The City of Richmond has killed a deal to sell 270 acres of a former naval depot to a Southern California developer for $45 million, claiming the company didn’t meet conditions of the agreement.
The Richmond City Council voted 5-2 to adopt a resolution outlining a failure by SunCal to meet several conditions needed to close on the Point Molate property, the San Francisco Business Times reported.
SunCal, an Irvine-based developer with approvals to build nearly 1,500 homes, had been poised to buy the East Bay property for $45 million.
The decision came two months after the city declined to create a community facilities district to pay for $292 million in infrastructure costs related to the mixed-use housing project.
In May, the developer wrote a letter accusing the city of acting in bad faith for rejecting the facilities district, saying it was a pretext to derail the project at the behest of a council majority opposed to the Point Molate development.
This week, a SunCal spokesperson said the company intended to sue the city in order to recoup millions it had invested in the project.
SunCal had received approvals for a 1,450-unit residential project with 400,000 square feet of commercial space. It can’t move forward on the development without ownership of the land.
The site has been eyed for redevelopment for a quarter-century, according to the Business Times.
Development partners Upstream Point Molate and the Guidiville Rancheria of California tribe tried to build a $1 billion casino project there in the 2000s, but that effort ended in failure and litigation.
Richmond Councilwoman Gayle McLaughlin, alongside other members of the council majority that voted against establishing the facilities district, vehemently rejected SunCal’s allegation of bad faith on their part.
She said in an interview that careful review of SunCal’s plans revealed a gap in funding for the project – and that the council had effectively saved the city from entering into a deal that would have put its general fund at risk.
The terms of a 2018 settlement between the city and former Point Molate developers Upstream and Guidiville require Richmond to offer the pair the chance to purchase Point Molate for $400 if not sold to another developer by May 21, 2022.
Upstream and Guidiville have signaled their intent to purchase the land, City Attorney Dave Aleshire explained to the city council. “The relevant player now is Upstream,” he said.
Terms of the 2018 settlement require Upstream and Guidiville to sell the site within five years, and the partners and the venture will split any proceeds for that sale.
Richmond Mayor Tom Butt, who supports SunCal’s work at Point Molate, said the city had failed to realize that derailing the SunCal project would expose its monetary reserves to “a much higher threat.”
Richmond, he said, could be out millions from loss of the land sale revenue and expected litigation costs.
In February, a judge dismissed a lawsuit brought by environmental groups attempting to block SunCal’s plans for Point Molate, claiming city officials approved the project without lawfully addressing its potential environmental impacts.
Attempts by SunCal to redevelop a former U.S. naval hospital in Oakland and a former naval air station in Alameda also ended in litigation, or termination, and the loss of millions in development funds, with a SunCal affiliate that declared bankruptcy.
[San Francisco Business Times] – Dana Bartholomew
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