Wareham: Preservation of historic factory too expensive

Wareham Development will demolish the seismically unstable Copra Warehouse at 740 Heinz Ave. to build a new laboratory. Photo: Ira Serkes

Wareham Development will demolish the seismically unstable Copra Warehouse at 740 Heinz Ave. to build a new laboratory. Photo: Ira Serkes

Four years after Wareham Development proposed transforming a historic West Berkeley warehouse into a laboratory building, the company is seeking to tear down the entire structure instead of preserving two brick walls.

Construction costs have gone up and rents have declined since the city approved Wareham’s 2009 design for 740 Heinz and it is now too expensive to build around the rickety walls, according to Chris Barlow, a partner in Wareham, which is headquartered in San Rafael. It will be much easier – and cheaper – to build a new 100,000 square foot structure, Barlow told the Zoning Adjustments Board in late September.

ZAB approved Wareham’s application to completely tear down the Copra Warehouse, which was part of the Durkee Foods complex built in 1917. Jeff Kaplan, representing The Friends of the West Berkeley Plan, is challenging the approval. The City Council will take up the matter on Jan. 22.

“This seems like a very greedy move to me,” David Bowman told ZAB at the Sept. 27 hearing. “They got 98% of what they wanted in the process the last time. They did not follow through when they could afford it. Now they want to make it so it works better financially. That is not your duty.”

Wareham, which leases the building from Garr Land and Resource Management, already owns a number of other structures at its adjacent Aquatic Park Center complex. The developer has been trying to do something with 740 Heinz for more than 10 years. The building, which was designated a Berkeley landmark in 1985, is unreinforced masonry and is considered one of the most seismically unsafe in the city, according to a planning department report. In 2002, the city declared the property a public nuisance.

In 2009, Berkeley granted Wareham a variance to develop the property. In exchange for retaining the historic north and south facades, the city allowed the company to exceed the neighborhood’s height and story limit. While the bulk of the old factory was 34 feet high, one section went as high as 74 feet. The city gave Wareham permission to build a $52 million, four-story research and development structure that was 74 feet high and had a 49-stall underground parking garage. Wareham had to do an EIR as part of the development plan.

Wareham wants to modify that design, stating it is too expensive to build and will not provide an adequate return on investment.  Since 2009, construction costs have increased by 17% and rents for bioscience R&D have declined 15%, which together make keeping the two historic walls financial unfeasible, said Barlow. Now the company wants to build an entirely new $44.5 million structure with a two-story lobby with a green roof on the south side of the building. It has also asked to slightly expand the first, third, and fourth floors, but maintain the setbacks established in 2009, and eliminate the parking, among other changes.

“The only way to make (the building’s financials) feasible is to take down the two walls,” Barlow told ZAB. “Keeping them comes at a significant expense.”

The generally accepted industry threshold for an acceptable investment risk for this kind of project is 7.2%, according to a report prepared for ZAB. The old design would have given Wareham a 4.85% return, while the new design will generate a 5.86% return, which is still below the industry norm.

The Copra Warehouse at night. Photo: Ira Serkes

The Copra Warehouse at night. Photo: Ira Serkes

ZAB, in a divided voted, approved the new plans and decided that the changes were minimal enough that Wareham only had to do an addendum to the existing EIR rather than an overhaul.

The Friends of the West Berkeley plan are arguing that the amended EIR “was neither adequate, subject to public comment, nor was it certified in compliance with CEQA.” The group has also expressed concern that researchers will be doing synthetic biology in the new complex and that the amended EIR did not adequately review “potential risks to the surrounding environment and human health associated with laboratory use.” More than 30 tenants of the nearby building at 800 Heinz signed a petition against the new structure.

As recently as 1985, there were eight buildings or features of the Durkee complex still standing. The destruction of the Copra Warehouse means there will only be two left, the Durkee Building at 800 Heinz and the Spice Warehouse at 820 Heinz.

City staff is recommending that the City Council deny the appeal of the Friends of the West Berkeley Plan, stating that the changes proposed by Wareham in 2012 do not materially affect the project approved in 2009. The city stands to collect at least $342,500 from the building’s construction: $194,000 will go into the Housing Trust Fund, $48,500 will go in the City Childcare Fund, and the owners will pay about $100,000 in property taxes the first year, according to a city staff report. The building will also create 300 new jobs.

