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Item 4BM E M O R A N D U M November 12, 2008 To: Honorable Mayor and Members of the City Council From: Ben Thatcher, Assistant City Manager Subject: Item 4B - City of Southlake Legislative Agenda Action Requested: Approval of Resolution 08-060, outlining the City’s legislative agenda for the upcoming state legislative session. Background Information:Every two years the Texas Legislature meets in regular session. Over the last several years the Legislature has taken up a number of issues that were thought to be, by some, an aggressive stance with regard to City’s rights to govern themselves in accordance with the desires of the City’s citizens. The City of Southlake wants to ensure that it has the ability to preserve its current authority to govern the City, its citizens and property. The City, with the assistance of Hillco Partners, has developed the attached draft legislative agenda (attachment A) for consideration by the City Council. The City’s General Legislative Policy is: STATEMENT OF PRESERVATION As a general policy, the City of Southlake seeks to preserve its current authority to govern the city, its citizens, and its property. The City will oppose any legislation viewed as detrimental to the City’s strategic goals; or that is contrary to the health, safety, and welfare of its citizens; or that mandates increased costs or loss of revenues; or that would diminish the fundamental authority of the City. STATEMENT OF SUPPORT Likewise, the City supports any legislation viewed as advancing the City’s strategic goals; or that improves the health, safety, and welfare of its citizens; or that responsibly increases revenues; or that advances the City’s authority to conduct the public's business. The City will oppose any initiatives that seek to erode municipal authority or that otherwise have a negative impact on municipal operations, including but not limited to legislation that would: Honorable Mayor and City Council City Legislative Agenda Page 2 of 4 Erode home rule authority; Detrimentally affect the City’s financial position by reducing revenue streams or increasing costs; Erode the authority of Texas cities to manage and control their rights-of-way or other public property and to be reasonably compensated for such use; Erode current municipal economic development authority; Erode the current authority of Texas cities to enact a system and set the level of impact fees for new development; and Further restrict cities’ ability to adopt or amend zoning regulations. FORM COALITIONS The City will form strategic partnerships with cities, political subdivisions, and private sector entities that share common goals with the City of Southlake. Additionally, the City will work in coordination with organizations such as the Texas Municipal League when their adopted positions are in line with the legislative objectives and goals of the City. The formation of strategic partnerships and coordinated efforts is intended to provide the City with a stronger presence in the legislative process. The remainder of the legislative agenda is broken down into several categories including the City’s Priority Legislative Agenda, a discussion of the Priority Legislative Issues, General Legislative Agenda and finally, the Goals of the Legislative Activities. Each legislative issue under these categories is given a priority designation as follows: Seek passage of legislation dealing with the issue Support legislation dealing with the issue Oppose legislation dealing with the issue Honorable Mayor and City Council City Legislative Agenda Page 3 of 4 The Priority Legislative Agenda includes the following issues: 1. Preserve Local Budgeting Authority and Revenue Sources Oppose legislation that would unduly restrict the ability of the City to set its own budget or raise the necessary revenue to provide services to City residents and businesses. 2. Preserve Local Control of Land Use Planning and Zoning Support legislation that preserves local land use authority. Oppose legislation that would erode local land use authority by restricting the ability of cities to zone or rezone properties. 3. Allow Municipal Regulation of Pipelines Support legislation that would permit greater local regulatory oversight of intra-state pipelines. Oppose legislation that would continue to preempt municipal regulation of intra-state pipelines. 4. “Place of Business” Definition Amendment in Texas Tax Code Ch. 321 Seek passage of an amendment to Texas Tax Code chapter 321 clarifying the “place of business” definition. 5. Clarify the Parameters of Homestead Exemption Amounts Honorable Mayor and City Council City Legislative Agenda Page 4 of 4 Seek passage of an amendment to Texas Tax Code 11.13 allowing taxing entities to offer homestead exemptions as a hard dollar number under 20% cap. Financial Considerations: It may be necessary for both the staff and members of the City Council to travel to Austin during the legislative session. Sufficient funds have been budgeted in the FY2009 budget to cover these expenses. Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: The Council could rely on TML’s legislative agenda and educational efforts for the legislative session; The Council could have no formal legislative agenda and rely on the staff to bring individual issues before the Council for your action. Because time is so often an issue during the legislative session you may find that this alternative puts the City in a “catch-up” position and/or without the Council providing specific support for a position on the issue, having the legislature suggesting that the position is merely that of one Council Member or the staff; Have no legislative agenda and deal with whatever legislation is passed by the State Legislature. Supporting Documents: Resolution 08-060 City of Southlake’s proposed legislative agenda Staff Recommendation: Passage of Resolution No. 08-060 adopting the City of Southlake’s Legislative Agenda RESOLUTION NO. 08-060 A RESOULTION OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, st TEXAS, ADOPTING A LEGISLATIVE AGENADA FOR THE 81 TEXAS LEGISLATIVE REGULAR SESSION. WHEREAS , Home Rule Charter of the City of Southlake, Texas, was approved by the voters in a duly call Charter election on April 4, 1987; and, WHEREAS, the City Council recognizes the need for the City to preserve its current authority to govern its citizens, budget and property; and, WHEREAS , the Texas Legislature has in the past adopted legislation that has impacted the City’s ability to govern its citizens, budget and property; and, WHEREAS, the City Council recognizes the importance of the City being fully involved in the legislative process; and, WHEREAS, the City Council had deemed that the recommended legislative agenda reflects the strategic goals and interests of the City, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS THAT: Section 1. All of the findings in the preamble are found to be true and correct and the City Council incorporates said findings into the body of this resolution as if copied in its entirety. Section 2. Exhibit A is hereby adopted as the Legislative Agenda for the City of st Southlake, Texas for the 81 Regular Legislative Session. Section 3. The different elements, issues or priorities, as adopted, and as amended from time to time, shall be kept on file in the office of the City Secretary of the City of Southlake, along with a copy of the resolution and minute order of the Council so adopting or approving same. Section 4. This resolution shall become effective on the date of approval by the City Council. TH PASSED AND APPROVED ON THIS 18 DAY OF NOVEMBER, 2008 CITY OF SOUTHLAKE By: _____________________ Andy Wambsganss, Mayor ATTEST: ______________________ Lori Farwell, City Secretary City of Southlake 2009 Legislative Agenda st 81 Texas Legislative Session TABLE OF CONTENTS I.General Legislative Policy.................................................................... Page 3 II.Priority Legislative Agenda................................................................. Page 5 III.Discussion of Priority Legislative Issues........................................…. Page 6 IV.General Legislative Agenda………………………………………….. Page 14 V.Goals of Legislative Activities………………………………………… Page 15 2 GENERAL LEGISLATIVE POLICY PRESERVE THE CITY’S STRATEGIC GOALS & INTERESTS STATEMENT OF PRESERVATION As a general policy, the City of Southlake seeks to preserve its current authority to govern the city, its citizens, and its property. The City will oppose any legislation viewed as detrimental to the City’s strategic goals; or that is contrary to the health, safety, and welfare of its citizens; or that mandates increased costs or loss of revenues; or that would diminish the fundamental authority of the City. SUPPORT LEGISLATION THAT ADVANCES THE CITY’S STRATEGIC GOALS & INTERESTS STATEMENT OF SUPPORT Likewise, the City supports any legislation viewed as advancing the City’s strategic goals; or that improves the health, safety, and welfare of its citizens; or that responsibly increases revenues; or that advances the City’s authority to conduct the public's business. The City will oppose any initiatives that seek to erode municipal authority or that otherwise have a negative impact on municipal operations, including but not limited to legislation that would: Erode home rule authority; Detrimentally affect the City’s financial position by reducing revenue streams or increasing costs; Erode the authority of Texas cities to manage and control their rights-of-way or other public property and to be reasonably compensated for such use; Erode current municipal economic development authority; Erode the current authority of Texas cities to enact a system and set the level of impact fees for new development; and Further restrict cities’ ability to adopt or amend zoning regulations. 