Yesterday’s important takeaway is that City & County are on the same page

Update 1:05 PM – SF Business Times has more on the land deal aspect, including quotes from Floyd Kephart. 

Yes, Raiders and A’s fans alike can start dreaming up their new stadium(s), all shiny and new. A proper team store inside each. There will be chances to compare whatever’s proposed on each proposal’s merits. And there’s a great likelihood that whatever each team proposes pushes the other out of the Coliseum due to scarce land resources and financing difficulties. When those proposals are presented, we’ll have plenty of time to discuss them. It’s entirely speculation at this point, so I don’t want to focus on that yet.

Instead, I want to look at the one less exciting news item that came out of the last couple of days. As Oakland Mayor Libby Schaaf reiterated during her interview with Damon Bruce yesterday, the City of Oakland and Alameda County are finally working together on plans for the Coliseum. Prior to this week, the City had been working on Coliseum City independently of the County, leaving the County to consider working on its own alternatives. They even got to the point of hiring a new general manager for the JPA along with a development consulting firm headed by former City Manager Robert Bobb before backing away. Eventually they decided that the best way forward was to work in concert with the City, since both parties will need to sign off on any future plans.

The biggest obstacle for the City and County is that blasted remaining Coliseum complex debt. At $200 million (split almost evenly between the stadium and arena), it is an albatross threatening the feasibility of any project at the Coliseum. Thankfully, that debt is being whittled away over time by annual payments, so in a few years it’ll be about 25% less. That’s still a heavy load on buildings that may well be demolished as part of any plan, so dealing with the debt in a responsible way is arguably the biggest responsibility for Oakland and Alameda County all told.

The Coliseum complex's location adjacent to BART makes it hugely valuable to developers

The Coliseum complex’s location adjacent to BART makes it hugely valuable to developers

The one major asset the City and County have available to them is 120 acres of land, comprised of the Coliseum complex, additionally required property out to Hegenberger, and a smattering of parcels near the BART station. Many are presuming that the land could be swapped for the remaining debt, however much that is when the time comes. That may be a bad presumption, considering the complex’s value as a potential Transit Oriented Development site. Even if you discard 30 acres for new venues, that’s 90 acres to play with, one of the largest TOD sites in the Bay Area (along with Bay Meadows and San Jose Berryessa).

How much is the Coliseum land worth? Located in East Oakland and surrounded by light industrial uses, no one’s going to ask for $7-10 million. What is the the fair market value, though? A listing on Loopnet for nearly 3 acres just north of the complex is asking for $6.75 million, or $2.36 million per acre.

coli-nearby

At that rate, the publicly owned 120 acres would be worth $283 million, which would be double the value of the remaining Coliseum debt in a few years. Maybe the JPA uses land sale proceeds for infrastructure, maybe it gets split between the City and County – either way it’s worth more than simply giving away the land to the Raiders or A’s in exchange for paying the debt. One of the owners may even consider those proceeds as a worthy public contribution for a stadium. As the adult conversation continues in earnest, City and County will bring in an appraiser to figure out FMV for that land, find out its revenue generating potential as it gets rezoned, and plan for how to use future revenue streams. It’s a conversation that’s bigger than just keeping teams in town.

If a proposal lowballs land value, as Lew Wolff’s 66th/High (Coliseum North) plan did, selling the land may be considered a nonstarter. If land is the public’s biggest asset and leverage, it hold true to guarding it in the public’s interest. That may lead to discussions in which only parts of the land are sold. In any case, it should be a very lively conversation, one Oakland and Alameda County need to have whether there are two or zero teams in Oakland in a decade.

City of Oakland Press Release Regarding Coliseum City ENA Extension

Hat tip to Zennie Abraham, who posted this first and did a quick video blog about it.

MAYOR LIBBY SCHAAF, OAKLAND CITY COUNCIL PRESIDENT LYNETTE GIBSON MCELHANEY, COUNCIL PRESIDENT PRO TEMPS LARRY REID and SUPERVISOR NATE MILEY SUPPORT THE CITY AND COUNTY JOINTLY EXTENDING AGREEMENT WITH NEW CITY AND ADDING RAIDERS AND A’S TO NEGOTIATIONS

OAKLAND, CA – January 19, 2015 – Mayor Libby Schaaf, Council President Lynette Gibson McElhaney and Council President Pro Temps Larry Reid today announced their support for extending the negotiating agreement with New City, as well as bringing the A’s and Raiders to the table to discuss developing the coliseum land themselves. Mayor Schaaf has also secured a commitment from the Alameda County Board of Supervisors to consider formally joining the City of Oakland in this new approach at their next meeting January 27th. The Oakland City Council will vote in a closed session next Tuesday, January 20th, to extend the Exclusive Negotiating Agreement (ENA) for up to 90 days, with an express condition that the City may negotiate simultaneously with its sports teams about developing the entire coliseum site.

