Houston investigative firm probing San Benito involvement with VARCO

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An investigative firm is probing the San Benito Economic Development Corporation’s involvement with a company developing the city’s first resaca-side commercial center.

On Thursday, Wayne Dolcefino, owner of Houston-based Dolcefino Consulting, declined to disclose his client’s name while describing his investigation as surrounding the EDC’s involvement with VARCO Real Estate, a Brownsville firm developing the Resaca Village project off Business 77.

John Flores

Meanwhile, Paul Serafy, an attorney representing VARCO, said the company did not hire Dolcefino’s firm.

Last week, the firm tipped off San Benito police about then-EDC board member John Flores Jr., who officers arrested on a felony charge of failing to register as a sex offender after moving here, Dolcefino said in an interview, adding his investigators “stumbled” upon Flores’ case while probing the EDC.

On Wednesday, Flores said he had resigned from the EDC’s board.

“People hire us to investigate,” Dolcefino said. “The VARCO thing’s one of the things we’re investigating down there.”

The firm is “investigating the conduct of the EDC and allegations some public officials are trying to chase away economic development because they want someone else,” he said. “Are they doing it to take away that shopping center in the 11th hour?”

As part of the probe, the firm is investigating EDC board member Jose Morales and his wife, City Commissioner Deborah Morales, Dolcefino said.

“The VARCO people feel they’re being shaken down by Joe Morales,” he said.

On Thursday, Jose Morales and Deborah Morales did not respond to messages requesting comment.

Dolcefino described his investigation as “ongoing.”

“We investigate governments,” he said during the interview. “It’s not a secret that our investigating media firm investigates EDCs around the state. Everything we do or don’t do is based on journalistic principles. People fund our work but they don’t control editorial.”

On Dolcefino Consulting’s website, Dolcefino describes himself as an former award-winning investigative reporter with ABC 13 in Houston.

“Dolcefino Consulting is an investigative media consulting firm, hired by companies, law firms, private citizens and taxpayers to expose injustice, fraud, and abuse of power,” the website states.

But some city commissioners believe the investigation was launched to try to “intimidate” officials.

“I’m not going to be intimidated by an organization that has a lot of money and a lot of political influence,” Commissioner Pete Galvan said Wednesday in an interview. “People are tired of the old school politics. They can do as much searching as they want. They’re going to waste their time. There’s a new generation of leadership and they’re hitting it head on.”

Meanwhile, Commissioner Tom Goodman described the investigation as “big-city politics coming to San Benito.”

For about two months, Resaca Village has been the center of a legal battle.

On April 29, VARCO filed a lawsuit against the city, claiming the EDC breached the parties’ contracts surrounding the development of Resaca Village, failing to “honor its obligations” under an agreement extending its construction timeline while claiming its amendments “void” because city commissioners had not approved them.

Resaca Village is pictured Friday, April 14, 2023, in San Benito. (Denise Cathey/The Brownsville Herald)

In March, VARCO stated, the EDC declared the company in breach of contract.

“SBEDC purported to terminate the performance agreement and the lease agreement and demanded that VARCO cease construction and turn over operations of Resaca Village,” the lawsuit states. “It made no attempt to reimburse VARCO for the over $8 million that VARCO poured into the construction and operation of Resaca Village. Instead, it wrongfully demanded VARCO pay an additional $1.8 million.”

In response to the company’s lawsuit, city officials said they would take on the Resaca Village project to complete its development.

“To date, the terms of the agreement have not been fulfilled and city leaders took the necessary action to ensure that taxpayers would not be in a position to return the funds or suffer any penalties,” officials said in a statement. “City leaders want to ensure that the development is completed, successful and provides quality-of-life opportunities within federal guidelines, even if that means completing the project ourselves or through other qualified partners.”

On May 21, Justice of the Peace Chuy Garcia denied the city’s request to evict VARCO from the Resaca Village project site.

While Goodman called on VARCO to discuss resolving the dispute, Serafy said the city hasn’t responded to the company’s request to meet.

“I would love to sit down and have a conversation with them,” Goodman said. “My desire to have a conversation is to avoid litigation. No one wins in litigation.”

Following Garcia’s ruling, VARCO is trying to resolve the issue, Serafy said.

“Our focus is resolving the issues with the EDC and finishing construction,” he said. “We’re focusing on making sure Resaca Village is successful .”

After launching construction of Resaca Village in 2019, in March 2020 the coronavirus pandemic’s outbreak spurred a national economic downturn slowing the plaza’s leasing while material costs soared, leading VARCO and the EDC to enter into performance agreements extending the four-phase project’s original completion date of December 2022.

As part of the city’s fourth agreement extending the company’s construction deadline to May 1, 2024, VARCO is paying the city $500 a day for every day the projected remains uncompleted.

In 2018, the EDC leased VARCO the 9.8-acre resaca-side tract off Business 77.

Under the parties’ original contract, VARCO agreed to pay the EDC 10% of the development’s property taxes for 15 years, at which time the agreement would give the developer the option of buying the property for $1.

Here’s the latest update: 

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