DALLAS - Harris County, Tex., Judge Jon Lindsay said yesterday he will seek legislative backing to buy outright the troubled Houston Ship Channel Bridge while continuing negotiations to take indirect control from the Texas Turnpike Authority.
Lindsay decided to pursue the plan for direct control of the project after an apparent misunderstanding late last month stalled the original plan.
The judge said in an interview yesterday that he will meet tomorrow with aides to Gov. Ann Richards in an effort to put the sale of turnpike projects on the agenda for a special legislative session set to begin Nov. 10.
"If we can't get on the [agenda], we'll try in the regular session next year," Lindsay said.
"We are going to go both ways," he said, explaining that he will pursue both plans. "Whichever works out best is what we'll go with."
The judge said yesterday he will seek clear authority for the turnpike to sell its projects, which could require a constitutional amendment. As an alternative, he said he will seek legislative support for the original plan. Under that plan, the county would have indirect control of the project by establishing a local bond agency to control the bridge and its obligations through a never-used licensing process. The agency would not legally own the bridge.
Under the latter proposal, the county-created Beltway 8 Transportation Corp. would issue up to $320 million of revenue bonds to defease the bridge's outstanding debt and expand the project to make it more financially viable.
The turnpike board had endorsed the original scheme, which was proposed by its general counsel, Dallas-based Locke, Purnell, Rain, Harrell.
However, at a negotiating session on Oct. 27 at the downtown Houston office of bond counsel Fulbright & Jaworski, the turnpike's lawyers passed out a 12-page letter that many interpreted to mean that Locke Purnell had changed its mind about the legality of the licensing arrangement, said sources familiar with the meeting.
"That caused all the lawyers to begin to get nervous," said one person who attended the meeting.
While the firm's perceived reversal would not directly affect the ability to legally issue bonds, several sources said it could hurt market confidence in the securities.
"If you don't have a valid licensing agreement, you don't have the authority to collect the fees to pay off the bonds," Lindsay said.
But Joe H. Staley Jr., of Locke Purnell, said that lawyers representing Harris County and its underwriter, Dillon, Read & Co., misunderstood the letter. Staley said the letter was merely a response to a draft licensing agreement the firm felt was incomplete.
"We just said we wouldn't be inclined to give an opinion on that [draft] licensing agreement," Staley said yesterday. "I came up with the idea. It's my intent to see it work because that's what my board wants."
On Friday, Turnpike Chairman Luther Jones sent a letter to Harris County reaffirming the turnpike's commitment to transferring control of the Houston project to the county-created agency. He was not available for comment.
County and turnpike officials and their lawyers plan to meet at 9:30 a.m. tomorrow in Austin with the Texas Attorney General's office to continue negotiations. Not everyone sees the deal as stalled, as some Harris, County officials have suggested.
"It's my understanding that Locke Purnell is negotiating about the kind of opinion they're going to give," said Assistant Attorney General Jim Thomassen, chief of the state's public finance section.
He said his office still believes the licensing arrangement would be valid and binding and that the deal can be done. "Basically, as proposed, it works." he said.
Turnpike officials have backed the proposed transfer of the bridge to avert a default in 1996 on outstanding junior lien bonds sold by the turnpike authority to address a revenue shortfall on the bridge.
While the turnpike's two other projects are financially stable, officials are pursuing similar plans to license its Dallas North Tollway and Mountain Creek Lake Bridge projects to Dallas County. Officials have estimated that up to $400 million in revenue bonds would be needed for that transaction.
