Lobbying Congress For Help

Absolutely Classic:

U.S. Rep. Zoe Lofgren, D-San Jose, sent letters to Kenneth Lewis, president of the Bank of America, and John Stumpf, president of Wells Fargo, dated May 7, asking them to explain why they refused to give Pau and partner RREEF a $391 million construction loan.

“Although I understand and respect your position as private institutions, this decision will have a serious, negative public impact on the city and neighboring areas,” Lofgren wrote. “The loss of the Town Center project will be a considerable economic setback to the City of Sunnyvale and the Bay Area region.”

Will somebody please explain why the banks are not funding the balance of the money required to get the project complete? It sounds like they are within their right, otherwise we would be reading about a lawsuit rather than this letter.

Aside from its funding issues, another problem the developer is likely facing is that the leases they have signed for the retail portion of the project likely have “drop dead” dates giving the retailers the right to kill the deal if the project is not delivered on time. This would open the door up to renegotiations if and once this project gets back online with this developer. There might also be some co-tenancy clauses, and other goodies in leases which put this project under further pressure stilll.

My personal take is that the developers took a big risk taking on such a project at a time when clearly the economic tide was turning. The developers made money on the way up, and now stand to lose on the way down. They are doing what they can to make sure that doesn’t happen, and that is completely acceptable and understandable, but sometimes you gotta take your lumps. And Sunnyvale Town Center has always been that.

If the taxpayer’s involvement is limited to having a congresswomen write a letter, that is also acceptable. But let’s keep it at that.

Balance of the article at the Business Journal

Similar Posts:

• Signs of Life at Moffett Towers in Sunnyvale
• NAILED: Sunnyvale Town Center
• Sunnyvale City Center In Trouble – Developer Wants To Convert to Public-Private Partnership!
• Citibank Forced to Resume Lending on Failed Mall Project
• RREEF, RREEF, and RREEF