Business & Real Estate

Settlement clears path for Elk Grove outlet mall

A developer has settled a lawsuit against the city of Elk Grove, clearing the way for construction of an outlet mall on Highway 99 at Kammerer Road.

The settlement concludes a lawsuit filed by M&H Realty Partners, which owns land adjacent to the spot where Howard Hughes Corp. is planning an outlet mall. The outlets would occupy a property that now houses a partially built shopping mall, whose construction stalled during the recession. City officials have worked for years to restart the abandoned project.

M&H sued the city last fall after the City Council approved the Howard Hughes proposal.

Elk Grove Mayor Gary Davis said the settlement revises a development agreement made years ago, which essentially put M&H’s plans on hold until the Hughes site could be developed.

“This eliminates the clause that prohibits M&H from moving forward before Howard Hughes goes ahead,” Davis said Wednesday.

Brad Geier, managing director at M&H, said in a prepared statement, “A solution has been reached that allows two complementary retail and commercial projects to move forward. This settlement truly benefits the community by providing new shopping opportunities, jobs and tax revenue.”

It wasn’t immediately clear what M&H plans for its land.

The dispute goes back to a deal made with the city 14 years ago.

At the time, M&H owned the entire 295-acre parcel off Highway 99 set aside for commercial development, including the site now controlled by Howard Hughes. The city’s development agreement said the bulk of the property would sit idle until a regional mall was developed on the remaining one-third of the land.

M&H then sold the regional mall site to General Growth Properties of Chicago, which began construction just as the economy began to falter. Construction halted in 2008, leaving unfinished shells of buildings scattered around the site, and General Growth eventually surrendered the property to Howard Hughes after filing for bankruptcy protection.

The Hughes company has said it will build a 525,000-square-foot complex called the Outlet Collection at Elk Grove. The City Council signed off on the plan, allowing an outlet mall instead of a traditional regional mall.

Hughes has declined to say how soon it will start construction. M&H, unable to move forward on its land with the Hughes project still in the blueprint phase, then filed its lawsuit.

The settlement “is a good start,” Davis said. “The real celebration comes when there are construction workers at the mall site, swinging hammers.”

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