Resolution 14472CITY OF ALAMEDA RESOLUTION NO. ? 44`72
DENYING A MODIFIED OPTIONAL ENTITLEMENT APPLICATION
INCLUDING A GENERAL PLAN AMENDMENT, ZONING
AMENDMENT, MASTER PLAN, AND DEVELOPMENT
AGREEMENT PROPOSED BY SCC ALAMEDA POINT LLC.
(PLNI 0-001 .
WHEREAS, the state legislature recognized the economic and social
745 s degradation faced by communities with military bases that were ordered to be
closed by the federal Base Closure Commission, and in Health & Safety Code
Sec, 33492.125 et seq. authorized the City of Alameda to adopt a redevelopment
plan covering the lands of the Alameda Naval Air Station to mitigate the very
serious economic effects of the base closure; and
WHEREAS, Health & Safety Code Sec. 33492.11 authorized the finding of
blight in closed military bases and the City Council in Ordinance No. 2754 found
the Alameda Naval Air Station a blighted area; and
WHEREAS, the City of Alameda adopted the NAS Community Reuse
Plan in 1996 which established guiding policies, objectives and goals for the
redevelopment of a portion of the 960 acres of uplands and 673 acres of
submerged lands that comprise the former Naval Air Station at Alameda Point
( "Alameda Point "); and
WHEREAS, as the City of Alameda adopted a comprehensive General
Plan Amendment in 2003 which incorporated the Community Reuse Plan
policies, objectives and goals for the redevelopment of Alameda Point into the
City's General Plan; and
WHEREAS, the Community Reuse Plan and General Plan goals, policies
and objectives represent the community's guiding principles for the
redevelopment of Alameda Point; and
WHEREAS, in July 2007, the Alameda Reuse and Redevelopment
Authority ( Community Improvement Commission ( "CIC "), and the City
of Alameda (together "Alameda ") approved an Exclusive Negotiation Agreement
("ENA ") with SCC Alameda Point LLC (SunCal), as the Master Developer for the
redevelopment of Alameda Point; and
WHEREAS, the purpose and intent of the ENA is to provide a timeframe
and framework for exclusive negotiations between Alameda and SunCal
concerning the terms of agreements and planning documents (including a
finalized Navy Term Sheet, a disposition and development agreement, a project
pro forma, and development and infrastructure plans) and preparation of and
use entitlement applications for the redevelopment of Alameda Point for
consideration by Alameda; and
WHEREAS, in October 2008, the ENA was amended, at SunCal's
request, to allow SunCal to pursue an initiative approving a non - Measure -A
compliant project for Alameda Point; and
WHEREAS, pursuant to the ENA, in January 2009, SunCal submitted an
Optional Entitlement Application for consideration by Alameda in the event
Measure B was defeated;
WHEREAS, SunCal's initiative, "Measure B," appeared on a special
election ballot in February 2010 and was rejected by the Alameda voters by a
margin of 85.4% to 14.6%; and
WHEREAS, subsequent to the defeat of Measure B, SunCal submitted the
Modified Optional Entitlement Application ( "Modified OEA ") requesting approval
of an amendment to the City of Alameda General Plan, an amendment to the
City of Alameda Municipal Code and Zoning Ordinance Amendment including
adoption of a Master Plan, and approval of a Development Agreement; and
WHEREAS, on July 20, 2010, the City Council of the City of Alameda held
a public hearing on SunCat's application for approval of the Modified OEA
examined pertinent reports, plans, maps and other documents, and considered
the testimony and written comments received.
NOW, THEREFORE, the City Council makes the following findings and
determinations concerning the Modified DEA
A. Th e Modified OEA and Project Uncertainty
1. The Modified . DEA requests text and map amendments to the City
of Alameda General Plan, adoption of a new Alameda Point
Community Plan, text and map amendments to the City of Alameda
Zoning Ordinance, approval of an Alameda Point Master Plan, and
adoption of a Development Agreement pursuant to California
Government Code sections 65864 et seq. These text and map
amendments include a proposed new General Plan land use
classification of "Alameda Point Master Plan" for the project site,
and a rezoning of the project site to "MX, Mixed Use Planned
Development District."
