CAUSE NO. _______________
CITY OF MCALLEN; CITY OF
DALLAS; CITY OF IRVING; CITY OF
BROWNSVILLE; CITY OF SUGAR
LAND; CITY OF MISSION; CITY OF
PHARR; CITY OF COPPELL; CITY
OF WESLACO; CITY OF ALAMO;
CITY OF MIDLOTHIAN; CITY OF
HIGHLAND VILLAGE; CITY OF
SEAGOVILLE; CITY OF ALTON;
CITY OF BOERNE; CITY OF ROMA;
CITY OF ROCKPORT; CITY OF LA
FERIA; CITY OF LUCAS; CITY OF
BALCONES HEIGHTS; CITY OF
SOUTH PADRE ISLAND; CITY OF
SIMONTON; and JIM DARLING, in
both his official capacity as Mayor of the
City of McAllen and individual capacity,

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IN THE DISTRICT COURT OF

Plaintiffs,

TRAVIS COUNTY, TEXAS

v.
THE STATE OF TEXAS;
GREG ABBOTT, sued in his official
capacity as Governor of the State of
Texas; and KEN PAXTON, sued in his
official capacity as Attorney General of
Texas,
Defendants.

_________ JUDICIAL DISTRICT

PLAINTIFFS' ORIGINAL PETITION
AND APPLICATION FOR INJUNCTIVE RELIEF
I.

INTRODUCTION

Since the time of its framing in 1876, the Texas Constitution has jealously guarded and
preserved the resources and power of the government. This is demonstrated with unmistakable
clarity in the Constitution’s interrelated prohibitions against gifting public funds or other things of

 value to aid the commercial interests of a private enterprise and against the delegation of legislative
power to private entities without providing for adequate standards of exercise or oversight.
Notwithstanding these constitutional prohibitions, SB 1004 seeks to require Texas
municipalities to forego arm’s-length negotiation and instead grant private wireless providers the
use of the public right-of-way for a gratuitously-small fraction of the market rate. The legislation
also places legislative powers relating to zoning and the management of municipal right-of-way in
the hands of private entities without providing guidelines for, or oversight over, the exercise of
these essential municipal police powers.
In mandating this result, the Legislature has not only violated the anti-gift and nondelegation provisions of the Texas Constitution, but would make cities and their officials complicit
in these transgressions by having them administer and sanction the transfer of wealth of as much
as hundreds of millions of dollars from municipal coffers to private telecommunications
companies each year and by having them abandon their obligations to the public by relinquishing
their responsibilities for implementing effective zoning measures and right-of-way management.
Taxpayers in these municipalities have an interest in preventing the unconstitutional transfer of
valuable city assets and legislative powers to private corporations. Put to the untenable choice of
violating SB 1004 or the state constitution, the named plaintiffs seek a declaration that SB 1004 is
unconstitutional and further seek an injunction against its implementation and enforcement
because it violates article II, section 1, article III, section 1, article III, section 52, and article XI,
section 3, of the Texas Constitution.
II.
1.

DISCOVERY CONTROL PLAN

Pursuant to Rule 190.4 of the Texas Rules of Civil Procedure, Plaintiffs intend that

discovery be conducted under Level 3.

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 2 of 26

 III.
2.

PARTIES AND SERVICE OF PROCESS

Plaintiff City of McAllen is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
3.

Plaintiff City of Dallas is a duly incorporated home-rule municipality located in

Dallas, Collin, Denton, Kaufman, and Rockwall Counties, Texas.
4.

Plaintiff City of Irving is a duly incorporated home-rule municipality located in

Dallas County, Texas.
5.

Plaintiff City of Brownsville is a duly incorporated home-rule municipality located

in Cameron County, Texas.
6.

Plaintiff City of Sugar Land is a duly incorporated home-rule municipality located

in Fort Bend County, Texas.
7.

Plaintiff City of Mission is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
8.

Plaintiff City of Pharr is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
9.

Plaintiff City of Coppell is a duly incorporated home-rule municipality located in

Dallas and Denton Counties, Texas.
10.

Plaintiff City of Weslaco is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
11.

Plaintiff City of Alamo is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
12.

Plaintiff City of Midlothian is a duly incorporated home-rule municipality located

in Ellis County, Texas.

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 3 of 26

 13.

Plaintiff City of Highland Village is a duly incorporated home-rule municipality

located in Denton County, Texas.
14.

Plaintiff City of Seagoville is a duly incorporated home-rule municipality located

in Dallas and Kaufman Counties, Texas.
15.

Plaintiff City of Alton is a duly incorporated home-rule municipality located in

Hidalgo County, Texas.
16.

Plaintiff City of Boerne is a duly incorporated home-rule municipality located in

Kendall County, Texas.
17.

Plaintiff City of Roma is a duly incorporated home-rule municipality located in

Starr County, Texas.
18.

Plaintiff City of Rockport is a duly incorporated home-rule municipality located in

Aransas County, Texas.
19.

Plaintiff City of La Feria is a duly incorporated home-rule municipality located in

Cameron County, Texas.
20.

Plaintiff City of Lucas is a duly incorporated home-rule municipality located in

Collin County, Texas.
21.

Plaintiff City of Balcones Heights is a duly incorporated General Law Type A

municipality located in Bexar County, Texas.
22.

Plaintiff City of South Padre Island is a duly incorporated home-rule municipality

located in Cameron County, Texas.
23.

Plaintiff City of Simonton is a duly incorporated General Law Type A municipality

located in Fort Bend County, Texas.
24.

Plaintiff Jim Darling is the Mayor of McAllen, Texas. He is a party to this

proceeding in his official capacity as mayor and in his individual capacity as a citizen and taxpayer.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 4 of 26

 25.

Defendant State of Texas may be served with process by delivering citation and

petition to the Texas Secretary of State at 1019 Brazos Street, Austin, Texas 78701.
26.

Defendant Greg Abbott, Governor of the State of Texas, may be served with

process by delivering citation and petition to 1100 San Jacinto Blvd., Austin, Texas 78701.
27.

Defendant Ken Paxton, Attorney General of the State of Texas, may be served with

process by delivering citation and petition to 209 West 14th Street, Austin, Texas 78701.
IV.
28.

JURISDICTION AND VENUE

The subject matter in controversy is within the jurisdictional limits of this Court,

and the Court has jurisdiction over this action pursuant to article V, section 8, of the Texas
Constitution and section 24.007 of the Texas Government Code, as well as the Texas Uniform
Declaratory Judgments Act. TEX. CIV. PRAC. & REM. CODE § 37.001, et seq.
29.

This Court has jurisdiction over the parties because all Defendants reside or have

their principal place of business in Texas.
30.

Plaintiffs seek non-monetary relief.

31.

Venue is proper in Travis County because Defendants have their principal office in

Travis County. TEX. CIV. PRAC. & REM. CODE § 15.002(a)(3).
V.
A.

FACTS

The Emergence of Small-Cell and Network-Node Technology
32.

