Memo to the City Manager (Part II)

Twenty-two years ago last week, the U.S. Navy left Naval Air Station Alameda, and nearly 18,000 jobs went with it.

Ever since, creating jobs to replace those lost – and generating new employment opportunities for Alameda residents and others – has been one of the primary objectives for developing the 918-acre property now known as Alameda Point.

This goal, however, has not come close to being met, and it doesn’t appear that the City is working on a strategy for meeting it any time soon.  Instead, it is far more likely that the current Council majority soon will decide, if not to abandon the goal of job creation at the Point altogether, at least to minimize it in favor of a policy much more attuned to their predilections:  Building more housing.

Ever since they served on the Planning Board – and even before the Bay Area planning gurus declared a “regional housing crisis” – Vice Mayor John Knox White and Mayor Marilyn Ezzy Ashcraft have seen the Point as a prime target for residential development.  And now that Governor Newsom and the Democratic leadership in the State Legislature have made housing a primary part of the party platform, Council members Jim Oddie and Malia Vella are sure to sign on as well.  (The Merry-Go-Round can just imagine the rhetoric this duo will use to proclaim their support:  “Alameda values demand it!” Mr. Oddie will assert; “Housing is a basic human right!” Ms. Vella will insist.)

Yet if the current Council majority does switch the priorities for developing Alameda Point from creating new jobs to building more housing, it will be up to new City Manager Eric Levitt and his staff to implement the new program.  Nobody asked us, but . . . this will be the second major challenge facing the new City administration in the coming years.  (We discussed the first – balancing the budget – in our last column).

Let’s start with an undisputed fact:  From the outset, the planning documents have stressed the importance of job creation at Alameda Point.

“The closure of NAS Alameda represents the loss of a major portion of the jobs available on the island of Alameda and jobs held by Alameda residents,” the Community Reuse Plan adopted in 1996 stated.  “All land use decisions and policy direction determined in the Community Reuse Plan must respond to this economic reality.  The long-term reuse of NAS Alameda must move beyond the idea of replacement of jobs lost at the base and focus on creating economic growth and development for the benefit of the whole community.”

Nearly 20 years later, the Conceptual Planning Guide adopted by the Planning Board and Council sounded the same themes.

“The long-term reuse of Alameda Point must focus on creating economic growth and development for the benefit of the whole community,” the Guide stated, echoing the Community Reuse Plan.  “Land use decisions and policy direction shall be guided by this principle. The City will actively seek and promote businesses, a range of industries, and economic development projects that provide significant sustainable employment opportunities.  Future plans will preserve and maintain Alameda Point’s ample supply of large industrial and warehouse space immediately adjacent to the water, which is a major foundation of local maritime businesses and significant regional economic advantage for the City.”

It hasn’t turned out quite that way.

According to a November 2017 report to Council, staff’s commercial marketing strategy for the Point has consisted of offering long-term leases and/or leases with purchase options or first rights to negotiate purchase options to individual corporate users.  At that time, the City had leased 1.8 million square feet of commercial space to approximately 66 businesses, but these lessees together employed only about 1,000 workers – a small fraction of the number who once held jobs at the Naval Air Station.

The majority of the leasing activity has occurred in the “Adaptive Reuse” district at the center of the Point.  Here’s a map of the zoning districts:

AP Proposed Zoning Districts

Economic Development Manager Nanette Mocanu gave us a list of 21 leases that have been signed or renewed for buildings located in the Adaptive Reuse district since 2012.  But not all of these leases have created significant new employment opportunities.  Ms. Mocanu told us that the lessee employing the most workers in this area was Saildrone, which makes wind- and solar-powered vehicles used for ocean data collection.  According to the staff report submitted with the Saildrone lease, the company “forecasts that they will have up to 40 full time employees by the end of 2017 and around 100 full time employees in the near future.”

