The original boundaries of the Fire Control District do not include the city’s Extra-Territorial Jurisdiction (Castle Hills). A special election is required to add the ETJ to the Fire Control District boundaries. This election was not possible prior to a State Law change approved by the Texas Legislature in 2015. Current state law does not allow a similar election to expand boundaries of the Crime Prevention District.

The Fire Control District was created by Lewisville voters in November 2011, and re-authorized in May 2016 for an additional 20 years. The intent is to provide for some Fire Department needs through sales tax collections, rather than through property taxes. Sales taxes are partially paid by non-residents who do not pay property tax to the city but are protected by Lewisville Fire Department while shopping or dining in Lewisville. This funding mechanism is used by many Texas cities to keep property tax rates lower (Lewisville has one of the lowest property tax rates in North Texas).

With annexation targeted as early as 2021, the City is analyzing all the changes that will be needed to bring full municipal services to Castle Hills. All sales tax currently collected in Lewisville will automatically be effective in Castle Hills upon annexation except the Fire Control District and Crime Prevention District. These tools are used to fund public safety needs with reduced impact on the property tax rate. The money collected in Castle Hills through the Fire Control District (about $200,000) would be less than 1 percent of the total Fire Department budget (projected at $25 million next year). The primary impact would be the funding source used to pay for Fire Services now and after annexation.

Lewisville provides fire and emergency medical services to Castle Hills through an agreement with Denton County Fresh Water Supply District 1-A, which manages the Castle Hills development. This year’s contract charge for Fire Services is $641,451.71.

No. This election is about a funding mechanism, not about service costs. The annual charge to Castle Hills for Fire Services is a product of actual calls the previous year and an average cost per call established through a third-party analysis conducted in 2015. The per-call rate has been the same since 2015-16, while the call volume has increased each year. Another third-party analysis will be conducted this year to establish the per-call rate for 2018-19. That, plus increased call volume, is likely to result in an increase in the contract charge next fiscal year. However, none of those calculations will be impacted by the outcome of the May 5 election.

Yes. The proceeds from the additional Fire Control District sales tax would be used directly for Fire Services within Castle Hills. This could free up some of the money currently being used by the Water District for that purpose, which then could be applied to other services such as law enforcement or debt retirement. Any such changes would be at the discretion of the Water District.

Use of any fire district sales tax money collected in Castle Hills would be directly controlled by two documents -- the Strategic Partnership Agreement (SPA) with the City of Lewisville, and Texas law governing a fire control and prevention district.

The SPA clearly states that sales tax collections in Castle Hills will be used first to pay costs of the public safety services provided by the city. The agreement leaves no wiggle room. Sales tax collections received must be used to pay those public safety costs. Once those costs are covered, any remaining sales tax revenue is split equally between the city and District 1-A, with all revenue to District 1-A being used for debt retirement. If sales tax collections are not sufficient to cover all public safety costs, District 1-A must pay the remainder through other revenue sources, which could include property taxes paid by Castle Hills residents.

Section 5.02 of the SPA states "Sales and Use Tax revenue collected from the prior quarter shall be applied to pay the Base Charge and any Sales and Use Tax revenue in excess of the Base Charge will be split equally between the City and the Districts." Article II of the SPA defines Base Charge as "the City's quarterly cost to provide fire, police and emergency medical services to the Serviced Districts."
State law only allows fire district collections to be used directly for fire services. There are no other uses allowed under the law. (Online reference: statutes.legis.state.tx.us/Docs/LG/htm/LG.344.htm - see Section 344.154 Use Of Revenue)

Taken in combination, it would work this way -- sales tax collections for the fire district (1/8 percent) would be used directly toward fire service costs. It could not be used for other services because of state law, and could not be used outside Castle Hills because of the SPA. Then general sales tax collections (1 percent) would be used to cover the rest of the fire service costs followed by all police service costs. If there is sales tax revenue remaining, it would be split as described above. If the general sales tax revenue is not enough to cover the remainder of the bill, District 1-A would go into its budget and find money to pay the rest of the bill.

Because of the binding terms of the SPA and Texas law, any fire district sales tax collected in Castle Hills prior to annexation could ONLY be used to pay for fire services provided in Castle Hills.

No. Capital costs are not part of the contract calculation for Castle Hills, so neither the building construction nor purchase of a new ladder truck for planned multi-story buildings in The Realm are included in the cost to Castle Hills. Capital costs for the station, and for the $1 million ladder truck expected to enter service in April, were paid by setting money aside during a six-year period through the Fire Control District.

This election is not expected to have any impact on future annexation of Castle Hills. Annexation will happen when the debt load in Castle Hills can be assumed by the city with minimal impact on the city’s property tax rate. Currently, officials believe that could happen as early as 2021 if certain financial tools are put into place for districts G and H, where significant new debt will be issued in coming years for new development.

No. Fire Station #8 is currently under construction on Josey Lane and will open later this year regardless of the election outcome. That station will provide service to East Lewisville, including Castle Hills. Fire Department response times will improve, especially in southeast Castle Hills, regardless of the election outcome.

Not initially. Lewisville City Council serves as the Fire Control District board. Because Castle Hills is in the ETJ and not yet part of Lewisville, Castle Hills residents are not eligible to serve on or vote for City Council. That will change after annexation.

At direction of City Council, staff further researched this question. State law allows the board to be composed entirely of City Council members, or entirely of Council appointees. A combination of the two is not allowed, as reinforced by an opinion issued by the Texas Attorney General. In other words, one or more Council members could not step down from the board and allow a Castle Hills resident to serve because it does not adhere to the restrictions of state law. While this has not been adjudicated by a court, it is the interpretation of the Attorney General, Lewisville City Attorney, and attorneys advising the Water District. Because the two public safety special districts manage a combined $8 million annual budget, City Council has opted to retain that authority at this time.

The current comparison of Lewisville (and all surrounding cities) to Castle Hills is 8.25 to 7.50. If the ballot issue passes, that would become 8.25 to 7.625. If the ballot issue fails, it would remain 8.25 to 7.50.
All businesses collect 6.25 percent for the state. Lewisville residents also pay 2 percent for local uses. Here’s the list:

State of Texas – 6.25

City of Lewisville – 1.00

Parks Development – 0.25

Crime Prevention District – 0.125

Fire Control District – 0.125

DCTA – 0.50

TOTAL – 8.25

Castle Hills businesses collect the first three only:

State of Texas – 6.25

City of Lewisville – 1.00

Parks Development – 0.25

TOTAL – 7.50

Yes, the 1/8-cent sales tax for the Fire Control District would be applied to all taxable services, including utility bills. The city’s general sales tax and Parks Development sales tax will not be applied to those services until after annexation.

This measure does not have any bearing on the Crime Prevention District, the level of Police Services provided, or the cost of those services. Police Services are provided on an on-demand basis in Castle Hills, unlike Fire Services that provide full coverage. That contract will not be impacted by the outcome of this election. State law does not currently allow an election to add the ETJ to the Crime Prevention District boundaries.

Information has been posted to the city’s website. A postcard with general information was mailed to all Castle Hills households on March 16. The City held a public on April 10 at Queen Margaret Community Center to answer residents’ questions on this and other topics.