Senate Bill 1004, enacted by the 85th Legislature in 2017 and to become effective

on September 1, 2017, enacts chapter 284 of the Texas Local Government Code. This new chapter
purports to govern the deployment of network nodes in public rights-of-way.
33.

A network node is defined in the bill as “equipment at a fixed location that enables

wireless communications between user equipment and a communication network.” A network
node encompasses multiple pieces of equipment including a radio transceiver, an antenna, a
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 5 of 26

 battery-only backup power supply, and coaxial or fiber-optic cable. The term does not include a
pole or tower to which the equipment is attached.
34.

Network nodes are a component of small-cell technology, which in turn is part of

the cellular network that supports smart phones, tablets, and other mobile devices.
35.

Mobile data traffic, driven by increased sales of smart phones, tablets, and similar

devices and by usage demanding greater bandwidth, results in significant growth in the use of
mobile data networks and requires increased capacity.
36.

Emerging technology will greatly accelerate the demand for increased capacity of

wireless networks and for additional network nodes. While small cell technology will make
possible greater uses of the internet, currently and in the foreseeable future the predominant use of
the network is for streaming video.
37.

Small-cell wireless networks using network nodes are a way to increase capacity

and capabilities above that provided by the familiar cellular technology provided by larger cell
towers, often referred to as macro sites. Rather than being located on tall macro towers, a small
cell network node may be located on a street sign, on a light pole, on a traffic signal pole, on the
side of a building, or on a dedicated pole.
38.

Small cells complement the existing macro tower system by providing additional

capacity and by increasing coverage in those areas where the signal from the macro tower is weak.
B.

Legislative Involvement in Telecommunications Companies’ Use of Municipal
Right-of-Way
1.

Earlier legislation is carefully crafted to avoid being a prohibited gift or
grant

39.

For many years telecommunications service was provided over land lines and was

typically provided in a locality by a single provider. Texas municipalities would grant franchises
to that company to permit it to use city rights-of-way. Typically, this would include the right to
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 6 of 26

 construct poles and string wire along the rights-of-way or to bury cable beneath the right-of-way.
As the cities were giving the company a valuable property right, the company was required to pay
for that right just as it would if it used an easement or other property right of a private landowner.
40.

In 1999, in response to the emergence of competition among companies offering

local exchange telephone service, the legislature enacted chapter 283 of the Local Government
Code.

That chapter was designed to encourage competition in the provision of

telecommunications services and to ensure that new entrants were not precluded from gaining
access to the use of municipal rights-of-way due to pre-existing franchise agreements. TEX. LOCAL
GOV’T CODE, § 283.001(a).
41.

Among other things, the statute set up a state system of determining the fees to be

paid to a municipality for the use of rights-of-way by new entrants to the market place, but did so
by basing the fee on the amount each city collected under its existing franchise fees. TEX. LOCAL
GOV’T CODE, §§ 283.053, 283.055. In apparent recognition of the constitutional prohibition on a
municipality making a gift or grant to a private corporation, the legislature designed the system to
provide the cities with the fees they had previously negotiated or imposed while letting new
entrants come into the market on the same basis as existing companies. Essentially, the city
received and the new entrants were charged what had previously been established as fair-market
value for the use of the city rights-of-way.
2.

SB 1004 is designed to transfer municipal property to private companies at a
fraction of its fair market value

42.

In 2017, the legislature enacted SB 1004 (chapter 284 of the Texas Local

Government Code), which becomes effective on September 1, 2017.

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 7 of 26

 43.

In SB 1004 the legislature seeks to encourage and simplify the use of network nodes

and small-cell technology by limiting cities’ regulatory powers over the placement and design of
network nodes and by below-market fees for the use of the public rights-of-way.
44.

The Texas legislation is part of a multi-state push by the wireless industry in

conjunction with the American Legislative Exchange Council (ALEC) to achieve a more relaxed
regulatory environment and to obtain a public subsidy.
45.

In sharp contrast to the approach taken in chapter 283 of the Local Government

Code, which was crafted to ensure that the fee for the use of public right-of-way was set at fair
market value, SB 1004 (chapter 284) imposes maximum charges that are a small fraction of market
value, thus, gratuitously, conveying public property to private corporations and providing a public
subsidy for a private commercial enterprise.
46.

SB 1004 (section 284.053) sets an annual maximum fee for the use of a city’s right-

of-way at $250 per network node. TEX. LOCAL GOV’T CODE, § 284.053.
47.

By contrast, as reflected in the attached affidavit (Exhibit 1), the standard rate for

the use of public right-of-way is between $1,500 and $2,500 per network node.
48.

The fee schedule established by SB 1004 requires cities to permit use of their rights-

of-way in return for only 10 to 16.7 percent of the fair market value of the property interest
conveyed.
49.

This amounts to a gift or grant to the companies maintaining the network of

between $1,250 and $2,250 per node per year.
50.

While significant numbers of small cell nodes are currently being installed, the

number of cells is expected to increase by a factor of five or more as carriers convert to 5G
technology.

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 8 of 26

 51.

At the time the SB 1004 fee structure was adopted, the legislature had before it the

Legislative Budget Board fiscal note prepared for the House of Representatives noting that the bill
could result in loss of right-of-way and similar fees to municipalities estimated at more than $800
million annually.
52.

Nevertheless, the legislature passed the bill initiating a significant annual wealth

transfer from Texas cities to private telecommunications companies of as much as hundreds of
millions of dollars each year.
3.

Earlier legislation is carefully crafted so that municipalities retain legislative
powers relating to right-of-way management

53.

Each Texas city is vested with “exclusive control over and under the public

highways, streets, and alleys of the municipality.” TEX. LOCAL GOV’T CODE, § 283. This exclusive
authority of right-of-way management is consistent with, and an extension of, municipal land-use
and zoning authority, which is exercised through a statutory framework that provides for public
participation, due process, and oversight. TEX. LOCAL GOV’T CODE, Chapter 211.
54.

Chapter 283 of the Local Government Code, which was designed to accommodate

and integrate new entrants to the telecommunications system, expressly recognizes that the
management of rights-of-way is a delegated legislative function that typically is vested in the
municipalities of the state:
It also declares that it is the policy of this state that municipalities:
. . .. retain the authority to manage a public right-of-way within the municipality to ensure
the health, safety, and welfare of the public . . .
TEX. LOCAL GOV’T CODE § 283.001 (b).
55.

Consistent with this fundamental governmental policy, chapter 283 expressly

provides that cities retain such powers in their consideration of applications for use of the rightof-way:
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 9 of 26

 A municipality may exercise those police power-based regulations in the
management of a public right-of-way that apply to all persons within the
municipality. A municipality may exercise police power-based regulations in the
management of the activities of certificated telecommunications providers within a
public right-of-way only to the extent that they are reasonably necessary to protect
the health, safety, and welfare of the public.
TEX. LOCAL GOV’T CODE § 283.056 (c). And,
In the exercise of its lawful regulatory authority, a municipality shall promptly
process each valid and administratively complete application of a certificated
telecommunications provider for any permit, license, or consent to excavate, set
poles, locate lines, construct facilities, make repairs, affect traffic flow, obtain
zoning or subdivision regulation approvals, or for other similar approvals, and
shall make every reasonable effort to not delay or unduly burden that provider in
the timely conduct of its business.
TEX. LOCAL GOV’T CODE. § 283.056(d) (emphasis added).
56.

