By Leslie Gibson
Herald-Banner Staff
Whether or not the recent issue of $30 million in tax notes to build a new county justice center was legal has been a concern of some citizens, and discussed in a public meeting.
Commissioner Lorie Grinnan expressed concern about about it prior to the split vote May 13 in regular meeting of the Rockwall Coounty Commissioners Court which authorized the sale. The “intent” of the statute allowing the sale piqued her interest.
However, she said in a recent interview she is satisfied with their legality.
“Tax notes have been used by counties before for public works, land and machinery,” said Rob Collins of the county’s bond counsel, Vinson and Elkins LLP. He took questions of commissioners at the May 13 meeting.
Jerry Wimpee, commisisoner, said, “I know there was a jail expansion in the mid-90s after the voters turned it down,” and it was noted that $500,000 in tax notes were issued initially for the expansion, then, “a couple of additional issues,” Collins said.
“The intent of tax notes was to enable a county to react to an unforeseen emergency to continue with services,” Grinnan said in the meeting.
Most of the issues are not for emergencies, Collins told the court, and said in a separate interview. Under the Texas Government Code Section 1431.006, A1, county-issued tax notes fund public works, land and public services, he noted.
“I’ve used 1431 multiple times,” he said by phone. “A1 projects are very clearly public works.”
Tax notes have a seven-year maturity, so, in June 2009, the court must “take additional action,” he explained.
Refunding bonds can be sold, without voter approval, under Section 1207.006. “It gives permission to refund bonds no more than 40 years,” he said, and added, “The attorney general reviews and approves all tax notes issued in the state.”
Analyst Marti Liljekvist with First Southwest Company explained in a phone interview that it is true tax notes are issued with a seven-year maturity, “but we’ll refund the bonds into long-term debt,” she said.
She and Boyd London, managing director of First Southwest Dallas office, presented two tax note financing plans to the court, first in a May 6 workshop, and then May 13.
Rockwall County’s tax notes were sold to Bank of America, the sole purchaser in the private placement method.
“We will issued refunding bonds at the end of the year.”
“A classic example of refinancing like a home mortgage, refunding bonds can be used for savings and to restructure debt,” she said in an interview.
“It will probably be part of an open-market sale, sent out as a negotiable sale.” It is not a general obligation bond, and does not require voter approval, she said.
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