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1999-11-03 ARRA MinutesAPPROVED MINUTES OF THE REGULAR MEETING OF THE ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY 2-- Wednesday, November 3,1999 1. SPECIAL SESSION The special session was convened at 5: 15 p.m. with Chair Appezzato presiding to address the following item: CONFERENCE WITH REAL PROPERTY NEGOTIATOR Attendees: Chair Appezzato , Member DeWitt , Member Kerr, Member Johnson , Alternate Member Leonhardy, Alternate Member Ornelas , Alternate Member Friedman. Chair Appezzato adjourned the special session at 5:25 and convened the regular meeting at 5:40 m. He announced the Board had met in special session and that direction was given to legal counsel. No action was taken. 2. ROLL CALLPresent: Chair Ralph Appezzato , Mayor City of Alameda Tony Daysog, Councilmember , City of Alameda Albert De Witt , Councilmember, City of Alameda Beverly Johnson , Councilmember , City of Alameda Barbara Kerr , Councilmember , City of Alameda Mark Friedman , alternate to Wilma Chan , Alameda County Board of Supervisors , District 3 Kathleen Ornelas , alternate to Sheila Young, Mayor , City of San Leandro Jay Leonhardy, alternate to Jerr Brown , Mayor , City of Oakland Absent:Sandre Swanson , Vice Chair , Ninth Congressional District for Barbara Lee CONSENT CALENDAR Approval of the minutes of the regular meeting of October 6 , 1999 and the special meetings of October 6 , 1999. Report recommending the appropriation of $2.4 milion grant funds awarded from the Economic Development Administration (EDA). Report recommending approval of the recommended priorities for the AR's 2000 grant application to the Economic Development Administration. - 1 - Report recommending the amendment of the Standards of Reasonableness to reflect recent AR Governing Board Action related to Economic Development Allocation to the Alameda Point Collaborative. Alternate Leonhardy moved approval of the minutes as presented for the regular meeting of October 6 1999 and the special meetings of October 6,1999, and the Consent Calendar. The motion was seconded by Alternate Member Friedman and passed by the following voice vote: Ayes 7. Noes O. Abstentions - O. Member Daysog arrived after the vote. ACTION ITEMS Report recommending authorization for the Executive Director to execute a ten (10) year lease , with an option to purchase , on Building 40 with Bladium , Inc. The public hearing was opened. AR Facilities Manager , Ed Levine stated that Bladium is an established company with major operations at Stapleton Airport in Denver and in San Francisco. They run recreational sports facility. They are proposing to lease Hangar 40 , a 105 000 square foot building to develop a sports center with roller blade hockey, indoor soccer , rock climbing, basketball , volleyball sports club and a cafe facility. They are proposing to enter into a ten year lease with two additional ten year options to extend the lease and an option to purchase the property. They will be leasing the building at market rate and the purchase option would be at fair market value , which would be no sooner than the fifth year oftheir lease term. Mr. Levine indicated staff has reviewed their financials which shows they are a very solid , established company. The estimated gross rental revenue from this deal over the first ten years , will be approximately $4.1 milion. This deal good for Alameda Point as it will attract other tenants and staff strongly recommends approval of it. Chair Appezzato asked Mr. Levine how long has staff been negotiating this contract? Mr. Levine stated negotiations have been going on for about one year. Chair Appezzato asked if Bladium does not succeed , are their any penalties or do they have to pay the remainder of the lease? Mr. Levine responded that they are signing up for a full term lease and it requires payment through the ternl of the lease of the rent. They are expected to invest a substantial amount of their own money into the building for improvements beyond the base of shell improvements which we pay for. Member Johnson asked Mr. Levine does he know how long this company has been operating in San Francisco? - 2 - Mr. Levine responded that he would rather defer to Bladium to answer that. Chair Appezzato asked Deputy City Manager David Berger did he have any comments? Deputy Berger responded that the Planning Board has provided an Interim Use Permit for this facility and BRAG has reviewed it for consistency with the Reuse Plan and has concluded that it is consistent. Chair Appezzato stated that the Principal of Bladium , Pete Halberstadt is a resident and businessman in the City of Alameda. Pete Halberstadt ofBladium , indicated that he hopes the AR and community would enter into a partnership with Bladium , to bring what wil be one of the West Coast's largest multi-sport facilities at Alameda Point. Mr. Halberstadt presented a four minute video about Bladium. He indicated Bladium will engineer a $2.5 million renovation of Building 40. $1 millon ofthat will go towards qualifying shell improvements to meet appropriate code levels. Once the operation reaches stability, the