CITY OF LUBBOCK OPPOSES HIGH PLAINS BOND ISSUE; HEARING SET FOR TUESDAY

A Houston law firm hired by the City of Lubbock filed a trial brief opposing the High Plains bond issue stating that High Plains was illegally created and cannot issue 1.5 billion in bonds to buy two Odessa power plants. In blunt language, the filing sums up the position of the City of Lubbock and many of its citizens when it states as follows:

“This proposed acquisition is part of a plan to use special powers and benefits reserved for governmental entities to conduct private business transactions and enrich private parties. If the Court validates the bonds, the net effect will be that High Plains will have the legal authority to incur $1.5 billion of apparently insufficiently collateralized debt and the Dallas-based investment firm will receive bonds representing as much as $75 million in additional public debt.”

In brilliant fashion the City of Lubbock’s brief details how High Plains was illegally created in 2008 by the W.T.M.P.A. The City argues that because the WTMPA is a municipal utility rather than a municipality, it could not create High Plains as a municipal corporation because only a municipality has the authority to create a municipal corporation. The original court filing in 2008 which was approved by former Judge Sam Medina, has no legal effect, according to the City, because there was no real opposition to the filing making the court order an advisory opinion only.

The City brief is also highly critical of High Plains for filing a request for the court to approve the bond issue without first filing any of the necessary bond documents that are required by law to be filed, for attempting to perform acts outside of the bylaws which created High Plains and for failing to have customers lined up to buy the power produced by the two plants.

In response to the City of Lubbock’s brief, High Plains held a hastily called board meeting on May 18 without public notice or posting of an agenda, and approved the issuance of the 1.5 billion in bonds and the agreement to pay Republic 75 million to buy out its “interest” in the partnership. High Plains then filed the board resolution, the bond documents and the agreement with Republic in an amended filing on May 19, one day before the scheduled hearing. The first question the attorneys for Odessa, Lubbock and the Attorney General will be asking at the hearing on Tuesday is how High Plains could file a suit on April 18 asking for approval of 1.575 billion in bonds when its own board didn’t approve the issuance of the bonds until May 18 at a meeting that in all probability was illegally held because the public did not have proper notice of the meeting.

At the hearing on Friday, many members of the public did not attend because signs posted at the courthouse indicated that the bond hearing had been canceled. Despite the notice of cancellation, a hearing was held. Judge Les Hatch overruled a motion by the Attorney General to reset the hearing for a date later than Tuesday in order to allow the parties to respond to High Plains late filing. The court overruled the motion and ordered the hearing to proceed on Tuesday. Then, in a highly unusual move, the court stated that he knew some investors in Republic Power and for that reason he was removing himself from the case. This is unusual because when a judge believes he has a conflict and intends to remove himself, he doesn’t rule on pending motions. He leaves all matters for the new judge. Instead of following established procedure, Judge Hatch ruled in favor of High Plains having the hearing on Tuesday and then removed himself. The manner in which Judge Hatch found out the names of the investors in Republic Power also raises questions. When a judge acts as a fact finder, he can only consider the evidence presented at trial and the pleadings filed in the case. Unlike Federal court, Texas does not require corporations to disclose the names of interested parties when corporations file suit. High Plains has never listed the names of the Republic investors in its pleadings and no testimony was taken at the hearing on Friday regarding the names of the investors. The media has never posted the names of the Republic investors. It would be interesting to know how, when and in what manner the judge found out the names of the Republic investors.

I will update the blog on Tuesday after the hearing.