdiction” of
Cottonwood Shores, Horseshoe Bay must obtain a waiver and consent from the town of
Cottonwood Shores.

Requirements as to the requisite number of inhabitants and square miles of surface area,
the Blue Lake & Deerhaven Study Committee has designed the proposed boundaries of
the proposed territorial “city limits” to include all of Blue Lake Estates, all of the Hilltop
At Blue Lake, all of Deerhaven, all of The Trails, and a strip on either side of RR 2831 to
Highway 71 and the corners at Highway 71 and RR 2831. This proposed surface area
would approximate the legal requirement of not more than 2 square miles and would
allow our Communities to control and manage growth, particularly in the approach to our
Communities. That growth alongside of RR 2831 has already started!

Please notice that Horseshoe Bay West, Sandy Harbor, and Applehead Island would NOT
be included in the designated proposed territorial city limits, although part of The Hills
might be considered.

BLUE LAKE AND DEERHAVEN: The Texas Hill Country’s phenomenal growth,
according to a study by Texas A & M University, will continue and will significantly
impact housing construction, school enrollment, road maintenance, traffic congestion,
and local communities, including Blue Lake & Deerhaven. Just look at the beginning
sprawl occurring at Texas 71 and RR 2831!
City dwellers (probably like most of the permanent residents here) have discovered the
Hill Country’s beauty. All of us want the same enjoyments of the Hill Country, namely
the same majestic views; the same slower-paced life styles; the same country living; the
same close access to golf, tennis, and lake recreation; the same breathable air; the same
good tasting water; the same “down home” friendliness; the same freedom from big city
problems dealing with crime, traffic, health issues, and high city taxes.

City dwellers have also discovered and realized that everything the Texas Hill Country
has to offer is just a simple hour’s drive from Austin and an hour and one half drive from
San Antonio. If needed or desired, one can even live in Blue Lake or Deerhaven and
work (full or part-time) in Austin or San Antonio. Even folks from the big cities such as
Dallas and Houston as well as the folks from small cities such as Midland and San
Angelo would like to escape to the Hill Country’s beautiful benefits, its peace and
tranquility, and freedom from “city life”. Now that the new multi-room Marriott Resort
has opened, more and more people will discover the Hill Country’s magnificence, since
Marriott is advertising throughout the country its newest “Destination Resort”.

Blue Lake and Deerhaven, as part of the Texas Hill Country, offer new residents the
peace and harmony not present in some bustling city. Perhaps, we would like to lock the
door and make certain that door is shut tight to preserve our tranquil “country living”,
but once reality sets in, we understand that there are presently, and there will be, many
more folks who are, and will be, moving HERE! What should we do to preserve the “life
style” we all want without surrendering too much of our “freedom” by creating a new
level of government? Doesn’t the Property Owners’ Association have the ability and the
power to satisfactorily deal with these problems already on our doorstep, those around the
corner, and those in the next block?

What should we do to preserve our property values, should circumstances force any of us
to move somewhere else? We all recognize that the death or illness of a spouse, of a
child, or of a grandchild; divorce; family difficulties; financial trouble; or other
circumstances may require the untimely sale of our property. But, will we obtain a
selling price in excess of our purchasing price, if our neighborhood property values
deteriorate? After all, every potential buyer will scope out every subdivision located in
the entire area for the best value. How will Blue Lake & Deerhaven measure up against
our neighboring subdivisions----The Hills, Sandy Harbor, The Trails of Lake LBJ, Bay
County, Escondido, Siena Creek, or Horseshoe Bay and its multifaceted parts?

How do we control and manage growth in our Communities?

Unless a subdivision is located within a city in a rural county, controlling and managing
growth is performed through the use of the restrictive covenants and building restrictions
applicable in each property owner’s deed.

Cities, of course, have zoning and ordinance powers. A “home rule” city (one with at
least 5,000 inhabitants and incorporated under the “home rule” provisions of State Law)
have the most far-reaching zoning and ordinance powers. While a “general law” city,
town, or village (whether Class “A, “B”, or “C”) has only those powers granted by the
State Legislature, nonetheless our new town would have many regulatory powers, more
than counties and certainly more than any property owners’ association.

