OAKLAND — Developers will have more time to shore up funds for a 360-unit, two-tower development on city-owned land southeast of Lake Merritt that has been opposed for years by activists who say the site should only be used for affordable housing.
The city’s Planning Commission unanimously reapproved the project Sept. 18. The commission had approved the project on a vacant one-acre lot on East 12th Street and Second Avenue by Dewey Academy in 2016, with a two-year deadline to break ground, but the developer, UrbanCore Development, still had not secured all the funding needed for the project. After the approval expired, developers had to reapply.
The delay is a result of the project costing substantially more than the developers expected. Rising construction costs and the city’s requirement that the project use only union labor has driven up the project’s cost by around 20 to 30 percent, to about $300 million, said Michael Johnson, president of UrbanCore Development.
UrbanCore is developing one of the two towers, which will include 252 market-rate apartments and 18 subsidized for moderate-income households. The other will contain 90 apartments affordable to low-income tenants and will be developed by East Bay Asian Local Development Corporation, or EBALDC.
During the meeting, Johnson said although UrbanCore and EBALDC have separate “capital stacks,” the two are dependent on each other; both are not fully funded. Some of the tax credits and bonds pertain to both towers.
The cost increase has caused the developers to refine and re-engineer the plans in order to save money. It also means they have to look for additional funds to pay for the housing.
Developers hope to break ground by June or July of next year and have people move in by late 2022.
The project has been a point of controversy for years. The parcel was created in 2013 when East 12th Street was realigned. Soon after, UrbanCore purchased the parcel for $5.1 million to build a single tower with market-rate apartments, but the sale was scrapped in 2015 after its legality was questioned. The state’s Surplus Land Act requires low- and moderate-income housing developments to be given priority for public land sales.
After UrbanCore partnered with EBALDC to develop a mixed-income project, the city gave them the go-ahead for the site. The city also fronted $2.35 million to the developer to purchase the land.
Activists have maintained that Oakland should have offered the land to developers for entirely affordable housing, since the city is behind in its low-income housing goal, and affordable housing developers often are unable to compete with market-rate developers to purchase private land.
Activists urged the Planning Commission not to approve the project, saying that if the developers weren’t able to get the money by now, they doubt it would ever happen.
“It’s really our desire to see affordable housing on the site, and we’re worried that UrbanCore can’t pull that off,” said Dunya Alwan, an organizer with Eastlake United for Justice, a neighborhood group opposing the project.
Johnson, via email, said developers have most of the money needed to fund the project, and are working on securing the rest of the funding over the next three months. It’s being paid for with a combination of financing through the federal Department of Housing, tax-exempt bonds, low-income tax credits, state funding and private equity.
He told planning commissioners that having 30 percent of the units be subsidized in a development like this is “unprecedented.” Activists at the meeting responded that while that might be commendable for other projects, the bar should be higher for a project on city-owned land.
Planning Commissioner Jahmese Myres, said it was because of the activists’ pressure that there is any affordable housing in the project at all.
“This project when it came to us many years ago was zero percent affordable housing,” Myers said. “It was because community groups organized and pushed and demanded that there be affordable housing on public land that we even have the number of units that we have here.”
The design has been updated to include a shared lobby and for the two towers, which would include commercial space and an art gallery. The previous plan called for a “cultural space” which included a performance center which the public could access with more than 100 seats.
All of the amenities that end up going into the shared lobby will be accessible by all the tenants.
Planning commissioners, at the meeting, justified the re-approval since the project had not significantly changed since they first signed off on it, and saw the expiration as an oversight. Planning Commissioner Jonathan Fearn said it seemed “pretty heavyhanded” to deny the project after all the work that has gone into it.
“Typically what we do with extensions is say ‘Have you made good faith efforts to move the project along?’ and I think (the developers) have proven that they have,” Fearn said at the meeting.
The decision can be appealed to the City Council by Oct. 2.
