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Members of the Graham City Council meet Thursday, May 14. Following an executive session, the council agreed to a $139,500 settlement agreement pursuant to a lawsuit with RKJ Adventures, LLC.
Following a settlement with RKJ Adventures, LLC approved by the Graham City Council in May, the city has released a statement regarding the lawsuit.
The city entered into a lease with RKJ Adventures, LCC in 2022 to develop and expand the Lake Eddleman RV Park. The city was operating a small RV park at the location and was seeking an operator to expand options for those at Lake Graham and Lake Eddleman.
“During 2022-2023, the city discovered that the real property assigned under the lease was
mistakenly identified as wholly owned by the city when in fact a portion of the property was leased by the city from the Vistra, formerly Luminant, electrical generation company. The city, and others, had in fact believed the land in question belonged to the city,” City Manager Eric Garretty said.
The city manager said in the statement that once the mistake was discovered, the city explored options to resolve the property issues which led to the lawsuit filed by RKJ.
“As a result of the mediation, the city agreed to a mediated settlement payment of $139,500 in exchange for a release from any and all claims and possible claims related to the Lease,” Garretty said. “The city council formally approved this settlement, finding it was in the public interest to resolve this matter through mediated settlement. Under the terms and conditions of the settlement agreement the city will make no further comment regarding this action.”
During a special-called meeting of Graham City Council held Monday, May 11, the Graham City Council moved to authorize the city attorney in conjunction with litigation counsel to accept and approve a mediator settlement proposal regarding the lawsuit.
The city council met Thursday, May 14 in executive session to consult with their attorney regarding the lawsuit and took action after reconvening.
The city’s Lake Fund contains all revenue generated from the sale and lease of properties located on Lake Graham and Lake Eddleman.
In June 2021, the city of Graham was seeking proposals for projects at Lake Eddleman and created a committee to review a business proposal for the one bid received from RKJ Adventures.
Robert and Ramsey Jackson, of RKJ Adventures, submitted a proposal after the city ran a public notice seeking sealed bids for the purchase or lease of the city property at Lake Eddleman Park to be used for RV and “enhance the quality of recreation surrounding Lake Eddleman.”
According to the proposal, RKJ Adventures was looking to purchase an RV park and build a small business for their future in a growing community.
The bid proposed by RKJ Adventures was $392,000 for Lake Eddleman Park, purchasing the entire 15.337 acres from the city of Graham and building an RV park with public recreation facilities to be used by those in the area and visitors.
The proposal included documentation from Bank of the West for a commercial loan in the amount of $1.1 million to be used to purchase the real property and make the needed improvements to update and expand the existing RV park at the lake.
The project was proposed to be completed in three-to-four phases, which would have started with the RV park. Phase 1 was stated in the proposal to be completed by May 2022.
The city decided to discuss a long-term lease agreement which would not require an election and could keep Lake Eddleman as a revenue stream for the city. The city council approved the agreement in September 2021 and it was later signed by the parties in February 2022.
RKJ Adventures entered into a lease agreement with the city of Graham for 49 years which gave them the rights as a tenant to expand and operate a campground and park at Lake Eddleman Park.
RKJ Adventures provided written notice to the city Sept. 1, 2022 of the disputes under the lease and demanded payment for damages from the city from an alleged breach of the lease agreement. According to a complaint, the parties were unable to resolve the dispute.
The company argued in the lawsuit that the city failed to fulfill its obligations under the approved lease when it could not provide the exclusive use of the premises due to the fact they did not own a portion of the land.
Additionally, they argued the city did not comply with its promise and warranty in the lease, misrepresented that it owned the acres within the leased premises and caused injury to RKJ Adventures due to the misrepresentation, with an amount to be determined at trial.
According to the lease agreement, RKJ could expand and operate the RV campground and park, including access for the public to use the adjoining lake and boat ramp for lake activities such as boating, fishing, canoeing, etc.
It was in April/May 2022 that RKJ Adventures discovered the city had sold a portion of the premises to Texas Electric Service Company, now known as Luminant Generation Company, LLC.
“Prior to the execution of the lease, the city knew or shown have known that it did not own the full 15.337 acres of the premises leased to RKJ, yet the city made material misrepresentations to the contrary that RKJ reasonably relied upon in entering the lease,” the petition from RKJ states.
Because the city was not in ownership of the full area, RKJ Adventures did not have exclusive use of the leased premises.
Additionally, Luminant did not allow RKJ Adventures to occupy or use the portion of land it owned in the lease and offered to enter a separate lease.
“To enter into a lease with Luminant, RKJ sought additional financing with a bank, but the bank informed RKJ that it would not approve a loan with multiple landlords given the increased risks involved,” the petition from RKJ states.
From May 18, 2022 through Aug. 16, 2022, RKJ Adventures operated an RV campground or park on Luminant’s land through a license with Luminant instead of using the land in the lease.
