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Matarrese: ‘We can control our own destiny’

Submitted by on 1, July 23, 2010 – 5:00 am17 Comments

City Councilman Frank Matarrese said the city should set up its own nonprofit development corporation to handle the redevelopment of Alameda Point, and he plans to ask his dais-mates at a council meeting next Tuesday whether they’ll agree to explore the idea.

Matarrese, who offered the idea on his campaign blog Wednesday and at a town hall meeting Thursday night that was attended by about 50 people, said he’d like to foster a commercial base at the Naval Air Station, which he said was the original base closure mandate, and push housing into other areas of the Island where it would be closer to other off-Island access points and transit.

He said new leasing guidelines for the Point that could be a starting point for commercial development will be presented Tuesday night.

“If we don’t do this now we are going to kind of wallow around, and it’ll be another 15 to 20 years before anything is done,” Matarrese said Thursday.

In a separate interview for another story, Vice Mayor Doug deHaan said he too thought setting up a city-sponsored nonprofit to handle the base redevelopment would be the way forward for the Point.

Matarrese said the proposal to set up a nonprofit corporation to develop the base could be similar to one set up by the Irvine City Council in 2003 to redevelop the former El Toro Marine Corps Air Station, which Matarrese and Mayor Beverly Johnson visited in November 2009, after they withdrew their support for SunCal’s Measure B.

In that case, the Navy auctioned the 4,682-acre base off to the highest bidder – a consortium led by Lennar Corp. – and the city got to keep 1,300 acres to develop into a park.

Matarrese also said he’d like to build on existing industries at Alameda Point, including environmental remediation, marine businesses and specialty food and beverage, in order to start building revenue to pay for redevelopment at the Point. And he said he thought the city could do the job more cheaply because it doesn’t have the same profit demand as SunCal or another private company.

He said he thought the city could manage the development, selling parcels to other small developers to build on in order to pay to replace roads, water pipes and other infrastructure there.

Matarrese said that he’d ask the experts to tell him how much housing might be built at Alameda Point, though he wants to push housing out to other areas of the Island. For example, he said the city could seek to build waterfront condominiums near the existing Main Street ferry terminal, or city officials could ask the United States Marine Corps to move their training center from its existing Clement Avenue location out onto the base so that new housing could be built there.

“It may or may not work. But we can ask the question now,” Matarrese said. “We can control our own destiny.”

Participants in Thursday’s town hall asked Matarrese questions about how a city-sponsored nonprofit would pay for development at the Point and what kind of housing might still be built there. They also asked what impact an anticipated lawsuit from SunCal might have on the city’s future progress at the Point.

Matarrese said he’s optimistic the city would still be able to move forward in the face of a suit.

“We negotiated in good faith. They didn’t. The agreement is terminated now,” he said.

17 Comments »

  • Jon Spangler says:

    I am highly skeptical that a city-managed nonprofit scheme will work at AP, although the concept is initially appealing on an emotional level.

    Since the city, county, and state have zero available funding for such a costly project, its success seems to depend on obtaining about $1 billion in federal funds to replace private capital. The cash will be needed for the infrastructure replacement and other pre-development work that will still be necessary. The prospect of federal funds on that scale appears really doubtful for such a localized project. (I can already hear the cries of “pork barrel project” coming from the soon-to-be-larger Republican minority in Congress.)

    Success of this DIY (do it yourself) approach also depends on the City having the necessary management expertise on both staff and Council levels to pursue a decades-long redevelopment project. This seems unsustainable in our current budgetary distress: the required level of expertise is extremely expensive and beyond current staff capabilities. (Look at how many consultants the city staff has needed just to analyze and keep up with developer proposals since 1997.) The long-term political consensus and consistency of political will and direction have also been lacking, as the last few years have shown.

    A primarily commercial or industrial redevelopment scheme would seem to recreate the nasty traffic congestion patterns of the ANAS days, too, compared to Peter Calthorpe’s plan to build proportionally more housing at AP and achieve closer to a 1:1 jobs-housing balance. With fewer housing units, there is also not the ridership to support the kinds of transit improvements that Alameda will need. More intense redevelopment like the original Calthorpe plan, which is the best I have seen so far for AP, offers much better potential markets for funding transit service at convenient intervals. Commercial/industrial development simply does not generate new transit users the way that housing does.

