Public Land Sold to Build Brooklyn Basin with No Affordable Housing Pledge by Developer

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Oakland Mayor Libby Schaaf received an enthusiastic response from some community members when she announced she was calling on Gov. Jerry Brown to give the city $45 million to help build affordable housing at the site of the massive Brooklyn Basin project, the 3,100-unit waterfront neighborhood that is already underway next to Chinatown, between the estuary and Highway 880.

 

So far, no officials have explained why provisions for affordable housing were not built into the project before the City Council approved it in 2006. The city provided land, approvals and encouragement with no guarantees for either sufficient local hire or housing that can be afforded by current Oakland residents.

 

Back in 2006, councilmembers who approved the deal without affordable housing included Libby Schaaf, who was a member of the City Council at the time.

 

At stake now is whether the city can come up with the funds to build 465 units of affordable or even mildly affordable “workforce-priced” housing on its 4.5 acres of the 64-acre project, the largest residential development in the history of Oakland.

 

Originally, the city was counting on utilizing redevelopment funds in the deal that was reached in 2006. But in 2011, under Gov. Brown, the state dissolved local redevelopment agencies but left redevelopment law intact. Since then, state obligations under redevelopment law have been unclear and are as yet untested.

 

Community redevelopment agencies were originally designed for cities to build projects that increased property values and then kept for themselves the excess in tax receipts that resulted. The agencies’ goal was to make over “blighted” areas in urban cores and to build affordable housing.

 

Mayor Schaaf is seeking to convince the governor to honor the 2006 redevelopment agency’s commitment to build affordable housing at Brooklyn Basin.

 

While the housing goal has broad support locally, the project raises an obvious and disconcerting question.

 

How did the city find itself in the predicament in which a $1.5 billion project on formerly city-owned land required no commitment to build affordable housing by developer Michael Ghielmetti of Signature Development Group?

 

Affordable housing aside, other parts of the deal also appear to have been great for the developer and not so good for Oakland residents.

 

Back in 2006, some of the coalition of community groups that opposed the development when it was approved by the City Council still consider Brooklyn Basin to be one of the worst real estate deals ever agreed to by the city and contend that its development agreement may rank among the worst in the country.

 

Opposing the project was a community coalition, the Oak-to-Ninth Referendum Committee.

 

“Over a period of a couple of years, we were engaged in three lawsuits and lobbied unsuccessfully to try to get the City Council to demand a better deal for the city and to reject some of the onerous parts of the development agreement,” said James Vann, Oakland architect and housing rights activist who was on the steering committee of the community coalition.

 

The Port of Oakland sold the 64 acres of valuable shoreline property to Ghielmetti for $18 million—way below market value, according to Vann. At the same time the city initially agreed to buy back, after cleanup, 4.5 acres designated for affordable housing for $29 million — almost two-thirds more than what Ghielmetti paid for the entire 64 acres.

 

In 2014, Ghielmetti requested the city to purchase its sites early in order to fund the first phase of site preparation. New appraisals resulted in the city paying Ghielmetti $22.5 million.

 

According to a statement by Ghielmetti, the developer would be responsible for toxic cleanup, so he would not pay market value for the property.

 

The commitment to build affordable housing is a state redevelopment requirement. The 15 percent requirement is not an option for the developer, but a mandate.

 

The two parcels purchased for affordable housing are located farthest from the waterfront and next to the freeway. To protect those who would live in these units from freeway noise and pollution from Highway I-880, sound walls will be built and windows facing the freeway will be un-openable.

 

At the ground level on one of the city-owned parcels, Ghielmetti will build a parking structure and a market on the other. He will retain ownership of those projects, and the city will pay Ghielmetti to build affordable housing above the projects.

 

At present, the developers include Signature Development Group and Zarsion Holdings Group Ltd., a Chinese investor that bought most or all of Signature’s interest in the development and committed $1.5 billion to build out the project.

 

Under the original deal signed by the city in 2006, the City of Oakland agreed to build the affordable units, which currently are estimated to cost $225 million. If the city could not come up with the money, the developer agreed to repurchase the property.

 

Workforce housing proposed by the city for the project would be geared to families and seniors making $60,000 to $80,000 a year.

 

Mayor Schaaf’s press conference last Thursday raised the possibility that Gov. Brown would give Oakland the money that it might have received before redevelopment agencies were dissolved.

 

“We have no reason to believe (state leaders) will not honor this obligation, but because it’s unusual and because there’s so much community support for it, we wanted to ensure that the governor and the state Department of Finance hear very clearly and loudly the level of support behind honoring this obligation,” said Schaaf, flanked by other elected officials and community groups.

 

Mayor Schaaf and Assistant City Manager Claudia Cappio have close ties to the governor and worked for him while he was Oakland’s mayor.

 

Cappio is deputy city administrator, in charge of the mayor’s development efforts. Until recently, she was executive director of the California Housing Finance Agency, appointed by Gov. Brown in 2011.

 

As a result, Oakland may have a fair chance of winning the funding, at least compared to other cities.

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