Fremont accuses developer of bait and switch on project.
Builder says work is being delayed while it and city battle over meaning of wording in age requirement
FREMONT » More than five years after the Fremont City Council approved a major housing development it intended for people “55 years and older,” the city is locked in a costly legal battle against a developer it claims is skirting that age restriction to sell homes.
The developer, Coloradobased Century Communities, is selling homes in its Enclave project to anyone who wants them so long as at least one member of the household is 55 or older. Although that complies with state law for senior housing, the city contends those sales go against the spirit of the development agreement it struck with Century, court documents show.
But Century isn’t buying that, saying the city failed to clearly state in the agreement that only people 55 and older should live in the homes.
Century planned to build 232 homes in all and has so far completed and sold 54 and is finishing up the next phase of 68 more homes in the Warm Springs development.
The city’s court fight with Century kept buyers from closing in on their purchases of about a dozen of the 68 homes for sev
eral months. The city had withheld inspections and occupancy permits until ordered by the courts to resume issuing them.
Meanwhile, Century can’t start building 110 additional homes because it and the city are still fighting over age restrictions, according to court documents, the developer and a city attorney.
The city — sued by Century for a breach of contract in September 2020 over the withheld permits and inspections — has argued in court documents that its intention from the beginning was for all the homes in the project to be “exclusively for the city’s senior population” — people 55 and older — as noted in several staff reports and project studies.
The problem is, Fremont’s development agreement with Century doesn’t specifically spell that out.
Instead, the agreement states that the homes must “be occupied or held available for occupancy by households that include ‘elderly’ or ‘senior’ residents in accordance with applicable law.” For age restricted housing developments, state law says senior means someone 55 and older.
Nevertheless, the city claims Century is violating the intent of the agreement by selling the homes to households with residents of mixed ages. Century disagrees.
“If the city intended for the age restriction to require all members of the household to qualify as seniors, the documents should have reflected that desire,” Nick Arenson, the division president of Century Communities, said in an email to this news organization.
So far, the courts have sided with Century, which claimed it lost more than $1 million since Fremont stopped conducting inspections and issuing occupancy permits in September and $350,000 a month while escrows and permits were delayed.
Alameda County Superior Court Judge Richard Seabolt in February granted a preliminary injunction against the city, ordering it to resume issuing permits and doing inspections for Century’s homes.
In March, after the city filed an appeal, 1st District Court of Appeals Judge P.J. Pollak affirmed part of the trial court’s ruling, forcing the city to resume issuing permits and conducting inspections on the 68 homes either completed or under construction at the time. The city requested Pollak not require it to issue permits on the 110 remaining homes still to be built, and the appellate court agreed.
Century is now seeking a permanent injunction against the city to ensure it can build and sell the rest of the planned homes as it has with the first 122. The city and Century have a mediation scheduled for mid-June, according to Peter Pierce, one of the attorneys for the city in the case.
If a settlement can’t be reached, a civil trial could loom over the remaining homes, Pierce said in an interview Monday.
Deputy City Attorney Bronwen Lacey said in an email that Fremont has spent $107,703 on litigation against the developer so far. Multiple city council members did not respond to requests for comment on this story. City planning staff declined to be interviewed, citing the ongoing litigation.
Arenson acknowledged that Century initially tried to sell the homes “exclusively” to people 55 and older, but was having trouble getting buyers in that category.
“Our market research found senior buyers in Fremont wanted less restrictive senior homes — more specifically ones that allowed for multigenerational households,” Arenson said.
There was no “bait and switch” as Fremont alleged, he insisted.
“The project entitlements in this case, and in most cases in California, have built-in flexibility. That is necessary given complex market dynamics, uncertain timing, and vagaries inherent in project construction,” he said.
In his ruling, Judge Seabolt agreed with Century’s position, noting the development agreement wasn’t specific enough to back up the city’s claimed intent.
If just one person in each household is 55 years or older, “the requirement… is satisfied. The word ‘include’ does not mean ‘composed of’ or ‘comprised of,’ rather it refers to ‘a part of a whole or group,’” Seabolt wrote.
Though the city showed staff reports and city studies that stated the homes would be for people “aged 55 years and older,” Seabolt said all of that, while it might be “persuasive evidence of city’s intent,” only amounts to “extrinsic” evidence and doesn’t override the contract the city agreed to with Century.
“At this time there is no resolution on the remaining 110 lots and we remain hopeful that we will reach an amicable resolution with the city of Fremont based upon the court’s findings to date,” Arenson said.
Century’s development is part of Fremont developer John Wong’s larger project, which the city approved in 2016. That project entails up to 497 senior housing units including apartments, townhouses, condominiums and a senior center across 23 acres. Wong later sold some development rights off to other developers, including Century.
Wong originally named the overall project “Parc 55.”
“My intention was always 55 and older. That’s how I named it,” Wong said in an interview Thursday. “It’s so unfortunate that this kind of thing happened.”