Hercules is suing the former retail broker at the stalled Sycamore North project, claiming he and his company cleaned out a trust account that contained rents and security deposits, and paid themselves management fees they did not earn.
Craig Semmelmeyer and Main Street Property Services Inc. of Lafayette emptied the account, leaving a balance of 39 cents, by helping themselves to $73,000 in prepaid rents and security deposits, according to a complaint filed this week in Contra Costa County Superior Court.
The $73,000 is part of $200,000 that the suit alleges the defendants wrongfully collected.
"There was no construction going on, no tenants to attend to, but he (Semmelmeyer) collected $125,000 in management fees between March 2009 and February 2011," said Judith Rentschler, attorney for the Hercules Redevelopment Agency. "This is in addition to the commissions he collected, and in addition to the $73,000 which he drained from the trust account."
The withdrawal of $73,000 occurred sometime after Nov. 30, when then-interim City Manager Charlie Long informed Semmelmeyer that the redevelopment agency was terminating its management agreement with Main Street, according to the suit.
The company's website lists a portfolio of projects that includes the Emeryville Public Market, The Clocktower in Lafayette; several properties on Main Street, Pleasanton; Salvio Pacheco Square and Todos Santos Plaza shops in Concord; and projects in Danville, Walnut Creek, San Anselmo, Berkeley, Napa and Novato.
Semmelmeyer, a Hercules resident, denied in an e-mail Friday that there was any wrongdoing at any time by him or his company, adding that the matter is now in the hands of his attorneys, whom he did not name. According to the suit, Semmelmeyer and Main Street denied that the agreement was terminated and challenged the agency's right to terminate it.
On Dec. 7, in an emotional address to the Hercules City Council, Semmelmeyer said "the misrepresentations of our agreement and our intentions have hurt me very deeply" and praised the council for making "some very strong and appropriate decisions." Moments earlier, then-Mayor Kris Valstad had announced that the city and Long had parted ways; a week later, Valstad told Long in a letter that the council terminated him for "an insubordinate failure to carry out its instructions."
Construction is at a virtual standstill at Sycamore North, a half-finished mixed-use project that is supposed to have 96 apartments over ground-floor retail. Earlier in 2010, Semmelmeyer signed three retail leases, with Patxi Pizza, the Bean Bag Cafe and Boracay Grill, collecting $88,626 in commissions. Patxi since has canceled its lease, Rentschler said. The Bean Bag can opt out if its premises are not ready by April 1, while Boracay wants to stick it out, Rentschler said.
The court has scheduled a case management conference for Nov. 8.
Contact Tom Lochner at 510-262-2760