Blogging Bayport Alameda

March 5, 2018

Feature not a bug

Filed under: Alameda — Lauren Do @ 6:05 am

I did mention how when Alameda Point Partners started down the road of Site A and blah blah I was not going to get excited until there were actually shovels in the ground and construction was underway.  APP has definitely hit a lot of bumps along the way, a lot of it outside the control of APP like the rise in construction costs, etc. but you have to hand it to this business, they keep chugging along.

APP is now back asking the City of Alameda to approve a Third Amendment to its DDA to remove one key provision from the Affordable Housing Implementation and that is the City’s ability to block any building permits from being issued for market rate units in excess of 395 if the funding is not secure for the low income housing development.

APP is essentially saying that the project will be dead if the City Council decides to hold firm on this, from the staff report:

APP is requesting a third DDA amendment (DDA Amendment) in order to remove the provision in Section 4.2 of Exhibit M (Affordable Housing Implementation Plan) of the DDA that allows the City to withhold building permits for any market rate units in excess of 395 units (Metering Provision), if Eden Housing has not received and executed a Low Income Housing Tax Credit Reservation for the Affordable Housing Projects. While Eden Housing has been very successful at obtaining much of its required financing for the Affordable Housing Projects, there are outstanding funding applications, whose results will be known in May/June 2018, after the April 9, 2018 Phase 1 closing date. As a result, at the time of the Phase 1 closing, there will be uncertainty for APP and their third-party developers as to whether the City will have the right to halt their building permits pursuant to the Metering Provision in the DDA.

APP asserts that the Metering Provision inhibits their ability to sell the market rate development blocks at sufficient value to cover the costs of the Phase 1 project, as the provision restricts one property owner based on the timing of another property owner out of their control. Further, APP believes that these reduced proceeds from the sale of these blocks would then be insufficient to cover the costs associated with the required backbone infrastructure and other amenities. In other words, the third-party vertical developers will not purchase the market rate blocks at all or will pay significantly less for them, if the City has the ability to stop them from developing their project due to the Metering Provision. APP contends that if the Metering Provision is removed, they will be able to close by April 9, 2018, deliver the $10 million Seaplane Lagoon Ferry Terminal contribution, and start construction on backbone infrastructure within 30 days. Without this third amendment, the Developer will not be able to continue with the Site A Project. [emphasis added]

This provision is one of the mechanisms that the City has put in place to attempt to relieve the affordable housing crisis but the unintended consequence is that they might make it worse because if the project is unable to move forward then the affordable housing units will never get built.  Sort of like how in some cities larger inclusionary housing percentages make it harder to build any housing at all so neither the market rate nor the affordable units are ever built.

But this is Alameda we’re talking about here, so maybe that’s a feature and not a bug.  After all, the latest talking point from the most strident anti-development group in Alameda has been insisting on affordable housing before market rate housing which is a cynical attempt to pit folks against the building of market rate housing as though market rate housing is somehow displacing the building of affordable housing.  As you all (should) know by now, the only way we’ve built any housing that is affordable is through major subsidies via market rate housing.

Anyway, this agenda item comes before the City Council on Tuesday night.  The big takeaway is, if this Third Amendment is not approved then the Eden Housing development, the ALL affordable housing development, will not get built if Site A does not get built.  Similarly, the infrastructure that is needed for the new-Alameda Point Collaborative partnership will also not get funded either since it’s reliant on an entity that is not APC to lay down the backbone infrastructure to the new consolidated site.  A lot of worthwhile projects are tied to the success of Site A.  And it all comes down to this incredibly dysfunctional City Council to provide adjudication as to its future.

See why I don’t get excited about these projects anymore?

7 Comments »

  1. Is APP and/or staff saying that APP requested, and was granted (1) a Phase I closing date extension of 4 months (after the Dec 2016 closing date had passed), (2) another extension of 11 months from April 2017 to April 9, 2018 was finally granted in June 2017, but one more 2-3 month extension of the Phase I closing date from April 9 to sometime after the May/June 2018 (dates by which APP will have answers to its funding/grant applications) – as opposed to complete removal of the Low Income Housing Tax Credit Reservation metering provisions — will unravel everything?

    Comment by MP — March 5, 2018 @ 7:47 am

  2. The conditions for the removal of the metering provision so they can get their building permit are:

    1) APP closes on the property by April 9, 2018
    2) APP starts construction within 30 days
    3) APP deposits $3M developer contribution at closing
    4) APP continues to support Eden Housing throughout their financing process

    Comment by Karen — March 5, 2018 @ 9:23 am

    • I don’t think #4 (“APP continues to support Eden Housing throughout their financing process”) is a condition of the waiver of the metering provision. The 3rd DDA says that it is an independent obligation of PPA, notwithstanding that metering may have already been waived by the City. I also don’t think that #2 – start of construction within 30 days – is a condition of the waiver of the metering provisions. 30 days to start construction is to be a “major milestone” rather than a condition on waiver of the metering provisions. The 3rd DDA (Sec. 2.1 “Conditional Waiver”) waives metering for Phase I if three conditions are met: (a) closing by April 11 (c) $3M Developer Contribution for the Affordable Housing Projects as of closing, and (b) “On or before the Close of Escrow for Phase 1, the Developer and the Qualified Affordable Housing Developer, Eden Housing, demonstrate to the satisfaction of the City that Eden Housing has secured sufficient public funds for the development of the Senior Project to achieve a competitive “tiebreaker” score in the March 2018 round of 9% Low Income Housing Tax Credit allocations as determined pursuant to the California Tax Credit Allocation Committee Regulations…..” Those three conditions to removal of metering will have all been met as of the April 11 closing date.

      Comment by MP — March 5, 2018 @ 10:35 am

  3. True about the “major milestone” — but by making it a major milestone they would be in default if they don’t start, and would lose their deposit(s). Remember, the developer’s goal here is to get their building permit.

    Also, there are many ways a developer supports — and I’m sure we’ll here more about that at the CC meeting:

    From the presentation:

    “Ongoing Support and Assurances. APP agrees to support Eden financing and readiness”

    And from the DDA Amendment:

    The Developer shall continue to cooperate with the Qualified Affordable Housing Developer with respect to the development of the Phase 1 Infrastructure Phase and the Affordable Housing Site as set forth in Section 1.1 of the Fourth Operating Memorandum to the DDA dated for references pursuant as of December 8, 2017and to provide assurances necessary to the Qualified Affordable Housing Developer’s lenders and investors regarding the completion of the Phase 1 Infrastructure.

    This looks like support to me…..

    Comment by Karen — March 5, 2018 @ 10:56 am

  4. Also, we’re talking about two different types of construction. APP is responsible for backbone infrastructure and Eden is responsible for Vertical construction (the buildings). By virtue of this type of project, the backbone infrastructure developer has to support the Vertical developer.

    Comment by Karen — March 5, 2018 @ 11:05 am

  5. This seems to be a no-brainer decision for our CC — removing the metering provision, at this juncture, would FACILITATE the market rate blocks and by extension, the horizontal infrastructure work, and by extension again, the development of the affordable units.

    I think the idea of the metering provision is a good one. And in the case of Alameda Point, it has been an effective to keep the master developer engaged with the affordable developer. But keeping them tethered, again at this particular juncture, will do nothing to promote the affordable units as both parties are well on their way towards securing the final key pieces of their financing plans and have great momentum behind them. If APP agrees to the pertinent conditions tied to the removal of metering, it should absolutely be approved.

    Comment by dya — March 5, 2018 @ 11:55 am

    • APP has already signed the 3rd DDA

      Comment by MP — March 5, 2018 @ 12:36 pm


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