Home » Island News

SunCal: “We may not have touched on all the bases”

Submitted by on 1, May 18, 2010 – 5:00 am20 Comments

With little more than two months left in its exclusive agreement to negotiate a deal to build at Alameda Point, representatives from SunCal Companies made a renewed push Monday to repair relations with a community that resoundingly rejected their development plan at the polls.

Representatives from SunCal and local labor unions that spent thousands of dollars to campaign against the developer’s ballot measure held a press conference Monday at the Point to tout recently inked labor agreements for a future Point project and plans to hold community meetings intended to build support for the developer’s efforts at the former naval air station.

“When we first came to Alameda three years ago, and in the last election, we may not have touched all the bases that we should have,” SunCal’s chief operating officer, Frank Faye, said Monday. Faye said the developer would work to build partnerships with local government officials, residents and labor.

City Councilman and mayoral candidate Frank Matarrese praised the developer for inking labor agreements. Matarrese had initially supported SunCal’s ballot measure but dropped his support over the lack of labor agreements and concerns over a host of financial issues.

“I’m glad SunCal finally decided to follow my request to sign a project labor agreement with local labor units,” Matarrese was quoted as saying in a SunCal press release. “PLAs are good for our Alameda and Bay Area union families. They make good business sense as well.”

Mayor Beverly Johnson said inking the labor agreements is a positive step. But she said SunCal has to convince local residents that they’re the right choice for Alameda Point.

“I think it’s really going to come down to if they come up with a project,” Johnson said. “And I don’t think either project they’ve proposed is going to be acceptable to the public.”

The developer has had frosty public relations with city leaders and, in the wake of their February 2 drubbing at the polls, has faced calls from opponents to leave town. But they have instead boosted efforts to make the project happen, calling in higher-placed SunCal executives like Faye to make the developer’s pitch and reaching out directly to the public with a website, blog and plans for community meetings.

The developer recently submitted a development plan that could see more than 4,800 homes at the Point, the same number it presented to voters. The plan also includes 4.57 million square feet of commercial, office and civic space and 146 acres of parks.

The Planning Board is working on a list of the proposed development’s potential environmental impacts to study, a key step in the city’s process for considering the plan itself.

SunCal has until July 20 to ink a development agreement with the city and a term sheet with the Navy for transfer of the Point property it is seeking to develop, though the deadline could be extended.

20 Comments »

  • Tony Daysog says:

    Below is a speech I delivered on May 10, 2010 to Alameda’s Planning Board, on the night that this board officially began envaluating the range of environmental impacts stemming from SunCal’s proposed approach to redeveloping Alameda Point. I urged the Board to understand what amount of housing is needed to pay for the hard-costs associated with building the wide range of public and recreational amenities the public has demonstrated strong interest in, balancing this quantity with other factors such as traffic, so as to fulfill our vision for a world-class amenity-rich mixed-use transit oriented development at Alameda Point.

    You can watch the speech at: http://www.daysog.com/sogblog_SunCal_EIR.html

    /s/ Tony Daysog

    ————————–

    “Good evening Chair, Planning Commission, and staff.

    Tonight is an important juncture in redeveloping Alameda Point, in evaluating a proposed plan in front of you from SunCal.

    There will be no doubt many, many detailed points that you will review, try to reconcile, perhaps even reject and / or accept.

    As you approach your work, I ask that you bear in mind years of community input in producing a vision, of a world-class mixed-use transit-friendly community, one in which job generating uses, residential uses, and public recreational amenities are balanced with fiscal and transit questions.

    To this end, a critical part in any mixed-use plan for the Point is the residential piece. I’m proud to have played the leading role in getting Bayport going. Bayport proves that the City of Alameda has the experience to plan and redevelop the rest of Alameda Point.

    But here’s why I’m here tonight. As we move forward with the rest of the Point, let’s plan for a mix of housing types, certainly upscale single-family homes, but also stylish townhouses, condos, and lofts. I love Bayport; but let’s now do something different this time.

    Let me end by saying this:

    As you know, there’s tremendous up-front hard costs involved in getting the rest of the Point going. These costs are infrastructure costs; the Navy’s sales price; and the cost of public and recreational amenities that we all want, to name a few.