Rural counties, such as Llano County, have very little control over the increasing sprawl
and the explosion of population growth, because rural counties have NO zoning powers
and very limited ordinance-enacting powers. Recent news accounts show that Tarrant
County could not prevent a telephone tower’s construction within 50 feet of a residence.
Unless public health, traffic, or safety is manifestly at issue, the County government is by
and large powerless to deal with these problems. And, even then, getting County Officials
to timely act, if at all in these budget crushing times, may be difficult.

The ONLY real means to manage and control growth outside of incorporated
municipalities in rural counties, such as Llano County, is the enforcement through
litigation in the civil courts of restrictive covenants and building restrictions, a
burdensome and expensive legal process borne by either individual homeowners or by
property owners’ associations.

Weak or imperfect restrictive covenants and building restrictions are not an effective
means for self-government and, usually, are not an efficient method to manage and
control growth within a subdivision. In Blue Lake & Deerhaven, the restrictive
covenants and building restrictions fail to address many issues important to the well-
being, protection of, and for the full enjoyment of the Community.

Of course, restrictive covenants and building restrictions cannot operate outside the
subdivision’s boundaries. Thus, neither Blue Lake’s or Deerhaven’s restrictive covenants
& building restrictions will manage and control growth outside of the subdivisions’

Some Communities (such as Horseshoe Bay) have very stringent restrictive covenants
and building restrictions which apply to every residence, business, and vacant lot located
inside the Horseshoe Bay subdivisions. The Horseshoe Bay Rules and Regulations cover
practically every activity, from building design to the non-existence of mail boxes. Some
folks would argue that some of these Horseshoe Bay Rules & Regulations are so
overbroad that the homeowner’s freedom is severely restricted. Enforcement in
Horseshoe Bay occurs through monetary penalties and civil litigation pursued either by
the Horseshoe Bay Property Owners’ Association or by individual property owners.

Other Communities such as Kingsland (which, surprisingly, is also not an incorporated
municipality and which is comprised of multiple subdivisions) have very loose restrictive
covenants and building restrictions and poor enforcement for any violations. Improving
or strengthening existing restrictive covenants and building restrictions can be difficult
and, sometimes, impossible because of the covenants voting procedures regarding
Other Communities such as Blue Lake and Horseshoe Bay also have a Municipal Utility
District, a taxing entity, which provides some “traditional” city services. For example, in
addition to providing water and sewer services to Horseshoe Bay, the LBJ MUD provides
police and fire protection, and, the LBJ MUD by contract with the Llano County MUD
#1 also provides fire protection to Blue Lake (but not Deerhaven). The Llano County
MUD # 1 provides street maintenance, water, and sewer services to Blue Lake. By
contract, both the LBJ MUD and the Llano County MUD #1 provide out-of-district
services to other Communities at higher rates than those rates charged in-district
customers; for example, Deerhaven obtains its sewer services from the Llano County
MUD #1 and its water services from the LBJ MUD at higher rates.
While Municipal Utility Districts have no power to enforce restrictive covenants and
building restrictions in a subdivision, these MUDs can enact regulations pertaining to
sewer and water or other utility operations, but—in reality—do not control or manage
growth, instead merely serving that growth.

Now, both Blue Lake & Deerhaven are included in the Emergency Medical Services
District, another taxing entity, providing ambulance and emergency medical services to
these Communities. But, this taxing entity has no power to manage and control growth,
but merely, like the MUDs, to serve that growth.

Certainly, cities or towns or villages (such as Llano, Sunrise Beach, Cottonwood Shores,
Highland Haven, Meadowlakes, and Marble Falls) have the ability to manage and control
growth through the power of zoning and through the power of enacting ordinances, which
apply not only within the town or city limits but also outside the town or city limits in the
area protected by the town or city’s “extra territorial jurisdiction”. While these zoning
laws may compliment a subdivision’s restrictive covenants and building restrictions,
these zoning laws are enforceable by the town or city, not by an individual property
owner or property owners’ association. Unless a subdivision’s restrictive covenants &
building restrictions conflict with a municipality’s zoning laws or ordinances, the
restrictive covenants & building restrictions are still applicable.

