I want to share this email I wrote East Bay Times Reporter Katie Lauer in response to her article headlined, “Another Controversial Point Molate Development in Richmond Sinks.” (https://www.mercurynews.com/2022/03/26/richmond-time-is-running-out-to-develop-point-molate-and-city-leaders-remain-divided/)
I hate to say it, but it appears you have swallowed the RPA spin on Point Molate hook, line and sinker. Thanks for providing two sentences of quotes from me at the end of an otherwise pro-RPA piece.
The current situation is far from being a sinking of Point Molate; it would be more accurate to call it a sinking of the City of Richmond.
First of all, SunCal (Winehaven Leagacy, LLC) remains fully entitled to purchase Point Molate on May 21, 2022, if they decide to do so, and that entitlement comes with full approval of the project. The plans were not at all, as you wrote, “scuttled.”
What you also wrote is, “ Under terms of a legal settlement, the city has to establish the district before it could sell the land to Winehaven – a subsidiary of development firm SunCal – for $45 million.” That is patently inaccurate. The city is not compelled to establish the district before Winehaven has the right close the transaction. Because of the City Council’s action, Winehaven may elect not to purchase, but they retain the full right to do so.
What the City Council voted to do is not to approve the first essential step (Resolution of Intent) to form a Community Facilities District (CFD) to finance the infrastructure, a common tool widely used in large scale development projects. In fact, such a tool was used to finance some of the infrastructure at Marina bay. The City Council’s denial is a breach of the Development Agreement (DA) and the Disposition and Development Agreement (DDA) as well as a breach of the covenant of good faith and fair dealing.
The action by the City Council will likely lead to expensive litigation that could expose the City to as much as $100 million in losses, enough to bankrupt the City.
But let’s say SunCal decides not to close the transaction. Point Molate does not automatically become the “193 acres of open space” envisioned by Robert Cheasty,“left alone to prevent any damage to an eel grass habitat that hosts ospreys, bald eagles and Dungeness crab.” (Incidentally, no bald eagles have ever been spotted at Point Molate, and the Court has already ruled that the CEQA review was complete and accurate and that any potential damage to flora and fauna will be fully mitigated).
If Winehaven decides not to close the sale on May 21, then Upstream and the Guidiville Tribe have the right to buy all of the development areas for $400.
The Settlement Agreement states:
If the Northern Development Area, Southern Development Area, Central Development Area, or any portions thereof, are not Sold within 48 months of the Effective Date or 24 months of City approving the last Discretionary City Approval, whichever occurs first (“City Sale Deadline”), Plaintiffs or either of them as designated by Upstream and the Tribe in writing, shall have the option to buy such Development Area(s) or portions thereof for a purchase price of $100 per Development Area or portion thereof. Plaintiffs’ option to purchase the Development Area shall include up to fifty percent of the land-side portion of the shoreline knoll referenced in the Certified EIR. Promptly after Plaintiffs, or either of them, exercise the option granted herein, City shall be obligated to forthwith sell the parcels identified in the exercise of the option, or portions thereof, to Plaintiffs, or either of them. Within thirty (30) days of the Effective Date, City shall cause a memorandum of this Judgment to be recorded on title to the Property, which shall reference the above-referenced option of Upstream and Tribe.
And all indications are that Upstream and the Tribe are prepared to make that purchase in less than 60 days if SunCal declines to close. If they do, they will inherit all of the existing entitlements earned by SunCal for development.
Upstream and Tribe, or either of them as designated by Upstream and the Tribe in writing, and any of their transferees, may pursue development of the parcels in accordance with the Discretionary City Approvals, or may seek additional or new entitlements for the development of the parcels beyond the Discretionary City Approvals required by this Judgment that City may or may not grant in its sole discretion. The Parties, and each of them, acknowledge the Tribe, commencing in 2004 and ending in 2012, maintained an office in Building 123 at Point Molate.
And in addition to owning the land, the Tribe could seek to take it into trust, which would limit the City’s right to assert regulatory authority on it. There is even a scenario where it could become the casino that was previously rejected.
Nothing in this Judgment is intended to limit or expand the Tribe’s right to continue to pursue its claims asserted in this Action against the Federal Defendants, which expressly are not resolved herein, or to pursue any lands be taken into trust by the United States for the benefit of the Tribe, for any lawful purposes. The Tribe will request to license City-owned or City-controlled property for Tribe use and the City will process that request in the normal course, in the same manner as other such requests are processed.
If Upstream and the Tribe make the $400 purchase, they have at least five years to sell the land, but the City has an ongoing obligation to “bear all expenses of maintaining and securing the Property,” until the Development Areas are sold to a third party,” a cost that could easily exceed $1 million annually.
