Category Archives: Oakland

The growing black hole (Update: Blackwell quits)

Update 4:15 PMThe Chronicle reports that Oakland City Administrator Fred Blackwell has left his job to become CEO of the San Francisco Foundation. Who exactly is going to do all the dealmaking that Blackwell was doing before?

Just so we get this straight…

Last summer, the Raiders stadium at Coliseum City was projected to cost $700 million, with a $300-400 million funding gap.

In November, the cost estimate was raised to $900 million, with a $400-500 million funding gap.

Yesterday, new Oakland City Administrator Fred Blackwell was interviewed by the Trib’s Matthew Artz. In passing, he mentioned that the funding gap has ballooned to a whopping $500-600 million.

He did note that one of his top projects, getting a new football stadium built for the Oakland Raiders, remained a struggle. Blackwell said the stadium project faces a $500 million to $600 million shortfall that would have to be subsidized by additional development within the Coliseum complex. While he praised the city’s business partners working on the deal, he said “there are a lot of things that can go wrong in a negotiation of that complexity.”

The biggest thing than can go wrong in any stadium project is not knowing how it gets paid for. Coliseum City is clearly at that moment. $600 million just off the development proceeds and fees? Sure, if they have 500 acres to develop at the Coliseum. In this case it’s only 100 acres, and much of that land is already taken up by the pre-existing venues.

How does this gap keep growing? Are the sides still having trouble determining what the proper stadium vision is? For some time the Raiders and the NFL have wanted a smaller, open-air stadium. The City wants a bigger, retractable dome venue that could also be used as a convention center and to attract future Super Bowls. If there’s still no consensus on the scope of the project a year in, it’s not confidence inspiring. And Mark Davis claims he’s being left in the dark.

Already the backers of Coliseum City are looking into alternatives. Perhaps that will involve the existing Coliseum, or further scaling back or cost-engineering the new stadium. The Raiders may even be considered too expensive to retain. Either way, this stadium project has turned into a money pit. Or a black hole, and not the kind cheers emanate from.

Kawakami: San Jose is dead for now

If you haven’t already read Tim Kawakami’s latest blog piece, I must insist that you do so. Then come back here.

Kawakami’s premise is that after checking with various league sources, San Jose is not happening soon, and doesn’t have the votes thanks to the Lodge’s reaction to last summer’s lawsuit filed against MLB.

I’ve heard differently, that for some months now everything is simply a big negotiation and the ongoing items in progress (lawsuits by/against San Jose, Oakland’s own activities) are there to make points towards the final figure. As we’ve seen time and time again, MLB is thoroughly inscrutable. They can choose to punish A’s ownership for nodding with San Jose’s antitrust lawsuit while turning a blind eye to the Giants’ interference with San Jose. It’s their Lodge, they make the rules. People have jokingly noted that the fifth anniversary of the “Blue Ribbon Commission” just happened. Well, so has the ninth anniversary of this blog! And we’re still not closer to a new ballpark!

Regardless of MLB’s (in)actions, the fact is that Kawakami’s right that the A’s aren’t going anywhere soon. Maybe that changes if Joe Cotchett can get the heat turned up via the Ninth Circuit. Even then it seems likely that in a loss MLB would appeal to the Supreme Court, which is really what Cotchett wants. If MLB can be made to heel, then it would force a solution the same way Tampa Bay got an expansion franchise. That is at best a long shot and shouldn’t be expected.

And maybe that’s Selig’s point. Selig and the rest of the owners prefer to work everything out within the confines of the Lodge. They could be holding the decision over Lew Wolff’s and John Fisher’s heads as long as the lawsuit moves forward. If the lawsuit were suddenly dropped, the process could be back on, but not while the lawsuit continues. The response brief from MLB is due this week.

While Kawakami’s basic point about inertia stands, it doesn’t speak to a real endgame. There remains the game of musical chairs at the Coliseum, as well as the pace of progress and the numerous unknowns of the Howard Terminal project. If both of those options fall apart it works in Wolff’s favor. If at least one works out it helps MLB and the Giants since they wouldn’t have to touch territorial rights. The endgame scenarios are unpredictable, involving plenty of independent moving parts. The situation within the Lodge could take years to settle, or could be done before Selig leaves office next year (if that happens).

