Developers beware!

Everyone sitting on the dais or standing at the podium at last Tuesday’s City Council meeting apparently realized that potential developers for Alameda Point were (or would be) watching a video of the meeting.

It might have been a good time to show off the City’s virtues as a business partner.

That wasn’t quite what happened.

The item on the Council agenda was pretty straightforward:  Staff sought Council approval to send out “requests for qualifications” to potential developers of two chunks of land at Alameda Point: a 68-acre parcel encompassing most of the so-called “Waterfront Town Center” (the “Town Center”) and an 82-acre parcel located mainly in the commercially zoned “Enterprise District.”  This would be the first step toward entering into Disposition and Development Agreements for the two parcels.

After more than two hours of “debate,” Council – unanimously, of course – approved the staff recommendation – with significant modifications.  In the meantime, the audience was treated to:

  • Councilman Tony Daysog delivering an extended metaphor – City Manager John Russo called it a “trope” – about how, to him, the planning process resembled a “fine painting,” right down to the thickness of the “paint” on the “canvas”;
  • The City Manager berating Vice Mayor Marilyn Ezzy Ashcraft at length for – as Mr. Russo saw it – impugning his own, and his staff’s, devotion to the sacred principle of “transparency”; and
  • The Planning Board’s chief “visionary,” John Knox White, showing up during the public comment period to chastise staff for – as Mr. Knox White saw it – usurping the authority of the Planning Board and ignoring “commitments” made to the “community.”

A potential developer might have found these performances bewildering and, frankly, a little off-putting.  But the meeting also sent more troublesome messages.

The first was that anyone who wants to develop the 68-acre Town Center parcel had better be prepared to pony up a lot of dough for the privilege.

The staff report made clear that the Town Center developer would be expected not only to construct “specific infrastructure improvements” on the Town Center parcel itself but also to “pay a ‘fair-share’ amount of site-wide infrastructure improvements” as an additional “Infrastructure Fee.”  At the meeting, Alameda Point Chief Operating Officer Jennifer Ott told Council – and the developers listening at home – that the Infrastructure Fee for the Town Center would be $91 million.

That was “a lot of money,” Ms. Ott conceded — indeed, it was $16 million more than a strict “fair share” computation would produce.  But Ms. Ott, and City Manager Russo, defended the premium by arguing that, since residential land is more valuable than commercial land, residential developers should bear a higher portion of the burden for site-wide infrastructure costs.

(A similar rationale led Council to decide to charge the developer who got the nod to negotiate a deal for the Town Center a higher fee for “reimbursement of City expenses” than a commercial developer would pay for the right to negotiate a deal for the Enterprise District).

But more unwelcome news for a potential Town Center developer was just around the corner.

The staff report declared that, “The RFQ will assign 800 units of the proposed 1,425 units planned for Alameda Point” to the 68-acre Town Center parcel.  As Council surely knew, 1,425 is the maximum number of housing units allowed at the Point under the City’s agreement with the U.S. Navy; any units above the 1,425-unit cap will trigger a $50,000 per unit penalty to the federal government.

According to Mr. Russo and Ms. Ott, about 218 units will continue to be used for low-income housing.  Of the approximately 1,200 units remaining, staff decided to allocate 200 for adaptive reuse of buildings in the Historic District like the former Bachelor Enlisted Quarters and 200 for new housing in the Main St. Neighborhood.  This left 800 units for the Town Center.

No one on the dais – except maybe for Mr. Daysog – liked “assign[ing]” 800 units to the Town Center.  Councilman Stewart Chen, D.C., thought the number was too high.  Vice Mayor Ashcraft thought it was too low.  (To him, 800 was represented a “ceiling”; to her, it was a “floor”).  And Mr. Knox White delivered his professional opinion that 800 units on 68 acres were far too few.

An impasse loomed.  Enter Councilman Chen, channeling his inner Henry Clay.  How about, he suggested, letting a developer build more than 800 housing units in the Town Center as long as he paid a $50,000 per unit fee for every unit above 800?  Eliminating the 800-unit “ceiling” should satisfy the Ashcraft/Knox White faction.  The fees could be “banked” to cover any penalties assessed if later residential development in other areas caused the City to exceed the 1,425-unit overall cap.

