Friday, September 12, 2008
City of Bryan initiated a lawsuit Friday to halt issuance of additional debt by the Texas Municipal Power Agency.
The action follows a Sept. 2 decision by the Bryan City Council to authorize the filing of amended pleadings in Grimes County District Court in response to a lawsuit filed against it by the Texas Municipal Power Agency.
At its meeting on Thursday, members of the TMPA board, representing the cities of Denton, Garland and Greenville, ignored the objections of the Bryan appointees to the TMPA board, and voted to approve a proposal to refinance more than $360 million in existing debt and commercial paper currently scheduled to be retired in 2018. The proposal extends this debt from 2018 to 2030, at an additional interest cost of more than $350 million, almost doubling the total interest costs on these funds, a cost that must ultimately be borne by the customers of the cities that purchase the Agency’s power.
“As reluctant as we are to pursue litigation, we believe that this action is necessary to protect both the Agency and all of the customers of the cities that are members of the Agency," BTU General Manager Dan Wilkerson said. "Refinancing the existing debt of the Agency, which can be retired at competitive rates under the present financing terms, and to push these costs out to the future when other factors are likely to come into play, such as a carbon tax and future capital investment, is not in the best interest of the Agency or its member cities, and places the future competitiveness of the plant in jeopardy.”
TMPA is owned and governed by four member cities – Bryan, Denton, Garland and Greenville. Bryan’s claims also assert that TMPA has been denied effective counsel in these matters as same lawyers that represent Denton, Garland and Greenville, voting in favor of the refinance, also represent TMPA in determining if the refinance is in TMPA's best interests.
The matter is pending in District Court, Brazos County, City of Bryan, Texas, v. the Texas Municipal Agency and the Cities of Denton, Garland, and Greenville. No hearing date is set at this time.
Any questions regarding this matter should be directed to Dan Wilkerson, General Manager, Bryan Texas Utilities, at 979-821-5750.
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