Elk Grove News

Elk Grove moves ahead with outlet plan; landowner threatens lawsuit

The Elk Grove Promenade stands unfinished in this March 2013 photo. The City Council has approved a development agreement with Howard Hughes Corp. to replace the half-built mall.Construction halted on the much-ballyhooed shopping center in 2008, as the economy soured. The mayor of Elk Grove said the current owner of the mall is seeking tenants, but not aggressively enough for the city.
The Elk Grove Promenade stands unfinished in this March 2013 photo. The City Council has approved a development agreement with Howard Hughes Corp. to replace the half-built mall.Construction halted on the much-ballyhooed shopping center in 2008, as the economy soured. The mayor of Elk Grove said the current owner of the mall is seeking tenants, but not aggressively enough for the city. mcrisostomo@sacbee.com

The Elk Grove City Council this week approved a development agreement with Howard Hughes Corp. to replace the half-built Elk Grove Promenade shopping mall – a failed project that has dogged the city for years – with an outlet mall similar to those found in Vacaville and Folsom.

“Most of us have waited for some time to see this go ahead,” Councilman Robert Trigg said before casting his vote. “It’s important to the community and to the business climate.”

The council’s decision “will now enable this long-awaited development to continue,” Mark Putney, a Howard Hughes vice president, said in a statement.

But Thursday’s action immediately drew the threat of litigation from another developer, M&H Realty of San Francisco, that owns the land surrounding the mall, which sits next to Highway 99 on the southern edge of the city at Kammerer Road. The developer’s attorney complained that the city’s deal with Howard Hughes would allow the Dallas company to build the same type of big box stores that M&H had intended to put on its land.

M&H Realty Partners “stands to suffer significant damage, and there will be a day of reckoning in the courts,” said Dan Jordan, a Los Angeles lawyer representing the developer.

The City Council voted 3-0 Wednesday night to approve the pact with Howard Hughes Corp. The company plans to build a 775,000-square-foot outlet mall on the site of the partially built promenade.

Mayor Gary Davis and Councilman Pat Hume were absent for the vote.

But M&H attorneys say the city acted inappropriately by not delaying the vote to give it and other landowners the chance to negotiate development agreements within the 295-acre Lent Ranch property, only a portion of which is occupied by the planned outlet mall. Jordan said the agreement with Howard Hughes gives it an unfair competitive advantage over M&H and other developers.

“With the new agreement, Howard Hughes is no longer use-restricted,” Jordan said, allowing it to build for other uses including so-called “power center” box store shopping centers.

“We want an outlet mall, but you don’t need to tread on those other rights to build an outlet mall,” Jordan said.

M&H said the Wednesday decision violates a 2001 agreement between the city and the various developers, including M&H, that owned pieces of the former Lent Ranch. That agreement divided the Lent Ranch site into commercial districts that included a regional mall, commercial development, office and entertainment space as well as multi-family housing.

“The developer agreement is being swept aside. This allows Howard Hughes to build a competing project. We are being damaged by this agreement. We will have to do what is necessary,” Jordan said at Wednesday’s council meeting.

Elk Grove’s partially built outdoor mall has haunted leaders for years, and city officials appeared to have little patience with M&H’s complaints Wednesday. The original Promenade project was envisioned as a conventional shopping mall with Macy’s and other major tenants before construction was halted in 2008 due to the recession. Since the recent economic downturn, city officials say, few if any traditional malls have been built in the United States.

“We’re underserved. I want to be able to bring these tax dollars here and make Elk Grove flourish,” said Councilman Steve Detrick.

“I’m ready to approve this project tonight,” said Vice Mayor Jim Cooper. “There’s a lot of head butting and chest puffing right now. We don’t need that. We need a mall built.”

Call The Bee’s Darrell Smith, (916) 321-1040.

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