It is not surprising that following my articles which were recently published which questioned the viability of Lennar-Urban and their subsidiary Five Point Holdings Inc. to finance the Concord Naval Weapons Station (CNWS) Reuse Project, a wall of silence prevailed.
No one involved in local government seems to be willing to admit the distinct possibility that they have been dealt a losing hand selecting Lennar.
At the City Council meeting on September 13, 2016, not a word was mentioned about the serious charges brought forth about Lennar and their shell companies that might question their ability to do the job necessary to make the promises in the glossy four color brochure sent to every Concord resident come to fruition. Instead, the City Council spent a considerable amount of time discussing the composition of the largely ceremonial Citizens Advisory Council (CAC) that will oversee the new development.
For them, the fitness of Lennar to be their partner working together on the CNWS was not an issue. Since then a couple events have transpired concerning two of the chief components of my previous criticisms of the Master Developer selection process by the City of Concord of some note.
The “poor” stress rating for Lennar issued on September 2nd Dunn & Bradstreet (D & B) which stated that the company could be a candidate for bankruptcy in the coming year. Because of the magnitude of this dire prediction, apparently there was a lot of pressure placed upon D & B to review their previous findings. The results were published by the credit rating service on September 13th.
At that time D & B confirmed their previous findings that Lennar currently has an abundance of financial problems. If such a conclusion does not raise a red flag for the Council, City Manager, and staff, what will be needed for them to reconsider tying the knot with Lennar?
Considering the recently-obtained information, it would be a dereliction of duty for City management not to demand audited financial information immediately from Lennar for Five Point Holdings Inc. And why would the City not want this information?
Of equal concern is an article published in the San Fernando Valley News on September 14th which read in part:
[CBD] – In response to a settlement with the Center for Biological Diversity to speed protections for 757 species, the U.S. Fish and Wildlife Service proposed today to protect the San Fernando Valley Spine Flower as a threatened species under the Endangered Species Act. There are only two known populations of the flower, which is so rare it was once thought to be extinct.
The San Fernando Valley spine flower is an annual plant in the buckwheat family that grows low to the ground with small, white flowers. Historically it was found in washes and sandy areas in only 10 locations in the foothills of Los Angeles and Orange counties.
All 10 of these locations were lost to development, and scientists thought the species was extinct from 1929 until a population was discovered in 1999 in Ventura County and the Service placed the flower on the candidate waiting list for protection. In 2000 an additional population of the flower was discovered near Santa Clarita in Los Angeles County, within the footprint of the proposed Newhall Ranch Development Project.
The Ventura County population is protected from development because it occurs in a designated open space preserve. The population in the footprint of the Newhall Ranch development has been proposed for management under a conservation plan developed by the company, under the state Endangered Species Act, that allowed the company to remove part of the population in exchange for creating preserves to protect about 75 percent of the plants.
Protection under the federal Endangered Species Act will require the company and state to work with the Service to develop an expanded and supplemented conservation strategy.
What this all means is that my previous comment that the shovels Lennar had in storage for ground breaking to occur on their Newhall Ranch development would be getting rusty waiting for the ceremony to occur, might be a bit of an understatement.
With the spine flower being designated for protection under the Federal Endangered Species Act, Lennar’s Kofi Bonner’s prediction of getting the Newhall ranch development back on track within a couple years does not seem to be even remotely realistic. Along with the California Supreme court’s decision in November 2015 to shelve the Newhall Ranch Environmental Impact Report (EIR), Five Point’s current principal asset is for all practical purposes DOA.
Coupled with the liabilities of Five Point is the debt held by the Third Ave Fund left over from the bankruptcy of Lennar’s LandSource subsidiary back in 2008. As such, why in the world would Concord want to be connected with them? It would appear them getting involved Five Point would be the equivalent of hiring the Captain of the Titanic to be your safety consultant.
This whole deal of Concord selecting Lennar has made no sense from the offset. By the city in effect running Lennar’s competitor Catellus Development out of town, the CNWS Reuse Project is in the hands of an inferior vendor with no solution in sight.
What has transpired in the last couple days with D & B sticking with their decision in down grading Lennar and the spine flower being placed on the endangered species list, ought to be a wake-up call for city government in Concord who is betting their future on a losing hand with few alternatives available.
Perhaps they should listen to Kenny Roger’s advice of “knowing when to hold em’, knowing when to fold em’, and when to walk away.”
Are these people willing to stake their futures on the ability of Lennar to be there so called partner and deliver the project the community yearns for?
We shall see.