Category Archives: Basketball

Negotiating Extension and Investor Group Approved for Coliseum City

Two weeks after a potential investor group headed by Colony Capital and Rashid Al Malik’s HayaH Holdings was revealed, that same group was formally approved as part of the master developer team. With that approval comes a 12-month extension on the ENA (exclusive negotiating agreement) to figure out all most of the details, plus a 6-month administrative extension if needed.

That’s the news. Now let’s try to understand what has to happen next.

The City of Oakland has about $250,000 remaining in money it assigned towards Coliseum City studies. Bay Investment Group (BayIG), the Colony/HayaH partnership, will put in $500,000 towards a market study to determine the viability of Coliseum City. This is important since BayIG is expected to push that study to its own individual investors, who as a group will decide if/how to move forward. The forthcoming study is not to be confused with AECOM’s feasibility study, which was made available during the summer.

Over the next 12 months, the public and private sides have to make good on a set of deliverables. Some within the City, especially CM Larry Reid, wanted a shorter 6-month + 6 month extension instead of the 12 + 6 deal that was approved. Reid’s concerns, aired last week in a committee meetings, were that 12 + 6 was too long a period and didn’t show the necessary urgency to the NFL and the Raiders. Raiders owner Mark Davis has indicated that he wants a lease/stadium deal in place shortly after the NFL season ends.

Nevertheless, Coliseum City will move forward on its own timeline because BayIG asked for 12 + 6 in order to get everything in order. A short list of deliverables looks like this:

  • November – Estimate on cost of remaining pre-development work
  • February – Assessment of new infrastructure costs
  • April – Letter(s) of intent from team(s) who choose to sign on with plan
  • May – BayIG market analysis
  • Summer/Fall – EIR and Specific Plan

These items, along with additional smaller ones, should lead up to preliminary project approval in whatever form it takes, plus a DDA (disposition and development agreement), the contract fine print on how Coliseum City is built, including costs, financing, and timelines. Zennie Abraham caught up with Oakland Asst. City Administrator Fred Blackwell at the meeting to summarize what’s next.

Simply put, BayIG just bought the City of Oakland and Alameda County some time. However, it’s easy to see how the list of deliverables doesn’t exactly line up with the timeframe that Davis is trying to dictate. Moving forward, the issue is whether the dev team can show significant enough progress to get Davis to sign on and sign a separate lease at the Coliseum that would keep the Raiders in Oakland throughout the transition. Then again, that part’s a little confusing too. When Raiders uber-fan Dr. Death asked JRDV’s Ed McFarlan when the earliest groundbreaking could be he received this rather optimistic response.

That seems unlikely given the scope of the project and all the little details that need to figured out. Is that groundbreaking for a new stadium alongside the existing Coliseum? Certainly it couldn’t be demolishing the current Coliseum and building on the same site, since the demo itself would take months and would displace both the Raiders and A’s. While BayIG indicated that it will reach out to the A’s and Warriors to gauge their interest in Coliseum City, it’s extremely unlikely that either team will commit. Despite recent setbacks, both teams are focused on their San Jose and San Francisco plans, respectively. Plus they’d have to commit without all deliverables in place, especially that market analysis. If you think that Lew Wolff would sign a short-term lease without knowing the development’s impact on the A’s, you’re crazy.

For the next 12 months, BayIG has control over most of the process. They could press the deal if they see encouraging signs, or they could kill it if the market analysis looks bad. They’re in great shape considering that they’ve only committed $500,000 towards the project – chump change for billionaires. Just as important, they don’t have to adhere to a specific vision of Coliseum City, though they’re positioning themselves to have at least the football stadium in place. Consider last night’s report on the agenda item:

The Coliseum City Master Plan is providing the basis upon which the City is currently under a separate contract with a specialized planning consultant firm to complete a Specific Plan and CEQA/EIR analysis. The Specific Plan will also identify alternatives to the Master Plan and will consider different development scenarios that will envision zero up to three sports facilifies at the site. Pursuant to CEQA, the separate planning contract will prepare an EIR to address the potential physical environmental effects of the Coliseum City project.

There’s nothing new there, but BayIG is positioned to take advantage of it. There could be a single football stadium, a football stadium and a ballpark, even an arena. At this early stage, it looks like it’ll just be the Raiders stadium, though even that is far from a given. BayIG could find that the best thing to do is to minimize its investment in the stadium, or seek out revenue streams from the stadium or team that could help pay back their investment. The infrastructure cost, which will be borne by City/County, could also prove prohibitively high on top of the remaining debt to be carried at the Coliseum. BayIG could even go with zero venues at the Coliseum. Such a plan would probably not get approval from City since it would represent a white flag. Yet it remains a distinct possibility – if not now, within a few years.

