San Benito Economic Development Corporation sued over retail site

SAN BENITO, Texas ( ValleyCentral ) — The Resaca Village Shopping Plaza in San Benito is at the heart of a lawsuit.

On April 26, the developer sued the San Benito Economic Development Corporation over the land deal.

In 2018, Varco Real Estate San Benito, LLC, and the SBECD signed a lease agreement. EDC agreed Varco would build a mixed-use retail center on nearly 10 acres of undeveloped land on Business 77.

Varco agreed to pay a percentage of the property taxes to SBEDC and was also granted a lease on the property, giving Varco the option to buy the land for $1 after the year 2033.

That lease was recently canceled, citing Varco’s delays in finishing construction on time.

Paul Serafy, a Varco Investments Executive said, “San Benito unilaterally terminated our ground lease in breach of several amendments we have to allow us to extend the construction deadline for phases 3 and 4 of the shopping center.”

Over the past couple of years, Varco and the EDC have signed several agreements giving Varco more time to complete its work. During the pandemic, tenants pulled out of their leases and construction costs surged. The two parties signed their last agreement in November. San Benito City Commissioners haven’t approved that latest amendment.

“We don’t think that it needs to be ratified by the city council,” Serafy said, “We think that the city council already gave its approval and we think that because the fourth amendment literally states that.”

Serafy feels like the city is pulling the rug out from under his company. He said city officials were fully aware the EDC voted to approve the latest revised construction timeline.

“The Mayor and two city council members were present at the EDC meeting at which this was voted on and approved by the EDC. At that meeting, neither the mayor, to my recollection because I was there, neither the mayor nor either of the city council members that were there, none of them voiced any objection to it,” Serafy said.

ValleyCentral contacted the city manager and the attorney for the Economic Development Corporation seeking comment about this story. No one from the city returned the phone calls.

Serafy said his company has already invested over $8 million. He wants to either have the canceled ground lease reinstated or have Varco be reimbursed for the money it has already spent.

If Varco isn’t able to complete the project, it’s unclear who the city could get to take over.

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