Dennis Evanosky

The federal government commissioned Naval Hospital Oakland in1942. The Navy broke ground on Dec. 7, 1965 for the hospital building pictured here. The base closed its doors in 1996.

SunCal Companies, which is also developing Alameda Point, announced that it is suspending work at its 167-acre development in the Oakland hills.

Difficulties with Lehman Brothers, the finance giant that declared bankruptcy on Sept. 15, have caused Alameda Point developer SunCal Companies to stop work at Oak Knoll, the old Navy hospital off Keller Avenue.

Before SunCal made its announcement, its representatives called on Oakland City Councilmember Larry Reid, in whose district the project lies, to tell him that when Lehman Brothers declared bankruptcy on Sept. 15, SunCal lost its backing for the Oak Knoll development.

SunCal spokesman Joe Aguirre said that his company regrets that Lehman Brothers' "bankruptcy filing requires us to suspend work at Oak Knoll, but [ending work] was necessary "to protect our many consultants and contractors." SunCal cannot move forward with assurance of continued funding, Aguirre said. "We cannot ask these professionals to work without having proper assurances of future payment."

Aguirre said the company remains committed to Oak Knoll and intends to resume work there as soon as possible. He brought up the possibility of SunCal's collaborating with D. E. Shaw & Co., the investment company that recently invested $10 million in Alameda Point. Aguirre said that the Lehman Brothers' bankruptcy does not affect SunCal's participation at Alameda Point because that project has different investors.