May trial set in Project Connect funding structure debate

The Travis County District Court will host a trial May 28-30 to weigh in on the legality of the funding behind Austin's Project Connect mass transit plan.

AUSTIN (KXAN) — A trial has been set in Travis County this May amid an ongoing legal dispute involving Austin's Project Connect mass transit plan.

The Austin Transit Partnership shared with KXAN a copy of a memo shared with ATP board members Monday. In it, ATP officials confirmed the Travis County District Court would host the trial May 28-30.

Prior to that trial's start is an initial hearing on April 10 related to ATP's request for a protective order in benefit of some confidential information they don't want divulged publicly. Officials said in the memo a public release of internal cost estimates for some portions of the light rail system "would seriously undermine ATP's ability to get the best pricing through competitive bidding."

That trial update comes after ATP filed a bond validation petition and lawsuit in the Travis County District Court in February, in the hopes of having ATP's bond program reaffirmed as a legitimate funding source.

The nature of that question comes amid ongoing legal issues surrounding Project Connect, and more specifically, its light rail plan. Back in November, a group of plaintiffs sued Austin City Council and ATP over Project Connect's "replacement transit plan," arguing the property tax increase voters approved in November 2020 was for a substantially different plan than the current version moving forward.

ATP officials told KXAN in November the organization would continue advancing work on the first phase of light rail and wouldn't comment on the pending litigation. Then, ATP announced in early February one of the lawsuit's plaintiffs — Dirty Martin's Place — was no longer at risk of displacement due to alignment changes to the light rail route.

Mark Nimer, owner of Dirty Martin's Place, told KXAN at the time he was "cautiously thrilled" about ATP's announcement but wanted to see that promise in writing. Legal counsel for Dirty Martin's and other plaintiffs confirmed they would continue with their lawsuit due to changes to the original plan approved by voters.

New court filings submitted last week by Bill Aleshire — lead attorney on the lawsuit representing the plaintiffs — spell out those changes to Project Connect's light rail system as a reaffirmation of the plaintiffs' concerns. The project was initially presented as a two-line, 20-plus-mile light rail plan leading up to and following the November 2020 election; last June, city and transportation officials adopted an initial 9.8-mile route to serve as Phase 1 of light rail operations in Austin.

"You are seeing the beginning of the end of the biggest con job ever perpetrated on the taxpayers of Austin," Aleshire said in a statement Tuesday. "When all is said and done, I expect the final court decision to result in a rollback of the almost 21% Austin property tax increase being used to Project Connect and a refund of hundreds of millions of those dollars that ATP has on hand, unspent."

Plaintiffs also raised concerns surrounding the legality of Project Connect's payment structure, with their latest filing alleging the city lacks the right "to use or pledge the Project Connect [maintenance and operations] Property Tax increase for debt service" and that it can only be spent on maintenance and operations-related purposes. Those arguments cite the Texas Tax Code as cause for its basis.

Plaintiffs are requesting Travis County District Court officials to grant an injunction against both the city and ATP defendants to prevent them from spending Project Connect tax revenues on the replacement plan's light rail route and related facilities on the merit that this version of the plan wasn't voter-approved.

On Friday, Texas Attorney General Ken Paxton also submitted a plea to the jurisdiction, requesting a dismissal of ATP's funding plans for Project Connect. He had previously issued a legal opinion last May questioning its funding structure, arguing at the time that Texas Tax Code "does not authorize a municipality to 'earmark' use of a voter-approved increase in its maintenance and operation property tax revenue for debt service."

ATP declined to comment on Paxton's latest plea or the new documents filed by the plaintiffs last week.