Coming to terms with the Point
New details are emerging about a plan before the City Council to allow Alameda Point developer SunCal Companies to take on a financial backer and make some major changes to the terms of their agreement with the city. The move could provide developer SunCal, which has struggled with a string of lawsuits and hundreds of millions of dollars in loan defaults, with a much-needed infusion of cash. But it could also wrest control of the project from the developer the city selected and place it in the hands of a New York-based hedge fund with little development experience.
SunCal had planned to ask the Council two months ago to approve the change, without allowing members to see the terms the Irvine-based developer had struck with backer D.E. Shaw. (Apparently, they had disclosed the terms of the agreement to a consultant working with the city that was supposed to read it and pass the information along. It’s complicated.) The city’s got the term sheet now, but at the behest of SunCal, they’re not sharing: The council is slated to discuss the terms at a closed-door meeting Tuesday night. And anybody who has a problem with that can apparently take it up with SunCal, which is obligated to foot the bill if someone sues to get a copy.
Now here’s what we do know about the terms, based on this staff report: D.E. Shaw will finance Alameda Point and another six to nine other unnamed SunCal projects, in return for control over major decisions like a business plan and budgets. They’ll basically pay the $10 million SunCal said it would be covering for the development concept, draft master plan, city expenses and other costs of SunCal’s negotiating agreement with the city, which is in full effect for 11 more months. The company can’t fire SunCal without cause during that time. But after that … who knows.
City staff have outlined some pretty considerable concerns with these terms, chief among them that development decisions can be made by an entity with little experience in such matters from an office that is 3,000 miles away and not SunCal, who the council picked for its experience in developing big, mixed-use projects and its ability to pay for those projects. Still, they think the change should be okayed, pending an operating agreement with more detail.
More to come …