2003-03-18 CIC MinutesMINUTES OF THE SPECIAL COMMUNITY IMPROVEMENT COMMISSION MEETING
TUESDAY - - - MARCH 18, 2003 - - - 7:27 P.M.
Chair Johnson convened the Special Meeting at 8:23 p.m.
ROLL CALL - Present: Commissioners Daysog, Kerr, Matarrese and
Chair Johnson – 4.
Absent: Commissioner DeWitt – 1.
MINUTES
(03-018) Minutes of the Special Community Improvement Commission
Meetings of March 4, 2003. Approved.
Commissioner Daysog moved approval of the minutes.
Commissioner Matarrese seconded the motion, which carried by
unanimous voice vote – 4. [Absent: Commissioner DeWitt – 1.]
AGENDA ITEMS
(03-019) Resolution No. 03-110, “Authorizing the Executive Director
of the Community Improvement Commission to Execute a Second
Amendment to the Disposition and Development Agreement (DDA) By and
Between the Community Improvement Commission (CIC) of the City of
Alameda and Catellus Development Corporation.” Adopted.
Dan Marcus, Catellus Development Corporation, stated there have
been many hurdles, including law suits, environmental hazardous
materials to be cleaned up, bifurcation of the commercial and
residential projects, Catellus loaning the City $9 Million, and
reaching the agreement to loan the CIC over $20 Million; Bay Port,
the residential project along Atlantic Avenue [Ralph J. Appezzato
Memorial Parkway] between Main and Webster Streets, would start
after the DDA amendment is approved; the initial phase would
increase from 75 units to 197 units; the entire project would
create 485 new homes and two affordable housing projects of 39-
units and 62-units; a kindergarten through eighth grade school and
five parks will be constructed on the site; outlined construction
activities which will commence pending approval of the DDA
amendment; further stated construction of model homes would begin
in June; construction of the first for-sale properties would begin
in October; model homes would open in January, 2004; move in should
begin April, 2004; thanked staff for their work to create a
mutually beneficial agreement.
Commissioner Daysog stated that since 1996, he has had concerns
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March 18, 2003 1
about creating such a large redevelopment area; property taxes will
not pay for municipal services; that he would like the CIC to
consider modifying the $480,000 annual assessment for the
maintenance district; that he would like to pursue allocating the
money for activities other than maintenance; inquired whether
Catellus has thoughts about use of funds for other services.
Mr. Marcus responded the maintenance district was designed as a
maximum to be used for maintenance of streets, parks, etc.; the
expenditure on other public services is acceptable to Catellus as
long as there is enough money, which is anticipated.
Commissioner Daysog stated the CIC has to consider options; and
should discuss whether recovering the true costs might go above
$480,000.
In response to Chair Johnson’s inquiry about the current phase of
the project, the Redevelopment Manager stated the demolition phase
and chlordane cleanup are complete; the project is at the start of
the residential Phase 1, backbone infrastructure.
Chair Johnson inquired how long Phase 1 would last, to which the
Redevelopment Manager responded through the summer.
Chair Johnson inquired whether construction [of homes] would begin
prior to completion of the backbone infrastructure.
The Redevelopment Manager responded the backbone infrastructure
would be taking place simultaneous with homebuilders on site doing
improvements.
Chair Johnson inquired whether a conveyance date could be included
in the DDA.
The Redevelopment Manager responded in the affirmative; stated the
target date is the latter part of May.
Chair Johnson inquired whether language could be added indicating
that conveyance will take place no later than May 31, 2003, to
which the Redevelopment Manager responded in the affirmative.
Commissioner Kerr stated the question is when tax increment can
start being collected; inquired whether tax increment would be
collected for the entire East Housing area.
The Redevelopment Manager responded tax increment would be
collected on the first 197 lots.
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March 18, 2003 2
Chair Johnson inquired whether the DDA amendment would be revised
to include that conveyance would be no later than May 31, 2003 for
the first 197 lots.
Legal Counsel inquired whether the Commission would consider
language that the best efforts would be made [pertaining to
conveyance date]; stated if the matter is delayed tonight,
conveyance would not occur in May.
Chair Johnson inquired whether conveyance could occur regardless
[of action tonight].
Mr. Marcus stated the DDA includes numerous conditions to
conveyance, which benefit both parties; the goal is to have
conveyance in May; including language about best efforts and a
grace period prior to an absolute deadline would be important to
give both parties flexibility.