    Because of these costs, we need to seriously analyze and quantify the economics of the residential component [of SunCal’s plan], because it’s the residential more so than the commercial and industrial uses that will pay for all the
    things that we want at the Point, i.e. the world-class recreational uses, the quality business districts, as well as help pay for the steep upfront infrastructure costs.

    In regard to these upfront costs and recreational amenities, is the right number 3,700 housing units? 4,000 units? 5,000 units? What’s the right mix of price points? What are the trade-offs you need to evaluate? Tonight, I
    am not at liberty to say what those numbers are, but your analysis, as the Planning Board and city staff, can help us in this regard.

    But I am very certain that the number is not the 1,800 PDC-units that I voted for when I was on City Council, largely because of the Navy’s $108 million price tag.

    So tonight, let’s move forward with Alameda Point. Yes, Measure B happened last February, but this is not about last February. Rather, this is about what we as a residents of Alameda want at Alameda Point and making sure that
    whoever the developer is, we get it. Thank you.”

  • Mike says:

    It’s like a horror movie… just when you think the monster/ax murderer/shark (whatever) is dead, BANG! It comes back to scare you one more time. When is this plan actually dead? I had hoped this monster had been impaled on a ballot initiative three months ago.

    Tony, I couldn’t tell from your speech if you were in favor of continuing with Sun Cal and it’s plan or not? Since you’re running for office, could you clear that up?

  • Jayne Smythe says:

    It just seems to me that if SunCal is in legal hot water, why would this or any town be wanting to do business with them? But I have been saying that for a long time, and everyone keeps on like SunCal is the best thing since sliced bread and ignores the legal problems behind that curtain…

  • Tony Daysog says:

    Sure. This is a question that comes up frequently when I meet people at my Saturday morning meetups in our local parks. This is what I wrote in my May 4 blog entry (http://www.daysog.com/sogblog.html): “Questions were raised on a number of ocassions if the City should even be dealing with the developer, SunCal, to which I responded that what matters the most is identifying what We, the People of Alameda, want at Alameda Point and finding a partner who can help us get there in a deal that’s fair to all. If we can strike such a deal with SunCal, great. If not, move forward. Alameda Point is about us and our vision.”

  • Jon Spangler says:

    Mike,

    Not all the monsters/ax murderers/sharks are at SunCal. Some seem to be lurking in City Hall as well.

    Part of the “horror movie” has been the unwillingness (or inability?) of the city council and staff to engage cooperatively and productively with the master developer that the council selected. The Council flat out refused to put forth a City Charter amendment to increase the allowable density at AP, which is economically necessary to a) pay the enormous fixed and unavoidable infrastructure and cleanup costs, and b) necessary to create a self-sustaining and lower-traffic-impact (“transit-oriented development”) community at AP.

    It was only after SunCal’s request for help to change the charter had been refused by the City Council that SunCal. left to its own private-sector resources, put together (without any public review or public hearings, which the Council could have had) the initiative that became Measure B. (And Measure B was a mess on several counts, I readily admit.)

    The City Council must accept at least partial responsibility for the current “horror movie.” And the Interim City Manager’s overly-quick trigger finger on declaring SunCal out of compliance with the ENA did not help SunCal make progress on the real problems at Alameda Point, either.

    It is time for the City Council to own its fair share of responsibility for their own AP decisions and culpability over the past 2 years.

  • Tony Daysog says:

    . . . And the “vision” I’ve heard over the many years and even now is of a amenity-rich mixed-use transit-oriented project with a range of housing types. To use a phrase a Planning Board member (Anne Cook) brought up in another context during that meeting, I’m basically asking what’s the “tipping point” in terms of amount of housing we need to get that range of world-class amenities we want at Alameda Point? Maybe it is, indeed, 3,700 units that SunCal wants in their base case; maybe it’s 4,800 or so. Let’s gather all information and data we need through this EIR process, and make some cold-hearted decisions. Whatever it is, I am going into this conversation from the vantage point of “I want the right amount of new housing that ultimately pays for the amenities we all dreamed of out at the Point, and once I know that number, I then will work with the community to balance that goal with other issues, like traffic and whether credible alternative transit solutions are within grasp.”