Chapter 283 treats the legislative function of right-of-way management and related

permitting processes as necessarily entailing three interrelated aspects: (1) Safety of the structure
to be placed within municipal right-of-way with respect to the construction required to install the
structure and its operational safety, TEX. LOCAL GOV’T CODE. § 283.056; (2) Receipt of
compensation for the use of right-of-way, TEX. LOCAL GOV’T CODE. § 283.051; and (3)
Determining the suitability of sites for property in or along right-of-way in terms of the health,
safety, and welfare of the public through proper land-use controls, TEX. LOCAL GOV’T CODE. §
283.056.
4.

SB 1004, in contrast to past legislative practice, is drafted to transfer
municipal legislative authority over right-of-way management to private
companies

57.

As with chapter 283 of the Texas Local Government Code, SB 1004 expressly

recognizes that the management of right-of-way is a delegated legislative function concerning the
health, safety, and welfare of the public that typically is vested in the municipalities of the state.
TEX. LOCAL GOV’T CODE §§ 284.001(a)(2); (c)(2).
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 10 of 26

 58.

Like chapter 283, SB 1004 recognizes that the legislative function of right-of-way

management and related permitting processes necessarily entails three interrelated aspects: (1)
Safety of the structure to be placed within municipal right-of-way with respect to the construction
required to install the structure and its operational safety, TEX. LOCAL GOV’T CODE §§ 284.102,
.108, .110, and 153; (2) Receipt of compensation for the use of right-of-way TEX. LOCAL GOV’T
CODE §§ 284.053, .0541; and (3) Control over zoning and land use, TEX. LOCAL GOV’T CODE §§
284.001(a)(2), .104, and .105.
59.

In contrast with Chapter 283, however, which vests municipalities with authority

to apply land-use controls as part of the permitting process, SB 1004 vests decision-making
authority with respect to land-use considerations with the telecommunications provider. As shown
above, SB 1004 expressly recognizes that land-use controls are an inextricable aspect of right-ofway management. In terms of promoting and preserving the health, safety and welfare of the
public, a selection of a site for the placement of telecommunications equipment cannot be made
properly without due consideration of the land-use aspects implicated in such site selection. SB
1004 delineates certain land-use-related limitations on site selection, i.e., relative proximity of
parks and residential areas, and location within historic or design districts. TEX. LOCAL GOV’T
CODE §§ 284.104, .105. Beyond that, however, SB 1004 vests ultimate responsibility for the
adequate consideration of the public health, safety, and welfare implications of site selection with
the telecommunications providers rather than with the municipalities. This is seen when
considering that the providers select their desired sites and that the application review cannot
include municipal-zoning review or land-use approvals. TEX. LOCAL GOV’T CODE §§ 284.101(a).

1

As discussed elsewhere, see e.g. ¶¶ 64, 73, infra, the chapter 283 system of market-based compensation is replaced
in chapter 284 with a system of merely token compensation.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 11 of 26

 60.

In a word, SB 1004 expressly takes the public right and obligation to manage right-

of-way with adequate consideration of zoning and land-use needs from the municipality, and vests
such decision making with telecommunications providers, whose applications must be approved
without analysis of land-use matters from a public perspective. TEX. LOCAL GOV’T CODE §§
284.101(a).
61.

Accordingly, SB 1004 represents an overly broad delegation of legislative authority

to private entities, in violation of article II, section 1, and article III, section 1, of the Texas
Constitution.
C.

Constitutional Framework
1.

Prohibition against gifts to private corporations

62.

In the period following the Civil War many Texas cities gave financial aid to

railroads in order to entice the railroad to come through their community and thus to provide those
cities with a commercial advantage. The railroads were not always constructed, and, even if they
were, the anticipated advantages to the cities did not always materialize. In response to this
situation, and to prevent its reoccurrence, the framers of the 1876 Constitution included article XI,
section 3, which provides, in part:
No county, city, or other municipal corporation shall hereafter . . . make any
appropriation or donation to [any private corporation or association] . . ..
TEX. CONST., art. XI, § 3.
63.

Additionally, the framers of the 1876 Constitution adopted article III, section 52,

which prohibited the legislature from approving legislation such as SB 1004 that would authorize
or direct a city to make a gift or grant to a corporation. That section provides in part:
(a) Except as otherwise provided by this section, the Legislature shall have no
power to authorize any county, city, town or other political corporation or
subdivision of the State to lend its credit or to grant public money or thing of
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 12 of 26

 value in aid of, or to any individual, association or corporation whatsoever, . .
..
TEX. CONST., art. III, § 52.
64.

SB 1004 not only authorizes cities to make a prohibited grant of a thing of value to

a private corporation, it requires it. Specifically, the legislation requires cities to permit network
providers to use public rights-of-way to locate network nodes, TEX. LOC. GOV’T CODE, § 284.151
(except as permitted by chapter 284, a city may not prohibit, regulate, or charge for the installation
or location of network nodes in a public right-of-way and may not institute a moratorium on
permitting such nodes), and it limits payment to the city for the use of those rights-of-way to an
annual rate of not more than $250 per node when the negotiated market rate ranges from $1,500
to $2,500. In other words, SB 1004 requires Texas cities to permit private corporations to use the
public right-of-way for a steeply discounted price that amounts to about between one-tenth and
one-sixth of its actual value. This is a grant of public money or thing of value contemplated and
prohibited by article III, section 52. Similarly, it is a prohibited donation under article XI, section
3. This amounts to a massive, multi-million-dollar gift to private corporations from the cities of
Texas. With the advent of 5G technology and the increased demand for more small cells, the size
of the gift may amount to hundreds of millions of dollars. And the gift continues year after year.
65.

While cities are prohibited from making a gift to a private corporation, the

constitution does not prohibit making purchases of goods or services where the payment from the
government is based on the value received. For example, cities purchase all types of goods (e.g.,
automobiles, street paving material, office supplies, etc.) from vendors at market-value prices.
66.

There are instances, though, where the transaction between the government and

private enterprise does not clearly fit the standard mode of a purchase at a price that is recognized
as reflecting value received. For those instances, Texas law has developed to recognize that some
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 13 of 26

 public benefits to private corporations are constitutionally permitted if they serve a legitimate
public purpose and provide a clear public benefit in return. E.g., Texas Municipal League
Intergovernmental Risk Pool v. Texas Workers’ Compensation Comm’n, 74 S.W.3d 377, 383 (Tex.
2002) (“TML”). “A three-part test determines if a statute accomplishes a public purpose consistent
with [article III,] section 52(a).” Id. at 384. “Specifically, the Legislature must: (1) ensure that
the statute’s predominant purpose is to accomplish a public purpose, not to benefit private parties;
(2) retain public control over the funds to ensure that the public purpose is accomplished and to
protect the public’s investment, and (3) ensure that the political subdivision receives a return
benefit.” Id.
67.

