JMBM Development Rights: JMBM Lawyer Plays Key Role in Successful Strategy for Brownfield

JMBM Government, Land Use & Environment lawyer, David Cincotta, played a pivotal role in clearing the way for the development of a $500 million project on 20 acres of brownfield in the Bay Area, near the San Francisco/Brisbane border. In a complex deal that involved settling a lawsuit, indemnifying parties from claims of future environmental liability, obtaining fixed cost contracts for remediation and securing environmental liability insurance, JMBM’s client, Universal Paragon Corporation (UPC), is now moving forward with plans to develop the former industrial site.

On the drawing board are 1,250 housing units (with 25% set aside as affordable); 100,000 square feet for retail, including a supermarket; and 3 parks. UPC also plans to convert the existing historic Schlage Lock Co. office building, which is currently boarded up, into community space and offices.

As part of the agreement, Ingersoll-Rand, the longtime owner of the Schlage Lock Co. factory that existed on the site, transferred the 12.3-acre Schlage property to UPC and, in exchange, UPC dropped its decade-old $100 million lawsuit alleging that the Schlage operations had polluted the groundwater at UPC’s adjacent parcel. UPC also agreed to pay a portion of the $25 million cleanup of the site.

The terms of the settlement also included environmental insurance provisions with third party insurance companies that transferred liability for the soil and groundwater cleanup to insure against the possibility of unknown contaminants and unexpected costs, and indemnifying UPC and Ingersoll-Rand from future claims. Fixed cost remediation contracts for the environmental cleanup were also negotiated.

The deal clears one of the biggest obstacles blocking a community-blessed plan to clean up and convert the brownfield to a mixed-use residential area. The brownfield property is within walking distance of a Caltrain station, includes two municipal bus stops and is a short distance from the San Francisco airport. The nearby community, which successfully fought against the development of a big box store on the property, supports the development of this mixed-use project. After years of battles with potential developers of the site, UPC and the San Francisco Redevelopment Agency have worked closely with the community over the last two years to produce a Redevelopment Plan that is widely supported.

JMBM lawyer David Cincotta represented UPC in the real estate transaction and is continuing to work on the land use entitlements and the development agreement for UPC. During the transaction, he worked closely with UPC to pull the numerous parties and the various legal components together. “This property is perfect for the kind of transit village needed in metropolitan areas,” he said. “It is especially satisfying to work on a deal where everyone seems to win, most importantly, the surrounding community.”

The San Francisco Redevelopment Commission and San Francisco Planning Commission approved the Redevelopment Plan and certified the Environmental Impact Report in mid-December 2008. Demolition and remediation activities are expected to begin immediately. Negotiations for a development agreement between UPC and the Redevelopment Agency will be finalized by Spring 2009.

David Cincotta is based in the Firm’s San Francisco office. He specializes in obtaining land use entitlements for large commercial, mixed-use and residential developments in San Francisco and throughout Northern California. His practice focuses on land use, zoning and environmental law, and includes real estate financing, real estate transactions and historic preservation law. David served as Deputy Director of Housing and Community Development under San Francisco Mayors Alioto, Moscone and Feinstein. David can be reached at 415.984.9687 or DCincotta@jmbm.com.