A Texas appellate court has ruled in favor of Pilot Point in part of its long-running battle with Celina over the boundaries between the two cities and a 3,700-acre parcel that lies between them.

The 2nd Court of Appeals of Texas ruled this week that Celina, by statute, had agreed to Pilot Point’s annexation of land along FM455 nine years ago and could neither sue to protest it nor the development agreements Pilot Point has with Talley Ranch.

“If any person or governmental entity doesn’t contest an annexation within two years, then it’s presumed that they’ve consented,” said Andrew Messer, city attorney for Pilot Point.

The ruling could be the end of the line for Celina in its efforts to regain control of Talley Ranch, unless Celina city leaders are successful in another appeal. A portion of the proposed mixed-use development used to be in Celina’s extraterritorial jurisdiction.

Celina City Manager Jason Gray said city leaders were disappointed in the decision, but hadn’t decided yet whether to appeal.

“We think that it [the annexation] was both illegal and wrong, but obviously the courts disagree with us,” Gray said.

Pilot Point City Manager J.C. Hughes said in a prepared statement that the city was delighted with the ruling and hoped it signaled the end of the long-running battle. Pilot Point has spent more than $377,000 in legal fees and court costs in the dispute.

Celina first filed suit in 2006 in Denton County’s 362nd District Court, claiming that Pilot Point’s annexation of land along FM455 to the county line six years earlier was illegal.

In the suit, Celina also alleged that Pilot Point’s development standards for Talley Ranch were lax, and would hinder Celina’s ability to grow in an orderly fashion.

With the agreement in hand, Talley Ranch developers were able to secure state approval to form special taxing districts.

The Texas Legislature authorized special districts years ago, in order to spark economic development for poor rural counties. Rural landowners were given the right to create the districts and vote for infrastructure improvements.

But in recent years, the special districts have become a favored financing tool for developers of large tracts of land, particularly near Austin, Houston and, increasingly, in Denton County. To comply with the law, developers must bring in short-term residents to vote in the districts, bringing with those votes the issuing of millions in bonds that will determine the future taxation of thousands of homeowners.

The special districts would finance about $276 million in infrastructure improvements, Messer said.

At this point, Celina has two options. The city has 15 days to ask the court of appeals for another hearing. Celina also has 45 days to ask the Texas Supreme Court to consider hearing the case, Gray said.

He said the Celina City Council will be meeting with city attorneys within the next week to make a decision about its next move.

Meanwhile, the two cities have been in talks about their boundaries, through both voluntary and court-ordered mediation. The talks haven’t been easy, given the active lawsuit, but they are making progress, Gray said.

“It would be hard to call them fruitful,” Gray said. “But I’m hopeful that we’ll get there relatively soon.”

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com .