SB 1004 does not meet the three-part test that might avoid the constitutional

prohibition of article III, section 52. Failure to satisfy any one of the three parts of the test is fatal.
68.

SB 1004 does not meet the first prong of the three-part test, which requires that the

predominant purpose is to accomplish a public purpose rather than to benefit private parties.
Section 284.001, enacted by SB 1004, does contain findings that network nodes are instrumental
to increasing access to advanced technology and information and that expeditious processes and
reasonable terms and conditions for access to the public right-of-way further the interest in having
a reliable wireless network. TEX. LOC. GOV’T CODE, § 284.001(1) and (5). While carriers
undoubtedly would like to have a statutorily imposed rental rate that is far below fair-market value,
there is no legislative finding or evidence that carriers have been prevented from creating their
wireless networks by the free-market economy. Indeed, carriers have been installing thousands of
cells in cities at the upper end of market rates, which makes it difficult to contend that the necessity
of paying fair value is a barrier to the development of the networks. Unless the existing system
operates as a barrier, the “predominant” effect, and presumably the purpose, of the establishment
of a far-below-fair-market-value is to benefit the private corporations, not the public.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 14 of 26

 69.

Further, while the public right-of-way is a convenient location for network nodes,

nodes can generally be placed on private property such as the side of a building located
immediately adjacent to the right-of-way. Making a gift of the use of the public right-of-way frees
network providers from the operation of the free market and deprives the private property owners
of the opportunity to rent space to host network nodes. This public subsidy undermines the free
market system and deprives the private landowners of the value of their property, which is not
consistent with public policy.
70.

The predominant purpose of SB 1004 is to benefit private parties, not to convey a

public benefit. Thus, the statute does not meet the first prong of the three-part TML test.
71.

SB 1004 also does not meet the second prong of the three-part test, which requires

that the local government retain control to ensure that the public purpose is accomplished. While
the statute directs maximum rates for use of the public right-of-way and specific deadlines for
permitting decisions, all of which benefits the network carriers, there is nothing in the statute to
mandate continued oversight to ensure that the public purpose is accomplished. The statute
provides great detail on the cities’ obligations to the wireless providers, but there is nothing in the
Act that provides for the cities’ or the state’s continued oversight of the carriers’ actions to ensure
that they act for the public’s benefit. Even if we are to assume that development of the wireless
system is the predominant purpose and represents the benefit to the public, there is nothing in the
Act to establish measurable benchmarks for the development of the system, nothing to ensure that
underserved areas rather than simply the most profitable areas are served, nothing to ensure that
the publicly subsidized nodes are available for the public rather than, in some cases, perhaps being
reserved for private users, or anything else to ensure that public purpose is accomplished. In the
absence of such statutorily provided oversight, the statute does not satisfy the Supreme Court’s
test.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 15 of 26

 72.

The third part of the test is to ensure that the political subdivision receives a return

benefit. This is often phrased as ensuring that there is adequate consideration. Here, the cities are
limited to roughly ten to sixteen percent of market value with no additional benefit to compensate
for the lost revenue.
73.

SB 1004 finds that the rates imposed by the statute are “fair and reasonable” and in

compliance with federal law (47 U.S.C. § 253) that prohibits rates that have the effect of
prohibiting the ability of any entity to provide telecommunications service. The SB 1004 rates,
though, are not only well below the rates that would be charged in a free market environment, they
are also a fraction of the rates the state is free to charge for the same services. The legislature was
careful to require cities to provide a major subsidy to these private enterprises, while, at the same
time, leaving the state free to charge market rates for the use of its rights-of-way. Presumably, if
it is fair and reasonable for the state to charge market rates, it is difficult to understand how limiting
cities to a small fraction of those rates can also meet the standard of fairness and reasonableness.
74.

SB 1004, so long as it is not enjoined and not declared to be unconstitutional directs

city officials, such as Mayor Darling, to give away city resources and, by doing so, to violate article
XI, section 3, of the Texas Constitution.
75.

Similarly, until SB 1004 is enjoined and declared to be unconstitutional, city

taxpayers, such as Jim Darling, in his individual capacity, are injured by the city’s gift of public
resources to private corporations. Even if the statute is subsequently declared to be invalid, the
cities, their officials, and their taxpayers are irreparably injured. The opportunity to negotiate a
market rate prior to the installation of any nodes is lost. Further, even if it is possible to recover
the difference between the ultimately determined rental rate and the $250 per node authorized by
SB 1004, the recovery will likely be in a subsequent fiscal year so that the opportunity to have an

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 16 of 26

 immediate favorable impact on the city’s finances and on its taxpayers in current fiscal years is
lost.
76.

SB 1004 by mandating that cities make a gratuitous grant of its property to a private

business enterprise violates the Texas Constitution, and, under Texas law, a violation of
constitutionally guaranteed rights inflicts irreparable injury warranting injunctive relief.
2.

Prohibition against certain delegations of legislative power to private
corporations

77.

In establishing the government of the state, the people delegated the powers of the

government to the legislative, executive, and judicial departments:
The powers of the Government of the State of Texas shall be divided into three
distinct departments, each of which shall be confided to a separate body of
magistracy, to wit: Those which are Legislative to one; those which are Executive
to another, and those which are Judicial to another; and no person, or collection of
persons, being of one of these departments, shall exercise any power properly
attached to either of the others, except in the instances herein expressly permitted
Tex. Const. art. II, § 1.
78.

The Legislature is authorized to delegate legislative powers to local governments,

administrative agencies, and private entities. As Texas courts have recognized, delegations of
legislative power can be both necessary and proper in certain circumstances, such as, for example,
with the delegation of power to private entities to promulgate certain industrial and professional
standards.
79.

By the same token, Texas courts have also recognized that delegations to private

entities raise more troubling issues than do delegations to public bodies and that they are therefore
subject to more stringent requirements and less judicial deference than public delegations. As the
Supreme Court has stated:
[P]rivate delegations clearly raise even more troubling constitutional issues than
their public counterparts. On a practical basis, the private delegate may have a
personal or pecuniary interest which is inconsistent with or repugnant to the public
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 17 of 26

 interest to be served. More fundamentally, the basic concept of democratic rule
under a republican form of government is compromised when public powers are
abandoned to those who are neither elected by the people, appointed by a public
official or entity, nor employed by the government. Thus, we believe it axiomatic
that courts should subject private delegations to a more searching scrutiny than their
public counterparts.
Texas Boll Weevil Eradication Found., Inc. v. Lewellen, 952 S.W.2d 454, 469 (Tex. 1997).
80.

Texas courts have developed a balancing test containing eight factors to determine

whether a particular delegation of legislative power to a private delegate is constitutional. These
factors are stated as follows:
1.

