Monthly Archives: January 2011
Now for the “fun” part.
Last night I described the fate of redevelopment in a California where the concept no longer works within the budget framework. Today it’s time to discuss all of the great/terrible fates that await our favorite local sports franchises should RDA funding sources dry up.
49ers Bond Rush
It all starts not with the Oakland Athletics, but rather the San Francisco 49ers. The linchpin to the Santa Clara stadium plan is $114 million in public funds, $42 million of it from the RDA (the 49ers would provide a partial advance). This money would have to be raised before any RDA dissolution or cutbacks take place, so the deadline would presumably be sometime in the next 4-5 months. This means that Santa Clara would have to go to the bond market three times for the stadium project:
- $42 million from the RDA
- $35 million from the newly assembled Mello-Roos district (hotel taxes)
- $330 million from the Stadium Authority
If the RDA doesn’t get the bonds by the deadline, there’s no chance that the hotels will even tax themselves for their piece, let alone fund a RDA shortfall. The agreement between Santa Clara and the Niners would have to be reopened so that an alternate funding source could be inserted, and that source couldn’t be tied to the general fund in any way. The Stadium Authority couldn’t get started because there’d be no certainty of the project getting off the ground until the funding package worked itself out.
$40 million doesn’t seem like a big deal as it’s less then 5% of the project cost. It’s still a lot of money to raise and a big enough gap to throw a wrench into the works. There’s a chance that both parties could figure out a way to bridge the gap but it’s not going to happen immediately, and unless it’s the team pledging to cover it completely, any contractual details will require renewed scrutiny.
Should the team find the sledding too rough, there’s always a Plan B. They can run to Oakland, where the Coliseum Authority and the Raiders will be waiting with open arms.
The Coliseum Authority has bonding authority and capacity through its joint powers, the City of Oakland and Alameda County. There’s that nagging problem of ongoing debt burdening both parties through 2026, which can be looked at one of two ways: Should the JPA endeavor to get a new two-team NFL stadium built in the hopes that helps cover the debt or cut its losses and keep paying the debt even though the Raiders could be long gone before it’s retired? (Not that amassing more debt is favorable as the current bonds were downgraded to BBB last month.)
The problem Oakland and the JPA has going forward is the fact that the new Raiders stadium plan had integrated redevelopment along Hegenberger, including a new conference center, hotel and retail. With the well run dry, none of that stuff could get built unless some new taxation/indebtedness occurred, or unless the stadium project’s funding coved it. So what you’d be left with is in all likelihood an updated version of the stadium and arena complex, surrounded by parking. Sounds familiar, eh?
On the other hand, if Santa Clara is able to get the funding ball rolling, it’ll prompt the Raiders to move more quickly in order to leave Oakland. Al Davis isn’t going to live forever, and Roger Goodell is a take-no-prisoners negotiator who has been clamoring for the two teams to share a stadium. Whatever the location, expect an agreement between the host city and the two teams sooner rather than later. Otherwise it might be too late for both.
Which Way Warriors
We’ve discussed the Warriors and the Lacob-Guber group’s interest in San Francisco. The Port of SF owns land to the south of AT&T Park that could be well suited for an arena. This is important as the money’s already spent, no new funds required. In order for a new arena to be built, it would have to be privately financed and it would make the most fiscal sense if two teams shared the arena, not just one. This model has worked well in Chicago and Dallas, where both cities’ representative hoops and hockey teams created partnerships to build their venues. The Giants being the developer has only limited impact since they couldn’t materially impact which touring acts or other events came to town. Two teams means two major winter sports teams, not just the W’s and a minor league franchise.
Can it be done? The Giants/Warriors would have to attract the Sharks or a second NHL team, neither of which seems likely. SVSE would probably entertain the offer as a way to extract lease concessions from San Jose, but it wouldn’t move beyond that. It’s much like trying to get the W’s to move south permanently – it’s technically doable but highly unlikely. Lacob-Guber could also use the SF arena as a stalking horse for improvements to the Arena.
Again, any new arena in SF is only possible if it is privately financed. The good news? There will be so little big project construction in the future (save for public facilities) that the labor could be relatively cheap.
