The Naval Air Station is a badly contaminated chunk of waterfront land for which the Navy wants $108.5 million, $40 million of which would help pay for the environmental cleanup. Prior to the successful vote to give Catellus and Lennar the opportunity to work together--which came after the two companies said they were amiable to the idea--council members failed to reach a majority on three separate votes for a single company.
The decision comes after the original would-be redeveloper--a JV of Shea Homes and Centex Homes and equity partners--walked away from the table, citing a downturn in the housing market. The situation prompted the city to issue a December request for qualifications that restarted the process.
Five groups responded to the city's subsequent request for qualifications. Three ultimately moved forward to Wednesday's meeting. If after 30 days the companies have not reached an agreement, city staff would make a new recommendation to the council.
Catellus previously won the right to be the master developer of Alameda Landing, the name for the redevelopment of the former US Navy Fleet Industrial Supply Center, which sits on 81 acres near the Naval Air Station. The supply center is slated to hold up to 300,000 sf of new retail development, 400,000 sf of offices and 300 single-family homes and townhomes. Demolition work at the site is expected to begin this spring, with delivery of the first phase of office and retail buildings planned for the second half of 2008.
According to the Alameda Landing disposition and development agreement, Catellus will receive title to the land from the city in exchange for bearing approximately $103 million in planning, cleanup and public infrastructure costs at the site. Catellus says it expects to recoup up to $56 million through proceeds from tax-increment bonds, community facilities districts and other public funds over time. Catellus will manage the entire development process, undertaking certain components of the project on its own and selling land to third parties for other components, such as the residential. The city will receive 50% of any returns Catellus achieves over an 18% IRR, according to the agreement.
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