The parting shot that Kawakami takes in which Wolff & Fisher haven’t endeared themselves to the other owners because they “make profits” from revenue sharing – that sounds like a talking point. That’s the system, set up and approved unanimously by the owners per the CBA. If the owners hate the A’s getting revenue sharing so much, adjust the formula to limit their take. Or how about this – allow them to have a solution to get them off revenue sharing. The 2012 CBA specified that the A’s would be off the dole once they moved into a new ballpark within the Bay Area market, perhaps as late as the end of the CBA in 2016. We now know that the next CBA will come with no new (permanent) venue for the A’s at that time. If the owners are that upset, get punitive. That said, I think that criticism is a load of B.S.

Even the outcome that has the A’s staying in Oakland in a new park is problematic. If the A’s (Wolff/Fisher or a new ownership group) privately finance a $500 million stadium, they’ll be on the hook for $30 million in debt service every year for 30 years, with no revenue sharing to backfill any revenue shortfalls (if the A’s have down years or the honeymoon period ends). Plus they won’t have nearly the kind of corporate revenue to cover a large percentage of the loans the same way a ballpark in San Jose or San Francisco would. Is the Lodge ready to approve such a deal? Or would they rather extend revenue sharing to provide a cushion for the A’s? If they do, the M.O. would belie those previous criticisms. Yet it would be the easy way out. Just treat the A’s like a small market team forever, and let the sleeping dog entrenched interests lie. Yep, that sounds a lot like MLB, especially under Bud Selig.

Coliseum gets upgrades for fans, media, players alike

The Coliseum will look a little different from last year or even FanFest. A number of improvements have been made, from fresh paint and changes to the dugouts and clubhouses to the redone West Side Club. Here’s the press release announcing the changes, courtesy of the Coliseum Authority:

For Immediate Release                                Contact: Dan Cohen/Edit Ruano                                              March 30, 2014

 

 

New Improvements to the O.co Coliseum Will Greet Oakland A’s Fans, Players, and Media for the Start of the 2014 Baseball Season

Oakland-Alameda Coliseum Authority and the Oakland A’s have invested in improved security, upgrades to press and player amenities, and new food options

 

OAKLAND, CA – A’s fans visiting the O.co Coliseum to watch a game this year have a number of new improvements to look forward to – and so do the A’s players, opponents, umpires, and media.  The Coliseum Authority and the Oakland A’s made significant investments in the off-season to improve the experience for all guests.  This includes improved security at the entrance, new food and beverage selections at the stadium, and improved amenities for players, fans, and media.

 

“A’s fans have been looking forward to the start of the 2014 baseball season all winter, and we want their return to the O.co Coliseum to be a positive one,” said Authority Chair and Alameda County Supervisor Nate Miley. “That’s why we are so excited about all the work that has been happening at the stadium during the off-season this year. It’s more than a fresh coat of paint – it’s about us addressing the needs of our loyal fans.”

 

For A’s fans, here are some new improvements to expect:

  • New look: The O.co Coliseum has been fully re-painted and new Kentucky blue grass sod has been laid on the field as it is each year before the season.  New investments in groundskeeping machinery, including industrial lawnmowers and a “laser-leveling system,” will allow the Authority to maintain the field more easily and effectively.
  • New concessionaire & food items: The Oakland A’s, which are in charge of the concessionaire contract, have brought in an exciting array of new items and are upgrading the concession experience/facilities. Fans will now have access to even more premium beers and new food items like wood-fired pizzas, and more!
  • Improved “Ring” Road:  The Coliseum Authority will repave the road that circumnavigates the stadium after the initial homestand.
  • Improved security: The Authority will provide state-of-the-art magnetic screening equipment that fans can quickly pass through as they enter. The Oakland’s A’s will provide personnel to manage the screening.

