Texas Supreme Court rules in favor of Hays Street Bridge group

by Ben OlivoMarch 15, 2019
This property next to the Hays Street Bridge has been the object of litigation for seven years. Photo by V. Finster | Heron

This story has been updated.

The Texas Supreme Court ruled Friday in favor of the Hays Street Bridge Restoration Group regarding its seven-year legal fight over how a property next to the bridge at Cherry and Lamar streets should be used.

The 1.7-acre property at 803 N. Cherry St., on the edge of the rapidly-changing near East Side neighborhood of Dignowity Hill, is currently owned by an entity managed by developer Mitch Meyer, who wants to build a five-story, 127-unit market-rate apartment building there. In 2012, the city agreed to sell the land to Eugene Simor, owner of Alamo Beer Co., for the apartment project headed by Meyer.

That same year, the restoration group sued the city, claiming the city had reneged on a 2002 memorandum of understanding in which it agreed to accept the donated land for a public-use project.

In 2014, a jury agreed with the group, but the district judge presiding delivered an ambiguous ruling on how the land should be used. Later that year, the city made the land sale official, and the bridge restoration group sued the city in District Court, claiming the sale violated the jury verdict.

The city appealed to the 4th Court of Appeals and won. The court ruled the city could not be sued because it has governmental immunity under the Local Government Contract Claims Act.

That's when the Hays Street Bridge Restoration Group took the case to the Texas Supreme Court, which heard oral arguments on Sept. 13.

In its decision on Friday, which was delivered by Chief Justice Hecht, Texas' highest court said the City of San Antonio's governmental immunity, a statute that protects local governments from being sued frivolously, can be waived in this case even though the group is not seeking money damages, but instead wants the land to become public use.

The ruling reverses the judgment of the 4th Court of Appeals and sends the case back to that court for "further proceedings."

Amy Kastely, the group's pro bono lawyer, said it's time the city "do the right thing" and figure out a way to reverse the land sale, and convert the vacant land into a park—which would become a learning center and park centered on the history of the Hays Street Bridge—which she said would honor the original 2002 memorandum.

"The restoration group has repeatedly offered to figure out a way for this to be made accessible to the public," Kastely said in an interview with the press on Friday. "Over and over again, we have stepped forward, willing to do that and we've been met with absolutely no response (from the city)."

In a statement issued Friday afternoon, the city of San Antonio said the ruling would not impact the land sale or development on the property.

"The ruling does not impact current or future development in the area," the city said in a statement released by spokeswoman Thea Setterbo. "The Texas Supreme Court sent the case back to the Fourth Court of Appeals for consideration of several other issues raised by the city in the appeal."

About two weeks before oral arguments were heard at the Texas Supreme Court in Austin, the city filed a motion asserting the same thing—that the case was moot because it said it had already satisfied the 2014 district court decision.

In it, the jury found the city had "failed to comply with the MOU with respect to the property" located at 803 N. Cherry St. Based on that finding, the district judge presiding at the time then ordered the city to "allocate, apply and use all funds raised" by the restoration group, including the property itself, to costs associated with the Hays Street Bridge project.

The jury verdict also said that the property was never "owned, held or claimed as a park."

The city interpreted the decision by selling the land and applying its proceeds toward the project, it says.

"The city applied proceeds from the sale of the property adjacent to the Hays Street Bridge to the budget for the restoration of the bridge, which the city contends fulfills the 2014 judgment of the district court, and any requirement of specific performance," the city said in its statement.

It's an argument the Texas Supreme Court disagreed with when it—in the judgment released on Friday—denied the city's motion to dismiss the case based on its claim of mootness.

"A party’s failure to prevail on a claim or defense does not mean that it was moot from the beginning," the judgment reads. "The city claims to have satisfied the judgment, but the Restoration Group’s contrary contentions remain viable. At this point, the case is not moot. The city’s motion is denied."

Kastely mentioned at least two situations where the land sale could be reversed—because the name of Simor's entity the City Council agreed to sell to did not match the name of the entity on the deed and because the entity has violated deadlines outlined in the contract, she said.

"In other words, they are not bound by this contract with Alamo Beer, and so the City Council has the power to say, 'This is a terminated contract (and) we are going to use the land for a public use,' " Kastely said.

In an interview with the Heron the day of the oral arguments on Sept. 13, Meyer said the Bridge Apartments project had been delayed 14 months and that, during that time, construction costs had risen 6 percent. In 2017, Meyer's development group, 803 North Cherry LLC, and the city agreed to an incentives package worth an estimated $1.2 million. At the time, the Bridge Apartments was expected to cost $14.6 million to build.

He also said he was proceeding with the project, but wanted to wait until after the Texas Supreme Court ruling to do so.

"There's just so much controversy around it—(the Texas Supreme Court decision) doesn't affect my property at all, but I want to be lean and clear when I start (construction)," he said.

On Friday, Meyer nor Simor did not return an interview request.

The decision by the Texas Supreme Court is the latest ruling regarding the legality of the land sale by the city to Simor.

Last year, on another front, the bridge restoration group, which lead the effort to restore the Hays Street Bridge into the destination it is today, fought the city on the Bridge Apartments' design.

In late 2017, early 2018, the city's Historic and Design Review Commission twice denied Meyer's design for the project. But on March 23, 2018, former City Manager Sheryl Sculley used her power, granted to the city manager under city statutes, to reverse the HDRC's decisions. She gave Meyer a set of stipulations to follow, and ultimately approved the development on July 3 of last year.

[ Editor's Note: For a recap of the controversy surrounding Sculley's decision, read "Analysis: Explaining the Bridge Apartments revisions that never happened." ]

The group has long said a development on that corner would block views of the historic bridge and the downtown skyline behind it. It has also says the development of the property would expedite the gentrification of the Dignowity Hill neighborhood, whose property values have risen 210 percent from 2014 to 2018.

In interviews granted at the time of the land sale, Simor pointed to The High Line in New York as an example of development built around a linear public space. He also said he wanted to play his part in restoring Dignowity Hill, which was once a prominent neighborhood.

Setting It Straight: A previous version of this article said the 2002 memorandum of understanding (MOU) was for a park. The MOU never mentions the word "park." Also, the Texas Supreme Court's judgment has been clarified.

Previously published
» July 22, 2018: In Dignowity Hill, views are nuanced on incoming apartments
» July 17, 2018: Analysis: Explaining the Bridge Apartments revisions that never happened
» July 10, 2018: Judge denies request to freeze permits for Hays Street Bridge apartments

Full disclosure: Amy Kastely and Eugene Simor are monthly contributors to the Heron.

Contact Ben Olivo: 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

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