SunCal Cuts Housing, Ups Commercial for Former Alameda Air Station

By Jessica Saunders

SunCal Cos. has proposed building about 1,200 fewer homes at Alameda Point after a bruising electoral defeat Feb. 2 of its proposed exemption to city density limits at the former military installation.

The private, Irvine-based master developer submitted its latest application to the city to re-develop the former Alameda Naval Air Station, which is more than 1,700 acres. The document requests 3,324 new homes, compared to 4,503 in an earlier master plan. The March 21 submission also increases proposed commercial space by nearly 1 million square feet.

The city of Alameda is reviewing the application to determine if it meets the city charter’s density limit and cures a February default notice filed by the city against the developer. The developer denies it is in default.

SunCal, a family-owned master developer with a portfolio of more than 70 communities, is also redeveloping the former naval hospital at Oak Knoll in Oakland and Dublin Crossing near Camp Parks in Dublin.

In the early February election, SunCal sought an exemption to Alameda’s Measure A, which limits density to one single-family home per 2,000 square feet of land. SunCal wanted to build multifamily housing, but voters defeated the idea. That led to the modified proposal currently under city review.

If the city approves the latest SunCal application, it and the developer would be a step closer to completing a disposition and development agreement for the land, which is still owned by the Navy. An exclusive negotiating period ends July 20.

Redevelopment of the base, which closed in 1997, is a long-held goal for both the city and the Navy. Alameda wants an eyesore remade into a mixed-use neighborhood with new homes and businesses, and the Navy has sought $108.5 million for the property.

SunCal believes its March 21 application complies with Measure A, said Pat Keliher, regional president of SunCal’s Bay Area division. City representatives said they are still reviewing the document when contacted.

The developer announced in 2008 it would seek a Measure A exemption for Alameda Point, saying site preparation costs made single-family residential development infeasible in most areas envisioned for it at the time. SunCal contended a predecessor developer underestimated costs for flood, seismic and other geotechnical work at the base and proposed 4,500 homes at density levels not permitted by the city charter.

SunCal’s proposal was defeated by city voters who voted 85 percent against it.

The modified application seeks to build 3,324 new residential units, relocate 186 collaborative housing units and adaptively reuse buildings in the base historic district for another 202 homes. New homes would include single-family, duplex, zero-lot-line single-family and live-work units, according to the project description in developer documents posted on the city’s Web site. Measure A would also allow up to 157 multi-family units within the buildings proposed for adaptive reuse, according to the developer’s proposal.

The March 21 application also increases the amount of commercial space from 3.18 million square feet to 4.05 million square feet, including a business park, compared to the January 2009 plan. It decreases the retail square footage from 350,000 square feet to 262,000 square feet. Both plans include about 146 acres of parks and open space, but the 2009 plan also allocated 47 acres to civic space and 18 acres for other uses. The March 21 proposal includes 260,000 square feet of civic uses, a ferry terminal and 600 marina boat slips.

The city’s core Alameda Point team, including the project manager, project planner and representatives of the public works department and the city attorney’s office, were reviewing the March 21 submission from SunCal, said Jennifer Ott, deputy city manager and Alameda Point project manager. It was too early to tell whether the application cured the notice of default and complied with Measure A, she said.

“We want to be sure we do a thorough review. We’ll see,” she said.

SunCal took on a financial partner, East Coast hedge fund D.E. Shaw & Co., in August 2008, seeking cash to pay upfront costs associated with negotiations to develop Alameda Point. Details of the agreement, which involved seven to 10 SunCal projects, were not made public. At the time, the city estimated it would take $10 million for SunCal to complete the entire approval process.

SunCal is the second master developer to tackle the remake of the 1,734 acres. Naval Air Station Alameda ceased operation on April 1, 1997. The first master developer, selected in 2001, was Alameda Point Community Partners, a consortium of Shea Homes, Shea Properties, Centex Homes, Morgan Stanley and Industrial Realty Group. Alameda Point Community Partners quit in 2006, in part citing the housing market downturn which led to the current recession. APCP developed a preliminary development concept that would have included 1,800 new homes compliant with Measure A.

The city rebid the project and narrowed the field of about 10 would-be developers to SunCal, ProLogis subsidiary Catellus Development Group and Lennar Inc. The latter two companies tried to create a joint venture to develop Alameda Point, but didn’t meet the city’s deadline. The Alameda Reuse and Redevelopment Authority, the council’s title for base-reuse issues, approved SunCal on a 3-2 vote May 8, 2007.

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