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The legal showdown that Menlo Park officials warned of has swiftly come to fruition. N17, the developer behind the 80 Willow Road high-rise development, filed a lawsuit against the city on Friday, Oct. 2.
The lawsuit alleges that Menlo Park moved the goalposts for approval and delayed its review of the mixed-use development. The arguments echo those detailed in a July 29 letter from the state Attorney General’s office, which accused Menlo Park of violating state housing law.
Menlo Park City Councilmember Drew Combs said that the lawsuit was not surprising, and added city officials were “thoughtful and deliberative” about their course of action.
“This was the possible, if not most likely, outcome that we were going to get from the council’s action,” Combs said. “We look forward to our day in court.”
N17’s lawsuit begins by citing California’s housing crisis and states that Menlo Park has “repeatedly refused to comply with state housing reform laws.” It also argues that the development qualified for Assembly Bill 2011, a law that allows projects meeting certain requirements “streamlined, ministerial review.”
“In other words, the city is not permitted to say no to the project,” the lawsuit states.
Just one day prior to the suit, Menlo Park sent a 65-page rebuttal to the Attorney General’s office, saying it has complied with all applicable law and defending its handling of the application.
The proposed development at the longtime home of Sunset Magazine on the Palo Alto border, called Willow Park, would include a 130-room hotel, over 300,000 square feet of office space and 665 housing units. It would also include a preschool and retail space, and feature buildings as high as 39 stories, or 458 feet tall.
The lawsuit sets in motion a legal battle between developer N17 and Menlo Park that could test the reach of state housing laws. The financial consequences could be “severe,” city officials acknowledged, and Mayor Betsy Nash has said that litigation costs could threaten city services. On Friday, Nash declined to comment on the lawsuit.
N17 founder Oísin Heneghan did not immediately respond to The Almanac’s request for comment, but characterized Menlo Park unfavorably in comments to the San Francisco Chronicle, which published a story about the lawsuit Friday.
“Menlo Park is one of the most hostile cities to building new and affordable housing in the nation,” N17 founder Oísin Heneghan said, according to the Chronicle’s reporting. “We regret having to bring the lawsuit, but we had no choice, given the city has done nothing but throw roadblocks in our way to delay and deny the project, arrogantly breaking state housing laws.”
N17’s lawsuit comes days after the Sept. 29 Menlo Park City Council meeting, in which city officials asserted that Menlo Park would hold its ground. At the council meeting, City Attorney Nira Doherty characterized the threat of penalties as “deeply unfair and extremely punitive.”
On Oct. 1, Menlo Park sent an official response to the Attorney General’s office. In the 65-page letter, City Manager Justin Murphy argues that the “city has taken its housing production goals very seriously.” Menlo Park rejected the state’s view that it violated state housing law, and stated that it had complied with all housing laws.
“The City Council believes it is important to get this right, even if there are financial consequences and service impacts for the city that may be triggered by our effort to vindicate our rights and protect the Menlo Park community,” said Nash at the Sept. 29 City Council meeting.
In an Aug. 25 letter to Attorney General Rob Bonta inviting him to Menlo Park to see the 80 Willow site for himself, Nash defended Menlo Park’s openness to building new housing, saying his office’s letter “implies that we are all NIMBYs who just don’t want housing. I believe our record shows quite the opposite.”
The city received the lawsuit Friday afternoon, after the Chronicle published its story, city spokesperson Kendra Calvert said.
“N17 Development’s lawsuit is based on inaccurate assumptions. The city’s letter to Attorney General Bonta provides in-depth conclusions on why the N17 Development application does not qualify for accelerated approvals,” Calvert said in a statement. “The city is committed to building housing and included the history of its housing production to meet state mandates in the letter.”
N17’s lawsuit comes after a recent report that a potential buyer of the 6.7-acre property at the corner of Middlefield Road intends to make “minimal interior modifications” to the existing campus. While N17 is the developer, the reported owner of the property is Vitaly Yusufov, a Russian businessman with ties to Russian government officials.
Heneghan told the Chronicle that the project is “not for sale.” Heneghan has declined repeated requests to clarify his relationship with Yusufov, who allegedly is connected to former Russian president and prime minister Dmitri Medvedev. Medvedev is under U.S. sanctions, while Yusofov’s father, Igor, is sanctioned by Canada and Ukraine.
Congressman Sam Liccardo has called for a federal investigation into Yusufov’s connection to Willow Park, citing national security concerns.
Arden Margulis contributed to this report.
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This would be funny if it wasn’t a catastrophe caused by our own city council, the fact that the development is lawful under California law BECAUSE of that negligence, and the fact that the taxpayers are on the hook for those same city council members who caused the problem fighting a losing legal fight. As a Menlo Park property taxpayer, I just cannot afford more of Drew and Betsy.