A years-long fight over one of the biggest housing proposals on the Peninsula has landed in court. N17 Development, the San Francisco developer behind the Willow Park project at 80 Willow Road in Menlo Park, sued the city on Friday, Oct. 2, in San Mateo County Superior Court.

The project would put 665 homes, a 130-room hotel, more than 300,000 square feet of office space, a preschool and retail on the former Sunset Magazine campus, with buildings as tall as 39 stories, according to Palo Alto Online and The Almanac.

What the developer claims

The lawsuit says Menlo Park kept moving the goalposts and dragged out its review instead of giving a clear yes or no. N17 argues the project qualifies for Assembly Bill 2011, a 2022 state law that gives certain housing projects on commercial land a fast, ministerial review that a city can't simply deny. It also leans on California's builder's remedy, which can let qualifying projects skip local zoning in cities that lacked a state-approved housing plan, as Menlo Park did when N17 applied in late 2023.

The city rejected the fast-track request in part because of the creek along the site, saying too little of the property's edge counts as "urban use" under AB 2011, the M-A Chronicle reported. N17 counters that the creek section borders a city park, and parks count as urban use.

The state already took a side

In a letter this summer, Attorney General Rob Bonta's office said Menlo Park improperly changed its reasons for rejecting streamlined approval, wrongly denied builder's remedy protections and shouldn't have made the developer pay the city's legal costs, the San Francisco Chronicle reported.

On Oct. 1, one day before the suit, City Manager Justin Murphy sent Bonta's office a 65-page response arguing the city had followed every housing law. City spokesperson Kendra Calvert said the lawsuit "is based on inaccurate assumptions." Mayor Betsy Nash had earlier pushed back on the idea that residents are "all NIMBYs who just don't want housing."

Why it matters

Under state housing law, cities that lose these cases after an attorney general warning can face fee-shifting and steep per-unit fines. Housing watchers across the Bay Area will be looking at how a judge treats the AB 2011 claim, since the outcome could shape how much room cities have to slow down large projects they don't want without ever formally rejecting them.