Shaped by the San Francisco Bay Area Rapid Transit District and Contra Costa County, the overall development began last year with a $50-million, 3,367-slip parking garage meant to replace the surface parking. The garage was completed a few months ago , clearing the way for the second phase.
Avalon Bay's portion of the project is being funded in part by the largest-ever State of California bond allocation, according to Godwin Proctor LLP, the law firm that handled the bond sales process for Avalon. Contra Costa County first filed an application with the state to issue bonds. The bonds were then sold on the open market with the proceeds being loaned to Avalon to begin construction of the development.Goodwin Proctor says it issued $10 million in tax-exempt multifamily housing revenue bonds and remarketed $125 million in mostly tax-exempt multifamily housing revenue bonds. The firm also says it helped secure a letter of credit from Bank of America NA in the amount of $135 million to provide credit enhancement and liquidity support for the bonds, and aided in the structuring of the joint venture development partnership for the apartment project between Alexandria, VA-based Avalon and the master developer, New York-based Millennium Partners.
"This was one of the largest multifamily housing bond allocations ever received by a private sector developer from the State of California, and the largest bond deal that AVB has ever completed," said Goodwin Proctor partner Tuan A. Pham in a prepared statement. Typically, CDLAC, the state's bond allocation committee, will cap its allocations at $30 million per development, Pham said.
James Kennedy, the county's redevelopment director told GlobeSt.com in July that the condominium component is probably 36 to 40 months out given market conditions and that the $150-million office component is a bit of a wild card because its construction will be market-driven. If an anchor tenant comes along sooner, it could go up along with the rest of the project; if not, it will follow closely on its heels, he said.
Only the land for the condos will be sold to the developers. The county is leasing the remaining land for 99-year terms. Kennedy says the county's benchmark return for the money it has invested is 6.5%. "The county's return is enhanced substantially by getting an office tenant sooner rather than later," he says. "We would start to accrue ground lease revenue for what is now a vacant site much earlier if that happens."
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