2. The proposed project described in the Modified OEA consists of the
"Base Project" and the "Density Bonus Option" under which the
residential density of the Proposed Project would be increased
pursuant to the City's Density Bonus Ordinance. The Modified
OEA proposes a mixed -use land use program with residential,
commercial, retail, hotel, civic, public trust, marina and parkland
uses. It also includes a range of public transportation
improvements, including relocation of the ferry terminal, a bus rapid
transit (BRT) system, and transportation demand management
measures. The Modified OEA presents essentially the same land
use program as the Measure B initiative, with the exception of an
increased amount of commercial development, one acre of
additional park and the inclusion of sustainable uses, such as a
solar farm, in the Northwest Territories.
3. The Base Project consists of up to 3,712 residential units and up to
4.57 million square feet of commercial development on the project
site. The residential density across the project site under the Base
Project would generally range from 4 to 19 dwelling units per acre.
Under the Density Bonus Option, SunCal seeks the right to
increase the overall project density of the project by approximately
30% for a total of 4,845 residential units. However, no minimum
development obligations, either for housing or commercial
development, are provided.
4. The Modified OEA provides minimal certainty about how the
property will ultimately be developed. Many specifics about number,
location and density of residential units, amount and type of
commercial development, site design, the transportation system,
and sustainability measures have not been provided. This
uncertainty makes it extremely difficult to plan appropriately for
infrastructure, transportation and traffic, City services and other key
project elements. It also makes public financing — in the form of
assessment or community facilities districts, tax increment bonds,
and affordable housing bonds -- very difficult to implement and
administer in order to ensure timely and adequate funding for
infrastructure and services.
5. There is also substantial uncertainty regarding the relative timing of
development of the residential and commercial components of the
project. The timing of the residential and commercial components
relative to each other can result in widely differing impacts on the
jobs /housing balance, traffic congestion, public financing,
transportation and infrastructure needs and provision of City
services. The Modified OEA establishes maximum development
capacity for each phase, but does not link development of housing
to commercial development. Under the Modified ()EA, the housing
units could be built in each phase up to the maximum allowed
without any commitment or requirement to provide the associated
commercial development that is necessary to create jobs and is
essential to a mixed -use development.
6. The Modified OEA ensures maximum flexibility for future
developers of Alameda Point to respond to future market conditions
and avoids or delays commitments regarding specific land uses,
design requirements, infrastructure, services, or operations. While
a certain degree of flexibility is necessary to enable the master
developer and vertical builders to respond to changing market
conditions, the Modified OEA does not provide sufficient upfront
commitment regarding the actual project SunCal intends to develop
despite the requests of staff, the Council and Board and the
community. Many of the build -out scenarios possible under the
Modified OEA are not consistent with the community's guiding
principles for Alameda Point.
7. These deficiencies in the Modified OEA reflect important
differences in objectives between the City and SunCal. The
Modified DEA maximizes flexibility and minimizes commitments
that could result in future costs and limitations on vertical
developers, which could ultimately affect the sales price of land.
While Alameda has acknowledged the need for flexibility to account
for changing market and technical conditions over the life of a long-
term project, a balance needs to be struck between flexibility and
provision of meaningful commitments to the community. The
Modified DEA does not reflect that balance.
B. Econo mic Development and Jobs /Housing Balance
1. The need for a mixed -use plan for Alameda Point that replaces the
jobs lost when the Naval Air Station was closed has been
repeatedly emphasized in all planning documents relating to
Alameda Point, including the 1996 Community Reuse Plan, the
2003 General Plan Amendment and the 2006 Preliminary
Development Concept (PDC). Section 9.1 of the General Plan
provides that redevelopment should create a mixed -use
environment at Alameda Point, result in replacement of jobs lost
due to cessation of Naval operations and foster economic growth
and development that benefits the community at large. Studies
prepared by the Metropolitan Transportation Commission, State of
California (Statewide Transit - Oriented Development Study), Urban
Ecology (Blueprint for a Sustainable Bay Area), the Greenbelt
Alliance, the American Planning Association and others support
Alameda's determination that transit - oriented, mixed use
development is critical to the successful redevelopment of Alameda
Point.
