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2000-02-02 ARRA MinutesAPPROVED MINUTES OF THE REGULAR MEETING OF THE 2-A_ ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY Wednesday, February 2, 2000 The meeting convened at 5:47 p.m. with Chair Appezzato presiding. 1. ROLL CALL Present: Tony Daysog, Councilmember, City of Alameda Albert DeWitt, Councilmember, City of Alameda Beverly Johnson, Councilmember, City of Alameda Barbara Kerr, Councilmember, City of Alameda Absent: Chair Ralph Appezzato, Mayor City of Alameda 2. CONSENT CALENDAR 2 -A. Approval of the minutes of the regular meeting of the November 3, 1999. 2 -B. Mid -Year Alameda Point Budget report from the Deputy City Manager. Member Kerr moved approval of the minutes as presented for the regular meeting of November 3, 1999 and the Mid -Year Alameda Point Budget report from the Deputy City Manager. The motion was seconded by Member DeWitt and passed by the following voice vote: Ayes - 4. Noes - 0. Abstentions - 0. 3. ACTION ITEMS 3 -A. Report and recommendation from the Deputy City Manager to amend sections 2.02 and 2.03 of the ARRA By -laws to establish the Mayor and Vice -Mayor as Chairperson and Vice - Chairperson of the ARRA Governing Body respectively. Member DeWitt moved approval of the recommendation. The motion was seconded by Member Kerr and passed by the following voice vote: Ayes - 4; Noes - 0; Abstentions - 0. 3 -B. Report and recommendation from the Deputy City Manager to amend ARRA Resolution 010 to establish a regular annual meeting of the ARRA Governing Body for the third Tuesday in June and allow for special meetings as- needed. The public hearing was opened. Diane Lichteinstine, BRAG Vice - Chair, expressed that some clarification was needed on how the ARRA intends to be open to the public. Nanette Banks, Alameda Point, Business and Special Projects Manager stated this recommendation is to move it to the Tuesday night meeting to conform it to the same way Council does the CIC and Housing meetings. The public would have ample notice of the meeting and the BRAG's information would be advanced to the ARRA in the same manner. If there was an issue which required immediate action, staff would hold an as needed meeting and conform to meet as the same time the Council meets, which means the ARRA could hold two meetings in one month. Jim Flint, City Manager, indicated staff's recommendation does conform to the Council's role as the Housing Authority and the CIC. Those meetings are frequently called if they are needed. If there is no business, it is not necessary to conduct a meeting, unless the Governing Body desires to meet. This gives the Board the flexibility to conduct other meetings, as needed. Richard Neveln, 1328 Park Street, questioned why staff recommended the regular scheduled ARRA meetings to be eliminated? He stated there should be some regularity to the meetings, so things do not occur in a crisis mode. These meetings should be specified and canceled if there is no business. Jim Flint responded that staff is always planning multiple meetings in advance and always know if they are going to have items for the Council, CIC and Housing Authority. There are no regular scheduled meetings for the Housing Authority or the CIC, yet staff always stays contemporary with current issues which have to be addressed by the Governing Body. This would not impede the Boards ability to make any decisions or staff's ability to manage these projects and to move issues through in a timely manner. Mr. Neveln asked is it reasonable to assume that these meetings would occur concurrent or just before Council meetings? Jim Flint responded yes. The public hearing was closed for Authority discussion. Member Kerr stated that we are developing 25% of the City and this is not some minor project. These issues may get lost within the Council meetings, as there are a lot of important issues that occur within the ARRA meetings. It is important that we have some regularity of meetings because it is difficult to get updates and current evaluations of what staff is doing. Member Kerr indicated that if meetings are stopped on a regular basis and the Governing Body sits as Council or CIC, it may be less informed than it is now. Member DeWitt questioned staff's recommendation about the alternative Wednesday meetings instead of having it on Tuesday. He asked if this meant that the ARRA will continue to have its regular meetings on Wednesday's or will it occur Tuesday's with the CIC? Nanette Banks responded that the paragraph he read was inserted so that the Board could have a choice. Staff is recommending that the Board move their meetings to Tuesday and have them on an as- needed basis. However, the Board may continue to have meetings on Wednesday's, if it so chooses. Member DeWitt asked what would happen if they continued to meet on Wednesday's? Ms. Banks responded that