Update, March 29: Council voted unanimously Tuesday night to go ahead with the purchase, but, in an amendment put forward by City Councilwoman Kate Harrison, to pay back the cost of borrowing money for the construction of new Council chambers with funds from excess property transfer taxes, not Measure U1 funds. If the City Council builds affordable housing on the site, Measure U1 funds may be used to repay the loan for that portion of the complex. “The remainder will be paid from an appropriate source after the use of the building is determined and the repayment plan is reviewed by the Housing Advisory Commission if required,” according to the amendment. Said Councilwoman Linda Maio: “We are really concerned about public safety. We have to get out of this building.” Current estimates are that the new building could be ready within six months to a year. The city has been trying to get out of Old City Hall since 2002, staff said Tuesday, but none of the available options has been considered appropriate.
Original story: The City Council will vote Tuesday on an emergency ordinance to buy the old Premier Cru building complex on University Avenue for $6.65 million with the aim of using the site for future City Council chambers and ultimately, affordable housing.
The complex includes four different addresses on three parcels: 1001 University Ave., 1007 University Ave., 1011 University Ave. and 1925 Ninth Street site. Bauman College: Holistic Nutrition and Culinary Arts currently occupies one of the buildings and the city’s plans would not interrupt their long-term operations, according to Jovan Grogan, Berkeley’s deputy city manager.
Berkeley is interested in buying the property because it is well situated for affordable housing, said Grogan. The parcel, at .864 of an acre, is big enough and the property sits on along a major transit corridor, he said. It is right near Interstate 80, businesses and schools as well. (It is one mile from the nearest BART station at North Berkeley.) The land is also zoned for commercial and residential development.
Berkeley plans to pay for the land by borrowing the funds from the city’s Workers’ Compensation Fund 875. It will repay the funds from money generated from excess property taxes and Measure U1, the new business tax on rental properties that voters approved in November. The funds will be repaid with interest, said city spokesman Matthai Chakko. The City Council still has to determine terms of the repayment and a timeline, according to Chakko.
In the short term, Berkeley could use Premier Cru’s former retail showroom for City Council meetings, said Grogan. The room is gorgeous with bamboo floors and mahogany shelving. It would need a bit of remodeling, such as enlarging the bathrooms and taking down some non-load-bearing walls, to adapt it for Council chambers, he said. A small room off the main room could be converted to an overflow room, too, he said. The new chambers might be ready to use six months to a year after the real-estate deal closes, he said.
“This is a beautiful place and it’s already almost laid out for us,” said Grogan.
The City Council currently meets in Old City Hall, which is seismically unsafe. Berkeley is still considering ways to retrofit that building, named after former City Councilwoman Maudelle Shirek, and the old Veterans Memorial Building.
It will take five to seven years to put together a package to build affordable housing on the former Premier Cru site, said Grogan. The city will work with non-profit affordable housing builders and will have to arrange financing to complete the project. In that time, he said he hopes Berkeley will make progress in figuring out how to upgrade Old City Hall.
Berkeley has been looking for years for sites to build affordable housing but there have not been many sites large enough, said Grogan. That is why staffers got so excited about this complex.
A February report presented to the City Council examined all 119 city-owned properties and assessed each parcel for its development potential. Six sites had potential. One, on Berkeley Way, already has plans for homeless housing. Another, the parking lot behind stores on College Avenue, also had potential, but there were some challenges as well. The remaining four parcels have significant challenges, according to the report.
The city would also earn revenue in the purchase since Bauman College leases 1007 University Ave. for about $100,000 a year, according to a staff report. The college has a lease through 2021 and two five-year options to extend. (The Bauman building is a historic building and would not be razed to build housing, said Grogan.)
The staff report also says Berkeley could consider using the complex for a navigation center for the homeless, but Chakko said using it for City Council chambers seems more likely now.
John Fox and Hector Ortega, the former owners of the wine retailer Premier Cru, moved their operations from Emeryville into the complex in 2011. The pair had formed an LLC, 1011 University, to hold the property. To finance its acquisition and substantial remodeling, 1011 University LLC borrowed $3.8 million from the Taylor Family Trust, funds from the Community Bank of the Bay, and more than $800,000 from Saul Gevertz, the owner of Eden Jewelry and Loan Co. in Hayward, according to court documents.
Premier Cru filed for bankruptcy in January 2016. The bankruptcy trustee worked out a deal with Gevertz, the LLC’s managing partner, to stay in the complex until the company’s 79,000 bottles of wine could be sold or given to their rightful owners. The Taylor Family Trust filed a lien against the property, according to George King, the trust’s attorney. Alameda County then placed the complex on its list of properties to be auctioned in March because the LLC owed $171,875 in back taxes, according to public records. It was pulled off once the county became aware it was part of bankruptcy proceedings, said Julie Manaois, Alameda County’s chief deputy tax collector. Gordon Commercial once again listed the property for sale. (It had been listed for $7.8 million in 2015. The price later dropped to $6.8 million).
Fox pleaded guilty in December to one count of wire fraud and was sentenced recently to 6.5 years in federal prison. Fox admitted to running a $55 million wine Ponzi scheme. He admitted in court that he spent about $5 million on buying nice houses and cars, sending his daughter to college, and meeting young women online for dates.