2000-09-19 ARRA PacketAGENDA
Special Meeting of the Governing Body of the
Alameda Reuse and Redevelopment Authority
* * * * * * **
Alameda City Hall
Council Chamber, Room 390
2263 Santa Clara Avenue
Alameda, CA 94501
1. ACTION ITEMS
Tuesday, September 19, 2000
Meeting will begin at 8:00 p.m.
City Hall will open at 7:00 p.m.
1 -A. Report from the Development Services Director recommending that the ARRA Governing
Body approve the disposition strategy of engaging a Master Developer for Alameda Point
and to authorize staff to proceed with the selection process for such a Developer.
The next regular ARRA meeting is scheduled for Wednesday, October 4,
2000.
Notes:
• Sign language interpreters will be available on request. Please contact Lucretia Akil, ARRA Secretary,
at 864 -3400 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.
Alameda Reuse and Redevelopment Authority
Interoffice Memorandum
September 15, 2000
TO: Honorable Chairman and Members of the
Alameda Reuse and Redevelopment Authority
FROM: Doug Yount, Development Services Director
SUBJ: Report from the Development Services Director recommending that the ARRA
approve the disposition strategy of engaging a Master Developer for Alameda Point
and to authorize staff to proceed with the selection process
Background:
At your September 6, 2000 scheduled ARRA meeting, you began your discussion on the master
developer selection process. Staff made a presentation on the proposed process, which is included
in the attached packet from the meeting (Attachment 1). The presentation was followed by several
questions and comments by the Board and the public. This staff report is a supplement to the
previous report and is designed to address many of the comments and issues raised during the regular
meeting.
Discussion:
Because of the tremendous work done by the community in developing the Community Reuse Plan
and the vision for the redevelopment of the Naval Air Station, President Clinton declared Alameda
a national model for base closure. Bringing a master developer into partnership with the City will
provide the City with the necessary resources and expertise to make this reuse model a reality.
There have been several issues that have been raised regarding use of a master developer and the
selection process:
1. Why should the City pursue the Master Developer approach?
► Ability to Finance Front End Costs: Investments in the water and electrical
systems are needed up front for redevelopment. A master developer will bring
private equity and debt funding resources to the project to finance these and other
improvements in a timely manner, as necessary. The ARRA or CIC currently do not
have adequate unallocated resources to undertake all of the up front expenses.
► Take advantage of the Market for Development: The final land use and
development schedule will need to be formulated by the developer. The master
developer will be in a favorable position to assess the market and ensure the most
efficient approach to development based on the robust market conditions..
► Timely Environmental Remediation: The master developer will help bring closure
with environmental regulators, because the developer will help define the timing and
nature of remediation relative to the development program. Similarly, the master
developer can be instrumental in completing negotiations with DoD on liability
agreements and remediation funding, which can result in expedited remediation and
Honorable Members of the September 15, 2000
Alameda Reuse and Redevelopment Authori ty Page 2
reuse of the property. In the absence of a developer, negotiations with the Navy and
regulatory review are extremely difficult to bring to closure.
► Provide a Leasing Program consistent with Reuse and Redevelopment: To
ensure a leasing program that creates synergy with the development program, it is
desirable to have the master developer involved in at least an advisory capacity in
leasing and asset management. Bringing on the master developer as soon as possible
will help minimize the opportunity cost of delayed leasing, or the risk of executing
leases that will not be synergistic.
► Ability to Advance Reuse and Redevelopment: The master developer will be better
able to bring the Community Reuse Plan to fruition, honoring thousands of hours of
community involvement and direction.
► Meet Navy's Property Disposition Schedule: The Navy schedule has
approximately 500 acres of property conveyed to the ARRA in early 2001. This
property is mostly free of environmental remediation and would be available for
reuse and redevelopment soon. Necessary master and development specific planning
would occur first before any development.
Coordination of all Development Projects at Alameda Point: A master developer
can help the ARRA better coordinate with the development for the golf course and
sports complex project in conjunction with the entire NAS development.
2. Why not develop Alameda Point in development "packages "?
► An entity needs to be identified as responsible for overall infrastructure planning and
financing.
► The master developer transfers the infrastructure financial risks to the private sector.
► Carving out "packages" ultimately transfers the risk and cost from the master
developer to the City. The long term result could be fragmented development of
Alameda Point, potentially leaving the City and master developer with the less viable
properties.
Will using a master developer limit the ARRA and CIC's normal regulatory authority
over land uses?
► Selecting a master developer does not imply a forfeiture of the City's ability to
achieve the community's goals and objectives for Alameda Point.
► Community dialogue on the balance between public benefits and private uses would
be part of the normal land use planning process.
► The Community Reuse Plan and ultimately the General Plan will guide the planning
process.
Honorable Members of the September 15, 2000
Alameda Reuse and Redevelopment Authority Page 3
4. What is the role of the ARRA and the City in the Development Process with a Master
Developer?
► Provide regulatory support
► Provide land and buildings
► Provide low cost infrastructure financing
► Ability to inexpensively hold land
► Manage the entire process to hold developer accountable
5. What is the role of the CIC in the long -term redevelopment of the site, should the
ARRA approve the master developer conveyance strategy?
Although the ARRA will receive conveyance of the property from the Navy and because the
property falls within the Alameda Point Improvement Project (APIP) area, development must
be consistent with the APIP redevelopment plan and state redevelopment law. The CIC has
jurisdiction and ability to use financing tools (such as tax increment financing) to implement
redevelopment consistent with the APIP Plan. (This is true even if the ARRA did not convey
the property to the CIC prior to the conveyance to a master developer.)
6. What are the alternatives to selecting a master developer?
Economic Planning Systems analyzed the use of master developers in closed military bases
and outlined several roles for the cities when selecting a Master Developer, including:
► In -house Development with Developer /Consultant Input: Under this scenario, the
ARRA or CIC owns the land and hires a private development company to function
as temporary staff while earning a commission or flat fee. This choice requires the
City to assume financial risks associated with development and to finance up -front
the staff resources necessary.
► Contract Development: The ARRA or CIC would own the land and hire a
development company on a for -fee basis to carry out master development tasks.
Financing would be secured with the assets of the ARRA without developer equity.
The contract development approach also requires the ARRA take the financial risks
associated with development and to finance up -front the staff resources necessary.
► Joint Venture: Here the ARRA or CIC and developer would share responsibilities
and revenues. The ARRA or CIC would contribute the land and perhaps the
backbone infrastructure, as in the case with the Catellus project. The developer takes
on the project management responsibility. Both the city and the developer secure the
financing, which allows for a broader range of available financing sources. The
ARRA would have an opportunity to share in the profits for the project, but would
also share in certain risks.
► Disposition to Private Developer: This is the recommended approach for Alameda
Point. Under this scenario, the ARRA or CIC selects a private development
company through a competitive bidding process to purchase the entire property and
redevelop it according the Community Reuse Plan and APIP Plan. The City would
Honorable Members of the September 15, 2000
Alameda Reuse and Redevelopment Authority Page 4
acquire development expertise, not inherent to cities, and minimize ongoing
responsibilities. The CIC would be expected to retain control over the type and
character of development, phasing, etc. to ensure that the private developer
implements the community reuse plan vision and compliance with the APIP plan.
The agreement also can expressly limit the CICIARRA/City financial obligations and
risks. Finally, the City would retain all of its tradition regulatory control over new
development.
Selection Process
Given that staff is recommending disposition to a private developer described previously, there are
several steps needed to be taken in order to begin the Request for Qualifications and Vision
Statement (RFQ /V) process described in the Consultant report included in Attachment 1. The
following is a list of the immediate actions necessary in order to develop the RFQ/V and the
proposed schedule.
Immediate Next Steps in Process
► Assemble developer selection team and contract with assisting consultants;
► Interview similar communities for additional information on drafting of RFQ/V
language and conditions
► Draft RFQ/V
► Return to ARRA at a Special Meeting on October 17 with the following for
information:
• Draft RFQ /V (For ARRA approval)
• Project Timeline including steps for Developer selection, ENA
development, ENA period, DDA Development
• Format of community forums
• Suggested membership for developer negotiation team
• Further detail on website, tours, information exchange
Recommended Process and Schedule
ARRA Board Approval
Mail RFQ/V
RFQ/V Responses Due
Short List Developers
Community Forum #1
Business Plan Submittal Due
Community Forum #2
Recommendation to the ARRA
Fiscal/Budget Impact:
September 19, 2000
November 3, 2000
December 8, 2000
December 20, 2000
January 10, 2001
February 7, 2001
February 21, 2001
March 7, 2001
To complete the immediate steps listed above, the city (through the lead of the Development
Services Department) would need to contract with a financial advisor, request redevelopment or
development legal assistance through the city attorney's office, and marketing /pr consultant to
provide the necessary expertise to develop the documents and prepare the city for release of the
Honorable Members of the September 15, 2000
Alameda Reuse and Redevelopment Authority Page 5
RFQ /V and RBP. The total cost of these consultants for these tasks is estimated to be less than
$50,000 and would come from the ARRA fund (consulting services).
Recommendation:
It is recommended that the ARRA Governing Body approve the disposition strategy of engaging a
Master Developer for Alameda Point and authorize staff to proceed with the selection process for
such a Developer, specifically to proceed with the immediate tasks outlined above.
Respectfully submitted,
Doug Yount
Development Services Director
By:
Nanette Banks
Business & Special Projects Manager
DB /nab /gis
Attachment One: Staff Report Packet from September 6, 2000 Regular ARRA Meeting
Attachment Two: Final Disposition Strategy Report for NAS, Alameda
cc: David A. Berger, Assistant City Manager, Community & Economic Development
Alexander Bascom, BVP
James Musbach, EPS
H:\ARRA\MAST2. WPD
Alameda Reuse and Redevelopment Authority
Interoffice Memorandum
August 31, 2000
TO: Honorable Chairman and Members of the
Alameda Reuse and Redevelopment Authority
FROM: Doug Yount, Development Services Director P k
SUBJ: Report from the Development Services Director recommending that the ARRA
approve the disposition strategy of engaging a Master Developer for Alameda Point
and to authorize staff to proceed with the selection process for such a Developer
Background:
In April, the ARRA hired a consultant team consisting of Jim Musbach, Economic Planning Systems
and Alexander "Duke" Bascom, Bascom Venture Partners to assist in re- evaluating the development
disposition strategy for Alameda Point. The December 1998 Alameda Point Business Plan,
contained a disposition strategy that presumed the Navy would remediate contaminated sites based
on a published clean-up schedule, and transfer "clean" property that, in turn, would allow the City
to sell five development "packages" to one or more parcel developers. During the early phase of our
negotiation last fall, following passage of the no -cost EDC legislation, the Navy asked staff to
consider taking much of NAS as a Sec. 334 early transfer, with the intention that the City engage
a single "master" developer to simultaneously perform the clean-up (at the Navy's expense) and
install back -bone infrastructure to support redevelopment.
During Phase One of the evaluation process, the consultants interviewed city staff to answer two
questions: (1) what is the capacity of the city to handle the redevelopment of NAS? ; and (2) what
is the appropriate role for City during the redevelopment process? In Phase Two, the EPSBVP
consultant team interviewed eleven development companies to test market interest in a master
developer for NAS.
The consultants approached the eleven developers with the same set of questions. The questions
were compiled and included in the disposition strategy report, previously submitted to you for
review. In general, all of the developers found Alameda Point to be highly desirable and possessed
enormous development potential. Even with the identified constraints such as environmental issues
and refuge obligations, the market responded positively to this project.
Discussion:
The consultants used the findings from these interviews, along with their expertise and experience
from other closed military base conversions in which they have been involved, to evaluate the
complex challenges facing the redevelopment of NAS. The following is a summary of the key
recommendations:
1. The City of Alameda should define its role as providing city policies and services, as well
as overseeing the NAS disposition, coordinating public financing for infrastructure, and
managing the development and disposition contract.
