December 19, 2017 / 6:05 PM / 5 months ago

Injunction sought to stop Houston's $1 bln pension bond sale

Dec 19 (Reuters) - A lawyer sought a temporary injunction on Tuesday to stop Houston from selling $1 billion of pension bonds until a lawsuit seeking to void voter approval of the debt can be heard in court.

But the sale of the taxable bonds through senior underwriters Barclays Capital and Jefferies was moving forward as planned on Tuesday, according to Max Moll, spokesman for Houston Controller Chris Brown.

The lawsuit, filed in Harris County District Court on Friday, contends the Nov. 7 ballot measure for the bonds mislead voters by failing to mention that money to pay off the debt would not be subject to Houston’s property tax cap. It asks the court to void the election result.

Jerad Najvar, the attorney who filed the lawsuit on behalf of his client, Houston resident James Noteware, asked the court to assign a judge to the case who can hold a hearing this week on enjoining Houston from proceeding with the bond sale.

“I think it would be supremely arrogant and irresponsible for the city to proceed with the bond sale before the court can decide if the ballot language was misleading or not,” Najvar told Reuters in an email.

Houston voters overwhelmingly approved the bond issue, which is a critical part of a 30-year, state-approved cost-saving plan to address the city’s $8.2 billion unfunded pension liability.

He said a notice went out to investors informing them of the litigation.

That notice also said the lawsuit would not impact the bonds. “Because the city is required to comply with the city charter revenue limitations as a condition for the attorney general to issue its approving opinion, no case or controversy is presented which would adversely affect issuance of the bonds,” the notice said.

A statement from Houston Mayor Sylvester Turner’s office called the lawsuit “factually and legally baseless.”

“There was never any intent to avoid the revenue cap nor are there any facts indicating that we would,” the statement said.

“We have able outside counsel who guide the city in demonstrating to the Texas Attorney General that we will not violate the cap, and have done so. So, again, obviously, the city did not mislead anyone.” (Reporting by Karen Pierog in Chicago; Editing by Matthew Lewis)

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