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Why Are the Butts Confused?

Updated: Jun 27, 2022

Photo credit Jack Scheinman

What is curious to many followers of the Point Molate saga is the role of Tom Butt and his sons Daniel and Andrew, all of them boosters of selling Point Molate to a SunCal affiliate (a shell corporation - no assets) with no reliable financial protections for the City of Richmond.

They seem intent to stir up alarm and panic about a fiscally smart decision the City Council made - the decision to turn down the sale of Point Molate to SunCal and thereby NOT expose the City's finances to hundreds of millions of dollars in losses. If the Butts cared about the well being of Richmond, they should be applauding the Council decision.

The three Butts also act as if they are shocked that after May 21, 2022, the City will be obliged to sell Point Molate for $400 to the former would-be casino developers, Upstream Inc. and the Guideville Rancheria (a Band of the Pomo Tribe).

Why the surprise when this is exactly the deal that Tom Butt worked out and that Andrew and Daniel supported. The potential sale for $400 was an integral part of the terms of the "secret settlement" that Tom Butt orchestrated when he muscled through a very poor settlement of the lawsuit filed by the casino developers against Richmond. The casino developers had sued Richmond seeking their money back after the City did not approve the casino developers' proposed project. Tom Butt used the specter of the sale for $400 over and over as he bullied and threatened anyone in his way in pushing the SunCal development deal through.

Why the feigned surprise and alarm that the City Council would not endanger the city's finances to back the project? The Butts seem perfectly willing to expose the City of Richmond to bankruptcy, pursuing this sale of Point Molate to Tom Butt's hand-picked developer SunCal. The Butts insist that the City put its finances behind the deeply flawed project even now after it has been exposed as a potentially disastrous deal for Richmond.

The City Attorney reviewed the financing package that was submitted by the developer (the SunCal empty shell, "Winehaven Legacy, LLC") in its effort to get the City's financial backing for a "Community Facilities District (CFD)" (basically a city guarantee for the costs of the infrastructure). But there were so many faulty assumptions, missing pieces of information, and falsehoods that the package made no financial sense as a proposal. The examination of the underlying math showed that the city financing that the developer sought would not be legal under state law because it exceeded the amount of debt per housing unit allowable. In addition, the City staff and the City Council saw that the project could cost the City hundreds of millions of dollars in losses.

Despite the continued efforts of the City Attorney, and the outside specialists and attorneys the City hired to address the problems with the missing requirements of its package, SunCal repeatedly failed to provide the numbers, data and documentation required under the Development Agreement and Disposition Development Agreement. From all accounts, the City Attorney made a mountainous effort to get the process of reviewing the proposal done, and to allow the sale to go through, but was simply thwarted by the mis-information, dis-information and missing information from SunCal and its affiliates.

This decision not to sell to SunCal is not about what other project or use people may want to see, or about what might be a better use for the property. It is about how bad the SunCal proposal was. And it was about how SunCal itself did not move forward to make the purchase in time due to the enormous risks of the project.

In plain words, when someone tries to sell the City a terrible deal, the City Council's responsibility is to say no.

The demand of Mayor Butt that the City Council have an alternative all worked out before saying no to a deal that could bankrupt the City is not only wrong-headed but would require a whole other planning process when the city is already under a contract with a developer. Simply put, the City does not have to have alternatives worked out before saying no to a very bad deal.

As to the rights the former casino developers would get for the $400 - the rights and obligations they get are to market the property for five years, to find a buyer who can pay a price agreeable to the City, for a project agreeable to the City.

If the former casino developers try to sell the City on a project that would risk bankruptcy as SunCal did, the City can and presumably will say no.

Everyone will have time to see what the proposed sale may be, and to see who the buyer may be. It is good to keep in mind that Upstream and the Guidiville Tribe will face the same quandary that SunCal faced - to be approved, a project must pencil out financially and have bona fide buyers behind it. The Butts’ house of cards is tumbling down.

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