The Oakland City Council recently approved several critical pieces of legislation that will help propel the Oakland Army Base development forward as the project’s September 2013 construction start date draws near.

On July 16, the council voted 7-0 to approve a new zoning district, building design guidelines and a supplemental development agreement, which provides clarity on development fees. Councilmember Desley Brooks was the lone abstention.

The new zoning area – the Gateway Industrial District — allows for the seaport, rail and logistics operations that are central to the Army Base development. The project’s first phase will convert 160 acres of functionally obsolete land that the U.S. Military deeded to the city in 2003. The property will be transformed into a modern trade, cargo and bulk goods center with news warehousing facilities, expanded rail access and a marine bulk terminal.

“The development team would like to acknowledge city staff for their hard work and thank all project stakeholders for moving this forward,” said Mark McClure, a partner with California Capital & Investment Group, the project’s Oakland-based lead developer.

In contrast to other Bay Area military base conversions following base closures in the 1990s, the Army Base is on track to become an economic engine for the city and region. Construction will generate approximately 1,500 jobs, fifty percent of which must be performed by Oakland residents.

The expanded working waterfront is expected to boost California’s exports and deliver more overseas goods inland – bolstering the state’s trade corridors, including more than 3,000 local and regional full-time jobs.

Phase I is a $500 million public-private partnership between the City of Oakland, local developer California Capital & Investment Group and Prologis, an international warehouse developer headquartered in San Francisco. $242 million comes from a California Transportation Commission (CTC) grant. Private investment, the city, the Port of Oakland, and the federal government are covering the rest.

A second development phase on former Army Base land controlled by the Port of Oakland could greatly expand the project and create more new jobs in coming years.

In order to comply with CTC requirements, hiring and construction work is expected to get underway by fall 2013. The CTC’s funding criteria focused on increasing the speed and volume of cargo and goods traveling through the state’s ports and transportation corridors; making that travel more timely and reliable; improving roadway safety; and reducing truck emissions by moving more goods by rail.

“The CTC funding allocation was a critical step in the process. We are grateful to all of the public and private partners working with us to get to this point,” said Phil Tagami, President and CEO of California Capital & Investment Group. “This is a huge shot in the arm for Oakland. We’re ready to put people to work.”

The new Oakland trade center will heighten business efficiencies and are expected to attract more commerce and investors – resulting not only in local jobs, but also regional economic stimulus. According to an MIT-based trade and logistics expert Yossi Sheffi, the former Army Base is poised to be a world-class “logistics cluster” generating exponential economic growth for Oakland and Northern California.

Sheffi says that successful logistics clusters such as Port of Rotterdam, the Louisville Airport and Chicago’s rail yards feature distribution centers, warehouses, facilities to sort and package goods, and easy access to transcontinental transportation.

“Bigger is better because the bigger the clusters get, the more that businesses benefit from economies of scale,” which is why governments usually like clusters,” Sheffi said. “It’s very hard to see from Boston why this hasn’t happened already (in Oakland).”

The businesses Sheffi referred to are all the companies in the import-export supply chain – including carriers, which move goods by large ships, trucking companies, railroads, terminal operators and firms producing and selling goods – from electronics to artichokes. These businesses seek out ports where they can get the best deal and logistics clusters’ efficiencies inherently lower their costs.

 

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