Austin bond-related cases seek Texas high court rulings

Austin Convention Center

A battle over a mostly bond-financed convention center in Austin moved this week to the Texas Supreme Court, where justices just heard oral arguments in a case involving bonds for the city's light-rail project. 

Backers of a petition drive to halt demolition and the construction of a convention center filed an emergency petition Tuesday with the high court seeking a writ of mandamus compelling Austin's city clerk to validate that enough valid signatures were submitted to put a proposed ordinance on the May ballot. The request was previously denied by a Travis County District Court judge.

Austin City Clerk Erika Brady determined in November that the petition drive, which submitted more than 25,000 signatures, fell 494 signatures short of a requirement for 20,000 valid signatures of registered voters.  

The ballot measure pushed by Austin United PAC and others seeks to stop the demolition and reconstruction of the convention center for seven years — or until the project is approved by voters — and prioritize city funding for local live music, arts, cultural, and outdoor tourism. 

A spokesperson for the city said the district court judge's decision "affirms that the city clerk adhered to established legal procedures and properly disqualified only signatures that did not meet legal standards," and that the supreme court filing was being reviewed.

The Austin City Council in October approved the initial issuance of up to $650 million of revenue bonds for a $1.6 billion replacement facility.

About $1.2 billion of the project's cost will be financed with bonds backed by revenue from the city's hotel occupancy taxes and incremental state tax revenue generated within a project finance zone the city established in 2024. 

The city and its Austin Transit Partnership, a nonprofit corporation in charge of the development and financing of the Project Connect light-rail program, are awaiting a ruling from the state supreme court on a matter that delayed their efforts to obtain court validation for an initial $150 million of revenue bonds.

The Texas Attorney General's Office contends ATP, the bonds' issuer, lacks standing to petition for validation under the state's Expedited Declaratory Judgements Act, which does not recognize a municipal-created nonprofit corporation as an issuer. 

Because the standing issue was not resolved in Travis County District Court ahead of trial, the attorney general took action that stayed proceedings and eventually landed the matter before the state's high court, which heard arguments on Tuesday. 

"We look forward to the Texas Supreme Court's ruling on the attorney general's jurisdictional challenge," Casey Burack, ATP's executive vice president, business and legal affairs, said in a statement. "We are confident in our case and remain ready for our day in court."

The bonds would be paid off with a portion of Austin's operation and maintenance property taxes voters approved in November 2020 for a light rail project.