Title
Summary Title: Approval of Development Agreements with BC West Midway LLC for the West Midway Project Consisting of Development of 478 Housing Units on Approximately 26 Acres of Land Located between West Tower Avenue, West Midway Avenue, Main Street and Pan Am Way at Alameda Point
Public Hearing to Consider Introduction of Ordinance Authorizing the City Manager to Execute a Disposition and Development Agreement in Substantial Conformance with Exhibit 2 between the City of Alameda and BC West Midway LLC;
Introduction of Ordinance Authorizing the City Manager to Execute a Development Agreement in Substantial Conformance with Exhibit 3 Between the City of Alameda and BC West Midway LLC;
Adoption of Resolution Amending the Fiscal Year 2023-2025 Budget to Appropriate and Allocate $9.5 Million from Fund 290 (Alameda Point Fund) for a Loan to Construct Infrastructure and Site Preparation for the RESHAP Project to Be Repaid at a Later Date with the Construction of the Adjacent Market Rate Housing Projects; and
Recommendation to Authorize the City Manager to Execute to a Sixth Amendment to the Exclusive Negotiating Agreement between the City of Alameda and Brookfield Bay Area Development Holdings LLC and Catellus Development Corporation for the West Midway Project until such Date that the Disposition and Development Agreement becomes Effective on October 6, 2023.
Pursuant to Public Resources Sections 21166 and 21083.3 and Sections 15162 and 15183 of the California Environmental Quality Act (CEQA) Guidelines, no further environmental review is required. (Base Reuse 29061810)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The West Midway Project is critical to the successful implementation of the RESHAP project (see RESHAP project staff report), the successful implementation of the City of Alameda Housing Element 2023-2031, and the successful implementation for General Plan policy objectives for the redevelopment and reuse of the former Naval Air Station lands at Alameda Point. The West Midway Project is one of three critical projects to the City’s commitment in its Housing Element to construct 1,482 housing units over eight years on City-owned land at Alameda Point. In addition to the 478 units provided by the West Midway project, the West Midway project provides critical infrastructure and site preparation improvements for the adjacent RESHAP Property, which includes 309 supportive housing units reserved for very low-income, low-income, and transitional households. Without the West Midway Project, the RESHAP project will not be able to proceed as planned.
The West Midway Project consists of 478 new housing units, up to 10,000 square feet of non-residential uses and associated streets, infrastructure, utilities, and open space on approximately 26 acres of land immediately adjacent to the 8-acre RESHAP project site in the Main Street Neighborhood Specific Plan area of Alameda Point.
The West Midway Development Plan and Development Agreement (DA) were unanimously supported by the Planning Board on May 22, 2023. Staff is now recommending that the City Council hold a public hearing and take the actions necessary to facilitate the construction of the West Midway Project, including:
• Approving a resolution declaring the 26-acre West Midway property at Alameda Point to be “exempt surplus land” under the Surplus Lands Act, as part of companion RESHAP project staff report and action items (see RESHAP staff report and agenda item);
• Approving a first reading of an ordinance authorizing the City Manager to execute the Disposition and Development Agreement (DDA) for the project (Exhibit 2);
• Approving a first reading of an ordinance authorizing the City Manager to execute the DA for the project (Exhibit 3);
• Approving a resolution amending the Fiscal Year 2023-2025 Budget to appropriate and allocate $9.5 million from Fund 290 (Alameda Point Fund) for a loan to construct infrastructure and site preparation for the RESHAP project to be repaid at a later date with the construction of the adjacent market rate housing projects; and
• Authorizing the City Manager to execute an extension to the Exclusive Negotiating Agreement (ENA) between the parties until the DDA becomes effective on October 6, 2023.
BACKGROUND
On March 21, 2017, the City Council approved the Main Street Neighborhood Specific Plan which establishes the City’s specific development policies and standards for development of the area bounded by West Tower Avenue, Pan Am Way, and Main Street (the Main Street Neighborhood). The Specific Plan designates the West Midway Property for residential development and identifies the adjacent RESHAP project as one of the two primary objectives for the development of the Specific Plan area.
