Appeal planned for suit on city pension bond

Turner is pleased after state district judge dismisses case, says reform is necessary

A lawsuit that contends Mayor Sylvester Turner misled voters into approving a $1 billion pension bond referendum last year was decided Friday in favor of Houston, according to a city news release.

“Today, State District Judge Mark Morefield dismissed the case,” according to a statement from the city issued Friday evening.

The lawsuit says city officials plan to use the bonds’ passage to sidestep a voter-approved limit on the property tax revenue Houston can collect.

By contrast, the city’s statement said the “ruling is important to the city’s pension reform plan.”

“These pension bonds are a critical part of our pension reform statute and plan, and I am very pleased with the judge’s ruling,” Turner added in the statement.

After the suit was filed last year, Turner’s office called the wording of Proposition A, “boilerplate” and said the city has not and will not sidestep the revenue cap as a result of the vote on the mayor’s landmark pension reform package or any of the prior bond issuances that included the same phrasing.

The bonds are part of Turner’s landmark pension reform plan, which recalculates the city’s payments to erase a debt of

more than $8 billion debt over three decades, cuts benefits by $2.8 billion and includes a mechanism to cap Houston’s future pension costs.

Turner offered to issue the $1 billion in bonds as an incentive to get the police and municipal pension systems to agree to another round of benefit cuts and to bolster both plans’ funding levels.

The Texas Legislature had passed the package with an amendment that required this public referendum.

In December, the city completed the sale of the pension bonds in New York and began delivering the proceeds to its police and municipal pension funds, cementing the pension reform package that dominated Turner’s first two years in office.

In the wake of the election last November, a local businessman and former Houston housing department director, James Noteware, sued the city in state district court, contesting the Nov. 7 election on the grounds the ballot language was “materially misleading.”

Jerad W. Najvar, Noteware’s attorney, offered an interpretation of the judge’s action that contrasts with the city’s.

“It’s clear that the court agrees that the language (of the propositon ) was misleading but he said he didn’t have jurisdiction at this time and the case was moot,” Najvar said Friday evening. “It was misleading because it didn’t tell the voters … that they were taxing without limit.

“We will file an appeal and I expect to prevail in the court appeal.”