Lack of interstate highway and ban on dense housing limit redevelopment

Alameda Point is closer to being successfully redeveloped now that John Russo, Alameda City Manager, has taken a firm grasp of the project.

Russo spoke in October to the inaugural meeting of Wendel Rosen’s Infrastructure Forum. A room of 60 developers, contractors, property owners, environmental consultants and attorneys gathered to hear Russo outline the project’s potential and talk frankly about its constraints. “No project is more challenged than the Alameda Naval Air Station,” Russo told the group.

But the current plan, which includes the creation of a working waterfront along the estuary, should add jobs, housing, and increase the city’s tax base. Nearby at Alameda Landing, developers have broken ground on a new 139,000 square foot Target store, which should increase the island city’s tax revenues by 5-7%, Russo said. The store is schedule to open in Fall 2013.

Alameda Point is 1,500 acres on the west end of the island of Alameda. The Navy decommissioned it in 1997, resulting in the loss of 14,000 local jobs. The Navy has spent $480 million cleaning up the soil and groundwater contamination left by decades of heavy industrial use, but the cleanup is not complete. Russo said the Navy anticipates spending another $190 million to finish the project’s remediation.

Over the next 18 months, the city will perform its CEQA (California Environmental Quality Act) analysis and hearings on Alameda Point, complete an infrastructure plan and establish baseline zoning for the entire property and specific, detailed zoning on the “Town Center” portion of the base. Construction could begin as early as 2014.

“There is no hard-and-fast plan for development,” Russo said. “We will zone the project in big chunks and will respond over time to signals in the market, instead of trying to centrally plan the entire development all at once.” Russo continued, central planning often misses turns in the market. For example, at one point, SunCal plans called for the development of more than 4,800 homes. “If we had built all that housing (prior to the mortgage crisis and recession), how would that have worked out?” Russo asked the group.

Housing—what kind and how much— has proved to be a difficult issue to negotiate, Russo said. More dense housing would provide additional funding for project infrastructure, but going over the agreed upon cap of 1,435 houses means the city would need to pay the Navy a premium for each unit. More importantly, because of California’s idiosyncratic property tax structure, housing is a losing financial proposition for most California cities.

“We have to stop looking at development of cities as a game of Sim City,” Russo said. “We need to make sure revenues exceed the costs created to municipal government.”

Several plans and developers later (not to mention a failed city ballot measure and litigation with SunCal, the previous developer on the project), city leaders have a concept that would include a working waterfront that would use the Oakland-Alameda estuary as a “highway” for commerce, Russo said.

The city has signed a lease with Bay Ship & Yacht. “We need more space for provisioners, for sail makers, cabinet makers,” Russo said. “During the Gold Rush, those are the people who made the money, not the miners looking for gold. The San Francisco Bay Area has boats galore. We will focus on the maritime industry and a working waterfront, jobs on our ‘highway’ with good wages,” he said.

Plans also call for a regional park, sports complex, and a Veterans Administration facility. Russo pledged “not to fight with the historical district people,” and will instead do long-term leases with existing businesses in the historic district. Part of the Point will be devoted to new construction, however.

Previous plans have included thoughts of using the old base for renewable energy such as a solar or a wind farm, but each idea has proved ultimately unworkable, Russo said.

The project continues to face challenges, including global warming and sea level rise, flooding issues, “crummy dirt,” and environmental advocates committed to preserving the habitat—the crumbling concrete Naval runways—of the California least tern, a migratory bird once on the brink of extinction that uses the site to mate and raise its young each summer.

The island city is also hamstrung by its lack of a connection to local interstates. The Posey/Webster Street Tube, which runs under the estuary and connects Alameda to Oakland, is already at its capacity to carry traffic. It is the nation’s second-oldest underwater tunnel. Only the Holland Tunnel connecting Manhattan to New Jersey is older.

Russo described the traffic issues as “somewhat intractable. There is a lot of talk about making the Town Center a regional hub, but that is somewhat utopian,” and would require, for example, some kind of light rail link to the Fruitvale BART station, he said.

The city of Alameda does not yet own the property outright. For many years, the Navy was asking the City for $108.5 million to transfer the property. In Fall 2011, the Navy agreed to transfer the property in a no-cost conveyance as long as the City agreed to a cap of 1,435 housing units. Thus, developing the property has been difficult without the ability to enter into long-term leases. “This makes the city both a partner and regulator of development,” Russo said. “We are simultaneously an investor, regulator and mediator in disputes, all in a politicized context.” The city should have deeds to 65% of the base by February 2013, Russo said.

Russo, who served as City Attorney in Oakland before taking the Alameda post in 2011, declined to talk about the litigation with SunCal. “We have a legal problem every time we breathe,” he said. But Russo is also no stranger to politics, and seems more than willing to jump into the fray, both locally and in Sacramento.

“We tried to get a bill through on the reuse of bases in Concord and Alameda, but that was vetoed by Governor Brown,” Russo said. The governor first wants cities to focus on dismantling their redevelopment agencies, Russo said, but he hopes a similar bill in the future would allow state base reuse authorities to set up special infrastructure financing districts to help rehab the closed bases.

“With the redevelopment agencies gone, we have no funding mechanism. The loss of redevelopment was a major blow to what we are trying to achieve here.”

Russo, true to form, was a lively and engaging speaker, peppering his talk with jokes and mild sarcasm, and enjoying the Q&A with attendees.