City Administration In Historic Disarray
In Which: We give an update on the state of the City's administration, Commissioner Stevens offers to give back free money, and One more Starbucks is too many for some on Commission
City Administration In Disarray
Recent events have thrown the City’s upper administration into disarray. A number of important administrative positions have either become vacant or are being patched together, all while the City is trying to fix a $12,000,000 deficit for next year. Quite a lot has happened in the last few days, so here’s the summary:
City Manager Ana Alvarez has been placed on administrative leave
A member of the Personnel Commission confirmed that the Council is finding a new City Manager
In the meantime, the City Attorney was appointed as Acting City Manager
Assistant City Manager Claussen is leaving the City
After failing to be appointed as the new City Manager, Dustin Claussen is leaving Hayward to take a new position at the City of San Leandro—a popular move
Assistant City Manager Youngblood takes over as HR Director
Just before she was placed on leave, Dr. Alvarez appointed ACM Regina Youngblood as the interim HR Director—the position was initially filled by the interim Finance Director
So to recap: the City Manager is gone, one Assistant City Manager is leaving, the other is running HR, the Finance Director is a temporary appointee chosen by someone who is now on leave, the City Clerk is under internal investigation, and the City Attorney is running both his office and the City Manager’s Office.
According to people who have been keeping an eye on City Hall longer than I have, this level of disarray is unprecedented in recent history.
Stack Data Center Coming To Hayward
The Planning Commission approved the construction of a new 310,000 square foot data center on an 11 acre site on Eden Landing Rd near Highway 92. It will replace about 10 vacant industrial buildings with a single 108 foot tall building that will house three floors of servers managed by Stack Infrastructure.
Stack Infrastructure is a global data center developer with structures in Indonesia, Korea, Sweden, Europe, Canada, and elsewhere throughout the United States. Nearby, they have two data centers in San Jose and are looking to expand into Hayward.
One of the biggest differences between this and the previous use of the site is the electrical substation and switching station that will need to be constructed to manage the enormous amount of power the data center will use. To give an idea, the Utility User’s Tax alone is expected to bring in around $5,400,000 per year once all of the servers are up and running in 2029. The total tax benefit is estimated to be around $9,000,000 per year, which is 3/4 of next year’s deficit.
To plan for potential emergencies, the data center will also have 28 emergency diesel generators on site. They will only be turned on once a month for a few minutes to ensure that they’re working. But they have so many, that the data center technically qualifies as a small-scale power plant.
To make up for the additional height that they want (8 feet more than is allowed), Stack is offering $2,000,000 in Public Benefits. This includes money for HUSD, La Vista Park, a Gateway Marker for the industrial part of town, the Stack Center, signage for the Eden Landing commercial property across the street, and more.
This is a $500,000 increase over the $1,500,000 package that they proposed at the last meeting. After meeting with the Hayward Area Shoreline Planning Agency (HASPA), they agreed to put in an additional chunk of money to support HASPA’s plans to revamp the Shoreline Interpretive Center. According to a public comment by HARD Board President Louis Andrade, the additions will allow the Center to focus on the impacts of climate change on the area, which is especially vulnerable to sea level rise.
The developer is also adding in an estimated $70,000,000 in infrastructure improvements that they framed as a public benefit. This includes replacing and increasing the size of the water main from 10” to 12” in the area—though data centers also use huge volumes of water.
Commission Concerned About Generators
Most of the Planning Commission was worried about the diesel generators that will be installed on site. Commissioner Goodbody asked if they had considered battery storage, but the developer said that it wasn’t feasible for the space they had available. Commissioner Lowe asked if they had considered natural gas, but the developer said that the site wasn’t plumbed for that much natural gas.
Commissioner Lowe also asked about noise, which the developer had addressed in their presentation, and said that the generators were in an enclosed building and would only reach about 70dB, or like a vacuum running or loud conversation next door.
Commissioner Hardy asked about the lifespan of the generators, which is about 15 year, and how they’ll be disposed of—they’ll be sent back to the manufacturer. She also asked about diesel spill hazards and the deliveries of the fuel. The developer said that they have a plan, approved by the Fire Department, for any potential spills and the deliveries will only be about 2 trucks every three months to top off the generators.
