News

Greenbriar Homes wants $5.31 million back

Fremont-based homebuilder that pulled out of the Alma Plaza project sues developer to get option fees returned

The beleaguered Alma Plaza project in south Palo Alto has been hit with another woe: Greenbriar Homes, the Fremont-based homebuilder that recently pulled out of the project, has sued for $5.31 million in option fees it has paid over several years.

The lawsuit was filed April 21 in Santa Clara County Superior Court the same day Greenbriar notified the City of Palo Alto by letter that it "hereby withdraws from the development of the Alma Plaza property."

The suit names Trestle Alma Plaza, LLC, as the technical developer rather than John McNellis, of McNellis Partners, LLC, the public face of the project over many months, even years, of city consideration.

The final project included the building of 37 homes and a building in the front, facing Alma Street, with a modest-sized grocery store and other shops, with 14 below-market apartments above the store.

McNellis, under advice from his attorney, said he could not comment on the lawsuit.

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In the lawsuit, Greenbriar claims that no land-subdivision was completed for the segment of the property it agreed to purchase "on or about April 25, 2005" for a total purchase price of $20.5 million.

"Therefore, the Agreement was and is void as of its initial execution on or about April 25, 2005," the lawsuit states, citing Government Code 66499.30 covering subdivision of land.

Greenbriar "has demanded restitution and repayment of all consideration received by Defendants," the suit states.

The suit also indicates the defendants received a total of $5.31 million "to which they were not entitled because the Agreement was void from inception."

Although McNellis could not comment on the lawsuit, he earlier told the Weekly, when Greenbriar's withdrawal became known, that the pullout was due to the recession and slump in the housing market.

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Ironically, the City Council in late January gave the project the green light, although a group of residents have since launched a petition drive against the project.

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Greenbriar Homes wants $5.31 million back

Fremont-based homebuilder that pulled out of the Alma Plaza project sues developer to get option fees returned

by / Palo Alto Weekly

Uploaded: Fri, Jun 19, 2009, 9:20 am

The beleaguered Alma Plaza project in south Palo Alto has been hit with another woe: Greenbriar Homes, the Fremont-based homebuilder that recently pulled out of the project, has sued for $5.31 million in option fees it has paid over several years.

The lawsuit was filed April 21 in Santa Clara County Superior Court the same day Greenbriar notified the City of Palo Alto by letter that it "hereby withdraws from the development of the Alma Plaza property."

The suit names Trestle Alma Plaza, LLC, as the technical developer rather than John McNellis, of McNellis Partners, LLC, the public face of the project over many months, even years, of city consideration.

The final project included the building of 37 homes and a building in the front, facing Alma Street, with a modest-sized grocery store and other shops, with 14 below-market apartments above the store.

McNellis, under advice from his attorney, said he could not comment on the lawsuit.

In the lawsuit, Greenbriar claims that no land-subdivision was completed for the segment of the property it agreed to purchase "on or about April 25, 2005" for a total purchase price of $20.5 million.

"Therefore, the Agreement was and is void as of its initial execution on or about April 25, 2005," the lawsuit states, citing Government Code 66499.30 covering subdivision of land.

Greenbriar "has demanded restitution and repayment of all consideration received by Defendants," the suit states.

The suit also indicates the defendants received a total of $5.31 million "to which they were not entitled because the Agreement was void from inception."

Although McNellis could not comment on the lawsuit, he earlier told the Weekly, when Greenbriar's withdrawal became known, that the pullout was due to the recession and slump in the housing market.

Ironically, the City Council in late January gave the project the green light, although a group of residents have since launched a petition drive against the project.

Comments

Sheri Furman
Midtown
on Jun 20, 2009 at 4:49 pm
Sheri Furman, Midtown
on Jun 20, 2009 at 4:49 pm
Like this comment

The statement that "a group of residents have since launched a petition drive against the project" is untrue. The petition has to do with the width of private streets and was started primarily in response to the problems with Arbor Real parking overflowing into the surrounding neighborhood. Any changes will apply to future projects and it is unclear if Alma Plaza would be impacted.


John
South of Midtown
on Jun 20, 2009 at 5:04 pm
John, South of Midtown
on Jun 20, 2009 at 5:04 pm
Like this comment

Is this the same "group of residents" that killed the previous plan to enlarge the supermarket on that site?


Wadda guy
Midtown
on Jun 20, 2009 at 7:32 pm
Wadda guy, Midtown
on Jun 20, 2009 at 7:32 pm
Like this comment

I think it's pretty funny how many people developer McNellis can antagonize, not just the people who live around his project, but also his fellow developers.