In 2018, the City Council approved a Development Plan, DA, and DDA for the RESHAP Project for a 8-acre site at the corner of West Midway and Main Street. The development proposed in the 2018 DDA contemplated that the infrastructure and site preparation for the RESHAP project would be constructed by the market rate developer of the adjacent properties and that the City would issue an RFP for that developer.
In 2020, the City of Alameda issued a Request for Proposals (RFP) and selected the development team of Catellus Development Corporation and Brookfield Properties for the development of approximately 26 acres of residentially zoned land (the West Midway project area) immediately adjacent to the RESHAP project within the Main Street Neighborhood Specific Plan area. The RFP and the subsequent ENA requires that the Catellus/Brookfield West Midway Pfund the necessary infrastructure improvements and site preparation costs for the adjacent RESHAP Property, which will produce sufficient additional very low- and low-income units to meet the very low- and low-income portion of West Midway inclusionary unit requirement.
In 2021, City staff, RESHAP, Catellus, and Brookfield made the determination that relocating the RESHAP campus from Main Street at the eastern edge of Alameda Point to Pan Am Way near the center of Alameda Point resulted in a better, more integrated site plan for West Midway and for RESHAP.
In 2022, the Planning Board held public workshops to review the initial site plans for the West Midway Project and the new location of the RESHAP campus, the Commission on People with Disabilities reviewed the Universal Design Ordinance waivers being requested by the West Midway Project, and the City Council unanimously approved the Term Sheet for the West Midway Project with the Brookfield/Catellus team.
In 2022, the City Council approved a new General Plan Housing Element for the period 2023-2031. Housing Element Program #1 commits the City of Alameda to take all necessary actions to facilitate and expedite the construction of the RESHAP and West Midway projects.
On May 8, 2023, the Planning Board unanimously approved the updated RESHAP Development Plan and recommended that the City Council approve the updated RESHAP DA.
On May 22, 2023, the Planning Board unanimously approved the West Midway Development Plan and recommended that the City Council approve the West Midway DA.
DISCUSSION
Development Partner: The Brookfield and Catellus development companies created a joint venture entity, BC West Midway LLC, to be the City’s development partner for the West Midway Project. For the purposes of this report, BC West Midway LLC is referred to as “the Developer.” The Catellus Development Corporation has over 20 years of experience working with the City on the successful redevelopment of the former Naval Air Station Alameda lands, which are now known as the Bayport neighborhood, the Tripoint neighborhood, the Alameda Landing Shopping Center, and the Alameda Landing Bay 37 waterfront neighborhood currently under construction. Catellus also constructed the recently opened Bohol Circle Immigrant waterfront park on City owned land for the City. Brookfield is a global real estate company that provides industry-leading portfolio management and development capabilities across a broad range of real estate. Brookfield has extensive experience building residential neighborhoods in the Bay Area. Both companies will be equal partners, but Catellus will take the lead for the construction of the infrastructure and site preparation, and Brookfield will take the lead for the construction and sale of the homes.
Development Plan: On May 22, 2023, the Planning Board approved the West Midway Development Plan prepared by BC West Midway, LLC. The Development Plan (Exhibit 1) provides a plan for the construction of 478 housing units, up to 10,000 square feet of non-residential space, and a grid of internal streets, bikeways and alleys on 26 acres of City-owned land immediately adjacent to the RESHAP project. The Development Plan is consistent with the Alameda General Plan, Main Street Neighborhood Specific Plan, and the applicable Alameda Point Zoning Ordinance policies, standards, and development densities.
The West Midway Project is designed as five neighborhoods of three- and four-story condominium and townhome type buildings. The buildings range in size from buildings with just two units (the Duets) to buildings with up to 11 units. Per the AMC Section 30-37 Design Review Regulations, the Developer is required to submit architectural plans for each building to the City for Design Review approval, prior to issuance of building permits.