2. In response to these policies, the City Council through its
preparation of the 2006 PDC stipulated that future development of
plans for Alameda Point should include preparation of an economic
development strategy for Alameda Point in order to: (1) consider
Alameda Point's opportunities and constraints for attracting
commercial development; (2) evaluate the strengths and
weaknesses of Alameda's and the region's other existing and
proposed commercial and business park areas; and (3) identify
how best to position Alameda Point competitively for future
commercial and business park development in order to maximize
job generation and to ensure a truly mixed -use community. The
ability and willingness to implement this strategy was one of the
criteria for selection of the Master Developer for Alameda Point.
3. Notwithstanding the requirement of these plans, and despite
repeated requests by Alameda, the Modified OEA has no such plan
or strategy for the commercial components of the Proposed Project:
it provides a maximum (but no minimum) development envelope for
commercial buildings and a list of permitted and conditionally
permitted non - residential uses. There is no certainty regarding the
amount and type of commercial development and the resulting
impact on the jobs /housing balance.
4. For the redevelopment of a mixed -use community at Alameda Point
to be successful, a development plan must include a well -
considered economic development strategy and commercial
business plan. A successful economic development strategy that
can attract new businesses to occupy the former Navy buildings will
be key to preserving the historic resources on the property.
Ensuring a mix of jobs, housing, and services is vital to ensuring
the economic health of both the local and regional economy and to
minimizing traffic congestion and air quality impacts locally and
regionally. creating such jobs requires a comprehensive and well-
designed economic development strategy. Particularly in the
current economic climate, a comprehensive economic development
plan is essential to creating a successful mixed-use development,
and should be an integral part of the overall plan rather than an
afterthought or a simple zoning designation. The absence of such
any such plan is a critical flaw in the Modified OEA.
C. Transportation Planning and Traffic Impacts
1. The redevelopment of Alameda Point also presents a unique
opportunity to create a comprehensive and integrated
transportation system that not only serves future residents and
employees at Alameda Point, but also improves the citywide
transportation system for all residents of Alameda. The
transportation plan for Alameda Point is a key component of the
project. Land use and transportation must be two equal parts of a
whole plan for Alameda Point given the transportation constraints
confronted by Alameda, as an island city.
2. The 1996 Community Reuse Plan and the 2003 General Plan
Amendment identify transportation as one of the greatest
constraints affecting redevelopment of Alameda Point. The City's
transportation system is severely constrained and there is little
capacity in the transportation system to add more housing which
adds vehicles to the already constrained AM outbound and inbound
PM commutes. Section 9.1 of the General Plan provides that
redevelopment should promote the use of alternative modes of
transportation to reduce present and future traffic congestion, and
General Plan Policy 9.2e expressly requires new development to
be transit - oriented.
3. The Modified OEA, as well as SunCal's previous planning
documents, have done little or nothing to advance these policies or
build on previous transportation planning efforts. Among other
elements, the proposed BRT and ferry improvements and services
are likely to be crucial in ensuring that the final phases of the
project are completed. However, the Modified OEA is not based on
any new transportation studies and has made little to no progress
addressing any of the key issues regarding BRT that have been
pending since 2006, including preferred alignments (instead
referencing staff's preferred alignment), location of dedicated and
queue - jumping lanes, operation of the BRT system in Oakland,
operating entities, and system costs and financing.
4. The Modified OEA likewise fails to address key issues regarding
ferry service, including ridership projections; ferry terminal
relocation, amenities and construction and maintenance costs;
funding requirements and operational subsidies; the sustainability
of a bifurcated Oakland /Alameda ferry service; and obtaining
preliminary support for a plan from WETA.
5. The Modified OEA does not adequately address these complex
transportation issues. Based upon the 2003 General Plan
Amendment EI R and the 2010 analysis evaluating the traffic
impacts of Measure B, it can be determined that the proposed
project is not compatible with the capacity of the transportation
system and will result in severe congestion and delays for
automobiles and other forms of transit, with associated significant
air quality impacts.
