UPDATED: M & H Realty Makes Good on Threat, Files Suit Against Elk Grove on 'Outlet Collection'

November 10, 2014 | Making good on its threat, M & H Realty has filed a lawsuit against the City of Elk Grove over its recent dec...

November 10, 2014 |

Making good on its threat, M & H Realty has filed a lawsuit against the City of Elk Grove over its recent decision to release the Howard Hughes Corporation (HHC) from a development agreement for the shopping center formerly known as the Elk Grove Promenade.

The suit, which was filed on October 29, alleges the city and HHC are in breach of contract for the development agreement for the special planning area that includes the shopping center now known as the Outlet Collection at Elk Grove and adjoining property owned by M & H. The lawsuit is also claiming the city's dismissal of HHC from the development agreement violates California Environmental Quality Act - CEQA - because a new environmental impact report (EIR) needs to be performed.

Prior to filing, attorneys for M & H twice warned the city during Planning Commission and City Council meetings that if HHC was released from the development agreement, a lawsuit would be filed. In spite of the warnings, the Planning Commission unanimously and the City Council  unanimously voted 4-0 (Council Member Pat Hume recused himself)  to release HHC. 

At the core of M & H's argument is that by releasing HHC, both parties will be competing for similar retailers, which the original agreement prohibited. M & H contends that HHC can now pursue big box retailers, such as Sam's Clubs, for their portion of the planning area. 

Among other things, M & H is seeking reversal of the city council's actions releasing HHC, a new EIR, and to enjoin any construction until the completion or a new environmental report. They are also seeking attorney fees.

Elk Grove's city manager, city attorney, council members and mayor did not respond to email requests seeking comment on the matter.

A spokesperson for M & H said a statement regarding the lawsuit will be issued Wednesday.  

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lynn said...

This is another business friendly maneuver by the city. Good for M&H! I hope this brings to light the games our leaders play. You do not create a business friendly environment by changing the rules all the time! We know that someone's word doesn't mean much anymore and it seems neither does an agreement.

Anonymous said...

It would seem that this would interfere with M & H's commercial development plans and would have significant negative impacts on their approved development. Could they not sue the city for damages, lost entitlement value and lost profits?

That's not even speaking about maybe a delay in getting our Outlet Mall built. No wonder we can't bring any good paying jobs into EG...what commercial entity would want to deal with this city?

Dennis said...

I have to agree with Lynn here. All the talk from Mayor Davis is how he and the council want to bring more business here to EG. They want to zone 75% of the SEPA land for business and industrial.

Don't you think the VPs in charge of land procurement and future growth of their businesses read these articles and see how it is the city treats potential businesses?

Nothing can be relied on. Everything, zoning, fees, contract terms, are all subject to change, seemingly at the whim of the council and the direction of the wind on a particular day.

I'm a VP for such a company and I mentioned in a recent board meeting that perhaps EG would potentially be an area we should look at for future expansion. Every board member shot down the idea as if I were crazy. The word is out about EG's poor business climate. This situation with the mall is another indication that
EG gov't is showing signs of bi-polar disease.

It would scare the hell out of me to invest my company's hard earned capital in EG. My job security would hang on the actions of the city council's whims. I'm not that confident in them. Neither is any other local corporate entity.

Anonymous said...

Another big stumbling block is the really lackluster choice of telecommunications options in Elk Grove.

This city is still served like a rural farm community.

All we have is Frontier and Comcast.

Sacramento has AT&T and has Surewest and other service providers in addition to Comcast.

This city would rather focus on "pie in the sky" projects like a $100,000,000 soccer stadium and a Olympic caliber waterpark in a residential community.

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