Westin Hotel developer accuses Councilman Bill Cox, former councilman Thad Helsley of extortion

Developer cites extortion claim under the Racketeer, Influenced, and Corrupt Organizations Act

By Brandi Hart
McKinneyupdate.com editor
Created at 11:23 p.m. on May 26, 2009

McKinney Shores Hotel Partners, a subsidiary of O & S Holdings, Inc., the developer of the Westin Hotel McKinney, is accusing former council member Thad Helsley and current Mayor Pro Tem Bill Cox of extortion in an answer filed to the McKinney Economic Development Corporation's initial petition for suit filed against MSHP.

MSHP filed the answer to the suit on May 22 in the 296th District Court in Collin County, and also named the city of McKinney and the McKinney Community Development Corporation as defendants, in addition to the MEDC.

According to the suit answer, MSHP officials filed a claim under the Racketeering, Influence and Corrupt Organization Act (RICO) that Helsley and Cox extorted $50,000 from MSHP in 2008. The suit answer states that MSHP officials traveled to McKinney on Feb. 27, 2008, the day before the groundbreaking ceremony for the Westin Hotel to finalize agreements on the project.

According to the suit answer, former City Councilman Helsley and Mayor Pro Tem Cox "confronted Chris Shane (Vice President of Acquisition for O & S Holdings, Inc.) in the council chambers at City Hall. The councilmen told Shane that in order to finalize the agreements and break ground on the project, MSHP had to contribute $50,000 to the McKinney Veterans Park Fund. Faced with potential breaches of timing requirements for the ground breaking the next day, MSHP principals had no choice but to capitulate to the councilmen's extortion request."

To read some of MHSP's answer to the MEDC's law suit, click here .

City Manager Frank Ragan said that the MEDC was forced to file a lawsuit to move the Gateway, the former name of the Bridge Street Town Centre project forward because the developer did not perform its obligations to build the retail project.

"While litigation is typically a last resort for the City, we intend to vigorously defend the wrongful claims brought by the developer in the lawsuit," Ragan said.

City Attorney Mark Houser said that MSHP made a voluntary donation to the Veterans Memorial Park Fund.

Helsley and Cox served on the city's negotiating team for the hotel project. Cox did not want to comment on May 26 as he had not seen MSHP's answers to the suit, and said he needed to speak with Houser and City Manager Frank Ragan. Helsley did no return a phone message about the issue left as his house on May 26.

MSHP's answer to the MEDC's petition for suit also claims that Shane was required to make an announcement about the "gift", or donation at the ground breaking ceremony on Feb. 28, 2008 but it is uncertain whether the $50,000 was ever used for the park.

The Veterans Memorial Park has not been constructed as the city and the McKinney Armed Services Board are still collecting donations to build the memorial in Craig Ranch. More information about if the $50,000 donation will be made available on McKinneyUpdate.com when it becomes available.

The MEDC initially filed a petition for suit against MSHP on April 7 of this year. O & S Holdings and MSHP were in charge of developing the 212 room Westin Hotel at the northeast corner of Spur 399 and US 75 in the 90-acre development that is known as the Bridge Street Town Centre. Development has ceased on the Westin Hotel since October, 2008 after O & S Holdings, Inc. issued a stop work order to Beck Construction, who was building the hotel, because O & S Holdings could not secure financing to finish constructing the hotel.

The MEDC and the city terminated the master development agreement for the Bridge Street Town Centre project earlier this year. The MEDC’s attempts to pay off two loans that are owed by the MEDC to the developer (O & Holdings, Inc. and MSHP) were not honored by McKinney Shores Hotel Properties, Inc., said David Pitstick, MEDC Board President and CEO in a statement issued in April about the law suit. To learn more about the MEDC's petition for suit click here to read the initial article published on McKinneyUpdate.com in April.

The Bridge Street Town Centre is comprised of 12.5 acres owned by MSHP and city, who own separate condominium units; 60 acres owned by the MEDC; and JDN Real Estate, another national shopping center developer, owns approximately 10 acres.

The city filed a condemnation case against JDN Real Estate more than two years ago to ask the court to condemn the property so it could be used for parking in the Bridge Street project. The judge who oversaw the case granted JDN's motion for summary judgment motion, or ruled in favor of JDN, and denied the city's motion for summary judgment, Houser said. Thus, the land has not been condemned.

McKinney Shores Hotel Properties  also cited, per the answers to the suit, the city officials promised that the JDN property would be condemned, but not deliver on the condemnation as one of many reasons why MHSP is counter suing the city, the MEDC, and the MCDC. The case is still pending and has a September trial date, Houser said.

Collin College also owns 5 acres on what is known as the Bridge Street site.Collin College is currently building its Higher Education Campus and Administration Building across from the Medical Center of McKinney. Collin College has not been named as a defendant in the MEDC, JDN Real Estate and MSHP/O & S Holdings, Inc. law suits, and is reportedly not being affected by the suits.

The multi-story campus is currently the only piece of the Bridge Street site, which initially had more than 60 retail stores, a 2,000 seat conference center that would have been connected to the Westin Hotel, and a 14 screen movie theater planned, that has come to fruition.

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