was their decision. Member DeWitt stated there are some issues that are going on which are very important and he would like to continue to meet once a month. Jim Flint responded that there would be no material difference in what they are doing to date. The monthly meeting would be scheduled and if there was an agenda of items, staff would conduct a meeting. If there were no items, staff would cancel as they have previously been doing. Member Johnson asked Ms. Banks if staff polled the members on their preference for Tuesday or Wednesday nights? Ms. Banks responded staff polled the members on what their preference would be and there was a split decision, which is why staff put forward this recommendation. Member Kerr stated it is very important to continue as they are until the City gets title to the Base. It is a very critical time and very important to stay on top of what is going on, as there are constant negotiations with the Navy. Lee Perez, BRAG Chair, expressed their concern is that whatever decision the Governing Body makes, it should be user friendly to the Commissioners and the community. There should be separate, regular meetings for a transitionary period that is dedicated to one issue, which is Alameda Point. Mr. Perez stated it should continue 3 to meet for a while and then change. Member Johnson stated it is important to keep access open to the public. If the Board schedules meetings on an as- needed basis, there is not an opportunity for public input. Member Johnson voiced she has no problems with going forward with the regularly scheduled Wednesday meetings and can cancel a meeting as needed. Member Kerr responded that she did not want to have a mandatory start on City Council meetings at 5:30, as those meetings are very long. To start at 5:30 on Tuesday would detract the Board from other City Council items later in the meeting. Member Daysog recommended staff continue the meetings for eight (8) months and in the course of that time, change it if the Board desires to. Member Kerr motioned to continue the ARRA meetings on Wednesday's until January, 2001. The motion was seconded by Member DeWitt and passed by the following voice votes: Ayes - 4; Noes - 0; Abstentions - 0. 3 -C. Report and recommendation from the Deputy City Manager to authorize the Executive Director to execute a 10 -year lease with two five year options to renew on Building 23 with West Coast Novelty Corporation. The public hearing was opened. Kurt Bohan, 344 Westline Drive, #301 C, expressed that Hangar 23 is the most desirable Hangar on the Base, due to its historic nature. It was available to Zebra, but they could not take it due to their lack of financial viability. Mr. Bohan stated it would be a big disaster to turn this building into a Warehouse and a total communication failure on the part of the Board, especially due to the twenty -year lease. Mr. Bohan indicated he would like to see something that is representative of what is presently going on at the base. If staff's recommendation passes, it would be a big political failure. Ann Mitchum, 732 Central Avenue, #16, expressed that at the last BRAG meeting, this was considered against what was considered the dream vision for the Base. This does not live up to the standards of what the community wants to see at Alameda Point. The two five year options after the ten year lease are at the discretion of the lessee, West Coast Novelty, who would have the choice of continuing the lease, as it would not be up to the City to make that decision. We do not want to loose control of the situation. Bill Smith, Alameda, expressed his concern with West Coast Novelty and their 12 intentions on future plans at Alameda Point. Mr. Smith indicated there is a novelty show in Reno and any can go there and pick up these fifteen cent products which are manufactured overseas and are marketed here for $1.50. Mr. Smith expressed that Alameda Point has not been properly marketed as there are many incubators throughout the country and more are coming. Larry Jones, Bay Street, expressed his support for West Coast Novelty. He stated he worked with their principals for over a year in an effort to attain one long -term facility which they could buy. This is a corporate warehouse facility, with no semi - trucks, just a business to the fulfillment of the Internet. This is an opportunity to take something that Oakland thinks they have and an opportunity to bring it to Alameda. This effort is not inconsistent with what is presently going on with the base. Brian T. McCroden, West Coast Novelty Corp., stated they had an option to build their own facility in a neighboring city. However, it was moving at a slow pace and their realtor contacted Mike and Ed, who have moved swiftly to make their lease a reality. West Coast Novelty is one of the leaders in the sales, creation, marketing and distribution of a wide variety of