    Given the extremely high costs of redeveloping AP (detoxifying and reusing historic buildings, preparing for sea level rise, replacing the infrastructure,
    implementing significant transit and transportation management improvements, etc.), any less-intensive redevelopment scheme seems unable to generate the tax-increment revenues needed to pay for everything, too. Even at “nonprofit” rates of return, the complex, costly, and challenging redevelopment of Alameda Point will take a huge investment of capital and need continuing tax revenues to succeed. Housing–with the associated retail businesses supported by the residents–would generate more tax revenue, as I understand it. (There will also be more of a market demand for housing than commercial in the near future.)

    In short, the City of Alameda seems to lack the financial wherewithal, the technical and management expertise, the political will, and the long-term consistency in its political leadership to pull off this redevelopment project as a “do-it-yourself” remodel. Having done a DIY remodel myself, I am doubtful, indeed.

  • Richard Bangert says:

    Military base reuse throughout the country has not gone smoothly. The record of using a sole, private master developer is not one the offers hope for Alameda, and our experience has born that out. On the other hand, here are three successful models that operate under a state-sanctioned development authority, rather than a private, for-profit master developer:

    http://www.marchjpa.com/index.html

    http://www.mcclellanpark.com/

    http://www.devenscommunity.com/about_us/index.html

    One starting point would be to convince the White House that they should abandon the “fair market value” approach and move to a “fair share” approach. Such an approach would dispense with the up-front land sales price, and replace it with a future-proceeds-sharing approach. That was the original idea in the business plan submitted with our application for an economic development conveyance over a decade ago. That plan called for future proceeds being shared with the Navy – they would get 25% and Alameda would get 75%.

    As for where some of the money comes from to jumpstart the process, we don’t need a handout. We need a federal loan. When the 25% internal rate of return plus the 20%+ profit are eliminated from the business plan (as in SunCal’s business plan), servicing a federal loan becomes more attractive as a way to move forward.

  • Linda Hudson says:

    I remember that, shortly after George W. Bush replaced Bill Clinton as President, the Defense Department decided to charge communities for the right to develop abandoned military properties. Our bill was $108 million. During Mayor Johnson’s first term, she was interviewed on NPR’s “Talk of the Nation”about how difficult this made development of Alameda Point, and how she hoped the Defense Department would change its mind. I was pretty new to Alameda then, but I remember what a body blow it was to the community. I think you’re right, Richard, a 25%/75% split may be the only way any development can occur. Perhaps we need some help from our Congressional delegation to encourage the Obama administration to help our struggling community.

  • Nancy Hird says:

    There are upfront revenue producers in place right now and have been generating enough revenue annually to keep close to the status quo. I don’t think the roads are any worse than elsewhere in Alameda. The short term leases can be turned into long term leases giving renters the opportnity to obtain loans and grants to help rennovate the buildings they occupy and the option of long term leases would be attractive to other businesses that want to locate here. (There is a planned bus tour of NAS history and adaptive reuse currently at AP the afternoon on 8/22. visit http://www.preservation-alameda.org for info)

    The VA plans to build a columbarium and clinic. This may be expanded to include a hospital to serve both veterans and Alamedans now that they will have an option to move closer to Main St. and reduce their infrastructure expense. That would save Alameda the expense of required siesmic upgrades to our current hospital and eleminate the $300 annual parcel tax. That hospital could also become a training place for our young people to intern for health care jobs which pay enough to allow them to live in Alameda, unlike retail.

    UC Berkeley needs housing and a campus housing area could be set up in the BEQ pretty rapidly since that area is clean of toxicity. City Hall West could be a great office campus for a green or tech start up. UC Berkeley also is looking for more space to expand their programs and AP is close to their main campus.

    Selling off parcels to industrial developers would increase cash flow for infrastructure and restoration plus the ammenities like the Sports Complex and ball fields.

    We always said we wanted AP to be seamless with the rest of the island. By building slowly, this my be accomplished. The revenues gained over time can pay for infrastructure as we go.

    Traffic would be reverse flow if there is not an influx of housing at AP.Even light and green industry invite a degree of telecommuting and we probably can not replicate the full 47,000 jobs that existed during the NAS heyday.

    I like Frank’s idea of moving the marines to AP to creatre space for housing and putting housing close to the existing ferry. Perhaps the exemption to Measure A will be the Northern Waterfront where Alameda condos could face Oakland condos. Some new residents would be close to their jobs at AP and some would join the commuters via the ferry. Some of us may report to work at AP, relieving the tube traffic.

    When we elected to find a master developer, times were different. We have seen that approach does not work for AP. It is time to get creative and pull together to resolve issues and move forward.

  • Mark says:

    I’m sure the City has explored the option of making Alameda a port.
    What was the reasoning behind not doing this?

  • Mike says:

    I’m still wondering why it can’t be a regional park.

