Hotel developers seeking payment for a $1.5 million settlement have won a court order compelling Corpus Christi City Manager Peter Zanoni to lift a hold on the funds.
A judge on Aug. 18 sided with Elevate QOF LLC, developers of a new Homewood Suites hotel downtown, signing off on a temporary restraining order against Zanoni that bars him from “continuing to freeze, withhold, delay, or obstruct” release of the funds or otherwise prevent city staff from doing so.
The settlement, as approved by the Type B board on Aug. 10, was to terminate an existing $2 million tax incentive agreement with Elevate and wire-transfer $1.5 million in Type B funds to attorneys representing the company.
The board oversees economic development incentive agreements backed
with a portion of the revenue from sales taxes.
The intent of the settlement was to help facilitate resolution of pending litigation that had been filed by a competing hotelier, according to the board.
The referenced pending lawsuit, filed by Ajit David, has sought to undo the original tax incentives agreement with Elevate.
Zanoni had aired concerns about the Type B board’s decision at the time, stating that there were legal questions that required vetting through attorneys before making a payment as the board had described.
Court records show that the temporary restraining order was granted, in part, because the settlement was approved by the Type B board — not the city.
It asserts that Zanoni was “acting without legal authority and in excess of his ministerial role” in freezing the payment.
The developers were “suffering immediate and irreparable injury in the form of financial harm that cannot be measured with certainty, reputational damage, interference with settlement efforts, loss of business opportunities, and disruption to business operations,” the order states.
Zanoni in an Aug. 18 message to the Caller-Times wrote that he was “more than confident that I did the right thing.”
He asserted that the city doesn’t have authority to wire-transfer the payment to Elevate and that there hadn’t been City Council approval to do so.
“It is sound fiduciary management and within our established financial policies to do what we did, and that is supported by the legal advice of our City Attorney and outside Legal Counsel,” he wrote.
This is a developing story. Check Caller.com for updates.
Kirsten Crow covers city government and water news. Have a story idea? Contact her at kirsten.crow@caller.com.
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This article originally appeared on Corpus Christi Caller Times: Court orders city manager to lift hold on hotel settlement funds
