H.B. No. 274 proposes the establishment of the District of Austin as the official seat of state government, created from the City of Austin in Travis County. The bill introduces a new chapter in the Local Government Code, specifically Chapter 2, which outlines the governance, powers, and territory of the newly formed district. The initial territory of the district will consist of the boundaries of the City of Austin as they existed on January 1, 2025, and these boundaries can be modified by the district's governing body. The charter and ordinances of the City of Austin that are in effect as of January 1, 2026, will serve as the initial laws of the district, which will have the powers of a home-rule municipality.

Additionally, the bill stipulates that any ongoing actions or proceedings involving the City of Austin as of January 1, 2026, will be transferred to the district without any change in status. This includes the transfer of all money, contracts, leases, rights, and property held by the City of Austin at that time. The district will also assume all outstanding debts of the City of Austin. The governing body of the district is required to notify the lieutenant governor and the speaker of the house of representatives regarding any actions taken to adopt or amend the district's charter or ordinances. The act is set to take effect on January 1, 2026, contingent upon the approval of a constitutional amendment by voters that allows for the establishment of the District of Austin.

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