The Texas Legislature is seeking ways to provide property tax relief. One of their key strategies is to restrict the use of certificates of obligation, which have been abused by cities and municipalities across the state.
The City of El Paso may be the worst offender in Texas, as it now owes $851,565,991 in principal and interest on ten certificates of obligation issued between 2013 and 2021.
Yesterday the Texas House passed HB 4082 with 129 yeas, 10 nays, 1 no-vote, and 10 abstentions. Of El Paso’s four state representatives, only one, Lina Ortega, voted opposed this bill.
HB 4082 stipulates that COs may be used for public works, which are defined as streets, roads, highways, bridges, sidewalks, parking structures, landfills, airports, utility systems, wharfs and docks, flood control and drainage projects, public safety facilities, judicial facilities, administrative buildings, animal shelters, libraries, and parks or recreation facilities that are part of the municipal or county park system.
However, HB 4082 clarifies that COs may not be used for “a facility for which more than 50 percent of the average annual usage is or is intended to be for professional or semi-professional sports; a new stadium, arena, civic center, convention center, or coliseum that is or is intended to be leased by a single for-profit tenant for more than 180 days in a single calendar year; or a hotel.”
But a last-minute amendment added that COs may be used for “the rehabilitation, expansion, reconstruction, or maintenance of an existing stadium, arena, civic center, convention center, or coliseum that is owned and operated by the municipality or county or by an entity created to act on behalf of the municipality or county.”
In spite of the broad use of COs permitted under state law, HB 4082 will prevent COs for being used to build a new arena or soccer stadium in El Paso.
This will save the taxpayers hundreds of millions of dollars and force certain developers to pay for their own stuff.
God bless Texas!