Developer Defaults on East Bay Project Financed by City
Monarch Bay development planned 500 homes, hotel and public library.
The future of a large mixed-used project that was initiated more than 15 years ago to anchor the development of the San Leandro shoreline is now uncertain.
The 75-acre Monarch Bay project, a partnership between Los Angeles-based developer Cal-Coast Companies and the city of San Leandro, included plans for 500 residential units, a 210-key hotel, a restaurant, a public library and park space.
Cal-Coast has been served a notice of default on a $24.8M loan from the city that is tied to a 15.9-acre portion of the site where 206 homes were planned, according to a report in SiliconValley.com.
In December 2022, Cal-Coast paid slightly less than $30M for the property. The city council approved a promissory note and deed of trust with Cal-Coast for the loan, which served as bridge financing for the sale of city-owned land along Monarch Bay Drive.
The two parties needed to complete the property purchase by the end of 2022 in order to comply with requirements of the California Surplus Lands Act.
The bridge loan had an initial term of six months, with as many as six three-month extensions through the end of 2023, conditioned on the payment of all interest accrued upon the loan.
The financing was structured so that the city didn’t provide any cash to the developer; the developer made a $5M down payment to San Leandro, the report said. The loan was intended to enable the developer to secure construction financing for the project.
Cal-Coast was current on the interest-only payments until Dec. 30, 2023. The city filed a notice of default on February 20, according to Alameda County records.
San Leandro’s public information office told the San Francisco Business Times that “the city is currently working with the developer to address the project’s financing.”
If the terms are not renegotiated, the city could end up reclaiming the land in a foreclosure procedure.
The project’s 75-acre footprint encompasses a stretch of the San Leandro shoreline along Monarch Drive between Marina Boulevard and Fairway Drive.
The land has been entitled for 200 single-family and townhome residences, with leases that permit the developer to construct a new hotel, a 16K SF restaurant, a retail building and a 295-unit multifamily campus. The project also envisioned a 2,500 SF branch library and the reconfiguration of an existing nine-hole golf course on the site.