Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (2024)

Editor’s note: This is the first of a three-part series examining the region’s largest redevelopment effort, the Concord Naval Weapon Stations in the East Bay. Click here to read Part II and Part III.

In 2005, an eye-catching invitation landed in Concord resident Kathy Gleason’s mailbox.

It was a notice asking her and neighbors living within 300 feet of the Concord Naval Weapons Station to attend a workshop focused on its reuse. The Navy had left the 5,200-acre outpost several years earlier with plans to officially decommission it and turn it over to the city.

Gleason quickly went into action, banding together with a group of neighbors and successfully lobbying with other parties to set aside 70% of the property as parkland. Then they worked with the city to devise a 2012 plan to develop the remaining 2,300 acres — those closest to the North Concord/Martinez BART station — for a massive mixed-use development.

The project — today the biggest redevelopment effort in the Bay Area based on acreage — is slated to deliver 12,000 new homes and more than 6 million square feet of commercial space to the East Bay city.

But a decade later they’re still waiting for the first home to be built, the first restaurant to open, the first office to rise.

And earlier this year, the project hit another snag: The developer selected last year to remake the site — the second company in that role after the city and the first developer parted ways in 2020 — says it’s having trouble making the project work financially.

“Here we go again,” a frustrated Gleason said. “This project was manipulated from the start.”

Huge project, huge impact

The stakes are high for all involved.

The many twists and turns in the lengthy weapons station redevelopment saga highlight the challenges of transforming abandoned federal real estate on toxic land into a sustainable community, while meeting the demands of the community and labor unions and turning a profit, all as the Bay Area wrangles with the fallout of the pandemic.

​​“It’s really hard to wrap your arms around a 30-year-project and what it means to the community — it will be an enormous economic engine locally,” said Bill Whitney, CEO of the Contra Costa Building and Construction Trades Council, the main labor group involved in the redevelopment effort.

Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (1)

Todd Johnson | San Francisco Business Times

Years of negotiations with Lennar Corp. — the publicly traded national homebuilder originally selected to redevelop the first 500 acres of the project in 2016 — hit an impasse after the developer failed to reach agreement with the trades council on how much union labor would be used, ultimately causing Lennar’s deal with the city to unravel in early 2020.

The city rebid the effort last year, this time seeking a master developer for the entire 2,300 acres slated for development.

The group of developers chosen — known collectively as Concord First Partners LLC, or CFP — includes Discovery Builders, the Concord-based, multigenerational building company owned by the Seeno family, which owns land adjacent to the weapons station. CFP also includes Lewis Group of Cos., a family-owned developer of master-planned communities in California and Nevada, and California Capital & Investment Group, the commercial real estate firm headed by developer Phil Tagami.

While city leaders have faith they can make a deal work this time around, conflicts with the developer have raised questions about whether the reuse project will be constructed as envisioned — and, if so, when. And like many major projects, it has spurred rumors, innuendo and finger-pointing.

“It’s all politics,” said former Concord Mayor Colleen Coll. “This really should be a movie.”

$20 million on spec?

In May, CFP appeared before the Concord City Council seeking more time to figure out how to make the $6 billion project pencil.

A month prior to the May hearing, CFP penned a letter to the city in which it deemed the reuse project “impractical” from an investment standpoint, writing that it does not work for any “responsible development entity.”

“Our key concern is that we expend the plus-or-minus $20 million of costs over the course of the next two to three years, get to a point where the project is in approval form — and they arbitrarily decide that they want to work with someone else at that time, just completely dismissing us from the equation with no value consideration,” said Jeb Elmore, vice president of acquisitions for Lewis Group of Cos. “We’re not here for that reason, we’re here to be the master developer.”

Lennar has been said to have spent an estimated $15 million before the city terminated negotiations, although city officials acknowledge that they can't say for certain how much the developer spent internally.

Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (2)

At the May hearing, CFP sought assurances that its time and money would result in the coveted master developer contract.

And so it upped the ante: It asked the city to deviate from its regular negotiation procedure by granting the team early rights to the land, long before required development documents currently under discussion are scheduled to be approved. CFP also requested that it be made whole on any costs sunk into the project should the city not go forward with CFP as master developer.

CFP’s demands were rejected by the Navy — which is responsible for cleaning the land and conveying it to the city for redevelopment — and denied by the Concord City Council after it was advised that granting the team an early stake in the land could open the city up to litigation should the deal unravel like the one before it.