The West Midway Project will be constructing all new sewer, storm water, power, and communications facilities and new curb, gutter and sidewalks in support of the 8-acre RESHAP project and the 26-acre West Midway Project. The infrastructure plan provides a grid of streets, bikeways, and pedestrian paseos that intersect the site, connect the West Midway Project to the RESHAP project, and connect the two projects to the adjacent Naval Air Station Alameda Historic District to the west, to the Bayport neighborhood and greater Alameda to the east, and the Site A development to the South. The Development Plan extends north-south streets Orion Street, Ardent Way, and Skylark Street from Site A through the project site, and the plan includes a new east-west street that would bisect the site and provide access from Main Street on the eastern edge of the site to Pan Am Way on the western edge of the site. The new east-west street is off set at Orion Street to discourage speeding through the neighborhood.
To encourage active modes of transportation, the project includes a shared bicycle and pedestrian trail through the middle of the site from Main Street to Pan Am Way, a Class 1 Bike Trail on the Main Street frontage, a raised two-way bike trail on the West Midway Avenue frontage, and continuation of the raised one-way bike ways on Orion Street. The bicycle and pedestrian network connect four small internal publicly accessible parks on the site to the larger regional parks at the Seaplane Lagoon and a larger community park planed for the next phase of Alameda Point just north of West Midway Avenue.
The West Midway site is served by AC Transit Line 96 and is within walking distance of two ferry terminals with direct access to Oakland and San Francisco. Pursuant to the Alameda Point Transportation Demand Management Plan, the West Midway Project property owners will pay annual assessments to fund supplemental transportation services for the residents of the project. As members of the Alameda Transportation Management Association (ATMA), the residents will receive transit passes, electric bicycle rebates, and other transportation services. As Alameda Point continues to grow, the services provided by the ATMA to the residents of Alameda Point will increase.
Affordable Housing. The Alameda Point Settlement Agreement with Renewed Hope requires that the City ensure that 25% of all new housing at Alameda Point be deed restricted for very low-, low- and moderate-income households. The West Midway Project includes 478 new units and the RESHAP project includes 108 new units (201 of the units in RESHAP are replacement units). Therefore the 25% requirement for the two projects together is 147 deed restricted affordable units. Of the 108 new affordable units provided by RESHAP, five will be managers units, thus 103 will be deed restricted units eligible to be counted towards the requirement for 147 deed restricted units. The 103 deed restricted units exceed the requirement for very low- and low-income housing under the Settlement Agreement, therefore, the remaining obligation for 44 moderate income housing units will be fulfilled by the West Midway Project.
Workforce Housing. The West Midway project includes 43 “affordable by design” units designed for “workforce” households with incomes between 120% and 180% of the Area Median Income. The 43 units represents 10% of the market rate units. The initial sale of these units will be limited to households within the target income range, but these units would not be deed restricted. Therefore, buyers will be able to sell the homes at a future date without limitations on the sales prices or the income of the subsequent buyers. The West Midway workforce housing program is required by, and consistent with, the Main Street Neighborhood Specific Plan.
Commercial Corner. The project provides for a 7,500 to 10,000 square foot commercial development at the corner of Pan Am Way and West Tower Avenue, which is directly across the street from the Almanac Beer Company. The plan proposes a two-step process for the development of the corner. The first step would be the creation of a temporary “container village” commercial establishment. The second step would be construction of a permanent 7,500 to 10,000-square-foot commercial structure.
No action is required by the City Council on the West Midway Development Plan; however, for the West Midway project to commence, City Council action is required on the following resolutions and ordinances:
I. Surplus Land Resolution
Prior to taking any action to dispose of (i.e., sell or convey) land owned by the City, the Surplus Land Act [Government Code Section 54221(b)(1)] requires the City to declare the land "surplus land" or “exempt surplus land" as supported by written findings. As part of the RESHAP project, staff recommended that the City Council adopt the necessary resolution declaring that the West Midway property and the adjacent 8-acre RESHAP property to be “exempt surplus land” under the Surplus Land Act. (For additional information on that resolution, see RESHAP Staff Report.)
