CORPUS CHRISTI, Tx — Nueces County filed a lawsuit Monday against the Corpus Christi Housing Authority, seeking to void controversial tax exemption deals for apartment complexes and the employment contract of former CEO Gary Allsup, alleging both were approved in violation of the Texas Open Meetings Act.
The lawsuit, filed in Nueces County District Court, alleges that the CCHA's deliberately used vague meeting agendas to conceal from the public that it was approving transactions that would remove approximately $350 million in property value from local tax rolls.
"But despite the fact that the CCHA's actions involved areas of heightened public interest—tax free treatment for private interests and lavish compensation packages for a public employee—the CCHA took each of these actions based on generic notices and meeting agenda items that would in no way inform the public of the actions being considered, much less the significant financial implications of its actions," the petition states.
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The lawsuit details how private investors allegedly exploited the Texas Housing Authorities Law by having CCHA nominally acquire apartment complexes to obtain tax exemptions, then lease them back to the private developers. According to the petition, these properties continue to operate "not as affordable housing, but at or above market rates with some operating as luxury apartments."
Jeffrey Lehrman, attorney for CCHA, said he was unable to comment on the lawsuit, given it is pending litigation.
The named complexes include Armon Bay, Azure, Churchill Square, Ocean Palms Apartments, Sandcastle, Sawgrass, South Lake Ranch, Stoneleigh Apartment, The Icon, The Summit, The Veranda, Tuscany Bay South, Villas of Ocean Drive, Arts at Ocean Drive, Caspian Apartments, Gulf Breeze, Shadow Bend, Bay Vista, Bay Vista Pointe, Baypoint, and Solana Vista.
As KRIS 6 News reported, the Nueces County Appraisal District denied exemptions for these properties in July.
Allsup's Compensation Under Fire
The lawsuit also targets Allsup's employment agreements from 2024 and 2025, which ultimately provided him with a base salary of $528,074 and an annual bonus of $257,742—nearly $800,000 in total compensation. The petition notes this was "more than double the compensation of the housing authority CEO for the City of Houston," despite Corpus Christi's much smaller size.
The county alleges meeting agendas for both compensation votes merely stated "Consider Renewal of President and Chief Executive Officer Contract" without indicating the board would take action to approve the contracts or disclosing the compensation amounts.
The petition also highlights unusual provisions in Allsup's contract, including that he would "develop the tool used in evaluating his own performance" and guaranteed severance packages of six months' salary if terminated for cause, or five years' salary if terminated without cause.
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Pattern of Inadequate Notice
According to the lawsuit, CCHA's meeting agendas routinely contained only cryptic descriptions such as "Action Item No. 24-EO-20 Consider Memorandum of Understanding" or "Consider Action Item No. 24-EO-28 Consider Approval of Memorandum of Understanding Brixton Sawgrass, LLC et Al."
"These agenda postings gave no notice that CCHA would consider and possibly approve the acquisition of an existing apartment complex for the purpose of granting private entities a tax exemption," the petition states.
The county notes that many of these properties "were previously constructed and occupied by tenants long before they were conveyed to the CCHA," meaning the deals didn't add any new affordable housing units while removing properties from tax rolls.
Nueces County is asking the court to void all actions taken without proper notice under the Texas Open Meetings Act, which provides that government actions taken in violation of the act are voidable. The lawsuit seeks injunctive relief to reverse these transactions and compel compliance with open meetings requirements.
The legal action follows the county commissioners' September 10 vote authorizing the lawsuit, which came after months of local media investigation into the deals. The new CCHA board, has already terminated Allsup's employment and pledged not to enter into any additional tax-exemption agreements with private developers.