2. The City of Alameda should engage a master developer for the entirety of NAS (excluding
the golf course) and avoid inefficiencies as well as conflicts inherent to parcelization.
Honorable Members of the
Alameda Reuse and Redevelopment Authority
August 31, 2000
Page 2
3. The brownfield sector can pursue the NAS opportunity by joining the master developer team,
but there is no benefit to pursuing this sector as an alternative to a traditional developer.
4. The asset management should be offered as part of the solicitation, with the city prepared to
have a selected master developer act as its advisor or agent for these services during the
exclusive right to negotiate period.
5. The City should begin its solicitation for a master developer as expeditiously as possible in
recognition of the maturity of the economic and development cycle, and the need to
capitalize on potential efficiencies as early as possible.
It is important to note, the City will serve as the "Executive Developer" during this process. The
City will retain ultimate oversight and control over the quality and character of the development.
Attached for your review is the section from a previous consultant report which briefly describes the
role of the city in the development process (Attachment One). All of the details of the roles of the
developer and city will be defined in the RFP and later in the executed development agreement.
Also as part of Phase Two, the consultant team took these recommendations to the Alameda Point
Advisory Committee, Economic Development Commission and Alameda Point Business
Consortium of the Alameda Chamber of Commerce. Attachment Two is written communication
from two of the three groups. Generally, each group felt the master developer strategy was right
for Alameda Point. The Chamber group does not take positions on issues affecting the base,
therefore chose not to submit written comments.
The final product from Phase Two is the attached report recommending that ARRA move forward
with the selection of a master developer and included a proposed selection process and schedule.
Building on lessons learned from the Catellus project, this process will ensure that the community
is informed and involved and that the city will get the necessary information in order to make the
best developer selection.
The report recommends a two step developer selection process and two community forums. The
proposed schedule brings a recommendation of a developer before the ARRA in March 2001.This
timing coincides with the Navy's conveyance schedule and will allow the city to have a developer
on board to negotiate with the Navy on clean -up issues.
There are some steps in the process that need further explanation at this point. These are:
1. Developer Selection Team —The following team is a list of the proposed team that will be tasked
with the duty of reviewing submittals by developers in the two step process and for guiding the
selection process:
a. Assistant City Manager, Community /Economic Development (Chair of team)
b. Chair of Economic Development Commission
c. Chair of Alameda Point Advisory Committee
d. Chair of Planning Board
e. Public Works Director
f. Planning Director
g. Development Services Director
Honorable Members of the
Alameda Reuse and Redevelopment Authority
August 31, 2000
Page 3
There would be a total of 7 individuals on this selection committee aided by the City Attorney, city
project manager and consultants (financial, redevelopment, legal, tbd).
2. Marketing/PR assistance — Because the Request for Qualifications and Vision Statement
(RFQN) will also be useful in the city's overall economic development marketing strategy, it
is very important that they be of high quality including graphical presentations. The documents
should convey the reality of development at Alameda Point and the desirability of other
development interests and businesses to locate in Alameda to be part of this exciting future and
synergy. Also, it is important for the city to develop a website for public participation and
comment on the master developer selection process (this web site may also be useful for
comment on future development plans). Finally, a marketing/PR consultant could aid in the
compilation of information in the technical library, the hosting of tours, and the community
forums.
3. Immediate Next Steps in Process — the following are the next steps in the process for selection
of a master developer before the RFQN is released:
a. Assemble developer selection team and contract with assisting consultants
b. Interview similar communities for additional information on drafting of RFQN
language and conditions
c. Draft RFQN and RBP (Request for Business Plan)
d. Return to ARRA at a special meeting on October 17 with the following:
Draft RFQN and RBP
Project Timeline including steps for Developer selection, ENA
development, ENA period, DDA Development
Format of community forums
Suggested membership for developer negotiation team
Further detail on website, tours, information exchange
Fiscal/Budget Impact:
To complete the immediate steps listed above, the City (through the lead of the development services
department) would need to contract with a financial advisor, redevelopment or development attorney
through the City Attorney, and marketing/pr consultant to provide the necessary expertise to develop
the documents and prepare the city for release of the RFQN and RBP. The total cost of these
consultants for these tasks is estimated to be less than $50,000 and would come from the ARRA fund
(consulting services).
Recommendation:
It is recommended that the ARRA Governing Body approve the disposition strategy of engaging a
Master Developer for Alameda Point and authorize staff to proceed with the selection process for
such a Developer, specifically to proceed with the immediate tasks outlined above.
Honorable Members of the
Alameda Reuse and Redevelopment Authority
Respectfully submitted,
Doug Yount
Development Services Director
By:
. 60A,th-
Nanette Banks
Business & Special Projects Manager
DY/NB /la
Attachment One: Role of the City in the Development Process
Attachment Two: Comments from Community Groups
Attachment Three: NAS Disposition: Recommended Process and Schedule
August 31, 2000
Page 4
cc: David A. Berger, Assistant City Manager, Community & Economic Development
Alexander Bascom, BVP
James Musbach, EPS
C: \LAK I L\A RRA \STAFFREP\2000 \A R RA DISP. W PD
Attachment One
Final Report
Alameda Naval Air Station Disposition Strategy Evaluation
May 31, 2000
III. THE ROLE OF THE CITY IN THE DEVELOPMENT
PROCESS
The division of responsibilities between the public and private sectors should be based
on a careful assessment of the skills and financial tools each entity can provide to the
reuse process. Generally, the public sector is good at providing land, entitlements,
public services, and public financing. Additionally, it can manage developer selection
and disposition processes.
These functions can be categorized as "executive" level functions, corresponding to a
City role as "Executive Developer" versus master developer. If the agreement is well -
structured, the City retains ultimate oversight and control over the quality and character
of development, while protecting the local jurisdiction from undue risk exposure and
responsibility for development tasks it is ill- equipped to carry out.
Conversely, the private sector tends to be skilled at taking on risk in an uncertain
environment, marshalling financial resources from the investment community, phasing
demolition and infrastructure installation, and selling and /or building structures in a
manner that is responsive to the real estate market. Thus, these development functions
are often best carried out by private sector developers serving as "master developers"
for the project.
Based on research conducted nationally by EPS, and recent experience of both BVP and
EPS in a variety of complex base reuse projects, it is clear that, in general, local
governments are more successful in the role of executive developer, outsourcing master
developer functions to a private developer. Our assessment of the capabilities and
interests of the City of Alameda is consistent with this finding. The principle reasons for
this conclusion are described briefly below:
• Complex projects require seasoned experience in the day -to -day management of
development. Implementation of a reuse plan requires skills in contract
management, construction management, infrastructure planning, financing, asset
management, and marketing. Although expertise may be brought in -house by the
recruitment of an individual with strong development experience, this recruitment
may involve substantial effort and expense. Moreover, such an individual may find
it difficult to execute developer responsibilities in the context of a municipal
government structure.
• A complex political-environment may argue for disposition to the private sector to
insulate transaction and development decisions from the political process to some
degree. Effective public involvement will, however, be important. The local
community will be more willing to accept the role of a private sector master
developer if it has a clear understanding of the pros and cons of private- sector
involvement, as well as the mechanisms available for ensuring accountability.
6
p2sumrpt.doc
Final Report
Alameda Naval Air Station Disposition Strategy Evaluation
May 31, 2000
• Substantial financial resources are required to carry out successful redevelopment of
a military base. Established private developers have access to the capital markets,
including substantial existing lines of credit.
Even with the engagement of a private sector master developer, the City plays a critical
role in the success of the project by providing: (1) regulatory support, including zoning
and general plan land use designations; (2) land and building assets; (3) low -cost
financing; and (4) the ability to hold the land to enhance project feasibility. This last
point relates to the ability of the City to be a "patient developer," because unlike private
developers, it has the ability to hold the land for long periods without incurring high
holding costs. This ability to hold the land allows the City to pursue public policy and
community development goals to a greater degree than a private developer can under
typical private development conditions.
7
p2sumrpt.doc
Attachment Two
August 14, 2000
TO Disposition Strategy Recommendation Ad Hoc Committee, APAC
members, Doug Yount
FROM: Diane Lichtenstein for the Committee 523 -1235
SUBJECT: APAC Recommendations to ARRA for Alameda Naval Air Station
Disposition Strategy Evaluation May 31, 2000
The Alameda Point Advisory Committee agrees with the
Consultant's recommendation for the Disposition Strategy, that a
Master Developer for Alameda Point is essential. However, we wish to
emphasize the following points as fundamental to the definition of the role
and functioning of the Master Developer:
1. The role of the Master Developer should be as the Planner /Coordinator
of the Project in order to assure planning and development expertise,
cost effectiveness and project funding. This will most likely result In
more than one developer.
2. The fundamental concepts of the Community Reuse Plan should be
adhered to. If market driven forces suggest a need for major
modification(s) to the Community Reuse Plan, the changes should be
subject to public scrutiny and review, and to City approval.
3. The public should be kept informed and aware through all stages of
the process. Public input must be a priority at policy, planning and
design levels to ensure that the development reflects the vision of the
community.
4. In the implementation of the Project, the short-term goals and
strategies must be consistent with the vision as expressed in the
Community Reuse Plan.
5. All efforts should be made to reach out to and employ local
developers, professionals, business and labor In all phases of the
Project.
6. The City of Alameda must retain and exercise active oversight through
all phases of the Project.
City of Alameda
Memorandum
August 10, 2000
To: Alameda Reuse and Redevelopment Authority
From:
Frank Matarrese, Chair
Economic Development Commission
Re: Alameda Point Disposition Strategy Evaluation
At its July 20, 2000 meeting, the Economic Development Commission (EDC)
accepted the report on the Alameda Point Disposition Strategy Evaluation. The
EDC is advisory to the City Council and the Community Improvement Commission
(CIC) on matters of economic development and redevelopment. Recognizing the
key role that the CIC will ultimately have in implementing a master developer
strategy at Alameda Point, the EDC appreciates the opportunity to comment to
the ARRA as the strategy is being formulated.
As the ARRA moves forward on the master developer process, the EDC asks that
the following be taken into consideration:
• recognizing the importance of the 15 to 25 year duration of the
relationship between the ARRA and a master developer;
ensuring that the master developer has sufficient up-front financial
resources to undertake the project and to prevent, for example, land
banking;
• acknowledging that the length and cost of remediation be considered in
implementation of the strategy;
incorporating interviews with communities that have implemented similar
projects with master developers into the scope of the next phase of
work on the master developer strategy;
• recognizing the importance of clearly defining the roles of the master
developer and the City; and
• applying the lessons learned from the Catellus project.
Thank you for the opportunity to comment.
Sincerely,
Frank Matarrese, Chair
Economic Development Commission
FM/JB:sf
cc: Doug Yount, Development Services Director
Dave Berger, Deputy City Manager
Economic Development Commission
GAECONDEVNEDC\CORRESPV+RRACOMM.WPD
F:EDC\Correspondence\General #3
Attachment Three
MEMORANDUM
EPA
Economic &
Planning Systems
Real Estate Economics
Regional Economics
Public Finance
Land Use Policy
To: Dave Berger, Doug Yount, Nanette Banks
From: Duke Bascom, Jim Musbach
Subject: NAS Disposition: Recommended Process and Schedule; EPS #9256
Date: August 31, 2000
Bascom Venture Partners (BVP) and Economic & Planning Systems (EPS) were retained
by the City of Alameda to develop a disposition strategy for Alameda Point, the former
Naval Air Station. An organizational capability study and market testing were
undertaken to determine the most appropriate means of achieving the City's goals
related to redevelopment of the site. As summarized in the final report, Alameda Naval
Air Station Disposition Strategy Evaluation, dated May 31, 2000, BVP and EPS
recommended that the City seek a Master Developer to carry out the redevelopment of
the base.