 

 

For the players, umpires and media, improvements include:

  • Remodeled dugouts: Both the home team and visitor dugouts have been upgraded with new padded benches, upgraded flooring, new dugout phones, water fountains, and new bathroom fixtures and paint.
  • Upgraded lockers: The home team, visitor, and umpire locker rooms all have new rubberized floors and showers.
  • Updated press box: Members of the press will now have access to flatscreen televisions, and new tables, carpets, restrooms and ceilings.

 

“We are excited about this season and confident that fans who come to the stadium and the players will have a winning experience,” said Chris Wright, VP of AEG Facilities and GM of O.co Coliseum & Oracle Arena. “Now, it’s time to play ball!”

 

To download pictures of the improvements, please visit:
https://www.dropbox.com/sh/kuljv0oejnuxp4n/gg26JgTftW?lst

 

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About the Oakland-Alameda Coliseum Authority:

The Authority is a public partnership between the City of Oakland and the County of Alameda (owners of the Coliseum Complex) that manages the Complex on behalf of City and County.  The Authority subcontracts the day-to-day operations of the Complex to AEG.  An eight-member Board of Commissioners governs the Authority.  Alameda County Supervisor Nate Miley currently serves as the Chair of the Board, and Oakland City Councilmember Larry Reid serves as the Vice-Chair.

Let’s hope that the weather cooperates tonight so that everyone can enjoy the changes. The one I care about most? You can guess:

20 craft beers now available in the West Side Club

20 craft and import beers now available in the West Side Club

Port of Oakland approves ENA

10 months. In the short term, that’s what we’re looking at with the approved exclusive negotiating agreement (ENA) for a potential ballpark at Howard Terminal. 10 months to figure some things out. Not the really important things, such as the real hard/soft costs of building there. No, the $50,000 (half of Oakland Waterfront Ballpark’s deposit) available for any kind of environmental impact study won’t go much further than figuring out if the soil at HT is still contaminated. (Hint: It probably is.) Instead, 10 months will buy Oakland some time to figure out, well, what exactly are they figuring out? According to the East Bay Express:

The agreement may also shed details on the feasibility of the site for a ballpark and its costs to investors and the public.

That’s a good start, though again, $50k won’t go far. It won’t even cover the full cost of a feasibility study, which usually ranges in the $100-200k range. Now, you may think that’s pocket change to all the rich people who want this to happen, but consider that $100k is still hanging up the process with Coliseum City, almost 6 months after the timeline was put in place. Some time in the near future, the Port of Oakland and OWB will have to come to another agreement to fund a feasibility study, which will take at least 6 months to complete. Historical notes: the City Council approved $750k for Victory Court studies at the end of 2010, while a 2010 Raiders stadium study at the Coliseum cost at least $125k.

Timing is a curious thing, since 6 months from April at the very earliest puts the publishing of such a feasibility study past the date of the 2014 general election. That works out well for all of the various mayoral, city council, and port commissioner candidates, since they don’t have to be linked to anything written that details costs, and thus they can support Howard Terminal in a nicely vague, non-committal way. If Mayor Jean Quan loses, her successor can pick up the ball and modify the proposal or push it through.

The way the ENA is constructed, 10 months is the time for the Port, City, and OWB to work out the basic tenets of a ballpark deal. Presumably this would include the following:

  • A very rough estimate of site prep costs
  • Who ends up paying for site prep and infrastructure, or the identification of a funding gap (similar to Coliseum City)
  • Options that include various forms of on-site ancillary development, including a separate arena or other public facility
  • How does the Port make money from this?
  • What happens if MLB and A’s ownership go along with the plan
  • How the agreement changes if new team ownership takes over
  • A plan B if Howard Terminal is rejected by MLB

That last bullet point has led to speculation that the site could work for the Warriors, who are running into legal and regulatory difficulties with the Piers 30/32 arena project in San Francisco.