City and County can expect to collect in excess of $500 000 a year from their operations. Mr. Halberstadt further stated they Bladium wil provide a safe , healthy environment for children and adults to enjoy organized sports and instruction. Bladium will also create between 75 and 100 new jobs for people of varying agents and backgrounds. Bladium is a true transition project for Alameda Point. This deal will bring thousands of Bay Area residents to Alameda Point on a regular basis in a very controlled manageable , off-peak manner. For these reasons , Bladium represents a tremendous step forward, integrating Alameda Point into the mainstream of Bay Area life. Mr. Halberstadt stated he and his partners are ready to invest a significant amount of money, time and energy into become a very positive contributor in this community. They are asking the ARR approval ofthe recommendations. Mr. Halberstadt indicated that their operations in Denver and San Francisco have never received a complaint from the community, as they invest in the community. Chair Appezzato asked how long has Bladium been in business and when did they open their first facility? Mr. Halberstadt responded April , 1995 they opened a single , rink facility in San Francisco. Chair Appezzato asked Mr. Halberstadt did they have any plans to allow for BMX bikes at their facility, in competition of the Skateboard park at Alameda Point. Mr. Halberstadt responded that they removed the skate park from their facilities to accommodate the City build project. Member Johnson asked what is their time frame for opening. Mr. Halberstadt responded they would like to be open in four to five months. - 3 - Diane Lichtenstein , BRAG Vice-Chair, indicated they received a presentation from Bladium two months ago and they applaud the idea , but they are concerned about the option to purchase after four years. Although Bladium fits into the Reuse Plan , Bladium itself may not be something that the City and community wants to continue after ten years. The Interim Reuse plan calls for five years and after that , a more pennanent use would be taken up at Alameda Point. Now we are into 20 years and then permanent use and this concerns the BRAG. Ms. Lichtenstein stated she and the BRAG are not making a recommendation of approval of this project , due to its timing of being put on their agenda. The BRAG has expressed their concerns about going into permanent use this early, without an overall plan of all the base. There has not been enough time planned for this project and it is not taking a good direction. MaryLymlOchaln , 1418 Central Avenue , representative of the Adult Soccer Community indicated she was in favor of the Bladium sports complex. She indicated she has a large network of soccer player friends who travel long distances to play indoor soccer from Concord , San Ramon , Belmont and San Jose who would also definitely be in favor of this complex. Bill Garvine , Alameda Power and Telecom (AP&T), stated that when the Alameda Navy Base closed down , they lost $6 milion in revenue and this Bladium complex would be a sizeable revenue opportunity for AP&T and the City. They are significant in their energy around the clock , particularly in the critical periods (weekends and late night) which is meaningful to AP&T income. This project is an ideal use to piggyback economic development business attraction and retention efforts targeted towards the advanced technology community. This facility wil be a major asset in AP&T presentation kit to market advanced technology places to Alameda Point. Bladium represents the kinds of places that this working group is interested in going to after work. Mr. Garvine indicated Bladium has the full endorsement of AP&T for recommending Bladium lease to go forward. Also , it is fair for any company who is investing $2.5 million of their own money to have the right to "purchase " in their lease. Richard Neveln , 1328 Park Street , expressed it is good that Alameda is doing something wonderful for the youth of the City and the whole Bay Area. An option to purchase four years into the process , is somewhat of concern as Diane Lichtenstein mentioned. This facility will give some recognition to the people who served this country and the Naval Air Station that worked at Alameda Point. Paula McCloskey, Alameda Chamber of Commerce , expressed it is a: Chamber recommendation to support the Bladium project. Ms. McCloskey stated that Pete Halberstadt gave them a tour of the facility, in which they concluded that it is an asset to the community of Alameda as it will involve the entire family. It is also a big money revenue generator for the City and it wil employee up to 75 to 100 employees. Ms. McCloskey stated she spoke to staff from Manex and they indicated that their employees would love to have a recreational facility such as Bladium located at Alameda Point. It is also a benefit to activities like the Hornet as it will attract families to visit the Hornet. The Bladium project would give the youth of the community a good healthy outlet to participate in. 4 - The public hearing was closed for Authority discussion. Member