Senate Natural Resources & Economic Development met on April 5 to take up a number of bills. This report covers SB 627 (Menéndez), SB 1398 (Schwertner | et al.), SB 1399 (Schwertner | et al.), SB 1340 (Zaffirini), SB 2196 (Hancock), SB 1809 (Sparks), SB 1419 (Birdwell), and SB 543 (Blanco).  Part one of the meeting can be found here and part two can be found here.

 

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Vote Outs

  • CSSB 1057 (Whitmire) Relating to the authority of certain municipalities and local government corporations to use certain tax revenue for certain qualified projects and project-associated infrastructure.
    • Voted out to the local and uncontested calendar (6-0)
  • CSSB 558 (Hughes) Relating to parkland dedication for property development by certain municipalities; authorizing a fee.
    • Voted out to the local and uncontested calendar (6-0)
  • SB 1158 (Whitmire) Relating to single event classification for eligibility under the major events reimbursement program.
    • Voted out to the local and uncontested calendar (6-0)
  • CSSB 1186 (Hughes) Relating to the regulation by the Railroad Commission of Texas of brine mining.
    • Voted out to the local and uncontested calendar (6-0)
  • CSSB 1210 (Blanco) Relating to the designation of a person who has an interest in the geothermal resources of an orphaned oil or gas well as the operator of that well.
    • Voted out to the local and uncontested calendar (7-0)
  • CSSB 1397 (Schwertner) Relating to the continuation and functions of the Texas Commission on Environmental Quality.
    • Voted out to the local and uncontested calendar (7-0)
    • Members discussed how since this is the Sunset bill, it will be taken off of the local and uncontested calendar
  • CSSB 874 (West) Relating to the eligibility of the certain cricket events for funding under the Major Events Reimbursement Program.
    • West – Substitute deletes references to USA Cricket and tightens language to ensure large culminating events are eligible
    • Voted out to the local and uncontested calendar (7-0)
  • CSSB 785 (Birdwell) Relating to the ownership by a landowner of the geothermal energy and associated resources below the surface of the landowner’s land.
    • Hancock – Sparks and I were discussing horizontal drilling, where is the heat being developed and which landowner gets it?
    • Birdwell – Mineral belongs to whoever owns it; heat is in the geothermal system, not in mineral rights; willing to discuss an amendment with sparks
    • Voted out to the Senate floor (6-1)
  • SB 786 (Birdwell) Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.
    • Voted out to the local and uncontested calendar (7-0)

 

Pending Business

SB 1397 (Schwertner) Relating to the continuation and functions of the Texas Commission on Environmental Quality.

  • Schwertner – This is the TCEQ Sunset bill; overviews CS changes
  • Provides that TCEQ do actual public outreach on how to participate in the permitting process
  • Extends deadline to 36 hours after the public meeting for air quality permits
  • Penalty cap reserved for the most substantial and egregious violations
  • Alvarado – Thanks Schwertner for the public education/outreach part of the bill
  • Birdwell – Will leave this pending, but will get to it as quickly as we can

 

SB 1397 left pending; in part two was voted out (7-0) to the local and uncontested calendar, but members noted it will be taken off as it is a Sunset bill

 

SB 785 (Birdwell) Relating to the ownership by a landowner of the geothermal energy and associated resources below the surface of the landowner’s land.

  • Birdwell – Have a new CS after discussions with GLO
  • Fiscal note concerns have been addressed and provides clarity for GLO leases to ensure the bill will not be construed to support statements to the contrary
  • CS makes it clear that minerals dissolved or in groundwater, including in hot brine, is not the case under this bill
    • Hancock – Sparks and I were discussing horizontal drilling, where is the heat being developed and which landowner gets it?
    • Mineral belongs to whoever owns it; heat is in the geothermal system, not in mineral rights; willing to discuss an amendment with sparks

 

SB 785 left pending; in part two was voted out (6-1) to the Senate floor

 

SB 786 (Birdwell) Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.

