Brooklyn Basin is a giant 65-acre, 3,000 unit housing project under construction along Oakland’s waterfront just south of Jack London Square. Of the 3,000 units, there are plans for 465 of them (15.5 percent) to be “affordable” according to the City of Oakland Staff Report presented below.
Tuesday’s Oakland City Council meeting will present the Oakland City Administrator’s recommendation to approve a lease disposition and development agreement (and which includes loan approval) for a partnership consisting of “The Oakland Housing Authority and MidPen Housing Corporation, Or Affiliated Entities, For Development of Affordable Housing At Brooklyn Basin,” to purchase a ground lease at “Parcel F” of the complex. That is where the affordable housing will be built.
The complex design was approved by the Oakland Planning Commission on August 21st 2017 and is by HKIT Architects, The building is to be 86 feet tall and be located on Brooklyn Basin’s Parcel F (bordered by Embarcadero, 7th and 8th Avenues as the map shows) The building will have 211 affordable units and a 192 car garage.
Brooklyn Basin was called “Oak Street to Ninth Avenue” and approved for construction in 2006, but then received a legal challenge, which Signature Properties, the master developer, beat in 2009.
Because of the timing of the development, the City’s impact fee structure can’t be applied to it.
Here is the full, digitized, staff report for Tuesday:
AGENDA REPORT
Sabrina B. Landreth
City Administrator
FROM: Michele Byrd,
Director, HCDD
Brooklyn Basin Affordable Housing
Agreements
DATE: September 14, 2017
City Administrator Approval
RECOMMENDATION
Staff Recommends That The City Council Adopt The Following Legislation:
Ordinance (1) Authorizing A Master Housing Agreement With The Oakland Housing
Authority and MidPen Housing Corporation, Or Affiliated Entities, For Development of
Affordable Housing At Brooklyn Basin, (2) Authorizing Lease Disposition and
Development Agreements With MidPen Housing Corporation And The Oakland Housing
Authority, Or Affiliated Entities, For The Long-Term Ground Lease Of Parcel F At
Brooklyn Basin For The First Phases Of Development, And (3) Making CEQA Findings
For This Action; And
Resolution (1) Authorizing An Unsecured Predevelopment Loan In The Amount Of
$2,067,000 To MidPen Housing Corporation, Or Affiliated Entities, To Support The
Development Of Affordable Housing On Parcels A And F At Brooklyn Basin, (2)
Authorizing A Secured Affordable Housing Development Loan In An Amount Not To
Exceed $15,243,000, To MidPen Housing Corporation, Or Affiliated Entities, To Support
The Development of Affordable Housing On Parcel F at Brooklyn Basin, And (3) Making
CEQA Findings For This Action.
EXECUTIVE SUMMARY
The City is required to ensure that 465 units of affordable rental housing are developed on two
parcels jointly owned by the City and the Oakland Housing Authority (OHA) at the Brooklyn
Basin project site. Staff is seeking Council authorization for land disposition and funding to
facilitate the development, including: (1) a Master Housing Agreement among the City, OHA
and MidPen Housing Corporation (the selected affordable housing developer) outlining the
general terms for disposition, development and funding of the affordable housing on the
Brooklyn Basin affordable housing parcels, (2) two Lease Disposition and Development
Agreements among the City, OHA and MidPen for the disposition by ground lease of one of the
affordable housing parcels, Parcel F, for development of an affordable family housing project
and an affordable senior housing project with a total of 211 affordable rental units, (3) a
$2,067,000 predevelopment loan to MidPen to fund predevelopment expenses associated with
the overall Brooklyn Basin affordable housing project, and (4) a $15,243,000 development loan
Item:
CED Committee
October 10, 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 2
to MidPen to fund development of the two affordable housing projects on Parcel F. The
predevelopment loans funds, including a $360,000 predevelopment loan approved in 2016, will
most likely be converted into permanent development loan funds, for a total consolidated loan
amount of $17,670,000 approved to date.
BACKGROUND I LEGISLATIVE HISTORY
Project Description and Affordable Housing Requirement
The Brooklyn Basin Project (formerly known as the Oak to Ninth Project) is a large-scale
development project on a formerly-industrial site along Oakland’s waterfront. When fully
developed, the project will comprise approximately 3,100 housing units, over 200,000 square
feet in retail space, 29.9 acres of parks and public open space, two renovated marinas and
restoration of an existing wetland area.
In 2006, the developer of the project (then known as Oakland Harbor Partners), the City, and
the Redevelopment Agency entered into a Development Agreement (DA) for the project. The
City negotiated a variety of community benefits provisions into the DA, including provisions for
on-site affordable housing development. The DA required the Redevelopment Agency to
purchase two parcels (then Parcels F and G) from the developer and to develop 465 units of
housing affordable to low income households on those parcels, to be developed in phases as
part of the overall project. Oakland Harbor Partners agreed to sell the affordable housing
parcels at a discount and to contribute $2 million toward development of affordable housing on
those parcels.
At the same time, the Redevelopment Agency also negotiated a “Cooperation Agreement” with
a coalition of community groups, known as the Oak to Ninth Community Benefits Coalition (the
“Coalition”), over the level of community benefits that would result from the project, including
affordable housing development. The Cooperation Agreement was executed in 2006.
Consistent with the DA, the Cooperation Agreement required the Redevelopment Agency to
purchase the affordable housing parcels and ensure that at least 465 affordable housing units
are developed as part of the overall development.
Delay and Subsequent Changes to Affordable Housing Requirements
Shortly after the DA and the Cooperation Agreement were originally signed, the Brooklyn Basin
project was put on hold by the developer due to the economic downturn, and a legal challenge
to the Project.
Upon dissolution of the Redevelopment Agency in 2012, the City retained and assumed the
housing assets and functions of the Redevelopment Agency, including obligations related to
affordable housing development at Brooklyn Basin.
