Search The Tattler

Friday, May 17, 2013

City's Latest Sweetheart Deal for Giant Developer

Oh, To Be Madison Marquette!
$6.8 Million Giveaway

With the end of Redevelopment Agencies throughout California, Emeryville residents might have assumed that the days of giant giveaways and massive subsidies to developers by our City Council had come to an end.  Not so!  Our resourceful City Council has found a new way to give millions of dollars to one of its favorite recipients of public funds: Madison Marquette Corporation, owner/developer of Emeryville’s Bay Street Mall.

On the agenda this coming Tuesday, May 21st, the City Council will consider allowing the Washington DC based Madison Marquette to pay back just $11.5 million on a promissory note owed to the former Redevelopment Agency where the principal amount, as of May 1, 2013, was $18.345 million, a giveaway to the billion-dollar company of $6,845,000.

This write-down is justified in an April 16th memo prepared by Emeryville’s Director of Economic Development and Housing, Helen Bean, in which Ms. Bean states that the present value of the principal balance at a 7% capitalization rate equals the proposed payoff amount.
Madison Marquette's Bay Street Mall:
Initially they received a $47 million Redevelopment
Agency subsidy.  Now they're getting $6.8 million.
But we're getting a mall Emeryville residents
don't use and an expensive drain on our police services.

The City would not see the entirety of the $11.5 million payoff. Like any debt owed to the former Redevelopment Agency, the money would be sent to the County Auditor to be distributed to the relevant taxing entities, with the City receiving 22% of the payoff, or just over $2.5 million.  The Oversight Board and the state Department of Finance would also have to sign off on the deal.

This promissory note is complex and full of legalese, but when our former City Manager, Patrick O’Keeffe, goes out of his way to sign a non-binding letter of intent to enter into this deal on his very last day of work, something smells funny to the Tattler.  Furthermore, while a payoff amount that eliminated the interest owed could make sense, it boggles the mind to imagine the response from Wells Fargo if you called them up to offer to pay off your home mortgage by paying just 62% of the principal owed on your home.  That kind of thing doesn’t happen for the 99%.  Those kinds of sweetheart deals are only doled out by Congress to their Wall Street cronies or our own City Council to its 1% developer friends.

No comments:

Post a Comment