  • Birdwell – After hearing last week, new RRC FY notes there is no fiscal impact

 

SB 786 left pending

 

 

Today’s Business

SB 627 (Menéndez) Relating to the entitlement of certain municipalities to certain tax revenue related to a hotel and convention center project

  • Menéndez – Have a CS
  • Clarify what is already in place concerning the rebate of state HOT under a QHP; San Antonio world class destination convention center; revitalization efforts;
  • City has nuances that require clarification
  • Eliminates any lingering ambiguities; have been working with stakeholders on the CS
  • Allows city to place property ownership as a nonprofit owned by the muni; creates a zone owned by the hotel
  • Adds Birdwell’s clawback language
  • Birdwell – Thanks for adding SB 1420 language; most people recoup what the state invests within 6 years; request you keep this language there; hopes it makes it on through the House

 

Shannon Miller, City of San Antonio – For

  • Bill clarifies land ownership for the purposes of using state Hotel Occupancy Tax program
  • Program has been successful and have built 13 projects since 1993
  • 4 of these projects have been their 10-year deadline resulting in $39m in net revenue
  • Bill will help sustain this thriving industry
  • Menéndez – Location in question is the site of a previous world’s fair

 

SB 627 left pending

 

SB 1398 (Schwertner | et al.) Relating to air quality permits for aggregate production operations and concrete batch plants

  • Schwertner – Ensures are responsible when demonstrating to the public how they will protect the land, particularly with roads
  • Expands TCEQ’s role in tracking nuisance complaints
  • Have a CS; clarifies plan’s intent to address income, land, water, ingress-egress, air
  • TCEQ’s language to align with their current practices
  • Permit applicants need to have a plan to be a good neighbor

 

Mark Fresianhan, TRAM and Self – Neutral

  • Are encouraging things in the bill such as more planning, reclamation, best practices
  • Are neutral because we are in negotiations on what these best practices are

 

Tsion Amare, Environmental Defense Fund – For

  • Bill is a step in the right direction Adopting additional steps installing air quality monitors
  • Language assesses and considers cumulative health impacts of new facilities on surrounding communities

 

Adrian Shelley, Public Citizen – Neutral

  • SB 1209 last session was a strong bill addressing this; bill could take some aspects of this to make this one stronger
  • Monitoring of dust emission and computer-aided blasting controls
  • Recommend including truck washing including other dust mitigation strategies

 

Tracie Schieffer, A L Helmcamp and Texas Highway Heavy Utilities & Industrial Branch – Against

  • Bill makes no distinction between a permanent and temporary batch plants
  • Reclamation as defined by the bill is unrealistic
  • Safe ingress and egress are determined by the engineer
  • Bill goes even beyond federal requirements
  • Birdwell – Ingress/egress determined by TxDOT engineers?
    • Correct on public works projects
  • Birdwell – How does this deal with permit renewals; grandfathering of current plants?
    • Is new permits; at the time of renewal, it would be subject to the bill
    • Need to have a plan to be a good neighbor
  • Birdwell – Does TxDOT engineer direct where these are located?
    • We submit where we want to be and then they are approved

 

Josh Leftwich, Texas Aggregate and Concrete Association – Against

  • Still reviewing the CS; still working with stakeholders on perfecting language
  • Birdwell – What perfecting language?
    • Need clarifications between the differences of concrete batch plants and APOs
  • Schwertner – Do not have opposition to disclosure and working with communities affecting your operations?
    • Already developed their own plans currently
  • Schwertner – Then this is formalizing what is already done; people want that transparency/dialogue
  • Birdwell – Concern is if the state does this here, where does it end? Do not want to incumber the industry so it shuts down, but sees Schwertner’s points
    • We are already highly regulated, but will continue to work with Schwertner’s office and stakeholders; permit process is already public/transparent
  • Alvarado – Have had many conversations about permitting; disappointed with your organization; feel you’re being disingenuous being against the bill; is about transparency/accountability
    • Will continue to stive to work with your office as well

 

SB 1398 left pending

 

SB 1399 (Schwertner | et al.) Relating to the renewal and review of certain air quality permits

  • Codifies TCEQ’s protectiveness review; prescribes an update even 6 years
  • Standard permit to be renewed every 6 years rather than the current 10
  • CS clarifies bill this concerns batch plants only; clarifies review and deadline are not meant to line up
  • Have worked on compromise, which no one seems to like
  • Birdwell – Have had a lot of concerns with these bills; felt important to have a dialogue on them

 

Mark Fresianhan, TRAM and Self – Neutral

  • Very positive aspects in the bill; a more complete statement would be that the protectiveness review should apply to all the stakeholders