Pursuant to the DA and the Cooperation Agreement, the City purchased Parcels F and G from
the Brooklyn Basin developer, now known as Zarsion-OHP I, LLC (ZOHP), on August 28, 2014,
for a purchase price of $21,508,462 plus closing costs, with ZOHP obligated to conduct
extensive environmental remediation, as well as infrastructure work on the property. The
purchase price represented the appraised fair market value of the parcels, discounted by
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 3
$3,033,204 due to the early purchase. To fund the purchase, the City used proceeds from a
housing bond issued by the Redevelopment Agency in 2011. Project funds totaling $2,454,627
from this bond remained after the purchase of the parcels.
Current Status and Projected Affordable Housing Funding Sources
ZOHP has completed remediation and substantially completed site preparation work on the first
phase of the overall project, including the affordable housing parcels. The first market rate
phase of the development, 241 units on Parcel B, started construction this spring.
In June 2015, ZOHP selected MidPen Housing Corporation, a nonprofit affordable housing
developer with extensive development experience in the Bay Area, to be the developer for the
affordable housing project, and the City Administrator approved this selection. The City has
been working closely with MidPen, OHA and the Coalition since June 2015, as MidPen
develops and refines its affordable housing development scenarios and financing plan.
On January 5, 2016, City Council approved Resolution No. 85939 C.M.S., which approved a
financing plan for the affordable housing unit development, and approved the submittal of a
petition to the California Department of Finance (DOF) for a Final and Conclusive Determination
that the City had an enforceable obligation under the DA and the Cooperation Agreement to
fund development of 465 units of affordable housing on the affordable housing parcels. The
City sought $45 million in Real Property Tax Trust Funds (RPTTF), i.e., property tax funds that
were formerly considered tax increment funds, as its contribution to develop the affordable
housing.
After extensive negotiations, DOF allowed the City to retroactively re-characterize previous
draws from the 2011 Affordable Housing Set-Aside Bond Fund, for the affordable parcel
purchase at Brooklyn Basin and the Mural Apartments affordable housing development at the
MacArthur BART station, as RPTTF expenditures. This freed up a minimum of $35 million in
2011 Affordable Housing Bond Funds to support vertical construction of affordable housing
development at Brooklyn Basin.
On July 19, 2016, per City Council Resolution No. 86301 C.M.S., the City Council approved a
$360,000 predevelopment loan to support MidPen in their predevelopment activities for
development on Parcel F, and that loan closed earlier this spring (after the Borrower affiliates for
Parcel F were formed).
On January 17, 2017, per City Council Resolution No. 13413 C.M.S., the City Council
authorized a swap with ZOHP of Parcel G for Parcel A. That swap closed in June. As a result,
the affordable housing parcels are now Parcels F and A. As part of the parcel swap, ZOHP
agreed to place its DA-required $2 million affordable housing contribution ($1 million per parcel)
into an escrow account through the end of 2018.
On July 18, 2017, City Council approved the first reading of an ordinance authorizing the sale of
a 50% joint ownership interest in the affordable housing parcels to OHA, in exchange for a $10
million purchase price and OHA’s commitment to provide 258 Project-Based Section 8 vouchers
to the project. The $10 million in sales proceeds would be earmarked to the project. The
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 4
second reading for this ordinance is scheduled for September 19, 2017, and the close of the
sale of the joint interest to OHA is anticipated by October
MidPen is proposing to build the required 465 units in four separate project phases over a
seven-year time frame. Per the terms of the Cooperation Agreement, 110 units will target
seniors and the remaining 355 will target families. All units must be affordable to households
earning 25 percent to 60 percent of Area Median Income. At least 30 percent of the units will be
three-bedroom units and at least 20 percent of the units will be two-bedroom units.
ANALYSIS AND POLICY ALTERNATIVES
The recommended actions will delineate the rights and responsibilities between the City, OHA
and MidPen, set the stage for predevelopment activities to take both parcels further into the
predevelopment process, and provide the formal site control and development financing
commitments required to allow MidPen to apply for its other funding sources for the first two
affordable housing developments on Parcel F. If successful in applying for their other funding
sources, construction could commence by the end of 2018 or early in 2019 on the first 211
affordable housing units at Brooklyn Basin.
The Master Housing Agreement (MHA) among the City, OHA, and MidPen will outline the
general terms for affordable housing development for the entire affordable housing project at
Brooklyn Basin, including land disposition and funding, and establish a proposed schedule for
development of the affordable housing in four project phases.
The Lease Disposition and Development Agreements (LDDAs) will set the terms for
conveying site control via long-term ground leases of Parcel F for a 101-unit family housing
project (Project 1) and a .110-unit senior housing project (Project 2) on Parcel F, the first parcel
to be developed. Parcel F will be ground leased to MidPen at a nominal rent in order to make
the projects economically feasible. The long-term ground lease structure complies with the
City’s policy for retaining long-term fee ownership of land parcels it owns. In this case, OHA will
be a 50% co-owner of the land as well. MidPen will develop and own the improvements (i.e., the
affordable housing developments), which the affordable housing development loans will be
secured against. The LDDAs will set forth the terms and conditions for the ground lease and
development of Parcel F, including various preconveyance conditions.
Now that the project is moving further along towards development, MidPen is requesting an
additional $2,067,000 in unsecured predevelopment loans for predevelopment expenses on
both Parcels A and F. (MidPen’s proposed predevelopment loan budget is attached as
Attachment A), In 2016, City Council approved a $360,000 predevelopment loan for partial
predevelopment expenses on Parcel F to get the project through design review approvals; this
would bring the total predevelopment loan award to $2,427,000. The additional funding will help
assist the Parcel F phases to get through the State Tax Credit Allocation Committee (TCAC)
application process to obtain an allocation of low-income housing tax credits, and the Parcel A
phases to proceed through the design review approval stage. The total amount of
predevelopment loan funds exceeds the City’s typical predevelopment loan amounts (which are
limited currently to $35,000-$75,000, depending on location within the City). Staff has long
considered increasing the predevelopment loan limits, but to date has not had sufficient funding
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 5
available to do so. In this instance, in which funding is set aside for development of the
affordable housing units at Brooklyn Basin, staff believes that it is appropriate to exceed the
usual predevelopment loan limits in order to cover permitting fees, architectural and engineering
fees, and legal costs.
