EXECUTIVE SUMMARY

Project Overview

The Norman Y. Mineta International Institute for Surface Transportation Policy Studies (IISTPS) has received funding through the federal Research and Special Programs Administration (RSPA) and the California Department of Transportation (Caltrans) to conduct policy related activities in the areas of research, education, and information sharing to benefit the U.S. surface transportation industry. The project which is the subject of this report was jointly sponsored by Caltrans and RSPA under the original title of “Zoning and Financing of Transportation Interchange Point Densification (Analysis of Opportunities and Barriers in Project Development).” The publication title of this report was changed for simplicity.

As communities become more urban, local governments are encouraging higher density developments adjacent to transportation corridors. Public policies that lead to transportation oriented developments encourage higher transit ridership, less auto use, and more efficient land use. However, the private sector is often reluctant to build higher density projects for a variety of reasons. To pioneer these efforts and begin the implementation of these policies, transportation agencies are using their surplus land as the basis for transportation oriented developments. Many agencies have formed partnerships with private developers to construct these higher density projects. Some have been successful, but others have faced great difficulty.

The Project

This document will examine several transportation-oriented developments. It will also recommend methods by which public transportation agencies can successfully implement high-density, mixed-use developments adjacent to transportation corridors.

Definition of Transportation Oriented Developments

For the purposes of this study, transportation oriented developments will be defined as higher density, residential or mixed-use developments built along transportation corridors. Transportation corridors include all intensely used surface transportation passageways, i.e. rail and major bus lines as well as freeways. These developments are constructed through partnerships between public agencies and private developers. In this partnership the public agency contributes land or capital or both and may assist in the financing. The private developer may be a for-profit or a non-profit entity. Their role in the partnership is to finance, build, rent or sell, and maintain the project over time. Each of the partners, private and public, expects to receive a return on its investment. For the public agency it may be a lease amount for the land or simply the implementation of public policy. For the private developer it is usually the developer’s fee and the net profits from managing the project.

This research project will review only transportation oriented developments that are constructed by a public/private partnership.

The Case Studies

Ten transportation oriented projects located in eight different cities were used as case studies. The cities include: Washington, D.C.; Atlanta, Georgia; Portland, Oregon; and San Diego, California. Several of the projects are located in the San Francisco Bay area: Redwood City, Hayward, and El Cerrito. In the course of studying these projects it was noted that all experienced difficulties with developing and completing the projects on time and within budget. At this point in time it is unknown if some will do well financially.

The case studies focus on the relationship between the public partner and the private entity. Employees of the public agencies and the private developers were extensively interviewed. In most cases the principal of the development company was directly interviewed. They were specifically asked about what difficulties they encountered, which aspects of the public/private relationship should be changed, and which retained. The main concern of the developers was that, because the public entities are not driven by issues of budgets, payroll, and cash flow, they often ignored the realities of business finances. They also found that the public agencies were inflexible, could not change when circumstances altered, and were generally unprepared to work in a business environment.

Two case studies in this report are different from the others. Plaza Del Sol in San Francisco had no public land and is not immediately adjacent to the BART transit station. The Redevelopment Agency loaned money to the project to purchase the land needed. Atlanta Financial Center in Atlanta, Georgia was a private development on private land that invited the public entity, MARTA, to build its station. In this case it was private land and public participation. Despite these differences, each case study provides additional insight into the public/private dimension of financing and joint development.

Some very interesting projects were not studied. For example, the research team attempted to study a project in San Jose, California. However, neither the local transit district nor the developers would supply information about the project, nor would they give interviews. The financial advisor to the developer, an attorney, told team members that they would have to sign a “non-competitive disclosure form” in order to do research on the project. This form was to ensure that any information about the project would not be sold to or used by competitors. The project team was fortunate that no other developer or public agency felt the same.

Other projects in Boston, Portland, and Los Angeles were considered and are worthy of being studied. However, because of time constraints, they are not included in this study.

Team Members

The project was fortunate in having an excellent team whose members contributed a variety of backgrounds and interests. The Department of Urban and Regional Planning Department at San José State University supplied a number of intelligent, hardworking graduate students: James Worthley, Monique Mayeaux, and Phil Nameny. Joe Sordi, graduate student and planner with San Mateo County, did the San Francisco case study. Maureen Riorden, city planner for the City of Redwood City and a graduate, did the Sequoia Station study. John Hugunin, transportation planner in Portland and a graduate student, did the case study on Gresham Central. IISTPS Research Associates Steve Mattoon, Michael Bernick, and Dr. Larry Frank, RLA, AICP, all assisted with major portions of the project. George Gray, IISTPS Research Associate, gave us assistance in San Diego. IISTPS Research Associate John Vargo did the editing and production layout. Dr. Scott Lefaver, IISTPS Research Associate and faculty member at San José State University, was the team leader. A list of contributors and their part in the studies is located after the List of Figures in this report.

THE CASE STUDY DEVELOPERS

The team thanks the developers and their staff for assisting in the gathering and reviewing of information and accuracy of the case studies. All were cooperative and willing participants. Without their help the team could not have produced this document. The developers included Richard Juarez of MAAC, Mercado Apartments, San Diego, California; John Heaphy, CMS Development, La Mesa Village Plaza, San Diego, California; Todd Regonini and Mark Kroll, Saris Regis, Atherton Place, Hayward, California; David Irmer, Sequoia Station, Redwood City, California; Bill Condo, Ballston Partnership, Ballston Center, Ballston, Virginia; Charlie Oewell, Pacific Valley Housing, and Jeff Loustau, John Stewart Company, Del Norte Place, El Cerrito, California; Robert L. Nelson, Executive Vice President, Noble Properties, Atlanta Financial, Atlanta, Georgia; Douglas Tollett, American Resurgens Management Company, Resurgens Plaza, Atlanta, Georgia; and Stan Christiansen and Frank Piacentini, Gresham Development Company, Gresham Station, Gresham, Oregon.

Project Tasks

The following section outlines the tasks given to the team by Caltrans and the U.S. DOT. Team members were then given specific items to accomplish, including an extensive review of the literature on public/private partnerships. Ten specific cases were studied.

Task 1: Literature Review.

Search the literature for projects and circumstances that are similar to, or exactly like, those described in the definition of transit oriented development. The scope includes the following general topic areas:

a) Public/Private development along transportation corridors

b) Public-sponsored development along transportation corridors

c) Public/Private development partnerships in general

d) Privately developed transportation oriented developments

Task 2: Identify and Develop Case Studies

Using the literature review and interviews, case studies were selected for close review. These case studies included a national sampling and considered historical cases. The discussion of each case includes:

a) Description of the project

b) Description of the partners

c) Roles of each partner

d) Description of the purpose of the partnership

e) Review of the partnership arrangements

f) Outcomes of the partnership

g) Lessons learned

Task 3: Project Development: Problems and Barriers

Using the literature review, case studies and interviews, a general review of problems and barriers to development of transit oriented projects will be discussed. Categories for discussion include:

a) Land use issues

b) Types of partnerships

c) Expectations and goals of each partner

d) The agreement

e) Financial arrangements

f) Perceptions of each partner

g) Legal restraints

Task 4: Private Sector Roles

The responsibilities of the private sector when involved with a public/private partnership are:

a) Site analysis

b) Analysis of the market

c) Product planning and design: types of product to be built

d) Plan preparation and government process

e) Environmental analysis

f) Legal aspects

g) Construction operations

h) Marketing the product

i) Managing the product

Task 5: Partnership Agreements

Review kinds of agreement reached in the past with other public/private partnerships. Examine what worked and what did not. Provide examples and recommendations for public/private partnership development agreements. Specify various scenarios for different types of development.

Conclusions

After study and discussion, the team drew several conclusions. Flexibility on the part of the public agency, together with a better understanding of the constraints imposed by financial markets, is the most important lesson for public agencies. Public agencies that imposed public policy criteria too strictly and still wanted to “make a profit” from the project had the worst record. Those public agencies that brought the land to a developable state including general plan changes and rezoning, and that sponsored public outreach, had fewer problems. Under those circumstances the developer was able to quickly begin construction. With quicker construction, market projections are more likely to be reached.

The team also learned that this type of project is financially difficult to fund and to maintain. None of the projects reviewed, with the exception of the Atlanta Financial Center, would have succeeded without financial subsidies from the public. This implies that there is no natural market for these projects and that without assistance, financial or operational, from the public agencies, private/public partnerships for transit oriented development projects cannot succeed.

RECOMMENDATIONS

While each study in this report uncovered separate problems with varying solutions, they had some issues in common and it became apparent that there are some general principles that will help to further smoother relationships between agencies and developers and lay the foundations of successful partnerships.

Private developers should:

Receive a good return on investment

Create a positive reputation

Positively identify the project

Avoid litigation

Public agencies should:

Increase density and mixed use

Create a successful partnership

Establish pedestrian and transit links

Obtain financially successful results

Add to the existing neighborhood

Provide for long term future growth

For more specific advice to agencies and developers involved in public/private partnerships see the Decision Check Lists at the end of the Successful Partnerships section.

PLAZA DEL SOL

San Francisco, California

INTRODUCTION

Plaza del Sol is a residential development containing 59 apartments located in the Mission District of San Francisco. The apartments, which are a mixture of two, three, and four bedroom units, are rented only to very low and low income families. The project provides convenient access to the 16th Street and Mission BART station located one block west.

The Plaza del Sol project cost $13.1 million to construct and was developed by the Mission Housing Development Corporation primarily with the financial assistance of the San Francisco Redevelopment Agency, State Low Income Housing Tax Credit Program, and the State Rental Housing Construction Program. The Mission Housing Development Corporation acquired the 37,900 square foot site with an acquisition loan from the Redevelopment Agency in 1991.

This project is not on public land and is not directly adjacent to a transit facility. It is important to our case studies because it showed that transit based development can be implemented in close proximity to a transit station and can accomplish the same public policy objectives of pedestrian access to transit and to other facilities. In this partnership the Redevelopment Agency played an important role by lending needed money and it expects a return on its investment. Without the agency and its concern for affordable housing and pedestrian access to amenities, the project would probably not have been built.

Construction of the project began in December 1992 and was completed in December 1994. The project has been leased to full capacity since the initial leasing period in January 1995.

PROJECT CONCEPT

The Plaza Del Sol project was initiated by the Mission Housing Development Corporation (MHDC), which specializes in the construction and rehabilitation of affordable rental housing for residents of the Mission District of San Francisco. MHDC has been heavily involved in the development of housing and mixed-use projects within the Mission District since it was established in 1971. The MHDC is a non-profit, community-based organization which creates and preserves affordable housing for low and moderate income persons and families. The MHDC was created to address the need for affordable housing in the Mission District and has launched a multitude of collaborative efforts with individuals, agencies, and organizations interested in securing safe and affordable living conditions for the Mission District. As of August 1996 MHDC had 268 housing units under development and was providing technical assistance on an additional eighty-eight units.[1] MHDC’s technical assistance consists of helping owners rehabilitate buildings by preparing loan packages, assisting with construction scheduling, and selecting qualified contractors. MHDC has a housing management subsidiary called Caritas Management Corporation. The MHDC shares an office with numerous agencies which provide educational assistance, counseling services, and child care services to residents of the Mission District. The Plaza Del Sol project idea and site selection were the result of a group effort by these interested community groups.

Initial Involvement

At the beginning of the project, the San Francisco Redevelopment Agency (SFRA) was approached to provide financial assistance for site acquisition as it had done in the past for MHDC projects. The SFRA worked closely with the Mayor’s Office of Housing (MOH) to gain political support for the project. Initial land acquisition money consisted of a temporary loan provided by the SFRA which was refinanced to provide permanent financing. The MOH and the SFRA have been partners in various projects, often teaming up to provide the funding and political support for projects in needy areas. The Mission District has historically been a focal point for the SFRA which distributes assistance throughout the city. The City’s role was to implement housing policies which address the need for very low and low income housing, particularly in the working-class Latino Mission District. The SFRA is required by State Law to use 20% of the tax increment they receive from several redevelopment districts within the city on affordable housing. Plaza Del Sol is one effort of many to provide low income housing in the Mission District.

BACKGROUND

Mission District History

The Mission district derived its name from Mission Dolores, founded by the Catholic Church in 1776. Although still a semi rural community during the Gold Rush years, the district grew rapidly in the late 1800s when it was linked to downtown San Francisco by the city’s first streetcar line. Much of the distinctive Victorian architecture in the Mission survived the 1906 San Francisco earthquake, but substantial portions of the north section of the district suffered damage that led to demolition of entire city blocks. As the large Victorian homes in the area were subdivided to accommodate increasing residents after the earthquake, the Mission became a working class neighborhood populated by Irish, German, Scandinavian and Italian immigrants and their descendants. After World War II, many Mission residents joined the movement out to the suburbs of San Francisco and were replaced by immigrants from Latin American countries, turning the area into a predominantly Latino community by the 1950s. In the 1960s, the Mission suffered from real estate disinvestment as suburban growth continued. This led to the physical and social deterioration of the area. Today, the Mission District is a thriving business district which offers all retail and general commercial services within walking distance of Plaza Del Sol.

