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2010-07-07 PacketN�7 Jh CITY OF A LA MEDA CALIFORNIA SPECIAL MEETING OF THE CITY COUNCIL WEDNESDAY JULY 79 2010 6:00 P.M. Locatio Cit Council Chambers Conference Room, Cit Hall, corner of Santa Clara Avenue and Oak Street 11.1. A 1. Roll Call Cit Council 2. Public Comment on A Items Onl An wishin to address the Council on a items onl ma speak for a maximum of 3 minutes per item 3. Adjournment to Closed Session to consider: 3-A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Propert 2221 Harbor Ba Parkwa Negotiatin parties: Cit of Alameda and SRIVI Associates Under ne Price and terms 3-B. CONFERENCE WITH LEGAL COUNSEL EXISTING LITIGATION (54956.9 Name of case: Collins v. Cit of Alameda (Boatworks) 4. Announcement of Action Taken in Closed Session, if an 5. Adjournment Cit Council �0 AGENDA Regular Meeting of the Governing Body of the Alameda Reuse and Redevelopment Authority Alameda City Hall Council Chamber, Room 399 2263 Santa Clara Avenue Alameda, CA 94501 Wednesday, July 7, 2010 Meeting will begin at 7 :00 p.m. 2. CONSENT CALENDAR Consent Calendar items are considered routine and will be enacted, approved or adopted by one motion unless a request for removal for discussion or explanation is received from the Board or a member of the public. 2 -A. Responses to Questions Posed by the ARRA Board at the May 6 2010 Special ARRA Meeting Regarding the United States Navy's Environmental Program at Alameda Point. 3. REGULAR AGENDA ITEMS 3 -A. None. 4. ORAL REPORTS 4 -A. Oral report from Member Matarrese, Restoration Advisory Board (RAB) representative Highlights of June 3 Alameda Point RAB Meeting 5. ORAL COMMUNICATIONS, NON AGENDA (PUBLIC COMMENT) (Any person may address the governing body in regard to any matter over which the governing body has jurisdiction that is not on the agenda.) 6. COMMUNICATIONS FROM THE GOVERNING BODY This meeting will be cablecast live on channel 15. Notes Sign language interpreters will be available on request. Please contact the ARRA Secretary at 747 -4800 at least 72 hours before the meeting to request an interpreter. Accessible seating for persons with disabilities (including those using wheelchairs) is available. Minutes of the meeting are available in enlarged print. Audio tapes of the meeting are available for review at the ARRA offices upon request. �r CALIF IF, OAN REGULAR MEETING OF THE ALAMEDA PUBLIC FINANCING AUTHORITY APFA WEDNESDAY JULYS 2013- -7 :01 P.M. Location council chambers, city Hall, corner of Santa Clara Avenue and oak Street Publ Part pation Anyone wishing to address the Board on agenda items or business introduced by Board Members may speak for a maximum of 3 minutes per agenda item when the subject is before the Board. Please file a speaker's slip with the Assistant city clerk if you wish to speak on an agenda item. 1. 2. 3. 4. 5. Roll call -APFA Agenda Items k0 Oral Communications (Public Comment) Any person may address the Board in regard to any matter over which the Board has jurisdiction or of which it may take cognizance that is not on the agenda Board Communications (Communications from the Board) Adjournment APFA ui CITY OF ALAMEDA C ALIFORNIA SPECIAL JOINT MEETING OF THE CITY COUNCIL AND ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA), AND COMMUNITY IMPROVEMENT COMMISSION (CIC) WEDNESDAY JULY 712010 -7:02 P.M. Location.: Cit Council Chambers, Cit Hall, corner of Santa Clara Ave and Oak Street Public Participation An wishin to address the Council/Board/Commission on a items or business introduced b the Council/Board/Commission ma speak for a maximum of 3 minutes per a item when the subject is before the Council/Board/Commission. Please file a speaker's slip with the Assistant Cit Clerk if y ou wish to speak. 1. ROLL CALL Cit Council, ARRA, CIC 2. MINUTES 2-A. Minutes of the Special Joint Cit Council, ARRA and CIC Meetin held on June 1 2010; and the Special Joint Cit Council and CIC Meetin and the Special Joint Cit Council, ARRA and CIC Meetin held on June 15, 2010. [Cit Council, ARRA, CIC] (Cit Clerk) 3. CITY MANAGER/EXECUTIVE DIRECTOR COMMUNICATION 3-A. Semimonthl Update on SunCal Ne [Cit Council, ARRA, CIC 3-13. Presentation on SunCal Modified Optional Entitlement Application Cit y Council, ARRA, CIC] 4. AGENDA ITEMS None 5. ADJOURNMENT Cit Council, ARRA, CIC Alameda Reuse and Redevelopment Authorit Memorandum To: Honorable Chair and Members of the Alameda Reuse and Redevelopment Authorit From: Ann Marie Gallant Interim Executive Director Date: Jul 7, 2010 Re: Responses to Questions Posed b the ARRA Board at the Ma 6th 2010 Special ARRA Meetin Re the United States Nav Environmental Pro at Alameda Point BACKGROUND On Ma 6, 2010, at a special ARRA meetin the U.S. Nav Base Reali and Closure Pro Mana Office (BRAG PMO) presented. its environmental pro at Alameda Point to the ARRA Board. Durin that meetin three q uestions were posed that re follow-up responses: How are the funds administered? ARRA looks for oppor for. F fundin for further cleanup. Is the Nav alread receivin that fundin or do y ou receive y our allocations throu Con author izations? What is the status of the transfer process of cleaned VA.1ands? Has. the Nav and the VA reached a basic deal? What is the status of the "clean" lands? Is the estimate of approximatel $100 million for the remediation of Site 2 correct? DISCUSSION The q uestions posed were researched b the Nav BRAC PMO and addressed in a Ma 25, 2010 letter, attached. FINANCIAL IMPACT There is no financial impact as a result of this action. A Item #2- ARR, 07-07-2011 Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 2 of 2 RECOMMENDATION This report is for information only. sp ctfully submi to, Jen fer tt D p ty C y Manager MOST Attachment: 1. Letter from the Department of the Navy Ms. Jennifer Ott Alameda City Hall 2263 Santa Clara Avenue Alameda, CA 94501 Dear .GIs. Ott: DEPARTMENT OF THE NAVY BASE REALIGNMENT AND CLOSURE PROGRAM MANAGEMENT OFFICE WEST 1456 FRAZEE AD, SUITE 900 SAN DIEGO, CA 92108-4310 Ser BPMOW.DR\0543 1! SUBJECT: RESPONSES To QUESTIONS POSED BY THE ARRA BOARD AT THE MAY 6 2010 PRESENTATION ABOUT" THE NAVY EVI ONMENT.AL PROGRAM AT A LAMEDA POINT During the May 6' 2010 presentation to the Alameda Meuse and Redevelopment Authority (ARRA) Board, three (3) questions were asked to the Navy representative that required follow up responses. The Navy's responses to these questions are provided as follows. Q.* Councilrnernber Tarn asked: I was trying to understand how the funds are administered because the ARRA loops at opportunities for Federal funding for further clean --up. Is the Navy already getting that funding? or haw do you get your allocations through congressional authorizations? A: The Department of the Navy (Nav Base Realignment. and Closure Program Management offuce (BR.AC PMO) seeks Congressional appropriation for environmental cleanup at Alameda Point rased on a multi -year planning process. On an annual .basis, the B.RAC PMO uses existing environmental information about the property to identify future funding requirements. For the past five years, the BRAG PMO has been successful in obtaining sufficient funding for the environmental cleanup program at .Alameda Paint, Q: Councilmember Gilmore asked: What is the status of the transfer process of cleaned VA lands? Has the Nary and the VA reached a basic deal? A: The Navy and the Department of "veterans Affairs (VA) are currently coordinating for the federal to federal transfer of approximately 549 acres of property located at the fom ter runway area on the merest end of Alameda Point. Since the ETA submitted its forMa.1 request to acquire the property in November 2006, the Navy and VA have accomplished several key milestones. Those milestones include the negotiation of a draft Memorandum of Understandin r {M the initiation of a Section 7 consultation in compliance with the Endangered Species Act (ESA), and the scoping of an onvironmental planning report in compliance with the National Environmental Policy .Act (NEPA). The next significant milestone the agencies .intend to complete is the submittal of a joint NavyNA Biological .Assessment to the U.S. Fish and Wildlife Service in compliance with ESA, and the issuance of an Environmental Assessment in compliance with NEPA. Ser BPMO1N SWAY 2 D 2 }10 Additionally, Councilmernber Gilmore asked the status of the "clean" lands. While the property subject to the VA transfer include two Installation Restoration (IF) sites and a parcel- w ide Site Inspection, it is important to note that the base closure law allows federal agencies to transfer properties to one another prior to the completion of the remedial actions. So to answer ouncilrnernber Gilmore "s question, while some portion of the lands are "clean and some are still subject to additional remedial actions, the Navy intends to transfer all lands at one time. The Navy is currently attempting to comply with other regulatory requirements identified above (NEPA, S ection 7, etc.). With regards to the question about a "basic deal the answer is essentially, yes. Future responsibilities of both agencies have been fundamentally agreed to in the draft Mod'. Should the AR.R A wish to understand the arrangements agreed to between the agencies, the Navy would he more than happy to provide a sunh.m.ary to the AFFA staff. Q vice Chair deHaan asked if his estimate of approximately loo million for the remediation of Site 2 was correct. Mr. Robinson stated that $10o million seems high, and is more likely $20 MI'llion but will provide the dent projection. A: The current projections for Site 2 remediation include $19.2 million for the remedial action and $.7 million for long -term monitoring after the remedial action is complete; for a total future expenditure of appro $21.9 million on Site 2. Please distribute this letter to the ARFA Board. If you have any further questions, feel free to contact me at (619) 5 3 2 -095 Sincerely, DEREK J FoB IN CAN BRAC Environmental Coordinator By direction of the Director copy to: Mr. Peter Fussell Russell Resources, Inc, 440 Nava Albion Way, Suite I San Rafael,, C 94903 3634 Ms. Leslie Little Economic Development Director City of Alameda 950 vest Mall Square, Building 1 Alameda, CA 94501-7575 575 2 Ser BPMOW.DR10543 MAY 2 5 2010 Blind copy to: Derek J. Robinson William McGinnis Alan K. Lee Amy Jo HiII Diane Silva (3 copies) X File Read File Serial File Writer: D. Robinson, BPMO .DR, 2 -0951 'typist: B. Foster, BPMOW.BF, 2-0914, MD:\ RESPONSE To ARRA QUESTIONS.DOC\ 25 MAY 10 I xgrt Russell Resources, inc. environmental management Alameda Point RAB Meeting on June 3, 2010 Highlights and Analysis RAB members present Dale Smith (Community Co- chair), George Humphreys, Joan Konrad, James Leach, Kurt Peterson, and Michael John Torrey. DTSC's Dot Lofstrom announced that she is being promoted to another position within DTSC, and that this likely would be the last RAB meeting she attends. Several RAB members thanked Ms. Lofstrom for her contributions to the progress made with Alameda Point's cleanup during her tenure. No formal RAB meeting will be held in July. However, on Saturday, July 17 at 9:00 am, the Navy will provide a two -hour tour of various Alameda Point remediation sites for RAB members and the general public. Remediation and other field work in progress. o Except for a 50-foot segment under an electrical substation, the Navy has completed removal and replacement of several radioactively contaminated storm drain lines originating at Buildings 5 and 400. These lines discharge into Seaplane Lagoon, and the work had to be completed before dredging of contaminated sediment from the lagoon, which is scheduled to take place between January and March 2011. o Active subsurface groundwater treatment is tentatively complete at IR Site 14, along the Oakland inner Harbor in Northwest Territories. At IR Site 27, just north of Pier 1, a third phase of active groundwater treatment will occur in May 2011.. Active groundwater treatment was just completed at IR Site 0, near the corner of West Tower Avenue and Ferry Point, and is beginning anew at IR Site 10, in the southeast corner of the base. The air sparge /vapor extraction system to treat groundwater contami.nateo with benzene and naphthalene at Alameda Point OD -5 and FISCA IR Site 2 is operating. The principal part of the petroleum contaminated groundwater treatment operation near the Atlantic Avenue entrance is completed. Later this summer, further groundwater treatment will be conducted in a small area near Orion Street where higher petroleum levels persist. o The Navy has completed pre dredge sediment sampling of the Seaplane Lagoon in preparation for its remediation. In conjunction with this sampling, sediment samples were collected near storm drain outfalls into Seaplane Lagoon and Oakland Inner harbor that drain the vicinity of Buildings 5 and 400. Except for the Oakland Inner Harbor's sample results, all sample analyzes have been presented to the BCT. o Cleanup of soil and groundwater contaminated with copper at IR Site 28, the former Todd Shipyard, near the ferry terminal on Oakland Inner Harbor, is being conducted through early July. RRt, 440 Nova Albion Way, Suite 1, San Rafael, California 94903 415.902.3123 fax 815.572.8500 Agenda Item #4 -A AR FAA 07-07-2010 Page 2 of 2 July 7, 2010 Alameda Point RAB Meeting, June 3, 2010 Highlights and Analysis o Additional demolition of Building 459 (the former gas station at the corner of West Tower Avenue and Main Street) will occur in July to allow excavation of metals contaminated soil. Basewide Radiological Investigations Update The Navy's presentation consisted of a review of the status of radiological investigations at various sites. specifically, FED -1A and -2B (runways area to be transferred to VA), IR Site 1 (landfill in northwest corner of Alameda Point), IR Site 32 (area in runways immediately east of IR Site 1), IR Site 2 (landfill in southwest corner of Alameda Point), the storm drains removal associated with Buildings 5 and 400, IR Site 17 (Seaplane Lagoon), and the basewide radiological surveys. The last of these investigations involves thorough scanning of several buildings .that have some historical involvement with handling radiological materials. For most of these, no radiological contamination is expected, but it has yet to be ruled out. RAB members expressed concern that the basewide radiological survey addresses only buildings with historical radiological activities and does not deal with other areas where undocumented radiological material releases may have occurred. The west shoreline of Seaplane Lagoon was offered as an example. EPA's Anna -Marie Cook floated the idea that the RAB might convene .a work group to nominate areas for the Navy to investigate for radiological contamination, but that are missed by the current plan. If the Navy were to make funding available for this purpose, the RAB's prioritization of sites could guide the effort. The Navy did not comment on Ms. Cook's idea. operable Unit 1 Remedial Action Update Except for minor soil contamination remaining at IR Site 7, remediation of soil in OU -1 is complete. The major remaining task for OU -1 is in situ treatment of groundwater at IR Site 16, in the southeast corner of the base, which is contaminated with chlorinated solvents. RAB Member's Reports RAB Member George Humphreys presented two technical reports to the RAB. The first, which deals with basewide radiological contamination, correlates the timing of fill events that formed Alameda Point with periods during which radiological materials were handled at the base. An aim of this exercise is to suggest areas of the base that are more or less likely to have radiological soil contamination due to filling with radiologically contaminated dredge spoils. Mr. Humphreys' other report deals with various aspects of the benzene/naphthalene groundwater plume at Alameda Point OU -5 and FISCA IR Site 2. The Navy thanked Mr. Humphreys for his work in researching and preparing the technical reports. It is very unusual for a RAB member to prepare technical reports for presentation at a RAB meeting. 440 Nova Apron Way, Suite 1, San Rafael, California 94903 415.902.3123 fax 815.572.8500 UNAPPROVED MINUTES OF THE SPECIAL JOINT CITY COUN ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY- (ARRA), AND COMMUNITY IMPROVEMENT COMMISSION (CIC-) -MEETING TUESDAY- -JUNE 11 2010- -7:01 P.M. Ma Johnson convened the meetin at 7:27 p.m. ROLL CALL Present: Councilmembers/ Board Members/ Commissioners deHaan, Gilmore, Matarrese, Tam, and Ma Johnson. Absent: None. CONSENT CALENDAR Councilmember/Board Member/Commissioner Matarrese moved approval of the Consent Calendar. Councilmember/Board Member/Commissioner Tam seconded the motion, which carried b unanimous voice vote 5. Items so enacted or adopted are indicated b an asterisk precedin the para number.] (*10-268 CC/ARRA/10-36 CIC) Minutes of the Special ARRA Meetin on Ma 6, 2010 and the Special Joint Cit Council, ARRA and CIC Meetin Held on Ma 18, 2010. Approved. *ARRA /'10 -37 CIC) Recommendation to Award a Five-Year Contract for Professional Audit Services for the Communit Improvement Commission and the Alameda Reuse and Redevelopment Authorit for Fiscal Years Endin June 30, 2010 throu June 30, 2014 to Caporicci Larson. Accepted. *ARRA) Recommendation to Authorize Ne and Execution of a Sublease for Dre Capital Partners, Buildin 29, at Alameda Point. Accepted. *ARRA Recommendation to Authorize Approval of a Sublease for Point Source Power, Buildin 7, at Alameda Point. Accepted. CITY MANAGER/EXECUTIVE DIRECTOR COMMUNICATION (10-269 CC/ARRA/1 0-38 CIC) Semimonthl Update on SunCal Ne The Deput Cit Mana Development Services provided a handout and g ave a brief presentation. Special Joint Meetin Alameda Cit Council, Alameda Reuse and Redevelopment Authorit and Communit Improvement Commission June 1, 2010 Councilmember /Board Member /Commissioner Tara inquired whether the City has received any indication from the Navy regarding whether the Navy would convey the land in phases and whether the issue would be related to funding issues. The Deputy City Manager Development Services responded the City has made some assumptions as to what the Navy would do; detailed conversations have not taken place; the Navy is motivated to convey the land. Councilmember /Board Member /Commissioner Tara inquired what assumptions the City would like to see with respect to phasing. The Deputy City Manager Development Services responded a couple issues in Phases 1 and 2 need to be resolved; stated Phases 3, 4, and 5 do not have significant issues; in general, the news is good. In response to Councilmernber /Board Member /Commissioner Tam's inquiry, the Deputy City Manager Development Services responded the pro forma assumes that the land would be taken down in 2012, with pads being sold in 2014 which is consistent with the clean up schedule, except for a couple of exceptions in Phases 1 and 2. Councilrnernber /Board Member /Commissioner Tam inquired whether the City assumes that the Navy would want funding all at once when Phase 1 is completed and conveyed. The Deputy City Manager Development Services responded land payments have been discussed; stated payment timing has not been discussed. Councilmember /Board Member /Co mmissioner Gilmore inquired whether staff has discussed money with the Navy and how and when the Navy wants to be paid. The Deputy City Manager Development Services responded staff has talked to the Navy regarding the Measure B plan; stated the Navy did not follow up after the initiative failed; the Navy stated that it has subsequent questions; conversations focused on SunCal's ability to guarantee payments; the Navy has questions regarding whether payments would be deferred, whether SunCal and D.E. Shag would be capable of making payments, and what assurances the Navy would have regarding secured payments. Councilmember /Board Member /Commissioner Gilmore inquired whether the Navy has indicated whether it would be interested in some number other than the $108.5 million. The Deputy City Manager Development Services responded in the negative; stated SunCal has made statements to the Navy regarding willingness to pa y what is shown in the project pro forma; terms are not clear; the Navy will not have conversations with Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 2 Community Improvement Commission June 1, 2010 SunCal until the City okays the discussion. Councilmember /Board Member /Commissioner Gilmore Inquired whether the Navy has indicated that it is not resistant to being paid over time. The Deputy City Manager Development Services responded the Navy prefers up front payment and is willing to consider back end participation because of the Defense Authorization Bill passed last October; the Navy's concern is how it knows it would be paid. Councilmen ber /Board Member /Commissioner deHaan stated AR.RA and SunCal have pledged openness; inquired whether the Navy has signed onto openness. The Deputy City Manager Development services responded the Navy is a public agency; stated that she will ask the Navy about the smatter. Council member /Board Member /Commissioner deHaan stated the. threshold for 1 ,100 individual homes was $000,000 per home; the Navy has not asked for more than $108.5 million with additional homes. The Deputy City Manager Development Services stated to date, the Navy has not asked for more than $108.5 million but has not stated that it is willing to accept $108.5 million; the $108.5 million does not include Phases 4 and 5. Councilmen ber /Board Member/Commissioner deHaan stated the proposal includes the northern territory. The Deputy City Manager Development Services stated details have not been worked out. Mayor /Chair Johnson stated that she recalls that the Navy bases its number on a land value formula. The Deputy City Manager Development Services stated the Navy hires an economic consultant; the consultant looks at the pro forma; $108.5 million is for the 1,800 Preliminary Development Concept (PDC) project; market changes have been significant. Stan Brown, SunCal, stated confusion has involved the application versus the density bonus option plan; SunCal believes addressing issues on the application is appropriate; SunCal has expressed a desire to move toward a transit oriented plan; SunCal will continue to be responsive to questions throughout the eighteen -month to two -year. process to complete the Environmental Impact Report; SunCal does not want to confuse openness with ghat is in the letter. