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City of Alameda Confirms No Direct Communications with SunCal’s Financial Partner D.E. Shaw

Responding to a public records request submitted last week by Action Alameda News, the City of Alameda confirmed that they have had no direct communications with SunCal’s declared financial partner, D.E. Shaw, regarding their proposed Alameda Point development. The question is important, because bankruptcy court documents show that SunCal has typically permitted their financial partners – Lehman Brothers, and more recently, D.E. Shaw – to take an ownership stake in their joint projects in excess of 90% thereby making the financial partner, and not SunCal, the majority owner in the projects.

Last month, a Delaware bankruptcy court dismissed SunCal’s bankruptcy filing for Westland DevCo LP, their special purpose entity formed with D.E. Shaw to develop an Albuquerque, New Mexico project. In a sworn declaration made to the bankruptcy court, SunCal’s in-house attorney Bruce Cook wrote that D.E. Shaw, through D.E. Shaw Real Estate Portfolios 1, LLC owned a 92.5% interest in Westland DevCo, and SunCal owned a 7.5% interest.

The intent of our public records request was to uncover any evidence that the City of Alameda has had direct discussions with D.E. Shaw, the presumed majority owner of the Alameda Point special purpose entity, or their head of real estate operations, George Rizk, regarding commitments by D.E. Shaw to fund the development at Alameda Point, and whether or not they would mortgage the property as they had done in Albuquerque. SunCal is facing foreclosure on their Albuquerque, New Mexico project because they, and D.E. Shaw, borrowed money from Barclay’s Bank, and other lenders, to develop the project, and then were either unable or unwilling to pay it back. This point is important because even though the City of Albuquerque, New Mexico, were originally negotiating with SunCal and D.E. Shaw, they may find themselves having to deal with Barclay’s Bank and other lenders, should Barclay’s succeed in their attempt to foreclose on the property.

City Attorney Teresa Highsmith responded to our request, confirming that the City has had no direct communications with D.E. Shaw or George Rizk regarding Alameda Point. Ms. Highsmith wrote, “City staff has made a diligent search of our records regarding SunCal’s interest/proposed project in Alameda Point and we have no documents which correspond to your requests 1) and 2) below; specifically, we have no documentation of communications or transactions between the City/CIC/ARRA and D.E. Shaw, either sent to or received from D.E. Shaw.”

So the City of Alameda cannot produce any evidence of D.E. Shaw committing to fund development at Alameda Point.

Councilmember Lena Tam, who supported SunCal’s failed Alameda Point redevelopmentballot measure in February told Action Alameda News, “In the discussions with the Navy and the public pro-forma that we have reviewed, Suncal/D.E. Shaw is ready, willing and able to spend the $108.5M in conveyance costs requested by the Navy.” However Ms. Tam furnished no further information to support that statement.

Additionally, a review of SunCal’s pro-forma commissioned by the City of Alameda has called SunCal’s assumptions “overly optimistic.” According to the report, prepared by Economic & Planning Systems, Inc. of Berkeley, “Overly optimistic assumptions can significantly distort the economics of the analysis and expose the City and the Developer to unnecessary risks.”

The Public Records Request that Action Alameda News submitted to the City of Alameda is reproduced below:

This is a request pursuant to Government Code Section 6253(a) to physically review “WRITINGS”, as that term is defined below, pursuant to the Public Records Act, Government Code Section 6250 et. seq.. This is not a request for photocopies of said WRITINGS, but instead those WRITINGS produced to the undersigned for inspection will be specifically designated, after their inspection, “to be copied” or “not to be copied”.

For the purpose of this Public Records Act Request the word “CITY” means the City of Alameda and every elected official, appointed official, commission or board member, employee, agent, independent contractor, consultant and attorney acting for the City of Alameda (all collectively “CITY ACTORS”).

For the purpose of this Public Records Act Request the word WRITING has the same meaning as is found in Government Code Section 6252(g) [analogous to case law discussions of “Document” under California Judicial Council Form Interrogatories – General], meaning “handwriting, typewriting, printing, photostating, photographing, photocopying, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing any form of communication or representation, including letters, words, pictures, sounds, or symbols, or combinations thereof, and any record thereby created, regardless of the manner in which the record has been stored.”

For the purpose of this Public Records Act Request the word WRITING includes all WRITINGS prepared or received by CITY ACTORS whether or not included in any official City of Alameda (“CITY”) file, and whether or not physically located on any real estate owned or leased by the City, including but not limited to and in particular WRITING considered any CITY ACTOR’S drafts, any CITY ACTOR’s notes, and personal communications between involving a CITY ACTOR and “D.E. SHAW” (as defined below), including but not limited to personal communications using private email services such as “hotmail.com”, “yahoo.com” and the like.

