Monkey Business is Happening in the Downtown San Ramon Sunset

San Ramon, CA

In an article published in the Contra Costa Times on 11/29/2008, written by political editor, Lisa Vorderbrueggen, titled, Vorderbrueggen: Secrecy dogs Walnut Creek campaign, she has presented some insightful information into the world of competing shopping mall developers and the tactical ballot measures and legal wars that ensue.

Walnut Creek is battling a covert war over a Neiman Marcus store. Apparently, with millions of dollars at stake, mall kingpins around the country wage neighboring wars with nearby cities that have competing malls being proposed to be developed in their city locations. The tactic, that is slyly employed by mall developers, is to have a key lead person be the front guy, who does not divulge who they are working for, which are many times covertly representing the competing development company, which then funnels funds to fight various aspects of a planned shopping mall development plan within a community.

Competition for anchor stores is immense across the country. With the state of the economy being what it is today, and people tightening their belts, it is unlikely that more than one Neiman Marcus store would move into the East Bay Area. Alex Mehran, President and CEO of Sunset Development Company has alluded to having (attracting) a couple of major anchor stores for his planned San Ramon Downtown plan. Sunset Development as of today's date, has not released any information as to who would be the big anchor store tenants. Would it be in the best interest for Sunset of not having the Walnut Creek Neiman Marcus store open? Even if Sunset Development Company is not going after a Neiman Marcus store, it would be advantageous for Sunset, for the Walnut Creek Neiman Marcus store plan go down the tubes.

Enter Al Abrams. Who is Al Abrams? He's the hired gun from Southern California that is leading the attack dogs in Walnut Creek. According to the article in the Contra Costa Times, "Abrams has told a Contra Costa Times reporter only that he works for the Irvine-based real estate law firm that filed a lawsuit against the city, Allen Matkins Leck Gamble Mallory & Natsis."

So let's connect the sunset monkey business dots. What is happening in Walnut Creek may in fact be the beginning salvo of battles between the north and the south on the Interstate 680 corridor. Also, this brings into question many of the aspects of the San Ramon Downtown Center. For example: What happens if Mr. Mehran does not get any anchor stores lined up for the downtown center? What impact would this have on the San Ramon Downtown Center, the City of San Ramon Civic Center, and his huge trifecta office complex? Many cities have fallen into the trap of grandiose visions of sugar plums dancing through their heads, and have built shopping malls, and downtown centers, with either taxpayer dollars or partially subsidized with a public/private partnership agreement through; reduced or no permit fees required from the developer, low or no business taxes to be paid by the developer, and other cost reductions (incentives) provided to the developer, or shared equity - shared liability arrangements dealt behind closed doors, that in fact produce shopping malls that turned out to be nothing more than oversized white elephants for the cities and their taxpayers.

Public/Private Partnership For San Ramon Downtown Center Between Sunset Development and The City of San Ramon

There are more facets to the San Ramon Downtown Center than meets the eye. First off, the San Ramon downtown center is a public/private partnership arrangement. The city owns the property for the Downtown Center that was once owned by Sunset Development Company. The City of San Ramon has now taken this property that was once owned and sold to the City of San Ramon from Sunset, and still ultimately controlled by Sunset Development (see below); and traded it for a promise of no cost to the taxpayers. However, that may not actually be the case at all. There is an ultimate cost to the taxpayers in subsidies given back to the developer, due to lost tax dollars, low or no building permit fees required for the developer, and even the true cost of the property that are being proposed to be forgiven or overlooked in a hidden financial arrangement to this day that has not been revealed to the people of San Ramon.

Very few know anything about the original purchase buy/sale agreements and extended escrows still in force that exist between the City of San Ramon and Sunset Development Company, for the two properties (the 7.5 acre property, and the 11 acre "City Center" property just west of Central Park and across Bollinger Canyon Road from the 7.5 acre property) which are located on the north and south side of Bollinger Canyon Rd, (now collectively the Downtown City Center Properties). Evidentiary documents uncovered at the City of San Ramon offices provide key details of the original purchase agreements and the extended escrows still in affect between the City of San Ramon and Sunset Development. According to the option to repurchase the property in the original and amended renegotiated sweetheart escrow deals for Sunset Development, the Seller (Sunset Development) shall have the annual right to purchase the Property from the City for the original purchase price plus a cost of living increase. Nice deal for Sunset; in that Sunset does not have to pay property taxes on the property (since Sunset does not technically own the two properties), but Sunset totally controls both properties and has the right to purchase them back for little more than what the properties were sold to the City of San Ramon for. See: San Ramon Resolution No. 2005-170 document and Lot 4 Tract 8454 Agreement and Contract of Sale & Escrow document.

According to the official City documents, Sunset has the right to buy the property back if Sunset does not approve of what is going to be built on the two properties. Wow, what a sweet sweetheart deal for Sunset! There is a question that must be asked. Did the City of San Ramon really own the properties at any time, or was it a shell game from the beginning in order to hide the money? There could be an argument made by some that the City of San Ramon is acting as a government holding company for Sunset Development and shielding property tax liability away from Sunset, while Sunset still maintains complete authority over how and when this land is used, and the full option to buy it back at below market prices.

