April 11, 2006
SUBJECT: Authorize Local Redevelopment Authority Staff to Communicate Positions and Open Dialog Regarding Department of Veterans Affairs Interest in Onizuka Air Force Station Property
REPORT IN BRIEF
Staff recommends the Local Redevelopment Authority (LRA) for Onizuka Air Force Station (AFS) authorize LRA staff to communicate its position relative to potential federal property transfer to the Department of Veterans Affairs (VA) of specific Onizuka AFS property. The expression of interest delivered to the Department of Defense (DOD) by the VA is part of the Base Realignment and Closure (BRAC) federal screening process that was initiated on December 7, 2005. The LRA has the opportunity to provide comment to the Air Force prior to the Air Force’s completion of this part of the screening process in May. Staff’s proposed position on the VA’s expression of interest is as follows: to express serious reservation about the VA proposal; to offer assistance to the VA to find an alternate suitable site and building in Sunnyvale; and to recommend that the entire 19 acre site be declared surplus and that the VA’s interest and need for locating on a portion of the site be considered in the community reuse planning process.
BACKGROUND
On May 16, 2005 the Secretary of Defense published in the Federal Register and transmitted to the Congressional Defense Committees and the Defense Base Closure and Realignment Commission a list of military installations that the Secretary of Defense recommended for closure or realignment. Onizuka AFS was included in the list of military installations recommended for closure and the recommended closures have since been confirmed.
On December 7, 2005 the Air Force initiated the federal screening process in which the Air Force advertises the property as excess to other DOD branches and Federal agencies through release of the Notice of Availability (NOA) (Attachment A). When it receives proposals, the Air Force will review requests and select specific property to be transferred to agencies expressing an interest in all or part of the property. VA submitted an Expression of Interest to DOD requesting approximately 1.53 acres of property (Attachment B). Note that staff calculates the area VA requested to be closer to 2.41 acres.
EXISTING POLICY
Legislative Management Sub-Element, Goal 7.3C: Participate in intergovernmental activities, including national, state and regional groups, as a means to represent the City’s interests, influence policy and legislation, and enhance awareness.
DISCUSSION
The Air Force released the NOA on December 7, 2005. Agencies have 30 days after release of the NOA to respond to DOD with written expressions of interest and 60 days after that to formally request transfer of the property. When the Air Force receives proposals, it will review requests and select specific property to be transferred to these agencies. The Air Force will require that non-DOD Federal agencies be required to pay fair market value for the land (unless a waiver is requested and granted by DOD and the Office of Management and Budget) and assume environmental remediation responsibilities.
VA submitted an Expression of Interest to DOD requesting approximately 1.53 acres of property, including the current headquarters building, a storage shed, the base exchange and space for 100 parking spaces (see map in Attachment B). Staff has calculated the acreage, based upon the information submitted by the VA to the Air Force, to be closer to 2.41 acres. If the DOD should grant the VA request for 2.41 acres, a remnant parcel of approximately 2.65 acres will remain between the VA site and the City of Sunnyvale Fire Station #5. Because this remnant parcel is not adjacent to the remainder of the site which is to be declared surplus, and because it cannot be used in conjunction with the remainder of the site, the effect of the VA request is to remove 5.06 acres (2.41 acres + 2.65 acres), or 27% of the total area of the Onizuka site, from the reuse parcel.
The VA proposes to use the existing 50,560 sq.ft. headquarters building as a dry lab research facility. The VA currently operates 340,740 sq.ft. of research facilities in Palo Alto, much of which is located in seismically deficient buildings. The VA intends to demolish 157,750 sq.ft. of research space in Palo Alto and 79,900 sq.ft. of research space in Menlo Park. The Onizuka AFS headquarters building could accommodate a portion of the displaced research facilities and facilitate the VA’s proposed expansion of such facilities in the Silicon Valley.
The proposed use as a research facility is consistent with the Moffett Park Specific Plan, which permits office, research and development, warehousing and limited manufacturing, and supportive ancillary uses. The stated goal of the plan is “to maximize Moffett Park development of corporate headquarters, office and research/development facilities of high technology companies which will represent the next wave of economic growth in Silicon Valley”. The VA’s expression of interest does not specify the number of jobs that would be transferred to Sunnyvale. It is anticipated that the use would pay no property or sales tax to the City of Sunnyvale.
The total area of the Onizuka site, 834,000 sq.ft. or approximately 19 acres, is a large site by Sunnyvale standards. Such large sites are difficult to find in the Silicon Valley in general, and in Sunnyvale in particular. The effective 27% reduction in the site area to 14 acres to accommodate the VA use would represent a substantial reduction in the reuse site size.
FISCAL IMPACT
It is not possible to accurately estimate the fiscal impact of the VA proposal until the preferred reuse of the overall site is determined. If the reuse were determined to be office development at a 35% Floor Area Ratio (FAR), the property tax loss to the City of five acres of public use would be approximately $25,000 per year. There would also be a sales tax loss if the VA use displaced a use engaged in business-to-business sales, and transient occupancy tax loss if it displaced a hotel.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda in public places, on the City’s web page, and the publication of the general business/public hearing items in the San Jose Mercury News.
ALTERNATIVES
1. Authorize LRA staff to communicate positions and open dialog regarding the VA interest in Onizuka AFS. The position is to express serious reservation about the VA proposal because it would effectively reduce the reuse site size by 27%, thereby limiting the number and type of uses that might be interested in the site and reducing the economic value of the site; to offer staff assistance to the VA to find an alternate suitable site and building in Sunnyvale; and to recommend that the entire 19 acre Onizuka AFS site be declared surplus and that the VA’s interest and need for locating on a portion of the site be considered in the community reuse planning process.
2. Authorize LRA staff to communicate positions and open dialog expressing the City of Sunnyvale’s support of the VA interest in Onizuka AFS.
3. Do not authorize LRA staff to communicate positions and open dialog regarding the VA interest in Onizuka AFS.
4. Other action as directed by Council.
STAFF RECOMMENDATION
Staff recommends Alternative 1, authorize staff to communicate position and open dialog regarding VA interest in Onizuka AFS. The recommended position is as follows:
- Express serious reservation about the VA proposal
Although the proposed VA use is consistent with the Moffett Park Specific Plan, it would effectively reduce the reuse site from 19 to 14 acres, a 27% reduction. The reuse value of the Onizuka site is based upon its size and location. Reduction of its size would reduce the number and type of potential uses, thereby reducing both its value per acre and the number of acres available. The seriousness of this cannot be determined until the community reuse planning process is completed.
The type and size of building which the VA seeks is not uncommon in the Sunnyvale market. Staff could assist the VA in finding another building either for lease or for sale. The VA apparently is prepared to pay market value for the Onizuka property; their application to the Air Force for transfer of the property indicates that a “fair market value reimbursement to the Air Force will be made…unless this obligation is waved by the Office of Management and Budget and Air Force”.
It is quite possible that the community reuse planning process would determine that the VA can be accommodated on the site either in the existing building which they have identified or in a portion of a new building constructed as part of the reuse of the site. In this manner both the VA’s goals and the maximum reuse potential of the site can be achieved.
Reviewed by:
Robert Walker, Assistant City Manager
Prepared by: Bob Paternoster, Director of Community Development
Approved by:
Amy Chan
City Manager
Attachments
A. Department of the Air Force Notice of Availability (NOA)
B. Letter received from Department of Veterans Affairs (VA) and formal expression of interest in approximately 1.53 acres of Onizuka Air Force Station (AFS)