No Ruling Yet As Bond Validation Hearing Held For University Beach

TUSCALOOSA, AL — Tuscaloosa County Circuit Court Judge Daniel Pruet declined to issue a ruling following a two-hour hearing Thursday and will spend more time considering the validation of a bond issuance for the developers of the controversial University Beach resort project in Northport.

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As Patch previously reported, the University Beach Improvement District is asking Judge Pruet to validate $59.7 million in Special Assessment Revenue Bonds to finance public infrastructure tied to the proposed $350 million University Beach lagoon resort in Northport.

The complaint was originally filed by attorneys on behalf of the Texas-based developers on Aug. 29, and sought a show-cause hearing and named “the taxpayers and citizens of the City of Northport” as defendants, a common step in bond-validation actions.

Developer and chair of the University Beach Improvement District Board of Directors Kent Donahue was on hand in the courtroom Thursday and represented by Mobile attorney Jaime Betbeze, while District Attorney Hays Webb represented the City of Northport for the bond validation hearing.

Joining Webb were attorneys Cam Parsons and Joseph Cox, with Cox representing Northport District 1 City Councilman Turnley Smith.

Northport resident Jason Sellars also spoke during the hearing after filing a objection pro se.

As Patch previously reported, Cox filed a motion on behalf of Smith arguing that the City Council’s prior actions may have violated state law by pre-committing to approve the creation of the project's Improvement District. This motion was discussed briefly at the end of Thursday's hearing and is also being considered by Judge Pruet.

According to the original complaint filed by the developers, which was discussed in detail during Thursday's hearing, the proposed bonds would fund road, water, wastewater and stormwater projects at the site.

The bonds would also be repaid through special assessments on property within the district, not taxes, with assessments also covering operations and project costs. University Beach LLC agreed to cover costs exceeding bond proceeds.

ALSO READ: University Beach Improvement District Board Manager Has Long History Of Regulatory Violations

The Series 2025 bonds, if issued, would carry interest rates up to 7.5% and mature no later than November 2055.

During the bond validation hearing, Judge Pruet pointed out two primary questions when considering the arguments presented: (1) Did the University Beach Improvement District have the authority to approve the bond issuance? (2) Did all parties follow the appropriate procedures in doing so?

Despite both sides arguing over smaller details, Webb said he had no issue with the bond validation and left the courtroom before the hearing concluded.

One issue raised by Judge Pruet, however, focused on potential changes to the first phase of the project.

"If all of the properties don't sell or it doesn't go as hoped, who pays the bond back?" Judge Pruet also asked, before Betbeze explained that it would be the sole responsibility of the developer.

There did, however, appear to be some ambiguity regarding Phase One of the project after it was mentioned by Betbeze that there could be changes to the initial phase after the bond was validated and issued.

Judge Pruet then questioned what would happen if a dispute arose after Betbeze said the current incarnation of the plan "leaves the door open if you have to move some things around."

Betbeze, along with public finance consultant and University Beach Improvement District Manager Pfilip Hunt said the language would be finalized after the bonds were validated.

Talk then turned to the five-year timetable for the revocation clause in the partnership agreement, which would see the city returned ownership of the roughly 12-acre parcel facing Highway 82 that was deeded over to the developers by the city as part of the original agreement.

It's worth noting Betbeze pointed out that if deadlines are missed or the project breaches the five-year window, then the developers would still own the much larger property, while the land deeded to developers by the city would once again be owned by City Hall.

With a packed courtroom looking on, Judge Pruet said "it is going to be a while before an order goes out," on the bond validation, before showing his gratitude to those who attended Thursday's hearing.

"I know there are deep feelings about this," he said. "But if more people did what y'all are doing, we would have less problems in our country."

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