What got into Jim?

It was, perhaps, no surprise that, at its last meeting of 2017, Council failed to approve a development agreement with Tim Lewis Communities for a project featuring 589 new housing units on the Encinal Terminals site.

After all, approval would require four affirmative votes, and based on their comments the last time the issue of Encinal Terminals came before Council, Mayor Trish Spencer and Councilman Frank Matarrese could be expected to vote No.

But it was surprising to see Councilman Jim Oddie stake out a position far closer to Mr. Matarrese’s (and maybe even to Ms. Spencer’s) than to that of Council members Malia Vella and Marilyn Ezzy Ashcraft, his fellow members of the Triumvirate now ruling Council.

Mr. Oddie didn’t actually vote against approving the development agreement – indeed, when Mayor Spencer solicited a motion from her colleagues, no one spoke up and no motion was made or voted on.  But his remarks raise intriguing questions about the fate of the Encinal Terminals project – and of Mr. Oddie’s upcoming bid for reelection.

The key to Tim Lewis’s proposal was the so-called “Tidelands swap,” whereby the City would exchange 6.4 acres of land it owned in trust at the heart of the site for 8.5 acres of land Tim Lewis owned on the perimeter.  (See diagram below.)  If the exchange went through, Tim Lewis would build a goodly chunk of the proposed new housing units on the land it acquired; the City could use the land it got in exchange for any purpose permitted under the Public Trust doctrine.

Tidelands Trust Exchange Diagram

In its attempt to get Council to approve its proposal, Tim Lewis touted the supposed economic benefits of the swap for Alameda.  Indeed, in a letter delivered the day of the hearing, it claimed that the “value” of the exchange to the City was $15,029,500!  If Council failed to agree to the swap, the developer suggested, the City could kiss this financial bonanza goodbye.

When Mike O’Hara, Tim Lewis’s spokesman, reiterated this pitch during his oral presentation to Council, Mr. Oddie pounced.

First, the Councilman got Mr. O’Hara to confirm that the developer’s stance was that if Council refused to approve the swap, the City would get none of the enumerated economic benefits.  (Later, Mr. Oddie revealed what he thought of this approach:  “When a developer comes before Council and says, ‘If you don’t do it our way, you’re not going to get this,’ I mean, that’s really not a good look.”)

Then, he pressed Mr. O’Hara to tell Council (and the public) what the value of the exchange was to Tim Lewis.  Absent such information, he pointed out, “we don’t know if [the swap] is going to increase [the value] of the project by $100 million and we’re getting 15, or if it’s going to increase [the value] by 15 and we’re getting all of it.”

Mr. O’Hara’s response was to equivocate – and then to stonewall.  “I’m not really able to give you an answer on that,” he said.  But Mr. Oddie wouldn’t let go.  Surely, he told Mr. O’Hara, Tim Lewis wasn’t investing in the project without having done a pro forma that would contain the information the Councilman was seeking.  “All pro formas are subject to a lot of assumptions,” Mr. O’Hara replied.

From the Merry-Go-Round’s perspective, Mr. Oddie was pursuing a legitimate – indeed, a necessary – line of inquiry.  The state Public Resources Code permits a trustee of tidelands property like the City to exchange it for other land only under certain conditions, one of which is that “[t]he monetary value of the lands or interests in lands received by the trust in exchange is equal to or greater than that of the lands or interests in lands given by the trust in exchange.”  So valuation is crucial to the legality of any swap transaction.

The statute does not address how to value the respective parcels involved in a proposed exchange, and there is no published opinion interpreting the quoted statutory language.  But it would not be unreasonable to determine the value of the land each party receives in an exchange based on the use it intends to make of that land thereafter.  If so, the swap posited by Mr. Oddie’s hypothetical – Tim Lewis gets land worth (to it) $100 million and the City gets land worth (to it) $15 million – wouldn’t pass muster under the statute.

Mr. O’Hara having twice dodged his question, Mr. Oddie went on to another of his concerns (which we’ll get to shortly).  But, later, during the Council discussion, the valuation issue resurfaced.

Mr. Matarrese brought it up first.  He recommended that Tim Lewis’s proposal, including the Tidelands swap, be sent back to the Planning Board “to look very carefully at the value.”  Tim Lewis admitted that the property was worth less without the swap than with it, Mr. Matarrese pointed out.  “My question is:  How much less and how much should we be getting?”

When it was his turn, Mr. Oddie picked up the ball.  “We have to look at the financial analysis,” he said.  “What is the value that this developer is going to have increased in this project over what they would have in the other project [i.e., without the Tidelands swap]? Are we actually getting our fair share?”

Both Mr. Matarrese and Mr. Oddie made what to us was a fair point on the merits.  But their comments also revealed a discernible distrust of the developer promoting the project.

Tim Lewis Communities has had a, well, checkered past hereabouts.  The record reveals a pattern of the developer buying land for cheap, getting the pro-development politicians to back its plans – and then not putting up any buildings.