II. Disposition and Development Agreement Ordinance
The DDA establishes a contractual relationship between the City of Alameda and BC West Midway LLC for the development of the 26 acres and the infrastructure and site preparation for the adjacent RESHAP project. The DDA establishes the schedule for the development of the West Midway Property and the conveyance of the Property in phases to BC West Midway, LLC for eventual sale to future homeowners and property owners in the West Midway neighborhood. The major terms established by the DDA include:
• Term. The Developer Affiliate will have ten (10) years with up to 36 months of possible extensions to construct the project. During the term of the agreement, each party has certain milestone commitments to ensure the timely delivery of land and construction of buildings. Per the DDA Milestone Schedule, the development will be constructed over an eight-year period. In the event of an economic downturn over the next eight years, the DDA allows the Developer to purchase up to 36 months of extensions. A maximum of 24 months of delay may be purchased at a rate of $20,833 per month if the Developer wishes to delay commencement of construction of the first phase of the market rate development. The final 12 of the 36 months may only be purchased if work has been completed on the first phase of the project (the first 155 housing units).
• RESHAP Backbone Infrastructure and Development Pad Preparation: Developer must provide the backbone infrastructure and graded buildings pads for the four buildings in the RESHAP project. Since the Collaborating Partners have existing residents on some of this land, the work will occur in two phases. The vacant RESHAP lands will be prepared first. Once the Collaborating Partners complete the first two buildings, they will be able to move the existing residents into the new buildings, and the Developer will be able to demolish the old buildings and prepare the remaining pads for the final two buildings for RESHAP. Pursuant to the DDA terms, the Developer must deliver the first two building pads by July 2024 and the second pad by May 2025. The DDA does not allow for any extensions on these two milestones to ensure that the RESHAP project may commence as soon as possible.
• $9.5 Million Loan. To expedite the RESHAP project, the DDA provides for an advance of funds from the City’s Alameda Point Fund fund balance (Fund 290) in the amount of $9.5 million for construction of the RESHAP Phase 1 infrastructure and pads by the Developer. The advance allows RESHAP to proceed on an expedited timeline in advance of the market rate project. The Developer must then repay the funds with interest at a rate of prime plus 1% (equals 9.25% as of 5/24/23). The obligation to repay the funds is triggered by the commencement of West Midway Phase 1 or completion of the Site A Infrastructure, which ever event occurs last.
• Site A Infrastructure: The West Midway project relies on the completion of new infrastructure in West Tower Avenue and Orion Way by the Site A developer. The Site A developer is currently delayed as a result of market conditions. To ensure that Site A delays do not delay West Midway construction, the West Midway DDA requires the West Midway Developer to construct the necessary infrastructure in West Tower and Orion Way necessary to support West Midway development, if necessary, due to delays by Site A. If the West Midway Project needs to construct the Site A infrastructure because Site A is delayed, the expense of constructing that infrastructure will be deducted from the Developer’s obligation to repay the City the $9.5 million at completion of the Site A infrastructure. Per the Site A DDA, if West Midway constructs the Site A infrastructure, the Site A developer is obligated to pay the City the costs of that infrastructure work. The following example illustrates these interconnecting DDA obligations: 1) City advances $9.5 million for RESHAP Phase 1; 2) Developer constructs RESHAP Phase 1; 3) Developer then needs to construct Site A infrastructure due to Site A delays at a cost of $7 million; 4) Developer is credited the $7 million spent on Site A Infrastructure and repays City $2.5 million owed for the RESHAP advance plus interest; and 5) Site A pays City $7 million for infrastructure constructed by Developer, when Site A commences construction on Site A Phase 2.
• Affordable Housing: As described above, the West Midway and RESHAP projects will meet the requirements for the Renewed Hope Settlement with a combination of very low-, low- and moderate-income units. In return for RESHAP providing the required new very low- and low-income units for West Midway, West Midway is providing approximately $20 million in infrastructure and pad preparation for RESHAP, which allows RESHAP to construct 309 total units (201 replacement units, 103 very low- and low-income new units and 5 additional on site manager units).