Naturally, any broad study won’t be able to get to the bottom of determining the full cost of site prep and infrastructure the way an EIR is designed to. Victory Court’s demise was forced by a number of factors, including rising land acquisition costs (not applicable with Howard Terminal), regulatory hurdles, and the death of redevelopment (very applicable). The W’s are running into the same problems now. Pursuing the W’s in this manner still looks awkward, as Let’s Go Oakland leader Doug Boxer is being paid by the W’s to work on the Piers 30/32 deal – in effect moving the W’s out of Oakland – while leading the effort to keep the A’s in town. And if W’s co-owner Joe Lacob is interested in buying the A’s, well, it’s not hard to connect the dots to figure out who’s giving Lacob advice.

Assuming that the ENA leads to a working agreement and a ballpark project, the parties can proceed to the environmental review phase, which the Port concedes could take 2-3 years. To keep this in perspective, that’s an EIR starting no earlier than 2015, and probably finishing sometime in 2017 if no legal challenges come along. We’ve already heard about neighbors looking for answers about infrastructure. That’s nothing compared to CEQA challenges, which in California are simply part of the process. Though, if the project skimps on providing infrastructure, those neighbors could easily be an early source of a CEQA challenge.

Signature Properties President and Brooklyn Basin (O29) developer Michael Ghielmetti noted the similarities between Howard Terminal and his project from a process standpoint.

Lot of the same issues, certainly not the same, but very similar regulatory frameworks and outreach process we would expect to occur. This is more complicated in many ways and less in others.

For those who care to remember, Brooklyn Basin was no slam dunk. It took 13 years to get to the recent point of groundbreaking. During that time it had an EIR certified, then thrown out, then recertified. Then-State Senate President Don Perata wrote a bill authorizing a land swap that exchanged waterfront Trust land for industrial land at the Oakland Army Base. A petition to force the project to be subject to a referendum appeared to have garnered enough signatures, then was declared invalid because of improper ballot language (like Sacramento but without the carpetbagging element). Multiple lawsuits were filed. By the time the dust settled, the recession was in full swing and the project laid dormant. The Bay Area’s economic upturn allowed Brooklyn Basin to rise like phoenix. As long as the tech sector continues to grow, it’s reasonable to expect a full buildout.

A land swap shouldn’t not be required, since a ballpark could simply be a privately-funded facility built on public, Port-owned land like AT&T Park. However there are already murmurs of legislation waiting in the wings. Bills could be limited to CEQA streamlining (so far good for the Kings, not so good for the Warriors) or extensive enough to authorize financing for the infrastructure piece.

This all promises to get good. Not immediately, but soon enough. This time the flood of information shouldn’t begin and end with an economic impact report. Fans want real info, as does the press. Don’t settle for less.

P.S. – While I was writing this I got some feedback on Twitter from Port Commissioner (and Mayor Quan’s campaign manager) Michael Colbruno. BTW, love his Twitter handle.

Coliseum City: It’s Complicated

At this week’s NFL owners’ meetings in Orlando, Mark Davis acknowledged the elephant in the middle of the Coliseum complex. From the Merc’s Tim Kawakami:

-Q: If Wolff’s saying he needs a 10-year lease…

-DAVIS: That would make it tough for us to build a new stadium on that site.

Last fall, Davis admitted that he’d rather build a new stadium on the Coliseum’s existing footprint, which would evict the A’s while changing the character of Coliseum City. In yesterday’s interview, Davis again expressed frustration at the pace of Coliseum City planning, throwing some shade Mayor Jean Quan’s way in the process.

It’s no secret that the Raiders and A’s would prefer that they not share facilities. By now it’s becoming clear that the two would rather not share the Coliseum complex, let alone a stadium. Financing issues and competing concepts aside, it’s simply less complicated. Davis would love for Oakland to commit to the Raiders, accelerate the development with BayIG, and figure out just how much money can be squeezed out of the plan. In the middle of an election season, Quan and her competitors won’t commit to anything, lest they appear to favor one team over another. So Quan keeps talking about signing the Raiders sometime in the near future, all the while deadlines continue to slip for the project.

Meanwhile, Lew Wolff has said that the best place in Oakland for something to be built is the Coliseum, though he hasn’t endorsed Coliseum City. Chances are that he’d be fine with the Davis taking the Raiders south, which would force Oakland and the JPA to deal with Wolff only to salvage one team at the complex.

