City Hall Loan Deal With Mall Developer "Illegal" Says Oversight Board Attorney

The Secret News covers the developing story of City Hall's give-a-way of public funds, over $6.5 million, to Bay Street Mall developer Madison Marquette Corporation.   The story emerged last May as City Council members considered the deal wherein the City would receive $2.5 million now from Madison Marquette but leave more than $6 million on the table that would be netted over the life of the loan, negating an original $18 million loan to the corporation from the former Emeryville Redevelopment Agency.  It has been called a deal a desperate-for-cash city would broker.  The Council directed Staff in May and covered by the Tattler, to look into Madison Marquette's economic prospects before they decided on the deal.  They wanted to check the credit worthiness of the multi-billion dollar development corporation.  Apparently, the City Council thinks Washington DC based Madison Marquette is not a sure thing since last Tuesday, they voted on the deal with the mall developer, taking the $2.5 million now and forgiving Madison Marquette the remainder of the loan.  But the former Emeryville Redevelopment Agency's own Oversight Board attorney says the city is not free to renegotiate the loan.  

Re-posted from The Secret News:

It is illegal for the City Council to allow Bay Street Mall developer Madison Marquette to pay back just $12 million on an $18 million dollar loan, according to the attorney for Emeryville’s Oversight Board. The county-level board is charged with monitoring the city’s transition after the elimination of state redevelopment funds.

The City Council last week voted 3-2 to allow Washington DC-based Madison Marquette to repay just $12 million on a promissory note owed to the city’s former Redevelopment Agency for $18.345 million. The City Council majority (Ruth Atkin, Nora Davis, and Kurt Brinkman) supported the loan discount, while Council members Jac Asher and Jennifer West voted against it.

“Payoff of the promissory note for the discounted amount of $12 million is prohibited … The former redevelopment agency has no authority to modify any existing agreements with any entity, including forgiving all or part of any balance owed on a loan, or changing any term of a loan,” wrote Oversight Board Attorney Paula Crow, in a memo included in the Board agenda packet for its Tuesday, July 9, meeting.

The City Council thought it could forgive Madision Marquette $6.5 million of the loan based on information provided by Helen Bean, Emeryville’s Director of Economic Development and Housing...

Read the rest of the story HERE.

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.

Conflict Of Interest Cited In Move To Sell City Owned Property

The City of Emeryville is seeking to sell a piece of fallow land it owns near the Bay Street Mall on Christie Avenue to Madison Marquette, the owner of the mall, but the sale is improper due to a conflict of interest by a member of the State mandated Emeryville Oversight Board, according to the Emeryville Property Owners Association.  

The Property Owners website alleges Oversight Board member and Emeryville resident John Gooding has been or currently is on the payroll of Madison Marquette and the politically connected Wareham Development but Mr Gooding failed to disclose this information as he is required to do. 

Oversight Board member and
Emeryville resident John Gooding

The real estate, called "site B" is part of a previous acquisition by the former Emeryville Redevelopment Agency and the city council had expressed interest in shuttling the parcel to Washington DC based Madison Marquette to develop into an expansion of the Bay Street Mall after clearing the land of condemned businesses and removing toxic soil on the site.  
Residents attempted to block the sale citing a lack of benefit for Emeryville residents and a recalcitrance on the part of the developer to even meet with them.  After the dissolution of the Redevelopment Agency however, Madison Marquette dropped interest in developing the property and it has remained fallow.  To the consternation of residents, the city has kept open the option to develop the property reserved exclusively for Madison Marquette in the interim years, garnering no taxes for the city.  Even though other developers have shown interest in the land, the city has protected Madison Marquette's interests and no other developers have been allowed to make proposals for the property.

Wareham Development's Transit Center is also is being considered for public subsidy by the Oversight Board and if Mr Gooding has been paid by that developer, that too would constitute a conflict of interest and Mr Gooding would be required to disclose that information. 

The Emeryville Property Owners Association story:

City Staff Seeking to Sell Site B to Madison Marquette
Posted on August 25, 2012

CITY STAFF REQUESTS TWO SPECIAL MEETINGS TO SELL SITE B TO MADISON MARQUETTE

The Emeryville Successor Agency (former Redevelopment Agency) has agreed to a Special Meeting on September 19th at 5:30pm in the City Council Chambers to approve the sale of Site B to Madison Marquette. “Madison” If the Agency decides to sell the property, the sale must be approved by Emeryville Oversight Board.

On September 25, at 5:30pm, City Council Chambers, the Emeryville Oversight Board, will vote on whether to ratify the Successor Agency action, should they vote to sell the property to Madison..

Background: The State decision to dissolve redevelopment Agencies has forced the former Redevelopment Agency to liquidate its assets. Site B is one of those assets.

The Emeryville Oversight Board was established by the legislature to oversee the actions of the Successor agency. It has seven representatives.
[1] Emeryville Mayor Jennifer West (Board Chair)
[2] Aisha Brown, Alameda County Board of Supervisor Keith Carson, senior staff
[3] Greg Harper, AC Transit Board Member
[4] Joshua Simon, Emery Unified School Board Director (Board Vice Chair)
[5] Ronald Gerhard, Vice Chancellor for Finance & Administration, Peralta Community College District
[6] John Gooding, Emeryville resident
[7] Helen Bean, City of Emeryville Economic Development & Housing Director.

The person on the Board representing the interests of Emeryville Residents is John Gooding. He was chosen by Alameda County Supervisor Keith Carson. Many people in the community believe Gooding is working for both Madison Marquette and Wareham Development. He has recused himself from some of the decisions affecting Madison Marquette. but he seems to be voting in conflict of interest on matters which benefit Wareham. He may have a conflict voting on the ECCL Project? He has stated he will not vote on the sale of Site B.

Click HERE to read the rest of the story.

Center Of Community Life Loses Millions In Funding

Re-printed from the Secret News:

Emeryville Center of Community Life (ECCL) On Chopping Block

May 28, 2012

By Tracy Schroth

State Has No Obligation to Fund ECCL; Attorney for Emeryville’s Oversight Board Says Agreement is Void

Two Days Too Late
An agreement by the state to pay $25 million in redevelopment money toward the Emeryville Center of Community Life (ECCL) does not constitute an enforceable contract and the city should withdraw its request for funding, said the attorney for Emeryville’s Oversight Board. The county-level Board was established to monitor the city’s transition now that the Governor has eliminated state redevelopment funds.
Oversight Board attorney Paula Crow has submitted an analysis of ECCL and other pending city projects under a new state law (AB 26) which defines what is and is not an enforceable obligation. Crow’s analysis, submitted to Oversight Board members Friday, said the agreement between the state and the city regarding ECCL was made two days too late.
Click HERE for the rest of the story.....