Elk Grove City Council Approves Mall Re-design, But Litigation Could Stall Project

October 9, 2014 | After waiting over six years for construction to restart on the unfinished Outlet Collection at Elk Grove (formerly k...

October 9, 2014 |

After waiting over six years for construction to restart on the unfinished Outlet Collection at Elk Grove (formerly known as the Elk Grove Promenade), the Elk Grove City Council saw light at the end of the tunnel last night as they approved a reconfigured mall design.

The question they may have to ask though is that light an opening, or a train about to spark litigation. 

After hearing a lengthy presentation by Howard Hughes Company (HHC) about their plans to convert the once fashion mall into an outlet center, the Elk City Council voted 3-0 in favor of the proposal. (Mayor Gary Davis was absent and Council Member Pat Hume recused himself.)

Prior to that vote though, the council heard from three individuals who suggested that the City of Elk Grove and HHC are colluding to the detriment of another party covered by the development agreement for the Outlet Collection's special planning area, San Francisco-based M&H Realty.

As they did at a recent planning commission meeting, attorney's for M&H said the city and HHC created an uneven playing field. They said finding that HHC had violated the terms of the development agreement and as a result, excusing them from compliance was a "manufactured breach of contract."

M&H is arguing that by allowing HHC out of the development agreement, both parties will be competing for similar retail tenants, which is a violation of the agreement struck in 2001.

"This is being done to allow Howard Hughes to build a competing project surrounding the outlet mall, and on phase 2," attorney Daniel Jordan said.

Jordan said M&H is willing to a compromise that will allow the project to forward with an unspecified amendment to the development agreement. Jordan also presented a map that he said HHC was circulating that showed the northern portion of their parcel, the so-called phase 2, being developed with retail space in direct competition with M&H.   

During their presentation to the council, HHC did not discuss any plans for the phase 2 portion of their development or show a map. 

M&H's legal team implied possible litigation and also suggested the new plan does not comply with the California Environmental Quality Act, or CEQA. CEQA lawsuits are often used as leverage tools, most typically by labor unions and environmental groups.

"If the city approves this tonight, what the consequences will be is that there will be no development at Lent ranch [the development's original name], the entirety of Lent ranch for many, many years," attorney Elisa Paster said. "We will have to pursue our remedies and its going to hurt the community."

Also appearing before the council was Mike Grehl, a partner at M&H who said he supports HHC's outlet concept but objects to the phase 2 portion of the project.   

After the meeting, Grehl issued a statement suggesting they may pursue legal remedies.

“It is unfortunate that the City Council rejected our proposed compromise and repeated requests for a continuance. This failure invites litigation and no forward progress on two very promising retail projects,” Grehl said. “We will continue to appeal to the city’s sense of fair play so that we can pursue a solution that promises exciting economic opportunities, thousands of new jobs and millions of dollars annually in new tax revenue for city services.”  

M&H Realty says Howard Hughes Company has circulated this site map showing development
in the project's phase 2 portion .


    



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17 comments

Warren Buffet said...

It's all about a race against the Delta Shores project and more than the mall per se. It's the whole enchilada, the surrounding properties as well. My bet is M&H is bluffing at litigation in order to earn a seat at the negotiating table, because they're dead in the water if Delta Shores beats them to the punch.

Anonymous said...

They're ALL dead in the water if Delta Shores beats them to the punch. Believe me, they are watching what goes on in EG. Which location would you go for if you were a business....

Laguna Pete said...

This city just can't help but stumble at every turn. Litigation will lead to delays that make the mall inconsequential due to the aforementioned Delta Shores project just north of EG off of I-5, not to mention the costs of defending the claims. Our city attorney and his firm will make out like bandits, while we'll have empty city coffers from paying for his mistakes.

If we avoid litigation, that may even cost us more, with the concessions we'll have to provide to make a suit go away.

Please write in Jeff Owen for Dist 4 council seat and Lynn Wheat for Mayor. It's time for responsible, practical government before we follow Stockton into bankruptcy.

Anonymous said...

Unfortunatly, the complete story was not reported. I watched the entire City Council item for the Outlet Mall and when reporters leave out important facts, it is a dis-service to the readers. I think if you watch the entire item that is on the City of Elk Grove's website, you will have a different view than what was reported by all the media outlets.

