Title
Adoption of Resolution Declaring Nine Project Sites at Alameda Point, Including Building 2, Building 22, Building 24, Building 41, Building 44, Building 114, Building 168, Building 169 and Building 170 to be Exempt from the Surplus Land Act; and
Adoption of Resolution Declaring Nine Project Sites at Alameda Point, Including Building 2, Building 22, Building 24, Building 41, Building 44, Building 114, Building 168, Building 169 and Building 170, Exempt from the Surplus Land Act and Authorizing the Acting Interim City Manager, or Designee, to Comply with the Surplus Land Act Procedures Related to the Properties Notwithstanding Their Exempt Status. (Community Development 29061822)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The State of California amended the Surplus Land Act (SLA), which changes became effective January 2020. The SLA, as amended, prescribes a process for local governments and agencies to dispose of surplus property. Although staff believes that the recently amended SLA may not be applicable to property that was transferred to the City of Alameda (City) pursuant to the Defense Base Realignment and Closure Act of 1990 (BRAC) process as explained below, staff is recommending, in an abundance of caution, that City Council approve issuing Notices of Availability to Sell or Lease for nine project sites at Alameda Point, including Building 2, Building 22, Building 24, Building 41, Building 44, Building 114, Building 168, Building 169, and Building 170, under the SLA (collectively, the Available Sites). Exhibits 3-11 depict each Project Site.
Following the completion of the SLA process, if the property remains available, staff will return to City Council to obtain direction on the sale or lease of each property and the process to be used for each such disposition.
BACKGROUND
Broadly speaking, the SLA, as amended by Assembly Bill (“AB”) 1486 of 2019, is intended to make public lands available for certain public uses such as open space or affordable housing, before it is disposed of to private parties. AB1486 expands the reach of the SLA and emphasizes the use of surplus property for affordable housing. The bill is considered to be a legislative response to the housing crisis, and defines surplus land to mean land owned in fee simple by the local agency that the local agency declares to be surplus and that is not necessary for agency use.
The legislation requires surplus land to be declared “surplus” land or “exempt surplus” land prior to any disposition. In addition, the SLA provides that it shall not apply when it conflicts with any other provision of statutory law.
The BRAC pursuant to which the City acquired the Available Sites allows the US Government to dispose of property to the local reuse authority for job generating purposes (see Section 2905(b)(4) of the Defense Base Closure and Realignment Act of 1990) without regard to the federal surplus property process, which would have required that the property be offered to federal agencies first and then to the highest bidder. As part of the disposition process for former military property, the US Government also requires that homeless providers be given an opportunity to acquire suitable property at former military bases, and approval of the Base Reuse Plan and the conveyance of the base properties to local reuse authorities is conditioned on the local reuse authority entering into legally binding agreements with homeless providers with respect to use and disposition of property for homeless services (See Base Closure Community Redevelopment and Homeless Assistance Act 10 U.S.C. 2687).
Pursuant to the BRAC statutes, the primary purpose of the disposal of former military base property to local reuse authorities such as the City is for development of the property for job generating uses consistent with the federally approval Base Reuse Plan. The Available Sites were conveyed to the City pursuant to an Economic Development Conveyance Agreement dated June 6, 2000 as amended (EDC Agreement) that requires that properties be used for purposes consistent with the Base Reuse Plan that are job generating uses. The BRAC statutes require that the City strictly comply with the Base Reuse Plan with respect to the disposition and use of the properties (32 C.F. R §174.9) and conflicts with the SLA provisions due to the fact that BRAC focused on job creation and placed limits on development of housing on the former Naval Air Base. Accordingly, staff believes that the SLA may not apply to the Available Sites and that the Available Sites are Exempt Surplus Land. However, in an abundance of caution staff is recommending that the City comply with the process for notifying housing providers and public agencies of the availability of the Available Sites in accordance with the process required by the SLA given the potential for penalties for failure to comply with the SLA.
