Could payment of back taxes by Texas Central Railroad be a sign of new life?
The company has paid back taxes that were due in several Texas counties but still face several other hurdles, according to experts.
BRYAN, Texas (KBTX) -Texas Central Railroad & Infrastructure’s next steps remain a mystery even after ninety-three property owners across nine Texas counties recently reached out to the company seeking answers about the future of its proposed high-speed train from Houston to Dallas.
Attorneys representing the property owners sent a lengthy letter to Texas Central in late September questioning the current status of the project and said residents and landowners have suffered long enough and should be allowed to move on with their lives if the project is no longer going to happen.
The letter from the attorneys also lists twenty questions they say landowners and the general public deserve the answers to including who is running the company, the company’s financial status, and why mail that’s being sent to Texas Central’s Dallas office is being returned undeliverable.
Last week attorneys for the property owners received a reply from Texas Central’s attorneys but it didn’t lead to any answers. In the letter, lawyers for Texas Central say they will not be responding to their questions citing questions they are seeking contain proprietary and confidential business information among other reasons.
Attorneys for the property owners also stated in the letter from September that if their questions are not answered they plan to seek what is called a Rule 202 deposition to investigate and seek the answers for themselves.
Jackon Walker LLP, attorneys for Texas Central responded to the threat to seek a Rule 202 deposition by saying the property owner’s attorneys have no legal claim to the information they’re seeking.
“Your threat to pursue a Rule 202 deposition to investigate claims would be an improper and abusive use of the rule. You say you would seek to investigate claims. Claims for what? Your letter states you plan to investigate claims about whether Texas Central plans to construct the railway. There is no legal claim or cause of action there. If there is some “claim” that I am not appreciating, please tell me what it is,” the letter said.
Texas Central’s attorneys also briefly addressed the issue of HOA dues and property taxes.
“Your letter includes misleading, incomplete, and erroneous statements,” the letter said. “For example, it fails to acknowledge that HOA dues are in dispute and that Texas Central has paid its property taxes in all counties.”
Property tax records obtained by KBTX show that all back taxes due in Freestone, Limestone, Leon, Madison, Grimes, Harris, and Dallas Counties have been paid in full. Tax records show a balance of $7,251.18 remaining in Ellis County. Property tax records for Waller and Navarro counties were not immediately available when this story was published.
Michael Shaub, Clinical Professor at the May Business School at Texas A&M says without speculation it appears that progress is being made at Texas Central.
“It’s a mystery. I don’t wanna speculate, but it is a sign, it’s certainly a sign of life,” Shaub. “It’s certainly a sign that when you’ve had several CEOs who have stepped aside over that process that if the leadership can be put in place, they still have an opportunity here because they have those properties.”
Shaub says Texas Central, which is currently without a CEO, could use this moment to gain momentum after paying its back taxes and winning its case in the Texas Supreme Court which granted them eminent domain status.
“If they had been banned from seeking eminent domain or having the power of eminent domain, paying the property taxes probably would be the least of their worries. It would be whether they could get the properties that they needed to actually do the project,” said Shaub. “Now that they have secured the right to use eminent domain, paying off the property taxes is the least they should do and the first thing they should do to maintain their standing in terms of those properties, they don’t want to forfeit their rights with respect to the properties.”
Shaub says with Texas Central tax problems potentially in the rearview mirror the project could become more attractive to investors but the company still faces significant challenges with opposition, raising capital, finding new leadership, and inflation.
“If I could look at a set of audited financial statements, I would understand a lot more about what they’re capable of doing, even before they go out and raise new capital,” said Shaub. “I think what they’ve done is put out the fire, they’ve provided themselves a window where they could potentially raise new capital if that’s what they need to do right now.”
“It’ll be very interesting to see what the supply chain impacts are because when they started this project, we didn’t think number one about supply chain problems. We also didn’t think about interest rates being where they are now because of what’s happened the last year in terms of inflation,” said Shaub. “Now with the fed driving the interest rates up if you’re trying to get new debt, the new debt isn’t what you were getting in 2015 or 2017. The debt is gonna cost you a lot more to do these things.”
The complete letters sent between Texas Central’s attorneys and attorneys for the 93 property owners can be found below.
KBTX reached out to both law offices and Texas Central for comment but did not receive a reply.
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