In the wee hours yesterday morning, SunCal withdrew their request to the City of Alameda for a 60-day “tolling agreement” in association with their March 22nd deadline to provide an alternate development plan for Alameda Point that complies with City laws and SunCal’s Exclusive Negotiating Agreement (ENA) with the City.
In her presentation to Council, Deputy City Manager Jennifer Ott recommended that Council deny SunCal’s request.
Councilmember Lena Tam led off the questioning of staff with a question about whether or not the language of the ENA explicitly lists “Measure A” as one of the required compliance items for an alternate plan.
City Attorney Teresa Highsmith responded with, “I suspect that you are aware that there is no such term, having, I’m sure, read it yourself,” and went on to explain that although the ENA does not explicitly mention Measure A, the ENA does say that the alternate plan must be compliant with City law, and Measure A is part of the City’s laws, ergo, the alternate plan must be Measure A compliant.
Tam then asked for an interpretation of a specific element of the ENA, to which an exasperated City Attorney responded, “Councilmember Tam, you may have gotten your second wind on this agenda item, but I have not. It is nearly two in the morning, and this particular…with the question you’re asking me, would have been more appropriately asked in a prior agenda.”
Earlier this year, Councilmember Lena Tam lent her name and picture to SunCal mailers urging voters to support Measure B on February 2nd. Measure B was defeated with 85% of the vote against the measure.
After some discussion about the process by which City staff would evaluate any newly submitted plan, the Mayor called for public speakers. Ultimately, Frank Faye, SunCal CFO came to the podium and said, “If we were going to speak tonight, it needed to be from a position of decision making authority.” In the past, local SunCal Vice President of Operations Pat Keliher has typically addressed Council at the speaker’s podium.
Mr. Faye went on to tell Council that SunCal had negotiated a preliminary labor agreement with trade groups that had been opposed to Measure B, and that SunCal intended to submit an alternate plan by the March 22nd deadline, but with a “reservation letter” – SunCal disputes that they are in default of the ENA.
He also said, “I came here today to withdraw the request for the 60-day tolling, because your council has said to us ‘we want to see the plan.’” Faye concluded his remarks at about 2:15 a.m. and other public speakers followed him.
In related SunCal news, the City of San Clemente is making progress on getting roads built that SunCal had planned in their now-bankrupt SunCal Marblehead project. The City of San Clemente may also get some $600,000 in legal expenses they incurred in the fight to force Arch Insurance Company to pay-out on performance bonds which guaranteed completion of the project.
SunCal and Arch Insurance had fought the City of San Clemente’s suit, but last week, San Clemente and Arch Insurance filed a settlement agreement with the bankruptcy court that reimburses the City for legal expenses and paves the way for Arch Insurance – and not SunCal – to move forward on completing the work, which includes roadway improvements and the construction of “dry utilities.”
The work has been stalled since SunCal’s financial partner on the project, Lehman Brothers, filed for bankruptcy in September, 2008. SunCal and the City of San Clemente originally came to agreement on the planned improvements on June 21,2005, and SunCal began work in late 2005.
The case is 8:08-bk-17206-ES in United States Bankruptcy Court, Central District of California, Santa Ana Division.