DALLAS -- Harris County officials plan to ask a state court judge to validate the proposed $320 million buyout of the troubled Houston Ship Channel Bridge now that the Texas attorney general's office has refused to issue an opinion on the sale's legality.

County officials could file papers as early as this week seeking a declaratory judgment that would enable the county-created Beltway 8 Transportation Corp. to issue bonds to buy the bridge from the Texas Turnpike Authority.

The county would be acting under a rarely used provision of the Texas Bond Validation Act, a law that would also automatically make the state attorney general's office a party to the proceeding.

The Texas attorney general on Sept. 16 refused to take a position as to whether turnpike officials had the legal authority to sell the bridge.

Assistant Attorney General Jim Thomassen, chief of the state's public finance section, has said that without an opinion he could not give the bonds their legally required certification. But he said yesterday his office would approve the deal if a court issues a declaratory judgment saying the bonds can be sold.

Mr. Thomassen said no decision had been made on what position, if any, the office would take in the validation proceeding. However, an executive with the underwriter of the proposed deal said he did not expect any problems.

"Politically, I know of no opposition to this project," said John Crew, managing director at Dillon, Read & Co. in Dallas. "The attorney general was neutral in their letter and we would not expect that to change."

Some Texas bond lawyers interviewed said the attorney general may have to formally back or oppose the proposed sale before a judge rules. "If they get a good judge, he will force the attorney general's office to take a side," said one lawyer who has used the proceeding before.

The decision to seek a judicial validation of the bond issue came after Harris County and turnpike officials last week met with Texas Attorney General Dan Morales to ask him to reconsider his office's neutral stance.

The plan can also be challenged by any taxpayer in Harris County.

One organization expected to back the plan is the Texas Turnpike Authority, which earlier this month voted to proceed with the sale of the bridge if it could be completed by Dec. 1.

The authority meets Friday morning in Houston to discuss negotiations with the county over terms of the sale of the bridge. At the meeting, officials said, it is likely that the board will vote to support the validation of the bonds.

"We would probably support it," said Luther Jones, chairman of the authority. "The board has made the decision to transfer the bridge to Harris County provided they can come up with the money to pay for it."

Earlier this month, the board agreed to sell the bridge in an effort to avert a default on junior lien bonds in 1996, when a revenue shortfall has been projected.

The proposed sale of the bridge to a Harris County transportation corporation prompted the authority to delay its own proposed fix for the default: a $210 million refunding issue.

"If the Harris County thing were to fail, then we would go back to the [Texas] Bond Review Board and ask for our original proposal to be approved," Mr. Jones said yesterday.

Just how the validation proceeding will turn out is not certain. The act covers widely differing types of issues and is rarely used.

"I've been here about five and a half years and I have seen it maybe a half-dozen times," Mr. Thomassen said. "I've never seen it on anything this high profile before."

The last issue his office authorized that had been validated by a judge involved a municipal utility district and a dispute over whether minerals on the property were part of the taxable values. The district and the attorney general differed, but the judge sided with the MUD by validating the issue.

However, Texas lawyers said that if Harris County is successful, the proposed $320 million bond issue would not be the largest ever sold under the validation process.

In 1979, Austin was forced to take a validation proceeding all the way to the Texas Supreme Court to sell $600 million of revenue bonds to pay its share of a South Texas nuclear power plant opposed by activists.

After months of litigation that included an unsuccessful appeal to the U.S. Supreme Court, the city finally won the right to sell the bonds.

"This kind of [validation] statute is common in most states," said a Houston bond lawyer. "The idea is to provide a mechanism so that bondholders can be assured they have a valid piece of paper."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.