Vacant Property

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Since 2015, Fireman’s Fund has been home to goblins and ghouls, but now Ghostbuster Bill Poland has one word for you. Housing.
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For almost four decades, the afternoon sun splashed off the concrete and glass walls, spilling into the faux lagoon, as the Fireman’s Fund buildings mocked Highway 101 motorists trickling home.

But now, longtime Ross resident Bill Poland is daring to imagine a world where those buildings disappear and are replaced by almost 1,100 apartments, townhomes, senior housing units and houses in a project that’s so bold and new it doesn’t even have a catchy name yet.

Poland’s firm, Silicon Valley-based Bay West Development along with Forum Investment Group formed a joint venture, San Marin Owner LLC, and purchased the campus for $28 million from New York hedge fund DW Partners LP in January. And now, a preliminary plan has emerged to begin the long redevelopment road for the 63-acre campus. The 10-step process to gain approval from the city of Novato includes submitting a formal plan, asking for zoning changes and a master plan. It will also go through design review and numerous public hearings.

The project

The public got a small taste of the project in July during a Zoom meeting conducted by the Novato’s planning department. In a full court press, Bay West partner Pete Beritzhoff represented the joint venture. Cindy Ma of KTYG Architects was there to answer design questions and Joe Runco of landscape architect firm SWA was on hand to talk of all things green. The project’s communication specialist, Ross Guehring of Town Hall Public Affairs was also on the call, in case, well, more communication was needed.

For the most part, Beritzhoff simply listened as call participants shared their observations. He likely had received a briefing on what to expect, perhaps by Guehring. This was after all, Marin, where developers were treated with a respect normally reserved for abusers of animals, cable companies and the media.

But for the most part the callers were docile. More than a few said they were troubled by the density of the proposed number of housing units. One savvy caller said that he believed the 1,100 housing units represented the opening bid at maximizing the property’s commercial value. This observation was gently rebuffed by Beritzhoff, who said the project was already right sized and wasn’t pushing the density envelope.

Other participants had issues with what they thought was a budding traffic problem. But Novato Planning Manager Steve Marshall assured them that traffic would be subject to not one, but two studies.

With the drought top of mind, a few callers expressed concern about where water would come from to serve all the new housing. Beritzhoff assured the callers that all landscaping would be handled using recycled H2O. And Marshall said the North Marin Water District would be on top of any water worries.

But other callers took a different tact. They thanked Beritzhoff for the JV investing in Novato and for being willing to take on the long-dormant property.

There was even a call from the North Bay Trades Council pitching local talent to be included in the build. And Ghilotti Brothers Construction President Mike Ghilotti dialed in to praise the project’s “tremendous vision” and for having a local developer (Poland) heading up the project.

The cast of characters

Local is a key word as the Fireman’s Fund teardown rolls forward and Poland and company do their best to win hearts and minds. A 40-year Marin resident and a former member of the Ross town council, Poland served on the board of directors at the Buck Institute for Research on Aging for three terms before he was named chairman. He’s now chairman emeritus, and active in philanthropic pursuits and social events. He can often be found in a tuxedo at charity bashes raising cash for a worthy cause.

SWA, which has offices in Sausalito and San Francisco, has historical local ties dating back to working on the master plan for the Golden Gate National Recreation Area. Joe Runco, the SWA rep heading up the project, is a Marinwood resident. And Guerhing, of Town Hall Public Affairs, is a long-time fixture in Marin lobbying and public relations circles, having worked for a pair of Marin firms before starting up his own shop last year. He serves on the Novato Chamber of Commerce government affairs committee. And he’s also a Marin Catholic High School regent and alum.

The roster of players continues with Bay West itself. The Campbell, Calif.-based developer focuses on “adding vibrancy to the fabric of the communities where it has been involved,” according to its newly updated website. It seeks out infill (reuse of land in already developed areas) projects and is comfortable doing multi-family, industrial, retail and office projects. It has five completed residential projects in the Bay Area. Besides Fireman’s Fund, the developer has plenty on its plate right now as there are eight other projects in various stages including four in the Bay Area, one in San Diego, another in Washington and a pair in Texas.

This brings us to Forum Investment, the Glendale, Colorado-based real estate investor that focuses mostly on multifamily and mixed-use projects. It has 13,000 apartment units across the country in 19 states and invests in a variety of ways including straight acquisition and development. According to its website, it has invested $2 billion in more than 60 properties.

