Freed of its affordable housing specification, a Hercules project has generated “great momentum” among developers since bidding was reopened, a city real estate official says.
“I expect, within two weeks, to have at least four written offers on the (Sycamore North) property,” Hercules’ Real Property Manager Frank Fox told the City Council on Sept. 13.
“We believe we have a buyer for it.”
Price and terms of a possible deal for the Sycamore North development are on Tuesday’s closed session City Council agenda.
Underlying the city’s optimism is the assumption that affordable housing requirements attached to Sycamore North can be satisfied with units elsewhere in the city that exceed its mandates under state redevelopment rules.
A 2010-14 implementation plan pegs that surplus at 147 affordable units as of the end of 2009.
The two-building project about midway between San Pablo Avenue and San Pablo Bay stands half-finished, with about $35 million already spent by the city and a fluctuating estimate of $25 million to $35 million needed to complete it. Construction halted in March. At that time, 74 of Sycamore North’s 96 homes were slated to be affordable.
That is how the city marketed the property earlier this year. The city received one offer, from Bridge Housing Corp., which proposed to make all 96 residential units affordable.
But residents, especially from the adjacent Bayside neighborhood, protested when Bridge presented its proposal to the City Council in July, warning that concentrating so many affordable units into one complex would be unfair to those residents as well as the community at large, and that it would bring crime and lower surrounding property values.
On Aug. 23, the council said “the Sycamore North Project as currently conceived is no longer feasible” and authorized the solicitation of additional proposals, including tearing down the partially completed residential component to leave only the retail space, or reducing or eliminating altogether the affordable housing component.
The accompanying staff report does not mention resident opposition and attributes the reason for seeking alternatives to uncertainties in the Bridge proposal, including a long escrow period of up to 14 months and Bridge’s need to get tax credits.
According to a 2006 staff report to the Hercules Planning Commission, Sycamore North, then named Sycamore Downtown, was part of Bayside and was supposed to satisfy its 15 percent affordable housing component mandated by state redevelopment rules. At the time, Bayside was supposed to comprise 409 units, including 104 at Sycamore Downtown; that number has shrunk to 96.
Under redevelopment rules, the affordable housing mandate is 30 percent if the redevelopment agency is the developer; that could add as many as 15 affordable units to Sycamore North’s obligation.
The city has spent the $25.9 million proceeds of a 2007 bond issue, almost half of them nontaxable, to finance housing-related activities, including some at Sycamore North, and at least $5.3 million in state loans predicated on the delivery of affordable housing.
The state Controller’s Office is auditing Hercules’ finances, including those of its redevelopment agency.
Contact Tom Lochner at 510-262-2760
IF YOU GO What: Hercules City Council Where: Hercules City Hall, 111 Civic Drive When: 7 p.m. Tuesday
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