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 3 Community Improvement Commission June 1, 2010 AGENDA ITEMS (10 -39 CIC) Public Hearing to Consider Adoption of Resolution Approving and Adopting the Five -Year Implementation Plan for the Business and Waterfront and West End Community Improvement Projects for Fiscal Year 2009 through 2010 and Fiscal Year 2013 through 2014. Continued to June 15, 2010. (10 -270 CC /ARRA /10 -40 CIC) Recommendation to: (1) Direct Planning Board to Provide Advisory Recommendation on SunCal Modified Optional Entitlement Application at June 21, 2010 Meeting, and (2) Set Public Hearing for Decision on SunCal Modified optional Entitlement Application and/or Extension of the Exclusive Negotiation Agreement from Governing Bodies of Alameda by July 20, 2010. The Deputy City Manager Development Services gave a brief presentation. Councilmember /Board Member/Commissioner Matarrese inquired whether milestone documents would be public upon submission, to which the Deputy City Manager Development Services responded in the affirmative. Speakers: Jean Sweeney, Alameda; Jim Sweeney, Alameda; Jon Spangler, Alameda; William Smith, Alameda. Stan Brown, SunCal, gave a Power Point presentation; stated that he disagrees with large elements of the staff~ report; the major issue he would discuss is the assertion that SunCal has used overly aggressive or optimistic assumptions in developing its pro forma; if the recommendations of City staff and Economic Planning Systems (EPS) are adopted, there would be substantial degradation to the project pro forma to the extent that the project may become financially infeasible; long range forecasting of project pro formas is difficult; assumption analysis needs to be based upon a clear understanding of industry business practices and a commitment to keep apples to apples comparisons; SunCal believes an apples to oranges comparison has gone on; the staff report identifies a number of differences between SunCal's estimates on various parameters and EPS's recommendations; EPS estimates $860,000 and SunCal estimates $1 ,042,000 for single family home sales in the year 2014, which is a 21 difference in value; the EPS study put historical sales prices in Alameda into two buckets: 1} single family and 2) all housing, including condominiums, townhouses, duplexes and single family homes; EPS came up with $582,000 for a 1 600 square foot house contrasted with SunCal's $900,000 for a 2500 square foot house; house size has a material effect on the sale price of a home; EPS's real price growth of 2% raises the price to $630,000; then, EPS applied a 1.22 factor higher sales price for Alameda Point to come up with a projection of $769,000; a 3% annual inflation rate reaches a nominal real price of $862,000; the problem with the analysis is that EPS is confusing the buckets and comparing a 1600 square foot house to a 2500 square foot house; the Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 4 Community Improvement Commission June 1, 2010 value per square foot of the $860,000 1600 square foot horse is $539 per square foot; $593 per square foot for a 2500 square foot house ends up with a house priced at $1,347,000; EPS started with the all residential bucket at $582,000, as opposed to the single family bucket at $666,000, which ends up with a price of $1,462,000 for a 2500 square foot single family house using the EPS methodology; EPS estimates that the average premiums at Alameda Point to be 1% of sale price; the SunCal estimate is 6.4 explained the basis for SunCal's estimate; stated SunCal disagrees with the 1 regarding absorption, SunCal is not opposed to changing to the City and EPS's recommendation; if the City wants to take a slower absorption, it is fine with SunCal; for Single family construction costs, SunCal estimates $115 versus EPS's estimate of $130, explained the basis for SunCal's estimate; further stated another area that has been discussed is what should be anticipated as the real growth in home prices over time; SunCal's pro forma includes 2% starting in 2012; ESP recommends 1.4 both sides have gone back and forth over the analysis; long terra construction cost trends range from -0.7% to 0.5 SunCal included a 0% real price growth; all of SunCal's prices are increased by CPI throughout the term of the project; there have been some clear mistakes in the EPS methodology as to price; EPS's premium analysis is simple; SunCal has done a lot more research on direct construction costs; regarding SunCal's Albuquerque, New Mexico project with D.E. Shag being put into bankruptcy, it is fair to say any large real estate player, particularly in residential, has struggled in the past several years; assets have gone through a devaluation; SunCal and its partners have been severely hurt; in the Albuquerque example, $180 million in D.E. Shaw and SunCal's combined equity is in danger of being lost, which is an unfortunate circumstance that is part of the price and risk of working in development; the good news is D.E. Shaw continues to invest along side of SunCal and to express faith that SunCal will go forward, as evidenced by the continuing investment in the Alameda process in terms of the millions of dollars spent to date; SunCal would like to complete the process; a project that the Council, Planning Board, citizens, D.E. Shaw and SunCal could be proud of will be presented to Council for consideration in the next 18 months to two years; SunCal looks forward to the opportunity to complete the process. Councilmember /Board Member /Commissioner Tangy stated the question is whether there would be sufficient funding to pay for public amenities and community benefits envisioned in the Master Plan; the answer is yes as demonstrated by two EPS pro formas delivered to the City on April 8th and April 26 the density bonus pro option p p forma was sent to the Deputy City Manager Development Services on April 26, 2010; inquired whether the pro forma was incorporated in the staff report. The Deputy City Manager Development Services responded the pro forma is an attachment to tonight's staff report. Councilmernber /Board Member /Commissioner Tara inquired why staff has a different conclusion than SunCal regarding the density bonus option pro forma relating to payment of public amenities. Special: Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 5 Community Improvement Commission June 1, 2010 The Deputy City Manager Development Services responded SunCal was responding to the April 20th letter; Stated comments are now bein g reviewed on the letter Sent six weeks ago; the City did not have the density bonus pro forma at the time the April 20 letter was sent. Councilmember /Board Member /Commissioner Tam Stated the staff report seems to be contradictory to the statement that there would be sufficient funds to pay for public amenities and community benefits. The Deputy City Manager Development Services Stated staff believes the assumptions are overly aggressive and questions whether the project could support the public benefits and transportation improvements; staff has come to a different conclusion than SunCal. Councilmember /Board Member/Commissioner Tam stated that Mr. Brown has stated that there are inconsistencies in the staff analysis of FPS projections; inquired whether staff still has the Sarre conclusions. The Deputy City Manager Development Services responded in the affirmative; stated staff has discussed the issues with SunCal; that she would be happy to have BPS discuss the analysis; the big picture is that there are five to seven key assumptions that significantly affect the bottom line of the pro forma; SunCal's assumption are overly optimistic. Councilmember /Board Member /Co mmissioner Tam stated that she does not understand why SunCal's assumptions are considered overly optimistic in light of the requirements for having a project labor agreement and information on builder cost surveys that occurred in May, 2010. Jim Musbach, BPS, stated BPS has been reviewing the pro forma; an independent market analysis was performed; all [SunCal] assumptions skew towards the optimistic; returns are overstated and project risk is understated; SunCal's analysis is inconsistent and is intended to paint a picture that is not supported by evidence; assuming 450 units per year versus 350 units would have a significant impact on the Internal Rate of Return (IRR); SunCal does not defend the suitability of the 14.7% I RR under the Measure A compliant project; funding public amenities and community benefits has risks; FPS calculated a premium of 22% for the area; the calculated premium would be less by starting with just single family homes; the land values keep escalating and is a red flag and far beyond other projects; improved land values as a percentage of unit prices range from 15% to 25 SunCal's land values are over 50% of unit value; SunCal ends up with 2% appreciation compounded year after year which all falls to the land value which means there is no escalation in construction costs and the land captures all of the value on the upside, which is not true; FPS does not see $1 million dollar houses being Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 0 Community Improvement Commission June 1, 2010 built for $105 per square foot; there is no evidence in today's market that land values are $2.5 million to $7.7 million per acre; comps suggest between $2 million and $5 million; EPS requested information that would substantiate land prices as a percent of unit prices; SunCal provide one comp from southern California; EPS believes the combination of assumptions is overly optimistic. CouncilmemberlBoard Member /Commissioner Matarrese requested clarification on Mr. Brown's comments regarding EPS's assumption of $800,000 for a small house versus $1.1 million house. Mr. Musbach stated that he cannot make sense of the issue; SunCal concludes that figures are lower than EPS by applying the average pricing across all product types, which is not legitimate. Councilmember /Board Member /Commissioner Matarrese stated that he needs an answer regarding whether or not numbers are real; back calculating the cost per square foot of an $860,000 house results in a $1.4. million house instead of a $1 million house; requested clarification of the matter. The Deputy City Manager Development Services responded a more detailed analysis would be provided. Mr. Musbach stated per square foot costs obscure house size and quality differences; bigger houses will have lower per square foot prices. CouncilmemberlBoard Member/Commissioner Tam stated the project would never pencil out by looking at just Single family homes; the Measure A compliant plan would not be financially feasible because it would not support the level of public amenities called for in the Master Plan; the Master Plan calculations were across all different housing types. Mr. Musbach stated EPS took all homes prices in Alameda and looked at that relative to Bayport; Bayport homes command a premium of 22 EPS could have started with a single family home and ended up with a smaller differential premium of 10% or 5 EPS forecasted home prices in Alameda as a whole and then applied the premium to get an estimate of what the cost for what single family homes are for Alameda; SunCal's argument is that since EPS started with a number for all housing that is for sale, then EPS should compare that price to SunCal's average price across all product types in the project, which includes townhouses and condominiums, which drops SunCal's average price way down. The Deputy City Manager Development Services stated the Bayport premium relates to the fact that it is new construction and predominately single family homes. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 7 Community Improvement Commission June 1, 2010 Councilmember /Board Member /Commissioner Tam stated EPS is stating that Bayport homes are currently listed for $375 per square foot; the assumption in the Optional Entitlement Agreement (OEA) is $360 per square foot. Mr. Musbach stated that he cannot follow the numbers; the comparison is not apples to apples but is a trick to change the average number which is not accurate. Councilmember /Board Member/Commissioner deHaan stated that he received the information [SunCal's Power Point] at 3:30 p.m. via email; things seem to be premature; SunCal and EPS need to sit down and have a discussion on the matter; EPS has worked With the City for thirteen years; neither Suncal or EPS understand what the city is going through; EPS should review issues and respond; tonight is not the time and place for discussion; the Power Point presentation is difficult to see; the pro forma has many other issues. Councilmember /Board Member /Commissioner Gilmore stated that she is thoroughly confused; requested an apple to apple comparison for single family homes and townhouses, stated that she wants Suncal and EPS to start at the same spot; if both parties end up in a different place, she wants to know where and why in plain English. Councilrnember /Board Member /Commissioner Matarrese stated the pro forma shows an IRR of 19% to 25 the project would be spread over twenty years; inquired what PERS hopes to get on investments, to which the Deputy city Manager Administrative Services responded 7.75 Council nember /Board Member/Commissioner Matarrese stated the I RR is not an acceptable level. Mayor /Chair Johnson state there have been discussions regarding conservative or aggressive assumptions; the real discussion is what would happen if there are not enough funds to pay for public improvements; questioned whether there would be enough money to pay for transportation solutions for 4,800 housing units and 4.5 million square feet of commercial development; said discussions are critical for a successful outcome; understanding the transit oriented nature of the development is important; having enough money to pay for transit solutions is critical. Mr. Musbach stated the issue is how to secure that the risk is appropriate. Councilmember /Board Member /Commissioner deHaan stated reverse engineering seems to be taking place; the project is totally different than the 1,700 housing unit project; understanding ghat is really sustainable is important; 4,800 housing units is hard to put into prospective. Councilrnember/Board Member /Commissioner Gilmore stated the key to any Special Joint Meeting Alameda City council, Alameda Reuse and Redevelopment Authority, and 8 Community Improvement commission June 1, 2010 development at Alameda Point is transit and traffic; the project will not be successful without transit and traffic solutions; job one is paying for transit solutions; the project will not be successful if there is not enough money to pay for transit solutions. Councilmember /Board Member/Commissioner Matarrese stated the first recommendation in the staff report is to direct the Planning Board to provide an advisory recommendation on the OEA; that he has no faith that any amount of money would solve the issue of getting people who are in the 4,800 housing units on and off the island; having the Planning Board provide an advisory recommendation is important; financing can be reviewed in parallel because financing needs to be based on the project. Councilmember /Board Member /Commissioner Gilmore inquired whether staff is assuming that SunCal mould provide a complete application by the Planning Board meeting, to which the Deputy City Manager Development Services responded in the negative. Councilmen ber /Board Member /Commissioner Gilmore stated generally, the Planning Board provides a recommendation to Council based on a complete application; a work session or scoping session would take place if an application is incomplete; a formal vote would not be taken; a policy determination would be needed without a formal application; making a policy determination is the Council's job. The Deputy City Manager Development Services stated the application on file is not deemed complete yet; the matter is an advisory recommendation. Councilmember /Board Member /Commissioner Tam inquired what the Planning Board would be reviewing if the application is incomplete. The Planning Services Manager responded the application includes a General Plan amendment and rezoning for the property; stated Council cannot take action on entitlement without an advisory recommendation from the Planning Board; Council's action would be to either deny or not deny the request and let the process continue; staff wanted to provide Council with the option of extending or not extending the Exclusive Negotiating Agreement (ENA) or not given the timeframe of the ENA; staff thought it was important to get advice from the Planning Board before the hearing; having a completed application is not required in order to get the Planning Board's advice. Councilmember /Board Member/Commissioner Gilmore inquired whether a Planning Board recommendation is required for General Plan amendments or rezoning, to which the Planning Services Manager responded in the affirmative. Councilmember /Board Member /Commissioner Gilmore Stated a determination cannot Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 9 Community Improvement Commission June 1, 2010 be made without a completed application. The City Attorney stated Planning Board action is required to approve a General Plan amendment or rezoning; action cannot be taken until an Environmental Impact Report (EIR) is completed; the application does not have to go to the Planning Board; however, going to the Planning Board affords another opportunity for community comment and Planning Board input. Councilrnember /Board Member /Commissioner deHaan stated that he understands that the Planning Board has not been provided with all the information; the Planning Board does not understand the total scope of the project; that he questions the need to go back to the Planning Board; too much information is missing. The Planning Services Manager stated the matter is Council's call since there is no legal requirement for the application to go to the Planning Board. Councilmember /Board Member /Commissioner Tam stated circling the matter back to the Planning Board may not have any value; that she does not feel there is enough financial information; she does not want to impose the issue on the Planning Board until financial information comes back in a more coherent form. The Planning Services Manager stated the intention would not be to bring all the economics back to the Planning Board; the Planning Board would be focusing on planning issues. CouncilmernberlBoard Member /Commissioner Matarrese stated recommendations on land use and transportation plans would be valuable. The Deputy City Manager Development services stated the Planning Board has some of the same questions regarding financial assurances. Mayor/Chair Johnson stated the project might be starting out to big and maybe the EIR should be smaller; housing units and commercial square footage could be increased if the EIR shows that more capacity would be doable. Councilrr emberlBoard Member /Commissioner Gilmore stated the Planning Board was looking to Council for guidance; that she thinks the process is backwards. Mayor/Chair Johnson stated that she does not have a strong opinion either way; the advantage would be to provide an opportunity for public input. CouncilmemberlBoard Member /Commissioner del -laan stated study after study has been done on transportation issues; today's traffic mitigations discussions are the same as three years ago but the project has increased three fold. