On Point: The China Connection
On Point: The China Connection
Perhaps one of the biggest challenges facing city leaders seeking to redevelop Alameda Point during tough economic times is finding the money to revitalize the 918-acre former Naval base. To address that challenge, some City Council candidates are suggesting Alameda take a look overseas.
“This world economy should not be a one way street. It should be a two way street. And I’d like to foster that,” said Stewart Chen, a council candidate who says Alameda should consider talking to foreign investors.
If elected, Chen said he’d be willing to consider potential Point investors from a variety of other countries, though a likely starting point in his and others’ minds is China (Chen said he isn’t at this point talking to any prospective developers or investors about specific Point proposals).
“I welcome anybody who wants to invest in Alameda and to create jobs in Alameda. Right now, the money is in Asia,” Chen said, noting China’s world-leading $1 trillion-plus investment in United States Treasury bills.
Chen isn’t the only council candidate who would back foreign investment at the Point. Former City Councilman Tony Daysog, who is also in the running for a council seat this fall, said in a recent candidate forum that the city should look at drawing foreign investors through the federal government’s EB-5 immigrant investor program, which offers visas in exchange for job-creating investments in new firms. In 2010, some 46 percent of the EB-5 visas – which require an investment of between $500,000 and $1 million – were issued to natives of mainland China and Taiwan, according to a U.S. Citizenship and Immigration Services slideshow.
“I can envision investors from any part of the world, but certainly in California at least, people from Taiwan or mainland China have been very active program,” said Daysog, who said he became aware of the program through a project he worked on for a former employer.
The idea of enticing foreign investment isn’t totally new: During his tenure on the City Council, Frank Matarrese also suggested the city consider foreign investment at the Point. He asked his dais-mates to consider entering a foreign trade zone centered at the Port of Oakland, which would offer foreign firms that sought to set up shop on the Point tax and tariff breaks and other benefits.
“All these benefits were meant to entice foreign investment and create jobs,” said Matarrese, who said the benefits for the city could include increased tax, sale and lease revenues and restoration and reuse of the Navy’s old buildings.
The breakneck growth of China’s economy, coupled with a decade-old shift in the country’s investment strategy, has heralded a boom in Chinese investment in the U.S. According to a November 2011 report from the Center for Strategic & International Studies, the Chinese invested $11.6 billion in the United States between 2003 and 2010, with $5.3 billion in investments flowing in 2010 alone.
Between 2000 and the first half of 2012, the Chinese invested $2 billion in California alone, with about half the money placed in electronics and information technology and the rest spread across hospitality and real estate, logistics, renewable energy and other investments, according to researchers with Rhodium Group, a New York City-based research firm. And China has done more deals in California – 159 of 591 nationwide – than any other state, the firm reported.
While much of China’s investment has been focused on securing technology and natural resources, the country’s money men have also shown a willingness to fund redevelopment projects like the one on tap for Alameda Point. Mayor Ed Lee said in August that Lennar Corp. is close to a deal with the China Development Bank for a $1.7 billion loan that’s expected to jump-start development projects on former Navy bases at Treasure Island and Hunter’s Point. Citing sources, The Wall Street Journal said the deal, if executed, could become a test case for others like it in the United States.
While the Lennar deal could be a test case for developers seeking Chinese money to back redevelopment efforts in the U.S., City Manager John Russo said Alameda’s city officials have been approached by a number of interested parties backed by Chinese money.
“We have been approached from time to time by different investors, and most always from China,” he said.
Russo said two development teams have pitched city officials with Alameda Point redevelopment proposals that would be backed with money from China; another long-ago acquaintance of Russo’s now working in China e-mailed him recently to inquire about the Point for a group that has $200 million to invest.
“Capital has been internationalized anyway. I would take good hard currency for redeveloping Alameda Point from just about anybody where it made sense from a business perspective,” he said.
While Chen, Daysog and Russo all said they’d welcome foreign investment at the Point, they offered a major caveat: They’d seek to ensure that any development that’s proposed is done on the city’s terms. Chen, who co-founded Alameda’s Sister City Association, said he’d be willing to travel to China to assess potential investors.
“We will retain control. The city and the citizens will retain control,” said Chen, who said any prospective Point developers would be expected to hire union contractors and pay prevailing wages, and to address things like the traffic impacts new development would impose.
Russo said he’d be willing to talk to any potential investor that offers a good project that pencils out financially and fits within the city’s base reuse plan. (Russo said he had no comment on any specific proposals being put forward by council candidates.)
“What really matters to us is, does it fit the vision that Alameda has for what we’re going to be doing out there?” Russo said.
Inside those parameters, Daysog and Chen said the city should consider talking to anyone willing to tackle the Point’s contamination, hundreds of millions of dollars in infrastructure replacement costs and other challenges the former Naval Air Station will pose to prospective developers.
“Whatever builder or series of builders we’re working with, if they’re scouring the globe for capital – all power to them,” Daysog said. “They’re helping us meet our vision for Alameda Point. We should welcome this.”