The November 2017 report cited the Bachelor Enlisted Quarters, which comprise three buildings over 21 acres with approximately 500,000 square feet, as “probably the greatest opportunity in the Adaptive Reuse area for large-scale job-generating uses.”  At staff’s recommendation, the same day it received the staff report on job creation, Council authorized hiring an architectural firm – for $199,450 – to “evaluate the potential” of turning the BEQ into a “technology campus.”

In April 2018, the firm presented Council with its preliminary design work, which was used to prepare marketing materials.  According to Public Information Officer Sarah Henry, “Our brokers have been showing the building as requested and we have had some limited interest over the last six months, but have not yet received a formal offer.”

In addition to the Adaptive Reuse district, the City also has been marketing existing buildings to individual corporate users at Site B in the Enterprise District.  Ms. Mocanu gave us a list of about a dozen lessees, and she identified two of them – Power Engineering and Williams-Sonoma – as employing the most workers.  According to the staff report for the Power Engineering lease, the company “employs approximately 90 union construction employees, engineers, and support staff, but typically has 10 permanent employees” working in the leased premises.  (The staff report for the Williams-Sonoma lease didn’t contain any job numbers.)

Most recently, at staff’s recommendation, Council authorized the City’s real-estate broker, Cushman & Wakefield, to market a 23.9-acre portion of Site B as a discrete parcel, but it’s too soon to tell whether there will be any takers, and, if so, how many new jobs they’ll generate.

Finally, the development plan for Site A in the Waterfront Town Center district approved by Council in June 2015 includes 600,000 square feet of commercial and retail space.  But none of the commercial development is scheduled to take place during Phase 1 of the project, for which backbone infrastructure construction began in May 2018 and will take two to three years to complete.  Only thereafter will vertical construction – including 100,409 square feet of “retail/creative office” space – occur.

We really don’t know why the City hasn’t been able to lure more job-creating businesses to the Point.  It’s not as if Bay Area employers aren’t looking to build or lease office space.  (And it’s not just tech companies, either.  Hell, just this week the papers carried a story about JUUL – which only a few people would call a tech company – negotiating to buy a 29-story office tower in downtown San Francisco.)  Nor – despite what you may read elsewhere – is the problem that Alameda doesn’t have enough nearby housing for the employees of these burgeoning businesses.  Salesforce seems to be gobbling up much of the office space in San Francisco’s Financial District even though it’s unlikely that many of its workers walk home to the Millennium Tower.

In any event, we wouldn’t expect the current Council (or its successors) to jettison the goal of creating new jobs at the Point entirely.  That would amount to a renunciation of the Community Reuse Plan and the Conceptual Planning Guide, whose stated principles never have been rescinded.  Instead, those on the dais likely will be content to let the commercial marketing efforts limp along, occasionally congratulating themselves when the City’s real-estate broker finds the “right” type of business – by which we mean “clean energy,” not single-malt whiskey (sorry, St. George’s) – to lease space to.  If so, our new City Manager and his staff won’t be called upon to undertake any especially onerous new tasks.

We do think, however, that, regardless of its druthers regarding job creation, the current Council will direct staff to shift the focus of its efforts to expanding the extent of residential development at the Point.

Leading the charge will be Mr. Knox White, whose credentials for the role are impeccable.  He was, of course, a vocal proponent of SunCal’s plan to build 4,346 new housing units on the former base.  During his six years on the Planning Board, he often vented his frustration with the limits placed by the federal government on the number of units that could be built, both at Alameda Point and on the North Housing site.  (At least as to the former, so did Ms. Ashcraft.)  And he is a charter member of the “Build, baby, build” society.  “The more units you build, the slower housing costs go up,” he once lectured his Planning Board colleagues, citing various “experts” to support his views.  “The only thing that is going to make housing affordable for Californians, especially in places like the Bay Area, is to build more housing for all incomes, and . . . actually building the more expensive housing does drop the costs of the other housing you have.”

The first mission the current Council may assign to Mr. Levitt and his staff is to get rid of, or find a way around, the major obstacle to increasing the number of housing units at the Point:  the no-cost conveyance agreement between the Navy and the City.

