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HomeMy WebLinkAbout034020 ORD - 09/08/2026Ordinance Ratifying One -Reading Ordinance disapproving the Program, Expenditure, and Funding under the Termination, Settlement, and Release Agreement between the Corpus Christi B Corporation and Elevate QOF, LLC; adjusting Type B Budget to withdraw funds from the terminated program for the Homewood Suite Incentive; directing the City Manager and City Staff not to make or facilitate payment; and providing for an effective date. WHEREAS, on August 10, 2026, Elevate QOF, LLC and Corpus Christi B Corporation terminated the Business Incentive Agreement for costs associated with Homewood Suites by Hilton at the corner of Chaparral Street and Lomax Street; WHEREAS, on August 10, 2026, the Corpus Christi B Corporation entered into a Termination, Settlement, and Release Agreement (TSRA) with Elevate QOF, LLC that provides, among other terms, for an immediate $1,500,000 payment to Elevate QOF, LLC; WHEREAS, TSRA expressly requires/demands payment on or before August 13, 2026; WHEREAS, on August 13th, County Court at Law #3 scheduled a hearing on Request For Injunctive Relief for City requests prompt entry of a Temporary Restraining Order "enjoining City, and all those acting in concert with City from transferring, paying, allocating, or otherwise directing any funds to the benefit of Elevate QOF LLC (or their attorneys to hold in trust, via ALBM Trust Account No. xxxxx9656 WHEREAS, on August 18th, Elevate QOF, LLC filed a lawsuit against Peter Zanoni, individually and in his official capacity as City Manager, in the 105th Judicial District Court of Nueces County, seeking a Temporary Restraining Order enjoining Defendant Zanoni, his agents, employees, and all persons acting in concert with him, from continuing to freeze, withhold, delay, or obstruct the $1,500,000 settlement payment required under the TSRA, and ordering the immediate temporary release and wire transfer of the funds to Plaintiffs designated trust account pending a Temporary Injunction hearing; WHEREAS, on August 18th, the 105th District Court issued a Temporary Restraining Order, ex parte, ordering Peter Zanoni to take all necessary steps to ensure that the wire transfer is executed immediately upon entry of this Order; WHEREAS, on August 19th following a hearing, County Court at Law #3 issued a Temporary Restraining Order enjoining the City, and all those acting in concert with the City (including all City employees) from transferring, paying, allocating, or otherwise directing any funds paid to the benefit of Elevate QOF LLC (or their attorneys to hold in trust, via ALBM Trust Account No. xxxxx9656); WHEREAS, due to pending Temporary Injunction Hearings scheduled for September 1, 2026, in the 105th and County Court at Law #3, there was an emergency for the City Council to take action; and WHEREAS, this ratification action provides an opportunity for additional public comment. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS, THAT: 034 020 SECTION 1. The statements and recitals contained in the preamble to this ordinance are hereby found to be true and correct and are incorporated into the body of this ordinance for all purposes. SECTION 2. Ordinance # 034001, attached as Exhibit A, is approved and ratified by the City Council. SECTION 3. This ordinance shall take effect immediately upon passage. Introduced and voted on the I 5t day of D and APPROVED on the day o Paulette Guajardo, May EFFECTIVE DATE �" lyt"+ , 2026. o)-tii -tr— , 2026. A-ST: Rebecca Huerta, City Secretary 034020 EXHIBIT A One -Reading Ordinance disapproving the Program, Expenditure, and Funding under the Termination, Settlement, and Release Agreement between the Corpus Christi B Corporation and Elevate QOF, LLC; adjusting Type B Budget to withdraw funds from the terminated program for the Homewood Suite Incentive; directing the City Manager and City Staff not to make or facilitate payment; and providing for an effective date. WHEREAS, the Corpus Christi B Corporation (the "Corporation") is a development corporation created by and for the benefit of the City of Corpus Christi under Chapters 501 and 505 of the Texas Local Government Code; WHEREAS, Texas Local Government Code § 501.054(b)(2) provides that, with respect to a project, a development corporation may exercise powers necessary or appropriate to effect its purposes "subject to the control of the governing body of the corporation's authorizing unit"; WHEREAS, Texas Local Government Code § 501.073(a) provides that the Corporation's authorizing unit "will approve all programs and expenditures of a corporation"; WHEREAS, Texas Local Government Code § 505.302 restricts the use of Type B sales and use tax proceeds to statutorily authorized project costs and related obligations; WHEREAS, Texas Local Government Code § 501.401(b) limits the authority of an authorizing unit "under this section" by the law of this state concerning impairment of contracts entered into by the Corporation; WHEREAS, on August 10, 2026, Elevate QOF, LLC and Corpus Christi B Corporation terminated the Business Incentive Agreement