(The following is a press release from Aransas County Attorney Amada L. Oster’s office about court action Monday, Sept. 13 regarding the settlement offer heard by the Honorable Donna Rayes in the quo warranto cases against the City of Aransas Pass alleging deficiencies with that City’s annexation efforts in 2019.)

The Honorable Donna Rayes approved a Settlement Agreement and an Agreed Order between the State of Texas and the City of Aransas Pass on Monday, Sept. 13, 2021, in the case styled State of Texas ex rel. Association Against Annexation Abuse, A-2019-0368-CV-C, in the District Court of Aransas County, Texas, 343rd Judicial District. The Court’s approval marks the end of almost two years in court.

Prior to resuming trial on Sept. 13, 2021, Aransas County Attorney Amanda Oster offered to settle the case for a reduced amount of attorney fees and costs. The Aransas Pass City Council voted to accept the offer. The terms of the approved Settlement Agreement provide that the City of Aransas Pass and the State execute an Agreed Judgment to file with the Court. The Agreed Judgment sets forth additional terms and conditions. Those terms and conditions include that the City of Aransas Pass shall reimburse the State by paying $750,000.00 in attorney’s fees and $65,000.00 in costs. Further, the City of Aransas Pass agrees that its annexation ordinances, for Phases I, II, and III, were void upon inception and of no legal effect, i.e. they were never valid. The City of Aransas Pass also agreed that the May 2019 resolution announcing its intent to prepare a service plan and to possibly annex the 21,000 acres in the Extra-Territorial Jurisdiction (“ETJ”) was also void upon inception and of no legal effect.

In March of 2019, the City of Aransas Pass endeavored to annex land as quickly as possible as did many cities. Due to the fact that annexation law in Texas was changing, the possibility of involuntary annexation would no longer exist as of September of 2019.

The City of Aransas Pass gave its citizens reasons annexation was needed. One reason was to prevent Corpus Christi from annexing property. Another reason was to control industrial development. The State hasn’t taken any position on these explanations as the litigation was centered around the City’s failure to follow State law and not the reasons behind annexation.

The general rule in Texas is that cities have to adopt an annexation plan at least three years prior to annexing property. The 2019 law contained some exceptions, like annexing sparsely populated areas that contained fewer than 100 tracts with residential dwellings.

On March 30, 2019, the Aransas Pass City Council adopted a resolution indicating the City was considering annexing approximately 1,874.42 acres of land. This “Original Annexation Area” announced by the City of Aransas Pass contained more than 200 tracts with at least one residence (which is greater than the amount allowed if operating under an exception).

Two weeks later, on April 15, 2019, the City Council went into a closed session to discuss the annexation. After reconvening, the Mayor announced the area was going to be reduced significantly, by about 90%, to 185 acres. The City immediately began referring to this smaller area as “Phase I.” It contained approximately 49 tracts with residences. In that same City Council meeting, the City adopted a resolution for a “Phase II” annexation. This phase contained an additional 1,400 acres of property, including about 25 residential tracts. Soon after, on April 26, 2019, a resolution for Phase III, located in San Patricio County, was adopted.

The Phase III annexation area contained 600 acres with two more residential tracts.

The City of Aransas Pass also adopted a resolution on May 17, 2019, directing the Aransas Pass City Manager to establish a service plan for up to 21,000 acres in the City’s ETJ. This “Loophole Resolution” could potentially enable the City to involuntarily annex property in the future by arguing that the area was in the process of annexation prior to the effective date of the new law.

In 2019, the City of Aransas Pass annexed just over 2,000 acres, which included more than 75 tracts of land with at least one residence on the tract.

Prior to the effective date of House Bill 347, cities could involuntarily annex property as long as certain procedures in Chapter 43 of the Texas Local Government Code were followed.

The procedures had basic requirements like requiring cities to mail official notices, containing specific information, to all property owners who would be impacted by the annexation with such notices being sent at specific times. Further, notices had to be sent to school districts and special districts in the proposed annexation areas. In most cases, cities were also required to take an inventory of the services and facilities currently provided to citizens inside the city limits and compose a service plan that would lead to those services and facilities being provided to the properties that would be annexed.

In every annexation, cities were required to prepare service plans prior to annexation. Service plans must include information, including timing and funding sources, to explain how the city will provide full municipal services to newly annexed areas. Full municipal services include providing water and wastewater facilities, police protection, fire protection, emergency medical services, solid waste, operation and maintenance of parks, playgrounds and swimming pools, operation and maintenance of roads and streets, and the operation and maintenance of any other publicly owned facility, building, or service.

The required pre-annexation meetings held by the City of Aransas Pass were well attended, and many citizens expressed their unhappiness regarding the proposed annexations. In response to the City’s actions, various concerned citizens and property owners formed a group called the Association Against Annexation Abuse (the “AAAA”), led by President Melissa Esquivel, in 2019. After the City annexed property, the AAAA filed a lawsuit against the City of Aransas Pass in the Aransas County District Court.

The State’s case, with the AAAA being the party in relation, was then filed because Texas law provides that certain legal arguments, such as asserting that procedural defects result in a void ordinance, can only be made by the State. The Aransas County Attorney’s Office, under previous County Attorney Kristen Barnebey, originally filed this quo warranto (a type of suit that is brought by the State to protect itself and the public good) lawsuit challenging the 2019 annexations in the City of Aransas Pass. County Attorney Amanda Oster began working on the case when she took office Jan. 1, 2021.