“I’m excited that, for the first time, both the Oakland Athletics and Oakland Raiders have expressed interest in coming to the table to join these serious discussions and that the City and County are poised to move forward together. This new approach represents real progress in crafting a project that protects the public dollar, retains our sports teams, and increases the economic vitality of the coliseum area,” said Mayor Libby Schaaf.

“Keeping our sports teams in Oakland with a world-class development is a top priority of these discussions,” said Oakland City Council President Lynette Gibson McElhaney. “As joint owners of the land in question, Alameda County will be a critical partner in the collaborative effort to retain our teams and determine the best way to build a state of the art complex that will be a beacon of civic pride for many years to come.”

“I appreciate Mayor Schaaf’s hard work to develop an approach that gets the city and county on the same page. I support the idea of signing onto the ENA with New City now that we will also start negotiating directly with our sports teams,” stated Supervisor and Coliseum Powers Authority Chair Nate Miley. “We’ll be doing our due diligence, but I’m optimistic that the City and County will start moving forward as a unified team after our January 27th action.”

More Tuesday, of course.

Schaaf proposal would allow competing proposals from Raiders and A’s

Oakland Mayor Libby Schaaf wants to extend the Coliseum City ENA. But that comes with one huge condition. From BANG’s Matthew Artz:

“…the 90-day extension, expected to receive City Council backing on Tuesday, would come with a condition that the two teams are free to offer competing plans.”

In effect, the Raiders and A’s would be pitted against each other, and also against Coliseum City.

It’s a bold and wise move by Schaaf that’s likely to garner much broader support from Alameda County than Coliseum City has so far. It would also force Mark Davis off the sidelines, into a role with much greater involvement in the stadium process. Previously, Davis had been content to be mostly hands-off, allowing developers to sell him on their plans while remaining detached. This would also explain the promotion of Marc Badain to Raiders team president. Badain, the CFO and interim team president, was the lead in Oakland stadium talks to this point.

What does this mean for Coliseum City? That depends on how much lifting the Raiders want to do. Badain’s the long-time numbers guy for the team, not a developer. It seems most logical for the Raiders to partner with Coliseum City, since some $5 million has already been spent on studies for the project, including an in-progress EIR. The plan already favors the Raiders over the A’s, so unless Davis dislikes some part of the plan so severely that he’d rather strike out on his own, it makes the most sense for him to partner with CC. At the very least he’d have to sign a completely nonbinding letter of interest or something similar.

If the Raiders choose to craft their own plan, Coliseum City as we know it is dead, since it would be competing against the two teams it’s trying to sign. It’s unlikely that CC would be able to satisfy both teams and its own investors to all parties’ desired benefit, especially now that the amount of land being discussed is merely the 120-acre Coliseum complex (out to Hegenberger), no additional land involved. That’s also a game-changer, since shrinking the focus to 120 acres would preclude further public land acquisitions by the City, County, or JPA.

Meanwhile, the A’s have been waiting for this moment for more than a year. Lew Wolff, as well as most of the discerning public, knew for some time that Coliseum City was serious pipe. Wolff will legally have the opportunity to present his own plan, and the City/County can decide which plan is best, or if no presented plan works. There’s a series of questions everyone will have to answer before a single shovel can hit the ground. Among those questions:

1. Which of the venues will be demolished to make way for new development? Neither team wants to play in the Coliseum long term, yet neither wants to build a new stadium for the other since it would blow up their own respective budget. So it might make the most sense to allow the other team to stay at the Coliseum, which would be renovated to some degree (or not) to make it more suitable long-term. Naturally, the Coliseum’s current condition is much better suited for football than baseball thanks to Mount Davis. Plans could also call for the demolition of the arena, which represents 8 valuable acres within the complex.

2. Who pays for the infrastructure? While it was assumed that the City/County would pay for new infrastructure, the introduction of competitive bidding gives them some leverage in terms of allowing the developer to pay for some or all of that cost. That cost would eat into each bidder’s bottom line, so the challenge for the bidders is to balance that public desire with their own internal projections. For instance, a bidder could adjust to assuming infrastructure costs by adding additional square footage to offset. However, keep in mind that Coliseum City’s full buildout at the complex called for around $400 million in infrastructure.

CC-easements

Colored lines represent easements for utilities, some of which may have to be relocated. Cost could run into tens or hundreds of millions.

