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SunCal gets a date

Submitted by on 1, November 4, 2009 – 6:00 am10 Comments

After a dramatic public hearing that saw some surprising alliances – and at least one local leader voting against their traditional base – the City Council set a February 2, 2010 election date for SunCal’s Alameda Point development initiative on a 3-2 vote.

Councilmembers Lena Tam and Marie Gilmore opposed the plan, saying they couldn’t support the cost of the special election the city will have to hold for the vote. Tam, who voted against the earlier date, and Gilmore, who abstained from voting, wanted the vote to be held during a county general election on June 8, 2010. A February election could cost the city upwards of $325,000, while a June ballot would cost the city $50,000 to $75,000, Gilmore said.

“It’s not only fiscally irresponsible, it’s unconscionable for us to do this,” Tam said, adding that staff has suggested the city cut staff, darken an ambulance on Bay Farm Island and shut City Hall on Fridays in order to save money. Tam had earlier made a motion to hold the election in June, which was voted down 3-2.

Mayor Beverly Johnson argued that the city didn’t have much choice but to approve the February 2 date, based on City Attorney Teresa Highsmith’s analysis of election law. The initiative contains both a charter amendment – to change Measure A – and an ordinance, and each faces different timelines for ballot placement under election law.

“We need to get on with this. We need to follow the law,” Johnson said.

Highsmith said the initiative posed a conundrum for the city because it is both an ordinance and a charter amendment. Each faces a different timeline for ballot placement.

Highsmith said there’s really no case law to provide guidance on which set of rules should prevail in the case of a “hybrid” measure like SunCal’s. So she said she looked at the “totality” of the measure – which was largely focused on the ordinance and which had language that she said spoke to the stricter timeline. She said that if the council strayed from that timeline, they could face a legal challenge to their election date.

An ordinance must be placed on the ballot between 88 and 103 days after the council certifies the sufficiency of a petition, which the council did on Tuesday night. With a charter amendment, the council would have more leeway to select a vote date, as it did when it chose to push off an election on the firefighters’ proposal to mandate staffing levels to 2011.

Tam said she read the election code to say that SunCal must specifically request a special election, and that she thought the city had more leeway in setting a date.

No one from SunCal came to the meeting to voice their opinion on a preferred date. But members of Alamedans for Alameda Point Revitalization, a group that supports the initiative, said they’d like to see the council consider the June date. Doug Siden, AAPR’s president, said the group would prefer the later date if it could be considered.

Initiative opponents agreed, saying they need more time to mount a campaign against the plan and that they think people need more time to digest the 288-page measure. The campaign would extend through the holidays and absentee voting would begin in early January, a month before the election date.

“February 2 is really too soon. How can you do a campaign during the holidays?” asked Diane Coler-Dark, who said absentee voting would begin soon.

Coler-Dark noted the hundreds of thousands of dollars SunCal has spent so far on the initiative. And she said community groups won’t be able to compete.

“The deck would be stacked. We’d be screwed, okay?” she said.

Anne Spanier, co-president of the League of Women Voters of Alameda, said the League opposed the February date, because it will be too costly for the city. But Robb Ratto of the Park Street Business Association said he supported city staff’s recommendation, because he didn’t think the city had a choice.

But some others said they’d like the earlier date – and that they’re hopeful the initiative fails. Bill Smith, a local resident who has opposed the initiative, said he’d be glad to see it go to the voters soon.

Johnson and Councilman Frank Matarrese – who earlier had been lauded by initiative opponents for switching their stance to oppose the ballot plan – said they didn’t think the city had any choice but to okay the February date. And Doug deHaan – a longtime opponent of the plan – also voted for the earlier date, despite the desire of many of the plan’s opponents to push it off a few months.

“My concern is how any citizen group can get their message out in short order. But it does seem the community understands what’s in the initiative now,” deHaan said in casting his vote for a February election.

Several opponents of the ballot measure and plan used the hearing to air their concerns about SunCal and the developer’s plans for the Point.

Speakers and council members also noted recent correspondence from the City of Oakland and Oakland’s Chinatown saying an environmental impact report on the proposed development needs to be done before a vote can happen. Johnson and Highsmith said they believe that would only be the case if the city put the initiative on the ballot.


  • RM says:

    At the meeting last night Mayor Johnson said several times that the initiative can not be changed. What SunCal wrote is what will be voted on.

    Last spring SunCal said they would submit the petition signatures back in June, for a November 2009 election. Then they waited several months to submit them to the County Registrar of Voters.

    That took us up to last night when the city council accepted them and then by law had to set an election date. The election code has deadlines that must be met.

    Last night Marie Gilmore said the city should ignore (yes, ignore!)the election code laws. She's an attorney, right?