Staff examined properties at Alameda Point that are highly desirable for leasing or sale for future development. In January 2020, as the SLA amendments became effective, all long-term real estate transactions at Alameda Point paused as staff reviewed the new law and its impact on the City's leasing and sale programs. Declaring these Available Sites to be exempt surplus land and authorizing the issuance of a Notice of Availability to Sell or Lease Surplus Property will begin the process of disposing of the Available Sites. Affordable housing developers and public agencies will have the first opportunity to make offers on the Available Sites. If no affordable housing developer or public agency responds to the Notice of Availability or if affordable housing developers/public agencies respond to the Notice of Availability but the City and the respondents are unable to reach agreement on terms for the sale or lease of any of the Available Sites, the City could then proceed to sell or lease each of the Available Sites for any purposes consistent with the Base Reuse Plan in accordance with the EDC Agreement and pursuant to a process to be determined by the City Council.
On May 18, 2021, the City Council declared five projects sites, including the Enterprise District; Package K Residential Parcels, Building 92, Building 11 and Building 19 and Building 25, to be exempt from the SLA, but also for the City Manager to comply with the SLA procedure for those sites. That noticing process did not generate any offers from any party, including any affordable housing developers.
DISCUSSION
Exhibit 1, entitled the Surplus Land Act Process Timing Overview, provides an overview of the process under the SLA to advance the development of the Available Sites. In summary, the City must send a Notice of Availability (Exhibit 2) to the list of interested parties described on the California Department of Housing Community Development website. Interested parties have sixty (60) days to submit Statements of Interest to the City. The City is then required to negotiate in good faith with the parties that submit a Statement of Interest for at least ninety (90) days. If an agreement with an interested party is not reached during the ninety (90) day period or the City rejects all offers consistent with the conditions prescribed in the legislation, the City can proceed with selling or leasing the land for any purpose, although the City is required to record a covenant on the Available Sites that if more than ten residential units are developed on the Available Site, at least 15% of those units must be affordable to lower income households. A more detailed description of the process is included in Exhibit 1. Although the intent of the amendment to the SLA is to make public property that is no longer necessary for public purposes available for affordable housing or other public agency use, the City retains its land use authority over any property declared surplus property and not all properties are suitable for residential uses.
PROPOSED PROJECT SITES (Exhibits 3-11):
• Building 2: Located across the street from Alameda City Hall West, Building 2 was formerly used as office, retail and residential space [Bachelor Living Quarters (BLQ)] on Naval Air Station (NAS) Alameda. The building requires major renovations. Of the total 214,439 square feet (SF), 148,439 SF is uninhabitable and 66,000 SF is available for use. Currently, the City’s IT Department, Alameda Police Department, and Eden Housing use portions of the habitable space.
• Building 22: Located on Alameda Point’s “Spirits Alley”, Building 22 is a 65,547 SF former hangar. Bordering federal land, the back side of the building has an unobstructed view of the San Francisco Bay. Proximo Spirits (Proximo) and Faction Brewing (Faction) currently lease portions of Building 22. Proximo’s initial lease term expires March 2024 with one ten-year renewal option. Faction’s initial term expires April 2028 with two ten-year renewal options.
• Building 24: Located on Alameda Point’s “Spirits Alley”, Building 24 is a 63,000 SF former hangar. The building is in need of roof work, specifically the removal of large roof-top equipment remaining from the Navy’s operations and replacement of the roof. Bordering federal land, the back of the building has an unobstructed view of the San Francisco Bay. Rockwall Winery leases the building, but is currently closed for business. Rockwall Winery’s lease term expires August 2023 with one five-year renewal option.
• Building 41: Located on West Tower Avenue across from Almanac Beer Co. and Admiral Maltings, this 118,041 SF former hangar is currently leased by Wrightspeed. The initial term of that lease expired March 2022. The lease provided two five-year renewal options and a purchase option, however the tenant did not exercise its first renewal option within the option period. City Council directed staff to keep the tenant in a hold-over status at the current rent rate while the building goes through the SLA disposition process, and then negotiate a new lease.