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 10 Community Improvement Commission .dune 1, 2010 Councilmember /Board Member /Commissioner Tam stated that she does not recall PDC information on the WRT Solomon Transportation study; inquired whether 1 ,700 homes would generate revenue to pay for transit solutions. Councilmember/Board Member /Commissioner deHaan responded the issue is extremely questionable; stated more public amenities would be needed for more homes. Councilmember /Board Member /Commissioner Tara stated that she thought the whole concept is to have people bike or walk to neighborhood amenities. Councilrr ember /Board Member /Commissioner deHaan stated a transit oriented plan was used in the community use plan; the transit oriented community in the community use plan and the PDC were almost parallel; nothing has changed; building more homes is not the answer to transit solutions; Treasure Island is the king of less auto usage; Treasure Island residents use 1.8 autos per home. Councilmernber /Board Member/Commissioner Tara inquired what assumptions were made with respect to the ferry; stated the Alameda Point ferry terminal seems to be doing well and has an over 40% fare box recovery ratio. Councilmernber /Board Member /Commissioner deHaan responded Oakland contributes more of the ridership than Alameda; Oakland would lose its ferry service if the ferry was moved to the lagoon; inquired what is Oakland's fare box recovery ratio. The Public works Director responded the Alameda /Oakland Ferry Service fare box recovery ratio is approximately 58 stated the Oakland connection helps. Alameda raid day because of Oakland excursion riders; staff has a meeting on Thursday with the Water Emergency Transit Authority (WETA); wETA is wondering what will happen to the fare box recovery ratio and whether the ferry service would be viable if it is bifurcated from the Oakland connection and located at the seaplane lagoon. Councilmember /Board Member/Commissioner deHaan stated the northeast corner lagoon location is a concern; the vessel would have to traverse the whole lagoon, which would take five minutes; the PDC relocated the ferry to one of the piers which changes having transit within a quarter mile of density. The Public works Director stated the matter was discussed at meetings [with SunCal; the travel time through the seaplane lagoon would be approximately seven minutes each way; WETA's Interim operating Plan (IOP) originally envisioned interlinking with the Harbor Bay Ferry Service; currently, the Harbor Bay Ferry Service travel time is 23 minutes, which would increase to 40 to 44 minutes due to the seaplane lagoon location. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission June 1, 2010 Councilmember /Board Member /Commissioner Tam stated there has to be some type of development at Alameda Point in order to create a more robust ferry system; otherwise, there would not be any ridership; inquired what is the threshold to obtain new ridership, to which the Public works Director responded a ten minute walk. In response to Councilmember /Board Member /Commissioner Tam's inquiry, the Public Works Director responded SunCal has not provided ridership estimates; the developer normally provides the information. Councilmelmber /Board Member /Commissioner deHaan stated the last study showed that 24% of Alarnedans go to San Francisco; thoughts are that every ferry would move all masses to San Francisco, which is not the case. The Public works Director stated SunCal is proposing that more people would commute to San Francisco because SunCal's product would be more appealing to people who work in San Francisco; the ferry is only one part of the transportation proposal; the bus rapid transit would be in the later phase. Councilmember /Board Member/Commissioner deHaan stated the PDC included the bus rapid transit; denser areas would provide an opportunity for more ridership; requested that all information be brought back; stated that he has not seen anything new. The Public works Director stated the City developed a preliminary traffic analysis for Measure B; the PDC did not have any traffic analysis, but had ideas to sustain a transit oriented development; level of service analyses were not done; the first time a level of service analysis was done was in the Election Report and was very preliminary. The Deputy City Manager Development Services stated a lot of new studies have not been conducted in the last three years; the issue would be addressed with SunCal at Thursday's meeting; said discussion could be brought back at the next meeting. Councilmember /Board Mernber /Commissioner Gilmore stated there still seems to be an issue regarding where the ferry terminal would be placed; transit solutions need to function as a whole; inquired how work can start on the rest of the transportation system when the ferry terminal location is unknown. Mayor /ChairJohnson inquired whether the ferry would be part of the transit hub. The Public works Director responded in the affirmative; stated the ferry terminal would meet the bus rapid transit; the matter would be discussed with WETA. In response to Mayor /Chair Johnson's inquiry, the Public works Director stated SunCal has told the City where it wants the ferry terminal. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 12 Community Improvement Commission June 1, 2010 Mayor/Chair Johnson stated planning is needed. The Public Works Director stated the matter is being fine tuned. Councilrnember /Board Member /Commissioner Gilmore stated that she assumes there would be a similar process with AC Transit. The Public Works Director stated a similar process would be done with AC Transit eventually. CouncilmemberlBoard Member /Commissioner Tara stated everything takes time; inquired whether there is enough time to gather information for the June 21 Planning Board Meeting. The Public Works Director responded the exact ferry terminal location is less important than the idea of ghat to have; stated the traffic model would not be that sensitive and the Board could see how to interrelate transit and land development density. Councilmember /Board Member /Commissioner Gilmore inquired whether the ferry terminal would be somewhere in the seaplane lagoon. The Public Works Director responded the seaplane lagoon is being proposed; stated the proposal is a transit hub in the seaplane lagoon with a ferry terminal at the northeast corner; staff has had discussions with WETA regarding whether there will be enough ridership to bifurcate from Oakland and move the ferry to the seaplane lagoon; that he would like to discuss adding Harbor Bay; WETA only wants to take on new ferry service out of the seaplane lagoon if it is financially feasible and the ridership is there; otherwise, the ferry terminal would remain at the Main street terminal; there would be shuttles from Alameda Point to the seaplane lagoon by the end of the 3 rd phase. In response to CouncilrnernberlBoard Member /Commissioner deHaan's inquiry, the Public Works Director responded WETA's boats accommodate 119 and 159 passengers. CouncilmemberlBoard Member /Commissioner deHaan stated other options need to be reviewed; other options are getting few and far between; today's generation will change employers many times; the vast majority of employees are in the south bay; Concord does not have any bus service; BART is available in Dublin but is limited in other areas; the City had three years of commitment; SunCal should have had the issue ironed out. Mayor/Chair Johnson inquired whether the matter should be sent back to the Planning Board, the majority of CouncilmemberslBoard Members /Commissioners responded in the negative. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 13 Community Improvement Commission June `I 2010 The Deputy City Manager Development Services stated action is needed on the second item [Setting a Public Hearing for Decision on the SunCal Modified optional Entitlement Application and/or Extension of the ENA from Governing Bodies of Alameda by July 20, 2010]; staff is looking at either July 6 th or July lo th Council r ember /Board Member /Commissioner Matarrese stated that he is puzzled why the matter is being addressed tonight when an ARRA meeting was scheduled for tomorrow but was cancelled; monthly ARRA meetings need to be reestablished. Councilmernber /Board Member /Commissioner Matarrese moved approval of setting a Public Hearing on July 6th, 7th, or lo to decide on the SunCal Modified OEA and/or extension of the ENA. Councilrnember /Board Member /Commissioner deHaan seconded the motion. Under discussion, the Deputy City Manager w Development Services stated staff would come back with a recommendation on which date. Councilmember /Board Member /Commissioner Matarrese stated that he prefers to have the public hearing at the regular July 7 th ARRA meeting which would not conflict with Council business. Councilmember /Board Member /Commissioner Tara inquired whether staff expects to have the submittal that occurred over the weekend, the determination of completeness, resolution of financial issues, and transportation plan issues available. The Deputy City Manager Development Services responded a definitive answer on the incompleteness [of the application] can be provided by June 16 stated follow up on the financial information could be provided in the next two weeks; staff would be reporting back on transportation questions on June 15 th Councilmernber /Board Member/Commissioner deHaan stated the density bonus leaves a lot of question in his mind; 1,310 homes is low density; high density is 3,631; the project is not new development throughout but is adaptive reuse and infill; that he needs clarification on 20 areas on the reuse of the Batchelor's Enlisted Quarters (BEQ). The Deputy City Manager Development Services stated the total number of units would increase by 30 densit in terms of the number of units per acre, occurs through a density bonus transfer; a density bonus plan cannot be achieved without the density bonus option and density transfer. Councilrnernber /Board Member /Commissioner deHaan stated high density housing is outside the quarter mile and actually goes beyond the quarter mile; more homes would be outside the density corridor; provided a handout; stated the orange area is high Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 14 Community Improvement Commission June 1, 2010 density and goes outside the quarter mile; inquired whether high density commercial is part of the equation. The Planning Services Manager responded commercial is not part of the density bonus plan; stated the density bonus ordinance mould not govern where SunCal chooses to put densities. Councilmember /Board Member /Commissioner deHaan stated the red outline on page 4 shows high density residential and commercial; the blue line is the buffer zone; that he has never seen anything similar in Alameda. Councilme mber /Board Member /Commissioner Tam stated the WRT Study also analyzed a high range in density that was closer to SunCal's plan. The Planning Services Manager stated the WRT Study looked at the PDC; the key to making the overall project work for the City is that the 4,200 unit project would have to develop and fund a very successful transportation plan that would work for the entire island; the only way to get people from the 4,200 housing units through the tube would be to have existing residents chose to participate [in a transportation program]. Councilmember/Board Member /Commissioner Tara inquired whether the WRT Study was commissioned by the City, to which the Planning Services Manager responded in the affirmative. Councilmember /Board Member /Commissioner Tam stated that her comfort level would increase if she had more information before deciding what the date should be; inquired whether information could be provided by the next Council meeting, to which the Planning Services Manager responded in the affirmative. The Deputy City Manager Development Services stated staff would come back on June 15 th with updates on the completeness of the application, financial issues, and transit oriented develop aspects. Council r7ember /Board Member/Commissioner Tam stated an update should be provided on the concept of density bonus and density transfer and how it works in light of the transit oriented development. On the call for the question, the motion carried by the following voice vote: Ayes: Councilmember /Board Member /Commissioners del aan, Gilmore, Matarrese, and Mayor /Chair Johnson 4. Abstention: Councilmember /Board Member /Commissioner Tarn 1. Councilmember /Board Member /Commissioner Tam stated that she needs more information before she is comfortable with setting a date. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 15 Community Improvement Commission June 1, 2010 DRAIN. REPORTS (ARRA) Oral report from Member Councilmember /Board Member /Commissioner Matarrese, Restoration Advisory Board (RAB) representative Highlights of May 6 Alameda Point RAB Meeting Board Member Matarrese stated the Navy is nearing completion of the replacement and removal of several radio active storm drain lines that go from Buildings 5 and 400 to the seaplane lagoon; requested clarification on whether the new storm drains would meet current standards; stated a number of remediations are in place; nearly 75% completion of characterization is being approached; part of the clean up plan includes the former Todd shipyard near the existing ferry terminal where copper is being removed, which is not all Navy contamination, but the Navy is paying for it. 4103 L911110 1 k► 01� There being no further business, Mayor /Chair Johnson adjourned the meeting at 10:55 p. M. Respectfully submitted, Lara Weisiger, City Clerk Secretary, CIC The agenda for this meeting was posted in accordance with the Brown Act. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and 1 Community Improvement Commission June I 2010 MINUTES of THE SPECIAL CITY COUNCIL AND COMMUNITY IMPROVEMENT COMMISSION (CIC) MEETING TUESDAY- -JUNE 15 2010- -5:00 P.M. Mayor /Chair Johnson convened the meeting at 5:15 p.m. Roll Cali Present: Councilmembers /Commissioners deHaan, Gilmore, Matarrese, Tarn and Mayor/Chair Johnson 5. Absent: None. The meeting was adjourned to Closed Session to consider: (10- CC) Conference with Legal Counsel Anticipated Litigation; Significant exposure to litigation pursuant to subdivision (b) of Section 54956.9; Number of cases: One. (10- CC) Public Employee Performance Evaluation (54957); Title: City Attorney. 10- CC) Conference with Legal Counsel Anticipated Lit, ation; Significant exposure to litigation pursuant to subdivision (b) of Section 54956.9; Number of cases: one. Following the Closed Session, the meeting was reconvened and Mayor/Chair Johnson announced that regarding Antici ated Litigation (paragraph no. 0- Council received a briefing from its Legal Counsel; no action was taken; regarding City Attorney, Council directed the City Attorney to bring back her goals and objectives by the Second meeting in September, 2010; no action was taken; and regarding Anticipated Litigation [paragraph no. 10- 1 Council received a briefing from Legal Counsel regarding a matter of potential litigation; no action was taken. Mayor /Chair Johnson called a recess at 7:30 p.m. and reconvened the meeting at 1:30 a.m. The meeting was adjourned to Closed Session to consider: (10- CC) Conference with Legal Counsel Anticipated Litigation; Initiation of litigation pursuant to subdivision (c) of Section 54956.9; Number of cases: One. (10- CC/1 0- CIC) Conference with Real Pro ert Negotiator; Property: 1 590 and 1616' Fortmann Way; Negotiating Parties: Warmington Homes, City of Alameda and CIC; Under Negotiations: Price and terms. Following the Closed Session, Mayor/Chair Johnson announced that regarding Anticipated Litigation, Council received a briefing on a matter of anticipated litigation and provided direction to Legal Counsel; and regarding Real Prop the Council and Special Joint Meeting Alameda City Council and Community Improvement Commission June 15, 2010 Commission received a briefing from its real property negotiator regarding potential sale of City -owned property to Warmington Homes. Adiou rn ment There being no further business, Mayor /Chair Johnson adjourned the meeting at 2:10 a.m. Respectfully submitted, Lara Weisiger, city clerk Secretary, CIC The agenda for this meeting was posted in accordance with the Brown Act. Special Joint Meeting Alameda city Council and 2 Community Improvement Commission June 15, 2010 UNAPPROVED MINUTES OF THE SPECIAL JOINT CI COUNCIL AND ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA) MEETING AND THE ANNUAL COMMUNITY IMPROVEMENT COMMISSION (CIC) MEETING TUESDAY- -JUNE 15 2010- -7:02 P.M. Mayor /Chair Johnson convened the meeting at 12:24 a.m. ROLL CALL Present: Councllmernbers /Board Members /Commissioners deHaan, Gilmore, Matarrese, Tam and Mayor /Chair Johnson —5. Absent: None. CONSENT CALENDAR Council member/Boa rd Member/Authority Member Gilmore stated page 4 of the minutes should include the Power Point presentation given by Stan Brown, SunCal. The City Clerk stated the minutes Would be revised and brought back at the next meeting. Councilmember /Board Member /Commissioner deHaan moved approval of the remainder of the Consent Calendar. Councilmember /Board Member /Commissioner _Matarrese seconded the motion, which carried by unanimous voice vote 5. [Items so enacted or adopted are indicated by an asterisk preceding the paragraph number.] 