Since that time, BVP and EPS have made presentations to several community groups
and have received their feedback on the recommendations of the study. Two meetings
were held with the Alameda Point Advisory Committee (APAC), and one each with the
Economic Development Commission (EDC) and the Alameda Chamber of Commerce.
All of the groups were in support of the recommended strategy, and several suggestions
were made regarding the process. Key suggestions include selecting a master developer
with a sufficient balance sheet to sustain thorough economic downturns (EDC), and
providing opportunities for local, smaller builders to participate in selective vertical
redevelopment of the base (APAC).
RECOMMENDED PROCESS
BVP and EPS recommend a two -stage process. The first phase would be a Request for
Qualifications and Vision Statement (RFQ +V), and the second phase would be the
submittal of proposed Business Plans by a short list of developers selected based on a
competitive review of their responses to the RFQ +V. The process would incorporate
two community forums, with the first being to present qualifications and the second to
address Business Plans. The key elements of the process are described briefly below.
BERKELEY
2501 Ninth St., Suite 200
Berkeley, CA 94710 -2515
www.epsys.com
Phone: 510- 841 -9190
Fax: 510 -841 -9208
SACRAMENTO DENVER
Phone: 916 -649 -8010 Phone: 303 -575 -8112
Fax: 916 -649 -2070 Fax: 303 - 623 -1294
Dave Berger, Doug Yount, Nanette Banks
NAS Alameda
August 31, 2000
Page 2
REQUEST FOR QUALIFICATIONS AND VISION STATEMENT (RFQ +V)
An RFQ would be drafted, outlining the information required to judge the qualifications
of each developer to serve as master developer of this project. This information would
include at least the following relevant project experience and track record, in -house
development capabilities, management team and structure, corporate balance sheet,
financing sources, and any partners that would be included on the team. Additionally,
the RFQ +V would elicit, at a minimum, the developer's vision for the property
consistent with the land use framework established by the reuse plan. This vision
statement would describe the development concept in terms of the location of uses and
tenants, character of development, amenities, and general approach to sequencing and
marketing of the site. This submittal would also address the interest, ability, and
strategies for the asset management of the Civic Core.
REQUEST FOR BUSINESS PLAN (RBP)
The RBP would replace the more typical Request for Proposals (RFP). The RBP
essentially requires a developer to conceptually program the site for development and
forecast the resulting cash flow with limited input by the City as expressed in Base
Reuse documents on entitlement, public financing, community requirements, public
policy constraints, toxic cleanup strategies, and other factors that will ultimately
determine the economics of the project. The final resolution of these detailed issues is
best left to the negotiations once a developer is selected and has signed an Exclusive
Negotiation Agreement (ENA).
The Request for Business Plan would provide a realistic framework for the developer's
approach to developing the property, expected financing, city /developer roles and
responsibilities, and an initial estimate of costs and revenues associated with
development. The Business Plan would include a schematic land use plan, a sequencing
and development program, and a cash flow showing expected public financing as well
as developer equity and debt financing.
Additionally, the developers' Business Plans would address the following key strategic
planning issues that will have major impacts on the success of the redevelopment
project:
• Market Driven Refinement of the Reuse Plan. The final land use and development
program that is adopted to implement the reuse plan needs to be formulated by the
developer who will take the risk and make the investment to execute the program.
This market driven development program will allow the identification of efficiencies
stemming from coordination of environmental remediation and infrastructure
development.
prorschadoc
Dave Berger, Doug Yount, Nanette Banks
NAS Alameda
August 31, 2000
Page 3
• Funding for Operations and Maintenance. Current base operations are funded
primarily from lease revenues. To ensure a leasing program that creates synergy
with the development program, it is desirable to have the master developer involved
in some capacity in the leasing and asset management. Bringing on the master
developer as soon as possible will help to minimize the opportunity cost of delayed
leasing, or the risk of executing leases that will not be synergistic.
• Golf Resort and Conference Center. Properties in northwest territories slated for
golf resort and conference center uses are outside development control and scope of
the Master Developer.
• Existing and Future Bond Obligations. As with operational funding, bond
financing related to the Naval Air Station depends in large part on the leasing
program. Thus, the same urgency to have master developer input on the leasing
program applies to the bond program as well as to operations.
• Environmental Remediation. The timely involvement of a master developer will
help bring closure with the environmental regulators, because the developer will
help define the timing and nature of remediation relative to the development
program. Similarly, the master developer can be instrumental in completing
negotiations with the Department of Defense on liability agreements and
remediation funding.
• Financing of Front End Costs. Certain investments in the water and electrical
systems are needed up front for the redevelopment to go forward. A master
developer is capable of bringing private equity and debt funding resources to the
project to finance these and other improvements in a timely manner, as necessary.
• Affordable Housing. The provision of affordable housing is a key community
concern. A master developer would facilitate the development of affordable housing
in the context of the overall development program for the Naval Air Station.
• Traffic Constraints. The traffic capacity of the Webster /Posey Tube represents a
potential constraint to development on the Naval Air Station and other areas of
Alameda. A master developer could help to resolve issues related to increasing the
capacity of the tubes. The developer would contribute through participation in
negotiations with City of Oakland and Caltrans, as well as development of a market
driven development plan that can be weighed against other development
opportunities and objectives in the north waterfront area.
prorsrhrd,doc
Dave Berger, Doug Yount, Nanette Banks
NAS Alameda
COMMUNITY FORUMS
August 31, 2000
Page 4
Public input will be important during the developer selection, to garner input from key
constituencies and to achieve buy -in on the developer selection. We recommend that
this input be achieved through two community forums sponsored by the EDC. These
meetings would be open to the public. The first would be held after selection of a short
list of preferred developers based on a review of the response to the RFQ +V. At this
meeting, developers would present their qualifications and vision for the site and
receive comments from community members. A second forum would be held after
submittal of the Business Plans. The developers would present their Business Plans and
receive input from the public.
PROTECT TECHNICAL LIBRARY
After approval of the process by the ARRA, an RFQ +V package for developers must be
developed, as well as a project technical information library. The library would contain
all the information relevant to the project that has been produced over the last five years,
including plans, engineering reports, environmental documents, market and economic
studies, and other pertinent information. The library would be accessible to the
developers doing due diligence, as well as to members of the public who want to
research the project.
TOURS
Informed individuals must be present upon request to lead tours which provide full
technical information on all dimensions of formulation and development. Those tours
must be proactive, informative, and timely.
INFORMATION EXCHANGE
Once the RFQ +V's have been issued, and continuing on to the submittal of the Business
Plans by short- listed developers, it will be necessary to establish and actively operate an
information exchange. This would include fielding and answering questions from
developers, or directing them to the appropriate resources in the project library, as well
as conducting tours of the property.
prorsrhnt.doo
Dave Berger, Doug Yount, Nanette Banks
NAS Alameda
RECOMMENDED PROCESS AND SCHEDULE
The recommended process and schedule is outlined below.
ARRA Board
Mail Out RFQ +V
RFQ +V Responses Due
Short List Developers
Community Forum #1
Business Plan Submittal Due
Community Forum #2
Recommendation to ARRA Board
September 6, 2000
November 3, 2000
December 8, 2000
December 20, 2001
January 10, 2001
February 7, 2001
February 21, 2001
March 7, 2001
August 31, 2000
Page 5
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FINAL REPORT
ALAMEDA NAVAL AIR STATION DISPOSITION STRA'T`EGY
EVALUATION
Prepared by:
Bascom Venture Partners
and
Economic & Planning Systems, Inc.
May 31, 2000
EPS #9256
TABLE OF CONTENTS
Page
I. INTRODUCTION AND OVERVIEW 1
II. CITY OBJECTIVES IN THE REDEVELOPMENT OF NAVAL AIR STATION ALAMEDA 4
III. THE ROLE OF THE CITY IN THE DEVELOPMENT PROCESS 6
IV. DEVELOPER PERSPECTIVES ON NAVAL AIR STATION ALAMEDA
REDEVELOPMENT ISSUES 8
Figure 1: Function /Responsibility Chart 9
V. RECOMMENDED DISPOSITION STRATEGY 11
APPENDIX A: Companies Interviewed for Alameda Point Master Developer Market
Evaluation
APPENDIX B: Developer and Brownfield Interview Summaries
Final Report
Alameda Naval Air Station Disposition Strategy Evaluation
May 31, 2000
INTRODUCTION AND OVERVIEW
The complex development processes and risks associated with the successful
redevelopment of former bases are typically beyond the purposes and capabilities of
local government agencies. Consequently, most local governments seek to engage
private sector developers, in some capacity, to carry out the redevelopment of the
military base properties in their communities. The recent move by the Dept Latent of
Defense (DoD) to no -cost EDC conveyances adds additional impetus to the use of a
master developer, in that the Navy is now encouraging early transfer and private
cleanup of closed bases.
There are, however, any number of strategies that may be employed to bring private
sector investment and development expertise into the process. As the conveyance of the
Naval Air Station Alameda property to the City of Alameda approaches, the City needs
to decide on the most effective approach to engaging the development community to
accomplish the City's objectives in the redevelopment of the base.
Bascom Venture Partners (BVP) and Economic & Planning Systems (EPS) were engaged
by the City of Alameda to evaluate the City's goals and capabilities, to assess the
perception of Naval Air Station Alameda reuse issues by the development community,
and to recommend a disposition strategy that would best accomplish the City's
objectives. This paper summarizes the findings and recommendations of the evaluation.
The essence of the BVP /EPS recommendation is that the City of Alameda should engage
a master developer as expeditiously as possible. There are a number of factors that lead
to this recommendation, including the following complex issues, the resolution of which
will have a material impact on the success of the Naval Air Station redevelopment
program.
• Market Driven Refinement of the Reuse Plan. The final land use and
development program that is adopted to implement the reuse plan needs to be
formulated by the developer who will take the risk and make the investment to
execute the program. This market driven development program will allow the
identification of efficiencies stemming from coordination of environmental
remediation and infrastructure development.
Funding for Operations and Maintenance. Operations funding is supported
primarily from lease revenues. To ensure a leasing program that creates synergy
with the development program, it is desirable to have the master developer
involved in the leasing and asset management. Bringing on the master
developer as soon as possible will help to minimize the opportunity cost of
delayed leasing, or the risk of executing leases that will not be synergistic.
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• Existing and Future Bond Obligations. As with operational funding, bond
financing related to the Naval Air Station depends in large part on the leasing
program. Thus, the same urgency to have master developer input on the leasing
program applies to the bond program as to operations.
• Resolution of EIR Litigation. To the extent that resolution of outstanding
litigation involves solutions related to the development program at the Naval Air
Station —e.g., in the provision of additional affordable housing —it would be
advantageous to have the master developer be a party to the crafting of the
solution in order to ensure that it is compatible with other base reuse economic
imperatives.
• Environmental Remediation. The timely involvement of a master developer
will help bring closure with the environmental regulators, because the developer
will help define the timing and nature of remediation relative to the
development program. Similarly, the master developer can be instrumental in
completing negotiations with DoD on liability agreements and remediation
funding.
• Financing of Front End Costs. Certain investments in the water and electrical
systems are needed up front for the redevelopment to go forward. A master
developer is capable of bringing private equity and debt funding resources to the
project to finance these and other improvements in a timely manner, as
necessary.
• Affordable Housing. The provision of affordable housing is a key community
concern and may be important in the resolution of outstanding legal issues. A
master developer would facilitate the development of affordable housing in the
context of the overall development program for the Naval Air Station.
• Traffic Constraints. The traffic capacity of the Webster /Posey Tube represents a
constraint to development on the Naval Air Station and other areas of Alameda.