Davis’s audience isn’t the media, Raiders fans, Oakland civic backers, or even taxpayers. His audience is his fellow owners and NFL commissioner Roger Goodell. The keys to the kingdom of LA are in Goodell’s hands, with the owners acting as his Greek chorus. Goodell can unlock access to banks and potential minority partners who have stadium futures to trade. All Davis has to do is show due diligence for at least one year.

So far he has. Davis has repeatedly dismissed the idea of tenancy at Levi’s Stadium, comparing it to the Jets playing in the Meadowlands. He has claimed that he wants the stadium in Oakland, while exploring other corners of the East Bay. Goodell may have nudged him to move to Santa Clara, but the whispers have fallen on deaf ears. It’s either Oakland or Los Angeles for the Raiders. If Coliseum City continues to move like molasses, or the Oakland pols are frozen out of electoral fear, Davis can go to Goodell and say, See, I tried, these people are incompetent.

The funny thing is that the urgency that Davis wants out of the various CC partners may not materialize unless he formally presents a stalking horse in the guise of LA. Talk all you want about not having political support from LA City Hall, or the legacy of attendance issues that plagued the Raiders. If the Raiders moving becomes a distinct possibility, multiple groups will coalesce in the Southland, all competing with each other for the rights to land the Raiders or Rams. The biggest obstacle in LA is the numerous egos all trying to get a piece of the action. Davis knows he’d be the belle at the ball when the time came to debut in LA. If LA becomes a legitimate threat, Oakland will be forced to (re)act. That’s the classic stadium playbook. We’re not far from that page.

The league has its own leverage play too. What Goodell doesn’t want is for the Raiders to have LA all to themselves. He’d rather have the Rams or Chargers there as well, sharing a stadium or not, providing competition for each other. He has a lot more control over franchise relocation than either of his predecessors (Pete Rozelle, Paul Tagliabue) did because of the league’s control over a large stadium funding mechanism, the G-4 program.

Oakland thinks it has leverage because the NFL has been loathe to acquiesce to Raiders ownership’s desires. That leverage could evaporate quickly with a simple nod from Goodell. And if Goodell agrees with Davis that Oakland isn’t moving fast enough, Goodell could turn up the heat on Oakland by making the LA stalking horse appear. That’s the playbook. Quan appears to be taking everything rather cavalierly, offering up a rather incomplete statement about what Oakland has to do for MLB to keep the A’s:

You saw that the (Port of Oakland) Port Commission, now that they have eliminated all the maritime uses from Howard Terminal, has begun to take up the proposal from the Ballpark Waterfront Group, which is made up of some of the top CEOs in the city, and they are asking for a one-year exclusive negotiating agreement, to develop a plan to build a ballpark at Howard Terminal, which, for most fans, is their priority. So that completes my promise to Major League Baseball, when I first became mayor, that we could provide two good sites that have site control, and when they finish negotiating their deal, I think Major League Baseball will have to make a decision.

MLB will have to make a decision? On what? Two sites that have uncertain funding scenarios and unknown cost outlays? MLB is used to taking cities for a ride. They’re not going to commit to anything until they see Oakland doing something truly significant. That may mean saying Adios! to the Raiders at the Coliseum, or pulling out the stops to get Howard Terminal ready for a ballpark. Presenting two sites that haven’t been studied? That’s as if Quan stepped to the starting line at the Oakland Running Festival over the weekend, and when the race started she declared herself victorious.

Consider that Sacramento didn’t truly get moving on its arena campaign until Seattle became a serious threat. Even late in the arena effort, the team was practically sold and delivered to the Emerald City. David Stern allowed that to happen. Mayor Kevin Johnson used a ton of political capital and connections to work out the arena deal, securing a quarter of a billion in public funds for the effort.

Why do teams and leagues use the playbook? Because it works. There’s nothing complicated about that.

