In 1978, the site of Pacific States Steel Corporation (PSSC) – once Union City’s largest employer — lay in ruins. The heirs of the corporation had abandoned the property. Ninety-three acres of environmentally contaminated land provided no employment, generated no property taxes and would cost millions of dollars to clean up.

Retired steel workers from PSSC no longer received the medical payments promised in their pension plan, so they sued for payments owed to them. The federal court took control of the property in 1984, and the judge appointed a “special master” charged with cleaning the site, providing medical payments to the pensioners and paying the debts of the corporation. The special master approached the city about forming a redevelopment agency to assist in the cleanup and development of the property to generate revenues.

In 1988, the city council formed a redevelopment agency and adopted a Specific Plan to allow development on the site for housing and light industrial uses. The site had great potential as it is close to Bay Area Rapid Transit (BART) and future regional rail connections. However, the special master appointed by the federal court chose not to proceed with the cleanup and instead sought to make himself the developer of the land and use rede velopment agency funds to clean the property. After six years and new litigation by the city and the retired steel workers, the federal judge finally fired the special master in 1999 and appointed Nina and Claude Gruen, who had audited the financial records of the former special master, as the new federal court representatives.

Breaking Ground

The Gruens and Union City faced costly cleanup and challeng ing environmental issues before development could proceed. The steel mill site had no basic infrastructure: no roads, drainage or utilities. Most of the site was landlocked and located between two sets of railroad tracks and BART tracks with no access to city streets. The only potential access point for constructing a public road required purchasing an adjoining 30-acre site — and this site, owned by PG&E, was contaminated with polychlorinated biphenyls, or PCBs, which are harmful to humans, animals and the environment.

The redevelopment agency convened weekly meetings with staff from all city departments, the Gruens as representa tives of the federal court, private developer KB Home, the state Department of Toxic Substances Control and Alameda County Flood Control District to formulate a strategy for cleanup and development. The project had to be phased in because the available cash was insufficient to clean the entire site at once. Land sale proceeds from cleaned areas would even tually fund the cleanup of remaining areas.

The cleanup and development plan, financing plan, payment plan for the pensioners and contract specifying the responsibilities for each party required sign-off from a federal judge. In addition, the authorization for the redevelopment agency to purchase the former PG&E property and provide access to the PSSC site required the approval of the California Public Utilities Commission.

The cleanup process required crews to excavate foundations 15 feet deep and to reuse crushed concrete to construct an entry road. They also excavated and moved off-site 6,000 truckloads of highly contaminated soil. Due to the high cost of hauling and dumping, slag material was stockpiled on-site and placed under a geosynthetic membrane. And more than 2.8 million gallons of highly contaminated water in the former cooling pond
was cleaned and removed.

Overcoming Obstacles

The redevelopment agency planned devel oping State Highway Route 84 through the middle of the PSSC site, as construction of this road was critical to serve new development located on the site. Opposition from an adjacent city blocked construction, but the federal court was committed to build housing in the future highway right of way, if Caltrans did not purchase the property. The city council recognized the importance of preserving the right of way and used its redevelop ment funds to purchase the property. The right of way was excavated in preparation for the highway and used as an interim stormwater-detention basin for the new homes built on the PSSC site. Land sale proceeds funded the cleanup of the site and building the on-site infrastructure, and the redevelopment agency funded construction of the access road to the site.

Transformation Yields Remarkable Results

The 93-acre PSSC site, once contaminated and bearing no tax value, is now clean and generates property taxes. As a result of the project:

• The retired steel workers received $5.8 million in payments for their medical plans;
• $20 million was spent on environ-mental cleanup;
• $5 million of backbone infrastructure was installed;
• 243 single-family units were constructed, generating $1.9 million a year in property taxes;
• 216 multifamily units are under construction and will generate $1.1 million a year in property taxes. Thirty of these units are set aside as affordable housing;
• A clean eight-acre research and development parcel is on the market; and
• Caltrans, Alameda Corridor Transportation Authority (ACTA), Fremont and Union City signed a memorandum of understanding to proceed with a modified version of Route 84.

The cleanup and development of the PSSC site stimulated the cleanup of the adjacent 30-acre PG&E property. It also spurred the preparation of a plan for transit-oriented development.

The redevelopment agency and Barry Swenson Builder plan to build up to 1,200 housing units, a 400,000 square-foot office, a community plaza, a public building and 52,000 square feet of retail. The Mid-Peninsula Housing Coalition will manage up to 180 affordable units.

BART and Union City entered into a cooperative agreement in 2005 to create an expanded two-sided BART station with a free at-grade pedestrian pass-through providing direct access to the homes on the former PSSC site and transit-oriented development. The BART station reconstruction is currently under way.

The Capitol Corridor train providing service between Sacramento and San Jose, and the Dumbarton Commuter train that will provide service across the bay to Redwood City, are working with Union City to create a passenger rail train station that will integrate with the Union City BART Station. The Altamont Commuter Express (ACE) train will provide service to the Central Valley.

The cleanup and development of the PSSC site and adjacent PG&E site succeeded because the community, city leaders and redevelopment agency articulated a positive vision and coordinated 15 pub lic agencies, the Union Pacific Railroad and two private developers to solve complex and challenging problems.

Contact: Mark Evanoff, manager, Redevelopment Agency, Economic and Community Development; phone: (510) 675-5345; e-mail: mevanoff@ci.union-city.ca.us.

This article appears in the May 2008 issue of Western City
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