Project Labor Agreement with Building Trades Council will ensure good paying construction careers
Oakland Mayor Jean Quan and Governor Jerry Brown announced April 10 that the Brooklyn Basin project is receiving funding from a developer and investor from China. Signature Development Group of Oakland and Beijing-based Zarsion Holdings Group Co. Ltd announced from Beijing their agreement to co-develop 65 acres of waterfront property on the Oakland Estuary of San Francisco Bay just south of Jack London Square.
The project, formerly known as “Oak to Ninth” and now called “Brooklyn Basin,” is described as “the largest approved, mixed-use masterplan in the city.” According to a press release from the Mayor’s Office, the development “will be an economic boon to the city and the region. According to projections from Signature Development the project represents an asset of more than $1.5 billion dollars at completion, with 3,100 residential units, approximately 200,000 square feet of retail and commercial space, and a marina with up to 200 boat slips. More than 30 acres have been set aside for waterfront parks and open space. An estimated 10,000 jobs will be created by its build-out.”
Signature was chosen as the master developer for the area in 2001. The original Oak to Ninth Environmental Impact Report was challenged and then revised. It won approvals from the Bay Conservation and Development Commission and the City in 2006, but was then stalled by the economic recession that hit the construction industry hard starting in 2007. The project is supported by the Alameda County Building Trades Council, which negotiated a Project Labor Agreement with the developer.
The investment is good news for construction workers, with as many as 10,000 jobs projected over the 15-year scope of the development. The first phases will consist of environmental remediation and infrastructure improvements, followed by construction of the residential units and retail components. The work is covered under a Project Labor Agreement as well as a Community Benefits Agreement hammered out between the City, the developer, a coalition of community organizations, and the Building Trades Council.
On its website, the East Bay Alliance for a Sustainable Economy noted that it “worked with the Oak to 9th Community Benefits Coalition to win a pipeline into good paying construction careers for 300 Oakland residents, with an emphasis on local neighborhood residents.”
ACBTC Executive Secretary Andreas Cluver said, “The PLA will ensure that the jobs will be good paying jobs and there will be apprenticeship opportunities that provide pathways for careers in construction.”
Signature Development’s spokesman Paul Nieto told the Journeyman that the CBA includes a commitment for the developer to spend $1.6 million on job training to prepare workers for union apprenticeship programs and requirements for local hiring and local apprentices. He said two parcels were set aside for affordable housing. Nieto said the developer would spend the next several months on the design and engineering, with the infrastructure improvements and utlity work starting near the end of 2013. He said construction of the residential units would begin by late 2014 or early 2015.
Michael Ghielmetti, Signature Development Group president, said, “We have enjoyed a strong partnership with both the Port of Oakland and the City of Oakland because we share in the belief that a community-driven, collaborative approach to development produces the best results. In the more than 10 years since we were awarded the rights to develop Brooklyn Basin, the City and the Port of Oakland have worked side by side with us to deliver on the vision of a thriving, dynamic waterside community—an asset to all of Oakland.”
The deal with Chinese investors came about as the result of efforts by Oakland Mayor Jean Quan to connect the developer with the Chinese investment firm. “I was pleased to introduce Signature Development Group to Zarsion Holdings Group, and I thank them both for their commitment to Oakland,” Mayor Quan said.
“This is an exciting time for Oakland and we are pleased to see the largest approved, mixed-use master plan in the city getting the financial backing it needs to move forward. One of the great, unique opportunities of my administration has been to introduce investors from China to the many amazing opportunities for them here in Oakland,” Quan said. “Part of my job as Mayor is to bring investments to the city, and I am pleased to see that a large Chinese developer and investor is smartly putting his money into the Brooklyn Basin master-planned community. It is the first of what we hope will be many major investments as the Chinese business community recognizes the wealth of opportunities here in Oakland.”
Signature Development’s Ghielmetti echoed Mayor Quan’s sentiments, saying, “Our entire team is thrilled to have the opportunity to work with such a well-respected developer as Beijing’s Zarsion Holdings Group.” Zarsion Holdings Group Co. Ltd, was formed in 1994 and develops approximately one million square meters of commercial and residential projects per year.
The news of the investment in the Oakland project came at the same time that the San Francisco Chronicle reported that the China Development Corp. and the Chinese national railway had backed out of a deal to loan $1.7 billion to developer Lennar for its Bayview-Hunters Point and Treasure Island projects. An article in the SF Business Times noted that the collapse of the Lennar deal “won’t stop [the] Chinese money flood into real estate.” Business Times writer Blanca Torres noted that, “Investors in Asia have plenty of reasons to put their capital in the United States and with our economy still recovering from the 2008 recession, domestic capital for projects is still relatively hard to come by.”
Torres wrote that, “Anton Qiu, a veteran broker with TRI Commercial, told me that this kind of deal is appealing to more Chinese companies and investors for a variety of reasons. At the macro level, China holds more than $1 trillion of U.S. debt, but the dollar has been weak since the recession, so investing in assets is much more attractive. In the last few years, the Chinese government has made it easier for investors to borrow money from the government to invest in foreign countries. In the U.S., the motivation is clear—the better our economy, the more the dollar and thus, the value of China’s holdings go up.” Several other projects in the Bay Area have received funding from China-based investors. The Business Times reported that, “According to research company Rhodium Group, from 2000 to 2011, Chinese investors funded 165 deals in California worth $1.3 billion, which is more than one quarter of all Chinese investments in the U.S. The group also found that California has the potential to attract up to $60 billion in Chinese foreign direct investment by 2020.”
Governor Brown announced the deal while in China, saying, “This massive influx of Chinese investment will put thousands of Californians to work and dramatically improve Oakland’s waterfront. This project is just one example of what’s possible when business leaders in two of the world’s most dynamic regions connect.” Brown met with China’s Minister of Commerce and signed a landmark agreement with the Ministry of Commerce to bolster economic ties and cooperation between California and China.
– Paul Burton