AMARILLO, Texas (KAMR/KCIT) — As the litigation continues in Potter County surrounding the use of anticipation notes for the Amarillo Civic Center Complex expansion and renovation project, Amarillo Businessman Alex Fairly has taken his message to Austin, recently testifying in front of both the Texas House of Representatives Ways and Means Committee along with the Texas Senate Committee on Local Government.
During the respective testimonies, Fairly laid out the case that his lawsuit brings forward to state lawmakers, none of which represent Texas Panhandle residents, questioning whether or not the city of Amarillo followed the law when they issued $260 million in anticipation notes for the city’s Civic Center Complex project, an amount which officials claim is the largest set of anticipation notes in the state’s history.
How did we get here?
According to previous reports by MyHighPlains.com, the Amarillo City Council passed an ordinance during the May 24 City Council meeting, approving the use of these notes, coming after Amarillo citizens voted against Civic Center-related bond measures in 2016 and in 2020. Fairly’s lawsuit in Potter County challenges the legality of this decision and the city subsequently filed its own lawsuit, asking a judge to validate the city’s decision to use the notes in this way. The two lawsuits have since been combined.
As the litigation process moved forward, a group of Amarillo citizens came together in August to begin a petition process aimed at overturning the Civic Center-related ordinance, a process that is outlined in the Amarillo City Charter. According to previous reports, a petition signed by around 12,575 individuals was delivered to the city of Amarillo in August.
What was involved in Fairly’s presentation to both committees?
In both opportunities Fairly had to testify in front of Texas lawmakers, Fairly spoke about the potential of abuse from cities and entities being able to issue debt that does not require voter approval, something he believes that the city of Amarillo did with the anticipation notes for its Civic Center project.
Fairly said it ultimately comes down to accountability, asking the lawmakers whether or not entities have the right to tax citizens without telling people what is going on.
“In a single vote, on May 24, with no public hearing and no second reading… the city of Amarillo more than doubled Amarillo’s ad valorem tax-supported debt,” Fairly said during his testimony to the Texas House of Representatives.
Fairly claims that the city plans to refinance the anticipation notes with a 30-year refunding bond, something he said does not require taxpayer approval. Fairly said regardless of whether or not he wins the lawsuit, he believes the city of Amarillo outlined an “end-around” roadmap for entities for an easier way to fund projects like the Amarillo Civic Center Complex project.
“I think they made some overreaches,” Fairly said in front of the house committee regarding the city of Amarillo. “We think they made some technical mistakes and we honestly think they were dishonest or misleading about some things that they did that day, so we’ll see how that goes.”
However, Fairly did stress that he believes that Texas Government Code 1431, the portion of the code that outlines the use of anticipation notes, is ultimately “good law.”
“The spirit of 1431 is, you’ve got a problem, you don’t have time to mess and fight with people who don’t think we ought to have a new fire… station or whatever. It seems like good sense to me,” Fairly said. “But, there’s a way to squeeze a Civic Center in there. I think usage ought to be addressed. I think it could be improved.”
How did the Texas House of Representatives Ways and Means Committee respond?
State Rep. Hugh Shine, R-Texas District 55 said that a tax anticipation note, or TAN, is exactly what it means, an anticipation of revenue that is coming in. Shine stressed that he has never heard of an entity using TANS for the purpose of coming around and financing them with “some other form of indebtedness.”
“When I look at what you’ve presented here and listened to your testimony, I mean to me, there are all kinds of red flags that go up on this deal,” Shine said. “So, my message to any other municipality out there who is thinking about pulling this stunt, I think they better be on guard because this would be something that the AG’s office would be on top of pretty quick, in my opinion.”
State Rep. Trey Martinez Fischer, D-Texas District 116 said that anticipation notes do a lot of good throughout the state and that they exist for a purpose. He said these notes are a good instrument to have if they are used following the law.
While he said he was concerned with what Fairly told the committee, Martinez Fischer stressed his need to hear from the Texas Attorney General’s Office, along with representatives from the city of Amarillo, who are both involved in the litigation.
“I’d like to know what the city of Amarillo says. I mean, I think that’s fair. But I appreciate you coming here and telling us about it,” he said. “…If there’s something that’s nefarious and not right, I think that there are a couple of avenues worth exploring and including your petition recall.”
How did the Texas Senate Committee on Local Government respond?
State Sen. Paul Bettencourt R-Houston, the chairman of the Texas Senate Committee on Local Government, said a $260 million tax anticipation note is a “blockbuster,” saying that Fairly’s claims against the city of Amarillo are “preposterously bad public policy.”
“It’s going to have real implications in the state and not only to the citizens of Amarillo if this kind of process can happen,” he said.
State Sen. Drew Springer R-Weatherford said that if the notes go through in this way, entities can bring forward projects and “never go out for a vote again,” with the approach that the city of Amarillo took being the “faster, quicker (and) easier” way to do things.
State Sen. Bob Hall R-Rockwall said what stood out to him about this is Fairly’s claim that the city of Amarillo went against the public’s wishes through this approach. Hall said that the government serves as an entity to be a servant to the people, and when the people speak, they are obligated to listen to them.
“To me, there is no higher bar set than the public’s opinion in a vote. When the public takes a vote on something, that should be the end of it,” Hall said during the hearing. “…The consequences are on them, not on us…. When it happens and there’s a vote taken, that should be the end of it. (It) may come back around again, when they realize that the building has crumbled or something, whatever it is, happens, then the people can decide whether it’s worth it to them to have their taxes raised.”
While she also believes this is a measure that should be looked at, State Sen. Sarah Eckhardt D-Austin provided an example of a situation where the anticipation notes process worked, giving Travis County the ability to build a recent courthouse project even though citizens voted down a bond.
Eckhardt said entities should be able to look for other ways to deliver services when the initial way to deliver the service did not work.
“This mechanism can be used well. I understand the concern about going around voter approval, but the state doesn’t build courthouses. The state doesn’t build schools and we can’t function without them,” she said. “I think we could function without a civic center, but there are bricks and mortar infrastructure we absolutely have to have, even when a bond fails… We are all looking for good stewardship of the tax dollar. Locals are not universally evil, running around looking for ways to squander your money. That will get you un-elected pretty quick.”
According to previous reports, a trial in the anticipation notes-centered litigation continues to be scheduled for 9 a.m. Oct. 4 in Potter County District Court.
However, lawmakers at the end of the testimony in front of the Texas House of Representatives Ways and Means Committee said that the committee plans on taking a look at the use of anticipation notes by entities, regardless of the outcome of the lawsuit.
MyHighPlains.com reached out to the city of Amarillo regarding Fairly’s recent testimony and to see if the city plans on reaching out to the committees and/or state lawmakers to provide their own perspective on the ongoing litigation and the city’s point of view on the use of the notes. City of Amarillo officials responded by saying that they have no comment on the pending litigation.