Current through Reg. 50, No. 13; March 28, 2025
(a) Purpose. This section establishes a
uniform method for determining a municipality's base amount and calculating the
value of in-kind services provided to a municipality under an effective
franchise agreement or ordinance by certificated telecommunications providers
(CTPs), and sets forth relevant reporting requirements.
(b) Application. This section applies to all
municipalities in the State of Texas.
(c) Definitions. The following words and
terms when used in this subchapter, shall have the following meaning, unless
the context clearly indicates otherwise.
(1)
Base amount--The total amount of revenue received by the municipality from CTPs
in franchise, license, permit, application, excavation, inspection, and other
fees related to the use of a public right-of-way in calendar year 1998 within
the boundaries of the municipality. The base amount may include revenue from
newly annexed areas, the value of in-kind services or facilities, or municipal
fee rate escalation provisions for certain municipalities as prescribed in
subsection (d) of this section.
(A) The base
amount does not include pole rental fees, special assessments, and taxes of any
kind, including ad valorem or sales and use taxes, or other compensation not
related to the use of a public right-of-way.
(B) The base amount does not include
compensation received from interexchange carriers, cable providers or wireless
providers, who may be CTPs, but whose lines do not meet the definition of
access line under §
26.461 of this title (relating to
Access Line Categories).
(2) Effective franchise agreement--A
franchise agreement or ordinance that is adopted and effective by its own terms
by January 12, 1999, or by mutual agreement of the parties has been held-over
after its expiration date, without dispute, and the municipality and the CTP
were in the process of developing a new agreement or ordinance.
(3) In-kind compensation.
(A) In-kind services--Services received by a
municipality from a CTP during calendar year 1998 at either below cost or no
cost as part of an effective franchise agreement.
(B) In-kind facilities--Facilities received
by a municipality from a CTP before or during calendar year 1998 at either
below cost or at no cost as part of an effective franchise agreement.
(4) Litigating municipality--A
municipality that was involved in litigation relating to franchise fees with
one or more CTPs during any part of calendar year 1998.
(5) Other compensation--Compensation not
related to the use of a public right-of-way paid by a CTP to a municipality,
including, but not limited to, fees paid to the municipality to obtain access
to municipally-owned poles, ducts, conduits, buildings, and other
facilities.
(6) Similarly sized
municipality--
(A) For municipalities with a
population less than 1000, a similarly sized municipality shall be another
municipality with a population within 200 more or fewer persons than the
reporting municipality's population, located in the same or adjacent county as
the reporting municipality.
(B) For
municipalities with a population greater than 1000, a similarly sized
municipality shall be another municipality with a population within 20% of the
reporting municipality's population, located in the same or adjacent county as
the reporting municipality.
(C)
Municipal population shall be determined using the January 1, 1999 population
estimates of the Texas State Data Center.
(D) The reporting municipality and the
similarly sized municipality shall have the same CTP with the greatest number
of access lines.
(7)
Special assessment--An assessment authorized for public improvements under the
Local Government Code or the Transportation Code.
(d) Determination of a municipality's base
amount. A municipality's base amount shall be the sum of all applicable revenue
received from CTPs, including newly annexed areas, the value of in-kind
compensation, and the value of any applicable escalation provisions in
effective franchise agreements or ordinances, unless a municipality's base
amount is determined under subsection (f) or (g) of this section.
(1) Revenue received. Payments received by a
municipality from CTPs as compensation for calendar year 1998 usage of the
public right-of-way.
(A) Payments received
outside of calendar year 1998 may be included as revenue received only to the
extent that these payments represent compensation for calendar year 1998 usage
of a public right-of-way.
(B)
Payments received in calendar year 1998 that do not represent compensation for
calendar year 1998 usage of a public right-of-way shall be excluded.
(2) Escalation provisions. The
municipality shall calculate and report its fee rate escalation amount that is
known and measurable for calendar year 1999, that was specifically prescribed
in effective agreements or ordinances, and add that escalation amount to the
base amount calculation.
(3)
In-kind compensation. In-kind services or facilities shall be valued at 1.0% of
the base amount unless a municipality can establish before the commission that
those services or facilities had a greater value in calendar year 1998.
