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Revitalize Alameda Point – Taxpayer Bailout of SunCal May Be Unlimited

Having typed this up in response to questions we’ve received, we thought we might as well post it here. SunCal is looking for taxpayer-financing for pretty much every element – infrastructure, fire stations, fire equipment, library, etc. – of their Alameda Point proposal except for the for-profit housing and commercial buildings. As best we can tell, the minimum cost to existing and future Alameda taxpayers is $200 million, running up through to as much as $700 million and beyond, in perpetuity.

And it makes sense, business-wise for SunCal to approach it this way – they earn no profit from building a firehouse or library, so why would they invest their money in that? They would rather use taxpayer money. Anyone who has ever managed a P&L would understand this.

But the thing that should concern Alameda voters is the potentially incalculable taxpayer subsidy that SunCal is proposing to enable them to make their profits. SunCal has indicated that “infrastructure” at Alameda Point will cost roughly $700 million, and that they would seek taxpayer subsidies to help finance that infrastructure. It’s clear now that SunCal is seeking a variety of taxpayer subsidies, from redevelopment bonds to fee waivers to subsidize “infrastructure” and other public benefits. The key language which explains this is in the ballot summary document and the development agreement, both of which are part of the ballot initiative packet.

In the ballot summary:

The development agreement requires the developer to provide public benefits including a sports complex, parks and open space, ferry terminal and transit hub, fire station improvements and a library. The benefits are contingent on the City redevelopment agency directing all tax increment legally allowed to the property, and forming a community facilities (Mello-Roos) district to allow the sale of bonds and collection of a special property tax paid by Alameda Point property owners to finance the improvements.

The City of Alameda has already indicated they are willing to provide roughly $200 million in tax-increment financing (TIF) subsidy to SunCal and the Mello-Roos community facilities district is an extra property tax levied on the new properties at Alameda Point. We’ve documented several times how tax-increment financing (a.k.a. redevelopment) steals money from the City’s General fund, and the Mello-Roos tax makes houses more expensive, not more affordable.

In the Development Agreement, Exhibit F Development Agreement, Item a. :

“Developer shall receive a dollar for dollar credit against police and fire fees, equal to the sum of (a) the value of the lands dedicated for facilities, (b) the aggregate amount of funds expended for design and construction of fire facilities, and (c) the purchase of public safety and firefighting equipment.”

It seems clear that SunCal is looking to re-coup their expenses for building an Alameda Point fire station by having the City of Alameda waive fees which would otherwise apply. This is a taxpayer subsidy.

Also in Exhibit F:

The City acknowledges that City shall credit Developer the sum of all costs associated with constructing, acquiring, and/or installing public infrastructure, including, without limitation, costs for design, engineering, surveying, permits fees, taxes, bonds, labor, materials, land and construction administration.

Again, it’s pretty clear that Alameda taxpayers will fund “infrastructure” by waiving certain fees or “exactions” such as Sewer Connection Fees, Strong Motion Instrumentation Program Fees (SMIP), Public Art Fees and Building Standards Fees. This is a taxpayer subsidy, and it’s incalculable to the average voter or resident today, because nobody knows how many sewer connections there will be in SunCal’s proposal (Sewer Connect Fee) or what the final valuation of residential and commercial property will be (SMIP). And to compound matters, the development agreement indicates that the waiver of these fees carries on in perpetuity:

The right to the foregoing credits or reimbursements shall survive the termination of the Development Agreement.

The waiver of fees never ends, it appears! The total cost of the subsidy may be un-limited!

At the beginning of item a) the agreement defines “exactions” :

Only the specific Exactions listed in Exhibit 3 shall apply to the Alameda Point project…

From the initiative alone, it’s not clear what other normal City fees might apply that SunCal is excluding themselves from. Rather, they are defining a set of fees they say apply, and then asking for a waiver of those fees. Any other normal City fees that would apply but which are not listed in Exhibit 3 would constitute at taxpayer subsidy as well. There is no way to know for certain what the full cost of all of these fee waivers and excluded fees will be to the City of Alameda. It’s clear though that SunCal will work to re-coup as much of the $700 million in infrastructure expense – and perhaps more – as they can from Alameda taxpayers.

A detailed list of the project elements is on Table 8-1: Implementation Proposal, from pages 221-222 in the Initiative package. We’ve re-produced below the portion of that table that shows the project element and the funding sources. Everywhere you see “TIF” or “PA” that means taxpayer-financed. “Transportation Assessment” evidently means taxpayer financed too.

Project(Funding Sources)

o Site Remediation (Navy, Developer, PA, TIF, state and federal grants and loans)

o Site Grading (Developer, PA, TIF)

o On-Site Streets & Roads(Developer, PA, TIF)

o On-Site Street Landscaping, Lighting(Developer, PA, TIF)

o Ferry Terminal and Transit Hub(Developer, PA, TIF, WETA)

o Off-Site Transportation Improvements(Developer, PA, TIF)
Shuttle Connecting Alameda Point to 12th Street BART (Developer and Transportation Assessment.)

o Bus Rapid Transit Network(Developer, PA, TIF)

o Queue Jumping Lanes(Developer, PA, TIF)

o On-Site Pedestrian etc.(Developer, PA, TIF)

o Public Parks(Developer, PA, TIF)

o Regional Sports Complex(Developer, PA, TIF)

o School Facilities(Developer, PA, State, General Obligation Bonds)

o Fire Station(Developer, PA, TIF)

o Library(Developer, PA, TIF)

o On-Site Water and Waste Water Facilities(Developer, PA, TIF)

o On-Site Storm Water Drainage Facilities(Developer, PA, TIF)

o On-Site Trenched Utilities(Developer, PA, TIF, SP)

o Flood Protection Facilities(Developer, PA, TIF)

o Geological Hazard Management Facilities((Developer, PA, TIF)

o Historic Resources (Developer, federal, state and local funds, grants and tax incentives.)

It’s very clear that existing and future Alameda taxpayers are on the hook for financing most everything at Alameda Point, except the for-profit homes and commercial buildings, either through PA – Property Assessment, TIF – Tax Increment Financing, G.O. – General Obligation Bonds, and Transportation Asessment. Not to mention the taxpayer money inherent in the federal and state grants.

And that is why this project is another massive bailout of a private enterprise for their profit, at our expense.

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