AMARILLO, Texas (KAMR/KCIT) — In the morning session of the first day of the Potter County bench trial surrounding the Amarillo Civic Center Complex funding ordinance, the legal teams for the city of Amarillo, Amarillo Businessman Alex Fairly along with the team from the Texas Attorney General’s Office provided an overview on the litigation, presenting their opinions about the documents and the facts surrounding the case.

According to previous reports by MyHighPlains.com, the litigation in Potter County began Tuesday morning, giving the legal teams for the three entities the ability to present their respective cases to retired Judge William Sowder in the 320th District Court of Potter County. Sowder is expected to make the decision on whether or not the city’s ordinance approving the use of $260 million of anticipation notes to fund improvements and the expansion of the Amarillo Civic Center Project is legal.

What happened Tuesday morning?

The morning of the first day of the bench trial in this case mainly consisted of opening arguments from the legal teams of the three entities involved in the case.

City of Amarillo’s Opening Argument

Paul Trahan, a member of the legal team for the city of Amarillo, presented the city’s argument first, saying that his presentation would not be “sexy,” with the legal issues being relatively “straightforward.”

Trahan said under Chapter 1205 of the Texas Government Code, the portion of the code which outlines the expedited declaratory judgment act, the city of Amarillo checked all the boxes to qualify for a declaratory judgment under that chapter.

Trahan also outlined what the city believes is relevant and not relevant in this case. First, Trahan said that the things that are not relevant in this case include:

• Proposition A from November 2020;
• Whether individuals disagree with the city’s decision;
• Overall personalities/ego.

Trahan said the topics that are relevant in this case include:

• Whether or not Ordinance 7985, the Civic Center funding ordinance passed on May 24, was indeed valid;
• Whether or not this ordinance would create a situation where the city of Amarillo would surpass its established tax rate limit established in the Amarillo City Charter;
• Texas Government Code chapter 1431, which establishes the rules of the use of anticipation notes for cities across the state;
• Claims of Texas Open Meetings Act violations.

First, Trahan said that under Texas Government Code Chapter 1431, the city is determined as the authorized issuer of the notes, which was approved by the Amarillo City Council in a 4-1 vote during the May 24 council meeting. He also said that there is “no question” that the Civic Center project is considered a public work under that portion of the code, stressing that the facility itself exists for the citizens of Amarillo.

In relation to the tax cap outlined in the Amarillo City Charter, Trahan said that the addition of this debt to future tax rates will “unquestionably” fall below the $1.30 per $100 valuation cap. He highlighted that the Amarillo City Council recently lowered its tax rate from $0.44 to $0.40 in the most recent fiscal year.

Since the property tax rate is set once a year, Trahan stressed the city’s point that it is impossible to know the specific tax impact of the Civic Center project on future rates. When the rate is set in future years, all the debt that the city of Amarillo accumulates will be included in that tax impact. Trahan also said there is “no question” that the Civic Center is located within the Tax Increment Reinvestment Zone No. One, falling within the debt portion of the tax rate and not the maintenance and operations side.

In relation to the claims of violations of the Texas Open Meetings Act, Trahan stressed that the notice for the meeting was published in a timely fashion, clearly saying that the ordinance was surrounding the use of tax notes for the Civic Center project. Trahan also said there was no evidence that quorum discussion occurred outside the May 24 meeting, saying that individual informational meetings occurred with the individual council members and city of Amarillo staff.

Fairly’s Opening Argument

T. Lynn Walden, a member of Fairly’s legal team, started his opening argument by highlighting that Fairly “took it upon himself” to bring this matter to light on behalf of the residents within the city of Amarillo, stressing Fairly’s team’s belief that the city of Amarillo used the wrong tool, for the wrong purpose, in the wrong way and in a secret fashion.

Walden said that this “secret plan” approach, which they previously outlined in a document filed last month titled “Alex Fairly’s Special Exceptions, Second Amended Answer, General Denial, Defenses Pursuant to 1205 of the Government Code and Counter Claims,” did not give Amarillo residents the knowledge that the city was allegedly imposing taxes on them without their permission.

Walden said that the use of tax notes does not provide the city of Amarillo with a way to circumvent the opinion of Amarillo residents in this matter. Walden cited the November 2020 bond election, saying the vote in that election clearly shows the residents’ view on this project.

Like in previous documents, Walden presented various arguments, including that Chapter 1401 of the Texas Government Code does require that an entity impose a tax, which they claim the city did not do. Walden also continued to push that the Civic Center does not constitute as a public work, claiming that public works consist of infrastructure, like transportation, water, sewer and utilities.

Walden then spent some time surrounding the team’s allegations of violations of the Texas Open Meetings Act, citing the meeting of the TIRZ One Board in May, the May 10 City Council meeting and the May 24 City Council meeting.

Fairly’s legal team claims that prior to the May 24 council vote surrounding Ordinance 7985, “secret” and “deliberative” meetings occurred between Amarillo City Council members and city of Amarillo staff “behind the scenes” to avoid voter approval. They also claimed that the city was not forthright about what the ordinance lays out surrounding the payment of the $260 million of notes in seven years, rather than the discussion surrounding refinancing the tax anticipation notes with refunding bonds.

Lastly, Walden presented an argument for why this case should be ruled “estoppel,” a term that the Legal Information Institute from Cornell Law School defines as “a bar that prevents one from asserting a claim or right that contradicts what one has said or done before, or what has been legally established as true…”

Walden said this meets the criteria because the city of Amarillo put this project to a vote, a vote which was ultimately denied by voters. Walden claims that because the Amarillo City Council did not like the result of that election, they decided to ignore the voters and move forward with the project regardless.

“If (the city of Amarillo) could have used tax notes… why did they even put it up for a vote?” Walden asked during the opening argument. He said that is not how elections are supposed to work, emphasizing the team’s belief that it is time for the city of Amarillo to “start over” on the Amarillo Civic Center Complex project.

Texas Attorney General’s Opening Argument

Alyssa Bixby-Lawson, the representative from the Texas Attorney General’s office, said that this case was a “matter of great and public importance.” Bixby-Lawson took time to explain the difference between general obligation bonds, certificates of obligation and the use of anticipation notes, specifically in relation to this Civic Center funding-related case.

Bixby-Lawson also brought up the recent referendum petition that was recently not authorized for submission by the Amarillo City Secretary. She said that there is a “strong argument” that the petition continues to apply in this case.

Bixby-Lawson went on to say that if the petition continues to be pending, the Texas Attorney General’s office would not be able to approve the city’s request for tax notes because of pending litigation. She also said that there is no guarantee, from the Texas Attorney General’s office’s side of things, that there would be an approval regarding the city’s push to refinance the tax anticipation notes with refunding bonds.

“Something feels remiss” about how the city is using these finance statutes, Bixby-Lawson said during the trial, quoting William Shakespeare’s play “Hamlet.” She also said that the city’s approach does not appear to be in the spirit of the law.

What’s next?

The morning session also included testimony from Amarillo City Councilmembers Eddy Sauer and Howard Smith, along with Stephanie Coggins, the city of Amarillo’s city secretary. The afternoon session is expected to consist of more testimony from various city of Amarillo officials surrounding the case.