The upside, regardless of your optimism or skepticism of Coliseum City, is that things are coming to a head. Coliseum was introduced more than 21 months ago, and has shown only the most tentative progress until a few weeks ago. Now’s the time to put up, to see what results Coliseum City can yield. No more stalling, and for that we can all be glad.

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Note: The only local mainstream media coverage of yesterday’s news came from CSNBA’s Scott Bair. Seems like everyone else was preoccupied with transit strikes and some other multibillion dollar development in the South Bay which is a lot more than vapor.

ESPN’s Tim Keown pens sobering feature on future of pro sports in Oakland

It’s terrible timing to have a column about Oakland titled “Death of Sports Town” as the A’s jump into the postseason, yet here it is. Written by ESPN the Magazine writer and former Chronicle scribe Tim Keown, the piece tries to codify the meaning and value professional sports teams provide to their home communities.

Keown deftly explains the socioeconomic dichotomy that stratifies Oakland, the lack of outsider faith in The Town, the city government’s ongoing ineptitude, and the greed of owners who already have one foot out the door.

At the end of the column is a plea from Keown for the owners and overseers of these sports to, for once, forgo the extra $$$ and try to keep the community intact.

In the relentlessly monarchical world of professional sports, someone has to be able to forsake a digit or two in the bank account to create a legacy more meaningful than a trust fund that’ll cover a lifetime of BMWs and Botox treatments for the grandchildren of his grandchildren. Someone has to consider the void left behind.

Yet Keown can’t clearly answer the question he poses about gauging the impact of pro sports. I don’t know that anyone can. Yes, they are part of the fabric of any community fortunate to have them there. He drops the Raider-turned-San Leandro-cop Kenny Shedd anecdote. He interviewed Oakland native and NBA rising star Damian Lillard, who grew up near the Coliseum. These are all good, but anecdotes are the worst kind of gauge. There should be something between these feel-good stories and cold political calculation, as was exhibited in the Oakland Chamber’s poll yesterday.

In the poll, 50% felt that it was very or extremely important to keep the franchises in town. 55% of the 500 respondents said that they hadn’t attended an A’s game in the last 12 months. Another 20% only went 1-2 times. Obviously, part of the reason has to be the Coliseum’s dilapidated state. Some may be turned off by ownership. It shouldn’t be the team, since they’ve been meme-ing the sports world for the last 15 months. Someday someone – perhaps multiple people – will write an academic study on Oakland and its relationship with sports. Hopefully it’s not an eulogy.

 

Coliseum City’s Mystery Investors Revealed

Earlier in the year, Oakland Mayor Jean Quan talked up foreign investment in Coliseum City, which had the potential to fill in funding gaps for one or more venues planned for the project. The Trib’s Matthew Artz reports tonight, on the eve of a Tuesday City Council closed session, that those investors are a partnership between real estate powerhouse Colony Capital and Dubai financier Rashid Al Malik. The closed session would presumably lead to a public discussion item on October 8, which should include some basic terms for the price of the land, a development timeline, and other critical information.

Colony/Al Malik are no strangers to bidding on expensive properties. In the spring they jumped to the lead in bidding for arena/stadium giant AEG. Eventually they balked as AEG honcho Phil Anschutz refused to budge from his asking price, purportedly up to $10 billion. That led to the departure of Farmers Field champion Tim Leiweke, leaving the football stadium project in limbo.

Coliseum City, which could cost $2 billion just for a replacement arena and separate baseball and football stadia, is expected to have billions more in development costs associated with offices, retail, and additional infrastructure. It has the potential to be the biggest single redevelopment project in California history.

The main problem is that redevelopment is yesterday’s plan. Tax increment is off limits thanks to Governor Brown’s dismantling of redevelopment agencies all over the state. While TIF couldn’t finance a lion’s share of the project, it could’ve helped take care of the infrastructure work, which no developer wants to take on if he can help it. The closed session talks are centered around land sales, so Oakland (and Alameda County) could conceivably sell Coliseum land or other nearby properties to help raise the public share. It’s not much of a departure from Lew Wolff’s Pacific Commons plan, which involved a fairly simple purchase option of privately owned, not publicly owned, land. While the Bay Area’s real estate market is experiencing a rebound, chances are that Oakland would name a price favorable for Colony/Al Malik in order to get them to play ball.