D. Wildlife Refuge Impact Area
1. The General Plan requires that development be consistent with
preservation of the Wildlife Refuge Impact Area (General Plan
Policies 9.3.k, 9.3m, and 9.30). One of the last habitats for the
endangered California Least Tern is located on the former runways
of Alameda Point. All previous plans and policies for Alameda
Point have endorsed the protection of the least tern habitat at
Alameda Point consistent with the recommendations of the United
States Fish and Wildlife Service (USFWS), as determined by their
1999 Biological Opinion (BO).
2. According to the USFWS BO, a portion along the western edge of
the master - developer footprint (Buffer Zone) should not include
buildings and residential uses that will result in potential noise,
lighting, and predator impacts to the endangered birds and their
fledglings. Notwithstanding these plans, policies and
recommendations, the Modified DEA proposes to build homes in
this Buffer Zone. The land use plan in the Modified OEA is thereby
in conflict with General Plan Policies 9.3k, 9.3m, and 9.3o, which
prohibit residential development in areas deemed necessary to
protect endangered species.
E. Financial Fe asibility
1 The ENA provides that a pro forma shall be prepared for the
project, which shall show the internal rate of return (IRR) to SunCal
for the project and shall reflect that, subject to Alameda's provision
of certain public financing to be determined in Alameda's sole
discretion, the pro forma for the project shall provide for future fiscal
neutrality for Alameda and shall preserve the current fiscal
neutrality with respect to Alameda's General Fund, including
funding for normal and customary municipal services, such as
police and fire.
2. After receipt of SunCal's proposed project pro forma in April 2010,
Alameda contracted with a real estate economics consulting firm,
Economic & Planning Systems (EPS), to evaluate the project pro
forma, including a review of the residential market assumptions that
serve as the basis for the amount and timing of revenue projections
in the project pro forma and a financial feasibility analysis to
evaluate the effects of changes to the pro forma on project
feasibility. Alameda also contracted with EPS for preparation of a
fiscal impact analysis to determine whether the proposed
development would achieve Alameda's policy of fiscal neutrality,
balancing the City's cost of providing municipal services against
public revenues generated by the project.
3. EPS's conclusions following this review are summarized in three
reports - the Alameda Point Pro Forma Market Review dated May
27, 2010 (EPS Market Report), the Alameda Point Financial
Feasibility Analysis dated June 2010 (EPS Financial Feasibility
Report) and the Alameda Point Public Services Analysis dated
June 2010 (EPS Fiscal Report) - and in a memorandum from EPS,
dated June 29, 2010, responding to SunCal's comments on the
EPS Market Report. EPS and staff determined that SunCal's
Project Pro Forma reflected a number of overly optimistic
assumptions regarding future base home sales prices, price
premiums, appreciation in home prices, direct construction costs,
cost escalation, key transportation and infrastructure costs and
infrastructure construction contingency, which were not supported
by sound data and analysis. These overly optimistic projections,
which did not take into account significant changes in the real
estate market in recent years, resulted in overestimating project
revenues and underestimating project costs.
4. In the EPS Fiscal Report, EPS also determined that revenues
dedicated to Public -Works related services would be insufficient to
fully fund costs of road - related maintenance, urban runoff and
sewer services, and other service costs related to the project. EPS
concluded that these shortfalls, which could reach nearly $5 million
annually at buildout, would require mitigation measures, such as
payments from SunCal and funding from assessments specific to
Alameda Point, and could adversely affect Citywide maintenance
services, if the project is infeasible.
5. Based upon the findings of the EPS Financial Feasibility Report, it
can also be determined that there is a high risk to the community of
Alameda that the project will not be able to adequately fund the
annual operating costs to provide the transportation services
necessary for the project. Without adequate financial support for
transit services on an annual basis, the project will result in
unacceptable congestion and related air quality impacts as project
residents are required to use their personal automobiles instead of
using alternative transportation services provided by the project.
This additional congestion and air quality impacts will be a
detriment to the quality of life for all Alameda residents dependant
on the limited available capacity of the existing transportation
system.