    But, honestly, I am NOT going to go into this discussion about what to do with the Point post-Measure B by saying out right “no new housing” or “keep housing to a minimum” at Alameda Point, because in my heart of hearts, I know if we go down this path right now, then we’re basically giving up on making Alameda Point fulfill the dreams that many people have worked for. Bottom line: housing pays for the amenities and infrastructure improvements we want and need out there. My value-added as a mayoral candidate is that we’ve got to “plan” for the right amount of housing, and just saying “no new housing” or “keep housing to a minimum” ain’t going to cut it.

    Thanks! /s/ Tony

  • Alana Dill says:

    Tony – this is a small semantic point, but an important one. Alameda needs cool-headed decisions, not cold-hearted decisions. It is so important to balance the bottom line with quality of life. As public transportation funds are cut back again and again, how will the new development avoid causing further traffic problems both on the Island, and commuting off-island?

    I’m actually very excited about more parks, mixed-use buildings, and cleanup of our toxic base. I’m also still hoping for a development that would allow for Targetand a few other large businesses. As for global warming/ flooding, as goes the West End so goes the rest of Alameda. If we have a vested interest from the businesses and homeowners at the Point, that will provide MORE financial and voter resources to help protect Alameda as a whole. But I’m not sure that SunCal is trustworthy to get this project completed. They’ve dropped the ball so many times and in so many ways. I’m very new to this – has the City got some kind of completion insurance? If SunCal does bail on us halfway through- what is the backup plan?

  • Tony Daysog says:

    Thanks Alana — yes, I like “cool-headed” better than “cold-hearted.” As for trustworthy — because this is a point I heard at the Planning Board meeting — let me put it this way: no developer is trustworthy. When it comes to us working with developers, what matters the most is making sure we have good lawyers and staff (and I think we do) who hammer out agreements that’s fair to Alameda and helps us achieve our vision — agreements that protect us on the downside of things and makes sure we get our share on the upside. If we can’t hammer out such agreements with SunCal, then I say, “next.” But if we can, then, okay, let’s move forward. On a final note: the one thing that my grad school advisor — Professor Michael Teitz — made sure to emphasize when he heard I was on City Council: “You know, Tony, watch out for developers. They are ALL sharks.” Trust but verify, right?

  • William Smith says:

    Now that Measure B is out of the way, we will have many opportunities to verify SunCal’s plans as they develop. Let’s get on with the EIR (Environmental Impact Report) that is the first major opportunity to verify the promise of SunCal’s preliminary and general land use plan for Alameda Point!

  • dlm says:

    Here are the comments that I made to the City Council this past Tuesday. To sum it up, this development is not about “tipping points” or “world class amenities”, it’s about MONEY — the density of dollars — and it’s about risk.

    ***

    In preparing for these comments, I did some reading on SunCal’s project in Albuquerque, New Mexico, which is now in foreclosure despite SunCal’s attempts to prevent that by filing another bankruptcy:

    Quoting from a state representative in New Mexico: “What we all said was going to happen and what we knew was going to happen finally happened. They were not viable financially and not of the caliber we should want to be in a relationship with.”

    “We knew they clearly had problems – 85 percent of their projects were going bankrupt.”

    “We [the people of New Mexico] would have been in a big financial mess right now if we had locked ourselves into a relationship with them.”

    This is all too obviously relevant to our circumstances here – we are still purporting to do business w/ a developer who is clearly going under on all fronts,

    We know that SunCal has 30 bankruptcies w/ its Lehman projects – bankruptcies that seriously threaten the parent company’s survival — we know that SunCal is facing foreclosure in New Mexico because Shaw refused to back them financially, and we now know that creditors have threatened to seize assets from the parent company or the CEO if they don’t pay up on an outstanding debt of $7.9 million dollars.

    We also know how SunCal and Shaw dealt with us here in Alameda.

    We still need to know what SunCal’s real financial status is and how long it will take to stabilize (if ever), – and by “SunCal”, I mean the parent company and all the related limited liability companies – or what kind of commitment Shaw has made to SunCal, in terms of hard cash, plus we need information on any litigation that SunCal or its CEO is currently involved in, and we need a report on the status of all of SunCal’s projects.

    On top of all that, of course, we still don’t whether this project is even financially viable. Until we know that, and until we know whether the developer will even be around six months from now, we cannot go ahead with any further commitments on this project.

    If SunCal is too much a risk for the entire state of New Mexico, then it’s too much of a risk for us. We do not want SunCal and we do not want their plan.