Area Demographics and Issues

The Mission District already provides a substantial number of affordable homes for those who live in San Francisco. It is also a large provider of housing for minorities. Approximately 52% of Mission District residents are Latino, 29% are Caucasian, just over 13% are Asian American, and about 5% are African American.[2] Mission District residents are predominantly low income with the median income reaching only 54% of the citywide median and one out of five Mission residents earns below the poverty line.[3] Homebase, an organization that tracks homelessness in the Bay Area, estimates that over 2,000 homeless persons are “based” in the Mission District. Although rents are generally lower in the Mission than in the rest of San Francisco, the MOH reports that average market rents in the Mission District are 61% beyond the reasonable attainment of very low income residents and 17% beyond that of low income residents.[4] The fact that only 19% of median income wage earners can afford to buy a home in San Francisco makes it the least affordable city for home-buying in the nation. Due to lower incomes, the buying power for the average person in the Mission District is much lower than that of the rest of San Francisco. Even so the median home sales price is $270,000, just $15,000 less than the city in general.[5] This makes home ownership impossible for most residents of the Mission.

Transit Options and Agencies

Like much of San Francisco, the Mission District has a considerable number of alternative transit routes. The Bay Area Rapid Transit (BART) rail system has a station one block away from the project, at 16th and Mission Streets. The BART line continues north from the 16th Street station with stops at the San Francisco Civic Center, Powell Street, Montgomery Street, and the Embarcadero Center before entering the “transbay tube” and running to the East Bay. To the south, the BART line runs to the Glen Park station and Balboa Park Station on its way toward Daly City. San Francisco MUNI bus lines run up and down Valencia Street, connecting the Mission District with other San Francisco neighborhoods. While quietly supportive of the Plaza Del Sol project, neither BART not MUNI took an active role as a partner in the development project.

Project Site Selection

The beginning of the Plaza Del Sol project resulted from the search for an office building to house social service agencies in the Mission District under one roof.[6] In the late 1980s, the local Operating Engineers Union made plans to sell their office building and a large adjacent parking lot and to move to a different location in San Francisco. The social service agencies, including MHDC, moved into the office building now named Centro Del Pueblo. However, they found that the adjacent parking lot exceeded their needs and thought that the site might be used for affordable rental housing if it were designed to provide parking in a underground garage. The site was considered an ideal in-fill property because it was a relatively large, under-utilized group of parcels in a neighborhood with little vacant land. The project site had been used as a parking lot by the Operating Engineers Union and had once held buildings, but these were demolished after the 1906 San Francisco earthquake.

PHYSICAL FEATURES

Location

The Plaza Del Sol affordable housing project is located on Valencia Street between 15th and 16th Streets in the Mission District of San Francisco. Initial planning for this project began in 1989 with site acquisition occurring in late 1991. Construction began at the end of December in 1992 and was completed by the end of December 1994.[7] The site is one block west of the 16th Street Mission BART station. Another BART station is located on Mission Street at 24th Street.

Site Improvements, Layout, and Use

The development provides 59 dwelling units of various sizes for very low and low income families. Since large apartment units for families are hard to find in San Francisco, Plaza Del Sol is comprised of two, three, and four bedroom apartments. Plaza Del Sol sits on a 0.87 acre parcel and has a site density of 67.8 dwelling units per acre. There is also an on-site day-care center of 26,200 sq. ft. accommodating forty-five school age children with tutoring rooms for school age children who live in the housing project. Student tutoring is provided by the adjacent Centro Del Pueblo educational services social program housed in an adjacent building.

The project consists of four separate buildings, A, B, C, and D (see site plan). An underground parking garage lies beneath Buildings A and B which are three stories each. Buildings C and D are four stories and are each 44 feet in height. The unit breakdown within the housing development consists of five four-bedroom units, 29 three-bedroom units, and 25 two-bedroom units.

The site fronts along 16th Street and is landlocked on the other sides by an adjacent development which includes two and three story apartments and town homes. Land uses on the project site include residential rental apartments (primary use), child day-care (secondary use), and subterranean parking. There is no commercial component to the project.

Interrupting the project’s street frontage along 16th Street is the Intersection for the Arts Theater, which has been on its existing site for many years. Buildings A, C, and D of the Plaza Del Sol project wrap around the theater with Building B set further back to the rear of the parcel. Adjacent land uses along the same side of the street include the Centro Del Pueblo office building immediately south and the Apollo Hotel, a four story hotel which is immediately north. Across the street lies the Hotel Sunrise, a plumbing and electrical supplies warehouse, and an auto glass repair warehouse. Both the Apollo Hotel and Hotel Sunrise are projects which have been rehabilitated with MHDC assistance to add to the number of affordable housing units in the Mission District.

Project Unit Size and Economics

The number of project units, number of bedrooms, and current monthly rental rate (August 1996) are illustrated in Table 1-1.

Table 1-1 Plaza Del Sol Number and Type of Units

by Monthly Rent Payment (1996)

Income Level

Number of

Bedrooms

Number

of Units

Monthly Rent

Very Low Income

$417.00

$453.00

$526.00

Low Income

$685.00

$782.00

$870.00

Market Rate*

No Rent

Total Units

(59 units)

* Resident Manager

THE PARTNERS AND PARTICIPANTS

Project Development Team

The project team for Plaza Del Sol consisted of MHDC, the architect, Hood Miller Associates, and the project contractor, Nibbi Brothers. Consultants involved in the project included: Alan Martinez (architectural consultant); Martin M. Ron Associates (Surveyor); Harding Lawson Associates (soils engineers); KCA Engineers (civil engineer); Simmons Structural Engineering; Hawk Engineers (mechanical engineer); Paoletti Associates (acoustical engineer); Antonia Bava and Daniel R. Osborne (landscape architects).

The specific role of the MHDC was to provide much needed family housing in the Mission District. While the Mission has numerous housing projects, few cater to the larger family. From a design perspective, the relatively large size of the site enabled them to design and construct “a secure urban village.” A primary goal of MHDC was to establish safe and affordable housing for families with more than two children. The MHDC has been a proponent of affordable housing in the Mission District and their interest in the Mission District is clear. They are a non-profit developer and only attempt to make enough profit per project to cover their in-house costs and general business expenses.

Hood Miller Associates is a well respected residential design firm that has worked for both profit and non-profit housing developers and has had project experience with MHDC in the past.

When choosing a builder, MHDC generally selects from a small group of contractors (five or fewer) who specialize in low cost housing and construction projects that involve public subsidies.[8] The Nibbi Brothers were the general contractor for this project and have done substantial work for MHDC in the past. There are only a few contractors that have the capacity and interest to do low cost housing projects and have established relationships with the non-profit developer and with staff from the SFRA and MOH, who regularly provide project funding. The Nibbi Brothers have done numerous public works projects for the City of San Francisco as well as recent upgrade work to Candlestick Park.

Governmental Agencies

The governmental agencies participating in the project included the SFRA, MOH, and the City Planning Department. The roles of the SFRA and MOH consisted primarily of financial and political support for the project. Details of the involvement of these two agencies with regard to the project will be discussed later in this report.

The City Planning Department guided the project through the City Planning Commission review and approval process, assuring consistency with the City General Plan and Zoning Ordinance. Their analysis included consistency with City housing policies and justification for several exceptions to the zoning code. These issues will be addressed later in this report in the discussion of agreements made between MHDC and the City of San Francisco.

Financial Partners

The project was financed with temporary construction loans, and much of the funding was converted to permanent loan status. Financing for this project came from various sources: the State Tax Credit Program, the State Rental Housing Construction Program (RHCP), SFRA, and a combination loan from Wells Fargo Bank and First Nationwide Bank.

The largest source of project funding was the State Tax Credit Program. The Federal Tax Reform Act of 1986 created an innovative program called “Tax Credit of Low Income Rental Housing.” The intent of the program was to provide an incentive on the part of private investors and corporate entities to seek a tax credit that would increase the supply of affordable housing nationally. The tax credit financing may be used to construct new housing, support “substantial rehabilitation” projects, and for the acquisition of existing properties with moderate rehabilitation needs. It can, therefore, cover a modest one-unit rental property or a new development with hundreds of units. The limited partner contribution was applied for through the State Tax Credit Allocation Committee. The amount of funding for this project totaled approximately $5 million for project construction and was converted to a permanent loan after construction.

The State RHCP program is sponsored by the State Department of Housing and Community Development and is intended to finance new rental housing in California. The RHCP program provided $4.3 million for construction roll-over financing for the Plaza Del Sol project.

The SFRA was the third largest financier, contributing $1.6 million in site acquisition funds and an additional $771,000 in construction financing, for a total of approximately $2.4 million. Both temporary loans were converted to permanent loan status.

Wells Fargo Bank provided a temporary construction loan of $750,000 for the project. However, Wells Fargo does not provide permanent financing, and most of this loan was paid for with a permanent loan of $690,000 from First Nationwide Bank.

NEGOTIATIONS

City Government Review

Design Phase

MHDC and the project development team first met with the City Planning staff in October of 1990 to discuss the project, presenting a scheme of 62 apartment units and 100 parking spaces. At the meeting the Assistant Planning Director indicated that the project was “approvable” as designed, and encouraged the design staff to continue with their proposed development scheme. A second review meeting with the City staff took place in January 1991 to discuss technical code issues and to outline the tight schedule for approval needed by MHDC if they were to meet State financing and tax credit committee limitations. The proponents met again with the City staff in May 1991, at which time the staff suggested that the smallest of the proposed four buildings on the site (containing just three housing units) be removed from the plans to allow for more open space. At another design meeting in June 1991, the Planning Director supported the removal of this building, but the Planning Director was present for only the last 10 minutes of the meeting and did not comment on the project as a whole.

After the June meeting the Planning Director sent a letter to MHDC that called for a substantial redesign of the project. The City staff evidently felt in the course of the previous meetings they had not committed to a specific design. This was a misunderstanding because both MHDC and the project architect felt that the city had pledged support for the project as designed.

In his letter the Planning Director said that while the City staff was “supportive of family housing at this location,” the project was “too intensive for the site.” He felt that with 50% of all units in the complex consisting of three or more bedrooms, there would be a substantial number of children living on the site, at least 100 and perhaps as many as 200. His comments addressed plan deficiencies including narrowness of hallways and courtyards that would limit light and reverberate noise. He also felt that the confined corridors and back stairwells would invite children’s playing in areas not intended for the purpose. The proposed design would result in community spaces which would be difficult to service and expensive to maintain. He initially recommended a substantial redesign with attention paid to noise, privacy, security, light, air, and unit exposure to open space. He concluded his letter by saying that “the whole concept may need to be rethought.”

These comments were not well received by MHDC staff and architect Hood Miller Associates since much thought and preparation had gone into the project design before the City review. Changes were made to the project design throughout the process including reducing the size of the basement and generally responding to the “light, space and air” comments of the Planning Department but the number of dwelling units remained roughly the same. Further, a consultant was called in to address design issues relating to “children’s use of space.” This specialist provided some recommendations for minor design changes but mostly provided rationale as to why the project’s design would work. This analysis was ultimately accepted by the Planning Department staff.

General Plan and Zoning Review

Once the basic design concept was agreed upon, the project was formally submitted to the Planning Department and underwent Planning Commission review. The City General Plan identifies the project site for mixed use development. The site falls within the Valencia Street Neighborhood Commercial District and is designated on City Zoning Maps as “NCD.” The zoning classification provides for general retail sales and services on the first floor, and residential units on the upper floors. Residential development is limited to one unit per 600 square feet of site area with a parking space required for each residential unit. This would have resulted in 63 dwelling units and the same number of parking spaces for residential use alone. In addition, it was necessary for the project to provide parking for the Centro Del Pueblo Office Building because the housing development eliminated the previous parking lot for the office building. Ultimately, this project was processed with a Conditional Use Permit and as a Planned Unit Development to account for the various exceptions granted from the underlying zoning standards.

Minor Subdivision

Relatively early in the process (early 1992), an application for a minor subdivision was processed so that the Centro Del Pueblo Associates could sell just the site intended for housing development (the former parking lot) to MHDC. This subdivision was mapped and recorded before MHDC proceeded with other permits from the City so that financing for the project could be arranged without waiting for the other permits to be approved.

Conditional Use Permit

According to the San Francisco Planning Department regulations, a conditional use permit is required for the new development of sites greater than 10,000 square feet in size. Under the provisions of the City Code, the Planning Commission can authorize a conditional use permit after finding that the proposed use will provide a development that is necessary or desirable for, and compatible with, the neighborhood and community.