• Building 44: Located on Alameda Point’s “Spirits Alley”. Building 44 is a 5,073 SF commercial kitchen. Formerly used as a maintenance shop, Wonky Kitchen currently leases the building. The lease term expires September 2026.
• Building 114: Located adjacent to Alameda City Hall West, Building 114 was formerly used for administration but is currently uninhabitable. Approximately 76,895 SF, the building was in poor condition when it was conveyed to the City and has since survived a fire and roof collapse in different portions of the structure.
• Building 168: Located near the Seaplane Lagoon Ferry Terminal, Building 168 is a 117,419 SF warehouse leased by Kai Concepts. The term of the existing lease expired July 31, 2022, and Kai Concepts is currently in holdover. A new three-year lease is scheduled for the City Council meeting on October 5, 2022.
• Building 169: Located within the Enterprise District, Building 169 is a 86,710 SF warehouse. Portions of the building are leased to Williams Sonoma and Pacific Pinball Museum (Pacific Pinball). Williams Sonoma’s lease expires April 2023. Pacific Pinball’s lease expires May 2023 with one twelve-month renewal option.
• Building 170: Located within the Enterprise District, Building 170 is 91,790 SF warehouse currently leased by Shimmick/CEC Joint Ventures. The lease expires October 2022.
Staff believes many of these locations may be suitable for an affordable housing development. Any proposing developer responding to a Notice of Availability will need to consider the infrastructure costs and environmental issues associated with each Available Site, as well as the existing land use designations for the Available Sites. Staff will provide information on the infrastructure costs, environmental issues and land use designations in connection with the Notice of Availability for the Available Site. Applicants will also be required to comply with deed restrictions imposed on the Available Sites by the Navy and environmental regulators, and this information will also be described in the applicable Notice of Availability.
ALTERNATIVES
• Adopt a resolution authorizing issuance of Notices of Availability to Sell or Lease with respect to each Available Site.
• Do not authorize the issuance of a Notice of Availability to Sell or Lease all or some of the Available Sites.
• Declare the Available Sites to be exempt surplus land by adopting the alternative resolution attached to this report and do not direct staff to comply with the SLA process in light of the declared exemption.
• Continue to seek a legislative solution with other base closure communities and do not take any other action in the interim.
FINANCIAL IMPACT
In advancing the SLA process, there would be staff and administrative costs that could be covered by existing staff resources and the current budget appropriation for the Alameda Point Fund (290). Sale proceeds would be received in the Alameda Point Fund (290). The SLA does not require that the City sell or lease any of the Available Sites for less than fair market value. Staff will return to City Council for authorization prior to the sale of the Available Sites, and will report on the financial impact of one-time sale proceeds compared with potential ongoing lease revenue.
Additionally, the City may experience increased revenue due to subsequent sale or lease of all or some of the Available Sites.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), these project sites are Categorically Exempt pursuant to CEQA Guidelines Section 15301(c) - Existing Facilities.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a resolution declaring nine project sites at Alameda Point, including the Building 2, Building 22, Building 24, Building 41, Building 44, Building 114, Building 168, Building 169 and Building 170 exempt from the Surplus Land Act; and
Authorize the Interim City Manager, or designee, to comply with Surplus Lands Act procedures related to the properties notwithstanding their exempt status.
Respectfully submitted,
Lisa Nelson Maxwell, Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibits:
1. Surplus Land Act Process-Timing Overview
2. Sample Notice of Availability
3. Map of Building 2
4. Map of Building 22
5. Map of Building 24
6. Map of Building 41
7. Map of Building 44
8. Map of Building 114
9. Map of Building 168
10. Map of Building 169
11. Map of Building 170
cc: Nancy Bronstein, Interim City Manager