April 28th, 2010

Two units of J.F. Shea Co. say they want to back out of a deal to develop an 820-acre parcel at the former Tustin Marine air base, saying that falling land values make it impossible to build homes, shops, offices and a hotel in today’s economy.

Shea maintains that land once valued at $236 million is now valued near zero, one city official said.

Tustin Legacy Community Partners (TLCP), consisting of Shea Properties and Shea Homes, agreed in 2006 to pay $236 million for the project, plus install infrastructure such as roads, sewer and water systems and parks in exchange for 160 developable acres in the heart of Tustin.

But Shea Properties President Colm Macken said that home and commercial values have sunk so low that it’s not worth going forward with the project unless the city of Tustin makes concessions it’s not willing to make.

For one thing, the city wants Shea to install $250 million worth of infrastructure by 2013. Shea believes, however, that property values won’t be back to 2006 levels until 2016, he said.

Said Macken:

“Unfortunately at this time, the TLCP can’t deliver what the city wants, which is a lot of infrastructure in advance of the market. I think it’s fair to say the project is a casualty of the economy.”


The development is the biggest project at the 1,600-acre air base. Plans included 2,105 housing units, up to 6.7 million square feet of office, retail and inudstrial space and a 500-room hotel. Development is to be built around a two-mile-long linear park.

The first blow to the project came in April 2007 when an earlier partner, Centex Corp., backed out of the partnership.

Macken declined to comment on a report by Martin Brower’s Orange County Report, a monthly real estate newsletter, that Centex wrote off nearly $20 million when it quit the project and that Shea stands to lose about $85 million.

In December, the Orange County Assessor’s Office reported that the assessed value of the project’s land fell by $251 million to $85 million — in part because the original assessment included undevelopable land, but also because of falling values.

Shea’s position is that the only way it could proceed is if the land — once valued at $236 million — now be valued near zero, according to Tustin Assistant City Manager Christine Shingleton.

Shingleton said:

“I don’t think under any circumstance we could put ourselves in that position or in any way value the property at or near zero. … They expected the city pretty much to subsidize the infrastructure and give them the land. … Our city sees this property as an asset.”

Shingleton said negotiations to get the stalled development back on track have been going on for the past 18 months. Shea “defaulted” on many of its obligations, she said, including requirements to install infrastructure by 2009, develop plans and make a $152 million land payment by September.

The city extended deadlines for Shea to meet some obligations under a “forebearance” agreement, since expired, and is now seeking to get infrastructure completed by 2013.

Both Macken and Shingleton said they are seeking to end the firm’s development agreement without litigation.

Shingleton declined to discuss what options the city is likely to pursue if Shea withdraws as “master developer.” But she said all options are possible, including hiring a new master developer, breaking the project up into smaller developments with multiple developers or the city acting as master developer.

The City Council likely will be asked to vote on Shea’s request to withdraw in 30 to 45 days, Shingleton said.

http://lansner.freedomblogging.com/2010/04/28/tustin-base-project-called-worthless/63835/

November, 2009

Legacy Park Developer Pushes To Rework Agreement with Tustin.

The developer of Tustin's Legacy Park project hopes to rework terms with city officials anxious to see construction resume at the massive project.

For now, Aliso Viejo-based Shea Properties has entered into a pact with the city to head off a foreclosure threat by Tustin - a tactical move designed to spur a resumption of development at the project.

Executives from Shea Properties say they remain committed to finishing the 820-acre redevelopment at the city's former Marine base with homes, shops, offices and hotels.

But they say they need more time amid the worst real estate downturn in the county since the early 1990s.

"We are heavily invested in the project, (but) the facts are that the pace of development at Tustin will have to follow the pace of growth of Orange County's economy," said CoIm Macken, chief executive for Shea Properties.

Shea Properties and Shea Homes, both part of Walnut's J.F. Shea Co., are handling development of Legacy Park with the city of Tustin.

A lack of work on the former base amid the real estate downturn has prompted speculation in recent weeks that the entire project could be in trouble.

