Marina City Council dumps an additional $70 million into The Dunes.
Thursday, January 10, 2008
Hoping to rescue Marina’s first major development from the real estate slump, the City Council this week agreed to pony up an additional $70 million in redevelopment funds for The Dunes project. While the council’s decision was unanimous, several city residents criticized the deal as a handout to Marina Community Partners, the project’s developers.
“In my opinion the Marina Community Partners are already way ahead of the… profit gains,” Chandler Roland told the council on Tuesday, Jan. 8. “No further financial relief is needed.”
City officials emphasized that the redevelopment funds would stem from property tax gains made possible by The Dunes. “It’s not money that is coming out of the pockets of citizens,” said Councilman Ken Gray. “It’s money generated from the project itself.”
The City Council agreed to renegotiate the financial terms after MCP asked to delay construction of the 1,237-home project due to the plummeting housing market. Through fiscal year 2019-2020, the Redevelopment Agency will contribute an estimated $46.3 million to help pay for the project’s infrastructure and $49.3 million to subsidize the below-market homes. MCP will also pay $43 million for property, $5 million less than the original purchase price.
The agreement, however, calls for Marina to get a much larger share of the development’s profits. MCP will start sharing profits with Marina and the Fort Ord Reuse Authority after it receives a 9 percent return on investment rather than 22 percent.
Councilman Gary Wilmot said it’s important that the project continues so the city benefits from the expected 4,700 new jobs and the removal of abandoned buildings. “This project is not about the city making money,” Wilmot said. “This project is about removing blight and getting economic development on Fort Ord.”
MCP has built the big box component of The Dunes, which includes Target, Best Buy and REI located off the 12th Street exit from Highway 1. But the slow economy has delayed the remainder of the project’s first phase, including the village promenade, which will have pedestrian-friendly retail stores, a 100-room hotel, business park and 537 homes.
It’s still unclear, however, whether construction workers for the rest of the project will get a fair wage.
Union officials have asked the council to put stronger language in the agreement so that all workers receive prevailing wages. Local unions, including the Monterey-Santa Cruz County Building and Construction Trades Council, are suing MCP for trying to sidestep the wage conditions when it sells land to another entity.
“This thing is not cleared up,” Trades Council President Ron Chesshire said after the meeting. “When [the City Council] talks about prevailing wage they don’t know what the hell they are talking about.”
In addition to the pending lawsuit, MCP still has another hurdle to jump in order to finance the development. MCP wants an additional $10.2 million of FORA’s tax increment, also to pay for infrastructure. The developer also wants to be reimbursed for all expenses of demolishing the old barracks.
The FORA board is expected to consider the arrangement in February. If FORA doesn’t agree to pay up by April 30, the new agreement between Marina and MCP would become void and the city may have dig for more dollars to keep the development going.