COMMERCIAL
City documents shine a little more light on the failed negotiations between the city of Tustin and Tustin Legacy Community Partners LLC to salvage redevelopment plans for the city’s former Marine helicopter base.
In last week’s Business Journal, I wrote on the breakdown of development plans for Tustin Legacy, the 820-acre commercial and housing project expected to take up about half of the 1,500-acre former Marine base.
Officials for Tustin Legacy Community Partners—a venture including Aliso Viejo’s Shea Properties and Shea Homes, both part of Walnut’s J.F. Shea Co.—said they were planning to pull out of the stalled megaproject by this summer.
That decision wasn’t news to city officials, who noted that the partnership had been out of compliance with its development agreement for some time.
Legacy Park initially called for 2,100 homes and 6.7 million square feet of offices, restaurants, shops and hotels. The city appears to have been willing to tweak those plans to help move the project along, according to a letter sent to Shea in September, warning of a potential default on the project.
The city contends that it offered “considerable revenue and cash flow enhancements” to the development partnership, according to the letter, written by Tustin City Manager William Huston.
“While certain enhancements would significantly assist in cash flow, other enhancements could have anywhere between a $140 million to $352 million positive revenue impact on the project,” Huston’s letter said.
The city said it offered to increase density bonuses for part of the project where homes were planned, allowing another 400 homes and apartments to be built, while also cutting back on affordable housing requirements for the area.
Tustin also said it offered to cut back on the amount of retail space and parking lots planned for the development.
The city, in its letter to Shea, said it
would consider issuing bonds to assist the developer in partially financing roads and sewer construction and city services for the project.
Completion dates for the first two phases of infrastructure construction also were pushed back by four years each, to September 2013 and July 2015, according to the city’s letter.
Those proposed concessions don’t appear to have been enough for Shea, which maintains that the city’s timetables for construction, even if pushed back, were well ahead of when a likely turnaround in the local real estate market would occur.
The developer said it valued the city’s incentives closer to $70 million and noted that none of those incentives were in the form of cash.
Shea officials said the original development agreement called for the existing partnership to spend nearly $500 million on roads, grading and sewers.
Shea officials also said that they still were obligated to make more than $236 million in land payments for the land at Tustin Legacy, due in September 2013 and July 2015 under the city’s proposed revisions to the development agreement.
According to last year’s forbearance agreement, the county assessor put a $43 million value on the property. The developers appealed that value, believing it was overstated.
The assessor’s value works out to a price of about $52,000 for each of the 820 acres of Tustin Legacy, or about $78,000 per acre for the roughly 550 acres of land on the site that’s developable.
Fight Night
After making it through another year of pain, Orange County’s commercial real estate industry will get to see some other people take it on the chin next week, in the area’s biggest annual networking event.
The Southern California chapter of the commercial real estate development group NAIOP is gearing up for its annual “Night at the Fights” event, being held May 13 at the Hyatt Regency Irvine. Tickets are $600 per person.
In addition to two state championship boxing matches that hopefully won’t involve members of the press, the event also includes a mixed martial arts state championship fight.
The entertainment includes dinner, cocktails, a cigar bar and a “Roaring 20s” after party, according to NAIOP.
RESIDENTIAL
Irvine’s Whittlesey Doyle, a land brokerage and advisory firm, said Greg Sullivan has joined the company as a senior land adviser. He’ll be focused primarily on the OC market.
Sullivan has worked on more than $1 billion in sales of commercial and residential properties, including during stints at CB Richard Ellis Group Inc. and Arden Realty Inc.
Most recently, he cofounded a Newport Beach boutique real estate brokerage called Urban Infill Properties Inc., which focused on infill redevelopment opportunities.