Municipalities requesting in-kind compensation above 1.0% of the base amount
shall make a request consistent with subsections (e) and (j) of this
section.
(e) Valuation
of additional in-kind compensation. If a municipality wants to establish that
the total value of in-kind compensation received from CTPs had a greater value
in 1998 than 1.0% of the municipality's base amount, it must make a showing
consistent with this subsection and meet the filing requirements of subsection
(j) of this section.
(1) Telecommunications
equipment. The municipality shall compute the 1998 value by dividing the
original cost of the equipment by the term in years of the effective franchise
agreement.
(2) Dark fiber. Where a
municipality had the option to use the CTP's dark fiber as in-kind compensation
in calendar year 1998, the municipality shall value the fiber only to the
extent the municipality utilized it in calendar year 1998. The value shall be
computed in accordance with paragraph (4) of this subsection. Where a CTP
permanently transferred ownership of the dark fiber to the municipality as
in-kind compensation before or during calendar year 1998, the value of the dark
fiber shall be computed for its entire length in accordance with paragraph (1)
of this subsection.
(3) Poles,
ducts, and conduits. Where a municipality had the option to use the CTP's
poles, ducts, and conduits as part of its in-kind compensation, it shall value
those facilities only to the extent the municipality utilized them during
calendar year 1998. The value of the poles, ducts and conduits shall be based
upon reasonable annual rental fees charged or paid by other utilities for
similar facilities. Where a municipality and a CTP have entered into a
joint-use agreement for the use of poles, ducts, or conduits, no value shall be
included in computing in-kind compensation for such use.
(4) Telecommunications service. The
municipality shall value the telecommunications service it received as in-kind
compensation by determining the fees paid by other municipalities for same or
similar services, or through the average price charged in 1998 by three
suppliers qualified to provide the service.
(5) All other facilities and services. The
municipality shall perform a survey of suppliers for all other in-kind
facilities and services it received in calendar year 1998, to establish true
market values. The municipality shall survey at least three suppliers for each
facility or service it is valuing.
(f) Base amount for eligible municipalities.
(1) Eligible municipalities include
municipalities in counties with a population of less than 25,000 on December
31, 1998, municipalities that did not have an effective franchise agreement or
ordinance on January 12, 1999, and municipalities that were not in existence on
January 12, 1999. A municipality that was incorporated prior to January 12,
1999 but received no compensation from CTPs for calendar 1998 use of the public
right-of-way, shall also be considered an eligible municipality.
(A) If a municipality is located in more than
one county, its eligibility shall be determined by the county containing the
greatest number of its residents.
(B) County population shall be determined
using the Texas State Data Center population estimates for January 1,
1999.
(2) The base
amount for an eligible municipality shall, at the election of the governing
body of the municipality, be equal to one of the following amounts:
(A) An amount not greater than the statewide
average fee per line for each category of access line of the CTP with the
greatest number of access lines in that municipality, multiplied by the total
number of access lines in each category located within the boundaries of the
municipality on December 31, 1998, for a municipality in existence on that
date, or on the date of incorporation for a municipality incorporated after
that date; or
(B) An amount not
greater than the base amount determined for a similarly sized municipality in
the same or an adjacent county in which the CTP with the greatest number of
access lines in the municipality is the same for each municipality. The
similarly sized municipality must have computed its base amount using methods
other than this paragraph; or
(C)
The total amount of revenue received by the municipality in franchise, license,
permit, and application fees from all CTPs in calendar year 1998 consistent
with the methodology prescribed under subsection (d)(1) of this
section.
(g)
Base amount for litigating municipality. The base amount for a litigating
municipality that not later than December 1, 1999, repeals any ordinance
subject to dispute in the litigation, voluntarily dismisses with prejudice any
claims in the litigation for compensation, and agrees to waive any potential
claim for compensation under any franchise agreement or ordinance expired or in
existence on September 1, 1999, is, at the municipality's election, equal to
one of the following amounts:
(1) An amount
not to exceed the statewide average access line rate on a per category basis
for the CTP with the greatest number of access lines in that municipality
multiplied by the total number of access lines located within the boundaries of
the municipality on December 31, 1998, including any newly annexed areas;
or
(2) An amount not to exceed 21%
of the total sales and use tax revenue received by the municipality pursuant to
Texas Tax Code, Chapter 321. The sales and use tax revenue will be based on the
calendar year 1998 report of taxes collected, as issued by the State
Comptroller for a municipality. The amount does not include sales and use taxes
collected under:
(A) Texas Transportation
Code, Chapters 451, 452, 453, or 454 for a mass transit authority;
(B) the Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), for a 4A or 4B Development
Corporation;
(C) Texas Local
Government Code, Chapters 334 and 335; and
(D) Texas Tax Code, Chapters 321, 322, and
323, for a special district, including health service, crime control, hospital,
and emergency service districts.
