Title
Summary Title: Public Hearing to Consider Parcelization and Acquisition of Oakland Inner Harbor Tidal Canal From the Army Corps of Engineers and Disposition of 94 Parcels to Individual Property Owners and Related Environmental and Zoning Amendment Actions.
Public Hearing to Consider: (A) Introduction of Ordinance Amending the Alameda Municipal Code by Amending Chapter 30, Section 30-4.21 E, Estuary District (Requires 3 affirmative votes);
(B) Adoption of Resolution Approving a Negative Declaration and Tentative Map #8337 for a 99 Lot Subdivision Located Along the Oakland Inner Harbor Tidal Canal from Approximately 1,800 Feet Northwest of the Park Street Bridge to Approximately 2,300 Feet South of High Street (Requires 3 affirmative votes); and
(C) Introduction of Ordinance Authorizing the City Manager to: (1) Execute a Memorandum of Understanding, Quitclaim Deed and All Other Necessary Documents Between the City of Alameda and the United States of America Acting By and Through the U.S. Army Corps of Engineers to Acquire 94 Parcels of Semi-Submerged and Submerged Land On the Alameda Side of the Oakland Inner Harbor Tidal Canal (“Tidal Canal”); (2) Execute Purchase and Sale Agreements, Quitclaim Deeds and All Other Necessary Documents Between the City of Alameda and Various Purchasers to Sell Approximately 92 Parcels on the Tidal Canal at Fair Market Value. A Draft Negative Declaration has been prepared for the proposed actions consistent with the California Environmental Quality Act (CEQA). (Requires 4 affirmative votes) (Community Development 481005)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Public Hearing to Consider: (A) Introduction of Ordinance Amending the Alameda Municipal Code by Amending Chapter 30, Section 30-4.21 E, Estuary District (Requires 3 affirmative votes);
(B) Adoption of Resolution Approving a Negative Declaration and Tentative Map #8337 for a 99 Lot Subdivision Located Along the Oakland Inner Harbor Tidal Canal from Approximately 1,800 Feet Northwest of the Park Street Bridge to Approximately 2,300 Feet South of High Street (Requires 3 affirmative votes); and
(C) Introduction of Ordinance Authorizing the City Manager to: (1) Execute a Memorandum of Understanding, Quitclaim Deed and All Other Necessary Documents Between the City of Alameda and the United States of America Acting By and Through the U.S. Army Corps of Engineers to Acquire 94 Parcels of Semi-Submerged and Submerged Land On the Alameda Side of the Oakland Inner Harbor Tidal Canal (“Tidal Canal”); (2) Execute Purchase and Sale Agreements, Quitclaim Deeds and All Other Necessary Documents Between the City of Alameda and Various Purchasers to Sell Approximately 92 Parcels on the Tidal Canal at Fair Market Value. A Draft Negative Declaration has been prepared for the proposed actions consistent with the California Environmental Quality Act (CEQA). (Requires 4 affirmative votes)
BACKGROUND
Overview of the Problem: The U.S. Army Corps of Engineers (“Army Corps”) has been trying to relieve itself of ownership for the past 25 years. To encourage the City of Alameda (“City”) to accept the transfer of the Alameda side of the Oakland Inner Harbor Tidal Canal (“Tidal Canal”), the Army Corps instituted a permitting moratorium in 2000, which has prohibited any construction, maintenance, repair or improvement of the waterfront along the OIHTC, except for emergency repairs. The Army Corps will not lift the permitting moratorium until the property has been transferred. As a result, regulating agencies with jurisdiction over the area, including the City, BCDC and the SF Regional Water Quality Control Board (“RWQCB”), have been unable to enforce regulations for code enforcement due to federal supremacy. Likewise property owners have been unable to legally make waterfront improvements and repairs (except emergency repairs) because they can’t get permission from the Army Corps. In addition, the Army Corps’ ownership and moratorium have created a cloud on title for the adjacent property owners. They own the improvements but the Army Corps owns the land upon which those improvements sit. In at least one instance, an Alameda realtor was sued over title confusion related to Tidal Canal ownership.