MidPen has requested that the predevelopment loan term be for an initial 24 month period (with
a six month extension available as an administrative action) at three percent simple interest,
with interest and principal payments deferred to the end of the term. The predevelopment loan
would initially be unsecured, which is necessary in this case because MidPen does not as yet
own a fee simple or ground lease interest in the parcels. When the parcels are conveyed to
MidPen via ground lease and the development loans are closed, then the predevelopment loans
will be consolidated with the development loans and will be secured by MidPen’s interest in the
properties and project improvements.
As previously noted, the proposed predevelopment loan is substantially larger than what would
be allowed under the City’s over-the-counter program (which allows for a loan of $35,000 per
phase, or up to $75,000 per phase if the Project is located in the downtown area). In addition,
MidPen has requested a lower interest rate (three percent to align with the City’s development
loans, rather than the usual six percent for predevelopment loans), and a longer term (24
months instead of 18 months). However, given the breadth and complexity of the project, and
the fact that the funding is clearly dedicated to the project, staff is comfortable with
recommending these terms. On occasion, for large projects, the City has provided large
unsecured predevelopment loans.
Currently, MidPen is requesting secured affordable housing development loan funding in
the total amount of $17,670,000 to fund the first two development projects on Parcel F, which
will include 211 of the 465 affordable units. The development budget and proforma for the
Parcel F family project is included as Attachment B, and the development budget and proforma
for the Parcel F senior project is included as Attachment C to this staff report.
Funding for the senior affordable housing loan on Parcel F is proposed to be funded by:
• $4,000,000 in housing bond funds (which will also take out $793,000 of the unsecured
predevelopment loan funds)
• $5,500,000 value of the below market ground lease (not included in loan amount)
Funding for the family affordable housing loan on Parcel F is proposed to be funded by:
• $7,670,000 in housing bond funds (taking out $868,000 in unsecured predevelopment
loan funds)
• $5,000,000 in land sales proceeds from OHA’s purchase of a joint interest in Parcel F
• $1,000,000 affordable housing contribution from ZOHP
Between the $17,670,000 in loans from City sources, and the $5,500,000 estimated value of the
below market ground lease on the senior phase, total funding contributions from the City on the
Parcel F projects will be $23,170,000, or just under $110,000 per unit. This funding amount is
well in line with other City loans in the past, and should place the projects competitively for other
funding sources.
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 6
Parcel A development loans and LDDAs for the remaining 254 units will be brought to City
Council at a later date for consideration and approval.
The terms of the DA and Cooperation Agreement, set out extensive requirements for the
affordable housing units in terms of depth of affordability, limits on senior units, and minimum
number family-sized units (two and three bedroom units). Although last year’s favorable DOF
decision provides substantial capital towards the development of the affordable units, this
estimated $35 million and land contribution costs of $21.5 million represents about 23 percent of
the projected total development costs for the project, which are estimated at $240 million for the
465 units. This gap is not unusual for affordable housing developments – the City’s policy is to
provide a maximum of 40 percent of total development costs, with developers expected to
leverage the rest of funding with a variety of sources, including tax credits, other state and
federal funding sources, and private loans to the extent that these are supported by cash flow.
OHA has an extensive history with this type of partnership with affordable housing developers
and/or the City, both in its HOPE VI revitalization efforts for its own public housing stock, and in
numerous stand alone projects throughout the City. OHA owns the land on such affordable
housing developments as the Savoy Hotel (formerly the Jefferson and Oaks Hotels), Prosperity
Place (11th and Jackson), and Ave Vista (Grand Avenue). In addition, the City and OHA have
worked together to secure Project-Based Section 8 rental vouchers in developments throughout
the City through the City’s competitive NOFA. OHA’s involvement as co-owner in the property
provides substantial benefits to the projects and to residents, including: development capital of
$10 million, on-going development subsidies via the vouchers, and on-going contributions to
project capital reserves and operating expenses for the affordable units over the long-term while
allowing the property to serve some households at even lower incomes than were originally
contemplated.
MidPen Qualifications
Although this is MidPen’s first development in Oakland, the organization has a 45 year history of
affordable housing development and property management, having developed or rehabilitated
over 100 properties with over 8,000 units in cities throughout the Bay Area. Their staff have
proceeded diligently with predevelopment activities on the affordable housing parcels, and is
working closely with Planning staff to complete their Final Development Plan (FDP) for Parcel F
this fall. As of the writing of this staff report, Planning staff expects to bring the FDP for Parcel F
to Design Review on September 28, 2017, and MidPen expects to apply for outside funding
sources (including state tax credits) in 2018. Should the tax credit applications be successful,
MidPen plans to start construction in late 2018 or early 2019.
The City is compelled to produce 465 affordable rental housing units at Brooklyn Basin per the
DA and the Cooperation Agreement at deep affordability levels. The partnerships with OHA and
MidPen, using the development funding allocated to the construction of the affordable housing,
are absolutely integral to bring these units to fruition. Therefore, especially given the Bay Area’s
deepening affordable housing crisis, no other options were considered.
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 7
FISCAL IMPACT
Since the City and OHA were already planning to retain ownership of the affordable housing
parcels, with long-term ground leases for each project to MidPen and their affiliates, the
approval of the Master Housing Agreement and Lease Disposition and Development
Agreements will have minimal fiscal impacts.
The additional $2,067,000 predevelopment loan, as well as the $360,000 predevelopment loan
made last year, will be paid from RPTTF funds (2011 Affordable Housing Set-Aside Bond, Fund
1885/9785, Projects 10000020, 1000390, and 1001237), and will be taken out by the
development loans for their respective projects ($793,000 for the senior housing development
on Parcel F, $868,000 for the family development on Parcel F, and $766,000 between the two
Parcel A phases).