 

3. How much does one team’s plan respect the other team? Both owners have expressed an interest in limiting the construction of parking garages in order to preserve surface parking. That’s also valuable, developable land. Again, how does the bidder strike the balance? Does one team’s bid kick the other team to the curb?

4. Does either plan pay off the existing Coliseum debt load? The original Coliseum City plan had no provision to pay off the $100 million at the Coliseum. Floyd Kephart added that responsibility to his plan. Lew Wolff’s alternative also appears to take care of this. If the Raiders propose their own plan do they offer the same? And what about the $100 million owed on the arena, which may not be paid off if/when the Warriors leave?

5. How does the development fit in with Oakland’s planning strategy? A hidden issue in all this redevelopment talk is how the future Coliseum will affect Oakland, especially East Oakland. Will it add much needed affordable housing? Will it gentrify East Oakland? Could it attract one major employer in a campus setting, or numerous smaller companies? Would the retail component be targeted properly, or could it end up with a bunch of empty shell buildings bringing in few rents? What if the retail part is just more big box stores? And how does the plan work with Oakland’s desire to create a thriving transit hub? Does that plan compete with downtown Oakland?

This is finally the emergence of the adult conversation we have long been waiting for. Kudos to Mayor Schaaf for acting so quickly to allow that conversation to begin in earnest. There’s actually a decent chance that Oakland can come out of this looking good in that the City won’t be ripped off. It’s a better chance than it had previously. It gives Oakland new, real leverage. Oakland should approve the ENA with the new conditions, and let the best team win.

Perhaps the City should fly in Mills Lane to judge the proceedings

Perhaps the City should fly in Mills Lane to judge the proceedings

Alameda County meets with group selling Coliseum City alternative

If you haven’t been aware before, the City of Oakland has an ENA (Exclusive Negotiating Agreement) with the principals behind Coliseum City. That includes newcomer New City Development, headed by Floyd Kephart, local architects JRDV, and Colony Capital (to some diminished extent). The ENA would also extend to any teams signing on to the plan, if the Raiders or A’s were interested. So far, neither has gotten on board. Nor has the Warriors, whose sights are set on San Francisco.

Now comes word that a group called O3 Capital is pushing its own plan to redevelop the Coliseum area. O3’s plan would include three new venues for football, baseball, and basketball, along with an unusual twist – a new terminal at Oakland International Airport. It’s unclear why specifically a airport terminal would be involved, but such an inclusion would make an already complex project significantly more complicated. My guess is that O3 would want a cut of revenues coming from running the airport and the sports venues. That would cut into the operations of the Port of Oakland, which oversees more than 70,000 jobs at the airport and the seaport.

It’s also worth questioning the viability of a third terminal. The airport has lost both United and American over the past several years, becoming more reliant on its status as a low-cost alternative to SFO as well as FedEx’s hub operations. It makes little sense for a third terminal to be built, especially after an expansion for Terminal 2 was already undertaken to satisfy Southwest Airlines’ growth at the airport.

Regardless, Alameda County Supervisor and JPA Board President Nate Miley appears willing to hear O3’s plans and others out. O3 head Tarik Hasan is unwilling to show his plans unless the ENA for Coliseum City expires, which would presumably allow for an open bidding process. With nearly $5 million spent on studies, reopening bidding might look to some like following up on a waste of effort and money, putting Coliseum redevelopment back at square one. It could also be said that the lack of progress made by the various groups associated with Coliseum City have simply shone a light on the fact that Coliseum City is too difficult to make work, so starting over is the next best step. Start over or allow for an extension and hope it works out? That should be decided this Tuesday.

Another thing I’m more interested in is whether others echo Miley’s sentiments on the project, especially within Alameda County. Over a year ago the Oakland City Council and Alameda County Board of Supervisors finally had a full, lengthy discussion about the project and its prospects. The Supes weren’t nearly as sanguine about Coliseum City as the Council was, given their more pointed questions and statements. There hasn’t been a similar session ever since, and I doubt that the Supes have since gained religion on the project with its struggles. The easiest thing for Oakland to do is the extend the ENA, effectively punting on the project for however many months. Inevitably some hard questions will need to be answered, and the Council will have to decide whether to fish or cut bait. Floyd Kephart has a hell of a sell job to make this week.

From Now Through Opening Day

With the MLB-San Jose legal battle out of the way (for now), we can turn our attention back towards Oakland, where most of the news over the last two years has originated.

