Attorney General Ken Paxton has suggested that a Travis County district court dismiss a bond-validation lawsuit that the City of McKinney had filed against its own citizens. Voters had twice rejected bonds funding an airport expansion project before the city sought alternate solutions.
As previously reported, the city utilized a little-known legal maneuver under the Texas Expedited Declaratory Judgment Act (EDJA), seeking to expedite the bond-validation process by filing a lawsuit in Travis County—over 200 miles away.
This made it unlikely that citizens would appear on short notice, in what is being called a “trial by ambush.” If the bonds are validated, any pending and future challenges to the bonds would be moot.
The Office of the Attorney General (OAG) is automatically served in EDJA cases and is tasked with informing the court whether the bonds comply with Texas law. Effectively, the OAG must pick a side—though it is also operating on short notice.
McKinney filed the lawsuit on April 24 and the first hearing was set for Monday, May 18. On Friday, the OAG filed its response, siding with taxpayers.
The filing began by arguing that the City of McKinney’s original petition was defective.
McKinney had argued “the 2026 Refunding Bonds will save millions of dollars over the life of the bonds.” The OAG ran its own calculations and came to a very different conclusion.
“[I]t is unclear how the refunding could accomplish this amount of savings when the 2025 bonds being refunded finally mature in 2032 and the 2026 Refunding Bonds finally mature in 2056, meaning that the 2026 Refunding Bonds extend the indebtedness by twenty-four years,” reads the filing. “Another schedule, attached as Exhibit B, reflects a net present value savings of $1,049,253.35, but an aggregate gross loss of $9,007,408.05.”
The OAG also contests the lawsuit for a lack of standing, as petitioners in EDJA cases must be bond issuers. The suit was filed by the City of McKinney as well as the McKinney Community Development Corporation (MCDC).
According to the OAG, economic development corporations do not classify as bond issuers. Moreover, because the city is not the entity issuing the bonds in this case, they too were found to be incapable of bringing the lawsuit.
The OAG provided a list of additional reasons the suit should be thrown out.
“The Attorney General requests that the Court deny the relief requested by Petitioners,” the filing concluded.
On Monday, the first hearing was held in Travis County, though it turned into more of a scheduling conference.
The OAG’s plea to the jurisdiction will be heard on June 29. If the case proceeds to trial, that is set for July 20. Both will be in Travis County, unless the city agrees to transfer the case to Collin County.
Under the EDJA, McKinney may move to set a bond for citizens to even participate in the case. In previous cases, such bonds have been upwards of a million dollars. There was no indication on Monday as to whether the city will do this.
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