The proposed $15,243,000 secured development loans for construction of the affordable
housing on Parcel F (total between the senior and family projects) will be funded as follows:
•
•
•
$1 million ZOHP affordable housing contribution – this represents half of the funds held
in escrow by First American Title Company through an escrow agreement with ZOHP
through the end of 2018
$5 million – half of OHA purchase price – sale scheduled to take place in late September
2017
$9,243,000 in swapped and remaining bond funds (coming in by FY18-19; as of the date
of this report, $10,559,627 of this funding is currently available)
After funding development on Parcel F, approximately $29,330,000 in local funding will remain
for development of the 254 units of affordable rental housing on Parcel A:
• $1 million contribution from ZOHP for the second parcel
• $5,000,000 from the other half of OHA’s purchase of a joint interest in Parcel A.
• Approximately $23,330,000 bond funding projected to come through FY 2021-22
The DOF drawdown schedule is attached as Attachment D. DOF’s May 19, 2016 decision
allows the City to use the remaining 2011 Bond funds, and allows the City to go back and re
characterize previous commitments totaling $37.5 million made from the 2011 Bond fund for the
City’s purchase of the affordable housing parcels in 2014 ($21.5 million) and Mural Apartments
(MacArthur BART Transit Oriented Development affordable phase, $16 million) as RPTTF
expenditures, which frees up the 2011 Bond Funds for use for the vertical construction of
affordable units at Brooklyn Basin. Funding would be reimbursed over six to seven tax years as
it becomes available. However, under this arrangement, DOF does not consider the vertical
unit construction to be an enforceable obligation of ORSA, and will not cover City staff project
delivery costs (estimated to total $4-$5 million over the life of the five phases of the project
through 2023). Therefore, City staffing costs will need to be recovered from the 2011 Housing
Bond as well, leaving approximately $35 million for vertical construction.
Between the City’s purchase price for the affordable housing parcels of approximately
$21,500,000 and estimated development loans of $35,000,000, the City’s total funding
investment in all 465 units will be roughly $56,500,000 ($121,505 per unit). OHA will provide
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 8
$10 million in development subsidies via its purchase of a 50% interest in the property, and
ZOHP is providing another $2 million towards the affordable housing. These sources are
expected to help leverage roughly $200 million in outside funding sources.
PUBLIC OUTREACH I INTEREST
The Coalition continues to be involved with this project since it is party to the 2006 Cooperation
Agreement with the City. The members of the Coalition are the Asian Pacific Environmental
Network, East Bay Asian Youth Center, Oakland Community Organizations, and the Urban
Strategies Council. City staff, the Coalition, OHA, and MidPen have been meeting frequently
since June 2015 to discuss the affordable housing program and financing plan and the Coalition
is an active participant in those discussions. The Coalition supports the involvement of OHA at
the current level of Section 8 units.
COORDINATION
Housing and Community Development staff coordinated with the City Attorney’s Office,
Controller’s Bureau, the City Administrator’s Office and MidPen Housing in preparation of this
report. Staff also remains in frequent contact with the Real Estate division, Bureau of Planning
and Building Department, and Public Works department’s Environmental Services Division.
SUSTAINABLE OPPORTUNITIES
Economic: The development of affordable housing at Brooklyn Basin will create economic
opportunities through the provision of construction and property management employment
opportunities. In addition, providing affordable housing, with a substantial portion of PBS8 units,
will allow residents have greater financial security. Residents of affordable housing tend to
spend their increased discretionary funds within their communities, which will also help local
businesses.
Environmental: Environmental remediation of the affordable housing parcels has been
completed and monitoring is occurring. Housing Staff will work with Public Works Environmental Services Division staff on remediation issues and monitoring, and with Planning
staff on NEPA review.
Social Equity: The development of affordable housing at Brooklyn Basin will create 465
affordable housing units for low and very low income residents, which is a means of achieving
greater social equity. Units will serve lower incomes (regulated at 25-60 percent of AMI, but
with vouchers that could allow residents in the 0-25 percent of AMI level as well). Affordable
units will serve seniors and families, with large (3 bedroom) units that would otherwise be
difficult to find in Oakland. Oakland’s neighborhood-level environment will be improved by
replacing vacant and underused lots with new homes and residents.
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 9
CEQA
The City of Oakland Planning Commission certified the Oak to Ninth Avenue Project
Environmental Impact Report on March 15, 2006. Under the California Environmental Quality
Act (CEQA) Section 15162, no subsequent environmental review is required unless the project
has changed substantially, the circumstances under which the project would occur have
changed substantially, or new information demonstrates that any potential environmental
impacts would be substantially more severe than previously demonstrated. In reviewing the
preliminary affordable housing development and financing plan, staff has determined that none
of the circumstances necessitating further environmental review are present. The reasons for
this determination include, among others, the following: (1) the preliminary affordable housing
development and financing plan does not affect development envelope previously reviewed in
the EIR and is not a change in the project that involves any new significant effects or a
substantial increase in the severity of previously identified significant effects; (2) circumstances
under which the project is undertaken have not occurred that will involve new significant
environmental effects or a substantial increase in the severity of previously identified significant
effects; and (3) no new information has come to light that would involve new or substantially
more severe effects or feasible alternatives or mitigation measures. Accordingly, no further
environmental review is required for this project at this time. The EIR identifies impacts and
requires mitigation measures, and the proposed project will continue to be required to
incorporate the mitigation measures. The EIR is available for review at 250 Frank Ogawa
Plaza, Suite 3315, Oakland, CA 94612 during normal business hours.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That The City Council Adopt
An Ordinance (1) Authorizing A Master Housing Agreement With The Oakland Housing
Authority and MidPen Housing Corporation, Or Affiliated Entities, For Development of
Affordable Housing At Brooklyn Basin, (2) Authorizing Lease Disposition and
Development Agreements With MidPen Housing Corporation And The Oakland Housing
Authority, Or Affiliated Entities, For The Long-Term Ground Lease Of Parcel F At
Brooklyn Basin For The First Phases Of Development, And (3) Making CEQA Findings
For This Action; And
A Resolution (1) Authorizing An Unsecured Predevelopment Loan In The Amount Of
$2,067,000 To MidPen Housing Corporation, Or Affiliated Entities, To Support The
Development Of Affordable Housing On Parcels A And F At Brooklyn Basin, (2)
Authorizing A Secured Affordable Housing Development Loan In An Amount Not To
Exceed $15,243,000, To MidPen Housing Corporation, Or Affiliated Entities, To Support
The Development of Affordable Housing On Parcel F at Brooklyn Basin, And (3) Making
CEQA Findings For This Action,,
Item:
CED Committee
October 10 2017
Sabrina B. Landreth, City Administrator
Subject: Brooklyn Basin Affordable Housing Agreements
Date: September 14, 2017
Page 10
For questions regarding this report, please contact Christia Katz Mulvey, Housing Development
Coordinator, at (510) 238-3623.