The key local player in the Fireman’s Fund tale is the city of Novato. In the end, the city will be the one to shape the project and to ultimately give it a green light or tell the JV to go back to the drawing board. In recent memory, the city approved the Whole Foods, mixed-use project in 2005, which included 125 housing units downtown. The $80 million project took three years to gain an approval, and by the time the project hit the market, the housing, which was planned to be condos, was switched out for apartments when the condos didn’t sell. At the time of the approval, a Novato Chamber of Commerce board member Aldo Gigliotti commented that the green light was a step in the right direction. “Novato has had a bit of a black eye in working with developers. This project had the support of the community and was clearly one of the reasons it went so smoothly.”

Indeed, Novato has taken heat in the past for its contentious relationship with those wishing to build, inspiring a standing joke that Novato focuses on only the first two letters of its name when it comes to development.

But it’s a new day, says Haden Ongaro, managing director at Newmark.

“Development is not viewed the same way that it was before. People understand that we need housing. Worries about density, parking, traffic—those are all good questions. But things have changed a bit.”

Ongaro was employed on behalf of Fireman’s Fund to lease a portion of the campus, an assignment that proved difficult, and is a fixture on the commercial real estate scene. He is the chairman of the Marin Economic Forum.

Brian Eiseberg of Elite Commercial Partners agrees that the Fireman’s Fund project will benefit from shifts in how development is viewed. “I do think it isn’t as bad as was in the past. And Novato has always been more conservative than the rest of Marin, it’s been more pro-development.”

Eiseberg has lived in Novato more than 30 years and actually represented a company wanting to buy the campus. (More on that later.) He is also a stalwart in commercial real estate circles.

Finally, we have the Fireman’s Fund campus itself. The property is still associated with the insurance company despite the fact the company decamped for Petaluma in 2015, essentially making the campus a ghost town. The trio of buildings contain about 710,000 square feet of Class A space with amenities that include various outdoor fitness facilities, a café and a manmade lake. It carries a LEED certification and Solid Oxide Fuel Cell technology making it even more environmentally friendly. Ongaro says if it was in San Jose the buildings would be leased “all day long.”

But the campus is far too large to suit any company in Marin where most businesses require 5,000 square feet or less. And it’s too far away from major public transit to make it a real alternative for a big company located somewhere else in the Bay Area. In recent years, rumors of Google or Yahoo coming to town to make the campus a satellite office were tossed around like so many organic apples at a Farmer’s Market. But those tales fit better under the category of urban myth.

The property also has some baggage strewn about. On the Zoom call, more than one caller mentioned that Fireman’s Fund may have provided jobs in Novato, but it was a less-than-ideal neighbor. The company was prickly about neighbors using the surrounding trails and recreational facilities and campus has not kept up much since Fireman’s Fund exited.

The backstory

Built on land where cows formerly grazed, the first building on campus was finished in 1982 and built specifically for Fireman’s Fund. The other two were added later as the company grew and added employees. At its height, 2,400 Fireman’s Fund employees populated the campus, the parking lot a sea of cars each day. But Fireman’s Fund was purchased by German insurer Allianz SE, which slowly began disassembling the company, selling off product lines. Though Fireman’s Fund held first option to purchase the campus when it hit the market, they passed. The campus changed hands a few times over the years and after the insurance company left the complex became the best-known ghost since Casper. The property eventually wound up in foreclosure with the lead lender DW Partners controlling the debt of a little more than $110 million.

The hedge fund tried to rebrand the property with a handle of North Bay Crossing. It produced a video plugging the property and did some minor work on the campus.

Eisberg actually brought DW a higher offer than Poland’s winning bid before the bidding process began. He represented Los Angeles-based Baker Pacific Group, which was willing to pay $35 million for the campus. The hedge fund never got back to Eisberg and Baker Pacific Group.

Baker Pacific certainly knows the local market. The firm, along with JV partner Prudential Insurance developed Hamilton Landing in Novato, seven plane hangers converted into Class A office space. Eventually Baker Pacific exited with a profit in 2015. They’re also the former owners of Rowland Plaza in Novato.

By the time San Marin Owner LLC picked up the property for a cool $28 million, DW Partners was owed about $96 million on the campus, but the hedge fund decided to take the money and run.

Nobody can accuse Poland of not understanding the playing field when it comes to this project. As a Marin resident, he knows better than most that building in the land of organic milk and small-batch honey is pretty challenging. And according to a Zoom comment by Beritzhoff, Bay West has been looking at Fireman’s Fund as a possible acquisition for at least three years.

