Urban property that is located in a district may be excluded from the district as provided by this subchapter only after the following have been paid to the district:
(1) all taxes, assessments, and other charges of the district accrued on the property to be excluded, together with all interest and penalties accrued on those taxes, assessments, and charges;
(2) the proportionate part of the outstanding bonded indebtedness or indebtedness in connection with a loan from an agency of the United States for which the property proposed to be excluded is liable, as determined under this subchapter; and
(3) agreement on a reasonable determined amount to be paid by the municipality or other supplier of potable water to compensate the district for loss of revenue occasioned by the exclusion.
Official text of the Texas Water Code as published by the Texas Legislative Council.