Earlier this year Flower Mound officials were vocal in their opposition to legislation that limits the amount a utility company has to pay a municipality for use of public right-of-way.

Nearly 50 municipalities feel the same way.

A group of at least 46 municipalities in Texas 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.

McAllen is the lead city in the lawsuit. Other municipalities involved include Highland Village, Coppell, Plano, Dallas, Irving and McKinney.

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.

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.”

While the original petition was filed in 2017 to challenge SB 1004, Flower Mound joined in July after the passage of SB 1152.

Flower Mound Town Manager Jimmy Stathatos on Monday repeated the town's position from the spring that SB 1152 is bad for local municipalities and that it “allows a private company to use public land for free and not have to pay for (both) phone and cable services.”

Specific to Flower Mound, he said SB 1152 is expected to cost the town $170,000 a year in lost revenue.

“And that would go up every year,” Stathatos said.

In addition, 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."

Stathatos said the town opposed SB 1004 but decided to join the lawsuit once SB 1152 passed, too.

“We think SB 1152 is unconstitutional,” Stathatos said. “This is clearly a private company using public property for free. We feel like we will prevail and that the law will be struck down.”

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