Dallas-based homebuilder Centex Corp., An original partner in the Legacy Park project pulled out in 2007.

Officials from the city and Shea Properties dismissed talk that Shea plans to walk away from the megaproject. They said talks are under way about a possible reworking of a development agreement for the project.

More Time Sought

Changes to the original plan are needed to reflect the reality of the current market, Macken said.

Given the current state of the local economy, it could take at least three or four years before the commercial real estate market here turns around, he said.

The company said it is in talks with Tustin over the structure of its development agreement for Legacy Park, first signed in 2006. Macken declined to specify what changes could be sought.

Industry sources expect Shea to seek a new plan similar to what neighboring Irvine approved as an amended development and implementation plan for the former El Toro Marine base, which gave the developer there a little breathing room.

Miami-based Heritage Fields El Toro LLC committed to a plan that will give the city anoth- I er 130 acres of land and ^ will see $100 million I spent at the site of Irvine's Great Park during the next five years, while the developers of the 3,700-acre project wait for signs of a market rebound.

Whether Tustin would be amenable to similar changes remains to be seen.

"The city's position is that this is a (great) asset, and the city doesn't want to see those assets devalued," said Christine Shingleton, Tustin 's assistant city manager.

Legacy Park - part of the 1,580-acre redevelopment of the former Marine helicopter base - calls for 2,105 homes and 6.7 million square feet of commercial space, along with about 170 acres of parks and open space.

In early 2008, it was hoped that some construction could begin this year. But that was before the commercial real estate market went into a freefall. Those plans have been indefinitely delayed.

That lack of activity, particularly for roads and other early work, has caused some concern within the city of Tustin. Officials there made moves this summer to try to force Shea Properties to move ahead on the development.

Notices of default items were filed against the partnership overseeing Legacy Park, according to city officials.

City officials said Tustin recently entered into a forbearance agreement with the Legacy Park partnership, following the notices of default.

A forbearance agreement typically is used by a lender to postpone a foreclosure to give a borrower more time to make up an overdue payment, or, in Shea's case, meet terms under the development agreement.

The forbearance agreement runs through the end of September, city officials said.

Specifics of the agreement weren't disclosed. Most of the issues tied to the default items are performance-related, rather than financial issues, according to Shingleton.

Hotel Plans

The last big news coming from Legacy Park was in early 2008, when development plans were announced for a trio of hotels, totaling 480 rooms.

Irvine-based R. D. Olson Development signed on to build and own the three hotels, which included plans for OC 's first Kimpton boutique hotel, as well as a Hilton Garden Inn and a Home wood Suites by Hilton Hospitality Inc.

Robert Olson, chief executive of the hotel developer, said last week that he expects the project to move ahead.

"I still like the market, and I still like Shea's plan," Olson said.

The original plan for the hotels was for construction to break ground this year. The project was set to be completed by the end of 2010.

Now Olson said he hopes the project could be done by 2012.

"It's going to be delayed. The question is what shape and form (the development) will be" when the market returns, Olson said.

As of mid-2008, Shea had spent about $60 million on Legacy Park. Officials at the time said that about $800 million worth of road and sewer work eventually would be done at Legacy Park.

When completed, Legacy Park should have an assessed value of nearly $3.5 billion, officials said at the time.

Brokers looking to find tenants for planned commercial space at Legacy Park said last week that it's still business as usual.

"We're still marketing," said Eric Hinkelman, senior managing director for Cushman & Wakefield Inc.'s OC office.

Cushman was tapped by Shea about two years ago to handle office leasing for Legacy Park. Some 6 million square feet of office space is planned at Legacy Park.

The first offices set to be built there are at the Shea Technology Campus, where about 340,000 square feet of two- and three-story buildings are planned near Warner and Red hill avenues.

To date, no leases have been signed for the project - not surprising considering the slow state of leasing for existing offices in the past few years, let alone proposed developments.

