McCombs’ partners sue over downtown San Antonio property deal

A lawsuit against companies tied to the McCombs family alleges minority co-owners were excluded from a multimillion-dollar lease deal involving a downtown San Antonio property and the city.

The property, a former Holiday Inn at 318 W. César  E. Chávez Blvd., was first used by the city early in the pandemic under a temporary agreement and later subleased for longer-term use as a homeless shelter. SAMMinistries operates the shelter.

The plaintiffs — three siblings who hold a minority stake in the property — allege the sublease and a later transfer of control were carried out without their consent.

Siblings Brant Oser Miller, Jay Robert Miller and Robin Nancy Miller Holbrook filed the lawsuit, seeking more than $5 million in damages and a forced sale of the property.

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In their lawsuit, they estimate the property’s value at between $14.7 million and $44 million.

The defendants are Tierra Mercado LP and 318 W. Cesar Chavez LLC, which are tied to the McCombs family, and P. Host San Antonio LP, the former leaseholder. P. Host is affiliated with Pacifica Host Hotels in San Diego.

The defendants deny the allegations and want the case dismissed. On Friday, they moved the lawsuit from state District Court in Bexar County to the Texas Business Court in San Antonio. Andrew Weissgarber, chief financial officer of McCombs Enterprises, said the company does not comment on ongoing litigation.

Property records show the land is owned by Lymarco, a company also tied to the McCombs family, while 318 W. Cesar Chavez LLC acquired the lease interest in 2024 and holds the sublease with the city.

In 2023, the San Antonio City Council approved an agreement to pay P. Host San Antonio up to $8.8 million to lease the property through Oct. 31, 2025, and to pay SAMMinistries up to $7.1 million to operate the shelter. The agreement includes options to extend the lease for up to two additional years.

The dispute centers on a long-standing lease structure that separates ownership of the land from control of the property’s use and income. The Miller siblings own a 20% stake in the property, while a McCombs-linked partnership holds the remaining 80%, according to the lawsuit. 

Under the property’s lease structure, the hotel operator — previously P. Host and now 318 W. Cesar Chavez LLC — controls the right to lease the property and collect rent, including payments from the city.

The siblings argue the lease requires their consent before the property can be subleased or transferred and that those requirements were not followed.

They say they were paid about $2,000 a month for their share of the property, even as the city paid roughly $4.4 million a year under the sublease — an amount that would translate to about $880,000 annually for their 20% stake, according to their claims.

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Court filings say Marsha McCombs Shields, acting on behalf of the McCombs interests, discussed plans with Jay Miller to acquire the P. Host lease and enter into a new agreement with the city.

Shields is the CEO and managing partner of McCombs Enterprises and the daughter of the late billionaire B.J. “Red” McCombs.

In emails cited in the lawsuit, Miller said he supported a short-term arrangement with the city but objected to provisions allowing demolition of the building and broader changes to the lease. He also said he did not consent to giving up the Miller siblings’ rights as co-owners and asked to review final agreements before they were executed.

The lawsuit says that in 1967, the patriarchs of five families — the McCombs, Millers, Saunders, Harwells and Kaliffs — acquired the roughly 5-acre site at 318 W. César E. Chávez Blvd. They built the Holiday Inn for the 1968 World’s Fair.

David Miller, the plaintiffs’ father, developed the resort and retirement community now known as Sunrise Beach Village in Llano County.

The five families executed a 33-year ground lease with Holiday Inns of America Inc.

In 2006, Holiday Inn assigned its interest as tenant to P. Host San Antonio, which continued to operate the hotel.

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The McCombs family, through Tierra Mercado, acquired the lease interest from P. Host in early 2024. The Miller siblings declined to join the partnership and say the deal moved forward over their objections, according to the lawsuit.

After that transaction, the lawsuit says, Shields became “more secretive” in her communications. 

The Millers say they did not learn of the 2023 sublease and the assignment of the ground lease until May 20, 2024.

They argue the property cannot be divided among the owners and should instead be sold, with the proceeds split according to each party’s ownership stake. They also seek a permanent injunction preventing the McCombs defendants from selling the property. 

P. Host is named in the lawsuit because it entered into the city sublease and later transferred its lease interest, actions the plaintiffs say required their consent.

Zachary Fanucchi, a San Antonio attorney representing the siblings, did not immediately respond to a request for comment. San Antonio attorneys Ricardo Cedillo and Brandy Peery, who represent the defendants, declined to comment.