By Point Molate Alliance & Norman La Force
On Friday, March 18th, the Richmond City Council rejected establishing a Community Facilities District (CFD) that would allow for a $292 million bond to finance the infrastructure needed for SunCal, an Irvine developer, to build up to 2,000 luxury units at Point Molate — the city-owned 411-acre headland that has long been a source of controversy.
The unanimous vote, 4 - 0, with Councilmembers McLaughlin, Jimenez, Martinez, and Willis voting “No” and Bates, Johnson, and Mayor Butt absent, was “a courageous step by the council’s progressive majority to undo the dangerous fiscal conduct of the former council,” says Point Molate Alliance (PMA) Steering Committee member Andrés Soto.
Three independent economic analyses had exposed the fiscal irresponsibility of the course Mayor Butt has been advocating successfully up until now. The council majority was convinced that the risks to the City's finances were too great and exercised their legal right under the Development Agreement to protect the City from negative General Fund impacts.
In his review of the proposed CFD, former Richmond Planning Commissioner Jeff Kilbreth estimated that in the Best Case scenario where all housing units were sold in 15 years, there could be almost $400 million in operating losses over 50 years. Even if SunCal picked up the first $70 million in losses, there would still be a shortfall of over $300 million to the General Fund over 50 years.
“The project never breaks-even for the City’s General Fund,” Kilbreth noted, “pointing to the high cost of city-funded fire and police substations required by SunCal’s insurance underwriter. A 24 X 7 fire and police station costs over $6 million per year. The property taxes on fourteen hundred and fifty two homes aren't enough to cover either the cost of this dedicated fire and police station or repaying $292 million in bonds over 35 years, which is like saddling every homeowner with an extra two hundred thousand dollar mortgage. We can't ask Richmond taxpayers to subsidize the operating costs of a new village called ‘Tiburon East.’”
A fire and police station are required due to the limited access to Point Molate and its proximity to the Chevron refinery. Without fire and police substations, homeowners could not get property insurance and mortgages.
To address General Fund impacts, SunCal proposed a “Special Fiscal Impact tax” on undeveloped land, but the tax would not cover all of the General Fund shortfalls as it extends only to the end of the construction period. The City’s bond consultant, Mark Northcross of NHA Advisors said, “The Special Fiscal Impact tax is no guarantee at all. If we levy the tax, and they don’t pay it, our only recourse is to foreclose on the property.”
If SunCal chooses not to move forward, the City has options. The option the Mayor is promoting and the one he negotiated in a settlement agreement between the City and Upstream, the earlier failed casino developers at Point Molate, is to sell the property to them for $300 if the City does not sell to a developer such as SunCal by May 21st, 2022. If the City does that, Upstream has four years to sell the property to a developer with a city-approved project and split the sale price with the City.
The Sierra Club views the defeat of the CFD as an opening for all parties in the lawsuits that the Sierra Club, Citizens for East Shore Parks, the Point Molate Alliance, and SPRAWLDEF have brought to save Point Molate. SunCal should consider how it can resolve these lawsuits in favor of making Point Molate a regional park instead of an enclave of luxury housing requiring annual incomes of over $250,000 to buy a unit.
The City should work with the East Bay Regional Park District and others to resolve the lawsuits, and in exchange for a fair settlement among the parties, develop Point Molate as a world-class regional park in the Park District. In fact, just recently the Trust for Public Land sent a letter to the City expressing its interest in Point Molate. The Sierra Club urges the parties in the various lawsuits to view this as an opportunity to resolve the legal issues over Point Molate instead of engaging in further litigation.
Creating such a park has been a goal of the Sierra Club for close to 30 years, and one of our priority conservation areas in our 30x30 campaign. Not only would our local community get a great new park, but the park designation would also protect Point Molate’s critical eelgrass beds that sequester more carbon per acre than trees, and protect Ohlone sacred sites as well as cultural sites important to the Chinese-American community.
Coming to an agreement with all parties would benefit the City of Richmond while giving Richmond’s small Planning Department the time and resources to pursue not only market, but affordable and moderately priced infill housing projects. The Sierra Club and the Point Molate Alliance call on the City to pursue a new settlement with the developers, end years of litigation, and avoid the fiscal and safety risks of a high-end housing development on this unique headland and natural treasure.
This article includes contributions from the Point Molate Alliance and Sierra Club SF Bay Chapter East Bay Public Lands Committee chair Norman La Force.
Photo credit: Photo by Jack Scheinman, provided by the Point Molate Alliance.