sports, entertainment and lifestyle licensed products. This is a big business with lots of employment opportunity and growth. West Coast employs approximately 70 people and are interested in employing people within the community. Mr. McCroden indicated they will not have many trucks entering their site. The company has grown from the 1980's in the six figures, to approximately $25 million a year. They are not a basic warehouse company, as they are continuously designing products. Mr. McCroden stated they intend to put their entire corporate headquarters at Alameda Point and put in $500,000 for upgrades and are very sensitive to the historic nature of this building. The public hearing was closed for Authority discussion. Member DeWitt asked Mr. McCroden how many people do they employ? Mr. McCroden responded that they employ approximately 70 people and it increases and decreases seasonally. Member DeWitt asked about their sales tax revenue. Mr. McCroden stated they are not a retail operation. They are a wholesale and internet operation and do not generate a lot of sales tax revenue. Member DeWitt asked Mr. McCroden how much traffic would they generate at Alameda Point in terms of large vehicles. Mr. McCroden responded one to two large trucks and UPS and Federal Express. Member Johnson asked what is the estimated tax revenue that would be generated for 5 the City. Mr. McCroden responded that whatever the City's tax rate is, put that number into $25 million a year and that would be the annual payment to the City. Member Johnson asked would their only warehouse be in Alameda? Mr. McCroden responded that is correct. Member Johnson asked how does their Internet business work? Mr. McCroden responded they are individual orders, which are downloaded onto their system. Once a day, UPS comes and loads these orders on their truck for delivery. Member Kerr asked what is the City's revenue based on, net or gross? Jim Flint responded that he was not sure of that but he suspects it is gross. Lance Littlejohn, CFO of West Coast Novelty, indicated that in their present facility in Emeryville which is comparable to Alameda, they would pay Alameda approximately $20,000 a year. Member Kerr asked Mr. Levine on their lease renewal, would their rent be renegotiated at the end of their ten (10) years? Mr. Levine responded no, because they have set the rent for years from eleven through fifteen and that is established in the lease based on a CPI increase from the first years rent. Thereafter, the second renewal option period would be set at 90% of the appraised fair market value at that time, for years sixteen through twenty. Member Johnson asked are there any rental increases during that fifteen year period? Mr. Levine responded yes, there are CIP increases each year. Member DeWitt asked Mr. Levine what happened to the incubator plans from four or five years ago? Mr. Levine responded that staff has two facilities presently, which seems to be sufficient to start up any new companies. Member DeWitt asked what happened to the electric cars? Mr. Levine responded that regretfully, they have not been successful. There are some companies that have hatched out of Calstart, although Zebra was supposed to be the 9 big success story staff was counting on, unfortunately they could not get their finance and go ahead with the lease for Hangar 23 as they originally intended to do. Member DeWitt asked are we moving to fast and using all of our space at this time? Mr. Levine responded that West Coast Novelty is a first class tenant and is consistent with the reuse plan. They are a headquarters operation and the space is not being use for some warehouse. Significant employment will result from this lease. Member Johnson asked what percentage of the building would be used for warehouse space and what percentage for headquarters. Mr. Levine responded that it is a 65,000 square foot building, of which 40,000 square feet is the hangar space and 25,000 square feet is office space. Member Johnson asked what is the amount per square foot that they are paying on the lease. Mr. Levine responded thirty -one to thirty -six cents per square foot for the entire building. It is a blended rate of the warehouse and office facility space. Normally when a warehouse is leased, there is a certain amount of office space that goes with it and it is a flat rate which is applied to all of the space. Member Johnson asked how much of an investment are they making? Mr. Levine responded approximately $500,000 and they are only be reimbursed for $125,000. The building has already been improved and brought up to code compliance with EDA grant money. Member Daysog stated there is a vision that they would like to see in place but there is a need for revenue to pay the bills at Alameda Point. Does staff have any leverage to move companies to different locations on the base even though staff has entered into