A master developer could help to resolve issues related to increasing the capacity
of the tubes, and the allocation of traffic capacity among competing
developments. The developer would contribute through participation in
negotiations with City of Oakland and Caltrans, as well as development of a
market driven development plan that can be weighed against other development
opportunities and objectives in the north waterfront area.
The need to resolve these issues in the context of a development plan backed by private
sector investment and development expertise provides a strong argument for the
selection of a master developer in an expeditious manner. Before a selection process can
begin, the City must decide whether to pursue engagement of a master developer and, if
so, under what terms. Then, a selection process needs to be designed that is
streamlined, inclusive, and protects the City's interests.
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Evaluation
May 31, 2000
The remainder of this memo presents background and research further underpinning
the recommended disposition strategy. The next section describes city objectives in the
base redevelopment process, and the following section discusses the city's role in the
development process. Next, developer perspectives on issues related to the reuse of the
Naval Air Station, gleaned from a series of interviews, are summarized. Finally, the
findings and recommendations of the disposition strategy evaluation are summarized.
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II. CITY OBJECTIVES IN THE REDEVELOPMENT OF
NAVAL AIR STATION ALAMEDA
As with most other base reuse projects, short -term financial returns in themselves are
not the overriding objective of the City of Alameda. If the reuse of the Naval Air Station
constitutes an attractive and dynamic addition to the City of Alameda, creates jobs,
diversifies the employment base, and bolsters the tax base without requiring substantial
infusions of public investment, it would be considered a success. To the extent that
Alameda can accomplish these things and also generate net cash flow for the larger
community, that would be an even greater success.
Thus, the goals of the City of Alameda may be expressed as follows.
1. Convert obsolete facilities to a viable reuse project. Naval Air Station Alameda has
obsolete buildings and infrastructure that need to be rehabilitated or demolished and
replaced. These preconditions make the execution of the reuse plan a complex and
financially challenging process. Regulatory and access constraints add to the
complexity of the project. Creation of a viable reuse project entails numerous
activities, including demolition, site preparation, development of a regulatory
framework, negotiation of land and building transactions, securing financing,
providing public services, and maintaining land and capital.
2. Stimulate the local economy. Military base buildings and land can provide
substantial opportunities for local economic development. At Naval Air Station
Alameda, the hangars and industrial buildings that will remain on the base are
suitable for serving a diverse array of tenants, and land areas available for
redevelopment are capable of accommodating a vibrant mix of uses, taking
advantage of the unique waterfront setting of the base. The net effect can be a
strengthening of the local economy through new and diverse jobs, expansion of the
housing stock, and associated economic effects.
3 Improve community urban form. The Naval Air Station has always been perceived
in Alameda as an "other" place, not integrated with the City. Similarly, west
Alameda, including Webster Street, has long been associated with the base and Navy
personnel. The redevelopment of the base provides the opportunity to create an
exciting new neighborhood, fully integrated with the rest of the City, and to
revitalize Webster Street and other portions of West Alameda.
4. Improve the local tax base. The leasing of buildings, opportunities for new
development, and spin -off effects in the local economy give the City of Alameda an
opportunity to improve the local tax base to the benefit of the entire community.
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5. Create revenue sources to provide long -term benefits to local jurisdictions. If the
reuse and redevelopment plan is well- conceived, supported by requisite market
conditions, properly executed, and well- negotiated so as to reward both public and
private entities, it is likely that the City of Alameda can derive a net financial gain
from the redevelopment of Naval Air Station over the long term.
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III. THE ROLE OF THE CITY IN THE DEVELOPMENT
PROCESS
The division of responsibilities between the public and private sectors should be based
on a careful assessment of the skills and financial tools each entity can provide to the
reuse process. Generally, the public sector is good at providing land, entitlements,
public services, and public financing. Additionally, it can manage developer selection
and disposition processes.
These functions can be categorized as "executive" level functions, corresponding to a
City role as "Executive Developer" versus master developer. If the agreement is well -
structured, the City retains ultimate oversight and control over the quality and character
of development, while protecting the local jurisdiction from undue risk exposure and
responsibility for development tasks it is ill - equipped to carry out.
Conversely, the private sector tends to be skilled at taking on risk in an uncertain
environment, marshalling financial resources from the investment community, phasing
demolition and infrastructure installation, and selling and /or building structures in a
manner that is responsive to the real estate market. Thus, these development functions
are often best carried out by private sector developers serving as "master developers"
for the project.
Based on research conducted nationally by EPS, and recent experience of both BVP and
EPS in a variety of complex base reuse projects, it is clear that, in general, local
governments are more successful in the role of executive developer, outsourcing master
developer functions to a private developer. Our assessment of the capabilities and
interests of the City of Alameda is consistent with this finding. The principle reasons for
this conclusion are described briefly below:
• Complex projects require seasoned experience in the day -to -day management of
development. Implementation of a reuse plan requires skills in contract
management, construction management, infrastructure planning, financing, asset
management, and marketing. Although expertise may be brought in -house by the
recruitment of an individual with strong development experience, this recruitment
may involve substantial effort and expense. Moreover, such an individual may find
it difficult to execute developer responsibilities in the context of a municipal
government structure.
• A complex political environment may argue for disposition to the private sector to
insulate transaction and development decisions from the political process to some
degree. Effective public involvement will, however, be important. The local
community will be more willing to accept the role of a private sector master
developer if it has a clear understanding of the pros and cons of private- sector
involvement, as well as the mechanisms available for ensuring accountability.
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• Substantial financial resources are required to carry out successful redevelopment of
a military base. Established private developers have access to the capital markets,
including substantial existing lines of credit.
Even with the engagement of a private sector master developer, the City plays a critical
role in the success of the project by providing: (1) regulatory support, including zoning
and general plan land use designations; (2) land and building assets; (3) low -cost
financing; and (4) the ability to hold the land to enhance project feasibility. This last
point relates to the ability of the City to be a "patient developer," because unlike private
developers, it has the ability to hold the land for long periods without incurring high
holding costs. This ability to hold the land allows the City to pursue public policy and
community development goals to a greater degree than a private developer can under
typical private development conditions.
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IV. DEVELOPER PERSPECTIVES ON NAVAL AIR STATION
ALAMEDA REDEVELOPMENT ISSUES
As part of the evaluation process, BVP and EPS were asked to "go to the market" to
ascertain the perspective of the development community on key issues associated with
the redevelopment of Naval Air Station Alameda. Top quality, national scale
developers with experience in base reuse were interviewed, as were the leading firms in
the "brownfield" development sector. More detailed information on the firms
interviewed and the process used is presented in Appendix A.
The five issues presented to the marketplace for assessment were:
1 Should the City of Alameda assume any functions and responsibilities of a developer
to satisfy the needs of the Naval Air Station?
2. Which is more advisable for disposition and redevelopment: a master developer or
disposition of smaller parcels to a series of developers?
3. How does the emerging brownfield sector fit into the Naval Air Station disposition
and redevelopment agenda?
4. Are the asset management and property management services (other than those
traditionally provided by cities) a desirable role for the master developer, and if so,
when should that role be assumed?
5. How desirable is the Naval Air Station as a development investment opportunity?
The responses of the development community on these issues are summarized briefly
below. Summaries of the interviews with each of the developers are presented in
Appendix B.
1. Should the City try to assume any functions and responsibilities of a developer in
satisfying the Naval Air Station requirements?
All companies considered it inadvisable for the City to take on developer functions and
responsibilities. Cities should do what cities do best: provide a regulatory and policy
framework and municipal services. Developers should provide development
capabilities and resources. Thus, the role of the City of Alameda should focus on its
land use policy and regulatory functions, providing public services, and coordinating
public financing for infrastructure and demolition.
An additional role that stems inevitably from its status as property owner is for the City
to manage the negotiation and administration of the Development and Disposition
Agreement. This document specifies the obligations, responsibilities, and business
terms of the arrangement with the master developer. The respective functions and
responsibilities of the City and master developer are shown in Figure 1.
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Figure 1
Function /Responsibility Chart
Alameda Point Disposition Stratgey Study
Item
Master
Developer City Comments
Secure Land Use Entitlements X
Provide Land Use Entitlements X
Negotiate Clean -Up & Liability Costfrerms X X City involvement required w/ FOSET
Plan Development Program X Developer builds on Reuse/Bus. Plans
Arrange Infrastructure Financing X X City should facilitate tax- exempt
financing where available
Conduct Property Remediation X
Demolish Buildings /Non - Essential Infrastructure X
Market to Prospective Parcel Developers X
Construct Backbone Infrastructure X
Negotiate Land Sales/Lease Transactions X
Adaptive Bldg Reuse Marketing, Leasing, and Maintenance X X Either Developer or City managed
Grounds Maintenance X
Public Safety X
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2. Which is more advisable for disposition and redevelopment: a master developer or
disposition of smaller parcels to a series of developers?
All groups considered the City and the Naval Air Station to be better served by a master
developer. This approach offers significant efficiencies and advantages in a number of
areas: for example, it facilitates the basewide coordination of environmental
remediation and infrastructure development; allows for an integrated approach to
marketing and development of the base; provides a single entity that can more
effectively negotiate closure on environmental, regulatory, and conveyance issues;
eliminates competition among multiple developers for City resources and staff time; and
reduces the administrative burden of negotiating and administering multiple
disposition agreements.
3. How does the emerging brownfield sector fit into the Naval Air Station disposition
and redevelopment agenda?
This is not a sector that would replace the role of a traditional land developer in
executing the full range of development responsibilities for the Naval Air Station and
the City of Alameda. Brownfield specialists would most probably be brought in as team
members of a master developer group in the role of contractor, and therefore would be
managed by the master developer. Any brownfield restoration developer can pursue
the full master developer role through the solicitation and be judged on its merits
accordingly.
4. Is the asset management a desirable role for the master developer, and if so, when
should that role be assumed?
Each group considered that the asset management should be subordinate to and
supportive of the broader development strategy for the base. Almost all groups thought
the developer would add significant value to the marketing dimension of the asset
management and should therefore significantly influence if not control the marketing, at
a minimum. The two most experienced groups with these types of large -scale
redevelopment environments were adamant about the need to be responsible for all
asset management services except those traditionally provided by the City.
The final assessment of this issue should come through the master developer solicitation
process. Candidate developers should be asked to define their positions and approaches
to this issue as part of their solicitation response. The selected master developer should
serve as an advisor or agent for the City starting at the time of selection for the ENA to
provide the necessary coordination in a timely fashion. The DDA will ultimately define
the obligations, services, ownership, and compensation structure.
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5. How desirable is the Naval Air Station as a development investment opportunity?
Everyone was very interested in the Naval Air Station opportunity and all recognized
both the regulatory and technical constraints as well as the long -term, multi-cycle nature
of the project. Master developer selection should begin as soon as is practically possible,
given City concerns for public information and buy in.
As a result of our research, assessment, and validation, listed below are the benefits
defined by these companies for a master developer strategy.
• The inter - relationship of delivery sequencing, value creation, and resource
deployment requires a full integration of all project dimensions.
• Area -wide challenges and liabilities do not recognize parcel boundaries.
• Economies of scale.
• Focused political strength for regulator negotiations.
• Base -wide solutions to base -wide challenges.
• Single overhead as opposed to multiple development overheads.
• Single contract management with the City of Alameda.
• A single coordinated voice speaking with the community.
• Efficiency and effectiveness in project execution.
In the selection of a master developer and the establishment of mutual goals, the City of
Alameda should look to that master developer for ways to reduce cost, maximize value
and benefits, achieve certainty, and "box" the environmental risk. A master developer
will have to bring certain essential capabilities, strengths, and resources to bear on the
Naval Air Station and its relationship with the City of Alameda:
• Multi- disciplinary management.
• Financial strength to survive the downturns associated with multiple cycles.
• Multi jurisdictional negotiating experience and regulatory closure.
