Title
Public Hearing to Consider Introduction of Ordinance Amending the Disposition and Development Agreement between Alameda Point Partners, LLC and the City of Alameda for Site A at Alameda Point to Extend the Phase 1 Outside Closing Date from December 12, 2016 to April 11, 2017 to Allow for Additional Time to Complete Property Due Diligence and to Secure Additional Financial Commitments. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Public Hearing to Consider Introduction of Ordinance Amending the Disposition and Development Agreement between Alameda Point Partners, LLC and the City of Alameda for Site A at Alameda Point to Extend the Phase 1 Outside Closing Date from December 12, 2016 to April 11, 2017 to Allow for Additional Time to Complete Property Due Diligence and to Secure Additional Financial Commitments
BACKGROUND
In June 2015, the City Council unanimously approved the Site A Development Plan and a Disposition and Development Agreement (DDA) with the private developer, Alameda Point Partners (APP), for a 68-acre area within Alameda Point that extends generally from the Main Street entrance of Alameda Point to the eastern edge of the Seaplane Lagoon. Site A includes 800 housing units (200 affordable), 600,000 square feet of commercial development, and extensive parks and utility infrastructure (Site A Project). The Site A Project represents the first major public/private development at Alameda Point since the Base closed and lost 18,000 jobs in 1997. It is an important first step towards achieving the community’s vision of a mixed-use transit-oriented development at Alameda Point. The Site A Project:
• Fulfills the community’s vision of building a high-quality mixed-use transit-oriented waterfront development that includes approximately 1,472 on-site permanent jobs and 2,570 direct construction jobs over the life of the project, retail amenities, a diversity of housing types for a wide range of income levels, and waterfront parks for the entire Alameda community;
• Sets the stage for future job creation through the construction of amenities, gateway improvements into Alameda Point, and a new sewer line from Main Street though Site A and up to the existing pump station at the northern edge of the Alameda Point property to support long-term employment-generating uses in the Enterprise Sub-district and the Naval Air Station Alameda Historic District (i.e., Adaptive Reuse Sub-district) at Alameda Point;
• Mitigates traffic impacts by funding transit service to BART every 15 minutes during peak traffic hours, free bus passes for all residents and employees, car- and bike-share stations, subsidized Clipper cards (all-in-one transit card for the Bay Area), a dedicated staff person to coordinate transportation services, an alternative modes website, and a number of other alternative transportation programs;
• Contributes $18 million towards significant transportation infrastructure, such as bus rapid transit lanes, a ferry terminal, bicycle lanes, and portions of the Bay Trail;
• Commits $19 million to approximately 15 acres of publicly accessible parks and open spaces, including eight acres of waterfront promenades and parks along the Seaplane Lagoon, which require expensive shoreline and flood protection improvements; and
• Complies with the City’s fiscal neutrality policy through dedicated special tax revenues; commits to building and funding $103 million in public infrastructure and amenities (including items described above) and provides profit sharing to the City in the event of exceptional financial performance.
The Site A development is the culmination of a unique and extensive community based planning process that began in 1993 and continued for over 20 years. The DDA contemplates that the Site A Project will be constructed in three phases over the next 15 years. Phase 1 of the Site A Project comprises approximately 30 acres of the 68-acre Site A property and consists of 650 housing units (25 percent below market rate, including 128 very-low and low-income affordable units and 36 moderate income affordable units), eight acres of parks and open space, and 93,000 square feet of retail development.
Since the approval of the Site A Development Plan and DDA, APP and its team of architects, engineers, and design professionals, in coordination with City staff, have expended significant staff and financial resources making extensive progress on implementing the Site A Project over an 18-month period, including the following items:
• Phase Zero: Phase Zero activities launched in October 2015, and have continued through the first year of the project. Over 11,000 visitors attended 15 events held throughout the year. Events included community-oriented programming such as a nature walk and coastal cleanup, as well as larger-scale productions such as Whimsy and The Soiled Dove, which were designed to attract regional audiences. Phase Zero activities will have a new home base with the opening of the Container Village on the taxiway, which will feature a café and beer garden. The Year 2 activity schedule was approved by the City Council in November 2016. It outlined the continuation and regular programming of the Seaplane Lagoon area.
• Parks and Open Space Design: Phase 1 of the Site A Project includes three publicly accessible open space areas: the initial phase of the Waterfront Park, the Block 10 open space and the Neighborhood Park. All of these parks and open spaces received Design Review approval from the Planning Board. The Recreation and Parks Commission also reviewed and approved the Neighborhood Park design in November 2016. Additionally, APP, in coordination with City staff, has held numerous meetings with the Bay Conservation and Development Commission (BCDC) staff and boards, including a well-received presentation of the Phase 1 Waterfront Park to the Design Review Board. Improvement plans and permit applications for the two public parks are currently under review by City staff and permit applications for the Phase 1 Waterfront Park have been submitted and are under review by BCDC, the State of California Regional Water Quality Control Board (Water Board), and the Army Corp of Engineers.
