Publication Date: Wednesday Jul 27, 1994

LAND USE: East Palo Alto rejects developer
City stays with original choice for Four Corners project

The East Palo Alto City Council, on a split vote, has reaffirmed its earlier choice of developer for a grocery store complex. But legal issues could complicate the process.

The Council, meeting as the city's redevelopment agency, voted 3-2 to reject a request for reconsideration by Barry Swenson Builder as the developer of Four Corners, the site at Bay Road and University Avenue slated for a grocery store shopping mall.

Swenson contends that his firm has more extensive redevelopment experience than Washingtonia, the company chosen by the Council in May, having completed almost a dozen projects in downtown San Jose. Swenson said his firm also has two major grocery store companies bidding to be part of the project and has obtained construction financing.

His main argument, though, is that his firm is part owner of the land along with Wilma Manuel, and by state law, the property owner has the right to participate in all redevelopment projects.

Bill Somerville of Washingtonia said his group would complete the project within 18 months. The project will be unique, he said, in that it would be funded completely through philanthropic donations, with $5 million in anonymous donations already received.

Somerville said Washingtonia is planning for a shopping mall including a grocery store, pharmacy, bank, restaurant and cleaners, with some office space.

The Council last week voted not to reconsider its earlier decision, with Council members R.B. Jones and Myrtle Walker in favor of reconsideration.

The other three Council members, Mayor Sharifa Wilson, Vice Mayor Bill Vines and Rose Jacobs Gibson, voted to reaffirm the earlier decision, which was made after an unanimous recommendation by a five-member selection committee.

Part of the confusion between that earlier vote in May and last week's vote was whether the Council knew that Swenson was a part-owner of the property and, if so, what legal difference it should have made.

Swenson's attorney, Kent Mitchell, warned the City Council that its decision was "very vulnerable." He said that in a parallel case, a California court ruled against another redevelopment agency because "state law stipulates that owners be allowed to participate" in such projects. The alternative to an owner's redevelopment plan is for the city to condemn the land, pay the owner fair market value, and take over ownership.

"We definitely want to do what they want us to do (to build a grocery store)," Swenson told the Weekly after the vote. Because the property owner wants to build the project that the redevelopment agency wants built, Swenson contends that the city cannot legally condemn the land but must instead work with the property owner.

But Vines, who sits as the head of the redevelopment agency, had some pointed words for Swenson.

Vines said he was "taken aback" by the implied legal threat, and was critical of Barry Swenson Builder for not making its partnership agreement with Manuel more clearly known before the May vote.

"Frankly, Mr. Swenson, your point person blew it," Vines said.

"There was some misunderstanding," Swenson agreed later. "I'm not sure they understood (the partnership), and maybe that's our fault."

--Don Kazak