6. Suncal has had the opportunity to review EPS's reports and
recommendations and to prepare and present its own financial
analyses to EPS, Alameda staff and the governing boards of
Alameda. This process has resulted in modification of some of the
assumptions in the Suncal project proforma, but there remain
significant discrepancies between SunCal's revenue and cost
projections and those projected by EPS. EPS has determined that
if more realistic assumptions regarding project revenues and costs
were substituted for those in SunCal's project pro forma, the result
would be an IRR on the project substantially below the minimum
required by Suncal, as reflected in the ENA. EPS also conducted
sensitivity analysis to determine the impact on project feasibility if
the market experienced stronger- than - expected recovery and/or the
project commanded higher - than - expected home prices and home
premiums or experienced lower- than - projected costs. Even with
these more optimistic assumptions, the resulting return on
investment would still be substantially lower than the 20 -25 percent
1RR deemed minimally necessary by SunCal.
7. Based upon EPS's evaluation, and analysis by Alameda's staff, and
after due consideration of SunCal's responses to EPS's
conclusions, Alameda has serious concerns about the financial
viability and fiscal neutrality of the Proposed Project. There is
considerable risk that the Modified OEA will not be able to support
the proposed transportation improvements and program, public
benefits, fiscal neutrality, as well as a significant land payment to
the Navy.
8. SunCal's financial projections also rely on the assumption that
100% of all available housing and non - housing redevelopment tax
increment financing (in excess of $200 million) will be dedicated
exclusively to this project, a discretionary determination that that
could be affected by future State takeaways or future discretionary
decisions made by Alameda's governing bodies and whose
outcome could well prove to be inconsistent with SunCal's
assumptions.
9. SunCal has not provided financial guarantees reasonably
necessary to assure Alameda and the community that the project
will be carried out as planned. Section 3.6 of the ENA recognizes
the importance of having a financially secure developer or
developer partner. Section 3.6.4 requires "ajppropriate financial
assurances, which may include performance and payment
guarantees, to assure development of conveyed phases."
10 In light of the serious discrepancies between the project pro forma
and the opinions of Alameda's professional consultants and staff,
and in the absence of financial guarantees from SunCal that the
project will be carried out as approved, the Proposed Project
presents an unacceptable financial risk for Alameda, which could
lead to additional costs to Alameda and unacceptable conditions
that are detrimental to the general welfare of the community. The
Proposed Project could expose the City of Alameda and the
residents of Alameda to significant risks, including, (1) that SunCal
cannot provide the financing commitments necessary to implement
the Proposed Project and, as a result, does not proceed with
development of the site; (2) that SunCal commences construction,
but the Proposed Project does not perform to the levels projected in
the project pro forma, and, therefore, future phases of development
are abandoned, or (3) that SunCal develops the Project, but
because the performance of the Project was significantly below
projections in the project pro forma, public benefits and
transportation improvements are not delivered to the levels
committed, shifting burdens to the community while depriving it of
the promised benefits.
I n light of the overwhelming defeat in February 2010 of Measure B, which
proposed a project substantially similar to the Modified OEA; the substantial
uncertainties regarding the size, type and timing of the project that will ultimately
be built; the absence of key planning elements required by applicable City
policies, including an economic development strategy and a comprehensive
transportation plan; the conflicts with goals and policies in the General Plan and
Community Reuse Plan; and the financial uncertainties and risks of the Modified
OEA and the lack of appropriate financial guarantees. and based upon review
and consideration of the applicable documents, the input of SunCal and the
public, and after due consideration and deliberation regarding SunCal's
application for approval of the Modified OEA, the City Council has determined
that the application for Project Entitlements should be denied.
THEREFORE BE IT RESOLVED that the City Council of the City of
Alameda hereby denies the Modified OEA, including the proposed General Plan
Amendment, Zoning Amendment, Master Plan, and Development Agreement
(PLN1 0- 0012).
1, the undersigned, hereby certify that the foregoing Resolution was duly and
regularly adopted and passed by the Council of the City of Alameda during the Regular
Meeting of the City Council on the 20th day of July, 2010, by the following vote to wit:
AYES: Councilmembers deHaan, Gilmore, Matarrese
and Mayor Johnson - 4.
NOES: None.
ABSENT: None.
ABSTENTIONS: Counciimember Tam - 1.
IN WITNESS, WHEREOF, I have hereunto set my hand and affixed the official seal of
said City this 21 day of July, 2010.
Lara Weisiger, City clerk
city of Alameda