Daysog asked if the $4.1 milion in revenue is net present value tenns or just a figure which was summed up? Deputy Berger responded that those figures are real dollars. It is also gross revenues which are explained in the staff report , not the net of the shell building improvements. Member Daysog asked what is the net present value of the actual lease? Deputy Berger responded that the net present value is $2.7 million. Member Leonhardy asked are there any estimates or inclusions regarding the revenues which will be received through Alameda Power & Telecom. Bill Garvine , AP&T , responded that they cannot give out any estimates or definite figure presently, because they are in the process of meeting with Bladium staff to assess this infornlation. Member Johnson asked would the purchase price based on fair market value , be based on the structure as it is improved? Deputy Berger responded that the value would be based upon its then fair market value. appraisal would be done. Member Johnson asked would they be reimbursed at all? ARR Facilities Manager Ed Levine indicated Bladium would front the money for the shell improvements which is approximately $1 million. They would be reimbursed through the initial 1 O-year lease term. If they buy the property prior to the 10-year period , they will have not received full reimbursement. The amount which they do not receive back in reimbursements will be deducted from the fair market value. Member Johnson indicated she respects the concern the BRAG has , however this is not inconsistent with the Reuse Plan and this project cannot be done unless we give the option to purchase. Member Johnson stated she has met with students all over town who have expressed they do not have anything to do in Alameda , not even a movie theater to go to. This is not just for kids , but for families. Member Johnson stated she supports the recommendation to go forward. Chair Appezzato asked Pete Halberstadt ofBladium, if they do not have the right to purchase will they not pursue this deal? Peter Halberstadt responded that is COlTect. - 5 - Member Kerr expressed that she was delighted to have a recreational facility presented to Alameda for which the City does not have to find tax money or worr about insurance or many other things which affects recreational projects. It is good that there are people who are wiling to put their own money into the facilities at Alameda Point , because this is the only way any serious money will be put into these buildings. Up to this point , we have taken reduced rent in exchange for people spending their money to improve these buildings so they can use it. Bladium putting $2.5 million of their money in for improvements , this will be an asset for Alameda Point. Member Kerr acknowledged that she understands the BRAG concerns , however if this waterfront area property value increases , Bladium may end up with their facilities somewhere else. Member DeWitt stated that this is an excellent project , which will bring people out to the base and the financial package looks good. The problem is the right to purchase option. It is premature to make a decision about purchase because we do not know if the Tidelands Trust area wil be conveyed to the City. There is an interim reuse . and a long term reuse policy and this is the reason why this project is before the Board because of its long-term reuse. We do not want to sell land in order to pay the bills at Alameda Point. The procedure we should be using, is that we need to know what our big picture is and we should have a developer who can decide how that area should be used. The Board can vote to sell the land to a developer and let him build what we want and not just whatever comes in off the street. Twenty or fifty years down the road , we may have a lot of different people owning a lot oflittle parcels and the City may be forced to buy it back for millions of dollars. The method we are using for Catellus is that we chose a developer , he is going to give us money for the land and build what we want. This procedure of selling parcels to whomever comes in and wants to build something so we can pay the bils , is not the right procedure to use. Member DeWitt indicated he would like to see this project go forward and to see it on the base , however it is to early to make a wise decision as to whether or not we should be selling this land. Bladium should give us a chance to see how we are going to develop the base. If the Board votes for this project to move forward , Member DeWitt asked that the AR Executive Director or somebody to get our act together and get some plans for long tenn reuse and get a developer for Alameda Point who wil develop the land , so it comes out to look like what the citizens want. Chair Appezzato stated he wished he knew what the citizens want. It does not matter what we bring here , one will like it and one will not. Member Johnson asked would there be anything to prevent a developer from purchasing the property from Bladium? Deputy City Manager David Berger responded not that he is aware of. Member Johnson asked this would still be a possibility if the