AMARILLO, Texas (KAMR/KCIT) – While no decision was ultimately made Thursday in Potter County District Court, a path was laid out which will ultimately determine whether or not Amarillo Businessman Alex Fairly will have to pay the increased costs caused by the delay in the Amarillo Civic Center Complex expansion and renovation project because of ongoing litigation.
How did we get here?
Officials with the city of Amarillo’s legal team filed a motion in Potter County District Court on July 15 asking William Sowder, the judge for this case, to hear from Fairly’s legal team to show why Fairly should not cover the increased costs to the project caused by the delays.
Fairly’s lawsuit, which was filed in early June, ultimately challenges 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 litigation, 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.
Those two lawsuits were ultimately combined by Sowder in Potter County District Court, scheduling a trial on the matter at 9 a.m. on Oct. 4.
The motion the city made, called a “security against suit” motion, is the city’s request for a judge to require Fairly pay for those increased costs, citing inflation increased construction costs and fluctuating interest rates throughout the course of the litigation. 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, court documents previously read 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 happened Thursday morning?
During Thursday morning’s hearing, officials from the legal teams of both Fairly and the city of Amarillo laid out their initial case, arguing why Fairly should not, or should, be required to pay these extra costs during the delay. The two questions on the table during Thursday’s hearing were:
- Should Fairly be required to post bond?
- If Fairly is required to post a bond, how much should that bond be?
Paul Trahan, a member of the city of Amarillo’s legal team, said that Fairly was the one holding up the project from moving forward, stressing that 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 went on to say that after Fairly’s lawsuit was filed, “things just kind of shut down,” regarding the entire project, forcing the city to file its own lawsuit to validate the use of the notes.
Officials from Fairly’s team then argued that because the Texas Attorney General’s office had not approved the use of the anticipation notes for the project, it was not Fairly who was delaying the overall process, saying that the city’s motion for “security against suit” was premature.
The rest of the morning was spent cross-examining 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.
During his questioning, T. Lynn Walden, a member of Fairly’s legal team, said that the agenda item initially 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 the city’s water and sewer services. The team claimed that this was a violation of the Open Meetings Act, misidentifying by what funding mechanism the city planned to fund the project.
Storrs also spoke about the city’s intention to refinance the anticipation notes for the Civic Center project over the span of 30 years, instead of letting it mature over seven years, aiming at lessening the overall impact on taxpayers. Storrs also stressed that other revenue sources could go towards the debt from the project, a decision that would be made by each council through the yearly budget process.
What happened Thursday afternoon?
Storrs’ testimony continued into the afternoon, with officials asking her questions regarding the process of draft ordinances and when the city decides to provide the draft of an ordinance to members of the city council.
Storrs said that what she did with the civic center funding-related ordinance, giving the final draft to the city council on May 24, the day of the meeting, was “common practice,” not wanting to provide them with a copy where the language could still be changed.
Storrs also continued to stress that while the tax notes were secured with the pledge of property taxes, it does not mean it will all be paid with city residents’ property taxes. Each year, the city council will have the chance to decide on how to pay off the debt for the project, whether it be property taxes, hotel occupancy taxes or other revenue sources.
Fairly himself then took the stand, answering questions on how the tax increase would impact him as a citizen. He said during the line of questioning that if his property tax increased it would be a substantial loss of money to him. The city’s legal team questioned that statement in their line of questioning, asking Fairly what month he paid his taxes and whether he did his taxes himself or through a personal assistant.
Steven Adams, a financial advisor for political subdivisions including the city of Amarillo through Specialized Public Finance, then took the stand. During his testimony, Adams spoke about the projected figures of increased costs the city of Amarillo faces if the delays continue because of the lawsuit. Adams said that taxpayers could face an increased cost of around $5.9 million for the project if the trial is delayed to mid-October.
Members of Fairly’s legal team questioned that figure, however, saying that Frost Bank was not clear on if they would maintain the current 3.85% interest rate that was initially agreed upon.
In Fairly’s team’s closing arguments, officials continued to stress that there was no evidence that Fairly was delaying the process, that delay coming from the Texas Attorney General. They also continued to claim that the city violated the Open Meetings Act, citing the mistake in the agenda and that the “public did not have enough notice of this meeting.”
If the judge was inclined to award a bond, officials from Fairly’s legal team asked for that bond to be “nominal,” in the $10,000 range.
In the city of Amarillo’s legal team’s closing arguments, Trahan stressed that there was written notice of the meeting, including the date, the time and the location. He said that people obviously knew that the Amarillo Civic Center Complex topic was being discussed during the meeting, citing the number of people speaking during public comment during the May 24 meeting.
Trahan said that the burden of proof was on Fairly’s team, saying that it was their job to prove that more likely than not that they would prevail. In Trahan’s opinion, Fairly’s legal team did not do that.
Trahan said “this case is about if they (the city of Amarillo) did it right, not if they got it right.” The city of Amarillo’s legal team presented that there was no real question that the city followed the Open Meetings Act.
The city’s legal team went on to say that if the judge grants the motion for a bond, it should be a “meaningful” amount.
How are the entities, and members of the community, responding to the litigation?
Along with a full courtroom on Thursday, more than 25 people gathered in the Fairly Club at Hodgetown, watching a live stream of the court proceedings and supporting Fairly. Organized by the High Plains Republican Women, Connie Morgan, a member of the organization, said that citizens are concerned about this issue.
“We feel like it’s not being done the right way as far as building the Civic Center,” Morgan said. “It was voted on a year and a half ago or so and the vote was negative, so we really respect Mr. Fairly and his efforts to raise this issue. A lot of us, as common citizens, can’t afford to do that or don’t have the means to do that. So, we are behind him all the way.”
Amarillo Citizen Ed Modery said he was at Hodgetown Thursday to support Fairly because he believes the city of Amarillo is going around the will of the people. He said he hopes that this changes how the city communicates moving forward.
“I’m hoping from this point forward, there’s more communications back and forth between the City Council and the people,” he said. “…There needs to be more communication. I mean, there are other ways to do things other than just saying, ‘Well, you, you don’t know what’s good for you. We’re just going to do it.’ That’s not how things are done.”
In response to the crowd supporting him both in the courtroom and at Hodgetown on Thursday, Fairly said that the support was amazing and he and his team really appreciate it.
When asked for comment on Thursday’s proceedings, Fairly said “Yeah, we have confidence in it. I feel like, we feel like—we feel really good about how today went.”
In a statement provided by Amarillo Mayor Ginger Nelson on Monday, she said that any action that delays a building project creates a “substantial risk of costs increasing,” citing rising construction costs and interest rates.
“We are seeking to protect the taxpayers of Amarillo from project cost increases that have resulted from this lawsuit,” Nelson said at the time.
MyHighPlains.com reached out to the city of Amarillo regarding a statement on Thursday’s court proceedings and they referred us to a statement provided on July 12 where city officials said “we’re not going to have additional information to provide on this situation until it’s resolved in the courts.”
Sowder said both parties will have the opportunity to respond to the closing arguments in written form, setting the deadline to file those documents as 5 p.m. Wednesday in Potter County District Court. The deadline for further documents to be filed in relation to this motion will be at 5 p.m. July 29.
Sowder said a decision will be made on this motion by Aug. 1-2 and will be filed in Potter County District Court.