Bait and switch

The draft financing plan for Lennar's southeast development keeps getting sweeter for the troubled company


The San Francisco Redevelopment Agency has endorsed a draft financing plan for Lennar's massive proposed Hunters Point Shipyard/Candlestick Point development project, one that increases the company's housing entitlements and profits.

The agency's endorsement came during a hastily convened Oct. 27 special meeting, raising the eyebrows of Lennar's critics. So did the details of the agency's non-binding financial agreement with Lennar, which two citizens' committees in the Bayview–Hunters Point community had jointly endorsed a week earlier.

Bayview–Hunters Point resident Francisco Da Costa claimed that "there was almost no public notice of the plan," while Leon Muhammad, who sits on the Bayview–Hunters Point Project Area Committee, fretted that some committee members have business ties and connections with Lennar.

"A group that supposedly represents the interests of the community needs to have transparency and full disclosure," stated Nation of Islam Rev. Christopher Muhammad, who has been a staunch critic of Lennar ever since the developer failed to properly monitor and control asbestos adjacent to his group's K-12 University of Islam school.

"Lennar never intended to do anything with this land but bank it," Muhammad opined about the public land that Lennar is getting for free. "And now they are hoping to squeeze more profit out of the deal, so they can hedge to where they can make it more attractive to sell."

Alicia Schwartz of People Organized to Win Employment Rights (POWER) observed that the deal is likely being driven by Mayor Gavin Newsom's unrequited desire to see the Olympics come to San Francisco — a dream that was squashed two years ago, Schwartz recalls, "amid a hoopla around toxicity at the shipyard."

Sup. Chris Daly, who has argued that Lennar's recent $500,000 settlement with the Bay Area Air Quality Management District over Lennar's asbestos violations was "too small and poorly handled," said he wasn't surprised by the latest deal: "That Lennar wants to pull a fast one is not news."

But with the financing deal likely headed for the full Board of Supervisors this month, Lennar's critics are worried that the city is being rushed into a deal that has already changed since voters approved Proposition G in June, supporting the vague outlines of Lennar's project.

They note that while Prop. G specified that the project would create "between 8,500 and 10,000 homes" in the depressed southeast sector, the financing deal that Redevelopment endorsed last week specifies 10,500 homes —and a demand that the agency and the city cooperate to help increase Lennar's annual rate of return.

Stephen Maduli-Williams, the agency's deputy executive director, told the Guardian that it was always the agency's intention to finalize Lennar's draft financing plan by the end of 2008. Asked if Lennar increased the number of proposed housing units by reducing unit size or increasing building height, Maduli-Williams told us, "They did it by finding a way to squeeze more units into the existing space. They redesigned one of the roads."

"Things are probably going to change again in the next year or two," Maduli-Williams said. "This is a living document. And overall, it is a really nice real estate deal."

Yet critics of Lennar are openly wondering whether it's nice for the beleaguered company, which had rapidly plummeting stock value even before the recent real estate meltdown, or nice for the city. Maduli-Williams said the deal works for all parties.

"We have strong financial partners," he said. "Any investors that look at the deal know that is it really solid. It includes mostly $600,000 homes, which are cheap by San Francisco standards.