In 2008, HAPA will be working with the City of Hayward to get General Plan designations and zoning supporting of QV. We will also be applying for a Site Plan approval. The Site Plan will be in roughly two stages, what we can do with limited resources and then what we can do with pre-predevelopment investment funds. We plan to make a good estimate of what we need for these funds, including a draft site plan and a charette for consultants.
The City is cooperative and supportive, our biggest problem being raising funds. We expect the City to approve a supportive plan and to do most of the environmental review with a Program EIR.
HAPA will be applying to the City for two projects, QV and a fall-back Smart Growth condominium plan with inconspicuous parking at a lower density. We hope to get both approved through the Conditional Report stage with the California Department of Real Estate.
HAPA is also developing a fairly detailed proforma. The QV proforma will give us a good idea of how many units we need to presell to make large investments and loans profitable. We would spend a year or so (hopefully less) aggressively marketing that number, then go to investors and banks with enough of the project already sold. However, should we fail to sell QV within an agreed time, HAPA would switch to the Smart Growth fall-back project which is relatively assured of profitability. Investors would lose some time on the QV marketing period but be assured of protection with the fall-back project.
HAPA as a non-profit, and as a recipient of foundation grants through a fiscal sponsor, cannot make any profit from QV. In order to have a corporate vehicle for investors, HAPA has started an S Corporation, QV Corp, controlled by the HAPA Board, with bylaws to prevent profit to HAPA or its Board of Directors. We plan to pitch QV to patient, green investors to sell stock, initially to cover pre-predevelopment costs. Subsequent funds would be raised by additional issuance of stock at values that reflect decreasing levels of risk.
Once QV Corp has predevelopment funds, it would hire an experienced developer and would make applications and get permits, get loans, contract for professional services, and let construction contracts. Major contracts would be for the architect, the site engineer, site improvements contractor, building construction contractors, and construction management.
Perhaps the biggest barrier to investors is HAPA’s lack of control of the land. At some point we need to get an option to buy, and, before that, some kind of commitment from Caltrans to negotiate an option to sell to QV Corp at the appraised value. This value will be based on the City’s plan, due to be decided in February 2009.
We think Caltrans would be willing if we create enough political consensus. Caltrans’ core goal is to sell at market value, and an option is the easiest, lowest overhead means of disposal. To persuade Caltrans we need to get support from the City. We think City support could be forthcoming if investors are willing to invest. HAPA also plans to talk to large lenders to see their level of interest. For no cost, key investors and lenders can let the City know of their interest and how important the City is in the process. The City could ask Caltrans to work with QV Corp, or it could buy the land and sell to QV Corp at the same price.
QV Corp would own the land, build the project, and gradually transfer ownership to buyers. Buyers will have a professional condo management, The Quarry Management Company, with two on-site residential units for managers. This company would manage the rentals by condo owners, condo sales, the community center, ATM, fitness center, homeowner association meetings, paid parking, street parking, transfer of eco-pass funds to the Quarry Bus Company, taxi vouchers, relations with a car rental agency and a car share agency, minibus, electrocart, deliveries, utilities, security, and related matters except the commercial building and bus service.
The QV Homeowner Association would have contracts with subsidiary corporate entities, the heads of which would sit on the Quarry Board. The subsidiary corporate entities would be:
