Judge dismisses Williamson County’s lawsuit against Austin for Candlewood Suites project

AUSTIN (KXAN) — A Williamson County district court judge has rejected a lawsuit from Williamson County that sued the City of Austin over a project to turn a former hotel into homeless housing.

The judge rejected the lawsuit Aug. 23. The order said the case “is dismissed with prejudice for lack of jurisdiction.”

Williamson County filed the lawsuit in June 2022, a day after Austin City Council members approved funding for the project. The county’s petition claimed the property is zoned for commercial use only. The lawsuit sought a temporary restraining order against AHFC Pecan Park PSH, a nonprofit created by the city, to stop the conversion of the hotel.

In a statement, a City of Austin spokesperson said the city appreciates the court’s careful consideration, and the decision means the Pecan Gardens project can proceed to address homelessness in the region.

“We are hopeful that neighbors experiencing homelessness will soon benefit from the renovated housing community and services Pecan Gardens will provide,” the city’s statement read in part.

A Williamson County spokesperson said the county does not wish to comment at this time.

The project is a city-funded renovation of the former Candlewood Suites hotel into permanent supportive housing for 78 people over the age of 55 with disabilities. In 2021, the city bought the property, located on Pecan Park Boulevard in northwest Austin, for $9 million.

The city has a contract with Family Eldercare to operate the property. Family Eldercare CEO Aaron Alarcon told KXAN last month that it plans to finish construction in January 2024.

Last week, Austin council members postponed a vote to extend the contract with Family Eldercare.