State bills Oakland $29 million for Henry J. Kaiser Center sale

Last summer, we followed the City of Oakland’s budget process with more attention than we normally would. The reason for the coverage was that the City was doing some financial trickery in order to make the budget work. In order to fill a $58 million budget deficit, Mayor Jean Quan tried to pass a parcel tax that would’ve covered half of that deficit. The parcel tax failed, which led to cuts. The City also sold the dormant Henry J. Kaiser Convention Center to the Oakland Redevelopment Agency for another $29 million. HJKCC is inoperable at the moment due to necessary repairs and retrofits, and it’s too expensive to run, making that $29 million a black hole.

Now Matier and Ross report that State Controller John Chiang is coming after that $29 million. Chiang has declared the land sale void, setting up a situation in which Oakland now owes the state $29 million. ORA is dead per legislation, however Oakland has set up a successor agency to continue projects already underway. It’s unclear what the City can do to plug this new-found gap. The property isn’t worth on the open market without either a discount to rehabilitate HJKCC. It couldn’t be demolished because it has historic landmark status. Some combination of additional asset sales and major cuts would also seem to be in order for the City. A major target could be the $3.5 million earmarked for the Coliseum City project, of which some percentage has already been spent.

The HJKCC situation is different from the Diridon ballpark land situation in San Jose, in that no money changed hands there. It was simply a transfer from one agency to another. Should Chiang go after the Diridon land in earnest, it would simply be auctioned off at the state’s discretion and they’d end up with the proceeds, with Lew Wolff potentially getting the land in a sale (though without the negotiated discount). In Oakland’s case, if HJKCC couldn’t be sold for the $29 million price or there were no bidders, the $29 million budget gap re-emerges. At this point there’s no telling what would have to be sacrificed to make ends meet. I have to think that the City has planned for this possibility, at least for the sake of Oakland citizens who may be adversely affected.

I thought it was strange that on other sites many were cheering news last week about land seizures because they could hurt San Jose’s ballpark efforts. The truth is a little more complicated than that, and on the surface, may be worse for Oakland. That’s why we looked at Oakland’s budget situation last year. It seemed unusual and ripe for a reversal. That chicken is coming home to roost.

Update 2:19 PM: Quick clarification on the HJKCC sale: $5.2 million was to be applied to this fiscal year and again to next fiscal year (2012-13), with the balance held in reserve.

50 thoughts on “State bills Oakland $29 million for Henry J. Kaiser Center sale

  1. Funny how news always seems to come in clusters. Drip, drip, drip… GUSH!!!
    I don’t know if it’s as simple as the article published by the Biz of Baseball layed it out, but still, just more information for wild speculation.

    http://bizofbaseball.com/index.php?option=com_content&view=article&id=5671:how-oakland-business-leaders-may-have-killed-the-as-to-san-jose&catid=26:editorials&Itemid=39

    As Rumsfeld once said, “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

  2. @crister – Maury and I had a good exchange of ideas about his editorial on Twitter. My final tweet was this:

    @BizballMaury One other thing. If the #Athletics issue wasn’t on the owners meetings agenda next week why does the timing matter?— newballpark (@newballpark) May 9, 2012

    “Timing” was in reference to the Knauss group announcement and subsequent PR moves.

  3. Kink some some impressive things with the SF Amory, which was a sporting venue at one point. It’d be nice to see some out-of-the-box thinking from Oakland and/or investors to give this place a new life.

  4. To Marine Layer:

    Aren’t Oakland and Alameda County officials showing some “vision”?

    How is the discussion not “public?”

    The City of Oakland had a public meeting – two in fact – re: Coliseum City.

    So – even if you don’t like any of the Oakland stadium sites – Oakland is trying to be transparent about its intentions.

    I’m an Oakland supporter as you know.

    I respect the pro-San Jose commenters on your pro-San Jose site but the constant denigration of Oakland – in my opinion – is not productive, warranted or fair.

    A’s observer.