January 20 – Tuesday is the deadline for the Coliseum City three-month extension, granted to Floyd Kephart’s New City Development group when they took over the project. The Oakland City Council will take up the matter in the afternoon’s closed session. During the evening open session the Council is expected to report on Coliseum City’s progress.

closed

Agenda item for 1/20 City Council meeting

If everything goes as expected, Kephart will get another extension of 3, 6, or 9 months so that he can try to rope the Raiders. The Raiders will probably be given another one-year lease extension, since Coliseum City is not yet a finished product and the Raiders have nowhere else to go for 2015. Mark Davis wants to retain maximum flexibility for his franchise, so a multiyear deal seems out of the question. Meanwhile, the A’s and Lew Wolff will be patiently waiting on the sidelines for Coliseum City to work itself out, wanting no part of the project.

February 8 – On Sunday comes FanFest. It’s worth going just to get acquainted with all of the A’s new players. If there’s a concurrent BlogFest event, there’ll be a post about it. Tickets are $10, and as usual you can expect a sellout.

On a personal note, this year’s FanFest will mark the first one since it came back that won’t be held on the same date as the Double IPA Festival, held at The Bistro in Hayward as part of SF Beer Week. Looking back, the doubleheader was truly my favorite day of the year. DIPA will be held the previous day, February 7 (Giants FanFest day). I may be draggin’ a bit during FanFest.

February 19 – Pitchers and Catchers report to Mesa, AZ. They’ll be at Fitch Park, as the renovated facility in Mesa has replaced Papago Park in Phoenix.

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March 3 – Spring Training Opening Day is a home game at Hohokam Stadium vs. the Giants. You might want to get your tickets in advance, or else the Giants fans will snatch them up. If you want to catch two games during a weekend, come to Phoenix the following weekend, March 7-8.

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March 13-14 – Want a different scene from laid back Arizona? The A’s and Cubs are playing a pair of spring training games at Cashman Field in Las Vegas. Yes, you can relive all the splendor that was the start of the 1996 season, then hit the craps tables and buffets.

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April 6 – Opening Day at the Coliseum. We’ll see if Billy and Bob can work their magic again.

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Get comfortable, folks. We’re gonna be here a while.

 

Ninth Circuit upholds MLB’s antitrust exemption in San Jose case

We’ve been waiting for the Ninth Circuit’s ruling for a few months now, though we had an idea how it would turn out. From Nathaniel Grow:

end_graf

Looks like Joe Cotchett will get his wish of filing with the Supreme Court.

The opinion is available here. More on the case can be found in the first legal link to the right.

Lew Wolff chimed in from Phoenix, where Bud Selig was given the title Commissioner Emeritus as part of his sendoff.

New commissioner Rob Manfred also had a comment.

San Jose Mayor Sam Liccardo said shortly after the opinion’s release that he wants to take this up to the Supreme Court. The pressure, it would seem, is on him to “play nice” with Manfred and MLB by dropping the lawsuit.

The Merc’s Howard Mintz has a full writeup, including comments from Grow.

Liccardo’s office released the following statement:

When the City Council decided to pursue this lawsuit, we knew that success would likely require a ruling from the U.S. Supreme Court, because only the Supreme Court can revisit its century-old decision that created an anti-trust exemption that no American industry other than Major League Baseball enjoys.   San Jose should be allowed to compete with other cities for major league teams, and I expect the U.S. Supreme Court to affirm the nation’s fundamental predisposition toward fair and free competition. 

Since taxpayers do not have to foot the bill for this litigation, San Jose has nothing but upside to continue to pursue this to the Supreme Court, as a successful result will enable a half-billion dollar, privately-financed stadium in the heart of our city.  A privately-funded stadium would also bring millions of dollars of tax revenues to help our City pay for more police officers, road repairs, libraries, and other critical services.”

St. Louis pitches its own Howard Terminal

An open air stadium.

On cleaned up industrial land.

Close to downtown.

Saves a team from leaving for a richer locale.

Sounds familiar, right? But no, it’s not Oakland’s stillborn Howard Terminal. It’s the brand new, last ditch effort by St. Louis interests to keep football in the Gateway City. The 64,000-seat stadium, ostensibly for the Rams, would sit north of of the Gateway Arch and across I-44 from the team’s current home, the Edward Jones Dome.

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The price tag? $860-985 million (gotta make the estimate a tiny bit less than 10 figures, you know). Half of that cost would be paid for by PSLs, a la Levi’s Stadium. The backers claim no taxes would be needed. And as your eyes roll repeatedly at everything I’m writing, there’s also this: the stadium doesn’t have to be for the Rams. It could be for another team desiring to relocate to the renowned football town known as St. Louis.

An open air stadium in St. Louis would be great. It could also look cool, like Paul Brown Stadium, if the stuffy Cincinnati crowd learned to appreciate a cool piece of modern sports architecture. But the financing is fanciful, the plan is extraordinarily late, and the team owner, Stan Kroenke, hasn’t returned backers’ phone calls this week. At least they can say they tried, right?