Peebles Folds

According to a recent San Mateo Times article (or this article from the San Francisco Business Times), the Peebles Corporation has put the Quarry property up for sale. This wasn't very surprising, since according to R. Donahue Peebles' book The Peebles Principles, the company's loan is due:

I went ahead with the closing and ended up getting a $16 million loan from a private equity group called Ambit. It was a four-year loan at 12 percent interest, and it included not only the purchase price but also the carrying costs and the money I’d need to conduct my political campaign with the voters.

Since the Peebles Corp. bought the property in 2005, the four-year loan is due this summer. Given the economic climate, especially the tightening of credit markets and the fact that the Peebles Corp. has made no progress in developing the property, it is unlikely that the company would have been able to refinance its loan. In an interview with last October, Peebles says:

Q The global economy is in turmoil. How has the state of the credit market affected your ability to develop and acquire projects? When do you think the markets will improve?

A The tightening of the credit markets has made it very challenging to get even the most economically viable projects financed.

In the most recent articles, the Peebles Corp. V.P. Daniel Grimm claims that the company has added value to the property, but the reality is that the company did not obtain any new city or state approvals. In fact, some of the environmental studies it had done have cast doubt on how much of the property can actually be developed.

The company continues to state that the Quarry is zoned for 2.4 million sq. ft. of commercial space, even though that number has been shown to be wrong. But promoting that number helps justify the $90 million appraisal it says it received in April, 2008. It defies common sense that the Quarry property is worth $90 million, and even Peebles himself did not believe that valuation. From The Peebles Principles:

I first approached the Credit Suisse Private Equity Group, my partner on the Bath Club, and offered them the deal. I met with the managing director of the real estate division, and we structured a partnership. I would contribute the land, which we agreed to value at $17 million to $20 million.

That deal fell through because Credit Suisse was worried that residential part of the development was not "locked up", which turned out to be prescient.

In retrospect, it is questionable whether the Peebles Corp. ever planned to develop the Quarry. The first mention of the company buying the property was a series of articles in March, 2005, but it wasn't until more than a year later that the company conducted the May, 2006 charrette. It supposedly started the charrette with a clean slate even though the result was a concept very similar to that described in the San Francisco Chronicle on August 23, 2005:

– A luxury hotel with about 250 to 400 rooms.

– Up to 400 residential units, including single-family homes costing millions of dollars each.

– A few hundred thousand square feet of commercial space that would be devoted to boutiques, restaurants, galleries and possibly office space. The site, designated a redevelopment area, is zoned for 2.4 million square feet of commercial space.

The company could have taken the concept drawing produced by the charrette and held further community meetings to refine it and produce a concrete development plan. Instead, it launched a referendum to win public approval for a large housing development and hotel. Had the Peebles Corp. won, it could have sold the property with the approval and made a quick profit.

After the disastrous Measure L campaign, which the company lost by 509 votes (not 452 as the San Francisco Business Times article said), the Peebles Corp. took down its website, the best way it had to communicate its future plans with Pacifica residents. It wasted time putting up no trespassing times throughout the Quarry, eventually removing them when they were informed that the signs required a coastal development permit.

In June 2007, seven months after losing the referendum, the Peebles Corp. attorney Tim Tosta gave a presentation in Pacifica that discussed the Quarry in general, but offered no specifics, instead saying that it was premature to do so before all the issues could be analyzed.

In March 2008, a San Mateo Times article (no longer available, but referenced on Pacifica Riptide)said:

The Florida-based housing scion and founder of The Peebles Corp. plans to unveil a new proposal for a mixed-use housing, retail and hotel development in the 86-acre former limestone quarry as soon as city officials give their blessing to make the plan public possibly later this month, according to the company.

The developer's proposal has been workshopped by city officials for more than a year. Daniel Grimm, senior vice president for Peebles Corp., said the company was waiting for the city's say-so to make public the particulars.

No plan was ever presented, and it became clear that this announcement was intended to put pressure on the City to make a deal with the Peebles Corp. with the hope this would be enough of an endorsement to win a new referendum. From a followup San Mateo Times article (also unavailable online, but referenced here):

"I expect the end result is a recommendation from the planning staff in favor of the project, and we would then take it to the next step with either the Planning Commission or the City Council, or both," said Grimm. "We want to make sure it's shared with the public once it's gotten to the point where we're all satisfied with the design."

A developer does not need a city's say-so to announce a project, and the planning staff would only make a recommendation after a developer had submitted a detailed development plan, something the Peebles Corp. had never done.

Only two months later, the Peebles Corp. filed a claim with the City of Pacifica alleging that the city did not properly grade the property when it built the current wastewater treatment plant. (A subsequent tolling agreement put that claim on hold.) And now, it has put the Quarry up for sale.

The end result is that after 4 years the Peebles Corp. has nothing to show for its multi-million dollar investment, and the City of Pacifica is no closer to seeing a responsible development project in the Quarry. The blame for this failure rests squarely with the Peebles Corp. for trying to buy an election, rather than spending time and money on building a community consensus for its plan, producing an Environmental Impact Report, and submitting an actual development plan to the City.