Developer sues Richmond over blocking $45M sale of Point Molate

SunCal says city breached contract, seeks $20 million, jury trial

Point Molate (Google Maps, iStock)
Point Molate (Google Maps, iStock)

The City of Richmond has traded a $45 million land deal for a $400 sale and a $20-million breach of contract lawsuit.

A Southern California developer has sued the East Bay city after a council majority voted to kill a deal to sell 270 acres on Point Molate, where it planned to build nearly 1,500 homes and rehabilitate some historic buildings, SiliconValley.com reported.

Winehaven Legacy, a unit of Irvine-based SunCal, has filed suit seeking $20 million in damages, the right to buy the shoreline property, and a court order preventing another developer from getting the land for as little as $400 in the meantime.

According to the 19-page complaint, Winehaven wants a jury to decide whether the Richmond City Council breached contract agreements and acted in bad faith when it voted 5-2 to scuttle its development plan. The city accused the company of not living up to conditions in its agreement.

The developer had agreed to buy the former Naval fuel depot for $45 million for a development of 1,450 homes, 400,000 square feet of commercial space and a shoreline park.

A previous council had agreed to sell the Point Molate site to Winehaven if it could come up with a financially workable plan to build the mixed-use project.

The agreement called for a community facilities district to pay for $292 million in needed infrastructure for the homes and businesses – a critical taxpayer funded component of SunCal’s project financing..

In November 2020, a new council was elected, including a four-member coalition that operated as a majority known as the Richmond Progressive Alliance, according to the suit. It claims the new council majority “engaged in protracted delays and stall tactics” that unraveled the development agreement.

At a special meeting in March, the new council majority voted against setting up the facilities district, saying it didn’t believe Winehaven could pencil out the project without seeking even more funding from the city.

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Winehaven alleges the council’s decision not only breached development contracts, but also violated a state open meetings law when the city failed to properly post an updated agenda indicating the community facilities district could be rejected.

The sudden agenda change without public input or explicit direction from the council resulted from “secret” or “serial” meetings to coordinate the vote, the suit alleges.

Asked to comment on the suit, Councilmember Claudia Jimenez, who voted to ditch Winehaven’s plan, said in a text message to the newspaper: “They did not fulfill the contractual obligations for the council to consider the sale of PT Molate to them.”

But in his blog, Mayor Tom Butt, who has supported the Winehaven development, said: “The millions of dollars this will cost taxpayers will mean that community priorities such as cleaning up Richmond and law enforcement will continue to suffer.”

Point Molate has become a years-long legal morass for the city, for its developers and for a local Indian tribe.

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.

Had the deal with SunCal’s Winhaven gone through, the city and the tribe, along with its former developer, would have split the proceeds from the $45-million sale.

The terms of a 2018 legal settlement required Richmond to offer Pointe Molate to the tribe and the developer for $400 if not sold to another developer by late last month. The Guidiville tribe and Upstream are now in the process of buying the land.

[East Bay Times] – Dana Bartholomew

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