Mirage High End Condo Project Dooms Courthouse?

The Oakland City Planning Commission that was appointed by Jerry Brown (the two new commissioners from Dellums are no improvement) wasn’t dubbed the Approval Commission for nothing–the commissioners supported Condomania developers with unbridled passion. Some market rate condo projects were built, some are half-built–the most notorious being “CityWalk” in the shadow of City Hall with its torn Tyvek wrapping flapping in the breeze. In my neighborhood, Temescal, where the condo development pressures were especially strong, the hurricane has passed and most of the proposed projects are “on hold,” the sites of approved projects with entitlements are for sale, attractive and affordable cottages, small businesses, and apartments, once presumed toast, are being rented out. Even the beloved Kingfish Pub is about to reopen with a new operator.

But local tornadoes threaten “sites” like the Courthouse Athletic Club at 2935 Telegraph at the foot of Pill Hill, in the stretch between Uptown and Temescal.  The Courthouse with its unusual Colonial Revival facade is a forlorn, empty landmark, soon to be (if we’re not lucky) one of the highest profile victims of the ongoing impact of the Commissioners’ unthinking zeal–condomania slamming up against the economic reality of overproduction and sated demand for a niche market.

Trammell Crow Residential, a Dallas-based housing developer, bought the site for $7.7 million, closing down the gym in the former mortuary–eligible for the National Register of Historic Places. TCR submitted plans for a 5 story, 142 unit, high-end condo project. The City of Oakland tends to pick the pockets of out-of-town developers by giving them a higher bar to jump over, so TCR even conducted an EIR. (Only one, for the Global Video condos, was required of all the Temescal projects, and again for unlucky out-of-towners.) The project and the EIR were dutifully approved by the Planning Commission in August, 2007. The EIR did note that the Courthouse was in an area of several distinguished period revival mortuary businesses–including others facing uncertain futures–which constituted a potential landmark district. 

That was so yesterday. TCR, realizing their project was going nowhere, quietly shopped it around. TCR’s good fortune was to find an eager new buyer–the Oakland Housing Authority. OHA was willing to pay $9 million for the site with entitlements, a sale that would have flown completely under the radar had not TCR resisted a $30,000 mitigation fee. TCR also wanted one of the  conditions of approval from 2007 modified, at the demand of OHA. TCR now wanted to clear the site before obtaining the building permits. Only these issues caused the radical change of developers and plans to publicly surface. Instead of being approved administratively as first planned, the Planning Commission and Landmarks Advisory Board weighed in two years later. Unfortunately, they flubbed their chances for a do-over.

But OHA isn’t just any deep-pocked developer still standing while others lost their shirts. Hugely controversial, as the largest landlord in the City, they’ve been sued by the City Attorney over the “condition of unabated criminal activity (including drug sales and prostitution) at some sites,” *and by their own calculations have some $75 million in deferred maintenance, for which they got a $10.6 million federal stimulus grant. They resisted onsite managers for years, and flatlands neighbors of their projects (redundancy since OHA is only IN the flatlands) must monitor their projects. 

OHA’s participation, now revealed, was problematic, especially since the project grew from one costing $25 million under TCR to a $40 million, 115 unit, “workforce housing” OHA project with the same footprint. TCR had done an EIR, OHA would undoubtedly need federal funds and therefore more (federal) review was required. This was pointed out to them by noted environmental attorney Susan Brandt-Hawley, HUD, and the State Office of Historic Preservation. Rather than comply, OHA dropped out. Or did they?

But inertia can keep even phantom projects moving forward. TCR decided to go through the motions of compliance with the 2007 conditions, thereby rendering moot the neighbors’ appeal to the City Council of the Planning Commission’s renewed go-ahead. TCR is completing plans and permits for their original market rate condo project and demolition nears. 

First, they will ante up close to $500,000 in fees–”two staff positions”, according to one City employee–so no questions are likely to be asked about whether TCR will simply put the lot up for sale post-demo, or whether OHA will suddenly reappear with rekindled interest and money. Who other than OHA could meet TCR’s price, especially considering the additional costs of demolition and site cleanup? And, despite OHA’s strategic “withdrawal” while the building stood, will the feds indulgently relent and open their vault to OHA once it’s gone? 

The Courthouse sits in Dist. 3, and that district’s Councilperson Nancy Nadel has raised (in June 3 e-mails we’ve obtained) the important questions to staff: 

“We are very concerned because community folks who had used public records to look into the housing authority’s plans for the site, saw that Trammell Crow is financially stressed and there was some info that their bank was about to foreclose. Therefore it seems like we can do some research just like we do on individual homes to see if they are moving to foreclosure and see if we have some authority to prevent a project from turning into another CityWalk…

The OHA deal has died and TC says they still have their equity partner. However, I greatly fear that we will have a gaping hole or a half finished building in yet another site for 5 years after having destroyed a viable building and an historic one at that? Is there any way to assure they have the money they need for the project before they start?”

Not bloody likely, at last by staff, not with those fees to a financially-strapped city! A call to the Bank of the West “relationship manager” (aka loan officer) in Newport Beach discerned that the Bank was funding the demo and site cleanup. Partners with TCR since the heady days of 2005, the Bank now must ponder throwing good money after bad. The banker–innocently?–inquired about how the neighborhood would take an OHA project.  

Letters to Bank of the West President Michael Shepherd might help, though: Michael Shepherd, President/CEO, Bank of the West, 180 Montgomery St., 25th Floor, San Francisco, Ca. 94104. Or bring it up with your local Bank of the West manager.

–Robert Brokl
July 1, 2009

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