The city of Oakland has extended the deadline to build a long-promised but stalled Eastlake apartment tower—again—while some neighborhood activists want the city to pursue a different project on the vacant, one-acre lot.
District 2 Councilmember Nikki Fortunato Bas, who represents the area where the empty lot is located, is also critical of the city administrator’s decision to give the developer more time. Bas said she’d rather see the publicly owned land, at E. 12th Street and 2nd Avenue, used immediately for a homeless shelter, and eventually for affordable housing.
“The project has had a number of years to pull together the financing,” said Bas, the council’s president. “It’s not acceptable that any public land sits vacant when we could be using it, particularly to house our unsheltered community.”
Michael Johnson, president of UrbanCore Development, said he was getting ready to start building last year, when COVID-19 upended the housing and investment market. Some of his funding sources fell through, he said, but “we anticipate starting construction in late summer.”
The UrbanCore project, called LakeHouse Commons, has been mired in controversy from the start.
In 2015, the City Council was poised to give UrbanCore the right to build a fully market-rate apartment complex at the site. But the deal violated the Surplus Lands Act, which requires that public land first be offered to affordable-housing developers, according to a confidential legal memo written by Oakland’s city attorney, which was leaked to the press. Subsequently, the city walked away from the deal and conducted a new bidding process that was open to other developers.
Through that process, UrbanCore was again selected to purchase the city-owned property, but this time the company also opted to team up with the affordable housing developer EBALDC. The project is set to include 252 market-rate units, 18 “workforce” units for middle-income residents, and 91 low-income apartments, in a separate building.
A neighborhood group called Eastlake United for Justice has protested the deal from the beginning. Its members crafted a different proposal, in partnership with developer Satellite Affordable Housing Associates, to build a 133-unit, 100% affordable housing complex with community spaces and a public park.
“We are opposed to the project as it is designed,” said Dunya Alwan, a member of Eastlake United for Justice. An architectural designer, Alwan co-led a community design process to come up with the alternate proposal. “We’re advocating for the land to be leased, for community control over it in perpetuity, for the maximum amount of affordable housing on site—and for the city to stop making backdoor deals and extensions, loans, and other preferential treatment to luxury developers,” she said. “Making homes for the elite is especially repugnant on public land.”
Johnson argued that his project will create much-needed housing stock, both market-rate and affordable—nearly as many low-income units as the alternate proposal, he noted—alleviating pressure on rents and expanding the tax base to support social services in Oakland. When the council selected his company as the lead developer six years ago, the thinking was also that the project would get built much quicker with a market-rate component.
“If you look around the Bay Area, these types of large-scale projects take time to put together,” he said. “It’s not uncommon to get additional extensions.”
Since the company was selected again to take control of the coveted land, UrbanCore has missed several construction deadlines. Since 2016, Oakland has granted UrbanCore six separate extensions or updates.
In January, Johnson sent a letter to Oakland City Administrator Ed Reiskin, asking for more time to secure financing. He explained that the impact of the pandemic on the housing market had thwarted UrbanCore’s chances of securing loans or other investments and beginning construction on time.
Johnson said investors who’d signed onto the project backed away after watching the pandemic cause rents to drop throughout the Bay Area. Others said they’re not making investments at all right now.
In a response letter to UrbanCore and EBALDC, Reiskin wrote that he would invoke a clause in the city’s contract with the developer that gives him the authority to extend the project deadline if an unforeseen event like an epidemic poses challenges. This extension did not require City Council approval. With the six-month extension, the developer is now required to buy the land from the city by August, and begin building by September.
The city administrator’s office did not respond to questions about why it granted the latest extension, or its confidence in the project.
Johnson declined to say how much money the project is still missing, but said the gap is about 30-35% of the cost of the project. Other sources, like a $134.7 federal loan, are definite, he said. The affordable portion being developed by EBALDC has secured all its financing, according to Johnson.
Since 2015, a large homeless camp has grown on the empty lot. The city currently provides toilets and handwashing stations to the camp.
Bas, the councilmember, said she’d always like to see the city hang onto all its public land leasing instead of selling it. But regardless of what ultimately happens to the E. 12th parcel, Bas said Oakland could have already built interim, temporary housing for homeless residents.
Bas said she’s been approached by companies like Pallet Shelter and DASH Houses, which build temporary, modular shelter structures, and said they could support dozens of dwellings with access to heat and running water at the site.
The housing and homelessness crises have worsened as the city’s waited for UrbanCore to pull together its funding, she said.
“I’m not sure what’s going to change, in terms of the market-rate development being able to secure financing that hasn’t been possible so far,” Bas said. “I don’t want this to drag on.”
According to letters exchanged between Johnson and Reiskin, the city has the authority to extend the deadlines another six months, if unforeseeable circumstances persist, before needing additional approval from the City Council.