One Rincon Hill Developer Intends to Pay All Fees

Written by Luke Thomas. Posted in News, Politics

Published on April 20, 2009 with 3 Comments

By Luke Thomas

April 20, 2009

One Rincon Hill developer Michael Kriozere released a statement today in response to a San Francisco Chronicle report suggesting Kriozere does not intend to pay an outstanding $5 million SOMA Stabilization Fee.

“While it is unfortunate that my discussion with the San Francisco Chronicle was taken out of context, and thus reflected inaccuracies, it does provide me with an opportunity to share what has been and continues to be our commitment to both the project and the City,” Kriozere wrote in statement released to Supervisor Chris Daly and his aide April Veneracion, who addressed the non-payment issue in an article published earlier today on FogCityJournal.com.

Kriozere said he has every intention of paying the fee “when we obtain a final Certificate of Occupancy.”

Kriozere’s statement in full:

An open letter to the leaders of the City of San Francisco, One Rincon Hill residents, our project partners and the media:

While it is unfortunate that my discussion with the San Francisco Chronicle was taken out of context and thus reflected inaccuracies, it does provide me with an opportunity to share what has been and continues to be our commitment to both the project and the City. As such, I share the following.

Not only is One Rincon Hill more than 70% sold, but sales once again are brisk; in fact, sales traffic has been above the pre-crash level (60-100 tours) every week in 2009. We are pleased to report that we have almost fully paid our construction lender and contractors, have no liens against the building and appreciate the unwavering support of our partners. We have not received any funds from the City in any aspect of the development of this project.

We have every intention to complete Tower II, but, as I said publicly months ago, we are waiting for the economy, and the residential real estate market in particular, to turn on the upswing. There is no rush to proceed at this time.

In specific response to the reporting in the San Francisco Chronicle that “he does not plan to pay the $5 million in fees that were central to obtaining city approval to build the high rise,” this is not my plan. In fact, to date we have paid more than $16.6 million in fees:

Affordable housing in lieu fee (offsite) $11,026,146 (Dec. 2005)

S.F. public school fee $858,448 (Feb. 2006)

Rincon Hill Community Improvement fee $3,162,889 (Sept. 2006)

SOMA Stabilization Fund fee $1,268,306 (Dec. 2005 and Sept. 2006)

Total: $16,615,789

The sole remaining fee to be paid is the balance of the SOMA Stabilization Fee of $13.75 x 393,884 square feet or $5,415,905. This payment is not yet due. The payment becomes due when we obtain a final Certificate of Occupancy (which has not yet occurred); or, alternatively, we can post a letter of credit at that time to delay the payment by 6 months. In other words, we are not in default nor do we intend to be.

Furthermore, the developer will not receive any distributions from the project before the SOMA Stabilization Fund fee is paid.

In my typical candor, I shared with the Chronicle the realities of today’s economy on our project – no different from what most every project is the country is experiencing. As we are in the most egregiously difficult financial environment of our times, I am realistically concerned with the burden of this fee. This was the intent of my discussion with the Chronicle, and I am disappointed it was not more clear. That said, we plan to pay the fees when due and proceed onto Tower II of this project which will provide a very singular living experience in a world class city.

Thank you for this opportunity to update our project and our vision.

Michael Kriozere
Urban West Associates

Luke Thomas

Luke Thomas

Luke Thomas is a former software developer and computer consultant who proudly hails from London, England. In 2001, Thomas took a yearlong sabbatical to travel and develop a photographic portfolio. Upon his return to the US, Thomas studied photojournalism to pursue a career in journalism. In 2004, Thomas worked for several neighborhood newspapers in San Francisco before accepting a partnership agreement with the SanFranciscoSentinel.com, a news website formerly covering local, state and national politics. In September 2006, Thomas launched FogCityJournal.com. The BBC, CNN, ABC, NBC, CBS, Fox News, New York Times, Der Spiegel, San Francisco Chronicle, San Francisco Magazine, 7×7, San Francisco Examiner, San Francisco Bay Guardian and the San Francisco Weekly, among other publications and news outlets, have published his work. Thomas is a member of the Freelance Unit of the Pacific Media Workers Guild, TNG-CWA Local 39521 and is a member of the Society of Professional Journalists.

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  • Campers,

    Anytime you get Daly and Howard Epstein on the same side, one or both of them are very very confused or hiding a crocodile smile. In this case it’s Epstein hiding the smile.

    Chris Daly is not just the number one champion of the poor in this town. He is also, ironically, the number one force behind gentrification.

    I blasted Chris 8 years ago when he voted in favor of Mark Leno’s legislation establishing a path for developers to avoid having economically diverse populations in the new high rises. All they have to do is to pay an ‘Off-Site In Lieu’ fee to the City and they can guarantee their projects include none of those pesky paupers making less than 200 grand a year. Note that Kriozere paid those fees up front. Where’s that money go and who gets to live in these ‘affordable’ units?

    The money goes to the Mayor and last I looked you can make up to 89k a year and live in one of these buildings in Outer Siberia. If they were building them. Which they’re not.

    Daly (who’s my hero on the Board which shows you how bad the rest of em are) … Daly also swallowed a treble-hook tossed from Angelo Sangiacomo’s bass boat at 8th and Market (Trinity Towers). He bought some stinky bait when he believed that Angelo (literally, “the father of rent control” – not in a good way; his gouging of tenants brought it on in 1979) … Angelo said that tenants left at the present site could return at the same rent. How many you figure are left? Not many, cowboys and cowgirls.

    Sangiacomo also promised to rent a high percentage of the new units at below market rate. And, he will. But, again, as with Kriozere … that means you can make up to 89k a year and be eligible. In similar circumstances over the last 3 decades these units have ended up in the hands of people in medical or law school.

    Yep, gentrification continues apace and you can thank Mark Leno and Chris Daly. Ask the D-6 stalwart how many tenants remain in Angelo’s old hotel at 8th and Mission. Then, ask him what the hell a Mello-Roos bond is and how it relates to community benefits payments.

    As regards the Class of 2000, Chris Daly has done more good for San Francisco than any supervisor except Matt Gonzalez. This is not one of his shining moments.

    h.

  • Nice recovery, Mr. Kriozere.

    I think perhaps you learned an important lesson; scream and protest all you like, but when you make a deal with the Devil, you’re always going to pay in the end.

    And that’s how Chris rolls.

  • Richmondman

    These fees do not go to the city; they will not result in any city services being paid for or provided; no poor children will be fed. No sick people will get medical aid; This money is to be paid to Chris Daly’s political allies. This is how Chris is able to build his political empire. He extorts money from developers with the threat of non-support for their projects, which should not be supported anyway. Like all political machines, the “new” DCCC is just like the “old” DCCC, except Chris is the new Willie.