It took a while, but Aransas County commissioners, at their regular meeting Monday, Dec. 14, approved with a 4-1 vote the issuance of $13.4 million in Texas Limited Tax Notes to build a new two-story 46,000-sq.-ft. courthouse.
The court also approved several other items related to the new courthouse and the overall Downtown Anchor Project.
A number of residents spoke in opposition to building a new courthouse without first putting it before voters in the May 2021 Election. Those comments were made during the citizens to be heard portion of the agenda, as well as when individual items were discussed.
First closed session
Commissioners met in closed session at the start of the meeting to discuss potential litigation, and to receive attorney’s advice on legal matters that are not related to litigation, as well as other matters protected by the attorney/client privilege.
Citizens to be heard
Three residents spoke in opposition to the court moving forward with construction of a new courthouse without voter approval in May. Commissioner Wendy Laubach read letters from two (of the three) individuals opposing such action. Brad Brumback said the issuance of debt should be placed on the ballot because voters made it clear they opposed building the courthouse as planned, based on the results of the election in November.
“Put it on the ballot,” he said, adding that any additional project costs can be blamed on the county for lack of preparation.
In another letter, Kathy Kane predicted commissioners would vote to build a three-story courthouse at a higher cost, vote to hire lawyers to defend the court’s decisions regarding issuing debt, and vote to issue tax notes to fund construction.
She predicted the court would do this because they just want this to be over.
“I too am ready for this to be over,” said Kane. “ I am ready for my elected officials to hold workshops with public input on a building I am helping to fund and to vote on a less expensive option. I am ready for my elected officials to not waste my money on lawyers and potential legal proceedings because they know they are overstepping their authority by twisting the rules to suit their wants.”
of the courthouse
Commissioners, after meeting for about an hour in closed session, approved with a 4-1 vote, settled on a 46,000-sq.-ft. two-story courthouse, requiring the issuance of $13.4 million debt. Commissioner Charles Smith cast the dissenting vote.
Aransas County Judge C.H. “Burt” Mills, prior to going into closed session, noted the county has the responsibility of providing a courthouse, as well as the fiduciary responsibility to get the best deal.
“Experts have told us further delay will only cost taxpayers more,” said Mills. “This issue has been the subject of much debate. But, the responsibility lies with this court. It’s time for us to step up and meet our obligations.”
He also noted the county learned a lawsuit had been filed (by Jeff Hutt and Andrew Kane) against the county Friday, Dec. 11 (in an attempt to block or delay the action that was ultimately taken).
When commissioners returned to open session, Mills made the motion to chose the two-story courthouse.
Before the vote was taken, Pct. 3 Commissioner-elect Pat Rousseau said she was disappointed to see the courthouse items on the agenda. She noted it has been three years since Hurricane Harvey, and the court initially looked at a two-story courthouse, then a three-story courthouse (when it was discovered it could be built without raising the debt tax rate), and now, after meeting in closed session for one hour, they are back to the two-story courthouse. She insinuated the court made that decision because grants sought didn’t come through.
After the vote, RBC Capital Market’s Bob Henderson, the county’s financial advisor, talked briefly about the funding required, and the impact on the interest rate, due to the lawsuit, which was filed against the county.
He noted the debt tax rate could remain at 4.7¢ (lower than the previous year’s 5.21¢ debt tax rate) until such time tax notes (proposed at this point in the meeting) are refunded in 2022. At that time maturity date could be expended to 13 years, versus the seven years under which the initial tax notes would be issued.
Contract amendment with PGAL
Eleven agenda items later, commissioners unanimously approved contract amendment #1 for PGAL, Inc., (architect) to initiate design plans for the plaza portion/open space features for the Downtown Anchor Project. The amendment authorizes PGAL to use available Community Development Block Grant - Disaster Recovery (CDBG-DR) grant funds awarded to Aransas County. The amendment has a zero dollar impact and is only referenced for documentation and administrative purposes.
(Note: The Downtown Anchor Project includes the new courthouse, Rockport city hall, and plaza.)
The motion to approve the amendment included an option to place the courthouse on the south side of the property, as opposed to the north side, if that can be accomplished. Doing so would position the courthouse (where courtrooms are located) closer to the Aransas County Detentions Center.
Judge Mills noted the city owns the property on which the new city hall will be located, and the city is already moving forward with its portion of the Downtown Anchor Project.
Commissioner Bubba Casterline said the county, since it chose to go with the smaller two-story courthouse, could consider building a separate courtroom next to the detention center in the future. He made that suggestion with the understanding a two-story courthouse could soon be inadequate due to a rise in population, and increase in services provided at the courthouse.
Prior to casting her vote in favor of the amendment, Laubach asked, “We can do this without committing to the courthouse?”
The answer was affirmative, and the vote was taken.
Further down the agenda, the court approved with a 4-1 vote authorizing the Bickerstaff Heath Delgado Acosta law firm to defend Aransas County in potential litigation related to the County’s authority to issue financial instruments, and to authorize the firm to file any necessary action to protect the County’s authority to issue financial instruments.
Laubach cast the lone dissenting vote.
Issuance of tax notes
The last item on the agenda was the issuance of tax notes to fund construction of the courthouse. The meeting was recessed until 3 p.m. to allow Henderson and his associates to finalize pricing for the notes.
