SunCal Sues the City of Alameda

The Irvine-based developer says it spent more than $17 million to work out a deal at the Point
By: Michele Ellson, The Island

SunCal Companies is suing the city in an effort to be reinstated as developer for Alameda Point.

In a suit filed Wednesday in a state court in Santa Ana, the Southern California developer claims the city violated the exclusive agreement it signed to negotiate a development deal with SunCal by blocking its efforts to meet the terms of the agreement.

Late last month, the Alameda City Council voted to deny SunCal’s development proposal for Alameda Point on a 4-0 vote, effectively sending the developer packing an hour after the expiration of their three-year exclusive agreement to negotiate a deal to develop the former Naval Air Station.

“By their scheme, the City staffmembers are seeking to destroy a development that will significantly enhance the environment and add value to the community, all so they can perpetuate their positions and ensure their own job longevity. SCC Alameda is highly qualified and experienced in land development; and is ready, willing and able to move forward in good faith and develop Alameda Point,” SunCal’s attorneys wrote.

They want the court to reinstate the developer’s exclusive agreement to negotiate a development deal for the Point, nix the Council’s July 20 vote effectively firing the developer, and stop the city from moving forward on any other plans to develop the Point.

City Attorney Teresa Highsmith could not be reached for comment Thursday morning.

SunCal had hoped to build more than 4,800 homes, 4.57 million square feet of commercial space and more on the former Naval Air Station. City staff are now putting together a list of options for developing the base.

SunCal’s suit alleges that negotiations were proceeding well until Anne Marie Gallant was hired on as interim city manager in April 2009. After that, they said, the city put up a series of roadblocks intended to frustrate their development efforts.

City staff questioned the company’s financial assumptions and said the developer failed to address concerns about traffic and the endangered California least tern, among other things. But SunCal’s attorneys dismissed those claims, saying the issues were resolved prior to Gallant’s arrival.

City staff also argued that SunCal failed to win over the community, citing the overwhelming loss of its ballot measure, which included a land plan, business deal and exemption from development-limiting Measure A.

The developer said they spent more than $17 million to work out a deal at the Point, but they are not asking for their money back.

The city inked a negotiating agreement with SunCal in 2007 that was to expire July 20, 2010 if a development deal for the Point wasn’t reached. The agreement had an automatic extension provision if certain milestones were met.

City staff argued that SunCal failed to meet one of the milestones – reaching terms for transfer of the Point with the Navy. SunCal’s attorneys claim the city blocked the company’s efforts to reach that milestone; city staff had said they cut off negotiations with the Navy because they didn’t think SunCal’s project financials added up.

SunCal wants to continue the development of an environmental impact report that would lay out traffic, noise, environmental and other impacts of the development plus possible solutions. The document could take up to two years to generate.