a lease agreement? Mr. Levine responded that it would have to be negotiated, as we do not have leverage through the lease. There are leases with Termination Provisions, should the need arise to redevelop the property. We reserve the right to terminate the lease at some point during the term of the lease. This provision is done with the lease primarily in the Inner Harbor area, not in the central core area, as all of those buildings are designated for long -term use according to the Reuse Plan. Member Johnson asked Mr. Levine would it be reasonable to renew at fair market value when the option to renew came up? Mr. Levine responded it is strictly a matter of negotiation. This was one aspect staff had 7 to give on to make this deal. Member Johnson asked what has CPI been most recently? Jim Flint responded the most recent CPI for the Bay Area is 4.8 %. Mr. Levine indicated staff is using Bay Area CPI rates. Member Daysog expressed that we are moving forward as part of the vision for Alameda Point with the West Coast Novelty lease. Although each company may not be perfect, there is space to accommodate this company and other companies for the future which will accommodate our vision for Alameda Point. Member DeWitt moved approval of the recommendation. The motion was seconded by Member Kerr and passed by the following voice vote: Ayes - 4; Noes - 0; Abstentions - 0. Discussion. Member Kerr indicated she is encouraged that there is 25,000 square feet of office space, which allows for flexibility for future use should West Coast Novelty decide not to renew, we will have an upgraded facility and office space. 3 -D. BRAG recommendation to the ARRA Governing Body against including an option to purchase in Alameda Point leases prior to the adoption of the General Plan Amendment. The public hearing was opened. Richard Neveln, 1328 Park Street, expressed he agrees with the BRAG recommendation against purchase options unless there can be some wording crafted by Mr. Levine, in the way he has crafted the West Coast Novelty lease, so that everyone benefits. Mr. Levine has shown that a good lease can be crafted without the purchase option as shown tonight. Kurt Bohan, 344 Westline Drive, #301 C, expressed staff should preserve their right to not have to purchase the property. Mr. Bohan encouraged the Board to make the option to buy, a universal vote of all members for a profitable lease. Bill Smith, Alameda, expressed his concern over renting out Hangar 23 for twenty years. He felt that there should be more electronic and internet type of companies at Alameda Point. The incubators should be given more opportunities, as the property value at Alameda Point is going to double in the near future. 9 Ann Mitchum, 732 Central Avenue, #16, stated she did not understand how the Governing Body could approve the recommendation to go forward on Hangar 23 for twenty - years. She expressed to the Board that if they are going to make a decision on a twenty -year lease and think they have the power to do that, they had better think again. Diane Lichteinstein, BRAG Vice - Chair, expressed that it behooves the BRAG to take a stand as an advisory body to reiterate the BRAG's position they have taken. BRAG is very cognizance of the need for economic viability for Alameda Point. BRAG does not want a warehouse at Alameda Point permanently with the option to purchase, as there are already two leases with that option. Option to purchase for some buildings is a disservice to the community. Ms. Lichteinstein indicated that the option to purchase not be given until the general plan is amended, because at that time rezoning will be done. The twenty -years with West Coast Novelty should not be permanent. We should keep our options open and have the opportunity to develop the neighborhood. The public hearing was closed for Authority discussion. Member Kerr stated her concerned over the use permits, which go through the Planning Board under the zoning paragraph, is always industrial planning. The current zoning at the base is not harmonious with the Community Reuse Plan. Member Kerr would like to see a movement towards rezoning the base, although there are arguments against doing it until the City gets title from the Navy, because it would influence economic transfer. This would require a general plan amendment. In the future when use permits go to the Planning Board after the City gets title, there would already be in place a consideration of use in terms of zoning, which would be compatible with the Reuse Plan which was developed by the community. To continue to send use permits to the Planning Board with the current zoning in place is a very dangerous thing to do. Member DeWitt stated are we selling property now for peanuts that could be worth billions of dollars in ten or twenty years? The solution to the problem would be to not have a contract that made purchase a total option, but have a contract that has a lease period for five or ten years with the option to purchase, but the option to purchase will be based on the market value at the time and it will be at the City's discretion. There should be a procedure that allows the lease and purchase, but the purchase has to be based on what the City wants to do at that time. The master plan is not sufficient to go and sell pieces of the land right now. Maybe in five or ten years from now there should be a better idea of what the market value is. There should be a policy or procedure with the option to buy, but the option should be in the City's control, market value and our vision. 