Approximately 90 residential and 8 commercial properties have been directly affected by the situation. Residential owners on the Alameda side have formed a voluntary homeowner’s association to lobby the City and the Corps to complete the transfer in order to remove the permitting moratorium. In March 2015, the City Council acknowledged this as a problem and authorized City staff to work with the property owners and the Corps to identify a transfer strategy.
On September 15, 2015, the City Council by unanimous vote directed the City Attorney to pursue a real estate transaction whereby the Army Corps would transfer the Alameda side of the Tidal Canal to the City and the City would then immediately sell some of the property to adjacent private property owners or other purchasers. To minimize the City’s potential liability and costs, the City Attorney determined that the best way to fulfill the conditions set by the City Council was to structure the transaction so that the City is in the chain of title for the shortest period possible. Thus, staff proposes to subdivide the Tidal Canal into 99 parcels while it is still in Army Corps ownership. 94 of the 99 parcels will be transferred from the Army Corps to the City. Once transferred, the plan is to immediately transfer most of the 94 new parcels to the adjacent property owners or other purchasers, at fair market value.
On July 11, 2016, the Planning Board held a noticed public hearing and unanimously approved resolutions, with added conditions, recommending that the City Council approve a Negative Declaration, approve an Estuary District zoning text amendment, and approve Tentative Map #8337 to implement the City Council’s September 15, 2015 direction.
discussion
The City Council is being asked to consider approval of the following items:
1. Negative Declaration.
In June 2016, staff circulated the following documents: A draft Negative Declaration (Exhibit 1), evaluates the potential environmental impacts of the proposed zoning amendments, tentative map, and land conveyance on the environment as required by the California Environmental Quality Act (CEQA). The Negative Declaration finds that the proposed actions will not cause environmental damage or substantially and avoidably injure fish or wildlife or their habitat. The proposal results in the simple transfer of land from a federal agency to a combination of public and private entities. No new development of the land is being proposed or contemplated as part of the project, and the project is not being pursued to facilitate new development of the primarily submerged lands. Further, any future development proposed on any of the proposed parcels will be subject to a discretionary decision by the City, which will require a review of potential environmental impacts. The Negative Declaration and other key documents can be found at <https://alamedaca.gov/tidal-canal-project>.
2. Estuary Zoning District Amendments.
Draft amendments to the Estuary Zoning District designed to ensure that the submerged lands can only be used for maritime structures and uses, such as docks, piers, and boathouses, and that all future proposals will be subject to discretionary review by the City and the Bay Conservation and Development Commission (BCDC).
3. Tentative Map #8337.
A draft Tentative Map #8337, which depicts a proposed subdivision of the Army Corp land into 99 individual lots. As proposed, the Army Corps will retain five lots: the Oakland side of the canal (Unsurveyed Remainder Area 1), property adjacent to the federally owned Navy Operational Support Center (Parcel 3) bridge footings for the High Street Bridge (Parcel 97), the Miller-Sweeney Bridge and the Fruitvale Rail Bridge (Parcel 98), and the Park Street Bridge (Parcel 99). The City will retain the two open water lots (Lots 2 and 96), which will be preserved for open navigation though the Tidal Canal. The City will offer at fair market value the remaining 92 lots (Lots 4 through 96) to the adjacent property owners. These 92 lots have historically been used by the adjacent property owners through leases, license agreements or other approvals with the Army Corps to support their docks, piers, boathouses and/or commercial activities. The proposed Tentative Map is attached as Exhibit 3.
The Tentative Map retains all known and recorded easements, including a pedestrian easement on Parcel 10 behind the Nob Hill shopping center. The proposed subdivision will not conflict with easements acquired by the public at large for access through or use of property within the subdivisions. All existing public access easements are to be retained. As described above, the City will retain the open water lots along the Oakland/Alameda city line to ensure that the navigable portion of the Tidal Canal remains open to recreational and commercial traffic. The Army Corps plans to convey the Oakland portion of the Tidal Canal to the East Bay Regional Parks District in a separate transaction.
In addition to the adoption of the above documents, the community and the Planning Board have raised questions about how this project effects existing public access.