Chair Johnson inquired whether the City or Catellus needs to
perform said conditions, to which the Redevelopment Manager
responded there are conditions that both Catellus and the CIC have
to complete.
Chair Johnson stated there have been numerous delays, many beyond
the control of Catellus; however, a conveyance date should be set.
Commissioner Kerr stated that she concurs with Chair Johnson’s
comments; land banking must stop; other developers are prompt in
development of their property because they are paying taxes.
Chair Johnson stated a conveyance date should be selected; if May
is not acceptable, June 30, 2003 could be selected.
The Redevelopment Manager stated the current schedule is to return
to the CIC on April 15 to have the CIC and Council approve the
final map, subdivision improvement agreement and actual conveyance
with the intent of conveying the property to Catellus in May.
Chair Johnson inquired whether the May 31, 2003 date could be
included.
Mr. Marcus stated most of the conditions are to be completed by the
City, such as clearing title to get the property ready for
transfer; Catellus has not been delaying the project and wants to
begin building homes.
Commissioner Matarrese inquired what reasons there would be for not
meeting the conveyance date.
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March 18, 2003 3
Legal Counsel responded unpredictable circumstances might be a
reason, such as circumstances related to the war in Iraq; stated
the DDA has been negotiated and requires Catellus’s consent; if the
condition is added and the deadline is not met, there would be a
breach of the DDA; suggested language be added that the matter will
return to the CIC for consideration, if the June 30, 2003
[conveyance] deadline cannot be met.
Chair Johnson inquired whether a [conveyance] date could be added
with the possibility of extension requiring the approval of the CIC
prior to the deadline.
Commissioner Kerr stated the amendments seem to be favorable to
Catellus; the original amount for infrastructure was $11 Million;
the City is being asked for another $21 Million; the City will not
receive tax increment on the commercial development, which is being
deferred; said money was going to be used to pay off existing and
future loans; the delay in the transfer of title of the commercial
area means there will be a delay in collecting tax increment from
the developer; the project has been shifted to residential only and
title will only be transferred for 197 lots out of the 485 lots;
backbone infrastructure, such as the major sewer, has to be
developed for the entire project; the City’s ability to collect tax
increment has been greatly diminished.
Chair Johnson inquired how many phases are included in the
residential project and whether there are schedules for conveyance
of the property for each phase.
The Redevelopment Manager stated there are three phases; the first
conveyance of 197 lots is targeted for May, 2003; the second
conveyance of 155 lots is scheduled for May, 2004; the third
conveyance of 133 lots would be in May, 2005.
Chair Johnson requested the same language be added that [second and
third] conveyance be no later than May 31 and extensions require
CIC approval.
Mr. Marcus stated the takedown [transfer] obligations are in the
amendment.
Chair Johnson stated that she is requesting the specific deadline
of May 31 for each phase, rather than just a goal.
Mr. Marcus responded said deadlines are included; if Catellus does
not take down a certain number of lots by a certain time then
Catellus is in default of the Agreement.
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March 18, 2003 4
Commissioner Kerr inquired why it would take until 2005 to complete
the housing project; stated Catellus’s resources will not be used
developing commercial property.
The Redevelopment Manager stated three major impacts caused delay
and additional costs: 1) the lawsuit Settlement Agreement [with
Renewed Hope]; 2) additional chlordane was found during demolition;
and 3) the downturn in the commercial and research and development
market.
Commissioner Kerr stated Catellus is switching its resources from
commercial to residential; inquired why the completion of
residential construction will take until 2005.
Mr. Marcus stated the residential takedown is expedited at
approximately two times as fast as is required in the Development
Agreement; the DDA provides for a downturn of the commercial
property economy; Catellus is acting in exact accordance with the
DDA; Catellus has gone above DDA requirements in presenting a
proposal to change some of entitlements from office to a retail
project, which would allow expedited development and tax generation
from the land; said proposal is on the table; Catellus and City
staff mutually decided there is demand for the residential project
to move forward quickly; if there is interest in the City, the
retail project and re-entitlement will be brought forward.
Legal Counsel stated Article 4 of the DDA, titled Conditions
Precedent to Transfer, has no less than 12 pages of conditions;
listed a number of the conditions; stated the matter is quite
complicated; the DDA is negotiated; inquired what Mr. Marcus’s
concurrence would be to a deadline with continuation.