It was nice knowing you Cowtown
Unlike some of the whispering about MLB contracting two teams, there actually has been talk about contracting the Kings. And it will only get louder as the current season draws to a close later this summer. The woes of the Kings and the Maloofs have been chronicled here and elsewhere for some time now, and there doesn’t seem to be a light at the end of the tunnel for them. Mayor Kevin Johnson is playing this like he has to walk the ball up the floor and dump it into the post every possession instead of being able to do anything dynamic like this. Being a mayor is a tough job. I want to see the Kings stay in Sac, but it’s hard to see long term with every proposal linked to some kind of redevelopment. The NBA probably won’t buy them as it did the Hornets, which leaves the Kings in some sort of limbo for years to come.
The landbanking strategy San Jose has used for years has never been more wise than right now, as it works to cobble together the remaining land at Diridon. As I understand it, the money is basically untouchable at this point and SJRA can do whatever it wants as long it takes care of its housing set-asides (25%). If SJ and the A’s are given the green light, the vote this summer or fall won’t be about ballparks vs. schools since the money will already be spent. The debate will be about baseball vs. other housing or commercial developers in a time of a glut of both housing and office space. And yes, the decision could drag on for another several months or even a year.
Oakland mayor Jean Quan has been publicly silent on what the death of RDAs could mean for the Victory Court project, and that’s not a good sign. When the mayors went up to the Capitol last week, the most quotable guy there was Chuck Reed, not Quan. There should be a greater sense of urgency there if Oakland’s various supporters want the donut hole strategy to come to fruition, but it’s not happening publicly, perhaps by design. Should the EIR be delivered at the beginning of April, there will be ample opportunity to go over every detail of the document, and it’s that thoroughness baked into the CEQA process that could eventually kill MLB in Oakland. The way I see it, Bud Selig is looking for a politically expedient opportunity to declare support for San Jose, and that could come in the form of a 400-page EIR that brings up more questions than answers. Why? Because Lew Wolff has to have been in his ear constantly about this redevelopment business, and opportunities are running out fast. Maybe the day of reckoning wont occur immediately, it might occur well along in the process as it did in Fremont. Either way the clock is ticking as it is for AT&T in that commercial for the Verizon iPhone.
Of course, if Let’s Go Oakland had declared Victory Court as its site in December 2009 instead of 2010, Oakland might not be in such a bad position. Oakland’s only saving grace now is something out of its control: the continued difficulty with T-rights negotiations. That’s like basing your retirement plan on an upcoming shared inheritance – will you get a good enough piece, or will it mostly go to the more favored child/mistress/charity? It’s not a real investment strategy.
Generally there isn’t much that I and the people at Baseball Oakland agree about. However, when I saw their interview with long time broadcaster Amaury Pi-Gonzalez, I was furious. Pi-Gonzalez admitted that this as of now, there is no carriage for the A’s in Spanish for 2011. This comes two years after the A’s signed a five-year deal with the Spanish Beisbol Network, which had broadcasts on two small stations.
Look, I understand that the team’s first broadcast priority is in acquiring KTRB, and then it’s to secure broadcast rights elsewhere should the station purchase not pan out. I get it. But to not have an option for Spanish language broadcasts is downright embarrassing. It’s WEAK. The A’s are trying to move to San Jose, where 31% of the populace is Hispanic and there is no shortage of activists ready to pounce. You don’t need PR missteps like this.
Pi-Gonzalez notes that even if the A’s were to go with internet streaming broadcasts, which are nowhere near as good as an actual radio station at this point, the cost would be $100,000 for the season. That’s chump change! The A’s could’ve non-tendered Conor Jackson, signed him back for cheap Cust-style, paid for the internet broadcast, and pocketed the difference. Or if Jackson left, they could’ve signed another Cal guy.
I feel bad for the veteran broadcaster. A Fremont resident, Pi-Gonzalez supported the Pacific Commons plan quite vocally, and he probably imagined himself in a brand new broadcast booth working A’s games this season, only a 10 minute drive from his house. Now with the broadcast world so uncertain, it hasn’t worked out the way anyone thought it would. We’re with you there, Amaury.
As for the A’s? COME ON, MAN.