  5. Who is denigrating Oakland? Is pointing out Oakland’s lack of a site, lack of funding and dismissal of the A’s for the past 20 years denigration or merely a statement of facts?

  6. Good luck Oakland “business leaders,” the latest in a long line of flaks from the East Bay snapping at flies like my yellow labrador on the back porch. Somehow Doug Boxer must be behind this Wizard of Oz act.
    .
    How would Mr. Clorox feel if he was precluded from selling his chemicals in Santa Clara County?
    .
    The list of companies that was trotted out by the East Bay consortium looked like a collection of cigar butt stocks….compared to the Silicon Valley group.
    .
    Maury Brown rarely has an original thought…..his chicken scratch reminds me of an internet hack looking for clicks……and, like almost all Bay Area so-called journalists, he never thinks outside the box….
    .
    This game is sufficiently down the road, further than most would believe.

  7. Right on, A’s observer.

    And if this site isn’t run by pro-SJ folks, as has been claimed by the creators, why exactly is their twitter wallpaper of the SJ Cisco FIeld rendering? Not exactly an innocuous statement being made with that image.

  8. @A’s observer – What does a $29 million land transaction have to do with “vision”? This post is about a financial problem.

    Now if you want to talk about actual vision being executed, please stick to one of the other threads.

    @Rayburn’s Son – Maury Brown is actually based out of Portland, though he’s originally from Richmond. His perspective on The Lodge is valued, but it’s only part of the story.

    @JGMJ – Got a similar quality rendering for an Oakland ballpark? I’ll be happy to alternate between the two.

  9. @ pjk – Not trying to be nit-picky but, can you define “dismal?” I only ask because the Indians, as an example, are barely averaging over 14k this year and are in 1st place and, as far as I’m aware, their ownership hasn’t publicly tried to move to a location outside of Cleveland and they are playing in a pretty good baseball-only facility. If we go back 20 years the A’s had 9 winning seasons averaging 25k+ and had 11 losing seasons averaging 18.7k. I know we’ve been down this road countless times before and I’m not trying to start an “attendance” argument but I just want to know where the bar is when it comes to dismal attendance in your opinion. Going back 20 years of course includes the ’94 strike, which MLB acknowledged that overall attendance declined 20-30% and took years to recover. We also had AT&T Park open up in 2000 as well as Mr. Barry Bonds, which likely took a majority of fans. And, of course, the whole Mt. Davis debacle occurred during this time. Not to mention the Bay Area was the smallest 2-team market by far. I’m just trying to keep this thing in perspective and avoid this whole “Oakland historical attendance sucks because it’s Oakland/East Bay” argument that keeps coming up. If a region had even 1 year of superior attendance I’m thinking that shows it can happen, albeit not with regularity, which is a matter of opinions as to why. Remember that the A’s outdrew the Giants prior to AT&T and SF was always the larger market. Again, I’m not trying to start an argument. I’m just curious.

  10. I’m going to start deleting comments in this thread that are OT.

  11. @ ML – I kind of figured you were going to say that. Please omit my comment to pjk because it is off-topic. Thanks.

  12. @ML
    .
    Wow! The people on this blog are glossing right over your tweet…ignorance is bliss…maybe because most peeps are still at work and haven’t read it yet?

  13. Columbo: I said Oakland’s dismissal of the A’s – as in, ruining the Coliseum, yawning at the North of the Coliseum project, firing Robert Bobb after he proposed a new ballpark. Stuff like that, which has been covered here many times before.

  14. A’s observer, they may have been transparent about Coliseum City but that doesn’t make it any more or less of a farce than it already was. MLB has already said the site is unacceptable (which should have been Oakland’s biggest clue to abandon any thought of building there which they didn’t). On top of that they’ve yet to identify any way with which to fund the farce’s 3 billion dollar price tag. Hell they’re about to have the state come strip them of the 3 million they’re using for the EIR at the site. Transparency is interesting, except when it’s leads nowhere interesting for the team. Call me when Oakland has an actual site that MLB is interested in.

  15. @ pjk – Agreed. You make exceptionally cogent and unassailable points.

