Show her the money

As the clock ticked toward midnight on August 20 and the City’s consultant finished his presentation on the master infrastructure plan for Alameda Point, Planning Board chair David Burton called on Board members for questions.  Dania Alvarez-Morroni, a recent appointee, went first.

“How are we going to pay for this?” she asked. “Where is the money going to come from?”

Ms. Alvarez-Morroni laughed when she spoke, but her questions ought to be taken seriously.  Those who had read the consultants’ report probably had spotted the same issue.  And the answers were no clearer when the meeting adjourned shortly before 1 a.m. than they had been when the Board convened six hours earlier.

The Master Infrastructure Plan – staff likes to call it the “MIP” – prepared by Carlson, Barbee & Gibson (“CBG”) for a fee of $199,500 showed the “backbone infrastructure” needed to support the land use program set forth in the 1996 Community Reuse Plan for the Point.  This includes replacement and/or rehabilitation of existing utility systems, streets and open spaces.

Total cost? $566,580,000.  That’s half a billion bucks for you keeping score at home.

The draft presented to the Planning Board broke down these costs into three groups:

  • Phase 1, covering what staff now calls the “Enterprise” area in the southeast portion of the Point as well as the proposed “Town Center,” would cost $219,870,000.
  • Phase 2, covering the “Main Street Neighborhood” area in the northeast portion, would cost $229,700,000.
  • Phase 3, covering the “Adaptive Reuse” area located within the Historic District north of the seaplane lagoon, would cost $117,010,000.

Here’s a map and a table:

Figure 62

Table 14

And now to Ms. Alvarez-Morroni’s questions.  The MIP is, well, a little vague.  This is what CBG has to say about financing:

It is anticipated that an Alameda Point Infrastructure Fee Program (APIFP) will be established to coordinate the funding and repayments associated with site-wide improvements. The APIFP will collect fees from both Development and Reuse Areas to generate funds to construct improvements with site-wide or multiple property to capture repayments from other future phases of development.

Other alternatives of infrastructure implementation and funding may also be employed at Alameda Point. These include seeking of infrastructure grants or tax measures. Another alternative is to create “packages” of infrastructure with site-wide benefits that would be assigned to be constructed by certain development areas.  The infrastructure packages would include all improvements necessary to support that specific development area as well as additional improvements with benefit to surrounding areas.

Got that? Grants, taxes, developer fees – that’s where the money will come from.  Details to follow.

Perhaps anticipating sticker shock, both the CBG consultant and City Planner Andrew Thomas took care to emphasize that the entire amount of infrastructure costs would not be incurred off the bat.  “It’s about phasing,” Mr. Thomas said. “You cannot do it at all once.”

The MIP itself presented three “scenarios” for Phase 1 – i.e., the first work to be done.  One focused on an area in the southeast portion of the Point for which commercial uses are contemplated; the second on an area in the northeast portion for which residential uses are planned, and the third on the Bachelor Officers’ Quarters in the reuse area.  The MIP did not provide cost estimates for any of these “scenarios,” but it did price a “sub-phase” for each of the first two of them.  “Phase 1A ‘South’” – 55 acres in the commercial area – would cost $67.5 million; “Phase 1A ‘North’” – 23.5 acres in the residential area – would cost $40 million.

Providing for infrastructure construction in phases, of course, doesn’t tell you who’s going to pay for it.  Perhaps because she is a real estate agent by profession – for Ron Cowan’s Harbor Bay Realty — Ms. Alvarez-Morroni honed in on who likely would be footing the bill.  “The large amount of money,” she said, “obviously, then, the developers become very important . . .”  Staff nodded their heads.

Presumably, the information provided in the MIP will tell a developer how much it should include in its budget if it’s interested in the land covered by a particular phase, sub-phase, or scenario shown in the MIP.  And the CBG consultant told the Planning Board that the firm in fact had priced 15 different “sub-phases,” so a developer should be able to find a match.  (But it is somewhat strange that the “sub-phases” presented to the Board did not include the Town Center, the other topic on that night’s agenda.  One would have thought that if the Town Center is supposed to be the catalyst for development at the Point, staff would have told CBG to focus on infrastructure costs for that area).

In response to Ms. Alvarez-Morroni’s questions, Alameda Point project manager Jennifer Ott told the Board that staff had been working with an economist – if nothing else, planning at the Point is providing a lot of paychecks for consultants – to come up with numbers to present to Council on September 17.  So maybe all will be revealed then.

But, having read the MIP and listened – on tape – to the Planning Board meeting, the Merry-Go-Round is left with an uncomfortable feeling:  Is development at Alameda Point, on the scale envisioned in the Community Reuse Plan or even in the “Planning Guide” recently endorsed by the Planning Board and Council, going to be economically feasible?  At times, it seems as if we’re one step ahead of the “If you build it, they will come” logic whispered to Kevin Costner in “Field of Dreams.”  If we design it, our planners seem to be saying it, someone will pay to build it.

On this point we are surprised to find ourselves apparently in sync with Planning Board member and Alameda Inner Ringer John Knox White, who declared during the Board comment period:

At some point in time we have to have a conversation about what this document [i.e., the MIP] is telling us about our thoughts and plans for Alameda Point.  The answer could be something we don’t want to hear.  It seems to be leading us to, This is a great document; what it’s saying is we’re going to hit a point at which we’ve got to say there are parts of the Point we’re not going to develop or we’re going to have to think totally differently about how we’re going to develop it.  I said that 18 months ago, I think at my first meeting, we can’t be afraid to say, you know what, there is no plan that we can develop in a way that makes sense for Alameda Point.  I do want to challenge us that the fact that we’ve been working on this for almost 20 years doesn’t mean we have to develop anything.  I’ve been involved with it for 11 years of my life.  I understand the interest in getting something going and whatever else, but let’s make sure that we don’t accidentally head down a road that fiscal neutrality never happens and we start costing the city money and what not.

To pick up on one of Mr. Knox White’s favorite locutions, that indeed would be worth “having a conversation about.”  And the sooner the better.

Source: 2013-08-08 draft master infrastructure plan

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in Alameda Point, Development and tagged , , , , , , , , , , . Bookmark the permalink.

One Response to Show her the money

  1. Ethel Lerche says:

    Great work, Bob. Thanks for taking the time to keep us informed of what is going on.

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