Planned Unit Development Permit

The Planned Unit Development (PUD) permit enabled the project to move forward without having to pursue variances. Because it is an infill site, it was difficult to design a project that met the strict zoning standards for the NCD district and still carry out the design objectives of the project. The following exceptions were sought by MHDC for development of the project.

· Rear Yard Living Area. The San Francisco Planning Code for an NCD District requires that the rear yard be 25% of the lot depth with a minimum 15 foot depth. Building B was placed within the site’s rear yard in order to better distribute open space on the site. Requiring the rear yard to take up a full 25% of the site (9,494 sq. ft.), would preclude the type of design on this parcel which could take advantage of the maximum density available and still stay within building height limits. Therefore, an exception to the 25% rule was granted.

· Parking Spaces. The Planning Code requires that one parking space be provided for each of the 59 units. According to code, one parking stall for each 500 sq. ft. of the Centro Del Pueblo office building was required as well. Additional parking, one stall for each 25 children, was also required for the day care facility. The office and day care uses together created a demand for an additional 55 parking stalls, totaling a demand of 114 stalls overall (including residential demand of 59 stalls). The architect’s design proposed 60 parking stalls for the residential units (exceeding the requirement by one stall), and another 36 stalls for the office use and day care center. A parking study prepared by the project engineer showed that the number of parking spaces proposed (96 stalls) would meet the overall demand of the project based on a shared parking analysis and the flexible work hours of some personnel working in Centro Del Pueblo offices. An off street parking exception for 18 stalls was therefore granted.

· Parking Stall Size. Construction of an underground parking garage often creates difficulties with meeting the minimum dimensions of parking spaces due to the structural support columns in the garage, required aisle widths, and space taken by ventilation equipment, elevators, and stairwells. The Bureau of Engineering and Public Works requires standard spaces to be a minimum of 160 sq. ft. and 127.5 sq. ft. for compact spaces. The architect requested an exception to the space dimensions for 32 of the required parking spaces which fell slightly short of the minimum size due to physical constraints. This exception was granted as well.

· Unit Exposure. Each dwelling unit is required to face on-site open space area. However, the site layout required an exception to this requirement for three of the units. Due to site layout constraints, this exception was granted as well.

Environmental Review

The project was granted a Negative Declaration which involved written analysis of potential environmental impacts of the project by the Department of City Planning’s Office of Environmental Review. The primary environmental issue was the contaminated soils in an area that had once held underground storage tanks. Mitigation measures were incorporated as conditions of approval for the project. These measures included excavations of all contaminants on the site, aerating the contaminated material or removal from the site by a licensed hauler, monitoring of groundwater and removal of excessive contaminants as needed. The mitigation measures were incorporated as conditions of approval for the project.

Another site contamination issue surfaced during construction when it was discovered that four to five feet of ash existed on the site, left over from the buildings destroyed in the 1906 Earthquake. This material tested positive for low level lead contamination and required a substantial project delay to conduct remediation which increased the project budget by approximately $1 million. This issue will be discussed again later in this report along with other unforeseen expenses that occurred with the project.

Conditions of Approval

The project conditions of approval included the requirements for the submittal of specific design review and landscaping plans to address design, street trees, and landscaping issues prior to issuance of building permits. These issues were to be dealt with by the developer and the City staff but required no subsequent public hearing as long as they proceeded in substantial conformance with the drawings presented to the Planning Commission. The City also included detailed findings and conditions requiring the project to provide housing affordable to persons or families earning no higher than 80% of the median income for the San Francisco Standard Metropolitan Statistical Area. This restriction was, however, intended to be subordinate to the affordability limitations of the State RHCP and State Tax Credit programs which are more restrictive.

Permit Review Priority

The City Planning Commission has a policy which establishes “preferential permit processing” for affordable housing projects. The Director of the Mayor's Office of Housing formally requested that the Planning Department grant this project “Priority A” status. The justification for this priority was that: 1) the project developer is a non-profit agency; 2) the project will be subsidized with public funds; and 3) the project would be 100% affordable to low income households or individuals. Although this status was granted, the typical permit applications still needed to be made and reviewed by the Planning Department.

FINAL AGREEMENTS AND CONTRACTS

San Francisco Redevelopment Agency Agreement

MHDC was required by the SFRA to enter into an agreement stipulating that all project funds be utilized either to acquire the site or for the construction of low and moderate income housing. The SFRA is required by California Community Redevelopment Law to distribute 20% of all the monies from its tax increment to a low and moderate income housing fund.

When funding becomes available for housing projects, the SFRA issues a Notice of Funding Availability (NOFA). In the case of Plaza Del Sol, an initial $1.64 million was provided by the SFRA to be used for land acquisition and to leverage financing from other available sources, specifically State funded programs. This was the only portion of the project the SFRA planned to fund. However, hazardous materials were discovered on the site during construction. A costly clean up and construction delay ensued which nearly halted project construction. The SFRA provided an additional $770,737 of construction financing to carry the project through this delay.

Rental Housing Construction Program (RHCP) Regulatory Agreement

The 38 very low income units (see Table 1-1) are those held to the restrictions of the State RHCP. This is a program sponsored by the State Department of Housing and Community Development. Very low income unit rent prices cannot exceed 30% of 50% of the median income for the City of San Francisco. Further, family income cannot exceed 50% of the median for San Francisco. MHDC entered into a Regulatory Agreement with the State RHCP to address housing rent restrictions. The agreement also addressed the number of units and overall square footage of development in the project. The State is liable for construction injuries, assignability of the loan without written consent of the state, interest rates and loan payment terms, compliance with local and State laws and regulations, and the State’s right to inspection of the project with regard to hazardous materials clean up liability. The State RHCP contributed approximately $4.3 million for project construction. Assistance for these 38 units came from other funding sources as well.

State Tax Credit Program Agreements and Funding Adjustments

The 20 low income housing units are those held to the restrictions of the State Tax Credit Program. The units supported by this funding are the subsidized low income units which have long term rent and occupancy restrictions that equal or exceed those required by the State Tax Credit Program. Allowable rents cannot exceed 30% of a wage that is 60% of the area median income, less a reasonable utility allowance. The maximum allowable income for a household occupying a unit is also 60% of the area median income. The California Equity Fund, which is the State Tax Credit Program limited partner for the project, contributed approximately $5 million for project construction in four installments.

State and federal law requires that all projects awarded low income housing tax credits in 1990 or later enter into a Regulatory Agreement with the Tax Credit Allocation Committee. The agreement outlines the conditions under which tax credits are awarded and must be recorded in the county where the project is located. The terms of this agreement between MHDC and the State are very similar to the RHCP agreement in terms of disclosures and liability.

The difficulty in striking an agreement with the State for tax credit funding is that the project must be slated for a specific target date so that credits can be utilized for that tax year. Therefore, after the application process with the State has begun, project construction must adhere to the time commitments stated in the funding application. Further, funding is not granted all at once but is released to the housing developer when milestones have been reached. There are, therefore, specific deadlines for construction progress that are often difficult to meet. In the case of Plaza Del Sol, once tax credit financing was obtained, MHDC had to adhere to a project schedule that would result in completed construction by the end of December 1992. While financing from the State RHCP and Wells Fargo was “approved” at the time, funding was not yet available from these sources. The schedule for the State Tax Credit Program, therefore, could not be met. The State Tax Credit Program funding for the project had to be returned to the TCAC and MHDC had to reapply in the following tax year. Tax credit financing was re-awarded to the project for a subsequent tax year which aligned with the timing of other construction financing, putting the project on a construction schedule that would lead to completion by the end of December 1994. As a result, MHDC lost their initial application fees paid to the TCAC which are non-refundable.

Wells Fargo Bank and First Nationwide Bank Commitment of Funds Agreement

Wells Fargo Bank provided a construction loan of $750,000 for the project. As a matter of policy, Wells Fargo Bank provides construction loans, but not permanent loans, for affordable housing. First Nationwide Bank provided a permanent loan of $690,000, which resulted from a refinancing of the construction loan made by Wells Fargo Bank.

In their respective commitment letters, each financial institution included information on project type and size, identification of the borrower, the purpose of the loan, the principal amount, the loan terms and the interest rate, loan security (secured by title to the property), lease and rental schedule, subordination agreements to state loans, appraisal, property survey, additional legal disclosures, and statements exempting each from liability.

RESULTS

Physical Changes

The project resulted in a notable change in the appearance of the urban block along Valencia Street between 15th and 16th Streets. However, the project has not had a profound effect on the neighborhood because of the many other problems that exist in this part of the Mission District. The project is gated and no one can enter the development other than residents and their guests. For security reasons, the residents are separated from the street life along Valencia. Just down the street (at Valencia and 16th Street), the Valencia Gardens housing project (constructed in the 1970s) continues to decline. The Valencia Gardens are in disrepair and the immediate neighborhood is considered unsafe by many Plaza Del Sol residents. One cab driver stated that he would not stop at Valencia Gardens since a driver was killed about two years ago. Drug dealers loiter along the street frontage of this struggling housing project and some individual living units have been condemned due to fire. This project has a negative effect on the neighborhood because its inhabitants and visitors, many of whom are unemployed or working poor, create a hostile atmosphere in the neighborhood. The Valencia Gardens project attracts unwanted visitors, is not policed well, and is not physically secure.

Effect on Business

The Plaza Del Sol project has had a positive effect on the neighborhood retail businesses in the area. The grocery store at 16th Street and Valencia has increased business as it is frequented by residents of the housing project. However, most properties across the street are light industrial, and therefore have not been affected.

ANALYSIS

Project Success

The Plaza Del Sol project was a success from the point of view of providing affordable family housing to those in need. Because it provides affordable housing in the Mission District, the response to the project was very favorable. The application process was begun far in advance of occupancy and all 59 units were reserved the day the project opened.

The concerns of the Planning Department, while well founded in the case of other projects, have never been an issue at Plaza Del Sol. There is adequate outdoor play area, open space, and “light and air” for residents. The day-care and child play area within the project is very important because the site is gated preventing outsiders from entering without proper credentials. Children can play within the development unattended but in safety.

Financing Issues

The State Tax Credit Program differs vastly from the State RHCP program complexity. While the State RHCP procedure involves typical loan or grant applications, the Tax Credit program involves numerous players in the transaction including professional tax consultants and syndicators. A limited partner used in the Tax Credit Program is the corporate investor. The limited partner for Plaza Del Sol was the California Equity Fund, which is a local spin-off of a national organization called Local Initiatives Support Corporation (LISC). This organization syndicates low income housing projects and the dispersal of tax credits. California Equity Fund, as the limited partner, is responsible for selling the tax credits to corporate entities. Such tax credits provide a dollar for dollar reduction in tax liability to the corporation for a specified number of years. The use of tax credits for a specific development project is determined by the California Tax Credit Allocation Committee (TCAC), which uses a formula to determine the percentage of a project that can be funded. This percentage is determined through the use of tables that account for housing construction costs in various parts of the State.

City Permit Review Process

The project experienced some difficulty during the City design and permitting process due to some apparent miscommunication between City Planning staff and the project development team, specifically the project architect. The City Planning Director decided, after numerous meetings between MHDC, their architect and lower ranking City staff personnel, that the density should be reduced. MHDC did not agree because construction of affordable housing relies on efficiency in the planning and design phases, and financial resources for the construction of a new project are always limited. Also, in an urban area such as the Mission District, where there is a need for safe, affordable housing, there is pressure to build at a high-density. In suburban areas of the Bay Area, non-profit housing developers (for example, Mid-Peninsula Housing Coalition) seek to construct projects at a density of about 20 units to the acre. The Plaza Del Sol project is constructed at a density of 67.8 per acre, far exceeding the density of suburban projects.

The comments of the Planning Director late in the design process were a surprise to the MHDC because in numerous meetings with the City staff, the City seemed to support the project design. MHDC and the project architect learned that it is best to get the support of the planning director himself and not to rely on the opinion of the planning staff during the design phase of the project.

Hood Miller Associates is a well-respected residential design firm. However, it can often be a challenge for an architect to implement specific design objectives and still meet the objectives (and often the personal opinions) of a local agency planning staff. One member of the project design team mentioned that initial conflicts during the design phase of the project were related to some differences of style and opinion between the architect and City staff on past projects.

Project Cost Overruns

As the Cost Reconciliation Schedule indicates, the project went over budget by approximately $1.25 million. Of this total, approximately $918,000 of the budget overrun could be attributed to unforeseen soil remediation costs for lead contamination. The Project Manager for MHDC, Philip Dochow, indicated that the biggest lesson he learned was in managing the consultants on the project, specifically the soils engineer who conducted tests. The tests were later invalidated which resulted in the biggest problem with the project budget.