10- CC/ARRA/10- CIC Minutes of the Special Joint City Council, ARRA and CIC Meeting held on June 1, 2010. Continued. (10- CIC) Resolution No. 10 -155, "Authorizing Execution and Delivery of an Agreement Regarding Refunding of Authority Bonds." Adopted. Commissioner Matarrese stated the resolution should be amended to include the 6% present value savings. The City Clerk stated the 6% present value savings does not need to be in the CIC resolution, only the corresponding Alameda Public Finance Authority (APFA) resolution [paragraph no. 10- APB Commissioner Matarrese moved adoption of the resolution. Commissioner deHaan seconded the motion, which Carried by unanimous voice vote Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and Annual Meeting Community Improvement Commission June 15, 2010 5. CITY MANAGER /EXECUTIVE DIRECTOR COMMUNICATION (10- CC /ARRA /10- CtC) Semimonthly Update on SunCal Negotiations The Deputy City Manager Development Services provided a handout and gave a brief presentation. Mayor /Chair Johnson inquired whether Stan Brown, SunCal, was here to speak or answer questions, to which Mr. Brown responded to answer questions. Vice Mayor /Board Member /Commissioner deHaan stated a lot of people would like to see the former Naval Base cleaned up; inquired whether SunCal is phone banking. Mr. Brown responded in the affirmative; stated SunCal has been contacting Supporters; SunCal is urging supporters to let the Council /Board Members /Commissioners know that there is broad support. Vice Mayor /Board Member /Commissioner deHaan inquired whether SunCal is intending to clean up the former Naval Base. Mr. Brown responded in the negative; stated the intent of the communication is for supporters to express continued support. Vice Mayor /Board Member/Commissioner deHaan inquired whether the communication is conning from SunCal staff, to which Mr. Brown responded the communication is coming from a consultant hired by SunCal. Vice Mayor /Board Member /Commissioner deHaan inquired ghat is the name of the consultant, to which Mr. Brown responded he does not know. Vice Mayor /Board Member /Commissioner deHaan inquired whether the transcript and consultant's name could be provided, to which Mr. Brown responded in the affirmative. Speakers: Jon Spangler, Alameda; William Smith, Alameda. (10- CC /ARRA /10- CIC) Status Report of Finalized Navy Terra Sheet Mandatory Milestone pursuant to Exclusive Negotiating Agreement Section 4.2.2. The Deputy City Manager Development Services gave a brief presentation. Councilrnember /Board Member/Commissioner Matarrese stated $108 million would have provided the Navy with profit participation when the housing market was hot and was calculated based upon far less units than ghat is in the optional Entitlement Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and 2 Annual Meeting Community Improvement Commission June 15, 2010 Agreement (OEA); requested that future analysis project 5,000 units instead of 1,700 units. The Deputy City Manager Development Services stated that she would apply the formula specified in the draft Navy terra sheet to the project to see what the land payment would be. Councilmember /Board Member /Commissioner Tam inquired whether the base project is the Measure A compliant plan and whether the density bonus option is higher; further inquired whether the two ranges would be analyzed in the Environmental Impact Report (EIR). The Deputy City Manager Development Services responded project alternatives have not been analyzed, but staff is close to finalizing a project description; stated the project description includes the base project and density bonus option; staff is studying two build -out scenarios. Councilmember /Board Member /Commissioner Tangy stated one hybrid project is being analyzed; inquired whether the base project and hybrid project would be analyzed when the Navy terra sheet is developed in accordance with the Exclusive Negotiating Agreement (ENA). The Deputy City Manager Development Services responded staff has not started negotiations on the modified oEA; stated staff has significant concerns with the project pro forma, and does not want to enter into land payment negotiations with the Navy; that she assumes that final term sheet negotiations would be based upon the density bonus option project because SunCal wants to build said project. Councilmember /Board Member /Commissioner Tam stated that she recalls receiving an email inviting Council, the Interim City Manager, and the Deputy City Manager Development Services to some type of outreach with the Navy; subsequently, the Interim City Manager sent an email reminding Council that a Council subcommittee was formed; inquired whether the subcommittee ever met with the Navy and the Pentagon is unclear; Inquired whether the staff report asserts that SunCal may be in breach of the Agreement because of what may have been a meeting with the Department of Defense that included the Navy. The Deputy City Manager Development Services responded in the affirmative; stated that she was on a conference call with SunCal in which SunCal notified both the City and Navy that they would like to set up a meeting with the Department of the Navy in Washington, D.C.; that she and the Base Realignment and Closures (BRAG) office in San Diego requested to be invited; several times, the BRAC office asked when the meeting might occur; she and the BRAG office were never notified. Councilmember /Board Member/Commissioner Tam inquired whether the Deputy City Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and 3 Annual Meeting Community Improvement Commission June 15, 2010 Manager— Development Services knows what the meeting was about. The Deputy City Manager Development Services responded the BRAC office informed her that the meeting did occur; stated conveyance term details were not discussed at the meeting; SunCal requested that the Navy support the six month ENA extension. Councilmember /Board Member /Commissioner Tara inquired whether the Deputy City Manager Development services' made a determination that there was a breach of the Agreement. The Deputy City Manager Development Services responded that she did not make the determination, but staff and the legal team made the determination that the City was supposed to be notified and invited to attend the meeting; that she was not invited to the meeting or a subsequent negotiation session. Councilrnember /Board Member /Commissioner Gilmore inquired whether or not the Washington, D.C. meeting was an outcome of the email which invited Council, the Interim city Manager and Deputy City Manager Development services to the meeting and reminded everyone that the subcommittee had been formed. The Deputy city Manager Development Services responded the meeting may have been; stated that she was never provided with a date or invited to attend. Council member/Boa rd Member /Commissioner Tara requested clarification on what transpired in Washington, D.C. and how communication occurred. Mir. Brown stated initially, the meeting was with the Department of Defense; that he heads Suncal's renewable energy plan; SunCal wanted to discuss opportunities to sell power to the federal government; solar power issues were discussed; negotiating was not done; the status of the ENA was discussed; that he still wants the council subcommittee meeting to occur. Councilmember /Board Member/Commissioner Tara inquired whether meeting discussions were communicated to staff. Mr. Brown responded that he called the Interim City Manager the next day; stated the Interim city Manager returned his call but he and the Interim City Manager were unable to connect; that he believes that SunCal CEO Frank Faye sent a text message to the Mayor regarding the meeting; the meeting was not focused on Alameda Point; that he strongly disagrees with the breach of Agreement position; the Agreement has a specific provision that states the developer is authorized to communicate directly with the Navy regarding the project or project site as long as the developer keeps the City informed. The Interim City Manager /Executive Director stated Mir. Brown's phone call was after Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and 4 Annual Meeting Community Improvement commission June 15, 2010 the fact; Mr. Faye advised her that he would take direction from Council and not the subcommittee. Mayor /Chair Johnson inquired whether SunCal requested the Navy to support an BNA extension. Mr. Brown responded that SunCal indicated that the BNA would be ending soon and that SunCal wanted to remain involved in the project. Mayor /Chair Johnson inquired if the conversation included whether the Navy supports the BNA extension, to which Mr. Brown responded briefly. Vice Mayor /Board Member /Commissioner deHaan stated Section 20-1 states that SunCal is not to meet or engage in negotiations with the Navy concerning the project or project site without giving advanced, reasonable notice to the City in order to give the City an opportunity to negotiate with SunCal and the Navy at such meeting; inquired what is Mr. Brown's interpretation of said Section. Mr. Brown responded that he concurs that the statement is the first sentence of the Section; however, the second sentence states "notwithstanding anything to the contrary in the foregoing, developer is authorized to communicate directly with the Navy regarding the project and project site as long as the developer promptly keeps the City informed of such communications"; stated SunCal made no attempt to negotiate with the Navy without the City being present. Councilmember /Board Member/Commissioner Tam inquired how the meeting carne about; further inquired whether Mr. Brown just happened to be in Washington, D.C. Mr. Brown responded in the negative; stated SunCal does a fair amount of business with the Department of Defense; originally, SunCal was talking to the Department of Defense regarding solar opportunities; SunCal has been pursuing entering into a Power Purchase Agreement to sell power to the armed services; the opportunity came to head at the meeting. Councilrr err ber /Board Member /Commissioner Tangy stated that it does not sound like a meeting was planned to follow up on Council's opportunity to meet with the Navy; inquired whether SunCal informed City staff immediately after the meeting. Mr. Brown responded in the affirmative; stated SunCal still wants to meet with senior Navy staff, Councilmembers, and City staff to negotiate terms of the Agreement; one frustration has been that SunCal desires to have communications with the Navy but the City has not been willing to schedule a joint meeting because of pro forma concerns and other issues; the situation is curious in that after a year of requesting to have a joint meeting, SunCal is considered to be in breach of the Agreement. Special Joint Meeting Alameda City Council and Alameda Reuse and redevelopment Authority; and 5 Annual Meeting Community Improvement Commission June 15, 2010 Councilrnember /Board Member /Commissioner Tara inquired what is the path to the resolution of pro forma issues. The Deputy City Manager Development Services responded staff has been working on the new pro forma for less than two months; stated an extensive report was attached to the June 1 2010 staff report regarding the pro forma; staff was directed to sit down and resolve some of the issues; staff met with SunCal today; that she advised Mr. Brown that staff discussed different assumptions and related, rational assumptions; staff would meet with the consultant [EPS] today to discuss issues; conversations would continue on Thursday. Councilrnember /Board Member /Commissioner Tam inquired when staff expects issues to be resolved. The Deputy City Manager Development Services responded resolving issues is not just up to staff; stated negotiations are mutual. Councilrnember /Board Member /Commissioner Tarn inquired when SunCal expects issues to be resolved. Mr. Brown responded today's phone call was productive; stated that he is unfamiliar with EPS's housing methodology and pricing; EPS feels that the unit value approach versus square footage is the appropriate value measurement; that he disagrees with said analysis; today, EPS was unable to advise him why it considered SunCal's construction costs to be too low; EPS wants to compare the project to Bayport, which has very few water views; water views are probably why SunCal has a higher premium in its pro forma; that he is not sure when issues would be resolved to bring closure. The Deputy City Manager Development services stated staff will be corning back on July 7 provide an update. Mayor /Chair Johnson inquired what is the status regarding school facility issues. Mr. Brown responded SunCal has had meetings with the School District; stated that he is not sure whether changes have occurred in the last month or so; the School District is evaluating facility needs; SunCal has provided two school sites within the plan. Mayor /Chair Johnson stated school site placement has been an issue. Mr. Brown stated the he is unaware of any location Issues, but SunCal would be happy to engage in said conversation; the issue is a normal give and take process and would be part of the EIR. Mayor /Chair Johnson inquired whether SunCal is working on a transportation plan. Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and 6 Annual Meeting Community Improvement Commission June 15, 2010 Mr. Brown responded transportation planning is a big part of the budget; stated SunCal is finding its own expert to advance the ball on transportation and transit issues; alternatives are being reviewed; SunCal realizes that issues need to be fully mitigated in order for a plan to be viable and approved by the City; SunCal recognizes that transportation issues cannot become worse and is willing to work with its own consultant in addition to the joint consultant retained through the EIR. Mayor /Chair Johnson inquired whether the EIR would provide an option for fewer housing units. Mr. Brown responded an alternative to be studied in the EIR has not been identified; stated work still needs to be done; typically, one option would be to have a lower level of development proposed; the EIR consultant and staff, along with comments from SunCal, would develop an alternative to be studied for a reasonable, smaller project. AGENDA ITEMS 10- CIC Public blearing to Consider Resolution No. 10 -167 "Approving and Adopting the Five -Year Implementation Plan for the Business and waterfront and the vilest End Community Improvement Projects (2010 2014)." Adopted. The Economic Development Director gave a Power Point presentation Commissioner Gilmore thanked the Economic Development Director for the presentation; stated sometimes the City gets busy pushing ahead on the next project and does not take the opportunity to look back on accomplishments; the City has changed for the better. The Economic Development Director stated policy decisions have been put in place with a lot of community input; this is the time for the City to talk about the impact that projects have had on the community; in the last couple of years, funding projects without redevelopment agency Support has been difficult; the construction trade is the hardest hit unemployment group in Alameda County. Commissioner Tarn stated that she would like to echo appreciation to staff; all Councilmembers throughout the State are telling their legislature that redevelopment funds are an economic engine and create jobs; inquired whether the City has a strategy for locating retail sites. The Economic Development Director responded the City has a number of different retail opportunities which are not necessarily within the redevelopment project area boundaries; stated Alameda Landing has an opportunity for up to 300,000 square feet of retail; the City has identified how much the City could handle through a saturation invoice and retail leakage analysis; the Catellus Agreement has a retail marketing plan in which Catellus has to meet quarterly with the City; Catellus needs to update the retail Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and 7 Annual Meeting Community Improvement Commission June 15, 2010 strategic planning analysis if it deviates from its basic retail plan; the Marina village Shopping Center has issues; Bridgeside Shopping Center never finished leasing its property; the City needs to work on the strategic retail side. Speaker Former Councilmember Tony Daysog, Alameda. Commissioner Matarrese moved adoption of the resolution. Commissioner Tarn seconded the motion, which carried by unanimous voice vote 5. ADJOURNMENT There being no further business, Mayor /Chair Johnson adjourned the meeting at 1:32 a.m. Respectfully submitted, Lara Weisiger City Clerk Secretary, C1C The agenda for this meeting was posted in accordance with the Brown Act. Special Joint Meeting Alameda City Council and Alameda Reuse and Redevelopment Authority; and S Annual Meeting w Community Improvement Commission June 15, 2010 CITY OF ALAMEDA Mem To. Honorable Mayor and Members of the city council Honorable Chair and Members of the Alameda Reuse and Redevelopment Authority Honorable chair and Members of the Community Improvement Commission From: Ann Marie Gallant Interim city Manager /Interim Executive Director Date: July 7, 2010 Re: Presentation on SunCal Modified Entitlemen Application ■m M■■■■ it On July 18, 2007, the governing bodies of the Alameda Reuse and Redevelopment Authority (ARRA), Community Improvement Commission (CIC), and 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. The ENA was amended in March 2008 and in October 2008. The second Amendment to the ENA created a process that SunCa.l to pursue a ballot initiative for a non Leasure A- compliant land use entitlement at Alameda Point and provided that if the initiative failed Suncal would. be permitted to submit an Optional Entitlement Application (OEA). This OEA would require a project consistent with the City charter (Measure A compliant) that could be processed within the overall timefra ne of the ENA. The amendment did not provide Suncal with the ability to pursue a second ballot initiative, nor did it contemplate extending the terms of the ENA for processing of an OEA. On March 20, 2009, Suncal submitted the Alameda Point Revitalization Initiative (Initiative) to the city. The Initiative included a charter Amendment, General Plan Amendment, Zoning Amendment, specific Plan .and Development Agreement IAA), the details of which were not negotiated with Alameda. On November 3, 2009, when the Initiative was determined to have qualified for the ballot, the city council set the election for February 2, 2010. Prior to the February election, Suncal submitted an OEA on January 14, 2010 as permitted by the ENA. The OEA submitted by Suncal consisted of substantially the same plan and processes contained in the Initiative. On February 2, 2010, the Initiative failed at the polls with 85 percent of those participating in the election voting against the Agenda Item #3-B CUARRAXIC 07-07-2010 Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 2 of 10 Honorable Mayor and Members of the city Council Honorable chair and Members