The other boring Howard Terminal stuff

The Port of Oakland is expected to approve an Exclusive Negotiating Agreement (ENA) with Oakland Waterfront Ballpark, LLC (OWB) at the May 27 board meeting. The terms are simple: they allow both parties to explore a potential ballpark – a non-maritime use – at Howard Terminal, studying costs and effects. OWB will plunk down $100,000 for the privilege, half of which will be immediately usable and the rest held in reserve and potentially refundable to OWB should things not work out. The agenda item also noted that the ENA is not a CEQA matter, though that is meaningless since nothing is being built during the ENA period. When it becomes an actual project that could be constructed, CEQA will come into play.

In preparation for the vote, Port staff had a report written by Oakland engineering and consulting firm Moffat & Nichol, to determine what needed to be done to keep Howard Terminal a maritime asset, capable of shipping and receiving cargo. The report contained several cost estimates, which included various types of new or rebuilt infrastructure. For instance, the cost to make HT a proper container terminal was estimated at $40 million, including $14.2 million dedicated to additional dredging and wharf strengthening. Another $20 million was estimated for two new container cranes ($10 million each? Wow). Port expansion and consolidation in conjunction with the Army Base repurposing project gives Oakland far more container capacity than is needed, so a container terminal isn’t considered necessary. Nevertheless, such a use is considered the most lucrative and there is a business case for it.

Other uses, from bulk dry or wet goods to roll-on/roll-off of vehicles or heavy equipment were also explored. The various options cost $8.9 million to $61.1 million. Think about that. Up to $61 million just to bring Howard Terminal up to date? No wonder the Port is exploring the non-maritime use option, that’s a big infrastructure cost. Of course, we saw earlier today that concerns from other existing Port operators about the compatibility of non-maritime uses like a ballpark can potentially translate into huge costs down the road. Either way, the Port has to be diligent about the future of Howard Terminal.

Summary of costs and returns from Moffat & Nichol report

Summary of costs and returns from Moffat & Nichol report

Interestingly, the report also tried to project ROI on these options. Using an IRR of 5% to break even, it was determined that a container terminal would take 16 years to get there, or 13 for a roll-on/roll-off terminal. Some options took longer than 30 years or didn’t break even at all. I’d like to see the Port do a similar assessment on a ballpark. The context of this kind of examination is important, as these costs and projections are about Howard Terminal being a self-sustaining entity. Most ballpark economic impact reports talk in terms of spillover effects and surrounding impact, but the Port doesn’t control most of the land surrounding Howard Terminal so it can’t claim such positives. The Port’s own financial statements treat the different terminals and other operations (airport, commercial leases) as separate line items, so the case for making a ballpark land deal provide a return to the Port should be a good one if it’s attempted. The case could rely largely on possessory interest tax, the substitute for property tax used for private interests who lease out public facilities. Assuming that the Port and OWB get down to deal terms, the Port may negotiate for a piece of tickets or other revenues to pay for new infrastructure, whatever that costs. In that sense, the Port is acting the same way a City would, in that the Port has its own bonding capacity and could levy fees to pay those bonds off.

Earlier today, the ballpark-following Twitterverse got into a tizzy as Howard Terminal ballpark proponents were on the defensive about the Schnitzer Steel/Union Pacific/California Trucking Association letter. They pointed out issues that, to resolve, will require all new and potentially costly infrastructure. HT proponents, in their usual reductionist manner, labeled such concerns as, “the Howard Terminal opponents say the ballpark is impossible/unviable.” That’s not the problem. Anything can be done if you throw enough money at it. The issues are whether or not the additional infrastructure can be paid for, and whether they can protect the interests of current tenants and Port operators. If that cost is manageable the ballpark could proceed, other procedural matters (CEQA/BCDC/SLC/FRA/CPUC) notwithstanding. If the costs prove prohibitively high, then we’ll be back at square one, with Oakland scrambling to find yet another site, retreating to Coliseum City (which has its own myriad complications), or starting yet another round of recriminations (“If only Wolff were a willing partner this could be done”). That’s why I’m glad all this is happening. Someone’s gonna get to say I told you so at the end. As childish as that may sound, it’s better than not knowing.