Changing the Rules at Alameda Point 

The developer SunCal delays its planned initiative, but still plans to go through with its end run around city officials.

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Brandt characterizes the scope of the initiative differently. "If you're going to do it, might as well grab everything you can," he said.

Of particular concern to Brandt are the financial provisions included in the development agreement, especially the $200 million cap on the developer's obligation to pay for public benefits. That obligation is contingent upon the city providing funding through redevelopment mechanisms overseen by agencies not party to a development agreement. Brandt said the approach is novel. "I don't know that the way that they've drafted it is per se illegal," he said, "but I've never seen it done before."

In addition, the details of the public benefits that SunCal must provide are unusually vague, says Brandt. "Typically, in a negotiated agreement, you would have it much more buttoned-down on both sides so that everybody knew what the obligations were. And the money part wouldn't necessarily be in the development agreement." Instead, those financial details would be spelled out in a separate "disposition and development agreement" — a document that also would cover the nitty-gritty specifics of timeframe, funding, performance guarantees, and the actual land acquisition and is expected to be negotiated by SunCal and the city's redevelopment agency after the election. But with such language up for a public vote, the financial details would become binding upon passage of the initiative, and Brandt said the city's redevelopment agency would have to negotiate a disposition and development agreement "under the sort of shadow of this whole initiative."

According to a recent report requested by the city council, that shadow could be a dark one. "The initiative does not calculate the total cost of infrastructure for the project," the report noted. "Therefore, it is unknown whether the $200 million will be sufficient to fund all of the aforementioned improvements. The project will also construct other project-related infrastructure, including street trees, storm drain, water, sewer, electrical, and telecommunications utility systems."

The "aforementioned improvements" named in the initiative and thus covered by the $200 million cap are a regional sports complex; parks, publically accessible open space and public art within the project; improvements to lagoon frontage; a bay trail extension; on-and-off-site traffic and transit improvements; a ferry terminal and transit hub; improvements to the existing fire station; and a branch library.

And because state law exempts voter-sponsored initiatives from the usual requirement that an environmental impact report be completed at this stage, it is currently unknown how much mandated environmental mitigations would cost. The city report concluded that some of those mitigations would probably also be covered under the $200 million cap. Gallant says that infrastructure improvements at Alameda Point are currently estimated to cost $679 million. The city estimates the total cost of public improvements to the site at $1.6 billion. SunCal's estimates are private.

That's why Gallant and other city administrators continue to negotiate with SunCal toward a development agreement and hope that those efforts will result in a better deal for the city than what's in the current initiative. By the time of a 2010 election, said Gallant, "I would hope that we would be further along in the negotiations with respect to an agreement that both parties find mutually beneficial."

However a SunCal spokesman said in an e-mail that SunCal does not intend to rewrite and resubmit its initiative. In a separate statement, a SunCal spokesman said the company had developed its initiative based on community and city input. "At every stage of the process, we have worked positively and cooperatively with the city's elected leaders and its staff to ensure that the development agreement would result in the best plan possible for the city and people of Alameda," the statement said.

One of the most prominent proponents of the SunCal plan, Councilman Frank Matarrese, said he is enthusiastic about the chance the plan presents for Alameda to fix crumbling infrastructure at Alameda Point, increase retail expenditures, and reclaim jobs lost when the Navy left the island. Nonetheless, Matarrese champions the efforts of city staff to help the council and the voters thoroughly understand the current initiative. Matarrese said he wants to see further study of the initiative so that it will be fully understood by the voters. Among other questions, he wants to know what will happen if the city is unable to settle on a disposition and development agreement with SunCal.

And echoing concerns he's heard from constituents, Matarrese also wants to know what would happen if SunCal goes bankrupt. This concern was echoed by the approximately one hundred protesters who attended a recent march and rally sponsored by opponents of the plan doing business as "Protect the Point" — including Matarrese's council opponent on the SunCal issue, Vice Mayor Doug deHaan. And, due in part to SunCal having 27 entities in bankruptcy protection — partial leftovers from the company's disastrous dalliance with the defunct investment bank Lehman Brothers — it's a concern that the military echoes as well. A Navy communication to the city obtained by the Express puts forth fourteen questions about the finances of SunCal and its capital partner D.E. Shaw, wondering about those bankruptcies and about whether the company will be able to cover "the annual deficits from approximately $53 million in 2011 to $148 million in 2013" the Point project is expected to incur "before revenues produce annual surpluses in later years."

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