of the Community Improvement Commission Initiative. On February 4, 2010, Alameda provided SunCal with a Notice of Default (MOD) stating that the OEA submitted by SunCal did not meet the requirements of the ENA because the OEA conflicts with the city Charter. The only way for the OEA to avoid conflicting with the City Charter was for SunCal to either submit a Density Bonus Application (DBA) for the project in compliance with the City's Density Bonus Ordinance, which SunCal did not do, or to seek an amendment to the city charter through a second ballot initiative. however, the ENA affords SunCal no further opportunities to amend the City Charter through a second initiative. Consistent with the terms of the ENA, SunCal had 30 business days, or not later than March 22, 2010, to cure the default. On March 22, 2010, SunCal submitted a Modified OEA in response to Alameda's MOD, which included a Measure A- compliant project (Base Project) that might be modified at a later date through a density bonus. At a meeting with Alameda staff, SunCal stated that no DBA would be submitted at this time consistent with the city's Density Bonus ordinance, because the ordinance itself requires specific information, such as architectural elevations, which SunCal stated could not be provided at this stage in the planning process. however, SunCal indicated verbally its commitment to developing a higher density project that .will permit the land uses, units, and density similar to the specific Plan contained in the Initiative (Density Bonus option), not the Base Project. SunCal also indicated that the Environmental Impact Report (EIR) and Disposition and Development Agreement (DDA) would include the Density Bonus option. The Density Bonus option is essentially the same land use program as the 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. SunCal also committed to preparing a master planned DBA at a future date to avoid a piecemeal approach to implementation of a higher density project under density bonus law. On April 20, 2010, the city of Alameda provided suncal with a letter identifying some of staff's major concerns with SunCal's current submittal. In response to the April 20, 2010 letter and staff's requests at weekly meetings, SunCal has provided various documents on the proposed Density Bonus option to Alameda over the last several months, including a project proforma provided on April 20, 2010 (Project Proforma) (Exhibit 1). Alameda also sent a letter to SunCal on May 19, 2010 stating that the Modified OEA was incomplete and requested that SunCal submit additional information on the Density Bonus Option with sufficient detail so that it can be reviewed and analyzed by staff and the EIR consultants, as well as the community, Planning Board, and Alameda at the same time as the Base Project. Honorable Chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 8 of 18 Honorable Mayor and Members of the city Council Honorable chair and Members of the Community Improvement Commission On May 27, 2010, SunCal emailed a letter to the city's Planning and Building Department responding to the city's Notice of Incompleteness letter, including supplemental information to be processed as part of the Modified OEA and, on May 28, 2010, a letter to the Interim city Manager responding to Alameda's April 20, 2010 letter. Staff reviewed SunCal's response and has met with Suncal on a weekly basis to address any remaining concerns regarding the completeness of the Modified OEA. Per the results of these discussions, and at staff's request, SunCai submitted, on June 24, 2010, a consolidation of all previous submittal related to the Density Bonus option as well as additionally requested documentation concerning the Density Bonus option. Based on a review of the initial Modified OEA provided on March 22, 2010, and all subsequent submittals through June 24, 2010, staff has determined the Modified OEA complete. Notwithstanding this "completeness" determination, staff continues to raise planning, transportation, and economic concerns with respect to the Suncal plan, including both the Base Project and the Density Bonus option. These concerns were shared Frith .the Planning Board on May 10, 2010 and May 24, 2010; also with the governing bodies of Alameda on May 18, 2010, and with the Economic Development commission on May 20, 2010. On June 1, 2010, the governing bodies of Alameda set a public hearing date for a decision on the Suncal Modified OEA and /or extension of the ENA by July 20, 2010. The public hearing has been scheduled for July 20, 2010. The governing bodies of Alameda at the June 1, 2010 also raised questions regarding SunCal's Modified OEA. The answers to these questions and staff's expressed concerns regarding SunCal's Modified OEA are the subject of this staff report. DISCUSSION Responses to June 1, 2010 Meetinq Questions At Alameda's June 1, 2010 meeting, various questions and issues were raised by the governing bodies. The questions and their responses are provided below: 1. What is the states of ongoing negotiations between Suncal and Alameda regarding project economics and assumptions in the sun Cal Project Proforma As discussed at the June 1, 2010 meeting, Alameda staff contracted with the real estate economics consulting firm that has been working on this project for many years, Economic Planning Systems (EPS), to evaluate SunCal's Project Proforma for the Density Bonus option. In particular, staff asked EPS to review and analyze the Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 4 of 16 Honorable Mayor and Members of the city Council Honorable chair and Members of the Community Improvement commission revenue, cost and fiscal neutrality assumptions in the Suncal Project Proforma. Overall, EPS and staff believe many of SunCal's assumptions are overly optimistic, which has significant implications on the financial feasibility of the Suncal Project Proforma. The following provides a discussion of EPS and staff findings .regarding key financial assumptions. Revenue Assumptions FPS prepared a detailed report, Alameda Point Pro Forma Market .Review, dated. May 24 2010, which summarizes areas of disagreement between FPS and Suncal concerning key market assumptions in the S.unCal Project Proforma (IMPS Market Report) (Exhibit 2 The FPS Market Report was made publicly available for. the June 1 2010 meeting and is on file in the clerk's office. At the time of the June 1 meeting, the key areas of disagreement regarding revenue assumptions.. included single family home sales prices, price pre miums, absorption, and hone value appreciation. At the June 1, 2010 meeting, Suncal presented its response (Exhibit 3) to the EPS Market Report, which outlined SunCal's differing conclusions regarding revenue. and cost assumptions. At the meeting, the governing boards of Alameda .directed staff to continue discussions with Suncal regarding the Suncal Project Proforma and to provide. an update on the results of these further conversations at a subsequent meeting.. Staff formally discussed the Project Proforma with Suncal .on June 1 .51. 2.01 0. and June 24, 2010, and has informally corresponded with .Sur Cal regarding the Project Proforma over the past month. As a result of these discussions, Suncal has agreed absorption schedule in its Project Proforma to be consistent with .EPS' recommendation. However, agreement has not been reached regarding other differing :assumptions and thus both FPS and Alameda staff continue to retain concerns on SunCal's other revenue assumptions, many of which appear to be overly optimistic... EPS prepared attached June 29, 2010 memorandum .(EPS Mernorandurn), which provides a status report on ongoing discussions and summarizes.: (1) SunCal's issues with the. FPS Market Report, (2) SunCal's supporting data .provided to date, and (3) FPS... response to SunCal's issues (Exhibit 4). In sung, the EPS Memorandum concludes that many. of SunCal's assumptions do not take into account the significant charges in the .real estate market that have taken place as a result of the unprecedented recession of the last several years. Consequently, FPS believes that many of the assumptions are.. not supported by sound data and analysis. A table comparing the differences between FPS and Suncal revenue assumptions is provided below. Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 5 of 16 Honorable Mayor and Members of the City Council Honorable chair and Members of the Community Improvement Commission Cost Assumptions EPS and staff also continue to have concerns with numerous cost assumptions, included in SunCal's Project Proforrna, including cost escalation, direct construction costs for single family homes, infrastructure construction contingency, and key transportation and infrastructure costs. The EPS Market Report and EPS Memorandum summarize EPS recommendations regarding cost escalation and direct construction cost assumptions. To date, at staff's request, Suncal has agreed to increase the construction cost for Bus Rapid Transit (BRT) by an additional $6 million, and to add the Cross Alameda multi- use pathway as a construction cost of $2 million. With soft costs and contingencies this increases projected project costs by approximately $10.3 million. There are other infrastructure related costs that staff believe also should be increased or added to the Suncal Project Proforma, including an increase to the infrastructure construction cost contingency from 20 to 25 percent and $1.2 million for a fair share amount of a projected new Corporation Yard. The construction costs for the ferry terminal, the project's share for the Broadway /Jackson interchange, and the transportation demand management (TDM) monitoring and refinement costs are still being discussed and evaluated, and will also affect the total costs for improvements. A table comparing the differences between EPS and Suncal cost assumptions is provided below. Fiscal Neutrality Assumptions Lastly, EPS prepared the June 2010, Alameda Point Public Services Analysis, which analyzes the fiscal impacts of the Modified OEA (Density Bonus option) on the City's General Fund and certain affected Special Revenue Funds (EPS Fiscal Report) (Exhibit 6) in order to assure that the City's established policy of fiscal neutrality will be achieved.' The EPS Fiscal Report finds that while the General Fund is projected to experience shortfalls only in the initial years, the Public works- related Special Revenue Funds are insufficient to fund costs. various measures can help to mitigate the fiscal impacts on Alameda, including developer payments and ongoing annual property assessments. There are also ongoing operations costs associated with the transportation program proposed for the project that will need to be supported through assessments from Alameda Point property owners. However, the effectiveness of the fiscal neutrality mitigation measures and the availability of transportation assessments, are affected by the overall feasibility of the project, as discussed in greater detail below. 1 City of Alameda Resolution No. 13643, November 6, 2003 Honorable Chair and Jul 7, 2010 Members of the Alameda Reuse and Redevelopment Authorit Pa 6 of 16 Honorable Ma and Members of the Cit Council Honorable Chair and Members of the Communit Improvement Commission 2. Can the project financiall y support the proposed transportation improvements and pro public benefits, fiscal neutralit and a si land pa to the Nav As a result of these remainin issues and concerns, staff directed EPS to prepare a financial feasibilit anal based on SunCal's Project Proforma, but incorporatin EPS and staff's proposed chan in revenue and cost assumptions, to evaluate the potential impacts of such chan on project feasibilit EPS prepared a report, Alameda Point Financial Feasibilit Anal dated June 2010, which summarizes the results of the feasibilit anal (EPS Feasibilit Report) (Exhibit 6), which incorporates the findin of the EPS Market Report, the EPS Memorandum, and EPS Fiscal Report. This financial feasibilit anal is a tool for evaluatin the effects of chan s to the SunCal Project Proforma on project feasibilit it is not intended to represent Alameda's proposed business plan. Table 1, recreated from the EPS Feasibilit Report, provides a summar of ke revenue and cost assumptions in the EPS financial feasibilit anal that differ from the SunCal Pro Proforma. Table 1 also compares the EPS and SunCal assumptions. EPS also incorporated other modifications into its anal that differ from the SunCal Pro Profroma, which are described in detail in the EPS Feasibilit Report, but do not substantiall affect the findin of the anal Table 1 a IV A a M a K a ONK j N IF Ao► N 117 !oil Assumption SunCall EPS Difference Recommendation SUI .n,s o Sin Famil Home Values (per unit in 2014) Sin Detached $1)042,000 $854,000 -17% Duplexes $868.000 $790,000 Avera Home Value Premiums Sin Detached 5% 1 -80% Duplexes 2.7% 1 -63% Townhomes 4% 1% -75% Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 7 of 16 Honorable Mayor and Members of the City council Honorable chair and Members of the Community Improvement Commission Average Single Family/Townhome Absorption 233 units units Io (per year) Average Multi-Family Absorption (per year} 220 units 1 units -20% Real Appreciation in Home 2% 1.4% -30° Prices Value �-i XS Single Family Direct construction Costs (per square foot in 2014) Single Family Detached $115 $130 1 3% Duplexes $126 $150 19% Townhomes $137 $202 47% Vertical construction Cost Escalation above Inflation 0% 0.4% n/a Horizontal Construction Cost Escalation above Inflation 0 0.5% n1a Horizontal construction cost Contingency 20% 25 25 Additional Costs (Cross Alameda bike trail, BRT costs, $0 million nla corporation yard) There are other policy and development assumptions contained in SunCal'S Project Proforrna that could be affected by further analysis and negotiations with Alameda and the Navy, including, but not limited to: Honorable Chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 8 of 16 Honorable Mayor and Members of the city council Honorable chair and Members of the community Improvement Commission 1. Public Financing. SunCal assumes 100 percent of all housing and non housing redevelopment tax increment financing will be dedicated to this project. ($212 million) 2. Property Management. Suncal assumes that it will provide interim property management services for Alameda Point as the property is developed, with the exception of the United States Maritime Administration (MARAID) lease. The MARAD lease revenues and expenses are assumed to be retained by the city in the EPS feasibility analysis. ($56 million) 3. Adaptive Reuse. suncal assumes no revenues or costs for the adaptive reuse of individual buildings. The suncal Project Proforma does include infrastructure costs associated with the adaptive reuse area. 4. Commercial Assumptions. suncal is preparing a commercial market study and business plan that will inform the ultimate revenue and cost assumptions for commercial uses in the Project Proforma. The EPS financial feasibility analysis determined that the feasibility of the project is substantially affected in an adverse manner by the aforementioned changes, resulting in an internal rate of return (IRR) of approximately negative 12 percent compared to a positive 20 percent in the suncal Project Proforma. As stated in the ENA, SunCal's IRR requirement for the Alameda Point project is between 20 percent to 25 percent. EPS also conducted sensitivity analyses to test the implications for project feasibility if the market experiences stronger than expected recovery and /or commands higher than projected prices, premiums and construction costs, as envisioned by SunCal's Project Proforma. The following describes the results of a sensitivity analysis run for each of the following individual assumptions: 1. Single Family Home Prices. EPS assumed single- family home prices similar to those in the Suncal Project Proforma the IRR increased by 10 percentage points (for an IRR of negative 2 percent, rather than a negative 12 percent). 2. Residential Pace Premiums. EPS assured additional price premiums for single family homes comparable to those in the suncal Project Proforma the IRR increased by three percentage points (for an IRR of negative g percent, rather than a negative 12 percent). Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 9 of 16 Honorable Mayor and Members of the city council Honorable chair and Members of the Community Improvement Commission 3. Construction costs. EPS assumed construction costs on vertical construction for single family homes comparable to those in the Suncal Project Proforrna the I RR increased by eight percent (for an I RR of negative 4 percent, rather than a negative 12 percent). The cumulative effect of these three sensitivity analyses result in an I RR of 14 percent, a return well below the return required by Suncal in the ENA. However, EPS continues to believe that this improved return using SunCal's assumptions does not take into account significant changes in the real estate market and that EPS's projected IRR of approximately negative 12 percent is much better supported by sound data and analyses. The results of the EPS Feasibility Report raise serious concerns about the financial feasibility of SunCal's Modified OEA, even if some of SunCal's key market assumptions are accepted. Moving forward on a project that is financially underwritten based on overly optimistic assumptions exposes both the city and the Developer to significant risks including: Suncal cannot provide the financing commitments necessary to implement the project and, as a result, "banks" the Alameda Point land without making progress on developing the property, (2) Suncal commences construction, the project does not perform to the levels projected in the Project Proforma, and, therefore, future phases of development are significantly deleted or perhaps not completed; and (3) Suncal develops the private project, but because project financial performance is significantly below projections in the Project Proforrna, public benefits and transportation improvements cannot be built to the levels committed in the approved plan, DA and DDA. In sum, there is considerable risk that the Modified OEA (Density Bonus option) 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. 3. Does ,du cal project comport with definitions of transit- oriented development (TOD)? At a recent city council meeting, discussion occurred regarding the applicability of the term "transit- oriented development" (TOD) in relation to the Suncal Density Bonus Option. While no single definition of TOD exists, transportation planners typically define TOD as including a mix of retail, commercial, and residential land uses, a diversity of Honorable Chair and Jul 7, 2010 Members of the Alameda Reuse and Redevelopment Authorit Pa 10 of 16 Honorable Ma and Members of the Cit Council Honorable Chair and Members of the Communit Improvement Commission housin t development within close proximit to a rail or rapid bus station (g enerall y within a one- to one-half mile walkin distance), hi pedestrian and bic facilities to encoura walkin and c and reduced amounts of parkin for personal vehicles to encoura transit and reduce vehicle miles traveled. As defined b the Center for Transit-Oriented Development, there are various t of TODs ran from "Re Centers", which exhibit the g reatest presence of TOD features, such as downtown San Francisco and Midtown Manhattan to "Special Use/Emplo Districts which contain fewer TOD features, such as South of Market in San Francisco and the South Waterfront in Portland, Ore 2 The differences between these TODs include the t and fre of transit services, parkin standards, and land use densities. Based on staff's review, the Densit Bonus Option proposal can be considered a "Transit Town Center" consistin of a moderate densit of residential, commercial, emplo and civic/cultural uses clustered around a multi- modal transit station. 