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DEFENSE COMMUNITIES 360

Alameda’s No-Cost EDC Followed City’s Return to Original Reuse Plan

  • October 19, 2011
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The agreement the Navy and the city of Alameda struck last month over the terms of the transfer of a 918-acre parcel at the former Naval Air Station Alameda was the direct result of the city’s decision to return to the base’s original reuse plan, one that emphasized job growth over housing.

That reuse plan was the basis for a deal the two parties reached in June 2000 calling for Alameda to obtain the San Francisco Bay area property under a no-cost economic development conveyance (EDC). In the intervening years, the city contemplated changes in the redevelopment plan for the parcel, now called Alameda Point, which reduced the emphasis on job creation in favor of increasing the amount of space devoted to housing.

As a result of the changes, the Navy and Alameda negotiated new agreements for EDCs that would have required compensation. The most recent deal required the city — really, its master developer — to fork over $108 million to the Navy. Those agreements never were carried out, however; one development group abandoned the project due to the decline in the real estate market in 2006, and last year the city dropped its master developer SunCal due to concerns over the viability of its vision for the site.

Instead, the city opted to “recommit” to the original plan, primarily because of the urgent need to generate jobs, said Jennifer Ott, chief operating officer for Alameda Point. And in turn, the Navy was willing to honor the original memorandum of agreement from 2000 for a no-cost EDC.

“[Now] the city is focusing on creating an economic engine at Alameda Point and bringing jobs back,” Ott said.

The change in emphasis between Alameda Point’s original reuse plan and subsequent ones is striking. The initial plan calls for about 1,400 residential units and 5.5 million square feet of commercial space. A revised general plan for the site would have resulted in up to 2,000 housing units and 2.3 million square feet of commercial space. The shift toward housing in SunCal’s plan was even more dramatic. The developer’s plan, which was not adopted by the city, called for 4,200 units of housing.

For the Navy’s part, reinstating the no-cost EDC was not a big deal. “We have a fully executed, legally binding, no-cost EDC signed in 2000,” said Tony Megliola, the property’s base closure manager.

The Navy requested one new provision, however, to protect it in the event the city’s plans change significantly. If the city builds more than about 1,400 market-rate residential units at Alameda Point, it would owe the Navy a penalty of $50,000 per excess home.

“Given the uncertainties associated with this type of long-term redevelopment project, we feel this arrangement is appropriate in this circumstance,” Megliola said.

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