Edgewood Plaza developer sues Palo Alto to recoup $700,000-plus in fines
The owners-developer of Edgewood Plaza is suing Palo Alto for fining it more than $700,000 for failing to land a grocery store at the shopping center.
The appeal that attorneys for John Tze and Edgewood LLC filed in Santa Clara County Superior Court alleges the city, Palo Alto City Council, Planning and Community Environment Department and administrative hearing officer Lance Bayer have been assessing unlawful and excessive fines.
The Edgewood owners-developer are asking the court to rule they did not violate any city ordinance and order Palo Alto to stop issuing fines and refund all the ones already paid.
Palo Alto has issued at least 72 citations for daily violations between Sept. 30, 2015, and Jan. 30, 2017. The fees have ranged from $500 to $5,000 per day.
Tze and co-owner Sand Hill Property Co. appealed the citations through an administrative hearing. In April, Bayer upheld the fines.
During the hearing, the Edgewood owners-developer explained that an independent grocery store’s decision to cease operations is beyond their control and the city’s fines are hindering efforts to find a market to fill the vacancy.
At the heart of the conflict is Tze’s and the city’s different interpretations of what it means to provide a grocery store at the plaza, located at 2170 West Bayshore Road.
City officials say Sand Hill broke a 2012 agreement that allowed it to build homes there on the condition a grocery store would be provided. The initial agreement specified the “provision of a grocery store in the 20,600 sq. ft. building.” The city amended the agreement in November 2013 by adding: “The commercial property owner shall ensure the continued use of the 20,600 sq. ft. building as a grocery store for the life of the project.”
Edgewood owners-developer have said they are complying with the city ordinance by reserving the building for a grocery store and no other use.
City officials have said the owners-developer are responsible for the “continued use” of a grocery store and since the Fresh Market left in 2015 they must find a new tenant. The Fresh Market continues to pay rent on a 10-year lease.
The lawsuit describes the city’s interpretation as unlawful and states “compliance with the city’s interpretation would be impossible.”
The City Council in November also unlawfully adopted a resolution establishing a new category of penalties that was “arbitrarily enacted and specifically targeted to increase fines on Petitioners,” according to the complaint.
Tze’s attorneys also say the city inappropriately executed the new resolution. For instance, the new resolution allows for an increase of the daily fine to $2,500 on the 181st day after notification of the violation, but the raised the amount on the third day.