AMARILLO, Texas (KAMR/KCIT) – The legal teams for both the city of Amarillo and Alex Fairly met for nearly three hours Thursday morning in Potter County District Court to discuss whether or not Fairly should be required to pay the increased costs caused by the delay in the Amarillo Civic Center Complex expansion and renovation project.
How did we get here?
According to previous reports by MyHighPlains.com, the city of Amarillo filed a “Security Against Suit” motion on July 15 asking William Sowder, the judge for this case, to hear from Fairly’s legal team to show cause why Fairly should not cover the increased costs to the project caused by the delays. Officials cited increased costs because of inflation, increased construction costs and fluctuating interest rates that the delay could impact.
This comes after Fairly filed a lawsuit, challenging the legality of the city council’s vote to use $260,525,000 in anticipation notes to fund the expansion and renovation of the complex. In response to Fairly’s lawsuit, the city then filed its own lawsuit, asking a Potter County Judge to validate the use of those notes under portions of the Texas Government Code, including the Expedited Declaratory Judgement Act (EDJA) in chapter 1205 of the code.
In a previous hearing hosted this month, Sowder decided to combine both lawsuits in Potter County District Court. According to previous reports, Sowder also decided that a trial on this case will be hosted in front of a judge at 9 a.m. on Oct. 4 in district court.
The city said that they were able to file documents under the EDJA requesting that Fairly, as the opposing party, cover the increased costs to the project, since the city claims his litigation ultimately caused the delay. Officials previously said a bond amount of at least $5,900,000 will compensate Amarillo taxpayers for the increased cost.
To show a cause of why Fairly should not be required to post the bond amount, officials previously said that Fairly’s legal team must prove the following things:
- A cause of action against the city of Amarillo;
- A probably right to the relief sought;
- A probable, imminent and irreparable injury in the interim.
Ultimately, officials from the city of Amarillo’s legal team said it was Fairly’s team’s burden to prove that their case is correct and valid under the motion.
What was said during the first part of court on Thursday?
Paul Trahan, a member of the city’s legal team, spent the first portion of Thursday morning’s hearing laying out why the city brought forward this “security against suit” motion in the first place.
Trahan said that initially, Frost Bank, the entity handling the anticipation notes, was scheduled to have approved the notes for the project by June 23 at a 3.85% interest rate. Trahan stressed that this timeline did not happen, citing the delay caused by Fairly’s litigation. Trahan went on to say that after the lawsuit was filed, “things just kind of shut down,” regarding the entire project.
Trahan said that Fairly’s lawsuit forced the city to file its own lawsuit, searching for that validation for the use of the notes by a Potter County Judge.
After laying out the purpose for the motion, members of Fairly’s legal team laid out their initial case for why Fairly should not be required to pay the bond. This included the claim that the city had not followed all the criteria under a purchase letter from Frost Bank surrounding the notes.
Officials from Fairly’s legal team said that in the purchase letter surrounding the notes, Frost Bank outlined a number of criteria the city had to follow before the notes became valid, including the passage of an ordinance, a bond counsel issuing an opinion on the notes and the approval of the notes from the Texas Attorney General’s office, the latter of which has not happened yet because of the ongoing litigation.
T. Lynn Walden, a member of Fairly’s legal team, also went on to claim that they have not seen all the documents they have requested by the city of Amarillo, which they argue caused the delay instead of Fairly. Trahan ultimately dismissed that claim, saying that the evidence establishes the purpose of why the hearing is occurring.
Alyssa Bixby-Lawson, a representative from the Texas Attorney General’s Office who appeared at the hearing via video conferencing software, said that the office was still evaluating the notes and had no opinion to give on the validity of the notes.
However, Bixby-Lawson said that the Texas Attorney General believes that taxpayers should be able to have their day in court, recommending that Sowder require a “nominal bond’ for Fairly, or postpone the issue.
After representatives from each legal team laid out their case, Sowder ultimately said that this hearing comes down to two questions:
- Should Fairly be required to post bond?
- If Fairly is required to post a bond, how much should that bond be?
In the case of the motion, Walden said that the motion made by the city’s legal team was “pre-mature,” stressing their belief that there is no basis for Fairly to pay anything since the Attorney General’s office has not approved the use of the notes.
The rest of the morning portion of the hearing was spent with both legal teams questioning Laura Storrs, the city of Amarillo’s assistant city manager and chief financial officer. The majority of the line of questioning from Fairly’s team was regarding the wording on various city council documents, including the agenda item for the funding-related ordinance passed during the May 24 council meeting, as well as when council members and officials saw the draft of the ordinance.
During his questioning, Walden said that the agenda item outlined that “tax and revenue notes” would be used to fund the project. However, he asked, and Storrs confirmed, that the notes were just tax notes pledging property taxes and not revenue sources for the funding of the notes, including revenue from water and sewer revenue.
Storrs said this was a mistake, but stressed in the May 24 meeting that tax notes were only going to be used in this case. Because of this mistake in the wording of the agenda, officials from Fairly’s legal team claimed that this was a violation of the open meetings act.
During her testimony, Storrs also went into the overall payment schedule for the notes. While tax notes are required to mature seven years from the date that the attorney general approves the note, Storrs stressed during her testimony that the city’s intention to refinance the notes over the span of 30 years to lessen the impact on the taxpayers.
Storrs said that other revenue sources through the Civic Center project over the span of that time could go towards the debt from the project, something that would be decided by each council through the yearly budget process.
Representatives from Fairly’s legal team, as well as the legal team from the city of Amarillo, are expected to meet in the afternoon, continuing the arguments on whether or not Fairly should be required to post a bond. If Sowder rules that Fairly will be required to post a bond, an argument will then be expected to occur about how much the bond amount should be.
This story is developing. Check with MyHighPlains.com for updates.