SUMMARY

The Plaza Del Sol housing project was initiated by MHDC with the initial political support of local community groups and the MOH. The initial financial player in the project was the San Francisco Redevelopment Agency. The Mission District is a focal point of important City policies which relate to the construction of new affordable housing units for persons of very low and low incomes. The Mission District has a history of providing housing for working class persons and families of a variety of ethnic backgrounds, primarily Hispanic families. The selection of the Plaza Del Sol site was a team effort of several community organizations which were looking for additional office space to house community services. The discovery of the project site was a result of good luck and timing. The project provides 59 units of very low and low income housing, primarily for families with children. The project design has resulted in a successful and secure urban village atmosphere. The developer made use of an oddly shaped parcel and was granted some exceptions to the City’s Zoning Ordinance after some challenging negotiations with the City of San Francisco. The Mayor’s Office of Housing provided political support for the project and was instrumental in getting the project approved in a relatively short time.

The project financing came primarily from State programs but was supplemented by two conventional lending institutions. All of the public money used to finance the project construction has been refinanced to provide permanent financing. The affected local transportation agencies (BART and MUNI) supported the project but played no major role in the project.

The effect of the project has been to reduce housing pressure on low income families in the Mission District. However, no substantial change has taken place in the neighborhood which is still adversely affected by the surrounding properties and a nearby decaying housing project built in the early 1970s.

Plaza Del Sol, San Francisco, California
A three and four story residential project located in San Francisco’s Mission District. Development consists of 2-4 bedroom units to provide for families. Location is one block from the 16th Street BART station. Agencies Involved: San Francisco Redevelopment Agency; Mayor’s Office of Housing

Special Features:
Housing exclusively for very low and low income families; 26,200 sq. ft. child day care center with capacity for 45 children; tutoring rooms.
Underground 96 stall parking garage for Plaza Del Sol and adjacent office building (Centro Del Pueblo)

Developer	Architect
Mission Housing Development Corp.	Hood Miller Associates
474 Valencia Street, Ste. 280	60 Federal Street
San Francisco, CA 94103	San Francisco, CA 94107
Philip Dochow, Project Manager	Principal-in-Charge: Bobbie Sue Hood

Land Use Information	Development Schedule
Site Area 0.87 acres 37,900 sq. ft.	Site Acquired 1991 Construction Begins Dec. 1992
Total Dwelling Units 59	Construction Ends Dec. 1994
Gross Density 67.8 units/acre	Occupancy Begins Jan. 1995
Total Parking Spaces 96 (underground)
Number of Stories 3 and 4

Residential Unit Information
Unit Type	Number Built	Very Low to Low Income Rates
two bedroom	25	$417 to 685
three bedroom	29	$453 to 782
four bedroom	5	$526 to 870
Development Total	59 units

Funding Sources
Limited Partner (State Tax Credit Program)	$4.96 million
State Rental Housing Construction Program	$4.34 million
San Francisco Redevelopment Agency	$2.41 million
First Nationwide	$690,000
Mission Housing Development. Corp. Capital	$700,000
Total	$13.1 million

Figure 1-1 Location of Plaza Del Sol, San Francisco, CA

Figure 1-2 Plan of Plaza Del Sol

Figure 1-3 View of Building A of Plaza Del Sol

Figure 1-4 View of Play Area and Building A of Plaza Del Sol

DEL NORTE PLACE

El Cerrito, California

INTRODUCTION

Del Norte Place, in El Cerrito, California, is a mixed-use development, containing 135 apartments and 21,500 square feet of commercial space on 4.1 acres of land, located within the City of El Cerrito. The apartments are a mixture of market rate, senior and low income units, while the retail is composed mostly of restaurants and service establishments. Designed to add convenience to the residents of the project as well as to the commuters who use Bay Area Rapid Transit (BART), this development is located one block away from the El Cerrito Del Norte Station. BART connects El Cerrito and north Contra Costa County with the cities of Oakland and San Francisco, and Fremont in Alameda County.

The $18.7 million Del Norte Place project was developed through an agreement between the City of El Cerrito Redevelopment Agency and IBEX Group. IBEX Group is a partnership whose main partners included The John Stewart Company, Sandy and Babcock Architects, and Mid State Construction. They formed a limited partnership, called Del Norte Place, to manage the construction of the project. The Redevelopment Agency provided the 4.1 acres of public land to the IBEX Group in a ground lease agreement. The lease runs for 65 years and will cost a dollar a year. The agency and IBEX signed a separate agreement that provided for the agency to receive 20% of the net cash flow of the project for 65 years with payment deferred for the first 5 years.

The project started construction in 1991. Apartment leasing began in July, 1992, and was fully leased in April, 1993 with occupancy rates exceeding 95%. Retail leasing began in 1992 and these spaces are currently 90% occupied.

PROJECT CONCEPT

Project Initiation

Del Norte Place came about largely due to the initial work of the El Cerrito Redevelopment Agency. El Cerrito is an older “inner ring” blue-collar suburb that saw its greatest period of growth during the years of World War II and directly afterward as workers filled the new industries in Richmond and the refineries to the north. By the 1970s portions of the city had begun to deteriorate. In addition, it was during the late 1960s and early 1970s that BART was built into the city, opening in 1972. This also had an effect of disrupting some of the commercial areas of the city during the construction.

The El Cerrito Redevelopment Plan was adopted in 1977 in response to these increases in blight in areas of the city, most notably around the El Cerrito Del Norte station. El Cerrito was surrounded by other government jurisdictions. Much of the growth of the 1960s and 1970s in the East Bay eluded El Cerrito, and its population had declined since the 1960 census. In order to attract development, the agency had to make infill development attractive to developers. The Redevelopment Agency was created to bring to life the goals of the Redevelopment Plan, and it targeted various areas of the city for development. The location which was to become Del Norte Place was identified as “Target Area Number Nine.” Proposed development goals identified by the agency included residential, retail, and office uses. In addition, multi-family residential would be encouraged to take advantage of the proximity to BART.

Throughout the 1980s, the Redevelopment Agency had entertained many proposals by private developers to develop some of the target sites around Del Norte Station but all the private projects failed to attract financing. The Redevelopment Agency made the decision that they would have to get more involved with development around the station, especially to help with financing. Thus the agency issued an RFP (Request for Proposal) in 1988 for a mixed use development on Target Area Number Nine.

Party Involvement and Goals

Eight developer/architect teams responded to the Redevelopment Agency’s RFP. All of their plans included multi-family residences but most only offered token retail space in the project. However, one developer submission stood out for its mixed use. This developer was known as the IBEX group, a partnership made up of The John Stewart Company, Sandy & Babcock Architects, and Mid State Construction. The actual partnership of this company was split equally among five members, Richard Moran, James Babcock, Roger Nelson, Peter Wilson, and The John Stewart Company. This group responded to the RFP with a project which most closely resembled what the Redevelopment Agency had in mind. The developers wanted a showcase project, and they wanted to work with the Redevelopment Agency to obtain financing. They submitted a proposal which was truly a mixed use and a mixed income project, details which were weak or lacking in the other proposals. The John Stewart Company, one of the partners in the IBEX group, had not had much experience working on mixed use projects, as their forte was mainly in developing and managing low and moderate income housing projects. Yet, they saw this as an opportunity to create something special. Their insight won them the bid.

Public Policy Issues

The Redevelopment Agency has a goal of attracting higher intensity, mixed use projects around BART stations. To this end, they have worked with the City Planning Department to have these desires reflected in the General Plan and Zoning for the areas. More recently, BART has considered proposals for development on some of their land at the station. Despite other attempts to encourage pedestrian oriented development, Del Norte Place is the only tangible result. The Redevelopment Agency has a reputation for increasing the retail tax base by providing incentives to large retailers such as Target, Home Depot, and Foods Co., to locate near the Del Norte Station. Many residents feel that the establishment of these large chains have come at the expense of losing the smaller, local businesses who could not compete. As a result, the Redevelopment Agency has come under fire for getting involved in decisions that many feel should be left solely to private enterprise.

BACKGROUND

General Information and Demographics

El Cerrito is a small inner-ring suburb of the East Bay Area, located a few miles north of Oakland and Berkeley and approximately 15 miles northeast of the financial district of San Francisco. It borders the city of Richmond to the North and West, the city of Albany to the South, the town of Kensington to the southeast, and Wildcat Canyon Park to the east. As of 1990, the population of El Cerrito was 22,869 residents, up slightly from the 1980 census of 22,731, but down considerably from the 1960 peak population of 25,437. Much of the development was due to the increase in manufacturing jobs during and directly after World War II. As a result of the earlier growth pattern, the housing stock tends to be smaller, older, and somewhat cheaper than the newer suburbs to the north, and its “blue collar” reputation also seems to place it socially below Albany and Berkeley to the south. The average age of El Cerrito inhabitants as of 1990 was 42 years and the average household size was 2.29 persons. Both of these factors indicate an older population with “empty nesters,” that is, parents whose children have grown and left home. The city has seen an increase in overall minority population, from 13.7% in 1970 to approximately 38% in 1990, with the largest growth among Asian American and African Americans.

Transit Options

BART is a major part of the transportation network of the city and has two stations within the city limits, at Del Norte and at El Cerrito Plaza on the southern edge of the city. BART provides service to areas throughout Alameda and Contra Costa County as well as providing service to the major job centers in San Francisco and Oakland. The Del Norte station on the northern edge of El Cerrito is attractive to commuters from out of town as there is easy access to adjacent San Pablo Avenue and Interstate 80. A large parking garage is provided for the commuter parking. Interstate 80 is the major north/south freeway access, connecting San Francisco with Vallejo and Sacramento to the north and east. However, this freeway is often clogged, which adds attractiveness to BART as an alternative mode of transportation. Interstate 580 runs to the west of El Cerrito and provides access across the Richmond-San Rafael bridge to Marin County.

Besides BART, the Del Norte station contains a bus pullout area providing easy access to several buses leaving the station. Alameda-Contra Costa Transit, (AC Transit) is the main provider of bus service to the BART station. AC Transit was developed when many of the private streetcar lines were converted to public buses. Service has been extended to Western Contra Costa County, where El Cerrito is located. AC Transit currently provides local service on about half a dozen lines from the Del Norte station to the neighborhoods of El Cerrito, Contra Costa County, and into Oakland and provides express bus service to San Francisco from some of the areas without easy access to BART. Golden Gate Transit provides express service from Del Norte to San Rafael, across the Richmond-San Rafael bridge. Commuter service is provided by other carriers from Del Norte station to Rodeo, Pinole, and Vallejo to the north along Interstate 80.

Amtrak runs to the west of El Cerrito and has a station in nearby Richmond (adjacent to the BART station) for longer train travel. Another commuter link is a bikeway along the BART tracks through the cities of El Cerrito and Albany.

El Cerrito’s Commercial Uses

El Cerrito does not have a typical downtown commercial district. Most of the commercial development is concentrated along San Pablo Avenue, which runs north and south along the entire length of El Cerrito. Much of this is older, “strip” development. A shopping center is next to the El Cerrito Plaza station, but with the closing of the Emporium Department Store and with many other tenants leaving, the future of this mall could be in jeopardy. The situation is similar around Del Norte Station with many marginal commercial uses. The Redevelopment Agency has attracted some major new tenants to the area, including Target, Home Depot, and Foods Co.

Previous Uses of Project Site

The Del Norte Place project had to be assembled from many different parcels. Target Area Nine of the Redevelopment plan consisted of 13 privately owned parcels. Three of these parcels were vacant, and two contained parking lots which captured the overflow BART parking. The remaining parcels contained shops, offices, residences, a popular restaurant called the Silver Dollar, and the Bay Bridge Motel, which was somewhat run-down and had a questionable reputation. The area had not seen much recent private investment, and therefore had few newer establishments or well maintained buildings.

In addition to the 13 privately owned parcels, three publicly owned pieces of land were needed for the project. One parcel was Kearney Street, a city right of way, which ran behind the existing buildings. This street mainly provided street parking for BART riders. The plan was to ask the city to abandon the roadway and have the Redevelopment Agency purchase the street parcel. The city also owned the old railroad right of way which contained a bike path. This path was also to be purchased but would have to be rerouted. The elevated BART tracks ran through the east side of the proposed project. Thus, BART would need to grant an easement to the Redevelopment Agency to allow access to the land underneath the tracks for parking and other uses for the project.

Based upon initial studies, the city recommended that a mitigated negative declaration be certified. This document labeled the project’s location as one of the mitigating factors in reducing air pollution, expecting that a higher percentage of people would use BART. The city also spent time in the design review phase, considering items such as signs and the placement of shutters and balconies.

PHYSICAL FEATURES

Location and Orientation

The Del Norte Place development is located one block north of the El Cerrito Del Norte BART station on San Pablo Avenue, between Wall and Knott Streets. The building fronts on San Pablo Avenue with the BART tracks running along the rear or east side of the building. Interstate 80 lies one block to the west. Its proximity to the BART station allows residents to take advantage of the BART train and the bus routes serving the Del Norte station, including transit to Oakland,Vallejo, Marin County, Rodeo, and Pinole. Bus routes also run on San Pablo Avenue and Cutting Boulevard nearby. The complex and its businesses can be accessed from both the front and the back, allowing easy access from the parking lots and pedestrian routes.

