Oakland Hills residents confirm that SunCal made promises to them about cleaning up buildings at the former Oak Knoll Naval Hospital site, similar to the promises SunCal is now making to Alameda residents about Alameda Point. But the bankruptcy of the joint SunCal – Lehman Brothers ventures and subsequent EPA investigation over asbestos debris piles left behind reveals a flaw in SunCal’s continued reliance on a single financial partner for their projects.
In a March, 2007 response to the City of Alameda questions about SunCal’s bid for master developer status at Alameda Point, SunCal wrote:
SunCal and Lehman Brothers have an approximate $660 million equity fund that is fully discretionary. This fund was closed in 2006 and has substantial remaining capacity. With debt, this fund has approximate purchasing power of close to $2 billion. The fund has an investment committee which approves all transactions. This fund was raised to invest almost exclusively in land and land related investments and is the largest discretionary fund ever raised of this nature.
Dozens of SunCal projects backed through this fund went bankrupt after Lehman Brothers filed for bankruptcy in September of 2008. Nowadays, SunCal is making similar claims about their current sole-source financing partner, D.E. Shaw.
Read the story about the fight by Oakland Hills residents to get Lehman and SunCal to clean-up the mess and fire hazard at Oak Knoll that resulted from the project failure. Using their “fully discretionary” power over the Lehman fund, SunCal paid over $100 million for the Oak Knoll site, whereas Action Alameda News sources tell us it was worth perhaps $30 million.