  • dlm says:

    To follow up on my comments re New Mexico (which should posted), let me explain a bit more about what happened — and what we’re really talking about here.

    SunCal, supposedly backed by Shaw, bought a huge tract of land just outside Alburquerque, 55,000 acres of what had originally been a Spanish land grant, for around $200 million. The sellers were the descendants of the original owner, a whole community of people w/ modest means. On top of the selling price, SunCal promised them $1 million a year for 100 years, which was to go towards community needs, college tuition for example.

    Shaw never put up the $200 million for the land tho — as it turned out, they got a loan thru Barclays and other banks.

    SunCal/Shaw then set out to get redevelopment financing, which had to be approved by the state legislature. They waged a long campaign, spending money left and right, and eventually lost. Shortly thereafter, the Barclays mortgage came due in full, and Shaw decided that the project wasn’t viable without the redevelopment financing, so they refused to pay the mortgage — they walked.

    So what happened? Barclays began foreclosure proceedings, SunCal tried to head it off by filing bankruptcy — and failed — so now evidently the foreclosure is back on. The former owners will never see the $1 million a year,the city of Albuquerque is now next door to 55,000 acres owned by a bank, and virtually everybody involved got screwed by this deal, to put it bluntly.

    So in sum: All the nice illustrations and the discussions about this or that detail of the plan are entirely irrelevant and it’s foolish to be discussing that — if SunCal (and Shaw) are not reliable business partners — which they obviously aren’t — then the rest of this “project” is a fantasy.

  • dlm says:

    Here’s the illustrations (renderings) that I mentioned above, from SunCal — see the ferry landing (the last picture). It’s very pretty, but it looks like San Francisco, not Alameda:
    http://www.seealamedapoint.com/artist-renderings/

    And regarding the proposed ferry landing: As it stands now, the ferry is serving both Oakland and Alameda, across the shared estuary. Both cities provide passengers and contribute funding to the ferry — which reduces the cost of the relatively high subsidies.

    If the ferry landing is moved to the Seaplane Lagoon, Oakland’s ferry service may be lost (as Oakland provides fewer passengers) so the net gain in ferry service will be zero. In addition, the Alameda ferry service will become more expensive. If the proposed ferry is in addition to the existing ferry, then neither one will be viable.

    So why is this being suggested? Because it sounds good — it’s like a class exercise, “How do we make a transit node?” Get all the transit and put it in one spot — here’s the bus, here’s the ferry. Does this make sense? Not that much, but that doesn’t seem to register.

  • Tony Daysog says:

    You write: “To sum it up, this development is not about ‘tipping points’ or ‘world class amenities’, it’s about MONEY — the density of dollars — and it’s about risk.”

    I ask: has there ever been a major development anywhere including Alameda, such as Bayport or Alameda Landing, where it’s **not** about money? Has there ever been a development where there is **no** risk? That’s obvious. Every developer — not just SunCal — is at risk of bankruptcy because many are so highly leveraged and given the swings in the market.

    So, with that as a given, what matters is that you structure a deal that protects you on the downside and makes sure you get what your share on the upside, all the while making sure the developer and the city work in tandem in achieving the community’s vision for Alameda Point. If you can’t structure such a deal with SunCal, well then, fine . . . we’ll find someone else. If you can, then, again, fine, then let’s move forward.

    Our work on Bayport certainly proves that we did all that and more — so our city has an excellent track record already in negotiating strong agreements with developers with regard to redeveloping Alameda Point.

    As for me, this development **is** about world-class recreational amenities for all Alamedans (beautiful waterfront paths for pedestrians and bicyclists, multi-sport complex for youths and young-at-heart, wildlife preserve for the endangered birds, etc) and improved infrastructure, and understanding the range of upscale homes and townhouses/lofts and commercial/industrial variety that allow us to get all that, and making trade-offs where necessary once we’ve obtained baseline information via the EIR process.

  • Mike says:

    Tony,

    Do you or do you not think that SunCal is Alameda’s best possible partner?