Project Size and Description

Del Norte Place is a mixed use project consisting of four residential buildings containing 135 units, connected in the front by a retail arcade of 21,500 square feet. The total square footage of all buildings is 137,000 square feet, spread over a 4.1 acre lot which also contains parking and the raised BART tracks. The project has a residential density of 33 units per acre. The four story, residential buildings are Mediterranean style, in earth colors with balconies and flower boxes.

Residential

The apartments consist of 78 two bedroom units and 57 one bedroom apartments. Twenty-seven of the units are reserved for very low income households. State guidelines define very low income households as those making 50% or less of the median income level for Contra Costa County. These guidelines set the rent at 30% of the very low income median level. These units are spread through the four buildings with 13 of the very low income units reserved for seniors. The senior apartments are all concentrated in the southernmost building, which contains 29 units. This building has the closest access to the BART station and houses the West Contra Costa Older Adults Clinic on the first level. Overall, 92 of the 135 units are set aside for market rate rentals, of which 63 of these are two bedroom. Rental rates are shown in Table 2-1:

Table 2-1 Del Norte Current Rental Rates

	Market Rate Units	Affordable Units	Senior Units
One Bedroom Apts.	$650-$785	$485	$680-$740
Two Bedroom Apts.	$850-$1050	$572	$850-$930

The residential buildings have common areas for laundry, exercise and meeting rooms, and a children’s play area. Each building has a small central courtyard. The buildings are accessible via a card-key and pathways lead from the buildings to parking in the back or the commercial areas in front. The senior apartments have emergency pull cords connected to the front desk and 24 hour emergency service.

Residential Demographics

As a result of the special senior apartments, the overall percentage of older adults living in this complex is higher than for the surrounding town. In fact, most of the residents are singles or couples without children, either empty nesters or young adults. Initial studies showed that only 17% of the households had children. A survey conducted in 1995 showed that over 43% of respondents were over age 65, while over 20% were also between the ages of 17 and 24 years, possibly reflecting the popularity this complex has with U.C. Berkeley students. Households were generally small, averaging approximately 1.5 persons per household. Income and occupation also reflect the mix of students, low income, and seniors, with 41.9% of the survey making under $15,000 per year. Nearly 33% list their occupation as “other,” which would be the probable response of students or retired persons (Menotti and Cervero, 1995).

The survey shows the importance of BART for the residents of this complex. Surveys by John Stewart and by independent sources have shown between 34% and 40% of households do not own a car, and one-third of all trips were being made by rail (Menotti and Cervero, 1995). Sixty to seventy per cent of the residents have responded that they use BART regularly (Loustau, 1996).

Commercial

There is a total of 21,500 square feet of commercial space, located at the front end of the first floor, facing San Pablo Avenue. This space is divided into a dozen storefronts. Current tenants include three restaurants and a coffee bar, along with services such as an optometrist, dentist, stock broker, postal annex, dry cleaner, and florist shop. Some of the commercial footage is at the sidewalk line of San Pablo. Most of the commercial area is connected by a covered arcade which provides additional seating for the restaurants.

The commercial space is currently at approximately 90% capacity. The busiest time for the restaurants appears to be at lunch. At that time, the parking area fills up with cars and the overflow parking goes out onto the streets. For true success, it would appear that the service uses such as the dry cleaning need to draw customers from beyond the apartment complex itself.

Parking

Residential parking is provided under the BART tracks. There are approximately 160 spaces for residents, a ratio of 1.18 spaces per unit. Some of the residential parking is covered by roof shelters. However, due to agreements with BART regarding the easement, parking spaces under the BART tracks are not covered. The commercial parking area in the front of the building consists of approximately 60 spaces. Street parking is also available on San Pablo Avenue and adjacent side streets. The commercial lot does fill up during the lunch time rush, due to the number of restaurants in the complex. Parking is adequate, although there have been some complaints about the lack of parking during lunch, when people have to park out on the street. The lack of complaints about the residential parking may be due to the large number of residents who use BART or the bus for much of their transit needs and do not actually own a car.

Special Features

Del Norte has many features which attract pedestrians. The buildings are relatively open to public access with only the interior courtyards to the buildings gated. People can enter the commercial area from San Pablo Avenue or from the residential parking and BART path at the back. The complex has successfully re-integrated the bicycle path that led along the old Atchison Topeka and Santa Fe (AT & SF) railroad tracks. This pathway, used by bicyclists, joggers, and walkers, runs near the rear of the complex. Special work had to be done to allow this path to run through the residential parking lot.

THE PARTNERS AND PARTICIPANTS

The two main partners who worked together in achieving the end result were the IBEX group and the El Cerrito Redevelopment Agency. The negotiations began with the drawing up of the Disposition and Development Agreement (DDA) in March of 1989. The negotiations took over a year and resulted in the execution of the DDA in September of 1990. This DDA provided the details regarding the roles of the Redevelopment Agency and the developer.

IBEX group

The IBEX group formed the limited partnership, Del Norte Place, to construct the project. Their interpretation of the RFP had been closest to the desires of the Redevelopment Agency, offering residential and retail components along with provisions for mixed incomes and mixed ages. One of the partners, The John Stewart Company, had a long history of developing low and moderate income housing but had not worked on a project involving a retail component. They were hoping that this project could become a showcase example of transit oriented development, providing a positive image for future projects. The IBEX group was also hoping that this project would be the first of several in the area, creating more demand for retail and residential space in Del Norte Place. In order to achieve this, they held many meetings and design reviews, secured financing which complied with the National Housing Act, and secured Low Income Housing Tax Credits from 30 individual investing partners (ULI, 1995).

The Redevelopment Agency

The Redevelopment Agency, with the issuance of the RFP, was trying to eliminate blight around the BART station and to develop mixed use projects to foster its vision of a pedestrian pocket. Their role was to assemble and purchase the land, negotiate the relocation of tenants and reach agreements with BART, El Cerrito, and Pacific Gas and Electric (PG&E), regarding parcels under those groups’ control. The agency became a land owner, leasing the property back to the Del Norte Place partnership. The hope was that the success of this initial project would spur private investment of a similar kind to the area, bringing new life to the north side of town. New businesses would bring more property and sales taxes to the city.

The City of El Cerrito, BART, and PG&E

There were some other players in the success of this development. The City of El Cerrito owned the right of way for Kearney Street and the old AT & SF right of way, which contained the bike path. Many BART riders parked on Kearney Street, which runs parallel to San Pablo Avenue. With the BART parking garage nearly finished, the city agreed to abandon the Kearney Street right of way. The city also allowed the purchase of the bike path which would have to be integrated into the project. BART’s role in the project was as the grantor of an easement to allow parking and underground utility lines to go in underneath the tracks. BART worked directly with the Redevelopment Agency on this agreement. Lastly PG&E was brought in, when it was realized that an electric substation on the property would be in the way of the development. PG&E negotiated with the Redevelopment Agency to move and relocate the substation to the rear of the parcel, out of the planned building area. The costs were to be paid for by the agency and the developer in accordance with the agreements in the DDA.

DETAILS OF THE NEGOTIATIONS

The Disposition and Development Agreement (DDA) is a document often created between a developer and an agency to provide an outline for the construction of the project. Once IBEX had been selected as the developer, they and the Redevelopment Agency worked for over a year to hammer out this agreement. The resulting DDA was issued in September, 1990, one month after the approval of the project by the Planning Commission. With some of the changes made to the project, the documents were not stamped “certified” until April, 1991, shortly before construction. The DDA provided the information for how the land was to be acquired, leased, and who was to pay for each of the steps in the improvement process. The DDA could not take effect until the project was approved by the City Council.

City Approval

The first step, even prior to the issuance of the DDA, was to get the project approved by the City. Based upon the Initial Study, the City staff recommended that a mitigated negative declaration be certified. The Redevelopment Agency aided the developer in working with the city. El Cerrito provided some flexibility by allowing some exceptions to the current zoning requirements of the area. These exceptions included allowing buildings exceeding the height limitations under standard policy, the loosening of the setback requirements to allow the two end building facades to approach street side property lines, rather than the usual 5 foot setback, and waiving the approval of the Use Permit for the multi-family and elderly housing. This route was taken, rather than attempting a rezoning for a Planned Unit or Mixed Use Development.

Formulating the DDA

Once the project was approved, the DDA had to allocate responsibility for the acquiring of the land and the relocation of existing tenants. The costs for clearance and construction were to be borne by the developer, who would be leasing the land from the agency on an “as is” basis. Altogether, the agency had to secure a total of 4.1 acres spread between the 13 privately owned parcels and the land owned by the two agencies, BART and the City of El Cerrito. It was soon evident that there would need to be flexibility on both the agency’s and the developer’s part to deal with unexpected circumstances described as follows.

Silver Dollar Restaurant

Most of the owners of the parcels in Target Area Number 9 willingly sold their properties. However, the Silver Dollar Restaurant posed a problem in that it was one of the area’s most popular restaurants. The agency realized that forcing this restaurant out of business would not be a popular move with residents, so the DDA had a special segment written to offer space to the restaurant in the new development. The project construction would be scheduled to allow the restaurant to continue operations until its new facility was available. The owners of the restaurant agreed to be bought out and relocated. However, disagreement arose over the nature of the compensation because the restaurant was only leasing space. This resulted in a lawsuit being brought against the Redevelopment Agency, which has only recently been settled. The Silver Dollar was given additional compensation to cover business interruption expenses and additional rent required at the new location.

Soil Composition

The original negotiation was that the properties be leased “as is,” with the developer bearing all expenses to improve the property. However, soil testing identified a problem with the high concentration of ground water, which makes construction difficult. A large portion of the area had to be excavated and the soils replaced to allow the construction of the building. Utility and sewer lines had to be moved during this excavation. These unexpected costs necessitated changes to the original agreements, resulting in the First Implementation Agreement and Agency Participation Agreement.

Other Problems

As the project got underway, negotiations with the City of El Cerrito, BART, and PG&E stalled over different issues. Although the city of El Cerrito was willing to give up the land containing the bike path to the Redevelopment Agency, they expected that the bike path would continue to run through the property after the development was completed. The original plans did not contain the pathway, and the path had to be added into the development, increasing costs. The moving of the PG&E station posed a greater expense than originally anticipated, so negotiations were held to limit the developer’s expense. Lastly, BART held up the easement negotiations with the Redevelopment Agency, forcing an extension to the agreement in the DDA. BART finally allowed the provision for parking underneath the tracks.

Public Involvement

This project went through numerous public hearings, from the design review board, through the planning commission and the City Council. Throughout the development process, public dissidence was fairly minimal. Some assurances had to be made in regards to the bike pathway, but otherwise there was not much objection. However, the relocation of the Silver Dollar Restaurant did stir public resentment to the Redevelopment Agency in general. This relocation, coupled with the agency’s help in locating the “big box” retailers, such as Target, on land previously occupied as a trailer park and bowling alley had some residents worried that local opinions were not being considered in favor of national chains. Residents voiced concern that the large businesses would cause small local businesses to go under (Frasleur, 1994). Some of the more vocal citizens organized a petition to eliminate the agency and in a referendum election held in November, 1993, the move was narrowly defeated. The public’s dissatisfaction with the Redevelopment Agency was mainly the result of the favorable deals the agency had signed with large retailers such as Target and Home Depot and with the displacement of residents. Del Norte Place was not a significant reason for residents’ negative opinion since most of the businesses displaced had been marginal.

FINAL AGREEMENTS AND CONTRACTS

There were four main agreements in this development, with three of them springing from the initial DDA. The other agreements were the Ground Lease, the First Implementation Agreement to the DDA, and the Agency Participation Agreement.

Details of the DDA

Land Acquisition

The DDA made it clear that the acquisition of land and the relocation of the tenants was the responsibility of the Redevelopment Agency. The Agency would also need to finance these purchases. In anticipation, they began acquiring the properties and had fee title to six properties by the time the DDA had been written. The DDA stated the intent of the agency to acquire all remaining parcels, and to refinance those parcels already acquired. In accordance with the agreement, the agency issued tax exempt “qualified redevelopment bonds” for this purchase in the amount of $3 million. According to city literature, the El Cerrito Redevelopment Agency was the first Redevelopment Agency to utilize this category of tax-exempt financing. The reason that more agencies do not take advantage of this type of financing is due to the limited definitions for the terms “redevelopment purposes” and “blighted areas.” The $3 million was secured from the California Development Limit Allocation Committee (CDLAC), with the intention that this amount would cover all acquisition costs as stated in the DDA, including the acquisition, settlement, relocation, compensation, fees, and other costs related to the land acquisition. If costs rose above $3 million, the Agency and the Developer would be jointly and equally responsible, subject to some restrictions.

