(Courtesy photo/Ray Quiroga)
By ARABELLA SERRATA
editor@sbnewspaper.com
A Texas court has weighed in on the San Benito Economic Development Corporation’s (EDC) ongoing legal battle with VARCO, a firm it hired to develop a commercial shopping center along Business 77 in San Benito.
As a result, a 107th Judicial District Judge has ordered the San Benito EDC, and named parties, to cease and desist from, “enforcing their purported legal rights under any documents executed with either SBEDC or the City of San Benito related to their tenancy at the Resaca Village Commercial Plaza including, but not limited to, a Notice of Attornment, Termination of Lease with VARCO, and a separate subsequent lease with the SBEDC.”
According to court records, and as previously reported in the NEWS, the San Benito EDC approached VARCO to build a plaza in 2018. VARCO agreed to the construction and management of the plaza and a lease on the property. The performance agreement was set to begin construction on March 31, 2019, and end Dec. 31, 2022.
VARCO completed the first two phases of the project “ahead of schedule,” according to the document. It also specified that the San Benito EDC is required to secure utility easements, and it was understood by VARCO that the EDC would enter an easement agreement with the City of San Benito, and “submit the easement agreement, the metes and bounds, and the plat of easement for the necessary approvals.”
The COVID-19 pandemic halted progress on the project, and many businesses canceled plans to lease spaces at the property named Resaca Village. There were also labor and material shortages. Both parties agreed to an extension of phases three and four by 12 months. This amendment was a binding agreement. Another amendment was executed in November 2023, pushing the phase four deadline to May 1, 2024.
The document also said VARCO complied with the agreements and continued with the project, investing “millions of dollars in capital” as they went along. In March 2024, the San Benito EDC declared VARCO to be in breach of the Performance Agreement for not meeting the original schedule. They continued to argue in favor of their claims, adding that the EDC never agreed to the amendments and demanded VARCO pay $1.8 million. The document states the EDC did approve the amendments, and the approval is available on public record.
Following their declaration, the EDC attempted to evict VARCO from the Village on May 21, 2024. The EDC was unsuccessful and failed to appeal the denial of the eviction. On Aug. 19, 2024, VARCO found that the EDC did not secure the water line easement with the City of San Benito. The City issued a stop work order on the Village because the easement was not submitted to the city commission for approval. This halted progress on the project even more. During the litigation process, VARCO found an “improper tapping” of a water line, done by a VARCO subcontractor. The issue was addressed immediately and all fines were paid, according to court records.
The document stated the San Benito EDC was to cease and desist from “asserting any and all ownership rights” over the Resaca Village. This included collecting payments from tenants at the plaza and communicating with them regarding a “Notice of Attornment, Termination of Lease with VARCO, and a separate and subsequent lease with SBEDC.”
“We think the Court did the right thing. We’re hopeful the court will enter an injunction to preserve the status quo of VARCO’s legal rights until the time of trial,” said Paul Serafy, a VARCO attorney.
“I’ve been saying this for months, the San Benito City government is on a suicide mission economically,” said Wayne Dolcefino, head of Dolcefino Consulting, a Houston-based investigative media group hired by an undisclosed client to first look into the City’s dealings with VARCO and has since broadcasted other controversial segments on San Benito on multiple media platforms. “The idea that they’re just trying to steal someone’s $8 million investment, even if it was not a good deal… They made the deal.”
He added, “I know of no vote, taken by the commission or the EDC, to tell tenants to not pay their rent to the people who are developing the shopping center. And instead, pay the rent to the EDC. It’s just another example of people who don’t care about the law.”
Dolcefino Consulting has been investigating the City of San Benito for several months. He insisted that the court order exists separate from his firm’s goals in the city. “But it is another example of the kind of arrogant, stupid, abuse of power we have been investigating in San Benito,” said Dolcefino.
The NEWS reached out to the City of San Benito for comment but did not receive a response as of Thursday’s newspaper deadline.
1 comment
Well in my opinion whether the city or VARCO are wrong they need to correct the errors and get this project moving. But why is Rios seeking 100 thousand in monetary relief from the city ? Like what would justify that amount from the city taxpayers. Just a question that probably needs to be answered.