The Gonzales City Council approved a 20-year General Obligation Refunding Bond to pay the $1.825 million settlement of the Austin Presbyterian Theological Seminary over a suit it filed over the estate of J.B. Wells.
The 5-0 vote by the council came at its Thursday, July 8 meeting – and followed the preceding joint meeting with the Gonzales Economic Development Corporation.
During the joint meeting, the GEDC voted to provide $912,500 to the city over 20 years. The amount represents half of the settlements and, depending on variables tied to the final bond, represents about $61,700 per year.
The GEDC is not a party to the bond and will not receive any interest in the J.B. Wells Park complex.
The city, faced with an Oct. 10 deadline to pay the settlement in full, explored multiple options for funding. The council honed in on the GEDC, which had an account balance in excess of the settlement amount.
The GEDC board, however, never warmed to the idea of writing a check to cover all or part of the settlement because it believed draining its assets would thwart its ongoing efforts to recruit and grow businesses.
At the joint meeting, the council decided to ask the GEDC for half of the money. Initially, the request was for a single payment. But, after the council deliberated in closed session, discussion shifted to having the GEDC help cover the yearly cost of the bond.
The council still needs to approve the finalized version of the bond sale. By opting for the refunding bond, the council is not required to post a legal notice nor solicit voter approved – either of which would not be feasible ahead of the Oct. 10 payment deadline.
The GEDC will still need to approve a performance agreement with the city to finalize the funding.
“Our attorney will draw up papers for the performance agreement,” said GEDC President Andy Rodriguez. “The city will be treated like anyone else asking us for money.”
Once done, the agreement would go to the city council for a final approval.
The GEDC collects ½-percent of sales tax revenue in the city for its funding.
By opting to contribute money yearly, the GEDC will strive to absorb the cost through its sales tax collection instead of running down its reserves.
“It gives us time to catch up,” Rodriguez said. “We’d rather take 20 cups of water out of the bucket over time than empty the whole bucket.”
The lawsuit brought in 2017 by the seminary against the city over its handling of property it received from the estate of J.B. Wells, who died in 1962.
When it came to options to fund the settlement through a bond, the city had four possibilities: General Obligation Bond, General of Obligation Refunding Bond, Certificate of Obligations, and Tax Notes.
The General Obligation Refunding Bond has no requirement for a public notice being posted 45 days ahead of the council voting on the bond.
The settlement avoids more legal fees and the city’s possible loss of the land that now houses the J.B. Wells Park, Expo and Arena. The city, as of June 4, had spent more than $429,000 on the litigation.
The seminary filed suit claiming that the conditions of J.B. Wells’s estate were not met by the city, “violating the terms of the gift,” where the land was to be made a public park.
The seminary sought ownership of the park. The provisions of the will state that if the city did not meet the conditions of Wells’s last will and testament, the land shall be sold, and all proceeds given to the seminary.
The J.B. Wells Park, Expo and Arena was appraised at $7.349 million by the Gonzales Central Appraisal District, and $11.3 million by Bolton Real Estate according to case filings.