RICHMOND — Six years ago, a developer sued this city after the casino it wanted to build was rejected. Now, Richmond is quietly considering settling with the company and granting the owner a chance to build housing on one of the last large parcels of bay-front property.

That has sparked anger and accusations that the move is a throwback to Richmond’s checkered past, when land deals were agreed upon with a handshake and when the city was known for three Cs: Chevron, crime and corruption.

The parcel at stake is Point Molate, a 412-acre peninsula that extends into San Pablo Bay and offers stunning views of Mount Tamalpais and San Francisco. A former U.S. Navy fuel depot, it’s also one of the last remaining coastal grassland areas and has a Rhineland-style castle that was once the site of the largest winery in the country before it was shut down by Prohibition.

Since the city acquired the property in 2003, it has remained vacant, the subject of many studies and proposals, none of which have panned out.

In 2010, Richmond voters rejected a plan by Jim Levine to build a casino resort in the area, prompting his company, Upstream Point Molate, to sue, arguing that the city had no legal basis for rejecting the project.

Richmond won, but the company appealed, along with the judgment to pay back $2 million in attorney fees to the city. The Ninth Circuit Court of Appeals has ruled in favor of the city on the main appeal but has not issued a ruling about the fees.

Now some at City Hall are considering settling with Upstream in hopes of accelerating development in the area. Councilwoman Gayle McLaughlin, who was mayor when Upstream sued the city, has criticized the closed-session City Council negotiations, saying she was “not willing to go back to the days of backdoor deals.”

“Should a settlement be reached, any open session (City Council) discussion will be simply a dog and pony show with the majority of the council having already agreed to the terms of settlement,” McLaughlin recently wrote in an email to her supporters. “The public deserves more than an opportunity to tweak an already settled-upon development proposal for this treasured site.”

Councilman Vinay Pimple counters that the city is simply keeping its options open.

“The city has said it is exploring a settlement, but if the terms aren’t beneficial, we will say no,” said Pimple, who is also an attorney. “There is no downside to exploring this possibility.”

Part of the reason the U.S. Navy turned over Point Molate to Richmond was to spur economic development in the city, Pimple adds.

“If we don’t do that, it could be taken away,” he said, adding that the time to consider building new housing is now. “If we miss the business cycle, any development can be pushed out another eight to 10 years.”

Mayor Tom Butt agrees, adding that the city is losing out on vital revenue while waiting for litigation to wrap up. Point Molate has at least 40 historic buildings, meaning they can’t be demolished, and they contribute to the $500,000 a year it costs to maintain the area.

“Those buildings are continuing to deteriorate, and the city doesn’t have any funds to maintain them,” Butt said. “The sooner we get started doing something out there, the less risk of the buildings falling apart. We are not getting any benefits by waiting, including no jobs and no taxes.”

In one scenario being explored, the city would award Upstream and Oxbow Partners, based in Corona Del Mar, a chance to develop more than 1,000 new homes in the area, some right on the waterfront, a 150-room hotel and a winery, according to emails and documents recently released by the city in a public records request.

But none of these plans have been made public, angering residents who have spent years carefully crafting plans for Point Molate.

“From what we are to understand about the terms of the settlement, the plan is outsize for the property,” said Paul Carman, a member of the Point Molate Community Advisory Committee, formed in 2010 to help steer the city’s plans for the peninsula. “It cherry-picks all the prime locations for privatization, includes far more housing … than the public wants, and destroys the last open space from shoreline to hilltop in the Bay Area.”

A key tension around redeveloping Point Molate is between those who favor building housing and those who prefer a lighter footprint — a hotel, some retail perhaps, but the rest reserved for open space, with trails, campgrounds and other recreational opportunities.

By greenlighting 1,000 new homes at Point Molate, the city would generate millions of dollars each year, something Richmond badly needs after job and service cuts earlier this summer to balance the budget.

At a hypothetical cost of $1 million per home — at least some of the proposed homes are rumored to be “mini-mansions” — the city could generate around $4.5 million a year in property taxes alone.

“There’s a desire to bring in quick cash,” said Pam Stello, also a member of the Point Molate Community Advisory Committee. “Jim Levine wants to recoup his losses, and Tom (Butt) has a vision that housing here can offset lower property values elsewhere in the city.”

But Stello and others worry that by hammering out the details of any plan in private, it grants land rights to one or two companies, instead of allowing an open bid, as is usually done with development projects. They also say that by not considering alternatives, Richmond could be shortchanging itself for decades to come.

“This is prime real estate on the San Francisco Bay,” Stello said. “If the public decided they wanted to sell this property, I would be surprised if there wasn’t a competitive bid for it. Anything you build on the bluff would be easily worth several millions of dollars.”

Contact Karina Ioffee at 510-262-2726. Follow her at Twitter.com/kioffee.

http://www.mercurynews.com/2016/07/29/richmond-closed-door-negotiations-over-point-molate-draw-suspicions/