Developer who recently won a $26 million settlement from Sacramento just sued again
The developer who in 2023 won a $26 million settlement from the city of Sacramento just sued again.
The lawsuit, which Paul Petrovich filed Friday in Sacramento Superior Court against the city and City Council, relates to the same development as the lawsuit for which Petrovich won the massive settlement.
While the lawsuit was regarding a gas station at the Curtis Park Crocker Village development, the new suit is involving housing.
The City Council earlier this year denied Petrovich’s request to build 61 new single-family homes to expand Crocker Village, partly on a lot zoned for multi-family residences, such as apartments.
City staff recommended the council deny the request because the city wants to encourage developers to build housing for a variety of income types, to help with the housing crisis. In May the council denied the request, and Petrovich threatened to sue. He then appealed the decision and the council again denied the request in September.
Petrovich is alleging the denial was unlawful.
“The denial unlawfully blocked the development of much-needed infill housing near transit and violated the Housing Accountability Act,” the lawsuit alleges. “The city’s action was arbitrary, pretextual, and inconsistent with the objective land use standards that govern the site. “
“The City has not yet been served with a complaint. As such, it would be premature to comment on it,” city spokeswoman Jennifer Singer said.
The lawsuit also alleges the denial was “driven by bias and political opposition.”
“During public hearings, multiple decision makers openly lectured (Petrovich) and its representatives, expressing hostility toward the developer rather than focusing on the statutory standards governing the project,” the lawsuit stated. “This conduct reinforced the impression that the city’s review was driven by bias and political opposition rather than an objective application of law.”
The suit claims violations of the state’s Housing Accountability Act, which aims to stop cities from blocking new housing. It requests for a judge to order the city to approve the project, as well as to issue a judicial finding that the city acted in bad faith “based on actions and inactions that were frivolous, pretextual and intended to cause unnecessary delay.”
The council denied the project after hearing from over a dozen people on both sides. The opposition said they wanted to stop Petrovich from building more of the luxury homes in the interest of ensuring that affordable homes were built. A 2,815 square-foot home in Crocker Village sold in August for $1.27 million, for example, according to Zillow.
Petrovich’s attorney Daniel Freedman told council the single-family homes Petrovich was planning to build in the new phase would have been more affordable than that, providing homeownership opportunities for the so-called “missing middle.” He has also built rentals as part of the development, he said
The city in 2023 paid a $26 million settlement to Petrovich, including $18.5 million in the form of purchasing a K Street building from him. The large settlement came after a state appeals court ruled the city had denied Petrovich a fair hearing on his proposal to build a gas station there. Over two years later, the city has not yet announced what it plans to do with the K Street building, but recently asked developers for proposals.
Proposals were due Oct. 3, and any decision would require council approval.
The item to deny Petrovich’s appeal in September passed 8-0. Councilwoman Lisa Kaplan recused herself due to a conflict.
This story was originally published October 27, 2025 at 3:03 PM.