market were there? Deputy Berger responded yes. - 6 - Member De Witt pointed out that in the Reuse Plan, there is a park , which runs from the main gate right up to the marina. This building falls very close to the parkway to the marina. It is very close to being in a park way area. The area on the waterfront is for marine industry and commercial. There is a plan that the people of Alameda did work with. Member Daysog stated he was approached by an owner of one of the recreational facility managers in Alameda and her concern was that this facility would not only compete with the facility which she manages , but staff would be subsidizing this facility. Member Daysog asked is this going to be an exercise facility with weights and racket ball courts? Pete Halberstadt ofBladium , responded no , this would not be a direct comparison between the two facilities. There is a fitness component to what is offered, but there are very few sport facilities that do rock wall climbing that do not offer fitness equipment. It is part ofBladium component , as their members want that. With respect to local competition, there has not been any fitness club on this island in the past eighteen to twenty years at that end of the island. Member Daysog stated the issue is not competition, but that the Governing Body might be subsidizing a competitor. Bladium is receiving almost $975 000. Mr. Halberstadt responded that they are not receiving that money, it is the City s building and Bladium is forwarding money that will be reimbursed in the fOlID of rent rebates. Mr. Halberstadt pointed out that their neighboring building was actually given grant money. Member Johnson stated she does not view this as subsidizing because Bladium is spending $975 000 to a improve a building they do not own. If they purchase the building in the future because ofthe $975 000 they are investing in the structure , the building will be worth more , so they will be paying the City more when they buy it. Alternate Member Friedman asked does this vote require a majority of the City Council for approval? Assistant Attorney Terri Highsmith responded yes it does. Member Daysog voiced that he lmows that we offer below market rent to get companies onto the base. Is this deal any different than what we have been doing with any other companies? Deputy Berger responded no. With this particular building, staff solicited proposals from several companies that were interested concurrently in the building, along with their price. We were able to gauge the market specifically for the building and staff believes this is not a below market, but at the market for this type of building, which does not meet today s building code standards. ARR Facilities Manager Ed Levine stated the rent structure for BIadium is higher than is being paid for by any other tenant in any ofthe other hangars , which staff has leased to date. - 7 - Member Daysog stated that any time we reimburse anyone for repairs and improvements to a building, that is subsidy, which is our tax dollars. Chair Appezzato stated we can sit and dream forever and look at something that mayor may not happen years down the road and not take any action. Because of the revenue generation and employment , it is what we promised when we began this reuse plan, that we would generate revenue and employment. This project is consistent with the Reuse Plan and we should be flexible enough to be able to adjust , especially when there is money riding on the project. It is important to note there is local control. The last tenant given local control does not have enough space to build their marina at the base. The business support is unanimous in the community for this Bladium project based on local control. If there is a higher use down the road , it will take precedence. Member Kerr moved approval of the recommendation. The motion was seconded Member Johnson, and passed by the following voice vote: Ayes - 7; Noes - 1 (Member DeWitt); Abstentions - Discussion. Member DeWitt stated he likes the project and thinks it great but the problem is the idea of the option to purchase in four years. Someday, the City will have to go and buy it back for billions of dollars. Chair Appezzato stated that if the City has to buy it back for a $1 billion dollars , it will probably be because the City has made $2 billion. There is no reason to buy back a property that is for a higher and better use. It is time to move on. ORAL REPORTS Oral report from the BRAG. Diane Lichtenstein indicated that her report was present earlier when she spoke about Bladium. Oral report from the Deputy City Manager (non-discussion items). None. ORAL COMMUNICATIONS , NON-AGENDA (PUBLIC COMMENT) Richard Neveln , 1328 Park Street , member of the Public Transit Committee , expressed to those that were watching the proceedings tonight have the opportunity to come tonight and listen to a presentation in the Council Chambers by AC Transit , who is one of the main Agenda Items on the Public Transmit Committee meeting tonight. - 8 - COMMUNICATIONS FROM THE GOVERNING BODY None. ADJOURNMENT The meeting was adjourned at 6:40 p. AkilAR Secretary - 9 -