After three years and 37 public meetings, the Berkeley City Council on Tuesday night approved plans to build an 18-story, 302-unit mixed-use complex in Berkeley’s downtown.

The vote, which followed five hours of public testimony, requires the developer, HSR Berkeley Investments, to pay $4.5 million into the city’s Housing Trust Fund, on top of the $6 million it is already obligated to pay. That $10.5 million can be leveraged with state and federal funds to construct about 105 units of affordable housing, according to city staff. The developer will also have to pay $1 million into an arts fund, with $250,000 of that going soon to Habitot Children’s Museum to help it relocate, among other fees.

Read complete Berkeleyside coverage of 2211 Harold Way.

“I think it’s a major improvement for our city,” Mayor Tom Bates said after the meeting about the project slated for 2211 Harold Way. “It sends a sign we’re serious about climate change. The building is LEED Gold. It’s a block from BART. It’s going to contribute seriously to the city’s coffers. It’s a great win-win.”

Many speakers praised the project saying it would bring much-needed housing to Berkeley, that it was an impressively green development and that it would encourage people to get out of their cars.

But opponents of the project told the city council repeatedly Tuesday night that it could be extracting more money from the developer. A number of speakers said Los Angeles-based HSR Berkeley Investments, which is headed by Joseph Penner, had deliberately understated the financials of the project. They pointed out that on one pro forma the developer stated that the cost of the land was $40 million when it was really $20 million. The developer used that inflated cost to argue a reduction in community benefits, opponents said.

Kate Harrison, a consultant, called for the council to require the developer to pay an additional $20 million in community benefits. She projected a slide that said: “The City Council is leaving millions on the table.”

The community benefits package approved by the council is a combination of straight payments and credits for using union labor and rebuilding a 10-screen movie theater complex. On Tuesday, the council voted to give the developer more credit than the Zoning Adjustments Board did for using union labor and building the theaters, but still required the extra $5.5 million payment, which the developer had said he could not afford.

Under the city council’s plan, the developer will contribute $17 million in community benefits: $6 million for the agreement to hire union labor, $5.5 million credit for the theater, $4.5 million for housing, and $1 million for an arts fund, which includes the $250,000 payment to Habitot.

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HSR Berkeley Investments will have to pay $2 million of that when it obtains its building permit. Half will go into the housing fund then, and half to the arts fund. The developer will have to pay $3.5 million – or post a bond or otherwise guarantee payment – when it gets its occupancy permit.

Mark Rhoades, whose Rhoades Planning Group has been helping Penner during the entitlement process, had previously said the project couldn’t sustain that level of payment. After the meeting Tuesday he said the fact that the payments would be spread out over a number of year will make them feasible.

“They gave us a little more time to pay the cash, which will make it work,” said Rhoades.

The city council held the special meeting at Longfellow Middle School to consider eight appeals of decisions made by the Landmarks Preservation Commission and ZAB. The council rejected all of those appeals.

Then the council took a series of votes on ratifying the project’s Environmental Impact Report; a structural alteration permit issued by the Landmarks Preservation Commission, and a use permit issued by ZAB in September.

The votes went along political lines with Bates, Laurie Capitelli, Lori Droste, Linda Maio, Darryl Moore, and Susan Wengraf voting for the project, and Kriss Worthington, Jesse Arreguín and Max Anderson voting against or abstaining.

The council also rejected two substitute proposals. The first, introduced by Arreguín and Anderson, would have sent the project back to both ZAB and LPC for reconsideration. The second, proposed by Worthington, called for a different allotment of the community benefits, with $6 million going into the Housing Trust Fund and $2.7 million going to Habitot.

Possible legal appeal may follow approval

One of the arguments put forth by the opponents of 2211 Harold Way may be the basis of a possible lawsuit. Becky O’Malley, who appealed the structural alterations permit issued by the LPC, told the council that the permit to tear down two additions to the Shattuck Hotel/old Hinks department store building had been issued because of a “dishonest premise.” When HSR Berkeley Investments asked for permission to tear down the Postal Annex, which was built in 1957, the developer stated that the building was separate from the Hinks building, which has landmarked status. O’Malley siad that is not true. The LPC landmarked the entire block in 1987, which meant that the developer couldn’t cherry-pick sections to tear down, she said. CEQA (California Environmental Quality Act) requires that a developer prepare a “focused” EIR when a historic resource is involved. This didn’t happen because the developer said the Postal Annex was a separate building, which is not the case, she said.

“It’s one building and it’s all landmarked,” said O’Malley. “…The discussion has been based on a faulty premise, a dishonest premise.”

A member of Berkeley’s planning staff told city council that the Postal Annex had been analyzed and determined to be a standalone building. It was connected to the Shattuck Hotel/old Hinks building, but was not part of it, the staffer said.

Other speakers asked the council to reject the project, but added that they knew they wouldn’t because “the fix was in.”

Carrie Olsen, who served 16 years on the LPC and 14 years on the Design Review Commission, voiced what many of the opponents who attended the meeting were thinking.

“This is about enabling investment, not development,” she said. Olsen added that “a cabal of ex-city staffers” have “had access in city hall while we have been going to city meetings.” Rhoades, as well as another consultant, Matt Taecker, used to work in Berkeley’s Planning Department.

While the city council approved 2211 Harold Way, residents won’t see construction beginning any time soon. The developer will wait to see if opponents file a lawsuit. Aside from that, it will probably take a year before the project gets its building permit. Rhoades said it will take two and a half years to build the complex.

The 18-story building in downtown Berkeley is set to include 302 residential units, 177 underground parking spots and more than 10,000 square feet of commercial space, including a 10-screen movie theater to replace Shattuck Cinemas.

Related:

Berkeley city council to consider Harold Way appeals (12.08.15)

Numerous appeals filed for Berkeley’s Harold Way project (11.03.15)

ZAB approves Harold Way permit with increased affordable housing provision (10.01.15)

Harold Way project gets Landmarks Commission approval (08.14.15)

Op-ed: The Harold Way Project, as presented, will sacrifice Berkeley’s unique character (08.05.15)

New plan calls for 10 theaters at 2211 Harold Way (07.30.15)

Berkeley council adopts community benefits package (07.16.15)

Op-ed: Let’s say ‘yes’ to a vibrant downtown Berkeley (07.10.15)

Council declines to overturn LPC vote on Campanile Way (07.01.15)

Berkeley council to hear Campanile Way landmark appeal (06.30.15)

Council approves community benefits package; ZAB votes to certify Harold Way EIR (06.29.15)

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