Towering Complexity

Terrence McGrath, developer of the first high-rise in Oakland’s Temescal district, gravitates toward difficult projects.


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Terrence McGrath says he prefers a project that “is very complex and requires a lot of time.”

Photo by D. Ross Cameron

Real estate developer Terrence McGrath is a player in Oakland, but he has done little to cultivate a public persona and has rarely spoken to journalists. “I have nothing to gain. It’s not going to get me [project] approvals,” said McGrath with a laugh.

McGrath agreed to an interview with Oakland Magazine, however, after facing charges of duplicity and bad faith from foes of the 25-story apartment tower that he and Boston Properties recently got approved for the transit village now taking shape on the site of an old parking lot next to the MacArthur BART station on the city’s largely low-slung north end.

Letting others command the narrative, McGrath decided, could complicate his other ongoing projects, which include another potential BART-side development in West Oakland and a major residential and commercial/retail development proposal in Napa County that he has been pushing for more than 10 years. “Going through this process on MacArthur made me realize it is important to tell a story that’s slightly different than the story the opposition tells about who you are,” McGrath said.

One thing for sure: McGrath is patient and tenacious.

 

The 402-unit apartment tower would be the centerpiece of a half-billion-dollar complex of residential and commercial buildings that McGrath and nonprofit housing developer Bridge Housing started developing in 2004. Already constructed are a six-story garage for commuters and 90 units of affordable housing built by Bridge. Real estate giant Hines recently started building 385 units of housing, which is slated for completion in March of 2019, after which McGrath expects construction to start on the roughly $260 million tower. It will be the first high-rise in the city’s Temescal district.

McGrath grew up as one of nine children in a three-bedroom house in St. Helena. Privacy was hard to come by, he said. He graduated from UC Berkeley in 1980 and went on to be very successful in East Bay real estate, largely by taking problematic commercial properties and turning them around. A notable example is the former PG&E building in Oakland at 1625 Clay St., a national historic monument built in 1922 that was decrepit, foreclosed, and vacant when he bought it and restored it in the late 1990s at a cost of more than $9 million.

“Everything I work on, it’s really taking an asset that’s broken and fixing it,” he said. “The more complex and the more interesting, the less competition.”

Today, McGrath, the father of two college-age girls, has a house in Piedmont, and he recently bought a second one in Rockridge because he said he wanted the opportunity to walk and bike around the neighborhood.

McGrath said he has a thick skin but was disturbed that a group of North Oakland residents calling itself the Coalition for Appropriate Development accused him of pulling a “bait and switch” on them by substituting the tower plan last year for a six-story project that the city council approved in 2008. They accuse planners of improperly fast-tracking the plan, which the council approved unanimously in March.

“McGrath profits off his connections with an entirely corrupt city government,” railed Mosswood Park neighbor Deirdre Snyder to a reporter recently. “As someone who worked for at least 30 years to get decent development at MacArthur, I am sickened by his arrogance and disregard for the long-standing community we have here,” she said.

Eden Burkman, another vocal tower critic, agreed. “Many in the community feel betrayed by Terry McGrath because of his tower proposal,” she said.

McGrath said he feels badly for such embittered residents, but he rejects their charges, saying he always favored a high-rise for the MacArthur site because it is immediately next to a BART station (and Highway 24, which is seven stories tall).

McGrath calls himself an environmentalist, saying he loves to hunt, fish, and ski (he goes to Lake Tahoe a lot). A tower at MacArthur is exactly the kind of transit-oriented development that the Bay Area needs, he said, to increase affordable housing, stimulate needed local economic growth, get people out of cars, reduce greenhouse gas emissions, and protect open space. The environmental group Greenbelt Alliance, which aims to limit urban sprawl, agrees and endorsed the tower.

“It is the right thing to do,” McGrath said.

The time was not right for a tower back in 2008, McGrath said, but he hoped conditions would ripen by 2024, the expiration date for the 2004 development agreement that his company and Bridge signed with BART and Oakland’s former redevelopment agency.

That, McGrath said, is why he pushed for a tower to be included in the environmental study of the lower-density proposal that the city council approved in 2008. McGrath and Bridge floated the concept of two 23-story towers at the time, but did not submit a proposal.

Critics came to believe that the tower idea was dead, a notion that they say city officials encouraged. They were shocked last July when McGrath and Boston Properties proposed a 260-foot tall concrete-glass-and-metal apartment edifice, and they were outraged that McGrath was allowed to use the 2008 environmental study to advance the new plan. Only an addendum (actually a 1,420-page document with appendices) was needed, planners said.

Opponents scraped together $8,932 to hire attorney Rebecca Davis, who alleged the city “misled the public by expressly disavowing the tower alternative in 2008.” The coalition’s Facebook page similarly states, “In 2006, a similar proposal was denied by the Planning Commission.”

But documents on the city’s website don’t support that contention, and McGrath counters flatly that the Oakland Planning Commission never voted on a tower proposal.

Asked about this, Davis, an associate attorney at Lozeau Drury LLP, backtracked. “They didn’t reject the option, but this was not the one that was agreed upon” after community input, she said.

The 2008 environmental impact report, in fact, expressed no opinion on the viability of a tower and stated that one could be pursued at a later date.

Conditions, in turn, changed dramatically in the following years to favor a tower, and McGrath was ready. Officials’ support for transit-oriented development had grown amid worsening traffic and growing fears of global warming and rising seas. Regional housing costs had also skyrocketed to crisis levels as construction lagged demand.

At public meetings, McGrath found support from a new cadre of neighborhood activists who demanded a high-rise, and they showed up in greater numbers than opponents.

“The fact that the project is larger than it was when it was first envisioned is great,” said Oakland resident Brian Hanlon, co-founder of the California Renters Legal Advocacy and Education Fund, a nonprofit that sues cities for hindering dense housing proposals.

Ultimately, North Oakland Councilmember Dan Kalb said the tower proposal got more of a public airing than required by law. “It’s a good deal, a good project, and I’m glad they are going forward with it,” Kalb said. “Some people have a difficult time understanding why the city did not agree with them, and they create unsavory narratives that have no true basis in fact.”

Kalb would have liked more money from the developers for community benefits, but he said the $1.35 million they will pay on top of the millions previously secured is “nothing to sneeze at.” He is also thrilled the tower includes 45 below-market-rate apartments, instead of the four in the 2008 plan.

Opponents could still file a lawsuit to try to stop the tower, but Burkman said her group does not have the money to litigate.

Either way, McGrath said he is prepared. “If it’s simple and easy, there’s a lot of people that can do it,” he said. “The stuff I work on typically is very complex and requires a lot of time.”

 

Published online on May 3, 2017 at 8:00 a.m.

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