• Building Design: Since approval of the Site A Development Plan in June 2015, APP has focused on vertical design for all of the Phase 1 blocks, including Blocks 6, 7, 8, 9, 10 and 11. This design process has included City staff, including the Department of Public Works, the Planning Board, and the Historical Advisory Board (HAB). The Planning Board has approved the Design Review applications for all the blocks in Phase 1, with the exception of Block 9, which is still under review. Additionally, the HAB has approved Certificates of Approval for all of the blocks in and adjacent to the Naval Air Station Alameda Historic District.
• Affordable Housing: Two hundred (200) of the residential units (25%) at Site A are required to be affordable units. One hundred thirty (130) affordable units will be provided in two buildings on Block 8: a family building with 70 units, and a senior building with 60 units. The moderate-income units will be distributed among the market-rate units in the other buildings. In March 2016, APP assigned the Affordable Housing Implementation Plan to Eden Housing, thereby designating Eden Housing as the Qualified Affordable Housing Developer for Site A. Although unsuccessful, APP and Eden Housing expended significant staff and financial resources applying for $23.7M from the State of California through the Affordable Housing Sustainable Communities (AHSC) grant program. This grant would have been used to help fund the development of Block 8’s family and senior buildings and eligible portions of Site A’s sustainable infrastructure such as bike paths, sidewalks and Bus Rapid Transit (BRT) infrastructure. APP and Eden Housing are exploring numerous additional financing options, including applying for vouchers from the Alameda Housing Authority, applying for 4% non-competitive tax credits and/or re-applying to the AHSC grant program in 2017.
• Infrastructure Design: Since approval of the Site A Development Plan in June 2015, APP has worked diligently on Phase 1 horizontal design, including infrastructure and utility design and development. During the first year, the Planning Board approved the tentative map, the West Atlantic Design Review application and the street names for all the side streets at Site A. The City Council also approved the tentative map and street names for Phase 1. The design process has included City staff, including the Departments of Public Works and Base Reuse, Alameda Municipal Power, Easy Bay Municipal Utility District, Pacific Gas & Electric, AC Transit, BCDC, and the Water Board, among others. APP has also obtained City approval of the demolition and grading permit applications necessary for Phase 1, and APP has paid in full $500,000 in permit fees and obtained City approval of all Phase 1 infrastructure improvement plans, including for the Backbone Infrastructure Improvements, Sewer Pump Station, Off-site Wastewater Trunkline, and Storm Drain Outfall. Additionally, APP has executed the construction contract with a contractor for the Phase 1 infrastructure work consistent with the City’s approved improvements plans.
• Transportation Demand Management (TDM) Plan: Per the DDA, the Site A Project is required to join a Transportation Management Association (TMA) and implement much of its TDM Program prior to receiving an occupancy permit for the first building. Measures to be implemented ‘Day One’ include a weekday, peak-period shuttle service from the project site to 12th Street BART at 15-minute headways, providing AC Transit EasyPasses to all project residents and employees, and a Parking Pricing program. Since approval of the DDA, APP has been working with the City and other local developers to form an umbrella TMA encompassing multiple projects across the City. This work has included the negotiation of bylaws, which are currently up for approval with the West Alameda TMA. As part of membership in the TMA and formation of a Community Facilities District for Alameda Point, the Site A Project will be required to pay an annual per unit and per square foot special tax to fund these TDM services.
• Ferry Terminal: DDA Section 5.2 (b) requires that APP “cooperate with the City in the construction of a permitted and operating ferry terminal at Seaplane Lagoon including any necessary parking improvements.” APP is obligated to pay $10M towards the costs incurred for the permitting, design and construction of the Seaplane Lagoon Ferry Terminal upon closing on the Phase 1 property. City staff, aided by APP, is pursuing funds from multiple additional funding sources to supplement the $10M already committed. On April 5, 2016, the City Council approved the Ferry Terminal Plan, including conceptual design, cost estimates and CEQA compliance. The City Council also approved a Memorandum of Understanding (MOU) between the City of Alameda and the Water Emergency Transit Authority (WETA), which provides a framework for the collaboration on funding, developing and operating ferry service from Seaplane Lagoon by no later than Fiscal Year 2020. The MOU was approved by City Council on April 5, 2016, and the WETA Board of Directors approved the MOU on April 7, 2016. The Concept Design for waterside and landside improvements was reviewed by the Planning Board on May 9, 2016. Additionally, the BCDC Design Review Board completed Design Review for the Seaplane Lagoon on June 7, 2016. The Water Board and US Army Corps of Engineers permit applications were submitted in June 2016. APP has pre-funded approximately $600,000 of the ferry terminal expenses to pay for design and permitting costs, as well as significant APP staff time to help coordinate these efforts with the City. The WETA Board also took action in October 2016 in procuring two new ferry boats that will be available to provide new service at the Seaplane Lagoon Ferry Terminal upon completion.
APP has expended $13 million to date in equity funds on all of these predevelopment efforts that have occurred over the last 18-month period. Due to the complexity of the project and the need to complete property due diligence items and to secure additional financial commitments, APP has requested that the City Council approve an extension of four additional months for closing on the Phase 1 property. Staff recommends granting this extension as explained in greater detail below.
