The Robstown City Council was presented with a lawsuit challenging its plan to approve Certificates of Obligation to fund the construction of a new city hall Monday, just moments before the council voted to approve the funding.
As Mayor Rodrigo Ramon called for a vote on whether the council should issue $5.65 million in certificates of obligation to construct the new city hall, local attorney Juan Perales interrupted the mayor and announced he had filed a lawsuit against the action.
The suit was filed by Perales Monday on behalf of his clients, Noe De Los Santos, Joe Avalos, Rudy Rivera and Ruben Vaiz against the City of Robstown, the Robstown Improvement Development Corporation, Mayor Rodrigo Ramon and RIDC President Armando Gonzalez. Gonzalez also serves as city attorney for the City of Robstown.
The suit requests a declaratory judgement from the court preventing the council from issuing Certificates of Obligation on this issue and any future issue.
After consulting briefly in open session with the city's bond counsel, San Antonio attorney Thomas Spurgeon, the council voted 6-0 to approve a motion to issue the Certificates of Obligation. Mayor Pro-Tem Elias Vasquez was not present at Monday's meeting.
Following the meeting, Perales said despite the council's vote, the city will not be able to move forward with the city hall project while the lawsuit is pending.
"As a practical matter, it kind of stops everything, because the attorney general won't approve (the Certificates of Obligation), and they won't be able to sell them until the litigation is ended," Perales said. "We're hoping we can compel them to have a bond election."
Governing bodies typically incur debt by one of two methods. To issue bonds, governing bodies must first hold a bond election, in which voters may decide whether to approve the issuance of the debt.
Certificates of Obligation issued by governing entities must be approved by the Texas Attorney General's Office before they may be issued, but do not require voter approval.
To stop a governing body from issuing Certificates of Obligation, a petition for signatures may be circulated to require the governing body to hold a bond election. Perales said Monday a petition had been briefly circulated in town seeking more than 300 signatures, but the required number could not be obtained before Monday's meeting.
When asked about the suit, Spurgeon said he did not expect it to significantly delay the city hall project.
"It'll slow the process somewhat, but there are some provisions under the law that provide for expedited proceedings," Spurgeon said. "We ought to be able to get this part resolved and not delay the city's project."
Spurgeon also said he did not believe the lawsuit had any merit.
"State law is very, very clear. The City of Robstown has the legal authority to issue the certificates without first having a vote," Spurgeon said. "The CO statute has been in existence for nearly 40 years. It was adopted in 1971, and it has literally been used thousands of times in Texas by cities and counties."
The city has been planning the new construction of city hall for more than six months, after learning that it was approved for a loan for the construction by the United States Department of Agriculture Rural Development.
Annual payments for the loan will be split between the City of Robstown, Robstown Utilities Systems and the Robstown Improvement Development Corp., leaving each entity responsible for about $97,000 annually toward the loan's repayment, city officials have said. The loan's repayment period will stretch over the next 40 years.
In other business Monday, the council also voted to approve the new city budget and tax rate.
The total tax rate approved by the city is $.98 per $100 valuation. That figure is divided between $.71 for the general fund and $.27 for the interest and sinking fund. Although the tax rate is two cents lower than last year's rate, it will bring in more tax revenue than last year's rate because property values have increased in the city. A tax rate of $.92 per $100 valuation would have brought in the same amount of revenue as last year, according to information provided by the city.
The council also unanimously approved an $8,425,082 budget for the coming fiscal year Monday. City Secretary Paula Wakefield told the council the budget is balanced, with revenue and expenditures set at $8.4 million.
In budget discussions last month, revenue was anticipated to be $8.3 million, with expenditures initially set at $8.9 million.
Wakefield said Monday administration made several cuts in the budget to bring it into line, although she declined to identify specific areas that had been reduced.