|Point Molate Continues to
October 3, 2004
Following are copies of news stories from today’s and yesterday’s San Francisco Chronicle, West County Times and Berkeley Daily Planet. Also attached is a full-page ad taken out by Upstream in today’s West County Times.
The October 5 City Council agenda includes consideration of both the Upstream proposal and the ChevronTexaco proposal.
The Upstream proposal is well developed conceptually for a project that includes an attractive destination resort, parks and open space substantially in conformance with the Reuse Plan, and potentially a lot of money and jobs for the City. Its most controversial components include a casino and the potential for massive traffic jams at the Richmond-San Rafael bridge toll plaza. Although the plan is solid, the proposed Land Development Agreement (LDA) is spongy.
The ChevronTexaco proposal remains nothing more than a concept and a dangled $80 million check. Expect it to be fleshed out on Tuesday, barely in time for the City Council meeting.
Controversy centers on Point Molate's future
Point Molate's geography ranges from wooded hills to watery marsh; its historic structures include red brick turrets, Arts and Crafts bungalows and labyrinths of above-ground pipeline.
This 354-acre real estate curio is at the center of an escalating bidding war between ChevronTexaco and a high-stakes casino developer.
Can this former navy fuel depot and turn-of-the-last-century winery be all things to all people? City officials are treading a thin line: While they're hoping for an economic engine that could generate tax dollars, jobs and tourism, they are trying to appease open space advocates, who treasure the hilly point, where blue herons and monarch butterflies roost in eucalyptus trees.
The view from the hilltop winemaster's cottage spans San Francisco Bay and the blue hills of Marin County. But facing inland from the docks, one sees roads, contaminated pits, heavy machinery, and 72 buildings.
On the heels of a $50 million offer by Upstream Point Molate LLC, ChevronTexaco upped its bid from $34 million to $55 million -- with an additional $25 million spread out over as many years in maintenance costs. Upstream, working with Harrah's, plans a lavish hotel/casino complex.
The pivotal revenue question for the city extends beyond the sale price.
If Chevron's property is expanded to encompass Point Molate, its taxes would increase as well. But the hotel, casino and high-end shopping mall Upstream proposed could pump out a steady stream of sales taxes.
The struggle could end with a whimper if the city does not act on credible advice, said Supervisor John Gioia, who has been conferring with attorneys on the two other local casino proposals.
Not to mention the political and financial hurdles; the chances of any casino passing all the legal obstacles in its path are less than 50 percent, Gioia said.
Betting on the future
"Chevron offers money up front," Gioia said. "The casino offers more in the long run -- if it works out. ... Whatever they negotiate with Chevron is a sure thing. Whatever they negotiate with Upstream is a gamble."
Meanwhile, the oil giant is pouring money into a relations tsunami aimed at turning public opinion against a casino.
A coalition made up of ChevronTexaco, East Bay Regional Parks and the Audubon Society has paid a Houston-based phone bank to call virtually every telephone in West County.
ChevronTexaco also has taken out weekly full-page newspaper ads urging residents to call the City Council to protest building a casino at Point Molate. Billboards along Richmond Parkway plug an anti-casino Web site.
"Industry loves open space," said Rod Satre, who led Richmond's effort to plan use of the site. "In their ideal world, industry is out in the boonies, and people take a train to work, then return home to the city. Farmers, of course, see it differently."
Satre put in 15 years with ChevronTexaco before going into environmental consulting.
"It's going to be hard for ChevronTexaco to give in on this," he said.
Safety, privacy buffer
Certainly, Chevron has no use for what is left at Point Molate. The navy pulled out in 1995, leaving vehicles, boats, a crane, and a network of corroded pipeline. Equally useless are the two-million-gallon tanks; Chevron's hold 25 million gallons.
"They're not against a casino, and they're not against development. They're against people," said Don Gosney, chairman of the Restoration Advisory Board that shaped a re-use plan for the property.
"They want to push people as far away as possible. It is cheaper for them to buy the property than to pay off the lawsuits when -- and it's not if, it's when -- another accident takes place."
At the same time, Mike Davenport, security chief for BP and formerly of Chevron, has said the refinery's exit plan routes workers to Point Molate, attesting to its safety.
