By Nancy Amdur
After years of litigation, the delayed development of the mixed-use Sunnyvale Town Center may soon move forward.
The 6th District Court of Appeals recently ruled in favor of Wells Fargo Bank in a lawsuit with Downtown Sunnyvale Residential LLC.[contextly_sidebar id=”xTIr5ZDOafV26TIBuOFZTLhsmAkrgMWR”]“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,” said Sunnyvale City Manager Deanna J. Santana in a statement.
Sunnyvale Town Center, bordered by Mathilda, Washington, Sunnyvale and Iowa avenues, was set to include offices, retail and apartments but has remained unfinished due to the legal dispute.
Plans for the 36-acre center began in 2007, when Sand Hill Property Co. became a minority investor in the project with asset manager RREEF, now known as Deutsche Asset & Wealth Management. The two companies are part of Downtown Sunnyvale Residential.
Wachovia Bank, since acquired by Wells Fargo, provided a $108.8 million loan to develop the center. The property went into foreclosure in August 2011 and is now owned by Wells Fargo. Litigation that began after the bank took ownership stalled the center’s development.
“We’re pleased with the court’s decision, which is a big step in paving the way for a potential sale,” wrote Wells Fargo spokeswoman Jessica Ong in an e-mailed statement. “When the property does go to market, we will consider offers from qualified buyers who will work with the City of Sunnyvale towards completing its vision for downtown.”
But Sand Hill is “disappointed” in the court ruling, said the company’s attorney Ronald Rossi of San Jose law firm Rossi, Hamerslough, Reischl & Chuck.
Sand Hill wants to purchase the property, but has not come to an agreement with Wells Fargo, Rossi said.
“Sand Hill made an offer during the litigation for more than the amount of the loan and all the interest and everything and [was] told by Wells Fargo that they would not even negotiate,” Rossi said. The company “always wanted to” and still would like to buy the Town Center property, wrote Sand Hill founder and Principal Peter Pau in an e-mail.
Sand Hill is considering appealing the ruling to the California Supreme Court, Rossi said. The 6th district court opinion will become final next month, and the parties will then have 10 days to ask the Supreme Court to hear the case.
“There are a lot of issues here that I think have long-term consequences regarding the foreclosure process in California,” Rossi said.
Apple Inc. occupies a 156,000-square-foot office building at the center. There is a Macy’s department store and Target on each end of the development, each with separate owners. Pau is the principal of investor group 200 Washington LLC, which about three months ago spent $40 million to buy the Macy’s next to the Town Center, Rossi said.
Despite the lagging development of the center, downtown Sunnyvale is growing. Essex Property Trust’s Solstice and Carmel Properties’ Carmel Loft House mixed-use projects recently opened near the center on Washington Avenue and Olson Way, bringing nearly 40,000 square feet of new retail space and more than 400 apartments.
Regarding the Town Center’s future, Santana said the city will “collaborate with all of the parties involved and put Sunnyvale in the best position to realize the full potential of its downtown.”