(h) Books and records. Subject to request by
the commission, a municipality shall provide sufficient records and
documentation to substantiate its base amount calculation as prescribed in this
chapter. A municipality shall maintain books and records relating to
compensation received pursuant to Texas Local Government Code, Chapter 283, in
accordance with generally accepted accounting principles (GAAP) and state and
federal guidelines, and in a manner that allows for easy identification and
reporting of right-of-way fees received from each CTP.
(i) Reporting procedures and requirements.
(1) Who shall file. The record-keeping and
reporting requirements listed in this section shall apply to all municipalities
in the State of Texas.
(2)
Reporting. Unless otherwise specified, periodic reporting shall be consistent
with this subsection and subsection (m) of this section.
(A) Initial reporting. A municipality shall
file its base amount using the commission-approved
Form for Calculating
Right-of-way Compensation (FCRC), or the commission-approved
Program for Calculating Right-of-way Compensation (PCRC), with
the commission no later than December 1, 1999 under Project Number 20935,
Implementation of HB 1777.(B) Subsequent reporting.
(i) The commission may periodically require
each municipality to file with the commission, on an as-needed basis, a report
on municipal compensation. The report shall include all amounts received
annually pursuant to this section and shall identify quarterly payments from
each CTP.
(ii) The commission may
request additional documentation if it determines a filing by the municipality
is insufficient. If the commission requires additional information, the
municipality shall respond and provide the needed documents to the commission
within 30 days from the time the municipality receives the request.
(j)
Reporting for additional in-kind compensation. This subsection applies only to
a municipality valuing in-kind compensation at a level greater than 1.0% of its
base amount, pursuant to subsection (e) of this section. The municipality
maintains the burden of proof for establishing the reasonableness of its
valuation. No later than December 1, 1999, the municipality shall file using
the commission-approved Form for Valuing In-kind Compensation Over
1.0%. If the commission determines that the value of in-kind
compensation is less than the value claimed by the municipality, the value of
in-kind compensation for that municipality shall, on an interim basis, default
to 1.0% of the base amount until the municipality makes a showing consistent
with this section and subsection (e) of this section.
(k) Allocation of Base Amount. Not later than
December 1, 1999, a municipality that wants to propose an allocation of the
base amount over specific access line categories shall notify the commission of
the desired allocation. The commission shall establish an allocation of the
base amount over the categories of access lines if a municipality does not file
its proposed allocation by December 1, 1999.
(1) A municipality may request a modification
of the commission's allocation not more than once every 24 months by notifying
the commission and all affected CTPs in September of that year that the
municipality wants to change the allocation for the next calendar
year.
(2) A municipality's
allocation shall be implemented unless, on complaint by an affected CTP, the
commission determines that the allocation is not just and reasonable, is not
competitively neutral, or is discriminatory.
(l) Late, insufficient, or incorrect filing.
(1) If a municipality fails to complete its
base amount report by the date required by this section, the commission shall
assume that the base amount for that municipality is $0.
(2) All commission-established rates and all
compensation thereunder shall be applied prospectively from the date the CTPs
timely implement the appropriate rates.
(3) A CTP shall not take more than 90 days to
implement the rates established by the commission.
(m) Report attestation. All filings with the
commission pursuant to this section shall be in accordance with the
commission-approved FCRC or PCRC instructions, as appropriate. The filings
shall be attested to by an officer or authorized representative of the
municipality under whose direction the report is prepared or other official in
responsible charge of the entity in accordance with §
26.71(d) of this
title (relating to General Procedures, Requirements and Penalties).
