Actual Text of the City’s Resolution Turning Down Financing at Point Molate as too Risky
By Sally Tobin (Richmond resident; retired Professor from Stanford University).
May 15, 2022
The text of the resolution passed by the City Council on March 18, 2022 is linked below. By passing this resolution, the Richmond City Council resoundingly rejected a Community Facilities District (CFD) that would have exposed the City to millions of dollars in financial losses. The proposal called for the City to issue bonds so that the Irvine developer, SunCal, could obtain money from investors to build infrastructure for residential units and commercial space at Point Molate. The loans would be paid back by the eventual buyers. CFD proposals are a common way for developers to cover initial construction costs. But there were four major problems with this particular CFD proposal: (1) millions of dollars would be drained from the Richmond General Fund; (2) the amount of financing the Developer sought was far too large and violated state law limits on CFD financing; (3) the developer has not yet demonstrated the capacity to perform; and (4) the developer has not paid money owed to the city.
The vote was unanimous, with Councilmembers McLaughlin, Jimenez, Martinez, and Willis voting to pass the resolution turning down the CFD. Councilmembers Bates, Johnson, and Mayor Butt were not present for the vote. The Council majority was convinced that the risks to the City’s finances were too great, so they exercised their legal right under the Development Agreement to protect the City from impacts to its General Fund.
Even in the best case scenario (all housing units sold in 15 years), according to a fiscal analysis by Jeff Kilbreth (former member of the Richmond Planning Commission), there could be losses of almost 400 million in operating costs over 50 years. As Kilbreth notes, “The project never breaks-even for the City’s General Fund.” The cost involved in salaries and pensions for a 24 X 7 fire and police station is a major item, but the station is required by the home insurance industry because of the isolation and fire danger at Point Molate.
To read the actual resolution passed by the City Council, see this link.