  16. Wait… short cuts and creative accounting don’t work?

  17. @Rayburn’s Son – People like headlines and stories that fit their narrative. Facts are secondary at best. Look at how little response there is to this post, even though it’s by far the most newsworthy item of the last week.

  18. I’m not glossing over it… I get it. Antitrustage nuclear option on countdown… Bud Selig is going to be forced to do something, holy crap…

  19. @ ML – Haha. I was thinking the same thing that there seemed to be an obvious lack of response to this important thread. I thought it was just that everyone was celebrating Nueve de Mayo.

  20. This is an important subject way beyond Just the Oakland-SJ-Giants issue. But the subject is dry and this just doesn’t get the general public’s emotions flowing. What does, as RM touched upon, are those that fit their narrative (confirmation bias) and the subjects that strike viscerally. Unfortunately when those things become too large a part of the situation, shabby main stream reporting becomes what sells papers/gets web hits/gets TVs turned on. Further, that leaves a huge opening for powerful interests to manipulate the stories to improve business and/or gain political power. It’s an unfortunate but unchangeable reality. The good news is the price of TiVo is getting cheaper! :-)
    Quite seriously, each city the state goes after has representation in SAC. How many districts can be pushed around before their is some sort of a tidal shift? I hope their is a second bill that will overlook the accounting chicanery and just start the non RDA era anew. Cities suing the state over a gray area is unproductive….

  21. To anyone and everyone:

    Investigating a downtown ballpark, a waterfront ballpark, a ballpark next to the adjacent Coliseum site is “denigration?”

    Regarding the discussion of “vision”: just wanted to point out that Oakland is trying to do something.

    Marine Layer: how come you rarely point out San Jose’s financial challenges? Just curious.

    A’s observer.

  22. @A’s observer – San Jose has already expended all of its resources getting to a certain point in the process. I’ve talked about how the City is tapped out when it comes to acquiring land repeatedly. You choose to ignore it. (1, 2, 3)

    Meanwhile, in Oakland, budget is absolutely an issue because there is so much to do in terms of getting a stadium project going. Why aren’t you talking about this very important issue, PR guy?

  23. A’s Observer: How about this? SJ has completed an ER, selected its site, worked out a majority of the land acquisition for the site, helped to get a prime naming deal for the proposed stadium, was eager to get a vote to the public ASAP to clear its own city legalities and worked with the A’s to get a plan framework in place. However, San Jose has faced budget deficits for multiple years now. Oakland does not have a selected site, does not have an ER, land acquisition is largely at stage 0, naming rights have been low budget and Oakland has done none of this with what 6 years? 10 years? And their idea of working with the A’s has been to play political football with the issue. However, Oakland, like San Jose, also has budgetary problems.
    Unfortunately the only thing Oakland and the ‘Oakland only’ supporters are ahead of SJ on is ignoring the facts. The bottom line is SJ gets a high grade for doing its homework and Oakland gets an F. And the budgetary issue is extremely far from a non starter with SJ. They are going to put this to the voters and ask them if they want to spend $$$ to help make the stadium plan a reality. It’s a matter of credit. And the budget issue in San Jose, while real, are for the voters to weigh (is it worth it to charge up some cost associated with the stadium or not?). I have never heard Oakland Pols suggest a public vote and that makes the Oakland budgetary problem a MUCH bigger stumbling block (if Oakland is preparing for or plan for a vote, my apologies).
    Lastly, when and where has ML championed SJ (as your question intimates he is a SJ supporter)? What he has championed is calling Oakland Pols on their constant bull (and it has been neck deep bull). If the Oakland only crowd would have called the Oakland Pols on their bull years ago when it could have made a difference, the A’s might already be playing in a new Oakland stadium. Instead they let the bull go on unchallenged. Now we get a 3 billion dollar project from the land of Oz and 6 years too late business leaders staging a ‘PSLs will see us through!” nonsense (and I do mean nonsense). LW had enough of it, MLB had enough of it and the only reason the A’s are not certain to leave Oakland is because of the Giants desire to get the A’s out of the bay area.
    Sorry but that’s just reality….