3 FORM COALITIONS WITH PARTIES THAT SHARE COMMON GOALS AND INTERESTS WITH THE CITY FORM COALITIONS The City will form strategic partnerships with cities, political subdivisions, and private sector entities that share common goals with the City of Southlake. Additionally, the City will work in coordination with organizations such as the Texas Municipal League when their adopted positions are in line with the legislative objectives and goals of the City. The formation of strategic partnerships and coordinated efforts is intended to provide the City with a stronger presence in the legislative process. 4 PRIORITY LEGISLATIVE AGENDA PRIORITY LEGISLATIVE ISSUES 1.Preserve Local Budgeting Authority and Revenue Sources Oppose legislation that would unduly restrict the ability of the City to set its own budget or raise the necessary revenue to provide services to City residents and businesses. 2.Preserve Local Control of Land Use Planning and Zoning Support legislation that preserves local land use authority. Oppose legislation that would erode local land use authority by restricting the ability of cities to zone or rezone properties. 3.Allow Municipal Regulation of Pipelines Support legislation that would permit greater local regulatory oversight of intra- state pipelines. Oppose legislation that would continue to preempt municipal regulation of intra- state pipelines. 4. “Place of Business” Definition Amendment in Texas Tax Code Ch. 321 Seek passage of an amendment to Texas Tax Code chapter 321 clarifying the “place of business” definition. 5.Clarify the Parameters of Homestead Exemption Amounts Seek passage of an amendment to Texas Tax Code 11.13 allowing taxing entities to offer homestead exemptions as a hard dollar number under 20% cap. 5 DISCUSSION OF PRIORITY LEGISLATIVE ISSUES Preserve Local Budgeting Authority and Revenue Sources The City of Southlake will oppose legislation that will unduly restrict the ability of the City to set its own budget or raise the necessary revenue to provide services to City residents and businesses. ISSUE During the last several Texas Legislative Sessions, proposals have been set forth that would severely limit the ability of cities to set their budgets or raise adequate revenues to carryout their fundamental functions. For example, numerous proposals to “cap” local revenues and property appraisals have been filed in the Texas Legislature. Every elected official in the City of Southlake is sensitive to the tax burden our citizens and businesses pay and is accountable to the local electorate for the decision they make. However, we are also mindful that it takes a great deal of flexibility with our local budget to meet the unique demands for services while at the same time preserving the high standards our community has come to expect. PROBLEM Appraisal and revenue caps undermine the ability of local governments to meet the individual needs and circumstances of their cities. Additionally, one size fits all “caps” violate the fundamental principle of local control. Citizens and businesses have numerous opportunities to provide input in to the City of Southlake’s budget and tax rate setting processes. Most importantly the citizens of our City get to voice their approval or disapproval of our budgeting performance and tax rates every time we hold a City election. Unfortunately, extremely low appraisal and revenue caps can produce numerous problems. For instance, appraisal caps shift the inequitable tax burden to businesses and new homeowners. This inequitable shift can produce serious long-term negative consequences for the local economy. Revenue caps on the other hand require the City to cut services or undertake on more debt to fund local projects and services. These types of “caps” are particularly harmful to a city like Southlake because it prevents the City from adequately dealing with the infrastructure needs brought on by tremendous population growth. It is inappropriate for the State of Texas to expect local governments to provide numerous public services, with no funding from the State, while at the same time unduly restricting the ability of local governments to raise the necessary levels of revenue to provide the required services. 6 SOLUTION If revenue caps are going to be applied to local governments they should be applied uniformly to the state budget as well. In short the same rules should apply to all levels of government. The State could also supplement local government funding as other states have done, who impose revenue caps and as the State of Texas recently did with the new school finance plan. 7 Preserve Local Control of Land Use Planning and Zoning The City of Southlake will support legislation that preserves local land use authority and oppose legislation that will erode local land use authority by restricting the ability of cities to zone or rezone properties. ISSUE Over the past few legislative sessions various proposals have been introduced to restrict the ability of cities to enforce