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20190625 Review of the 86th Legislative Session Town of ProsperReview of the 86th Legislative Session Rick Dennis HillCo Partners Entering the 86th Session •Democrats made significant gains in both chambers •Every statewide was re-elected, but by much smaller margins •Elected a new Speaker of the House •Critical Issues Identified: Overhauling School Finance / Increasing the state’s share Property Tax Reform Hurricane Harvey Response Senate Bill 2 The legislature, along with the Governor, Lt. Governor and Speaker of the House, made it apparent from the beginning of session that it was not “if” property tax reform would pass, but “when” and what form it would take. Both chambers designated the identical first proposals as SB 2 and HB 2, signifying their importance. Hearings on both bills were held almost as immediate as committees were formed in each chamber. Senate Bill 2 Early versions of one or both bills included such problematic components as: •Only allowing for a growth rate of 2.5% in revenue before triggering an automatic ratification election •Counting non-voted debt service payments the proposed revenue cap •Not allowing taxing entities to “bank” any unused cap space from year to year Senate Bill 2 The final product on Senate Bill 2 was certainly a disappointment for those who value local control and infrastructure spending, but the bill was improved in several ways before the final version was passed and signed into law, such as: •Growth rate was increased from 2.5% to 3.5% •A “banking” provision was inserted to allow taxing units to tap into unused cap space from the three previous budget years •Payments necessary for non-voted debt were removed from the calculation and would not count against the 3.5% cap •Accommodations were put in for taxing units in disaster declared parts of the state Local Govt. Preemption Measures The Governor and the Legislature took aim not only at local government budgeting decisions, but also those of public policy as well. Several attempts were made to strike local government’s abilities to govern non-discriminatory policies and initiatives, employee rights and relations, even the ability to regulate the number of chickens a resident can maintain on their property. While none of those mentioned bills passed, here is a look at some local government preemption bills that were enacted during the session. Regulation of Building Materials House Bill 2493 •States that municipalities may not go outside of the National Model Code •May not prohibit a particular piece of equipment or material that is not prohibited by the national model code •May not prohibit a standard or aesthetic method of construction that is allowed for by the national model code •Does carve out from the prohibition any buildings that have been designated with a historic or cultural significance, or located in a municipality’s designated main street program Residential Permit Fees House Bill 852 •Prevents municipalities from determining the amount of building and inspection permit fees based on the value of the property or the construction cost involved with the improvement project. •Allows municipalities to consider all other factors beyond property value and construction cost Ban on Red Light Cameras House Bill 1631 •Prohibits municipalities from using photographic technology to enforce applicable traffic laws and makes unenforceable any citations issued beyond the effective date of the act any citations that are issued using photographic technology •Act immediately took effect after the Governor signing it into law •Does include a provision that allows current photographic systems to continue to operate and for citations using them to be issued until the contract with the current service provider expires Designation of Historical Landmarks House Bill 2496 •Requires a municipality to either gain property owner consent before designating their property as a historical site, or to take the act via a public vote by the governing board with at least 75% voting in favor •Further sets forth necessary notifications and disclosures that must be sent to a property owner before any meeting where designating their property as a historical site is to be considered •Similar language was also passed as a component to SB 2 Rough Session. Anything Good Happen? Not all was problematic during the legislative session for municipalities. In fact, there were several legislative outcomes to be thankful for. Specifically….. •Local Debt Issuance –much was protected, only transparency bills were passed Attempts to limit debt elections to November elections only defeated No new ballot language Thresholds for voter participation and yes votes were avoided •Charter Amendment Elections –no change in procedure. Efforts to make the ballot language for a charter amendment elections go through a judicial or Secretary of State review process were not enacted More Good Things…. •Chapter 312 Agreements –were reauthorized after much work and discussion. New process will include a 30 day disclosure period for impacted property owners to have more notification, but that is the only significant change from existing program •Scope of Responsibility for Economic Development Corps –Protected and not expanded to include those functions that have been traditionally left to municipalities, like funding police and fire protection or road improvements •Eminent Domain Authority –While attempts were made, nothing was passed during the legislative session to restrict or make harder for a municipality to utilize eminent domain to acquire land necessary for a public project More Good Things…. •Strengthening TMRS –Several small, but needed cleanups and changes were made to TMRS to ensure that it will continue to meet our commitment to retired municipal employees. •Avoiding a Sales Tax Cap –Although no bills were actually filed on this topic, conversations were had early in session about conceptual ideas to require municipalities to use their year to year sales tax growth above a certain threshold on further buying down their local property tax rate. Ultimately they were not introduced, but not without a lot of work. •Maintaining the Right to Advocacy –SB 29 would have restricted the ability of municipalities to have registered lobbyists work on their behalf, but the bill was ultimately defeated on the House floor 55-85. And The Best Thing of All… •The expiration date Prosper (and other municipalities) faced to execute a hotel convention center project under Chapter 351 of the Tax Code was removed completely. Without legislative action, Prosper would have been forced to sign a development agreement in the next 66 days or else lose their authority. Senator Pat Fallon and Rep. Scott Sanford both filed bills to extend the sunset date for all municipalities by 2 years, but with Prosper mostly in mind. Ultimately their concept was included in the omnibus hotel convention center bill signed into law by the Governor, HB 4347, but not before it was improved to simply do away with the sunset provision all together. Now Prosper can develop and execute their plan on their timeline, and not that of some arbitrary deadline. Questions? It was an eventful session on the municipal front. Many more measures beyond those focused on were introduced during the session. If further information is helpful, always feel free to contact me at: Rick Dennis, HillCo Partners rdennis@hillcopartners.com 512-480-8962 (office) 512-573-9347 (cell)