Denevi includes MROSD in land purchase lawsuit

By Nathan R. Huff

While environmentalists may be rejoicing over Midpeninsula Regional Open Space District's purchase of 1,000 acres west of the Lexington reservoir, local developer and Los Gatos Country Club visionary Pete Denevi believes it's the latest of a string of slaps in his face.

Denevi has added the open-space district to a Los Gatos Country Club lawsuit against former property owner Arlie Land and Cattle Co. The court documents allege that the district broke his purchase and sale agreement on a 210-acre chunk of the property, and behaved "maliciously, oppressively, and in conscious disregard of plaintiff's rights."

Denevi, who said he's already spent nearly $1.7 million trying to hold onto the 210 acres for which he once had a purchase option, since 1995 has tried to build the country club at the former Alma College Jesuit Seminary site off Bear Creek Road. Investors in the country club include developer Barry Swenson. After battling with environmental groups, the county and then-property owner Arlie (which attempted to terminate Denevi's option in 1998), it appeared Denevi might finally purchase the land and build his golf course. But disagreements over price and a payment conflict between Denevi and Swenson, which has generated its own litigation, led Arlie to terminate Denevi's option a second time.

Around this time, the Midpeninsula Regional Open Space District (MROSD) entered the picture. "His option was no longer in place [at the time of purchase]," said Craig Britton, district manager for MROSD. "Naming us in the lawsuit doesn't mean much because we didn't have anything to do with [his option]."

Arlie went from villain--it used turn of the century land grants to increase the number of housing lots and tried to sue the Greenbelt Alliance--to hero by cutting the deal with MROSD.

Last January, a judge removed Denevi's notice of lis pendens, which he had filed to block the open-space district from purchasing the land while he was involved in litigation against Arlie.

Denevi maintains Arlie and the MROSD negotiated an agreement while he still held an option on the land. Denevi said all his attempts to get the open-space district to honor the option or allow him to lease the land were ignored.

"I just want my property, but if I can't have it, I'd at least like to lease it," Denevi said. "But why would Arlie sell to me if he can get two times the money from Mid-Pen."

Britton said the open-space district never considered leasing the land to Denevi. "We bought it for open space, not a golf course," he said.

The land cost the cash-strapped MROSD a total of $25 million, $10 million of which was put up by the Peninsula Open Space Trust.

The open-space district needs to make costly improvements before they can open up the land for public uses, which will take at least a few years. Luckily for its bank account, Arlie agreed to defend MROSD against any possible litigation when it sold the land.

Denevi said the land will sit unused for years, but if he had been allowed to purchase it, improvements would have been immediate. Denevi maintains that his eco-friendly golf course is the best possible use of the land. Golf courses are an extremely effective fire buffer, Denevi said, and a seismic engineer has stated that the grading would actually stabilize the area.

Meanwhile, Big Creek Lumber continues to log the land. It acquired timber rights from Arlie in 1998, paying $5.2 million for the entire area. A timber harvest plan for 125 acres was approved by the California Department of Forestry, and Big Creek began cutting trees last May. The company is applying for another harvesting permit for the remaining area.

While Arlie still holds the residual timber rights, MROSD has a purchase option Britton described as "very reasonable," though the district cannot currently afford to exercise it.

Denevi has repeatedly pointed out what he believes to be the ultimate irony in the situation: If he had been able to buy the land and build the golf course environmentalists feared, trees would have been added to the property rather than removed.

But with his country club dreams a thing of the past, Denevi is focused on getting compensated for the time and money he's put into the defunct project.

John Musumeci, land acquisition manager for Arlie Land and Cattle Co. of Oregon, would not comment on the lawsuit without his lawyer's approval. However, Musumeci hinted that he believes the suit will be thrown out of court. Jonathan Polland, his Bay Area-based lawyer, did not return phone calls requesting comment for this story.

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