Lennar Corp. seeks higher return for S.F. redevelopment project
By: John Upton
Examiner Staff Writer
October 28, 2008
SAN FRANCISCO — Massive redevelopment efforts at Candlestick Point and the long-shuttered Hunters Point Naval Shipyard — including a possible new 49ers stadium — will be in peril unless profit margins increase, the developer warned Monday.
The San Francisco Redevelopment Commission approved a nonbinding, multibillion-dollar draft financing plan negotiated between government officials and developer Lennar Corp. to build homes, office and research space, shops and parks in the southeast neighborhood.
However, further negotiations are needed in the coming months to increase the projected monthly internal rate of return — a measure of profitability — from 15.8 percent to 22.5 percent, Lennar chief local negotiator and Vice President Kofi Bonner told The Examiner after the hearing. The current rate would result in a projected profit of $700 million during 15 years.
“This project, in its entirety, is not where it needs to be,” Bonner said. “The capital markets would not look at this given the risks.”
Projected profitability could be lifted by increasing planned taxes, amending construction schedules and tweaking other elements of the redevelopment plan, Bonner said.
In an effort to convince the 49ers to remain in San Francisco, The City is proposing to lease 17.4 acres of land at the former shipyard to the franchise for $1 a year, and Lennar is offering the franchise $100 million toward construction of a new stadium, the draft plan shows.
The proposal also shows the number of housing units that could be built on the 770 acres of waterfront land has increased from 10,000 to 10,500 since June, when 62 percent of San Francisco voters backed the plan by endorsing Measure G.
San Francisco Redevelopment Agency Executive Director Fred Blackwell said Lennar’s push for bigger profits is reasonable, but it will be a challenge.
“I think it can be achieved, but I think we’re going to have to really dig deeply,” Blackwell said.
If the project moves forward, a 15-year building phase could begin by 2011 or ’12, according to Redevelopment Agency official Stephen Maduli-Williams.
Built to last?
Details on the Candlestick Point-Hunters Point Naval Shipyard plan:
10,500 New homes
1,650 Homes targeted at households earning less than half the average local income
1,700 Homes targeted at households earning 80 to 160 percent of average local income
256 Public housing units to be rebuilt at Alice Griffith Housing Development
885,000 square feet Planned retail space
2,500 Construction jobs development would create
Source: Redevelopment Agency