• Regulatory and political relationships throughout all levels of government.
• Service provider relationships for the full range of necessary disciplines.
• Apolitical decision - making willingness and ability.
• Access to equity and debt financing as well as strong reputation and relationships in
the capital markets.
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V. RECOMMENDED DISPOSITION STRA'T'EGY
The assessment of City objectives and capabilities and the insights gleaned from the
developer /brownfield interviews provide a basis for the following recommendations:
1. The City of Alameda should define its role as providing City policies and services as
well as overseeing the Naval Air Station disposition, coordinating public financing
for infrastructure, and managing the Development and Disposition contract.
2. The City of Alameda should engage a master developer for the entirety of the Naval
Air Station and avoid inefficiencies as well as conflicts inherent to parcelization. The
golf course would not be part of the portfolio offered in the solicitation.
3. The brownfield sector can pursue the Naval Air Station opportunity by joining the
master developer team. There is no benefit to pursuing this sector as an alternative
to a traditional master developer.
4. The asset management should be offered as part of the solicitation, with the City
prepared to have a selected master developer act as its advisor or agent for these
services during the Exclusive Right to Negotiate period. The Development and
Disposition Agreement would ultimately define the obligations, services, and
ownership going forward permanently.
5. The City should begin its solicitation for a master developer as expeditiously as
possible in recognition of the maturity of the economic and development cycle, and
the need to capitalize on potential efficiencies as early as possible.
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APPENDIX A: COMPANIES INTERVIEWED FOR ALAMEDA
POINT MASTER DEVELOPER MARKET EVALUATION
The companies involved in our market research are listed:
• Traditional Developers
1. Forest City
2. Lennar Communities
3. Legacy
4. Catellus
5. AMB
• Brownfield Sector
1. Remediation Financial Investois "RFI"
2. Land Bank
3. Environmental Property Fund
4. Cherokee Investments
5. CH2M Hill
6. Levine Fricke
Companies in both the areas of traditional developers and the brownfield sector have
the knowledge, skills, experience, and resources necessary to understand, plan, and
successfully execute the Naval Air Station requirements. Initial contacting was made to
the CEO or President of each entity to ensure participation from the most senior
corporate representative. Sixteen companies were contacted in all with five companies
declining to participate. All companies were assured this effort was a market research
endeavor and not a selection or pre - selection effort.
Each group was given a package to define the challenges, needs, constraints, and
opportunities of the Naval Air Station. Close to an hour was spent on the telephone
further clarifying the Naval Air Station information and the goals of our market research
prior to formal discussions. Standard questions were also submitted to reflect the
interest and concerns of the city. Interviews lasted approximately two hours. Dave
Berger, Deputy City Manager, and Nannette Banks, Alameda Point Business Manager,
participated in some interviews to achieve a first -hand random sampling of the process.
Most of the groups would be, in fact, the primary candidates for an actual solicitation.
Each company has the depth and breath of knowledge, skills, experiences, and resources
to effectively satisfy the Naval Air Station requirements. Few groups otherwise exist in
the United States which are adept and experienced at large -scale urban land
redevelopment constrained by multi jurisdictional regulators, environmental
contamination, and a very difficult seller in the form of the United States Department of
Defense.
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APPENDIX B: DEVELOPER AND BROWNFIELD INTERVIEW
SUMMARIES
NAS DEVELOPER INTERVIEW SUMMARIES
LEVINE FRICKE
Attendees:
Charles R. Henry, President, LFR Group
Donald T. Bradshaw R.G., Operations Manager
Frank Lorincz, Vice President
Levine Fricke (LFR) was formed 15 years ago by Jim Fricke. It was subsequently
acquired by Francois Corrette, a French citizen. LFR now has offices in 18 cities and is
seeking to grow through strategic acquisitions and hires. The firm provides
environmental remediation services related to brownfields, base reuse, and similar
projects.
LFR is currently partnered with Lennar Communities on Hunters Point Naval Shipyard,
in San Francisco. They have carried out an independent site characterization and are
negotiating with the Navy and regulators on environmental closure, cleanup funding,
and conveyance issues.
The firms are seeking to create an entity to take title to the land prior to remediation.
This entity would then perform the cleanup, transferring "clean title" to Lennar, thereby
protecting Lennar and City of San Francisco from toxics liability. The City of San
Francisco may have to be involved in this organization, resulting in a quasi - public
entity, in order to receive funding from the Navy.
In the case of NAS Alameda, LFR would not seek the role of master developer, but
would partner with a traditional developer. Most likely, they would look to partner
with Lennar Communities, as they are in Hunters Point Naval Shipyard, in San
Francisco.
Key Points Related to Alameda Point
Navy Negotiations. The Navy will drive a hard bargain on environmental settlement,
and they are in a position to create delays. If the Navy does the cleanup, contracting and
management will take a long time. It would be better if the City (or its master
developer) does the contract management.
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Regulatory Closure. It is best to bring the regulators in early on to get their buy -in on
remediation strategies. Each staff person is different; the success of negotiations may
depend in part on whom you get. Also, regulatory agencies, e.g., EPA, DTSC, RWQCB,
etc., are all different; experience is required to handle them well.
Drivers for Navy in Conveyance Process
The Navy wants to save money and reduce liability. LFR is not afraid of letting them off
on liability over insurance cap. (But it depends on level of funding for cleanup.)
Master Developer. A single master developer is necessary for effective development of
the site. The City needs one party to deal with and one big player can be more effective
in leaning on Washington. A single master developer can achieve economies of scale in
the development, resulting in a 20 to 30 percent efficiency gain. There is a significant
advantage in having an environmental solution that is basewide versus tract by tract.
Also, the city's administrative burden will be considerably less with a single master
developer.
Developer Solicitation. LFR would do remediation on a contract basis for the City, but
there is more problem - solving ability when they are teamed with a land developer. It is
best to solicit for a land developer, rather than specifying a brownfield developer, and
let the land developer decide how to assemble the necessary capabilities.
Role of Developer in Negotiations with Regulators. The master developer brings the
following attributes to the negotiations with the regulators: urgency, political clout,
knowledge of problems and solutions, knowledge of regulators, and single party
responsibility.
LAND BANK
Attendee:
David McMurtry, Regional Senior Executive
Land Bank (LB) is owned by IT Group, a large, international infrastructure and
environmental solutions design /construction company. IT was started in the 1930s. In
the 1970s and 1980s, IT got into environmental cleanup, hazardous waste treatment,
disposal, and landfills. In the 1990s, the firm embarked on a strategic program to
consolidate the waste business and to diversify beyond hazmat. They are now doing
$1.4 billion in annual sales.
As part of this strategic program, IT purchased Land Bank in 1997. LB was pioneering
in the "brownfield" development business. Founders of LB came mostly out of
insurance business. Carlyle Group was its biggest stockholder.
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LB has a relationship with Catellus. They are partnered with them on the Pacific
Refinery site in Hercules (50/50 LLC). LB is responsible for demolition and site cleanup.
The RWQCB is the regulator, not DTSC, due to the nature of the petroleum pollution
and contact with the Bay. LB also is redeveloping a former Kaiser Steel plant in
Riverside, CA, a pinball plant in New Jersey, and a site in Chula Vista, CA.
They generally look to buy, clean up, and sell property, usually not in partnership with a
developer. In some cases, such as Chula Vista, they will put in some infrastructure prior
to sale of land. Typically, they outsource the actual cleanup to IT, though they would
use other remediation firms, if City preferred.
LB uses United National for insurance. United National helps them craft policies for
each parcel and will write "Full Occurrence" (perpetual) policies, versus "Claims Made"
policies, which is a more limited coverage offered by most other insurers. AIG, for
example, is the biggest insurer and will not write full occurrence policies.
LB has not done any base projects. They have not wanted to get into community issues
or negotiations with the Navy. They believe in a strong market, there are better
opportunities for them with less "red tape." They are more interested now because
there are exciting properties coming available, and, they hope, the process is becoming
less protracted. Also, they see IT's work doing remediation for DoD shrinking as a
result of an increase in early transfers.
Key Points Related to Alameda Point
Use of Brownfield Developer. Combining development with environmental
remediation will save money. In some cases, brownfield developers can get a better deal
with regulators than the military can. Private sector procurement efficiency will reduce
costs relative to military effort. They also would work directly for the City, taking "dirty
title" and performing risk management and clean -up. In that case, they would sell while
clean -up was underway.
Master Developer. LB would not take on master developer role. They would either
seek to partner with a developer, or take on a single parcel of the base for cleanup and
resale. A parcel developer approach would provide more competition for the land, and
allow the different components to be developed by developers with appropriate
specialties. However, if the base has shared infrastructure and cleanup issues, a master
developer would be better.
Financial Returns. LB looks for returns on equity in the 30 to 40 percent range.
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REMEDIATION FINANCIAL, INC.
Attendees:
Myla D. Bobrow, President Sr CEO
Timothy E. Lewis, Executive Vice President
Cree Partridge, Regional VP
Remediation Financial, Inc., (RFI) sees itself as a full- fledged "restoration" developer.
They only buy "impaired" properties. They will take all toxics liabilities from the seller,
then "embrace" them in the infrastructure and land use program to create value. In
some cases, their willingness to take on all liabilities related to toxics is worth more to
the seller than the real estate. This is particularly true for publicly traded companies that
don't want these liabilities on their balance sheets.
RFI makes its money on the land development, not on the margin between cleanup costs
and funding. They start by looking at the highest and best use for a project, given
regulatory framework and city objectives. Then they develop a land use program that
optimizes the land use versus cleanup levels and methods. This program becomes the
basis for negotiations with the Navy and regulators. They currently are involved in
development of a 1,000 -acre site in Santa Clarita, in southern California.
Key Points for Alameda Point
RFI vis -a -vis Navy Negotiation. RFI offers a comprehensive clean -up solution. Because
no one else will deal with the land, they can limit liability exposure of the Navy. They
also have a strong balance sheet and can provide assurance that the project will be
completed.
Asset Management. This represents an integral part of restoration projects in terms of
management of cash flows. Long -term leases can be problematic in implementation of
development with respect to ability to manage the phasing, cash flow, and the tone of
the project. Control over leased assets is important in terms of consolidating liabilities
for toxics. However, they could be flexible regarding whether the City or RFI managed
the assets, depending on City needs.
Return Requirements. RFI looks for a "somewhat higher" return on investment from
restoration projects than would be expected from a clean development site.
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CATELLUS CORPORATION
Attendees:
Nelson Rising, CEO
Ralph Pickett, Associate Vice President for Asset Management
Marti Buxton, VP
Don Little, Senior VP
Catellus Corporation is a publicly traded real estate development company. It
undertakes commercial, residential, and mixed use projects throughout California and
elsewhere in the United States. They do both land and vertical development and have
been involved in development of many toxic sites, including Mission Bay, in San
Francisco, and the former Pacific Refinery, in Hercules, CA.
Catellus was created from a portfolio of assets "only a seller would put together" as an
outgrowth of the holdings of the Southern Pacific Railroad. Nelson Rising put together
the "core competencies" to work through the portfolio and develop an ongoing
business.
In developing contaminated properties, Catellus has partnered with brownfield/
remediation companies. In Hercules, for example, they partnered with Land Bank (IT)
in the form of an LLC. The LLC owned the land during cleanup. LB did cleanup and
Catellus did entitlement, with an option to buy the property from the LLC.
Key Points for Alameda Point
Master Developer. It is critical that a single master developer control all the assets
strategically. A single developer can create market vision and synergy among uses,
carry out more effective negotiations with regulators, realize development and
environmental efficiencies, and reduce the administrative burden on the City.
Use of Brownfield Developer. There are several ways to deal with remediation, and
there are some advantages in working with brownfield / remediation companies. Also,
there are a variety of insurance products to protect sellers. Master developer
management of remediation is key to creating value. Remediation specialists should be
incorporated by the master developer into the development team, based on the
arrangement that makes the most sense for specific property and liability issues.
