Potter County District Courts Building/Photo by Noah Dawson
The City of Amarillo has been handed another legal defeat after the Seventh Court of Appeals ruled against their appeal in the civic center financing lawsuit brought by businessman Alex Fairly. In his lawsuit, Fairly alleged the city had passed tax anticipation notes to circumvent the will of voters when they rejected a 2020 bond proposal to renovate the Amarillo Civic Center Complex.
Justice Lawrence M. Doss of the Seventh Court of Appeals, who wrote the opinion, stated that, “if executed successfully, [the city’s] plan would presumably allow the City to obtain what voters had already rejected: a civic center construction project funded by long-term bond financing.”
Following a section providing background information about the lawsuit, the opinion considered four areas of analysis it used to reach its conclusions.
Jurisdiction
First, the opinion looked at the city’s claim that “the trial court lacked jurisdiction to invalidate Ordinance 7985 and the City’s Notes.” In its analysis, the court found that the city never “expressly sought to dispose of Fairly’s TOMA claims” on jurisdictional grounds. Further, the opinion noted that “the City did not raise that issue in the trial court.” For these reasons, the appeals court found that the trial court did have jurisdiction over the case.
City’s Open Meetings Act Violations
Second, the opinion looked at the validity of the tax notes and the ordinance which authorized the notes. The section focused specifically on violations of the Texas Open Meetings Act, with special emphasis given to the 1985 Texas Supreme Court Case Cox Enterprises v. Board of Trustees.
In the 1985 case, the state supreme court found that the Austin Independent School District had used vague language in agenda notices for items of special public interest. For instance, the school district had simply listed “personnel” to describe an executive session meeting to discuss hiring a new superintendent. Given the special public interest, the court ruled that “less than full disclosure is not substantial compliance” with the Texas Open Meetings Act.
“Consistent with Cox’s teaching, we believe that the City was required to provide detailed notice of its intentions to issue notes for a project including the civic center,” wrote Justice Doss. The opinion went on to describe three problems with the city’s notice of the item.
First, the opinion noted that, unless a reader made their way through the 197-page document of attachments affixed to the six-page agenda, they would not have any way to know that the tax notes in question were related to reviving the civic center project. Secondly, the opinion noted that the city’s “failure to disclose an intent to finance more than a quarter-billion-dollars of public funds prevented the public from determining the consequences on its own.” The opinion further stated that the city’s arguments that simply stating they would issue debt in some amount “is contrary to the purpose of” the Texas Open Meetings Act.
Third, the opinion pointed out that the language of the agenda item in question was “patently incorrect” as it described the item as authorizing “combination tax and revenue notes.” In reality, the ordinance authorized only tax notes, with none of the proposed funding coming from revenues.
In a hearing ahead of the trial, City of Amarillo CFO Laura Storrs claimed the error was a typo. However, during the trial, then-councilman Eddy Sauer argued the wording was technically correct. “The combination was 100% tax notes and 0% revenue notes,” said Sauer.
However, the court was unconvinced. In the opinion, Justice Doss wrote that “the City’s notice cannot be ignored as a mere ‘typo,’ as they mislead even the most informed citizen about the extent to which Ordinance 7985 intended to commit tax dollars.”
Finally, the opinion looked to one of the defenses offered by the city: the fact that Don Tipps (who was later elected to City Council Place 2) attend the meeting because he had knowledge of the city’s plan to use the item to revive the civic center project. The court found two problems with this argument. First, testimony showed that Tipps attended the meeting after being informed of the city’s plans by then-councilman Cole Stanley. “Only then did the citizen [Don Tipps] obtain and review a copy of the city’s notice.” Secondly, the opinion also notes that “the City’s cured-by-attendance theory also overlooks the fact that City officials publicly presented a 30-year term for the notes’ repayment, instead of the actual seven-year term.”
In light of the three errors with the city’s notice, along with the problems with the city’s defense, Doss wrote that the court found “no error by the trial court in declaring Ordinance 7985 and the anticipation notes void for want of sufficient notice.”
Attorney’s Fees
In addition to arguing that the trial court did not have jurisdiction and that they complied with the Texas Open Meetings Act, the city also argued that it should not have to pay attorney’s fees.
This section of the appeal traces its roots to the early procedural history of the case. Shortly after Fairly filed his lawsuit under Chapter 37 of the Texas Civil Practice and Remedies Code, the city filed a suit seeking for the court to declare the notes valid under Chapter 1205 of the Texas Government Code. The city then requested both suits be combined. With no objection from Fairly, the suits were combined.
The city’s argument that Fairly should not be awarded attorney’s fees stems from the fact that “Chapter 1205 makes no provision for the recovery of fees.” Further, Chapter 1205 notes that, “should a conflict or inconsistency exist between Chapter 1205 and another law, Chapter 1205 controls.” However, the court found that, while Chapter 1205 does not provide for recovery of attorney’s fees, which is allowed under Fairly’s Chapter 37 claim, the fact that there is no provision under 1205 does not create a conflict. “We decline the City’s request to manufacture a conflict between the statutes,” wrote Justice Doss.
Fairly’s Appeal
Finally, the opinion turned to the issue of Fairly’s cross-appeal of the opinion. While Fairly won at the trial level, after the city filed its notice of appeal, Fairly also filed his own notice of appeal, arguing that the trial court did not go far enough in listing the various laws broken by the city. However, the appeals court declined to consider this argument. Justice Doss’s reasoning was as follows:
“In this opinion, we have already affirmed the trial court’s judgment voiding Ordinance 7985 and anticipation notes. Fairly’s complaint that the trial court failed to make this requested declaration is of no moment because it would not afford Fairly greater relief than what he has already asked for.”
What Comes Next
While the City of Amarillo didn’t get what it hoped out of the appeal, they do have the option of appealing to the Texas Supreme Court. However, earlier this year, a full Fairly-backed slate of candidates was elected to Amarillo City Council. Included on this council are Mayor Cole Stanley, who was the only no vote on the tax note issuance, Councilman Don Tipps, who testified against the city during the trial, and Councilman Tom Scherlen, who was part of the committee that campaigned against the original 2020 bond issuance. Given this shift in the political leadership at City Hall, this opinion, for now, may be the end of this legal saga.