Mr. Marcus stated City staff and Catellus have spent a great amount
of time working through the pages of conditions; most of the items
have been completed; that he understands the City’s concern about
wanting the project move forward as quickly as possible; Catellus
wants the project to move forward as quickly as possible; Catellus
did not expect or desire a lawsuit against the City, which delayed
the project for about a year; Catellus did not want to find
chlordane; however, once discovered, Catellus worked in conjunction
with the City on remediation; delays have not been by Catellus or
the City.
Chair Johnson stated many causes of delay were well beyond
Catellus’s control; the CIC is using the proposed [conveyance] date
and would just like to make the date firm; the end of June is an
acceptable deadline.
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March 18, 2003 5
Mr. Marcus stated Catellus is committed to make its best effort to
meet the date; his concern is the City failing to complete an item
that is its responsibility, not Catellus’s responsibility; Catellus
has $9 Million of pre-development money at risk; Catellus has a
contract with Warmington Homes housing developer that will be
signed shortly; if the DDA amendment is approved, Catellus has
contracts with Pacific Gas & Electric, Alameda Power & Telecom and
other entities who will be working on the property tomorrow to help
meet the takedown schedule; Catellus is comfortable with a grace
period as long as everyone is giving their best efforts.
Chair Johnson inquired whether the date could be the end of June,
which includes a 30-day grace period; if further time is needed,
the matter would have to return to the CIC.
The Base Reuse and Redevelopment Manager stated said suggestion is
completely doable; staff is prepared to meet the deadline; if staff
is not able to meet the deadline, the matter will return to the CIC
with the reasons why the deadline is not being met.
Commissioner Daysog stated the cost of demolition and backbone
infrastructure has increased and is exorbitantly higher than
originally anticipated because the City miscalculated costs;
inquired whether said costs are a reason the City is turning to
Catellus for a loan.
Mr. Marcus responded the statement is partly correct; there are
other factors; the environmental problem found on the site was not
anticipated and cost approximately $4.6 Million to cure.
In response to Commissioner Daysog’s inquiry regarding the
remaining amount, Mr. Marcus stated the cost of completing items
and scope of items that needed to be completed was miscalculated.
Commissioner Daysog inquired the exact amount of the increased
costs.
Commissioner Kerr responded $21 Million.
The Base Reuse and Redevelopment Manager stated the backbone
infrastructure cost for the first phase is $14 Million.
Commissioner Kerr stated the CIC is being asked to authorize an
extra $21 Million loan.
The Base Reuse and Redevelopment Manager stated $7 Million is the
cost for Phase 2 demolition, pre-infrastructure, pre-design and
pre-development; the ancillary soft costs associated with Phase 1
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March 18, 2003 6
and 2 are an additional $5 Million.
Commissioner Daysog stated the redevelopment area merger could
allow redevelopment money to be taken from existing projects;
business associations should be involved in monitoring costs; there
might not be enough money for the parking structure or movie
theater projects.
The Base Reuse and Redevelopment Manager stated as the project
budget and pro-forma currently stands, the project will be
completely self-funded in a combination of land sale proceeds,
profit participation, and the tax increment that the project will
generate; the project does not anticipate accessing any other
Business and Waterfront Improvement Project (BWIP) tax increment
funds outside of funds generated by the project itself.
Commissioner Kerr stated the housing market could crash; the
housing market is only staying up due to extraordinarily low
interest rates; the developer might find a way not to complete the
residential project.
The Base Reuse and Redevelopment Manager stated the current
absorption for the 485-unit project will be through 2007; the
project is phased to allow time for units to be absorbed by the
market; the builder will not construct 485 units at one time;
rolling starts will continue to provide sufficient time for the
product to be absorbed on the market; as the product is absorbed,
new construction continues; the projected build-out of the 485
units will be between January, 2004 and 2007; the schedule is
accelerated; the DDA requires a minimum takedown of 75 units per
phase.
Commissioner Kerr noted the 75-unit minimum per phase was in
conjunction with Catellus proceeding with the commercial
development.
Chair Johnson inquired when the Housing Authority units would be
constructed, to which the Base Reuse and Redevelopment Manager
stated as long as the State funding is received, construction would
begin February, 2004.
Chair Johnson stated Phase 3 conveyance is scheduled for May, 2005;
inquired why construction could not be completed by May, 2006.
