On Point: The final countdown
In two weeks, SunCal’s agreement to negotiate a development deal for Alameda Point is set to end. The City Council has the option of either extending its negotiating agreement with SunCal or bidding the developer adieu, leaving the city in the position of searching for a third master developer or for other ways to develop the Point.
City staff is set to report to the council Wednesday that there’s pretty much no way they will be able to ink a disposition and development agreement, one of the items SunCal is on the hook to complete before the developer’s exclusive negotiating agreement sunsets on July 20. And while they have determined that SunCal’s most recently submitted development plan is complete – with fresh details about its “density bonus option” plan, which is essentially the same size development they asked for on the ballot – that determination appears to have come too late for the city and SunCal to work out a deal with the Navy for transfer of the land before the deadline, a second, required item.
(City staff are also claiming SunCal breached their agreement by asking the Navy brass to tell city staff to extend the negotiating agreement by six months; SunCal’s reps confirmed at a June 15 council meeting that they made the request, but denied that they breached the agreement. The Navy, incidentally, has not said anything public about the development process at all of late.)
In the absence of a DDA, SunCal can submit a “best and final offer” for the city to consider. But Deputy City Manager Jennifer Ott wrote in a staff report to be presented Wednesday that staff still has major concerns about the project, most of which stem from worries that it doesn’t pencil out.
SunCal’s numbers show the project generating a 20 percent profit, the low end of what their agreement with the city requires for them to move forward. But a consultant hired by the city to test SunCal’s numbers estimated that the project would actually generate a deficit of 12 percent. Even when they used the developer’s home sales price and construction cost numbers, their analysis showed the project generating a 14 percent profit, which is still less than the developer’s agreement with the city requires.
Those numbers – which include an estimated $212 million in future property tax dollars – have city staffers concerned that SunCal might stall the project, cut out later development phases or short-shrift promised public benefits like parks and transportation improvements. And they are concerned the project won’t support the $108.5 million payment the Navy wants for the land. (SunCal’s reps have disputed the consultant’s numbers.)
In the meantime, both the developer and opponents of SunCal and its development plan have been fighting to continue (or cease) work on the project, with SunCal launching a massive public outreach campaign that has included teleconferences, public meetings and events and opponents putting together a petition to tell city leaders they want SunCal out.
And what will the council do? They’re not set to vote this week on whether to deny the project or keep things going while an environmental analysis of the project’s impacts can be completed (an 18-to-24-month process) and in the hope that agreements can be reached. SunCal’s reps wrote on their blog that a vote is coming July 20.
As I always say … stay tuned.