Construction and Operation Costs

It was the responsibility of the Del Norte Place partnership to submit a financing plan, detailing any other joint ventures entered into to provide funds as well as the cash flow projection and a cost breakdown. The developer was responsible for the marketing plan for the retail component of the center. The DDA specifically called for leases to vendors of specialty foods such as coffee, fresh fish, and baked goods. If, ten months after completion, the developer presented reports showing the unfeasibility of these leasing requirements, they would be allowed to search for other tenants. This did become the case.

In order to construct this project, the developer and the agency secured nearly $11 million in tax exempt, Mortgage Revenue Multi-family Housing Bonds, issued by Contra Costa County. These funds were refinanced in 1994 with a lower interest, variable rate tax exempt bond, indexed to the seven day Kenny Index (ULI, 1995). The loan was insured through the Federal Housing Administration (FHA) co-insurance program, section 221(d)(4), overseen by the Secretary of Housing and Urban Development (HUD). Del Norte Place had to comply with regulatory agreements adopted by HUD and the National Housing Act, which included the restriction that these bonds not be used for retail or commercial construction. Financing for the retail component, estimated at $2,800,000, had to come from elsewhere. Both the DDA and the Ground Lease had a Housing Affordability section to address these issues. In order to cover the retail portion of the project, IBEX, as general partner in Del Norte Place, contributed $3,200,000 of their own resources for equity. To further help pay for the housing, IBEX secured the low income housing tax credits from 30 individual investors for an additional $1,800,000 in equity contributions (ULI, 1995).

DDA Agreement of Agency Participation

The initial plan of the DDA was to allow the agency to receive 20% of the Net Cash Flow during each year from the operations, as specified in the Ground Lease. Due to the restrictions imposed by HUD, these terms were moved from the Ground Lease to an Agency Participation Agreement. The developer was required to operate the property for a period of five years from the date that 90% occupancy in the retail center was achieved before the property could be re-sold. After that point, any sale of the property would occur simultaneously with the sale of the agency’s fee interest in the property and its leasehold interest in the BART right of way. The agency would receive 20% of the net sales proceeds and the developer would receive 80%. These participation percentages could change if the equity contributions by the developer or the agency changed by more than 10% during construction.

Ground Lease

The Ground Lease set up the leasing agreements between the Redevelopment Agency and Del Norte Place. The term of the lease was for 65 years, terminating on the date of the lease execution, at which point the agency could negotiate ownership of the improvements. Rent was set at $1.00 per year. The initial lease also contained the participation rent agreements, but these were separated to conform with HUD guidelines which did not allow the lease to be based upon net revenues. The lease provides limitations on the use of property, the quality of operations, maintenance, transfers, subletting, housing affordability restrictions, and many other items referred to on the DDA. This Ground Lease was enacted and certified in April, 1991 when construction began.

First Implementation Agreement to the DDA

This agreement was set up to address the increased costs incurred from the land acquisition and site improvement. The agreement requested that the agency apply to Contra Costa County for a Community Development Block Grant (CDBG) which would then be paid to the developer to help with the site improvements, such as the soil replacement and utilities relocation. The grant, in the form of a loan, would be repaid by the Redevelopment Agency. This agreement altered the responsibility for the moving of the PG&E substation, making Del Norte Place responsible for only the first $70,000 of relocation costs. The definition of the property boundaries was changed to remove the parcel containing the moved substation, so that this piece of property was not actually part of the lease. The agency, as owner, granted an easement to PG&E for that parcel. The agreement eliminated the provision forcing the developer to pay rent on the BART easement. At the same time, the agreement allowed an extension for the negotiations of this easement between the Redevelopment Agency and BART. Lastly, the First Implementation Agreement laid the groundwork for the setup of the Agency Participation Agreement to detail the participation rent provisions.

Agency Participation Agreement

This agreement was created to establish the participation rent procedures, separate from the Ground Lease, in accord with the requirements of HUD. Pursuant to the DDA, this agreement allowed the participation of the Redevelopment Agency in receiving 20% of the Net Cash Flow generated from the project. However, Del Norte Place could elect to defer any and all annual payments for the first 5 years after completion of the project. This deferment would accrue interest at 7% annually. This provision, put in place when costs of the project increased, allowed the developer to recoup some of the initial investment.

Final Costs

With all of the unexpected costs and delays, the project costs were $18,786,300: the residential space cost $138.25 per square foot and retail space $131.07 per square foot. This was higher than the initial estimates of $16 million at the beginning of the project. The flexibility of the Del Norte Place partnership and the Redevelopment Agency to realign agreements and secure financing allowed these additional costs to be absorbed.

Developer and Agency Policy Changes to Ensure Success

The apartments began leasing in July of 1992 and full leasing (90% occupancy) was attained by April, 1993. The seniors’ building was finished first. Although the John Stewart Group is pleased with the results, some modifications had to be made to ensure occupancy. Many of these decisions were financial in nature, as the project was opened at the depth of the California recession. The residential units had their target rents dropped by 15% to facilitate renting and meet cash flow targets. Various forms of advertising were tried, in order to find which were most effective for the market rate units.

As stated in the DDA, the Redevelopment Agency policy was to attract specialty vendors selling various items such as flowers and gourmet meats and cheeses. Businesses of this type in the Rockridge area of Oakland were expected to expand into Del Norte Place. Unfortunately the retail environment in El Cerrito did not support these types of businesses and those at Rockridge suffered customer losses due to the Oakland Hills fire of October, 1991. The agency allowed the John Stewart Group to find businesses that were more service oriented and convenient to commuters. These uses included dentist and optometrist offices, a dry cleaner, and packaging store. Once the vision for the commercial center was altered, leasing of the retail center proceeded quickly.

Overall Result

The residential units have been able to maintain high occupancy rates since being leased. Especially popular have been the low income and senior units, which often have waiting lists. The John Stewart Company has kept an on-site residential and commercial building manager, which helps to keep residents and tenants satisfied. Visually, the project is an improvement over the previous buildings on the site, and there have been no reports of neighbor dissatisfaction. Although the businesses are not experiencing a boom, they have been able to survive during tough economic times. Their future success may depend on the type of projects built in the vicinity. As of this writing, no other similar developments have been built. The lot across the street contains a vacant supermarket and restaurant and continues to be a security problem with the City. Although Del Norte Place appears to have achieved overall success, it will need to be augmented with other, similar projects in the area. Currently, there is a tentative project to bring in a movie theater and more apartments.

AMC Movie Theaters and Apartments

This project has been slowly going through the review process since BART issued an RFP in 1992 for development of its 2.7 acre surface parking lot located in front of the Del Norte station, a block south of Del Norte Place. At the time, BART was looking at developing more housing in and around its stations. Since then, this project has grown and changed to include a movie theater on the BART parcel, with market rate apartments on the adjacent block, which is next to Del Norte Place.

Charles Oewell, the president of Pacific Valley Housing, is the developer in this project. Mr. Oewell has previous experience in developing housing near transit. He developed Bay Landing, a 282 unit rental complex at Pleasant Hill BART, and the Verandas, a 360 unit project with an adjacent shopping center, next to the Union City BART station. Oewell’s development at Del Norte Place was originally projected to be 200 apartment units constructed on the BART lot, but it was shelved for financial reasons. When the project was resumed, the plans were revised to reflect the growing interest in developing a theater complex. The apartments were moved one block north onto land to be acquired by the Redevelopment Agency.

The project at Del Norte, as submitted for review in June, 1996, consists of a 70,000 square foot AMC movie complex with 20 screens, containing 4,500 seats. An additional 40,000 square feet of retail space would be provided. These facilities would be sited on a BART owned surface parking lot directly between the Del Norte Station and San Pablo Avenue. A lease would be worked out between BART and the developer, currently projected at 75 years. A parking garage, holding 1,000 cars, would be built below ground. The most innovative part of this complex is the agreement made by Oewell and BART to share both the theater garage and BART garage parking. Since the peak times for BART and the theater are at opposite times of the day, 312 of the spaces in the theater garage would be reserved for BART passengers during the day, while the BART garage would be made available to night and weekend theater visitors. This multi-modal parking would help to keep the overall parking requirements down, fostering a more pedestrian friendly environment.

The apartments would be located on San Pablo Avenue, between the theater and the Del Norte Place project. There would be 208 apartments, 88 one-bedroom and 120 two-bedroom. All units would be market rate. A small commercial storefront would be located in one corner, containing 1500 square feet. This land would be acquired with the aid of the Redevelopment Agency and sold to Pacific Valley Housing at the market rate.

The project’s Environmental Impact Report (EIR) has just been completed in early 1997. Mr. Oewell is hopeful that construction can start in the fall of 1997. Unlike Del Norte Place, this project is expected to have a problem getting approval from adjoining neighbors and tenants, who may object to the volume of nighttime activity. The public review of the EIR should occur soon.

ANALYSIS

Del Norte Place has been considered a successful project from both the developer’s and the agency’s point of view, despite the fact that it ran over budget and had some problems with the initial leasing of the commercial area. The project has sustained acceptable occupancy rates, and rents have increased 3.5% per year, keeping up with inflation. The project is running slightly in the black. From the agency’s perspective, the project is successful by beginning the fulfillment of a transit oriented village at Del Norte BART. Studies of the project show a large proportion of the residents (60 to 70%) use BART regularly and nearly 40% do not own a car. Although this may be due in part to the number of seniors and students who live there, it still provides a case that people will take advantage of transit if it is conveniently provided near housing. Del Norte Place has not yet succeeded in providing a visible spill-over effect to other parcels in the area. Although the John Stewart Company is happy with the results so far, they had hoped that more development would have occurred by now, increasing demand for their units (Loustau, 1996).

Factors in the Success of Project

Since Del Norte Place, the John Stewart Company has not built any other Transit Oriented Developments. This does not mean they are not open to pursuing other projects in the future. They have studied similar developments in Portland, Oregon, so that they can engage in the next project with more knowledge. In an interview, Jeff Loustau of the John Stewart Company stated that the company should have done more demographic research into the marketplace so that there would have been a better idea of what type of commercial usage would work best in the center and how to target the residential audience (Loustau, 1996).

One of the most important lessons to be gained from the study of the El Cerrito Del Norte BART station is the amount of time it takes to create a transit linked village. It takes more than one development to create the linkage between land use and the transit station. However, Del Norte Place is a step in the right direction. Its success can be attributed to the factors given below, which can be guidelines for future projects:

Developer and Agency Participation

Despite the initial problems with the Silver Dollar Restaurant, the soils consistency and the electric substation, both the agency and the developer were committed to making the project work. They believed in the project and realized that they needed each other. From this realization came a mutual respect which kept negotiations going. As a result, Del Norte Place is expected to be profitable and to fulfill the agency’s desire to create a Transit Oriented Development.

Flexibility

Most private businesses and developers are accustomed to working through changes in order to survive. However, public agencies reporting to their constituents have more trouble changing midstream. Public agencies are required by law to adhere to a strict code of behavior and guidelines. This strict adherence can sometimes kill a development. In the Del Norte Place project, the Redevelopment Agency showed agility in being able to respond to changes in the project and to increased costs by amending the DDA. The city also allowed variances to their zoning guidelines because the benefits of the project outweighed the costs of allowing the violations in the zoning. Rarely does any project go through the entire development process without hitting some snags, and it is important to react to these positively, preserving the relationship between the private and public entities. The Del Norte Place Project was a business agreement between two parties and this required both parties to be able to negotiate their case and to compromise when necessary.

DDA Process

Although it is important to retain flexibility during the life of the project, a comprehensive document to provide guidelines for responsibility and behavior is also needed. In complex cases, where financing sources are many and a lease is involved based upon net cash flow, the DDA needs to think this process through. In less complex deals, such as a simple land swap, the DDA can be less complex. A DDA should be as complete as it can be at the time it is drawn up. However, flexibility is required to make amendments as needed.

Creative Financing

Without careful investigation into the types of financing opportunities available, Del Norte Place might have never been built. The combination of owner equity, tax exempt redevelopment, and mortgage housing bonds and tax credits took some time to investigate. In the end, all these sources were needed, and it was important to realize some of the restrictions on them, such as with the mortgage housing bonds and commercial development. A detailed investigation into financing sources may spell the difference between a completed project and one that is abandoned.

Public Process

Although Del Norte Place was built during a time when the public’s perception of the Redevelopment Agency was low, the project itself went through the process with little fanfare. For the most part, the development was successful because it replaced a declining area with a new development which was compatible with the surrounding area. With the final relocation of the Silver Dollar Restaurant, a balance was struck between attaining a public good and the disruption of neighborhood institutions. It also appears that political arguments were kept to a minimum. This can sometimes alienate the public, causing them to lobby against it. The balanced mix of housing types seems to have helped alleviate neighborhood fears that normally accompany developments which are entirely “low income” or “senior” complexes.

