The Fort Ord Reuse Authority, an agency whose express purpose is to facilitate the redevelopment of the former Fort Ord, has run afoul of one of the few developers working to do just that – even though it’s taking them awhile.
On March 9, Marina Community Partners, the lead developer of The Dunes on Monterey Bay, a three-phase project on 420 acres in Marina that was approved in 2005, sued FORA, alleging the agency owes MCP roughly $4.7 million for costs incurred in building demolition to date.
MCP, the lawsuit states, has demolished about 406 “World War II era” buildings, clearing land for the development of things like the big-box shopping center, the VA/DOD clinic and new single-family homes that are still being built.
MCP has only purchased the land for the first phase of the development, at the cost of $6 million in 2006, but the developer spent nearly $30 million in clearing the land of buildings, $25 million of which has been reimbursed by FORA. (More than 500 buildings slated for removal remain in The Dunes project area.)
Per a series of agreements between FORA and MCP in 2005 and 2006, FORA is responsible for reimbursing up to $46 million to MCP for building removal on the project site.
Yet Jon Giffen, FORA’s attorney, says that because the costs were incurred around a decade ago, and were only submitted for reimbursement in recent years – one agreement says the reimbursement invoices are to be billed monthly – it’s “legally defensible” for FORA to not pay MCP the money.
Additionally, Giffen notes, $1.66 million of the costs were not even brought to FORA’s attention until 2016. “We’ve never seen those [costs] before, which is kind of indicative of the entire claim,” he says.
Before filing a claim to FORA in July 2017 for the $4.66 million, Doug Yount, MCP’s project director for The Dunes, wrote a letter to FORA in September 2016, calling it a “formal request for payment.”
Steve Endsley, FORA’s assistant executive officer, responded with a letter stating that, in addition to payment MCP has already received, FORA promised roughly $19.5 million of credit against future land sales revenues.
MCP’s stance is that “credit” can only be applied from existing FORA land sale revenue – not future land sale revenue – and that if no such revenue exists, FORA would pay MCP from other funding sources.
Endsley’s letter also adds an interesting wrinkle: He notes that one of the agreements involves the now-defunct Marina Redevelopment Agency and writes, “How can this agreement be considered operative when the Agency no longer exists and did not perform prior to dissolution?”
Which raises a series of sticky questions about FORA itself: The agency – which is also a redevelopment agency – is scheduled to sunset in June 2020, and it must figure out how to meet myriad contractual obligations that will continue past that year.
Doing that, Giffen says, is just “one component of a host of complicated issues that need to be resolved by FORA and its underlying jurisdictions.”
Giffen says the FORA board will discuss MCP’s lawsuit in closed session April 13.