Could there finally be movement at the Sunnyvale Town Center?
An appellate court last week issued an opinion that removes the legal hurdles to further development of the long-stalled Sunnyvale Town Center.
According to a press release issued May 19 by the city of Sunnyvale, the Sixth District Court of Appeal issued a long-awaited opinion in the Downtown Sunnyvale LLC vs. Wells Fargo Bank case, finding in favor of Wells Fargo on all issues.
In a written statement, Sunnyvale city manager Deanna Santana said, “This is a very significant decision that brings our community a big step closer to fully achieving the vision for the Town Center that it deserves.”
City attorney Joan Borger added, “Our hope is that the court’s decision clears the way for this project to finally move forward.”
The 36-acre site in downtown Sunnyvale is bordered by Mathilda, Washington, Sunnyvale and Iowa avenues. It is occupied by office buildings near a Target and Macy’s, as well as partially constructed apartments, but otherwise sits partially undeveloped because of a lawsuit filed a few years ago.
Elise Wilkinson, a communications manager for Wells Fargo, said in an email to this publication that the decision opens new doors for the property.
“We’re pleased with the court’s decision, which is a big step in paving the way for a potential sale,” she said. “When the property does go to market, we will consider offers from qualified buyers who will work with the city of Sunnyvale toward completing its vision for downtown.”
The Town Center was initially bought in 2007 and developed by a joint venture of Sand Hill Property Co. and Rreef, but the companies were forced to abandon the project in 2009 after they defaulted on a $108.8 million loan from Wells Fargo.
As a result, Jerry Hunt of Quattro-Realty Group was named the receiver in the project in October 2009. The court denied a motion to approve sale of the property through receivership in June 2011.
Wells Fargo took ownership of the property at a foreclosure auction in August 2011. Sand Hill founder Peter Pau subsequently sued the bank, a move that essentially halted additional development of the Town Center while a detailed and often delayed appeals process followed.
Sand Hill’s lawsuit contended that Wells Fargo’s actions related to the receivership of the property and following sale were not handled properly. In December 2012, the court dismissed the first four cases of action: to set aside the foreclosure, cancel the deed of trust, slander of title and accounting errors.
The Sixth District Court of Appeal ruled 3-0 in favor of Wells Fargo in October 2013 on an appeal that Pau filed.
The most recent decision may cause Sand Hill to pursue filing a petition to have the ruling reviewed by the California Supreme Court. Sand Hill acquired the Macy’s at the Town Center in February.
The city of Sunnyvale has been little more than a spectator during the ongoing legal battle.
“The city does have a role in determining who the property owner might select to develop the property,” the city website related to the Town Center development states. “But the city must base any concern it has on specific grounds, such as insufficient financing on the part of the developer to complete the job. The city cannot simply refuse to allow a certain developer to be involved, or require a city-preferred developer be used.”
Although the appellate court’s ruling may mark the beginning of a new chapter for the Town Center, Santana stressed there is still work to be done.
“Our goal is to see this project come to fruition so we will continue to do whatever we can to collaborate with all of the parties involved and put Sunnyvale in the best position to realize the full potential of its downtown,” she said in the city-issued statement.
After 30 days, unless the court grants a rehearing, the decision will become final. Both sides then will have 10 more days to request the California Supreme Court to hear the case.
