Marina Coast’s Missing Money
Former Fort Ord Developers owe the district big bucks. So why aren’t they paying up?
Thursday, August 4, 2011
Buried deep in the files of the Marina Coast Water District is a curious and unresolved story involving project developers on the former Fort Ord who defaulted on payments to the district to the tune of $850,000. Even more curious, though, is the lack of action by the district against these developers, and the city of Marina’s lack of knowledge about the agreement.
The story starts in 2006, when a trio of developers – Marina Heights, Marina Community Partners (responsible for The Dunes on Monterey Bay) and the now-defunct Front Porch, which was developing the Cypress Knolls project area – sought approval from the Marina City Council to build 600 more homes than authorized by a joint Marina Coast-Fort Ord Reuse Authority water supply assessment.
In order to secure that approval without getting sued for building beyond what was specified by the city’s general plan, they had to secure more water from Marina Coast – 300 acre-feet per year for eight years. The three developers entered into a joint lease agreement with Marina Coast on July 12, 2006 requiring them to pay the district $198,000 a year for the next eight years.
At the time, ratepayers and district board members alike raised concerns about the numerous outs it gave developers should they decide not to go through with the plan.
“You see all kinds of off-ramps for the developers where they can just walk away with little or no penalty,” says Tom Moore, who was on the district board in 2006 and opposed the agreement. In a June 28, 2006 memo to his fellow board members, Moore urged the district to modify the agreement to demand more accountability from the developers.
“The current wording of the proposed agreement leaves the district responsible for dealing with any single member of the project group who defaults on or quits the agreement,” Moore wrote in the memo.
But the district approved the agreement; less than a year later, the project group first defaulted on its payment. The year after that, Front Porch went belly-up, leaving Marina Heights and Marina Community Partners to pay the district. They didn’t, and still haven’t, meaning they owe the district around $850,000, according to district lawyer Lloyd Lowery.
“I don’t think there’s been money paid for a long time,” Lowery says. He was unaware what legal ramifications, if any, there might be for the developers.
“There’s no hope for getting that money,” says Howard Gustafson, a district board member who helped negotiate the agreement. “We’re not going to try, because we don’t want to open a can of worms that causes everyone to dive into some sort of legal issue.”
His remarks echo Moore’s sentiments: “They are not going to want to take action against developers who could turn around and sue them.”
Debby Platt, the city of Marina’s project manager for The Dunes on Monterey Bay, says that since the agreement did not formally involve the city, she and others on staff don’t know where it stands. Calls to the developers were not returned.
The economic downturn ground progress on the projects to a halt, and Lowery says that the agreement is currently in a state of suspension. But whether the delinquent developers will ever be taken to task is the $850,000 question
“I’ve been asking questions about this for years,” says Chandler Rowland, a Marina Coast ratepayer. “I’m astounded and disappointed by their lack of response.”