Deal clears obstacle to Brooklyn Basin affordable housing.
OAKLAND — By trading one parcel of land for another within the Oak Street to Ninth Avenue development along the Oakland Estuary known as Brooklyn Basin, the city has cleared a roadblock in its longstanding plan to build 465 affordable apartments there.
The deal between Oakland and master developer Zarsion-Oakland Harbor Partners releases the city from its agreement to build retail space and parking along with 300 affordable apartments at the entrance to the 65-acre development.
Instead, the city, with nonprofit developer MidPen Housing, will build those apartments on another parcel within the site, without having to also finance the retail and parking.
The overall Brooklyn Basin project encompasses 65 acres jutting into the Oakland Estuary west of Interstate 880 south of Jack London Square.
The project’s beginning dates back to 2001, during Jerry Brown’s tenure as Oakland mayor. It stalled for lack of financing, including Brown’s 2011 decision as governor to abolish the state’s redevelopment agencies that allowed cities and counties to redirect property taxes to improve mostly blighted areas.
The city negotiated a $45 million commitment in state financing for the Brooklyn Basin project, but the cost of building the planned 465 affordable apartments there is likely to exceed $200 million, according to MidPen.
Plans for the site include building 3,100 housing units — 15 percent of them priced as affordable for low- and very-low income tenants — and proiding 32 acres of open space, including a shoreline park, a marina and retail.
Three hundred of those affordable apartments were planned at a site described as Parcel G, at the project’s entrance, which would also have included 42,000 square feet of retail and 400 parking spots.
“It has been commonly acknowledged for some time that the requirement that the affordable housing developer also finance and construct the parking and commercial space … would make financing for the overall development of Parcel G fairly challenging,” Michelle Byrd, Oakland’s director of housing and community development, wrote in a memo describing the proposed parcel trade.
So the city will return Parcel G to Zarsion-Oakland Harbor Partners in exchange for the slightly smaller Parcel A, which has the advantage of being closer to the waterline, where Signature Development Group is planning an 8-acre park to rival New York’s Battery Park, according to its executive vice president Paul Nieto.
The rest of the 465 affordable apartments are planned for the adjacent parcel F, also to be built by the city. Oakland in 2014 paid developer Zarsion-Oakland Harbor Partners more than $20 million for the two parcels.
Zarsion-Oakland Harbor Partners is a limited liability corporation created when Signature brought in private Chinese investors Zarsion-America as the project financier in 2014.
The company has been building infrastructure for the project, widening Embarcadero from two to four lanes with a median, planting trees and other landscaping, and building streets, curbs and gutters, Nieto said.
It broke ground in April on Parcel B, which will include 241 market-rate units ranging from studios to three bedrooms.
That part of the project, Nieto said, should be complete by spring 2019.
As for the affordable housing, MidPen, working with Oakland architect Hkit, is going through the city’s design review process and will apply for federal low income equity tax credits in March 2018, said Polo Munoz, MidPen project manager.
The tax credits are the final piece of the financing puzzle, he said, following contributions from the city’s 2011 housing bonds, a commitment from the Housing Authority for Section 8 vouchers, a $2 million contribution from Zarsion-Oakland Harbor Partners that is part of the parcel trade and conventional debt in the form of construction and mortgage loans.
“It’s a sequential, daisy-chain process. It’s not until you win those tax credits that you really have a green light,” Munoz said.
Getting those tax credits is a competitive process, he said. Although MidPen is confident of succeeding, “the more local funding you can leverage, the more competitive you become. That’s just the situation that affordable housing finds itself in.”
MidPen is optimistic that, with the tax credits in hand, it can break ground on Parcel F’s two buildings in December 2018 and on one of Parcel G’s two buildings in mid-2019, the other two years later.
All the developments are expected to take 18 to 23 months, with an average cost per unit in the range of a half-million dollars, Munoz said.
Current estimates are that Parcel F will have 110 apartments for seniors and 101 for families. Plans call for 254 family apartments in the two buildings in Parcel G, Munoz wrote in an email.
The apartments, intended for people earning 30 percent to 60 percent of area median income, are the company’s first in Oakland. At projects the company has completed, more than 400 people have applied for each apartment, Munoz said.