Respectfully submitted,
March 2021
May 2021
July 2021
July 2021
January 2022
December 2022
5,7S0,000
APPROVED AS TO FO$M AND LEGALITY
ill? SEP 28 PH |:3I ‘ .
C_~-H3EPUTY CITY ATTORNEY
OAKLAND CITY COUNCIL
ORDINANCE NO.
C.M.S.
ORDINANCE (1) AUTHORIZING A MASTER HOUSING AGREEMENT WITH THE OAKLAND HOUSING AUTHORITY AND MIDPEN HOUSING CORPORATION, OR AFFILIATED ENTITIES, FOR DEVELOPMENT OF AFFORDABLE HOUSING AT BROOKLYN BASIN, (2) AUTHORIZING LEASE DISPOSITION AND DEVELOPMENT AGREEMENTS WITH
MIDPEN HOUSING CORPORATION AND THE OAKLAND HOUSING AUTHORITY, OR AFFILIATED ENTITIES, FOR THE LONG-TERM GROUND LEASE OF PARCEL F AT BROOKLYN BASIN FOR THE
FIRST PHASES OF DEVELOPMENT, AND (3) MAKING CEQA FINDINGS FOR THIS ACTION
WHEREAS, in 2014 and 2017, the City acquired Project Parcels A and F
(the “affordable housing parcels”) at the Brooklyn Basin development project (formerly
the Oak to 9th project) for the development of 465 units of affordable housing; and
WHEREAS, the obligation to purchase the affordable housing parcels for
development of affordable housing arises pursuant to a Development Agreement
between the City and Zarsion-OHP I, LLC (“ZOHP”), originally entered into in 2006 and
subsequently amended (the “Development Agreement”) and a Cooperation Agreement
between the City and the Oak to Ninth Community Benefits Coalition originally entered
into in 2006 and subsequently amended (the “Cooperation Agreement”); and
WHEREAS, the Development Agreement provides that the City and
ZOHP will work together to identify, recruit and select an affordable housing developer
to acquire the affordable housing parcels and develop affordable housing, and sets forth
a process for ZOHP to propose an affordable housing developer and for the City to
accept or reject the proposed developer; and
WHEREAS, the Housing Authority of the City of Oakland, California (“OHA”)
has purchased or will be purchasing an undivided 50 percent tenant-in-common interest in
the affordable housing parcels; and
WHEREAS, the City and OHA have selected MidPen Housing
Corporation (“MidPen”), a California nonprofit public benefit corporation, pursuant to the
developer selection process in the Development Agreement, to be the developer of
affordable housing at the affordable housing parcels; and
WHEREAS, MidPen is an experienced and capable affordable housing
developer; and
WHEREAS, on January 5, 2016, Council passed Resolution No. 85939
C.M.S. approving a financing plan for developing affordable housing at Brooklyn Basin;
and
WHEREAS, a Master Housing Agreement among the City, OHA and
MidPen, or affiliates, will set forth the general terms and conditions under which the
affordable housing parcels will be conveyed and the affordable housing will be financed
and developed on the parcels; and
WHEREAS, MidPen has proposed developing the affordable housing on the
affordable housing parcels in phases, with the first two project phases being developed on
Parcel F; and
WHEREAS, MidPen has proposed to develop 101 units of family housing
as part of Project 1 and 110 units of senior housing as part of Project 2 on Parcel F; and
WHEREAS, all units (other than manager units) will be affordable to
households earning no more than 60% of area median income; and
WHEREAS, Section 2.42.140, et seq., of the Oakland Municipal Code
authorizes the City to sell or lease real property for development by ordinance; and
WHEREAS, lease disposition and development agreements among the City,
OHA and MidPen will set forth the terms and conditions under which the City and OHA will
dispose of Parcel F to MidPen and/or affiliated entities by means of long-term ground
leases, and by which MidPen will construct Project 1 and Project 2 on Parcel F; and
WHEREAS, the conveyance of Parcel F to MidPen for development and
operation of affordable housing will further the health, safety, and general welfare of the
residents of the City of Oakland by increasing the stock of housing affordable to low
income households; and
WHEREAS, Section 2.42.180 of the Oakland Municipal Code authorizes
the City to dispose of property at its fair reuse value as assessed based on the
property’s proposed development and use, prevailing market conditions, development
climate at the time of disposition, and other economic and noneconomic factors, and
requires findings to justify any below-market disposition; and
WHEREAS, the assessment set forth in the staff report accompanying this
Ordinance concludes that, based on a financial feasibility analysis of the proposed project,
the fair reuse value of Parcel F is nominal; and
2
WHEREAS, given the economics of the proposed projects and the need to
make the projects work, the ground lease of Parcel F to MidPen at a nominal cost is
necessary; and
WHEREAS, the Environmental Impact Report for the Oak to Ninth Mixed
Use Development Project prepared under the California Environmental Quality Act
(“CEQA”) and certified by the City Council in 2006 and recertified in 2009 (the “EIR”)
provides a project-level analysis of the environmental impacts of the Brooklyn Basin
development project and supports all levels of approval necessary to implement the
Brooklyn Basin project, including affordable housing development on the affordable
housing parcels; and
WHEREAS, the proposed transactions, including development of Project 1
and Project 2 on Parcel F, would not result in any significant effect that has not already
been analyzed in the EIR, and there will be no significant environmental effects caused by
the transactions that have not already been analyzed in the EIR; now, therefore
The Council of the City of Oakland does ordain as follows:
SECTION 1. The City Council hereby authorizes the City Administrator or
her designee to negotiate and execute a Master Housing Agreement with OHA and
MidPen, or affiliated entity or entities approved by the City Administrator, setting forth the
general terms and conditions under which the affordable housing parcels will be conveyed
and the affordable housing units will be financed and developed on the parcels.
