City moves forward with 20-year bond to pay $1.825 million lawsuit settlement; GEDC to pay half of yearly payments

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 variable 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 business.

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.”

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.”

We will have more on this story in the July 15 print edition of The Inquirer.