When Mark Purdy starts writing about the state of redevelopment, you know it’s serious.
The truth is, whether by design or accident, Selig has dawdled so much that any Northern California ballpark plan could be imperiled by new Gov. Jerry Brown’s plan for the state to scarf up redevelopment funds. Oakland was counting on those funds to buy ballpark property. Fortunately, San Jose has already purchased most of its land and has a Plan B to obtain the rest — selling other downtown parcels owned by the city and using that money to buy up the remaining ballpark footprint.
Following up on former San Jose Mayor Tom McEnery’s appearance on The Ronn Owens Show, Purdy is taking the tack of calling Bill Neukom’s stance on T-rights silly, as opposed to McEnery’s appeal to Neukom’s better angels. Again, I can’t see this media campaign as being effective other than the fact that the issue remains in public view, which may be the point.
Going back to redevelopment, an article in today’s Merc tries to project what would happen in the near term to the beleaguered SJRA. The agency has tax increment over 8,100 acres of property in SJ city limits, equivalent to a 12 square miles or a city the size of Mountain View. Even if Sacramento ordered SJRA to stop any new development contracts tomorrow, they couldn’t claim any new tax increment off the top because it’s already sworn to pay off debt for existing projects. That’s because nothing new is being built in San Jose other than a few projects which started a few years ago such as the Brocade headquarters in North San Jose. For Sacramento to be able to get “new unsecured” tax increment, San Jose and other cities would have to embark on a new development boom, or at least encounter a situation where a bunch of property gets sold among private parties. That means that, ironically, one of the ways Brown could see that new tax increment is if he allows the RDAs to make their last hurrahs and go out with a bang by approving new projects, like a Diridon ballpark. Diridon would be a different case from most other new projects in that no new funding source would be required to complete the project.
That’s not a situation that would work in Oakland, since ORA would have borrow against future tax increment to assemble the Victory Court land and infrastructure. That’s exactly what Brown wants to prevent. Oakland could raise funds without ORA, but it would have to occur via a hike in sales tax or a parcel tax, the same kind used for local school improvements, and thus would require a vote. Should the dissolution or scaling back of RDAs happen – say by this summer – the biggest obstacle facing San Jose would also face Oakland, except that Oakland would require a supermajority (2/3rds approval) 55% approval per Brown’s proposal for limited redevelopment, whereas San Jose would require only a simple majority (no new taxes). Judging by the results of the last vote on a parcel tax measure in Oakland (for police funding), it’s not very promising.
Even if the cuts were quick, there’s no chance that they’d be clean. The Bay Citizen’s Zusha Elinson ponts out that both Oakland and San Jose have a lot of budget crossover between RDA and City, with both cities paying for some police task forces and even city council members’ salaries. When Controller John Chiang finishes his audit of 18 cities (including SJ), he may find that whatever revenue Governor Brown thought he could realize by killing RDAs was a mere illusion. Then what?
Then there’s the issue of what tool Brown would use to extract funds. He promised not to go after already under contract projects. He might go after recently agreed upon projects, the ones cities have been rushing to approve over the last few years weeks. This goes against the spirit of Proposition 22 which was passed in November. Brown and his aides talked of Prop 22, which is now enshrined as a constitutional amendment, being moot if the agencies themselves were eliminated. But that would undoubtedly run into lawsuits and scared the big city mayors enough to lobby Brown in the Capitol last Wednesday. The result of the meeting was that the mayors, including Chuck Reed and Jean Quan among others, agreed to put together a “working group” whose mission it is to make a counterproposal. Given our experience with panels/committees/working groups, the mayors aren’t the best bet right now.
A compromise solution may come from the legislature. Assemblyman Jim Beall suggests that the state could place a cap on the percentage of tax increment any RDA takes. For many cities and specific redevelopment districts, such a step would amount to a freeze. San Jose would have to search far and wide for projects in areas not affected by a cap, whereas Oakland might benefit from having large swaths of former industrial lands or brownfields which could work under the cap. It’s unlikely that this solution would net the $1.7 Billion in revenue Brown is seeking, but at least it would keep the lawyers at bay. I could also see a situation where there are caps on individual projects based on proportionality. Even if San Jose wanted to raise bonds for a big project right now it would be in trouble because Fitch just dropped its rating on non-housing RDA bonds from A to BBB-, putting the confidence in SJRA bonds just barely above that of junk bonds.
