August 6, 2021, Number 30
Download the full .pdf version here: TML Legislative Update Number 30
GOVERNOR ANNOUNCES SECOND SPECIAL SESSION
On Thursday, Governor Abbott announced the agenda for the second special session which will begin on Saturday, August 7 at noon. The following items are on the agenda:
Federal Relief Appropriations: Legislation providing appropriations from unappropriated available revenues for COVID-19-related healthcare expenses, such as those listed below, taking into consideration the approximately $10.5 billion in funds received by local governments intended to be used on COVID-19 from the American Rescue Plan Act of 2021(ARPA), Pub. L. No. 117-2:
- healthcare staffing needs, including physicians, nurses, and other medical professionals;
- establishing, staffing, and operating alternative care sites;
- supporting the operations of nursing homes, state supported living centers, assisted living facilities, and long-term care facilities;
- vaccine administration;
- testing sites;
- supplies and equipment, such as personal protective equipment (PPE) and ventilators; and
- standing up and operating infusion centers.
Employment: Legislation shielding private employers and employees from political subdivision rules, regulations, ordinances, and other actions that require any terms of employment that exceed or conflict with federal or state law relating to any form of employment leave, hiring practices, employment benefits, or scheduling practices.
Bail reform: Legislation reforming the bail system in Texas to protect the public from accused criminal who may be released on bail.
Election Integrity: Legislation strengthening the integrity of elections in Texas.
Education: Legislation providing strategies for public-school education in prekindergarten through twelfth grade during the COVID-19 pandemic, which ensures:
- students received a high-quality education and progress in their learning;
- in-person learning is available for any student whose parent wants it;
- the wearing of face coverings is not mandatory; and
- COVID-19 vaccinations are always voluntary.
Border Security: Legislation enhancing criminal laws or providing funding from unappropriated available revenues to support law-enforcement agencies, counties, and other strategies as part of Texas’ comprehensive border security plan.
Social Media Censorship: Legislation safeguarding the freedom of speech by protecting social-media and email users from being censored based on the user’s expressed viewpoints, including by providing a legal remedy for those wrongfully excluded from a platform.
Article X Funding: Legislation providing appropriations from unappropriated available revenues to the Legislature and legislative agencies in Article X of the General Appropriations Act.
Family Violence Prevention: Legislation similar to Senate Bill 1109 from the 87th Legislature, Regular Session, requiring schools to provide appropriate education to middle- and high-school students about dating violence, domestic violence, and child abuse, but that recognizes the right of parents to opt their children out of the instruction.
Youth Sports: Legislation identical to Senate Bill 29 as passed by the Texas Senate in the 87th Legislature, Regular Session, disallowing a student from competing in University Interscholastic League athletic competitions designated for the sex opposite to the student’s sex at birth.
Abortion-Inducing Drugs: Legislation similar to Senate Bill 394 from the 87th Legislature, Regular Session, which prohibits people from providing abortion-inducing drugs by mail or delivery service, strengthens the laws applicable to the reporting of abortions and abortion complications, and ensures that no abortion-inducing drugs arc provided unless there is voluntary and informed consent.
Thirteenth Check: Legislation similar to House Bill 3507 from the 87th Legislature, Regular Session, relating to a “thirteenth check” or one-time supplemental payment of benefits under the Teacher Retirement System of Texas.
Critical Race Theory: Legislation similar to House Bill 3979 concerning critical race theory as originally passed by the Texas Senate in the 87th Legislature, Regular Session.
Appropriations: Legislation providing appropriations from unappropriated available revenues for the following purposes:
- property-tax relief;
- enhanced protection for the safety of children in Texas’ foster-care system by attracting and retaining private providers for the system; and
- to better safeguard the state from potential cybersecurity threats.
Primary Elections: Legislation modifying the filing periods and related election dates, including any runoffs, for primary elections held in Texas in 2022.
Radioactive Waste: Legislation reforming the laws governing radioactive waste to protect the safety of Texans, including by further limiting the ability to store and transport high-level radioactive materials in this state.
State Legislature: Legislation relating to legislative quorum requirements.
