Emeryville demands $20M in lieu of homes on commercial project

East Bay city seeks stiff tab to let developer out of agreement for affordable housing at Public Market

Oxford Properties' Michael Turner, City Center Realty's Sigurd Anderson and Emeryville Mayor John Bauters with 5959 Shellmound Avenue (Oxford Properties, City Center Realty Partners, City of Emeryville)
Oxford Properties' Michael Turner, City Center Realty's Sigurd Anderson and Emeryville Mayor John Bauters with 5959 Shellmound Avenue (Oxford Properties, City Center Realty Partners, City of Emeryville)

A Canadian developer wants to amend an agreement with Emeryville to build lab space instead of affordable housing at its new Public Market. The little city of 13,000 on the edge of Oakland wants $20 million to approve the switch.

Oxford Properties has offered to pay Emeryville $17 million to build the life science space in lieu of a residential complex with 18 affordable units at its Public Market at 5959 Shellmound Ave., the San Francisco Business Times reported. The city counter-offered for $3 million more.

A draft proposal seeking $20 million in exchange for amending the development agreement will need Emeryville City Council approval as well as buy-in from Toronto-based Oxford and its partner, City Center Realty Partners, based in San Francisco.

The negotiations center on plans by Oxford and CCRP unveiled last year to build more life science space at two Public Market sites, including a 10-story, 421,000-square-foot research and development building and a parking lot for 700 cars.

The project would replace a previously approved housing development of 167 units and a 150,000-square-foot R&D building with 10 percent devoted to shops and restaurants, and parking for 500 cars.

Oxford Properties, which is owned by the Ontario Municipal Employees Retirement System, bought the 148,000-square-foot complex and two adjacent parcels in early 2021 for $120 million. Last fall, it told the city the project’s residential component was no longer financially viable.

The developer initially offered $17 million to scrub the housing, which includes $15 million in lieu of building the affordable units and a $2 million housing-impact fee. The offer far exceeds the $11.1 million cost to build the 18 homes.

It’s also about eight times more than what the developers might normally have been asked to contribute in affordable housing and impact fees, city staff said during a study session last month.

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But Mayor John Bauters said at that meeting he believed the proposed dollar figure wasn’t high enough. He said the East Bay city should expect similar proposals from other developers because of rising construction costs.

“I think we need to be mindful of the fact that this is probably not going to be a stand-alone issue,” Bauters said, pointing to the high rents commanded by laboratory space in Emeryville. “So as a policy matter — how do we want to address this?”

The price of being relieved of building residential projects in favor of commercial uses in the city of 13,000 residents could be steep.

Under the draft proposal from Bauters and Vice Mayor Ally Medina, Oxford would be required to pay $10 million by June 30, 2023, and pay out the remaining sum over the course of three years beginning in 2024.

The city would also require the developers to provide letters of support in pursuit of public financing for future affordable housing on city-owned property near the Public Market. In addition, the builders would have to convert certain roads nearby into vehicle-free, publicly accessible pedestrian space for 11 hours a day.

The two developers did not respond to a request for comment by the newspaper. Mayor Bauters declined to comment on the new proposal ahead of a planned study session this month.

Emeryville also has earned a reputation as a place where housing of various sorts gets built. And the mayor has earned a reputation as a straight talker when it comes to a desire to build more homes.

[San Francisco Business Times] – Dana Bartholomew

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