Without the leverage it requested, Elmore said CFP is reduced to working in a “speculative manner” — meaning that the team is covering all entitlement costs, money that’s at risk should the city not accept the numerous documents that it is required to produce, including a term sheet, specific plan, a state-mandated environmental review for the project and eventually, a disposition and development agreement.

CFP’s request stoked skepticism among critics.

“We don’t think that they can be trusted, we don’t think they’re capable of completing a project of this scale or complexity, and they’ve admitted as much already by asking the city to change the deal, even before they’ve been confirmed as master developer,” said Seth Adams, land conservation director for Save Mount Diablo, a conservation nonprofit.

In the end, the City Council gave the developers extra time, through the end of January, to negotiate the project’s term sheet and come up with cost estimates. The term sheet, originally due in March, is a nonbinding agreement that lays out the basic terms and conditions.

Concord Mayor Dominic Aliano and Councilmember Edi Birsan have personally stepped in to facilitate an agreement.

Aliano is not alarmed by CFP’s recent requests. He said the team has made significant progress in “getting up to speed and designing conceptual plans in less than a year since their selection.” The goal, he said, remains to get a “project that meets community expectations and is financially feasible.”

He believes the biggest challenge is developing a plan that provides the “necessary sewer, water, road improvements and can finance those upfront costs while also building housing and commercial space that the market will absorb.”

“Making it all pencil out in dollars and cents while also including the community benefits our residents expect is a major undertaking,” he said.

CFP says that’s just the problem.

An outdated plan?

The city adopted an Area Plan in 2012 that laid out the vision for a transit-oriented development around the underutilized BART station adjacent to the weapons station. The plan addressed affordable housing, and around the time of its adoption the city added a requirement clarifying that 25% of the housing component be affordable to lower-income households as defined by the city’s Housing Element, with some of those units prioritized for lower-income seniors, veterans, and teachers. The Area Plan spoke to “local hire” and other labor-related concepts, and when the deal with Lennar fell through, the City Council made it clear that a project labor agreement would be a requirement and priority in the second developer search.

“One of the biggest constraints is just the fact that we’re trying to deal with a 10-year old plan, that’s really a 20-year-old concept, and trying to modernize that,” Elmore said. “The Area Plan that we are effectively trying to stay in compliance with is a 2012 document, with thousands of public input comments and no developer in the room to really set a table of what was reasonable or not.”

Tagami, who heads one of the development partners, California Capital & Investment Group, said state environmental laws enacted over the last decade have also complicated the task.

“It’s not that they’re onerous. They’re just different than what was before — so we have to make sure that each suggested solution comports to what they’re saying is required by the regulation,” he said. “It’s easy to say that we’re going to need some 900 to 1,100 permits — that excludes the vertical development. That’s just the horizontal development: streets signalization, power, roads, sewer, water and fire requirements, as well as environmental mitigations.”

Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (3)

Stan Olszewski

CFP says it entered the solicitation knowing that the project would be a heavy lift financially — which it says is evidenced by the fact that only three teams responded the second time around. But it said it was unrealistic to believe the solicitation process included all the information to complete the project.

Despite its recent remarks that the project is infeasible as is, CFP has not given specifics on what aspects of the development do not work and what changes, if any, it is planning to make, other than noting that plans for “gigantic office major employment hubs” are now “a thing of the past.”

“It’s not that offices won’t be a factor here. It’s not that the office won’t be marketable here,” Elmore said. “A sea of offices like we see in some of the business parks down on the 680 corridor — that’s all being reimagined in those districts.”

The team said it has been working with the city since November to present “several alternatives, options, and project amendments, which have resulted in material betterments to the feasibility of the project.”

It said the feasibility could be strengthened by expanding the land-use categories to include “modern and marketable product types for housing, commercial, and light industrial spaces within the project instead of locking in to 2012 conditions, which pre-date COVID as well.”

Tagami said technology-based uses are moving out of the area and while biotech and medical uses are increasing.

“That’s a very specific build out with very specific core infrastructure for each individual building to support those activities. That’s a lot of promise we need to meet and the challenge of the current market,” he said. “The question is, will we be able to do it in time.”

Massive upfront costs

The City Council has publicly pressed CFP for details on timing; Elmore acknowledged that those are not available yet.

The Navy is still actively working to clean the land of pollutants. Elmore estimates it will take a decade or more to fully transfer the land, though city officials say that a roughly 1,300-acre slice has been cleared and could be in the city’s possession next year.

