Bond Hearing for Northport’s University Beach Lagoon Ends Without Ruling

A Tuscaloosa County judge has a lot to digest after a two-hour hearing Thursday about whether to validate bonds for the $350 million University Beach lagoon resort in Northport.

Circuit Judge Daniel Pruet is overseeing the matter, and it's important to note from the outset that he is not tasked with weighing the merits of the 76-acre water park.

As the Thread has extensively reported, the proposed resort would include a water park built around a man-made, 10-acre lagoon, a conference center, dozens of single-family residences with a starting price point of $800,000, a luxury Marriott hotel, and a slew of new-to-market boardwalk-style restaurants and retail options.

Opinions differ on whether University Beach would be "an economic boon to the county or a generational eyesore," as Pruet put it. Still, the Thursday hearing was narrowly focused on some pretty mundane aspects of the development.

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Here's a layman's best shot at summarizing the matter: the Northport City Council has already voted to approve the development, as well as to create an improvement district, a quasi-governmental body that governs the development—a bit like a homeowners' association, District Attorney Hays Webb said.

To make the proposed resort a reality, the developers will need to build or install approximately $43 million in infrastructure, including roads, drainage, hookups for sewer and electricity services, lighting, landscaping, signage, and more.

To raise money for that infrastructure, the University Beach Improvement District is seeking to issue $59.7 million in 30-year bonds, which are essentially IOUs that investors purchase to be repaid later. The bondholders receive a twice-annual interest payment, and at the end of the term, receive back their full original investment in or before November 2055.

To repay the money, the Improvement District is authorized to issue a special assessment against property owners within the district, much like an HOA or condo owner. That would include homeowners, restaurants, retailers, hoteliers, and others who operate within the 76-acre University Beach, but not anyone who lives outside of it.

Those within the Improvement District would pay an annual assessment based on the size of their property and its impact on infrastructure. Thirty years from now, the funds raised through these assessments will be used to repay bondholders.

The improvement district has the authority to issue these bonds to finance the development's infrastructure needs, and the hearing on Thursday was only about whether to "validate" them, an appreciated but unrequired assurance for purchasers.

"It is generally understood that investors look more favorably upon bonds which have been validated," Webb said in a memo.

So, Thursday's hearing was not to greenlight or reject the University Beach development, but only to consider validating these bonds, which the Improvement District can issue and sell regardless of whether they're validated or not.

District Attorney Webb is statutorily obligated to represent the people of Northport in bond validation actions such as this one and ensure it is not "defective, insufficient or untrue" and that it was authorized correctly and legally.

He said serving in this role has also allowed Webb to hear and answer as many questions as possible about the project, which has drawn opposition from most of the Northport citizens who have spoken during public comment periods and posted about it online.

"This writing is done acknowledging the widely-held belief that Northport could have been more receptive to community input throughout the process," Webb wrote. "Any seeming absence of transparency stokes the fires of those opposed and raises legitimate concerns among those who are merely curious and seeking information from their representatives."

Still, on Thursday, Webb said, "there appears to be no legitimate basis for fighting this bond validation aspect of the University Beach project."

The hearing was predominantly led by Jaime Betbeze, an attorney representing the University Beach Improvement District and its board chairman, developer Kent Donahue.

Betbeze laid out the previous votes of the Northport City Council, which authorized the University Beach development, created the Improvement District, and granted permission to issue bonds similar to the ones proposed. He also demonstrated that they had followed proper procedures and state law governing public meetings and open records.

His much longer presentation boiled down to the fact that there was no legitimate reason to block the validation of the bonds.

"We have demonstrated that we have complied with all statutory requirements for the validation of these bonds and we submit the case to your honor," Betbeze said.

A series of counterarguments was presented by three speakers: attorney Cam Parsons, on behalf of a Northport citizen opposing the development; lawyer Joseph Cox, for newly inaugurated city councilman Turnley Smith; and Jason Sellars, a resident speaking on his own behalf.

Sellars raised issues including whether the disputed residency of a city councilman might invalidate his past decisions on the council. Cox argued that a critical city council vote may have been invalid if voting members had pre-committed to its results.

Pruet promised to take all those arguments and counterarguments from Betbeze under advisement, and adjourned the hearing without ruling from the bench, warning that it might take a while for him to read and digest mountains of filings in a matter that he said has already taken more time than some capital murder trials.

Pruet also thanked the 60 or 70 people who packed into his courtroom to witness the proceedings and said if more citizens were as engaged as they were civically, the world would be a better place.

For more coverage of the University Beach development and court matters in the county, stay connected to the Tuscaloosa Thread.