Post-Session Update: ETJ Development Agreements
When H. B. 1929 was signed into law on June 15, development agreements (“DAs”) between cities and landowners or developers in the cities’ extraterritorial jurisdiction (ETJ) became much riskier for cities. After September 1, 2021, the framework upon which these agreements are built will be changed in several fundamental ways.
Waiver of Governmental Immunity
This bill contains a broad waiver of sovereign immunity from suit for the purpose of adjudicating breach of contract claims. Cities are generally immune from suit for “governmental” functions but remain liable for damages causes when they undertake “proprietary” action. Distinguishing between these two types of functions can be confusing. Regulatory actions such as traffic management, police, and sewer operations have been held to be governmental actions to which immunity attaches, while activities such as construction or repair of infrastructure are proprietary functions with no immunity protection. Development agreements often provide for traditionally proprietary functions such as infrastructure construction, which would be unaffected by this new waiver; however, DAs can also control governmental functions such as planning authority, land uses, and annexation. This bill’s waiver language introduces new liability for municipal functions for which cities have always been immune to suit.
Broad Liability for Landowner Costs
In addition to liability for actual damages, unpaid amounts due under the contract, specific performance and injunctive relief, cities can also be forced to pay “any amount owed by the landowner as a result of the municipality’s failure to perform under the contract” including compensation for the increase of material costs, attorney fees and interest. In a world where the price of building materials have shot through the roof (pun intended), this bill statutorily shifts the risk of those price increases from developers to taxpayers if the city can be blamed for a delay. The cost of development is highly unpredictable, and the reasons for cost overruns are many. Poor estimates, bad decision making, supplier issues, increases in the cost of materials, unpredictable weather, and staffing issues are just a few of the many factors that drive the ultimate price of projects. This bill incentivizes a landowner to seek repayment from city tax dollars when their projects go over budget.
It is true that damages are only awarded when a breach of contract suit is proved in court, but these statutory changes significantly shift the risk analysis in the developers’ favor. Will this shift cause developers to threaten suit more quickly or more often, knowing that cities might prefer to pay a little more rather than defend the case? Who knows, but cities need to take a sharp look at any proposed DAs to make sure that the city-side obligations will be completed on time, because delays to the project can result in a big, unpredictable bill.
Validation of Prior Agreements
These new immunity waiver and damage provisions also apply to all existing ETJ development agreements – not just the new ones. Take a look at all the DAs your city has and make sure the city is meeting all obligations. That should go without saying, of course, but with new legislation comes new motivation.
Constitutional Funding Limitations for these “Programs”
Another interesting shift introduced by this bill was to define an ETJ development agreement to be a “program” authorized by Section 52-a, Article III, of the Texas Constitution. That is important, because any “bonds or other obligations” that a city uses to fund a “program” that are payable by ad valorem taxes must be approved by a majority of city voters. Since they are not usually approved by a vote of the people, this provision removes tax notes and tax-supported certificates of obligation from the list of funding options for ETJ developments. Cities should consult their financial advisor, city attorney and/or bond counsel for guidance with regard to the impact of this provision on current and planned ETJ development.
Taking all these changes together, the bottom line with H.B. 1929 is that it makes entering ETJ development agreements riskier for cities while also removing potential funding sources. Talk with your local professionals about how these changes may impact existing DAs in your city and how these changes could impact your city’s overall ETJ development agreement philosophy and policies.
Post-Session Update: Chapter 380 Agreement Reporting
Cities are authorized by Chapter 380 of the Texas Local Government Code to establish programs that loan or grant city funds, staff, or services to promote state or local economic development and to stimulate business and commercial activity in the city. Cities make these grants or loans through “380 agreements,” which, while being public records, are maintained at the city level. If a member of the public wants to get a copy of a 380 agreement, or if they want to get copies of all 380 agreements, today, they would have to go city-to-city requesting copies. The member of the public would face the usual Public Information Act hurdles and costs. After H.B. 2404 is fully-implemented next year, the public will have access to a centralized, state-maintained database of 380 agreements at no charge.