L. Smith
Palo Alto Orchards
on Jun 21, 2009 at 6:23 pm
L. Smith, Palo Alto Orchards
on Jun 21, 2009 at 6:23 pm
Like this comment

I would really like to see a decent supermarket there and some other related shops - not unlike what it was before, before the previous owner/developer killed them off. Housing would be OK, if it doesn't destroy the viability of a center. Isn't that a pretty ideal location for a mixed use development, with housing upstairs over some of the shops? Shop owners and/or employees would love to be able to live and work in the same location.
Is it really THAT hard to get a decent, financially viable, community-oriented shopping center in that spot? (It's not like it's never been done anyplace else!) Why is it so hard for a town of such talented people to get something simple done? Is it really the fault of the "Palo Alto Process" or neighbors who are impossible to please?
Or do we just get a succession of fast-talking and quick-dealing developers who are trying to make a killing? - something the real estate profession never seems to have a deficit of? Forgive me if I'm wrong, but McNellis came across that way in the stories I read.

I really don't know!! It's so frustrating to see nothing happen.


Enough of the Nonsense
Midtown
on Jun 22, 2009 at 12:18 am
Enough of the Nonsense, Midtown
on Jun 22, 2009 at 12:18 am
Like this comment

I hope the company wins the law suit and all the NIMBY people have to pay-up!

Enough of the Nonsense.


Wadda guy
Midtown
on Jun 22, 2009 at 1:54 am
Wadda guy, Midtown
on Jun 22, 2009 at 1:54 am
Like this comment

Huh? The housing builder is suing the developer-landowner. The people have nothing to do with it. It turns out it never was a viable project, there is no housing market.


Resident
Another Palo Alto neighborhood
on Jun 22, 2009 at 3:13 am
Resident, Another Palo Alto neighborhood
on Jun 22, 2009 at 3:13 am
Like this comment

Now perhaps we will get what we need, a decent grocery store with some other useful retail. What we don't need is more housing.


Resident
Meadow Park
on Jun 22, 2009 at 7:39 am
Resident, Meadow Park
on Jun 22, 2009 at 7:39 am
Like this comment

Nobody is shopping anywhere, so retail isn't even a viable option. How do you make a profit with no customers for the store? Alma Plaza will never be built on so long as the residents and Council continue to demand that an unprofitable 16,000 sq. ft. store be built.

Look at all the empty stores Downtown if you don't believe that retail has had it's day!!!


Marie
South of Midtown
on Jun 22, 2009 at 12:02 pm
Marie, South of Midtown
on Jun 22, 2009 at 12:02 pm
Like this comment

I believe existing zoning allows a 30,000 sq. ft. grocery store at Alma Plaza. Lucky's/Albertson's insisted on 40,000 which I suspect would have precluded any other stores. I also believe that Albertson's added a deed restriction in the sale of the property to the current owner that would prevent anything but a small store (don't know the exact sq. footage), much less than what Palo Alto would allow, in order not to compete with their Mt. View store, which ironically has been closed anyway.

This is a story of developer greed and refusal to cooperate with the neighbors.

The most successful development in recent history is SOFA, the downtown development of property previously owned by PAMF. It took several years, and lots of community involvement However, the result has been a development that I'm sure was profitable to the developer (who I believe was local), fits into the community, and has enhanced local property values, rather than affected them negatively like arbor real (which I believe is a Texas company), which has lowered the value of surrounding homes by causing parking problems.

One example of the PA process working is that it took so long to approve a really bad proposal to tear down the old Hyatt (now Crowne Plaza) on El Camino opposite Arbor Real and replace it with housing, that someone bought it, refurbished it and imade it a successful hotel generating lots of taxes for Palo Alto.

Let's stick to existing zoning, or modify zoning to enhance Palo Alto, and stop approving major rezoning to enhance developer profits that reduce the quality of life surrounding neighborhoods.


John
South of Midtown
on Jun 22, 2009 at 12:06 pm
John, South of Midtown
on Jun 22, 2009 at 12:06 pm
Like this comment

I would be happy with a 40,000 sq ft grocery store on that site with no other adjacent stores. Why were the neighbors opposed to that?


Westphalia
Barron Park
on Jun 22, 2009 at 1:35 pm
Westphalia, Barron Park
on Jun 22, 2009 at 1:35 pm
Like this comment

Marie seems like a thoughful person with some knowledge of the situation and background knowledge in general. Agree with her or not, she has made a useful conribution to the dialogue.

On t'other hand, "Enough of the nonsense" seems like an angry and uninformed person who winds up posting on the blog even tho' he has little to contribute and could not get anyone to listen to him in any other venue. (Why do I assume he is a male?)


Andrew L. Freedman
College Terrace
on Jun 22, 2009 at 2:55 pm
Andrew L. Freedman, College Terrace
on Jun 22, 2009 at 2:55 pm
Like this comment

Because Lucky/Albertson was not able to expand their store because of the neighborhood opposition at the time, (and then the temporary building moratorium imposed by the-then city council), they sold the property.

There is a covenant that whoever buys the property will not be able to build a grocery store any larger than what was there before (was that 1800 sq feet?)

So . . . unless there is a loophole in the covenant . . .

Andy Freedman


elliegms
Palo Verde
on Jun 23, 2009 at 12:42 pm
elliegms, Palo Verde
on Jun 23, 2009 at 12:42 pm
Like this comment

I agree that Marie is the one that is most informed and makes a lot of sense. Scroll up and read her comments and information in case you missed it.


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