The company responsible for three of San Francisco’s largest redevelopment zones will have more time to deliver on millions of dollars intended for projects to benefit the community, according to documents obtained from The City.
Lennar Corp., the Miami company whose Lennar Urban is in charge of redevelopments at the Hunters Point Naval Shipyard, Candlestick Park and Treasure Island, struck a deal in 2010 to pay nearly $25 million to rebuild the Alice Griffith housing projects in exchange for the right to redevelop the shipyard and the area around Candlestick. The projects would see thousands of new homes built in those neighborhoods. The $25 million is part of a package of community benefits promised by Lennar in exchange for the development rights.
The company attempted to defer payment of the entire sum until “sometime later,” but a November letter from a Lennar executive shows that Lennar successfully persuaded The City to allow it to pay $15 million later this month and the remaining $9.8 million in 2016.
Among the negotiated community benefits, which include an African market, Lennar agreed in 2010 to held pay to rebuild the dilapidated Alice Griffith projects near Candlestick, the 49ers’ former home stadium that is scheduled to be demolished this year. At the time, the payment was $15 million. That broke down to $90,000 per federally subsidized public housing unit and $70,000 per new city subsidized below-market-rate unit.
Since then, cost overruns caused the bill to balloon to $24.9 million. That payment was originally due last month.
The money would go to The City's Office of Community Investment and Infrastructure before being paid to housing developer McCormack Baron Salazar and subsidiary DoubleRock Ventures, which plan to demolish low-rise public housing and replace it with mixed-income townhomes.
Lennar asked Mayor Ed Lee and other top city officials to allow the payment to be deferred until “needed” by construction, according to a Nov. 10 memo from Community Investment Office Director Tiffany Bohee that was obtained by The San Francisco Examiner.
Lennar claimed to have the money on hand, but preferred to save it to “benefit market rate housing and commercial projects at the Shipyard and Candlestick Point,” Bohee wrote.
Such a move would have put a time-sensitive $30.5 million planning grant from the federal Department of Housing and Urban Development at risk.
In a “compromise,” according to the memo, The City allowed Lennar to pay $15 million this month and the rest in 2016, once the rebuild of Alice Griffith is complete.
City officials would not provide comment on the deal.
In a November letter, Lennar Urban President Kofi Bonner praised the wisdom of delaying the payment.
“Making payments that will sit fallow in a bank account for considerable periods before they are needed … is an unnecessary financial burden on us and on the Project that diverts resources that could be productively used for other Project development,” Bonner wrote.
Lennar reported over $2.5 billion in earnings in 2014, according to MarketWatch.
Condos at The Shipyard SF at the Hunters Point site started selling last year. They range from $400,000 to $700,000, which is a relative bargain in a city where the median home price in 2014 was $1 million, but out of reach for many in the neighborhood, which has San Francisco’s highest unemployment rate.
Despite making payments to local nonprofits and other community efforts, Lennar has long been criticized for failing to fully deliver on deals cut in return for the rights to build thousands of new homes in San Francisco's southeastern neighborhoods.
In 2006, Lennar slashed in half the number of rental units to be built at The Shipyard. Two years later, the company agreed to pay $500,000 for failing to properly stop asbestos-laden toxic dust from falling on the neighborhood after it was kicked up by construction.
Most recently, the company agreed to scrap plans to implode Candlestick Park over similar dust fears. The stadium will instead be demolished section by section. That work was scheduled to begin before the end of January.
In a statement e-mailed to The Examiner, Bonner noted that “the cash is not needed” immediately and “would have [been] used to accelerate the construction” of badly needed market-rate housing at The Shipyard.
At least one activist said the delay is another example of the developer backing out on a deal.
“They have reserves, they have record profits. We have an affordable housing crisis,” said John Eller, an organizer with the Alliance of Californians for Community Empowerment. “Lennar should meet their obligations.”Bay Area NewsBayview Hunters PointHunters Point ShipyardThe Shipyard SF
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