for costs associated with Homewood Suites by Hilton at the corner of Chaparral Street and Lomax Street; WHEREAS, on August 10, 2026, the Corpus Christi B Corporation entered into a Termination, Settlement, and Release Agreement with Elevate QOF, LLC that provides, among other terms, for an immediate $1,500,000 payment to Elevate QOF, LLC; WHEREAS, the City Council did not approve the Termination, Settlement, and Release Agreement nor any creation of any program for that agreement, nor the $1,500,000 expenditure of Corporation funds; WHEREAS, the Corporation's Certificate of Formation, Article IV, provides that "[ajil actions of the Corporation shall be taken ... with the advice and consent of the Corpus Christi City Council"; WHEREAS, the Corporation's Bylaws § 2.1(a) provides: "Any projects undertaken using the funds of the Corporation will require the approval of the Corpus Christi City Council, in accordance with the Act"; WHEREAS, the Corporation's Bylaws § 5.5 provides that, to the extent the Bylaws or Certificate of Formation require City Council approval, "such approval shall be evidenced by a certified copy of a resolution, ordinance or motion duly adopted by the City Council"; 034001 j- EXHIBIT A WHEREAS, the City Council has now reviewed the program, expenditure, and funding contemplated by the Termination, Settlement, and Release Agreement and determines not to approve them; WHEREAS, the City Council finds that preserving the status quo by maintaining the funds under existing control is necessary to protect public funds and ensure compliance with applicable law; WHEREAS, City's Notice of Default letter sent by City on May 14, 2026, to Elevate QOF LLC is affirmed, and it is further resolved that Elevate QOF LLC's default described therein is not curable and thus — pursuant to the express terms of the Business Incentive Agreement ("BIA") signed by Elevate QOF LLC on January 18, 2024 — the "[Type B] Corporation and [Elevate QOF LLC] shall have no further obligation to one another under [the Business Incentive Agreement];" WHEREAS, City's Type B Corporation terminated the BIA on August 10, 2026, with Type B Corporation approving a Termination, Settlement, and Release Agreement ("TSRA"), which TSRA is subject to City's approval of funding, if any, pursuant to Texas Government Code section 501.073; and WHEREAS, there is "no further obligation" for the City to fund the BIA because of Elevate QOF LLC's default; and no obligation for the City to fund the TSRA pursuant to Texas Government Code section 501.073. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS, THAT: SECTION 1. The foregoing recitals are true and correct and are adopted as findings of the City Council. In adopting this Ordinance, the City Council is exercising its authority as the Corporation's authorizing unit under applicable law, including Texas Local Government Code §§ 501.054 and 501.073. SECTION 2. Pursuant to the City Council's authority under applicable law, including Texas Local Government Code §§ 501.054 and 501.073, the City Council disapproves the program, expenditure, and funding contemplated by the Termination, Settlement, and Release Agreement between the Corpus Christi B Corporation and Elevate QOF, LLC, including the proposed $1,500,000 payment to or for the benefit of Elevate QOF, LLC. SECTION 3. The City Manager and City staff are directed not to make, authorize, process, facilitate, or cause any payment or transfer of Corpus Christi B Corporation funds to or for the benefit of Elevate QOF, LLC under the Termination, Settlement, and Release Agreement. SECTION 4. The City Manager and City staff shall pursue all appropriate and available trial court and appellate remedies, including appeals, mandamuses, stays, or supersedeas, as appropriate, to preserve the status quo. They shall comply with any applicable court order requiring payment when no further legal remedy permits the City to withhold payment pending review. SECTION 5. To the extent any funds have been and are appropriated pursuant to Ordinance #033350 and any subsequent amendments for the same (up to $2,000,000.00), the Type B Budget is amended to decrease all expenditures designated for the terminated project for the EXHIBIT A Business Incentive Agreement between Corpus Christi B Corporation and Elevate QOF, LLC for costs associated with Homewood Suites by Hilton at the corner of Chaparral Street and Lomax Street. SECTION 6. This section constitutes a written request by the Mayor Pro Tem or a majority of the members of the Council for this ordinance to be passed finally on the date of introduction due to an emergency. The City Council finds and declares an emergency due to the need for immediate action to preserve public funds that are presently the subject of a demand for payment and pending litigation; and suspends the City Charter rule requiring consideration of and voting upon ordinances at two regular meetings so that this ordinance is passed and takes effect upon first reading as an emergency measure. PASSED and APPROVED on the a5 day of AkcilAM" ylynayor Pro Tem ATTEST: , 2026. Rebec a Huerta, it Secretary 034001 p.