Blogging Bayport Alameda

September 28, 2011

No cost? No way!

Filed under: Alameda, Alameda Point, City Council, Development — Tags: — Lauren Do @ 6:03 am

Buried under the ARRA agenda for the October 5th meeting and — amazingly enough — has not been headline news yet is the news that the Department of Defense has agreed to a no-cost conveyance of Alameda Point to the City of Alameda.

Let me let that sink in a bit.

Remember, Alameda Point has previously come with a price tag of $108 million for the land.  Plus an additional $75K for housing units above the 1,800 unit cap.

Now, the cost is $0.  As long as the City stays below the housing cap.

According to the staff report, this summer City staff met with the Navy to discuss a no-cost conveyance for the parcel that is currently reserved for Lawrence Berkeley Lab if they select Alameda for its second campus.  Shortly after that the Navy agreed to negotiate a no-cost conveyance for all the property, not just the proposed LBL site and here we are today with a projected date of June 2012 for the first land transfer if everything goes through.

For those confused about the history and timeline, as I was, I found this excellent summary here which describes previous efforts to get a no-cost conveyance, you can scroll through if you don’t want to read, it’s kinda long:

…Congress, with the active support of the Clinton Administration and the Defense Department enacted legislation that created the Local Redevelopment Agency concept to comprehensively guide the disposal process. At the same time, they authorized the disposal of bases as a comprehensive single unit for job generating purposes the so-called “Economic Development Conveyance (EDC).

The early EDC negotiations between the Defense Department and the LRA’s, including those between the ARRA and the Navy, were very slow and complicated due to the need to “value jobs against the fair market value of the surplus property, (i. e. each job is worth $2 500 as in the case of the first Air Force EDC). To speed up the process, in 1999 Congress amended the EDC authority to mandate that all EDC’s would be at no cost , the “no-cost EDC. ” Not all disposals were by EDC, but all EDCs were now at no cost. The AR’ s renewed EDC negotiations were conducted under this new regimen. And because job generation was the motivation for the EDC process, it was incumbent on all LRA’s seeking a no-cost EDC to demonstrate that the reuse plan
would generate jobs to replace those 10st due to the closure. Housing was not thought to generate permanent jobs (only temporary construction jobs) and residential uses were therefore deemed ineligible for inclusion in an EDC, other than those necessary to support the job generating activities.

In June 2000, the Navy and ARRA executed a No-Cost Economic Development Conveyance Memorandum of Agreement (EDC MOA) in accordance with amendments to the Federal Base Closure Act. Those amendments were designed to aid communities adjacent to closing military installations recover from the closure by allowing the local redevelopment authority to acquire the surplus federal property at “no-cost” in exchange for generating jobs at the closed installation. In order to qualify for such a “no-cost” conveyance, the LRA was required to prepare and support a reuse plan that favored job-generating activities over other land uses such as residential development. In order to recover from the closure of NAS Alameda, and to qualify for the “no-cost” Economic Development Conveyance, the ARRA’s 1998 EDC application made certain development assumptions that favored job-generating activities (such as commercial development) over residential uses. In the 2002 National Defense Authorization Act, the no-cost EDCs were again made pennissive, and in subsequent legislation, Congress required the Defense Department to seek fair market value for all closed military property closed after January 2005.

In 2002, as the City began work on a General Plan amendment to incorporate the Community Reuse Plan policies and land uses into the General Plan, the Navy expressed concern over what it perceived as a discrepancy between the ratio of commercial and residential development identified in the 1998 EDC Application as compared to the 2002 General Plan Amendment. (i.e. more residential construction and less commercial construction). As a result of analyzing the 2002 General Plan Amendment, the Navy questioned whether ARRA remained eligible for a “No-Cost” EDC conveyance.

The ARRA asserted its continued eligibility to receive the property at no cost. However, in January, 2004, the Deputy Undersecretary of the Navy sent the AR a letter asking it to formally submit an amendment to its EDC application based on the newly amended General Plan. The letter did not indicate a timeframe for reviewing and acting upon the amended application. The letter further stated that without such an amendment, the Navy could not continue to work with the AR. In lieu of ARRA submitting an amendment to its EDC application, the Navy expressed a willingness to convert the transaction to a “for cost” conveyance and to negotiate a purchase price for the property. The Navy assured the ARRA that the negotiations would be streamlined, consistent with its current practice of conveying property based on fair market value, and focused on an early transfer.

The ARRA, working with its master developer, detennined that negotiating a land price with the Navy would provide a quicker resolution to property conveyance than protracted efforts to convince the Navy that the ARRA was still eligible for a no-cost conveyance when the Navy would be the final decision maker regarding the ARRA’s eligibility for a program it no longer embraced. The ARRA’s goal was to expeditiously receive property that could be cleaned up and put into active reuse to provide the community with jobs, affordable housing, new recreational opportunities, enhanced open space and access to the waterfront, and a vibrant new neighborhood. This goal could be jeopardized ifthe Navy did not act timely on an amended EDC application.