Prior to the recess, however, those in attendance (in person or remotely) were allowed to air their concerns.
“I think we should discuss other things other than pricing (before recessing),” said Laubach. “Those things that triggered the lawsuit.”
One woman said the county has an obligation to have a courthouse, then noted, “You have one. Why would you saddle taxpayers with this debt?
“This is tyranny when you go against voters without their representation.”
Laubach said, “I think we should discuss whether we do the tax notes, or go to another election in May.”
Andrew Kane said this should not be a decision made by the court, but rather by the voters.
“Why, after an election you called, are you going against the voters?” he asked. “You are telling citizens their vote doesn’t matter.”
He said the county, in an earlier resolution for the November election, noted it would go to the public (before issuing debt).
“I’m sure you can get an attorney to say something different,” said Kane.
“You have five months (until the May election) to get this right. Do a 25-year bond (and the public won’t lose trust in the court),” he said.
Kristie Rutledge said the real issue is if the court will circumvent the will of the people.
“You will declare 6,211 votes against Proposition A (funds for a new courthouse that failed in the November election) null and void,” she said. “Dec. 14, 2020 will be determined to be one the darkest days in Aransas County.
“Was the plan all along voters be damned?
“Do our elections have integrity?
“Please take this question to heart.
“We the people do not consent to this debt.
“You have a courthouse.
“Judge Mills and commissioners, you will be held accountable.”
Another woman said, “We didn’t vote it (Proposition A) down to be ignored.
“To make things worse, you hired lawyers to go against the will of the people.
“We should never incur debt without approval of the people.”
Rousseau said she is embarrassed and ashamed with the end run the court is attempting.
The meeting was then recessed until 3 p.m.
When the meeting was back in session, there were several delays because the pricing for the tax notes had not been finalized.
Henderson noted that funding for such issuance of debt is usually accomplished in 30 days, but that now has to be extended to up to 90 days due to the lawsuit filed the previous Friday.
“It looks like the impact will be less than I thought it would be this morning,” said Henderson.
He noted the delay in securing pricing for the tax notes was due to the nature of it being a “forward delivery” instrument, which requires senior underwriters to confirm they are all on board the issuance.
“They’ve been working on it all weekend,” he said.
A discussion followed about the cost of issuing tax notes, versus if Proposition A would have passed, compared to if the original plan to issue general obligation bonds would have been successful. Petitioners forced an election after a meeting in July when commissioners announced its intent to issue general obligation bonds for the construction of a three-story courthouse, after learning it could do so, and lower the debt tax rate, due to higher than expected property values.
Casterline asked Henderson, “You don’t anticipate having to raise the tax rate if we refinance (the tax notes)?”
Henderson said no.
“There are variables at play that we can use (to keep the tax rate at 4.71¢).”
Laubach asked why Henderson didn’t propose using tax notes initially.
He said because the county had the opportunity to finance other projects, stay within the 4.71¢ tax rate, and finance over 20 years.
“This county has a very modest amount of debt that pays off quickly,” said Henderson. “In August 2022 the county will have to the opportunity to refinance (the tax notes and extend the maturity date).”
He noted the courthouse is a “big deal” for a county.
“Borrowing money makes sense in that services (provided for future taxpayers) are paid for (in part) by future taxpayers,” said Henderson.
Rutledge chimed in again, saying the court needs to be faithful to the public trust.
“How many times has a court gone after tax notes after a failed election?” she asked.
She said Henderson will use this action as a precedent, basically saying the public has no input is such decisions.
“You should not violate public trust,” she said. “Take your time. Let’s get it right. Know what you’re getting us into.
“I’m asking you to consider postponing this decision.”
Smith shot back at Rutledge, saying, “You made the comment that the courthouse went up $10 million (after the meeting in July when commissioners issued its intent to sell general obligation bonds to fund construction of a three-story courthouse, versus the two-story version which was considered, prior to receiving the official property valuations, which made building the three-story courthouse a possibility while actually lowering the debt tax rate).
“It went up $3.8 million.”
Jeff Hutt said it appears the court is dealing with two issues - fiduciary responsibility and honoring the results of an election.
“If you don’t have the consent of the governed, then the decision is wrong,” he said.
He challenged commissioners to put the courthouse on the May ballot, therefore taking the fiduciary responsibility off the court, and putting it on the voters.
Laubach said she believes the court owes it to the taxpayers.
“I think we can get to work and go (to the polls) in May. Plus, we’re dealing with a lawsuit that never needed to happen.”
Henderson then received the phone call that provided the final numbers for the tax notes.
The par amount on the bonds is $13.23 million. A premium of $389,063.90 provides a total of $13,619,063.90.
The project cost (courthouse) is $13.4 million, with date of delivery expenses totaling $218,263.45.
The true interest cost is 2.700846%.
Mills made the motion to approve Order #O-26-2020, authorizing the Issuance of Aransas County, Texas Limited Tax Notes, Series 2021; Levying a Continuing Direct Annual Ad Valorem Tax on all Taxable Property within the County to pay the principal of and interest on said notes and to create a sinking fund for the redemption thereof and the assessment and collection of such taxes; authorizing the sale thereof: and enacting provisions incident and related to the issuance of said notes.
Commissioner Jack Chaney seconded the motion.
It was approved 4-1 with Mills, Chaney, Casterline, and Smith voting for the issuance, and Laubach opposing the action.