Horseshoe Bay citizens voted to incorporate as a Class A City under Texas law on September 10, 2005. The boundaries of the city followed those of the Lake LBJ Municipal Utility District, with the exception of The Trails and a 20 acre parcel on the corner of Highway 71 and Ranch Road 2821. These were not included because they were annexed shortly after incorporation.

1st City Council & Mayor
The 1st Mayor and City Council were elected at a general election November 8, 2005. They were sworn in at Quail Point in ceremonies November 18th. The Council met for the 1st time on November 22, 2005 and the council elected officers.