Project Connect lawsuit finally headed to court Monday

Although the matter has been postponed in the past, it seems likely that Monday will be the trial date for the Austin Transit Partnership and the city of Austin lawsuit to validate voter-approved bonds for Project Connect, combined with the Dirty Martin’s lawsuit to prevent issuance of those bonds. The other important player on this field is Attorney General Ken Paxton, whose office has opposed issuance of the bonds to fund the rail system, an atypical move for an official who routinely approves bonds for local jurisdictions.

The hearing is set for 10 a.m. in Travis County Judge Eric Shepperd’s courtroom.

As explained by a city spokesperson, each year City Council approves a transfer of voter-approved tax revenues to Austin Transit Partnership through its yearly budget process: “At its February 14, 2024 meeting, the City Council authorized amendments to the Interlocal Funding Agreement between the City and Austin Transit Partnership that memorialized this annual transfer and clarified that the revenue transfer is subject to annual appropriation.”

Hanging over the case is the question of whether the judge has jurisdiction to decide the validation issue. The attorney general and the plaintiffs who sued over the question of the authority of ATP and the city to use this avenue to validate the bonds argue that Shepperd does not have that authority. ATP and the city argue that he does. In opposing the partnership’s bond issuance, Assistant Attorney General Alyssa Bixby-Lawson filed a plea to the jurisdiction three months ago.

In the balance is a mass transit plan now estimated to cost $5 billion to $7 billion – as well as Austin’s reputation as a modern and growing city.

Casey Burack, executive vice president for business and legal affairs at ATP, issued a strong defense of her agency and the bond validation suit.

“Austin voters overwhelmingly approved Austin Light Rail and the funding mechanism to pay for construction. Austin Transit Partnership and the City of Austin have followed the law at every step in advancing this project,” she told the Austin Monitor. “We filed bond validation proceedings earlier this year to get an expedited ruling from an impartial judge, and we look forward to our day in court.”

Last month, Burack referred to the attorney general’s arguments about the judge’s jurisdiction as an attempt “to force a premature ruling … to delay bond validation proceedings with a lengthy appeals process – at the expense of Austin taxpayers.”

The attorney general may try to take up the jurisdiction question on appeal without a ruling from Shepperd, arguing that his failure to issue a ruling on the matter is the same as accepting jurisdiction. Bill Aleshire, an attorney representing taxpayers who sued to block the bond issuance, told The Bond Buyer in April that even if a judge says that ATP has standing, the city’s petition could be brought to “a screeching halt” – and that Paxton’s office can appeal such a ruling.

“That could easily take a year or more,” he said. “In the meantime, they can’t issue the bonds.”

Either way, it should be a lively hearing on Monday. And possibly for several days after that.

State Sen. Paul Bettencourt, R-Houston, and state Rep. Ellen Troxclair, R-Lakeway, have already tried to pass legislation requiring voters to go back to the polls to authorize rail expenditures. That legislation did not make it through the 2023 legislative session. However, if the project is held up by a lengthy appeals process, there is reason to believe that Project Connect’s opponents would try again.

Paxton’s opinion from 2023 offered a legal way for the Project Connect plan to move forward. As a result, the city and ATP believed they had the authority to issue bonds. However, opponents of the project and of taxation in general did not read it that way.

Besides the legal wrangling, at the heart of the plaintiffs’ complaints is the fact that the rail line, as now currently proposed, is significantly scaled back from what voters approved in 2020. As The Austin Independent newsletter points out, voters were promised a downtown transit tunnel. The tunnel was supposed to take the pain out of waiting for a train if you were driving a car or other vehicle downtown.

Slusher quotes the city’s brochure as saying, “The City expects operating rail service beneath the streets to increase the system’s travel time reliability and to be safer than operating at street level.” However, ATP discovered that the tunnel would result in cost overruns too costly to make it feasible.

Aleshire told the Monitor he expects the trial to go on for at least three days. Presuming it moves forward on Monday but pauses on Wednesday for the Juneteenth state and federal holiday, the trial could continue through next Thursday. The judge will then have whatever time he thinks is needed to reveal his decision.

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