Blogging Bayport Alameda

January 25, 2010

The sum of all fears

Before I got too sidetracked by the new submission by SunCal for Alameda Point I wanted to talk about the $500 million number that has been put into print by opponents to Measure B as proof that Measure B is a “bad deal” for Alameda.   As you might have guessed, I just got my Protect the Point mailer with this little nugget prominently placed.   I liked the clip art of the little guy with his pockets overturned and a big frown-y face.

For those who have watched the joint meeting of the City Council and School Board you may remember Councilmember Frank Matarrese vehemently defending this number as being valid since it comes from “three sourced documents”:

The first number is $185 million in tax increment bond money.   Frank Matarrese thinks this is a valid number to count against SunCal as a “shortfall” because the State might possibly take all this money away from Alameda’s redevelopment pot

The second number is the $108 million price tag for Alameda Point.

The third number is $175 million as the delta between what the City estimated that the Public Benefits should cost, and the cap that SunCal had placed within the Development Agreement of $200 million.

Then to round up to $500 million, he threw on top of that the waivers of the fees ($51 million) that SunCal had also included into the Development Agreement.

So at the end of his statement, Frank Matarrese declares that “you can argue that, but those are sourced documents” and that he has “no reason to believe that they are not true.”

Here’s the problem with that logic, no one is saying that there isn’t $185 million in tax increment financing on the table.   No one is saying that the price tag for Alameda Point isn’t $108 million.   There is a dispute over what SunCal had intended was to be included in that $200 million cap, SunCal says soft costs and CEQA mitigation aren’t included in the public benefits number, the City calculated them as part of the public benefits number.   And the fee waivers, well that is a whole other ball of wax about whether or not we should be holding out our hands for the fees or insist on SunCal to build what the fees are supposed to pay for which would give the City much more bang for our buck anyway.

The problem with the logic being presented is that just because these costs exist does not make it a “shortfall” in what the Developer is providing.

But let’s first talk about the $108 million price tag.   The way that Frank Matarrese is making it sound is as though the CITY has to pay for it, and not the Developer.   That is not true.   Here is how the Interim City Manager tries to spin it when School Board member Niel Tam asks, pretty precisely, who pays for the land:

Yes it takes her a minute to say something that would be as simple as, “The Developer is supposed to pay for it, but the City as the Redevelopment Agency would act as the conduit for this transaction.”  But then she goes on to say:

That the City still needs to negotiate with SunCal as to how much SunCal wants to pay for the land, even though everyone knows that the Navy’s price is $108 million.   So essentially, using Frank Matarreses argument, the City sucks so bad at negotiating that even though everyone and their mother knows that the Navy is asking for $108 million, the City is going to fold like a cheap suit and give SunCal the land for chump change.

Because that is what the $500 million amount captures.   The amount that is a “developer shortfall” meaning that the City is going to be on the hook for that amount.  Worse, as suggested by Mayor Johnson’s letter paid for by Building and Trades Union, that you, ordinary citizens will be taxed to make up for that “shortfall.”

So to recap, Frank Matarrese and the ICM have absolutely no faith in the negotiating prowess of City staff that when pushed to come to an agreement on the purchase price between the City and SunCal, the City will say, “We’ll give it to you for free.”

Next up is the redevelopment money.  Frank Matarrese is assuming that all $185 million in tax increment will be taken away from Alameda by the State.   That’s a pretty grim outlook.   Here is what SunCal’s Pat Keliher said about that assumption:

He points out that that doomsday scenario that Frank Matarrese has projected has not occurred at Treasure Island and across the state in other projects and that if those doomsday scenarios become reality then Alameda has much bigger problems.   And, unspoken is that if SunCal walks away and there is never any redevelopment money ever again, which is what Frank Matarrese’s analysis is based on, the City itself would never be able to do anything out at Alameda Point either because we don’t have any money.

With regard to the delta between SunCal’s numbers for the Public Benefits ($200 million) and the City’s numbers for the Public Benefits ($375 million), John Knox White actually wrote two strong posts about that issue, highlights from the first (you can read the other at your leisure):

…But what is this $375 million number? Well, $224 million of it are for “on-site and off-site traffic and transit improvements,” which looks odd when one only has to reference the Draft Alameda Point Transportation Strategy document from November 2008 to see that SunCal has proposed a traffic mitigation plan that costs less than $90 million…

…In order to come up with $224 million in traffic/transit benefits, the city has added $106 million in fees and contingency costs to their own calculations of $117 million in infrastructure and operations costs, including 45% in contingency fees.