ChevronTexaco and some bidders never thought Richmond would take on Point Molate. After a 10-year struggle, the Navy had to threaten to sell the land directly to a third-party bidder before the city began to take the necessary steps for assuming ownership.
About two years ago, city officials put out a request for proposals from developers, drawing seven. The majority involved Indian gaming casinos, Satre said.
Chevron's tendered its current proposal as soon as Upstream Point Molate LLC's exclusive right to negotiate for it ended.
If the city enters negotiations with ChevronTexaco, that would stall any action until after the November election, when the makeup of the council may change. Four incumbents are vying with 11 challengers, many of whom oppose shoreline development.
Gosney says Chevron is pursuing an "out of sight, out of mind" strategy. It wants Point Molate as a buffer; it doesn't want its refinery operations to be on view for city residents or other passersby.
Chevron's manager for external affairs, Dean O'Hair, did not return calls Friday.
Pulling for a park
And if the city accepts Chevron's offer, the oil company will gain control of the entire peninsula. The bid includes Point San Pablo, which the city had not been planning to sell. Its worth has been pegged at $20 million.
Chevron also pitched the idea of creating a waterfront park if it buys the point, but neither the company nor the parks agency has any interest in maintaining the 39 historic structures that remain from Point Molate's pre-Prohibition Winehaven days. The company now maintains a park is the best use of Point Molate, which abuts the Bay Trail -- even though it once balked at the idea of having public open space at its border.
"Chevron had the opportunity to make a proposal for this (land)," Satre said. "They did not do that, and now they're upsetting the apple cart at the last minute."
One of the pollsters who have been calling area homes in recent weeks, struggled to pronounce "Contra Costa" and "Point Molate" when Gosney picked up his phone.
Among the pollster's questions: "People are saying if a casino moves into Point Molate, blue-collar people will be spending all their money on gambling, increasing joblessness, homelessness, suicide and crime. Would this make you more likely or less likely to support a casino?"
And, "Are you worried about proximity to a company like Chevron and the risk that would pose to people playing or staying overnight?"
Councilman Nat Bates has received similar calls.
"They would call every one or two minutes with a different person," Bates said in an e-mail. "When I questioned if they were being paid, they hung up."
Richmond city officials must be dizzy from the dollar signs dancing in their heads as a result of competing offers for either a casino or open space on 300 acres of waterfront real estate.
But leaders of the cash-strapped East Bay city had better tread carefully. If they're not wise, and there are ample examples that suggest they may not be, it could all turn out to be a dream.
Chevron, which operates a refinery within a stone's throw of the site at Point Molate, offered this week to buy the land from the city for $80 million and use the land as open space and a buffer zone between the refinery and the community.
Tuesday's offer trumped a $50 million pitch from Upstream Development, an Emeryville development firm working with casino industry giant Harrah's to build a waterfront Indian gaming casino at Point Molate in partnership with the Guidiville Band of Pomo Indians.
The City Council was compelled to suspend voting on the Upstream offer while it reviews the new proposal.
Under the Chevron deal, the city would receive a lump-sum payment of $55 million plus $1 million a year for the next 25 years. The casino deal, on the other hand, would provide the city with a one-time cash payment of $20 million, with the remaining $30 million paid out over 15 years.
Now the council must decide whether an airtight $80 million price will adequately compensate the city for a piece of land that could be developed and yield hundreds of millions of dollars in revenues to the city over the long run.
But there is one big catch with the casino offer: It would require state and federal approval, and given the current political climate, neither one of those appears easy.
Gov. Arnold Schwarzenegger has announced his intention to sign a gaming compact with another California tribe that would allow the construction of a casino with 2,500 slot machines in the adjacent city of San Pablo. The agreement includes a ban on slot machines within a 35-mile radius of Casino San Pablo, which includes Point Molate.
Even if that obstacle were cleared, sources close to the deal say it's doubtful that the tribe bucking for the Richmond casino would get the same act of Congress that the tribe running Casino San Pablo received under an amendment by Rep. George Miller, D-Martinez, that designated the 10-acre site an Indian reservation.
Sen. Dianne Feinstein, D-California, is pushing her own amendment that would eliminate the language Miller attached to an omnibus Indian rights bill in 2000. Feinstein's measure would jeopardize future casino deals involving landless Indian tribes and the savvy investors who partner with them.
