In 2009, the City of Keene wanted to annex seven parcels of land to its South, but was met with strong opposition from the parcels' residents. Judge John Neill of the 18th. District Court subsequently blocked the annexation of three of the seven parcels on the grounds that they were outside of Keene's extraterritorial jurisdiction. On March 10, 2010, 25 residents petitioned a specially called meeting of the Johnson County Commissioners Court to become incorporated as a municipality. The name "Coyote Flats" was submitted at the meeting.
An election to incorporate the City of Coyote Flats was held on May 8, 2010. The measure was approved by a vote of 76 to 11. John Barnett was sworn in as Mayor on August 11.