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Enhancement Planning & Development of Brownfield Site
Client: The United States District Court, Northern District of California
In 1999, the United States District Court, Northern District of California, appointed Gruen Gruen + Associates and its two San Francisco-based principals as Overseers and then Special Masters in charge of the Pacific States Steel Corporation (PSSC). The Court had taken control of PSSC and its only asset – the site of the now-wrecked steelworks, in a judgment on a lawsuit filed by retired members of the Steelworkers’ Union who had been left with an unfunded medical plan when PSSC closed.When GG+A took over responsibility for PSSC and its obligations, 84 housing units had been completed, but all further work stopped on the construction of 204 single family units that had been approved on an approximately 21-acre site that adjoined the steel plant itself and was no longer contaminated. The remaining 62-acre site was contaminated, strewn with the partially demolished wreckage of the steel plant, contained a toxic pond that had been used for heat treatment, over 600,000 cubic yards of slag, and lacked any infrastructure, access roads, drainage, or other utilities. The landlocked site was located between two sets of railroad tracks and the BART track.
Working with the California Department of Toxic Substances Control (DTSC), five state agencies and three county agencies, the Special Masters led the preparation of a new Remediation Development Implementation Plan (RDIP) to clean the site. The approved RDIP provided the scope of work for an agreement negotiated with Envirocon, the selected remediation contractor. A cost cap insurance policy was purchased to lock in remediation costs at a little over $20 million. No subsidies were available for the remediation, but PSSC was able to restart construction on the clean portion of the site so as to develop seed money to start the remediation process.
At the same time, negotiations with the City included an Owner’s Participation Agreement (OPA) under which the City agreed to buy the adjoining site for subsequent development and the construction of a major road that would link to the existing street system. The Special Masters, representing PSSC, agreed to extend the street through the PSSC property on land that would be dedicated to the City. PSSC agreed in the OPA to pay the City $6,250,000 for the construction costs for the road through the PSSC property, as well as other backbone infrastructure. As that road would not be built until after remediation was completed, the Special Masters negotiated a lease with one of the adjoining railroads to provide a haul road that was used for several years to allow construction equipment and hauling of material from the site.
Once the approvals, contracting, and needed access for remediation were completed, the Special Masters began working with Randall Planning & Design to identify the land use plan capable of maximizing land value and meeting the goals of the City of Union City. A builder was selected to work with the Special Masters and their planners to present the recommended plan through the planning process for a new General Plan. Upon approval of the General Plan and associated permits and maps, KB Home began construction as the phased remediation effort provided clean land for the construction of 219 townhomes and 119 single family homes in Union City. Subsequently, approval was also received for the construction of six single family homes on PSSC property in the City of Fremont.
When Gruen Gruen + Associates was appointed Special Masters, none of the retired steelworkers had received any medical payments since 1978, nor had any payments been made on the more than $14 million owed to other first tier PSSC creditors. In 2007, the League of California Cities awarded the PSSC project its Helen Putnam Award for Excellence in Planning and Environmental Quality. In 2008, the California Redevelopment Association chose the PSSC project to receive its Award of Excellence. By that time, a total of 125 single family units had been completed and sold, and 219 townhome units were in the final phase of construction on the previously contaminated land, with all but 17 units sold. In addition, all 204 single family units on the adjoining non-contaminated land were completed and sold. Retroactive medical plan payments of over $6 million had been made to the steelworkers, and the medical plan was fully funded. All first tier creditors have been paid, and it is believed that a significant portion of lower tier creditors will be paid.
The 62-acre site, which previously had not generated any property tax, is now paying $3 million per year to the local agency. The Special Masters are currently in negotiations for the development of the 16 acres of non-residential land that still remain unsold.