09/24/2020 – Trophy Club, TX
The Trophy Club Journal has uncovered a document that shows former Councilman Rhylan Rowe may have known in advance that the property for Breadwinners was going to be sold. Rowe not only didn’t inform the Town Manager or the Council but instead urged the town to change the terms of the agreement in favor of the Developer.
The shocking email, which could only be understood in it’s totality through the lens of history, implies that Mr. Rowe potentially knew about a pending property transfer, and was urging the Council to modify the Developers Agreement so that the incentive payments would no longer go to the future property owner … but instead, directly to the current developer, Old Town Development (which is owned by Chris Gordon and Justin Springfield).
Following discussions with the Town Attorney, David Dodd, about other issues in the agreement, Rowe sent an email to David Dodd, fellow councilman Tim Kurtz, Mayor Nick Sanders and Town Manager Tom Class on May 30, 2018. (Copy of email attached.)
The email reads, “Thanks for providing this. At our next meeting, I would like to have an amended agreement in front of us for review that provides for payment of the Breadwinner’s obligation directly to OTD, continues to pay the lender directly for the HG Sply parcel, but is adequately future-proofed in such a way that if/when the HG property changes hands, we won’t have to amend the agreement again to make the same change. Going back to the discussion in 2014, and looking at how we came to be paying the lender directly in the first place, we would’ve done well to structure it like that in the beginning. Are there any other cleanup items that we need to address?”
The following day on May 31, 2018, property tax records indicate that the Breadwinners property was sold, without notification to the town as required in the Agreement, to a company called “Bread 114, llc. That company was formed just 30 days prior, on April 30, 2018 by Steven Wood.
In a Facebook discussion this past Tuesday, Rowe admitted that he knew the property was under contract in May, 2018. However, in that conversation Rowe fails to mention that he is the one that instigated the discussion with the council about changing the agreement.
Even more concerning, two days after the sale on June 1, 2018, Chris Gordon, was still discussing with Dodd that the lender for HG Sply was requiring that they pay off the land for Breadwinners. In that email exchange, no mention was made that OTD had already sold the property.
While Rowe maintains that the Town Manager did know about the sale, we could find no evidence of this. In fact, the only person who has admitted any prior knowledge of the sale is Rhylan Rowe. In fact, the evidence provided to TCJ in an Open Records Request show that it wasn’t until 10 months later that Town Manager Tom Class discovered the sale after following up on an inquiry from Mayor Pro Tem Philip Shoffner.
That investigation was the catalyst that uncovered alleged conflicts of interest with Councilman Tim Kurtz and OTD.
Following the sale of the property, but before discovery by the Town Manager that the property had been sold, the Agreement with OTD was modified in June 2018 in a joint session with the Town Council and the EDC to reflect that incentive payments would be paid directly to the Developer, and not the property owner.
But the essence of that discussion was rooted in the belief that the Council was being proactive. At that point in time, most of the Council had no idea that they were being misled and that the Breadwinners deed was already transferred. Nor did they know at that time that OTD has signed an amended agreement for a property that they no longer own. As for the town, Sean Bone signed the document on behalf of EDC and Mayor Sanders signed on behalf of the Council.
Mr. Class discovered the sale shortly before March 26, 2019. It was at that point when Mr. Class intended to bring the issue up to the Council in an executive session, but that meeting fell apart over a discussion regarding the email between Kurtz & OTD and the admission by the Town Manager that he had responded to an inquiry by the Texas Rangers. (Click here for the story of how Eric Jensen cost the town $400k.)
By this point in time though, Rowe had already resigned and was not part of that conversation.
Suddenly, the issue about the sale of the property became secondary to the primary issue of alleged corruption. But the threat of withholding money to the Developer due to a potential breach of contract issue brought the issue to the forefront again. Like they say, “It’s always about the money”.
But there are questions that were never answered.
According to the Agreement, which was amended earlier that year on January 18, 2018, paragraph 3.2(d) read,
“Discretionary Sale by OTD. The Town and/or EDC shall have the Right of First Refusal to purchase the Property if Developer desires to sell the Property with or without Public Improvements or Property Improvements at any time during the Right of First Refusal Term (defined below). The right of Town and/or EDC under this section shall remain in effect until such time as two (2) separate restaurants on the Property have each received a Certificate of Occupancy and Developer complies with all of its obligations under § 3.2 and Section 4.1(a) of this Agreement (above), at which time the Town’s and EDC’s right of First Refusal shall terminate and be of no further force and effect (“Right of First Refusal Term”). If at any time during the Right of First Refusal Term Developer desires to sell the Property, Developer shall first advise Town, EDC, and TIRZ in writing by providing the name of the potential purchaser of the Property. Town, EDC and TIRZ shall have the right to reasonably approve any and all future purchasers of the Property during the term of this Agreement. Upon approval by Town, EDC and TIRZ of the proposed purchaser of the Property, this Agreement shall be fully transferrable to the approved purchaser. Town, EDC and TIRZ approval shall not be unreasonably withheld or delayed.” [bold emphasis added]
It seems clear that the intent of the Agreement was for the payments to run with the property owner, whomever that may be, not the developer.
OTD lawyers assert that the right of first refusal expired when Breadwinners obtained their Certificate of Occupancy (C/O). However, the agreement clearly requires that (2) separate restaurants have each received their C/O. At this point in time, only Breadwinners had received a C/O so from the perspective of the Town, Old Town Development was in breach of contract.
Eric Jensen speaking in the defense of the Developer, has made the claim that this provision is wrong. That the contract is wrong. That the contract was only referring to the property wherein Breadwinners is located, and not the 2nd property where HG Sply is located.
Debatable? Yes. Perhaps the agreement is wrong, but perhaps it isn’t. And if it is wrong, then which part? Interpreting the intent of a contract is often subjective. Regardless it is exactly what the myriad of lawyers on both sides agreed to … and it is exactly what Councilman Jensen agreed to when he was on the EDC, even though he later admitted he never read it.
Regardless, at the time in question, all parties were working under the belief that it was a valid provision of the Agreement. Had they not believed it to be so, there would have been no reason to modify it. Except, for that pesky little provision about, who gets the money?
In an undercover investigation, the Trophy Club Journal reached out to Mr. Wood, the current owner of the property, who stated that he was unaware that the funds were fully transferrable to the approved purchaser of the property. Nor was he aware the terms of the Agreement were changed after the property was transferred to him. Still, at the time of our inquiry, he seemed unphased by this revelation…perhaps he just needs time to think it through and understand how much money he left on the table.
The real questions that remain are:
- Why was Mr. Rowe more concerned about the welfare of the Developer than the interests of the town? (IE: the people whom he represents).
- Why is it that Mr. Rowe never mentioned the impending sale of the property which he knew was coming at the time he suggested changing the terms of the Agreement?
- Why does Mr. Rowe continue to mislead the people of Trophy Club about his involvement and friendship with the Old Town Development?
- Why were our town representatives so eager to modify the Agreement in the first place? Who was representing the people? Why MUST the agreement be amended to favor the developer … after the fact?
In a fair negotiation of an Agreement, especially in a modification to an existing Agreement, each party should receive a benefit. Otherwise, why agree to modify it? What benefit did the town receive that they didn’t already have? The answer to that question indicates where loyalties lie.
One thing is for sure, if Trophy Club keeps electing (or reelecting) the same people involved with this scandal, we will never get to the truth and we are doomed to repeat the mistakes of the past.
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