Central corridor project on Mare Island halted while Vallejo negotiates with developer on infrastructure

VALLEJO —  A proposed six-block walkable district with retail, hotel, housing, and open space within the central part of Mare Island has been paused while the city resolves infrastructure-related issues affecting Connolly Street and broader Mare Island. 

The city disclosed that the Connolly Corridor project, the first project the Mare Island Company expected to initiate in alignment with the 2004 Draft Mare Island Specific Plan, had been paused during a City Council meeting on April 27.

City of Vallejo long range planning manager Hector Rojas said during the meeting that the Connolly Corridor project is delayed while mediation between the city and the Vallejo Flood and Wastewater District resolves infrastructure-related issues affecting Connolly Street and broader Mare Island.

Rojas said that city staff is negotiating a new development agreement that will apply to land holdings represented by Mare Island Company, because two prior agreements that were approved at different times for different parts of the island don’t fully align with the island-wide planning framework being developed through the new Mare Island specific plan.

Development on Mare Island has been highly anticipated to boost Vallejo’s economic productivity and reduce the burden of special taxes paid by Mare Island property owners. The announcement of the hold on the Connolly Corridor project was met with disappointment and anger from public speakers at the meeting.

Mare Island Brewing Co. founder Kent Fortner said during the meeting that he found the new specific plan too long-term and fanciful. “I'm extremely disappointed to hear that the Connolly Street corridor is currently at its pause and not moving forward due to market conditions,” he said. 

Fortner opened a brewery at the north end of the partially refurbished Coalsheds on the Mare Island waterfront in 2020. He pointed out that previous plans for the island called for the Connolly Street corridor to be finished by 2027.

The major sticking point in negotiations between the city and Mare Island Company is the poor condition of the sewer system, which was already deteriorating when the Mare Island Naval Shipyard was decommissioned in 1996.

After the Navy base closed, it started transferring its land to the city of Vallejo. The city sold 677 acres of it to housing developer Lennar in 1999 for $1 but received a promise from Lennar to spend $260 million in infrastructure improvement. Lennar subsequently built all the housing developments on the west side of the island but did not address the preexisting infrastructure.

As part of that purchase, Lennar agreed to an acquisition agreement with the city, which states, "Lennar shall be solely responsible for all costs incurred in connection with the development of the Acquisition Property, including all costs of infrastructure."

Another developer, the Nimitz Group, bought all of Lennar’s properties in 2019. That company, in partnership with the Southern Land Company, bought another large parcel of land on North Mare Island in 2022 for $3 million. They formed the Mare Island Company to manage the development. 

A disposition and development agreement signed by the city and the Mare Island Company as part of the North Mare Island sale provides for “construction and installation of new backbone infrastructure improvements, including sanitary sewer and storm water.”

The severity of the problems with the sewer system were known when housing developer Lennar and Nimitz Group purchased the property.

A Mare Island Reuse Infrastructure Study published in 1997 noted that the island’s sewer system was in very poor condition. The first version of the Mare Island Specific Plan adopted in 1999, and a study conducted in 2017, both refer to the 1997 report and repeat the assessment that the sewer system would require substantial upgrades and improvements in order to support reuse and redevelopment. 

The development agreement between Lennar and the City of Vallejo signed in 2001 provides for the developer to complete infrastructure improvements, but also allows the developer to request extensions, which were granted multiple times through 2019.

A city staff report published last month states that when the first phase of the Connolly Corridor design approval pre-application was submitted to the city in 2024, the sewer district raised issues related to ownership of sewer and stormwater infrastructure, sewer capacity, and the need for an overall Connolly development plan and infrastructure rehabilitation plan. 

The district advised that the first phase of the Connolly Corridor project does not create capacity concerns, but that the full area needed a broader planning and infrastructure framework.

The sewer district does not have funds to address the island-wide sewer infrastructure issues, and Mare Island Company is balking at taking responsibility for infrastructure improvements that they inherited from Lennar.

Sheryl McKibben, a Mare Island Company spokesperson, said in an email that the company’s position is that there is distinction between current and future infrastructure. “The Mare Island Company is responsible for new infrastructure and infrastructure improvements on land the company develops,” McKibben said. “Outside of that narrowly defined case, the Mare Island Company is not responsible for improving or maintaining Mare Island’s existing infrastructure.”

At a sewer district board meeting on April 21, general manager Mark Tomko noted that Mare Island infrastructure is deteriorating faster than the pace of improvement.

Sewer district general counsel Claire Collins said the district thought Lennar would begin infrastructure repairs in 2003, but the developer was not held accountable to complete the repairs because the development agreement lacked financial assurances that she said would typically be included in a master plan. “But it's not the case here,” Collins said. “We as a community are stuck between a rock and a hard place.”

Collins said she has been working with the city attorney to find an appropriate mediator for “this unicorn of an issue,” and that it’s not easy. She said that settlement officers typically negotiate things like car accidents and slip and fall settlements, but this situation requires a talented mediator who understands the legal and political challenges and the business challenges with a third party.

Another outstanding issue between the city and Mare Island Company that may be renegotiated in the new developer agreement is the payment of 5% of gross lease revenues from subleases, which would typically exceed $400,000 per year. 

City officials say that Mare Island Company hasn’t been making the payments. Vallejo Planning and Development Services Director Christina Ratcliffe wrote in a memo to the city Planning Commission in 2023 that Lennar stopped making the payments in December 2017, and that the Mare Island Company’s continuing obligation to pay to the city a portion of its rent revenues has yet to be resolved. 

This issue was raised by Mare Island Special Tax Elimination Alliance member Daniel Boone during the City Council meeting. Boone said “We've documented for you over and over again, missing $9 million that the city never bothered to collect from Lennar and Mare Island Company.”

Boone’s group has been seeking relief for Mare Island homeowners subject to the Mare Island Community Facilities District (CFD), a special tax district enacted by the city and developer Lennar in 2002 to fund police and fire services on the island.

Boone sent an email to Vallejo City Council members in 2025 with attached files to support his argument that each fiscal year, the city is to review the revenues generated from property or activities on Mare Island, and to apply that amount against the services budget the city has projected for Mare Island to calculate the amount of CFD taxes Mare Island taxpayers will pay. 

Boone deduced that 15 years of annual payments from Lennar would equal $6 million, which he said has not been accounted for by the city, and estimated the uncollected lease revenue payments from Mare Island Company at $2.8 million.

McKibben, the Mare Island Company spokesperson, said that the company disputes that the obligation to pay the city a percentage of the “gross net revenue” still applies. “It is our expectation that the new Development Agreement will reallocate the rights and obligations of the parties, including Mare Island Company’s provision of various community benefits to the City,” McKibben said.

Meanwhile, construction on another long-delayed Mare Island project may soon resume. 

Lennar Mare Island ceased work on the Coral Sea Village subdivision when the Nimitz group came to Mare Island in 2019. Construction is expected to resume later this year, in spite of calls by some Mare Island residents to put that project on hold due to limitations of sewer capacity.

Mayor Andrea Sorce closed last month’s meeting by acknowledging the public’s frustration with the stalled pace of Mare Island development. “I think there's a lot of good things happening, and I think there's also a frustration of this kind of repeated deja vu,” she said. “We're always, kind of perpetually, six to 12 months off from the next big thing.”

Source called for a post-mortem to identify the deficiencies in the agreements and any enforceable elements that the city may have missed. She said that the city has “a crappy CFD from 2002” and a “crappy development agreement from the 90s.”