Under the agreement, the Navy transferred the land comprising the former Naval Air Station to the City for free – on condition that the City agree to allow no more than 1,425 new housing units to be built on the property.  If the City wanted to exceed this cap, it would owe the Navy a penalty for every extra market-rate unit.  The penalty was set originally at $50,000 per unit, but it was subject to increases based on the San Francisco metro home price index and now is close to $100,000 per unit.

The projects already approved, or currently proposed, for the Point have eaten up all but 67 units of the cap:  a total of 800 new housing units will be built at Site A, and 267 units of supportive housing, 260 market-rate units, and 31 moderate-income units are planned for the “West Midway” section of the Main Street Neighborhood.  There’s no way 67 additional units will be anywhere near enough for Mr. Knox White and his acolytes.

We suppose that, if the Council directed it to, staff could look for a developer who was willing to pay an extra 100 grand per unit to get the right to build a project of the size that would satisfy the pro-housing crowd.  Good luck with that.  Or maybe our local politicians could lobby Congresswoman Barbara Lee to use her influence in Washington to get the Navy to waive or eliminate the cap.  But that might have to wait till Kamala Harris becomes President.  Until then, it will be up to Mr. Levitt to come up with a better idea on his own.

If the new City Manager does succeed in removing the cap, his work will be far from over.

We’d guess that, based on Mr. Knox White’s comments as a Planning Board member, his preferred destination for further residential development at the Point would be the area north of West Midway Avenue in the Main Street neighborhood.  (The area south of West Midway already has been designated for the supportive, market-rate, and moderate-income project.)  This area contains the residential portion of the Alameda Historic District, which now is occupied by the 18 Big Whites (large single-family homes for married officers arranged around a beehive street network) and 30 bungalows (smaller single-family homes for NCOs located south of the Big Whites).

Here’s a map:

Alameda Point Historic District

This segment of the Historic District encompasses 23 acres of prime real-estate.  Imagine – we suspect Mr. Knox White does – how many high-density apartment buildings could be built on this land if the Big Whites and bungalows were torn down and bulldozed away!

But there’s a problem – and fixing it may become Mr. Levitt’s job.  The City’s General Plan for Alameda Point specifically sets forth a “policy” to “[p]reserve the Big Whites for their historical significance, and [to] encourage surrounding development that is complementary.”  Moreover, the specific plan for the Main Street Neighborhood adopted by Council in November 2016 requires that any new development in the Historic District comply with guidelines designed to “ensure that new infill development and building placement is consistent with the character-defining features of the Historic District, and that all new buildings constructed within the Main Street Neighborhood’s Historic District are consistent with the original ‘Total Base Design’ described in the 2005 NAS Historic District Assessment and the NAS Alameda Historic District designation, and shown in the Navy’s 1940 Master Plan for the property.”

The pro-housing faction on Council likely would be eager to pass amendments to the General Plan and the specific plan to get rid of these pesky restrictions, but staff is going to have to draft them first.  You can bet that the Alameda Architectural Preservation Society, and like-minded Alameda residents who value the historic character of the former base, will want a say in the matter.  And once the documents are done, staff still will need to find a developer.

Then there’s Site B.  The Alameda Point zoning ordinance passed by Council in February 2014 restricts three of the four sub-districts in the 107-acre Enterprise District, of which Site B is a part, to commercial and maritime uses, and permits residential use only conditionally in the fourth.  Here’s a map of Site B (mislabeled as “Enterprise District”):

Alameda Point Enterprise District

Even with a zoning change, not all of the land in the Enterprise District would be readily available for new housing:  The areas along the Seaplane Lagoon are Public Trust Lands, where no residential development can take place.  And a goodly chunk of the land on the north side of the District lies over a toxic groundwater plume.

During his time on the Planning Board, Mr. Knox White didn’t object to keeping residential development out of the center of the Enterprise District, and he voted in favor of the proposed zoning ordinance with its commercial-and-maritime-only designations for three sub-districts.  We don’t know whether he’s changed his mind, but one of his colleagues, Ms. Vella, now appears to be thinking about putting housing where it isn’t currently allowed.