The City of Alameda currently owns three small public properties along Fernside Boulevard between High Street and Fairview Avenue that are designed to provide public access from Fernside Boulevard to the water’s edge. The public access lands are 10 feet wide at Fernside Boulevard and then “bulb out” to approximately 35 feet at the water’s edge. At its July 2016 public hearing, the Planning Board recommended that the City Council add three (3), 35-foot wide public access easements across six of the new submerged lots created by Tentative Map #8337 to preserve opportunities for the Alameda community to build future public water access facilities, such as a floating dock for public use, at the foot of three existing public access points located along Fernside Boulevard. Although it is outside of the project area, this project has renewed interest in the community for resolving the encroachment issues on the City-owned properties landside and in increased public access to and into the water.
In response to stakeholder input, staff revised the Tentative Map presented to the Planning Board in order to retain as part of the open water parcel (Parcel 2) those submerged areas adjacent to the public access lands extending to the next nearest adjacent property line.
The portions of Parcel 2 in question include:
• A 108-foot long segment behind the existing City owned waterfront land extending behind 3227 and 3229 Fernside. This area is between Parcels 64 and 65 on the Tentative Map.
• A 100-foot long segment behind the existing City owned waterfront land extending between 3267 and 3301 Fernside. This area is between Parcels 75 and 76 on the Tentative Map.
• An 89-foot long segment behind the existing City owned waterfront land extending behind 3335 and 3341 Fernside. This area is between Parcels 85 and 86 on the Tentative Map.
Staff made the changes in light of the following considerations:
• Staff agrees that the City should preserve opportunities for future public improvements to improve public water access where feasible for all Alameda residents.
• It is not in the City’s long-term interest to retain ownership of the submerged areas in question along Fernside because these areas have existing docks associated with the adjacent properties. However, staff believes that in light of the community’s renewed interest in resolving the encroachment issues on City-owned property and the City’s interest in increasing public access, staff needed more information and time to discuss these issues in more detail with the affected adjacent homeowners and the community. Once staff has more information, staff can return to the City Council with a proposal for increased public access, resolution of the encroachment issues and disposition (whether through sale, license or lease) of the remaining property, if any, not needed for public access.
• At the three Fernside locations, staff believes that an 18-foot wide easement is adequate to accommodate a 14-foot wide floating dock with 2 feet of open water on each side to step into a kayak or canoe or onto a paddle board. Furthermore, the 10-foot width of the land-side public lands limits the use of the floating docks to watercraft that can be carried or rolled down to the future floating docks. These docks will not have automobile access for launching large boats.
• By retaining the entire area in question at the foot of the three public access easements, the City Council is giving staff sufficient time to craft a fair and equitable solution for all concerned instead of the City Council having to make a decision on those areas without exploring all of the possibilities and hearing from the citizens on both sides of the issue.
• Although the City Council has not budgeted any funds at this time to make any physical improvements that could include floating docks and access ramps from the City-owned land into the water, it is within the City Council’s purview to reserve some of the proceeds of this transaction for this purpose should the remainder of the Project move forward.
In addition to the issue of creating new public access to the water, there is also the issue of long term code enforcement issues all along the Tidal Canal. The proposed real estate transaction does not waive, forgive, approve or condone unlawful activity including code violations. The property owners will be responsible for ensuring that they have or will obtain permits necessary for their waterfront structure.
Transactional Agreements
In addition to approving the Negative Declaration, Zoning Amendments, and Tentative Map, staff is requesting that the City Council authorize the City Manager to execute: 1) a Memorandum of Understanding between the City of Alameda and U.S. Army Corps of Engineers for the City’s acquisition of 94 lots of semi-submerged and submerged land along the Alameda side of the Oakland Inner Harbor Tidal Canal (collectively the “Subject Property); 2) Purchase and Sale Agreements with various purchasers for the disposition of the Subject Property at fair market value; and 3) any and all documents necessary and convenient to consummate these transactions. These and other documents will be placed into escrow until all of the conditions for closing have been met. The City Manager would have the authority to determine if the conditions precedent to close have been met, to waive minor defects in compliance with the conditions precedent and to postpone the entire transaction if conditions precedent (except minor defects) have not occurred.
With this authorization, staff will be able to continue to work with the Army Corps and the adjacent property owners to ensure that all of the necessary land transfers are able to occur. Staff will return to the City Council at a noticed public hearing for approving a Final Map (creating the necessary parcels).