If you’re Colony/Al Malik, you want to be able to get in with as little equity or borrowing as possible. At the same time, we’re hearing that the project could work with only one or two venues as opposed to three. That works in Colony/Al Malik’s favor, since there would presumably be less money going towards stadia that would otherwise go to their shareholders. Not having to build a new ballpark or arena would also free up 10-15 acres of “prime” development land near the Raiders stadium. Of course, that has to be balanced with the recognition that more venues equals more events and event days, which would make the project more attractive to prospective tenants. There’s the possibility that no teams remain, which would result in no new venues. There’s also a remaining disconnect regarding the different players’ respective visions. Raiders owner Mark Davis continues to focus on a smallish outdoor stadium with less than 60,000 seats. Planning consultant JRDV (and previously Mayor Quan) want something larger – and perhaps retractably domed – that could attract big events such as the Super Bowl.

There’s one other angle to play here. In 2010, Colony bought the construction firm Tutor-Saliba, the contractor responsible for rebuilding the Coliseum Arena, Mt. Davis (no, they weren’t the architects), and several transit projects including the planned California High Speed Rail and the BART-to-SFO extension. Colony could see some additional opportunities associated with having Tutor-Saliba control the construction process for much of the project. Not sure how that might conflict with an open bidding process often required when using public funds.

Besides the failed AEG bid, Colony and Al Malik have had their share of hits and misses. Colony invested heavily in Station Casinos just as the recession was starting, and Station eventually declared bankruptcy. Al Malik was head of Dubai Aerospace and launched an aggressive strategy to buy (and lease out) a bunch of jumbo jets in 2006. He quit the company in 2008 as DAE floundered. Colony once co-owned the French football club Paris St.-Germain, then flipped it to investors from Qatar two years ago.

There’s a great sense of irony in that much of the criticism of A’s managing partner Lew Wolff is that he’s a “greedy developer” who only wants to make money. Yet who is Oakland bringing in to give Coliseum City a whiff of viability? One of the richest developer/hedge fund groups in the world, Colony Capital. The master developer for Coliseum City appears to be Forest City, the company Brown favored for Uptown condos and apartments instead of a ballpark. When you need big money and expertise, there are only so many places to find it. What are the chances that this group isn’t “greedy”? Slim and none.

Update 12:25 PM – Got a copy of today’s agenda (thanks Matt Artz). The resolution calls for a 12-month extension of the ENA (Exclusive Negotiating Agreement) to figure out the terms of the deal. This comes on the heels of the the original ENA expiring October 21. In addition to the 12 months there would be another 6-month administrative extension option. No additional money would be needed to complete all of the project deliverables, a concern going back from the early summer.

What I have to wonder is what Mark Davis thinks of all of this. While it’s good to have the potential for additional investment to help defray the stadium cost, here’s another case of the JPA/Oakland/Alameda County pushing a deadline out. This time it could go into early 2015 before things are finalized. This doesn’t seem like the kind of urgency that Davis is looking for:

Whether there’s a sense of urgency or not? I know there is on our side. We have to find out how urgent on their side. The picture that’s been drawn is there. We know what needs to get done. It’s just whether it’s going to be able to be done.

It’s Davis, after all, who’s pushing for a long-term lease extension tied to a new stadium development deal. How does this news affect that? Another 2-3 year lease to stay in the game?

Governor Brown signs streamlining bills for Sacramento, SF arena projects

You can’t say Jerry Brown doesn’t like sports now, folks. No sir.

The Governor signed two bills to help with environmental review for separate arena projects championed by the Kings and Warriors. SB 743 (Steinberg, D-Sacramento), for the Kings, made incremental changes to how traffic and parking studies will be done, but fell short of the sort of sweeping CEQA changes desired by Republicans and the Governor. Much of the streamlining in SB 743 benefits the Kings arena specifically by creating a time limit for lawsuits and allowing for eminent domain proceedings while the project goes through the EIR process.

AB 1273 (Ting, D-San Francisco) sought to bypass the State Lands Commission so that approval of the project rested with the City/County of San Francisco. That provision was stricken, neutering the bill rather severely. However, the EIR process now inserts SF and the BCDC to manage the process, allowing them to head off any red flag issues that the SLC could use to deny approval of the project. One key win for the Warriors was the granting of a development permit at Piers 30/32 to the BCDC, which should help advance to process of determining the proper (read: low) amount of parking to be built in concurrence with the arena.