Negotiating Regulatory Closure. It is better to have a well - defined land use program
and development strategy, which allows remediation strategies and timing to be keyed
to actual development needs.
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Asset Management. Master developer control of leased assets is key to allowing a
coordinated development program. This should begin at the time of signing the ENA.
This will allow a master developer to use existing buildings as incubators for future
tenants of new space, to buy out leases on a timely basis, and to coordinate leasing with
the overall development program.
Marina. You won't know how expensive it will be until you get into it. If it turns out a
marina can't be done, it will still be possible to create a waterfront amenity. Marinas are
not big money makers; the visual amenity is the main advantage to the overall real
estate project. The solution on the Marina will be tied up with the Runoff Management
Plan (ROMP), which will be part of the overall environmental regulatory closure.
City Role. The City is a better regulator than developer. However, it is overloaded and
needs to develop additional capacity to perform its project administration functions.
Developer Role in Navy Negotiations. The only effective way to move the Navy is
through those who appropriate their funds —i.e., Congress. Catellus is capable of
carrying out a sophisticated lobbying of Congress. They prefer to do it themselves,
rather than through lobbyists, because they are close to the issues and have the know
how.
Timing of Disposition. The City should start disposition now. Market conditions are
extraordinary. FISC development will activate a new segment of the market-1.3
million square feet may not take long.
Alameda Point Development Strategy. Development could start at the gate on
Atlantic. The entire infrastructure outside the gate up to the property is "normal."
Could create dramatic entrance, open up window to seaplane lagoon. A ferry terminal
in the sea plane lagoon would be a major asset for commercial development. Could start
with rehab of existing buildings for long -term tenants right away. The "campus" area
west of mall is good for dot.com companies, and it could be done in the current real
estate cycle. Infrastructure problems will make new development somewhat slower. A
key issue is whether programmatic EIR will allow "neg dec" on reuse of existing
buildings. The residential could also start in this cycle, though it will be easy to
"monetize" the residential property irrespective of the real estate cycle, as long as capital
investment is managed properly.
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LENNAR COMMUNITIES
Attendee (via telephone):
Greg McWilliams, President, Lennar Communities Northern California
Lennar Communities is a publicly traded development company. Their origins are in
the home building industry, but over the last several years they have entered into the
segment of large - scale, mixed use projects, including base reuse. Typically, these
ventures are undertaken in partnership with other companies, including LNR, a sister
company with a focus on commercial development, remediation /restoration
development companies, and local developers. Lennar is serving as master developer
for both Hunters Point Naval Shipyard, in San Francisco, and Mare Island Naval
Shipyard, in Vallejo.
Key Points for Alameda Point
Master Developer. Infrastructure development on former bases is difficult. Using a
master developer makes it easier to accomplish. It also reduces conflicts among
competing developers for resources of the City and provides a strong balance sheet to
sustain development through down cycles and unexpected problems. If the City were
not using a master developer approach, Lennar would be concerned about the credit
worthiness of neighbors; they don't want to build next to someone who may fold in a
downturn.
Asset Management. It is best to have the master developer manage the assets, because
it allows them to put together a quality marketing program and manage the whole
picture. It is necessary to have someone with experience and expertise in control in
order to create synergy. Everybody wins when it is done well. Master developer
control over leased assets facilitates certainty to tenants, market positioning, reduced
competition for resources and priority actions, and synergy between leased assets and
development.
Leases with Option to Buy. Any time tenants are in a position to control development
process, you have problems. The contention that "option to buy" is necessary for
financing improvements is not true in his experience.
Toxics. Early transfer is a preferable approach in order to control the process. Lennar
would set up a company in partnership with a restoration developer to accept liability,
and would carry out remediation in concert with infrastructure development.
Restoration Developers/Environmental Remediation Firms. Remediation specialists
are critical to the clean -up and risk management aspects of the project. Lennar wants to
work with companies that will stake their success on the outcome. They do not believe
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that companies can be both remediation specialists and developers; they look for the
very best in remediation and want them to do only that.
LEGACY
Attendee (via telephone):
Barry De Ramando, Senior Executive Vice President
Legacy, formerly Lincoln Properties, is a national real estate developer, with capabilities
in commercial, industrial, residential, and mixed use development. Legacy is doing a
part of Mare Island, a light industrial park on a portion of the base that was the first
disposition by the City, preceding the selection of Lennar as master developer.
Key Points for Alameda Point
Master Developer. Disposition through master developer is the most efficient way for
the City to manage development. Parcel -by- parcel disposition presents the potential for
a lot of conflict. The master developer will quickly move to parcel disposition strategy,
selling off pieces to developers who specialize in different product types.
Brownfield Developers. Somewhat "oversold" concept. Most developers who have
been in the game now know how to deal with toxics. They just need the capital to fund
it, and the right team of consultants and engineers to provide the environmental
services. Capital funding for toxics remediation is now much easier than it was.
Asset Management. If the City is doing the master developer approach, it may be most
efficient to have them do the asset management as well. However, he doesn't believe
the asset management issue is that big of a downside for the developer, although it may
be for the City. Cities generally are not good marketers.
City Role. If the City doesn't do master developer disposition, it will need staff devoted
full time to the development. That would be expensive.
Legacy Approach to Alameda Point Development. They would want to do multi-
family housing. Might do warehouse, office, and R &D. Legacy is not a "for sale"
developer. They want to build product they can hold.
Tube Capacity. He is concerned that the tube will not handle sufficient traffic to achieve
development potential, and that Oakland has a major impact on the solution. When
market gets soft, it will be more difficult to pull people through the tube.
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FOREST CITY
Attendee:
Victor Grgas, Director of Planning and Governmental Relations
Forest City is a national development company, traded on the New York stock
exchange. The company has a strong track record in retail development. They have
increasingly been pursuing major mixed use redevelopment and reuse opportunities
throughout the country. They were selected as the master developer for the 4,700 -acre
Stapleton Airport in Denver, CO, and were the runner up in the competition for master
developer of Hunters Point.
Key Points for Alameda Point
Forest City as Master Developer. Forest City is seeking large tracts of land; therefore,
they need to look at closed bases. But they are not sure these properties meet their
needs. They do not want to assume any risk for toxics, and they do not believe they can
live with any covenants on the land in light of impacts on financing. Forest City would
not take title to "dirty" land, because the company is 60 percent owned by a single
family.
Navy Deal on Toxics. They would want a fixed -cost solution and indemnification by
Navy on any other problems, along with assurance that they would be cleaned up fully
within a short time frame. Also, they would want an agreement that if any unknown
toxics problems are found, Forest City could clean it up fast and the Navy would pay for
it. They would buy cost cap insurance and expect that the Navy would retain CERCLA
liabilities for additional unknown problems. The City and the developer would need to
act as partners in the negotiation of the environmental clean -up terms. To date, Forest
City has not had the experience of negotiating environmental closure with regulators.
Asset Management. Taking management of leased assets is not in itself desirable,
because of the high maintenance and upgrade costs. If the City, or another entity,
managed the leased assets well, with respect to upkeep and quality of tenants, that
would be acceptable to Forest City. If Forest City did not have control and the leased
assets were not well managed, that would be a problem, because they tend to build and
hold property, and quality is a key concern. Another downside of taking on
management of the leased assets from their perspective is that it may expose them to
additional liability.
Brownfield Developers. They have looked at partnering with a restoration developer
before (RFI), but they felt that the deal was uneconomic, because RFI wanted 50 percent
of the deal and a land price that could not be supported by the development economics.
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Required Returns. Forest City looks for 12 percent cash yield on costs (this corresponds
roughly to an IRR of 20 percent). If they were to come into a base reuse project prior to
resolution of toxics, conveyance, etc., they would have to be convinced based on their
own due diligence that the risk /reward equation looks very favorable.
ENVIRONMENTAL PROPERTY FUND
Attendee (via telephone):
Peter Hornick, Founding Managing Director
Environmental Property Fund (EPF), based in New York, is in the business of providing
capital and managing risk to allow development of contaminated properties. EPF is
owned by two wealthy families in partnership with Zurich, one of the major insurers in
the toxics area. They describe their business as "middleware," which allows a developer
to undertake development of arty piece of property, irrespective of toxics issues.
In a property such as Alameda Point, their approach would be to provide the insurance
to insulate the City and any future developers from toxics liability, to work with the City
to hire a master developer on a fee basis, to develop a master plan for the project, to
negotiate with regulators to secure environmental closure (working the master plan
around the toxics, not vice versa), and then to sell off parcels to individual developers.
Key Points for Alameda Point
Master Developer. EPF sees the master developer's role as primarily to develop a
master plan for the site, working on a fee basis. They would not act as master developer,
but would help the city select one, then would work with the master developer in
formulating the land use program and environmental remediation strategy.
Environmental Remediation/Regulatory Closure. EPF would be actively engaged in
negotiations with the regulators. They see this as an area where they can add
substantial value. They would want to mold the land use plan around the toxics
constraints in order to achieve the least cost environmental strategy consistent with a
marketable land use program.
Asset Management. EPF does not believe that they would need to be responsible for
asset management. It would be fine with them to have the City do it. If the City did not
want to do it, they would help them come up with a strategy to deal with the asset
management.
Compensation and Required Returns. EPF would want to receive a share of the land
sale proceeds when properties are sold to developers after environmental closure. They
would expect returns of 30 percent and higher, depending on the specific site issues and
risks.
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CHEROKEE INVESTMENTS
Cherokee Investments was one of the earliest players in the Brownfield investment
development business sector. The company is eight years old, has 48 professionals and
over 300 assets under ownership.
In each instance, Cherokee assembles a team of staff and consultant members to execute
on a development opportunity. Pertinent examples of their Brownfield redevelopment
work are:
1. Risk management redevelopment
2. McClellan Air Force Base risk management /investor
The company would be interested in assuming the role of master developer and
considers the master developer approach to be the most advisable approach to the city.
They would propose to streamline the process and create momentum under their
development coalition master developer approach. They consider the continuity
achieved under master developer to be superior to the management inefficiency
associated with parcelization or segmentation of the Naval Air Station.
Regarding the asset management, Cherokee indicated that they would be interested in
assuming that role from the "get go." Cherokee believes that assuming the asset
management is important to address the needs of the Naval Air Station even while the
proposed master developer is negotiating their development agreement.
Cherokee also indicated that they recognize the long -term multi cycle nature of the
Naval Air Station and therefore would seek flexibility of terms and conditions and
ultimately pricing to reflect this multi cycle nature of the project and its risks.
CH2MHILL
April 10, 2000
Jill T. Shapiro Sideman, Ph.D., Board of Directors, Vice President
James Kovalcik, Vice President, Navy Programs
Michael Petauhoff, Project Manager
Introduction
CH2Mhill brings a somewhat different perspective than the other developers
interviewed regarding master development /disposition issues. The firm brings a long
history of technical experience associated with brownfields development, including
geotechnical and remediation consulting and implementation. This is paired with an
emerging practice of partnering with cities, master developers, and parcel developers to
separate environmental liability from land title in order to reduce the level of
contaminant- related risk and uncertainty in the development process.
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OVERVIEW: MASTER DEVELOPERS VS. PARCEL
DEVELOPERS
A single entity can most effectively provide area -wide coordination. This is particularly
true in contaminated base reuse projects, as contaminants such as marsh crust and
ambient groundwater contamination do not respect parcel boundaries. A single master
developer on the entire property can most effectively integrate infrastructure
design /phasing and clean -up strategies to create "bulldozer savings." A single master
developer may also simplify the process for plowing net proceeds back into the land
consistent with the requirements of the no -cost EDC legislation.
One difficult aspect is that many master developers have a "greenfield" orientation.