Mr. Marcus responded the schedule anticipates steady, on-going
construction and purchasing; the projection is that the final home
will be sold in early 2007; Catellus hopes to move faster.
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March 18, 2003 7
Chair Johnson inquired the number of homes constructed by Kaufman &
Broad during one year, to which staff responded 106 units.
Mr. Marcus stated backbone infrastructure will be planned and
constructed lot-by-lot along with the number of homes that can be
reasonably built and sold.
Commissioner Daysog inquired at what price the homes must sell to
keep the City from losing land sale proceeds.
The Base Reuse and Redevelopment Manager responded the land sale
per lot is never at risk; the City’s share of the profit
participation is at risk; the current projection for the full
build-out estimated the City would receive $28 Million in profit
participation based on average home sale price of $600,000; if
homes sell for more than $600,000 on average, the City would
receive a greater amount; if homes sell for less than $600,000 on
average, the City will receive less than $28 Million [in profit
participation].
In response to Commissioner Daysog’s inquiry about how much less
profit sharing could be, the Base Reuse and Redevelopment Manager
stated there is a complicated sliding scale formula.
Chair Johnson stated if the housing market crashed, the schedule
would have to be adjusted because houses that cannot be sold should
not be built; inquired when construction of the entire project
would be completed.
The Base Reuse and Redevelopment Manager responded construction
would be completed by the end of 2006; further stated the DDA
amendment includes an accelerated payout of the profit
participation; the City will start to accrue profit participation
at the sale of each home, rather than the end of each phase.
Commissioner Matarrese inquired what services would be covered by
the $480,000 maintenance district and what the City would do to
cover shortfalls.
The Redevelopment Manager stated the $480,000 maximum was created
to cover maintenance of the parks and public works maintenance.
Commissioner Kerr noted the costs do not include police and fire
services; inquired whether the maximum should be increased.
Commissioner Daysog stated that he calculated $103,059 per housing
unit as the cost for City services using the City’s budget; the
aggregate cost for the Catellus project is $665,000; removing some
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March 18, 2003 8
capital costs reduces the operating cost $625,000; there should be
a mechanism to pay for police and fire costs; suggested options be
reviewed for recovering police and fire costs; stated public works
and recreation costs are grossly over-calculated.
The Base Reuse and Redevelopment Manager stated the existing DDA
with Catellus precluded the City and Catellus from entering into
any kind of assessment district; the DDA required the CIC to enter
into a separate agreement with the City to cover the cost of park
maintenance and public right-of-way maintenance; because the City
was precluded from an assessment district, a sinking fund was
proposed to generate interest revenue that would be paid to the
City for maintenance; the sinking fund became a large burden for
the project; therefore, a special tax district was proposed and
negotiated in the DDA amendments as a more affordable method to
structure the CIC’s maintenance payment to the City; the maximum
amount of $582,000 per year for maintenance was negotiated;
however, if the homeowners’ association assumes some responsibility
for right-of-way maintenance, the obligation would be lowered;
raising the cap on the maintenance district would affect the City’s
profit participation; Catellus is open to a redistribution of the
money as long as it does not exceed the cap; the special tax
district has not been engineered; staff can propose an alternate
distribution under the $582,000 maximum; approval of the DDA
amendment would not impact staff’s ability to review redistribution
of the funds to pay for a range of other services.
Chair Johnson inquired whether the budget could include police and
fire services, to which the Base Reuse and Redevelopment Manager
responded as long as legally permitted.
Commissioner Daysog stated direction has been that Alameda Point,
and East Housing in particular, must pay for municipal services.
The Executive Director outlined the history of the process; stated
staff has made a good faith effort to make the project work.
Chair Johnson stated the office project should not go forward when
there is no demand because the City has to spend money for the
project to move forward; the housing project should move forward
with the inclusion of conveyance deadlines; requested clarification
about the maximum amount for the maintenance district.
The Base Reuse and Redevelopment Manager stated the maximum amount
of the assessment is $582,000; however, Catellus indicated that the
homeowners’ association would like to assume responsibility for a
portion of the maintenance; if so, the maximum would lower to
$482,000.
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March 18, 2003 9
Chair Johnson inquired whether Catellus or the City would set the
amount that will be assessed, to which the Base Reuse and
Redevelopment Manager responded the City.
Commissioner Daysog stated the matter should not go forward without
the amounts decided upon; that he wants to ensure public safety
will receive the bulk of the money.