Barlow told ZAB that “there is no research space of this quality available in Berkeley now.”

Read the appeal and city staff report here.

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  • David Denton

    This building was constructed circa 1890 as part of the Standard Soap Company owned by Captain Richard Parks Thomas. It was constructed as a copra warehouse. Copra is dried coconut pulp which was collected by Copra boats that plied the south seas trading with the indigenous people. The copra bales were unloaded at the Berkeley wharf also owned by the Captain. It has never been a residential building.

    I find the structure quite interesting from a historical perspective, imagining the bales being raised and lowered from horse draw wagons, and trying to understand how it functioned as a warehouse.

    However, it is a VERY challenging structure for re-use.

    PS, I am not being mean.

  • Charles_Siegel

    “If Wareham’s margins are that slender on the project, why should we believe there will be sufficient benefit for Berkeley?”

    I don’t see the relationship between the developer’s profit margin and the benefit to the city.

    To use two examples off the top of my head, the oil refineries in Richmond earn a profit, and UC Berkeley earns no profit. Does that mean there is a greater benefit to having oil refineries in your city than to having a university?

  • berkeleykev

    Yes, that is a straw man.

    Arguing about the wisdom of preserving brick walls in an eq zone IS NOT GERMANE to this topic. If you want to change that historic preservation rule for the entire city, have at it. If you can muster public support, go for it. But that requirement is not unique to this project, and has not changed since the deal was struck with Wareham.

    Wareham agreed to the historic preservation, and to many other requirements as well.

    The only thing that changed is Wareham’s (and only Wareham’s) figures representing cost and benefit of the structure. AKA their profit margin.

  • getreal

    Charles this is in reply to your question “To use two examples off the top of my head, the oil refineries in
    Richmond earn a profit, and UC Berkeley earns no profit. Does that mean
    there is a greater benefit to having oil refineries in your city than
    to having a university?”

    You suggest two possible proposals. Let’s look at the two proposals using a similar mode of analysis:

    One proposal is to build an oil refinery in Berkeley. For some reason, to evaluate the case of Wareham, you want us to think about the possibility of an oil refinery in Berkeley. Well, ok…

    In the unlikely event this were proposed the promise would be that Berkeley offer enormous concessions on environmental health and safety in exchange for large increases in tax revenue. I take it as obvious on the face that the tax revenue would never seem like a good deal against the environmental problems here and I don’t think you would seriously disagree. A refinery would be a bad deal for Berkeley. (That Berkeley is logistically unsuitable for a refinery is, I guess, a happy accident of history and geography.)

    The other proposal would be to further expand UC’s footprint in Berkeley and to further reduce the tax basis of real property in exchange for…. well, I’m not sure what, exactly. Perhaps a small increment in local employment. Each UC-proposed project ought to be examined on its particulars, of course, but we can safely note that UC projects all start with one strike against them when they reduce the tax basis of real property. Additionally, any UC expansion project comes at the cost of reducing the potential economic diversity of employers in Berkeley, making more of Berkeley’s economy dependent on state funding for the university system. So the benefits of a UC project ought to be held to account on that as well. UC expansion projects are also, easily, a very bad deal for the city.

    Here is where I want to accuse of pure sophistry, arguing for arguments sake without having a position I can believe you seriously mean. You write: ” Does that mean there is a greater benefit to having oil refineries in your city than to having a university?”

    No, it obviously doesn’t, nor is anything even close to that suggested by what I wrote. I’m not sure I can believe you earnestly believe otherwise. Will you acknowledge that it is possible to hold that both a refinery and UC expansion would both be bad for the city (albeit in different degrees and in different ways)?

  • Charles_Siegel

    I was giving my honest reaction: I do not see any reason why there should be a relation between the business’s profit margin and its benefit to the city.

    Maybe I used bad examples. But note that the example of oil refineries was meant to illustrate the point that a profitable business may have fewer benefits than costs; it was not meant to claim that Berkeley would actually let a refinery open here. You spent all your time on irrelevant arguments about my examples and on ad hominem attacks.

    But you still haven’t said why you think there is any relation between profit margins and benefits to the city.

  • PragmaticProgressive

    Tom Lord v3.0?

