(San Benito News/Ray Quiroga)
By RAY QUIROGA
publisher@sbnewspaper.com
The City of San Benito’s depository bank, Texas Regional Bank [TRB] has filed a lawsuit against the San Benito Economic Development Corporation [EDC], claiming that the entity has defaulted on a lien involving the embattled Resaca Village retail center off of Business 77, near Sam Houston Blvd., in San Benito.
The suit, filed in the 197th District Court on April 1, 2025, came days after officials representing the EDC and the City of San Benito held a press conference to discuss their concerns regarding a lien placed on the Resaca City property by TRB.
The lien was placed on Resaca-front, 10-acre development by TRB, accusing the EDC/City on defaulting of on a $3.4M lien on the property; but during the Thursday morning press conference, City officials insisted that the lien did not go through the proper bureaucratic channels as per the City/EDC’s agreement with the bank, thus calling the lien’s legitimacy into question.
The press conference was led by San Benito EDC attorney Michael Pruneda, who was flanked by San Benito City Manager Fred Sandoval, San Benito Mayor Ricardo “Rick” Guerra, and City/EDC staff. During the press conference, Pruneda announced that the San Benito EDC had officially initiated legal action against TRB to protect public funds, assets, and, “the well-being of the San Benito community.”
In a prior statement, Guerra remarked that, “We recently learned that our City’s depository bank, Texas Regional Bank, recorded a lien of over $3.4 million on our Resaca Village property. Neither our City commission nor the board of directors of our Economic Development Corporation voted for this. We have filed a lawsuit to protect our City.”
During the press conference, Pruneda reinterred Guerra’s statement, further explaining that the a second loan was not approved by the San Benito EDC’s Board of Directors, nor the San Benito City Commission as mandated by the entities’ binding agreement with the bank.
Officials also presented two visual aids, one featuring the timeline of EDC board meetings where no indication of the approval was found, and other featuring an up-close signature of former EDC Executive Director Ramiro Aleman reportedly as the signee on the bank’s loan, according to Pruneda.
Furthermore, the total amount of two liens (the first going through the authorized and documented channels) tallied approximately $6M, yet the most recent tax filing for Resaca Village by its development company, VARCO, indicated its valuation at just over $2M.
Officials at the press conference went on to add that a thorough investigation is underway, which may result in civil and/or criminal charges. Pruneda said that the investigation involves locating and interviewing former EDC board members who sat on the governing body at the time of these events and interviewing past EDC employees.
The underlying issue stems from the City’s ongoing legal entanglement with VARCO, which, in 2018, the EDC contracted to construct and manage the Resaca Village retail center.
The project’s progress slowed during the COVID-19 pandemic in 2020, and VARCO requested an extension of the project’s deadline. In a prior interview, Guerra said VARCO, hoping for a second extension, last spring, sent a representative to speak with him and the city manager. They agreed to discuss the project with VARCO, but the City wanted to renegotiate the contract because the original one had expired.
Shortly after, Guerra received a call from a reporter about VARCO suing the EDC. “By the time I got back to the City, I got a call from another newspaper… and that’s how we found out (about the suit),” Guerra previously explained.
Guerra claims VARCO never “came to the table” to discuss the matter properly before suing. Three years before Guerra’s run as Mayor, the EDC entered its contract with VARCO to construct the Resaca Village shopping plaza. Now, some seven years later, the project is still unfinished, and the EDC wants to take it into its own hands. VARCO sued the EDC to maintain control of the development, and the EDC countersued for nonperformance.
In their suit against the EDC, TRB claims that the entity broke agreements with VARCO, which stood as a basis of its loans to the company. The bank is demanding $1 million in damages from the EDC. The bank “relied on such promises in making and securing the 2019 loan and the 2023 loan,” the lawsuit states.
In its lawsuit, the bank states the agreement “provides that VARCO may pledge its interests in the leasehold property and grant deed of trust liens and/or security interests in to a lender which provides it financing or refinancing for the development, operation or management of the property.”
“[SB]EDC’s actions in executing and filing the notice of termination failed to comply with the terms of the 2019 consent and 2023 consent and are wholly improper,” the suit read. “The notice of termination is void and/or voidable and of no force or effect. Even if the lease terminated, [SB]EDC must issue a new lease on the same terms.”