4. What are the traffic findin from previous anal conducted for Alameda Point that could be used to determine the traffic impacts associated with the proposed Densit Bonus Option? There have been several studies related to the development of Alameda Point that address traffic, be with the 1999 EIR for Reuse of Naval Air Station Alameda and the Fleet and Industrial Suppl Center, Alameda Annex and Facilit The. EIR anal now-outdated land use assumptions and cumulative impacts. Additionall this document anal six different mixed land use assumptions, but did not identif or anal specific TDM measures. Transportation proposals included some modifications to the then-current transit service, a demonstration project for the use of Amphibious Transportation Vehicle (DUKW) and an electric shuttle service to the 12th Street BART Station. A more detailed TDM pro was included in the mixed land use assumptions for the 2002 Master Concept Plan developed b Alameda Point Communit Partners, includin an enhanced and relocated ferr and an aerial tram to the West Oakland BART Station. However, this stud did not include a traffic impact anal To assess traffic Impacts, the consultant assumed that the proposed TDM pro would reduce peak- hour traffic volumes b 32 percent and compared the peak hour volumes from the 2 Reconnectin America and the Center for Transit-Oriented Development, Station Area Plannin How to Make Great Transit- oriented Places, 2008 Honorable Chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 11 of 18 Honorable Mayor and Members of the City Council Honorable Chair and Members of the Community Improvement Commission project and cumulative traffic from other uses with the then projected 2005 and 2020 capacities of the Webster and Posey Tubes (Tubes). The following year (2003), the city initiated the Alameda Point General Plan Amendment (GPA) EIR, which included a detailed traffic analysis for a mixed land use proposal that included 1,928 housing units and approximately 2.3 million square feet of job producing commercial. The analysis concluded that a total of 37,034 daily trips would be generated from the development at full buildout. A total of 792 trips were assumed to be by transit. In addition, 2,704 trips and 2,911 trips were estimated for the AM and PM peak hours, respectively. The traffic analysis identified significant impacts to two intersections in Oakland (Jackson Street /6th Street and Brush Street/12th Street) and no significant impacts to intersections in the City of Alameda. The Posey Tube street segment was determined to have significant impacts due to the project, but no significant impacts were identified for any of the congestion Management Plan network segments in the AM peak hour. During the PM peak hour, High Street from Howard Street to 1 -380, and Alameda Avenue from Fruitvale Avenue to High Street were identified as having significant impacts due to the project. These street segments are in Oakland. The 2000 Alameda Point Preliminary Development Concept (PDC) included residential land use assumptions consistent with the GPA BIR, but job generating commercial land use assumptions were increased by approximately a million square feet to .3.4 million square feet. The proposed TDIVI program was divided into three stages: Day one Improvements, Mid- Terra Improvements and Long -Terre Improvements. The goal of the TDM program was to reduce residential trips by 10 percent and commercial trips by 30 percent. Day -one Improvements included a shuttle or transit service to 12th Street BART at 15- to 20- minute headways and expanded ferry service. The lipid -Terre Improvements included Rapid Bus Service, Long -Term Improvements including consideration of Bus Rapid Transit (BRT), Light Rail or Group Rapid Transit along the former Alameda Beltline right --of -way and crossing into Oakland using the railroad bridge at Fruitvale Avenue. No detailed traffic impact evaluations were conducted for street segments and intersections as part of the 2005 PDC effort. In April 2008, the city hired a consultant to develop the Alameda Point Station Area Plan (SAP) funded by the Metropolitan Transportation Commission and the Alameda County Transportation Improvement Authority to evaluate benefits of clustering development with close proximity to transit. The plan looked at the following three alternatives with different transportation strategies: Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 12 of 15 Honorable Mayor and Members of the city council Honorable chair and Members of the community Improvement Commission 1. The 2008 PDC that would provide transit service to Oakland BART at 12th Street at 15- minute headways, ferry service to San Francisco at 30- minute headways, shuttle connections to San Francisco express buses and downtown Oakland, a transit: station at the Sea Plane Lagoon, and a car Share program. 2. A Transit Enhanced PDC with 1,800 market rate housing units, and 9,000 jobs that would provide transit service to Oakland BART at 12th Street at 12-minute headways, ferry service to San Francisco at 30- minute headways, shuttle connections to San Francisco express buses and downtown Oakland, a transit station at the Sea Plane Lagoon, and a car Share program. 3. A Transit Plus alternative with 3,000 market rate housing units, and 9,000 jobs that would provide BRT to Oakland BART at 12th Street at 5- minute headways, ferry service to San Francisco at 20- minute headways, shuttle connections to San Francisco express buses and downtown Oakland, a transit station at the Sea Plane Lagoon, a Car Share program, and a future extension of the transit service (potentially a BRT) to Fruitvale BART station. However, no analysis on actual impacts to intersections or street segments was conducted for any alternative. The SAP estimated total traffic trips from Alameda Point after taking credits for transit enhancements for each alternative and then compared them with the PDC alternative trips in the Tubes. In September 2009, the city prepared a Preliminary Traffic Impact Report for the land use program in the SunCal Initiative. The project included up to 4,340 new housing units, 180 existing lour -cost housing, re -use of existing buildings for up to 309 housing units, 350,000 square feet of retail space and approximately 3.2 million square feet of commercial. TDIVI strategies assumed to be included as elements of the project were a dedicated shuttle service with 15- minute headways during weekday peak hours to the 12th Street BART station in the first phase. The shuttle service would evolve to a BRT service in the later stages of the development with 15- minute headways during peak commute hours and 20- minute headways. off peak, expanded Ferry Service at 30- minute headways. The report concluded that in 2035, with the assumed transportation improvement plan and TDM measures in place, the project would generate 01,501 vehicle trips per weekday, with 5,200 trips in the a.m. peak and 4,927 trips in the p.m. peak. Existing (2007) traffic volumes from Alameda Point were reported at 1 0,284 vehicles trip per weekday, with 722 trips in the AM peak and 703 trips in the PIVI peak. The Honorable Chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 13 of 18 Honorable Mayor and Members of the city council Honorable Chair and Members of the community Improvement commission transportation program (improvements and TDM) was estimated to provide an overall 33 percent reduction in peak hour traffic volumes for the Project, with an 18 percent traffic volume reduction at the gateways and a 15 percent reduction internal to the city. The report then analyzed intersection Level of Service (LOS) impacts of the net increased trips and determined that with the project transportation improvements in place, several major intersections that currently operate at an acceptable LOS would degrade to an unacceptable LDS with the project. For example, the Webster Street at Ralph Appezzato Memorial Parkway intersection would degrade for an existing LOS D to LOS E in both the AM and PM peak periods; the Park Street at clement Avenue intersection would degrade from LDS D to LOS F in the a.m. peak and from LOS C to LOS F in the p.m. peak; and the Tilden Way /Blanding Avenue /Fernsid.e Boulevard intersection would degrade for an existing LOS B to LOS F in both the AM and PM peak periods Finally, the city recently conducted traffic counts for the Posey and Webster Tubes in 2009 as part of the city's Traffic capacity Management Procedure (TCMP), which is a requirement of the Catellus EIR. The TCMP estimates the theoretical reserve capacity in the Tubes based on the free flow capacity of the Tubes. The most recent June 2010 report, which is included as Exhibit 7, determined that the projected rernaining capacity in the Posey Tube is 829 vehicles in the AM peak and 1,183 vehicles in the PM peak. The projected remaining capacity in the Webster Tube is 1 ,533 vehicles in the AM peak and 304 vehicles in the PM peak. As described above, there are numerous studies that have been conducted on the traffic impacts associated with development at Alameda Point. The Density Bonus Option will result in traffic impacts to the Tubes and to intersections in Alameda and Oakland. Funding and implementation of a forward- thinking transportation program and key transportation improvements will be necessary to minimize, though not always eliminate, the traffic impacts of development at Alameda Point. The ability of the Modified OEA to fund the capital and operational costs associated with the required Alameda Point transportation strategy and mitigation measures will depend on the feasibility of the project. 5. What is the staters of meetings with the San Francisco Bay Area Water Emergency Transit Authority (WETA) re arding relocation of the Fain street Ferry Terminal to the Seaplane Lagoon, as envisioned i the SunCal plan? Staff and SunCal met with META on June 3, 2010 to discuss the proposed Modified OEA and the transportation improvements associated with the project. At that meeting, SunCal provided a cost estimate for the new ferry terminal at the Seaplane Lagoon and Honorable chair and July 7, 2010 Members of the Alameda Reuse and Redevelopment Authority Page 14 of 16 Honorable Mayor and Members of the city council Honorable Chair and Members of the Community Improvement Commission general ferry ridership projections, based on County -wide data related to rail and ferry transit from 2000. WETA and city staff are reviewing the data and will discuss these and other ferry related issues at an upcoming July 8, 2010 meeting. WETA's Initial concerns with relocation of the ferry centered on the impacts associated with the Oakland riders and how ferry service would be provided from Oakland, Recommended Next Steps As discussed at previous meetings of the governing boards of Alameda, the term of the ENA between Suncal and Alameda expires on July 20, 2010. The ENA further provides that if Suncal were to complete its Modified OEA and satisfy the remaining two mandatory milestones in the ENA by July 20, 2010 (the Finalized Navy Terre Sheet and the DDA as described below), the ENA would automatically extend until such time as the city acted on the project. either by denying the Modified OEA (which action is exempt from CEQA and does not require an EIR), or certifying the pending EIR when it is complete and therefore approving the !Modified OEA. The status of SunCal's remaining ENA requirements is provided below: 1. Complete Application. As discussed above, Alameda staff has concluded that SunCal's Modified OEA is complete. Z. Finalized Navy Terre Sheet. The Finalized Navy Terra sheet (Term Sheet) is one of two remaining mandatory milestones that must be achieved by SunCal before the July 20, 2010 date, according to the ENA. A staff report providing a status report of SunCal's attainment of the Term Sheet mandatory milestone pursuant to the ENA was provided to the governing bodies of Alameda at the June 15, 2010 meeting. As discussed at the June 15, 2010 meeting, Alameda has not engaged the Navy in negotiations of the Term Sheet related to the Modified OEA because of the need for a well- defined project description, a thoughtful phasing plan and a mutually agreed upon project proforrna for the Density Bonus option. As outlined in this staff report, staff continues to have serious concerns with key assumptions in the Project Proforrna, and cannot negotiate the project's ability to support a significant land payment to the Navy until these issues of financial infeasibility are resolved. It is unlikely that these issues, in particular, will be resolved and a Term Sheet agreed to by all parties before the upcoming July 20, 2010 date. As discussed at the June 15, 2010 meeting, SunCal's election to meet with the Navy at the Pentagon concerning the project on June 9, 2010 without providing Honorable Chair and Jul 7, 2010 Members of the Alameda Reuse and Redevelopment Authorit Pa 15 of 16 Honorable Ma and Members of the Cit Council Honorable Chair and Members of the Communit Improvement Commission notice or an opportunit to participate to Alameda constitutes a breach of SunCal's obli under the ENA. At the June 15 th meetin SunCal confirmed at the June 9th meetin that it had asked the Nav to support a six- month extension of the ENA. The Nav did not a to this re and indicated that all future communication about the project should be directed to the ARRA and the Base Reali and Closure Pro Mana Office in San Die 3. Disposition and Development A The DDA is the other remainin mandator performance milestone that must be achieved b SunCal b Jul 20, 201 pursuant to the ENA. SunCal can achieve the mandator milestone for the DDA if both SunCal and Alameda a on the form and substance of the DDA or if SunCal submits its best and final offer of a DDA acceptable to SunCal. On June 10, 2010, SunCal submitted a draft DDA to staff. Staff is reviewin the DDA and providin comments to SunCal on a weekl basis. Given the complexit of a public-private partnership between SunCal and Alameda for the Alameda Point project, and ultimatel the Nav it is unlikel that staff and SunCal will a on the form and substance of the DDA b Jul 20, 2010, but that SunCal will submit its "best and final offer" as described in the ENA.. FINANCIAL IMPACT The proposed re does not modif the financial provisions contained in the ENA re reimbursement of staff and Alameda third-part consultant costs. Therefore, there is no fiscal impact to the Cit General Fund, Communit Improvement Commission, or Alameda Reuse and Redevelopment Authorit bud This report is for information onl R e %-,spe tfull submitted, A. J e n n�',,'-f e r tt D "l c;i y Mana De I Honorable Chair and Jul 7, 2010 Members of the Alameda Reuse and Redevelopment Authorit Pa 16 of 16 Honorable Ma and Members of the Cit Council Honorable Chair and Members of the Communit Improvement Commission Exhibits: 1. April 26, 2010 SunCal Densit Bonus Option Project Proforma 2. Ma 24, 2010 Final Report, Alameda Point Pro Forma Market Review, prepared b EPS on file in Cit Clerk's Office 3. June 1, 2010 SunCal Presentation on Ma 24, 2010 EPS Market Report 4. June 29, 2010 Memorandum, Response to SunCal's Alameda Point Market Anal and Feasibilit Stud Comments, prepared b EPS 5. June 201 Alameda Point Public Services Anal prepared b EPS on file in Cit Clerk's Office 6. J 2010. Final Report, Alameda Point Financial Feasibilit Anal prepared b EPS 7. June 2010 Cit of Alameda Traffic Capacit Mana Procedure SunCal Companies graft Alameda P€ in Deus ity Bonus Option Cash Flow Alameda, ACA flnancial Sutmnary Average Marktt Rate Net Horn Pace 650,914 Deasity Bonus Option Investor Surnmar 1.472 Project Summary P ojeci Dura (Months): 180 Avg, Ytarly N t Bate Absorption, 454 Tmal `umbe of Lots: 4,841 Mar':.�--t Rate Lots 3,63 A ffordable L OTS 1,209 Average Marktt Rate Net Horn Pace 650,914 Average Market Rate Horl.e Size 1.472 Average Market Rat,-,Net SISF 442-25 Av erage, �k� I at ire is i Average FLV (including Premiums) 169,405 Gross ResidcmW Saes Proceeds S 820,090,740 Gross Conuper &iai Sales Prod. -ds eery Gross Sales Prueer is a eiadi ag S 902.658,720 In -Tract Costs, Less: Builder In -Tract Cow and Fees (233,425,208) Oth er lkevenue: Residential l7scala c-rs 1 ResidcTi -&d Frics: ApprcuiuLior 417,301,016 CnrnsnerclaE Price Appreeiation 2(},958.8911 C-I? 199,759.542 Tax hicrem nt Financing 235t686,324 M L e d,'k01 36,200,333 Ma,q,er Lease Re vers io n M aiir a Operat g InV.AJrne 2,838,(08 Marina R.cvorsion Value 15,013,532 Taal OT-her Revenue 97 3,210,247 Add Master Marketing Rei-TnbuTsemcnts 32,504,983 Add::1VIisc. R- d ues 307 Less: Builde- C ksin;.- Costs (24,4 72.445) Net Sales Froceedsi S 1,650,476,610 Nf aster Casts. (I 08-500000) T o tal ..end Co `'I L}'8' 500,C -00) 1 J u�w ei Satz rap, Gradin (L1 St '1s (38,484.35 r F b r '.3. yy� 5,00 T S i "p SCar,, Se ty Vat r �!�Y�� rove l£f.tSts I/ 0 s 2 6 y 5 St y L ITIF p l j4 4'• 2 �y�� y r�?y Fes^. �y �yy�v yy Q y p[ 3O) L1 tIli tl; s S 18.3 50dLI00 F Subto'�Lm (J97. C.ontin �tcnv�' r 119,5 67,014) Fees.. Assessments Bond _flap (27.181,000) Subto (27,181,000) Corsulunts and En2i feenrt-r 1,0 piaster Cost Inflation q (149,1.31,850) Total Direct Costs (964,754 381) Tr_Ci rect5 Insu=ce (13,3 2(3.493 Project Managemert (54,024,246) General Adrfn nistrativ (2$,523,064) Leml ca; Close Praie yy (3,9 33 333) Le .1, Closing. etc. A A &D Lo (1,191,667) Le C°losin- eta. Lot Sales (1,210,250) lastt°r Yiarkecui° Prrad =.Yas 7 (12,3 4,988) Misc --H nexus (2,380,000) evefOtsnentAdrni Servkes (16,699,567) A lameda 13wbt. S crvice R pavrTI C (20.12 7,01124 EProjtcL Bu cicn (17,5. 11,904) Property Taxes (7- 977.944) Total Indirect Costs 1 Acquisition Development Loan Points (I 1,054.810) requisition .Development Loan Interest Restn� (41,362,494) Tornl Financing Costs (52,41 "a,3G4) otai Cost 5 (1,325,491,258) Project Profit: 325,385,351_ Profit Margin on Cost Protit 1arlgin vn Revenue 119 lP H 1 nlevered Project IRR 2111.€15 Levered P IRR 2333% Ala: ;eda Densi Sons Option Assumptions (C4-25-10) CUAR RAX C Exhibit 1 t0 Printers on 4126/2 ge%; 1&w1d a Item #3-13 07 -07 -10 O O 9 sun==~=- lu aA au D-4 011 O—iv 155 N, 4arul MASE au Ak Oj AO Al 17 Sf z A 4 1 AaN IT 7, M 7 I O std F I 1 s ¢W A 2 w" �N r! r V4 40 91, 2F s i 3 r f Y. •s r f s n� 3 s s r r s a i h f F 1 I fz kG 41, 75 j� Af� I O std 5 71 ƒ e +f �w: Q4 -k n as �A 7f S'uncaj ccmpan !as Drj-", AJ a nt Point uer'srt 3o s option Ca"h F4cw CA N' i ut >-Feo� 6 m i (w 4 l2r-si fig. -Andy.:w T:lr3,vz5 Dmv,dud fmp"'a FEE so"'MEE A of U I Avle-a�; Url K: 5: L a MG�ACT t- s- D tn-';t' E VA r- F-Q JP' :t of isef, resM jr S h 'a aci'v 7."? 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Wi -41 a S '�o 0 '�t r� E fn -r M ?c v .N C' C 0� -4 r C' 'N lr: ell C4 rN `-'.y a� n�- -;t vl: C� IT rr, Irl F!] C4 C% 4 C'-' C, M V" I I I Cl- C-� C- 1- Cl� I=?- 1:01 rq VII C> C)t 71 rq �'4 �-I. xn t- �4 �n C-i rq r�4 In t M C-1 r4 t o :Z1 =f On MEP ^W No cr y r C> va n. x Q--i 77, CID a x a ;'s Alameda Point Pro Forma Market Review Prepared for: City of Alameda Prepared b Economic Plannin S Inc. ln-z- 'r' Ma 24, 2010 4,50' Aiintrz S_ Surite 200 Ber'kehz:` CA 9 5_1 0 6_11 IL 9_1 910- 51 8� 1 9-208 fa: EPS _7#14012 C C/A RRA/CIC Exhibit 2 to A Item #3-B 07-07-10 Table of Contents 1 I NTRODUCTION x r i s a x r F F F F s s x a F 1 Key Fi n d i E 3 g s x s x s r e r a a s r i i r x I 2, RESIDENTIAL MAR KET REVIEW s r x x s f r r E Home r ..............:....._..............................r 5 Absorption k....