HIGH PLAINS FACES LITTLE OPPOSITION IN SUIT FOR PERMISSION TO ISSUE 1.575 BILLION IN BONDS

As reported by this blog earlier, High Plains filed suit on April 18, 2011 requesting court authority to issue 1.5 Billion in revenue bonds to purchase two power plants located in Odessa and for 75 Million in subordinate bonds to buy out the interests of its partner Republic Power. Its suit also requests that the court declare the entire transaction and operation of the plants to be free of government oversight and property tax. High Plains had smooth sailing without opposition when it was created by court order in 2008, and things do not appear to be any different this time around.

On May 6, 2011, on behalf of West Texas Municipal Power Agency, a San Antonio law firm filed a token petition in intervention in the suit to issue the bonds. In its pleadings, the WTMPA simply restates that it legally created High Plains in 2008 and that High Plains has authority to issue the bonds requested. In addition, WTMPA’s petition requests that the court issue an order that the financing documents issued by High Plains state in bold print that the indebtedness of High Plains is not the indebtedness of Lubbock or any other WTMPA city. This, of course, is nothing new. High Plains has always maintained these same legal positions making WTMPA’s intervention meaningless because there is no real dispute between the parties.

Not to be left out of the meaningless intervention business, the City of Lubbock hired one of the largest and most expensive law firms in the State to file the same type of intervention. According to the Avalanche-Journal, the Houston firm of Vincent & Elkins was hired to intervene in the bond suit and to ask for the same meaningless court declaration that the debts of High Plains are not the debts of the City of Lubbock. In 2007 the firm charged Dallas $300 an hour per attorney for its services. See what Dallas paid them here.

The net affect of both interventions is that the WTMPA and the City of Lubbock hired two expensive out of town law firms to rubber stamp the High Plains deal. Once again, the winners are High Plains and Republic and the losers are the tax payers of Lubbock.

To understand why the court declaration that the debts of High Plains are not the debts of the City of Lubbock is legally meaningless requires that you understand how the legal system works. Our system does not issue “advisory” opinions. What this means is that when you file a suit against another, there must be a real issue in controversy. If there is not, then any declaration of the court is meaningless. This has been the law in the United States for many years and was recently restated in a Federal case out of the Eastern District of Texas styled Texas v. City of Frisco, 2008 WL 828055 (E.D. Tex. Mar. 27, 2008). In that case the State of Texas filed a declaratory judgment against the City of Frisco asking the court to declare that it did not have to preserve certain documents held by the Texas Department of Transportation that Frisco wanted preserved for a potential lawsuit.

The City of Frisco moved to dismiss the declaratory judgment action arguing that the State failed to plead the elements of any viable claim and was essentially asking the court for an advisory opinion concerning what action it must take to properly preserve the documents subject to the litigation” hold.” The court agreed, and dismissed the complaint.

The facts of this case are the same. Neither the City of Lubbock nor the WTMPA opposes the issuance of the bonds, the request for non-tax status or the request for no government oversight. The expensive out of town lawyers are simply asking for an advisory opinion that the bond debt is not the debt of Lubbock. Since there is no real dispute between the parties such an opinion is meaningless and will easily be set aside if the bonds go to default and a purchaser wants to hold WTMPA cities responsible.