  24. Hey eb, how bout the wsj piece on Oakland’s related struggle?
    .
    Redev claw backs hurt both cities, but with Wolff willing to buy the land in San Jose… It pretty clearly hurts them less.

  25. @ ML – I’m curious, but when is the next budget for Oakland supposed to be finalized? It will drastically affect the outcome of both the 1) politics around a stadium proposal and 2) citizen’s viewpoint of said stadium proposal (do you want to spend $3 million on an EIR when the general fund is already depleted and crime rampant in the streets?).

  26. It does hurt both cities, with Oakland possibly facing the larger brunt of it. However, at this point, Wolff outbidding others for the land is secondary the fact that the Giants still “own” the South Bay market. Frustrations are abound, but nothing will even get close to being decided until MLB finally and definitively weighs in. Wouldn’t MLB wait to say definitively “Yes” on SJ until this matter is officially squared away, which might take over a year to happen. Plus, there is the whole legal matter with the Giants to deal with. I was just posting the article because as of late most pundits from across the country were saying SJ was absolutely going to happen, now there seems to be a growing broader skepticism. I didn’t see the Oakland article, but really, most people have almost officially counted Oakland out, and yes, perhaps with good reason.

  27. Oakland is definitely the underdog. Anyone rooting for artificial barriers to entry that can be changed to keep them in the game is in a bad position.

  28. Since this decision came down, it is a given that the A’s are not going to San Jose, for the near future (If ever), which spares MLB from having to make a decision one way or another. Here is the big question when it comes to the A’s and their future in Oakland. Will the City make a deal with the Raiders and essentially evict the A’s after the lease expires? The odds of this increased tremendously with the apparent agreement of the Vikings staying in Minnesota, and not going to LA (Besides the Raiders, Buffalo, San Diego, Jacksonville & St Louis remain possibilities to end up there). Mark Davis now has three alternatives: 1: LA. 2: Share a Stadium with the 49ers. 3: Stay in Oakland. This gives the Raiders quite a bit of power when dealing with the City, and I am quite sure that Davis will not hesitate to use it.

  29. DB: As long as staying in Oakland involves the Raiders coming up with $1 billion to pay for their own new stadium, I see them eventually going back to LA. They won’t want to be 49er tenants in Santa Clara and Mark Davis can’t draw blood from a rock (by demanding a new stadium from Oakland)….It would serve Selig right if the A’s were evicted from the Coliseum after next year, because it would be Selig’s fault for doing nothing for years and years and years when Wolff offered him a solution in San Jose several years ago. I don’t think he’d have any choice but to suspend the franchise’s operations, since there’s not a chance the Giants will let them share their ballpark.

  30. @DB – Forgive me for being daft, But I fail to see how the decision leads to it being a given the A’s won’t be in SJ? You didn’t show your work or lay out your thought process.

  31. I think DB’s assessment is accurate. Selig has had San Jose on his desk for several years and continues to do nothing. There”s obviously not enough votes to make it happen. And if MLB approved it today we’d still be looking at three years at least, before we’d have a ballpark. And that’s if the Giants step aside…I was arguing with someone last fall, telling them the approval for San Jose would come soon after the World Series. Looks like I was dead wrong….

  32. @pjk, I don’t think Selig really started caring that much about the A’s situation until more recently. Odds are he’s only really been “working” on it for a couple of month during which he still had to deal with other issues ranging from the Dodgers to the new playoff system. As for the property issue in SJ, if it really came to it, I’m sure the city, state & Wolff could come to a settlement where the state gets their money and the A’s the property. It’s likely several years away from happening (if it does) but it’s hardly a death sentence to the whole thing.

  33. The state thing could add another multi-year delay, to the point where it would probably be easier for Wolff to just the ballpark next to the soccer stadium. Do we really want the A’s having to quibble with a vehemently anti-sports governor about all this? Brown didn’t care if the A’s moved to Fremont and he won’t care if they leave the state, either.