There's been no indication from Shea that any development plans have been scrapped, according to Hinkelman.

http://tustinlegacy.spaces.live.com/blog/cns!CB049C080383674!208.entry


Copyright CBJ, L. P. Aug 31-Sep 6, 2009

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District at Tustin Legacy

History

The last loan, from the retail sector, is a transitional story. The $206mn District at Tustin Legacy loan is backed by a newly constructed 985k shopping center in Tustin, California. The project was part of the redevelopment of the 1,600 acre former Tustin Marine Corps base.

The center is anchored by Costco and Lowe’s, which are independently owned and not part of the collateral, along with Target, which is on a ground lease, and Whole Foods, which is part of the collateral. The collateral consists of 522k sf, resulting in a loan balance psf of $395. The property is owned by Vestar and Kimco, a major shopping mall REIT. The 6.9%, 10y interest-only loan was originated in November 2007 and securitized in LBUBS 07-C7. We view this loan as transitional. At securitization, construction at the property had not yet been completed. As of November 2007, only 82% of the space was occupied, despite leases signed for 99% of space. An upfront reserve was established with a balance of $540k.

The transitional nature of the property was likely a factor in the higher loan coupon; we estimate that the relative loan SATO was +55bp. (Loan SATO stands for spread at origination, and is adjusted for comparably issued loans made at the same time. A number > zero suggests a higher-than-average loan spread and higher perceived risk from the issuer standpoint.) The borrower stated that the property would stabilize in 1H08.

Also, the loan terms are unique in that they suggest a partnership with the City of Tustin. The city must approve any lease of space over 20K sf and receives 25% of all percentage rents payable to the borrower. The sponsors invested a significant amount in infrastructure improvement in the area around the site.

Current snapshot

The property has yet to stabilize, due to delayed store openings and lower-than-expected rents. The completion of the project coincided with a severe housing bust in the region. MSA level unemployment touched 11.9% in September, well above the national average, as a large portion of employment was tied to housing. High unemployment and falling property values have contributed to weak retail spending and net absorption in Orange County (Figure 8).

The 2008 NOI for District at Tustin Legacy came in at $13.1mn, versus a budgeted amount of $16.8mn. This was due to a decline in average rent to $20.7 psf, versus $26.2 psf at underwriting. Mid-year financials suggest a similar result for 2009, and the most recent DSCR was 0.86x. The loan has been on the servicer watch list since November 2008, and the upfront reserve has been depleted. On the positive side, occupancy has rebounded to 99% as of June 2009, but we suspect that rent concessions have risen as well.

http://wealth.net/2009/11/five-cmbs-case-studies/

I may have found the ultimate secret weapon against the Armored Car Drivers "The Liability Insurance Underwriter for the District at Tustin Legacy (A Vestar Company)"

Sgt. Jeff Blair - Standards and Practices - Tustin California - Police Department


Dear Sgt. Jeff,

This weekend as you can see was business as usual for our Scofflaw Armored Car Diver - Losers.

These photos encompass both Saturday and Sunday.

Saturday was a particularly good day for photos, I'm only including a fraction of them in this email, but you will notice the near misses, "potential vehicle collisions cause by motorists inability to see around the massive illegally parked Armored Cars - motorists were honking at them on Saturday and visibly unnerved by this completely illegal and mitigatable safety hazard.

Also, some folks at Peet's coffee have agreed to take photographs and also report this illegal activity to me - knowing that I will have your Police Department put it in their incident log, Brinks although not shown in the photographs from Sunday also violated our public safety laws - parking right in front of Peet's coffee.

One woman who works at Peet's mentioned to me that - aside from all of the other unnecessary risks to pedestrians and vehicles, there is as I have mentioned in the past - an alarming possibility that in the event of a robbery shootout - Peet's coffee - which is surrounded by all glass windows - would be the most likely place for a stray bullet incursion - into a store full of patrons and employees.

This of course begs the question - when is Peet's Corporate going to get involved by sending some demand letters to the Management at the District at Tustin Legacy and to your Police Department and the City of Tustin as well?