  • Charles_Siegel

    In addition, you are making statements that are completely untrue when you say:

    “You suggest two possible proposals. Let’s look at the two proposals using a similar mode of analysis: One proposal is to build an oil refinery in Berkeley. …. The other proposal would be to further expand UC’s footprint in Berkeley..”

    To state the obvious once again, it did not propose either of these. I was using them as examples to show that there is no basis for your claim that there is a relation between profit margin and benefit.

    The oil refineries in Richmond are profitable. That does not mean that their benefits to Richmond are greater than their cost to Richmond.

  • The Sharkey

    I had the exact same thought.
    So many words used to say so little.

  • getreal

    Charles you wrote “Maybe I used bad examples” Fair enough.

    You wrote: “I was giving my honest reaction: I do not see any reason why there
    should be a relation between the business’s profit margin and its
    benefit to the city.”

    In this case, Wareham’s claims about their own profitability provide us indirectly with their own best guess about the kind of business that they hope to attract to Berkeley with development of this sort and for this kind of use. If Wareham hopes to attract businesses that will give them only sub-standard rent, we should expect those same tenants to nickel and dime the city at every opportunity. If some homeowners think that projects like Wareham’s are the key to holding down residential property taxes, they ought to look more critically at what can be realistically expected from such projects for city revenue.

    One elephant in the room here, as another commenter has pointed out, is the question of why the profits of a few land owners should become a public policy priority. We ought to be willing to entertain at least the possibility that Wareham and other major holders of Berkeley property should wind up taking a haircut.

  • BHS verteran

    Let’s get really real and cut through some of this flapjawing…

    “It seems to me that any project of the sort Wareham is proposing to the city is an invitation that we join them in a kind of real estate speculation.

    It may seem to YOU that way, but that is far from the fact. This private property is being developed to make as much profit as is currently feasible. That “feasibility”, being determined in part by how successfully they can navigate the cities absolutely uninvited demands for concessions.

    “Berkeley is invited to pay for the privilege of hosting this new development…”

    Berkeley isn’t “hosting” anything. Anymore than Berkeley is “hosting” the car dealerships, restaurants or health spas, or any other piece of private property in town.

    “Berkeley is asked to make concessions in return for future returns.”

    No, Berkeley is asked to apply it’s lawful authority by deciding within a range of allowable variances.

    “What is at stake is a permanent fixture on the lot…”

    That’s not what’s at stake. There is a dangerous permanent fixture on the lot, put there by owners with exactly the same motivations as the current group: To make as much profit as is feasible.

    “Or is it just the drone of the same-old same-old handful of who foreclose on meaningful debate time and again?”

    Did Berkeleyside close this thread? No, if some feel foreclosed, they foreclosed themselves…but that couldn’t include you…you posted!

    “So how great for Berkeley would this structure really be? This should be enough to cause us to question what’s in this deal for Berkeley in the first place.”

    This is not a shopping trip. Private parties make the best deal the law allows.

  • The Sharkey

    If Wareham hopes to attract businesses that will give them only sub-standard rent…

    Where does the article state this?
    I would imagine that, as a for-profit company, Wareham hopes to maximize profits. I see no statement in this article supporting your claim that they hope to attract businesses that will give them sub-standard/below-average rent.

  • PragmaticProgressive

    I don’t know if you were around for the last few iterations of Tom Lord (aka Bruce Love) on BSide, but he was banned after threatening to sue other participants here. He’ll spend hours and hours in tedious sophistry — it’s best to ignore him.

  • berkeleykev

    The irony is that I have actually worked on multiple projects where maintaining a portion of the structure was the only way it was allowed to be done, and it was admittedly quite frustrating. I have also worked on retrofit projects of load-bearing brick buildings, and I questioned the wisdom of those structures in our area.

    In other words, I pretty much agree with your opinion about brick structures in eq zones.

    But Wareham did not raise a single concern along those lines of concern that you and I share. The concern they raised was clearly, explicitly about profit. That is why your (and my) concerns about brick walls in eq zones is a strawman.

  • berkeleykev

    “You start your sermon by positing a conspiratorial action by the city and Wareham”

    Uh, no, I didn’t.