Are the private delegate's actions subject to meaningful review by a state

agency or other branch of state government?
2.

Are the persons affected by the private delegate's actions adequately

represented in the decision making process?
3.

Is the private delegate's power limited to making rules, or does the

delegate also apply the law to particular individuals?
4.

Does the private delegate have a pecuniary or other personal interest that

may conflict with his or her public function?
5.

Is the private delegate empowered to define criminal acts or impose

criminal sanctions?
6.

Is the delegation narrow in duration, extent, and subject matter?

7.

Does the private delegate possess special qualifications or training for the

task delegated to it?
8.

Has the Legislature provided sufficient standards to guide the private

delegate in its work?
Texas Boll Weevil Eradication Found. 952 S.W.2d at 472.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 18 of 26

 81.

SB 1004 vests the legislative power of zoning and land use as it applies to right-of-

way management with private parties. When considered through the lens of the eight-part
balancing test, it is abundantly clear that the delegation to private entities of the legislative
authority to manage the right-of-way by making land-use decisions that typically require
application of the processes set out in Local Government Code chapter 211, violates article II,
section 1, and article III, section 1, of the Texas constitution.
82.

Specifically, with respect to the zoning and land-use aspects of right-of-way

management:
(a)

The actions of the telecommunications providers, as private delegates of

legislative authority, are not subject to meaningful review by a state agency or other branch of
government;
(b)

The members of the public that will be most affected by the private

delegates’ actions are not adequately represented in the decision-making process;
(c)

The private delegate is applying the law to its individual, pecuniary

interest rather than making rules of general application;
(d)

The private delegates have a pecuniary or other personal interest that may

conflict with their public functions;
(e)

The delegation is not narrow in duration, extent, or subject matter;

(f)

The private delegates do not possess special qualifications or training in

municipal land planning or right-of-way management; and
(g)

The legislature has not provided sufficient standards to guide the private

delegate in its work.
83.

SB 1004, so long as it is not enjoined and not declared to be unconstitutional directs

city officials, such as Mayor Darling, to relinquish properly delegated municipal authority to
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 19 of 26

 manage the right-of-way for the health, safety, and welfare of the public to private delegates whose
pecuniary interests most likely will conflict with the public’s interests, and who do not have the
expertise to manage public right-of-way for the benefit of the public. As such, SB 1004 directs city
officials, such as Mayor Darling, to violate their obligations to promote and preserve the safety of
the public under their respective city charters, chapter 211 of the Texas Local Government Code,
and chapter 311 of the Texas Transportation Code, and, by doing so, affirmatively participate in
the violation of article II, section 1, and article III, section 1 of the Texas Constitution.
84.

SB 1004 by mandating that municipalities cede their properly delegated authorities

that are necessary for right-of-way management in the interest of public health, safety, and welfare
of the public violates the Texas Constitution, and under Texas law, is a violation of constitutionally
guaranteed rights that inflicts irreparable injury warranting injunctive relief.
VI.
84.

CAUSES OF ACTION

Paragraphs 1-84 are incorporated by reference as though fully restated in support

of each of the following causes of action.
A.

Declaratory Judgment – SB 1004 Violates the Texas Constitution
85.

The Uniform Declaratory Judgments Act (‘‘UDJA’’) is remedial, and intended to

settle and afford relief from uncertainty and insecurity with respect to rights under a statute, and
must be liberally construed to achieve that purpose.
86.

The UDJA waives the sovereign immunity of the state and its officials in actions

that challenge the constitutionality of a statute and that seek only equitable relief.
87.

Pursuant to the UDJA, Plaintiffs request a declaratory judgment of the Court, as

follows:
a. That SB 1004, in its requirement set out in section 284.053 of the Texas Local
Government Code that cities permit private corporations to use the public
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 20 of 26

 rights-of-way at significantly below market value rates, impermissibly
authorizes and requires cities to make a gift or grant in violation of article III,
section 52(a), of the Texas Constitution;
b. Cities complying with the statutory direction will violate article XI, section 3,
of the Texas Constitution as they will be making a prohibited donation to a
private corporation;
c. Section 284.053 of the Texas Local Government Code is unconstitutional and
unenforceable;
d. SB 1004, in delegating legislative powers of managing right-of-way through
proper zoning and land-use controls to private corporations such that the
corporations are entitled to make land-use decisions without meaningful
guidance, public process, or oversight is an impermissible delegation of
legislative power in violation of article II, section 1, and article III, section 1,
of the Texas Constitution;
e. Cities complying with the statutory direction violate article II, section 1, and
article III, section 1, of the Texas Constitution as they will be affirmatively
participating in an unconstitutional delegation of municipal legislative
authority.
f. Sections 248.101(a) and 248.154(c) are unconstitutional and unenforceable.
B.

Injunction
88.

For the reasons set forth in paragraphs 1-84, SB 1004 violates the state constitution.

89.

Plaintiffs are entitled to a temporary injunction enjoining enforcement of section

284.053 of the Texas Local Government Code pending a decision on a permanent injunction and
declaratory judgment. Section 284.053 is invalid as being enacted in contravention to the express
denial of authority to the legislature to permit or require cities to make gifts or grants to private
corporations. Accordingly, the statute is void. The state, by enacting SB 1004 and subjecting
plaintiffs to its requirements, is directing plaintiffs to violate the Texas Constitution. The forced
transfer of property pursuant to an unconstitutional statute is subject to being enjoined without
regard to whether there is a legal remedy. Being subjected to, and forced to administer, an
unconstitutional statute is necessarily and of itself an irreparable injury. Further, there is irreparable
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 21 of 26

 injury to the cities and their citizens, which potentially face the grossly inadequately compensated
use of their property prior to having an opportunity for a merits decision on the constitutionality
of the statute. Plaintiffs are therefore entitled to a temporary and ultimately to a permanent
injunction against enforcement of the unconstitutional statute.
90.

Plaintiffs are entitled to a temporary injunction enjoining enforcement of sections

248.101(a) and 248.154(c) of the Texas Local Government Code pending a decision on a
permanent injunction and declaratory judgment. Sections 248.101(a) and 248.154(c) are invalid
as being enacted in contravention to the denial of authority to the legislature to make delegations
of legislative authority to private actors such that the private delegates are neither constrained
before they act by meaningful standards nor made accountable after they act by administrative,
judicial, or popular review. Accordingly, the statute is void. The state, by enacting SB 1004 and
subjecting plaintiffs to its requirements, is directing plaintiffs to violate the Texas Constitution.
The improper delegation of legislative authority pursuant to an unconstitutional statute is subject
to being enjoined without regard to whether there is a legal remedy. Being subjected to, and forced
to administer, an unconstitutional statute is necessarily and of itself an irreparable injury. Further,
there is irreparable injury to the cities and their citizens, which potentially face the substantial and
detrimental consequences of the implementation of land-use decisions in public right-of-way
which are made by actors who have pecuniary interests that often most likely will conflict with the
promotion of the health, safety, and welfare of the public, and which will not be made by persons
or entities with specialized knowledge of public right-of-way management, and which will not be
subject to meaningful review. Plaintiffs are therefore entitled to a temporary and ultimately to a
permanent injunction against enforcement of the unconstitutional statute.
91.