  • Richard Bangert says:

    Mark,

    The reasoning is contained in the 1999 EIR. It boils down to the need to construct a new bridge or tunnel for truck traffic.

    In September of 1997, the Bay Conservation and Development Commission voted to remove the seaport designation from consideration. The seaport would not have been using the dock area on the south side of the base where the ships are, as one might expect. The seaport would have been located in the Northwest Territories right across the estuary from the Port of Oakland.

    If you want to read more of the history, here it is: http://issuu.com/alamedapointinfo/docs/1999-eir-alameda-point-part-one go to section 2.28 for reference to the Seaport Alternative.

  • Richard Bangert says:

    Follow-up on the port question…

    Two years prior to the 1999 EIR, the city also considered, and rejected, the idea of having the area around the Seaplane Lagoon transferred under the provisions for a Port Development Conveyance. It is discussed on page 17 of this document:
    http://issuu.com/alamedapointinfo/docs/1997-economic-development-conveyance-application

    The problem here was that a wide strip of land extending from the Seaplane Lagoon north to the estuary has historically been, and still is, classified as Tidelands Trust. If the Seaplane Lagoon area was to be transferred for port uses, the land adjacent would have to remain as Tidelands Trust, or Public Trust, Land. This would preclude a wide variety of potential revenue-generating uses such as housing, manufacturing, retail, etc., as well as purely municipal uses, that are not allowed on public trust land.

    A few other points on this Tidelands Trust strip. Around 1999, the state assembly approved a tidelands land swap at Alameda Point under which this prime parcel extending through the center of the main mixed-use area would be swapped for a strip along the northern waterfront/estuary which, for historical reasons, was never officially part of the public trust. Upon conveyance of Alameda Point to Alameda, the city can follow through and execute this land swap.

    And this relates to one other question – a Navy auction. This important Tidelands Trust strip of land cannot be sold to a private entity, therefore the Navy has its hands tied as far as auctioning it off. I guess you could say they COULD auction it off, but the minute it left Navy hands, the state would say, “It’s ours. Sorry, investors, but all you have is a worthless piece of paper.” Once the property belongs to Alameda and the city executes the land swap, Alameda can sell it. But the Navy cannot.

    Another related reason why the Navy will not resort to an auction is that by definition there would no longer be a reuse plan. The only way an auction could occur is if the city said it no longer wanted the land and was annulling the reuse plan approved by the Defense Department.

  • ct says:

    Why would Councilman Frank Matarrese propose a nonprofit development corporation for Alameda Point based on one that has failed to develop the Orange County Great Park, as plans for the Great Park have stagnated for five years?

    articles.latimes.com/2009/nov/12/local/me-great-park12

    laurendo.wordpress.com/2009/11/23/southern-california-comfort/

    “The city [of Irvine] has drawn scrutiny in recent years as it has spent $104 million on the Great Park with little to show for it other than a design and a tethered-balloon ride surrounded by a small ‘preview park.’ ”

    Matarrese says, “It may or may not work. But we can ask the question now. We can control our own destiny.” Nice words, but he is either grossly misinformed or not being forthright with what he knows about the work of the nonprofit corporation set up by the Irvine City Council.

  • Richard Bangert says:

    I think councilmember/candidate Matarrese is proposing to explore the FORM of Irvine’s redevelopment authority, not necessarily the same substance. Matarrese’s campaign website talks about generating more business activity and jobs.

    I don’t think it’s fair to say we would be emulating failure by going the non-profit development route just because Irvine’s project is going slowly. They, and we, exist in the same economy as a private developer. And they were effected by that economy the same as we are. Here is another quote from that LA Times article cited by ct http://articles.latimes.com/2009/nov/12/local/me-great-park12 : “Plans for ringing the park with homes and business parks — a development scheme that was expected to be the engine that would pay for much of Great Park through localized taxes — collapsed as the economy and real estate market slumped.”

    Here’s something more recent on Irvine http://www.ocgp.org/benchmark/ It’s not all gloom and doom.

    The development of Alameda Point is a 15 to 25-year project no matter who or what entity develops it. Since the economy is iffy, an important question is: Which land bank do you want this property in – a private developer’s or the city of Alameda’s?

    Having a city non-profit development authority in charge of Alameda Point would allow us to receive federal loans and outright stimulus grants. As an example of where we could start, look at the Seaplane Lagoon vicinity. Upgrading the perimeter of the Seaplane Lagoon has not been controversial. The cleanup will be done shortly, meaning the facelift could begin by the time the approvals are cleared.

