Since 2017, El Paso taxpayers have paid $3.3 million in legal fees surrounding the controversial Downtown multipurpose cultural and performing arts center – and the costs will continue to climb as litigation continues.
At least $50,000 has been billed to the city through May of this year by the Alexander Dubose Jefferson Townsend law firm based in Austin and the Kemp Smith law firm based in El Paso, according to documents obtained through the Texas Public Information Act.
City Attorney Karla Nieman, in an interview with El Paso Matters, could not say how much longer the litigation might last, or how much more the legal fees will add up to. There is no cap on the legal costs.
She said the city hired outside counsel due to the complexity of the topic and the volume of the cases filed by the opponents.
Kemp Smith charges the city hourly rates ranging from $220 to $380, while Jefferson Townsend is charging from $200 to $1,000 per hour, documents show. Details of the expenses that were subject to attorney-client privilege were redacted in documents released to El Paso Matters.
About $1.4 million of the total fees was used for legal expenses related to the real estate acquisition of the properties within the arena footprint.
Nieman said the city is proceeding with an appeal to the Texas Supreme Court while it continues negotiations with Max Grossman and Houston preservationist J.P. Bryan. Bryan is funding the legal challenges against the city. Grossman declined to comment on their legal expenses.
A University of Texas at El Paso art history professor who has been active in historic preservation efforts, Grossman maintains that the site and buildings in Duranguito have historic value and should be preserved.
“J.P. and I remain steadfast in our belief that the Duranguito neighborhood is worth saving and that it would be of more economic value to the city fully restored than if it were replaced by an ‘arena’ or anything else,” Grossman said in email responses to El Paso Matters.
El Paso voters in 2012 overwhelmingly approved a $180 million bond issue to build a multipurpose event center, which the city later proposed to build in the Duranguito neighborhood in Union Plaza in Downtown.
The city has about $155 million of the $180 million budget left, according to city documents. Expenses to-date include land acquisition, appraisals, project consulting and unspecified construction costs.
City officials have repeatedly said the project’s cost was underestimated. Multiple projects from the 2012 bond package passed under former Mayor John Cook, former City Manager Joyce Wilson and a prior council cost millions more than what was initially allocated – some in part because the community lobbied for larger-scale projects than were planned under the bond.
The city is now conducting a feasibility study that aims to “reimagine” the project and determine its true to-date cost. The study will also look at the possibility of incorporating existing buildings within the arena footprint into the design – a compromise that could help its negotiations with Grossman.
Lawsuits have lingered and bounced around Texas courts since the city filed a bond validation suit in Austin in 2017. Grossman was a respondent in that lawsuit. The trial court ruled that the city was not authorized to use quality of life bonds to build a sports arena, but an appeals court ultimately ruled in the city’s favor in 2018.
Taxpayers paid about $1.3 million for the bond validation lawsuit, documents show. The city hired three outside law firms for the litigation. Norton Rose Fulbright, the city’s long-time bond counsel, was paid about $738,000, the Denton Navarro Rocha Bernal Hyde & Zech firm based in San Antonio was paid about $56,000 and Alexander Dubose Jefferson Townsend was paid about $500,000, documents show.
Where the litigation stands
Nieman said the recent appeal to the state Supreme Court, if accepted, will determine whether Grossman — as a private citizen — had the right to sue the city in 2019 for acquiring a permit from the Texas Historical Commission to conduct a required archaeological survey.
Grossman’s lawsuit alleges, in part, that the permit granted for the archeological study required by the Texas Antiquities Code prior to performing any work in the arena site was flawed because it didn’t include specialized procedures to allow for the detection of remains of indigenous people including members of the Mescalero Apache tribe, that may buried in the arena site.
“The law does not specify that a third party can sue a government entity for obtaining a permit or prevent the issuance of a permit,” Nieman said, adding the city’s archaeological survey would include the search for and preservation of all potential artifacts.
Nieman said the Third Court of Appeals in Austin already ruled in the Texas Historical Commission’s favor on the same legal issue and determined the THC was correct in issuing the city its permit to conduct the archaeological survey.
She said if the Texas Supreme Court agrees to hear the appeal and rules in the city’s favor, the city can proceed with the archeological survey.
If the court refuses to hear the appeal, it could send the case back to the trial court.
Nieman said the appeal is necessary to ensure the city retains its governmental immunity from lawsuits when applying for permits for other projects in the future.
Asked whether she thinks Grossman will continue to file lawsuits if the state Supreme Court rules in the city’s favor, Nieman said “I anticipate that he will continue to litigate.”
Grossman said he has no comment on his future litigation plans or legal strategies.
The city and Grossman have entered into an agreement that the city will not proceed with the archaeological survey until either there is a settlement among the parties or until 30 days after the conclusion of the appeal at the state Supreme Court.