Short answer: The Woodlands is not part of the City of Houston. The payments come from a 2007 Regional Participation Agreement negotiated when Houston had much broader annexation power under Texas law. The agreement gave The Woodlands long-term annexation protection and a path to determine its own form of government while dedicating part of local sales-tax revenue to regional projects.
Why was Houston able to threaten annexation in the first place?
Much of The Woodlands was historically placed inside Houston’s extraterritorial jurisdiction, or ETJ. That did not make The Woodlands part of Houston, but under the annexation laws that existed decades ago it gave Houston potential annexation authority over the community.
Why did Kingwood matter?
Houston annexed Kingwood in 1996 without a local approval vote. That event made annexation much more tangible for Woodlands residents and helped accelerate efforts to secure a long-term governance solution.
The 2007 Regional Participation Agreement
In 2007, The Woodlands and Houston entered a Regional Participation Agreement. The Woodlands made an initial contribution and agreed to dedicate a small portion of sales-tax revenue to a regional participation fund. Houston, in return, agreed not to annex The Woodlands for 50 years and provided a pathway for residents to determine their future form of government.
Texas law later changed
Texas changed municipal annexation law in 2017 and 2019, greatly limiting forced annexation and generally requiring voter consent. That means The Woodlands now has much stronger state-law protection than it had when the 2007 agreement was negotiated.
What happened on August 26, 2026?
The Woodlands Township Board voted 7-0 to approve a proposed third amendment to the Houston RPA. The proposal would provide Houston a total of $50 million, end the ongoing Woodlands contribution after 2030 and make Houston’s non-annexation commitment permanent as provided by the amendment. Houston City Council did not vote that day; a council member tagged the item, delaying consideration for one week.
So the proposal is not fully final yet as of August 26, 2026. The Township has approved it, but Houston still must act.
The bottom line
The Woodlands is not paying Houston because Houston owns the community or can simply annex it tomorrow. The payments are the legacy of a unique 2007 bargain created under a very different Texas annexation system.