The Galveston City Council is considering voting to validate a controversial development agreement for the Beachtown neighborhood, which is the subject of a lawsuit against the Galveston Redevelopment Authority, Mayor Jim Yarbrough said.
The council has met in executive session to discuss the lawsuit brought by three residents against the authority, which oversees special tax zones designed to encourage development.
The lawsuit claims authority board members broke open meeting laws to reconfigure a deal with the developer of Beachtown, a luxury subdivision on the island’s East End.
The three residents contend in the lawsuit the board renegotiated a deal with the developer in a series of meetings hidden from the public in 2014.
Yarbrough said no decision has been made as to whether the council will put the item on an upcoming agenda, as some legal issues need to be reviewed.
“We’re not saying we need to do that,” Yarbrough said. “We don’t want to take action and do something incorrect.”
Jackie Cole, Jos Wristers and Elizabeth Beeton filed the lawsuit in June 2016. Beeton had been a member of the authority board but was ousted by the city council before the deal was restructured.
Beachtown is being developed in Tax Increment Reinvestment Zone No. 13.
A tax increment reinvestment zones, or TIRZ, is a designated space in a city where developers build public improvements such as streets and drainage and are reimbursed by an increase in property taxes generated by the development. The city continues to receive the amount of tax revenue generated before the new development, while taxes on the new development values are used to pay for improvements.
A previous authority in October 2012 found Beachtown’s developer, Tofigh Shirazi in default of an agreement to build a set amount of retail space, single-family housing units, multifamily housing units, retirement housing units and a hotel in the subdivision.
Shirazi contended that the authority misinterpreted the development agreement and said circumstances beyond his control, such as Hurricane Ike in 2008 and the housing market collapse in 2007, slowed progress.
In August 2013, the city council removed members, including Beeton, from the authority that had found Shirazi in default and replaced them in the middle of their terms.
Beeton, Cole and Wristers’ lawsuit claims the authority’s agreement with the developer substantially changed over the course of seven closed session meetings from January to July 2014. The public didn’t have the opportunity to contribute input to the changes, and the developer and authority agreed not to seek approval from city council or other elected officials, the plaintiffs claim.
Beeton said the city council should be telling the judge presiding over the lawsuit that the Galveston Redevelopment Authority gave inadequate notice in changing the development agreement.
If the city council validates the agreement, the lawsuit could be in trouble, Beeton, a former council member, said.
“It may very well moot our lawsuit,” Beeton said. “That’s the problem from our point of view. And that’s why they would do it. This is an initiative of the developer to prevent any possibility that the deal from the RDA might not become permanent.”
Validating the agreement is a rubber stamp of something negotiated behind closed doors, Beeton said.
“The failure to allow public input can’t really be cured by just rubber-stamping what was done,” Beeton said. “It needs to be opened up so that the council can look at it afresh without its hands being tied by what was originally agreed to behind closed doors.”