City Government

City Council Set to Approve Sale of City Land for Luxury Apartment Tower

Published

11 years ago

June 1, 2015

The Oakland City Council is set to vote Tuesday evening on a controversial proposal to sell a city-owned parcel to build a luxury apartment tower at the corner of East 12^th Street and Lake Merritt.

The council had been originally scheduled to approve the property sale on May 5 when its meeting was shut down and taken over by protesters demanding that public property should only be developed for public use.

Councilmembers informally agreed to postpone the final vote for several weeks to give Councilmember Abel Guillen time to negotiate increased community benefits with the developer. Guillen represents District 2, where the property is located.

The final list of the benefits features a modest reduction of the monthly rent for 30 units of the 298-unit project, though not to a rate that many in Oakland would consider to be affordable.

Besides reducing prices on 10 percent of the units, the developer has agreed to make donations for a number of different public services.

However, the current proposal does not satisfy the demands that have been raised by the neighborhood activists, who say it still lacks affordable housing.

“It’s not affordable – not to the people living in the (Eastlake) zip code,” and it’s not affordable for people living in Oakland, said Monica Garcia, a member of the neighborhood group, Eastlake United for Justice. “Public land should be for the public.”

“We don’t have any idea where this laundry list of community benefits came from,” she continued. “Community benefits are generally generated in meetings with members of the community. These came from the councilmember or the developer.”

Garcia said the benefits are crumbs and do not address the housing crisis that is driving people out of Oakland and robbing the city of its diversity.

“We have not seen real leadership from the council on housing issues yet,” she said.

“We will be at the meeting to speak out against this proposal – against this use of public land.”

The agreement between the city and the developer would reduce the cost of 30 units, to be rented at three different levels between 80 percent and 120 percent of the East Bay’s Area Median Income (AMI) – which is about $99,000 for a family of three. The median income for a family of four in the Eastlake area is about $38,000 year, says Garcia.

Ten units would be rented at 80 percent of the AMI – $1,461 for a two-bedroom apartment.

Ten units would be rented at 100 percent of the AMI – $2,044 for a two-bedroom apartment.

And, 10 units would be rented at 120 percent of AMI – $2,466 for a two-bedroom apartment.

In addition, the developer would pay for a number of community benefits, including:

$150,000 towards building or maintaining a skateboard park;

$25,000 to support Children’s Fairyland;

$100,000 to support graffiti abatement and neighborhood beautification in the area;

And, $50,000 to plant trees east of Lake Merritt and by San Antonio Park.

The developer will also work with Councilmember Guillen and city staff to find potential space in District 2 that can accommodate between 50 and 70 affordable housing units. The developer will pay some of the predevelopment cost of this project.

Garcia was also unimpressed with the proposed agreement’s commitment to hire local workers for the project, saying the agreement “doesn’t have any teeth.”

In fact, the agreement leaves the promise of local jobs up to the developer to figure out.

The proposal says that within 120 days of signing the contract, the developer “will complete a plan…to accomplish a 25 percent good-faith-effort goal for local hiring for new jobs created during construction.”

The proposal does not distinguish between journeyman and apprenticeship jobs. Nor does it focus on hiring people from the less affluent zip codes in the city.

In addition, the “developer will consider using a Union General Contractor at the Developer’s sole discretion.”

Unlike this project, hard-fought negotiations over the Army Base development lasted for several years and resulted in the developer of that project eventually agreeing to a 50 percent local hire program and a Project Labor Agreement (PLA) that protects union jobs.

The buyers of the property are Urban Core Development, a local company, and UDR, a Denver-based national real estate corporation. Almost all the project will be owned by UDR.

“The proposed ownership of the project will include a 97.5 percent interest for UDR and a 2.5 percent interest for Urban Core,” according to the report submitted by city staff for Tuesday’s council meeting.

“UDR will serve as the Managing Member of the LLC and provide the required guarantees necessary to secure the project capital as needed,” the report continued. “Both companies will work together jointly throughout the predevelopment and construction phases, and UDR will manage the marketing, leasing and property management of the property.”

UDR, Inc., the city report said, is a leading multifamily real estate investment trust in the U.S. In 2014, the company owned 51,293 “apartment homes” across the country.

Eastlake United for Justice is planning to hold a rally Tuesday night in front of Oakland City Hall at 8 p.m.