•.. F..... F.. r...... ...............r■..•[...s.... 8 Constru C o s t s k x r L T F F 6 t F r R F k l a x i r i r x e l e r x x i i y 22 Construction Cost Appreciation /Land Leveraging F........, F 23 s n s k x F a s x s F LandPrices f....... •..._...........iF.. .x..................x........•; 25 i■ E E!■ 3 i. F r r i. f Y a. k i; F. L.!.. a. r. r[ APPENDICES Appendix A: The San Francisco Bay Area Economic Outlook Appendix B. Bayport Sales Data Appendix C: Average Horne Affordability Multipliers Appendix D; Residential Unit 'value Trends 1988 -2009 (nominal Appendix E: Case Schiller L.S. Horne Prices, Building Costs, Population, and Interest Rates, 890 -2004 Appendix F: National Building Cost Manual for Single- Family Direct Const Costs (2010) List of Tables Table 1. Key Assumption Comparison ...................i..... r....... r...... s..r.... sse. :..xr.e.r.J Table 2. Housing Distribution in Alameda (2008) rr..i. rs. r..rrrr s r........ Table 3. Housing Foreclosures in Alameda (2002-2009) x. x.. er....,., r....■ ..............................8 Table 4. Alameda Housing Values (constant $2010)....— g Table 5. Household Income Distribution in Alameda Count} (2008) 12 Table 6. median Household Incomes and Home Value Multipliers (constant S2010)....,..r., 13 Table 7. Alameda County Projections (2010-2020) ..............x...,...r.,...... 14 Table 8. Residential Housing Appreciation and Inflation in Alameda (1989 2009) 15 Table 9. Alameda Point Price Point Forecast (2013 -2020) s.. r .r. =,.r... .....rr 17 Table 10. Alameda County Demand Distribution of Home Prices (2010-2020) 19 Table 11. Alameda and San Francisco County Projections for Households, Employment, andIncome (2010 2020) r......... lot s.,,.s r..... s.,. r.. a ..r.re...r..•.,s.rx.,.a.sr..ass 20 Table 12. City of Alameda Projections for Households, Employment, and Income (2010 -2020) sr•.. ......................_......21 Table 13. Bay Area Appreciation Compariscn (1995- 2010) s. s. sx. sr,............... ......s.,.......e, 24 List of Fi Fi 1. Ba Market-Rate Price Trends Comparison to Cit Prices (per unit) 10 Figure 2, Home Values in Alameda ($2D1O) --~-----..--.—.16 Figure Home Value Annual Rate of Growth (n Alameda ---~~---..16 Figure 4, Annual Change in National Home Values and Costs (1988'2008) _..23 1. INTRODUCTION As a result of the failure of Measure B in February 2010, SunCal (the Developer) has proposed two alternative land use programs for Alameda Point (the Project), A fiscal and financial review process for these alternatives is under way to assist Alameda in assessing the level of risk facing the City as a result of the Project. The ability of the Project to achieve feasibility is an important consideration in determining whether anticipated publ benefits will occur as anticipated, and to determine whether the City faces any potential adverse financial or fiscal impacts on its budget, Prior market research has been updated to reflect the implications of the decline in the real estate market, as well as changes in the land use program. Due to the dramatic disruption in financial and real estate markets, financial.assumptions in the joint pro forma between SunCal and Economic Planning Systems, Inc. (EPS) in 2 have become obsolete and need to be updated to reflect current conditions and future prospects. Assuming the economy continues its nascent recovery, future conditions should result in improved real estate values. A market update will help to characterize trends .in price and absorption, both on a regional and local level, to help determine values, tinning, and risks associated with future real estate conditions and the degree of recovery and growth required for Project feasibility. The review and update is based on research into past and current residential development including price and absorption, experience with other comparable large -scale projects in the Bay Area, consideration of factors unique to Alameda, and examination of potential economic and real estate rates of recovery. The results of the market review will provide. the basis for financial projections for potential uses planned in Alameda Point under the current land use .alternatives to evaluate risks and estimate the magnitude of potential returns. Public financing estimates will also be updated to reflect the impacts of market and program changes on the overall financial capacity of the Alameda Point development. Fin Ke After reviewing SunCal's pro forma, EPS and the City have concerns about SunCal's assumptions, many of which appear to be overly optimistic. The following key findings address specific areas of concern in SunCal's financial analysis and EPS's recommended "normalized" post market recovery assumptions based on the market data presented in this analysis, Overly optimistic assumptions can significantly distort the economics of the analysis and expose the City and the Developer to unnecessary risks. Therefore, assumptions should be on the conservative side for purposes of underwriting the business terms of the Project. Comparison between SunCal's assumptions and EPS recommendations are shown in Table 1 and described below. Regional Supply 1. Alameda Point well compete with other major reuse projects 07at will lik -ely be developed during the same 10- to 20 -year time frame, These projects, including Treasure Island, Hunters Point, gaylands, Oak Knoll and Oak to plinth, could deliver. between Economi Planning Systems, In �w� sY »FPM r fiaa� :M�,ke� n�- ��:����r .��_7- "�R- r�" Alameda Paint Pro Forma Market R-, Final Report 5124110 20,000 and 25,000 residential units. This competition will temper price and absorption at Alameda Point. Residential Val ues 2: SunCal`s single family residential price projections exceed current Bayport sales by 20 to 30 percent. SunCal's single family price forecast is optimistic; if it is not achieved, the start of development could be delayed or financial performance will be below projections. Home values in Alameda currently average $583,000 per unit with single family herpes at Bayport selling for around $750,000 per unit. Based on EPS's market assessment, single- family home prices are more likely to be around $860,000 per unit by 2014 compared to SunCal's forecast of $1,042,000 per unit. 3. SunCal assumes additional view premiums above its base home price forecast. These premiums average 6.3 percent of the sales price and reach as high as 15 percent for some units. EPS assumes a more conservative average premium of 1.0 percent above Bayport values given the site's attributes and challenges. 4. SunCal forecasts residential values based on the 2002 {prices per square foot increasing by 5 percent compounded annually. This forecasting approach ignores the recent market downturn which caused prices to fall below 2002 levels. SunCal's forecast, which begins in 2002 without accounting for the downturn, results in significant overestimates of values by 2010 and thereafter. In addition, SunCal calculates changes in price "per square foot," which mask changes in unit prices. Residential Absorption 5. SunCal's projected absorption is significantly above 100 units per year average absorption experienced by Bayport. Bayport is a comparable master planned community, recently developed adjacent to Alameda Point with predominantly single- family homes. Absorption in Bayport is significantly below SunCal's forecast of 233.single- family homes and townhomes per year. Between 2COO and 2009 during the formation of the housing bubble, single family residential growth in Alameda averaged less than 75 units per year, with the highest annual increase in single family inventory of 146 units. Because SunCal proposes a more diverse housing mix relative to Bayport and substantial community benefits, EPS' market assessment supports an average annual absorption rate of between 150 and Zoo single- family and townhorne units. SunCal projects an average absorption of about 220 multifamily units per year in addition to 233 single-family and townhome units, The overall market -rate absorption of 454 units per year is significantly above a typical residential absorption of approximately 300 to 350 units per year for a project of this type. This range reflects construction and sales of homes by five to seven builders simultaneously, assuming an average of up to 60 sales per year. Economic Planning Systems Inc. 2 :,1400wS,i40 2: =2; .�t.. r'..' k e 03:3 Z 0 10 I r 7,7 4 rke 4,y10 cur 80 E CL >1 E 0 E E 0 U) fl CJ C: U— -�o --0 ls� 0 cl, a o- -0-0- C� C Cfl CV n N co Lo LO el 0 1 C) LO 0 CN co CD LO N 0-c- IM-0- ::3 CD co 0 CD CD LO 0 1 C) cn 0 C: cL E cy", 0 LO CD Q- CD C� Ga. co CD LO N 0-c- IM-0- ::3 CD co 0 CD 1-3 Q zz LU 0 C: 4-� CL E 0 CD Q- C3 C: cu U) U) C7) 0) C z c cu CD cu CD p C7 Ln V) L (D 0 CD 0- w 0 0 (1) a) t13 I? m cn cu co cc a 76- C: 0 0 U- to C: E a) N CO cu C) a Co 0- :3 LL (1) cu 0 Oa u) (D cu (2) m cz L CN E 'a E L- (D L- L- a) 0 I- Q) c 1— 0 0 1: 0 C co a) ct� cr) 1-3 Q zz LU C: E E Q- C3 C: cu U) U) C7) 0) C z c cu CD cu CD p C7 Ln V) L (D 0 CD 0- w 0 0 (1) a) t13 I? m cn cu cc m m C m m m C: 0 0 Cl) cu cz m 0 0 N CO 1-3 Q zz LU Alameda Point Pro Foj ma Market Review Final Report 5124110 7. Alameda Point would have t o capture 40 percent of all n gro wth in demand for multifamily housing in Oakland and Alameda combined to achieve its absorption projecti This is based on the absorption rate of 221 multifamily units (454 total units minus 233 single--family units) and its share relative to historic growth in Oakland and Alameda, For comparison, ABAG's regional housing needs allocation projects 843 market- rate residential units to be absorbed in Alameda between 2007 and 2014, an average of 120 units per year. Residential Construction costs S. SunCal assumes construction c osts below those likely to be exp erienc ed in a post recovery "normalized" market. SunCal's assumptions for direct construction costs are very low, from about $105 per square foot for residential units in 2010 or $115 per square foot by 2014 for homes proposed to sell for over $1 million. Direct construction costs for prevailing wage development in the inner Bay Area typically range between $115 and $125 or more per square foot, which translates into $125 to $135 in 2014 after inflation. ,appreciation and Land Leverage 9. SunCal assumes land value appreciation rate of up to 11.9 percent a year. This rate of growth is due to assumed home appreciation of 2.0 percent per year above inflation and no real increase of construction costs above inflation, These assumptions result in aggressive land value estimates, especially in later years after the compounding effect is magnified and implies that land values grow at a very high rate in perpetuity. EPS projects housing appreciation of between 1.3 and 1.5 percent per year and construction cost appreciation of between 0.3 and 0.5 percent per year (above inflation) following market stabilization. These rates are based on historic real appreciation trends and imply a one percent annual real growth in residential values over construction costs, half of ghat is assumed by SunCal. 10. sun Ca I assumes that all home price appreciation would lie captured by land values. While limited land leverage effects could be realized, since the land generally captures residual value (revenues minus non -land costs), this effect is not likely to achieve levels projected by SunCal and will diminish over time as strong market demand increases the cost of construction materials and services, Com mercial Program 11. A separa m arket analysis is needed to pro detail on the commercial portion of the development program. This analysis should provide the current market overview and commercial trends in Alameda, recommendations for commercial use allocation (Le., retail, office, R&D), density and parking, land and building value estimates, and absorption projections based on competitive sGpply and demand. Economic Plannin S sterns Inc. 4 F 9 Y r. ca.�c ;M ,.ra,v ie Y,' :i J lY Jp ✓t" _i 7_; M� Alameda Point Pro F Market Review Final Report 5124 L v alues 12. SunCal estimates residen lam' values in the range of $2.5 million to $7.7 million per acre in 2014 with a high rate of appreciation thereafter. These values match and even exceed those generated during the peak of the real estate market and appear unrealistic and likely unachievable given the slow recovery expected in the housing market and the deleveraging of home financing. EPS projects finished land values in the range of $2.0 million to $5.3 million per acre upon market recovery, These values are based on EP5' vertical development pro formas and are consistent with projections for revenues forecasted in other major reuse projects. It is anticipated that growth in land revenues will generally follow growth in prices for finished homes. Economic Planning Systems, Inc, 5 t� �W�= wra ;f t_c�r ?�I^ -0 r �i Z. RESIDENTIAL MARKET REVIEW i Ir Regional Trends The San Francisco Bay Area economy entered a deep recession similar to the broader region, State, and U.S. econornies by the end of 2008. Recessionary impacts have been pronounced in the Bay Area through an increase in unemployment, decrease in real wages, decline in real estate values, and reduction in consumer confidence (see Appendix A The current financial crisis, initially driven by subprime mortgage defaults and associated home foreclosures, has significantly tightened fending practices and available capital, thereby reducing demand for homes. rhis has corresponded to a large number of homes entering the market through foreclosure, further deflating home prices. California has the highest number of subprirne mortgages in the nation, with Alameda affected by home foreclosures and associated economic impacts. Demand for commercia space has been affected by fa employment as the financial crisis has developed into what has become known as the global "Great Recession," DQ News reported a Bay Area home sales median price drop of nearly 40 percent since the 2006 price peaks DQ Mews estimates the median sales pace in Alameda at $582,500 per unit (new and resale) in larch 2010, a slight increase from a year agc. This supports many economic forecasts of home prices continuing to improve, with economic recovery supporting moderate home price growth over the next several years. Local Trends Alameda's housing inventory is generally older than housing stock in many other parts of the gay Area, with over 80 percent of the housing stock developed before the 1980s and 43 percent developed before the 1950s. The distribution of residential uses by age in Alameda shown in Table 2 indicates that the supply of newer housing is limited, While about 53 percent of the housing inventory in Alameda is single family, roughly 55 percent of all housing units are owner occupied. Generally, the ownership segment represents a higher income cohort of the population, as mortgage payments are typically higher than rent. As shown in Table 3, Alameda has historically experienced between two and eight annual foreclosures. Subsequent to the economic downturn, the foreclosure count increased to a high of 75 annual foreclosures in 2009. This represents a foreclosure rate of roughly to units per 1,000, lower than the California average of about 18.6 foreclosures per 1,800 units. According to RAND, another .sales price source, home prices in Alameda have experienced a trend similar to the broader housing market, with rapid price appreciation driving housing values to 2006-2007 peaks and declining thereafter, as shown in Table 4. City of Alameda mean home prices decreased from $733,400 in 2006 to $557,300 per unit in 2009, a drop of 24 percent, Single family home sales in the City experienced a similar trend with prices decreasing from -5786,600 in 2007 to 5639,600 per unit in 2009, a drop of 2 percent. Although significan r aj Orx e Pianning Systems, Inc, 6 1 1400 Osti 4 2 N EL CN E a 0 0 E u ol U lm on M Lo C� CD r- N co (n cc m r-- M CO C7 CQ CD V7 N C� 00 00 mzz:' LO C 0 r-- NT cr) CD 04 cn rl- rl_ m M LO U-) M CO M -c-- 'r- rl- N b U) t- (D r-- to m U'; I c3- CO (s CD LO U* 1 0 co r-- m U*) N m 0 M C 0 M LO CD r-- M 0, C) LO of C\j C\� U-� r-: >1 >1 0 IJ r- 0 A.- a CL 0 L. Q- M M M 0 CD m w rl- co LI) -t C7 T m c tai o o o 0 o o o ry -0 C) 0 C) CD C) oc Go r-- LO It ftf t :tf c >1 >1 0 IJ I M CD n CL m 0 c Lo Cf) (D C:) C-) CZ) C) L-1 m PIIJ 1-0- NJ PQ C) CD -Cl 0- OD NJ C-71 ca w --j p p co m CD 4�- P; CD I%j CD C) NJ CIO CD Ul C; CD --j to Q co C> --i 0 a 0 0 CD C) X CD (D r-f- (1) C/) EL l< a) B m 0 ti Lo C/) C: E: CD -n (D CD CD (D C) U7 (D C) C:) C-) CZ) C) L-1 m PIIJ 1-0- NJ PQ C) CD -Cl 0- OD NJ C-71 ca w --j p p co m CD 4�- P; CD I%j CD C) NJ CIO CD Ul C; CD --j to Q co C> --i 0 a 0 0 CD C) X CD (D r-f- (1) C/) EL l< a) B m 0 ti Lo C7 N CD ,Zt Ln CD Lr) Co C\� (.0 co GG U) co 0 Ga 0 LO LO cc co co N m co co co Lo CY) to cr) "Zil C) CN V), Ln L.1 Lr) CT) C) C; C� CN C\l C�) CD LO (Y) co co C� Cf) co T— LO U') co C) a) LO LO U) 0 u 0 uj 7.3 4-4 CL M r L) C7 tn Alameda Point Pro Forma Market Review Final Re 512411 these declines in prices are not as pronounced as for thce� broader Bay Area home price average, which demonstrates the relative strength of the Alameda housing market as a result of its inner Ba Area location and desirable communit attributes, Bayport is a relatively new master-planned community that offers many amenities comparable to those contemplated for Alameda Point, It provides the most direct price comparison because of its master plan features and /ooat'Jon a to Alameda Point, although its units are predominantly lower density relative to the mix of1ow-, mndenste- andh|gh-densityp|anned in Alameda Point, Homes for sale at Bayport are listed for $750,000 per unit, or $375 per square fbot'. This represents roughly a 10 to 20 percent premium over the 2010. single-family median sales price in the City. This premium is consistent with the original sale pr/oes.at Bayport relative to citywide average, as shown in Figure 1. During buUdout of the Bayport project, market-rate units generated an average premium of 22 percent over the citywide average, with premiums ranging between G and 43 percent. Detailed Bayport sales data are included in Appendix B. Fi 1. Sa Market-Rate Price Trends Comparison to Citvwide Prices (per unit) S7003000 SO ":S SSI S� 's C�; C6 Note: nominal do'Hars Re Income Trends Median household income and homeva|ue mu|tipUers are useful measures ofhomemffordabUity relative to income. These mu|bpUens vary based on a number of factors such as interest rates, availability ofcapital, and lending pracUcefs. Income levels are considered on a countywide basis given the regional nature of the Alameda housing market and its competition for higher income households the regional market area rather than income levels at a lower citywide average. For this reason, distribution of countywide income 1s an important determinant of achievable prices in Alameda Point. I- According to redfin.com Economic Plannin 1_3ystems, Inc, 10 Alameda Point Pro For Market Review Final Report 512411 As shown in Table 5, nearly half of households in Alameda County make over $75,000 a year and 34 percent make over $100,000 a year. Median household income in Alameda County and the multipliers between income and home values between 2002 and 2009 are shown in Table 6. Before the housing boom, single family multipliers were in the seven to eight range in Alameda, slightly above the "normal" range of four to six because of high housing demand in the inner Bay Area and relative desirability of Alameda within the broader housing market. These multipliers reached as high as 10.6 in 