Since any injunction will be against the state, which has no pecuniary interest in

the suit and can show no monetary damages, the court should set a nominal bond of $1,000.
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 22 of 26

 Additionally, at least nine of the plaintiffs are home rule cities whose charters exempt them from
bond requirements in injunction suits. Accordingly, nothing more than a nominal bond would be
appropriate under Rule 684.
92.

Plaintiffs ask the court to set its request for a temporary injunction for an expedited

hearing and set its request for permanent injunction for an expedited full trial on the merits and,
after said trial, issue a declaratory judgment and a permanent injunction and barring the
enforcement of Sections 284.053, 248.101(a), and 248.154(c) of the Local Government Code.
VII. CONDITIONS PRECEDENT
93.

All conditions precedent have been performed or have occurred.
VIII. ATTORNEY’S FEES

94.

As a result of the actions complained of herein, Plaintiffs have had to engage

qualified counsel to prosecute this action and has incurred, and will continue to incur, reasonable
and necessary attorney’s fees. Plaintiffs are therefore entitled to recover these fees pursuant to
Chapters 37, of the Texas Civil Practice and Remedies Code.
IX.
95.

REQUEST FOR DISCLOSURES

Pursuant to Texas Rule of Civil Procedure 194.2, Plaintiffs hereby request that

Defendants make the disclosures identified in Tex. R. Civ. P. 194.2(a-i) and (l) within fifty (50)
days of the service of this Petition.
PRAYER
FOR THESE REASONS, Plaintiffs request that Defendants be cited to appear and answer
and, on final trial that Plaintiffs have judgment against Defendants for:
1.

The declaratory relief requested herein;

2.

A temporary and permanent injunction;

3.

Attorney’s fees;

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 23 of 26

 4.

Litigation costs;

5.

Such other and further relief, at law and in equity, to which the Plaintiffs may
show themselves entitled.

Dated: August 31, 2017
Respectfully submitted,

By:

/s/ C. Robert Heath
C. ROBERT HEATH
Texas Bar No. 09347500
bheath@bickerstaff.com
GUNNAR P. SEAQUIST
Texas Bar No. 24043358
gseaquist@bickerstaff.com
GREGORY D. MILLER
Texas Bar No. 24046443
gmiller@bickerstaff.com
BICKERSTAFF HEATH
DELGADO ACOSTA LLP
3711 S. MoPac Expressway
Building One, Suite 300
Austin, Texas 78746
Telephone: (512) 472-8021
Facsimile: (512) 320-5638

McALLEN CITY
ATTORNEY'S OFFICE
P.O. Box 220
1300 Houston
McAllen, Texas 78505-0220
Telephone: (956) 681-1090
Facsimile: (956) 681-1099
KEVIN D. PAGAN
City Attorney
Texas Bar No. 15406460
kpagan@mcallen.net
McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 24 of 26

 AUSTIN WADE STEVENSON
Assistant City Attorney
Texas Bar No. 24085961
astevenson@mcallen.net
ISAAC J TAWIL
Assistant City Attorney
Texas Bar No. 24013605
itawil@mcallen.net

LAW OFFICES OF SNAPPER L. CARR
816 Congress Avenue, Suite 370
Austin, Texas 78701
Telephone: (512) 637-6020
Facsimile: (512) 637-6021
SNAPPER L. CARR
Texas Bar No. 24035433
Snapper@focusedadvocacy.com
Attorneys for Plaintiffs

DARLING LAW OFFICE
P.O. Box 5489
McAllen, Texas 78502-5489
Telephone: (956) 681-1003
Facsimile: (956) 681-1010
JAMES E. “JIM” DARLING
Texas Bar No. 05386000
jdarling@mcallen.net
Pro Se for Plaintiff Jim Darling
in His Individual Capacity

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 25 of 26

 VERIFICATION
STATE OF TEXAS
COUNTY OF TRAVIS

§
§
§

BEFORE ME, a Notary Public for the State of Texas, personally appeared C. Robert Heath,
who after identifying himself and being duly sworn by me deposed and said that he has read the
foregoing and that the facts stated are based on personal knowledge and are true and correct.

~

C. Robert Heath

SWORN TO AND SUBSCRIBED BEFORE ME on this

3/~~ay of August, 2017.

"" ,;r~'~eV~~. REBECCA ANN VRAGEL
!W~'¥.l MY COMMISSION EXPIRES
~~;,,~i
JUNE 7, 2021
~,{1.)?f.~,"" ~ NOTARY ID: 8326019

McAllen, et al v. State
Original Petition and Application for Injunctive Relief

Page 26 of26

 AFFIDAVIT

State of New York
County of

6 N Jt l) A- 6 It-

)

)

The undersigned affiant, Ken Schmidt, being first duly sworn, hereby deposes and says:
1. My name is Ken Schmidt. I reside in the Syracuse, New York, area. I am over the age of
eighteen and capable of making this affidavit. The statements in this affidavit are true and
correct and within my personal knowledge. To the extent they reflect expert opinion, they
are based on facts or data that I have been made aware of, reviewed, or personally observed
and reflect facts and data that would reasonably be relied on by experts in the field.
2. Attached as Exhibit A to this affidavit is a true and correct copy of my professional resume
that reflects my educational and professional background. To briefly summarize material
in the resume, I have worked in the wireless industry for twenty years. From 1997- 2004,
I worked at a small tower company, and then provided site acquisition services to wireless
companies. In 2004, I started Steel in the Air, Inc. which provides wireless-infrastructurelease-related services to landowners and small-tower owners across the United States. I
am the president and owner of that company. Since 2004, we have advised over 3,500
landowners, including cities, corporations, and individuals, regarding valuation questions
related to wireless-infrastructure leases.

We have collected lease-rate data on

approximately 10,000 wireless leases which include all types ofleases in every state in the
United States. Steel in the Air and I have been recognized as experts in the field oflease
valuation by our peers, in national and local publications, and by courts of law. I am also
a Partner in SteelTree Partners, LLC and have provided valuation services and sell-side

 advisory service to many clients regarding over $1.5 billion dollars of communication
infrastructure assets.
3. Nearly 20 years ago, I started collecting publicly and privately available tower location and
lease data. When I formed Steel in the Air, I believed that strong data was paramount to
our being able to advise landowners and tower owners effectively. Over that timeframe,
we have collected lease data through news stories, public records requests, industry
sources, and client-provided information. We maintain one of the most comprehensive
wireless infrastructure databases in the United States which is not owned by a wireless
company or tower company.
4. Specifically related to small-cell and Distributed-Antenna-System (DAS) leases, my
company has conducted hundreds of hours of research regarding small cell and DAS-node
lease agreements including making public records requests to various public entities over
the last three years.
5. Earlier this year, I testified as an expert before the Florida Legislature on behalf of the
Florida League of Cities and the Florida Association of Counties regarding similar smallcell legislation in Florida. In part through the Florida engagement I became aware of the
effort by the industry, led by the Wireless Infrastructure Association in conjunction with
the American Legislative Exchange Council (ALEC) to enact legislation in multiple states
to provide relatively consistent procedures and fee structures for obtaining the use of public
rights-of-way and to require local governments to permit use of their rights-of-way at farbelow-market rates.
6. In preparation for making this affidavit, I have reviewed SB 1004, which enacted chapter
284 ofthe Texas Local Government Code.