SECTION 2. The City Council hereby authorizes the City Administrator or
her designee to negotiate and execute lease disposition and development agreements
with OHA and MidPen, or affiliated entity or entities approved by the City Administrator, for
the disposition of Parcel F to Mid-Pen or affiliate by long-term ground leases and the
development of Project 1 and Project 2 on Parcel F by MidPen or affiliate consistent with
the terms of this Ordinance and other agreements with respect to the affordable housing
parcels.
SECTION 3. The City Council hereby authorizes long-term ground leases of
the City’s interest in Parcel F at Brooklyn Basin to MidPen, or affiliated entity or entities
approved by the City Administrator, for nominal lease payments, in return for an
agreement by the developer to develop and operate Project 1 and Project 2 on Parcel F as
affordable housing. The City Council further authorizes the City Administrator or her
designate to negotiate and execute ground leases and any other agreements or
documents as necessary to convey leasehold interests in Parcel F to MidPen or affiliates,
as well as agreements or documents as necessary to transfer or assign funds or other
interests the City has with respect to Parcel F including remediation and monitoring funds,
escrowed funds, and environmental protections, upon the satisfaction of any
preconveyance conditions imposed by the City Administrator or her designee.
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SECTION 4. As a condition of the conveyances, the City will require that
appropriate restrictions on occupancy, rents and operations for affordable units developed
as part of Project 1 and Project 2 be recorded against improvements developed on Parcel
F.
SECTION 5. The City Council, pursuant to Oakland Municipal Code
Section 2.42.170.B., hereby waives the competitive Notice of Development Opportunity
(“NODO”) process for disposition of Parcel F, and finds and determines that disposition
of Parcel F without a competitive NODO process is in the best interests of the City in
order to comply with the provisions of the Development Agreement concerning selection
of an affordable housing developer for the affordable housing parcels, and to facilitate
timely development of affordable housing on the affordable housing parcels by an
experienced and capable affordable housing developer.
SECTBQN 8. Based on the reuse value assessment set forth in the staff
report accompanying this Ordinance concluding that the fair reuse value of Parcel F is
nominal given its required use as affordable housing and the need to make Project 1 and
Project 2 financially feasible, Council hereby finds that the ground lease of Parcel F to
MidPen at nominal cost is necessary and in the best interests of the City. Because Parcel
F is being conveyed at less than fair rental value, all City employment and contracting
programs shall apply to Project 1 and Project 2.
SECTION 7. All agreements associated with the Parcel F and Project 1 and
Project 2 shall be reviewed and approved as to form and legality by the Office of the City
Attorney prior to execution by the City, and shall be placed on file with the City Clerk.
SECTION 8. The City Council finds and determines that the proposed
transactions would not result in any significant effect that has not already been analyzed in
the EIR, and there will be no significant environmental effects caused by the transactions
that have not already been analyzed in the EIR. The City Administrator or her designee is
hereby authorized to file a notice of determination with the Office of the Alameda County
Recorder and the State Office of Planning and Research, and to take any other action
necessary in furtherance of the project consistent with this Ordinance and its basic
purposes.
SECTION 9. The record before this Council relating to this Ordinance
includes, without limitation, the following:
A. All staff reports, decision letters and other documentation and information
produced by or on behalf of the City, and all notices relating to this
Ordinance and the LDDAs;
B. All oral and written evidence received by City staff and the City Council
before and during the consideration of this Ordinance;
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C. All matters of common knowledge and all official enactments and acts of the
City, such as (1) the General Plan; (2) the Oakland Municipal Code,
including, without limitation, the Oakland real estate regulations; (3) the
Oakland Planning Code; (4) other applicable City policies and regulations;
and (5) all applicable state and federal laws, rules and regulations.
SECTION 10. The custodians and locations of the documents or other
materials which constitute the record of proceedings upon which the City Council’s
decision is based are respectively: (a) the Office of Housing And Community
Development, 250 Frank H. Ogawa Plaza, 5th floor, Oakland CA; (b) Planning and
Neighborhood Preservation Department, Planning Division, 250 Frank H. Ogawa Plaza,
3rd floor, Oakland CA; and (c) the Office of the City Clerk, 1 Frank H. Ogawa Plaza, 1st
floor, Oakland, CA.
SECTION 11. The recitals contained in this Ordinance are true and
correct and are an integral part of the Council’s decision.
SECTION 12. This Ordinance shall be in full force and effect immediately
upon its passage as provided by Section 216 of the City Charter if adopted by at least six
members of Council, or upon the seventh day after final adoption if adopted by fewer
votes.
IN COUNCIL, OAKLAND, CALIFORNIA
2017
PASSED BY THE FOLLOWING VOTE:
AYES-
BROOKS, CAMPBELL WASHINGTON, GALLO, GIBSON MCELHANEY,
GUILLEN, KALB, KAPLAN, AND PRESIDENT REID,
NOESABSENTABSTENTION-
ATTEST:
LATONDA SIMMONS
City Clerk and Clerk of the Council
of the City of Oakland, California
5
ORDINANCE AUTHORIZING A MASTER HOUSING AGREEMENT WITH THE OAKLAND HOUSING AUTHORITY AND MIDPEN HOUSING CORPORATION, OR AFFILIATED ENTITIES, FOR DEVELOPMENT OF AFFORDABLE HOUSING AT BROOKLYN BASIN, AND (2) AUTHORIZING LEASE DISPOSITION AND DEVELOPMENT AGREEMENTS WITH MIDPEN HOUSING CORPORATION AND THE OAKLAND HOUSING AUTHORITY, OR AFFILIATED ENTITIES, FOR THE LONG-TERM GROUND LEASE OF PARCEL F AT BROOKLYN BASIN FOR THE FIRST PHASES OF DEVELOPMENT, AND (3) MAKING CEQA FINDINGS FOR THIS ACTION NOTICE AND DIGEST
This Ordinance authorizes a Master Housing Agreement between the City, the Oakland Housing
Authority, and MidPen Housing Corporation for the disposition of the affordable housing parcels at
Brooklyn Basin and the financing and development of affordable housing on those parcels. This
Ordinance also authorizes the long-term ground leases of one of the affordable housing parcels,
Parcel F, to MidPen Housing Corporation at a nominal cost for development of affordable housing, on the site, and authorizes the City Administrator to negotiate and enter into lease disposition and development agreements and ground leases with MidPen Housing Corporation and the Oakland Housing Authority for this transaction, and makes associated findings with respect to the California Environmental Quality Act (CEQA) and other matters.
