Oakland committee moves Lake Merritt luxury tower deal for council approval

Oakland Councilmember Abel Guillen’s plan
to conduct a new appraisal of the parcel was 
rebuffed by the committee.

OAKLAND CITY COUNCIL | The proposed sale of the vacant Lake Merritt property, known as the 12th Street remainder parcel, has frustrated neighbors and stoked fears that the 24-story luxury apartment tower will hasten gentrification. In addition, the $5.1 million price tag for the public property potentially holds scant benefits to the public, according to affordable housing critics.

At an Oakland City Council committee Tuesday afternoon, the proposed sale was forwarded for the full council’s approval on May 5, along with direction to set aside a quarter of the proceeds from the sale to the city’s affordable housing fund and another quarter for improvements to Lake Merritt. But Councilmember Abel Guillen is seeking more and told the committee he is in negotiations with the tower’s developer for the inclusion of community benefits to the deal. However, there appears disagreement over how much the developer is proposing for the project.

Michael Johnson, CEO of UrbanCore, LLC, one of the partners in the deal, told the Community and Economic Development Committee the menu of community benefits amount to around $1 million in addition to the proposed selling price and include a skate park, benefits for nearby Fairyland and open space adjacent to the proposed building.

Guillen, who represents the district where the tower will be constructed, but is not a member of the committee, could be seen in the audience shaking his head in disagreement over Johnson’s statement. Afterwards, Guillen told the East Bay Citizen, “It’s not $1 million.” Guillen and Johnson continued the discussion in the back of the room, with Guillen telling the developer, “I’m just trying to do what’s best for the city.”

Earlier, Guillen asserted the $5.1 million asking price negotiated by the city is too low—maybe $1 million short of fair market price. After informal talks with appraisers, Guillen told the committee the price tag is possibly 25 percent, or another $1 million below what the city could receive if it conducted another appraisal of the property. The suggestion set off a chaotic scene as members of the developer team and council members who have previously supported the deal, scrambled to discredit including the Guillen’s proposal for a new appraisal.

Changing the negotiated deal, at this point, is “tantamount to retrading,” Johnson told the committee. The developers agreed to the asking price and are ready to move forward, he added. “This is not the type of situation we expected to be in. We hope you all stick with what has been negotiated.”

Councilmember Larry Reid and Council President Lynette Gibson McElhaney expressed support for keeping the deal as negotiated. “My belief is that the city must honor its processes and what we’ve said to the public,” said McElhaney.

Reid added, a new appraisal, if conducted, could be lower than the original. However, a city staffer testified earlier that Oakland’s sizzling housing market would likely return a higher monetary figure over the appraisal executed last January and would take an additional 6-8 weeks to complete. McElhaney said she did not believe another appraisal would be markedly different than the first.

McElhaney then asked city staff to explain the specific point when the city’s deal with the developer is finalized. City staff replied, when the Development and Disposition Agreement being discussed Tuesday is formally approved by the council. Meanwhile, Ray Leon, Reid’s long-time chief of staff could be seen texting his boss that the $5.1 million price tag has already been agreed. Seconds later, Reid interjected, “But, we agreed to the $5.1 (million), correct?” asked Reid. Afterwards, Leon repeatedly muttered, “What’s fair is fair” and “That’s not right.”

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