Negotiations between a Chinese state-run bank and a Miami-based homebuilder for a $1.7 billion loan to bankroll the biggest San Francisco redevelopment project in a lifetime have collapsed.
Lennar Urban has development rights to build more than 12,000 homes on former Navy installations at Hunters Point and Treasure Island, two of the biggest parcels of land open to development in The City in 50 years. The homebuilder had been in negotiations since last year with the China Development Bank to finance the construction.
Mayor Ed Lee — who this week returned from a trip to China that included meetings with key government and bank officials — confirmed reports Thursday that talks between Lennar and the bank have ended.
“I wish we could have gotten the funding done, and I’m going to continue to try and help Lennar to do that,” said the mayor, who had acted as an intermediary between the two parties.
At least 200 homes are still expected to be built at Hunters Point — and soon. Construction is slated to begin sometime over “the next few months,” according to a Lennar spokesman, who declined to be more specific and also would not identify the current investor.
Neither Lennar nor the Mayor’s Office would comment on exactly what caused the deal to fall apart, though sources said there had been disagreements about how overseas investment would be taxed and how heavily involved Chinese construction companies would be in a China-financed deal.
Organized labor, which would have been guaranteed “hundreds” of jobs on the two construction sites under local-hire mandates, noted that Chinese capital is flowing into other development projects, such as 201 Folsom St., and that the domestic lending market has recovered since the financial crisis of 2008.
“We’re keeping our fingers crossed and hope [Lennar executive and point man on the shipyard project] Kofi Bonner and Lennar can get a financing package together,” said Michael Theriault, a spokesman for the San Francisco Building Construction Trades Council. “Eventually it’ll dawn on lenders that San Francisco is a perfectly viable market.”
More than homes and jobs would benefit from the project being financed. Lennar has promised a host of community benefits — including $10 million to build schools, a $3.5 million scholarship fund, funding for parks, an African market and more — for the working-class Bayview-Hunters Point area in exchange for redevelopment rights at the former shipyard, which closed in 1976.
Whether or not Chinese capital eventually funds the Lennar ventures, China is poised to remain a key player in California.
Gov. Jerry Brown, who’s on a trade mission this week to China with representatives from 75 American companies, announced on Wednesday $1.5 billion in funding from a Beijing-based investment firm called Zarsion Holdings Group to redevelop the Oakland waterfront near Jack London Square. And on Thursday, the governor met with Premier Li Keqiang in Beijing.
China and California have entered a “new period … of mutual trust and mutual benefit,” said Li, who urged more U.S. states to follow California’s lead and establish closer business ties.
U.S.-China trade topped $536 billion in 2012, according to the U.S. Census Bureau.