According to Blogging Bayport Alameda, Council members were asked at a workshop on March 16 to write “what they wanted to see as a headline in five years from now.”  Ms. Vella’s offering: “New units open at Site B, Alameda Point continues to thrive as ground breaking for new West End crossing is today.”  The word “units” struck us as ambiguous – indeed, the whole sentence is hard to parse – so we sent an email asking Ms. Vella to clarify whether she in fact envisioned that residential development would occur at Site B in the next five years.  She didn’t respond, but we wouldn’t be surprised if that wasn’t exactly what she had in mind.

If the current Council indeed wants to open up the Enterprise District for more housing, Mr. Levitt and his staff will have a lot of work to do.  And it’s not just drafting amendments to the General Plan and the zoning ordinance, as they would for the Main Street Neighborhood.  They’d also need to find a residential developer who was willing to comply with the regulatory requirements for building housing on the property.  As Richard Bangert, our go-to expert on all things Alameda Point, explained to us:

Most of the roughly 110 acres of the Enterprise subdistrict could be permitted for residential construction after approval of a soil and groundwater management plan by the California Department of Toxic Substances Control and the Regional Water Quality Control Board.  The dozen or so acres at the northern part of the district where the solvent plume is being remediated are not a good candidate area for residential, as it would require a specially engineered vapor barrier system, in addition to no residential occupancy being permitted on the ground floor for at least the next 30 years.

So Ms. Vella may have to wait awhile to see her desired headline over a post by Steve Tavares in the East Bay Citizen.

We suppose it’s possible that the current Council majority will decide to put issues relating to the development of Alameda Point on the back burner so that they can devote their time to more important causes like impeaching Donald Trump or mandating gender-neutral restrooms.  But Mr. Knox White has held himself out for so long as an authority on urban planning that it’s unlikely he will remain silent about how the former base should be developed on his watch.  And if he starts issuing diktats and gets his colleagues to march in step, Mr. Levitt and his staff will need to get ready to make it happen.

Sources:

Community Reuse Plan: 1996 Community Reuse Plan

Conceptual Planning Guide: Conceptual Planning Guide

Leasing: 2017-11-21 staff report re job creation efforts; 2017-06-06 staff report re Bldg 12 lease (Saildrone); 2015-10-06 staff report re Bldg 166 lease (Power Engineering Construction Co.); 2017-02-21 staff report re Bldg 169 lease (Williams-Sonoma); 2019-04-22 staff report re Site B

Main St. Neighborhood specific plan: 2016-11-01 Ex. 1 to staff report – Draft Main Street Neighborhood Specific Plan

 

About Robert Sullwold

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

2 Responses to Memo to the City Manager (Part II)

  1. Here’s another memo to the city manager: In your media outreach, play up the $100 million investment in infrastructure at Site A and the exciting development in progress there, along with investment in buildings along West Tower Avenue. Act like there is a reason to invest, instead of showing it as a risky rundown mess. The awful media event a few days ago made it seem as though nothing was happening, it’s just the same rundown military base it’s been for years. The ABC7 news story that interviewed development director Debbie Potter could have used some of the same footage as used in a 2013 NBC news story. Back in 2013, Jennifer Ott played up the mix of businesses already taking up residence.
    Here are the links to the two news videos:
    https://sanfrancisco.cbslocal.com/video/4078769-plan-to-develop-alameda-point-would-have-it-transformed-into-enterprise-hub/

    https://www.nbcbayarea.com/news/local/Naval-Base-Returns-to-Alameda-212864381.html

  2. carol says:

    Debbie Potter on CBS local TV news. So for the mere price of putting in the infrastructure, anyone can start development here. https://sanfrancisco.cbslocal.com/video/4078769-plan-to-develop-alameda-point-would-have-it-transformed-into-enterprise-hub/

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