Tim Lewis’s first foray into Alameda was a proposal to build 48 luxury homes on “surplus” land it had agreed to buy from the federal government at Neptune Point for $3.075 million.  The project was made possible by a Council decision in 2012, when Marie Gilmore was mayor, to re-zone the 3.9-acre site for residential use.  Outraged by the prospect of losing parkland on the shoreline, a citizen’s group qualified an initiative to re-zone the parcel to open space.  Rather than suffer defeat at the polls, the Gilmore-led Council voted to adopt the initiative as an ordinance, and Tim Lewis withdrew its application.

Next, having bought the land containing the Del Monte warehouse in a bankruptcy sale, Tim Lewis put forward a proposal to turn the building into a 414-unit residential complex.  The Planning Board chaired by David Burton (who later took a job with an architectural firm that does work for Tim Lewis Communities) recommended approval of the plan, but, six weeks later, both Mayor Gilmore and Councilman Stewart Chen, D.C., lost their bids for reelection, to be replaced by Ms. Spencer and Mr. Matarrese, and the Del Monte development agreement was rammed through the lame duck Council in December 2014.

Since then, construction has occurred at the site –  but not on Tim Lewis’s project.  A 31-unit apartment building providing “affordable” senior housing was planned for land adjacent to the warehouse.  The building would be developed by the Alameda Housing Authority; Tim Lewis’s role was to contribute a portion of the construction cost.  Ground was broken in November 2016, and, according to the AHA website, the building will be completed this March.

Development by Tim Lewis of the warehouse itself is a different story.  Drive down Buena Vista Avenue and see for yourself:  the old warehouse remains in exactly the same condition as it was in December 2014, three years ago.  When we asked for a status report from the developer’s politically well-connected PR representative, Becca Perata, in October, she told us that Tim Lewis was “in the process of getting financing and while they do that, [they] aren’t in a position to comment on” when permits would be pulled or construction would begin.

At the December 19 Council meeting, Mr. Oddie raised the same issue.  This time, after blaming “rampant cost increases” for the delay, Mr. O’Hara announced that, as of
“today . . . we have the financing in place, and over the next couple of months we’ll be putting that whole deal together and be able to start on that building very soon.”

Mr. Matarrese, and Mr. Oddie, remained skeptical.

“We heard some nice words about Del Monte,” Mr. Matarrese said during the Council discussion, and then, turning to face the Tim Lewis contingent in the audience, continued:  “But, you know, guys, it’s been three years, and I didn’t want to be so glib to ask, What makes you think you can do this property when you can’t do Del Monte?  That’s a rhetorical question, but I think you really have to think about it:  What makes you think you can do these 17 acres on a much more difficult, complex property and you cannot do Del Monte?”

Mr. Oddie echoed Mr. Matarrese’s question:  “What makes us believe that this project, which is infinitely more complicated than Del Monte, is going to get done any time soon?”  This wasn’t idle curiosity, he made clear:  “I want to have confidence in somebody that we do a deal with that it’s actually going to get done and that we’re actually going to start solving this problem. . . .”

For their part, neither Councilwoman Ashcraft nor Vice Mayor Vella expressed similar concerns about the Tidelands swap or the developer.  It’s surely just a coincidence that the political action committee funded by Tim Lewis and other developers (as well as organized labor) spent $12,888.19 to elect Ms. Ashcraft and $18,706.32 to elect Ms. Vella to Council in November 2016.

No motion to approve the development agreement having been made and no vote having been taken, Tim Lewis’s plan for the Encinal Terminals would seem to be in limbo.  We are not, of course, privy to the developer’s thinking about what to do next.  If the Tidelands swap is as valuable to Tim Lewis as Mr. Matarrese and Mr. Oddie suspect it is, maybe the developer could throw a little cash or other goodies at the City to sweeten the exchange deal.  Or maybe Tim Lewis will make good on its threat to submit a plan for a 589-unit residential development on the land it already owns.

Indeed, City Planner Andrew Thomas appeared to encourage the latter move by offering his opinion that not only would Tim Lewis be legally entitled to build 589 new housing units on the Encinal Terminals site without the swap, it had the legal right to build that many units regardless of how much acreage Council wanted to see devoted to commercial uses in what is supposed to be a “mixed use” master plan.  We have our doubts about whether a court would find this conclusion to reflect a proper reconciliation between the zoning and density bonus ordinances, but City Attorney Janet Kern nodded her assent to Mr. Thomas’s statement.

Yet if Tim Lewis decides to go ahead with a 589-unit project without the swap, the residential buildings on the site will need to exceed – by a lot – the existing 60-foot height limit in the General Plan.  Once again, Mr. Thomas opined that the City would be legally obligated to accommodate the developer by allowing taller structures, but Mr. Oddie seemed taken aback.  “I don’t know if anyone wants that,” he said.

