City of Amarillo files motion in Civic Center suit seeking nearly $6M bond for delay costs
The city of Amarillo filed a motion Friday for a Security Against Suit in its current civil court case filed in the Potter County 320th Judicial District to recoup costs caused by the delay of its expedited declaratory judgment in an effort to issue anticipation notes totaling $260 million to renovate the Amarillo Civic Center.
In response to a lawsuit filed by Alex Fairly that contends the city council is not making proper use of Texas Government Code 1431 in its issuance of debt, this motion seeks to hold Fairly liable for increased costs of the project due to holding up funding. The city had asked for expedited judgment earlier in the month to move forward on procuring funding for the civic center project, citing delays would increase the cost to taxpayers with rising interest rates.
A hearing has been set for Thursday to decide whether a bond must be issued by Fairly.
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With this motion, the city is asking presiding Judge William Sowder to have a hearing to ask why Fairly should not be required to post a surety bond in an amount sufficient to cover the increased costs that a delay of three months would impose on taxpayers. The city says in its motion that, according to Chapter 1205, known as the expedited declaratory judgment act, it has acted properly to secure the issuance of funds and that it would be unfair for one disgruntled taxpayer to hold up the issuance of these funds.
The city states it is acting within the code, which allows the issuer of bonds to request that the opposing party post a bond amount sufficient to cover damages or costs incurred to the city due to delays. This bond would make Fairly responsible for any debt added to the civic center proposal due to rising interest rates and delays and be set at the anticipated added cost to the civic center project from this suit.
In the suit, the city states Fairly’s intervention has already caused the project funding not to be made available on its anticipated timeframe and that a three-month delay will only raise the project's costs. The city is requesting a surety bond of $5.9 million.
In a statement to the Globe-News, Amarillo Mayor Ginger Nelson stated:
“In this volatile environment of rising construction costs and interest rates, any action that delays a building project creates a substantial risk of costs increasing. Friday, the City filed a Request for Relief following the Texas State law designed to protect the Amarillo taxpayers from these increasing costs. State law allows the City to ask for a surety bond in an amount sufficient to cover the increased cost to Amarillo taxpayers associated with delays caused by the civic center lawsuit. We are seeking to protect the taxpayers of Amarillo from project cost increases that have resulted from this lawsuit.”
The city contends in its motion this does not prevent Fairly from an opportunity to be heard in the civil suit, but it does exercise its right to a surety bond. If the judge grants the city’s request, Fairly has 10 days to post the bond or his suit is dismissed.
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According to documents filed by the city, a bond is required under this motion unless Fairly can prove the following to establish a right to a temporary injunction:
∙ A cause if action against the city of Amarillo
∙ A probable right to the relief sought
∙ A probable, imminent and repairable injury in the interim
If Fairly is unable to show that this motion is entitled to a temporary injunction, the city of Amarillo, in the documents, states the court must grant the motion and set a surety bond covered by Fairly so that no further costs from delay are borne by the city's taxpayers.
According to the paperwork filed by the city, the “legislative purpose in enacting the statute was to stop ‘the age-old practice' allowing one disgruntled taxpayer to stop the entire bond issue by simply filing suit.” Citing the Texas Supreme Court the city contends in its suit that "the mere existence of such a suit is likely to cause damages” and, as such, “it was not an unreasonable or arbitrary action for the legislature to provide that a contestant be required to post bond for the damages accruing solely because of the pendency of the suit, to be paid only if the contestant should be unsuccessful in the suit.”
If the suit proves unfounded, the city contends the basic right to prosecute a lawsuit does not isolate them from damages caused by the public agency.
According to its motion, the city contends:
“In short, the EDJA’s bond requirement is necessary to ensure that an issuer of public securities is not forced to sit idly by watching interest rates and construction costs rise while a taxpayer with an ax to grind holds up the issuance of valid securities.”
In response to the city of Amarillo's motion, Fairly stated to the Globe-News:
“The City’s motion claims to ‘protect taxpayers’ from additional interest costs associated with the delay of my suit. This is the same group of folks who are looking to encumber Amarilloans with $260,000,000 of debt and then spend another approximately $250,000,000+ in interest costs over 30 years. To believe this group of people, Amarillo’s City Council, are concerned about saving taxpayers money is simply not believable. This recent motion is simply a thinly-veiled attempt to end this process.
"We always knew this motion was a possibility with the city lawyers and mayor have been telegraphing this for time," Fairly stated. "If the Judge that day says that I have to put up a $6 million bond, the suit will be dropped. The city knows I will not put that amount of money at risk in this case, so if that happens, it will be over."
This article originally appeared on Amarillo Globe-News: City of Amarillo files motion in Civic Center Suit for delay costs