Anonymous said...

Please enlighten me, I don't have time to watch the video Anon. 8:14. What important facts were left out of this article?

Anonymous said...

Maybe EGN could put the original mall diagram and the new outlet mall diagram up for all the readers to see and all the comments from the City Attorney.

Anonymous said...

The Agenda item which includes maps.....

http://www.elkgrovecity.org/documents/agendas/attachments/attachments/2014/10-08-14_9.1.pdf

Video which includes Attorney comments.....

http://elkgrove.granicus.com/MediaPlayer.php?view_id=3&clip_id=1208

Anonymous said...

Where was Waldo?

Anonymous said...

Thank you Anon @ 11:19 for the links.

It is very helpful to see the old and the new plans.

The City Attorney comments make all of this make more sense.

The M&H Compromise was never mentioned. If the M&H folks have not met with the City of Elk Grove and Howard Hughes for months, it looks like M&H is getting ready for Halloween with smoke and mirrors.

I hope these developers and the city can get this all worked out so we can get this dumpy site up and running and have a real asset to be proud of.

Anonymous said...

What major event prompted our Mayor Davis to miss this meeting? Seems this would have been something he would have made every attempt to attend, since we've certainly heard much from him about building a fire under HHC. Fire must have gone out and he's on to big and better things to make this a Destination City.

Laguna Pete said...

Let's not forget the mayor was absent when the MLS officials visited here as well.

Seems he has too much to do that take precedence over running our city.

Time for change. We need someone who actually has OUR best interests at heart and will not be swayed by developer monies. Write in Lynn Wheat for mayor in November.

Mr. Mayor; where were you this time? Where you ignoring city business on the tax payer's dime?

Anonymous said...

Curious how the mayor has abandoned ship like a scurrying rat. What a coward.




Connie said...

Mayor Gary Davis did not attend the last council meeting because he and Elk Grove Chief of Police Bob Lehner were attending a public safety conference in Arkansas.

Had City Manager Laura Gill made that announcement at the last council meeting, comments such as the above would have been avoided.

Anonymous said...

Thanks for that bit of information. I still have to question a testicular fortitude of Mayor Davis. What could be so important that he has to attend a conference with the chief - he's the mayor, not a sworn officer. Furthermore, why all the stealth activity of late for the mayor? Funny, he will plaster his face all over Facebook when things are going well or he wants to promote his coffee shop, but when there is the slightest chance of a tough going, he disappears like beer at a fraternity rush party.

Eastside Betty said...

I have to agree with poster above. the mayor isn't a sworn peace officer, the chief could have represented us in Ark. without his help I'm sure.

Davis seems to be taking his position for granted lately, something I don't find endearing. First, after building up the big hoopla (and $100,000 of our tax money)to bring the MLS officials here, he and his co-conspirator Fabian Nunez, booth skipped town
and missed the entire weekend MLS was here.

Now with the mall on the agenda, the single most important item we have going here in Elk Grove and the threat of litigation over it looming, he is again elsewhere.

He's supposed to be our leader, but he's never around when the battles are on.

After what I've been seeing, I too am strongly considering a vote for Lynn Wheat as a write in for mayor. I know that Gary Davis won't be getting my vote. He can go peddle his coffee full time.

Anonymous said...

Have to agree that our Mayor missing in action at what I consider some very important meeetings for our city is troublesome. Of course some could be due to time being spent on the LY campaign...he did say on the flyer "the partner I need at City Hall." I can see it now, Davis & Lys high-fives after every vote. Is that what our city council has become...no free thinkers, just partnerships? Scary thought!

David Webb said...

I have supported Gary Davis in the past, but he has morphed from the people's choice to the developer's choice and now seemingly into a self-absorbed "look at me" model of what my dad commonly referred to as "a Philadelphia lawyer."

Is recent actions of missing the MLS meetings along w/ Nunez made us look foolish and now with his absence from the council meeting with the proposed mall approval, knowing litigation issues existed which could put the project back years, he's off to Arkansas on our dime at a conference our police chief could have handled.

Davis is no longer looking out for the best interests of this community, he's looking out for his best interests as a politician.

It's time for a change, write in Ms. Wheat, write in your next door neighbor, just don't vote for the incumbent, he's lost our trust.

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