their traditional land use controls. Specifically, legislation that requires cities to compensate landowners anytime a zoning classification change (often referred to as a “downzoning”) have become dangerously close to becoming the law. Under these proposals cities would have to compensate landowners, even if the proposed zoning changes did not interfere with the current or intended use of the property. In addition to compensating landowners for zoning changes, proposals have been considered that would require compensation for numerous types of city regulations. For example, previously proposed legislation would have required cities to compensate landowners if they restricted the ability of patrons to smoke on premises or limited the time of day that alcohol could be served. All of these types of local restrictions have been debated under the theory of “regulatory takings.” Additional legislative proposals would have prevented cities from ever changing the zoning classification of a property if any type of basic permit or site plan has been filed with any governmental entity. Since 1999 the Texas Legislature has continually expanded the “permit vesting” statute to include different aspects of city land use authority. The expansion of the “permit vesting” statute is beginning to interfere with the ability of cities to impose orderly, efficient, and comprehensive land use and development plans for their communities. PROBLEM Restricting the ability of cities to properly regulate land uses ultimately prevents them from being able to respond to the needs and demands of their citizens. For example, land use controls are used to keep undesirable businesses from locating in neighborhood type settings. Additionally, one of the main reasons people live in cities is to have the protection of a regulated land use system. In short when a home or business locates in a particular city they do so in part to ensure that an incompatible structure will not be placed next to their property. 8 SOLUTION The ability of most cities to manage growth and development is based on the Texas constitution’s home rule provisions. Cities are allowed to amend charters and pass ordinances al long as they do not conflict with the constitution or general laws enacted by the state legislature. The bottom line means that each home rule city can make its own decisions about what planning tools and techniques are most appropriate to its situation unless those tools have been proscribed by the Texas legislature. The State should be very cautious in proscribing solutions that are only applicable to individual situations because of the vast differences between cities in this large state. 9 Allow Municipal Regulation of Pipelines The City of Southlake will support legislation that would permit greater local regulatory oversight of intra-state pipelines and oppose legislation that would continue to preempt municipal regulation of intra-state pipelines. ISSUE Certain intra-state gas utilities are not typical public utilities that deliver a product to the consumer, but rather transport natural gas for the benefit of the production companies that they are affiliated with. However, currently these companies have greater powers than typical public utilities, or even municipalities. Further, these companies refuse to collaborate in the coordination or utilization of other producers’ pipelines in the region. Instead these companies prefer to install their own redundant pipelines enforcing eminent domain on property owners. For those municipalities who have no requirement for these companies to map the pipeline route, they are not even required to notify the municipality of the installation. PROBLEM The possibility of having several redundant pipelines crossing our municipal boundaries can potentially ruin any opportunity for future economic growth of those areas. When easements for these lines are forcibly taken through threats of eminent domain, they are permanent, and therefore, the future land use is limited. Basically, it will be permanently used as limited agricultural use land only. While in some instances the land may not be ideal for other uses, these companies take the shortest and least expensive route, not taking into consideration the comprehensive plans set by the municipality. Therefore, we might find one of these pipelines going through areas that are planned commercial or residential areas, destroying future growth. Developers will then have to work around the pipeline easements when constructing homes and businesses. SOLUTION The City Council of the City of Southlake, Texas, respectfully requests and urges the Legislature to revisit the prudence and continued appropriateness of preempting municipalities from regulating the practices of midstream gas utilities and respectfully requests that the Legislature confer additional regulatory authority upon municipalities over the activities described herein in 10 order to safeguard the interests of the public and the long term economic viability of private property. 