Amarillo Civic Center trial closes: Judge to make a decision within 10 days

On Wednesday, the city of Amarillo’s trial to move forward on its civic center project using tax anticipation notes ended, with all arguments presented before retired Potter County Judge William Sowder to make his declaratory judgment.

Legal representatives from the city of Amarillo, local businessman Alex Fairly and the Texas Attorney General’s Office conducted their final questioning of city council members and expert witnesses in an effort to decide if the city can move forward with Ordinance 7985 authorizing $260 million in debt issuance.

Mayor Ginger Nelson and Mayor Pro-Tem Freda Powell were the last two city council members to testify to the court. All council members were brought as witnesses over the two-day trial and questioned extensively about their understanding of the Texas Open Meetings Act and when they saw the actual ordinance that was voted upon.

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Powell, during her testimony, testified that she had met with city staff the week prior to the vote for background information and to be better educated on the proposals to address the civic center issue. Fairly’s legal team pointed out that she had said during a deposition that she had not met with staff that week, but upon further review of her schedule, she admitted her erroneous statement. All city council members were allowed to meet with staff for background, according to city staff, and every member did spend some time with staff the previous week.

Fairly’s legal team stated that this was the first time that they were given the knowledge that Powell had misspoke at her original deposition. Powell was pressed on what a rolling quorum was by Fairly’s counsel. A rolling quorum occurs when a quorum is achieved without all the members needed being present in the same room at the same time. They might discuss public business by email or phone call over several days. This practice unequivocally puts its practitioners in violation of public meeting laws.

All city council members testified that there was no prior knowledge or consensus of how their colleagues would vote on the civic center issue.

Mayor Nelson was then called to the witness stand and asked a series of questions about when she received a draft of Ordinance 7985; why the agenda did not include the dollar amount of the project; and would it not be prudent to the citizens of the city to know the exact amount of money that was being discussed to be levied as tax notes. Asked why the agenda listed tax and revenue notes, Nelson said that no decision had been made on the proposal, but it plainly listed a debt issuance. She assumed the number was not included since no final decision was made and to give flexibility for discussion among the city council.

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During the line of questioning, Nelson was asked about the decision in the May 10 city council meeting that included the civic center into Tax Reinvestment Zone 1. The language was added to include the civic center in the zone. The civic center was already located within the TIRZ zone, but this amended it to clarify the usage of the area, adding one amended line with Ordinance 7980, which read as follows:

“Expansion and renovation, including the addition of an arena to the Amarillo Civic Center Complex, as well as improvements to the Amarillo Santa Fe Depot Property. lt is not anticipated for the costs of these public improvements to be financed with TIRZ revenues.”

This measure was unanimously approved on the first reading at that council meeting and was passed as part of the consent agenda at the May 24 meeting.

According to the transmittal memo, the proposed change to the Final Project and Financing Plan will allow for City Council flexibility when evaluating any future methods to fund Civic Center Complex or Santa Fe Depot improvements suggested in the civic center Needs Assessment or upcoming Garfield Public Private Report.

Asked about the amended language to TIRZ 1 and its impact on the decision to use tax anticipation notes to finance the civic center project, Nelson said that the change was not done in anticipation of a specific plan but was done as recommended by the consultants doing work on the Garfield Report to give the city more options in doing any renovations to the civic center.

Nelson was then asked again about why the $260 million number had not been reflected in the agenda; she stated that while the amount was not listed, the agenda stated that it would be a debt issuance.

During the morning session of court, Fairly’s team called John Diamond, the director of the Center of Public Finance at Rice University, as an expert witness to rebut the city’s argument that it needed to be expedient in securing financing for the civic center project that was passed by the city council. He argued that he felt the city was overestimating the rising cost of construction costs and rising interest rates. In a rebuttal, Paul Trahan, lead attorney for the city of Amarillo’s case, stated that Diamond was not an expert in building costs.

