Judge stops San Benito from collecting rent from Resaca Village tenants

BROWNSVILLE — A judge Tuesday granted a real estate company an injunction stopping San Benito officials from trying to collect rent at the city’s first resaca-side commercial development.

In Cameron County’s 107th state District Court, Judge Benjamin Euristi signed an order granting VARCO, a Brownsville-based real estate company, its request to stop San Benito officials from trying to collect rent at the Resaca Village plaza off Business 77.

The case landed in the courtroom amid a year-long legal battle in which and the city of San Benito are contesting the ownership of the Resaca Village.

On Dec. 31, Euresti granted VARCO a temporary restraining order against the city, while the company requested he issue an injunction stopping San Benito officials from trying to collect rent.

In its request for the injunction, VARCO demanded city officials “be immediately enjoined and caused to cease and desist from collecting any and all rental payments from the tenants” at Resaca Village while pleading they “be immediately enjoined and caused to cease and desist from asserting any and all ownership rights and/or interests” in the plaza.

The temporary order also demanded officials “be immediately enjoined and caused to cease and desist, be prohibited from communicating with the tenants of the Resaca Village Commercial Plaza, including, but not limited to, any and all communications related to the attempts by defendants to have the tenants sign a notice of attornment, a termination of lease with VARCO and a separate and subsequent lease with SBEDC.”

In its request for the injunction, the company claimed officials including City Manager Fred Sandoval and Mayor Rick Guerra along with city commissioners and EDC members launched a “civil conspiracy to interfere with VARCO’s outstanding contractual obligations.”

“The court further finds, at all times relevant in this litigation, SBEDC and the San Benito city commission have been engaged in a civil conspiracy to interfere with VARCO’s outstanding contractual obligations,” the temporary restraining order states.

Since about Dec. 20, the order states, officials including Sandoval and city commissioners “have begun interfering the individual tenants at the Resaca Village directly, informing them that, effective Jan. 1, 2025, all rents would be due and payable to SBEDC, rather than VARCO,” a move the company describes as the EDC’s “attempted shakedown of VARCO’s tenants.”

The rent dispute comes amid a bitter year-long legal battle over Resaca Village’s ownership.

Last March, San Benito officials filed a lawsuit, claiming VARCO breached its 2018 contract when it failed to comply with the city’s agreements granting extensions on the four-phase project’s completion, originally set for 2022.

‘For lease’ signs dot a cluster of empty storefronts Wednesday, Jan. 26, 2022, at VARCO Real Estate’s Resaca Village on Business Highway 77 in San Benito. (Denise Cathey/The Brownsville Herald)

As part of a contract, VARCO pledged the project would create 300 full- and part-time jobs while generating $10 million in annual sales, drawing 20 new businesses and office suites while also building a resaca-side dock along a 9.8-acre tract by 2022, San Benito officials said in a news release.

In a 2018 agreement, VARCO planned the project’s first phase to span 12,600 square feet, including a resaca “boardwalk,” officials said.

Meanwhile, the company planned the project’s second, third and fourth phases to each run across 10,000 square feet, they said.

In exchange, San Benito’s economic development corporation agreed to grant VARCO the land for $1 after 2033, officials said.

Now, the Resaca Village “remains mostly vacant, unfinished and lacking the planned features that VARCO promised,” officials argue. “This project has dragged on for more than five years, which means the city is losing valuable property and sales tax revenue that could be used to pay for improved streets, public safety and many other services our citizens need,” Sandoval said in the news release.

To complete the project while aiming to boost job creation and sales, the city has proposed “buying out” VARCO, officials said.

Meanwhile, officials are contesting the Resaca Village development’s worth $8 million, as VARCO maintains.

In the news release, officials cite Cameron Appraisal District records they argue show VARCO’s Harlingen project off Stuart Place Road is valued at $6 million, while the company’s Brownsville project’s worth $4 million.

“While there have been many twists and turns in this process, one thing that is crystal clear — the project is behind schedule and taxpayers are losing out on the revenue the project would generate for the city,” Sandoval said.

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