Unlike the Del Norte Place project, the theater complex is expected to generate greater public concern because it will be attracting a much larger number of people, many from outside the area. If the agency and the developer want to see a project go through, it is important to address the public’s concern early and ensure that the positive aspects of the development outweigh the negative aspects.

Long Term Vision and Perspective

From planning to completion, Del Norte Place took nearly five years, and it was just the first step in the development of a transit based development. Developments of this type require the lead agency to adopt a long range view which transcends short term political goals. Elections for the El Cerrito City Council are held every two years. In 1989, at the beginning of the Del Norte project, three council positions were up for election. Two more positions were contested in 1991. Although the council members elected during that time favored redevelopment, the political climate could change quickly. In addition, the City Council may feel a need to increase sales tax revenue and may pressure the agency to satisfy their agenda. It is hard to estimate how much political pressure has been applied to the Redevelopment Agency to increase the sales tax base, since their other contributions to the area have been Target, Foods Co., and Home Depot, all “big box” retailers. For the Del Norte area to succeed as a transit based project, further transit based developments need to be encouraged.

At the same time, perspective is needed to realize that only one development such as Del Norte Place does not create a transit village. Ongoing hard work building upon the success of Del Norte Place will be needed to attract future development. These qualities will be needed in any future transit linked development.

SUMMARY

The El Cerrito Del Norte BART station is currently at a crossroads. New development has consisted of both auto oriented retail outlets and transit oriented mixed use development. Del Norte Place appears to be a success in both the public and private realm, encouraging transit ridership while turning a profit for the developer. The project was built during a difficult time for new development, with a souring economy, cutbacks at nearby job centers such as U.C. Berkeley, and the natural disasters of the Loma Prieta earthquake and the Oakland Hills fire. Yet the flexibility in the relationship between the Redevelopment Agency and the IBEX group ensured the completion of the project, even after project costs jumped from around $16 million to over $18 million. This joint relationship is what ensured the completion of this development, compared to previous attempts which had failed.

At Del Norte Place residents can get off of the BART train, walk a block north, buy a cup of coffee, a dinner, or a new pair of glasses, and enjoy their new home. The 135 rental units provide an opportunity for a group of people of mixed incomes and backgrounds to live together in a harmonious environment, all taking advantage of the nearby services. The 21,500 square feet of retail establishments provides added sales tax revenue to the city while providing convenience to residents and neighbors.

The current year, 1997, should be an interesting time for El Cerrito Del Norte. During this time, the fate of another transit linked project, the AMC theater, with its multi-modal parking idea, retail features, and apartment complex should be decided. In addition, three positions on the City Council will be up for election, possibly changing the decisions of the Redevelopment Agency. These decisions, and the way they are carried out, may have a significant impact on whether Del Norte BART becomes an integrated transit based development or a typical suburban BART stop. It is possible that the success of Del Norte Place will encourage decision makers and the public to continue to favor transit oriented projects.

Del Norte Place; El Cerrito, California
135 unit, four story rental apartment complex with 21,500 square feet of retail and service space.
Location is one block from El Cerrito del Norte BART station, providing convenient alternative to driving.
Agencies involved: El Cerrito Redevelopment Agency, City of El Cerrito, Contra Costa County, BART

Special Features	Architect
Public/Private Development Agreement and Lease	Sandy & Babcock 1349 Larkin St.
Mixed Income rental housing with retail	San Francisco, CA 94109
Senior Housing and Services
Transit oriented project

Developer	Financing / Management
The IBEX Group	The IBEX Group
2310 Mason St.	2310 Mason St.
San Francisco, CA 94133	San Francisco, CA 94133

Land Use Information	Development Schedule
Site Area 4.1 acres	Planning started June 1989
Total Dwelling Units 135	Site leasing started October 1990
Gross Density 33 u.p.a.	Dev. Agreement/ April 1991
Gross Building Area 137,000 sq. ft.	Construction started
Total Parking Spaces 64 retail	Sales/leasing started July 1992
159 residential	Leasing completed April 1993
Number of Stories 4

Residential Unit Information
Unit Type	Size (sq.ft.)	Number Built	Market Rate Units	Low Income	Senior
One bedroom avg.	641	57	$900	$485	$680-740
Two bedroom avg.	914	78	$1,000	$572	$680-930
Development Total	107,829	135	N/A	N/A	N/A
Senior Units		29
Low Income Units		27

Building Use Information			Development Cost Information
	Sq. ft.	% GBA	Site Acquisition	$3,000,000
Residential Units	107,000	78%	Site Improvements	$370,497
Retail	21,500	16%	Construction Costs	$11,120,147
Common Areas	8,500	6%	Soft Costs	$4,295,656
Total	137,000	100%	Architecture	$825,608
			Marketing	$294,471
			LC Fees/bond issue	$395,963
			Construction Loan.	$746,325
			Construction loan fee	$586,589
			Contingency	$620,000
			Taxes and Insurance	$75,000
			Legal	$68,611

Figure 2-1 Location of Del Norte Place, El Cerrito, CA

Figure 2-2 Advertisement for Del Norte Place

Figure 2-3 View of Del Norte Place from BART station

Atherton Place

Hayward, California

Introduction

Atherton Place is a high-density residential development located in downtown Hayward, Alameda County, California. Hayward lies approximately 25 miles north of San Jose in the Bay Area. The project lies adjacent to Hayward’s city library and the under construction civic center site, and is within two blocks of the downtown shopping district. The 3.3 acres of land contains 83 units of townhouses built at a density of 25 units per acre. The Hayward BART station is across C Street from the development and the station is served by a transit center for AC Transit buses.

This $12.2 million development provides high-density housing in the downtown Hayward area and is the first of numerous sites scheduled to be redeveloped by the Redevelopment Agency of the City of Hayward. The Redevelopment Agency was the public agency that initiated the proposal for high-density housing on this site. In July 1992, the City adopted what is known as the Downtown Core Area Plan in which they detailed their plans of the downtown area. Bringing housing to this area was a top priority toward creating a strong, diverse identity for downtown Hayward. They found a willing developer in Atherton Place Company, a California limited partnership and subsidiary of Regis Homes of Northern California.

The Redevelopment Agency had to significantly discount the cost of the land to the developer in order to attract the desired type of development. The Agency paid $2,622,768 and sold it to the developer for $763,930.

Project Concept

In the early 1980s there was interest in developing high-density residences on this lot. A partnership of four developers bought the land and in 1985 and 1986 submitted initial plans to build a 14 story residential high rise building. The partnership dissolved amidst problems of securing financing for the project. At this point, both BART and the Hayward Redevelopment Agency showed interest in the parcel; BART wanted to add on to their existing parking lot, and the Redevelopment Agency wanted to use the lot to help bring back housing to the downtown area. A bidding war resulted. This caused the final selling price to be somewhat inflated, especially considering that 1988 was the peak time for land value. However, the Redevelopment Agency felt that additional BART parking would be detrimental to their plans to reinvigorate downtown Hayward. The project concept was initiated by the Redevelopment Agency through the creation of the Downtown Core Area Plan in 1992.

Background

Neighborhood Background

From the early days of its existence, Hayward was a satellite town connected by the railroad to other East Bay cities: Oakland, Alameda, and San Leandro. The original downtown district was a thriving center of residential, civic and commercial lots and a public square with a park. After 1952, the development patterns of the city changed and the original gridiron form was drastically altered. New arterial streets ripped through the downtown district (Foothill Boulevard and Mission Boulevard), and geologists discovered that the Hayward Fault ran just east of Mission Boulevard. A setback of 50 feet on each side of this fault was created to prevent development and potential damage close to the fault, and this too detracted from downtown development.

Another alteration in the downtown area was the construction of a BART station in 1972. The station offers a transit option to Hayward which has gone unrealized due to careless placement of BART surface parking lots. The current layout has effectively cut off pedestrian traffic to the station from other downtown areas.

Transit Options

There are two public transit options for residents and workers of the Hayward area: BART (Bay Area Rapid Transit) and AC Transit (Alameda-Contra Costa Transit), the local and regional bus agency. The BART station is located across C Street from the development and AC Transit has a bus center in the BART parking lot. Highways 92, 880, and 580 are also close to the project.

Previous Uses of Land

The parcel upon which Atherton Place was built had been vacant for a long time until the late 1970s, when P G & E owned it and used it as a service lot.

Demographics

The project demographics (with 43 units sold) are in Table 3-1:

Table 3-1 Atherton Place Demographics

Marital Status	Age	Place of Employment
56% married	24% under 30 yrs	52% Alameda County
38% single	35% 31 to 40 yrs	26% San Francisco
6% divorced	35% 41 to 50 yrs	22% Other
	6% 51 to 60 yrs

Almost half of the buyers previously lived in apartments and these buyers are evenly split between one and two income households.

Project Marketing for Residential

The targeted homeowners have been young, first time buyers. Sares-Regis, the project developer, assumed there would be many female head-of-household buyers and a large percentage of commuters due to the project’s proximity to BART and the nearby highways. The marketing strategy included an emphasis on the security aspects of the development, giving potential buyers peace of mind due to the downtown location of the project.

Germination of Project

After acquiring the land for $2,622,768, the Redevelopment Agency issued a RFP to develop this plot of land at a density of at least 30 dwelling units per acre. The Agency chose a developer and entered into an Exclusive Negotiating Agreement in 1988. However, disagreements created a rift between the Agency and the Developer and finally caused the Exclusive Negotiating Agreement to be canceled in 1989.

After the failure of that attempt, the Agency held onto the plot of land, known as Site I of their redevelopment sites. Instead of moving on with the development process for Site I, they began issuing an RFP for the Site III location. While going through their selection process for the new project, another developer expressed interest in developing Site I. Negotiations continued for approximately one year until the developer requested a lower density project from the Redevelopment Agency. The Redevelopment Agency did not want to deviate from the set density level, and their judgment was supported by the Solomon Consulting report which confirmed that higher density housing was needed to make the project viable. The Redevelopment Agency then decided to offer the development of Site I to another developer, the one who had won the bid for Site III: Sares-Regis. They accepted the offer.

Participants for the Site I project included the following agencies and organizations:

· Developer: Atherton Place Company,

· Architects: Seidel/Holtzman (San Francisco)

James Guthrie & Associates (San Mateo)

· Civil Engineer: Giuliani and Kull (Cupertino)

· Landscape Architect: Guzzardo and Associates (San Francisco)

· Legal Services: Cassidy and Verges (San Francisco)

· General Contractor: Regis Contractors of Northern California

The architects Seidel/Holtzman were chosen because they had extensive experience with designing high-density housing alternatives and had been extremely effective in maximizing volume and light in compact spaces. They also had extensive experience with urban site plans.

Physical Features

Location and Orientation of Project

The project lies in the heart of downtown Hayward. The Redevelopment Agency hopes to revitalize the area with its planned Focal Point being just one block away from the Atherton Place development. The Focal Point block will include a downtown plaza, and its purpose will be to reestablish a connection to the transit center and provide a defined public space for civic events. Possible uses for buildings include public uses and a firehouse. The Redevelopment Agency is also considering utilizing the buildings for City or County offices.

The project site is bounded by Atherton Street to the east, C Street to the north, D Street to the south, and the BART tracks to the west.

Project Size

The project is a strictly residential development, situated on 3.3 acres of land. Table 3-2 shows the unit breakdown:

Table 3-2 Atherton Place Apartment Details

Plan	Unit Size		Ft²	Units	Sale Price	Price/Ft²
A	3 bdrm/3 bath		1325	58	$169,500	$128
B	2 bdrm/2.5 bath		1095	21	$155,000	$142
C	2 bdrm/2 bath		1175	4	$153,000	$130
Average Per Unit			1260	1	$165,036	$133
Development Total		104,545		83	$13,698,000	$133

Many of the units have doors which open directly to the street, but most of the garages and entryways open onto Atherton Place, the circular drive running through the interior of the complex. The development has been termed “pedestrian friendly” with its easy access to transit options and the future civic center. The Development has a community center with a swimming pool, located in the center of the complex. Initial sale prices were expected to be $153,000 to $169,500 and all project phases are expected to be completed by December 1997.

Environmental Issues

There were some concerns about possible hazardous materials in the soils on the BART Triangle property. When it was tested for contamination, the levels were low enough and the soil was to be removed for construction purposes anyway, so the soil was legally allowed to be extracted and disposed of in a special landfill at no extra cost.

The Hayward Fault Line, an earthquake fault, runs through downtown Hayward and has proven to be a disruptive element. Fifty foot setbacks have been imposed on either side of the fault to prevent destruction to buildings in the event of an earthquake. The Redevelopment Agency has proposed the idea of realigning Mission Boulevard to run with the fault, and widening the Boulevard to cover the setbacks. A median park is planned for the middle of the Boulevard and two lanes of traffic running in each direction. The historic City Hall currently sits on the faultline, and it has been proposed in the Core Area Plan that it be relocated to the new Focal Point.

