Bracing for impact

Tonight, City Council has the impact report for the Neptune Pointe/McKay Avenue ballot measure in its hot little hands and there’s nothing really shocking in it.  I imagine that anyone on the side of the ballot measure feels as though the possible impacts were overstated, but it’s not too alarmist.  For example I found this portion interesting when discussing the three possible ownership scenarios:

Even a Federal Government lessee is not required to obtain a permit from a city in compliance with local zoning ordinances. For instance, the United States Postal Service need not comply with local zoning regulations in construction of a post office on land owned or leased by the Federal Government

When I mentioned that the impact report was not overly alarmist, this was one of the points I was thinking about.  Using the Post Office as an example of a possible lessee was pretty benign, but a lessee doesn’t necessarily have to be a government agency.  It could be anyone, including, say, a private developer.   Of course the big hangup is the question about McKay Avenue itself as the whole condemnation thing is winding its way through the courts.

So here’s the potential legal liability part:

Passage of the Initiative could potentially lead to litigation against the City. Because the Initiative seeks to substantially down-zone a valuable parcel of residentially-zoned land located in a desirable part of the City, it is conceivable that passage of the Initiative would result in litigation against the City by those whose economic interests are adversely affected. The Initiative proponents have publicly stated that the Initiative is intended to stop the Federal Government’s sale of the Site to the Developer and to prevent development of the Site by the Developer. EBRPD has publicly stated that it brought a currently pending lawsuit against the City in an effort to cause the City to down-zone the Site to prevent the Federal Government’s sale of the Site to the Developer and, as a result, hopes to force the Federal Government to instead sell the Site to the EPRPD at a lower price. In light of those facts, and the fact that the Initiative, if passed, would designate the Site as Open Space and eliminate its current residential zoning, the Federal Government or the Developer potentially could bring a lawsuit against the City challenging the Initiative.

…

The City would defend any such claim and, regardless of whether the City ultimately prevailed in Court, the City would incur legal defense costs. Legal defense costs are likely to amount to hundreds of thousands of dollars. Damages, if the City were to lose in Court, could amount to millions of dollars.

A potential legal challenge could assert that by down-zoning the Site (from residential to open space), the City is precluding the owner from realizing its full economic benefit. In such a claim the City would be asserted to have committed a “taking” of a valuable property right in violation of the Fifth and Fourteenth Amendments of the United States Constitution and Article I, Section 19 of the California Constitution. As a result, the property owner would claim the City should purchase the site at its fair market value.

…

In addition to incurring substantial expense for its own legal fees, in the event such a lawsuit were successful, the City would be potentially liable for a range of damages including having to pay the property owner the fair market value of the Site. In a takings case, the Court would determine the fair market value which is likely to be in the millions of dollars. Damage estimates range from the amount of the pending sales contract for the Site which has a price of $3,075,000 (see the documents at Appendix III) to $5.6 million based on the City’s Development Impact Fees Update and Nexus Study dated June 18, 2014 which places $1.4 million per acre value on residential property in the City of Alameda ($1.4 million times 4 acres equals $5.6 million). Potential plaintiffs are likely to argue the fair market value exceeds $1.4 million per acre in light of the desirable location of the Site in close proximity to the beach.

I’m pretty sure that the ballot measure will pass which means that the fiscal responsibility agenda item is even more important because it should insulate the City as best as possible much like the companion measure for the Beltline rezoning ballot initiative.   The City Council can do three things, the first is do nothing.  Let the other ballot measure stand on its own and call pray that neither Tim Lewis Communities or the GSA do anything if it passes.   Or they can place a companion measure on the ballot or adopt similar language by ordinance.  Both the last two will do pretty much the same thing which is:

If, within 120 days after the Initiative Ordinance becomes effective, the City is sued for inverse condemnation or a taking based on the General Plan designation and/or zoning change effected by the Initiative Ordinance, the City Council shall be authorized to take such measures as are necessary to mitigate any possible detrimental impacts on its ability to fund necessary services such as provision of City parks, libraries, police, fire, and other city services until such time as the lawsuit is finally resolved in favor of the City or, if the lawsuit results in a final inverse condemnation judgment in favor of the plaintiff and against the City, until such time as:

a) there is a vote of the electorate of the City authorizing new or increased taxes sufficient to pay the judgment and all accrued interest thereon, pay all legal fees associated with defending the inverse condemnation or taking claim, make any required improvements to the Property, and pay for necessary maintenance of the Property; OR

b) the City is able to sell the Property to a third party, including but not limited to the East Bay Regional Parks District which has publicly stated it has 2008 Measure WW funds available for this purpose, pursuant to a purchase agreement whereby the new owner would agree to pay to the City a purchase price in a sum equal to the amount of any judgment and all accrued interest thereon, pay all legal fees associated with defending the inverse condemnation or taking claim, make any required improvements to the Property and pay for necessary maintenance of the Property, at no cost to the City.

So essentially the City Council can do whatever it needs to in order to buffer the City from the financial impacts until the voters authorize a new tax to pay for the judgement and the legal fees or whoever wants to buy the property (coughEBRPDcough) will be obligated to buy the property and pay the legal fees and maintenance.  I kind of feel like if option (b) is the eventual result it would be been cheaper for EBRPD to just have purchased the property at the price Tim Lewis Communities was willing to purchase it for.