  • Tony Daysog says:

    If Alameda can strike a deal with SunCal that achieves our objectives, i.e. our vision of a amenity-rich mixed-use project with a range of housing types and job generating uses, and that deal is air-tight like (if not better) the deal with struck with Catellus over Bayport, protects us on the downside and make sure we share in the upside, then, sure, why **not** move forward in this context? Is Alameda capable of striking such an agreement with SunCal? Sure, why not? It’ll take time and patience, but sure.

    We, as a City, have done this before — it’s right there called Bayport. 490 homes. A school in the middle. Park. Mini pocket parks. Agreement on up-side sharing of profit. Agreement on downside costs. So, let’s not pretend that the City of Alameda all of the sudden got struck with amnesia and now doesn’t know how to bargain for the right, fair and strongest deal that achieves our community’s vision for the rest of the Point.

    I have no particular love for any developer including SunCal — frankly I was off of Council by 2006 when they were selected in 2007. Honestly, I would have gone with Catellus largely because between 1998 and 2006, I dealt closely with them and, more importantly, could see their work literally in front of me eyes — touch it, feel it, see it, kind of thing. But Council selected SunCal in 2007.

    All I care is that the person across the table has the bona fides to help us achieve our community’s vision for Alameda Point — and that the people on our side of the table (our city staff and city attorneys) help the Mayor and Council in negotiating a strong agreement for the People of Alameda. We’ve done it before; we can do it again.

    Of course, as part of that negotiations, we’d talk about **our** wants with respect to type and number of housing, amenities, traffic, alternative transit, upside sharing of profits, downside protection against things like bankruptcies or market downturns, among other things. If they can’t meet our needs, then next; if they can, then let’s move forward.

  • dlm says:

    Tony: I understand that you have a great deal of experience as a planner and a councilmember, but I don’t think that this proposed development, w/ ten times as many homes, in a very different business climate, is really comparable to Bayport.

    SunCal is in dire straits — w/ the Lehman related bankruptcies, the foreclosure in Alburquerque,and now creditors chasing after the CEO. I don’t see how this risk can be managed in any real way. Plus we don’t know — the Council doesn’t know — the real details of SunCal’s “arrangement” with Shaw. We do not know what kind of financial commitment Shaw has made, and I would not say, let’s enter an agreement and then hope we find out.

    If Shaw should go thru a lender as they did in Alburquerque, we could wind up w/ a bank owning Alameda Point.

    And in any event, Alameda is already a “vibrant, walkable” community, so why don’t we start by valuing that instead of treating it like an afterthought? Reasonable commute times off and on the island are a necessity, and nothing in the way of amenities can take precedence over that. You cannot negotiate certainty in that respect, not with AC Transit.

  • dlm says:

    Regarding density “tipping points”, transit and money: What comes first? Money comes before density. As someone said at the Planning Board meeting, Oakland and Berkeley have plenty of density and they’re still losing transit service.

    I don’t agree with this type of reasoning, first and foremost — that we have decisions being made by people who literally believe that building condos will cause buses to appear. And truthfully, if that heeds to be explained then it’s already too late.

  • ct says:

    dlm,

    According to a Reuters article (www.reuters.com/article/idUSN0519094320100405), Westland DevCo (of which D.E. Shaw and SunCal are limited partners) declared bankruptcy on their Albuquerque project because “disputes among the lenders [Barclays, Five Mile Capital, and a unit of iStar Financial] was making it difficult to negotiate a restructuring. To avoid the uncertainty of litigation, it filed for bankruptcy.” This account from Reuters differs markedly from your claim in your first comment that “SunCal is facing foreclosure in New Mexico because Shaw refused to back them financially.”

    In your second comment, you say “Shaw never put up the $200 million for the land,” but in fact D.E. Shaw contributed $100 million of the $250 million that went directly to Atrisco Heirs for the land in New Mexico you’re referring to.

  • DLM says:

    Right. The operation was a success but the patient died. The bankruptcy filing was tossed and Barclays et al are pursuing foreclosure. When I think of “financial backing” this is not what springs to mind.

  • Mike says:

    Tony,

    Okay, I just wasn’t sure that you supported a developer that 85% of the voters rejected. Thanks for clearing that up.

Leave a comment!

Add your comment below, or trackback from your own site. You can also subscribe to these comments via RSS.

Be nice. Keep it clean. Stay on topic. No spam.

You can use these tags:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This is a Gravatar-enabled weblog. To get your own globally-recognized-avatar, please register at Gravatar.

*