Naval Base Manuevers

San Francisco’s base reuse plan is moving forward at a pretty steady pace,  highlights from the San Francisco Chronicle article:

 A proposal to transform Treasure Island and its neighbor, Yerba Buena Island, into an environmentally friendly development with 13,500 new residents, will come under closer scrutiny today when it is presented to two Board of Supervisors committees.

The development plan calls for a $1.2 billion investment of private and public funds. The money would be spent to clean up pollution left behind on the former Navy base in the bay, make the 365-acre island seismically safe, and to build 6,000 “green” homes, a new ferry terminal and nearly 300 acres of parks and other open space.

“This hearing is the single biggest step in a detailed process that has been in the planning stages for more than four years,” said Jack Sylvan, an aide to Mayor Gavin Newsom working on the redevelopment project…

The private development team is a partnership of local developer Wilson Meany Sullivan, Miami-based homebuilder Lennar Corp., which is currently developing land to build 1,600 new homes at the Hunters Point Naval Shipyard, and Kenwood Investments, a firm formed by California lobbyist and Democratic Party fundraiser Darius Anderson.

To pay for infrastructure and other development costs, the group will spend nearly $500 million and the city will borrow $700 million through the issuance of bonds backed by property taxes collected from the island after development is completed.

The developers already have spent approximately $11 million on planning, consultants and environmental studies, they say. They estimate collecting $370 million in profits by completion in 2022, according to Jay Wallace, of Kenwood investments.

The city can share in the profits after the developers have realized a 20 percent return on their investment.

…

Before ground is broken and any money is made, however, the proposal must first obtain approval from the Board of Supervisors Land Use and Budget and Finance Committees — and then be endorsed by the full Board of Supervisors.

If the project is approved by the board, developers and the city will negotiate a final agreement and conduct an environmental impact report, both of which would come back before the supervisors. If all goes smoothly, residents could start moving in by early 2013.

Sylvan said the development’s use of private investment and future tax revenues provides significant benefits to San Francisco while not taking money from the city’s general fund.

…

The city and the Navy have yet to agree on how much the developers will have to pay for the right to build on the manmade island.

The developers have proposed that in exchange for the land, they pay the approximately $40 million it will take to clean up the remaining petroleum, cleaning solvents, metals and other toxic substances. They also propose to take over the cleanup responsibility.

Navy base closure manager, Doug Gilkey, said that the Navy is in the process of appraising the fair market value of the island and should have an estimate of what it’s worth in the next three months. He said the Navy already has spent $120 million thus far on the cleanup and estimates the remaining work will cost approximately $16 million.

The proposal is currently at a pivotal moment in the approval process where the full San Francisco Board of Supervisors get a crack at giving it a thumbs up or down, after two subcomittees have already given it approval albeit with amendments, some highlights from today’s Chronicle article:

In a hearing that lasted more than five hours, supervisors expressed concerns about a host of issues, including the fact that the city might have to pay for community services before new taxes could cover them and that future transportation costs might outpace the fees intended to pay for them.

As a result, committee members made several amendments to ensure that a final financing scheme covered the new costs and that the Board of Supervisors had the final say on any major changes to the plan.

The first article is interesting on a few levels.  First is that it looks like the funding mechanism approved by the Council in regards to Alameda Landing is not out of the ordinary, in fact, San Francisco is proposing a similar scheme to fund the redevelopment of Treasure and Yerba Buena Islands.  Secondly, once the Navy has set a “fair market value” for Treasure Island, we’ll know what the going rate for waterfront former miltary land is going for on the open market right now and see whether we are getting a bum deal on the Alameda Landing project.  And finally, the developers proposal to be financially responsible for the evironmental clean-up in lieu of paying the Navy for the property is an interesting idea, however considering how bad of housekeepers the Navy was in general, that might end up being a worse deal for the developers and a huge money pit in the long run if there is something really nasty buried out there on Treasure Island. 

The Alameda Times-Star reports that five developers have expressed interest in picking up where ACPC left off in regards to Alameda Point, some highlights:

…The five groups that responded to the city’s request for qualifications are: Catellus Development Corp., which has also formulated separate plans to build shops and homes on the former Fleet Industrial Supply Center in Alameda; The Corky McMillin Companies, based in San Diego; Lennar Corp., a Miami-based home building company; SunCal Companies, an Irvine-based real estate company; and a partnership led by United World Infrastructure, a recently formulated holding company with plans to open offices in New York and San Francisco.

The next step for the city is to evaluate the responses based on factors such as their financial wherewithal and experience with brownfield projects, Potter said.

Potter said after the analysis, city staff will recommend the City Council approve an exclusive negotiating deal with an applicant. That could happen as soon as January, she said.

The only company I couldn’t find a website for was United World Infrastructure, according to the press release it’s a newly formed “Delaware-based corporation.”  Beware the companies incorporated in Delaware, if I remember correctly, Delaware has some corporation friendly laws – not to mention a crap load (yes that is the legal term for it) of case law —  there that make it very desireable to incorporate in Delaware.  

Just from a cursory glance at the websites, SunCal stands out with a very compelling introduction that says:

Seven decades of commitment and experience have made SunCal Companies the largest privately owned developer of masterplanned and mixed-use communities in the West.

And they have a whole section on their committment to the environment.  However, combing quickly through their projects, it doesn’t look like they have a whole lot of expertise in brownfield development, possibly this one, but a research facility sounds a lot cleaner than a naval base.  They are, however, the developer for the naval hospital land in Oakland, here’s a little controversey over the addition of low-income housing in the development as reported in the Times-Star. 

We know that of this list Catellus and Lennar (Mare Island) both have brownfield redevelopment experience, so they’ll probably be on the shortlist.

The San Francisco Chronicle also covered the Landing approval and piggybacked the information about the developers response to the RFPs.