New: Revised Pro Forma Proves that Harold Way Project Profits Will Be $89-145 Million--Berkeley's Benefits Should Reflect This
Developer profits from the Harold Way project will be $89-$145 million even after the cost of the project labor agreeement (PLA) and the rebuilt theaters are met. The only "out of pocket" cost imposed by the Zoning Adjustments Board on the developer is a proposed $350,000 payment to the displaced tenant Habitot. This does not meet the "significant community benefit" standard required in Berkeley's Downtown Plan.
To download a revised Pro Forma which accurately analyses this project, click here.
In order to determine that the amount of “significant community benefits” that the Harold Way Project should provide it is necessary to conduct a thorough independent analysis of its potential profits in order that such profits can be fairly shared with the community. The Berkeley City Council’s guidance in Resolution 67,172 was that all applicants, even those predating June 25, 2015, must show that “the total value of benefits must bear a reasonable relationship to the value generated by the project” and that ZAB “will independently evaluate ”whether the benefits package is adequate in proportion to the value in height.”
To date, despite repeated requests throughout the process, ZAB has not developed an independent pro forma of potential profits for the Harold Way Project. Compounding this problem has been the developer’s lack of clarity in the project’s financials which continually appear to overstate costs and understate revenues. This includes, for example, overstating land costs, using higher rental rates to calculate claimed benefits while providing lower rates to calculate profits, and completely omitting various project revenue sources (such as parking) from their analyses.
To remedy this shortfall, and to better inform both the public and ZAB, a revised Pro Forma for Harold Way has been developed. It takes as its starting point the same format used by the Rhoades Planning Group, representing the project developer, in its July 28, 2015 Pro Forma, but then revises it to more accurately reflect actual costs and revenues. These revisions use numbers provided by the Rhoades Group itself in previous submittals to the City of Berkeley, or from economic studies prepared for the Berkeley City Council, primarily by the City’s consultants, AECOM that are also part of ZAB’s September 30th agenda package.
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