SunCal Sues City Of Richmond Following Point Molate Purchase Rejection

The city of Richmond, California’s decision not to move forward with a mixed-use project from developer SunCal at Point Molate has made its way to the courts.

SunCal has sued the city and city council for over $20M over the stalled development, alleging that the entities breached a contract and acted in bad faith when rejecting, via a 5-2 vote, SunCal's plans to redevelop the site at Point Molate, as reported by the San Francisco Business Times. In addition to damages, SunCal is seeking an injunction to prevent another developer from purchasing the land, as well as the right to purchase the property.

Per an earlier ownership agreement borne out of another lawsuit over the site, the 270-acre parcel must now be offered to the Guidiville Rancheria of California tribe for just $400. The Guidiville tribe previously tried and failed to reach a deal with the city to develop the site, and the tribe and its developer, Upstream Point Molate, indicated to city council that they intend to purchase the tract. Should Upstream decide to sell the land later, the city will be eligible to receive 50% of the sale price. 

SunCal claimed in a press release last week that the deal would have added $22.5M to the city’s general fund and given $22.5M to the Guidiville tribe.

"The new City Council and its law firm, Aleshire and Wynder, had no good faith basis to prevent the deal from moving forward," a Winehaven Legacy spokesperson said in the release. Winehaven is an affiliate of SunCal.

SunCal entered into negotiations with the city in 2019 to develop the site, which would have included 1,450 homes and 400K SF in commercial space. SunCal planned to purchase the land for $45M and preserve 70% of the tract as open space.

The project was approved for development in 2020. The developer was under a deadline of May 21 of this year to complete the purchase of the land, but the city rejected the deal on May 14, stating that SunCal and Winehaven had gaps in the project’s funding. SunCal alleges the denial was not about financing but about keeping high-end housing out of the area.

Opponents of the project have argued that much of SunCal’s plans for the project were dependent on occupancy and revenue projections that didn’t make sense.

Former Richmond City Council Member Jeff Kilbreth noted one sticking point is the projection from the developer that the city would get $150M in assessed value from the commercial properties, 80% of that coming from office space. Kilbreth said “it seems particularly foolish to count on this financial projection now,” because the Bay Area’s office vacancies are at historical lows.

The project was also met with heavy criticism from Richmond residents, with several public comments during a hearing to vote on the project urging the council not to approve the sale of the land to SunCal.

“This land should be a public park, not a luxury development for a wealthy few. Please do everything you can to protect it for the people of Richmond,” one comment said.

The land itself has been a hotbed of legal activity. Beyond the lawsuit from Guidiville over the last development plans, SunCal scored a win for the development in 2020, when a judge dismissed a lawsuit from the Point Molate Alliance and other plaintiffs that argued the then-city council approved the project without addressing the potential environmental impact.