Hays County, Texas, is considering issuing certificates of obligation (COs) as it appeals a recent court ruling that voided a successful Nov. 5 election for nearly $400 million of general obligation bonds to finance road projects.
The county commissioners court voted unanimously last week to appeal a June 23 Travis County District Court judge's determination that the county's notice for its Aug. 13, 2024, meeting, which included an item to order the bond election,
A group of Hays County property taxpayers sued the county, claiming the meeting notice violated the act because it failed to disclose the amount of bonds, use of proceeds, and a proposed property tax increase to pay off the debt.
At their meeting last week, county commissioners raised concerns that the ruling could set a troubling precedent.
"I think the implications put forth in this case, not just for us, but statewide and in the world of municipal and city, county bonds and elections, is important enough that no matter what, if we have to, we take it as far as the Supreme Court," Commissioner Walt Smith said.
Bill Aleshire, an attorney representing the plaintiffs, said a Texas district court decision is not binding precedent for other courts.
"I am delighted to see that Hays County will appeal so we do get a binding appellate court opinion," he said in an email on Wednesday. "There is no exception in the Texas Open Meetings Act that says you can violate it if you are calling a massive road bond election."
County commissioners also discussed using COs to finance road projects that would have been funded with proceeds from the $439.6 million GOs that were approved Nov. 5 with 55.7% of the vote.
While several hypotheticals have been discussed, a final decision regarding funding mechanisms, including the use of COs, will be up to commissioners, according to Hays County Commissioners Court Judge Ruben Becerra.
"In the meantime, the idea of issuing COs is being explored specifically for shovel-ready projects where timing is critical," he said in a statement on Wednesday. "The amount and scope of any potential COs would be shaped by project readiness and community need."
Hays County last sold unlimited tax road bonds in 2019, a $97 million bond issue that was rated AA by S&P Global Ratings and Fitch Ratings, according to the Municipal Securities Rulemaking Board's disclosure website. Last July, Fitch upgraded the county's GO rating to AA-plus.
In its fiscal 2024 annual comprehensive financial report, the county reported it had
