Redevapocalypse What-If Scenarios

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.

San JosA’s
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.

15 Responses to Redevapocalypse What-If Scenarios

  1. pjk says:

    It’s a certainty any Frisco arena builder would go after the Sharks. It was tried before when a Frisco arena proposal briefly surfaced several years ago. But the Sharks signed a lease extension running to 2017, I think. I’d hate to see my Sharks move to Frisco and I don’t think it will happen, anyway. The existing arena is sold out and the Sharks run the show. Not much Frisco can throw at the the Sharks that they couldn’t get out of San Jose…

    Looks like San Jose’s lead has lengthened a bit thanks to this redevelopment thing. Oakland is too little too late. Now we need Selig the owners to have the intelligence to do the right thing for baseball instead of whatever the Giants want.

  2. Larry E says:

    god, not San Fran. I can deal with the sharks in Oakland, berkley, sac,
    …anywhere but sf!

  3. letsgoas says:

    wouldn’t you argue that most of the sharks fans are in the south bay/sj area. why move away from an arena that is more than adequate for the team and is routinely sold out in one of the wealthiest parts of the country, so they’re different than comparing the a’s moving out of oakland, that has supported that team strong over the past decade especially.

    funny i think sf is the only “major” US city that doesn’t have a state of the art arena. even small mid western cities like kc/stl have state of the art arenas and “world class” *puke* sf doesn’t. they’ll probably get one and the w’s most likely move to sf within the next decade if i had to be honest about the situation even though media guys like bruce on knbr and steinmitz on csn said it’d be a bad decision to move to team from oak to sf.

  4. tony d. says:

    Based on economical (not emotional) realities, I didn’t think Oakland had a shot at this prior to the “death sentence” of RDA’s. Now? No need to say more.
    Again, once all of Diridon South is in the bag and an A’s ballpark all but becomes guaranteed in SJ, expect the T-Rights to fall like Rome. No need to keep the A’s and all of MLB down because of one a$$hole in SF.

  5. tony d. says:

    Should have said “economic” not “economical.”

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  7. Zonis says:

    I don’t think the Sharks would move up to SF, only because they already have themselves a good situation in SJ, and with the state of Hockey attendance right now, I think they’d prefer to keep the sellouts.

  8. Dan says:

    Not only that regarding attendance, but the bigger plus for the Sharks is complete control of HP Pavilion. They run the whole show including having control of the Strikeforce and gaining revenue from all ancillary events held at the arena. That wouldn’t be the case in SF and ultimately it would lose them money to move to SF as they’d no longer get those extra slices of the pie. No the likelihood of the Sharks moving to SF is about the same as the Golden Gate Bridge moving to SJ.

  9. pjk says:

    What I wouldn’t be surprised to see happening, though, is the Sharks again bring up the San Jose airport curfew thing – a thorn in the side of the entire NHL – if the Frisco arena proposal ever gets moving. It’s not just the Sharks that have complained about it – other teams, have too. The Red Wings got fined for violating it during the playoffs last year.

    Of course, SFO would be roughly 20-25 minutes to any downtown Frisco arena if there was no traffic at all. SJ Arena is about 8 minutes to SJ’s arena – probably the shortest arena-to-the-airport distance in the entire league. Go fly into JFK and it’s probably 45 minutes to Madison Square Garden.

  10. Mark N. says:

    If new Coli and Santa Clara go down, does this at all help SF’s bid to keep the Niners at the proposed new Hunters Point stadium? Or is that project equally as doomed?

  11. Marine Layer says:

    @Mark N. – The Hunters Point project is in the same kind of danger.

  12. Dan says:

    Looks like one project isn’t doomed (though it wasn’t in any redevelopment danger). The San Jose Earthquakes have finally applied for the development permit for their new soccer specific stadium on January 20th which is the final stage before actual construction begins. Depending on the length of time of the review we could be only weeks away from a ground breaking on the first of the planned south bay stadiums.

  13. LoneStranger says:

    Dan, I wonder if that’s the original schedule they were working with, or if it was accelerated due to the Brown/RDA stuff. I know there was thought that the two stadiums would be built about the same time as a sort of package deal to save costs.
    .
    Most likely they want to make sure it doesn’t get killed, but part of me hopes this is a sign that the A’s ballpark news might not be too far away.

  14. Dan says:

    LS, while some thought they were dependent on each other (and there were logical reasons to assume it was possible) from the beginning Wolff and the Earthquakes have been operating their stadium search as an independent operation. At least that’s how they’ve been presenting it and the process to Quakes fans. I think this is just a sign they finally got the funding they wanted for the Quakes stadium, or at the very least decided to spend the small amount of money comparatively that the soccer stadium will cost out of pocket in hopes of drawing in the sponsorship they’ve been looking for if they don’t already have it.

    What bearing any of it has on the A’s ballpark is hard to say, but I doubt very much it was anything to do with Brown that finally prompted movement on the Quakes stadium since that deal to my knowledge had little to do with the RDA situation since it is a long time existing contract which Brown has said will be honored regardless if his RDA destruction scheme passes or not.

  15. LoneStranger says:

    Yea, that makes sense. The reason I thought there is a chance they could be related is that if the decision is no SJ for the A’s, then they move ahead with the Quakes stadium construction since there is nothing to wait around for anymore. Or, if the decision is yes to SJ for the A’s, then they start building the package deal.

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