Sec. 775.022. REMOVAL OF TERRITORY BY MUNICIPALITY. (a) If a municipality completes all other procedures necessary to annex territory in a district, including the preparation of a service plan if required by Section 43.056 , Local Government Code, the municipality intends to remove the territory from the district, and the municipality is capable at the time of the removal of being the sole provider of emergency services to the territory by the use of municipal personnel or by some method other than by use of the district, the municipality shall send written notice of those facts, and the completed service plan, if applicable, to the board not later than the 30th day after completing the necessary procedures. The municipality must send the notice to the secretary of the board by certified mail, return receipt requested. The territory remains part of the district and does not become part of the municipality until the secretary of the board receives the notice and the board by resolution disannexes the territory from the district. The board must send a copy of the resolution to the municipality by certified mail, return receipt requested, not later than the 30th day after the date on which the board adopts the resolution. If the governing body of the municipality disagrees with the board's determination that the municipal services will not meet or exceed the level of service provided by the district, the municipality may adopt a resolution stating the grounds for the disagreement and requesting arbitration in the manner provided by Section 775.0221 . If the board determines that the municipal services planned to be provided in the territory will not meet or exceed the level of service provided by the district in the territory, the board shall adopt that determination in a resolution and may not by resolution disannex the territory from the district. If the board determines that municipal services planned to be provided in the territory will meet or exceed the level of service provided by the district in the territory at the time of disannexation, the board shall by resolution disannex the territory from the district, notify the appraisal district to change its records to show that the territory has been disannexed from the district, and cease to provide further services to the residents of that territory. This subsection does not require a municipality to remove from a district territory the municipality has annexed. For the purposes of this subsection, "level of service" for fire and emergency medical protection means the location, deployment, and response time of fire suppression or medical resources originally dispatched to a structural or wildland fire or emergency medical incident. (a-1) A board is considered to have approved a disannexation of territory under Subsection (a) if the board fails to provide to the municipality a resolution disapproving or approving the disannexation before the 30th day after the date the board receives the notice under Subsection (a) from the municipality. (b) The disannexation of territory under this section does not diminish or impair the rights of the holders of any outstanding and unpaid bonds, warrants, or other obligations of the district including loans and lease-purchase agreements. (c) If a municipality removes territory from a district that the municipality has annexed, the municipality shall compensate the district immediately after disannexation of the territory under Subsection (a) in an amount equal to the annexed territory's pro rata share of the district's bonded and other indebtedness as computed according to the formula in Subsection (e) or (e-1), whichever yields the greater amount. The district shall apply compensation received from a municipality under this subsection exclusively to the payment of the annexed territory's pro rata share of the district's bonded and other indebtedness. (d) On the district's request, a municipality shall purchase from the district at fair market value any real or personal property used to provide emergency services in territory disannexed under this section. (e) Unless Subsection (e-1) would yield a greater amount, the amount of compensation under Subsection (c) shall be determined by multiplying the district's total indebtedness at the time of the annexation by a fraction the numerator of which is the assessed value of the property to be annexed based on the most recent certified county property tax rolls at the time of annexation and the denominator of which is the total assessed value of the property of the district based on the most recent certified county property tax rolls at the time of annexation. (e-1) Unless Subsection (e) would yield a greater amount, the amount of compensation under Subsection (c) shall be determined by multiplying the district's total indebtedness at the time of the annexation by a fraction: (1) the numerator of which is the assessed value of the property to be annexed based on the most recent certified county property tax rolls at the time of annexation plus the total amount of the district's sales and use tax revenue collected by retailers located in the property to be annexed in the 12 months preceding the date of annexation, as reported by the comptroller; and (2) the denominator of which is the total assessed value of the property of the district based on the most recent certified county property tax rolls at the time of annexation plus the total amount of the district's sales and use tax revenue collected by retailers located in the district in the 12 months preceding the date of annexation, as reported by the comptroller. (f) For purposes of this section, total indebtedness includes loans and lease-purchase agreements but does not include: (1) a loan or lease-purchase agreement the district enters into after the district receives notice of the municipality's intent to annex district territory; or (2) any indebtedness attributed to any real or personal property that the district requires a municipality to purchase under Subsection (d). (g) The amount of compensation under Subsection (c) shall be determined under Subsection (e) regardless of whether Subsection (e-1) would yield a greater amount if: (1) the municipality has a population of more than one million and the majority of the territory inside the municipality's corporate boundaries is located inside a county with a population of less than 2.1 million; and (2) the municipality and the district enter into an agreement on or before September 1, 2019, regarding the district's bonded and other indebtedness.
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