At last night’ City Council meeting, the four RPA City Council members (McLaughlin, Jimenez, Willis and Martinez) voted to end the attempt by SunCal (Wineheven LLC) to purchase the developable portion of Point Molate for $45 million. Bates and I dissented, and Johnson was absent. This effectively ends a four-year effort to fulfill the primary provisions of the Settlement Agreement (Amended Final Judgment) by entitling and selling the property to a developer.
Disappointingly, the city attorney supported and encouraged the City Council RPA Four in their reckless and relentless campaign to thwart the proposed SunCal project. For the 24 months that SunCal had been working towards the acquisition, the Development Agreement (DA) and the Disposition and Development Agreement (DDA) anticipated the formation of a Community Facilities District (CFD) to fund the construction of infrastructure. In the 22nd month, the same RPA Four City Council members pulled to rug out from under SunCal by declining to approve a proposed CFD, even though the City’s own consultant testified that it was financially sound.
The RPA Four maintained that the proposed CFD put the General Fund at risk, and they blamed the victim, SunCal, for not having a backup plan ready to fill the gap. SunCal maintains the City Council has breached their agreements by refusing to support the CFD. Although the RPA Four continues to hammer on how the project would have put the General Fund at risk, they have never acknowledged that their actions of serial bad faith are putting the General Fund at much greater risk. From the beginning, they have done everything they can to impede the sale to SunCal. They have supported the two legal challenges, both of which were subsequently denied by the courts. Their actions have now set the City up for years of expensive litigation.
The RPA Four have been telling the public for two years that settlement negotiations are ongoing and are going to resolve the litigation challenging the SunCal project, but that was a lie. They have told the public that East Bay Regional Parks District and/or the Trust for Public Land is going to buy Point Molate, but that was also a lie.
In any event, it appears that on or about May 22, 2022, Upstream and the Tribe will exercise their option to purchase all the developable parcels at Point Molate for $400 pursuant to the Settlement Agreement, which states:
If the Northern Development Area, Southern Development Area, Central Development Area, or any portions thereof, are not Sold within 48 30 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 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.
The fallout from this disastrous action by the RPA Four could be catastrophic for the City:
- The City will not receive $22,500,500 in cash on May 21, 2022.
- The City will get stuck immediately with a million dollars in legal fees that would otherwise be reimbursed by SunCal.
- The City will likely incur millions of dollars in legal fees on subsequent litigation
- The City will have to pay to maintain and secure Point Molate the next five years at about $1 million a year. The Settlement Agreement states, “City shall bear all expenses of maintaining and securing the Property, until the Development Areas are sold to a third party.”
- The City could be subject to an adverse judgment as high as $100 million plus attorneys’ fees.
- Point Molate will remain off limits to the public for the foreseeable future.
- The historic buildings in the Winehaven Historic District will continue to deteriorate and may be lost forever.
It appears that the RPA Four have never thought beyond last night’s action. I asked the RPA Four what their plan for Point Molate is after it is transferred to Upstream and the Tribe. Only McLaughlin and Jimenez responded. Jimenez said she had a plan but could not reveal it. McLaughlin said she had no plan; “it is one step at a time.”