Stranger still, and someone correct me if I’m wrong here, but there are $48 million in the creation of the projects internal streets and roads, not only do I believe that the Public Benefits in the initiative did not include these based on my reading the Alameda Point transportation strategy document, but some quick research into the definition of “Public Benefits” confirmed that this would not typically be considered included…

Because the assumption is, or should have been on the part of the City, that roads and streets within the project aren’t a “Public Benefit” it’s a necessity as part of the building and developing the land.  To include this as a “public benefit” is like including the installation of street lights or electrical lines or sewers as a “public benefit” cost.

Regarding the waiver of the fees which the City anticipates would be around $51 million, the bulk of these fees are for the Community Development Fund.  The Community Development Fund levies only a proportion of fees for certain projects to pay for projects around the City that is supposed to benefit all residents.  The Sports Complex alone will cost $20-30 million to build and that is only one of the Public Benefits that SunCal has promised to build as part of their project.   While the ICM insists in her rebuttal letter to SunCal that even if SunCal were to build projects identified as part of the CDF list of projects, they would not get full credit for the actual cost to build the project but only the cost apporporioned to the project.  (I know it’s a bit confusing)   I think the intent of the CDF is to encourage projects to be built, not to milk as much money out of a developer as possible.   So, is it $51 million in fees we are losing or is it $xxx million in value add that we are receiving because the City no longer has to fund projects like the Sports Complex by cobbling bits of money here and there and the money already in the fund can be diverted to other projects.

This “loss” is a not as straightforward as opponents to Measure B would have you believe.   And all these numbers totaled together as proof  that there is a “shortfall” are based on pretty shaky (if any) evidence at all.


  1. Recent photo of Frank Matarrese.

    Comment by Susan — January 25, 2010 @ 9:49 am

  2. surprise, politicians lie to get their way.

    Comment by E — January 25, 2010 @ 11:16 am

  3. 1. isn’t that a picture of the owner of SunCal?

    Comment by M.I. — January 25, 2010 @ 12:50 pm

  4. I doubt that most people could follow this. You’d have to be familiar w/ all the related documents and the terms.

    I could rebut this in detail, but let’s cut to the chase — let’s suppose that the shortfall was $250 million vs. $500 million, would that be okay? Whatever the number is, it’s more than the city can afford, and it certainly doesn’t qualify as “fiscally neutral”.

    Comment by dlm — January 25, 2010 @ 1:00 pm

  5. DLM: Then rebut them.

    As it stands, simply because these numbers exist in documents does not mean that they are a shortfall against the developer. And just by saying they are “sourced” does not provide a nexus.

    Comment by Lauren Do — January 25, 2010 @ 1:06 pm

  6. I have a source that says if you vote yes on B, suncal will give everyone in Alameda a million dollars. and it will net the city 1 trillion dollars, with which they can quadruple police protection, make young people pull up their pants, and will automatically reduce traffic by 90%

    Comment by E — January 25, 2010 @ 1:13 pm

  7. #3 “1. isn’t that a picture of the owner of SunCal?”

    No; here is a pic of the owner of SunCal violating the Brown Act with Mayor Beverly Johnson

    Comment by Susan — January 25, 2010 @ 1:38 pm

  8. We’ll see on February 2nd whose interpretation is more trusted.

    There is an election this November for mayor and council. I believe that it was George Burns who once quipped that it was a shame that all the people who knew how to run government were too busy driving taxis and cutting hair. I would update that to include writing blogs.

    Comment by AlamedaNayTiff — January 25, 2010 @ 4:18 pm

  9. and commenting on them

    Comment by Jack Richard — January 25, 2010 @ 5:34 pm

  10. How about we bid on this Feb third?

    Comment by Jack Richard — January 25, 2010 @ 5:45 pm

  11. Hey Naytiff.. We had a guy that was cutting hair, he became Mayor for a couple of terms and did a pretty fair job. He also saved the Golf course,it can happen.

    Comment by John Piziali — January 25, 2010 @ 9:56 pm

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