Navy nixes Point price break
Well folks, it sounds like the Navy was a little less than impressed by a joint SunCal-city proposal that would change the terms of the deal to convey the former Naval Air Station to the city – and specifically, with SunCal request for a $50 million break on the $108.5 million asking price for the property.
SunCal was selected as master developer for the Point in part because it would be able to meet the terms of the agreement already in place between the Navy and the city, including the purchase price for the land, per a March 16 letter from Laura Duchnak, director of the Navy’s Base Realignment and Closure office in San Diego, to Assistant City Manager David Brandt.
Duchnak wrote that the Navy was “disappointed” with the conclusions stated in SunCal’s business plan, which asks for more land and more development than envisioned under the previous Point developer. The current plan, which SunCal is trying to put on the November ballot, asks for up to 4,841 homes, many of which will not be Measure A-compliant, plus nearly 3.2 million square feet of commercial space and 350,000 square feet of retail.
“A very conservative approach was applied in many assumptions which significantly reduced revenues, increased costs, and placed downward pressure on the residual value … It is disconcerting that even after the back and forth between ARRA/SunCal, significant data caps (sic) (particularly Adaptive Reuse) still exist,” Duchnak wrote.
“While it would be our desire to quickly resolve the land value question and move on with conveyance, it is clear the process we agreed to follow in 2006 has become distorted and does not follow the fundamental terms of the agreed-upon term sheet,” she wrote. “Based on our initial review of the SunCal submittal, we do not agree that the current offer represents the fair market value for the property.”
The Navy is proposing that SunCal – whose financial stability raised “considerable concerns” – offer some cash up front, and some on the back end of the development in order to pay what it considers to be fair market value for the Point. A similar proposal was placed in a defense bill last year but didn’t make it into the final version of the bill.
“(W)e ask ARRA and SunCal agree to provide the Navy with an up front payment at conveyance and a percentage of all future gross land, residential and commercial building sales,” the letter said.
Alameda’s base reuse manager, Debbie Potter, said the city and SunCal will meet over the next few weeks to chew over the Navy’s letter and move forward from there.
“Our response is, let’s meet,” Potter said. “Let’s sit down and talk about what doesn’t work for us, and what doesn’t work for the Navy.”
A SunCal representative did not respond to an e-mail seeking comment.
I’ve gotten a number of e-mails, by the way, from folks who said they’re miffed about what signature-gatherers for the measure were telling folks this weekend. I’ll get more on that and follow up with you, soon.