The W’s arena should also benefit from some of the new provisions in SB 743. Piers 30/32 most certainly qualifies most certainly qualifies as an urban infill project, considering its near-transit location and dilapidated state.

Now that the legislative endaround has been successfully executed for both arenas, it’s only a matter of time to get their EIRs completed and approved. Sure, all sorts of challenges will occur in the meantime, but these actions are big if they’re to have any hope of being open by 2016 (Sacramento), or more likely, 2017 (SF). It’s just too bad that the legislature couldn’t properly fix CEQA for everyone.

Bending rules instead of fixing them

As the legislative session ended late Thursday night in Sacramento, the assembled pols found themselves at yet another crossroads regarding CEQA. They were getting ready to prove another project’s sidestepping of existing CEQA law, all in the name of making the state more competitive, or jobs, or keeping a team from moving to another state. While Democrats were generally in lockstep about the prospects of the project, Republicans complained about how granting exceptions like this one doesn’t fix the core problem.

Just about everyone including Governor Brown agrees that CEQA makes the procedural environment too difficult to get things built. It’s all too easy to create year-plus delays because of often frivolous CEQA challenges. Don’t get me wrong, many CEQA challenges have real merit. If a contaminated site needs to be cleaned and an applicant isn’t thorough about mitigation steps, CEQA provides the method to keep such abuse in check. But uses of CEQA can themselves be abusive, such when homeowners object to a project simply because it will affect their property values.

CEQA was designed to protect the environment. While it needs to be overhauled to prevent abuse, whatever programmatic changes need to be made must keep the spirit of the law intact. Judging from the debate on the Assembly floor on Thursday, it’s not clear exactly how that will happen.

State Senate President Pro Tem Darrell Steinberg (D-Sacramento) did a victory lap Thursday afternoon as SB 743, the bill designed to help streamline CEQA for the Kings’ downtown Sacramento arena, was easily approved in both houses. Previous bills provided similar exemptions for other big projects. Farmers Field received an exemption because it was thought that streamlining CEQA would help bring a NFL franchise to LA. It didn’t. SF Assemblyman drafted similar legislation for the Warriors’ arena (AB 1273). And if Howard Terminal got off the ground for any kind of major project including a ballpark, it’s likely that another bill would be written to benefit that project. Given the amount of cleanup that would be required, bypass legislation is practically a given.

During the debate over AB 852, a last minute gut-and-redraft meant to impose union-backed CEQA protections over certain projects, Assemblyman Paul Fong (D-Cupertino) asked the bill’s author, Roger Dickinson (D-Sacramento), if the bill and AB 743 could help a project Fong champions in his backyard, Apple’s spaceship campus headquarters. Dickinson indicated that this was the case.

The problem with providing exceptions for big, high profile projects like stadia and convention centers (or corporate headquarters) is that they chiefly benefit the big money team owners and associated businesses who run such facilities. If we’re going to be serious about real, substantial CEQA reform, we need real legislation to get to the core problems regarding abuse and delay. That way every kind of applicant can benefit, not just incredibly wealthy business interests. Steinberg made some headway by reshaping how some areas of concern are measured, but only after he shelved SB 731, the bill he wrote as a broader approach towards real CEQA reform. Chief among the issues addressed in SB 743 are parking and traffic, both of which will now have a potentially more flexible way to define mitigations. Aesthetics are also deemphasized for certain projects. All in all, these are small but necessary steps that should modernize CEQA. Steinberg did what he needed to do to help the Kings arena, just as he promised to David Stern and the NBA’s Board of Governors. As for properly reforming CEQA? That’s for the next legislative session, I suppose.

On Subsidies and Votes

If you’ve been reading this blog for a while, you’re probably already familiar with my stance on public subsidies for sports teams. It has perhaps become more hardline over the years, as civic coffers have dried up and redevelopment died out. The ideas are pretty simple, and I don’t expect everyone to think the same way I do:

  1. Public money for stadia in the form of cash, loans, or bonds – whether or not secured by upfront taxes or fees – should never happen in this day and age.
  2. All new or renovated venues that do not require public money are generally good, as long as they don’t come with significant kickbacks for the team and developers.
  3. Any public assistance that goes beyond processing permits or planning work (providing land, money, or other benefits) should require a public vote over the terms of the deal.

