New Law Hampers Point Development

Richard Bangert  City of Alameda Partial view of the 22-acre commercial and light industrial parcel, shown in full in the map at right as Site B. The white stacks in the background are at the former Navy jet engine test facility that is now used by Astra to test its rocket engines.
Richard Bangert City of Alameda

New Law Hampers Point Development

A new state law that took effect in January has stymied the city’s plan for commercial development on a plot of land at Alameda Point.

Assembly Bill No. 1486 requires cities, counties, special districts and the state to first offer any and all surplus land to affordable housing developers before it can be leased for more than one year or sold.

This legislation amended the Surplus Lands Act and, unbeknownst to the city when it supported the bill, swept in former military bases.

The city had received proposals from 10 commercial developers as a result of its marketing campaign in 2019. Each applicant was willing to pay at least the minimum listing price of $36.5 million for 22 acres in the Enterprise District and provide a construction timeline.

The acreage is within the larger commercial and light industrial zone adjacent to Main Street and includes the self-storage facilities. This new law means that the City was unable to proceed with the selection process.

“It’s ironic,” said Nanette Mocanu, assistant director of Base Reuse & Community Development. “The city is a proponent for affordable housing and supported this legislation. We and many other communities were caught off guard when the legislation was applied to leasing and base reuse properties. Cities across the state are working to find solutions to the unintended consequences of this legislation.”

Soon after the new law took effect, the city hired a lobbyist to work with other base closure communities on a legislative solution.

“We focused on working with the author of the legislation, Assemblymember Phil Ting,” said Mocanu. “We failed.”

Alameda Point is one of the few closed military bases that welcomed a homeless services provider that is now successfully operating. It is also one of the few redevelopment areas in California with a requirement of 25 percent affordable housing in new construction.

“We argued all of those things,” said Mocanu.

Rocket manufacturer Astra, located in the Enterprise District, is also affected by the legislation. Astra recently secured a new investment partner and will be listed on the NASDAQ stock exchange as a publicly traded company.

The company is flush with orders and poised for expansion. However, no long-term lease or option to buy the buildings it occupies or additional surrounding land is allowed until after the city lists the property on the state clearinghouse for affordable housing and receives no takers.

Nevertheless, Astra is willing to take the risk, with minimal site control, of investing in outfitting the rest of Building 360 where it now assembles rockets. Astra is aiming to produce one rocket per day in the coming years.

The small rockets will carry satellites that are about the size of a small microwave oven into low earth orbit. One of the first contracts for launching the so-called cube satellites is with NASA.

“Astra will carry out three launches in 2022 to deliver NASA CubeSat satellites that will allow scientists to better measure the temperature, pressure and humidity of hurricanes,” states CEO Chris Kemp on the company’s website. Kemp previously served as Chief Technology Officer for NASA.

The Surplus Lands Act targets land that was acquired for government purposes and is no longer needed. At Alameda Point, however, the land was surplus for the Navy, not the city.

The city never acquired the land for government purposes. Rather, the City acquired the land to implement the 1996 base reuse plan.

The Navy is giving land to the city for free under an Economic Development Conveyance Agreement. Lease revenue and land sales revenue cannot go into the City’s General Fund. Instead, that money must be reinvested at Alameda Point for 25 years from the date of conveyance to cover the infrastructure tab for Alameda Point that is now over $500 million.

The goal of leasing and land sales at the former base is rebuilding the crumbling infra structure and creating a new mixed-use neighborhood that seamlessly integrates into the City. The goal is not to simply dispose of the property.

Affordable housing developers seeking the so-called surplus land at Alameda Point would be required to pay the same $1.65 million per acre as any other developer to meet fair-share infra structure obligations.

In the case of the 22-acre parcel, part of the purchase price would go toward building a new street where there currently is none.

“We get to treat this like any other project,” said Mocanu.

“If we cannot get to an agreement [with an affordable housing developer], the land is freed from the surplus process.”

But the City first wants to try to get the law changed to untangle former military bases from the surplus process.

“I’m aware of the surplus land issue at Alameda Point,” said Assemblymember Rob Bonta. “I’m reaching out to Assemblymember Ting to discuss this local issue.” The city remains hopeful.

“Our brokers tell us that there is still a great demand for light industrial and bioscience development,” said Mocanu. “It is our hope that with Astra and subsequently moving forward with the Enterprise District, Alameda Point will restore jobs lost over two decades ago and provide a new economic engine to Alameda.”

Contributing writer Richard Bangert posts stories and photos about Alameda Point on his blog Alameda Point Environmental Report https://alamedapointenviro.com.

City of Alameda