In the mid-1960s, the California State Department of Transportation (Caltrans) purchased more than 400 parcels of property for construction of a 14-mile 238 Corridor Bypass Freeway to run through the City of Hayward and parts of unincorporated Alameda County.

In 1971, a lawsuit, filed in federal court on behalf of residents to be displaced by the freeway construction, blocked the project.  Caltrans subsequently abandoned the freeway plan.

In 1982, state legislation was passed to allow Hayward and other local jurisdictions—working through the Alameda County Transportation Authority—to develop alternative strategies for relieving traffic congestion in Central Alameda County.  The legislation called for these Local Alternative Transportation Improvement Program projects to be funded from proceeds from the sale of properties that had been accumulated by Caltrans for the 238 Bypass Freeway.

In 2009, then- Gov. Arnold Schwarzenegger directed Caltrans to sell all property not needed for existing LATIP projects.  The directive led to negotiations and a legal settlement between Caltrans, the City and residential tenants residing on the 238 Bypass Corridor properties.  Under the settlement, every tenant household living in the Corridor as of Jan. 1, 2010, received a “lump sum stipend,” which was calculated using Caltrans policies with consideration given to length of tenancy, household size and income.  The lump sum stipends were comprised of a “relocation payment” and “moving stipend.”

Additionally, several of the Caltrans 238 properties were sold to their Corridor tenants through a City-assisted first-time homebuyer program.

Lastly, new residential development in the Corridor was required to include at least 237 new low-income housing units through application of the city’s inclusionary Affordable Housing Ordinance.  And, tenants of the Caltrans properties were to be given occupancy preference where possible and allowable when new below-market housing is constructed in the Corridor.

In 2011, following formal adoption of the settlement, the City approached Caltrans with a proposal to allow the City to take responsibility for the disposition and development of the remaining Caltrans-owned property.  After initial disinterest, Caltrans agreed to negotiate, and eventually a Purchase and Sale Agreement was approved by the City Council and the California Transportation Commission (CTC) in January 2016.

The Agreement with Caltrans consists of the following major elements and benefits:

• The City may buy from Caltrans 10 different parcel groups for a six-year period that expires in January 2022.
• Properties that have not been resold by the City to developers can be returned to Caltrans without penalty
• During the six-year period, the City will pre-plan and partially entitle each parcel group to ensure maximum value and conformance with city land-use plans, policies and vision.
• An appraisal process shall determine property values.  These amounts will be paid to Caltrans.  If the City can negotiate a higher land value on resale to developers, due to its preplanning and entitlement process, the excess proceeds will be allocated to the City.
• The City will require parcels to be developed and not resold for speculation.
• The City has control over the public input process on proposed development plans.
• The City can plan the appropriate infrastructure upgrades needed to support the sale of the combined parcel groups, and establish infrastructure funding districts as appropriate.