DISCUSSION
The outside closing date in the DDA for transfer of the Phase 1 property from the City to APP was December 12, 2016 (Phase 1 Outside Closing Date). Prior to the deadline, APP requested that the City Council amend the DDA to extend the Phase 1 Outside Closing Date to April 11, 2017 to allow for an additional 120 days to complete property due diligence items and obtain additional financing commitments prior to closing. This amendment would not extend any of the major performance milestones specified in the DDA related to Phase 1, such as completion of infrastructure and vertical building construction for Phase 1, or any milestones for Phases 2 and 3. For instance, completion of infrastructure construction must still be completed within 30 months of the original Phase 1 Outside Closing Date of December 12, 2016 and would not be extended by the 120 days.
If approved, the DDA amendment will grant a 120-day extension of the Phase 1 Outside Closing Date to allow APP, in coordination with City staff, to accomplish the following:
1. Complete Complex Base Reuse Property Due Diligence Issues. The redevelopment of former military property is challenging due to complex infrastructure and environmental issues, including the need to upgrade 70-year-old deteriorating infrastructure, as well as issues related to prior, and in some cases existing, environmental conditions of the property. APP, in coordination with City staff, have tackled a significant number of infrastructure issues related to bridging existing utilities so that utilities are maintained to all existing users, complicated routing of infrastructure on or around Navy property to account for environmental issues, such as groundwater contamination near the Cartwright Electrical Sub-Station, and obtaining Navy approval for construction of infrastructure on their land. Additionally, in the transfers of land from the Navy to the City, the City inherited several open petroleum sites, a few of which are in the Phase 1 Site A boundaries. While APP has taken a leadership role in assisting the Navy in obtaining closure for several of these petroleum sites from the Water Board, the closure process is complicated and requires additional investigation and negotiation of covenants with the Water Board before closing on the property can occur. While these items are very close to being resolved, it is important to have a few more months to complete these due diligence items before transferring the Phase 1 Site A property to APP.
2. Secure Additional Financial Commitments from Capital Investor. While APP has secured significant financial commitment from its parent company, Trammell Crow Residential, APP has also been working with UDR, a New York Stock Exchange apartment developer and investor that specializes in unique urban mixed-use environments, over the last year to participate in the financing and development of Site A infrastructure and vertical construction of Blocks 9, 10, and 11. As specified in the DDA, APP must provide evidence of its financing commitments before the City transfers the property to them. While APP and UDR have been working diligently on their financing agreements and commitments, they need more time to complete the documentation. City staff and its financial consultants and attorneys have participated in discussions with UDR and APP and have reviewed draft documents. Staff and its advisors believe that providing more time to solidify UDR’s role in the Site A Project brings extensive additional capital investment and development expertise to the project and diversifies the sources of capital, which will enhance the ultimate feasibility of the project.
Staff recommends approving the DDA amendment because it is important for these items to be resolved before transferring the property out of City ownership. APP has invested significant financial and staff resources into the predevelopment of Phase 1 of Site A demonstrating a solid commitment to implementing the Site A Project successfully. As described above, APP has already expended $13 million in equity funds to date on predevelopment efforts. Additionally, in certain instances, APP expended funds and significant staff resources on accomplishing a number of tasks which exceeded the DDA requirements: (1) APP expended approximately $600,000 in predevelopment funds on planning and permitting of the Seaplane Lagoon Ferry Terminal before transfer of the land from the City; and (2) obtained design review approval for five of the six development blocks when the DDA only required approval of one block before the City’s transfer of the land.
The recommended DDA Amendment is attached as Exhibit 1. A complete copy of the executed DDA is attached as Exhibit 2.
FINANCIAL IMPACT
There is no financial impact to the General Fund or Base Reuse Fund budgets.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
These actions are consistent with the approved General Plan, Zoning Ordinance, Town Center Plan, MIP, Site A Development Plan, and DDA.
ENVIRONMENTAL REVIEW
On February 4, 2014, the City of Alameda certified the Alameda Point Final EIR in compliance with the California Environmental Quality Act (CEQA). The Final EIR evaluated the environmental impacts of redevelopment and reuse of the lands at Alameda Point consistent with the Town Center Plan, which included Site A. No further review is required for this review of the project designs.
RECOMMENDATION
Hold a public hearing to consider introduction of Ordinance amending the Disposition and Development Agreement between Alameda Point Partners, LLC and the City of Alameda for Site A at Alameda Point to extend the Phase 1 Outside Closing Date from December 12, 2016 to April 11, 2017 to allow for additional time to complete property due diligence and to secure additional financial commitments.
Respectfully submitted,
Jennifer Ott, Base Reuse Director
By,
Jennifer Ott, Base Reuse Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Amendment to Disposition and Development Agreement between Alameda Point Partners, LLC and the City of Alameda for Site A at Alameda Point
2. Disposition and Development Agreement between Alameda Point Partners, LLC and the City of Alameda for Site A at Alameda Point (August 6, 2015)