  • Richard Bangert says:

    And by the way, it would be instructive to read this chonology of events concerning El Toro:

    http://wiki.ocregister.com/Communities/Irvine/Great_Park/History_of_Great_Park_and_El_Toro_Marine_Base

    Most of El Toro was bought at auction by developer Lennar. The Great Park acreage is a small piece of the whole picture. If the business plan for the entire base is not going as fast as envisioned, it has more to do with the economy than with Irvine having a non-profit development authority for a multi-dimensional park.

    If Alameda sets up a non-profit development authority, I think it will be a hybrid version of what is happening at El Toro. We are, after all, going to be leasing and selling property. Irvine is not going to be selling off parts of the Great Park.

  • Jeff says:

    Why not turn some hangers or a part of the base into a paintball field? I believe upkeep is pretty low and it only has to be open on the weekend plus it can generate revenue. It does however require a capital to get it all started but still. Why not?

  • ct says:

    Mr Bangert,

    When you say “Having a city nonprofit development authority in charge of Alameda Point would allow us to receive federal loans and outright stimulus grants,” it’s hard to believe that the U.S. government would consider Alameda Point enough of a priority when so much else demands federal dollars. Have other communities been able to obtain federal loans and grants for local redevelopment while American armed forces are in Iraq and Afghanistan, national health care is being overhauled, jobless benefits are being extended, etc? If the City is serious about redeveloping the Point, other, feasible sources of funding must also be proposed.

    The Irvine City Council’s nonprofit development corporation for the Orange County Great Park produced a nice-looking report on their downsized plan for the Great Park, but according to the L.A. Times article, “The plan was crafted to address what has become a common criticism: that despite spending tens of millions of dollars on a much-lauded design, the city has yet to deliver on its promise to build a showcase park in the heart of Orange County.” And according to The Orange County Register, “The Orange County grand jury is investigating allegations of lax financial oversight in the $1.4 billion Great Park project”:

    taxdollars.ocregister.com/2010/01/08/great-park-probed-by-grand-jury-again/48981/

    taxdollars.ocregister.com/2010/06/03/o-c-grand-jury-criticizes-great-park-financing/58433/

    One can blame the economy for the need to lower expectations, but is it customary for a city to expend tens of millions of dollars on a park design? Given Alameda’s resistance to oversight, accountability, and transparency, this is exactly what I would be concerned about if the City develops the Point on its own.

  • Richard Bangert says:

    ct,
    I can’t point to other communities where federal dollars have been offered for base reuse efforts in the amounts we need. Perhaps it’s time someone with influence, like an elected representative, made the case for Alameda Point.

    Other bases that have transitioned successfully to job creation and economic activity, like McClellan, have apparently not needed to redo all the underground infrastructure or worry about sea level rise and earthquakes. My favorite example of base conversion, Devens, Massachusetts, on the other hand, received a $200 million infrastructure grant from the state right at the beginning in the late ’90s. It has been money well-spent.

    I agree that multiple funding sources need to be identified. But it is not an anomaly to find recent instances of federal dollars being handed out at the same time as other national priorities are being funded like our various wars, health care and the like. Farm subsidies have been a staple of federal funding for ages. And with the Economic Recovery Act, we have over $700 billion being distributed to pump up the economy. And how much is being spent to extend unemployment? Money for sewer, gas and electric, as well as site grading issues, could be money immediately pumped into the local economy by paying wages.

    We don’t need any more visions in order to start basic upgrades at Alameda Point. Other than the two diagonal streets added in the Calthorpe plan, the street grid at the point has remained essentially unchanged from the PDC of 2006.

    I just find it remarkable that with the VA getting ready to invest $200 million in facilities at Alameda Point; with ready reserve ships and a national military museum (behind on its lease payments that should be covered by Washington) docked at the Point; and a location in one of the most prominent metropolitan areas of the country, that our elected representatives cannot construct a compelling narrative for assistance.

    As for adequate oversight, we’ll need oversight no matter if it’s a private developer or the city. Why should we expect better oversight if we have a private developer?

  • anotherfrank says:

    I remember the last time “we controlled our own destiny” Alameda Cable.

    We are still paying for that one.

  • ct says:

    Mr Bangert,

    I don’t have the faith you seem to in government’s ability to help with Alameda Point’s redevelopment. It would be terrific if the economy improved to such a degree that public funding became easy to come by, but I just don’t see that happening anytime soon.

    As for oversight, I have absolutely no faith in our local government right now. With the balance of power in City Hall the way it is, I don’t want any more taxpayer dollars to be wasted on projects that largely justify this bureaucracy’s existence.

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