Still, Richmond's good fortune is quite a turnabout from its recent run of bad luck and worse government. Six months ago, the city announced it would have to take emergency action to stem a $35 million shortfall.
Like many California cities, Richmond has seen its fiscal responsibilities to the state's public employee retirement system increase dramatically in recent years. At the same time, City Hall has become a revolving door for department heads who've been fired or left the city.
Council supporters of the Point Molate casino deal have urged colleagues to act quickly to approve the plan and gain state legislative approval while it still exists.
That is just about the worst advice anyone could give. This is not the time when the city should be rolling the dice on its financial future.
Council member Tom Butt has asked for more details on the Chevron offer and has asked the oil company to make commitments to develop and maintain a trail system, 35 acres of shoreline and open space at the site.
It's a good idea to press the company for the details of its offer, and city officials should use the casino offer as a lever to get the best deal.
City officials are faced with a proverbial dilemma: Take the bird in the hand, or go hunting for the two in the bush. The most important thing for council members to keep in mind is their fiduciary responsibility to the city.
The Point Molate casino deal is a risky venture with political potholes at every level of the state and federal approval process. Jim Levine, a spokesman for Upstream Development, said casino developers were not in a "bidding war'' with Chevron over the site. He said their offer is superior, especially in the long run.
I don't know about that. Chevron has upped the ante and faces few, if any, obstacles to starting an environmental cleanup and upgrade of the area. And let's face it, $55 million up front is nothing to ignore.
The casino proposals, while possibly more lucrative, could be caught up in a political battle for years, with no guarantees.
City officials are entrusted with public tax dollars and are expected to make sound financial decisions that are not speculative and risky.
If that is the criteria for elected officials are supposed to use, I'd have to say the oil company and the casino developer are in competition, and Chevron has just raised the stakes in this hand.
E-mail Chip Johnson at email@example.com or write to him at 483 Ninth St., Suite 100, Oakland, CA 94607.
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Council Ponders Chevron’s Pt. Molate Offer: By RICHARD BRENNEMAN
Richmond City Council members tabled Tuesday night’s planned vote on a casino complex development pact for Point Molate after ChevronTexaco offered a lucrative last-minute alternative.
The oil company is offering a total of $80 million: $55 million payable on execution of a deed to the city-owned property at Point Molate and Point San Pablo and a million dollars a year for 25 years.
The annual payments would be earmarked for development and maintenance of public improvements on the site.
“We have provided the city with both a serious and a generous offer,” said Dean O’Hair, spokesperson for the oil company’s Richmond refinery, situated just across the ridgeline from the Molate site.
The only reason the oil company was able to make the offer Tuesday was because the exclusive negotiations pact signed by the city with Berkeley developer James D. Levine’s Upstream Point Molate LLC, which proposed building a casino on the site, had expired at midnight Monday.
Levine and others involved in the Upstream project met Wednesday in Sacramento with Gov. Arnold Schwarzenegger’s legal staff for an informational meeting.
Chevron had floated an earlier offer on Aug. 13, when Richmond was legally barred from receiving it. Chevron then offered a $5 million down payment followed by another $29 million in payments spread out over two decades. Levine said his deal would give the city over $400 million in the same period.
Levine offered a $20 million down payment, with additional $2 million a year for the following 15 years.
In addition, the Guidiville Rancheria band of Pomo tribespeople, who would own the site as a reservation, has agreed to compensate the city for required city services. They would pay $8 million a year for the first eight years after gambling operations commence and $10 million annually thereafter.
The tribe would also pay additional compensatory fees to cover lost sales and hotel occupancy taxes.
But the path to a tribal casino is strewn with potential stumbling blocks, requiring authorizations at the federal, state, and local levels.
Then there’s Gov. Schwarzenegger’s stalled pact that would grant Casino San Pablo exclusive slot machine rights within a 35-miles radius. If approved by legislators, the plans for a half-dozen or so other Bay Area casinos, including Point Molate, would be derailed instantly.
Thus, the promise of an $80 million bird in the hand has to look tempting to a city government struggling with more than $30 million in debt. City councilmembers have laid off large numbers of municipal workers, drastically reduced municipal services and privatized the city’s water and sewer systems.