The Navy’s desire to obtain economic value for the property was consistent with changes in national policy relating to developing closed military installations. While the Congress and Department of Defense supported a subsidy to communities surrounding closed military installations previously, by 2003 , it was clear that the Federal Governent would seek “fair market value” for all base closure property. In fact, by 2004, the Defense Base Closure Act was modified to eliminate all “no-cost” economic development conveyance for 2005 closures. In March 2004, the ARRA and Navy announced a “new beginning” to develop a term sheet for property conveyance and prepare a conceptual land pIan that supported a negotiated land price for the property.

I think it’s key to note that the current no-cost conveyance, although will need to conform the 2000 EDC MOA is not specifically called a “no cost economic development conveyance.”   While there are caps on the number of housing units, as well as $50K per unit “penalty,” in the grand scheme of things, if a developer is motivated enough, they’ll gladly eat that cost per unit.

And certainly this is a much different outlook than a year ago when no cost conveyances appeared to be heading the way of the dinosaurs.   Big stroke of luck for the City of Alameda and definitely a great big notch on the belt of staff who worked on these negotiations with the Navy.  Of course, now all Alameda needs to do is to execute, but that seems to be the place where we tend to stall out.

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21 Comments

  1. Does this change the terms of the current clean-up efforts on the part of the Navy? Will the Navy continue to do the clean up to “industrial use” standards?

    Comment by Kate Quick. — September 28, 2011 @ 6:51 am

  2. City staff deserves high praise for persevering. And credit is also due the Navy for changing their position. We now have a resolution to the conveyance riddle. I think they key to the resolution is not having a developer as a third party to conveyance.

    As for a future developer buying their way to metropolis, I think that’s not likely. We will be proceeding forward based on the 1999 environmental impact report. By the time we get to the last phase of conveyance, if we are at, or approaching, the limit of around 2,700 housing units (which includes Bayport), the owner of that last phase would run up against the EIR limit. I think this would trigger a new EIR with mitigations having to be absorbed by someone. It’s not likely that the then current owners of property would tax themselves, and it seems that there would be a lot more financial burden on this last phase of development than just a $50,000 surcharge.

    Comment by Richard Bangert — September 28, 2011 @ 7:09 am

  3. #1 The Navy is cleaning areas designated by us for residential to residential standards. Commercial/industrial areas are being cleaned to commercial/industrial standards, but in many cases the regulators convinced the Navy that bringing the cleanup quality in commerical/industrial areas to residential standards was not that much more expensive.

    The cleanup program for various areas is what has determined the conveyance schedule.

    Comment by Richard Bangert — September 28, 2011 @ 7:23 am

  4. Thank you, Richard! This is a very interesting development, and it would be similarly interesting to know how the “breakthrough” in these negotiations was achieved. Did the City’s approach change, or did the Navy find it was ready to deal on a different platform?

    Comment by Kate Quick. — September 28, 2011 @ 9:10 am

  5. And thank you Richard for your perseverance too! You never stopped advocating for a no-cost conveyance.

    Comment by Dave — September 28, 2011 @ 9:18 am

  6. Now THIS makes me happy!

    Comment by Not A. Alamedan — September 28, 2011 @ 10:10 am

  7. I agree with Lauren at the surprise that this is not front page news – it certainly ought ot be. Having worked with various city staff members and the Navy since 2004 as a member of the Alameda Architectural Preservation Society, I have lived this roller coaster of conveyance plans. While I am sure that Jennifer Ott and Andrew Thomas deserve much credit for this wonderful turn of events, I think John Russo brought his negotiating skills to the table as well. While we are quick to ctiticize, I hope Alamedans can recognize the efforts these staff members have made on our behalf. At the same time, the environmental circumstances at Alameda Point tend towards a fair market value being zero, which I am sure was a negotiating point made by our team. I also hope we all remember who actually has been responsible for this work and do not allow any politician to use this as a feather in his or her cap come election time.

    Comment by Nancy Hird — September 28, 2011 @ 11:32 am

  8. I don’t see any great breakthough here, just a return to the terms of agreements in 2000, before SunCal entered the picture. I have the 2-volume 1999 NAS-EIR & the 1996 Community Re-Use Plan sitting on my desk. Re: base clean-up: Areas for which the Navy & Regulators chose Monitored Natural Attenuation will reach their clean-up goals in 22 years, altho the RAB is trying to change that. Nothing much gets developed on a dirty Superfund site.

    Comment by vig — September 28, 2011 @ 11:49 am

  9. vig – you could have also pointed out that almost all of the areas where the Navy has chosen monitored natural attenuation are in the runway area where no development is taking place, but that would have been useful information, and I know how much you hate useful information.

    Comment by notadave — September 28, 2011 @ 12:35 pm

  10. 10. Sorry, 9, I was talking abt Sites 9 & 19. UR dead wrong.