If you’re reading this and thinking, “GAWD why is ML writing about this crap again?!?!” or “Cities have too much power to let RDAs die” I suggest you read up on this. I assure you, when it comes to the A’s staying in the Bay Area long term, it’s very serious. The cities aren’t acting like they’ve got nothing to lose, they’re battening down the hatches. The end is nigh for the era of modern redevelopment throughout California, and if cities aren’t proactive, the chances of being able to pull off the next big library/sports facility/city hall/transit hub will dwindle to nothing (admittedly some are cheering this on).
Tomorrow, I’ll go over the weird possibilities for the local sports teams if RDAs were to crumble.
The Save Caltrain Summit, held in San Carlos and sponsored by Friends of Caltrain, just wrapped up. I’d like to say I came out of it the session hopeful, but I can’t. Yes, this session and the many town halls to come were prompted by service cuts amidst the ongoing transit fiscal crunch. Moving forward, Caltrain’s problems are more linked to what it really is and how it wants to be perceived.
A few years back, Caltrain ran nearly 100 trains up and down the Peninsula every weekday, including every 30 minutes during middays. Right now it runs 86 trains on weekdays, and this summer will run 48 per weekday (commute hours only) unless Jerry Brown gives the transit agency a $30 million gift.
Amidst all of the debate over electrification, grade separations, and degrading service was a specific question: What kind of service does Caltrain want to run? Does it aspire to be a rapid metro service like BART or a much simpler commuter train?
Obviously, that’s a question easily answered in good times. In lean times, not so much. Should Caltrain roll back its service to commuter only, the perception of it as infrequent – and therefore inferior – will only grow. Ridership will decline dramatically as the agency finds itself in a funding death spiral.
Should austerity prevail long term and limit Caltrain to only commuter service, it won’t just affect a San Jose A’s team as well as the Giants. While it would be easy to get to an A’s game on Caltrain, getting back home would be an entirely different kettle of fish.
The problems Caltrain faces are severe enough that it is fielding bids for outside companies to run its operations. It’s quite possible that at some point in the near future, BART could run Caltrain just as it does Capitol Corridor. Clem Tillier, who runs the Caltrain HSR Compatibility Blog, thinks Caltrain trains with BART livery and logos wouldn’t be a bad thing, as it could at reduce some of the bureaucratic overhead and lead to better synchronization of the services. It would also be a step toward unification of all of the disparate transit agencies into one, which would help riders. BART is set to startup its own commuter eBART service, a DMU service which will run from Pittsburg/Baypoint to Antioch.
Frankly, I think it’d be a great idea to bring all heavy rail service (BART/Caltrain/Capitol Corridor/ACE) under a single body with one brand, while the individual bus/light rail services act as “last mile” customers/partners. Each of the rail agencies is tied to a separate joint powers agreement between counties, creating a huge amount of overlap and waste. Caltrain’s dependence on other agencies and not a separate operating subsidy makes it a candidate for merging with BART.
Does Caltrain have to be killed to save it? In one sense, yes. Due to the dire situation Caltrain faces, it may be time for someone else to take the controls. As gas heads back to $4/gallon and the roads start to get clogged due to the Bay Area’s growth, citizens need solutions that work. As Caltrain is reorganized, residents can create the proper framework by which Peninsula rail will operate for the rest of the century.
My dad moved the family from San Francisco to Sunnyvale in December 1979, when I was 4. My mom still loved the City after the move, so she would take my brother and me to SF to visit relatives or go to Chinatown regularly. She didn’t even get a driver’s license until the mid 80′s and was terribly afraid of driving on freeways. Back in the 80’s the change to Caltrain wasn’t yet complete so we called it Southern Pacific, after the old rail company that was contracted to operate the service. Caltrain grew and gained a foothold in the community. The trains even inspired the design of what would be HP Pavilion. Caltrain may be the Peninsula’s rail service, but that identity does nothing for it outside of the Bay Area. Let’s cast aside the perverse tribalism we’ve created in our transit world, and let’s get going.
