Midway Slaps Hutto With $300M Lawsuit Over Cottonwood Deal

A Houston developer is taking its fight with a fast-growing Austin suburb to court, accusing city leaders of blowing up a long-planned mixed-use project and demanding nine-figures in damages.

Midway Development Group filed a lawsuit last week against the city of Hutto, Mayor Mike Snyder and the Hutto Economic Development Corporation, seeking more than $301 million. The Austin Business Journal reported that the petition, filed in Harris County District Court, includes $50 million in alleged lost profits and $250 million “for the benefit of the city’s residents.”

The suit landed roughly five months after Hutto’s board voted to cease negotiations with Midway on the 250-acre Cottonwood Tract, a marquee site envisioned as a multi-phase, decadeslong buildout. Midway alleges breach of contract, tortious interference, bribery and civil conspiracy, sharply escalating what had been a public war of words over the project’s pace and financing.

Midway was selected in December 2023 to transform the tract into a master-planned district with apartments and townhomes, big-box retail, restaurants, parks and trails, sports facilities and a potential school site. Executives pitched the project as a retail and commercial catalyst akin to Hutto’s Co-Op District, aimed at expanding the city’s tax base.

Mayor Snyder, who also sits on the EDC board, publicly pulled the plug in October, citing a “lack of progress.” In a Facebook post responding to the lawsuit, he said the city received few concrete concepts and “a lot of excuses.” Snyder declined to comment further, saying he had not yet reviewed the filing.

Midway CEO Bradley Freels paints a different picture. The firm said it was engaged with the city for about 18 months, 11 of which were stalled by plans for a highway overpass. Around the same time, city staff allegedly warned that utility service would not be available until early 2028 — a timeline that would hamstring vertical development.

The lawsuit also alleges Snyder pressured Midway to compensate Austin-based development and real estate investment firm Terra Halona and its co-managing partner, Joel Scott, suggesting that unless payment was “satisfactory,” the deal would unravel. Terra Halona had helped introduce Midway to city officials, but was not part of the developer’s formal team, according to the filing. Both Terra Halona and Scott are named as defendants.

At the heart of the dispute is financing. Midway claims a memorandum of understanding contemplated tools such as a municipal management district to fund infrastructure, according to the publication, while city officials balked at the potential cost exposure.

— Eric Weilbacher