That is where CFP wants to start with a focus on “housing and jobs,” said Elmore. The project’s other components, such as recreation uses and open space, will be built out on a “phase-by-phase basis” and anchor off of Willow Pass Road he said.

But nothing can be built on the site until the city successfully negotiates an economic conveyance agreement, or ECN, with the Navy for the land. Doing so requires the development team to procure the project’s entitlements and prove financial feasibility.

Elmore said the team is looking at about $1.5 billion in upfront infrastructure work for the whole project; the city’s estimate is $2 to $3 billion. Elmore said $500 million will be needed before the first home can be built.

The financing of “large upfront costs is a concern,” according to CFP. The team is working to identify federal and state funding sources for some of the project’s infrastructure components.

CFP maintains it has the experience and resources needed.

“We all self-finance the majority of our developments and we’re all very sustainable through these market cycles,” Elmore said.

Guy Bjerke, the city’s director of economic development and base reuse, said the team is “exploring ideas that will allow the project to meet community expectations and be financially feasible.”

The housing question

In regard to the project’s housing component, another thing that’s changed in the era of Covid-19 are the “sizes of the houses and densities that we are willing to accept,” Elmore said.

“That’s also a challenge when the city says, ‘Hey, we want this many residential units, we want that in this area’ — none of those concepts are really meaningful or marketable any longer in today’s climate,” he said. “So not only do we have to be concerned about what’s marketable today — especially when housing affordability is the most keynote subject — but we also have to be thinking about tomorrow as well.”

Gloria Bruce, executive director of the East Bay Housing Organizations, said CFP’s comments have raised questions about the affordability levels of the project’s below-market rate housing.

“I don’t know that we or the City Council has gotten enough specifics yet to really assess whether their plan is workable, and we’re concerned that what we’ve heard so far implies that there might be some consideration of watering down the affordability levels in the project, which wouldn’t be OK with us,” Bruce said.

Elmore said that while “certain segments of the community” are pushing for the affordable housing to be provided at 80% of area median income, the team is considering how to make the project “more inclusive” by including middle-income households.

“There’s going to be plenty of affordable units to go around,” he said. “We’re still analyzing exactly how best we can deliver that. Our viewpoint is that a diverse product line is a much better approach. But obviously, the city is going to ultimately set the policy.”

Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (4)

Todd Johnson | San Francisco Business Times

The history of the Concord Naval Weapons Station

The Concord Naval Weapons Station’s history began in 1942 as the U.S. Naval Magazine, Port Chicago — located in a roughly 7,600-acre tidal area north of Concord that was established as an ammunition depot serving as an annex to the Mare Island Shipyard.

It is a site remembered for a World War II tragedy: Hundreds of people, including more than 200 Black sailors, were killed during a massive 1944 explosion that occurred while two ships were being loaded with explosives.

In response to the incident, the Navy purchased a roughly 5,200-acre “inland” area located within Concord city limits, where it stored ammunition and built administration buildings, barracks, a rail system and small airfield, and operated a weapons laboratory.

Ownership of the tidal area was ultimately transferred to the Army.

The inland site operated for decades until the Navy slowly vacated it in the late 1990s.Joint uses for the property were studied, but proposals for its future reuse were largely shelved by the Navy until the area was approved for base closure in 2005.

Not long after, residents living within 300 feet of the weapons station were first informed of a workshop held to discuss the opportunities and priorities for its future reuse.

The timeline of the Concord Naval Weapons Station

Key dates in the site’s history:

  • 1942: Base opens on Suisun Bay as Port Chicago
  • 1944-45: Navy buys inland acreage
  • 1999: Navy vacates inland site
  • 2005: Base approved for closure
  • 2012: City adopts area plan for base reuse
  • 2014: City issues bid for developer
  • 2016: Lennar tapped
  • March 2020: Lennar, city end talks
  • April 2021: City issues second RFQ
  • August 2021: City selects CFP, beating out Brookfield Properties and City Ventures
  • March 2022: CFP granted first extension on term sheet negotiations
  • May 2022: CFP granted second extension term sheet negotiations; requests for early stake in property and reimbursem*nt of costs denied
  • June 2022: Ad hoc committee with Mayor Dominic Aliano and Councilmember Edi Birsan formed to guide negotiations
  • January 2023: New deadline for term sheet completion
Controversy in Concord: The long saga of the naval weapons station remake - San Francisco Business Times (2024)

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