Okay, I can’t help it. This post is wildly off topic. I’ve been waiting for the alternate jersey design to be revealed, and today it was revealed at A’s Media Day. By now you’ve seen the initial pic from Jane Lee, which frankly, looked somewhat underwhelming. Billy Beane described the jersey’s color as “canary yellow,” which seemed to be backed up by more photos, but other photos showed a richer gold instead of muted canary. The A’s web site has now been updated to include a gallery which includes this closeup:
Does that solve anything? I don’t know that it does. In cloudy or night games, the color may look more muted. On bright sunny days, gold may prevail. The stripe has also alternated between green and blue depending on the picture, so it seems that lighting has everything to do with how the uni looks.
Then again, that stripe has a teal-ish tinge to it… We’ll be able to judge for ourselves in a few weeks when the alternate jerseys start showing up in stores. ESPN’s Paul Lukas mentioned the A’s last summer after a throwback game involving the Pirates. This season, Uni Watch may have its first two-face uniform article.
One thing’s for certain: the black alternate is out. Which makes gold/canary the new black I suppose. What will Gio choose when he takes the Coliseum mound?
P.S. Shortly after the post went up I was sent a few more shots by CSN producer Casey Pratt (danke). Judge for yourself.
In what will probably end up a footnote in this neverending saga, Cisco completed acquisition of the bulk of the Pacific Commons site (the Trib’s George Avalos reporting). 103 acres were purchased from Catellus (ProLogis) in December 2009, followed by another 41 acres last month. Judging from the sizes of the acquired parcels, they do not include the area slated for a movie theater and Target.
Cisco could build a new campus in Fremont, but it’s not likely to happen anytime soon. Instead, it seems more likely that they may end up selling or leasing the property to some up-and-coming tech company, though being in Fremont tends to limit the kinds of firms that might locate or relocate there. Cisco also bought land near the Dublin-Pleasanton BART station with the intent to expand there. They ended up selling that property to the quasi-public State Compensation Insurance Fund. SCIF is relocating from San Francisco to Pleasanton and Vacaville, citing high costs at the mid-Market headquarters.
The stretch marks and scars of boom and bust cycles are everywhere throughout Silicon Valley. Aerospace and defense contractors were replaced by PC hardware manufacturers who were themselves replaced by Web companies. Farmland and orchards gave way to giant campuses for Cisco and eBay. Facebook may be moving into Sun’s former headquarters in Menlo Park. Such is the pace of innovation.
Speaking of transformations, the Argus’ Matt Artz has been trying to figure out what will happen with Union Pacific buying all of that old NUMMI land. He dug up some information on an railyard expansion project UP did in Lathrop, which would grow the yard from 134 to 277 acres over 10 years. The Lathrop yard, which runs 24/7 and was moved there to get out of an urbanized locale in Stockton, has a whopping 83 jobs on site. I’m sure the folks at the Taco Bravo on Auto Mall and Grimmer are ecstatic about having one job for every two acres come into their part of town. And as active as Fremont Citizens Network was in fighting the Warm Springs ballpark, they seem to be completely ignoring UP’s railyard plan.
San Jose note from erw, who attended the long session tonight (but he spoke at least twice!):
Both the Diridon Station Area Good Neigbor Committee’s Framework for Implementation and the Planning Dept.’s Diridon Station Area Plan passed unanimously. Council was very careful to not do anything to affect the parking for Pavilion/SVSE. Next steps: GNC to reconvene when big developments come up (HSR, Baseball) and an EIR for the Station Area Plan (expected complete by March 2011).
I should also add that an EIR study session may occur sometime in April. The Diridon Station Master Plan’s goal is to address near-term (10 years) development and construction in the area. In doing this, planners have made the following assumptions:
- Construction of Ballpark
- Development of the Core Area
- Development of the former San Jose Water Co. site (Adobe)
- Construction of BART Box [cut and cover]
The Master Plan EIR (separate from the already certified Ballpark EIR) will contain an alternative to the ballpark which has 2.4-5.3 million square feet of new commercial space.