Sycamore North

By Gerard Boulanger

The "perfect" example of Municipal stupidity

Follow the link: http://www.youtube.com/WaterfrontWatch#p/u/27/EB3JxPNIBc8

The RDA (Redevelopment Agency) wanted to be in the Real Estate business and decided to be the developer of that project. Why? To control the Affordable Housing mix without any discussion probably. Instead of the 30% required by the State, RDA suggested a 77% mix (half very-low income units), mostly concentrated in one section of the building. Who was in charge of the affordable housing business? The former CIty manager's daughter... Did Council knew? Yes.

NEO Consulting billed the RDA for an amount of $700,000 for their Affordable Housing services. What services? The individual invoices were small enough to go under the radar of the City Council for 3 years. Bills were approved in the Consent Calendar and paid with no discussion. "No conflict of interest" said our City Attorney... What did Council said? Not a word.

RDA gave MSPS (Main Street Property Services) the contract to manage TI (Tenant Improvement for the commercial spaces). TI was financed by the RDA, of course. First thing they did was to give an allotment of $200 per sq.foot to the first 2 or 3 potential tenants, when the average TI in our county is about $70. Are we buying furniture for them? Was that discussed in Council? No. Did Council questioned this matter? No.

Where are we Today? We can't complete the project: no more money. So, we are selling it in a very low real estate market. How much can we expect a buyer to pay for the whole building? Anywhere between $25-32M. How much is the total construction cost? $68M So.... City/RDA will lose a minimum of $36M, maybe $43M, and we end up not even owning the building. Since we already paid $37M, we are $31M away from a finished product. Best scenario: we end up with $1M from escrow but will lose $36M total. Worse scenario: we end up having to bring $6M to escrow and will lose $43M total.

Was the Financing discussed in Council? No. Project has been under funded since the beginning and nobody in Council challenged that... This is insane! Did Council questioned the project? No.