Graphic by Noah Dawson for The Amarillo Pioneer
Welcome to The Amarillo Pioneer live blog for the second day of the trial in the lawsuit between local businessman Alex Fairly and The City of Amarillo over the city’s use of anticipation tax notes to fund civic center renovations.
To read more about the background of the trial and a summary of what has happened leading up to the trial, read our recap here. To read our live blog of the events in yesterday’s trial, click here. This page will update regularly, so be sure to refresh often.
9:04 am
Court is in session
9:05 am
Fairly's legal team has called their first witness, Dr. John W. Diamond, an expert on public finance from Rice University.
9:13 am
The anticipation notes “would result in a massive tax increase,” states Dr. Diamond.
9:17 am
“It's approximately going to double the tax rate, really, at a minimum,” says Dr. Diamond.
9:24 am
Dr. Diamond’s testimony seems to be showing that Danforth’s testimony yesterday exaggerated the estimated cost increase from delaying the project.
9:42 am
The city has offered another of several objections to Dr. Diamond’s testimony, claiming he, as an economist, is not qualified to speak on cost increases, as he is not a construction expert. Judge Sowder overruled the objection.
9:44 am
Dr. Diamond has been passed to the city’s legal team.
9:45 am
The city’s brief line of questioning focused on casting doubt on Dr. Diamond’s expertise relative to Danforth’s given testimony, with a focus again on the fact that Dr. Diamond is an economist, not a construction expert. The city asked if he is “familiar with the construction industry in the Texas Panhandle.” He noted that he is actually currently working on a paper examining the construction trends in Houston and comparing it with other regions in Texas, including the Texas Panhandle.
Dr. Diamond has concluded his testimony. The city has called Steven Adams, a financial advisor from Specialized Public Finance, as an expert witness. The city has contracted with SPF to advise on debt issuances.
10:08 am
Adams is stating that he does not feel it is “silly” to assume that interest rates won’t move similar in the period over a potential delay as it has moved recently. He states he isn’t predicting it will happen, but that it could. The city has used this to argue a potential magnitude for the cost of delaying the project.
10:13 am
Witness passed to Fairly’s team. Fairly’s team is bringing up in their questioning that Adams has a financial interest of $200,000 in the closing of the transaction.
10:23 am
Adams concludes his testimony. The court is taking a 15 minute break. Councilwoman and Mayor Pro Tem Freda Powell is set to be the next witness.
10:42 am
The trial has resumed, Councilwoman and Mayor Pro Tem Freda Powell has been called as a witness by the city.
10:53 am
Freda Powell notes that she did meet with Jared Miller or Laura Storrs prior to the May 24th meeting, despite claiming to not have had any such meeting during her deposition. She claimed in her deposition that she had checked her calendar, but she did check her calendar again afterwards to find that she had met with them. This is apparently the first time Fairly’s legal team has been made aware of the meeting, as the deposition was not updated once the error was found by Powell.
Freda Powell has also noted in her testimony that she understands the concept of a “rolling quorum.”
10:54 am
Powell concludes her testimony. The city has called Mayor Ginger Nelson as a witness.
10:59 am
Nelson cites “efficiency” as the reason for members of the council aside from herself and Councilman Howard Smith not receiving a draft of the ordinance ahead of voting on the ordinance.
11:06 am
Nelson cites “flexibility” for the agenda not including the $260 million figure (the total amount of debt approved under the ordinance in question) on the agenda.
11:13 am
Nelson is now claiming that a major reason for the discrepancy between Prop A failing and approving debt for a civic center project anyways is that there was not a vaccine for Covid-19 available when Prop A failed.
11:15 am
The witness has been passed to Fairly’s team. Fairly’s team notes that the door has been left open to discussing Prop A by the city’s attorneys.
11:16 am
When asked who the city relied on to determine they needed to move quickly instead of placing the debt issuance on a ballot, Nelson states the city relied on the Garfield Report. When asked where the Garfield Report got its economic data from, Nelson stated she does not know.
11:20 am
Nelson states that she knows that interest rates will be higher in November of 2023 “based on the economy.”
11:33 am
Nelson states that she does not know if the Garfield Report has been made publicly available. The witness has been passed to the AG's representative.
11:35 am
Nelson has stated that there have been “very preliminary” discussions about attempting to attract an anchor tenant professional sports team to the Civic Center after the renovations.
11:36 am
Nelson has concluded her testimony.
11:37 am
Fairly’s team has one more witness they intend to briefly call, though they will not be available until 1:00 pm. The city has no more witnesses.
11:39 am
The court is recessing for lunch until 1:15 pm. One piece of information we learned: It appears Judge Sowder is planning on taking his notes and copies of the evidence presented home with him “back to Lubbock.” This appears to indicate we will not be getting a ruling today.
11:55 am
The witness Fairly’s team intends to call after the break is insurance agent Don Tipps, per our sources.
1:21 pm
Court has resumed. Fairly’s team has made a motion for directed verdict. Sowder denied the motion.
1:23 pm
Fairly’s team has called Don Tipps as a witness. Tipps is an insurance agent.
1:27 pm
Tipps has testified he spoke at the council meeting when the notes were passed. He notes he did not know before the meeting the city would be voting to approve $260 of debt to be paid through tax notes.