“Brilliant,” said the Mayor.  Done and done, voted her colleagues.

But a prospective Town Center developer was left scratching her head.  You won’t tell me how many units you want me to build in the Town Center.  But if I decide to build more than 800, I’ve got to pay you an extra 50 grand per unit?  And the money is going to subsidize residential development in another area of the base?  Thanks a lot, guys and gals.

Unfortunately, the rest of the meeting offered no reassurance that, even if a developer complied with the Chen compromise, her proposed project would find favor with Alameda’s elected officials.  Why?  Because this City Council resolutely refuses to make any decision about how important “transit-oriented development” is for Alameda Point, much less about how such a strategy should be implemented.

“Transit-oriented development” – we’d call it “TOD,” but that’s the German word for “death” — means different things to different people.  The politicians are fond of proclaiming that the “community” long ago endorsed transit-oriented development at Alameda Point.  In fact, you won’t find the phrase anywhere in the 1996 Community Reuse Plan, and it’s used only once in the 2003 amendment to the General Plan.

Ask the ordinary Alamedan what the phrase “transit-oriented development” means and she might very well tell you it signifies making sure that residential development at the Point will not create additional traffic congestion on the Island.  But that’s not how the urban planners use the phrase. To them, “transit-oriented development” refers to a strategy for combating climate change by reducing automobile usage and its accompanying carbon emissions.

Here’s the concept:  Create a “transit center” offering public transportation like buses, trains, and ferries.  Cluster residential development around the center so that people can get to it by walking or bicycling.  Throw in “community-serving” and “destination” retail so that residents can shop near where they live.  Voila!  You’ll end up with fewer cars, lower carbon emissions – and the planet will thank you for it.

Now, if you presume to ask what good all this does for the City of Alameda and its residents, well, you’ve just demonstrated how unenlightened you are.  To the urban planners, “transit-oriented development” is not supposed to benefit one particular city.  That would be too parochial.  Instead, it’s part of a grander scheme to benefit the entire Bay Area region.

The stated goal of the Plan Bay Area promulgated by the Metropolitan Transportation Commission and the Association of Bay Area Governments is to reduce carbon emissions by concentrating new housing construction in so-called “priority development areas” (“PDAs”) featuring – you guessed it – “transit-oriented development.”  Alameda Point is one of them.  The regional planners’ theory is, If people who work in San Francisco or Oakland can live at Alameda Point and take the bus or ferry to their jobs, they won’t be driving their cars from Tracy to get to work.  Mission accomplished.

Once a city decides that this kind of transit-oriented development is a worthy goal, it still has to determine how much housing to put near the transit center.  Obviously, transit operators won’t expand their services unless they can be sure there’ll be enough fare-paying customers for the buses and ferries.  The more people you can cram into housing units within walking or biking distance of the transit center, the more potential customers you’ll be able to deliver.  High-density housing thus is the key to success of a transit-oriented development strategy.

Unfortunately, there’s no unanimity about what density is high enough to support new or enhanced public transportation.  There are plenty of opinions on the subject.  To cite only one, the Station Area Planning Manual prepared for the MTC states that a “transit center” should contain 20-to-75 dwellings units per acre, “with higher intensities in close proximity to transit and neighborhood-serving retail areas.”  That’s a pretty broad range, and we suspect it wouldn’t be hard to find experts deeming even higher densities necessary to make the plan work.

A similar divergence of views exists about the density needed for the Town Center itself.  At Tuesday’s meeting, Mr. Russo and Ms. Ott declared that 25 dwelling units per acre — which is the density Ms. Ott computed based on putting 800 housing units on the 30 “developable” acres in the Town Center – was high enough to induce transit operators like AC Transit to expand their services.  For his part, Mr. Knox White insisted that such a density “barely supported” even infrequent bus service to and from the Town Center.  And the draft “precise plan” for the Town Center – which will be presented to the Planning Board at its next meeting – “recommends a minimum density of 35 dwelling units/acre overall and higher densities in the Core area.”