  34. I could be way off-base on this, but I would like to see the A’s get evicted purely from a standpoint that it may force someone to do something. Is it out of the question where the A’s just declare themselves the San Jose Athletics? I am hoping it’s all a moot point because I am hoping there may be something going on at this owner’s meeting to make it so.

  35. pjk, the state wants money, plain and simple. It also doesn’t want to waste money fighting the cities for it. I’m not saying it would happen quickly, but state won’t want to own the land themselves, they won’t want to have to deal with lawsuits, they’ll be in a position where bargaining for more a little less than the value of the land and more than the option price was set and be done with it. Even if Selig approved the move today, I don’t see the A’s in SJ for another 4 – 5 years regardless simply because of layers of difficulty. The city doesn’t own all the land so it’ll take time to acquire the rest of it as well. They’ll be able to do that concurrently.

  36. this is to say that this is a really friggin’ messed up situation all the way around… For those who think that decisions can always wait and work themselves out… Here is a case study in why that isn’t true all the time.

  37. The location of that Kaiser building is right next to Lake Merritt. Is there any chance that this could potentially be considered as a ballpark site? If the building is indeed dormint, seems to me that a potential investor can give Oakland the 29 mil to get the state off their back and proceed with ideas of developing a staduim there.

  38. I really don’t understand it when people think the A’s issue simply needs to move up Selig’s “to do list” after dealing with the new playoff system and new ownership issues with the Dodgers, Mets, Rangers (2010) and Cubs (2009). I’ve read this belief several times on the comments page of this site over the past three years. Can Selig only do one thing at a time? I know he’s slow and demented but Selig has a number of people working for him. I’m sure they’re able to work on multiple projects simultaneously – as all businesses do. The San Diego Padres are likely to get a new ownership group this year and I’m sure there will be a San Jose proponent on this board who will say “Oh, the A’s will hear some good news after the Padres ownership situation is resolved.” The reason this thing is taking so damn long is not simply because the A’s issue is at the bottom of the order just waiting for its time to bat.

  39. @Shane, I believe the Henry J. Kaiser Convention Center site in Oakland is too small for a ballpark. It has been mentioned on this blog before. I’ve always thought that Laney College’s athletic fields was the best (and most cost efficient) spot in Oakland for a new park. However, Laney College has no intention of giving the fields up. And I always thought a way around this would be to build new athletic facilities on the current HJKCC site for Laney and build the park on their current athletic fields.

  40. Chris, it isn’t that no one was doing anything. They’ve had people more focused on better understanding the economic realities of the bay area for 3 years. Selig didn’t bother becoming more actively involved with the situation until more recently (after dealing with more pressing issues like extending the CBA, the Dodgers, the Mets, etc.). And he certainly didn’t start making suggestive comments that he was actively trying to broker an agreement with the two teams to move the A’s to SJ until very recently. To suggest that he’s spent 3 years doing that (or anything A’s related) and therefore it’ll never happen is just flat false.

    • @Shane/Chris – HJKCC is too small at 4-5 acres. There’s barely enough room for a ballfield. The building couldn’t be demolished because it’s an historic landmark.

  41. HJKCC is also a Historical Landmark, I am nto sure you could keep the building as is and build a ballpark there even if there was enough land around it.
    .
    Laney College was at the bottom of the list when HOK did their East Bay ballpark study in 2001 (or maybe 2002? Drawing a blank right now). Several factors made it undesirable.
    .
    And for the record, the top sites on that HOK study have all been study and either didn’t happen in favor of other development or were passed on for other factors.

  42. all been studied further… geez. I am typing like a chimp today.

  43. Okay, thanks everybody for clarifying.

  44. This all sounds like the debate gong on right now between the East Bay business folks who came forward last week and MLB. “What about this site?” “Looked at it several years ago. Here’s why it wont’ work….” Well, what about this site?” “Looked at that site, too. Here’s why that one, also, won’t work…” etc etc.

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