5,1 Option to Repurchase Property.

(a) Commencing January 1, 2006 and continuing until the earlier to occur of the date the City commences construction or July 1, 2011, Seller shall have the annual right to purchase the Property from City. Seller may exercise the right to repurchase by giving written notice to City between January 1 and July 1 of any calendar year following a calendar year in which construction has not commenced on the Property. Once Seller has exercised Seller's right to repurchase, Buyer may not commence construction. If not exercised by July 1, 2011, this Option shall terminate. If Seller gives such notice to City, the purchase shall close within ninety (90) days after the giving of such notice through an escrow at a title company doing business in Contra Costa County as designated by Seller. Title to the Property shall be conveyed by the City by grant deed free and clear of all liens and encumbrances, except real property taxes not delinquent, customary utility easements to service the Property, and the Covenants, Conditions and Restrictions for Bishop Ranch Business Park. The purchase price for the Property shall be the original purchase price paid to Seller by Buyer under the Agreement, which amount shall be adjusted by the Consumer Price Index for the San Francisco-Oakland Area from the base date of January 1, 2002. The requirement of this paragraph to "commence construction" shall mean material construction activity including, not less than the preparation of plans and specifications and the issuance of building permits and all other approvals required for the construction of not less than 50,000 square feet of improvements to the Property and the commencement of the excavation for the foundation of the proposed improvements. The provisions of this Section 5.1 shall survive close of escrow.

(b) Buyer agrees to execute and deliver through the Escrow the First Amendment Memorandum of Option to Purchase reflecting Seller's option to repurchase the Property, in the form attached hereto as Exhibit A. Escrow Holder shall cause such document to be recorded within ten (10) days of the date of execution of this Agreement. The Property shall remain subject to Seller's right of repurchase under this paragraph 5.1 following any sale, assignment, transfer, conveyance or encumbrance of the Property until commencement of construction as defined above has occurred. The option created hereby shall be irrevocable by Buyer and shall be binding upon and inure to the benefit of the parties hereto and their respective successors in interest. Upon Buyer's written request following Buyer's commencement of construction on the Property, Seller shall execute and deliver to Buyer any documents necessary to eliminate the First Memorandum of Option to Purchase from record title to the Property.

3. Buyer represents that Buyer has not liened or encumbered the Property.

4. Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect.

5. This First Amendment may be executed via facsimile transmission, with originals to follow, and in any number of counterparts, each of which shall be considered an original and all of which, taken together, shall constitute one and the same instrument.

With a reported cost of over $750,000,000.00 to build this San Ramon Downtown City Center project, we as taxpayers demand to know the fine print of this deal between Sunset and the City of San Ramon. With money like that, and the secret back-room deals that are being made without full transparent and honest open disclosure to the citizens, and with the fact of how these escrow purchase agreements have been made in the past, and the ability of the City Council to have the escrows amended, which already has been done on at least one other occasion, to be able to extend the dates (into perpetuity) to which Alex Mehran, of Sunset Development Company can exercise his right to take back the properties for practically the same price he paid for them; the citizens have a right to know the truth.

Don't be surprised Mr. and Mrs. San Ramon Citizen, when the City of San Ramon comes out with more statements that repeat the mantra, "You need not worry, because this San Ramon Downtown City Center is not going to cost the San Ramon taxpayer a dime." That's when you know you need to worry that it will cost the San Ramon taxpayers a lot more than a dime, for it's likely to cost hundreds if not thousands of dollars to the San Ramon taxpayers in ways that many have not even thought of. Can you say higher business license fees? Can you say an added on city-wide sales tax? Can you say a huge tacked on property tax assessment? What about an increase in lighting fees, homeowner permit fees, garbage fees, cable TV fees, police department fees, high parking and traffic tickets, fire department fees, landscape maintenance fees, and even garage sale fees and garage sale ticket fines for illegal garage sales being issued by the San Ramon Police?

So, maybe we will get some sort of revenue sharing arrangement with this public/private partnership, however just looking at the history between the good old boys network, Mayor Abram Wilson and the San Ramon City Council, and many of the City Council and Planning Commission Members from the past, you have to decide if it would be a smart decision to not even question what is going on here in small town San Ramon.

It would be highly advisable to read the fine print in any agreement between Sunset and the City of San Ramon for the public/private downtown center project. It could very easily include a clause for nearly a 100% filled lease rate for Mr. Mehran and his City Center office complex and shopping center venues, and require an extremely low vacancy rate on the upscale housing units designed to be built on top of the shopping center area, and require a large number of years filled at this unattainable vacancy rate, before any revenue sharing would transpire between the Sunset Development and the City. Sunset is the key and only player in San Ramon for developing the Downtown Center, and because of Mr. Mehran's extreme dictatorial influence over the City Council, and all the other Bishop Ranch properties that are closely tied to the City Councils' decisions of the past, we need to be especially on the lookout for what other past and future documents might be hidden from the citizens of San Ramon which show poor decision making, or unethical, illegal, and slight of hand tactics for Sunset and the City.

