Legal Questions
Q & A
Dated: October 13, 2020
Q: Is the reason that the language “levying of a tax in payment thereof” is on the ballot because the law requires that specific language for a general obligation bond?
A: Yes, section 1251.004 of the Texas Government Code requires the incorporation of this language into any general obligation bond proposition.
(Reference: Stephanie Leibe, Bond Counsel at Norton Rose Fulbright)
Dated: October 5, 2020
Q: Could the City Council decide NOT to proceed with the creation of the municipal broadband utility for any reason, or no reason?
A: Yes, the City Council retains that discretion.
Q: Could the City Council decide that it isn’t the right thing to do for Lucas and vote against proceeding any further with the issue?
A: Yes, the City Council retains discretion to not move forward with the project.
Q: Could the City Council delay establishing the broadband utility for an indefinite period of time?
A: No, establishment of the broadband utility could be delayed, but not for an indefinite period of time.
The City Council does have discretion related to both the establishment of the municipal broadband utility and the issuance of the bonds. If approved by the voters, any bonds will have to be authorized by an official action of the City Council. Without an authorizing action, the bonds could not be issued.
If bonds are issued, the municipal broadband utility would have to be created by the City in connection with the issuance of those bonds. A delay, if any, could not be indefinite but could be for an extended period of time. Based on Texas case law, the Texas Attorney General’s Office has taken the position that voter authorization will generally go stale (e.g. cannot be utilized) if no affirmative action is taken to issue the bonds within 10 years of the voter authorization.
(Reference: Stephanie Leibe, Bond Counsel at Norton Rose Fulbright)
Dated: September 22, 2020
Q: Will the City guarantee that there will be no financial gain either by employment, contracts or by any other means from any city employee, council member, member of the technology committee or any other committee or person that was affiliated in any way on behalf of the City if prop B is passed?
A: City Council Members must adhere to Chapter 171 of the Texas Local Government Code. Specifically, they cannot vote or participate in a discussion regarding a matter that they have a substantial interest. Doing such is Class A misdemeanor. A substantial Interest is defined as either a business interest or a property interest. However, the City is not prohibited from entering into such a contract with business entity that is owned by a council member or the council member is employed by such business entity.
For example: If a council member works for a company that desires to enter into a contract with the City for service and the council member owns 10 percent or more of the voting stock or shares of the business entity or owns either 10 percent or more or $15,000 or more of the fair market value of the business entity; or they receive funds from the business entity that exceed 10 percent of the person’s gross income from the previous year; then the council member must abstain from participation and voting on the matter.
There is no state law or local ethics policy that precludes a City employee from separating employment and then entering into an employment relationship with a business entity that has a contract with the City.
There is no state law or local ethics policy that would preclude a committee or commission member from working for a business entity that has a contract with the City. (Reference: Joe Gorfida, City Attorney)
Dated: September 1, 2020
Q: If Proposition B (Lucas Broadband Project Bond) does not pass, when could this proposition be placed on the ballot again?
A: There is no legal reason which would preclude the City from placing the proposition on the May ballot. If the November election is unsuccessful, the City would be prohibited from issuing certificates of obligation for this project for the next three years. (Reference: Stephanie Leibe, Bond Counsel at Norton Rose Fulbright)
Bond Information
Limitations to the use of the bonds for the project described in the proposition:
The City would not be able to use the bond proceeds to assist or incentivize a company (public or private) to expand their service. The system to be constructed would be a City owned system/City service. The City may be able to contract with a third party (public or private) to operate or manage the system on the City’s behalf. Certain terms and conditions would apply to any such operating agreement to ensure compliance with both Texas state law and federal tax law.
If the City decides not to issue the bonds, is the City obligated simply because the voters approved the issuance:
If the bonds are approved by the voters at the November 3, 2020 election, the City Council is not obligated to authorize their issuance. If the election is successful, bonds can only be issued through subsequent action by the City Council through adoption of a bond ordinance.
Unlawful Use of Public Funds for Political Advertising
Section 255.003 of the Election Code makes it unlawful to use public funds to promote a proposition. The communication that is made using city resources can be factual but cannot advocate for or against. The law does not prohibit a council member from speaking for or against when they are not acting in capacity as a council member. (For example; not using city resources, on city property, advocating before, during or after a meeting.) Employees can also advocate for or against on their own time.
Sec. 255.003. UNLAWFUL USE OF PUBLIC FUNDS FOR POLITICAL ADVERTISING. (a) An officer or employee of a political subdivision may not knowingly spend or authorize the spending of public funds for political advertising.
(b) Subsection (a) does not apply to a communication that factually describes the purposes of a measure if the communication does not advocate passage or defeat of the measure.
(b-1) An officer or employee of a political subdivision may not spend or authorize the spending of public funds for a communication describing a measure if the communication contains information that:
(1) the officer or employee knows is false; and
(2) is sufficiently substantial and important as to be reasonably likely to influence a voter to vote for or against the measure.
(c) A person who violates Subsection (a) or (b-1) commits an offense. An offense under this section is a Class A misdemeanor.
(d) It is an affirmative defense to prosecution for an offense under this section or the imposition of a civil penalty for conduct under this section that an officer or employee of a political subdivision reasonably relied on a court order or an interpretation of this section in a written opinion issued by:
(1) a court of record;
(2) the attorney general; or
(3) the commission.
(e) On written request of the governing body of a political subdivision that has ordered an election on a measure, the commission shall prepare an advance written advisory opinion as to whether a particular communication relating to the measure does or does not comply with this section.
(f) Subsections (d) and (e) do not apply to a port authority or navigation district.