However, simply because a town or city has power to enact zoning law and pass
ordinances does not always provide the best way to manage and control growth. For
example, until recently, the City of Austin “controlled” growth by ignoring growth,
resulting in nightmare traffic, unreasonable regulations, etc. The City of Granite Shoals
acted too late with too little to manage its city, resulting in many an eyesore throughout
the city. The City of Dripping Springs had to place a moratorium on new construction
because the 2 employees hired to approve plats and plans could not keep up with the fast
paced development and because the city’s ordinances controlling growth were archaic.

Zoning laws and ordinances CANNOT apply to certain conditions or buildings already in
existence before the enactment of the zoning laws and ordinances. For example, a legally
existing 1,200 square foot house cannot be forced to become a 1,600 square foot house
by the enactment of a zoning law.
While most Blue Lake & Deerhaven Property Owners strongly value the independence
we experience from the big city life of Austin or San Antonio or wherever, can we safely
rely on the Blue Lake & Deerhaven restrictive covenants and building restrictions to fix
the growth problems coming our way, and, still preserve that independence? Should we
just stick our heads in the sand to avoid seeing and dealing with these problems?

7) ANNEXATION: Quite simply, annexation means a city or town can add to its
surface area and increase its territory by adding areas outside its city or town limits.
Annexation can be a) voluntary (the non-city area owner or owners petitions to be
included within the city or town), or b) involuntary (without the landowners’ consent the
city or town adds non-city area to its territory within the city or town limits). The Texas
Legislature has set up complicated limits for the amount of surface territory subject to
forced or involuntary annexation by the various classes of municipalities.

Sometimes, cities or towns form a systematic plan to add territory to the city or town
limits by both voluntary and involuntary annexation.
 Just take a good look at the City of Marble Falls!
In 2003, Marble Falls announced the involuntary annexation of territory, including areas
south on U.S. 281.
Recently, on November 22, 2004, the property owners of a 1,056-acre tract (bounded by
U.S. 281, Texas 71, and RR 2147) received preliminary approval from the Marble Falls
City Council, for this land mass to be voluntarily included within the “extra territorial
jurisdiction” of the City of Marble Falls and eventual annexation by the city. According
to newspaper accounts, the LCRA is currently negotiating for water services and waste
water facilities to provide for 1,000 single family dwellings, 500 condos, and Big Box
Stores at Texas 71 and U.S. 281 to this 1,056 acre property.
Moreover, some landowners along U.S. 281 and RR 2147 are also seeking voluntary
annexation to the City of Marble Falls.

As the city limits of Marble Falls expand, so too, do the “extra territorial jurisdiction”
boundaries also expand to manage and control the growth and the prohibition of the
creation of any new municipality within that newly added buffer zone.

When voluntary annexation occurs, the property owners give their consent. Thus, in
December of 2004, Cottonwood Shores accepted 26 acres annexed voluntarily from a
petitioning landowner. Of course, in the case of involuntary annexation, the inhabitants in
the area annexed never are allowed to vote on the question of annexation. Need an

Recently, the City of Granite Shoals has begun proceedings to annex the high-dollar
property value areas of Beaver Island and Web Island, to the utter disbelief and dismay of
the residents and property owners within those subdivisions, who are denied any vote.
Inclusion into a city such as Marble Falls or Granite Shoals, either by voluntary
annexation or by involuntary annexation, means that the city not only gains population
and surface area to increase its size, but the city also gains additional property evaluations
and hence, additional city tax revenue. Sometimes, the additional taxes for the annexed
area will produce additional and new city services for the annexed area. But, sometimes,
there are NOT many additional and new city services produced for the annexed area, and
its residents are now paying new taxes.

Will the City of Marble Falls or Cottonwood Shores eventually cast an annexation eye
toward property rich Horseshoe Bay? Maybe and maybe not. Certainly, the high dollar
tax evaluation of the property in Horseshoe Bay would be an inviting temptation for
Marble Falls or Cottonwood Shores. No doubt, if Horseshoe Bay thinks Marble Falls or
Cottonwood Shores will be moving its way through the annexation process, then,
Horseshoe Bay MUST incorporate to avoid being gobbled up by Marble Falls or
Cottonwood Shores.
(But, if part of Horseshoe Bay is already included within the “extra territorial
jurisdiction” of the town of Cottonwood Shores, then Cottonwood Shores has veto power
over that part of Horseshoe Bay and can prevent, if it desires, Horseshoe Bay from using
that area as part of its surface area for any incorporation effort).

