Cal-Coast Development has defaulted on a $24.9 million public loan tied to land approved for more than 200 homes on the waterfront in San Leandro.
The Los Angeles-based developer led by Edward Miller became delinquent on the loan linked to 15.9 acres at 2599 Fairway Drive, within a larger Monarch Bay Shoreline development, the San Jose Mercury News reported.
In late 2022, the City of San Leandro provided the loan to Cal-Coast when it bought the land for $29.9 million. The default may allow the city to seize the land through foreclosure.
Plans by Cal-Coast call for 206 for-sale homes, including 144 single-family homes and 62 townhouses, including 21 affordable units.
It’s part of a 75-acre Monarch Bay Shoreline redevelopment of the city marina along Monarch Bay Drive, between Marina Boulevard and Fairway Drive.
The joint development between Cal-Coast and San Leandro includes 491 for-sale homes and apartments, a 210-room hotel, a 16,000-square-foot restaurant, a 2,500-square-foot library and a revamped nine-hole golf course. It also includes a market, shops and a 9-acre waterfront park.
The development agreement was inked in 2020, but the project stalled during the pandemic.
Financing for the nearly 16-acre portion included a $5 million down payment to San Leandro, with no cash from the city. That allowed Cal-Coast to seek construction financing for the more than 200 homes.
Cal-Coast made payments on the public loan until January, when it fell into default.
Despite the mortgage delinquency, the East Bay city is trying to come up with a plan to save the project, Paul Sanftner, a spokesman for the city, said.
“The city is currently working with the developer to address the project’s financing,” Sanftner told the Mercury News in an email.
The developer and the city were supposed to complete the property purchase by the end of 2022 to comply with the state Surplus Lands Act. Then the developer hit economic headwinds, making it tougher to land a construction loan.
“With interest and inflation rates rising markedly and an uncertain economic outlook, lenders have become more cautious and limited in their lending activity, opting to ‘sit on the sidelines’ for the remainder of 2022,” Katie Bowman, San Leandro’s economic development director, wrote in a staff report late that year.
San Leandro began looking to redevelop its marina in 2008 when it lost federal funding to dredge the incoming channel, and the city chose to dismantle the docks to make way for homes.
— Dana Bartholomew
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