Those which are involved in base reuse are often scrambling to deal with environmental
issues. In these cases, it may be helpful for the master developer to have experience (or
partner with an experienced firm) conducting restoration program management,
whereby it would conduct clean -up, infrastructure, and site development. This
approach is particularly relevant in the context of a FOSET, where both title and liability
are passed from the Navy, to the City, and ultimately to the Master Developer.
If a parcel developer approach is undertaken, the situation becomes increasingly
complex. If parcel developers control their respective clean -up and development under
a FOSET, it will become difficult to determine who takes the lead on key environmental
liability issues. As presented by CH2Mhi11, a restoration developer can help to
coordinate the parcel developers' entitlement processes and restoration efforts in order
to minimize City /parcel developer risk and to expedite property reuse.
USE OF RESTORATION DEVELOPER
A "restoration developer "(e.g., CH2Mhi11) can act as an intermediary between the City
and developers under either a FOSET or a FOST:
1) Under a FOSET, the City accepts title and environmental liability, and passes both to
subsequent developer(s); or
2) Under a FOST, the City takes title only and passes it on to subsequent developer(s).
Under this scenario, an Environmental Liability Manager (ELM) could "purchase"
and hold the liability so that the City may avoid EL exposure.
SCENARIO 1: CITY ACCEPTS TITLE AND ENVIRONMENTAL LIABILITY
UNDER FOSET
Under this model, the City would receive and subsequently transfer title and
environmental liability to one or more developers with restoration program
management (RPM) expertise. Alternatively, the City could require an RPM to partner
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with one or more developers to purchase site environmental liability and pass clean title
to the developer(s).
If the City elects to transfer both land and liability to developers, it can either make the
transfer to a single master developer /RPM, or to multiple parties. As discussed
elsewhere, pursuing a single master developer disposition has some important
advantages over disposing property and liability to multiple parties, particularly where
EL issues are present. Use of a single master developer /RPM to process entitlements is
likely far superior to having multiple parcel developers moving along in different stages
and rates of progress, as it will place fewer demands on the City and will reduce
uncertainty among parcel developers.
There are several potential variations on this theme. One major consideration is how an
RPM would be positioned in the development process. For example, this entity could
actually be the master developer, taking -on both liability and title, as well as
responsibility for vertical development. Alternatively, it could be placed as an
intermediary between the City and the ultimate master developer(s), effectively
stripping the land of its environmental liability and passing the clean title through to the
development community. There many intermediate possibilities as well, which could
involve the RPM managing entitlements and infrastructure installation before passing
title through to subsequent developers, or alternatively working in collaboration with
one or more developers to clear property, install backbone infrastructure, and oversee
vertical construction.
SCENARIO 2: CITY TAKES TITLE ONLY
The elements of a traditional FOST transfer are well understood. The Navy is
responsible for clean -up, and title transfers only after it has been completed consistent
with the Reuse Plan. The developer is responsible for the cost and liability associated
only with clean -up standards that exceed those of the Reuse Plan. One variant on this
approach is to use a FOSET while still holding the Navy responsible for clean -up,
thereby expediting the transfer of property title. This approach may help to reduce
"schedule risk." Both of these approaches may involve the services of an environmental
liability management (ELM) entity prior to the point at which the City takes title.
For example, in Charleston CH2Mhi11 (as the ELM /RPM) purchased the environmental
liability from the Navy. The firm will own the environmental liability, even after title is
transferred to the City, for a total period of 20 years. The contract with the Navy "locks -
in" the negotiated clean -up cost (in this case $28.8 million), alleviating the risk that
BRAC clean -up funds may be less accessible in the future. CH2Mhi11 purchased
environmental insurance from Zurich. Title is scheduled to pass- through to the City of
Charleston on specific dates over the next five years.
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One issue with the above - referenced approach is that the contract for clean -up runs
directly between the Navy and the ELM /RPM. This can be a disadvantage relative to
having the RPM was under contract with the City /LRA. However, in exchange for the
potential loss in control, the City benefits from avoiding any exposure to environmental
liability, which is separated from title prior to title transfer to the City /LRA. One
possible variant on this model, which helps to integrate clean-up and property reuse, is
to structure a financial sharing arrangement between the Navy, the ELM /RPM, and the
City for the "bulldozer savings" that may accrue from the tight coordination of
remediation, infrastructure placement, and development siting.
The above - referenced example assumed that the property, with clean title, transferred to
the City under a FOST with a fixed schedule and consistent with the City's Reuse Plan.
Under another approach, a FOSET could be utilized whereby the title would transfer at
the completion of the ROD. This accelerated approach may, with appropriate financial
sharing arrangements in place, be a way to maximize City /developer involvement in an
expedited clean-up that avoids City environmental liability exposure.
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VINCENT F. MACKEL
Landscape Arc hitect #1277
2510 Biing Ave. #A
Alameda, CA 94501
510- 523 -8444 fx
'510-523-8146
Mayor Appezzato, Chairman
Honorable Members of the Board
Alameda Reuse And Redevelopment Authority (ARRA)
2263 Santa Clara Ave.
Alameda, CA 94501
Re: ARRA Master Developer Selection
Members of the Board:.
nO SEP
;a`,STRI UTIO
Sept. 19, 2000
I oppose the proposed selection of a master developer with the City acting as the
Executive Developer until a comprehensive master plan is approved for Alameda Point that
considers the West End.
Within the body of the City Council and the Cities staff there are individuals who have stated
they are educated and understand City, Urban Planning, and master plan development. A master
plan will provide visual and written support and assurances to the people of Alameda of the
direction, locations and quality of the development contemplated.
When you the City Council members, Boards and the Cities administrative staff took
your respective positions you understand your fiduciary responsibilities to the citizens and City
properties. The people of Alameda are not desperate for a quick fix for land worth $790 million
to $1.5 billion. In the past four years in which a master plan should have been proceeding the
citizens should note approximately $200 million was given away with little in return nor a
concrete explanation. Within this $200 million the City could have been developing strong
master plans not only for Alameda Point but also the West End, Northern Water Front but also
the bridge, tunnel traffic solutions facing the future of these developments.
Again I am opposed to establishing a relationship with a master developer until a master plan is
developed and approved. Right now the City with your leadership has the opportunity to sit in
the drivers seat, we do not need to be passengers in our own vehicle.
Cordially.
Vine
Landscape Architect
Re: Agenda Item No. 1 -A
9 -19 -00 Special ARRA Meeting
FOR YOUR INFORMATION
ARRA Boardmembers Daysog,
DeWitt, Johnson, Kerr, Chair
Appezzato, CM, ACM -Ops., ACM -
E&CD*, Development Serv.
Director*
( *Received under separate cover)
Hugh G. McKay Associates
A MANAGEMENT GROUP • INTERNATIONAL
September 18, 2000
Mayor Ralph Appezzato, Chairman
Honorable Members of the Board
Alameda Reuse and Redevelopment Authority (ARRA)
2263 Santa Clara Ave.
Alameda, Ca 94501
Re: ARRA Master Developer Selection
Dear Members of the Board:
I oppose the proposed selection of a Master Developer for
the Naval Air Station.
In my opinion, a Master Plan should be developed as per the
recommendation of the NAS Alameda Community Reuse Plan.
Planning properly will provide public awareness, while
creating a vision and mission for the future of all of
Alameda.
r)
Separating the golf course (s) for development, would
underscore the opportunity to Master Plan Community
Development for tourism, jobs, tax revenues, etc. for all of
Alameda. (e.g. Webster and Park Streets)
Yours very truly,
J
HUGH M(rK ASSOCIAf ES
gh'G. McKay
rincipal
Re: Agenda Item No. 1 -A
9 -19 -00 Special ARRA Meeting
FOR YOUR INFORMATION
ARRA Boardmembers Daysog,
DeWitt, Johnson, Kerr, Chair
Appezzato, CM, ACM -Ops., ACM -
E&CD*, Development Serv.
Director*
( *Received under separate cover)
P.O. Box 14286 • Oakland, CA 94614 • 510/749 -9062
BRAG
LAND USE
-
i
February 17, 1999
RECOMMENDATIONS FOR DEVELOPMENT OF A
GOLF COURSE COMPLEX
The Economic Development/Land Use/Reuse Task Force has been directed by the BRAG to
recommend the type of golf course development that will best serve Alameda. This is the Land
Use recommendations. They are based on an analysis of the related overall Goals and
Objectives of the NAS Alameda Community Reuse Plan, the Land Use Elements for the
Northwest Territories and Civic Core sub - areas, Objectives of the Golf Course Development
approved by ARRA February 7, 1999, assumptions the Task Force has made, and the
advantages and disadvantages of the two proposals for golf course development presently
under consideration.
RECOMMENDATIONS . •
peugliz16QAG. 2/ 17/99 Move 14410M 212-1
Plan for a resort hotel /convention center and two 18 hole golf courses. Such a development
adheres to the Goals and Objectives of the Community Reuse Plan, will enhance the quality of
urban design of the Civic Core, integrate uses, reduce the impacts on the Wild Life Refuge, and
begin construction of new development in accordance with the long term vision for Alameda
• Point. oind. S emt F6tturm.d. (Guri4 .147,4141A1 n711,1479
GOALS AND OBJECTIVES (As defined in the Community Reuse Plan - See attached
Appendix.)
I. Land Use - Achieve a balanced mix of land uses, creating a vibrant and diverse new
neighborhood in Alameda. Provide a balance among public benefit, private sector, and the
environmental uses. Seek creative solutions to provide energetic land uses while reducing
the impact of the automobile and energy consumption.
II. Urban Design and Neighborhood Character - Create the same "small town" character in
the former NAS site as highly valued by the existing community. Create a series of
neighborhoods, each with a central focus of mixed -use development, including local-
serving commercial and recreational uses and a mixture of housing densities.
lll. Achieve human - scale, transit - oriented development - Emphasize walkable streets,
restricting most traffic circulation to specific major access routes. Enhance the viability and
use of transit and other alternative modes of transportation in all development, through
deliberate design of neighborhoods, commercial, industrial and recreation /open space
areas.
• IV. CYptimize u*e of transit and other alternative modes of transportation to reduce
vehicular traffic and dependence on the automobile.
ALLOWABLE USES IN THE NORTHWEST TERRITORIES (As defined in the
Community Reuse Plan - See attached Appendix.)
I. Northern edge of the existing airfield - Mixed-use as an international commerce and
trade zone including light industrial, R&D, warehousing, trade showrooms and other similar
uses.
11. Easternmost portion adjacent to the NAS pool and gymnasium - 17 acre Recreation
and Park Department Sports Complex.
111. Remainder of area - recreation and open space (". .acting as a transition zone between
• more intensive human uses and wildlife habitat preserved to the south. . •"). including Bay
Trail and Shoreline Park, Point Alameda Regional Park at northwest end, and Scottish style
"links" golf course. "A public facility with multiple uses could be developed to jointly serve
as a golf clubhouse, environmental education center, parks and recreation multi-use
center."
ALLOWABLE USES IN THE CIVIC CORE (As defined in the Community Reuse Plan
- See attached Appendix.)
1. Civic Core - Main focal point of activity for the new neighborhoods created on the former
NAS site.
11. Civic Core ". . .The emphasis is to provide public serving and civic uses while providing
ample opportunity for job creation" - R&D/industrial Ilex" uses, light industry, office, civic.
• residential, educational, recreational, commercial, places of worship and nonprofit
organizations.
111. Civic Core - A central north-south open space promenade or mall would create an
extension of the existing Navy parade ground from the Oakland Alameda Estuary to the
Seaplane Lagoon, opening into a public plaza at the marina.
