CORPUS CHRISTI, Tx — A local hotel developer filed a lawsuit Monday seeking to invalidate a Corpus Christi City Council vote that awarded $2 million to a competing hotelier.
The lawsuit was filed in Nueces County Court on behalf of Ajit David. It seeks to invalidate an ordinance in which Type B Sales Tax funds were awarded for the downtown Homewood Suites.
The future Homewood Suites is located just across the street from the Executive Surf Club. It is a five-story, 126-room hotel which city officials said is the first new hotel to be built downtown in more than a decade.
However, the Residence Inn, located downtown, was built in 2019.
As 6 Investigates previously reported, before the approval of this project in April these types of funds had never been used to subsidize a hotel.
That petition alleges Homewood Suites developers altered a FEMA website screenshot in a presentation to both the city's Type B Corporation and during a City Council meeting.
In a presentation to the Type B Corporation in December developers said a newly released Federal Emergency Management Agency (FEMA) Flood Plain map caught them off-guard and resulted in unexpected additional costs.
But, those maps were released in April of 2022, well before construction began on the Homewood Suites.
This property was purchased in January 2022. According to the petition, at the time of purchase of the property, and since at least 1985, FEMA had identified the property as within/below the "flood boundary."
Developers told the Type B Corporation that FEMA maps were preliminary at the time the project was imagined and that the finalized and adopted maps came into effect on October 13, 2023. They said those new requirements "throw a wrinkle and an aspect to the project from a constructability perspective but also just an added cost that we were not anticipating when we first started moving forward with the project."
In February 2024, an ordinance was placed on the Corpus Christi City Council Agenda.
"Ordinance authorizing an agreement between the Corpus Christi B Corporation and Elevate QOF LLC, for costs associated with FEMA AE Flood Zone requirements and exterior upgrades for Homewood Suites by Hilton at the corner of Chaparral Street and Lomax Street; appropriating $2,000,000.00 for a non-reimbursable grant from the Type B Economic Development."
The first reading of that ordinance passed with a 7-1-1 vote, with Council Member Michael Hunter voting "nay" and Sylvia Campos abstaining.
In April 2024, on the second reading of that ordinance, the language was amended.
"Ordinance authorizing an agreement between the Type B Corporation and Elevate QOF LLC, for a total incentive amount not to exceed $2,000,000 for Homewood Suites by Hilton at the corner of N Chaparral Street and Lomax Street; for costs associated with the street level retail, public space, and outdoor dining area activation including gray box and finish out including necessary floodwall and dry flood proofing to allow for consistent street level access; authorizing the expenditure of up to $2,000,000 from the Type B unreserved fund balance; and amending the fiscal year 2023-24 budget to increase expenditures by $2,000,000.00."
That time, the ordinance passed 5-3-1, with Council Members Michael Hunter, Jim Klein, and Sylvia Campos voting "nay" and Gil Hernandez abstaining.
The lawsuit seeks a declaratory judgment invalidating this vote, based partly on an allegation that the city failed to follow its two-reading rule.
Additionally, it seeks invalidation given the use of an altered federal document and alleged violations of the Texas Open Meetings Act.
6 Investigates reached out to Mayor Paulette Guajardo, who is named throughout the petition, for comment. She responded with this written statement, "I was not aware of this filing, and since it involves a legal matter with the city, I am unable to comment. I trust the process and will address it accordingly."
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