Vince Sollitto, deputy press secretary for the governor, said the meeting was requested by Upstream and the governor’s office accepted “becaus e the administration always attempts to learn the plans of sovereign Indian nations.
“It is my understanding that the tribe does not have land in trust and therefore they are not in a position to pursue a gaming compact at this time,” he said.
The Upstream pact was scheduled for signing when the city council met Monday evening, and a sizable contingent of would-be speakers had planned to address the council.
But right after Mayor Irma Anderson had gaveled the council to order, Assistant City Manager Richard McCoy, the city’s point man for casino negotiations, asked that the item be pulled from the agenda “to allow the council to have additional information from the proposal just received from Chevron.
“They have indicated they would be receptive to a n agreement,” he said. “I recommend one week to negotiate a contract with them,” with the new agreement to be presented alongside the Upstream proposal at next week’s council meeting.
Announcement of the offer drew a few gasps from the audience, but as t he official proposed, the council disposed, shelving the vote and prompting an exodus of would-be speakers.
The addition of Point San Pablo would give the oil firm control of the entire western side of the Point San Pablo Peninsula, though the site may b e a key sticking point in negotiations with the city.
The city-owned seven and a half acre terminal at the tip of the peninsula lost its two major tenants in the last decade.
“The inclusion of Point San Pablo along with our own Point Lorean property ensures that we’ll have public park and open space all the way to the end of the peninsula,” said O’Hair.
But McCoy said Thursday that no deal could be signed that included Point San Pablo. During a meeting between Chevron representatives, McCoy, interim City Attorney Everett Jenkins, and city outside counsel John Knox, “We advised them that inclusion of the point was unacceptable.”
Because the land was city-owned, it would have to first be offered to other government agencies, McCoy said.
“That was the same point Chevron made when they tried to block the sale of Point Molate, so it’s kind of ironic,” he said.
The city also advised Chevron that any sale of Point Molate would have to include a guarantee that Chevron would contain provisions that allowed some development that would create jobs and boost the local economy—mandates of the Base Closure Act under which the city acquired the former Navy property, McCoy said.
Councilmember Tom Butt also opposes the Point San Pablo sale, a sentiment apparently s hared by others in municipal government.
Chevron has until the close of business Monday to present a formal offer, and their legal staff was sorting through records in City Hall Thursday to aid in their effort, McCoy said.
The proposal will go to the city council for review during a closed-door executive session prior to next Tuesday evening’s public meeting when the council will have the option of accepted either of the two offers or rejecting both.
O’Hair said the oil company’s cash would give the city up front funds for infrastructure improvements and leave Richmond with cash on hand.
Councilmember Butt’s accusation
The most dramatic part of Tuesday council meeting came during a heated discussion of a controversial e-mail from member Butt.
In a scathing message dispatched to constituents on his Tom Butt E-Forum, the councilmember blasted acting City Attorney Everett Jenkins and his assistant Bruce Soublett for garnishing his “meager City Council wages” to recoup a 9 year old civil judgment resulting from a Butt Public Records Act.
Butt, not yet a councilmember at the time, had sued the city to force disclosure of Chevron’s “unique exemption” from the city Utility User Tax.
Butt wrote in an earlier e-mail on April 2 that he won most of records h e sought the suit. The judgment stemmed from a failed bid to recoup legal costs from the city.
Butt’s Sept. 27 e-mail declared that “the city attorney’s office is just as dysfunctional as the rest of City Hall” with “a huge backlog of uncollected judgments going back a decade or more that they are too lazy or too incompetent to collect. . .It’s interesting that the only one they have gotten around to acting on is mine.”
The missive declared that “Soublett was a puzzling choice to play the hatchet man. H e has a troubling reputation for seldom showing up for work and spending long lunch hours with Human Resources Director Cedric Williams at the Hotel Mac paid for by taxpayers through City credit cards. Based on past credit card receipts submitted by Williams, Butt’s monthly payments will not even support Williams’ and Soublet’s gourmet dining style.”
During the Tuesday council session, Jenkins fired back. “I object to the criticism. . .that e-mail is not accurate and not appropriate according to the council’s own code of conduct.”
Councilmember Maria Viramontes called the missive “an outrage, an absolute outrage Tom. You’ve totally, utterly crossed the line.”