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Recommendation to: 1) Direct Staff to Conduct a Four-Week Request For Qualification (RFQ) Solicitation Process for the Development of the West Midway Project; 2) Approve Debbie Potter, Community Development Director; Michelle Giles, Base Reuse Manager; Lisa N. Maxwell, Assistant City Attorney; and Eric Levitt, City Manager, as Designated Real Property Negotiators for the West Midway Project; 3) Approve the Finding Related to the Surplus Lands Act that the Property Constitutes Exempt Surplus Land; and 4) Direct Staff to Include a $350,000 Appropriation for the RESHAP Project Backbone Infrastructure Design in the Mid-Year Budget. (Community Development 819099)
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To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
Staff requests that City Council direct staff to conduct a four-week Request for Qualifications (RFQ) solicitation process for development of the West Midway project, a 22.8-acre mixed-use project that includes 291 market-rate residential units and commercial uses, all required backbone and in-tract infrastructure improvements, for the property and all of the required backbone infrastructure for the adjacent 9.7-acre RESHAP project (Market Rate West Midway Project). The RESHAP project is a 267-unit, 100% affordable housing development being built by Alameda Point Collaborative, Operation Dignity, and Building Futures with Women and Children (collectively, the Collaborating Partners) and Mid-Penn, a non-profit affordable housing developer and that is subject to the RESHAP Disposition and Development Agreement (DDA) with the City (the RESHAP Project). The Market Rate West Midway Project and the RESHAP Project collectively make up a 32.5-acre development that includes 558 units, of which 48% are affordable to very low- and low-income households, commercial uses and backbone and in-tract infrastructure improvements (the West Midway Project).
Staff recommends that the City Council appoint certain staff to serve as real estate negotiators for the Market Rate West Midway Project and additionally recommends that the City Council direct staff to include a $350,000 appropriation for the RESHAP Project backbone infrastructure design. The funding would be added in the mid-year budget request if approved to move forward.
BACKGROUND
On July 10, 2018, City Council authorized staff to issue an RFQ for development of the Market Rate West Midway Project at Alameda Point, comprised of a 22.8-acre area within the Main Street Neighborhood sub-district, located south of West Midway and bounded by Main Street on the east, Pan Am Way on the west and West Tower to the south (Exhibit 1). The selected developer of the site will construct the necessary backbone infrastructure for the entire West Midway Project. The RFQ is attached as Exhibit 2.
On September 24, 2018, the City of Alameda (City) received seven qualified responses in response to the RFQ. Staff and community partners evaluated the responses and interviewed the top four development teams. On February 2, 2019, City Council narrowed the field to two finalists: 1) APP (a partnership of Trammel Crow Residential (TCR) and srmErnst Development Partners (SRM)); and 2) Jamestown/Cypress Equity Investment (CEI).
On March 11, 2019, the two developer teams notified staff that they were having initial discussions about a development partnership and requested additional time to determine if this approach was a viable alternative. On May 6, 2019, the two developer teams submitted a combined response to the supplemental questions, a preliminary program description, and partnership organizational structure.
On May 21, 2019, staff was informed by Jamestown that it was withdrawing from the developer selection process due to uncertainty regarding the viability of commercial development, given the project phasing and increased costs of infrastructure.
On July 16, 2019, City Council selected APP as the developer for West Midway. On September 19, 2019, the City received a letter from APP withdrawing as developer of West Midway to focus on Site A.
DISCUSSION
Market Rate West Midway Project and RESHAP Project
The West Midway Project is a 32.5-acre mixed use development opportunity that includes (a) a 22.8-acre parcel to be made available to a market-rate developer for up to 291 residential units and commercial development, and (b) a parcel that would consolidate the Collaborating Partners’ holdings on 9.7 acres and provide 267 affordable units (200 replacing the existing units that comprise the Homeless Accommodation and 67 additional affordable units). The market-rate developer would be responsible for providing the backbone infrastructure to the RESHAP Project. The collective West Midway Project would include 558 units, of which 48% are affordable to very low- and low-income households, commercial uses and backbone and in-tract infrastructure improvements. Staff previously moved forward with the RFQ to secure a master developer and negotiate a DDA with the Collaborating Partners and Mid-Penn for the RESHAP Project.