Now for the secret weapon - I am going to make contact with the Liability Insurance Underwriter for the District at Tustin Legacy this week, and arrange for them to view my collection of photographs and documents - and ask the question - are you willing to take-on this unnecessary liability exposure - an exposure which should have been mitigated a year and a half ago - at my beckoning.

As you know Insurance carriers are even more distressed than American Banks are these days, and the shareholders - will ask lots of questions when they are made aware of this very unnecessary risk and financial exposure.

I'm betting that the Insurance Carrier will say - "either the risk is to be mitigated - or the Liability Insurance is cancelled".

Let's find out together.

On both Saturday and Sunday I spoke with Sgt. Quinn on your watch commander's desk, and asked that he log all three incidents by date, time, and Armored Car Carrier.

As you already know - once the Attorneys and Bean Counters get involved - they'll be generous in naming defendants in the Litigation - and I expect your Police Department and the City of Tustin's failure to mitigate this Public Safety hazard will land the City on the defendants list too - and maybe even individuals at the City and your Police Department - who I have spoken to about this problem for the last year and a half - as well.

There will not likely be any excuses - nor will there be any place to hide.

In my estimation it is only a matter of time before someone is seriously injured or even killed - all as a result of people's failure to act - then we can read about it over and over again - and maybe Dateline NBC or someone will pick-up the story - and I can say "I told you so" on camera.


Saturday Feb 07 2009 Image 0020 - Near miss vehicular collision

Saturday Feb 07 2009 Image 0016 - Visibility Impairment from Illegally parked Armored Car - Threatens Pedestrian Safety

Sunday Feb 08 2009 Image 0006

This as always will be posted on my blog by tonight or at least by Monday - then if you like entertainment as I do - watch the Armored Car Drivers log-on to my blog in the comments section - they usually call me a pervert - a child molester - and make numerous death threats - and Gay slurs - I will have to admit though - they are a creative bunch of scumbag losers aren't they.

Best regards,

Dave - "I Snitch"

Sgt. Jeff Blair - Standards and Practices - Tustin California - Police Department

Dear Jeff,

I spoke with the watch commander this afternoon, and asked that he log my call and complaint about - "you guessed it" - and this time it's a "mouthy" - smart-ass Armored Car Guard - who wants to sue me - "lions and tigers and bears oh my".

I use the term Guard loosely, because as you already know - I make the claim that most of these guys a helping themselves to the cash - a little bit here and a little bit there - just enough to make it inconvenient to investigate and prosecute.

I'll remind you of the other Guard on my blog who got greedy and took 60 thousand all in the same day - a few weeks back - he got caught.

So - here is my celebrity photo log for this week.


Jan 25th - 2009 - This one doesn't like me very much - he'll probably write-in to my blog with "another death threat" - nice folks aren't they - dude - get a hair stylist!

As you can see the guard today who works for Garda Systems - was a bit perturbed about me taking his photograph - and said he was goanna sue me - well, he doesn't know that I'm getting all of the documentation ready to sue not only him, but the Shopping Center Owner - The City of Tustin - The Tustin Police Department - Garda - Garda's Clients at the District - and one Attorney friend of mine - will even include the Guard's Family and Dog - all at the same time.

Let's see who comes out ahead on that deal.

This off course is not to mention that when a Mother and Baby in a stroller are hit and killed, because of this scofflaw behavior on the part of these criminal Guards, her Attorneys will have a field day - with the same list of defendants - using my photo files going back at least a year and a half.

Let's see who comes out ahead on that deal too!


Jan 25th - 2009

So - as you know - I've been somewhat critical of Scott Jordan - your Police Chief for Tustin, because he Jogs on my time,"Taxpayers Time", instead of doing Police work.

But, I may have found a way for him to Jog on the job, here's how - let's have the Chief strap a radio - camera - and a citation book on his back, then have someone drop him off at the District every day, and have him Jog the perimeter of the shopping mall, conducting parking enforcement, this way I /we might get some of our money's worth out of him, and he might avoid a heart attack related disability - which costs us "Taxpayers" - million of dollars.

