AMARILLO, Texas (KAMR/KCIT) — In the most recent set of court documents filed in Potter County District Court by Amarillo Businessman Alex Fairly’s legal team, the team, once again, lays out its allegations against the city of Amarillo, choosing to highlight their belief that the city of Amarillo had a “secret plan” to fund the expansion and improvements to the Amarillo Civic Center Complex.
On Wednesday afternoon, Fairly’s team filed a new document titled “Alex Fairly’s Special Exceptions, Second Amended Answer, General Denial, Defenses Pursuant to 1205 of the Government Code and Counter Claims.” This document outlines the overall case Fairly’s team has been pursuing since late May against the city of Amarillo and its use of anticipation notes to fund the Amarillo Civic Center Complex project.
According to previous reports by MyHighPlains.com, Fairly filed a lawsuit against the city of Amarillo in late May, aimed at preventing the city from moving forward with issuing more than $260 million in anticipation notes for the project, a measure which the Amarillo City Council approved during its May 24 regular meeting.
The city of Amarillo then filed its own lawsuit in Potter County, seeking a judge to validate the use of the anticipation notes under Chapter 1205 of the Texas Government Code, a lawsuit which was since combined with Fairly’s into one piece of litigation. The bench trial for this combined litigation is scheduled for early October in Potter County Federal Court.
What is this alleged “Secret Plan” these documents outline?
In the documents, Fairly’s team lays out a narrative saying that the city of Amarillo resorted to a “secret plan” after two events occurred. First, Proposition A, the measure which consisted of $275 million in bonds to pay for the project, was voted down in November 2020 which ultimately caused the second event, hiring Garfield Public/Private LLC to help the city explore funding options, including but not limited to public/private partnerships.
In March 2022, the documents claim that the collaboration with Garfield did not bear any results, ultimately failing “to provide the City with any viable private equity or private money to finance the construction of the complex.” Fairly’s team claims in the aftermath of that revelation, a plan was created by the city to finance the project without the need for voter approval.
“The Secret Plan’s scheme was to first add components of the proposed complex into a tax reinvestment zone, then finance the Complex with tax anticipation notes by vote of City Council without alerting the public, and then, at some point in the future and likely by a different city council, refinance the tax anticipation notes with refunding bonds extending the period for redeeming the notes from seven to 30 or more years,” the documents state. “…The Secret Plan, by its very nature, was meant to withhold certain information from the public while these plans were in development and to bypass, circumvent, and avoid facing the will of the voters.”
According to the documents, Fairly’s team claims that the city needed to amend the City Center Tax Increment Reinvestment Zone No. 1’s plan to include the Civic Center Complex. The team believes the city did that to “work around House Bill 1869’s statutory reform of tax-supported debt characterization requirements and limitations upon incremental tax rate increases provided in Chapter 26 of the Tax Code.”
During the May 5 meeting of the TIRZ One board, the City Manager’s office provided the board with an update to the plan, which Fairly’s team claims did not alert the public to what was occurring. An ultimate amendment to Ordinance No. 7980, the ordinance related to the goals of the TIRZ One plan, was approved by the Amarillo City Council after two readings.
According to the Amarillo City Council’s agenda transmittal memo for the measure considering the first reading of Ordinance No. 7980 on May 10, the item specifically listed that this would include the expansion and renovation of the complex, with the documents stressing that the city did not anticipate “the costs of these public improvements to be financed with TIRZ revenues” and allowed the Amarillo City Council “flexibility when evaluating any future methods to fund” the project.
Prior to the May 24 meeting, where the Amarillo City Council approved the use of the notes, the documents said that Amarillo City Manager Jared Miller and Amarillo Chief Financial Officer Laura Storrs met with each member of the City Council to discuss the ordinance. The documents claim that there was only one recommendation to come out of the meeting, and that was to use the anticipation notes for the project.
“These discussions included an analysis of the tax anticipation notes and refunding bonds,” the documents allege, “including that the City had one offer to finance up to roughly 260 million dollars because of the City’s current credit posture.”
The documents also continue to allege that the city gave “vague references” in its agenda that they were even going to talk about the project during the May 24 meeting. However, in the agenda transmittal memo that accompanied the May 24 agenda, the memo specifies that the notes were for “acquiring, constructing, improving, expanding, and equipping the City’s convention center fasciitis, to-wit; the City’s civic center complex.”
However, Fairly’s team stressed that the agenda, along with the memo, stated that the funding mechanism that was listed as “Combination Tax and Revenue Notes,” instead of just “anticipation notes,” along with there not being a full-text draft of Ordinance No. 7985 accompanying the agenda and a notice of the anticipated impact on tax rates.
“Because of the failure to provide proper notice, the agenda also failed to give taxpayers an opportunity to be heard with respect to any proposed tax at the May 24 meeting,” the documents read. “A public hearing was never held regarding the imposition of the tax necessary to pay and service the anticipation notes later found in the published version of Ordinance 7985.”
With the vote on May 24, Fairly’s legal team alleges that the Amarillo City Council already knew what they were going to do, not needing any time to discuss and deliberate on the ordinance. Fairly’s team continues to claim that because of the difference in wording on the ordinance, as well as potential violations of the Texas Open Meetings Act, the ordinance the council voted on is not valid.
“The City seeks herein a declaration of validity of securities that were not clearly authorized by the City Council, of which citizens were provided with no advance notice, that will result in debt that can be serviced only through tax increases, on a matter the voters previously rejected in an election,” the documents read. “This is wrong, and contrary to the Texas Constitution, Texas statutory law, and Texas history and tradition.
Like the other court documents filed previously by Fairly’s team, the documents continue to allege that the city violated various portions of the Texas Constitution, the Texas Government Code the Texas Tax Code, the Texas Open Meetings Act as well as the city’s own charter through this process.
The ultimate goal of Fairly’s lawsuit is for the court to declare that the Civic Center funding-related ordinance (Ordinance No. 7985) along with the TIRZ One ordinance (Ordinance No. 7980) is rendered void and that the city’s use of anticipation notes, in this case, is not considered debt per the Texas Tax Code, according to the documents.
“The City has made covert decisions regarding its intent for millions of dollars in obligations it seeks to impose on its citizen taxpayers,” the documents read, “with inadequate public notice and records and opaque accountability.”
As of Friday afternoon, the city of Amarillo’s legal team has not responded to Fairly’s team’s set of new documents. This comes as both legal teams prepare for the upcoming trial surrounding this litigation. The city of Amarillo has previously said they do not comment on ongoing litigation. However, Amarillo Mayor Ginger Nelson provided the following statement to MyHighPlains.com in July surrounding the litigation, saying:
“I remain committed to the ongoing legal process and I am certain this process will confirm the validity of the City Council’s action related to the tax notes for the civic center. My primary hope is that this matter can be resolved as quickly as possible with the least expense to our citizen taxpayers both in litigation costs and added expense to the project overall.”Mayor Ginger Nelson
According to Potter County District Court documents, the pre-trial hearing is scheduled for 9 a.m. on Sept. 30 in Potter County District Court. The bench trial for this litigation is scheduled for 9 a.m. on Oct. 4 in Potter County District Court.