11 “Place of Business” Definition Amendment The City of Southlake will seek passage of an amendment to Texas Tax Code chapter 321 clarifying the “place of business” definition. ISSUE Recently, some local governments have entered into agreements with retailers that alter the allocation of sales tax receipts from one city to another based on the interpretation of what constitutes a place of business. The Comptroller’s Office currently interprets a place of business to be any business location that has at least three sales within a calendar year. Using this guideline, some cities have persuaded retailers to alter their primary place of business from a traditional retail outlet to a warehouse in order to receive the sales tax receipts in their city instead. As a result of these practices, many cities are now losing revenue that is needed to support core services such as public safety, street maintenance, code enforcement, and libraries. PROBLEM The current “place of business” definition and sales tax agreements that have been implemented have created financial losses for many Texas cities. While presently limited in number, these agreements create a precedent for other retailers and municipal governments to follow. As such, it is possible that additional agreements from a number of retailers may follow suit which may cause tremendous financial strain for many local governments. Cities have made a number of service delivery financing decisions based on the historical collection of sales taxes. The reallocation procedures limit the effectiveness of long-term financial planning since cities cannot guarantee that sales tax dollars will continue to be received. These agreements meet the spirit of the tax code, and as such, the statute should be modified to prevent these types of issues from occurring in the future. SOLUTION The Texas Legislature should amend Chapter 321 of the Texas Tax Code to clarify the “place of business” definitionThe criteria used to determine whether a location qualifies as a place of . business is not sufficient. The place of business definition should be altered to consider the total sales of the retailer in question. Using a basis of only three sales during the course of a year, the tax code improperly ignores that thousands of other sales may be occurring at another location. 12 Clarify the Parameters of Homestead Exemption Amounts The City of Southlake will seek passage of and amendment to Texas Tax Code 11.13 allowing taxing entities to offer homestead exemptions as a hard dollar number under the 20% cap. ISSUE For the FY 2009 budget the City of Southlake approved a homestead exemption for its residents. The ordinance that was approved by City Council setting the exemption stated that each resident is entitled to an exemption of $15,000 or 20% of assessed value, whichever is the lesser. After the budget and all the pertinent ordinances were approved the Tax Assessors office came forward claiming that we were not authorized by state law to set a hard dollar amount. PROBLEM In reviewing this issue with our attorneys it is our position that the exemption set by City Council is allowed since the City of Southlake operates as a home rule city and the tax code does not state that a hard number can not be set. School districts in Texas are able to set hard dollar number exemptions, and the City of Southlake would like this to be clarified in the tax code so as not to cause any confusion going forward. SOLUTION The City of Southlake would like to see an amendment to Texas Tax Code 11.13 allowing taxing entities to offer homestead exemptions as a hard dollar number, as long as it is still under the 20% cap already in place in the tax code. 13 GENERAL LEGISLATIVE AGENDA 1.Preserve the Authority to Impose and Collect Municipal Impact Fees Oppose legislation that would restrict the ability of cities to impose and collect municipal impact fees from new developments. 2.Protection of Local Economic Development Authority Supportlegislation that provides local governments with the ability to expand local economic development efforts. Opposelegislation that would erode current authority to participate in local economic development projects, including but not limited to, the ability to provide tax abatements and Chapter 380 economic development agreements. 14 Goals of City Legislative Activities The fundamental goal of all City of Southlake legislative activities is to produce positive outcomes for the citizens of the City of Southlake as a whole. Numerous proposals in the Texas Legislature have the potential to seriously impact the ability of the City to carryout its overall mission. By taking a proactive role in monitoring and commenting on proposals in the Texas Legislature we are working to ensure that the citizens of the City of Southlake can continue to enjoy the quality of life they have come to expect and deserve. 15