AMARILLO, Texas (KAMR/KCIT) — According to court documents filed earlier this month, the city of Amarillo is requesting that a Potter County Judge declare the city’s use of anticipation notes to help fund the renovations and improvements to the Amarillo Civic Center Complex was legal and valid.
City of Amarillo officials filed a suit in the 320th Judicial District Court of Potter County on June 8, seeking an “expedited declaratory judgment” from the court, stating that the city’s issuance of anticipation notes for the Civic Center Complex project was “legal, valid and enforceable,” according to court documents.
This comes after Alex Fairly, the president of the Fairly Group, filed a lawsuit in the 108th Judicial District Court in Potter County stating his belief that the city’s use of the anticipation notes was not legal under Texas Government Code.
How did we get here?
During a May 24 meeting, the Amarillo City Council voted 4-1 to approve the issuance of an amount not to exceed $260,525,000 in anticipation notes to help fund the expansion and renovations to the Amarillo Civic Center Complex.
This comes after a bond election was hosted in November 2020, where 61% of Amarillo residents voted against a measure issuing bonds for the project. After the election, the Amarillo City Council searched for other ways to fund the project, eventually entering into a pre-development services agreement with Garfield Public/Private LLC to explore different options.
During the May 24 meeting, the Amarillo City Council, along with city officials and members of the public, heard the final report from Garfield before they voted on the ordinance that issued the anticipation notes.
According to court documents, these notes would help fund the addition of an arena on the site, along with improvements to the Amarillo Santa Fe Depot property and any needed land and rights-of-way. The notes would also help cover any professional services needed in this project.
In response to this vote by the Amarillo City Council, Fairly filed a lawsuit on May 27 which argued that the use of the anticipation notes by the Amarillo City Council was illegal. In the lawsuit, Fairly aims at preventing the city from using the notes, saying that the decision to fund the Civic Center Complex expansion and renovation project in this way goes against the will of the voters after the November 2020 election.
City of Amarillo officials, including Amarillo Mayor Ginger Nelson and City Councilmember Howard Smith, continued to tout the benefits of the project, saying that the measure the council took is to prevent the city from having to spend more money on the expansion and renovation project down the road. Both Smith and Nelson also stressed that the city would not fund the project in any way that was illegal.
“Since the Ordinance passed, questions have arisen about the legality of tax notes,” Smith said in a statement earlier this month. “Not only are tax notes a lawful tool for cities to use, I believe they are the best tool for this situation because of the time urgency created by rising interest rates and rising construction costs.”
What does the lawsuit entail?
According to the lawsuit documents from the city of Amarillo, the city requested a bench trial to hear from “Interested Parties,” as well as the Texas Attorney General, to give opponents the opportunity to present their arguments for why they believe the anticipation notes are illegal.
In the documents, officials identify “Interested Parties” as those who live within the city limits, those who own property within the city limits, as well as those who pay taxes in the city of Amarillo.
Ultimately, the city’s goal is to have a declaration from a judge, validating the use of these anticipation funds under Texas Government Code Chapter 1431. According to previous reports by MyHighPlains.com, that chapter of the Texas Government Code outlines what anticipation notes can be used to pay for, including:
- Construction of public works
- Purchase of materials, supplies, buildings, lands, and other items for various needs
- Operating or current expenses for a professional service, including those from an engineer, architect, attorney auditor, or fiscal agent.
According to the code, the notes can be paid from revenue, taxes, a combination of revenue and taxes, or bond proceeds.
“The City brings this expedited declaratory judgment action so that it can proceed with confidence and certainty in the issuance of the Notes in accordance with Chapter 1431, assured by an order of this Court that its actions taken to issue the Notes are valid and incontestable,” the documents read, “that the City has the authority to issue the Notes in accordance with Chapter 1431, substantially as set forth in the Ordinance; and that such Notes are, upon approval by the Attorney General, incontestable and are valid and enforceable under the laws of the state.”
The documents also claim that the ordinance, which is Ordinance No. 7985 that was approved during the May 24 City Council meeting, was properly adopted under the Public Securities Procedures Act. Under the act, an additional meeting and vote are not required for authorization of anticipation notes.
The documents state that the city hopes that a final ruling from the Potter County Judge declares that the city has the authorization to issue the notes and that the ordinance is a valid purpose for which the anticipation notes can be authorized. The city also states that it hoped the court rules that the city has the authority to tax residents in an amount not to exceed $1.80 per $100 valuation of all taxable property for the project.
“The City has brought this Chapter 1205 action to provide standing to all Interested Parties and to put to rest any current or future potential legal challenges, such that the City may issue the Notes within the limits prescribed by law,” the documents read.
How did parties respond to the lawsuit?
As of Wednesday afternoon, the city of Amarillo has not responded to MyHighPlains.com’s request for comment on this lawsuit. However, officials have previously told MyHighPlains.com that the city does not comment on pending litigation.
According to a response to the city’s lawsuit filed Wednesday in the 320th Judicial District Court of Potter County, Fairly said he denies “each and every” allegation from the city’s petition. Fairly is requesting “strict proof” for the city’s allegations “in accordance with the laws and Constitution of the State of Texas.”
Fairly argued that the city’s overall request for an expedited declaratory judgment and the ability to issue the anticipation notes should be denied.
According to the documents, Chapter 1205 states that the Court is required to set the matter for trial at 10 a.m. on the first Monday after the 20th day after the date of the order. Twenty days after June 8, the date the petition was filed, was June 28, making the next Monday on the calendar July 4, 2022.
Because July 4 is a federal holiday, a bench trial is scheduled in the 320th Judicial District Court in Potter County at 10 a.m. July 5. According to court documents, Pamela Sirmon is expected to be the judicial officer in the case.