A long-standing plan to build 85 residences at a former nursery site in downtown Larkspur will move forward after a developer purchased the 16.8-acre property last week.

The New Home Co. — which has offices in Aliso Viejo and Roseville — has closed escrow on the Niven Nursery property off Doherty Drive and plans to finalize project maps and break ground in the next few months.

“We’re anticipating opening for sale in early 2013,” said Brian Olin, a senior vice president at the company. “The demolition is being processed with the city of Larkspur now.”

The sale comes after property owner the Irving Group severed its more than 13-year relationship with Walnut Creek developer Larkspur Housing Partners earlier this year.

In August 2010, Irving Group attorneys filed a lawsuit alleging that Larkspur Housing had voided its contract by not closing escrow on the property in time for a July 1 deadline. “For sale” signs went up at the property, also known as the Rose Garden site, at around the same time.

In March 2011, attorneys for both parties filed a request to dismiss the original lawsuit, as well as a cross-complaint the developer filed against the owner. The Marin County Assessor-Recorder’s Office said it received a quitclaim deed canceling Larkspur Housing’s interest in the property in February.

The New Home Co. declined to disclose the purchase price but said the sale included the rights to plans Larkspur already approved under the previous developer. Those plans are for 29 single-family homes, six below-market-rate cottages and 50 condominiums for seniors, as well as a large public space and creek restoration.

“As a part of the transaction, we do have the rights to the plans,” Olin said. “We’re moving forward with the plans as they’ve been approved.”

In court documents, Larkspur Housing said it spent more than $5 million obtaining those approvals and doing other preparation work for the project. Larkspur City Manager Dan Schwarz said any change to the plans would likely trigger a new approval process.

A 1997 agreement between the Irving Group and Larkspur Housing put the purchase price at no less than $8.5 million before adjustments for below-market-rate and senior units, court records show. The property hadn’t gone through an assessment since 1996, and its value was listed at about $2.1 million earlier this year.

“We’re certainly very thrilled the sale’s gone through and excited to work with the buyer on fulfilling the vision,” Schwarz said.

Mayor Larry Chu said he and other residents have grown tired of the property’s dilapidated, graffiti-covered state, particularly given its location in the center of town.

“The thing’s been basically in some form of transition now for what, 12, 14 years?” Chu said. “I certainly see (the sale) as welcome news and want it to move forward.”

Olin said his company intends to start cleaning up the property in coming weeks. A sign-up list for anyone interested in buying a home is available at www.thenewhomecompany.com.

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