    She and Lena Tam said they're concerned about the approximately $300,000 (three hundred thousand dollars) cost of a February election.

    I am much more concerned about the approximately $51,000,000 (fifty one million dollars)in fees that the developer will not pay at the NAS. That's the way SunCal wrote this initiative–the $51,000,000 in fees will be waived.

    Compare $300,000 to $51,000,000. Those dollars will come out of the pockets of taxpayers.

    How deep are your personal pockets?

    How deep are the pockets of SunCal and their hedge fund financier/partner DE Shaw? How much deeper will SunCal/DE Shaw's pockets be if they get what they want?

    The election is set for February 2.

    Start reading the documents now if you have not yet done so.

    The full 283 page initiative is on the city's website: http://www.ci.alameda.ca.us Or start with the city's two part summary which is there also.

    Then head over to http://www.AlamedaPointInfo.com and http://www.ProtectThePoint.com

    for more info.

    Be thankful that Beverly Johnson, Doug DeHaan and Frank Matarrese have read the documents, understand them, and oppose this initiative.

  • Barbara Thomas says:

    Time to start making lists and checking them twice of all your friends, neighbors and fellow Alamedans that can vote. Check your email accounts, personal telephone books, clubs you belong to. Talk to everyone you can, educate them, get them to sign up to vote absentee. Include this in your Holiday greeting cards, and at all the holiday events you and your family attend. And ask everyone you convince to do the same thing with their other friends. We can't compete financially with the millions of dollars that SUNCAL and DESHAW are going to spend to try and buy this election. If each of us contributes time and labor STARTING NOW – we can get SUNCAL's hooks out of our town ASAP.

  • Scott says:

    No more discussion let the people vote already. We should have gotten started on this project 10 years ago.

  • Jayne Smythe says:

    I thought it was a really good meeting! So many people had good things to say, but too bad none of it made a hill of beans in the situation! It was really interesting to hear about the difference between ordinance and charter amendment (took me a while to figure out what they were talking about), but I don't get why they couldn't have held off on the vote until checking into that "hybrid" thing–I mean, they've got 10 days. Sounded to me like the initiative is about two things… shouldn't it be 2 initiatives then? I don't know.

    I felt like the CC was forced to vote on something that was a no choice deal.

    In the end, it is hard to tell if it is good or bad (or who it might be good or bad FOR) having a Feb election! It is too bad, though, that the city is forced to spend the money on the special election. I appreciated Tam and Gilmore trying to make the statement… even tho it couldn't go anywhere.

  • Richard Bangert says:

    The fact that this is initiative is a "hybrid" containing both an ordinance and a charter change, as pointed out by the city attorney, and therefore lacking in strict election law guidelines or case law, should give rise to at least considering one rather obvious conclusion: It violates the "single subject" rule for initiatives and referendums.

    Many states, including California, adopted a law regarding initiatives that said you can only ask voters to vote on a single subject. Otherwise, you can create a situation where voters end up voting against something they would otherwise be in favor of because there is in an objectionable "subject" in the initiative. That's exactly what we have here. Many groups and individuals support the slide show concepts and would be amenable to changing the charter to allow apartments and condos, but they are dead set against the business deal and ordinance changes regarding the approval process and local control issues as well as the high number of residences proposed.

  • Jayne Smythe says:

    OMG! Well, Richard, I thought that double issue question came up during the meeting, and the city attorney didn't even bat an eye! What are we all missing, here? I mean, I didn't imagine that, did I?

    Meanwhile, what Detailer has to say is downright scary! But, we all have been saying some of this, based on what information we find on SunCal happening in other places, for some time now.

  • Detailer says:

    One good thing about the special election. SunCal will have to earn every yes vote. There will be no “accidental yes vote” just because someone participates in the June election to vote for something else.

    And as to D.E. Shaw’s deep pockets, forget it. The deal will be structured by D.E. Shaw’s lawyers the same way all investment banks document their real estate deals. There will be no guarantees to the City which will survive a trip to the bankruptcy court, if the project goes sour:

    The limited liability company which will be the property owner will be organized in Delaware. The identity of the members and managers will be kept a secret, as provided under Delaware law. The members will be able to sell their memberships to third parties without any filing with the State of Delaware. Alamedans will never know who the owners of that Shaw/SunCal entity are. Alamedans will never know who the decision maker managers of that entity are.

    The Delaware limited liability company operating agreement, which is the contract between SunCal and D.E. Shaw, will detail how the ownership entity will be run in terms of management decision making. The operating agreement will provide that each “member” has to contribute $X to the LLC’s coffers and nothing more. That $X is called the mandatory capital contribution. Once that money is contributed, neither the LLC nor any member can compel the other members to contribute more money. In fact, under Delaware’s limited liability company law, the members can unanimously agree, among themselves, to scale back that mandatory capital contribution under any circumstance.