2

 7. Section 284.053 of the Texas Local Government Code sets a maximum annual rental rate
of $250 per network node located in a city's right-of-way. The term "network node" is
defined so that it includes both small cells and DAS but does not include macrocells or cell
towers.
8. A macrocell is what most people think of when considering cellular antennas and cell
service. Multiple macrocells may be placed on a single structure such as a cell tower. Cell
towers are typically 50' or taller towers containing multiple antennas that have been used
to provide cell phone service for more than two decades. Small cells, conversely, as their
name suggests, are much smaller in size and coverage area than a macrocell or a cell macro
tower, will become much more numerous, and can often be found on poles used for street
lights, traffic lights, street signs, and poles of similar height. A small cell typically is
utilized exclusively by one wireless company, while a distributed-antenna system or DAS
can receive and transmit signals from multiple wireless service providers. As noted above,
both small cells and DAS are included in the statute's definition of network node.
9. To determine a fair market value for the use of municipal right-of-way by a wireless

'\
provider to locate a small-cell or DAS network node, I looked at data from 50 cities in 25
states. The pole attachment fees went from $200 to as high as $13,200 per year. In Texas,
the rates ranged from $1,000 to $2,400 per year.
10. I tried to make an apples-to-apples comparison by using rates for attachment to an existing
pole. For example, in Houston, the Master License Agreement for Wireless Facilities and
Poles in the Right-of-Way provides a 2016 annual per pole fee of $2,700 if the licensee
will be placing its own pole in the right-of-way and $2,000 if it is attaching to an existing
utility pole. For Houston, I used the lower $2,000 fee for attaching to an existing pole.

3

 Similarly, in determining average fees, I looked solely at the fees on a city-by-city basis
rather than weighting the fees by the number of cells in each city. Larger cities tend to be
on the higher end of the annual rental rates and generally have the highest number of node
locations. If I had weighted the average by the number of locations, the average would
have been higher.
11. I determined that the average annual per pole rate in the 50 cites in our small celllDAS data
base is $2,388 per pole per year.
12. The average rate for the six cities in Texas in the data base is $1,733 per pole per year.
13. Looking at the complete sample and discarding the extremes on both the high and low end,
it is my opinion that fair market value for attaching a network node to a pole in a municipal
right-of-way will fall within the range of$I,500 to $2,500.
14. The $250/year rate for pole attachments is substantially below fair market value. It is
10.4% of the average rate that was negotiated at arm's length between u.S. cities and
counties and wireless service providers in our data, and 14% of the average of Texas public
cities.
15. If one considers the $1,500-$2,500 range for fair market value, the $250 rate represents
one-tenth to one-sixth of fair market value or 10% to 16.7% of fair market value.
16. Because of the statute's requirement that Texas cities make city-owned poles in their rightsof-way available to the network providers at a rate that is substantially below fair market
value, there will be an obvious negative impact on municipal fmances. It will also have an
impact on other entities.
17. The reduced rental rate for network nodes on poles in municipal rights-of-way would have
a negative effect on the ability of private property owners to rent space for small cells and

4

 DAS. These nodes can be and would likely be located on building roofs, the sides of
buildings and similar outdoor locations. In my experience, private small cell leases
between property owners and wireless companies traditionally range from $4,200 per year
to $8,400 per year. By establishing such a low and far-below market rate for small cell
leases in the public right-of-way, Texas will largely eliminate the use of private property
for small cells. In my experience, very few, if any, private property owners would be
willing to lease their property to wireless service providers for rates anywhere near

$250/year.

Thus, by subsidizing the wireless service providers on public right-of-way,

private landowners as a whole in Texas will see significantly less interest for small cells
on their land or buildings and as a result, will realize measurably less income.
18. An effect of the requirement that Texas municipalities permit the use of poles within their
rights-of-way at extremely low rental rates is likely to be that the residents of Texas cities
will be subsidizing the wireless rates paid by consumers in other states that do not have
artificial barriers to what can be charged wireless providers. Specifically, the large wireless
companies-e.g., AT&T, Sprint, T-Mobile, and Verizon-do not charge geographically
based rates. Rates are consistent throughout the United States regardless of what may be
higher underlying costs of operating a network in other areas. By setting low rates in Texas
that are as much as five or more times lower than what municipalities in other states without
similar legislation charge, Texas consumers are fundamentally subsidizing service for
customers in other states. Alternatively, Texas cities are subsidizing wireless service
provider profits in an already very profitable industry.
19. While the ability to use poles within the public right-of-way at a statutorily set rate that is
far below fair market value undoubtedly benefits the wireless service providers, it is

5

 unlikely that the absence of a rate cap on the use of the right-of-way would materially
prevent or slow down the expansion of the wireless network. Wireless providers are
expanding the small cell network not just because they hope to offer advanced services,
but to reduce their operating costs and to increase capacity for more profitable services like
consumer video. Additionally, the cost of the use of the right-of-way is minuscule when
considered in the context of the revenue currently generated by the network. The wireless
industry in 2016 generated $188 billion in service revenue according to industry trade
organization CTIA's 2016 Wireless Industry Survey. Paying fair market value for small
cell infrastructure rights would not create a barrier to entry. Assuming $2,000 per year
per pole and 100,000 poles in the State of Texas, the "burden" on the wireless industry
would be $200 million per year, or one-tenth of one percent of the wireless industry's
combined service revenue. This assumes that the wireless industry would not be capable
of generating additional service revenue from deployment of this infrastructure, which is
clearly not the case as demonstrated by numerous comments to the contrary during nearly
every wireless company quarterly earnings call. To the contrary, there is every reason to
believe that the wireless providers would still generate positive net revenue by paying the
level of right-of-way rental rates they were paying before SB 1004. Wireless service
providers have deployed over 2,000 small cells in New York City despite New York having
rates that are above average at $3,000 per pole. Even at $2,000 per pole, the City of
Houston still received 700 plus applications for small cells in 2016. There is no reason to
believe that paying market rates for the use of public property of Texas cities will delay or
hinder the development of the wireless network.

