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‘SunCal has cured its default’

Submitted by on 1, April 21, 2010 – 5:00 am16 Comments

City officials announced late Tuesday night that SunCal is no longer in default of its exclusive deal to negotiate a development agreement at Alameda Point and that they are moving forward with plans to study the environmental impact of redeveloping the former Naval base.

Interim City Manager Ann Marie Gallant said she’d be sending SunCal’s reps a letter today with a series of questions about transportation, affordable housing, financial issues and SunCal’s assertion that they may seek to use state and local affordable housing laws to increase the size of their development. But those issues will be worked out in the city and SunCal’s weekly negotiating sessions, she said.

“Just so everyone is clear: This is a letter asking for further qualification and clarification on their application. This acknowledges that SunCal has cured their default,” Gallant told the City Council in the last moments of their meeting Tuesday night.

City officials said they are also getting set to notify the public that they are preparing an environmental impact report that will lay out impacts the development could cause and potential solutions for dealing with those impacts. A public meeting to discuss what should be studied for the document is set on the Planning Board’s calendar for May 10.

City staff has said the report will take about a year and cost roughly $1 million to process.

Gallant’s announcement followed another of what have become increasingly bitter public exchanges between city leaders and the developer that seem to more closely resemble scenes from a failing marriage than negotiations for a major land deal. For example, SunCal’s chief operating officer, Frank Faye, claimed that his company was paying half of Gallant’s salary through an escrow account it has established with the city to cover certain predevelopment costs. Gallant denied that the company was helping to pay her salary.

Faye and members of the council also got into a long and heated back and forth about SunCal’s decision to moved forward with an election instead of submitting a Measure A compliant plan that seeks to use state and local affordable housing laws to expand the number of homes it can build to what they asked the voters for. (City officials are set to ask SunCal to pay the election tab.) Faye insisted the developer would never have gone to the ballot if the city had enacted its so-called “density bonus” law before it had to go to the ballot – and he said the developer looked into taking its Measure B off the ballot after the city okayed the law in December but discovered it couldn’t.

City officials also said they are working to set up a website that will offer the city’s own report-outs of their weekly negotiating sessions with SunCal, plus documents, public meeting announcements and more. Deputy City Manager Jennifer Ott said the site should go live at the end of this week and that it will be available by linking off the city’s web page.

SunCal set up its own web page with similar content in March, and they uploaded a series of once-confidential financial and other documents last week.


  • Jack B. says:

    >>> City staff has said the report will take about a year and cost roughly $1 million to process.

    Michele, who pays?

  • Barbara Thomas says:

    SUNCAL apparently has no grasp of even basic economics. Staff had to spend hundreds if not thousands of hours on SUNCAL’s scorpion tactics for the last year plus. The petition circulation tactics, the election, the default, the “cure” of the default, ad infinitum. When staff is working on SUNCAL’s stuff it keeps city staff from doing other necessary city work. To say that SUNCAL is paying staff is typical SUNCAL speak. (If it were true, then staff would be violating its duties to the citizens and the statement that SUNCAL had “cured” the default would be legally suspect if not in total jeopardy)
    The taxpayers are merely getting reimbursed for the opportunity costs of time wasted on SUNCAL.

    A better way to say it is that SUNCAL stands to make so many hundreds of millions of dollars in profit off of our City and its streets, land, and citizens, that it still will fight to keep that option open – for its benefit. Even when 85% plus of the voters said “Please please please – NO SUNCAL”. The profit it stands to make is so great, that SUNCAL will not give up. It is going to fight Alameda to the bitter end. Just as it has done in nearly every other City where the elected officials -such as Johnson, Tam, Gilmore and Matarese, give a hurried approval before thoroughly reading the documents. And no due diligence by staff as to SUNCAL’s track record. Now that we have a competent City Manager to explain things to our wayward elected officials, SUNCAL wants to besmirch her by rubbing off their stink onto her. I don’t buy it. SUNCAL wants to make so much money here that is will say or do anything.

    Faye’s statement that “the developer would never have gone to the ballot if the city had enacted its so-called “density bonus” law before it had to go to the ballot” is also disengenuos. It didn’t like existing laws, so why would it wait for passage of a new law? SUNCAL’s campaign finance disclosures will also prove otherwise. SUNCAL could have simply said “Oops, our bad” instead of spending hundreds of thousands of dollars to win an election after December.

    Hopefully the next round of financial failures in the commercial world will take SUNCAL and DESHAW down and out of Alameda forever. It may be the only chance Alameda has of survival.

  • Scott says:

    I am so sick of hearing how bad Suncal is. Let’s get a new developer in there and start the redevelopment this summer. No more talk. Let’s go.

  • Lauren Do says:

    Barbara Thomas: As part of the ENA, SunCal is required to reimburse the City for all staff time spent on evaluating/processing/commenting/etc and so forth on their applications.

  • Mike P. says:

    First section of the State Density Bonus Law which applies to all cities, including charter cities. Note last sentence. Doesn’t it seem that a developer’s legal team would know that there is no requirement to wait for a local ordinance?

    SECTION 65915-65918

    65915. (a) When an applicant seeks a density bonus for a housing
    development within, or for the donation of land for housing within,
    the jurisdiction of a city, county, or city and county, that local
    government shall provide the applicant with incentives or concessions
    for the production of housing units and child care facilities as
    prescribed in this section. All cities, counties, or cities and
    counties shall adopt an ordinance that specifies how compliance with
    this section will be implemented. Failure to adopt an ordinance shall
    not relieve a city, county, or city and county from complying with
    this section.

