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City Confronts Brower Center Cost Overruns By MATTHEW ARTZ

Friday July 29, 2005

The City Council learned Monday that the greenest project ever planned for Berkeley might leave the city in the red. 

With construction still at least a year off, the David Brower Center is already $8.5 million over budget, and the developers are asking for up to $2 million in additional city subsidies. 

Negotiations on a possible bailout are scheduled to proceed throughout the summer. The project’s uncertain finances forced the council to hold off on a scheduled agreement to transfer ownership of a city owned parking lot, valued at $5.7 million, to make way for the project. The council is scheduled to revisit the development in October. 

“I love this project, but there are some warning bells,” Mayor Tom Bates said. 

Despite rising cost estimates the council continued to show support for the concept they first approved three years ago. By an 8-0-1 vote (Olds abstain) councilmembers adopted an environmental report for the project and approved amending local zoning rules to allow for its design. The vote was seen as necessary to help the developers, non-profit housing developer Resources For Community Development (RCD) and The David Brower Center, raise more money for the buildings. 

The Brower Center, along with RCD’s Oxford Plaza, an adjoining affordable housing development, have been heralded by city leaders as a salvation for the ailing downtown economy. 

The project, honoring the late David Brower, the Berkeley-born founder of the Friends of the Earth, is slated to replace the parking lot on Oxford Street between Kittredge Street and Allston Way. It would include the 96-unit, six-story affordable housing complex for low income families, at least one level of underground parking, high-end retail shops and a four-story office building and conference center for non-profit environmental groups. 

Since last May estimated project costs have jumped from $52.2 million to $63.5 million. As for many projects, rising prices for steel and other construction materials are partially to blame. However the Brower Center’s commitment to an environmentally innovative design—the office building will generate its own energy and employ a natural climate control system—means the price tag is higher than standard downtown developments.  

The city’s investment in the project was to be $2.5 million in federal affordable housing funds plus the loss of parking revenues from the Oxford lot during construction, estimated at $600,000. 

But now the project is asking for more, specifically more than $1 million to construct a 105-space underground parking garage to replace most of the parking lost at the 130-space Oxford lot. Originally the city had agreed to sell the lot to the developers for $1 in return for the construction of the underground lot, which they then lease back to the city. 

However cost estimates for the underground parking have jumped from $4.8 million last year to $6.5 million—higher than the appraised value of the land. The developers want Berkeley to make up the difference. In response, the city has commissioned a new appraisal of the property. 

Meanwhile downtown merchants have been pressing the council to build a second level of underground parking, estimated to cost an additional $6 million, to make up for the loss of other downtown lots over the past several years. Councilmembers hinted Monday that with financing for the project already tight, the merchants would have to pay part of the construction costs for additional parking. 

The financial risks to the city go beyond the parking lot shortfall. Although the David Brower Center is ultimately responsible for completion of the office building, the city would likely have to bail out the housing development if cost overruns during construction plague the project, said Housing Director Steve Barton.  

As a non-profit housing developer, RCD doesn’t have assets to offer lenders as collateral. Although Berkeley wouldn’t be legally responsible for backing the project, Barton said the city would have to help the developer raise additional funds to finish it. 

Brower Center Project Manager John Clawson told councilmembers that environmental groups have already reserved 50 percent of the planned office space and that outdoor apparel retailer Patagonia has signed a letter of intent to occupy one of the retail spaces. 

He added that that project has lined up potential funding to cover $6.5 million of the $8.5 million shortfall. 


Willard Afterschool Program 

Parents whose children attend a recently defunded city after-school program at Willard Park urged the council to find money to reopen the program in September. As a cost saving measure to balance this year’s budget, the city cut a recreation coordinator position that oversaw the program serving 24 elementary school aged children.  

Parks and Recreation Director Marc Seleznow said that restoring the program would cost the city $123,000. To control costs at city recreation programs, Seleznow has proposed operating larger after-school programs at fewer sites. The city is reserving space for the students at a similar program, the Frances Albrier Center in West Berkeley. 

Dove Scherr, the mother of a child in the Willard program, said it was unfair for the city to target Willard and that parents would not stop fighting for its reinstatement. 

“You can’t just cut a program with 24 kids and expect us to just disappear,” she said. 

The council opened the door to a possible special meeting in August if staff could come up with a way to keep the program open. 


Density Bonus 

In a further escalation of the war of words between some councilmembers and city staff, Councilmember Kriss Worthington charged that staff was trying to manipulate the council. 

At issue was a vote by the council last week establishing a joint subcommittee to look into how the city applies a state housing law. Critics of the current interpretation like Worthington say it allows developers to build bigger buildings with proportionately fewer affordable units. 

Last week the council passed a resolution adding Acting Housing Advisory Commission Chair Jesse Arreguin—a critic of current city policy—to the subcommittee made up of four Planning Commission and Zoning Adjustment Board members. 

But this week the council voted to rescind that action because of concern that it wasn’t properly noticed on the prior week’s meeting agenda and thus violated state open government laws. 

Worthington was fuming because the agenda for Monday’s meeting didn’t mention the council’s vote last week to include Arreguin. Without that recommendation on the agenda for this week, the council was unable once again to add Arreguin to the commission. 

“This item for a second week in a row is a manipulation of the City Council,” Worthington said. “It declines to list an option that the entire City Council voted for and instead gives one politically biased distorted recommendation that is grossly unfair and a manipulation of the process.” 

City Manager Phil Kamlarz shot back, “I think that’s totally unfair.” He added that the agenda was not set by staff, but by a three-person panel of the counsel.  

Most other councilmembers didn’t seem bothered by the recommendation. Councilmember Gordon Wozniak called the dispute, “a relatively minor issue,” and Councilmember Betty Olds argued that “the sneaky thing” was the council improperly adding Arreguin to the commission last week. 

The council voted 6-2-1 (Worthington, Spring no, Anderson abstain) to approve a joint subcommittee of just planning commissioners and ZAB members. By an unanimous vote the council agreed to take up adding a member of the HAC when it reconvenes Sept. 13.