Title
Recommendation to Find that Pulte Home Company, LLC is a Qualified Developer Pursuant to the Alameda Landing Disposition and Development Agreement, and Consent to the Form of the Partial Assignment and Assumption Agreement (Disposition and Development Agreement (Alameda Landing Mixed Use Project) - Remainder Residential Parcel), and Authorize the City Manager, or Designee, to Execute the Required Documents. [SACIC]; and
Recommendation to Consent to the Form of the Partial Assignment and Assumption Agreement (Development Agreement (Alameda Landing Mixed Use Commercial Project) - Remainder Residential Parcel) to Pulte Homes Company LLC, and Authorize the City Manager, or Designee, to Execute the Required Documents. [City Council] (Community Development 256)
Body
To: Honorable Chair and Members of the Successor Agency to the Community Improvement Commission
Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The Disposition and Development Agreement (DDA) and Development Agreement (DA) between the Successor Agency to the Community Improvement Commission of the City of Alameda (Successor Agency) and City of Alameda (City), respectively, and Catellus Alameda Development, LLC (Catellus) allow for the agreements to be assigned, in whole or in part, to a different entity(ies) under certain circumstances: 1) pursuant to the DDA the Successor Agency must find that the assignee is a Qualified Developer, as defined in the DDA, and 2) the Successor Agency must consent to the assignment of the DDA and the City must consent to the assignment of the DA as follows: 1) the Successor Agency finds that Pulte Home Company, LLC (Pulte) is a Qualified Developer as defined in the DDA; 2) the Successor of the DDA and authorize the City Manager, or designee, to execute the required documents; and 3) the City Council consent to the form of Partial Assignment and Assumption Agreement of the DA and authorize the City Manager, or designee, to execute the required documents
BACKGROUND
In December 2006 and January 2007, City Council approved a General Plan Amendment, Master Plan Amendment, Development Agreement Amendment, and two new DAs for the Alameda Landing Mixed Use Project. In December 2006, the former Community Improvement Commission (CIC) approved a DDA with Catellus for the Alameda Landing Mixed Use Project. With the dissolution of redevelopment agencies effective February 1, 2012, the Successor Agency acquired the Alameda Landing property and assumed the CIC’s obligations pursuant to the DDA by operation of law. The Alameda Landing DDA is an enforceable obligation pursuant to the Successor Agency’s Recognized Obligations Payment Schedule (ROPS).
In July 2017, City Council approved an ordinance amending the Bayport/Alameda Landing Master Plan. The 2017 amendment made changes to the development plan for a 39-acre waterfront sub-area, the final phase of the Alameda Landing development. The amendment allowed for 17 acres of maritime commercial and light manufacturing uses in 364,000 square feet of existing warehouses adjacent to Bay Ship and Yacht, approximately seven acres of open space including a 4.5-acre waterfront park, and 15.3 acres of residential development. In December 2017, Catellus acquired from the Successor Agency, and then sold to FISC Properties LLC (an entity of Bay Ship and Yacht), the 17-acre site designated for maritime and light manufacturing uses.
Over the last several years, Catellus has been working with Pulte on a development plan for the 15.3-acre residential parcel and on an agreement for Pulte to purchase rights to acquire the property from Catellus. Pulte has secured its entitlements for a 357-unit residential project. On March 17, 2020, City Council approved a parcel map creating four parcels located north of Mitchell Avenue and east of the maritime property (owned by FISC Properties, LLC) at Alameda Landing. All parcels are residential parcels, although Parcel 2 includes 5,000 square feet of commercial uses. A map of the residential parcels is attached as Exhibit 1. As contemplated by the DDA, Catellus proposes to either acquire from the Successor Agency and then sell to Pulte all of the parcels, or request a direct conveyance from the Successor Agency to Pulte, for construction of a residential subdivision. Catellus will construct the backbone infrastructure to support the residential development. Pulte will construct the homes and in-tract infrastructure improvements, including 2.3 acres of parks and open space. Pursuant to Section 8.2 of the DDA, property can be transferred to a “Qualified Developer” (as defined in the DDA) and Catellus can assign its rights and obligations under the DDA for the transferred property to the Qualified Developer if certain conditions are met. Catellus can also assign its rights and obligations under the Alameda Landing Mixed Use Commercial DA to the owner of any transferred property.