While Horseshoe Bay is NOT CURRENTLY in any danger of annexation by the City of
Marble Falls, part of Horseshoe Bay does have some danger of a Cottonwood Shores
Without any doubt, Horseshoe Bay has indeed studied its own incorporation as a
municipality, weighing the advantages and disadvantages of becoming a city or town. In
June of 2003, the then-available information from the June 2003 leadership of the
Horseshoe Bay POA indicated that, as of June 2003, Horseshoe Bay had no immediate
plans to incorporate. But, as reasonable people, we all know that when circumstances
change, plans and actions must also change.

And, surprise, in January, 2004, a movement surfaced in Horseshoe Bay to seriously
consider incorporation (See And now, it
seems, to some Horseshoe Bay residents, that Cottonwood Shores may be a closer and
more real threat than that of Marble Falls for Horseshoe Bay.

Many areas have incorporated as towns or cities to avoid possible annexation by another
municipality or to avoid falling into the “extra territorial jurisdiction” or buffer zone of a
city attempting to prevent people within that area from forming their own city. Look at
Rollingwood and Westlake and Bee Caves and Lakeway near Austin. Look at Fair Oaks
Ranch and Live Oak and Universal City near San Antonio. Look at Highland Haven near
Granite Shoals. Look at Meadowlakes and Cottonwood Shores near Marble Falls. People
in these areas recognized the threat, some immediate and some distant, of annexation or
of “extra territorial jurisdiction” and seized the opportunity to avoid that threat, whether
immediate or distant, before it was too late.
IF Horseshoe Bay began its incorporation process BEFORE Blue Lake & Deerhaven,
then our Communities would be effectively stopped from incorporating as a town, unless
Horseshoe Bay consented. While Blue Lake & Deerhaven are not as “property rich” as
Horseshoe Bay, the 2004 property tax evaluation of our Communities is over
$65,000,000, an amount which would be quite tempting for Horseshoe Bay to withhold
consent until the right time arrived for Horseshoe Bay to annex our Communities.

In June of 2003, the then-current information from the 2003 leadership of Horseshoe Bay
was that no incorporation of Horseshoe Bay was on the front burner. Circumstances have
changed, it seems.

Can Blue Lake and Deerhaven afford to wait? Should Blue Lake and Deerhaven simply
hope that there will be no change coming? Should Blue Lake and Deerhaven expect
Horseshoe Bay’s continued avoidance of any association or connection and continued
fencing out of Blue Lake and Deerhaven?
Of course, nobody has the ultimate and final answers to these questions.
But, the old legal adage rings true: “First In Time Is First In Right!”.
Once Horseshoe Bay begins the incorporation process, our Communities will be stopped
from our own incorporation attempt, unless Horseshoe Bay agrees to let us go forward.
But, by giving its consent for the Blue Lake & Deerhaven incorporation as a town,
Horseshoe Bay will definitely lose the potential ability to impose its new city taxes on
our Communities, with its 2004 property tax evaluation of over $65,000,000. Will
Horseshoe Bay forgo property taxes to be gained by taking over Blue Lake & Deerhaven
if the cost of providing municipal services to Blue Lake & Deerhaven is indeed small?


Thanks for reading this detailed, lengthy, and complicated educational message on THE
this important issue for our Communities is truly appreciated.
Hopefully, this information has presented some thoughtful insight about the
Incorporation Issue and its serious impact on our Communities.
Please, keep this Letter for future reference!
In the next mailing, that very important issue of the COSTS associated with the creation
of a new town will be on the front burner.
Please, as a concerned, intelligent and aware resident and/or property owner, keep an
open mind on this Incorporation Issue until you’ve obtained all of the facts, pro and con.
As Officer Friday of “Dragnet” TV fame said: “Just the facts!”

Again, thanks for your time and interest.

                              The Board of Directors
                              Property Owners Association of Blue Lake Estates

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