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North Beach canal ordinance faces legal challenge

Posted at 5:32 PM, Dec 06, 2019
and last updated 2019-12-06 23:47:49-05

CORPUS CHRISTI — Just days from a city council vote deciding its fate, the proposed canal project for North Beach faces some legal uncertainties.

Developer Jeff Blackard pitched the canal as a solution to drainage issues in North Beach. More importantly, it's the centerpiece of a multi-million-dollar development. However, the city's legal department has raised some red flags about the project.

In order to get the North Beach vote on the next week's agenda, District 1 city councilman Everett Roy, and three other council members; Ben Molina, Gil Hernandez, and Rudy Garza, wrote an ordinance for the council to consider committing the city to the $41.2 million canal project. City Attorney Miles Risley reviewed that ordinance and found ten ways it could violate either the city charter or state law.

  • 1. The proposed ordinance establishes an obligation involving an expenditure of money and is not accompanied by a certification of funds of the director of finance as required by Article IV, Section 7 of the City Charter.
  • 2. The proposed ordinance requires excavation and placement of fill that is not permitted in accordance with local, state, and federal law unless the City successfully applies for and obtains all necessary permits for construction of the canal, which could delay construction beyond January 1, 2025 or require modifications to design, potentially subjecting the City to liability under an estoppel theory.
  • 3. The proposed ordinance provides for execution of an agreement that contains municipal obligations that are indefinite in amount and therefore violate the City Charter and the Texas Constitution.
  • 4. The proposed ordinance provides for execution of an agreement that contains rebates that are not legally permitted in the absence of contractual provisions restricting expenditures of such funds for statutorily permitted purposes.
  • 5. The proposed ordinance provides for execution of an agreement that mandates execution of a lease that is longer than is permitted by the City Charter in the absence of a 28-day delay in second reading and is otherwise not permitted by State law.
  • 6. The proposed ordinance provides for execution of an agreement that mandates expenditure of Tax Increment Reinvestment Zone (TIRZ) funds that are not authorized by a Financing Plan approved by the TIRZ board.
  • 7. The proposed ordinance provides for execution of an agreement that contains counter-party obligations that may be so indefinite as to undermine a potential municipal public purpose for the obligations therein.
  • 8. The proposed ordinance provides for execution of an agreement that contains an obligation to effectively transfer (90-year lease) property to which the City does not have fee simple ownership.
  • 9. The proposed ordinance provides for execution of an agreement that may violate Article IX, Section 4 of the City Charter, which requires City Council approval of any assignment of a lease.
  • 10. The proposed ordinance provides for execution of an agreement that may violate Chapters 252 and 271 of the Texas Local Government Code and Chapter 2269 of the Texas Government Code via the requirement to pay general fund revenues to the Developer as a design/build contractor.

City Manager Peter Zanoni says these objections show his staff is keeping the public's best interests in mind while considering the canal proposal.

“They're the rate payer, they're the ones who are going to pay for the entire canal,” said Zanoni. “That's an important point; there's no develop who has money in hand and is willing to pay for the canal, but rather the taxpayer, the rate payer, our Corpus Christians, they're the ones who are going to pay for the canal.”

Zanoni added that city staff will work with the council members to get a more compliant ordinance written. There's a chance that updated ordinance could be posted by 11:30 a.m. Saturday. That would have the ordinance posted by the deadline of 72 hours before the scheduled meeting. If a new ordinance isn't written in time, the council can discuss and consider changing the posted ordinance from the floor.

Developers want the city to commit to the canal next week in order to take advantage of federal tax incentives.