 

Adrian Shelley, Public Citizen – For

  • Support bill specifically the six-year turnaround and the six-year schedule for protectiveness review
  • Protectiveness review was only redone recently because of a drafting error;

 

Josh Leftwich, Texas Aggregate and Concrete Association – Neutral

  • Supports the concept of a regular review; looking at CS now, possible it addresses our concerns
  • Recommend adding clearly defined notification and grace period for operators

 

SB 1699 left pending

 

SB 1340 (Zaffirini) Relating to the local development agreement database maintained by the comptroller of public accounts

  • Zaffirini – Enhances transparency/accountability with local development agreements; expands definition to include 312s and school districts
  • Would include contact information, taxes abated, among other information
  • CS removes outdated reference to chapter 313s

 

Cyrus Reed, Sierra Club – For

  • Is a good government and transparency bill

 

SB 1340 left pending

 

SB 2196 (Hancock) Relating to the identification and mapping of aggregate production operations by The University of Texas Bureau of Economic Geology

  • Hancock – Have a CS; requires Bureau of Economic Geology to study aggregate production sites and report on available and potential impacts
  • CS clarifies a receive gifts/donations and other funds can be used for the study; takes the fiscal note off the bill

 

Josh Leftwich, Texas Aggregate and Concrete Association – For

  • Speaks in favor of the bill; is a common-sense measure

 

SB 2196 left pending

 

SB 1809 (Sparks) Relating to the authority of certain counties to impose a hotel occupancy tax

  • Sparks – Creates a HOT for Armstrong County; will present the CS on a future date

 

Justin Bragel, Texas Hospitality and Lodging Association – For

  • Can speak to the CS; addresses maximum rate the county may impose on lodging in the county; many are short-term rentals
  • Max rates between 7% and 2%

 

SB 1809 left pending

 

SB 1419 (Birdwell) Relating to limitations on the use of public money under certain economic development agreements or programs adopted by certain political subdivisions

  • Birdwell – Chapters 380 and 381; questionable practices and transparency to ensure programs remain viable
  • Public meetings prior to an agreement
  • Cities have utilized these to provide property tax rebates; migration from 312 was not the intent of the legislature
  • Some agreements extend over 60 years; no accountability and review of agreements
  • Bifurcates public monies between 380 and 381 to create clear and equitable distinctions
  • Can no longer abate ad valorum taxes out of these funds
  • Limits grants, loans, abatements to 10 years
  • Transparency measures from 312; public meeting and notice requirements
  • To be held and notice not less than 15, not more than 30 days before the meeting
  • Rescheduling/postponement requirements; extended to chapter 312

 

Bennett Sandlin, Texas Municipal League – Neutral

  • Thanks the chair for these improvements; have seen what happens if the government loses faith in these types of programs
  • Believe 15 days is better than 30 days
  • Support the idea preventing using 380s for tax abatements; as written is a little inaccurate cannot come from property taxes owed/paid by the grantee
  • Birdwell – Trying to put guardrails on this as we saw the corruption with 313s
  • Birdwell – Do not want to see these become unsound; saw one town in Williamson County that did a 60 year and no one who authorized that would be subject to review
  • Birdwell – Trying to do this on the front end like we do for the Enterprise Fund; is not a clawback in here, and do not need one

 

Kent Sharp, Sherman Economic Development Corporation – Neutral

  • Agree with transparency portions of the bill; concerned about the 10-year timeline
  • Notes Sherman was competing with other countries/states and ended up with a 90% 30-year abatement; similarly did the same for wafer production in Sherman
  • Recommend for large capital projects being able to extend tax abatement; if cut to 10 years will not be able to compete with other states/countries
  • Birdwell – Started with 10 because other funds have that; what is the definition of a major capital project? Hesitant to put a dollar amount on it as it may become a negotiation point; problem is there is no review/reconciliation
    • Economic impact at the front could be incorporated; will work with you
  • Birdwell – The issue with economic impact upfront was on 313s it was a complete farce

 