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III SEP 28 PH |: 32
Approved as to Fdrm/and Legality
TO
Deputy City Attorney
OAKLAND CITY COUNCIL
RESOLUTION NO.
C.M.S.
RESOLUTION (1) AUTHORIZING AN UNSECURED PREDEVELOPMENT
LOAN IN THE AMOUNT OF $2,067,000 TO MIDPEN HOUSING
CORPORATION, OR AFFILIATED ENTITIES, TO SUPPORT THE
DEVELOPMENT OF AFFORDABLE HOUSING ON PARCELS A AND F AT
BROOKLYN BASIN, (2) AUTHORIZING A SECURED AFFORDABLE
HOUSING DEVELOPMENT LOAN IN AN AMOUNT NOT TO EXCEED
$15,243,000, TO MIDPEN HOUSING CORPORATION, OR AFFILIATED
ENTITIES, TO SUPPORT THE DEVELOPMENT OF AFFORDABLE
HOUSING ON PARCEL F AT BROOKLYN BASIN, AND (3) MAKING CEQA
FINDINGS FOR THIS ACTION
WHEREAS, in 2014 and 2017, the City acquired Project Parcels A and F (the
“affordable housing parcels”) at the Brooklyn Basin development project (formerly the Oak
to 9th project) for the development of 465 units of affordable housing; and
WHEREAS, the obligation to purchase the affordable housing parcels for
development of affordable housing and to ensure development of at least 465 units of
affordable housing on the site arises pursuant to a Development Agreement between the
City and Zarsion-OHP I, LLC (“ZOHP”), originally entered into in 2006 and subsequently
amended (the “Development Agreement”) and a Cooperation Agreement between the City
and the Oak to Ninth Community Benefits Coalition originally entered into in 2006 and
subsequently amended (the “Cooperation Agreement”); and
WHEREAS, the Development Agreement provides that the City and ZOHP
will work together to identify, recruit and select an affordable housing developer to acquire
the affordable housing parcels and develop affordable housing, and sets forth a process
for ZOHP to propose an affordable housing developer and for the City to accept or reject
the proposed developer; and
WHEREAS, the Housing Authority of the City of Oakland, California (“OHA”)
has purchased or will be purchasing an undivided 50 percent tenant-in-common interest in
the affordable housing parcels from the City for $10 million, with these sale proceeds to the
City earmarked to the development of affordable housing on the affordable housing
parcels; and
WHEREAS, the City and OHA have selected MidPen Housing Corporation
(“MidPen”), a California nonprofit public benefit corporation, pursuant to the developer
selection process in the Development Agreement, to be the developer of affordable
housing at the affordable housing parcels; and
WHEREAS, MidPen is an experienced and capable affordable housing
developer; and
WHEREAS, MidPen has proposed to develop the required 465 affordable
housing units in four separate phases in order to maximize project viability and ability to
leverage outside funding sources; and
WHEREAS, the City and OHA have been working closely with MidPen and
the Community Benefits Coalition to develop and refine the affordable housing
development scenarios and financing plan; and
WHEREAS, on January 5, 2016, Council passed Resolution No. 85939
C.M.S. approving a financing plan for developing affordable housing at the affordable
housing parcels; and
WHEREAS, on July 19, 2016, the City Council approved City Council
Resolution No. 86301 C.M.S. authorizing a $360,000 unsecured predevelopment loan for
the project; and
WHEREAS, it will be beneficial to the affordable housing development at
Brooklyn Basin for the projects to receive additional predevelopment loan funds in the
amount of $2,067,000, for a total predevelopment loan amount not to exceed $2,427,000,
so that MidPen will have working capital to undertake predevelopment activities for the first
two planned phases of the project through design review; and
WHEREAS, sufficient funding is available to the City from the Oakland
Redevelopment Successor Agency from the 2011 Affordable Housing Set-Aside Bond
Fund to provide the additional requested predevelopment loan; and
WHEREAS, MidPen does not currently hold an interest in the affordable
housing parcels, and it is therefore not possible to secure the predevelopment loans at this
time; and
WHEREAS, it is anticipated that the predevelopment loans will be
consolidated with the loans for development of the projects on the affordable housing
parcels when the development loans are closed; and
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WHEREAS, the City anticipates receiving roughly $40 million in additional
housing bond proceeds over the next several years for affordable housing at Brooklyn
Basin, of which $35,000,000 will be available for development loans to the projects after
paying City staff and administrative costs; and
WHEREAS, pursuant to the terms of the Development Agreement, ZOHP
must provide a $2 million affordable housing contribution to affordable housing
development costs ($1 million per affordable housing parcel), to be paid to the City once
building permits for the affordable housing are drawn on each parcel; and
WHEREAS, MidPen has proposed developing the first two project phases on
Parcel F, with 101 units of family housing as part of Project 1 and 110 units of senior
housing as part of Project 2, for a total of 211 affordable units developed on Parcel F; and
WHEREAS, lease disposition and development agreements among the City,
OHA and MidPen will set forth the terms and conditions under which the City and OHA will
dispose of Parcel F to MidPen and/or affiliated entities by means of long-term ground leases,
and by which MidPen will construct Project 1 and Project 2 on Parcel F; and
WHEREAS, all units (other than manager units) will be rented at rents
affordable to households earning no more than 60% of area median income; and
WHEREAS, the project is consistent with the City’s Project Development
Guidelines, and MidPen meets the City’s Threshold Developer Criteria; and
WHEREAS, the project will increase and improve the supply of low and very
low income housing available in the City of Oakland; and
WHEREAS, the Environmental Impact Report for the Oak to Ninth Mixed Use
Development Project prepared under the California Environmental Quality Act (“CEQA”) and
certified by the City Council in 2006 and recertified in 2009 (the “EIR”) provides a project-level
analysis of the environmental impacts of the Brooklyn Basin development project and
supports all levels of approval necessary to implement the Brooklyn Basin project, including
affordable housing development on the affordable housing parcels; and
WHEREAS, the proposed transactions, including development of Project 1
