Value add

Another one of the numbers touted by opponents to Measure B is the $51 million in fees that SunCal has asked they be exempted from paying.    The bulk of those fees is for the Community Development Fund which was a fee created by the City in 2001 to pay for projects in the City that have been deemed to be a priority to the City.

When I say “bulk” of those fees, according to the Interim City Manager’s rebuttal letter to SunCal, she estimated that those fees would be about $34 million.   Also in that rebuttal letter, the ICM declared that the way that the CDF is set up, since only a portion of the cost to construct the individual projects is assigned to new development, technically SunCal would only get a small portion of the fees they are supposed to pay credited toward the larger fee amount.

First off, the interesting thing about the whole CDF program is that the majority of the costs for each individual project is apportioned to existing development and not new development.   Which means that the majority of the project has to be funded by the City itself, the suggestion made by the consultants who crafted the CDF program was that the City look into

…allocating State and Federal funding sources, allocating general fund revenues, allocating tax increment, implementing additional parcel taxes, and allocating County sales tax revenues…

So, for example, the Sports Complex that is part of the public benefits that SunCal has promised to build is estimated to cost $23 million according to the CDF study.  But the only amount apportioned to “New Development” which is not just limited to Alameda Point but all new development is $1.9 million.   So “Existing Development” which means all the rest of us are technically on the hook to build the Sports Complex for $21 million.

And to top off the weirdness that is the insistence that the City will lose all this money, the total portion for all “New Development” of CDF fees is $27 million, $7 million less than what the City is estimating they will collect from SunCal based on their land use plan.

Of course, there is dispute as to what the credit should be if a developer constructs a project that is included in the list.   The largest one that SunCal has agreed to fund is, of course, the Sports Complex.    The Nexus Study says this about fee credits:

A fee credit may be obtained by a developer if the following criteria are met:

• The developer has funded an infrastructue project listed in the City’s Capital Improvement Program (CIP).
• The infrastructue project is considered a “priority” project by the City. An infrastructure project is considered a “priority” if the City has identified funding for, and if funding was to take place within three years of when the project was completed by the developer.

If approved by City staff and the City Council, the fee credit should equal the most current cost estimate of the infrastructure item (as defined by annual cost review or other recent evaluation of cost) regardless of the actual cost to construct.

Of course, it is highly unlikely that the City will ever be able to scrape enough money together to identify funding for a project like the Sports Complex so it will never be considered a “priority” project.   But it would only seem equitable if a developer were to build a facility that would cost more than than City has budgeted for it AND the City had only apportioned a fraction of the cost of the project to the developer that the developer get some credit for building the damn thing more than what was apportioned to it.

Because, the purpose of the CDF is to get projects built, not to simply accumulate bits of money here and there without a project to fund, which is what collecting the fee would do since the bulk of the projects still require City investment to get them built.   Given the size and complexity of the Alameda Point project and that some of the largest big ticket items on the project list are either within the Alameda Point area or it will impact (Mosley/Mitchell Extension Project, Atlantic Beltline, etc…) we should be concentrating on getting the developer to construct and complete these projects as opposed to simply collecting a fee which would give the City much more value add than an isolated pot of money that requires a lot of additional funding.   Not to mention a whole host of the projects will become unnecessary with the development of Alameda Point (Alameda Point Gym, Renovation of O’ Club, Swimming Pool) which should also be taken into consideration as well.

On another note, if you haven’t checked out Michele Ellson’s comment on the whole Alameda Point deal, it’s a must read.