Here’s a good place to mention that I asked for a sit-down with Poland and Beritzhoff. I was referred to Guehring who listened patiently while I explained why I wanted to chat the pair up. He warned me that any talk of money and the deal was a non-starter but talking about the project was a possibility. As it turned out, they decided not to talk at all.

They are in good company. Their JV partner Forum Investment failed to respond to my request for an interview. Likewise, DW Partners decided that silence was indeed golden, after all, who wants to explain the wisdom of losing $68 million or leaving $7 million on the table.

The future

As San Marin Owner sees it now, the project would consist of eight different areas or “blocks” of development. In the northeast corner bordered by Wood Hollow and San Marin Drives would be a four- to five-story senior housing complex. Adjacent to the complex to the south would be three blocks of apartments, with the buildings also five stories. On the west side of the senior complex would be more apartments reaching five stories. Adjacent to the apartments would be a concentration of two-story homes, over the balance of the project.

The redevelopment will also be required to include 20% affordable housing. It will be interesting to see how Bay West/Forum Investment handles this since it will be likely that it can buy its way out the requirement by providing capital to the city to build it someplace else. While Marin has a reputation as a liberal haven, on this issue the most vocal elements of the community always sound the same: “We badly need affordable housing, but not in my neighborhood.”

The pre-development plan calls for construction on almost 35 acres of the land or 54%. The plan calls for 39.6% or almost 26 acres to be open space, with 23.5 acres of that land being outside the development and the balance being within the community.

The existing buildings would be torn down and the lake filled in. The land would be graded so that some of the housing would be built at a lower point on the property, somewhat reducing the scale of the project to the naked eye.

The plan calls for outdoor areas that include an events plaza where food trucks could do business, exercise area and a preschool play area.

Beritzhoff said the project will include the amount of parking required for the number of housing units. This will likely become a battleground as the project is nipped and tucked. Eisberg said he believes this will be an area where the city will insist the developer give up some housing development to create a better balance. He points out housing, unlike commercial space is considered a full-time use demanding more parking than a commute situation where the parking spaces would be empty at night.

Ongaro thinks the Fireman’s Fund site makes sense for housing, saying it is close to the freeway, isn’t being proposed for a hillside or blocking a view corridor, and the streets are already set up for more traffic due to the previous use. “I look at the opportunity as a good housing site, it’s compelling.”

The site will most assuredly capture the imagination of the city council. Thanks to the state of California and the Association of Bay Area Governments (ABAG), Novato is on the hook to make it possible to build 2,090 units of housing between 2023 and 2031 via the identification of areas as well as providing possible zoning. The proposed project would take care of better than half of Novato’s housing worry at current density. Both Ongaro and Eisberg agree the city is under serious pressure to respond to the ABAG mandate.

That said, it’s unlikely the current density will hold up. As Eisberg points out parking may fool with the math, and its probable the city will also heed the protest of a density of a little over 31 units per acre of developed land.

Eisberg says Bay West is very qualified to do a redevelopment of this scale and that its pursuing the project in the right way so far, asking the community for input. But he thinks the it will require tweaking by the city. He points to Highway 101, saying that on and off ramps will need upgrades to deal with an influx of new residents. Traffic signals and intersections will also need help.

He also suggests that Bay West buy some love from the neighborhood by offering the city cash to build the affordable housing elsewhere. “There are other areas in Novato where it would work, closer to downtown, south of Novato Boulevard. That would help the relationship (between Bay West) with the neighbors.” Eisberg says the project would also benefit from some light retail, a deli or restaurant and a major bank.

Since Bay West won’t talk money or anything else for that matter, here are a few rough back-of –the-envelope calculations about some costs for the project, from Eisberg. Demolishing the buildings could run around $10 million. The housing is likely to cost $400 to $450 per square foot. Interior paths and roads will run about $50 per square foot, with offsite work like freeway ramps at $40 a square foot. He says that in order capture 18% to 20% return, housing would be sold at $800 a square foot.

As for a timeline. Eisberg puts it at three to four years before housing product hits the market, and that assumes some of the environmental work from the existing campus holds up.

Ongaro sees the project potentially taking two to three years to get through the planning process, with units hitting the market in five to six years. “And that’s assuming the project is something that Novato likes and something consumers will like.”

In the end, Bill Poland of Bay West is willing to turn in his tuxedo for a Ghostbuster jumpsuit, and he thinks he knows the answer to the musical question, “Who you gonna call?”

The much larger query of course, is can Poland convince the city of Novato to sing along?

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