And while the Stack Center has promised to use 100% renewable energy, the Commission had some questions about that, as well. Commissioner Lowe asked why they hadn’t gone with Ava Energy, which the City prefers. The developer said that they just hadn’t chatted with them yet, but also said that they’d use 100% renewable no matter who they went through.
Commissioner Meyers asked if some of that renewable claim was being paid for by energy credits—they confirmed that they are. He also asked if there was a plan if those credits expired or became invalid. The developer had no plan, but stressed that they would try to increase efficiency and try to come up with something if needed.
Meanwhile…
Commissioner Haman asked for clarification on what a “mitigated negative declaration” was, and was told by Staff that it’s standard language meaning that they found ways of mitigating any issues. “This applicant came to the table to work in such a way… [as] necessary to develop a full mitigation package with this application,” Staff said. Senior Planner Blanton clarified that it means, “reduced any identified potential impact to a less than significant level.”
Commissioner Haman then asked about a section in the permit about Native American artifacts and fossils, but staff assured him that this was standard language in every permit. He also asked if the La Vista Park section of the Public Benefits Package was separate from the impact fees, and staff reassured him that they were. “It’s above and beyond what’s required of them,” they said.
Popular With Unions
Having committed to using 100% union labor, the labor unions came out in force to support the project. Members from IBEW 595, the Alameda Building Trades Council, Carpenter’s Union, Drywallers, Bricklayers, Plumbers and pipefitters, and even the contractor who will be leading the project all came out to support it. This project is estimated to provide over 380 temporary construction jobs—though only 41 on-site jobs.
Even More Popular With Commissioner Stevens
As evidenced during the last meeting with Stack, Commissioner Stevens was enamored with the project. His first question was “Why not make it taller?” The developer said that they could have added another story, but “we felt a three-story project was more appropriate.”
Commissioner Stevens then alleged that the generators could help during power outages, but the developer had to temper his enthusiasm. They stressed that it has happened before, but Stack itself has never helped and it would have to be a direct ask from the Governor. Both of them also alleged that the data center would increase internet speeds and reliability in the City, though neither explained how the data center could affect traffic that isn’t running through its own servers.
During comments, Commissioner Stevens praised the project and praised an AI drive future as an economic inevitability. “This should be a no-brainer—there shouldn’t even be an issue with this,” he said. “I don’t think policy makers understand that there is an AI race right now… and hyperscale data centers like this make this realistically possible.”
He even went so far as to question why the developer is even considering building in Hayward and push back against the benefits package. “I don’t know why they chose Hayward,” he said. “I feel frustrated that there is any payment made for a special benefit. I think that sets a really bad precedent. $2 million is too much to spend given all the other benefits that are coming here.”
Commissioner Stevens also pushed back on the promise of it being powered by renewable energy. “It’s laughable to think that this is going to be supported by any type of renewable energy,” he said.
They’re Just Happy To See People
Multiple members of the Commission were glad to have people in the room—members have complained about low public attendance in the past. “It’s very refreshing to see so many people here passionate about a topic,” Commissioner Lowe said. “Usually we don’t have anyone here.”
Commissioner Hardy agreed. “It’s so exciting to see people onboard and engaged,” she said, “I hope that we do see more of that.”
Changes Accepted… And Not
When it came time to approve the project, Commissioner Hardy pushed to add a condition to integrate the Russell City Art Project into the Gateway Sign—though it’s unclear if the former residents and descendants of Russell City would want their art project integrated into a gateway sign for the industrial park that displaced their entire community.
Commissioner Stevens, who moved the item, supported the idea—mostly. “I am, with the caveat that I don’t accept and approve the use of these funds… I do not believe that Stack should have to pay any special benefit, but I recognize your comment.”
Commissioner Haman pushed for the center to abandon the elaborate wave grate that they developed to screen the substation, but Commissioner Stevens pushed back. “I fundamentally disagree that it should be screened,” he said. “Our society and the economic success of all of us thrive on the future of AI. I think we have to get real about things and we can’t cover things up.”
The Commission approved the vote unanimously, after which the majority of the people in the room left.
Commission Splits On Starbucks
The Hilton Home2 Suites on Hesperian—22101 Hesperian Blvd—is looking to put a drive through Starbucks on a section of its lot. It was originally supposed to be a multi-tenant commercial building, but after the pandemic it turned out that wasn’t a profitable option anymore. The owner was then contacted by Starbucks, but the Council Economic Development Committee pushed to make the building mixed-use. The developer agreed.