Since the withdrawal of APP as the selected master developer for the Market Rate West Midway Project, the Collaborating Partners have explored potential options for funding the backbone infrastructure and developing the RESHAP Project on their own. One option they looked at was the new State Infill Infrastructure Grant (IIG). After further research, it was determined that their preliminary self-score was too low to qualify to submit an application. Areas where points could not be maximized included public transit that comes at least every 15 minutes during peak commute times (this will happen in the next 8-10 months when “day one” service commences at Site A), lack of density, and the absence of pro-housing policies as defined by the State.
While the Collaborating Partners continue to research other public/private financing for large infrastructure projects, they have asked the City to re-start the RFQ process for retaining a private sector market rate development team as they do not believe it is feasible to move forward on their own with the RESHAP Project. Given the importance of the RESHAP Project and the Collaborating Partners’ conclusion that a private sector partner is needed to move the overall West Midway Project forward, staff recommends that City Council re-start the Market Rate West Midway Project and select a market rate developer who is capable of seeing the overall West Midway Project to its conclusion.
In the interest of jump starting the West Midway Project, staff has also identified options that City Council could consider to facilitate advancement of the overall West Midway Project, as further discussed below.
Real Property Negotiators
Under Government Code Section 54956.8, Title 5, Division 2, Part 1, Chapter 9, City Council must identify its real property negotiators for the Market Rate West Midway Project, which are recommended to be Debbie Potter, Community Development Director; Michelle Giles, Base Reuse Manager; and Lisa N. Maxwell, Assistant City Attorney, and the City Manager, Eric Levitt.
City Assistance for the RESHAP Project
While staff is recommending that City Council re-start the Market Rate West Midway Project and select a developer for this project, there may also be an opportunity for the City to support and facilitate the advancement of the RESHAP Project by considering and potentially funding the following:
• Demolition of the Commissary. The largest building within the RESHAP parcel is the Navy Commissary building containing approximately 91,000 sq. ft. The City could fund demolition of this structure and foundation. This would include disconnecting any existing utilities from the building, abatement of any hazardous materials, demolition and disposal of the structure, the foundation, and leveling the site post- demolition. The demolition is estimated to take two to three months. The rough cost estimate of this work is $1.5 million.
• Site Preparation of the RESHAP Parcel. The City could fund removal of the other remaining structures, surface materials (pavement, concrete), removal or abandoning of existing utilities and leveling of the site post demolition. This would not include grading of the RESHAP site for their future building pads or corrective geotechnical measures. The site preparation is estimated to take three to four months. The rough cost estimate of this work is $1.75 million.
• Backbone Infrastructure Design for RESHAP Project Phase 1. The City could fund preparation of construction documents for the backbone infrastructure necessary to support the RESHAP Phase 1 area. The backbone improvements would include the southern half of Orion Street and future in-tract road. The construction documents would include street and utility improvement plans, dry utility plans, landscape and irrigation plans. This will also require agreements to be executed with Alameda Municipal Power and East Bay Municipal Utility District (EBMUD) to prepare electrical and water system designs, respectively. The construction document preparation is estimated to be one to one and one-half years, primarily due to the EBMUD design process. The rough cost estimate of construction document preparation for this package of backbone infrastructure is $350,000.
The first two items above, either together or individually, are costly but can be competed in a relatively short period of time. The third option, Phase 1 backbone infrastructure design, is less costly ($350,000) but has a long lead time, up to 1 ½ years. If City Council wants to assist the RESHAP Project’s progress, it might consider the catalyst impact of advancing the design work. It could be argued that these initiatives are the responsibility of the market-rate developer, however, it will likely be 18 months before a developer is in a position to initiate this work given the need to solicit a developer, negotiate an agreement, and commence the infrastructure design work or bid required demolition work.
Any further advancement of backbone infrastructure, site improvements or design, would not be recommended in advance of a market-rate developer being selected. The costs associated with advancing development of the RESHAP Project, such as corrective grading measures and completion of the remainder of the backbone improvements, are significant and not recommended as these next steps are highly dependent on the design details of the Market Rate West Midway Project development and RESHAP’s need to secure funding to advance construction.
Lastly, it should be noted that City assistance for the RESHAP Project may be inconsistent with the City’s policy of fiscal neutrality at Alameda Point. However, the beneficiaries of the RESHAP Project extend beyond Alameda Point residents, as 67 new affordable units (in addition to 200 replacement units) will be available to very low- and low-income residents from throughout the City through this project.
ALTERNATIVES
In light of the Surplus Lands Act, as amended effective January 1, 2020 (the Act), as further described below, there is only one legally compliant option for moving forward with a developer selection process that City Council can consider: direct staff to
Staff recommends that the City Council direct staff to initiate an expedited four-week RFQ process. This approach ensures that any interested party, including, without limitation, Other Agencies, have an opportunity to submit a proposal, while also encouraging those developers who continue to be engaged to participate in the process. Staff anticipates concluding the selection process and bringing a final recommendation to City Council in the first quarter of 2020.
FINANCIAL IMPACT
There is no financial impact to the City’s General Fund related to the recommendation to re-start the solicitation process for the development of the Market Rate West Midway Project.
However, if the City Council would like to support and facilitate the RESAHP Project by funding the Phase 1 backbone infrastructure design work, it is estimated to cost $350,000. Those funds would need to be appropriated and will be included in the mid-year budget.
MUNICIPAL CODE/POLICY CODUMENT CROSS REFERENCE
The recommended actions are consistent with the General Plan, Zoning Ordinance, Main Street Specific Plan, Master Infrastructure Plan, and RESHAP DDA.
SURPLUS LANDS ACT
The West Midway Project is exempt under the Act because the West Midway Project contemplated for development is considered “exempt surplus land,” as defined in California Government Code Section 54221(f)(1) of the Act. Specifically, the project as defined above falls within the exemption contained in California Government Code Section 54221(f)(1)(F)(i) (the Finding), which exempts land on which a mixed-use development will be constructed, following the land being put out to an open, competitive bid by the City, provided all entities identified in Section 54222(a) of the Act (Other Agencies) are invited to participate in the competitive bid process, where the project includes at least 300 housing units and restricts at least 25 percent of the residential units to lower income households, as defined in the California Health and Safety Code. As indicated above, the aggregate West Midway Project seeks to develop 558 units of housing, 48% percent of which will be restricted to lower income households pursuant to the RESHAP DDA, and provides for 267 affordable housing units. Consistent with the Act, all Other Agencies will be invited to participate in the RFQ process.
ENVIRONMENTAL REVIEW
No environmental review is required as recommending a RFQ process is not a project as defined under California Environmental Quality act (CEQA). CEQA Guidelines, section 15378(a).
CLIMATE IMPACTS
There are no climate impacts associated with the recommendation of a RFQ process. Climate impacts and associated mitigation measures will be addressed during the entitlement phase of the project.
RECOMMENDATION
It is recommended that City Council:
1) Direct staff to conduct a four-week RFQ solicitation process for the development of the Market Rate West Midway Project;
2) Approve Debbie Potter, Community Development Director; Michelle Giles, Base Reuse Manager; Lisa N. Maxwell, Assistant City Attorney, and the City Manager, Eric Levitt, as designated real property negotiators for the West Midway project;
3) Approve the Finding related to the Surplus Lands Act that the property constitutes Exempt Surplus Land; and
4) Direct staff to include a $350,000 appropriation for the RESHAP project backbone infrastructure design as part of the mid-year budget.
CITY MANAGER RECOMMENDATION
The City Manager recommends approval of the staff recommendation.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Michelle Giles, Base Reuse Manager
Financial section reviewed by,
Elena Adair, Finance Director
Exhibit:
1. Map
2. 2018 Request for Qualifications
cc: Eric Levitt, City Manager