Comptroller Responsibility: 380 Agreement Database
H.B. 2404 requires the Texas Comptroller of Public Accounts to create an online database of information related to 380 agreements made by cities (and other local governments) across the state. The database would include the following information for each 380 agreement:
- the name of the city making the agreement;
- the names of the other parties to the agreement;
- contact information for a city representative and the city’s administrative offices;
- name and contact information for the person submitting the information;
- the beginning and ending dates of the 380 Agreement;
- the focus or scope of the agreement;
- a copy of the 380 Agreement; and
- a numerical code assigned to the city by the comptroller.
Within 15 business days of receiving the above information, the comptroller must enter it into the database, where it must remain accessible to the public for no charge during the term of the agreement. Additionally, the comptroller is authorized to contact the city’s representative for additional information related to the 380 agreement.
City Responsibilities: Provide the Information
Why does a city care about this bill if it requires the Comptroller to create a database? Cities care because the city is the party responsible for supplying the above information and the copy of the agreement to the comptroller within 14 days of entering into, amending, or renewing a 380 agreement. If the city misses this deadline, the city could eventually be liable for a $1,000 penalty to the state, after receiving a 30-day notice letter from the comptroller.
Additionally, once the comptroller’s database is up and running, a city that maintains a website must provide on the city website a direct link to the comptroller’s database.
Dates of Import
September 1, 2021: The effective date of this bill.
January 1, 2022: The date by which cities must submit the required information to the comptroller for each 380
agreement in effect as of September 1, 2021.
September 1, 2022: The date by which the comptroller must have the database up, running, and accessible.
Ultimately, this bill should increase the transparency into how tax funds are expended by cities for economic development, which is generally a good thing. The comptroller has not yet created the process for submitting the required information, and TML will continue to monitor the situation and update this article when more information is available.
post-session update: new pre-employment screening procedures for law enforcement agencies
S.B. 24 establishes new pre-employment procedures for law enforcement agencies hiring individuals licensed by the Texas Commission on Law Enforcement (TCOLE), including a peace officer and a telecommunicator.
Before a law enforcement agency may hire TCOLE-licensed individuals, the agency must, on a form and in the manner prescribed by TCOLE, request from TCOLE and any other applicable person, and obtain and review as related to the individual, the following information: (1) personnel files and other employee records from each previous law enforcement agency employer, including the employment application submitted to the previous employer; (2) employment termination reports maintained by TCOLE; (3) service records maintained by TCOLE; (4) proof that the person meets the minimum qualifications for enrollment in a TCOLE training program; (5) a military veteran’s United States Department of Defense Form DD-214 or other military discharge record; (6) criminal history record information; (7) information on pending warrants as available through the Texas Crime Information Center and National Crime Information Center; (8) evidence of financial responsibility required to operate a vehicle; (9) driving record from the Department of Public Safety; (10) proof of United States citizenship; and (11) information on the individual’s background from at least three personal references and at least two professional references. Additionally, the law enforcement agency must submit confirmation to TCOLE that the agency, to the best of the agency’s ability, contacted each entity or individual necessary to obtain the above-referenced information. The chief of police or his or her designee must review and sign each required confirmation form before the form is submitted to TCOLE. Failure to do so shall be grounds for suspension of the chief of police’s TCOLE license.
S.B. 24 is effective September 1, 2021 but applies only to hiring decisions that occur on or after January 1, 2022.
TCOLE will be establishing a secure file transfer system to allow agencies to electronically share background documents when a licensee who has a law enforcement work history in Texas is being hired. The League will continue to monitor this issue and provide updates once TCOLE selects a system and establishes procedures to utilize the system.
post-session update: mental health leave for police officers
S.B. 1359 requires law enforcement agencies to develop and adopt a mental health leave policy for police officers who experience a traumatic event in the scope of employment. While state statute provides that a policy be adopted, the details of the policy are within the discretion of the law enforcement agency that developed the policy.
The bill requires that the mental health leave policy: (1) include clear and objective guidelines establishing when a police officer may be granted leave; (2) grant leave without deduction in salary or compensation; (3) list the number of leave days available; and (4) detail how much anonymity the police officer has when leave is taken.
