The City of Houston and The Woodlands Township have a longstanding partnership built on cooperation, shared interests and a history of successful joint projects. As geographic neighbors, the two communities are connected in many ways.  

The original Regional Participation Agreement was established in 2007 and created the Regional Participation Fund, which was funded through a portion of sales tax revenues generated in The Woodlands for qualifying regional projects. The agreement also provided long-term protection from annexation by the City of Houston and became an important part of the framework for the future governance of The Woodlands.  

Nearly 20 years later, the Third Amendment would update that framework to reflect the current and foreseeable needs of both communities.  

Under the amendment approved by the Township Board, the Regional Participation Fund structure would end, eliminating The Woodlands Township’s ongoing obligation to allocate a portion of its sales tax revenues to the fund. The terms include payments totaling $27.4 million from the Township to the City of Houston, spread over the next three years. Of the $27.4 million, $7.9 million in sales tax revenue collected from 2027 through 2029 is already obligated to be paid to the City of Houston under the terms of the original Regional Participation Agreement. The remaining $19.5 million would be funded from cash reserves.  

The amendment would also release restrictions on approximately $22.6 million in sales tax revenue accumulated over the past 20 years and currently held in the fund, making those funds available for the City of Houston’s use. Together, these provisions would provide $50 million in near-term financial benefit to the City of Houston.  

Beginning in 2030, annual sales tax revenues previously required to be allocated to the fund would remain with The Woodlands Township and be available for Township priorities. Based on current projections, those revenues are estimated to average approximately $4.5 million annually, providing significant additional financial resources for the Township over the long term.

The amendment would also provide greater certainty regarding the future governance of The Woodlands. If approved by Houston, the updated agreement would eliminate the possibility of future annexation of The Woodlands Township by the City of Houston while keeping the Township within Houston’s extraterritorial jurisdiction. The amendment does not change the community’s ability to consider incorporation in the future. That decision would continue to rest with voters.  

“Our responsibility as Township Board Directors is to protect the interests of The Woodlands and plan for a strong future for the generations that follow us,” said Brad Bailey, Chairman of The Woodlands Township Board of Directors. “With today’s unanimous vote, we acted to protect our community, protect our future and put millions more dollars back in the hands of the people of The Woodlands. If approved by the City of Houston, this amendment will provide greater certainty around annexation, give the Township greater control over locally generated revenues and preserve our community’s ability to determine its own future. That is something worth celebrating. I appreciate Mayor Whitmire, Houston City Council and City staff for the work that has gone into developing an agreement that serves both communities.”

The Third Amendment reflects an effort by both organizations to reconsider elements of the Regional Participation Agreement that no longer best serve their current and foreseeable needs. The proposed new structure addresses Houston’s near-term financial priorities while providing the Township with greater long-term financial flexibility and certainty regarding governance.  

The Houston City Council was scheduled to consider the Third Amendment on Wednesday, August 26, 2026. Consideration of the item has been postponed and is expected to occur next week.