Kilroy Appeals Thomas Project
A long-running feud between two prominent Los Angeles-area developers flared up again this week when Kilroy Realty Corp. and its allies filed a last-minute court appeal and raised new environmental concerns over a proposed El Segundo office development by rival Thomas Properties Group.
The latest maneuver in the unusual and costly battle will keep the proposed 46-acre El Segundo Corporate Campus in legal limbo for at least another six months, according to attorneys.
Kilroy and the Citizens Against Gridlock in El Segundo on Monday appealed a decision by Los Angeles Superior Court Judge David Yaffe to dismiss their lawsuit, which had charged the city of El Segundo with failing to, among other things, fully study the environmental and traffic effects of the multimillion-dollar project and to allow for sufficient public comment. The decision now will be reviewed by the California Court of Appeal.
“Our attorneys feel we have excellent grounds for appeal,” said Hugh Greenup, executive vice president at Kilroy, a publicly traded real estate investment trust. “Our issue is that the city did not conduct an appropriate review of this project.”
Representatives of privately held Thomas Properties said the lawsuit is without merit and repeated past charges that Kilroy, one of El Segundo’s biggest office landlords, is simply trying to keep competitors out of the market. The Thomas project is to be built on the site of a former aerospace plant located in the eastern part of the city near Nash Street and Mariposa Avenue. The site sits near an office complex owned by Kilroy.
“What you have here is a smoke screen to hide their true intention, which is to quash competition,” said Thomas Properties attorney Dale Goldsmith.
Both sides have been at it for more than a year and have waged a costly and high-profile campaign to influence elected officials, voters and the courts. This June, Kilroy and the citizens group, which is funded primarily by the developer, tried unsuccessfully to overturn the city’s approval of the project in a special referendum, which saw both sides combined spend in excess of $1 million.
The protracted contest has surprised many in the real estate business, where developers rarely wage such public and costly battles against rival projects.
“They often won’t do it because of [potential] retributions on the next project,” said Los Angeles developer Cliff Goldstein at the firm J.H. Snyder Co. “You can create a vicious circle chasing each other and destroying each other’s business.”
In addition to filing its appeal, the citizens group also called on Thomas Properties to post a $350-million bond to protect the city from potential litigation that could arise from exposure to toxic air emissions on youth soccer fields that will be built on a portion of the El Segundo Corporate Campus. The group’s officials claimed the city had failed to seek such legal protection.
But El Segundo Mayor Mike Gordon said such a bond was unnecessary because environmental experts hired by the city had determined that concerns about contamination did not exist. “This is just one more of Kilroy’s efforts to scare our community,” said Gordon.