IV. Northern Civic Core - Mixed-use office and institutional center allowing for a wide range of
employment, education, and commercial uses. Existing gym, pool and Officer's Club to be
developed by Recreation and Park Department for recreational uses
OBJECTIVES FOR DEVELOPMENT as approved by the ARRA
I. Components of land use such as, but not limited to, a conference center, hotel, etc., should
lead to the highest and best use for the City of Alameda consistent with the NAS Alameda
Community Reuse Plan.
11. Tourism,should be an essential key to the development of the area.
111. The development should be of a quality consistent with the goal of oth.Lfism.
IV. The development should be planned with consideration given to the planning of the Civic
Core.
2
" V. The development shouldbe planned with ttie currently existing facilities at Alameda Point
(e.g. the 0' Club) in mind.
ASSUMPTIONS MADE BY THE TASK FORCE
I. The golf course complex must be smoothly integrated into the adjacent land uses as
envisioned in the Community Reuse Plan.
II. Private funding is available for the resort hotel/conference center and 36 hole golf course.
III. The golf course is being developed as a profit making enterprise.
IV. The development will act as a magnet for other businesses and tourism.
V. The potential opening of a golf course will be delayed because the Port of Oakland did not
acquire funds to dredge the Estuary in 1998. Aleal • Aaesn- tinft aza,yr, tie ED c
KYLE PHILLIPS GOLF COURSE DESIGN PROPOSAL
The elements of the Feasibility Study written by Kyle Phillips Golf Course Design include an 18
hole golf course, golf practice tee, clubhouse/banquet facility, possible future 200 room hotel
site, golf maintenance facility, park/shoreline bay trail, car parking and entry road to golf course
and parks.
ADVANTAGES
1. A golf course and park/trails are a good use of the land adjacent to the Wildlife Refuse.
2. The golf course site is within the prescribed boundaries of the community Reuse Plan and
• no changes would have to be made to the Plan.
3. The development process could go ahead immediately.
DISADVANTAGES
1. Though the golf course complex is a true recreational asset, the design is too isolated from
other uses, such as other commercial development, and from convenient public
transportation at Alameda Point. One of the primary goals of the Reuse Plan is to, "Achieve
a balance mix of land uses, creating a vibrant and diverse new neighborhood in Alameda".
2. The placement of the clubhouse relies too much on the automobile for access and would
require a length of road designed for heavy traffic.
3. Because of its isolation and limited type uses, it's impact as a magnet to desirable
commercial and industrial development would be limited.
4. Placement of the golf course clubhouse and banquet facilities in the middle of the project is
unlikely to be consistent with the requirements of the USF&WS Wildlife Refuge because of
heightened activity in the area, especially at night.
5. The site placement of a possible 200 room hotel in the same area would alsote
unacceptable to the USF&WS for the heightened activity and the probable height required
for hotel buildings..
3
HUGH G. MCKAY ASSOCIATES AND DESMOND MUIRHEAD,
INC. PROPOSAL
•A proposal prepared by Hugh G. McKay Associates and Desmond Muirhead, Inc. includes two
18 hole golf courses, practice tee, golf clubhouse, resort hotel/conference center,
park/shoreline trails, parking, golf museum and golf academy.
ADVANTAGES
1. • The Civic Core is the focal point of activity for Alameda Point. The hotel/conference center
would be an integral part of it, generating vitality for the area and acting as a magnet for
other desirable commercial development.
II. The complex would start the long term new development as envisioned in the Reuse Plan.
111. The resort/conference center would give Alameda a much needed facility.
IV. The complex would have good access to public transportation and be within walking
distance of other Civic Core uses.
V. The heightened activity of clubhouse and hotel/conference center would be removed from
the USF&W Refuge.
VI. A It would not require a length of a high use road.
VII. A quality resort hotel/conference center could be built immediately with private funds.
VIII .Construction of the golf course would be privately funded.
IX. The resort hotel/conference center would provide additional revenue for the City.
X. Two 113 hole golf courses would provide additional revenue for the City.
DISADVANTAGES
I. Placement of the hotel/conference center would require the relocation of the Alameda
Recreation and Park Department Sports Complex necessitating a change in the
amendment to the Community Reuse Plan which sets aside 17 acres qn the easternmost
portion of the Northwest Territories. However, if there is no prospect for funding of the
Sports Complex and the 17 acres is likely to be unused for years, perhaps it would be of
benefit to the City to relocate it to the southeast and allow the 17 acres to be used by a
revenue producing development. Perhaps the gym building could remain in place. It would
be an asset contributing to the fabric of the Civic Core.
11. Amendment of the Community Reuse Plan would delay the Record of Decision (ROD) due
some time this Spring. However, as there is a delay in Oakland's ability to dredge the
Estuary and the Request for Proposals is some time away, perhaps the project would
proceed after the ROD is signed.
4
APPENDIX
EXCERPTS FROM GOALS AND OBJECTIVES OF THE COMMUNITY
REUSE PLAN (Page numbers shown in parenthesis are from the Community Reuse Plan.)
Goal A - Land Use: (page 1 -8, 9) "Achieve a balanced mix of land uses, creating a vibrant and diverse new
neighborhood in Alameda."
Objectives
• `Emphasize mixed -use development as the overall reuse vision.'
• 'Ensure that the Community Reuse Plan is economically viable."
• `Fully integrate the existing NAS Alameda into the City of Alameda creating a new neighborhood; full
integration includes land use compatibility within and surrounding the installation, matches with the urban
fabric of Alameda, and realization of a seamless transition between the existing NAS site and the entire island
of Alameda."
• Provide a balance among public benefit, private sector, and the environmental uses and concerns; include
provisions for open space, recreational resources, environmental protection, and viable economic
development?
• 'Seek creative solutions to provide energetic land uses while reducing the impact of the automobile and
energy consumption?
Goal B - Employment and Economic Development: (page 1 -9) "Achieve job creation and economic
development to provide the employment and economic benefits historically associated with NAS
Alameda.'
Objectives
• 'Prioritize ARRA and/or City revenue generation in major land use decision, consistent with the intent to
balance economic development needs with public benefit conveyance and public/community service uses."
Goal 01- Urban Design and Neighborhood Character: (page 1 -10) "Achieve complete integration of the
former NAS site with the rest of the island of Alameda; this is to be a seamless integration of the many
neighborhoods, open space, and the best qualities of the existing City."
Objectives
• 'Create the same 'Small town' Character in the former NAS site as highly valued by the existing community."
• 'Create a series of neighborhoods, each with a central focus of mixed -use development, including local
serving commercial and recreational uses and a mixture of housing densities?
• 'Encourage development of distinctive and individualized neighborhood character?
Goal D2 - Achieve human - scale, transit - oriented development (page1-10, 11)
• Objectives
• 'Emphasize walkable streets, restricting most traffic circulation to specific major access routes.'
• Achieve the same human - scale, tree -lined character of neighborhood streets found throughout the existing
City.'
5
•• 'Enhance the viability and use of transit and other alternative, modes of transportation in all development,
through deliberate design of neighborhoods, commercial, industrial, and recreation /open space areas."
Goal 12 - Optimize use of transit and other alternative modes of transportation to reduce vehicular traffic
and dependence on the automobile. (page 1 -15)
. Objectives
• Promote continued and expanded ferry service as an alternative to the automobile.
• 'Establish a viable pedestrian and bicycle circulation system within the installation and linking the former NAS
site with the rest of the City?
EXCERPTS FROM THE COMMUNITY REUSE PLAN AND AMENDMENTS
APPROVED MAY 28, 1997 FOR THE NORTHWEST TERRITORIES (Added
wording underlined)
Northwest Territories (page 2 -25) ... 'A portion of the northern edge of the existing airfield is
designated mixed -use for future development as an intemational commerce and trade zone including light
industrial, R &D development and warehousing., trade showrooms, and other similar uses. This area may
include a site for Alameda Science & Technology Center, an institution dedicated to marrying scientific
research and commerce.
The easternmost portion of the Northwest Territories adiacent to the NAS pool and gymnasium is
intended to be developed as part of the City of Alameda Recreation and Park Department Sports Complex
at Alameda Point. This 17 acre portion will be incorporated into the City of Alameda PBC Public Benefit
Conveyance application.
The remainder of the Northwest Territories will be devoted to recreation and open space uses.
Beat{ roVirblimit i de a Bay Trail and Shoreline Park, with Point Alameda Regional Park at the far
The open space areas could include developed recreation uses such as ball fields, soccer fields, or a
Scottish style 'links" or 'rough' golf course. A public facility with multiple uses could be developed to
jointly serve as a golf clubhouse, environmental education center, parks and recreation multi -use center,
or a retreat and conference center. This area provides recreational opportunities and acts as a
transitional zone between more intensive human uses and wildlife habitat preserved to the south. In
addition, the site provides the opportunity for use as an upland dredge soils disposal site that can be
configured with open spaces, recreation and golf course uses on top of fill.
'Allowable Uses - The Northwest Territories is intended as a mixed -use area with a major emphasis on
International trade and commerce and light industrial uses. Recreational uses such as meeting and
conference facilities, club houses, educational center and recreational buildings such as pools, recreation
hails, gym and incidental storage and maintenance facilities are allowed within the district in addition to
secondary warehousing, light industry, office and supporting commercial uses. Housing may be permitted
under certain conditions. Supporting uses should be developed focused in or around a neighborhood
center. Community- oriented institutions such as places of worship and nonprofit organizations are also
considered allowable and desirable uses...'
Northwest Territories Policies: (page 2 -26) 2 -57 The Northwest Territories will be included in the
ARRA's Economic Development Conveyance request to allow the flexibility for a range of potential
economic development uses on the site both in the near term and potential long term.
6
EXCERPTS FROM THE COMMUNITY REUSE PLAN AND AMENDMENTS
APPROVED MAY-28, 1997 FOR THE CIVIC CORE (Added wording underlined)
Civic Core (page 2 -13) '...This area, representing the existing core of the base, will continue to constitute
the main focal point of activity for the new neighborhoods created on the former NAS site.
"... The emphasis in the area is to provide public serving and civic uses while providing ample
opportunity for job creation. Potential civic uses include a new university geared towards international
affairs and commerce, public recreation facilities, a museum, a library, a teen activity center, a civic
auditorium, civic office space, a place of worship, and meeting spaces.
(page 2 -14) 'The northern portion of the Civic Core is intended for reuse as a mixed -use office and
institutional center allowing for a wide range of employment, education, and commercial uses. Existing
recreational buildings and facilities along the northem edge of the Civic Core, including the existing gym,
pool and Officers' Club are intended to be redeveloped for parks and recreational uses by the City of
Alameda Recreation and Park Department.
.. ▪ A central north -south open space promenade or mall would create an extension of the existing Navy
parade ground from the Oakland Alameda Estuary to the Seaplane Lagoon, opening into a public plaza at
the marina.
' Allowable Uses (page 2 -15) The Civic Core is a mixed -use area with a major emphasis on research &
development/industrial "flex' uses. Light industry, office, civic, residential, educational, recreational,
commercial, and other supporting uses are allowed within the district. Community - oriented institutions
such as places of worship and nonprofit organizations are also considered allowable and desirable uses.
"Civic Core Recreation Area (page 6 -5) The existing Navy recreation area framing the northern edge of
the parade ground will be conveyed to the Alameda Recreation and Park Department for reuse. The
makes these facilities ideally situated for public recreational. uses.'
PLANNING GUIDELINES FOR GOLF COURSE FEASIBILITY STUDY
GIVEN TO KYLE PHILLIPS
I. An 18 hole, world class links style golf course with clubhouse, parking, practice facility and
maintenance building.
I1. Consider clean Merritt sand.
111. Consider a public park site adjacent to the waterfront accessible by vehicle.
IV. Consider a 300 room hotel side in connection with the golf course development.
V. A 100 foot Buffer along the north and west waterfront for a pedestrian /bike trail.
VI. Consider site drainage.
VII. Consider neighboring wildlife refuge.
7
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