OAKLAND (KPIX 5) — Lake Merritt is Oakland’s crown jewel, a haven in the heart of the city where residents can go for walks or jogs or just to relax. But lately, homeless encampments have taken over. One especially caught our eye.

It’s right next to Children’s Fairyland in Oakland’s Lakeshore Park. Partially hidden under an old oak tree, a group of homeless residents have set up what appears to be a bike shop. Over several months, KPIX 5 watched it evolve from a few tents to a large encampment.

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We watched residents working on bikes and carrying bike parts in and out of a wall of tarps. All of this took place under the nose of the park’s daily visitors. One man seemed to be in charge, directing operations.

So we decided to talk to him. While we waited for him to show up, the rumble of a generator led us to the heart of the operation inside the main tent. Other tents were filled to the brim with bikes and bike parts.

One of the tents containing an abundance of bikes and bike parts. (CBS)

Finally, the owner arrived. He told us his name was Chris.

“How much stuff is here? It looks like a lot?” we asked him.

“Yes it’s a lot, there’s quite a bit. There are probably 70 bicycles maybe, and a lot of parts. Definitely hundreds of parts,” said Chris.

He told us he buys the bikes at auction and sells them to passersby. “Is it all legal?” we asked him.

“Yeah, they are all checked out. Police have checked them out three times, just to make sure,” he responded. That’s because neighbors have been complaining.

“It just seemed really obvious that this was a really thriving illegal business going on right behind our fairy gates,” said CJ Hirschfield, executive director of Children’s Fairyland. “There are clearly tons of bikes being brought in, all the time,” she said.

She says she has called Oakland police, but to no avail.

“I did contact police and said, ‘Look, we think this is a chop shop.’ And the police responded, in effect, ‘If you can prove to us that is going on.’ That is not something I feel comfortable with, nor is it my job,” said Hirschfield.

If you were wondering, it is illegal to set up a bike shop in a public park without a permit. Oakland police admit they’re not heavily enforcing that law. Oakland city officials didn’t even know this encampment existed until we told them.

But when Joe Devries, the city’s point man on homeless encampments, found out, he told us, “It’s unacceptable to be running a business in our park next to Children’s Fairyland, and that has to stop.”

He says bikes or no bikes, under a new city policy, all the homeless currently camping in the park will have to leave.

“These individuals can pack up their belongings that they want to keep and they can move on. Hopefully they will take us up on our offer of shelter,” said Devries.

At Children’s Fairyland, Hirschfield and her neighbors say they’re happy to see all the encampments cleared out.

“I am starting to feel a change in the force, with the city acknowledging that Lakeside Park is a public park. It’s not an appropriate place at this point for private residences, or chop shops for that matter,” said Hirschfield.

Oakland will be posting signs around Lake Merritt and will start moving the homeless within a few days. It’s a controversial move that is likely to be challenged by homeless activists.

On Wednesday evening, the city of Oakland sent us an update: they say their outreach team identified fewer than two dozen people remaining in the closure area.

Eight others have already moved into transitional housing and one moved into a community cabin. The city still has spaces for a handful more at the cabins and there are 20 beds at the shelter.

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