Developer sues San Jose-Evergreen Community College District

Republic Urban Property LLC is suing the San Jose-Evergreen Community College District for what it calls “bad faith negotiations” over a swath of South San Jose land.

Republic Urban’s claim comes after the college district last month opted not to renew its exclusive negotiating agreement with the San Jose developer, instead deciding to reevaluate how the district could use the 27 acres of surplus land in South San Jose where its headquarters once sat.

But Republic Urban says the decision, outlined in a July 11 letter from the district’s Chancellor Byron Clift Breland, came suddenly after years of negotiations and investments by the developer. Republic Urban was aiming to build 175 units of senior care housing and a medical office building on about 13 acres of the district’s land.

“Chancellor Breland publicly referred to Republic as his partner two months before pulling the rug out from under the project,” Republic Urban’s attorney, Steven Ellenberg of Hopkins & Carley, said in a statement to this news organization Wednesday.

San Jose-Evergreen Community College District officials told San José Spotlight earlier this week that the district wanted more community engagement around plans for the land, but still aims to develop.

“Our efforts to involve more folks will continue as we determine next steps and move forward with development of the land,” said district spokesman Ryan Brown. “The district remains committed to holding a community workshop to collect input and feedback from the public regarding master planning of our surplus land.”

But in the meantime, Republic Urban has filed a claim for damages that could exceed $1 million. CEO Michael Van Every could not immediately be reached Wednesday.

Discussions around redeveloping the surplus land started in 2015, when the San Jose-Evergreen Community College District put out a call for developers to offer up bids to lease the land and build a mixed-use project in an effort to generate income for the college district.

Notably, Republic Urban already had a non-binding letter of intent to negotiate with the district at the time. But officials for the San Jose-Evergreen Community College District opted to test the waters for other developer interests, according to past reporting by the Silicon Valley Business Journal.

In 2017, Republic Urban submitted its first zoning application to the city of San Jose. The company submitted a new zoning application to the city in March this year after a slew of community meetings, scaling back the mixed-use project from 27 acres to 13 acres and dropping plans for housing amid concerns of traffic congestion in the Evergreen area.

Republic Urban entered into an exclusive agreement with the district in March 2018 by making a non-refundable payment of $455,000, Ellenberg said. The developer also committed to a pre-payment of $1 million in base rent to the district, as well as an annual minimum of $500,000 and an amount equal to 50% of the project’s net operating revenues.

But when the exclusive negotiating agreement between the developer and college district expired in July — after two previous extensions —  leaders for San Jose-Evergreen Community College District took that as an opportunity to mull other options.

“Our district remains committed to utilizing our surplus land to generate revenue in support of student success programs and initiatives, like San Jose Promise, throughout our district,” Brown said earlier this week.

Brown could not immediately be reached Wednesday.

But Ellenberg maintains that “nothing changed on Republic’s end,” while district officials began to pull away from the developer this year. The company is pushing ahead with the suit, which was filed Wednesday.

The attorney claims that district leaders, including Chancellor Breland, assured Republic Urban that they intended to pursue the development as recently as April, prompting the developer to keep pouring money into the project. “We look forward to revealing why the district made this bad faith decision,” Ellenberg added.

This story will be updated.

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.