The Partners and Participants

The Redevelopment Agency of the City of Hayward and Atherton Place Company were the main partners in the Atherton Place Project. The Hayward Redevelopment Agency hopes to balance downtown uses between commercial, residential and office uses. This project provides ownership of housing in the downtown area. Long term objectives were to alleviate blight from the downtown area and to provide for private reinvestment in the area. The Redevelopment Agency hoped to develop the property with only a few restrictions. They wished the project to be 30 units per acre, to conform to the existing residential zoning. The units were to be owned privately and it was necessary to conform to the city design plan. The Redevelopment Agency wanted no variance from the zoned density or parking requirements.

Interest in developing this lot for high-density residential units came about in the early 1980s. The land was eventually bought in the mid 1980s when initial plans for a high rise residential building were submitted. Financing problems caused the breakup of the partnership of owners and the public sector began showing interest in the property. A bidding war between BART and the Hayward Redevelopment Agency inflated the final selling price, with the Redevelopment Agency eventually purchasing the property for $2,622,768. The Redevelopment Agency developed a Core Area Plan, with the purchased property designated as Site I and slated for a density of 30 dwelling units per acre. After several unsuccessful attempts at securing a developer for the Site I location, the Redevelopment Agency concentrated on getting RFPs for the Site III location of their Core Area Plan. While going through this process the Agency found a developer who expressed interest in developing the Site I plot. After negotiating density, Sares-Regis finally won the bid to develop the Site I and Site III properties.

Details of the Negotiations

The following information is from the Reuse Appraisal and Summary Report, published by the Hayward Redevelopment Agency. On July 26, 1994, a joint public hearing of City Council and the Hayward Redevelopment Agency was held to discuss the Disposition and Development Agreement (DDA) between the Agency and the Developer. The developer, Sares-Regis Group of Northern California, formed a new partnership titled Atherton Place Company, a California limited liability partnership.

In the DDA , the Developer is responsible for the following:

· Submit for Agency approval construction plans and specifications, the construction contractor contract, and a financing plan which will include an economic proforma and evidence of the financing for the Development and a construction budget.

· Purchase the Site I Property from the Agency for $763,930[9] plus estimated interest payments.

· Construct, or cause to be constructed, at its sole costs and expense, 83 units or more of for-sale housing consisting of two and three bedroom units.

· Construct, or cause to be constructed, related landscaping, parking, on site and off site improvements and all other necessary improvements, with the exception of the Agency’s site preparation requirements.

Given the current market conditions, a project developed at 30 units per acre will likely result in a residual land value of $9,000 to $10,000 per unit. According to the Reuse Value of Property in the Amended Hayward Site I Reuse Appraisal and Summary Report, the Agency will sell the property to the Developer for $763,930 plus estimated interest payments.

The Agency is responsible for the following:

· Act as the liaison between the Developer and the City of Hayward during the approval process.

· Sell the Site I Property to the Developer.

· Deliver the Site, after all known and visible concrete improvements currently existing on the site have been removed.

· Construct curb, gutter, sidewalk, and street work along Atherton and D Street frontages as required by the City of Hayward.

Site I had been targeted for a high-density residential development in the General Plan and Zoning Ordinances. However, a zoning change did have to be made as this development is considered a Planned Unit Development (PUD).

Public meetings and workshops were encouraged. A meeting was held to discuss the development of the specific plan for the downtown area. A series of workshops established a Downtown Plan framework. Issues brought up by citizens were the Focal Point, Housing, B Street, and Cultural Activities.

Final Agreements and Contracts

The agreement between the Redevelopment Agency and Atherton Place Company is detailed in the Deposition and Development Agreement (DDA). The following information was taken from the DDA, dated October 10, 1994 and the First Amendment to the DDA, dated May 16, 1995.

Land Cost

The Site I parcel was bought by the Redevelopment Agency for $2,622,768 in 1988 and sold to Atherton Place Company for $763,930 in 1994. The developer also paid a deposit of $13,930 into escrow with BART to purchase the 14,000 square foot BART Triangle parcel. The principal amount of the Agency’s note may also be reduced by 1) up to $100,000 only, and 2) the amount of any school fees the Agency has agreed to cover, if any. All ad valorem taxes and assessments on the site, if any, and taxes on the agreement were paid by the Agency. All ad valorem taxes and assessments levied for any period commencing upon or after closing for the escrow were paid by the Developer. From the purchase price, $34,495 was retained in escrow to be used by the Agency for remediation of known hazardous materials on the BART Triangle. The Agency and the Developer agree to fund any additional funds needed in the event that more remediation costs accrue. The Agency is liable for up to $20,000 and the Developer is liable for up to $20,000 for any additional remediation costs.

The Agency’s Responsibilities

· The Agency entered into a purchase and sale agreement with BART to acquire the BART Triangle (Lot 89 of Tract 6716)

· The Agency was required to deposit in escrow a maximum of $12,000 to pay the following:

1) costs necessary to put the Site in condition for conveyance as required by the provisions of the DDA

2) escrow fees

3) recording fees

4) notary fees

5) ad valorem taxes, if any, upon the Site for any time prior to conveyance of title

6) any applicable State, County, or City documentary transfer tax

7) the premium, including any date downs, for a CLTA (California Land Title Association) standard title insurance owners policy as set forth in section 208 of the DDA, with endorsements as approved by the Agency

8) the costs of an ALTA (American Land Title Association) survey of the Site

9) the premium, including any date downs, for an ALTA lender’s title insurance policy insuring the Agency’s Deed of Trust with endorsements

10) the premium, including any date downs, for any title policies with endorsements insuring any Construction Financing Security Interests.

Site Clearance and Preparation

The Agency was responsible for performing any work required to remove all known and visible concrete improvements currently existing on the Site, including concrete slabs and foundations, except for existing A/C paving.

Off-Site Improvements

The Agency shall try to bury underground the existing overhead utilities along Atherton and D Streets prior to close of escrow. Also any curb, gutter, sidewalk, and street work along Atherton Street side of the Site.

The Developer’s Responsibilities

The Developer deposited $25,000 with the Redevelopment Agency as a “good faith payment.”

Taxes and Assessments

The Developer is financially responsible for securing all construction permits, paying all real estate taxes and assessments.

Site Clearance and Preparation

The Developer shall perform all work necessary to prepare the Site for construction of the improvements, remove all improvements currently on the Site, and perform any necessary utility relocation, compaction and grading.

Off-Site Improvements

The Developer shall construct all necessary off-site improvements, any curb cuts related to the Agency off-site work and storm drains.

Projected Agency Costs

As of May 1995, the Agency expended approximately $2,791,567.

Land Purchase Price	$2,622,768
Relocation costs	N/A
Other pre-development costs	$56,499[10]
Interest	$112,300
Total	$2,791,567

These costs have been paid from tax increment revenue. The Agency has previously borrowed a portion of the funds used to pay these costs, and there was interest required to be paid by the Agency to the City in connection with these costs.

Projected Agency Revenue

Revenue from Sale of Property
Note and Deed of Trust	$750,000
plus: BART Triangle acquisition	$13,930
Net Payment to the Agency	$763,930

The Note is for a term of five (5) years from the conveyance of title to the Developer. The estimated value includes interest for the first 36 months of the note.

Agency Revenue

Net costs equal the difference between projected revenues and costs.

Revenue from Sale of Property $763,930

Present value of Future Tax Increment $2,518,991

Subtotal $3,282,921

Less: Agency Costs to Date ($2,791,567)

Net Financial Gain (Projected) $491,354

Results

The Redevelopment Agency

Although there was no public resistance to the proposed higher density, the Planning Commission had mixed feelings about the proposed density of the project of 30 units per acre. They felt that the density was too high for Hayward but too low to be considered a viable transit oriented development.

The Redevelopment Agency has entered into agreements with Sares-Regis to construct the new Hayward City Hall, another townhouse project of 80 units, and a rental residential project. All of these projects are near the BART station and Atherton Place on Sites II and III. The City felt that the whole process of developing this project was a learning experience. Being the first in the redevelopment zone, the project required new procedures and officials struggled with the planning, financing, and negotiations, knowing that with the next project the process would be easier.

The Developer

According to the Developer, this project was complex, as most redevelopment projects are. They have no estimate as yet of their return on investment and, according to Mark Kroll, Executive Vice-president of Atherton Place Company, the project has gone over budget, mainly due to increases in prevailing wages for union workers, changes in the lumber market, changing City requirements, and increased redevelopment fees. Only time and profits will tell if this project will encourage this developer to built similar projects.

Neighborhood Reaction

The project won an award at the Pacific Coast Builders Conference in 1996, and the design has been well received by the City and the neighboring community. According to the current property manager, the people living in the Atherton Place development have expressed their happiness with the project. As of November 1996, even though only 35 of the 85 units were completed, 43 were sold and 20 were occupied.

Analysis

The project is successful in that the units are selling well and the design has been well received. This is the first phase of a large downtown redevelopment plan for the City of Hayward, and the success of this development may not be realized until other sites in the Core Plan are completed.

The Redevelopment Agency successfully found a developer who was willing to work within their constraints. Sares-Regis has entered into agreements with the Redevelopment Agency to construct the new City Hall and two residential projects in the Core Area, so it seems a working relationship has developed. Sares-Regis feels that it would be helpful if the City of Hayward’s Down Payment Assistance program were given more funding, since the majority of first time home buyers need help with the down payment. They feel that this type of program is important if Hayward hopes to bring market rate residents into the downtown core to live. When a city has a redevelopment zone and has specific plans for a site, they may need to be willing to bend on minor details in order to find and keep a developer for that project.

The most difficult issue for the Redevelopment Agency was change in its upper management in the middle of the project. The change affected the consistency and the efficiency of their relationship with the developer.

The neighborhood is being revitalized, and the current residents are excited about the positive changes. The City’s expectations of this project are being met by the developer, and they are very happy with the way the development is turning out.

Summary

Atherton Place in downtown Hayward lies in the Redevelopment Agency’s Core Area Redevelopment Zone. The downtown area has deteriorated over the past 40 years due to changing development patterns. In response the Redevelopment Agency created a comprehensive plan for revitalizing the area. Atherton Place is a strictly residential development, built at 25 units per acre. The Hayward BART station lies directly across C Street from the $12.2 million project. After acquiring the land for $2,622,768, the Redevelopment Agency issued a RFP to develop this plot of land at a density of at least 30 dwelling units per acre. The Agency identified a developer and entered into an Exclusive Negotiating Agreement in 1988-89, but disagreements created a rift between the Agency and the Developer and finally caused the Exclusive Negotiating Agreement to be canceled.

Interest in developing this lot into high-density residential units on this lot began in the early 1980s. After one failed attempt at a partnership, the Redevelopment Agency bought the property but for some time could not find a developer. Eventually, when the allowed density was changed, Sares-Regis won the bid to develop both Site I, the future location of Atherton Place, and Site III.

The Redevelopment Agency has successfully achieved its goal of creating high-density housing in the downtown Core Area of Hayward. The Core Area Plan is an inclusive, elaborate plan in which the Downtown/BART Station district will be revitalized through the creation of a strong civic focal point, retail developments, high-density housing, and cultural activities. The creation of Atherton Place on Site I is the first of many elements the Redevelopment Agency is using to give downtown Hayward a new identity. The Agency felt that having a quality developer to work with made all the difference in the success of the project. They felt that Sares-Regis has an excellent background of working on projects like this and has the ability to foresee future problems.

The City of Hayward has great hopes for the redeveloped downtown area and the Atherton Place development is an important part of the expected renaissance of downtown Hayward.

Atherton Place, Hayward, California

Residential townhomes project (83 units)

Near BART and Highways 880, 92 and 580

Agencies Involved: City of Hayward Redevelopment Agency, Atherton Place Company

Special Features
One/two blocks from BART, future city
hall, library, and downtown
Hayward shopping district

Developer	Architect
Atherton Place Company	Seidel/Holtzman
393 Vintage Park Drive, #100	San Francisco, CA
Foster City, CA

Land Use Information	Development Schedule
Site Area 33 acres	Planning started 1992
Total Dwelling Units 83	Construction started 1995
Gross Density 30 units per acre	Sales/leasing started 1996
Gross Building Area 400,000 sq. ft.
Number of Stories 2

	Residential Unit Information
Unit Type	Size (sq.ft.)	Number Built	Market Rate Units
Two bedroom/2 bath	1175	4	$153,000
Two bedroom/2.5 bath	1095	21	$155,000
Three bedroom/3 bath	1325	58	$169,500
Development Total

May 1997

Dr. Scott Lefaver, AICP

IISTPS

Technical Report Documentation Page

Copyright © 1997 by IISTPS

Prepared in cooperation with the State of California Business, Transportation, and Housing Agency, Department of Transportation and the U.S. Department of Transportation, Research and Special Programs Administration, University Research Institutes program.

TABLE OF CONTENTS

List of Figures

Contributors