A group of at least 46 Texas municipalities have joined in a lawsuit against the state claiming two bills that were passed at the Legislative Session this year and signed into law are unconstitutional.
Senate Bill (SB) 1152, authored by Sen. Kelly Hancock (R-North Richland Hills), limits the franchise fees that telecommunications companies pay municipalities when they put lines in their right-of-way. Before the law went into effect Sept. 1, the utility companies were required to pay separate fees for phone and cable even if the line carries both services. SB 1152 eliminates the least-expensive cost.
SB 1004, also authored by Hancock and passed in 2017, caps a city’s right-of-way rental fee for cellular nodes at $250 per cell node. Its financial impact is unknown since the technology is so new.
Paige Mims, Plano city attorney, said Plano joined a lawsuit in 2017 regarding SB 1004, and the challenge to SB 1152 was added this year.
The lawsuit states the laws essentially direct municipalities to give private corporations “free or far-below-market-value use of municipal rights-of-way.” It states this will result in “an unconstitutional gift of public property with an annual value exceeding $100 million.”
McAllen is the lead city in the lawsuit. Other municipalities involved include Highland Village, Coppell, Flower Mound, Dallas, Irving and McKinney.
“We joined because Article III, Section 52 of the Texas Constitution prohibits the legislature from authorizing cities to grant anything of value to a corporation, and these bills authorizes use of the city rights-of-way for less than fair market value to the city and providing no requirement that any cost savings to the companies be passed on to the consumer,” Mims said.
Mims said the city could stand to lose $2 million a year because of SB 1152. He said the impact of SB 1004 is unknown since it impacts future technology.
Flower Mound Town Manager Jimmy Stathatos said residents aren't likely to benefit from these bills.
“There's nothing that requires the savings to be paid to the residents,” Stathatos said. “It's corporate welfare.”
Lawmakers said there is a need for these bills. While Hancock’s office said he won’t comment on pending litigation, he explained the benefit of SB 1152 and SB 1004.
"Texas is a global economic leader, and staying that way means looking ahead and adapting to the infrastructure of the future,” Hancock said. “That includes deploying innovative wireless technology and reliable 5G networks, as addressed in SB 1004, and acknowledging the simple fact that government shouldn't be charging two, duplicative "line fees" – a cost that, frankly, gets passed on to consumers – when technology developments have eliminated the need for a second hard-wired line, as addressed by SB 1152."