During the meeting, Mr. Oddie took pains to emphasize that the decision facing Council that night did not present a “binary choice” between building housing and not building housing.  But having seen too many promises made by developers and then not fulfilled, he wanted to be sure that the City would “take the time to do this right.”

Which is an eminently reasonable position.  But Mr. Oddie is a politician, and he is running for reelection in November.  By failing to endorse Tim Lewis’s proposal, he risked alienating the crowd that brands anyone who identifies any flaw in a residential development plan as a NIMBY or worse.   (To say nothing about the coterie who argues – we kid you not – that Alameda needs to build more housing in order to give refugees from “Trump America” a place to live.)  Moreover, he might have to rely this time solely on his union friends to fund his campaign, since Tim Lewis and its fellow developers are unlikely to pony up.

Will Mr. Oddie will stick to his guns?  We can’t be confident, since we remember what happened last year when he made the mistake of asking for evidence about the frequency of no-cause evictions in order to evaluate the need to amend the rent stabilization ordinance to ban them.  After being vilified by the Alameda Renters Coalition and its followers for 48 hours, he reversed his position so completely that thereafter one tenant advocate nicknamed him, “Just Cause Jim.”

If Mr. Oddie pulls another about-face, we guess he’ll be able to add “Sky High Jim” to his list of sobriquets.

Sources:

Encinal Terminals: 2017-12-19 staff report; 2017-12-19 Correspondence – Updated 12-19

“Alamedans United” campaign disclosure statements are available on the City website: http://docs.ci.alameda.ca.us/WebLink8/Browse.aspx?startid=310100&row=1&dbid=0

About Robert Sullwold

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

8 Responses to What got into Jim?

  1. RJS says:

    Well written – and just for the record, I still don’t trust Mr. Oddie after the ARC- vilification-induced about face. I would love to be proven wrong – but just don’t see how that would happen. He reports, after all, to Mr. Bonta – who is a sponsor of a legislative bill repealing Costa-Hawkins. I think I know where his loyalties really lie – but he DID ask good questions, in this case.

    Maybe there’s hope.

  2. NYBORN says:

    Interesting review of the facts. I must say that I am pleased that Council Member Oddie asked for some additional information. It shows promise for him. Frank on the other hand has always been an honest and fair citizen. He too, deserves thanks for asking difficult questions. Robert, when elections come around, you ned to gather the information about who takes money for votes and what impact it has had on our city, so a far broader base of voters can see what they are voting for. Visibility is critical to a small town like ours. Happy New Years!

  3. Linda S says:

    Fool me once shame on you fool me twice shame on me. Jim Oddie is not to be trusted. He has made that crystal clear

  4. carol says:

    GREAT Questions like this one show me that, somewhere inside Jim Oddie, there’s a man with integrity clamoring to get out. If he wasn’t working for Bonta, who knows what he might be capable of….

  5. dave says:

    Regardless of theoretical or appraised value, what is the ACTUAL value of tidelands to the city? Can they be sold outright for cash? Can they be leased profitably to a marina or other maritime user? Is there any other way for City Hall to realize positive cash flow other than exchanging them to create taxable structures?

  6. Steve Gerstle says:

    Over the past few years, I have written to the Mayor and Council about 15-20 times on local issues. Jim Oddie has never responded. Not once. Mayor Spencer and Councilmember Matarrese are the best at responding. Councilmembers Ashcraft and Vella sometimes reply. Oddie — never. I assume that he chooses not to respond and not because he does not know how to use the City’s email system. Does he respond to anyone, or it just me? It cannot be personal, as I have never met him. Regardless if I agree or disagree with him on issues, I do not think that he should be in office and would vote for anyone else — or no one — for council over him.

  7. barbara thomas says:

    Dave. Reading the Final EIR for Encinal Terminals indicated that Lewis was going to raise the ground level to 13 feet to combat global warming and sea level rise. On ground at 4 – 8 feet, that means dropping in a lot of dirt on “fill” at high risk for liquefaction, adjacent to two major earth quake faults: Loma Prieta and Hayward. BCDC was using 66 inches sea level rise by 2100, which the State raised in April 2017, to 85 inches. In view of all the updates in measuring sea level rise, (its greater than thought with each new factor) its time to pay attention to the Sierra Club’s position that we need to rethink how we are going to use our coastline to combat the inevitable. Do we build high density housing that taxpayers will have to pay milliions to save? Or do we do procrastinate and keep the coast and Tidelands Trust lands (which can only be used for maritime and public uses) as an option for dealing with the future? The Alameda Marina Draft EIR only purports to protect against sea level rise of 24 inches for the 776 homes it wants to build. And the DEIR admits that will only protect the development for 60 to 75 years. Add to that the development agreement will undoubtedly be for 15 years, with endless extensions, a la Harbor Bay Isle. My home is at 12 feet, and will be once again waterfront property! I wont be around, but my children and grandchildren will undoubtedly enjoy living on the water’s edge.

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