Title
Adoption of Resolution Authorizing the City Manager to Enter into a Third Amendment to the Economic Development Conveyance Agreement to Modify the Housing Fee for the Former Naval Air Station, Alameda.
The streamlining provisions of Public Resources Section 21083.3 and Section 15183 of the California Environmental Quality Act (CEQA) Guidelines apply and no further environmental review is required. (Base Reuse and Economic Development, 29061822)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The Economic Development Conveyance Memorandum of Agreement (EDC Agreement) between the City of Alameda (City) and the Navy guides the process and terms by which the Navy has conveyed property at the former Naval Air Station Alameda (Alameda Point) to the City. This agreement was originally executed in 2000 and amended in 2001 and 2012.
Staff and the Navy have negotiated and recommend several changes to the agreement, with the goals of accelerating housing development at Alameda Point and providing the Navy with further information needed to ensure the City’s compliance with its requirement to reinvest proceeds of Alameda Point leases and sales on job creation and redevelopment of the former base.
The recommended third amendment to the EDC agreement would amend the housing development section as follows: for every market rate unit beyond a baseline of 2,011 units established in the agreement, the City will pay the Navy a per unit fee, which is reduced from its current level of approximately $103,000 to $73,000. If the City pays the fee upon transfer of property or commencement of infrastructure construction, the fee is reduced to 45% of its set amount (approximately $33,000 in 2025). If the City pays the fee upon issuance of vertical building permits, the fee is reduced to 75% (approximately $55,000 in 2025). The City’s intent is to pass this fee requirement through to future private developers.
Netting out the City’s built and entitled units, there are approximately 250 units remaining under the 2,011 unit residential baseline.
BACKGROUND
The EDC Agreement between the City and the Navy authorized a no-cost conveyance of major portions of the former Naval Air Station Alameda (NAS Alameda) property to the City. The EDC Agreement was originally executed in 2000 and amended in 2001 to clarify details regarding the property, and again in 2012 to address a variety of issues needed as the first major conveyance approached (completed in 2013), and to affirm the City and Navy’s commitment to the original concept plan.
The Second Amendment included two major provisions which staff are proposing to modify with this Third Amendment. One provision established that the City would pay a sum of fifty thousand dollars ($50,000) for each market rate unit in excess of 2,011 new market rate units. This sum escalates in line with the Case-Schiller Housing Price Index.
The second provision of the Second Amendment extended the amount of time during which proceeds from the sale or lease of NAS Alameda Property must be used for long term job creation and redevelopment of the property to 2037. The City submits annual financial reports to the Navy to demonstrate its compliance with this section of the EDC Agreement.
At its September 3, 2024 study session on advancing housing at Alameda Point, staff proposed a work plan which included negotiating with the Navy to reduce the housing fee. City and Navy Base Closure staff collaborated over the last year to modify the fee as part of a third amendment to the EDC Agreement. This third amendment also includes provisions for the City to provide greater detail in its annual financial reports, consistent with a Navy audit of the City’s reports, which was completed in 2023 and 2024.
DISCUSSION
The Second Amendment to the EDC Agreement established a baseline fee of $50,000 per unit for each market rate unit constructed at Alameda Point in excess of 2,011 units.
The City has executed development agreements resulting in a total of 1,761 built and entitled units on the property subject to the EDC Agreement. Entitled, but not built, units are located in the Site A and West Midway developments. In total, 250 units remain under the 2,011 unit residential baseline, when built and entitled units are considered. However, because the entitled units have not been built, they are not yet counted toward the baseline in reports to the Navy. There are roughly 129 undeveloped acres of land remaining at Alameda Point that are zoned for residential or mixed-use development.
The Second Amendment established that the $50,000 fee will escalate annually from the 2013 date of the initial Navy property conveyance using the Case-Shiller Housing Price Index for the San Francisco Bay Area (Housing Price Index). In 2013, the Bay Area began its recovery from the Great Recession, resulting in rapid escalation of the Housing Price Index, and thus, the excess unit fee. As of 2025, the fee had grown to $103,000 per unit, which exceeds the per unit land value that the City secured in its Site A and West Midway Disposition and Development Agreements (DDAs), and would exceed the value of the remaining residential land at Alameda Point for the foreseeable future.
To address this cost while acknowledging the Navy’s interest in, and rights to, receiving some revenue in a more housing-focused development, the proposed third amendment includes the following provisions:
• Utilize the San Francisco region Consumer Price Index as the adjustment factor for the $50,000 fee instead of the Housing Price Index, retroactive to 2013. This adjusts the current amount of the fee from $103,000 to $73,000.
• Allow for prepayment of the fee at a discounted rate. This rate would be discounted to 45% of the standard fee if paid at the time of land sale or authorization to commence infrastructure construction for new housing or discounted to 75% of the standard fee if paid at the time that the City issues vertical building permits for housing. Currently, this would reduce the fee to $33,000 or $55,000 per unit, respectively.
These adjustments will make a substantial contribution toward ensuring Alameda Point can accommodate more housing development in the future and offer an important first step in removing hurdles to future housing. However, development at Alameda Point carries substantial community benefit and infrastructure requirements, and the City will need to do additional work to ensure future housing can be delivered. This will be the subject of upcoming City Council meetings, including the upcoming special meeting of the City Council to tour the next potential phase of housing development in Main Street Neighborhood North.
ALTERNATIVES
• Adopt the Resolution authorizing the City Manager to execute the third amendment to the EDC Agreement, as proposed.
• Direct staff to modify the terms of the agreement. In this alternative, City Council should provide direction to staff on modified terms, with which staff will return to the Navy. The Navy may not agree to modified terms resulting in no changes to the housing fee.
• Do not adopt the Resolution, and do not agree to the terms. The terms and rate of the housing fee will remain as they currently are.
FINANCIAL IMPACT
The process of amending the EDC Agreement is included in staff’s housing work plan, and there is no additional unanticipated financial impact. The goal of the amendment is to increase the amount of market rate housing at Alameda Point by reducing the cost of development, which ultimately if achieved would result in additional property tax revenue to the City General Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Alameda Point Environmental Impact Report (2014)
Main Street Neighborhood Specific Plan
City Strategic Plan: HH7 - Implement the City’s Housing Element
This action is subject to the Levine Act
ENVIRONMENTAL REVIEW
The streamlining provisions of Public Resources Section 21083.3 and Section 15183 of CEQA Guidelines apply and no further environmental review is required.
CLIMATE IMPACT
This Resolution will facilitate and expedite the City’s continued efforts to redevelop Alameda Point as a mixed-use, transit-oriented community, which is consistent with and supports the City’s Climate Action Plan and regional and statewide Climate Protection and Greenhouse Gas Emission reduction strategies, including the Bay Area’s Sustainability Strategy, Plan Bay Area.
RECOMMENDATION
Adopt a Resolution authorizing the City Manager to enter into a third amendment to the Economic Development Conveyance Agreement for the Former Naval Air Station, Alameda.
Respectfully submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. Original Economic Development Conveyance Agreement (EDC Agreement)
2. First Amendment to the EDC Agreement
3. Second Amendment to the EDC Agreement
4. Proposed Third Amendment to the EDC Agreement