In addition, the law enforcement agency may provide a list of mental health services available in the area that the police officer may use. The bill requires the law enforcement agency to adopt a policy as soon as practicable after the effective date of September 1, 2021.
A sample policy from the Texas Police Chiefs Association is available here. Cities should consult with legal counsel and human resources when adopting such policies.
texas alcoholic Beverage commission: meeting with local government officials
Major changes to Texas Alcoholic Beverage Commission (TABC) operations adopted by the 86th Legislature (2019) go into effect Sept. 1, 2021. TABC is hosting a virtual meeting for local government officials, including city secretaries, to provide updates about those changes. The meeting is scheduled August 10 at 10 a.m. CDT, and will include updates on: (1) new TABC technology known as the Alcohol Industry Management System (AIMS); (2) how AIMS affects local certifications; (3) how license consolidation affects local fees; and (4) the new process for temporary events. Register to attend the meeting here.
covid-19 update (no. 197)
All pandemic-related updates, including information about the American Rescue Plan’s city-related provisions, will be in the Legislative Update Newsletter from now on.
- American Rescue Plan Act Funds DEADLINE: August 2, 2021 was a state deadline for “non-entitlement units of local government” (NEUs are generally cities under 50,000 population) to register with the Texas Division Emergency Management to receive ARPA funds. TDEM recently updated its Coronavirus Local Fiscal Recovery Fund FAQ. NEUs should pay special attention to Question 13: How does my NEU receive funding? The answer includes a link to the CLFRF Timeline Check-in document with step-by-step instructions on registering your city with the TDEM Grant Management System, which is a critical step to receiving funds.
Even though TDEM indicated that August 2, 2021 was a deadline to register with the GMS system, if your city missed that deadline but still wants to participate in the funding, register with GMS ASAP.
- Rental Assistance Call to Action: The federal Consumer Finance Protection Bureau (CFPB) has put out a Call to Action to raise awareness about federal rental assistance programs. Among other things, the CFPB has developed a new Rental Assistance Look Up Tool that allows renters to find information on rental assistance in their area as well as sample messages and graphics that could be used by interested entities looking to spread the word. Please visit the CFPB’s housing assistance page for more information.
- Open Meetings Act Reminder: In March 2020, as Texans worked to mitigate the spread of COVID-19, Governor Abbott’s office granted the attorney general’s request to suspend certain open-meeting statutes. The temporary suspension allows, among other things, for telephonic or videoconference meetings of governmental bodies that are accessible to the public in an effort to reduce in-person meetings that assemble large groups of people.
On June 30, 2021, the governor’s office approved a request by the attorney general to lift those suspensions. The suspensions will lift at 12:01 a.m. on September 1, 2021. Thus, as of September 1, 2021, all provisions of the Open Meetings Act will be effective and all Texas governmental bodies subject to the Open Meetings Act must conduct their meetings in full compliance with the Open Meetings Act as written in state law.
This could change, given the rising numbers of COVID-19 cases across the state, but as of now, plan for the September 1 expiration.
- No ARPA Funds Received by Texas: On August 2, 2021, the U.S. Treasury updated its “Status of Payments to States for Distribution to Non-Entitlement Units of Local Government” chart reflecting payments made to states under the American Rescue Plan Act for distribution to non-entitlement units of local government. A non-entitlement unit of local government is typically a city or town which serves fewer than 50,000 people, and their portions of the ARPA funds are sent to the state and should be distributed by the state to the individual cities within 30 days of receipt. Texas remains one of only 7 states to have received no funding through the ARPA. Whether the Governor has made the required application to the Treasury Department is unclear. The complete chart, updated weekly, can be found here. .
- ARPA FAQs: The U.S. Treasury Department’s Coronavirus State and Local Fiscal Recovery Funds FAQ contains a number of questions and answers related to eligibility for recovery funds and eligible uses of recovery funds. The entire FAQ can be accessed here.
The National League of Cities also maintains an ARPA-related FAQ which can be found here.
TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.