Legal Counsel stated distribution is at the sole discretion of the
CIC and City Council and shall be voted on when the district is
engineered and the specific numbers are presented for approval; as
an alternative to having the specific numbers [tonight], the matter
would be at the sole discretion of the CIC/ Council’s vote when the
district is engineered in six to eight weeks.
Chair Johnson stated if the CIC is satisfied with the cap, the
budget could be determined later; inquired how much conveyance
would be delayed if the DDA amendment is not approved tonight.
The Base Reuse and Redevelopment Manager responded if the City does
not go forward with the amendment, Catellus would not provide the
loan the City needs to fulfill its pre-conveyance obligation to
start construction on the backbone infrastructure; Catellus will
not work until the City approves the agreement that sets the loan
in place.
Chair Johnson stated if the CIC is satisfied with the cap, the
budget could be handled as suggested.
Commissioner Daysog stated that he concurs with said suggestion.
Chair Johnson inquired whether the decision to set the cap at
$480,000 or $580,000 rests with the City rather than Catellus, to
which the Base Reuse and Redevelopment Manager responded in the
affirmative.
Commissioner Kerr stated staff made a statement that the City would
not receive the loan, if the DDA Amendments are not approved
tonight; staff brings matters with hard deadlines at the last
moment when the CIC has to act under the threat that City will not
receive the loan if the CIC does approve what is presented;
Catellus and staff make decisions that are brought to the CIC
lacking options and time.
Chair Johnson stated that she is concerned about causing a delay;
the housing project should move forward; that she is proposing the
end of June deadline for conveyance and does not want to delay.
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March 18, 2003 10
Commissioner Daysog stated the CIC should proceed within the
framework suggested by Chair Johnson; the CIC will deal with the
municipal services question; the issue is important; since 1996, he
has stated the project has to pay for itself.
Commissioner Daysog moved [adoption of resolution] with the
direction provided tonight regarding municipal services.
Chair Johnson requested the motion include conveyance dates and a
date for completion of construction.
Legal Counsel clarified that the two directions included in the
motion were: 1) June 30, 2003 conveyance date [be included in the
DDA] with any further extensions beyond said time brought back for
further legislative action and amendment; and 2) regarding the
maintenance district established on page 12 [of the DDA], the
specific allocation is subject to the sole discretion of the
Community Improvement Commission (CIC), which will be voted on at
the time that the district is engineered and brought before the
CIC.
Chair Johnson stated the motion should also include: 1) that the
other conveyance dates are May, 2004 [for Phase 2] and May, 2005
[for Phase 3]; and 2) the end of 2006 is the completion date for
construction.
Legal Counsel stated staff's understanding is that said dates are
currently included; if not, staff will add language.
Commissioner Matarrese stated although not required by the DDA, the
CIC would like the project to move faster; other jurisdictions
build houses very quickly; the small window of opportunity is
rapidly closing; the June conveyance date does not mean June should
be the goal, rather June is the drop dead final date.
Chair Johnson concurred that conveyance should be no later than
June.
Commissioner Matarrese noted the May 31, 2003 date discussed was
revised to June.
Chair Johnson clarified a grace period was requested; instead of
providing a grace period, the Commission will allow 30 days longer
[for conveyance] with CIC approval for further extension.
Commissioner Matarrese requested that the CIC be informed anytime
there are roadblocks which may impact the [conveyance] date; that
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March 18, 2003 11
he wanted to make said matter explicit; the Commission should be
apprised of issues, rather than receiving a last minute scenario
the day prior to the deadline.
The City Manager stated staff provides monthly updates in closed
session on several development projects; staff can ensure the CIC
is apprised if there are any problems.
Commissioner Kerr inquired whether Commissioner Matarrese was
requesting updates more often than once a month if there is a
problem.
Commissioner Matarrese responded in the affirmative; stated that he
wanted to make said point explicit.
Commissioner Matarrese seconded the motion, which carried by
unanimous voice vote - 4. [Absent: Commissioner DeWitt - 1.]
ADJOURNMENT
There being no further business, Chair Johnson adjourned the
Special Meeting at 9:37 p.m.
Respectfully Submitted,
Lara Weisiger
Secretary, Community Improvement
Commission
The agenda for this meeting was posted in accordance with the Brown
Act.
Special Meeting Community Improvement Commission
March 18, 2003 12