For the purposes of this Public Records Act Request the term “D.E. SHAW” means and includes D.E. Shaw & Co., any other entity registered with the Secretaries of State of Delaware, New York or California containing the words “DE Shaw”, “D.E. Shaw” or “D.E. Shaw”, and the term “D.E. SHAW” includes any other entity known or reasonably suspected by the City Attorney or City Manager of Alameda to be owned and controlled by D.E. SHAW (as opposed to by “SunCal” as defined below) but not containing the terms D.E. Shaw, D. E. Shaw or DE Shaw in its organizational name and the term “D.E. SHAW” means any attorney expressly purporting to act on behalf of “D.E. Shaw” (as defined in this paragraph) as opposed to acting on behalf of “SunCal” (as defined herein).

For the purposes of this Public Records Act Request the term “SunCal” means (1) “The SunCal Companies” or “SunCal” as dba’s of some known or unknown entity, (2) any entity registered with the Secretaries of State of Delaware, New York or California, either (a) having the name “SCC” or “SunCal” or “WM” or “Cal Land” in its name, or (b) having as its office address 2392 Morse Avenue, Irvine, CA 92614-6234 or 300 Frank H. Ogawa Place, Oakland, CA 94612, (3) Mr. Bruce Elieff or trusts for his or his family’s benefit or for which is acting trustee, (4) Mr. Stephan Elieff or trusts for his or his family’s benefit or for which is acting trustee, (5) Mr. Robert Elieff or trusts for his or his family’s benefit or for which is acting trustee, (6) any of their officers, employees, agents and/or (7) any attorney who has failed to expressly purport to the CITY ACTORS, in writing, that he or his/her law firm are acting on behalf of “D.E. Shaw” (as defined hereinabove) in connection with the Alameda Point property.

The undersigned states and represents to the CITY that the public interest in the CITY producing the WRITINGS described herein for inspection and later copying is to illustrate whether any entity owned and controlled by D.E. SHAW (as defined herein), in which SunCal (as defined herein) has no economic interest, is still AS OF THIS MONTH AND YEAR directly, financially committed to materially participate in the financing of the development of Alameda Point in an ownership capacity. The public’s right to know that information clearly outweighs any private interest served by non-disclosure of the WRITINGS requested herein.

The WRITINGS which the undersigned requests to physically examine, pursuant to the Public Records Act are:

(1) All WRITINGS made or sent or received in 2010 addressed to, or received from, or communicated between (A) D.E. SHAW or any entity containing the name “D.E. Shaw” in any form, Mr. D. E. Shaw, or Mr. George Rizk or their employees or attorneys and (b) any CITY ACTORS.

(2) All WRITINGS made or sent or received in 2009 addressed to, or received from, or communicated between (A) D.E. SHAW or any entity containing the name “D.E. Shaw” in any form, Mr. D. E. Shaw, or Mr. George Rizk or their employees or attorneys and (b) any CITY ACTORS.

THE WRITINGS REQUESTED ABOVE SPECIFICALLY EXCLUDE ANY WRITINGS BY OR TO “SunCal” as defined herein or any of SunCal’s officers, employees, agents or attorneys purporting to act as the agent for, representative of, or attorney for Mr. D. E. Shaw, or Mr. George Rizk, or “D.E. Shaw” as defined herein.

This Public Records Act Request, by its wording, does not request any document covered by the City of Alameda’s attorney client privilege, in that the only documents request are those addressed to, received from, or communicated to “D.E. SHAW” or their employees or attorneys.

To the extent that any DOCUMENT is withheld by the CITY from production for inspection by the undersigned, pursuant to Government Code Section 6255(a) the CITY is required to “justify withholding any record by demonstrating that the record in question is exempt under express provisions of this chapter or that on the facts of the particular case the public interest served by not disclosing the record clearly outweigh the public interest served by disclosure of the record.” Pursuant to Government Code Section 6255(b) any response by the CITY to this Public Records Act request which includes a determination that the request is denied, in whole or in part, must be in writing. As the City Attorney of Alameda is aware, California case law concerning any denial must describe each WRITING for which review is denied by a general description of the document, including date, author and subject matter, the particular subsection of the Public Records Act Request under which the request is denied, and if relevant the City Attorney’s specific analysis of why the non-disclosure of the WRITING outweighs the public interest served by disclosure of the record.

3 comments to City of Alameda Confirms No Direct Communications with SunCal’s Financial Partner D.E. Shaw

  • Alan2010

    “City staff has made a diligent search of our records regarding SunCal’s interest/proposed project in Alameda Point and we have no documents which correspond to your requests 1) and 2) below; specifically, we have no documentation of communications or transactions between the City/CIC/ARRA and D.E. Shaw, either sent to or received from D.E. Shaw.”

    There’s one to send to John Knox White.

    Don’t bother sending the information to Lena Tam. She’s too delusional (or biased) to understand it.

  • Lena Tam also asserted that SunCal/DE Shaw invested $183 million in upfront cash in Albuquerque, but she didn’t provide any evidence to back-up that assertion, and that figure is roughly the same as the amount said to be owed Barclay’s and other lenders in the foreclosure documents.

    And in any event, it’s irrelevant, because when push came to shove, DE Shaw didn’t pay the bills, and the project was pushed into foreclosure, and now a protracted legal battle, with no development happening.

  • dlm

    Yes, the $183M equals the amount owed on the mortgage.

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