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SunCal Attorney Threatens Legal Action Against Measure B Rebuttal Argument Authors

In a letter from an attorney representing SunCal, obtained by Action Alameda News through a public records request, SunCal has threatened legal action against the authors of the voter pamphlet Measure B rebuttal argument (see below) over “false and misleading statements.” The trouble is, the attorney could enumerate only two out of about ten statements which he wanted to quibble with, tacitly conceding the rest of the rebuttal argument. This looks like a big corporation trying to squash dissent over their initiative. SunCal, the big bully from southern California, trying to crush their opponents – local residents and officials trying to protect their city – with threats of legal action.

The letter, dated December 3rd, 2009 and stamped at the City Clerk’s office on December 9th, is addressed to the signatories to the rebuttal argument: Frank Matarrese, Tracy Jensen, Kevin Kearney, Trish Spencer and Ashley Jones.

In the letter, Attorney for SunCal Barry Fadem takes issue with the statement “Oakland residents sued SunCal….” As reported by Action Alameda News previously, Oakland residents filed a claim with the U.S. Bankruptcy Court for $115 million, against Lehman Brothers Holdings over health and fire hazards at the SunCal Oak Knoll LLC project. Residents filed the claim against Lehman Brothers Holdings because it’s obvious that SunCal has no money. (Fadem indeed, insists that Oakland residents went after Lehman’s deeper pockets.)

Court documents show that SunCal was a 10% partner in SunCal Oak Knoll, and within a month of Lehman Brothers filing for bankruptcy in September 2008, SunCal fled the site. Clearly SunCal had no money to finish the asbestos mitigation and building demolition at the site. (As reported on www.AlamedaDailyNews.com earlier this week, this statement on the rebuttal argument was adjusted to read “Oakland residents sued because Oak Knoll became a public safety Hazard.”)

And in fact, SunCal and Lehman have thirty bankruptcies pending. And as they did with SunCal Oak Knoll and all those other bankrupt entities, SunCal is relying on a single financing partner – DE Shaw this time, in place of Lehman.

Additionally, the attorney acknowledges the estimated $175 million shortfall for public benefits, as documented in the City of Alameda Supplementary Election Report on the initiative. In that document the City of Alameda notes that the sports complex and other public benefits that SunCal promises to build – with roughly $200 million of taxpayer money – falls short of an estimated $300 million to $375 million cost, as calculated by the City of Alameda Public Works Department.

But Fadem took issue with the statement “developer’s shortfall of nearly $500 million in funding for public benefits.” Let’s add up the numbers.

The initiative clearly states that the promised $200 million for public benefits – which will cost anywhere from $300 million to $375 million, according to the City – is contingent on SunCal receiving property tax (technically called “tax increment”) from the project. The $200 million that SunCal is promising for public benefits is not SunCal’s money – it’s taxpayer money! At the January 7, 2009 ARRA meeting, City staff talked about raising approximately $184 million in tax increment from Alameda Point. However, as the State of California increasingly appropriates some of the $10 billion per year in redevelopment agency revenue state-wide to pay for schools, this is an unreliable funding source.

The best public estimate of the price tag from the Navy for Alameda Point is $108 million, according to a March 16, 2009 letter from the Navy to then-Assistant City Manager David Brandt. This is probably low, as it was based on the previous plan for around 1,800 homes. With SunCal planning roughly 5,000 homes, it’s fair to expect the Navy would set a higher price tag. (We’ve heard whisper numbers that put the price tag much, much, higher.)

Add it up: $184 million, plus $175 million, plus $108 million = $467 million total. Round that figure to the nearest hundred million and one arrives at $500 million.

But wait! There’s more! That figure doesn’t account for additional costs:

The City’s election report estimates that the General Fund budget “annual shortfall during the development of the project is (cumulatively) estimated to total approximately $17.7 million during an assumed 15-year period.”

Further, “the annual negative impact to the General Fund at buildout thereafter is estimated to be $4.8 million.”

The election report also notes “The total fee revenue not received by the City due to the exemption in the Development Agreement is estimated to be approximately $82.4 million.”

Adding these figures in brings the total to $572 million.

All in all, it looks like SunCal is on weak legal footing and is acting out of desperation over their declining fortunes in this campaign.

Measure B Rebuttal Argument
Promises and pretty pictures will not develop Alameda Point.

SunCal has more than 27 bankruptcies throughout the Southwest, plus numerous projects that remain undeveloped. Oakland residents sued SunCal because Oak Knoll became a public safety hazard. [ed. note: See above, this is a point that SunCal disputed.] We cannot let this happen to Alameda.

Measure B was written by SunCal and benefits the developer. Once passed, it’ s LAW! Measure B creates traffic from a potential 11,000 new residents without sufficient funding for managing traffic.

This is NOT our last chance to redevelop Alameda Point.

Defeat Measure B and our community will move forward to develop Alameda Point in a manner that includes funded infrastructure, sports facilities, open space schools, libraries and a full range of housing opportunities for every segment of our community. We can do this without giving millions of public dollars in a deal which only benefits the developer, not our community.

Ignore the false promises of SunCal:

There’s no guarantee that any additional agreements will be legally enforceable or protect our city should this Initiative pass.

This is a one-sided Initiative that gives the developer 100% control of the project development with NO requirement to fulfill their financial commitments.

The Initiative doesn’t guarantee funding for or construction of a single public school at Alameda Point.

Developer’s shortfall of nearly $500 million in funding for public benefits will result in a failure to deliver promised benefits.

Don’t let this slick million dollar campaign buy your vote.

Please join with the Alameda community and us by voting NO on Measure B.

For more FACTS visit www.alamedapointinfo.com

1 comment to SunCal Attorney Threatens Legal Action Against Measure B Rebuttal Argument Authors

  • barb

    So is it a lie to say the developer’s shortfall is “nearly $500 million” when it is really more like $572 million? And is this “shortfall” [SUNCAL speak for required taxpayer funding] in 2009 dollars? So what will the total shortfall amount to in the year 2034 dollars? Or year 2059 dollars should SUNCAL actually finish?

    We should all thank SUNCAL for pointing out this weakness in the rebuttal argument.

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