What happened during day one of the Amarillo Civic Center Trial? Here's a recap

Legal teams for the city of Amarillo and local businessman Alex Fairly argued their cases before Judge William Sowder of Potter County in the 320th District Court on Tuesday to determine if the city had acted with proper authority in passing Ordinance 7985, authorizing $260 million in debt for its civic center revitalization project.

Opening statements issued

In the morning’s opening arguments, legal representatives from the city, Fairly and the Texas Attorney General’s (AG) Office made opening arguments on the building blocks of their respective cases or stances.

Paul Trahan, representing the city’s legal team, started with a lengthy PowerPoint presentation that emphasized that the city had followed the rule of the law in its determination to use tax anticipation notes under Texas Government Code 1431 for its civic center project, citing that under the code this is a public work and therefore eligible.

“It is our burden to show the city council approved the tax notes,” Trahan said.

Fairly legal representative T. Lynn Walden argued against the idea that the civic center project was a public work and said that the city had violated the Texas Meeting’s Act as well with improper listing of the city council agenda that implied revenue was part of the civic center plan. He also alleged that city council was using this to circumvent the will of Amarillo voters who voted down a bond issue in 2020 that was for this very same purpose.

“This case is about the City of Amarillo using the wrong tool for the wrong purpose in the wrong way secretly to trample upon the rights of the people of Amarillo, ultimately resulting in forcing a tax increase on them without their consent,” Walden said.

Representing the Texas AG, Alyssa Bixby-Lawson, who had little to say at previous trials and meetings, stressed to the judge that the state had questions with the city’s usage of the Texas Code and that no matter the decision of the court, the state could still not approve the city of Amarillo’s request to use tax notes under Texas Code. She also raised questions of proper procedure.

The city opened their case by calling members of the Amarillo City Council to the stand as witnesses.

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Witness testimony from council members

Eddy Sauer was the first councilmember to testify. Much of his testimony had to do with when he received a draft of Ordinance 7985 and whether there had been meetings prior to the city council meeting involving three or more councilmembers. Sauer stated that he had received a copy of the ordinance the day of the meeting.

Also brought up in the testimony on cross examination was the civic center plan’s seven-year tax note repayment schedule, whether a 30-year plan to refinance had been discussed, and if there were any revenue elements discussed. Sauer pushed back on Walden’s assertion that no revenue had been discussed, citing that hotel HOT tax and revenue from the city’s fleet vehicles were mentioned as revenue streams to go toward paying down debt on the civic center project.

Councilmember Howard Smith was the next witness called by the city’s legal team. When asked when he received his copy of Ordinance 7985, he said he had received an emailed copy at 8 p.m. the night prior to the city council meeting. Smith was a member of the civic center subcommittee along with Mayor Ginger Nelson. Stating that he was aware of the procedures of the Texas Open Meetings Act, Smith denied that there was any decision made prior to city council as a quorum with predetermined votes for the ordinance.

When questioned why he included revenue with tax notes in his motion to approve the ordinance, Smith stated that he was just reading verbatim from the agenda, which had listed tax and revenue notes. Fairly’s team argued that it was improper, since no revenue was included in the final plan. The city countered that this is something that could be addressed in future councils, but it was a justified measure to just have tax notes.

Councilmember Cole Stanley, a later arrival as a witness, asserted that he did not have a draft of Ordinance 7985 during the May 24 council meeting. During the May 24 meeting, there was no mention of not having the ordinance in question to look over, but Stanley did ask that the council hold off on voting for the ordinance, stating that there was no major impact financially to taking more time on the matter. Stressing that he had not had enough time to study the proposal during the city council meeting, Stanley was the one dissenting vote on the measure.

Raising objections during that meeting, Stanley had stated that the civic center was not a proper usage of the Texas Code, since it was not a desperate city need such as a fire station.

The city’s legal team pressed Stanley on whether he had met with Fairly prior to the council vote or whether he had met with his legal team after litigation had begun. Stanley said that he had had only a general conversation with Fairly in relation to the civic center, but it was brief and not specific to the ordinance. Stanley testified that he was a member of the 12-person referring committee that had submitted a petition request to the city challenging the city council's decision to use tax notes for its civic center project.

