Lawsuit over bonds that would pay for Project Connect is taking a longer route

Although lawyers for the city of Austin and the Austin Transit Partnership were looking for a way to validate bonds needed to build Project Connect, the city’s proposed rail system, they have run into opposition from the Texas attorney general’s office as well as individual citizens opposing ATP’s plans.

In addition to pushback from Attorney General Ken Paxton, plans to build Project Connect are opposed by a number of citizens, including former City Council Member Ora Houston, former state Sen. Gonzalo Barrientos and Mark Nemir, the owner of Dirty Martin’s hamburger joint on Guadalupe Street. They hired attorney Bill Aleshire, well-known for his dogged pursuit of various governmental entities.

“We just filed (an) additional claim to block the issuance of the Bonds since ATP plans to use them for reimbursement of prior expenditures they made for planning and design for Light Rail,” Aleshire wrote to the Austin Monitor. Such a plan, he said, would violate Texas law and might cause the bonds “to lose their tax-exempt status.”

Casey Burack, ATP’s executive vice president of business and legal affairs, said in a statement to the Monitor, “State law allows Austin Transit Partnership and the City of Austin to use bond validation proceedings to get an expedited ruling from an impartial court. The OAG’s latest filing to delay the trial and attempt to force a premature ruling is only meant to delay bond validation proceedings with a lengthy appeals process – at the expense of Austin taxpayers.

“ATP filed the bond validation petition in good faith to achieve clarity for Austin voters with an expedited ruling from an impartial judge. We will continue to advance Austin Light Rail and look forward to our day in court.”

The question of the validity of the bonds is currently set for trial on May 28, but the attorney general’s office has filed a motion seeking a continuance. County Court at Law No. 2 Judge Eric Shepperd will hear arguments on that motion on Tuesday.

In opposing the partnership’s bond issuance, Assistant Attorney General Alyssa Bixby-Lawson has filed what’s called a “plea to the jurisdiction” – a motion seeking dismissal of the suit on the grounds that the court lacks subject matter jurisdiction over the case. Bixby-Lawson filed the state’s motion on March 15, but Shepperd has not yet issued a ruling. If the judge were to rule that the court lacked the authority to hear the case as the attorney general contends, then ATP and the city could immediately ask the Third Court of Appeals to consider the matter. Likewise, if the judge ruled against the attorney general’s position, then the state would appeal immediately.

In a letter to the judge sent this week, Aleshire – who represents the citizen plaintiffs – told the judge if he were to issue his ruling on the jurisdiction question, there would likely be no need for next week’s hearing on the motion for continuance.

In an amended petition, Aleshire points out that ATP had changed its plan for selling bonds. As they wrote in the new filing with the court, ATP and the city are now “only seeking declaratory relief with respect to ATP’s authority to issue the Initial Bonds, not any future obligations.”

As Aleshire points out, originally ATP and the city sought court approval of their so-called “financing program,” future bonds and other obligations issued pursuant to the financing program. This is a considerable change that required ATP and the city to republish notice to the public on their proposal. Under Texas law, a court-ordered notice is required to give any interested parties sufficient notice.

The attorney general’s office responded to ATP’s new petition by asking for a continuance on the May 28 hearing. According to the attorney general’s understanding of the law, it would be illegal for the court to proceed until the first Monday after the 20th day after the date of the order giving the public notice about the parties’ plans for their money. That means a June hearing is more likely.

Photo made available through a Creative Commons license.

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