Community awaits benefits as Lennar finally breaks ground in Hunters Point

Pub date July 1, 2013
SectionPolitics Blog

More than five years after San Francisco voters approved a massive redevelopment plan for the Hunters Point Shipyard and much the southeast part of the city — giving Lennar Corp., the country’s biggest home builder, the largest tracts of open land in the city — that project is now finally, slowly, getting underway.

But activists who have been following the project say the city is getting played by Lennar because of an agreement that lacks performance standards and has allowed the company to drag its feet to maximize its profits despite an affordable housing crisis in the city. And some community members say Lennar hasn’t lived up to promises of jobs and other benefits.

“The modus operandi of Lennar is bait and switch and delay,” Saul Bloom of Arc Ecology, who consulted on this development deal for the Redevelopment Agency before his contract was dropped in 2010 after publicly raising concerns, told us. Bloom and his firm have decades of experience analyzing complex development deals, and he has been tracking Lennar’s pattern of behavior around the country. 

Bloom said that when Lennar cut its initial deals with then-Mayor Willie Brown and other local officials in 1997, the company said it needed no external financing and that it would build housing affordable to Hunters Point residents, including rentals. Since then, the deal has gotten steadily better for the company and worse for San Francisco, and the groundbreaking date has been repeatedly pushed back.

“The city was not smart enough to build in liquidated damage and a performance schedule and that kind of thing,” Bloom said. “Lennar tells them what they want and the city tends to roll over, and there’s been no pushback.”

When Lennar ended up needing financing after all, the project stood by while a $1.7 billion deal with the China Development Bank Corp. was structured in 2012. Despite Mayor Lee personally participating in the quest for capital in China alongside the developer, the deal quickly collapsed. It is yet to be seen how Lennar will satisfy its commitments in the Bayview and at its separate Treasure Island site since the plug was pulled on the loan deal.

Lennar Urban Director of Community Affairs Cheryl Smith referred our questions to communications consultant David Satterfield of G.F. Bunting, who said that he passed them on to Lennar officials and, “They don’t have anything to say.” The Mayor’s Office also has not responded to our request for comment on the issues that Bloom is raising.

With a weak agreement and a lack of political will to push the company to expedite construction of affordable housing, Bloom said Lennar has simply waited for housing prices to increase and for other developers to lead the way in gentrifying Bayview Hunters Point before moving forward on the nearly 1,400 acres of land it controls in San Francisco — an area equivalent in size to the Presidio.

“Their incentive is to wait for the property values to rise…Lennar understands how much this land is worth,” Bloom said. “What Lennar has done is crafted a strategically smart box that the city is in.”

Yet after years of delays, the project did officially get underway last week (Wed/27), with a well-attended hilltop ceremony.  Mayor Ed Lee, former Mayor Willie Brown, District 10 Sup. Malia Cohen, and Cohen’s predecessor, Sophie Maxwell, joined Lennar Urban President Kofi Bonner to speak at the long-anticipated event.

Lennar’s local subsidiary, Lennar Urban, unveiled a master plan to convert the land to a brand new mixed-use community. At the ceremony, Brown remarked that “there is no other piece of soil that is as lucrative” as the Bayview Hunters Point peninsula and that it promises to be the “ideal place to live.”

The Hunters Point Shipyard, occupies roughly 500 acres of southeastern San Francisco and when taken together with neighboring Candlestick Point and parts of Bayview, it is the largest single tract of land in San Francisco designated for redevelopment. The other big redevelopment site in the city, Treasure Island, is also controlled by Lennar and its partners.

A former naval base, the shipyard was transferred to the city in 2004. Most naval operations there had ceased in 1974 and commercial uses declined in the 20 years that followed, steadily displacing black workers employed on the premises.

Affordable housing and job creation for neighborhood locals were two major stipulations in the ballot measure San Francisco voters approved in 2008. The “Bayview Jobs, Parks, and Housing Initiative,” however, entrusted that goal fulfillment almost wholly to Lennar and Bloom now questions whether that trust was well placed.

Phase 1 of the project will consist of construction of 1,400 new residential units in the shipyard, approximately 30 percent of which will one day be affordable housing. But Bloom said that Lennar has delayed construction of the affordable units until after much of the more lucrative market rate housing is done.

At the event, Bonner enthusiastically outlined the goal of having 800 of 1,100 market rate homes in this first phase constructed and occupied within 36 months time and Mayor Lee opened his remarks with the celebratory chant “Welcome to The Bayview! We need housing for everybody!”

But Bloom said that the city is rapidly gentrifying as Lennar waits to meet its affordable housing obligations, noting that the city was 11 percent African-American when Lennar cuts its first deal to develop Hunters Point in 1997, and that population is now 4 percent and falling.

Reconstruction of the Alice Griffith Public Housing Project will help Lennar to satisfy its affordable housing quota. Announcements of these plans garnered large applause from community activists in attendance, though they are slated for the project’s second phase, which likely won’t begin for years.

“They could build all of Alice Griffith on Parcel A, but they’re not going to do it,” Bloom said. “When is this community going to get what was promised to them?”

A group of picketers from Aboriginal Blackman United (ABU) was contained by SFPD at the bottom of the hill during the afternoon’s proceedings. As black town cars chauffeured officials to the event site, the protesters’ cries were drowned out by the music of Miles Davis playing from stage speakers.

ABU was protesting non-inclusive hiring practices at the shipyard site. Members, who were outnumbered by police 2-to-1, argued that they were being wrongfully barred access to the ceremony above and by the event’s conclusion, they had been relocated from the main intersection at Innes Avenue and Donahue Street to a side access road.

Job creation was trumpeted generally in the afternoon’s speeches, with Sup. Cohen applauding the public-private partnership between Lennar and Bayview organizations and Mayor Lee praising the project for “honoring labor and honoring local residents.” However, ABU’s founder and president, James Richards, said “we’re not getting the jobs or the contracts that the community people are supposed to get and that’s why we’re out here.”

Though ABU wants to see local residents of color placed in many of the new positions opening up, workers in the community have only been promised good faith consideration rather than actual job guarantees by the San Francisco Building and Construction Trades Council, which is in charge of staffing the project. Attempts to reach Michael Theriault, Secretary-General of the Council, were unsuccessful.

Bloom said Lennar has insulated itself from community criticism with an agreement that promises money to community groups that refrain from publicly criticizing Lennar or the project. He said Lennar has followed a similar pattern here as it has elsewhere, using its clout and political contacts to get lucrative redevelopment deals, then using delay and bait-and-switch tactics to make those projects more lucrative. He cited Lennar’s Mare Island project, which is now in bankruptcy, and its massive Newhall Ranch project north of Los Angeles.

In that latter deal, the California Public Employees’ Retirement System lost the $970 million it paid Lennar in 2007 for part of its stake in Newhall Land Development Co., which went bankrupt when the housing market crashed the next year. But Lennar built in an option to reclaim the shares, which a bankruptcy judge allowed Lennar to do in 2009 for just $138 million.

Bloom said that deal is typical behavior for a manipulative company that has a history of acting contrary to the public interest, but in which local political officials have given tremendous control over the city’s future.

“We remain skeptical about their commitment to getting it done,” Bloom said of the affordable housing that Lennar has promised. “What we’d like to see is some real action on the promises that were made to the public.”