Library Gardens—the apartment complex nearing completion behind the Berkeley Public Library—is going condo, if the Berkeley Planning Commission approves.
If the city gives the nod, the 176 apartment and four commercial spaces in the building at 2020 Kittredge St. could all become for-sale condos.
But that doesn’t mean condos would go on sale any time soon, Berkeley Housing Director Steve Barton said Thursday.
“As best I know, they are putting in an underlying condo map now because now is the time to do it,” he said. “As far as I know they have no intention at this time to sell” units.
But Deputy Planning Director Wendy Cosin said she understood that the units will be marketed as condos, though they may be initially rented as apartments.
The project was originally approved as apartments, with the intent to rent the relatively small one- and two-bedroom units to UC Berkeley students.
Barton said that applying for a condo map at this point makes good financial sense for several reasons.
“Lenders like it because the property keeps its value if they have to foreclose for any reason,” he said, because condos appreciate with the housing market.
And even buildings purposefully built for condo sale are often rented initially because a 10-year warranty period accompanies the sale of new condos, Barton said.
Builders can rent the units until the warranty expires and then sell without incurring the same obligations that would come from sales during the warranty period, he said.
In addition, concerns over the rental market provide another incentive to see approval as a condo project.
Getting the map approved now before the units are rented also exempts the developer from being forced to pay mitigation fees incurred if the switch is sought after the units have been rented, Barton said.
Barton said he isn’t certain about the ownership status of the project. According to filings with the Securities and Exchange Commission, developer John DeClerq had a nonbinding agreement to sell the property to GMH Communities Trust, a Maryland real estate investment trust (REIT).
GMH, which specializes in rentals to college students and the military, subsequently experienced a dramatic decline in stock value. The property is not currently listed among their holdings.
DeClerq did not return calls from the Daily Planet.
Asked if DeClerq still owned the property, Barton said, “I always assumed he was the agent for some big money source.”
Robert H. Bisno—who is listed with the California Secretary of State as the agent of TransAction Financial Corporation, of which DeClerq is vice-president—is an attorney based in Oakland and Los Angeles.
According to the website of Ponte Vista, a San Pedro development in which he is a participant, Bisno has investments in more than 70 properties in 40 cities, totaling over 6 million square feet,
Those properties include, among other things, 3,600 residential units, 600,000 square feet of retail buildings, 1.1 million square feet of office buildings, parking lots, a conference center and a ski resort mixed-use development.
Library Gardens proved controversial from the start, in part because construction entailed the demolition of one of the city’s most popular parking lots, a 362-space structure built for the long-vanished Hink’s department store and heavily patronized by movie-goers.
As originally proposed, the developer would have replaced all 362 spaces in a two-level underground lot. Citing higher costs, De Clerq resubmitted plans that included only 116 ground-level spaces, of which all but 11 were reserved for tenants—and promptly ran into strong resistance.
The project was approved when he added another 124 underground spaces, but in the final version of plans given the city’s blessing, the project includes only 130 spaces.
No sooner had the project been approved by the Zoning Adjustments Board than a critic of the project appealed.
Oddly, that critic was none other than DeClerq, who was seeking to overturn the city’s requirement that the project include units reserved for low-income tenants. Hitting a stone wall from a city council that has consistently pushed for the so-called inclusionary units, the developer surrendered.