    Comment by vig — September 28, 2011 @ 1:02 pm

  11. The City just announced they will be holding a press conference Thursday (tomorrow) at 1:30 p.m. about the no cost conveyance at St. George Spirits.

    Comment by Lauren Do — September 28, 2011 @ 1:26 pm

  12. We all appreciate Richard’s continuing advocacy for a no-cost conveyance as this is the best in civic engagement, and kudos to him. My guess is that, at the direction of the Council, Mr. Russo used his connections (which are many and powerful, I understand) and his negotiating skills to pull this off. This is a GOOD thing, and please don’t diminish it as an accomplishment, Vigi. Even people you don’t like can occasionally do great things. We’ll all know for sure what happened to make this a reality tomorrow at the press conference at St. George’s Spirits.

    Comment by Kate Quick. — September 28, 2011 @ 2:23 pm

  13. #10 – I love people who try to act like an expert by quoting acronyms or “codes” that make it seem like they know more than you. The “sites 9 and 19″ quoted by vig make up a whopping 5 acres of the total development potential of over 700 acres at Alameda Point. The two sites contain an old paint building and a hazardous waste storage facility. Soil contamination was found to be lower than comparison samples from non contaminated soils. ground water contamination was found to be above target levels for some contaminants, but decreasing over time, indicating no new sources of contamination.

    A detailed analysis of the proposed action is at http://alamedapointinfo.com/sites/default/files/Proposed_Plan_OU2A_Alameda_Point_1.pdf

    Vig, when you signed on to the RAB, you committed to inform, not misinform the public. If you can’t fulfill your duties honorably, you should step down.

    Comment by notadave — September 28, 2011 @ 2:47 pm

  14. With this no cost conveyance from the Navy and a set schedule for phased conveyance base on clean-up, do we still need the RAB. Can it be dismantled?

    Comment by David M. — September 28, 2011 @ 3:11 pm

  15. Re feathers in the cap– city council is responsible for appointing people to positions such as city manager and city attorney; council is also ultimately responsible for direction that any negotiations take. John Russo, Jennifer Ott, and Andrew Thomas are all people with a proven record of accomplishments prior to this particular one and their work is very appreciated. But the “politicians” on city council– I prefer to consider them fellow citizens of Alameda– who appointed John Russo and provided direction to the negotiators deserve credit too.

    Comment by Kevis Brownson — September 28, 2011 @ 5:44 pm

  16. This is a major milestone! Congratulations to Jennifer Ott, Andrew Thomas and John Russo for making it happen.

    Comment by Karen Bey — September 28, 2011 @ 9:32 pm

  17. This is very good news. Congratulations!

    Comment by Tony Daysog — September 29, 2011 @ 10:48 am

  18. Today’s news conference announcing the no cost conveyance was one of those rare occassions when nearly every Alamedan was in agreement! The people happy about the conveyance represented an even broader cross-section of Alamedan’s than those who orchestrated the 15-85% margin by which Measure B was defeated.

    The prospective location of the 2nd campus is scheduled to transfer to the City in December 2012. Within 3 years, the remainder of the base is scheduled for transfer as well. Mayor Gilmore acknowledged the role that Senator Diane Feinstein played in making the transfer. Others City officials commented that City Manager’s contacts also were important.

    Now when we formulate a reuse plan that will attract financing … we’ll be on our way. As depressed as the housing market is, business real estate may be more distressed so housing may be first out the block!

    Comment by William Smith — September 29, 2011 @ 3:29 pm

  19. I heard a nice little report on the conveyance on NPR this afternoon on my way back from Sacramento. Seems to me that Mr. Russo has just more than earned his pay; well worth the work the Council put in to choose him. Kudos of course to the other City staff (yeah! Andrew and Jennifer) who worked hard and long on this business, as well as to our elected leaders for seeing the worth of pursuing this as a top tier goal.

    Comment by Kate Quick. — September 29, 2011 @ 5:49 pm

  20. Kate, Are you saying that John Russo is the reason this happened? I like the guy enough but please fill me in how or what he did to make this happen…….or are you just spinning…

    Comment by J.E.A. — September 29, 2011 @ 6:47 pm

  21. I think it was a lot of people. Last night at the League’s public budget workshop (very well attended, thanks!) he asked us to give special credit to Jennifer Ott. Now, I think his powerful contacts, good direction from Council and Jennifer’s hard work all had a lot to do with making this happen. Not just Russo, but all of it. However, I think he is a big thinker who is willing to use his brain and contacts to leverage getting all that staff work to tilt things in our favor. “It takes a village.” Oh, and I really, really liked the fact that he called out staff by name and asked us to thank her for her hard work. As a former staff person, I know what that means and it is quite refreshing. Russo has a big ego, but he is no self glorifier.

    Comment by Kate Quick. — September 30, 2011 @ 6:26 am


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