• Land Conveyance. The City will continue to hold ownership of all the land at West Midway until such time that BC West Midway LLC has completed all of the site infrastructure and site preparation work necessary to construct homes. Once that work has been completed by Developer on the City owned land, the land for that phase will be transferred from the City to BC West Midway, LLC or its assignee, most likely an affiliated entity, which will be responsible for the construction of the homes. At that point the Developer will begin paying taxes on the West Midway Property. Once the vertical developer has completed the home, the home may be sold by the Developer to an individual home buyer.
• Open Space. The Developer will contribute $2.5 million to the construction of the Main Street Neighborhood public park planned for the area just north of West Midway Avenue. The funds will be paid in three installments with each of the three development phases.
• Commercial Development. The Developer will construct a temporary commercial “container village” at the corner of Pan AM and West Tower by 2027. The temporary commercial facility will be replaced by a permeant commercial development at the corner by 2030. The City will retain ownership of the commercial property during the temporary commercial use and will only convey the property to the Developer when permits for the construction of the permanent commercial building are issued. If the permits are not issued for the permanent commercial buildings by 2030, the City will retain ownership of the property.
III. Development Agreement Ordinance
The West Midway Project is designed to be constructed over an eight-year period. Per the AMC, development plans and use permits must be vested with a building permit within two years. For these reasons, most land use entitlements for large projects that will be constructed over many years are accompanied by a DA which provides certainty that the project can be constructed over an extended time without changes to the underlying laws, conditions and requirements governing the project. The West Midway DA ensures that:
• The City’s approval of the Development Plan will be vested for more than two years. The DA extends the life of the West Midway project approvals for the 10-year term of the DDA.
• The Developer’s construction of the West Midway Project will comply with the project approvals.
• The City will process subsequent approvals required for the West Midway Project (such as design review and subdivisions maps) in accordance with the project approvals.
• Future changes in City codes, regulations, standards or fees that conflict with the project approvals will not apply to the development of the project, absent a health or safety impact or conflict with federal or state law. All existing 2023 codes, regulations, standards, and fees must be followed by City and Developer, but new codes, regulations or standards that conflict or prevent development of the project that are approved after approval of the DA will not be applied to the project.
IV. Budget Amendment Resolution
The budget amendment resolution amends the Fiscal Year 2023-24 Budget to appropriate and allocate $9.5 million in available Fund 290 residual fund balance (Alameda Point Fund) for the construction of the infrastructure and site preparation for RESHAP Phase 1 (first two of four building sites) as described above under “$9.5 Million Loan.”
The Alameda Point Fund includes proceeds from a sale, lease, or equivalent use of property at Alameda Point. These funds may only be used within Alameda Point pursuant to a Memorandum of Agreement with the U.S. Navy.
As described above, the proposed appropriation of $9.5 million from the Alameda Point Fund (Funds 290) would be used for a loan to be repaid by Catellus/Brookfield according to the proposed West Midway DDA. The loan allows RESHAP to proceed on an expedited timeline in advance of the market rate project. The Developer must repay the funds with interest at a rate of prime plus 1% (equals 9.25% as of 5/24/23). The obligation to repay the funds is triggered by the commencement of West Midway Phase 1 or completion of the Site A Infrastructure, which ever event occurs last.
V. Exclusive Negotiating Agreement Extension
On October 6, 2020, the City and the Developer entered into an ENA, which granted the Developer exclusive negotiating rights for the proposed transfer of the 26-acre West Midway Project at Alameda Point. The ENA is designed to preserve this relationship until such time that either: the City Council approves the proposed project agreements and those agreements become effective, or the City Council denies the proposed agreements and does not wish to continue negotiations.
As described above, staff is recommending that the City Council approve the project agreements, and therefore, staff is recommending that the City Council authorize the City Manager to execute a 6th amendment in substantial conformance with Exhibit 5 to the ENA to ensure that the ENA remains in effect until such time that the agreements, if approved, become effective. If the Council does not wish to approve the agreements, but does wish to continue negotiations with the Developer, then the Council should consider extending the ENA even if it does not support the recommended agreements in their current form.