City staff called to the stand

After the three city council members had testified, the city’s legal team then started calling city staff as witnesses.

City Secretary Stephanie Coggins in her testimony spoke to the city’s procedure for posting agendas and said that it had been posted online the Friday prior to the May 24 council meeting, and that all council members were in receipt of that by that time frame.

The major contention of Fairly’s legal team was the wording of the agenda, emphasizing that the agenda item was purposely vague and did not give the public a proper idea of what was being brought before council. Also, the verbiage that stated revenue and tax notes was a point of discussion, since the ordinance did not include that proponent. Coggins stated that she had worded it based on information received from a memo from Laura Storrs but was confident that all procedures had been followed in respect to the Texas Open Meetings Act.

After questioning from Fairly’s team, Coggins was asked about the rejected petition by Bixby-Lawson and why it was not presented to city council. Coggins restated that the petition did not meet the standards as outlined by the city charter and did not move forward. By her questioning, Bixby-Lawson seemed under the impression that the petition was still in play, but Coggins stated that the entire process must be restarted if a petition is to be sent to city council for action.

Next to the stand was assistant city manager Andrew Freeman, who was questioned about the inclusion of the civic center within a Tax Increment Reinvestment Zone (TIRZ). Fairly’s team questioned Freeman about the addition of that area within the TIRZ zone No. 1, which had been amended during the May 10 city council meeting. The civic center being in this zone is key to the case, since it allows the city to place this debt in the interest and sinking portion of the city tax rate.

Laura Storrs had the longest testimony of the first day, with a detailed discussion of when tax rates must be set by each year. Fairly’s team has argued that once Ordinance 7985 passed that a tax rate should have been set, but Storrs testified that there is no way that Amarillo could do that, since tax rates are set each year as the city approves its budget.

Questioned about the seven-year tax notes and its major effect on tax rates, Storrs stipulated that even with a seven-year tax note, the city would be well below the legally allowable property tax rate. By Amarillo city charter, the maximum property tax rate can be no more than $1.30 per $100; even if paid over seven years, the property tax rate would be no more than 82 cents per $100, according to Storrs.

When asked about the agenda memo, Storrs said that while it did include the term revenue with tax notes, there was no intention to be misleading in her wording. Storrs was also asked about an email chain between her and sub-committee members Smith and Nelson, which she described as informational in nature with no quorum established on a final decision.

Called as an expert witness from the city was Jerry Danforth, facilities manager for Amarillo. Danforth spoke about the city's need to move quickly on the project due to rising construction costs that would also be affected by increased interest rates handed down by the Federal Reserve.

Danforth expects construction costs to rise by about 6% in the coming months, based on the previous rise in material costs such as steel, which is the biggest cost associated with the civic center project. This rise in costs would increase costs to complete the project by about $15 million.

The last city official called to be a witness on day one was Jared Miller, Amarillo City Manager. Miller testified that he was heavily involved with the creation of Ordinance 7985 with his advisory capacity to the citizen group that recommended moving forward on issuing tax notes rather than another bond election much later down the line.

Once the citizen's group proposal was agreed to, Miller said that discussions were had with the Mayor about putting the ordinance on the agenda. Miller testified that he had individual discussions with city council members the week preceding the city council meeting to educate them on the proposal and options, but at no point did they discuss how individual members would vote.

On the schedule for day two

The city has three more witnesses scheduled for Wednesday morning. Scheduled to appear for the city is Mayor Pro-Tem Freda Powell, Amarillo Mayor Ginger Nelson and Steven Adams, financial advisor with Public Finance. Fairly's team will call John Diamond, director for the center of public finance at Rice University, as an expert witness.

Closing arguments should be completed by end of the day, with Judge Sowder not expected to give a final judgment until reviewing all evidence.

This article originally appeared on Amarillo Globe-News: Day one recap of Amarillo Civic Center trial. What you need to know