Now the plan is to have a drive through Starbucks with a set of four office suites on top—the offices total a little under 2,000 square feet. The primary thing that the Commission is voting on is allowing drive-through restaurants and coffee shops on specific types of Airport land. There are a few other parcels that match this and could possibly have a drive-through on them, but they all have a building on them already and would all need to go before the Planning Commission regardless.
That’s Too Many Starbucks
Commissioner Meyers, who revealed that he’s learning to fly, commented on the idea of the “$100 hamburger” which is shorthand for pilots flying their small craft somewhere to get lunch. He asked if a restaurant could be put on the site if they voted to approve the changes as a way to entice pilots to fly there for lunch. Staff said they could, without even needing a special permit.
Commissioner Meyers then asked how many Starbucks locations were in Hayward, alleging it was the 16th location. Staff clarified that they didn’t know how many there were, but that deciding a tenant isn’t their job. “Staff isn’t the one going out and trying to attract a Starbucks,” they said. “[The owner] was approached by the Starbucks corporation.”
Commissioner Goodbody was also concerned about the number of nearby Starbucks locations, highlighting the one at Target and at a nearby shopping center on the corner of Winton and Hesperian. The hotel owner stressed that a Starbucks helps support guest services and the hotel, and having one nearby is a very common model in the industry.
Commissioner Lowe asked if Staff was concerned about “opening the floodgates.” “No. We’re well aware that a lot of the City’s leaders have expressed concern about the number of drive throughs,” they said, saying again that the changes only apply to a few lots around the Airport and all of them have other buildings on them.
Commissioner Hardy asked if there were any plans of closing other nearby Starbucks locations. Staff said, “Starbucks is in a pretty aggressive growth mode.”
Who Owns What?
The Commissioners asked multiple questions that hinted that they thought the offices above the Starbucks would belong to the Starbucks. However Staff reminded them multiple times that the building is leased to a Starbucks franchisee—they’re not the landlord. The owner said, multiple times, that they had identified a tenant for the offices, but still they asked if Starbucks would have a say in who leased the offices above them.
A Rare Split Decision
The Planning Commission was divided into two camps: One who didn’t want another Starbucks and one that didn’t really care. Staff mentioned multiple times that the City does not get a say in who rents the building, but half of the Commission ultimately voted against approving the changes exclusively based on the idea that the tenant should be something other than a Starbucks.
Commissioner Goodbody said, “I’m concerned about the proximity of all these Starbucks near each other.” She even went so far as to ask if the Planning Commission could push for a different tenant. “We don’t really have the ability to select particular tenants,” Staff said. But Commissioner Goodbody said a standalone restaurant was her preference.
Commissioner Meyers agreed. “I think a restaurant would better suit the airport, would also better suit the hotel.” He was concerned about potential mass-closures of Starbucks locations and ultimately voted against approval.
Commissioner Lowe also voted against the project both because it’s a Starbucks and also because it’s boring. “16 Starbucks is a lot of Starbucks,” she said. “I would prefer that Hayward not become one gigantic Starbucks.” She said she wanted the project to become a draw for the City, comparing it to a “Starbucks Reserve in Chicago that is so gorgeous.”
The Starbucks Reserve Roastery is the world’s largest Starbucks as opposed to a 2,000 square foot location near a municipal airport. The developer even took a moment to comment on the architecture, which became a point of conversation briefly. “I don’t think you’d get any developer to actually invest so much in such a small little building here.”
Commissioner Stevens, after asking his paid AI with the research package to generate a business report for Hayward Starbucks locations, ultimately supported the changes. “To me, the concentration of Starbucks in this location makes reasonable business sense,” he said. “This is a free economy that we live in. If Starbucks wants to make the investment here, I think it makes perfect sense.”
Commissioner Haman agreed. “Again, it is a market economy,” he said. He also noted that no other developer seemed excited to use the lot.
Commissioner Hardy tied the project to the hotel’s future success. “I want the hotel to be successful,” she said. “I’m concerned that if we don’t do this… we may end up having nothing.”
When the vote came, it was split 3:3. Commissioner Franco-Claussen was once again absent—the second in a row—and according to City Staff, that means that the project goes to City Council with no recommendation from the Commission.