    I pointed out that Wareham’s sole argument for reneging on the deal was (a purported) reduction in profit, and the city has agreed that Wareham’s (purported) reduction in profit is reason enough to give them more concessions.

    That’s not a conspiracy, that is openly public history, indeed it is what the above article itself says. You did read the article, right?

    And you continue- “Histrionic self-serving dramatics like yours…” Nice reduction of the discussion to insults and personal debasement. Very classy. I’m surprised Berkeleyside allows personal debasement like that in their comments.

  • Charles_Siegel

    Often, the most interesting businesses are those that cannot afford high rents.

    If you are only looking for ways for the city to earn revenue and hold down property taxes for existing residents, then you should back lots of freeway-oriented shopping, like they have in Emeryville.

  • Charles_Siegel

    I think TL tends to discuss the subject at hand, rather than resorting to personal abuse.

    Getreal seems to be unable to pose a comment without personal abuse:
    – “a drab rehearsal of the empty rhetoric of tired, largely empty, rudely polarized talk”
    – “I want to accuse of pure sophistry, arguing for arguments sake without having a position I can believe you seriously mean.”
    and so on.

  • BHS verteran

    Read your own words again, carefully:

    “If you care to explain why the city should be guaranteeing a minimum profit for Wareham…”

    Then:

    “I pointed out that Wareham’s sole argument for reneging on the deal was (a purported) reduction in profit, and the city has agreed that Wareham’s (purported) reduction in profit is reason enough to give them more concessions.”

    __________________________

    Wareham sought to renegotiate a business deal after four years of nationwide economic malaise. Here “renegotiating” is equivalent to “reneging” only in a self-serving description of the facts.

    The city agreed to renegotiate. Only someone prone to histrionic presentation of facts would consider that a “guarantee of a minimum profit” for the project.

  • BHS verteran

    …accusing who of sophistry?

    “…but we can safely note that UC projects all start with one strike against them when they reduce the tax basis of real property…”

    I am breathless at the opportunity to translate this for my fellow local yokels:

    “Let’s find a way to tax UC, so our city government can continue the great job we all agree they’re doing managing the money we already give them.

    Of course, to be fair, we’ll have to reset the value of our property as though there was no University. We can use comps from Oakland or Albany…El Cerrito…whatever’s closest! Anything for the potential diversity of employers!

  • berkeleykev

    You initially said I was speaking of conspiracies, and I proved you wrong. Strike one.

    Now you are saying that the city simply agreed to renegotiate. Wrong again. From the article:

    “City staff is recommending that the City Council deny the appeal of the
    Friends of the West Berkeley Plan, stating that the changes proposed by
    Wareham in 2012 do not materially affect the project approved in 2009.”

    The city (“City staff”) has officially recommended changing the deal to accommodate Wareham’s plea for greater profit. Period. Strike two.

    Then for strike three: try googling “definition of reneging”

    “reneging present participle of re·nege Verb
    Go back on a promise, undertaking, or contract.”

    Strike three.

    And even so, you continue to use perjorative terms. I’m done with you. Anyone following this thread has by this time seen enough of the value of your ideas, and they have seen mine. Have a nice night.

  • BHS verteran

    I thought I’d put the dots so close you wouldn’t need a line to connect them:

    Successfully guaranteeing the developer a minimum profit would require covert cooperative illegal action to circumvent the law: a conspiracy.

    Renegotiation is not reneging. The difference in usage is readily apparent to native speakers of American english.

    There’s a reason catchers don’t call the ball and strikes.

  • The Sharkey

    I agree that it doesn’t seem quite right, but towards the end he would attack me for asking questions he “could not believe you seriously mean” and the like. He was never a fan of Socratic questioning.

  • The Sharkey

    Arguing about the wisdom of preserving brick walls in an earthquake zone IS NOT GERMANE to a discussion about a deal revolving around the preservation of brick walls in an earthquake zone?

    Do you read anything you write?

  • Elliot

    The vast majority of prehistorical people did not live under conditions of private property (i.e. under a legal system whose goal was to reify differences of ownership), but rather in tribal units of gatherers/hunters in which sharing resources was a key element in survival, and in which trade of resources and DNA with other tribes further enhanced survival. Tens of thousands of years of humanity prior to centralization of power and development of law and writing/urbanization and so on…