With the proposed sale of four parcels to Pulte for construction of a residential subdivision, Catellus is requesting, and staff is recommending, 1) the Successor Agency’s determination that Pulte is a Qualified Developer and its consent to the form of Partial Assignment and Assumption Agreement (Disposition and Development Agreement (Alameda Landing Mixed Use Project) - Remainder Residential Parcel) (Exhibit 2) and execution of required documents by the City Manager or designee, and 2) the City’s consent to the form of Partial Assignment and Assumption Agreement (Development Agreement (Alameda Landing Mixed Use Commercial Project) - Remainder Residential Parcel) (Exhibit 3) and execution of required documents by the City Manager or designee.
DISCUSSION
Qualified Developer
Section 8.2(a) of the Alameda Landing DDA provides that “the CIC shall not withhold its consent to a Transfer by Developer of all or a portion of a Conveyance Parcel provided that…the following conditions have been satisfied . . . in the CIC’s reasonable discretion (a “Permitted Transfer”):
(i) The Parcel Map has been approved by the City Council…;
(ii) The Transfer is to a Qualified Developer;
(iii) Developer pays to the CIC the reasonable cost of attorneys’ and other professional fees in connection with the Transfer . . . .”
The parcel map is scheduled for approval by City Council on March 17, 2020.
Section 8.11 of the DDA provides the following definition of a Qualified Developer: “A “Qualified Developer” shall mean a real property development entity (including without limitation a retailer that develops and constructs its own buildings) that (a) in the reasonable judgment of the CIC is financially capable of performing Developer’s obligations under this Agreement and any other agreements relating to the proposed Transferred Property; and (b) has the experience developing major projects in the land use category (e.g., mixed use, office, residential, retail, research and development) applicable to the Conveyance Parcel(s) in question, which projects are comparable to the development contemplated on the Property to be Transferred; and (c) is able to demonstrate to the CIC’s reasonable satisfaction that it has the experience and capability to develop a quality project on the Transferred Property commensurate with the quality that would have been developed by the Developer. “
In order for the Successor Agency to determine if the proposed Transferee is a Qualified Developer, Section 8.11 of the DDA specifies that the Developer shall submit to the CIC financial information for the proposed Transferee demonstrating that the Transferee is a Qualified Developer, evidence that the proposed Transferee has a record of carrying out the construction of its projects in accordance with proper and accepted construction practices, and evidence that such proposed Transferee has the capacity to prepare and pursue the necessary applications for all design approvals, building permits and other approvals necessary to construct the proposed Improvements on the Transferred Property.
Exhibit 4 is a memo from Keyser Marston Associates, the Successor Agency’s economic consultant, recommending that the Successor Agency find that Pulte is a Qualified Developer based on financial and other information provided. Pulte is a publicly traded residential home builder founded in 1956, and is one of the largest homebuilders in the United States. The company focuses on designing, constructing, and selling homes for its major customer groups: first-time, move-up and active adult markets. Since its inception, Pulte has delivered nearly 750,000 homes. As of December 31, 2019, Pulte was conducting operations in 42 markets located throughout 23 states. Pulte is well capitalized, with cash on the company’s balance sheet totaling $1.2 billion. As of December 31, 2019, annual home sales revenue was $9.9 billion.
Pulte has successfully entitled the residential project at Alameda Landing. It plans to construct the project in three phases. It will acquire the first land parcel in April 2020, and the subsequent parcels in 2021. As contemplated, the entire project will be built-out by 2024.
Catellus has reimbursed, and continues to reimburse, the Successor Agency and City for all costs associated with development of Alameda Landing, including the cost of attorneys’ and other professional fees in connection with the proposed Transfer.
Consent to the Partial Assignments of the DDA and DA
Once the Successor Agency finds that the conditions described above have been met, the partial assignment of the DDA to Pulte will be deemed a Permitted Transfer, which the Successor Agency cannot deny. In addition to consenting to the partial assignment of the DDA to Pulte, Catellus is requesting that the City Council consent to a partial assignment of the Alameda Landing Mixed Use Commercial Project DA to Pulte. Consent to the partial assignment of the DA is required because the DA and DDA partial assignments have default protection language that precludes the City/Successor Agency from enforcing any action against Pulte (and other assignees) in the event of a Catellus default under the DA or DDA or from enforcing any action against Catellus (and other assignees) in the event of a Pulte default under the DA or DDA.
The partial assignment of rights and responsibilities under the DDA and DA are essentially the same. All rights and obligations under the DA and DDA related to the four parcels to be purchased by Pulte will be assigned to Pulte. In addition, certain obligations under the Mitigation Monitoring and Reporting Program (MMRP), as required pursuant to the California Environmental Quality Act (CEQA), and attached as an exhibit to the DA and DDA, have been assigned to Pulte to implement. The remaining MMRP obligations continue to be the responsibility of Catellus and/or the Successor Agency (or other assignees as applicable).