For each parcel of the Development Area or portion thereof sold to Plaintiffs, upon a sale by either of them of such parcel(s), Plaintiffs shall pay to the City fifty percent (50%) of the Net Revenues received by Plaintiffs. Plaintiffs must sell any Development Area or portion hereof purchased pursuant to this Judgment within 5 years of the City’s Sale Deadline or 4 years after the City makes a decision on any additional, discretionary City entitlements concerning any purchased portions, whichever is later, otherwise the Development Area(s) or portion(s) thereof revert back to the City, and the City shall pay Plaintiffs $100 for each Development Area or portion thereof.3 If the City takes back property under this Paragraph, the Revenue sharing described in Paragraph 22 will still apply, and the City will have an on-going obligation to market and sell the remaining unsold portions of the Development Areas.
City shall bear all expenses of maintaining and securing the Property, until the Development Areas are sold to a third party.
There is another fly in the ointment that no one is considering, AB 330, which prohibits local jurisdictions from enacting new laws that would have the effect of reducing the legal limit on new housing within their borders, or delay new housing via administrative or other regulatory barriers. Point Molate has a General Plan designation and Zoning that allows extensive residential development. The City cannot downzone it easily without violating AB 330.
The refusal of the City Council RPA Four to move forward with the CFD is largely based on an argument that the sales prices of units projected by the City’s consultant are too high, based on analysis by a biased consultant hired by the anti-Point Molate development group, who also projected slow market absorption. You wrote:
In deciding against setting up a facilities district, the council questioned whether houses built at Point Molate would fetch $1 million to $1.8 million, as initially projected, or whether townhouses and condos could sell for $521,000 to $1.35 million.
A September 2020 report from consultants Strategic Economics indicated the homes likely would sell for much less because of Point Molate’s remote location, lack of amenities, fire risks and proximity to the Chevron Richmond Refinery.
Strategic Economics also concluded the original project would take 20 years to complete and lease — not the nine years assumed by Winehaven’s analysis.
Anyone familiar with the market for homes along Richmond’s shoreline knows that this pessimistic projection is a fantasy.
Richmond home values are finally catching up with the rest of the Bay Area after years of significant lagging. See the data from Zillow below. Richmond is pushing a median value of nearly $800,000!
Both Waterline and NOMA have sold out, evidencing a strong real estate market.
Home prices in Richmond continue to climb, and here is a story (https://www.sfchronicle.com/projects/2022/point-richmond-real-estate-quiz/) from last week about a tiny Point Richmond home that went for $1,048,000, which is $913.69/SF. The house is only 1,147 SF, 2BR/2BA on a 3,999 SF lot with no view and no parking.
Finally, Gayle McLaughlin is no stranger to breaching the covenant of good faith and fair dealing. Her previous indiscretions caused the City to lose control of Point Molate. In the Upstream lawsuit, the City initially prevailed on all counts in Federal District Court, but Upstream and the Tribe appealed to the Ninth Circuit, which remanded the case back to the District Court, finding a plausible claim that Mayor McLaughlin had inappropriately tried to influence public policy and “breached the implied covenant of good faith and fair dealing.”
This cottage-style home is just one example of the kind of homes that are flying off the real estate shelves in Point Richmond. The quaint Richmond neighborhood is known for its village feel, convenience for Bay Area commuters, and panoramic views of the East Bay and Marin County — and also its relative affordability compared to the rest of the Bay Area. McCarthy + Moe Group real estate agent Shenna Moe listed the two-bedroom, two-bathroom property and says the neighborhood offers plenty of options for under $1 million. She added that the neighborhood has seen a huge increase in demand over the last five years, but especially so during the pandemic, even though Point Richmond properties tend to be smaller than suburban Bay Area homes. She has seen the most interest among Bay Area residents looking to downsize while moving to a place with a neighborhood feel. She also seeks people looking to start a family, or just enjoy the amenities the area has to offer, including its outdoor spaces, sailing and swimming opportunities, shopping, dining, and more. Inventory is always low in the area, which means homes often sell quickly and receive multiple offers, she said. "People like the idea that you're not in a suburban area where it's just a sprawl of homes," she said, adding that the neighborhood is fairly varied in its architectural styles, with many turn-of-the-century homes in its historic downtown area and some larger, more contemporary waterfront developments on its other side. People who came to see the Nevada Ave. home were particularly drawn to its large backyard space (complete with palm trees), multiple deck and patio areas, and the fact that it was move-in ready. The fact that it was a street-to-street lot (with both streets on dead-ends) was also appealing to buyers who were looking for a tranquil and cozy property to call home. The home is somewhat of a rarity in the central Bay Area: it was listed for below $1 million. Can you guess if the sale price stayed below that level?
We therefore conclude that the TAC [Third Amended Complaint] states a plausible claim that, by preventing the occurrence of the condition precedent and relying partially on the non-occurrence to deny the casino project and avoid carrying out the purpose of the LDA, the City breached the implied covenant of good faith and fair dealing when it promulgated Resolution 23-11 and discontinued consideration of a casino use for Point Molate. ( https://caselaw.findlaw.com/us-9th-circuit/1869961.html).
In short, McLaughlin abused her office as mayor to pursue her personal agenda regarding Point Molate, and it has cost the City dearly.