AMARILLO, Texas (KAMR/KCIT) – After months of preparation and back and forth conversations via documents along with both in-person and virtual hearings, retired Judge William Sowder will hear from the legal teams for the city of Amarillo and Amarillo Businessman Alex Fairly and ultimately determine if the city will be able to use anticipation notes for the Amarillo Civic Center project.
Sowder, as part of the 320th District Court of Potter County, will host a bench trial starting at 9 a.m. Tuesday surrounding this matter. According to previous reports by MyHighPlains.com, the Amarillo City Council approved an ordinance, giving the city the ability to use $260 million in anticipation notes for improvements and the expansion of the Amarillo Civic Center Complex.
This comes after Amarillo residents voted down a $275 million bond for Amarillo Civic Center improvements in 2020. According to previous reports, the ordinance was approved by the Amarillo City Council after city officials, along with a citizens group, researched the best way to approach the project.
Fairly filed a lawsuit against the city of Amarillo after that ordinance was passed, claiming that the use of anticipation notes, in this case, was illegal and aimed at preventing the ordinance from moving forward. According to previous reports, the city filed its own lawsuit, asking a Potter County judge to validate the use of the notes. The two lawsuits have since been combined and will be the one that Sowder is expected to make a decision on.
Nelson said the ongoing problems with the Amarillo Civic Center Complex are not new to the city. As the project continues to be delayed, Nelson stressed that the complex’s issues will only get more and more expensive.
Something that Amarillo residents do not realize, Nelson said, is that they are paying for the Civic Center through their tax bills.
“I’m not sure that people know that taxpayers in the city lose money on the Civic Center every single day. Last year, we lost $6,300 a day, subsidizing the Civic Center,” she said. “So we’re losing money as we speak with the existing facility. If we don’t make a change, to make it competitive to attract events, competitive to attract youth sports tournaments, that subsidy number, is just going to increase in addition to the loss that we have on our local economy, local restaurants (and) local retail shops.”
After the bond election in November 2020, Nelson said what the city heard is that something needs to be done about the Amarillo Civic Center, but residents did not want to spend that amount of money on the facility. The city then partnered with a Citizens Committee, along with Garfield Public/Private, to try and find a way forward, aimed at finding “different ways to finance” the improvements.
Ultimately, Nelson said the 2022 project is different and cheaper than the one that was on the ballot in 2020. However, this new project does not include a parking garage or the renovations of existing meeting spaces, two of which were on the original project. However, it does include an arena and expanded meeting room space, two things that Nelson stressed that will bring revenue to the city of Amarillo.
Nelson said the use of anticipation notes, which was decided through the passage of the ordinance during the May 24 Amarillo City Council meeting, is a “more creative” way of funding the project. Nelson said revenues that will pay down the debt on the project include sales tax and hotel occupancy tax revenue, naming rights for the facility along with property taxes.
Anticipation notes is something that the city of Amarillo had used before, with Nelson describing it as a “tool in the toolbox that every city has.”
“It’s merely a tool in the toolbox that we chose to pick up and use in this case, because of the urgency in the changing interest rate environment,” she said. “We reached a point where 80% of the city council felt like the right business decision for the city was to move forward as quickly as possible and so the tool that was available to us to do that was anticipation notes.”
This is something that Fairly disagrees with. Fairly said that he believes what the city of Amarillo did was illegal, making “several mistakes along the way.” Fairly believes that it was wrong what the city did, pushing a project forward that Amarillo residents voted against in a bond election.
“I think there’s no disagreement on whether people have the right to want to continue a project going forward. That isn’t the issue,” Fairly said. “The real issue is that whether you want a project to get done, or you don’t, and let’s say most of them did, it doesn’t mean you can impose a tax on a population of people without adequately notifying them and telling them what you’re doing and getting their input.”
Fairly believes that after 90 days of discovery, his attorneys are ready to move forward with the litigation. Through this process, Fairly said his team has found out many details about what the City Council planned to do through what his team has previously called its “secret plan.”
However, when asked about the city’s “secret plan,” Nelson said there was nothing secret about it.
“For one thing, we had a Citizens Committee that was part of this and worked on all the Garfield report. They were involved in that. They gave feedback on that. We met with that Citizens Committee in April of this last year before the May vote. We talked about this option with that Citizen’s Committee. So this was not secret,” she said. “The Citizens Committee recommended to us that we move forward with this plan. So I don’t know where that phrase comes from. I think it suits someone else’s narrative and it’s not it doesn’t match the facts of what happened here.”
The litigation has ultimately put the project on pause, Nelson said, causing the project to be more expensive as interest rates and construction costs increase. But, Nelson stressed that the project continues to be a priority, with the subsidized cost still having an impact on taxpayers.
“It’s the right time to do it, while we are growing. Our businesses are growing, our economy is booming. It’s the right time to take on this challenge. So it’s an old problem. But I actually see it as one of our best and new opportunities,” Nelson said. “In a 10-year period alone, Garfield has projected that it will bring $500 million of economic impact to our city. Some of that is directly related to the subsidy the $6,300 that citizens pay for right now to support the existing facility… A $500 million economic impact is a number that I can’t ignore… as a leader making business decisions for the city. So I think you have to have your long-term lenses on as you consider what decision needs to be made about the Civic Center.”
However, Fairly continues to see this project as something he needs to stand up and fight against, with it being a bigger issue overall, not only impacting the city of Amarillo but for taxing entities throughout the state in general.
“This has become truly about a principal issue about whether taxing entities like, you know, city governments, or it could be county governments, can impose a tax on taxpayers without asking them or without telling them even at a minimal level what’s going on,” Fairly said.
What Fairly hopes that comes out of this litigation is that the city is denied the ability to use anticipation notes for this project. Secondarily, he hopes this litigation sends a message across the state, ultimately leading to legislation that prevents taxing entities to be able to do this in the future.
“If people in government who have the ability to impose a tax get to do whatever they want, just because that person’s opinion is we just need this in government, is utterly out of control and run amok,” Fairly said. “So it’s a really bad answer to say, we told people we wanted it. So even if we did something wrong, they should have had good notice. That’s just not how government works. Everybody that I’ve talked to in Austin is utterly shocked at what they did. The justification that we told everyone we wanted it so we can do whatever we want, it just isn’t how government works in Texas, or even in the United States.”
What Nelson hopes that Sowder will rule is that the city followed the process of using anticipation notes correctly.
“Anticipation notes are just a tool that every city has in the toolbox for issuing debt,” she said. “We used it properly. We followed the statute properly and I think as we trust the process of this litigation, the results will show that we follow the statute properly.”
Regardless, Nelson said the city’s plan is to move forward and continue to find solutions to solve this long-standing problem.
“No matter what the judge decides, the plan is the same and that is to find the solution to solve this problem, and to save the taxpayers as much money as we possibly can in finding that solution,” Nelson said. “…I think we have a city council that doesn’t want to kick this can down the road to future councils. We felt the urgency of solving it now if we could do it, and do it before interest rates went up before construction costs continued to climb. So we tried to act quickly, in order to capture that opportunity. I think we did it properly. And I think the legal process will prove that. As for what future councils will do, I hope they’ll follow through on the momentum that we have here and the success that we have currently in our economy. I think the Civic Center is an opportunity and part of that success.”
According to previous reports, officials previously said they expect the trial to last two days. However, officials have told MyHighPlains.com that they would not be surprised if the trial moves into a third day.
During Friday’s pre-trial hearing, Sowder made the decision for the bench trial to be live streamed on the Potter County 320th District Court’s YouTube page. The hearing can be accessed at this link.