DALLAS — Expecting a green light for its long-delayed, $49.3 million bond sale this week, the Waller Independent School District instead on Wednesday got another stop sign from the Texas attorney general’s office due to pending lawsuits.
“We’re not moving forward until the cloud of litigation is removed,” said Tom Kelley, spokesman for Attorney General Greg Abbott.
The bond issue, approved by voters in May 2007, has been delayed since June by a lawsuit filed by attorney Ty Clevenger on behalf of Waller County Justice of the Peace DeWayne Charleston, who claimed the district violated the state’s open meetings laws and discriminated against African Americans in setting the date for the election. In a separate federal lawsuit, Charleston alleges discrimination against minorities in the proposed use of the bond proceeds.
The Texas bond community is closely watching the Waller case because it could determine how lawsuits regarded as nuisance cases could gum up future sales. Another Clevenger lawsuit in the Houston Independent School District is preventing issuance from $800 million of debt approved last November.
Kelley said the Houston ISD is in the same position as Waller ISD regarding the attorney general’s approval.
In addition to lawsuits claiming racial discrimination in the two districts, Clevenger is challenging the constitutionality of a Texas law known as the Expedited Declaratory Judgment Act passed in 1999 to streamline litigation involving securities such as municipal bonds. The law allows debt issuers to get court validation of bonds along with an injunction against future lawsuits. The law also allows courts to consolidate related cases.
In the Houston ISD case, the district went to Austin to seek court validation of its bonds, supposedly pre-empting any litigation before it was filed. However, Clevenger said the district failed to give adequate notice that it was contemplating the move. He is challenging the constitutionality of a law that enjoins lawsuits.
Clevenger’s suit claiming the Waller district violated the open meetings law was dismissed by the trial court on Sept. 24. In a bond validation suit by the district, the court on Oct. 2 upheld the district’s right to issue the bonds.
On Dec. 21, Texas’ First Court of Appeals ruled against Charleston, dismissing the state suit. The appeals court required Charleston to post a $715,000 bond within 11 days to appeal to the Texas Supreme Court. Charleston did not post the bond but appealed both rulings — the dismissal of the suit and the appeal bond requirement. Under state law, appeal bonds can be required to cover additional costs caused by delays in issuance of securities.
Patrick Mizell, attorney from Vinson & Elkins who represents both the Waller and Houston districts, sought the state attorney general’s ruling that the federal case against Waller ISD and the state court appeal should not prevent the issuance of the bonds.