    The LLC operating agreement will state that none of the members of the LLC will be liable to pay or perform any of the debts or promises/obligations/contracts of the LLC.

    If the project goes badly for the LLC, once all of the mandatory capital contributions have been spent, the LLC will have to rely on loans to keep the project going, if sufficient land sales proceeds do not provide the necessary cash. [This is the circumstance under which SunCal’s 30 Lehman related bankruptcies were filed, and the circumstance under which Lennar’s affiliate put its entities, including the Mare Island redevelopment, into Chapter 11].

    Whatever “agreements” the LLC makes with the City of Alameda, whether in the context of the initiative/development agreement, or any side deals, will be worth less than the paper they are written on. The LLC will perform if its managers choose to have the LLC perform. The LLC will not perform if its managers choose not to perform. The LLC’s managers are not and will not be SunCal’s local Vice President. They will be SunCal’s owners, the Elieffs, and nameless faceless Wall Streeters chosen from D.E. Shaw’s 12 person real estate department.

    If the City chooses to terminate the Development Agreement for non-performance, under the procedures set forth in the Government Code, a simple Chapter 11 filing by the LLC will set the stage for the bankruptcy court judge to order the City to still honor the terms of the Development Agreement.

    Under basic principles of bankruptcy law, which SunCal now well knows, a debtor/project owner LLC can reject any contract, agreement or obligation it chooses to reject. All the recipient of the rejection (e.g. the City, Redevelopment Agency, School District, or utility district) gets is an unsecured claim against the bankrupt entity. In most development LLC bankruptcies, the unsecured creditors get pennies on the dollar for their claims. Just ask the owner of Goats R Us how much she is expecting to be paid on her claim concerning Oak Knoll.

    The bottom line is that the only obligations of this land owner LLC to the City of Alamada which will be performed are promises secured by surety bonds, where a third party insurance company is on the hook to pay when the developer defaults. The initiative/development agreement does not require any promise by the Shaw/SunCal LLC to be bonded, except bonds in compliance with the Subdivision Map Act.

    Unfortunately, under the Subdivision Map Act, the City has no meaningful opportunity to reject surety bonds written by insurance companies which are close to insolvent. So, even promises by the land owner LLC which are bonded by an insurance company are not bullet proof.

    The foregoing is the real world. Commentary by people like the members of Alamedans for Alameda Point Revitalization, concerning benefits which the Shaw/SunCal LLC will bring to the community are simply delusional.

  • ct says:

    Would a four-month delay to vote on the SunCal initiative really make that much of a difference to voters? Squandering up to $325,000 for a special election in order to hew to an arcane election code is irresponsible and defies logic; it'd be like something out of Dickens' "Bleak House". If common sense prevailed here, the vote on the initiative would occur during the general election.

  • Jenna says:

    My company worked as a subcontractor to Suncal several years ago, when they went bankrupt. I remember the mess they created for us. They shut down all the utilities because they wouldn't pay for them. We couldn't get the money that was due to us.

    Several years later, I find out that they are the developers for Alameda. I think, well they came back from their bankruptcy. Somehow they got a second chance and pulled it together. Then I find out that they've done the bankruptcy thing 27 times? When I heard that I felt sick to my stomach, knowing what we're in for. Like I said, I remember.

    Bernie Madoff is sitting in jail wishing he'd pulled off the SunCal scam. It's legal and he wouldn't be in jail. Just get enough fools to vote for the pretty picture and Suncal is going to do it again. To Alameda.

    Terrifying. Suncal in control of Alameda is a terrifying thought.

  • DJM says:

    Are the people of Alameda so desperate for development at the Point that they'll embrace a developer that is currently in bankruptcy up and down the state of California- sticking it royally to the communities that they once so freely made big promises to- with the financial backing of a hedge fund that deals in extremely risky derivitives? The folks in Oakland had to come out in force recently and put the screws to SunCal in order to get Oak Knoll cleaned up. We had to actually petition Alameda County's D.A. two weeks ago to make arrests and initiate prosecution for the serious laws broken at Oak Knoll. There's a big news conference scheduled for the front gate at Oak Knoll this Monday at 10:30 by Oakland's City Attorney. Come out and see if SunCal has the nerve to show up and suggest, only now, that they're going to do the right (lawful) thing and clean up Oak Knoll, when it was really the nearby neighbors that had to shame and embarass them into compliance. All they're interested in is protecting their reputation long enough to screw Alameda, too. If Alameda foolishly goes down this path let me know when it all goes sour and I can loan you my notes to help you dig yourselves out from the debt you'll be saddled with. See you Monday at the news conference…

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