Moreover, the limitation imposed by the conveyance agreement with the Navy creates additional practical issues unique to Alameda.  If you can only build 1,425 housing units on a 918-acre piece of land without incurring a penalty, how many of them do you put it in the Town Center?  If transit-oriented development were your only, or your primary, goal, the answer would be simple: As many as possible.  But every penalty-free unit you put in the Town Center is one fewer penalty-free unit for the Historic District or the Main St. Neighborhood.  Sure, the City itself isn’t going to pay the penalty, but shifting the fee to the developers will affect their assessment of whether, to use Councilwoman Lena Tam’s favorite phrase, a project will “pencil out.”

For Alameda Point planning, there are thus a host of policy decisions to be made and practical options to be chosen.  Do we agree that our mission as a city should be to combat climate change through “transit-oriented development”?  How important is that goal compared to other goals for Alameda Point (such as rehabilitation of the Historic District)?  And if the answers are “Yes,’ and “Very”:  How dense does housing in the Town Center need to be to entice transit operators to provide the public transportation options we’re looking for?  Given the limitations imposed by the conveyance agreement, how does allocating housing to the Town Center affect residential development planned for other areas at the base?

Our City Council left all of these issues unresolved last Tuesday.  Instead, we got the Chen compromise.  So, we guess, developers now know that Council wants to see some sort of transit-oriented development at the Town Center – whatever that may mean or however it may play out.  Perhaps no one expressed the clarity of Council’s consensus better than Councilman Tony Daysog when he declared,

We are working within a world of constraints.  And, as such, the transit-oriented development we are promoting at Alameda Point is not with a capital T, capital O, capital D.  It’s with a small-case t, small-case o, small-case d.  We’re trying to build the best transit-oriented development that we can possibly do within the constraints and opportunities that we’re faced with.

Got the picture?  We’re glad you do.

It didn’t have to be this way.  As we previously have pointed out, Council had the opportunity before it approved the planning documents for the Point to identify the goals it wanted to achieve – we called it the “bucket list” – and to rank them in order of priority.  Maybe that was too much to ask.  In any event, it never happened.

But there is still another way to go.  Having watched a lot of Council and Planning Board meetings, it appears to us that Mr. Russo, on the one hand, and Mr. Knox White, on the other, have different ideas – we hesitate to call them “visions” – about transit-oriented development and its relationship to other goals for the Point.  Whatever one might think of their respective styles and personalities, both are articulate, and even impassioned, advocates.  Why not let each of them state his case in a public forum – and then have each Council member declare which position he or she agrees with?

But, no, that, too, will never happen as long as Ms. Gilmore occupies the Mayor’s chair.  Instead, she will continue to search for the lowest common denominator that will produce a unanimous vote.  Maybe by the end of her next four-year term the developers will have been able to figure out on their own what the politicians really want.

Sources:

Staff report re RFQs: 2014-04-15 staff report re RFQ

Plan Bay Area: Plan_Bay_Area

Station Area Planning Manual: Station_Area_Planning_Manual_Nov07

About Robert Sullwold

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

5 Responses to Developers beware!

  1. Steve Gerstle says:

    The only way I see transit working at the Point is to move the Ferry Terminal to Seaplane Lagoon. However, that would mean separating it from the Oakland service.
    Having the terminal at Seaplane would bring a lot of commuters to the area and make transit service to and from the terminal viable. It would open up the area to those from San Francisco who visit or work at the Point. The terminal at Seaplane would also shorten the trip to and from SF. Time is money, so a shorter trip would help to make an independent service viable.
    Transit to and from the terminal would need to serve not only Alameda Point, but other parts of Alameda and also connect to BART. Several bus routes would be needed.
    Moving the Ferry Terminal needs to be the top priority as that would bring an established base of commuters with it. The ferry has grown in popularity. Just check out the parking lots during a weekday.
    Also, we cannot keep adding new taxes and fees to the development or we will simply price ourselves out of the market. No one has to live at Alameda Point or open a business there.

