Northgate Market Files Lawsuit Seeking to Block Workforce Multi-Family Housing Development in Town of Riverside Amid Housing Crisis, Business News

The Court of Appeals, Fourth Appellate District, will hear an appeal of a lower court ruling prohibiting a 450-unit apartment development known as Magnolia Flats, located adjacent to Northgate Market in Riverside, in California. Northgate Market has taken legal action to stop construction of the housing because it will (allegedly) interfere with its delivery trucks which currently cross a driveway protected by an easement between Northgate and the housing site to be developed. The Magnolia Flats developer said the project meets Northgate’s desire to drive its delivery trucks around the Magnolia Flats development site with multiple entry and exit options.

Magnolia Partnership LLC (“Magnolia”) owns 16 acres of zoned mixed-use property at 10481 Magnolia Avenue, Riverside, California (the “Magnolia Property”). Magnolia purchased the Magnolia Property to build an attractive mixed-use commercial development consisting of desperately needed multi-family housing for the workforce (450 apartments) and 9,000 square feet of commercial space (the “Magnolia Project”). Magnolia’s goal in developing the Magnolia Project is to provide much needed workforce housing to hundreds of middle and low income families in the Riverside community. This new multi-family housing development would also greatly assist the City of Riverside in complying with the State of California’s Regional Housing Needs Allocation (“RHNA”) requirements. The Town of Riverside is required to provide a minimum of 18,415 new housing units for the 2021-2029 housing element cycle. An added benefit of the Magnolia Project would be additional customers patronizing the businesses surrounding the Magnolia property, businesses that include the proposed Northgate Market grocery store. However, Northgate is seeking to block development of the Magnolia project due to alleged easement and access issues.

Magnolia went through an arduous two-year process to design and license the Magnolia Project which culminated in the recent approval of the Magnolia Project by the City of Riverside. The city’s approval included a review of noise and walkway design considerations, which are governed by the CEQA code of the State of California and the City of Riverside. At the time the Magnolia project was approved, it was the largest multi-family housing community recently approved by the City of Riverside. Unfortunately, on September 14, 2021, Northgate Gonzalez, LLC (“Northgate Market”) blocked the development of the Magnolia project by filing a lawsuit against Magnolia and Realm Real Estate, LLC (“Realm”) (Northgate Gonzalez, LLC v Realm Real Estate, LLC; Magnolia Partnership, LLC, Case No. CVRI2104149). The suit filed by Northgate Market also named Wilson Holdings, LP (“Wilson”), a real estate entity owned by Scott Bell of ICI Development Company, Inc., and Los Altos XXVII, LP (“Los Altos”), a real estate entity entity owned by Northgate Gonzalez RE, LLC, of ​​which Oscar Gonzalez, Co-Chairman, Chief Operating Officer and Owner of Northgate Market and Carl Middleton are members, as plaintiffs. According to the Complaint, Wilson and Los Altos own the property where the Northgate Market is located (the “Northgate Property”).

In its complaint, Northgate Market alleges a technicality that the development of the Magnolia Project violates a 1979 easement agreement between the properties of the Northgate Market and the Magnolia Project. Northgate Market alleges that the land is to be used as a shopping center and for commercial purposes. Previously, a Toys-R-Us operated on the Northgate property and a GEMCO was located on the Magnolia property (Toys-R-Us and GEMCO closed their stores, leaving the vacant site a blighted and underutilized eyesore).

Along with the filing of its lawsuit, Northgate Market also sought and obtained a preliminary injunction restraining (blocking or prohibiting) the Magnolia project, the recently approved largest multi-family housing community in the City of Riverside. Thus, pending the outcome of the ongoing litigation, the development of the Magnolia project is suspended. In the meantime, Magnolia and Realm have appealed the preliminary injunction on the grounds that the purpose of the easement agreement is entry, egress, and parking, and contains no restrictions on use, maintaining that the multi-family mixed-use commercial project Magnolia is by definition commercial parlance. of the easement agreement. Northgate Market has not yet responded to Magnolia’s appeal brief. Additionally, Magnolia filed a cross-complaint against Northgate Market.

Surprisingly, in their counterclaim, Magnolia alleges that prior to Northgate Market’s lawsuit, representatives of Northgate Market, Wilson, and Los Altos demanded substantial money from Magnolia. The counterclaim alleges: “On or about January 29, 2019, the representatives of the plaintiffs and the [Magnolia] met in Newport Beach to discuss the co-complainants’ project. Plaintiffs’ representative Scott Bell opened the meeting by stating “This is going to cost iStar a lot of money!” According to the cross-complaint, at the time Mr. Bell made these comments, iStar was the owner of the Magnolia property. Tellingly, it appears that based on the timeline of events as described in the cross-complaint, the request made to Magnolia precedes the filing of Northgate Market’s lawsuit to enjoin or block development of the Magnolia project.This begs the question: Was the lawsuit brought simply to use the obstruction of the approved project to “demand » a substantial monetary payment?

Darrin Olson (Rep, Magnolia) says “Northgate Market’s decision to take legal action opposing the city-approved development of 450 housing units is unfortunate given that housing is desperately needed in the State of California and the City of Riverside. From the start of the Magnolia project and up until today, the development team has gone to great lengths to design the mixed-use commercial and multi-family development to be harmonious with the easement and integrated with its neighbors such as Northgate Market, while going above and beyond to design the Magnolia Project in a way that addresses and mitigates concerns expressed by Northgate Market, including delivery truck traffic.

Mr. Olson further states: “Words cannot describe how disappointed we are with Northgate Market’s opposition to a proposed 450-unit multi-family housing development for the workforce. These same residents of our apartment development project are likely customers of Northgate Market. Magnolia simply wants to improve our community by providing desperately needed labor housing in the area. The City of Riverside describes its vision of Riverside as “the place where the American dream comes true”. A place where people of all income levels can find distinctive and special places to live. The Magnolia project is designed with the aim of providing such housing so that the City can realize this vision and furnish this dream. Unfortunately, Northgate Market does not share the same dream or vision and is determined to stop the development of more workforce housing.

The Magnolia Flats developer has successfully developed other architecturally appealing multi-family projects in the Inland Empire, providing housing improvements to communities. For example, “Mission Lofts” is an attractive 212-unit apartment community located in the Eastside neighborhood of Riverside, a Hispanic neighborhood, where a dilapidated commercial site, adjacent to Metrolink, has been redeveloped into workforce housing. work. Additionally, “Monterey Station”, a 349-unit apartment community was developed by the owners of Magnolia and completed in downtown Pomona. Similar to the Magnolia Flats and Mission Lofts developments, the Monterey Station project site was a run-down commercial area near downtown Pomona and next to the Metrolink station, before it was turned into new housing for the main -work for hundreds of families.

Like Mission Lofts and Monterey Station, the owners of Magnolia are seeking to upgrade and provide the 450 much-needed multi-family housing units to the workforce in Riverside on a degraded site.

About Us: Magnolia Partnership and its investors have completed more than $20.7 billion in value-added multifamily transactions since 1996, including 350 multifamily community acquisitions and 90,000 units as well as numerous developments.

Contact information:
Name: Darrin Olson
Email: Send Email
Organization: Kingdom Group

Build ID: 89073913

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Margie D. Carlisle