There are major pressures being placed on developers and cities around the country. What was agreed to between developers and cities six months ago has likely changed drastically in just the last month or two. In light of today's bad economic times, huge financial credit crunch, with home prices falling and home foreclosures reaching an all-time high, we as citizens of San Ramon need to be eternally vigilant, and demand that our public officials work for us in an honest and full transparent mode, not covering it up behind our backs. Yes, this may require pulling teeth in the open to get to the root of the problem, but our future and our children's future in San Ramon depends upon it. It is better to expose the pain now, and get it fixed right, than get an abscess that is rotten to the core, which can cause a body much more harm in the long run.

Thinking back on the various proposed San Ramon City Center plans over the years, is it any wonder that they did not go through? Some of the other proposals had nothing in it for Sunset Development or Alex Mehran. Did Alex threaten to exercise his options in the past to buy back the properties? What other options is Alex holding over the head of San Ramon? What other documents are hidden and never to be talked about in the public spotlight?

San Ramon Tribune
Editor

Article Addendum 12/12/08

Sunset Development Company has already exercised the right to repurchase the 7.5 acre property without any public release of the financial arrangement for the City Center project. In the San Ramon City Council July 8, 2008 ANNOTATED AGENDA and {the Minutes of the City of San Ramon - Council Meeting dated June 24, 2008 Unfinished Business section (#9.1) City Center Update – City Center Update and Execution of Contract for Sale of APN 213-120-013 support this} it was announced the City Council sold the property to Sunset. Here are the terms of the sale. By-the-way, the original purchase price paid for this property on November 7, 2001, by the City of San Ramon was, $7,081,756.00. The original escrow agreement had the option for Sunset Building Company, LLC to buy it back for what Alex Mehran sold it for, plus the adjustment using the CPI index for the San Francisco-Oakland Area from the base date of January 1, 2002. See Consumer Price Index Base Table.

12
No Council deliberation or decision is anticipated.
CITY MANAGER MONIZ REQUESTED A CLOSED SESSION FOR AN EMERGENCY ITEM. THE COUNCIL VOTED 4-0 (ROWLEY ABSENT) THAT THERE IS A NEED FOR IMMEDIATE ACTION AND THAT THE ITEM CAME TO THE ATTENTION OF THE CITY COUNCIL AFTER THE PUBLICATION OF THE AGENDA.

CONVENE TO CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54956.8 REGARDING ASSESSOR'S PARCEL NO. 213-120-013 TO MEET WITH THE REAL PROPERTY NEGOTIATOR HERB MONIZ.

AFTER CLOSED SESSION, COUNCILPERSON PERKINS MOVED THAT THE CITY COUNCIL CONFIRM THAT IN CLOSED SESSION, JUNE 24, 2008, UPON MOTION OF COUNCILPERSON PERKINS, SECONDED BY COUNCILPERSON HUDSON AND PASSED UNANIMOUSLY (MAYOR PRO TEM LIVINGSTONE, COUNCILPERSONS HUDSON AND PERKINS), THE NEGOTIATOR WAS INSTRUCTED TO NEGOTIATE AND THE MAYOR AUTHORIZED TO EXECUTE A CONTRACT OF SALE FOR THE SALE OF THE 7.56 ACRE PARCEL TO SUNSET BUILDING COMPANY FOR $8,285,000 ON THE FOLLOWING TERMS:

1. $1,000,000 CASH

2. THE BALANCE TO BE PAID IN ONE YEAR WITH INTEREST AT THE RATE OF 6%

3. INTEREST ONLY TO BE PAID QUARTERLY

4. SALE OF PROPERTY TO BE SECURED BY DEED OF TRUST

COUNCILPERSON HUDSON SECONDED THE MOTION. APPROVED 3-0-1-1; ROWLEY ABSENT, WILSON ABSTAIN.

There are several interesting aspects here. First off, one has to wonder why Mayor Abram Wilson abstained in the vote? Did the mayor have a conflict of interest? Did he see something wrong with the deal, but decided not to say anything? Was it because Mr. Wilson was running for CA State Assembly and it didn't meet the smell test? It is important to note that Mayor Abram Wilson's background was an investment banker for thirty years including work as a federal funds trader as Vice President of Wells Fargo Bank and worked as a Principal and Senior Account Executive at Bank of America. See Wilson Bio. The amount of the sale seems to be out of alignment, (verify for yourself using the quick CPI inflation calculator) compared to the original buy/sell escrow agreement. Keep in mind, there still is another larger piece of property (11 acres owned by the City but controlled by Sunset with the same type of escrow arrangement) on the chopping block related to the Downtown City Center.