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SunCal Project to Cost $1.53 billion and Worth $5 billion When Finished

Last night, Alameda City Redevelopment Services staff presented a summary of SunCal’s business plan in public session to City Council sitting as the Alameda Re-use and Redevelopment Authority (ARRA). SunCal has deemed the details of their plan confidential and not subject to public records requests. But SunCal forgets that those of us who aren’t busy cheering on their project are handy with a calculator.

City staff didn’t provide specifics, but they did provide a rough breakdown of the funding sources for the cost to build out the project. For example, they estimated that 12% of the project cost would come from tax-increment financing. In the past, City staff has insisted that tax-increment subsidies from the City of Alameda would not be higher than $184 million. (We believe that figure will be higher, but let’s work with it for the moment. Dividing $184 million by 12% provides an estimated project build-out cost of $1.53 billion. Separately, City staff estimated that the aggregate assessed property value of the development would be approximately $5 billion.

Here is a rough breakdown of the funding sources for the costs:

    Residential/Commercial Land Sales to provide 63% of costs, or $966 million

    Tax-Increment to provide 12% of costs, or $184 million

    Municipal Services District Special Tax Levies to provide 13% of costs, or $199.3 million

    Private Funding to provide 12% of costs, or $184 million

However, these figures do not include a cost for buying the land from the Navy, nor do they include a profit for SunCal. The Navy is in the processing of evaluating the SunCal project, which is far larger than the one they reviewed from APCP a few years back, and will be determining a new value for the land, to be set sometime this month. SunCal’s profit estimate is likely in the “confidential” documents shared with the City staff and City Council but not released to the public.

As we’ve indicated in the past, we expect SunCal to push for a much greater tax-increment subsidy than the $184 million currently on offer from the City – SunCal estimates infrastructure costs at Alameda Point to total $700 million. Another interesting point – the Municipal Services District (MSD) Tax is an extra tax on top of property owners which makes the housing more expensive to own. Bayport residents currently pay over $1,200 per year in MSD tax over and above their property taxes.

The final profit figure for SunCal will not be set contractually with the City until mid-July of 2010, when the Development and Disposition Agreement (DDA) is finalized. So when SunCal goes out to collect signatures for their ballot measure in May, and when it comes to the November vote, Alameda citizens will not have the full true picture of the project they are being asked to vote on.

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