I don't see much in the way of Police work being accomplished at the Tustin Police Department anyway - so - this might be an improvement - who knows the Chief might actually catch a car burglar at the same time.

Again - I'll reiterate that I have a call in for the City Attorney the Mayor and the Council to contact me about seeking a Court Injunction against the Armored Car Companies - which would act like a restraining order - and if violated - would allow us to surround the Armored Car with Police Vehicles - tow it away - take the Guards to Jail, and notify the Armored car carrier to send replacements - to finish their route.



Jan 20th - 2009

The other photo is from earlier this week - this is "Pendum Armored Car" - and as you can see - they also think that they are "special" - and that cars and pedestrians can just go around them - all of this - with a state-of-the-art delivery entrance right behind the Target store - which is where they should be stopping.

Then - in the rare event of an actual robbery "one not committed by the Guards themselves" - pedestrians and shoppers won't have to duck and dodge flying bullets - which of course - when the Attorneys get my photo files - will mean that Target "good company as they are" - will also be facing an ugly lawsuit.

Still waiting for that call Mr. City Attorney!

Some Legacy!

Best wishes


Dave - "I Snitch"

This massive Security presence is not only annoying and intimidating to customers of these establishments - it in essence amounts to illegal surveillance - harassment - staking - invasion of privacy and a whole bunch of US Constitutional Rights Violations!


Sgt. Jeff Blair - Tustin California - Police Department - Standards and Practices

Dear Jeff,

I've spoken to some folks including tenants at the District about IPC Security Personnel hanging around the Auld Dubliner and Ra Sushi at night - both Restaurant Bars - 3 Security Vehicles and then 6-8 Security Guards standing on the sidewalk glaring at people who are partaking in legitimate and legal Alcoholic Beverages, Dinner etc., in these establishments.

This massive Security presence is not only annoying and intimidating to customers of these establishments - but it in essence amounts to an illegal surveillance - harassment - staking - invasion of privacy and a whole bunch of other US Constitutional Rights Violations.

If there is a problem at one of these locations that might require Police Intervention - the business operators will call the Police (You), and ask for assistance. 911

I also patronize these businesses, and I won't stand for this illegal surveillance - when the businesses established a lease with Vestar Corporation - the business owner / operator established legal possession of the premises, and the landlord maintains zero right of intrusion, surveillance - eavesdropping - illegal search and seizure, etc..

The Business owner operator is essentially and legally entitled to "Quiet Enjoyment" of the premises - without any interference!

When I see this activity and I begin taking photographs to document this activity - the security personnel scurry-off and quickly - because they also know that while goofing-off - looking for trouble at these restaurants - they are neglecting legitimate security functions at the Shopping Mall - putting Shoppers at Risk - which will eventually get Vestar, IPC and as of this email, maybe even you - sued.

I / we do not want or need any Police or Security supervision when we go out to dinner and have Cocktails - this presence is intimidating, and amounts interference with a legal business operation - there is an abundance of case law on file - some including Police Departments which have conducted illegal sting operations with regard to Alcoholic Beverage consumption - such as hanging around Bars waiting for people to leave - so as to follow and pursue individuals who could have been presumed to having had consumed Alcoholic Beverages - hence stopping one of these vehicles - would amount to a stop without legally obtained probable cause.

This activity would be no more Legal than Police going into a Restaurant and or Bar, and observing who had and who hadn't been consuming Alcoholic Beverages - with the intention of pulling them over later - without any of the required probable cause.

This is just a note to get you in the right direction, I'm forwarding it to an Attorney who specializes in these kinds of issues.

I'm glad to learn of progress being made with regard to the abusive Armored Car Companies at this and other Shopping Malls - and I will continue to be vigilant with regard to observing and documenting their behavior.

This is just a step in the right direction - not a mission accomplished.

Thanks in advance!

Dave - "I Snitch"