ANNEXATION OF DISTRICT BY MUNICIPALITY

(a) A municipality may annex all or part of the territory of the district or any new district created by the division of the district only as provided by an annexation agreement described by Section 8315.004(b). (b) A municipality is not required to annex any part of the district's territory that is outside the corporate boundaries of the municipality. (c) A municipality is not required to assume control and operation of the district or a new district created by division of the district on annexation of all or part of the territory of the district or new district, but the municipality may assume control and operation of the district or a new district and dissolve the district or new district if: (1) the municipality has annexed all of the territory of the district or new district; (2) the water and wastewater facilities required to serve at least 95 percent of the lots in the district or new district, as set out by a final plat, have been completed; and (3) the municipality has complied with the requirements of Section 43.075, Local Government Code. (d) Notwithstanding Section 54.016(f)(2), Water Code, a contract between a municipality and the district or new district that provides for the allocation of the taxes or revenues of the district and the municipality following the date of inclusion of all or part of the district's territory in the corporate limits of the municipality, may provide that the total annual ad valorem taxes collected by the municipality and the district from taxable property in the district may exceed the city's ad valorem tax on the property.