ALTERNATIVES
After opening the public hearing and considering all of the documents, the City Council could consider a number of alternative courses of action, including but not limited to:
• Approve the above-described resolutions and ordinances for the project as recommended by staff.
• Approve the resolutions and ordinances with specific modifications identified by the City Council at the public hearing.
• Delay action on the resolutions and ordinances to a future date until such time that staff is able to return with specific information identified by the City Council at the public hearing necessary for the City Council to take action. In this alternative, the Council should consider extending the ENA as recommended above.
FINANCIAL IMPACT
The recommended resolution and ordinances are specifically designed to have no financial impact on the City of Alameda General Fund and to ensure that the development of the subject properties at Alameda Point are fiscally neutral to the General Fund consistent with City Council adopted policy.
The proposed appropriation of $9.5 million from the Alameda Point Fund (Fund 290) fund balance would be used for a loan to be repaid by the Developer according to the proposed West Midway DDA. The Alameda Point Fund includes proceeds from a sale, lease, or equivalent use of property at Alameda Point. These funds may only be used within Alameda Point pursuant to a Memorandum of Agreement with the U.S. Navy. The obligation to repay the funds is triggered by the commencement of West Midway Phase 1 in May of 2025 or completion of the Site A Infrastructure, which ever event occurs last.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The recommended ordinances and resolutions are consistent with the City of Alameda General Plan policies related to the redevelopment and reuse of Alameda Point, the Main Street Neighborhood Specific Plan, the Alameda Municipal Code regulations and development standards for the 26-acre West Midway Property.
ENVIRONMENTAL REVIEW
Pursuant to the streamlining provision of Public Resources Sections 21166 and 21083.3 and Sections 15162 and 15183 of CEQA Guidelines, no further environmental review is required because the West Midway Project is consistent with the development density in an adopted Specific Plan for the area; the environmental impacts of the development of the area consistent with the Specific Plan were considered in the Alameda Point Project Final Environmental Impact Report (APP FEIR) adopted by the City Council on February 4, 2014, in compliance with CEQA; the West Midway Project is consistent with the development density of, is specifically listed in, and implements the City of Alameda’s Housing Element adopted on November 15, 2022; the environmental impacts of the Housing Element and the development of the sites included in the Housing sites inventory were considered in the General Plan Update EIR adopted by the City Council on November 30, 2021; and as documented in the project CEQA Checklist (Exhibit 4), the West Midway Project would not result in new or substantially more severe significant impacts than identified in the APP FEIR or the General Plan Update EIR due to changes in the project, changed circumstances, or new information and there are no new or considerably different feasible mitigation measures or alternatives from those identified in the APP FEIR and the General Plan Update EIR that would substantially reduce one or more significant effects that the project proponent declines to adopt; and the West Midway project would not result in significant impacts that: (1) are peculiar to the project or project site; (2) were not already identified as significant effects, cumulative effects, or off-site effects in the APP FEIR and the General Plan Update FEIR; or (3) were previously identified as significant effects, but are determined to be substantially more severe than discussed in the APP FEIR and the General Plan Update FEIR.
RECOMMENDATION
Hold a public hearing and approve: 1) Introduction of Ordinance authorizing the City Manager to execute the DDA between the City of Alameda and BC West Midway LLC; 2) Introduction of Ordinance authorizing the City Manager to execute the DA between the City of Alameda and BC West Midway LLC; 3) the Resolution amending the Fiscal Year 2023-2025 Budget to appropriate and allocate $9.5 million from Fund 290 (Alameda Point Fund) for a loan to construct infrastructure and site preparation for the RESHAP project to be repaid at a later date with the construction of the adjacent market rate housing projects; and 4) authorizing the City Manager to execute a 6th Amendment to the ENA.
Respectfully submitted,
Andrew Thomas, Interim Base Reuse and Economic Development Director
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibits:
1. West Midway Development Plan
2. West Midway Development Agreement
3. West Midway Disposition and Development Agreement
4. CEQA Checklist and West Midway Project Mitigation Monitoring and Reporting Program
5. Sixth Amendment to the Exclusive Negotiating Agreement