The requirements to enter into an Affordable Housing Agreement to meet the project’s inclusionary requirements and to consent to formation of a Municipal Services District (MSD) to pay for operation and maintenance of the public infrastructure are also shared between Pulte and Catellus under the partial assignment. Catellus will retain all rights and obligations under the DA and DDA pertaining to the Master Plan, demolition and construction of backbone infrastructure and property conveyance.
Pulte proposes to acquire the property in three phases. The first parcel will be acquired by April 15, 2020. The second parcel by February 15, 2021, and third parcel by December 15, 2021. Because the property is being acquired in phases, the partial assignments of the DA and DDA will be entered into in phases. Therefore, staff has prepared a form of partial assignment of the DA and form of partial assignment of the DDA for Successor Agency and City Council approval and approval by Successor Agency and City Council to execute such assignments in phases, as described above.
Lastly, the Successor Agency/City consent to the partial assignment of the DDA and DA provides that if any property acquired by Pulte is later re-acquired by Catellus, the partial assignment of the DDA/DA back to Catellus does not require Successor Agency/City consent. The partial assignment of the DDA and DA back to Catellus allows Catellus to assume control of the property in the event that Pulte defaults on its obligations to complete the project and for Catellus to finish the project consistent with the performance requirements in the DDA/DA.
ALTERNATIVES
Staff recommends that the Successor Agency find that Pulte is a Qualified Developer as defined in the DDA and consent to the partial assignment of the DDA to Pulte, and that the City Council consent to the partial assignment of the DA to Pulte, as described above. Staff is further requesting that the Successor Agency and City Council direct the City Manager, or designee, to execute the partial assignments, consistent with the form of the partial assignments, at each property acquisition, and execute all related documents over the next three years.
Regarding the DDA, the Successor Agency could:
• Decline to find that Pulte is a Qualified Developer as defined in the DDA.
• Modify or decline to the consent of the partial assignment of the DDA to Pulte.
Regarding the DA, the City Council could:
• Modify or decline to the consent of the partial assignment of the DA to Pulte.
FINANCIAL IMPACT
There is no financial impact to the General Fund from finding that Pulte is a Qualified Developer and consenting to partial assignments of the Alameda Landing Mixed Use Project DA and DDA to Pulte for construction of 357 homes and related amenities.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The Alameda Landing DDA is an enforceable obligation on the Successor Agency’s Recognized Obligation Payment Schedule.
ENVIRONMENTAL REVIEW
On December 5, 2006, the City Council certified the Final Environmental Impact Report for the Alameda Landing Mixed Use Development Project (a Supplement to the 2000 Catellus Mixed-Use Development Project EIR) in accordance with the California Environmental Quality Act (CEQA) (State Clearinghouse #2006012091). The City approved a First Addendum to the EIR in 2007, a Second Addendum to the EIR in 2008, and a Third Addendum to the EIR in 2012. The proposed finding that Pulte is a Qualified Developer and consent to partial assignments of the DA and DDA to Pulte facilitate redevelopment of the property consistent with the prior approvals and will not result in any new or substantially more severe environmental impacts than were previously identified in the Supplemental EIR and addenda.
CLIMATE IMPACTS
Pulte’s residential project will be constructed consistent with the City’s recently adopted Climate Action and Resiliency Plan, including a commitment to construct homes that are solely powered, heated, and cooled using only electricity.
RECOMMENDATION
It is recommended that the Successor Agency:
1. Find that Pulte is a Qualified Developer pursuant to the Alameda Landing DDA; and
2. Consent to the Partial Assignments of the DDA to Pulte and the form of the partial Assignment and Assumption Agreement (Disposition and Development Agreement (Alameda Landing Mixed Use Project) - Remainder Residential Parcel), and authorize the City Manager, or designee, to execute the required documents related to the conveyance and partial assignment of each phase, as described above.
It is recommended that the City Council:
1. Consent to partial assignments of the DA to Pulte and the form of the Partial Assignment and Assumption Agreement (Development Agreement (Alameda Landing Mixed Use Commercial Project) - Remainder Residential Parcel), and authorize the City Manager, or designee, to execute the required documents related to the conveyance and partial assignment of each phase, as described above.
CITY MANAGER RECOMMENDATION
The City Manager concurs with staff recommendation.
Respectfully submitted,
Debbie Potter Community Development Director
Exhibits:
1. Parcel Map
2. Form of Assignment (Mixed Use DDA)
3. Form of Assignment (Mixed Use Commercial DA)
4. KMA Memo
Cc: Eric Levitt, City Manager