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Texas Supreme Court weighs whether missing attorney general approval voids PID bond contracts
Summary
At oral argument in River Creek Development Corp. v. Preston Hollow Capital, counsel debated whether failure to submit bonds or notes to the Texas attorney general, as required by statute, should render public improvement district (PID) financing contracts void, with justices probing statutory text, precedent and market consequences.
The Supreme Court of Texas on Monday heard argument over whether a statutory requirement to submit certain bonds or notes to the attorney general should automatically invalidate public improvement district (PID) financing contracts that were issued without that approval.
Counsel arguing for the position that the contracts may be void (identified in the transcript here as "Counsel (Speaker 1)") told the court that PIDs create assessment liens on property for infrastructure such as water and sidewalks and that, under the statute, a corporation "shall submit a bond or note authorized under section 431.071 to the attorney general." That counsel said contracts that fail to meet statutory requirements can be illegal and therefore void, and that private property owners bear the cost of assessments when a PID finances improvements.
Opposing counsel (recorded here as "Counsel (Speaker 4)") urged the court not to read an automatic invalidation remedy into the statute. Counsel pointed to the court's prior applied-remedy cases and argued that when a…
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