2005 and dropped to 6.3 in 2009 and 5.7 by early 2010. The decrease occurred because of home price appreciation at the pace of the rnid -2000s not being sustainable in the long run. In a stable, sustainable market, home prices are linked to household income levels and strong employment growth. As a result, median household income and home value multipliers are likely to stabilize in the 5.5 to 6 range. These multipliers are high relative to many other geographic regions, as shown in Appendix C_ Housing p rice Forecast ABAG's Projections 2009 forecasts a moderate income growth of 1.1 percent in the inner Bay Area between 2010 and 2020, below the historic growth rate of 1,4 percent between 2002 and 2009. however, projected income growth of 1.1 percent exceeds the 0.5 percent growth forecasted for the City of Alameda. ABAG's forecasts have historically been optimistic, especially for income growth. Multipliers fluctuate based on many macro- and microeconomic conditions such as regulation and lending requirements of the private debt and equity markets, access to capital, interest rates, regional housing supply, and unemployment rate. Assuming that the 2010 median household income and home value multiplier of 5,7 is slightly compressed and short-term market recovery is likely, a longer --term home value multiplier of 6.0 is projected based on a mortgage allocation of about 33 percent of total household income. These multipliers result in average home price projections of about $030,000 by 2014, based on projected median household income for Alameda County, Alameda Point is expected to achieve sales 10 to 30 percent above citywide averages, as described below.. These assumptions reflect a short -term market recovery effect with home values growing at 2.0 percent annually in real terms between 2010 and 2015 and stabilizing at about 1 perce thereafter. This translates into an average annual increase of 1.5 percent above a typical inflation rate of 3 percent a year in real tern is (see Table 7). These growth assumptions are relatively optimistic compared to the 20 -year historic price appreciation in Alameda or the broader region, as shown in Table S. Specifically, while real growth in Alameda over the last 15 years was higher at 2.6 percent per year, growth over the last 20 years, which captures a full economic cycle, was lower at 0.7 percent per year. Projections for home values in Alameda are shown in Figure 2, and the projected rate of increase relative to historic inflation is shown in Figure 3. The rate of growth is relatively optimistic and reflects market recovery, as the historic trend between 2002 and 2010 suggests that real growth has been around 1 percent in Alameda hone prices, Furthermore, during a more stable period between 1988 and 1998, Alameda home prices experienced growth of 3.3 percent (no real appreciation) while regional prices experienced growth of 3,6 percent a year, Based on the undervEiriting standard of mortgage making up one -third of the household income; reflects a 20 percent down payment at 5.5 percent annual interest rate. Economic Planning Systems Inc. 11 q '1.yG ?�'?yJb? 'arn[iN3ita' t1c Ga.a2�, �vG Mir r r w?�_ cur ys ZT Cl) 61) -G9 -c-n -e� -r� ea -Ee -r� fJ9 -e9 r— ;z --i 0 N) -.a --4 C W M --I. 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E 0 Lli U; CD 0 (D N E 0 0 c 0 0 0 0 0 (a) z cl� _0 (D (1) _0 U) _0 >1 Q) E 0 C7 CD E Q) 0 Q) It- CZ Q) Lu 13 ca -t7 T :E m 1 0 1-1 r-o- CD 62 -0 0 c a) UD 0) W c n (D 0 (D r (D (D r-f- (D 0 c o (D CD CL CL CD CD c (n (D CL I w w (D CD (D D (D IV 0 (D QL) :r :r 0 0 0 9 CCD CL 0 0 0 m rQ (D 0 0 CD o 0 (D m rQ 0 w C) 0 0 CD CD cn 0 -u (D 2- :3 CL 73 0 C) (D 3 Z3 cri co 0 (0 0 C) CD C) N) 0 CD --0 0 t D 4 p- rn C) w co 0') Ul Ul 3 cry w C -PI. C) (D CD C") CD C) 0 C) C) su co m tv IZ r\j C co Cri UT Lo G7 c7l, C:) (D N) c 0 C) 1 (D (n (D --*6 00 En m 00 C) N) CZ) (Z) G) W CL CD 0- 0 C LF C-4 EL Lu >1 ji 0 4-J 'CL c w co W 0 Ic 0 C) i�z CD 7 cz 14- Z� m 03 rl_ 11r) C Chi m Ci o 0) Z c cu :E CZ 0 E I Cj 17- (N m C 14 c N E M LO c co co 0') co T— U) ci 'E C M 0 M a) r3 m ta7 0 Q) I a f >-5 r r a t� 1 04' LD I s LO E 0 U) 'E E (D 0 0 E LU r) (D 00 —eD 0 .0 Alameda Point Pro Forma Marke-t Revi--w Final Report 5124110 j ust 0.3 percent- real appreciation above inflation. Data data for annual prices in Alameda homes and re avera are shown in deta".1 in Appendix D. On a national level, home prices have experienced no real g rowth over the last centur from 1890 to 1990s as shown in Appendix E. It is worth notin that Appendix E presents a home value index without the bias for improvement in q ualit y of new homes over time that make up a share of all home sales. Data sources used in th"s anal g enerall y overestimate home value g rowth over time because of this bias. Fi 2. Home Values in Alameda ($2010) 1 N� YAAr LSO L r—ce. RA ND B LS; American Co mmu- n i t S urve y ABA G Rro�e cUo ns 200 Fi 3. Home Value Annual Rate of Growth in Alameda Year RAND, BLS Home Value Annual Rate of Grath Inflation Althou this projection sets the g eneral basis for forecastin future home prices for Alameda Point, the forecast has to consider a distribution of housin t that are proposed within Alameda that ma not be directl comparable to the existin housin inventor Market data su that sales in Ba exceed the avera home pr(ces in the Cit b 10 to 30 percent. in other words, households g eneratin g incomes a the mean are more likel to purchase units planned in Alameda Point. About one-third of households in Alameda C:ount make over �100,000 a y ear, which could enable them to purchase homes exceedin the Cit avera Economic Planning SystemS, inc, r, 0- 0 cq 0 cq C) N 0 LL C:) CL UJ >1 0 0 a. Cl) a) cu m Cn 0 CN C%4 CNJ 47 Cpl r' L7 N CO C6 N CD CO T- 69- CV) CN I;;:- co m m Itt il.- CD C-0 ti T- CO co co CD (Y') N LO (D OD CD (IS- CD N m co m N 00 m co Ln co N LO m co 0 ill- m 69- 69- co C\l LO CD co C\l r� lqj- CY) LO (D f` C37 61)r (74 64 N LO LO Cif Lf7 0) LO cr) Itt C15 v- CD nt 00 0 (D I CY) 6:)- &4 C) N 00 N t- N V- N co Lo (D ti CO 6cxl (14 64 co Cti1 m co C3] N co (c) co LO (N rl- cc 4-a tz m 0 0 C (D a) 0 0 L- d- a- n 0- n C: 0 CL a. D- 03 cu m (D E E E >1 4-j Cu 0 cn (D CZ E 0 -C (D 0 -0 M F: E c U� W E Lo >1 0 06 U) 0 1E C: LU 0 UD Li UJ 17 Alameda Point Pro Forma Market Review Final Report 5124110 An average premium of 22 percent was generated by Bayport residential unit sales relative to the City average. Table 9 shows the forecast for average price points, assuming a similar premium could be supported by Alameda Point. This forecast shows Alameda Point prices growing at the same rate as citywide prices with the fixed premium over time. Based on the multipliers described above, single family units in Alameda Point could be purchased by roughly the top one -third of Alameda County households based on income. Applying the assumptions about home value multipliers and market recovery factors described above, demand will be generated for various housing price points by households in different income brackets. The distribution of housing prices over time based on incomes is shown in Table x.;0. If Alameda Point would capture the same distribution of incomes as the County average, horse paces could range from $600,000 and up and would increase by about 1.5 percent per year above inflation on average over the next 10 years. The strongest demand, about half of the total, would be for units in the $600,00€ to $830,000 range. The Project's ability to capture various income levels will depend on a wider range of factors, such as other major reuse and redevelopment projects that could be developed in the market area during a similar time frame, transit linkages, and public facilities and services. A bsorptio r The inner Bay Area (San Francisco and portions of Alameda County) is pr ojecte d to add 84,000 households between 2010 and 2020, an annual growth rate of about 1.0 percent (see Table 11). Assuming that incomes would be similar to the existing distribution, about one -third or 28,500 new households would be able to afford homes in Alameda Point. Alameda Point needs to capture roughly 15 percent of the regional household growth to achieve SunCal's assumed absorption, ABAG Projections 2009 indicates that the City of Alameda will grow by about 1,640 housing units over the next 10 years, an average growth of 164 units per year (see Table 1 This growth translates into an annual average rate of 0.5 percent per year and exceeds the .historic rate of growth in the City between 2000 and 2009. During this time period, the highest annual increase in single family inventory was 146 units. Hcwever, this projection does not capture development of Alameda Point, which could offer a range €Df new hoLrsing types and densities that are not currently available in the Alameda housing market. In addition, .potential accessibility improvements, such as construction of a new ferry terminal, could have a positive impact on the residential absorption, especially for higher density units. SunCal's residential absorption assumption for Alameda Point of 454 ma rket -rate units per year represents about 1.4 percent annual growth of the City's residential unit inventory, almost triple ABAG's rate of projected household growth for the City as a whole. Total SunCal absorption, including affordable units, would result in an average annual increase of 6.05 units or 1.9 percent, nearly four tirnes the rate of residential growth projected by ABAG for the City as a 3 Assuming no significant changes in income have occurred between 2008 and 2010 and that most cif, the households within each income range generate income within the mid- -point of the range. Economic Plan nin 9 Systems f Inc. 18 0 .H� 0� a w'�. 7,1 i9 61 Z Q- ff C\j C\4 LO m (Y) CD m r-: L6 r C.q cL LO co co Ln cu CD LO 0 a) M CO CD N m co N co t N C: co Lo g S c- I-- co Ln co CD I,- co m LO co m 0 t-- 01) C) Lo ,F N co LO N m T- 0-) LO co CD OD N U-) LO L6 ci fad f:& GpJ- U) M (N C14 N ddb 0 c U3 Ln E 0 Q) c al cn C 4 CY) CD fl— co m CL a 0 o U CD 4- u CD 0 U) 7 0 4- 4-- 0 0 0 (J) 0 LU u) a E W 0 E E 0 0 71 V) -5 -6 a) cn a) aa 0 cr, E C) 0 E r- .c 0 4-J Q) 0 0 o o 0S 0 CD 0 (D C) 0 CD CD 0 CD CD c) C C 0 7 X C: 0 E 0 0 E C C CD U-) CD E L 0 <D N n C) c -a) (n eel=�- 61a epl- fb� a) 0 CC 0 CN CO i9 61 Z Q- ff r CJ cn 0 C: m 0 0 —u w zs rn a: CD CD C) 0 B 0 3 -3 0 CD CD to CL O w C:) P7 CD CD M., cn 0 -&9 co co 0 c CD 0 0 0 4�, -Q. 0 to C) C) -u c cn co co- 4-h. CD 0 CP Cn -r- 4�1 LM CD -14 0 C) C) 0 (n -b9 r1i -lh 0 CD N) co C:) N) CD m m cc 0 CD w NO CD rQ 0 c CD 0 U) N) Co m Co m ---4 CD 0- 8-0- 2 L L U C7 co w �i 6 41 lz: 00 E a N CL E uj V 0 0 L co 4 C U) C7 CY7 C 0 CL CZ E 0 U co a; c 2 L U C7 co 6 C 6 CD C7 lz: 00 co rl- C6 C\ co CY7 C Gf} U co a; C\j m C Tl- CO C° L C� d G C CC (f; 2 L Alameda Point Pro Forma Market Review Final Report 5124110 whole. For comparison, ABAG regional housing needs allocation projects 843 market -rate residential units to be absorbed in Alameda between 2007 and 2014, an average of 120 units per year, Given EPS' assessment of the market and comparable projects, absorption of between 300 and 400 units a year would be reasonable in Alameda Point. This would require five to seven different builders developing new space simultaneously and selling up to 60 units per year each. This assumes that opportunities for other infill locations within the City would be fairly limited and Alameda Point would capture a significant portion of new citywide and even regional growth. I n addition, operation of more than four to five builders would mean that direct competition would exist between builders during simultaneous unit delivery to the market. Alameda Point is planned to have four major density types, and presence of competing buildings with similar product could adversely impact absorption, As a reference, 357 market -rate homes have been developed in Bayport during a 4.5 -year period, with an average absorption rate of 97 market rate units per year. Annual absorption for Treasure Island, a Project with a wider range of densities and roughly twice as many units as Alameda Point, is projected in the range of 350 to 400 units per year, The actual rate of absorption in Alarneda Point will vary based on a range of product types offered within the development, with a diverse mix of densities, locations, neighborhoods, and heights likely to improve the overall absorption, A "single- family only" project and the reduced ability to market across market segments and income levels with multiple product types would reduce total absorption. Absorption will also vary based on a number of external factors and competing projects in the inner Bay Area, such as Treasure Island, Oak Knoll, bunters Point, Oak to Ninth, and Baylands, that could all be developing during a similar time frame. If these projects carne online at the same time as Alameda Point, they could combine for an additional 20,000 to 25,000 new households in the inner Bay Area. Because of the product mix and density, these projects may capture a larger range of incomes and could impose direct competition to the residential program planned in Alameda Point on a regional level. Constructi o s. EPS's experience with comparable projects and review of construction cost data indicates that direct vertical construction costs range between $115 and $125 or more per square foot, as shown in Appendix F. Appendix F provides an estimate of 2010 construction costs for standard construction of 2,500 square loot tract homes with a configuration similar to Bayport units of the same size. By 2014, the first year land sales are projected to take place, EPS projects direct construction costs in the $125 to $135 range, assuming moderate inflation gro wth. For comparison, SunCal projects direct construction costs per square foot for single family units at $105 in 2010 and at $115 in 2014. Construction costs will vary based on prevailing wage conditions and whether homes built are custom or merchant. I n addition, SunCal assumes that costs will increase at the rate of inflation of 3 percent per year, Based on the EPS research, construction costs have typically outpaced inflation, especially during "hot" real estate markets where demand for construction in materials and services is very strong. As a result, construction costs will increase at a rate above inflation, although likely Economic ,_K Pianning Systems, Inc. 2 2 r:,.��u.�;7�L.��,, ayr 0 *:a D:t.: t]] Q3 C U C fE3 t r- 14 v i L M c n Q) 0 Q ca N o (n M [73 0 O p Q o C v C� LO a) VE d= Q C 0 D a CD CL cv rz Q �t mW N E© r CS LtmQC� CL tn E N r Q r 4 Q L CI] C� Q Q L L Q CIO a �7 fR m Ci; G U- co r V LID C) f- C) 0 I;r CSC 00 C) (D ti CC3 U co CCU 0 Cfl C) (C7 Co '�fi C37 C Q'3 -v- CSI (3 CC3 C ce q C) Co r t�- LO CSI 00 (n r co o 6;3 b co C) co LO co iy3 co co rl-_ w 4Y'] C) CD "q' G Q cs C6 C\ 0 :M Ct3 (£3 M rl- Co co 6 C3) N .j' Li) N "r (1 co C1i Lf] CO r'- C6 C7 i Gi co C lk N co d co V- 00 CY] I r CY) (D CT) r-- CY) 1�- Liz Q (D 00 (D CV Do s CO N 00 C) (D ti co co CCU 0 Cfl V C C'7 C) 00 E-.. CO m ";1 i V� C37 C Q'3 -v- CSI (3 CC3 C ce q �to�cc_ LO0)m (n r co o 6;3 b co C) co LO co cf m lzzr rl ca i Lo q C\! 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L7 C7 it y LT L' VD cl, w <d Cr- 0 ;W m d m C) cI3 G3 a Case-Schiller U.S. Horne Prices, Buildin Costs, Population, and Interest Rates, 1890-2004 CU (U X N rPI V4 C co 4-1 s. Ntl ct ou cc Jrj A P P E N Dƒ x F: National Buildin Cost Manual for Sin Direct Construction Costs (2010) rk Building costs for this house: 2,500 sq.f;., wood exterior (no brick), standard interior finishes. Generally based on Bayport exterior configurations (10 or more earners Tract (not custom) house in suburban Iccation. This J s an estimate for a single family residence built under competitive conditions in Zip area 945 947 Oakiand, Califomia in (Inlay, 2010. This estimate includes a foundation as required for normal soil cond tions, excavation for foundation and piers on a prepared building pad, floor, wall, interior and exterior finishes, roof cover, interior partitions, doors, Windows, trim, electric wiring and fixtures, rough and finish plumbing, built -in appliances, supervision, design fees, perr its, utility hook -ups, the contractors' cont ngency, overhead and profit. Highly decorative, starkly original or exceptionally Nell- appointed residences will cost more. Item Name Material Labor Equipment TOTAL Excavation $4,127 $985 $5,112 Foundation, Piers, Flatwork 8,171 13,983 2,004 24,158 Rough Hardware 798 1,367 197 2,382 Rough Carpentry 26,420 42,435 68,855 Insulation. 4,947 3,680 8,527 Exter'or Finish 14,065 9,139 1,033 24,240 Exterior Trim 953 1,532 235 2,820 Doors 2,415 2,204 4,519 VVinclows 4,159 3,076 7,2.35 Finish Hardware 402 3x38 T- 770 Garage Door 1,140 506 1,645 Roofing, Flashing, Fascia 11,047 10,082 21,129 Finish Carpentry 1,48E 8,035 9,501 Interior Wall Finish 7,038 11,825 18,863 Painting 4,245 10,682 14,887 Wiring 4,269 8,770 13,039 Lighting Fixtures 3,201 1,095 4,296 Flooring 3,145 4,855 6,060 6,2.5 7 8,686 Bath Bath A 1,550 1 ,038 2,588 Shower Tub Enclosure 589 903 1,892 Countertops 2,993 2,729 5,722 Cabinets 9,839 3,367 13,206 Quilt In Appliances 4,787 727 5,514 Plumbing Rough -in and Connection 4,492 11,871 649 17,012 Plumbing Fixtures 9,126 3,146 12,272 Heating and Coaling Systems 6,273 9,410 15,683 Unit Heating and Cooling Fireplace and Chimney 924 1,386 r 2,310 Subtotal Direct Job Casts $145,071 $174,867 $5,106 $325.044 per sq.ft. $130 Final Cleanup $1,302 $1,302 Insurance 9,116 9.116 Permits tail :ties 5,534 16534 Plans Specs 1.302 1 Subtotal Indirect Job Costs $15,952 $1,302 $0 $17.254 TOTAL 5342,298 Costs in the tables include all construction costs: labor, material, equipment, plans, building permit, supervision, overhead and profit, Cost tables do not include land value, site development costs, government mandated fees (other than the building permit) or the cast nt modifying unusual soil conditions or grades. 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Li rr a �3 cq Q 0 fi n C) c� 0 (,p C> a -I CIO ro r rn a Q ID M v v CD 4 Z Z3 Z CD a' s 3 ZE Zr rr zz; n zz n CD ct� n a3i a 0 Cn 2 CD Cfl W A c 3 Cfl Q. CTI W C_ �3 w r+ C_37 CD CIO 3 N w v d !V y D Co iD fa 0 C co co CO N y W 4 Od C31 U, ry €V 07 W CD r -2-31 z ry�� 1 �L/ Lt��yy Qo il,J y rn� l(�D r l D WSJ 11 ry D Q V `z c D� a N) o Q o ��v 0 Q v Q rD r� a CD d7 0) C,) (n Co D cn N LQ. n co rh O W llI) AL K o C-) T 3 r^ CD tZ o v CD a cr, 0 Y cc C 0 C QL (DD N r N 0 C) a n ii +ice lNr .y !iw D 0 (,p C> a fig N Sz� W Q a n ii +ice lNr .y !iw Alameda Point Public Services Analysis Revised Report 06129110 Urban Runoff (Fund 351-1, The Urban Runoff Fund accounts for revenues from the Storm Water Fee used for expenditures associated with the City's Clean Water Program, which is designed to mitigate the effects of pollution entering the City's storm water system. The City currently uses the funds to perform drainage maintenance and street sweeping, as well as ongoing capital repair. The Fee is based on the amount of pollution that the City estimates enters the municipal storm water system as a result of the installation or maintenance of impervious surfaces. The current Storm 'Dater Fee is $56.15 per Equivalent Residential Unit (ERU). Sewer Service (Fund 6 02) The fund accounts for revenues and expenditures related to the operation of the municipal sewer system including operations, maintenance, capital financing, debt service, billing, .and collections. Revenues are generated from Seger Service Fees, which are currently $178.95 per Equivalent Dwelling Unit (EDU). Economic Planning System In c. 2g A: �14000sj14012 afapoint�Fiscaf? £31QrptV4G12_AvbSvcsRpt aszzzc_revaszssa.dcc Fiscal Impact Model