The State’s case was based on a variety of claims that amounted to the City of Aransas Pass failing to follow Texas law with regard to annexations and it failed to follow the requirements of the Texas Open Meetings Act. Specifically, the State argued in the quo warranto case that the City’s ordinances were void or voidable due to:

• The City’s failure to provide notice to all public school districts located in the annexed areas.

• The City’s failure to provide notices to all public entities and political subdivisions located in and/or providing services in the annexed areas, and the City’s failure to provide adequate notice when notice was provided.

• The City’s failure to provide adequate notice to property owners and the City’s failure to provide notice to all property owners.

• The City’s failure to ensure that the narrowest point of any annexed area was greater than 1,000 feet.

• The City’s failure to ensure all of the annexed property was located in the City’s ETJ.

• The City’s failure to provide accurate legal descriptions for the annexation areas.

• The City’s failure to limit annexed area to property that was included in the notices sent to property owners and notices provided to the public.

• The City’s failure to prepare adequate service plans for each annexation area that illustrated what services would be provided, when they would be provided, how it would be paid for, and how much it would cost the City to provide the services.

• The City’s failure to prepare a revised service plan for the Phase I area.

• The City’s failure to prepare and adopt a three-year annexation plan.

• The City’s failure to prepare inventories of City services prior to creating service plans.

• The City’s failure to ensure it had legal authority to provide water and/or sewer facilities in all of the annexed areas.

When making its arguments, the State listed numerous specific actions that it contended were in violation of State law. It is impossible to adequately describe everything in the 73-page Amended Petition in this article, so just a few examples will follow.

The State asserted when the Aransas County Independent School District (ACISD) was provided written notice of annexation, those notices were not sent out until after the Phase I public hearings had been held. This meant the ACISD never had an opportunity to participate in the public hearings.

The State also brought up that when the City passed the resolution to indicate its intent to annex up to 21,000 acres in the City’s ETJ, it did not prepare an inventory of services, a service plan, or include the property in a three-year annexation plan that is generally required for annexation.

That maps involved in all phases of the annexation were at the center of many of the deficiencies, according to the State. For example, the maps used for the Phase II annexation did not include the same amount of land, or specific properties, that were ultimately included in the map attached to the Annexation Ordinance. The result was that some property owners were never notified that their property would be annexed.

After the State filed its case, the City of Aransas Pass argued that the filing of the quo warranto in Aransas County District Court was improper because it included claims for all phases when one of the phases was in San Patricio County. To avoid further delays, the State, through San Patricio District Attorney Samuel Smith, filed a second quo warranto in San Patricio County in 2020. In 2021, the parties agreed to a change of venue in the San Patricio County case, and the case was sent to Aransas County. Once it was there, the two quo warranto cases were consolidated into one case in 2021. The trial in Aug. 2021 covered both cases.

The parties went to trial on Aug. 16, 2021, for five days. At the end of the regularly scheduled trial, the Court set four more days aside in September to continue, and recessed the proceedings. In an effort to spare the parties from incurring additional costs and fees, Oster offered to settle the case. She agreed to accept a reduced amount of attorney’s fees and costs so long as the parties agree that all of the City’s annexation activities at issue were void upon inception and of no legal effect, i.e. they were never valid. The City of Aransas Pass City Council voted to accept the settlement offer and the Court approved it Sept. 13, 2021.

David Earl, an attorney from San Antonio, first became involved in this situation in 2019 when he was representing a corporate client that owns property in what became known as the Phase II area. Earl and his client worked diligently with the City of Aransas Pass to discuss options that would help the City accomplish its goals without annexation. During this time, Earl became familiar with members of the AAAA and was sympathetic to their plight. His representation of the corporate client wrapped up. Earl began representing the AAAA, which filed the first lawsuit. Earl contacted the Aransas County Attorney and the San Patricio District Attorney when it became clear that a second case, a quo warranto proceeding, would be necessary to assert that the City of Aransas Pass made certain procedural errors. He was sworn in as a Special Assistant to both offices and worked with them to file the second and third lawsuits on behalf of the State of Texas.

During all of his time representing the State of Texas, Earl worked without any promise of compensation. He understood that the only way he would be paid for his efforts was if the City of Aransas Pass agreed to settle the case or if the State prevailed and the Court awarded attorney’s fees and costs to the State.

In order to facilitate settlement in this case, Earl agreed to waive more than $550,000 in attorney’s fees. The Aransas County and San Patricio County elected officials and their staff members do not receive any portion of the settlement; the attorney’s fees awarded to the State will be deposited in the Aransas County General Fund. The Aransas County Attorney will be requesting that certain funds be paid to Earl for his work on this case.

As of the date of settlement, the State of Texas spent approximately $25,000 in out of pocket costs, in addition to the cost of the time devoted by attorneys working for the Aransas County Attorney and the San Patricio District Attorney.

In addition to paying the settlement funds to the State, the City of Aransas Pass is responsible for its costs and for the fees of the attorneys contracted to represent the City in this case.

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