Evergreen college district sued over development deal’s collapse

Four months after threatening litigation, a prominent San Jose developer has sued a major community college district after negotiations over a swath of land stalled and a high-profile development deal fell apart.

“I think this case will raise important issues about the relationship between developers and public entities and how they go about getting property developed and what the obligations are between them, particularly as it applies to fair dealings,” said Steven Ellenberg, a lawyer with the firm Hopkins & Carley, who is representing developer Republic Urban Property LLC.

The legal battle between one of Silicon Valley’s biggest mixed-use developers and the San José-Evergreen Community College District could have lasting implications for how public land is developed, Ellenberg told San José Spotlight.

A lawsuit Republic filed against the district in October in Santa Clara County Superior Court claims the college board pulled the rug out from under the developer after it had invested substantial time and money to plan a mixed-use development project on 13 acres near the intersection of San Felipe and Yerba Buena roads at the Evergreen Valley College campus in San Jose.

The project, which the developer dubbed The Montgomery Place, was to be a 175-unit senior living facility that would provide a range of care services for the “silver tsunami” — the growing population of aging Silicon Valley who are leaving their homes for care facilities. According to the Republic website, The Montgomery Place would also have included a 103,000-square-foot medical office building.

The developer initially pitched the plan for 27 acres of surplus land adjacent to Evergreen Community College, but halved the footprint and dropped plans for housing amid residents’ concerns about traffic and other impacts.

The lawsuit says Republic also went the extra mile with neighborhood residents and community stakeholders — scaling back its plans and cutting lucrative market-rate housing and retail from the project — to generate public support for the project.

According to the lawsuit, the developer made those efforts expecting the college board to extend its exclusive negotiation agreement when it expired in July.

It did not. So, Republic filed a notice of complaint, a prelude to a lawsuit that is usually required when the defendant to be named is a public entity. In August, when the notice was filed, Ellenberg told this news organization that it was unclear to Republic why the board had decided not to extend the agreement.

“We look forward to revealing why the district made this bad faith decision,” Ellenberg said at the time.

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

San José-Evergreen Community College District spokesman Ryan Brown on Wednesday declined to comment on the lawsuit, citing “pending litigation.”

But in August, after the Evergreen college board retreated from its negotiations with Republic, Brown told San José Spotlight that the district was committed to developing the land to generate revenue to support student services.

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

Longtime community leader Pat Waite, who led the nonprofit District 8 Community Roundtable, said his group has been pushing to use the surplus land in a way that benefits the Evergreen community.

“The lawsuit slows things down,” Waite said. “But we hope that when the dust settles, what ends up on that parcel of land is a benefit to the community and we can start working with the developer and the community college to help ensure that happens.”

Contact Adam F. Hutton at [email protected] or follow @adamfhutton on Twitter.