  • Dennis V. says:

    What happens if application of the Density Bonus Ordinance makes the application “non-Measure A” compliant? Isn’t that why the City found Suncal in default the first time around because it submitted a plan that was not compliant with Measure A?

    • Hey Dennis,

      Okay, here goes:

      The city’s density bonus ordinance allows a developer to ask the city for permission to build non-Measure A compliant units, either multifamily or on lots that are smaller than allowed under Measure A. In order to get approval to do that, the developer needs to prove that it would not be physically or financially feasible to build the project and the affordable housing they say they’ll build without a break on Measure A.

      SunCal’s original optional entitlement application to the city – the development application they submitted directly to the city in advance of their loss at the polls – offered a non-Measure A compliant development plan for the Point, and that’s the reason the city gave for issuing the notice of default. They subsequently sent the city a Measure A compliant plan – their “base” plan – and they’ve said they will request a density bonus that would essentially allow them to build the same number of units lined out in their original plan. As far as I know, they have not yet submitted an actual density bonus application, so we don’t yet know if they want to build multifamily housing, housing on smaller lots, or both.

      Last night SunCal’s COO, Frank Faye, got into a lengthy and bitter back and forth with members of the council and city staff on this topic (it started when Doug deHaan asked him why they put their non-Measure A compliant plan on the ballot if they were essentially going to use the density bonus to ask for the same thing). Faye said SunCal wouldn’t have gone to the ballot if they had known the city would get its long-overdue density bonus ordinance passed when it did, with the Measure A concession in it. Several council members said they didn’t think Faye’s reasoning washed, because state law supercedes local law on this issue, so the bonus was available. (The density bonus was the topic of a lawsuit filed against the city by one Francis Collins, who wanted to use it to develop his long-stalled Boatworks project.)

      And Dennis, if your head isn’t spinning after all that, I congratulate you.

  • Miriam says:

    SunCal sure knows how to make enemies.

    I agree with Barbara that the following makes SunCal look disingenuous,”Faye insisted the developer would never have gone to the ballot if the city had enacted its so-called ‘density bonus’ law before it had to go to the ballot” Who from SunCal made that statement prior to putting the measure on the ballot?

    From what I’ve seen of SunCal, it isn’t a company that I would want to invest in and it certainly isn’t the company that I would trust to develop Alameda Point. I don’t even see how this company continues to survive given their major errors in judgment.



  • Karen Bey says:

    I can’t believe that SunCal would argue against paying for the election. Afer everything they have put this community through — this is a no brainer!

    I don’t know about you, but I’m having a hard time seeing the way forward with this kind of tension between City and developer. You can’t have a successful development without a strong partnership — and SunCal doesn’t appear to know the meaning.

  • dlm says:

    Michele has given a good explanation re: the density bonus above. It’s absolutely true that nothing prevented SunCal from using the density bonus rather than put Measure B on the ballot. Frank Faye’s statements on this and other issues were patently untrue, and utterly pointless and irrational as well. Why bother to lie when there’s a whole row of people facing you who can easily dispute what you’re saying?

    The comment about the city manager’s pay was also bizarre — and given that Frank is the COO, how could he not know who’s billing their time to SunCal and who isn’t?

    In terms of public relations, this man should be kept locked in his office, “interfacing” with a computer. I bet SunCal laid off everyone else so old Frank got thrown out there to handle the public.

    The city’s letter to SunCal seems to be saying, essentially, that SunCal is way overvaluing its expected return on investment, for instance, that the selling price it estimates (at $400+ per sf) is too high. It’s more of the same dishonesty and sleazeball tactics that we’ve seen all along.

  • ct says:

    Ms Thomas,

    It seems that the “hundreds, if not thousands, of hours” that City staff has worked on Alameda Point-related matters is part of the Point’s predevelopment costs, which are being paid for by SunCal.

    For accuracy’s sake, one would say that 85 percent of Alameda voters said no to *Measure B*. I can understand why some reflexively portray SunCal as a calculating corporation focused on self-preservation, but members of our local government are calculating and self-preservationist too. However, SunCal is a private company taking on a high-risk project for a chance at commensurate financial gain; City Hall is a public entity charged with serving its citizens instead of wasting taxpayer money to justify an inefficient, incapable bureaucracy’s existence and preserve its status quo.

    “The only chance Alameda has of survival” is for us to break free from muddleheaded demagoguery and to examine the issues rationally.

    Ms Bey,

    The SunCal initiative could and should have been placed on the June ballot, but the City Council had voted to squander $325,000 on the early, single-item election.

  • CT,

    the June ballot isn’t a city election (nor was February), so using the legal reading of the City Attorney, the only election it should have been placed on is November. It would have been difficult to place it there, given the drive to get rid of SunCal, because it would have required an extension of the ENA.

    On the other hand, the City could have gone all-mail on that date as well, saving whoever pays the bill a couple hundred grand.

    There were many options, staff and three council members decided that February met their needs and voted to support the date contrary to any points that speakers and other council people made that February was not required by law.

  • dlm says:

    Is that “November”, as in “November, 2009”? Too bad we can’t have a show of hands online — what exactly was it that delayed the November, 2009 election, raise your hand if you remember. As I recall, SunCal was supposed to submit the signatures in June and needless to say, they didn’t. So whose fault was it that they missed the November election?

    I often wonder, quite seriously: why are we expected to support a developer which can’t be held responsible for its own incompetent behavior?

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