and Project 2 on Parcel F, would not result in any significant effect that has not already
been analyzed in the EIR, and there will be no significant environmental effects caused by
the transactions that have not already been analyzed in the EIR; now, therefore, be it
RESOLVED: That the City Council hereby authorizes the City Administrator
or her designee to provide an additional unsecured predevelopment loan in the amount of
$2,067,000 to MidPen Housing Corporation, or to an affiliated entity or entities approved by
the City Administrator or her designee, to support predevelopment work associated with
the development of 465 units of affordable housing on the Brooklyn Basin affordable
housing parcels, for a total unsecured predevelopment loan in an amount not to exceed
3
$2,427,000; and be it
FURTHER RESOLVED: That the funding for this additional predevelopment
loan shall be allocated from the 2011 Affordable Housing Set-Aside Bond Fund (City Fund
1885, Org 89929, Project 10001237; ORSA Fund 9785, Org 89929, Projects 10000020,
1000390 and 1001237); 2011 Affordable Housing Set-Aside Bond Fund and be it
FURTHER RESOLVED: That the additional predevelopment loan shall be
contingent on the availability of sufficient funds in the 2011 Affordable Housing Set-Aside
Bond Fund; and be it
FURTHER RESOLVED: That the predevelopment loan shall be for an initial
term of 24 months (with a six month extension available at the City Administrator’s
discretion), with an interest rate to be determined by the City Administrator in her
discretion, with the balance due at the end of the term, or on such other repayment terms
and schedule as the City Administrator or her designee determines are in the best interests
of the City and the project; and be it
FURTHER RESOLVED: That the City Administrator is authorized to
consolidate the predevelopment loans or any portion thereof with any development loans
for the project; and be it
FURTHER RESOLVED: That the City Council hereby further authorizes the
City Administrator or her designee to provide a development loan in an amount not to
exceed $15,243,000, for a total consolidated loan amount (predevelopment and
development loans) of up to $17,670,000, to MidPen Housing Corporation, or to an
affiliated entity or entities approved by the City Administrator or her designee, to be used
for development of 211 units of affordable housing as part of Project 1 and Project 2 on
Parcel F; and be it
FURTHER RESOLVED: That the funding for the development loan shall be
allocated from the following sources: $9,603,000 from 2011 Affordable Housing Set-Aside
Bond Fund (City Fund 1885, Org 89929, Project L439410; ORSA Fund 9785, Org 89929,
Projects 10000020, 1000390 and 1001237), and $6,000,000 in funding from OHA sales
proceeds and ZOHP developer contributions that will be deposited in the Low and
Moderate Income Housing Asset Fund (2830), Housing Development Organization
(88929), Housing Development Program Project (To Be Determined); and be it
FURTHER RESOLVED: That the development loan shall be contingent on
the availability of sufficient funds in the Low and Moderate Income Housing Asset Fund
and other funds; and be it
FURTHER RESOLVED: That the development loan and/or the consolidated
loan shall be for a maximum term of 55 years, with an interest rate to be determined by the
City Administrator in her discretion, with repayment to the City from surplus cash flow from
the project and other available funds during the term of the loan, with the balance due at
4
the end of the term, or on such other repayment terms and schedule as the City
Administrator or her designee determines are in the best interests of the City and the
project; and be it
FURTHER RESOLVED: That as a condition of the development loan and/or
consolidated loan, the City will require that appropriate restrictions on project occupancy,
rents and operations be recorded against project improvements on Parcel F; and be it
FURTHER RESOLVED: That the development loan and/or consolidated
loan shall be secured by a deed of trust on project improvements on Parcel F; and be it
FURTHER RESOLVED: That the development loan funds shall be reserved
for a period of no more than 24 months from the date of this Resolution and shall be
subject to reprogramming at the end of this period unless MidPen has secured
commitments for full project funding or provided other assurances of adequate project
funding that the City Administrator or her designee deems sufficient within her discretion,
within the reservation period; and be it
FURTHER RESOLVED: That the making of the predevelopment loan and
the development loan shall be contingent on and subject to such other appropriate terms
and conditions as the City Administrator or her designee may establish; and be it
FURTHER RESOLVED: That the City hereby authorizes the City
Administrator or her designee in her discretion to subordinate the priority of any of the
City’s recorded interests in Parcel F to a lien or encumbrance of another private or
governmental entity providing financial assistance to the project, if the City Administrator or
her designee determines that (1) an economically feasible alternative method of financing
the project on substantially comparable terms and conditions but without subordination is
not reasonably available, (2) the City’s investment in the project in the event of default is
reasonably protected, and (3) subordination is in the best interests of the City; and be it
FURTHER RESOLVED: That the City Administrator is hereby authorized to
negotiate and execute loan documents for the predevelopment loan and the development
loan, administer the loans, extend or modify the repayment terms, and take whatever other
action is necessary with respect to the loans and the project consistent with this Resolution
and its basic purposes; and be it
5-
FURTHER RESOLVED: That the City Council finds and determines that the
proposed funding transactions would not result in any significant effect that has not already
been analyzed in the EIR, and there will be no significant environmental effects caused by
the funding transactions that have not already been analyzed in the EIR.
IN COUNCIL, OAKLAND, CALIFORNIA
PASSED BY THE FOLLOWING VOTE:
AYES – BROOKS, CAMPBELL WASHINGTON, GALLO, GIBSON MCELHANEY, GUILLEN, KALB, KAPLAN,
AND PRESIDENT REID
NOESABSENTABSTENTION ATTEST:
6
LaTonda Simmons
City Clerk and Clerk of the Council
of the City of Oakland, California