1:30 pm
The witness has been passed to the city. Tipps notes in answering the city’s questioning he has filed a treasurer appointment to run for city council.
1:34 pm
Tipps has concluded his testimony. All parties have rested, closing arguments are now beginning. Judge Sowder specifically wants to hear about the timing of the TIRZ amendment and “if a referendum applies to the ordinance in question.” The city is beginning.
1:41 pm
“Mr. Fairly hired very competent counsel and they’ve basically thrown everything on the wall you could possibly imagine in our view, and we believe the briefing that we’ve provided and the evidence we’ve put on here through the city’s witnesses proves that none of it sticks,” says the city.
1:47 pm
The city argues in their closing that the difference between the tax notes in question and other tax notes passed by the council this year is simply that this one is “political.” The city’s attorneys state that Nelson’s testimony proves the city is not intending on using the renovations to attract a sports team.
1:51 pm
The city has claimed that Mr. Diamond, Fairly’s team's expert witness on public finance, “demonstrated no expertise in public finance.” They are also arguing that it would not be constitutional for a petition to force the city to hold a referendum to overturn the tax notes. The city states that allowing a referendum would “turn public finance on its head.”
1:56 pm
The city is arguing that Fairly has not met the burden of showing cause.
2:00 pm
The city is now moving on to speaking about the Texas Open Meetings Act. They state that the Texas Supreme Court essentially states “it doesn’t take much” when putting something on the agenda for it to be sufficient.
2:02 pm
They also argue that no evidence that a rolling quorum occurred was presented.
2:03 pm
The city is now appealing to sympathy for members of the council, calling it “a thankless job.”
2:07 pm
The city is now speaking on the argument that, as passed, the notes count as part of the maintenance and operations rate, not the debt side of the rate. The city disputes this, stating that it is in a TIRZ. They further state that they feel the modification of the TIRZ plan to include Civic Center modifications was done correctly.
2:19 pm
The city is again claiming Dr. Diamond, the expert on public finance brought in by Fairly’s team, has no experience with public finance.
2:20 pm
The city has yet again mentioned the “diverse” citizens committee, without mentioning the members who stopped showing up to meetings in protest of the direction the committee was taking.
2:21 pm
The city has rested, Fairly’s team is beginning their closing arguments.
2:22 pm
Fairly’s team is alleging that the city did not correctly represent their position on the TIRZ issue.
2:24 pm
Fairly’s team, citing the same case as the city, argues the interpretation is that “in a matter of special of special interest to the public, there are heightened notice requirements.” They further note that Storrs had testified that “any tax matter would be a matter of special interest.”
2:34 pm
Fairly’s team argues that the exemption of debt from referendum petitions is absurd, framing their argument as referendums apply “to everything but your pocket book.”
2:46 pm
Fairly’s team is now speaking to the allegations of a rolling quorum. They mention that, under questioning, witnesses admitted that the members spoken to other than Nelson and Smith were made aware in meetings with city staff that Nelson and Smith seemed to support the notes.
2:50 pm
Fairly’s team concludes their closing. The AG’s representative is now giving the AG’s closing.
2:53 pm
The AG’s representative notes disagreements with the city over the issuance of the notes. She notes that Ginger Nelson admitted the city is considering using the renovations to attract a sports team, claiming this contradicted the city’s position as stated during the trial.
2:55 pm
“It is the Attorney General understanding that if city has to get a new deal with Frost Bank, on different terms, that city council would have to adopt a new ordinance approving new tax notes on new terms. that means ordinance 7985 would become irrelevant,” says the AG’s representative.
2:56 pm
The AG appeals the court to “weigh the matter in favor of public transparency,” regarding the Open Meetings Act discussions. She notes the number of people watching the livestream as evidence of the item being of special interest.
2:58 pm
The AG’s representative rests her closing. The city and Fairly’s team are being allowed rebuttals.
2:59 pm
The city appears to be stating that the arguments relating to the issue amounting to bringing politics into the trial.
3:04 pm
The city is arguing that they still feel that Judge Sowder should rule that any petition for referendum would not apply to the ordinance in question.
3:08 pm
The city is arguing that preliminary discussions about attracting a sports team as an anchor tenant for the civic center does not constitute a planned change of use.
3:10 pm
“That’s crazy!” exclaims the city’s attorney regarding the position that a separate ordinance would be needed if a new deal on the tax notes had to be negotiated.
3:11 pm
The city has finished their rebuttal. Fairly’s team is arguing that the TIRZ issue is on the side of Fairly’s team. They also ask that the court not make a ruling regarding the referendum question, noting that that issue “because it’s not before this court and the legality and these notes.” Fairly’s team concludes their short rebuttal.
3:15 pm
Judge Sowder notes that this case has featured “some of the best lawyering I’ve ever been involved with.” He notes that the zealousness each side represented their clients with gives him faith in the judicial system. He is planning on watching the video of the council meeting and review the evidence and his notes before rendering a decision. He said he will release a decision “in less than 10 days.”
3:18 pm
The trial concludes, aside from a hearing on attorney’s fees scheduled to occur over zoom next Tuesday at 1:30 pm.