Major Terms of the Real Estate Transaction
The parcels will be sold by the City at fair market value based upon an independent appraisal report dated August 2016 and prepared by Watts, Cohn and Partners, Inc. (The appraisal was based on 90 residential parcels not 84. However, since the appraisal value was on a per parcel basis the value does not change.) The 84 residential parcels will be sold for $10,000 per parcel plus normal closing costs up to $1,000. The City will cover any normal closing costs in excess of $1,000. It is anticipated that these additional costs will not exceed $42,000. The 8 commercial parcels will be priced as follows (plus closing costs):
|
1. |
Lot 4 |
$280,000 |
|
2. |
Lot 5 |
$20,000 |
|
3. |
Lot 6 |
$90,000 |
|
4. |
Lot 7 |
$160,000 |
|
5. |
Lot 8 |
$25,000 |
|
6. |
Lot 9 |
$50,000 |
|
7. |
Lot 10 |
$110,000 |
|
8. |
Lot 11 |
$70,000 |
As a condition of sale, the City requires that there be 100% participation for the residential parcels. The residential owners have formed a voluntary homeowners’ association which has pledged to purchase any “holdout” residential parcels. The parcels (residential and commercial) with be sold “AS IS” and “With All Faults” via quitclaim deed. An exemplar purchase and sale agreement with the terms of transaction is attached as Exhibit 4. Transactional and Environmental documents related to this transaction can be found on the City’s website at https://alamedaca.gov/tidal-canal-project.
FINANCIAL IMPACT
In September 2015, the City Council authorized $350,000 General Fund funding allocation for the Tidal Canal project. It is anticipated that the City will recoup the project costs as well as internal staff time costs when properties are sold to the individual property owners as discussed above. It is anticipated that if all parcels are sold that the City would recognize positive cash flow in the range of $7-900,000. However, if not all of the commercial parcels are sold immediately, then the City will incur the carrying costs and liability risk for those parcels until sold which will further reduce this amount. It is anticipated that a portion of these proceeds would be available for public access improvement and maintenance projects along the Tidal Canal.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed conveyance and Tentative Map is consistent with the City of Alameda General Plan Open Space and Land Use Policies, as well as the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
A Draft Initial Study/Negative Declaration (“IS/ND”) for the Project was published on June 1, 2016, in accordance with the California Environmental Quality Act (CEQA), which addresses all potential environmental impacts associated with the proposed transfer and subsequent transfers into private ownership, amendments to the Estuary District Zoning, and the proposed subdivision map. The IS/ND concludes that the proposed project would not cause any potentially significant environmental impacts, and accordingly, no mitigation measures would be required as part of the Project. Any proposed future improvements along the Tidal Canal will be subject to separate review and discretionary approval by the City.
RECOMMENDATION
Hold a Public Hearing and
A) Adopt the First Reading to Introduce an Ordinance Amending Chapter 30 of the Alameda Municipal Code Section 3-4.21 E, Estuary District,
B) Approve Tentative Map #8337 (PLN16-0240) for a 99 lot subdivision Located along the Oakland Inner Harbor Tidal Canal from approximately 1,800 Feet Northwest of the Park Street Bridge to approximately 2,300 Feet South of High Street Bridge, and
C) Authorize the City Manager to: (i) execute a Memorandum of Understanding and Quitclaim Deed between the City of Alameda (City) and U.S. Army Corps of Engineers (Corps) for the City’s acquisition of 94 parcels of semi-submerged and submerged land along the Alameda side of the Oakland Inner Harbor Tidal Canal (collectively the “Subject Property”); (ii) execute Purchase and Sale Agreements and Quitclaim Deeds with various purchasers for the disposition of the Subject Property at fair market value; and (iii) execute any and all ancillary documents necessary and convenient to consummate these transactions.
Respectfully submitted,
Janet C. Kern, City Attorney
By,
Andrico Q. Penick, Assistant City Attorney
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Negative Declaration
2. Zoning Text Amendment
3. Tentative Map dated September 7, 2016.
4. Purchase and Sale Agreement Exemplar