Four years after Wareham Development proposed transforming a historic West Berkeley warehouse into a laboratory building, the company is seeking to tear down the entire structure instead of preserving two brick walls.
Construction costs have gone up and rents have declined since the city approved Wareham’s 2009 design for 740 Heinz and it is now too expensive to build around the rickety walls, according to Chris Barlow, a partner in Wareham, which is headquartered in San Rafael. It will be much easier – and cheaper – to build a new 100,000 square foot structure, Barlow told the Zoning Adjustments Board in late September.
ZAB approved Wareham’s application to completely tear down the Copra Warehouse, which was part of the Durkee Foods complex built in 1917. Jeff Kaplan, representing The Friends of the West Berkeley Plan, is challenging the approval. The City Council will take up the matter on Jan. 22.
“This seems like a very greedy move to me,” David Bowman told ZAB at the Sept. 27 hearing. “They got 98% of what they wanted in the process the last time. They did not follow through when they could afford it. Now they want to make it so it works better financially. That is not your duty.”
Wareham, which leases the building from Garr Land and Resource Management, already owns a number of other structures at its adjacent Aquatic Park Center complex. The developer has been trying to do something with 740 Heinz for more than 10 years. The building, which was designated a Berkeley landmark in 1985, is unreinforced masonry and is considered one of the most seismically unsafe in the city, according to a planning department report. In 2002, the city declared the property a public nuisance.
In 2009, Berkeley granted Wareham a variance to develop the property. In exchange for retaining the historic north and south facades, the city allowed the company to exceed the neighborhood’s height and story limit. While the bulk of the old factory was 34 feet high, one section went as high as 74 feet. The city gave Wareham permission to build a $52 million, four-story research and development structure that was 74 feet high and had a 49-stall underground parking garage. Wareham had to do an EIR as part of the development plan.
Wareham wants to modify that design, stating it is too expensive to build and will not provide an adequate return on investment. Since 2009, construction costs have increased by 17% and rents for bioscience R&D have declined 15%, which together make keeping the two historic walls financial unfeasible, said Barlow. Now the company wants to build an entirely new $44.5 million structure with a two-story lobby with a green roof on the south side of the building. It has also asked to slightly expand the first, third, and fourth floors, but maintain the setbacks established in 2009, and eliminate the parking, among other changes.
“The only way to make (the building’s financials) feasible is to take down the two walls,” Barlow told ZAB. “Keeping them comes at a significant expense.”
The generally accepted industry threshold for an acceptable investment risk for this kind of project is 7.2%, according to a report prepared for ZAB. The old design would have given Wareham a 4.85% return, while the new design will generate a 5.86% return, which is still below the industry norm.
ZAB, in a divided voted, approved the new plans and decided that the changes were minimal enough that Wareham only had to do an addendum to the existing EIR rather than an overhaul.
The Friends of the West Berkeley plan are arguing that the amended EIR “was neither adequate, subject to public comment, nor was it certified in compliance with CEQA.” The group has also expressed concern that researchers will be doing synthetic biology in the new complex and that the amended EIR did not adequately review “potential risks to the surrounding environment and human health associated with laboratory use.” More than 30 tenants of the nearby building at 800 Heinz signed a petition against the new structure.
As recently as 1985, there were eight buildings or features of the Durkee complex still standing. The destruction of the Copra Warehouse means there will only be two left, the Durkee Building at 800 Heinz and the Spice Warehouse at 820 Heinz.
City staff is recommending that the City Council deny the appeal of the Friends of the West Berkeley Plan, stating that the changes proposed by Wareham in 2012 do not materially affect the project approved in 2009. The city stands to collect at least $342,500 from the building’s construction: $194,000 will go into the Housing Trust Fund, $48,500 will go in the City Childcare Fund, and the owners will pay about $100,000 in property taxes the first year, according to a city staff report. The building will also create 300 new jobs.
Barlow told ZAB that “there is no research space of this quality available in Berkeley now.”
Read the appeal and city staff report here.
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