October 26, 2016 In News

A Costly Fight Over Housing

By: Robert Gammon
Alameda Magazine

Alameda could lose tens of millions of dollars in a legal battle with a developer that wants to build 182 units of housing along the estuary.

Boatworks is proposing to build 182 units of housing just north of the Park Street Bridge.

Courtesy of Boatworks

In late August, Bay Area regional planners issued a report warning Alameda that it might not meet its housing goals. The report by the Metropolitan Transportation Commission stated that for Alameda to do its part in dealing with the increase in population and jobs in the Bay Area, the city needs to add 10,000 units of housing by 2040. Alameda is currently on track to fall well short of that proposal, and a recent decision by city leaders to effectively block a proposed housing development on the estuary promises to put Alameda even further behind.

The battle over the 182-unit housing development, proposed for a large vacant lot just north of the Park Street Bridge, also could have wide-ranging ramifications for Alameda’s finances. Boatworks, the developer of the proposed project, has taken its fight to court, and if it wins, the city could lose tens of millions of dollars of taxpayer funds. And even if the city wins, a giant weed-strewn lot on prime Alameda waterfront property could remain a vacant eyesore for years to come.

“The whole thing is really frustrating and time consuming and costly,” said Nicoley Collins, whose family owns the Emeryville-based Boatworks. “It makes you feel sad it’s taken this long.”

Robert Gammon

Even if the city wins, a giant weed-strewn lot on prime Alameda waterfront property could remain a vacant eyesore for years to come.

The clash over Boatworks’ 9.4-acre property on Clement Avenue, bordered by Oak Street, dates back more than a decade. In 2005 and 2006, the Collins family proposed to build 242 units of housing on its property. The project included a mix of townhomes and condominiums, of which 20 percent would be affordable units.

But the city council at the time flatly rejected the Collins’ proposal, saying it was “too dense.” After a legal skirmish, the city and the Collins family reached a settlement in 2010, which called for Boatworks to build a smaller project: 182 units of housing, of which 15 percent would be affordable. The Collins family also agreed to dedicate 2 acres of its property to be permanent open space in exchange for receiving $4.45 million in redevelopment money from the city.

But because of the Great Recession, Boatworks was unable to cobble together the financing needed to build the 182-unit project. Both the city and Boatworks, however, continued to abide by the 2010 settlement agreement in the hopes that the project would ultimately break ground some day. In 2014, as the Bay Area’s housing market heated up, Boatworks struck a deal with a homebuilder to develop the property.

But then in early 2016, city planners suddenly changed course, and began to demand that Boatworks hike the percentage of affordable units from 15 to 20 percent. Then in July, the Alameda Planning Board unanimously approved this new, higher requirement, despite pleas by Boatworks not to do so.

Boatworks then quickly sued, arguing that the city’s mandate for more affordable units not only made the project less financially feasible, but also represented a clear violation of the 2010 settlement between Boatworks and the city. “This new requirement that they’re trying to impose is illegal,” said Shona Armstrong, an attorney for Boatworks. “It’s a breach of contract.”

In legal papers, the Alameda City Attorney’s Office countered that the 2010 settlement contract was no longer valid. However, in September, Alameda County Superior Court Judge Kimberly E. Cowell signaled that she agrees with Boatworks. In a tentative ruling concerning Alameda’s attempt to get Boatworks’ suit thrown out of court, Cowell wrote that the evidence in the case showed that the 2010 settlement agreement is still in effect. Cowell, however, put off making a final decision until a hearing scheduled for Nov. 2.

So why is Alameda now throwing up barriers to a much-needed housing project that the council greenlighted six years ago? The Collins family believes city leaders are attempting to exact revenge on them for a separate lawsuit they filed against Alameda. “I think the city is punishing them for their free speech,” Armstrong said.

This second lawsuit stems from a decision by the city council in 2014 to greatly increase the so-called “impact fees” that developers must pay when they build new housing. According to court documents, the city hiked impact fees from $4,057 per home to $16,601—a jump of more than 300 percent. For Boatworks, the hike in impact fees would increase the cost of its housing project by a total of about $2.3 million—on top of the extra costs for building more affordable housing.

The Collins family contends that the higher impact fees shouldn’t apply to them, because the city effectively approved their project in 2010, four years before the impact fees went into effect. They also argue that the Alameda’s rationale for the higher fees is deeply flawed.

And this is where the city’s fight with the Collinses could turn out to be very expensive for Alamedans.

In this second lawsuit, the Collins family argues that the city illegally manipulated a pivotal study in order to raise impact fees higher than the law allows. The study, known as a “nexus study,” is required under state law to justify raising development impact fees. In Alameda’s case, a significant portion of the new, higher impact fee is earmarked to purchase more parkland. But the Collins family contends that the city purposely left out hundreds of acres of property at Alameda Point from its calculations, because if it had included the amount of land it can use for parks at the former Naval Air Station, then it wouldn’t need to buy so much land in the future, and thus wouldn’t need such high impact fees. “The city failed to account for the fact that it has received hundreds of acres for free from the Navy,” said Thomas Roth, an attorney representing the Collins family and Boatworks in this second case. Roth also said evidence that he has gathered in his case indicates that the city is now mandating more affordable housing for the Boatworks project as payback for the nexus study suit.

In court, the Alameda City Attorney’s Office has contended that its nexus study was done properly. “We believe we did a very good job,” Kern said in an interview.

However, the city has failed in its attempts to have this second case dismissed, and it’s scheduled to go to trial in November. The stakes are huge: If the city loses, the court could invalidate Alameda’s higher impact fees, and the city might be forced to return millions of dollars that it has already collected from other developers. In addition, Boatworks and the Collins family are seeking $24.5 million in damages in the first lawsuit concerning the city’s mandate for more affordable housing.

Kern, Alameda’s chief planner Andrew Thomas, and Alameda Planning Board chair John Knox White all contended in interviews that the city’s decision to require more affordable housing had nothing to do with the Collins’ suit over the nexus study. Instead, Thomas argued that the city had a legal right to require more affordable housing because of changes made to the estuary side of the Boatworks property.

In 2013, the U.S. Environmental Protection Agency, in concert with the Army Corps of Engineers, the California Water Quality Control Board, and other state agencies, completed a restoration of the estuary shoreline, including of the Boatworks property, and built a retaining wall. That work required an alteration of Boatworks’ original map of its project—a change the city now claims allows it to treat the Boatworks proposal as if it were new. And new projects like this one require 20 percent affordable housing under current Alameda law. The city is expected to make the same argument about the impact fees—although it remains to be seen whether the courts will agree.

For their part, the Collins family says the city’s argument is absurd. They note that the city seemed to be perfectly happy with their 182-unit project—until they filed their nexus study suit. They also argue that their project is the same one they proposed in 2010—and they just want to build it and not be forced to add more affordable housing or pay fees that didn’t exist back then. “It’s been such a long struggle,” Armstrong said.

But as of early October, Armstrong and Roth said the city had shown no interest in settling the cases—even though if it did, then Alameda could end up with housing it needs and its impact fee intact.