DALLAS — The Waller Independent School District is awaiting the Texas attorney general’s go-ahead for a $49.3 million bond sale after an appeals court ruling dismissed litigation that had delayed the sale for six months.

An attorney for the district said the sale could happen this week, but that next week appeared more likely.

The bonds were tied up by a lawsuit from Waller County justice of the peace Dewayne Charleston, who said the district failed to give proper notice of the meetings that resulted in the May 12 bond election. The bonds were approved in the election, which occurred when the predominantly black Prairie View A&M University was on break, and the election was not pre-cleared by the U.S. Justice Department’s voting rights section, according to the suit.

Through his attorney Ty Clevenger, Charleston also filed a federal lawsuit in which he claims that the election and use of the bond proceeds put the district’s minority students at a disadvantage.

The trial court on Sept. 24 dismissed Charleston’s suit, ruling that the district had obeyed state law in posting notices of meetings. In a bond validation suit by the district, the court on Oct. 2 upheld its right to issue the debt.

The same day, the court required Charleston to post a $715,000 bond to continue appeals in the case within 11 days. Charleston did not post the bond but appealed both rulings — the dismissal of the suit and the bond requirement. Under state law, appeal bonds can be required to cover additional costs caused by delays in the issuance of securities.

Gary Blanton, managing principal of HSW Group LLP’s architecture and engineering unit, testified that due to rising construction costs, a six-month delay would cost $715,689 and a nine-month delay would cost $1.2 million.

On Dec. 21, Texas’ First Court of Appeals ruled against Charleston, dismissing the state suit. In the appeal, Charleston claimed that the school district would not be able to issue any debt until the federal lawsuit is heard. Because Charleston did not bring up that issue at trial, the appeals court said the issue was not considered.

However, Pat Mizell, attorney from Vinson & Elkins who represented the school district, said the federal case should not prevent the issuance of the bonds.

Clevenger is also representing a group of clients in a similar suit in Houston that seeks to overturn a court’s bond validation of $805 million of Houston Independent School District bonds.

The suit claims that HISD sought to avoid scrutiny of its preemptive validation suit by filing it in Austin instead of Houston. The district also failed to give proper notice of the meeting in which the bond validation suit was authorized, according to Clevenger’s motion to vacate the ruling. Clevenger said his clients were not aware that the bond validation suit had been filed until two weeks later.

The lawsuit also asks the court to overturn Texas’ Expedited Declaratory Judgment Act as unconstitutional. That law was passed in 1999 to allow debt issuers to get court validation of bonds along with an injunction against future lawsuits. The law also allows courts to consolidate related cases.

The Houston lawsuit claims the district “consistently provides lower-quality academic programs, equipment, facilities, and materials at school facilities located in predominantly minority communities, and particularly at those located in African-American communities.”

“Left unrestrained with $805 million in new bond proceeds, HISD is certain to continue its pattern and practice of diverting resources away from minority communities,” the suit claims.

Mizell is also representing the Houston ISD in defending against Clevenger’s suit.

“The mere filing of a lawsuit by any plaintiff implicating a bond issue can result in a practical injunction that stops badly needed public projects in their tracks — without bond, without hearing, and even without substance,” Mizell argued in his bond validation suit.

Without the Expedited Declaratory Judgment Act, “legal questions regarding the validity of any proposed actions of a district would, even if without merit, stop the sale of public securities by the state’s bond-issuing subdivisions, instrumentalities, and public corporations for needed public purposes and infrastructure,” HISD’s suit maintains.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.