6

 20. SB 1004 does not provide for cities or the state to have continuing control over the use of
the subsidized nodes placed in the municipal right-of-way to ensure that the public is being
served as such service is contemplated in the lengthy preamble of the legislation. For
example, there is nothing in the Act to preclude dedicating some nodes to purely private
use by individual customers rather than being available to the public. Similarly, there is
nothing to give cities the ability to see that the subsidies to the network are used to bring
"reliable wireless networks and services" to areas of greatest public need such as
traditionally underserved areas. There is no assurance that the public will be provided cost
effective access to "next-generation services" or that the wireless service providers won't
deploy small cells solely to maintain more favorable cost structures for existing generation
services. There is no methodology for either the state or cities to ensure that the wireless
service providers will deploy infrastructure that will "help ensure that this state remains
competitive in the global economy." Furthermore, there is no ability to confirm over time
that the nodes were deployed in a method that "protect and safeguards the health, safety,
and welfare of the public". As written, SB 1004 has almost no checks and balances
necessary to assure that wireless service providers don't simply install network nodes
where it is most economically advantageous to them while ignoring the areas where it
would be most beneficial to serve the public or that would further Texas' stated policy
objectives in passing this legislation.
Signed this the

22 day of

4. lJ (0 lJ S'/

,2017.

~
KE

7

SCHMIDT

----

 Sworn to before me tbis ,) f)-- day of

avr

,2017.

MARCY J KLIPPEL
Notary Public· Stat. 01 New York

NO.01KLI131338
Qualified In Onondagl County'
My Commission Explrn Dec 19. 2017

My Commission expires:

8

 EXHIBIT A

Ken Schmidt
16001 Waterleaf Lane, Ft. Myers, FL 33908 Phone: (813) 335-4766
Email: ken@steelintheair.com
_____________________________________________________________________________

PROFESSIONAL EXPERIENCE:
Steel in the Air, Inc.
Fort Myers, FL
01/2004 - Current
President/Owner
 Started Cell Tower Consulting Firm specialized in due diligence, cell tower tenant and
ground lease negotiations
 Provided fair market value analysis for cell site leases for over 2,700 clients
nationwide in the course of 10 years
 Created online Competitive Analysis GIS mapping service for clients to use in
evaluation of potential tower sites and acquisition of cell towers and or ground leases
 Established nationwide database of 250,000 cell site locations and 8,500 cell site
leases
 Enlisted to provide due diligence and competitive analysis services by multiple tower
companies including projections of potential lease up and document review
 Provide sale side advisory services as a partner in SteelTree Partners for the sale of
over $800,000,000 in tower assets over 10 years
 Retained regularly by Investment Analysts to review and analyze the public tower
companies and the current state of the market
 Formulated process for initial evaluation of any tower site in the US to determine its
uniqueness/value as a wireless communication facility

Cell Tower Attorney
New York, NY and Fort Myers, FL
01/2007 - Current
Partner
 Started Cell Tower Law Firm specialized in cell tower lease related legal issues.
 Provided legal guidance on cell site lease related issues for over 500 clients
nationwide in the course of 6 years

Horizon Site Services, Inc.
Tampa, FL







01/2000 to 01/2004

General Manager (01/2001)
Responsible for coordinating of due diligence, database accuracy, and general
business development for due diligence, site acquisition, and zoning projects
Developed proprietary GIS (Geographical Information Systems) database of
communications towers and established a clientele of tower companies and wireless
carriers for custom mapping applications and lease up analysis
Performed Project Management of site acquisition and zoning for 300 site build for
Nextel in Atlanta, Georgia
Established and maintained of positive working relationship with clients & contractors.
Site Acquisition and Zoning Manager (01/2000)
Performed Project Management of site acquisition and zoning for 100 site build for
Voicestream Wireless in St. Louis, Missouri
Managed field agents to accomplish the required tasks including preliminary site
drives, zoning analysis, construction caravans, leasing and final zoning through
permit

 Ken Schmidt
16001 Waterleaf Lane, Ft. Myers, FL 33908 Phone: (813) 335-4766
Email: ken@steelintheair.com
_____________________________________________________________________________

Imperial Tower Leasing, Inc.
Tampa, FL





06/2000-01/2003

General Manager/Part Owner
Performed project management for all development activities related to the
identification and development of potential communication towers including
identifying corridors for suitable for speculative development, RF design, search ring
creation, site acquisition and zoning
Formulated Process for determining lease-up potential of prospective build sites
Negotiated development deal for communication towers with large private tower
company

Broadcast Tower Leasing, Inc.
Tampa, FL







01/1998 to 01/1999

General Manager
Developed and executed strategic plan for identification and development of
community broadcast towers across the US
Managed engineering, marketing, and all phases of site development for community
broadcast facilities
Established strategic relationships and joint marketing agreements with national
vendors and key consultants for development of towers up to 2000’ tall
Created forecast models for all broadcast tower opportunities including lease-up
estimates and cost projections
Managed all external contractors and marketing agents
Recruited, interviewed, hired and trained personnel.

Acme Towers, Inc.
Tampa, FL




01/1997 to 01/1998

Site Acquisition Manager
Managed site acquisition and zoning for Central Florida
Zoned 15 difficult sites in central Florida
Developed and maintained client relationships.
.

EDUCATION & CERTIFICATIONS:
University of Florida School of Law
Gainesville, FL
 Juris Doctorate
Concentration in Construction Law and Bankruptcy
Northeast Missouri State University
Kirksville, MO
 Bachelor of Science- Political Science
Minor in Business Law

1996

1992

 Ken Schmidt
16001 Waterleaf Lane, Ft. Myers, FL 33908 Phone: (813) 335-4766
Email: ken@steelintheair.com
_____________________________________________________________________________

INDUSTRY HONORS:
 Spoke at the Tower Summit (Industry Conference) twice- “Broadcast Tower
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Opportunities” and “Cell Tower Due Diligence”
Spoke at 2005 Georgia Association of Assessing Officials Annual Conference – “Cell
Tower Valuation and Assessment”
Spoke at 2006 Association of University Real Estate Officials- “State of the Wireless
Industry”
Spoke at 2007 Arkansas Appraisers Association Annual Conference- “Cell Tower
Valuation and Assessment”
Spoke at 2008 Inside Self Storage Association Conference on “Cell Site Leases for
Self Storage: Long-Term, Reliable Income Opportunities”
Spoke at 2009 International Association of Assessing Officials Annual Conference on
“Assessing the Value of Cell Towers”
Spoke at 2013 US Navy Appraisers’ Annual Appraisal Conference on “Appraisal of
Cell Towers”
Retained as Expert Witness in Multiple Cases Involving Cell Tower Valuation and
Lease Forecasting Litigation
Regularly Quoted as Cell Tower Expert in Numerous Newspaper Articles including in
the Wall Street Journal, New York Times and in Industry Trade Magazines including
RCR News and AGL Magazine

COMPUTER SKILLS:
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Microsoft Office 2013- Powerpoint, Excel, Access, Word, Outlook, CRM Dynamics
MapInfo, ArcInfo- Geographical Information Systems (Mapping Programs)
Google Earth, Bing Mapping
All Delorme Mapping Products