GALVESTON - A rainy weekday morning is not an ideal time to visit Beachtown, an upscale development near the eastern tip of Galveston Island. Its grand, Victorian-inspired houses are mainly weekend getaways. The restaurant, ice cream parlor and bike shop were locked up when I stopped by on Wednesday, as was the sales office.

A lot of empty land surrounds Beachtown, which lacks many of the features its developer agreed to build in a 2004 deal for public financing through a Tax Increment Reinvestment Zone, or TIRZ. There is no sign of a promised hotel, for example, and there appear to be far fewer homes than the originally planned 306 single-family houses, 200 multifamily units and 250 units of retirement housing. The project was to have been completed by 2013.

A few years after that deal was struck, a hurricane slammed into Galveston Island and an economic recession gripped the nation. These calamities doubtless contributed to the development's problems, but local political machinations are at work in this story as well. A lawsuit filed this month reveals the drama that has unfolded during the 14 years since the Galveston City Council created TIRZ 13 as a financing vehicle for Beachtown.

Among the highlights: The Galveston Island Redevelopment Authority, charged with overseeing the project, declared the developer in default and threatened to seek damages. The City Council, allegedly succumbing to pressure from the developer, replaced three of the authority's five members in mid-term. Secret negotiations followed, leading to a new agreement with terms dramatically more favorable to the developer, including a provision giving him autonomy to build as much - or as little - as he likes.

Breaking apart the Beachtown deal

This document shows changes to a revised agreement for the development of Beachtown in Galveston. Additions to the original agreement are highlighted in yellow; deletions are written in the margins. Source: Elizabeth Beeton, lawsuit plaintiff

Notwithstanding the legal claims in the suit, which allege that the authority's board repeatedly violated the Texas Open Meetings Act, its narrative of the project's history is supported by documents provided to me by one of the plaintiffs, Elizabeth Beeton, a former Galveston City Council member. (Disclosure: Another plaintiff, Jackie Cole, is the wife of Harvey Rice, a Houston Chronicle reporter based in Galveston.)

Developer Tofigh Shirazi declined to comment, writing in an email that he would rather have the legal dispute "addressed and resolved in the court of law" than in the news media. My calls to James Ware - the chairman of the redevelopment authority, which is the defendant in the suit - and to his lawyer were not returned. The authority's response offers a general denial and claims immunity as a governmental agency. The authority's conduct "had a reasonable basis in law," the brief filing states.

Among the many questions raised by this project, two issues stand out: conflict of interest and the lack of transparency despite the substantial public investment.

Shirazi chairs the board of the TIRZ, the city-created entity that uses revenue generated within the zone for public improvements - in this case, infrastructure like streets and sewers for the Beachtown project. The developer's goal is to make a profit, while the TIRZ board should represent the interests of taxpayers in such investment zones. The arrangement is legal, however, and it is not uncommon for TIRZ boards to include developers of projects within the zones.

Discussions about a new Beachtown development plan, which began in 2014, were shrouded in secrecy. The talks took place in closed redevelopment authority sessions announced with vague public notices ("Update on discussions with Zone 13 developer"). Attorney-client discussions were the purported justification for the closed sessions.

But even that process wasn't secretive enough, it seems. On Jan. 20, 2014, Shirazi, Ware and Michael Kovacs, Galveston's city manager at the time, signed an agreement stipulating that their discussions must remain "absolutely confidential." It went on: "All parties agree not to disclose the content and terms of the discussion and negotiations, whether to the media, the public or any other persons except as specifically provided herein."

I asked Bill Aleshire, a former Travis County judge who has practiced open-government law for 14 years, to review the non-disclosure agreement and the pleadings in the case.

"I've never heard of or seen such a gag-order agreed to by a governmental body as part of a contract negotiation," Aleshire wrote in an email. "I cannot imagine how that serves the public's interest. (The Open Meetings Act) does not require government officials to say anything, but it does not permit government officials to hide their deliberations about public business."

The public interest in Beachtown is substantial. Scott Bounds, a lawyer for the redevelopment authority, said in a 2011 letter that failure to build out the project as planned would lead to the TIRZ paying more than $40 million for about $10 million in public improvements - "public improvements that another developer would have been expected to construct with their own money without reimbursement from public tax funds."

By any measure, that's a very bad deal for taxpayers.