Diamond testified that the proposed original seven-year redemption rate would almost double the property tax rate for citizens of Amarillo. The city’s plan for its ordinance is to refinance the debt to 30 years but as proposed it had to be a 7-year rate initially.

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Steven Adams, financial advisor for debt issuance to the city from Specialized Public Finance, was then called as the city's last expert witness. Adams testified that the delays in issuing tax debt could generate more than $3 million from rising interest rates.

Fairly’s legal team called the last witness of the trial to give a citizen's view of the passing of the civic center ordinance. Don Tipps, an insurance agent, testified that he had spoken with councilmember Cole Stanley prior to the May 24 city council meeting and that an agenda item was coming before the council regarding the civic center project.

Tipps, who stated at the trial he had ambitions to run for city council, said that the agenda item, in his opinion, was not clear to what was going to be discussed or what action was to be taken regarding the civic center. Tipps spoke about the civic center at the public portion of the city council's May 24 meeting.

Trahan, in cross-examination, asked Tipps to read the agenda item, which plainly states that anticipation notes would be for the civic center project, although no specific amount was stated.

Following the final testimony, all legal teams made their closing arguments.

Trahan returned to his opening arguments that the city’s case clearly meets the criteria for the tax notes to be verified within Texas Government Code 1205 declaratory judgment, stating that multiple projects have had anticipation notes issued for them with no legal challenges to actions taken by the city with similar language in ordinances and agendas.

Calling out that this case has become political in nature at a state and local level, Trahan said that arguments being made against the city had little to do with the legality or procedures followed in taking this action by the council. Emphasizing that this attempt to block a measure by a duly elected council is about Fairly taking issue with the ordinance and has nothing to do with its legality under State Code 1431.

“The law is that these tax notes were issued were for a valid reason from a duly elected city council,” Trahan said.

He stated that these notes were valid, legal and in the best interests of the citizens of Amarillo. Trahan said that the politics surrounding the hearing had no relevance in the city's legal standing in the matter.

Closing for Fairly’s team was Christopher Diamond. He argued that the city had violated the Texas Open Meetings Act in reference to the TIRZ project plan amendment that had its first reading at the May 10 city council meeting. Diamond was tying both that ordinance and the one authorizing tax note issuance for the civic center project as dependent on each other and was done in conjunction without proper public notice, thus making the amendment to TIRZ invalid.

Diamond stated that the TIRZ amendment was central to the case since it affected whether the city reached its own cap on a 3.5 % increase which would force a referendum election. He also said that the city was using it as a workaround to be able to issue tax notes without public approval, comparing it to pushing the air in a tire to its maximum capacity as a live test. Diamond stated that is not the purpose of Texas Code 1431.

Also, Diamond questioned whether the issuance of tax notes was even valid since no contract had closed with the financier for the project Frost Bank.

Weighing in for the Texas Attorney General was Alyssa Bixby-Lawson, assistant attorney general. She challenged the city’s measure in three key areas.

She did not feel that the city of Amarillo satisfied the Texas Open Records Act with its amendment to the TIRZ, saying that there was no publication or proper notice given on the agenda. Bixby-Lawson also questioned the private use argument of the city due to a possibility of a sports team being housed in the facility. Finally, she questioned if the original terms reached with Frost Bank were still valid and, in her opinion, would require a new ordinance proposed if terms were changed.

Overall, she strongly recommended against the city’s argument to move forward as she felt it manipulated a series of statutes to go around voter approval.

Also brought up in closing arguments was the petition that was submitted to the city and what would become of it. According to the city, secretary process was not followed according to the city charter, and 40% of the signatures were found to be invalid or fraudulent. Trahan, speaking for the city, said that the petition was irrelevant to the case as it does not apply to this type of council action.

Judge Sowder said that he understood the need for timeliness in making a decision and expected to make a final determination in 10 days or less.

This article originally appeared on Amarillo Globe-News: Civic Center trial closes, judge to make decision within 10 days