Elk Grove PC Approves Redesigned 'Outlet' Mall, Possible Litigants Calls Agreement a 'Sham'

September 19, 2014 | Although city leaders may hope last night's approval by the Elk Grove Planning Commission to reconfigure to Elk ...

September 19, 2014 |

Although city leaders may hope last night's approval by the Elk Grove Planning Commission to reconfigure to Elk Grove Promenade could jump start construction of the beleaguered shopping center, there were indications that litigation may once again stall the project.

By a unanimous vote, the commission approved plans submitted by the shopping centers owner, Howard Hughes Corporation, to convert the unfinished structure from a so-called fashion mall to an outlet-themed center. To approve the conversion, the planning commission had to find that the shopping center's original developer, Chicago-based General Growth Properties, was in breach of contract of the original terms of the special planning area (SPA) development agreement.
Possible litigation by M&H Realty Partners could 
stall renewed construction of the Outlet Collection at
Elk Grove. 

It was this change that drew the ire of another property owner in the SPA, San Francisco-based M&H Realty Partners. M&H owns two parcels totaling 138-acres directly across Promenade Parkway that are part of the SPA development agreement restrictions.

During public comment, attorney Elisa Paster said that her client M&H does not object to the conversion to an outlet-themed center, but finding GGP and now HHC in breach of contract that essentially allows them to compete directly with M&H's plans for their retail development.

"We strenuously oppose the proposed action here tonight," Paster said during public comment. "What we do oppose, and what is frankly illegal, is to, this sort of conspiracy and a sham to find the applicant is in breach of the development agreement so 'we're just going to let them out of the development agreement,' and 'oh by the way, we are going to adopt a new development arrangement and a new plan that is totally different from the existing plan' and that is going to impact our clients vested rights."

Paster added, "there is no law that supports this sort of conspiracy that is going on between the applicant and the city."

Paster went on to opine that if HHC wants to change the existing agreement, it must be done within the confines of the original agreement, which she said all parties need to be in agreement.  

"The sham is very obvious if you just look at the application," she said. "The application is just not for an outlet mall. It is funny; I didn't hear anything tonight about two very key elements."

The elements Paster noted were the elimination of size limitations for stand-alone commercial uses and eliminationof the maximum square footage for any use. Paster said the elimination of these elements would put HHC in direct competition with M&H.

After the meeting Paster and Daniel Jordan, her fellow partner from the Los Angeles-based law firm of Glaser Weil, stressed their client is not opposed to the outlet mall. Their opposition comes from the elimination of the conditions that would allow non-outlet type retailers such as T.J Maxx or Home Goods locate on the periphery of the outlet mall parcel. 

"Those perimeter buildings had no discussion," Jordan said. "They [planning commission] approved,  but did not discuss."

They also said when the north portion of the HHC parcel opens, the so-called Phase 2, it could host large stores such as a Lowes, Home Depot or Costco.  

Jordan said that development agreement restricted M&H from developing their projects until the completion of the original Promenade project. If this change is approved by the Elk Grove City Council, HHC could build a competing project while they are still required to wait until certain trigger goals are met.  

"We didn't build, because we couldn't," Jordan added.       

When asked if M&H would litigate the matter, Jordan said "we are considering all our options."

Separately, when asked is there were any leases signed for the outlet, HHC's Vice President of Development Mark Putney said he could not comment, but noted they generally announce lease commitments in large groups.  






  


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6 comments

Anonymous said...

Meet the new boss, same as the old boss!

Love Boat said...

Sounds like the city is "selectively" business-friendly, depending upon who writes the biggest checks. The playing field for businesses in this town is as level as the Titanic's last voyage.

Dave on the east side said...

Just another example of the incompetence at city hall. A three party SPA and only two parties are invited to table to discuss modifications. On top of that we don't seek damages for their breach of contract? Guess we don't need the money, huh?

More likely litigation potentially pushing the start date for the mall back another couple of years.

Wonder if Cooper discussed this with the MLS this am?

Anonymous said...

Why does the city continue to create SPA's when they clearly don't follow them...didn't the city re-vamp on the Laguna Ridge SPA multiple times? The triangle SPA looks to be in trouble if the city now tries to build a stadium next to that SPA land; Lent Ranch SPA is now in legal trouble; wonder how the newest Silverado SPA (which I understand is poorly written) stands the test of time. Our city seems to incompetent on so many fronts. Truly uninspiring!!

Anonymous said...

Someone needs to send Gary Davis some balloons!!!!

LOL!!! LOL!!!! LOL!!!!

Hooterville!!! LOL!!! LOL!!!!

Jackie Peters said...

Anon @ 15:56 is absolutely right. Why create SPA's when the City then turns round and ignores them?

Gives no confidence to anyone that the City will follow their own policies and directives. It's like Dodge City in 1870. - Those with the $$ dictate justice.

Time to clean house at city hall.

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