9 Ed Levine stated there are currently two purchase options in place, one with AVTS and the other with Bladium. In both cases, they have the option to purchase. The market value they would pay for the property is the appraised market value of the property at the time of the purchase. They would not be able to lock up the property at the present, cheaper rates, they would have to pay the appraised amount. Member DeWitt asked what if we want to change businesses? Since they have the option to purchase, does it mean the Board can deny them or are they going to be competitive with everyone else? Mr. Levine stated the Board does not have the option to change businesses. Member Johnson indicated she understands the BRAG's position on this, however she does not want to take away the option to purchase on a really good deal we want to go forward with. It could take some time before the General Plan is amended and the option to purchase has been used sparingly, only two facilities have the option to purchase. Member Kerr raised the issue of zoning, which might be a better to have control of the property. Member Kerr asked staff to prepare a report for rezoning the property and implication of rezoning the property when title passes. Jim Flint indicated staff can respond to that direction, however they are unsure as to how long it may take to prepare such a report. It will entail a good deal of thought and study before a report could be given to the Governing Body. It would take sixty to ninety to respond thoroughly. In order to respond fairly staff cannot give the Board a timeline although staff can prepare an off - agenda report at some time to reflect the concerns the Board has expressed. Member Kerr stated it has been brought up before and the answer was that the Navy might look amiss at the City rezoning the property before title is received, because it might effect the economic development. Since the City may get title within the next six months and the issues of planning are very important, it is dangerous to leave the present industrial zoning over the entire base as it stands now. Ninety days is fine if staff thinks it can get it to the Board. Jim Flint stated that the president has signed a no -cost legislation so this should not affect rezoning during negotiations, because staff is not negotiating the economic value of the property and we are not talking about taking an action until after conveyance of the property occurs. For these reasons, this should not have any affect on the conveyance of the property. Member DeWitt asked in the leases that have been done, is there a clause to 10 renegotiate the lease? Ed Levine responded that typically there is a provision allowing the tenant the first right to negotiate for renewal of the lease, but that is subject to staff's decision to extend the lease. At the conclusion of a ten -year lease, if staff decides no more because the building is going to be demolished or something else, then the tenant cannot exercise the right to negotiate. It is our decision and in our control. Member DeWitt asked how many buildings are left since most of the base is leased out? Mr. Levine responded that most of the smaller and medium buildings are leased out. There are approximately ten large buildings left, totaling approximately 1.7 million square feet, which staff will be concentrating on over the next year. There are real interest from perspective tenants on Buildings 2, 3 and 4, the former Bachelor's Quarters. Staff is talking with developers in converting those into incubator offices, in line with the Community Reuse Plan. There is a developer who is interested in the 300,000 square foot Building 8 who will do a similar type of conversion whose been working with Dot Com companies in San Francisco and thinks he can successfully reuse Building 8 and redevelop it for those kind of tenants. Diane Lichteinstein stated the BRAG felt that the right for option to purchase be denied until the General Plan is in place, but rezoning for the BRAG would accomplish that purpose. Until the BRAG has a much better idea of what the community wants at Alameda Point, staff did not want to make permanent decisions. Member Johnson asked what about a policy