Note that I haven’t specified dollar values for anything. That means that it doesn’t matter if a municipality provides $1 million or $1 billion in assistance - any assistance merits a referendum. There is no gray area at work.

As currently structured right now the Sacramento Kings’ new arena will not go to the ballot box. The City Council and Mayor Kevin Johnson have argued that a referendum isn’t necessary isn’t because no new general taxes are being levied. Councilman Steve Hansen (no relation to Seattle investor Chris Hansen – we’ll get to that in a bit) even argued in a forum earlier this week that because Sacramento’s airport received $1 billion in publicly-funded improvements without a vote, the arena shouldn’t either. That is utterly absurd. First of all, an airport in a major city is a pretty important piece of public infrastructure, incomparable to an arena, which is a luxury. Secondly, it’s foolish to use third grade-level reasoning to justify a political move such as this (“My friend’s parents let him stay out late, why can’t I?”). Not voting on airport improvements was arguably a bad move in the first place. Not voting on an arena would only compound that error.

An anti-arena group, STOP, emerged as the only entity with enough cash to fund a petition drive that would’ve put the arena on a ballot. STOP’s origins were murky, as it was connected to Loeb & Loeb, a Southern California law firm associated with the Maloof family (former Kings owners). Initially that led to accusations that the Maloofs funded STOP. It turns out that the aforementioned Chris Hansen had actually funded STOP to the tune of $100,000. The non-disclosure and solicitation of the contribution(s) were all state campaign-reporting violations. Hansen eventually admitted his part in the subterfuge and apologized, explaining that he wouldn’t fund the campaign further. Arena advocates are rightly incensed and not satisfied with Hansen’s apology, going as far as asking the hedge fund manager to pull back all gathered signatures. In addition, STOP pulled some shady tactics in misrepresenting aspects of the arena plan, which has caused several thousand petition signers to request their names be removed.

Messy, right? This brouhaha didn’t start with Hansen or pro-arena forces. It started with the need for a referendum. Since the City decided the arena didn’t need one, the anti-arena political machine geared up to get enough signatures to force one. That got another group going in defense of the plan, trying to head off the petition drive at the pass. All of it, and I mean all of it, is unsavory. There’s a very simple, easy way to resolve this once and for all: just allow the referendum to take place. Even if the delay counts for several months it shouldn’t materially impact the construction plan, which has numerous pieces to work out including a potential eminent domain land acquisition. If the pro-arena forces are as confident as they say they are about the plan, there’s no reason to skip this crucial civic step. Mayor KJ has called the arena the biggest project in the City’s history. Shouldn’t the biggest project in the City’s history be confirmed by plebiscite? Forget the dirty politics, the real and phony outrage. Let it all air out in a real campaign. Sacramento voters at least deserve that amount of respect.

Plus, let’s not forget that one famous Sacramentan was caught on the other side of this divide. Last year I wrote about Gregg Lukenbill’s plot to kill the original China Basin ballpark in 1989 with mailers targeting San Francisco voters, all part of a plan to coax the team northeast along I-80 to land next to ARCO (Sleep Train) Arena. (An even more revealing account can be found at The California Fix.) Why no outrage? Because that’s part of the game. It’s also part of the past. After all, Oakland Mayor Jean Quan certainly picked up a few votes after the revelation that Lew Wolff donated $25k to presumed frontrunner Dom Perata’s campaign in 2010. How’d that work out in the end for Oakland?

Eventually, San Francisco got new ownership in that were willing to spend their own money on a ballpark, with minimal city assistance (land, infrastructure). Even that plan ended up in a referendum, one that won in a landslide. Santa Clara’s 49ers stadium plans received legitimacy thanks to their victory at the ballot box, as did San Jose’s arena plans. Meanwhile, Oakland pushed Mt. Davis (and arena renovations) through without a city or county vote to disastrous effects, and pols are hinting at even more stadium plans that won’t require referenda. Are these people nuts? Have some respect for your citizens, politicians. Allow for campaigns. Allow the citizens and fans to be fully educated on the issues. You owe them that much. Sure, campaigns are expensive. The billionaires and millionaires who want these projects can afford campaign costs, they’ve seen and done it before. Chances are that they’ll outspend opponents 10:1. They have the resources. That’s fine. That’s the way the process works. The track record, at least in this state, is that allowing proper vetting of stadium projects is good for all concerned. If stadium and arena proponents aren’t willing to accede to a referendum request, it’s worth wondering what they’re hiding.