Times: Developer may owe $5 million if Hercules project doesn’t pan out

— by Jeffrey Wisniewski — 25 January 2011 — 12 comments below »

Tom Lochner reports… “The attorney for the developer, Hercules New Town Center LLC/The Red Barn Co.’s attorney, declined to state the company’s position on a possible repayment of all or part of the $5 million. That amount represents the price that the developer would have paid, absent performance-based reductions, for a 6.6-acre plot along San Pablo Avenue just west of Interstate 80 slated for New Town Center’s Phase I, Market Town. But if the New Town Center should end up less grand than planned and the developer were found to owe the city money, it’s not clear how the city would collect it, given Red Barn’s apparent financial straits and the fact that the city already has transferred ownership of the site — for zero dollars.

Divorces are messy.

But here is the kicker — the land transfer may have been illegal:

The Hercules Redevelopment Agency transferred title to the 6.62-acre Market Hall property to Hercules New Town Center LLC in August 2009 for zero dollars.

Under state law, any transfer of redevelopment agency-owned property, be it by sale, lease or even sublease, is subject to approval by the legislative body — in Hercules’ case, the City Council and redevelopment agency board — following a public hearing. The transfer of the Market Town site to Hercules New Town Center LLC did not go before the council at the time of the transfer. But [City Attorney Mick] Cabral said the requirement was satisfied when the development agreement, which included terms of the future sale, was adopted by the council in March 2005 following a public hearing. The resolution approving the development agreement makes no reference to the sale price of the parcel other than that it is “not less than the fair market value” and “not less than the fair reuse value.”

Somehow Cabral remains the City’s attorney. And, unfortunately, the newest councilmembers seem hesitant to make that necessary change.


12 comments already …

  1. # Anonymous commented on 25-Jan-11 @ 9:27am

    Jeff,

    How many and whose votes are needed to fire Cabral? If the answer is more than two, stop browbeating John and Myrna for not firing him yet. Stop wondering why Cabral is still on the payroll until enough votes are available to terminate him. If my vote counts, I vote yes.

    As for the real estate transaction, if it was illegal it may be reversable and if they default on an enforceable contract, foreclose.

  2. # Jeffrey Wisniewski commented on 25-Jan-11 @ 9:40am

    @ Anonymous — They need to try. They haven’t, and have indicated they are unwilling to do so, which is a problem.

  3. # Anonymous commented on 25-Jan-11 @ 10:55am

    Anybody out there able to answer my question?

  4. # JC commented on 25-Jan-11 @ 11:22am

    As far as I know, there are still no efforts to remove Cabral from office nor an indication from the current city council to do so. Isn’t there another lawyer, who specializes and handles real estate affairs for the city? Shouldn’t this lawyer be questioned or be held responsible for all these questionable real estate deals as well?

  5. # PS commented on 25-Jan-11 @ 1:33pm

    # Anonymous commented on 25-Jan-11 @ 10:55am
    Anybody out there able to answer my question?

    What was your question?

  6. # Anonymous commented on 25-Jan-11 @ 3:10pm

    PS,

    Read the thread. It’s the first post and Jeff failed to answer the question in his response.

  7. # PS commented on 25-Jan-11 @ 3:35pm

    # Anonymous
    Oh, I didn’t think that was a question. It appeared rhetorical because you answered it accurately yourself.
    As an added thought, though I can’t speak for Jeff, I suspect that he is making his comments in the high hopes that one of the other two will vote with the other two (whoever that now is) to make it a 3-1 or 4-0 vote rather than accepting that it as a 2-2 vote or worse.

  8. # Anonymous commented on 25-Jan-11 @ 5:53pm

    PS,

    How in the world did you come to that conclusion?

    I am following the rules and still no results. This has been my frustration for a long time. No one wants to answer the questions presented here. It’s not like I’m asking if you still beat your wife.

    Rule #1. Don’t go off topic.
    Rule #2. Jeff decides what the topic is. Don’t deviate or Phil will chastise you and write another witty analogy.

    Result: Still no answers to the question, which is as follows: (to make it easier I am breaking it down into multiple questions)

    Who gets a vote?
    How many yes votes do you need to terminate Cabral?

  9. # PS commented on 25-Jan-11 @ 6:36pm

    # Anonymous
    The four remaining members get a vote.
    It would need to be a 3-1 or 4-0 vote.
    I used my Staples “that was easy button”

  10. # PS commented on 26-Jan-11 @ 8:28am

    # Anonymous
    If what I learned last night at the city council meeting is true. The vote could actually be one of several scenarios.
    It could be 2 in favor 2 abstaining, 2 in favor 1 opposed and 1 abstaining. it could even be 1 in favor and 3 abstaining.
    So in theory one person voting to terminate could happen.

    Cabral made the point himself during a vote that ended 2 in favor and 2 abstaining in which he as legal council pulled out the rule book to prove or approve the vote.

    Of course there might be a different set of rules if termination was the issue.

  11. # Anonymous commented on 26-Jan-11 @ 1:21pm

    PS,

    I was actually watching. I dont think you’ll see as many abstensions in the future.

  12. # Susan Keeffe commented on 29-Jan-11 @ 12:59am

    I was there and I agree, Myrna and John didn’t know the Roberts Rules of Orders ramifications. They do now! I do believe Myrna has also expressed an interest in searching for a new attorney. Personally, I think Patrick would be awesome!

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