Greg Sims, Greenville Economic Development – Against

  • Agree with transparency, but do not want to mess up these programs/tools that created the Texas miracle; taking away 313s was taking away a tool in our toolbox
  • Need all these programs; need local control to make our own decisions
  • Birdwell – With 313s the corruption was bad; was a different situation
  • Birdwell – Want to preserve this, but want transparency; when cities and school districts do not police themselves, the legislature has to step in
  • Birdwell – Like
    • Yes; maybe considering penalties for bad actors would be better than tweaking what is there
  • Birdwell and Sims discus 313s
    • Sims – Imagine how many funds could have come to the state for M&O and debt services to build new schools in rural areas

 

Kris Collins, Greater Waco Chamber of Commerce – Against

  • 380 and 381 have been helpful programs and have resulted in $2.5b in industrial developments, 4.5k new jobs
  • For every $1 invested by the GCD, results in $25 ROI
  • Birdwell – Concerned about the ad valorum piece?
    • Correct, but also about how we can be creative with 380/381
  • Birdwell – 312s have a 10-year time limit; advocating 380/381s be sales tax and property taxes; trying to put guardrails on this
    • Local government have created our own bracket and review process; have an annual review for companies under these programs
  • Birdwell – Who is doing that and how much public participation?
    • Run our analysis through a third party
  • Birdwell – Trying to bring transparency at the decision point to enter into a 380/381
  • Birdwell – What would be the time constraint on reviews?
    • Have a billion-dollar project with a 20-year timeframe; value of projects varies across the state and do not know about future projects
    • Depends on the community’s tax base
    • Maybe answer is something like the Enterprise Fund that has zone designations for rural versus urban

 

Stewart McGregor, Texas Economic Development Council – Against

  • Need this important tool to continue to compete with other states who are becoming more competitive
  • Need to maintain flexibility; have suggested proposed amendments
  • Allowing for a longer timeframe on these agreements
  • Allowing chapter 380/381 being able to stack with 312s
  • Keeping ad valorum rebates in place and ensuring there is an economic impact analysis on these
  • Support HB 4385 (Shine) as it has a lot of transparency
  • Birdwell – Bill does not prevent from stacking
  • Birdwell – What would be the time constraint on reviews?
    • Know that companies want consistency to mitigate risk; challenge is differences in types of industries to attract

 

Dale Craymer, Texas Taxpayers and Research Association – Against

  • Not against notice and transparency requirements, but have other concerns
  • Concerns this may eliminate this as a tool because of their use of property tax values may be a drafting error
  • 10-year limit is a concern; more appropriate to compare to other states; have lost out to other states that have offered 30 to 40 years
  • Toolbox is more limited, which makes what is left more valuable
  • Could require company to sign an agreement with specific performance targets and if met, after 10 years have an extension, if they meet them again are extended 25 yeas
  • Birdwell – Want to have a threshold we do not go beyond, no threshold in statute currently; struggling with what is the right answer
  • Birdwell – Will think about what you said about year process and property tax values
    • If we can meet corporate financial modeling at 25 years, would be better
    • McGregor and Collins – Most agreements fall within that time frame; reiterate need for flexibility

 

Glenn Hamer, Texas Association of Business – Against

  • Powerful economic development incentives have helped create the Texas miracle
  • Transparency is important, but want to make sure we are giving these economic development professionals flexibilities; are losing out to other states, need to be more competitive
  • Support this chamber’s work on property tax relief

 

SB 1419 left pending

 

SB 543 (Blanco) Relating to the conveyance of property by a municipality for the public purpose of economic development

  • Blanco – Allows municipalities to use conveyance as part of the 380 agreements; will drive back cost and scale back property tax
  • CS make it clear that a city cannot transfer property acquired using eminent domain
  • Birdwell – Hope you are committed to keep that language in the bill; would be undoing work we did concerning protections for eminent domain use
    • Absolutely

 

Bennett Sandlin, Texas Municipal League – For

  • Corrects an oversight in Chapter 380 not including land; is a great economic incentive
  • Would benefit all, not just big cities

 

Snapper Carr, City of El Paso – For

  • City has worked on a number of years to refine the language in the bill today
  • Not a clear law that allows for inclusion of those as part of an economic development package
  • Many around the state have large parcels to be included in these offerings
  • This would help with transparency and to help with quickness in which these projects can get negotiated/completed

 

Eddie Solis, Representative from El Paso Water – Neural

  • Previously filled out a card in opposition, would like this to be changed to neutral

 

SB 543 left pending