HOUSTON-Federal judge Kenneth Hoyt has granted the city’s motion to dismiss the case disputing the legality of leasing the Compaq Center to Lakewood Church. If approved, the lease would hand the Compaq Center over to the church for up to 90 years.

Fort Worth-based REIT Crescent Real Estate Equities filed the case in July charging such a lease would violate the deed restrictions put on the property when the late Kenneth Schnitzer donated the land in the early 1970s. According to deed restrictions, the property was to be used for the first 25 years as a municipal sports arena. For the next 30 years, uses are restricted to either continuance as an arena or as a location for offices, a library, a post-office, retail, banks and savings and loan associations.

Hoyt has granted the city’s motion to dismiss the case on the jurisdictional grounds holding that the case is premature. Crescent owns a 4 million sf office center, Greenway Plaza, next to the Compaq Center and has filed an appeal today in the US First Circuit Court of Appeals.

“Crescent believes that Judge Hoyt’s ruling is in error and the lawsuit is ripe for adjudication,” says Paul Dobrowski, attorney for Crescent. “The city’s recent statements that negotiations with Lakewood have been completed and the fact that the Lakewood lease is scheduled on the city council’s November 28, 2001 agenda adds further support to Crescent’s position.”

Randy Pourteau, senior assistant city attorney, tells GlobeSt.com the city will likely be responding to Crescent’s appeal sometime today. He contends that until the city actually enters into a lease, deed restrictions cannot be violated.

“The case isn’t ripe,” he says, ” and it wasn’t ripe when they filed it.”

Pourteau adds negotiating a lease and signing a lease are two different things, but even when and if Lakewood gets the lease, the city plans to require Lakewood to follow the deed restrictions.

Pourteau argues there has not as yet been a ruling as to whether the activities planned by the church for the site violate the deed restrictions.

“We are committed to pursuing our legal rights in this matter,” says Jane Page, Crescent’s senior vice president of asset management and leasing. “While we do not relish a conflict with the City, we have a responsibility to press forward to ensure that the Compaq Center site is put to a use that is complementary to the surrounding master-planned commercial development.”

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