that the Board's preference is not to give an option to purchase, without completely eliminating it? Ms. Lichteinstein stated the BRAG is cognizant of the need for income and economic viability. Perhaps a trade off is the best that can be accepted, although ultimately the BRAG would like their recommendation to succeed. Member Johnson stated she would be more comfortable with a policy which is what they have been following against the option to purchase until the rezoning is done. Member Johnson asked can there be a motion made adopting a policy? Assistant City Attorney, Terri Highsmith responded yes, as the agenda item is more regarding formulating a policy. Member Johnson motioned to establish a policy against granting options to purchase, but making it clear that the Governing Body can grant options to purchase if they feel it is appropriate and move forward as member Kerr suggested towards rezoning the base. Motion was seconded by Member Kerr. 11 Ayes - 4; Noes -0; Abstentions - 0. Discussion. Mr. Flint indicated staff could be directed to draft a policy for the Board's consideration, perhaps in an off - agenda report, so that by the next meeting of the ARRA the Board could consider it. Member Johnson asked would there be an opportunity for the BRAG to review the language before it came to the Board? Mr. Flint responded staff could prepare a draft policy, incorporate it into an off - agenda report, present it to the Council acting as the Governing Body for ARRA and simultaneously distribute it to the BRAG prior to the next Board meeting. Ms. Lichteinstein expressed her concern over the timing of these things, as they are out of sync. It would be helpful if the BRAG could get it in time to review and make a formal recommendation to the ARRA. Mr. Flint responded the BRAG could call a special meeting so they could have the time to review and reflect on it prior to the next ARRA meeting. Member Johnson agreed that it is a good idea that the BRAG have a special meeting so that the Governing Body can get it in place soon, rather than later. 4. ORAL REPORTS 4 -A. Oral report from BRAG. Lee Perez stated that on March 25, 2000 at the old historic Alameda High School cafeteria, from 9 -12 PM, the BRAG will be holding their next town meeting to discuss the issues that are going on, maintaining the open forum of communication and allowing the public participation in this meeting. 4 -B. Oral report from the Deputy City Manager (non - discussion items). None. 5. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) Doug deHaan, 1305 Dayton Avenue, expressed that seven years ago when things first started, everyone felt things would move quickly. Now that there is a twenty -year lease in place, the Board may be short changing itself to give itself the flexibility it needs. If 12 the Board starts selling off property or giving the options to purchase, you have to worry about the remediation that may occur. The vast majority of the cleaning up at Alameda Point will occur with the redeveloper, not the Navy. Mr. deHaan cautioned the Board in the use of the way they choose to use the purchase options. Ann Mitchum, 732 Central Avenue, #16, expressed that Member Kerr's suggestion of rezoning at the Base is a very good idea. Ms. Mitchum recommended there should be extra staff based on the Planning Department in order to fulfill that, when that time comes. This also fits in with the FISC property. The property should be used as a lot - by -lot, zone -by -zone infrastructure of personal use products such as office, commercial housing, in terms of the architecture. Bill Smith, Alameda, stated if we appreciate the infrastructure that the developers can put in the Base, food, shelter, clothing the kind of amenities we can build upon, then more jobs can be created. Mr. Smith indicated someone brought Zebra Motors $50 million for industrial use and the Board has just lost it in approving the West Coast Novelty lease. Richard Neveln, 1328 Park Street, encouraged the public to attend the Public Transit Committee meetings, as it will play an important part in the development of the entire City and reduce congestion. 6. COMMUNICATIONS FROM THE GOVERNING BODY Member Kerr asked could the Board get a one -time list of what the various entities are paying in monthly and annual rents? Jim Flint responded yes. Jim Flint asked the Board to endorse the Mayor in sending a letter to Congresswoman Barbara Lee, Wilma Chan and to the Mayor's and Council's of both the City of Oakland and San Leandro for their participation on the ARRA Governing Body. Member Daysog suggested that it was a great idea and perhaps we should give them a plaque, in addition to the letter. Member Johnson stated she agreed with Member Daysog's suggestion and also felt that it was a good idea. 7. ADJOURNMENT The meeting was adjourned at 7:30 p.m. Respectfully, 13 Lucretia AM ARRA Secretary 14