  2. Thomas Bertken says:

    Thanks for your intelligent analysis of these city issues

  3. Merry Go Round,
    Your article states: “The politicians are fond of proclaiming that the ‘community’ long ago endorsed transit-oriented development at Alameda Point. In fact, you won’t find the phrase anywhere in the 1996 Community Reuse Plan, and it’s used only once in the 2003 amendment to the General Plan.”
    The phrase “transit-oriented development” is used at least once in the 1996 Community Reuse Plan, and it is in the title of Goal D2 – Achieve human-scale, transit-oriented development. Elsewhere, there is repeated reference to transit-oriented design, which could be taken to mean the same thing. But the intent of the transit orientation in the Reuse Plan was not, as we are hearing today, to combat climate change. It was to maintain a livable city.
    Here is what Goal D2 Achieve human-scale, transit-oriented development says, in part: “Enhance the viability and use of transit and other alternative modes of transportation in all development, through deliberate design of neighborhoods, commercial, industrial, and recreation/open space area. Reflect the grid street pattern that is characteristic of existing Alameda and that provides a framework for emphasizing transit modes.”
    Then in the Land Use Element under the subheading of De-emphasis of the Automobile is says, among other things, “The Community Reuse Plan is intended to support transit improvements, ferry service, transit-oriented design and enjoyable pedestrian environment.”
    And under the subheading of Transit Orientation is says, “By emphasizing existing land patterns, providing better opportunities to perform day to day activities within walking distance of home, and creating transit links that can easily convey employees to their workplace, redevelopment at NAS Alameda can help re-establish the transit-oriented character that is Alameda’s heritage.”
    And under Sustainable Development & Design is says, “Sustainability is a series of principles from transit-oriented design to preservation of open space that render concern for the human and natural environment fixtures in the urban fabric.”
    While we can argue about the number of housing units that are desirable or necessary, the Metropolitan Transportation Commission funded the design of our Town Center and Waterfront Plan, knowing the constraints of the no-cost conveyance (1,425 housing units) and the ingress/egress constraints. They are one of the agencies that created the Plan Bay Area that is supposed to address climate change issues.
    If combating climate change is going to supersede the main economic development and job creation goal under which we are accepting land from the Navy, then we should at least balance our efforts by addressing both sides of the issue: Combating and adapting. We have an adaptation opportunity built into the Town Center Plan in the form of the naturalizing of the western side of the Seaplane Lagoon to transition it to the nearby Runway Wetland. The only adaptation talk we hear much about right now is levees.
    The Community Reuse Plan can be read here without downloading the whole document: http://issuu.com/alamedapointinfo/docs/1996_community_reuse_plan

  4. MQ says:

    “1,425 is the maximum number of housing units allowed at the Point under the City’s agreement with the U.S. Navy; any units above the 1,425-unit cap will trigger a $50,000 per unit penalty to the federal government.”

    Do you have any details as to why there is this limit or what this “penalty” is intended to make amends for? It seems strange for there to be any further caveats once the Navy decided to turn over the land to the city.

    • The 1,425-unit cap and associated penalty are contained in the conveyance agreement between the Navy and the City signed in January 2012 (technically, Amendment No. 2 to the Economic Development Conveyance Agreement executed in 2000).
      The history of this provision is somewhat complicated, but here’s a short version:
      The original agreement between the Navy and the Alameda Reuse and Redevelopment Authority provided that, once remediated, the former Naval Air Station would be conveyed to the City for “no cost.” This agreement contemplated that the City would develop the site in accordance with the 1996 Community Reuse Plan, which provided for 1,425 housing units on the 918-acre Alameda Point site.
      When the City later began negotiations with “master developers” that envisioned a much larger residential development at the former base, the Navy no longer was willing to give the property to the City for free. If the City was going to get paid by a developer who intended to build a lot of houses, the feds reasoned, the Navy should get a cut.
      No deal, of course, was reached with the master developers. The City then attempted to get the Navy to agree to a “no-cost” conveyance of a 45-acre parcel to be made available as a campus for Lawrence Berkeley National Labs. The LBNL deal, too, fell through, but, according to staff, the Navy then proposed to convey the entire 918-acre site for free, subject to certain conditions. One of them was the 1,425-unit cap and the $50,000 per unit penalty, which the agreement describes as an “enforcement mechanism.”

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