Onus

Update 4:50 PM – The League of California Cities, a redevelopment and city lobbying group, is going straight to the California Supreme Court for a ruling on the constitutionality of the new laws.

Update 2:40 PM – Governor Brown has signed the twin kill redevelopment bills.

Reminder: Lew Wolff will be on The Chris Townsend Show (95.7 FM) at 5:30 PM today.

At the end of Howard Bryant’s first column on the state of the A’s, it might have been easy to lose track of something Lew Wolff said.

Though the clock is ticking on the A’s, sources also say the committee has not expressed any time pressure to present Selig of its findings.

“That’s very true,” Wolff said. “The pressure isn’t on them. It’s on me.”

Starting today, the pressure will definitely be on Wolff – despite the fact that this pressure will come from circumstances beyond his control. At the Capitol, Republicans briefly delayed the inevitable passage of the budget, which was constructed from a combination of realignment and suspect revenue projections. The final package includes the two redevelopment bills (one to kill, one for ransom/rebirth) that were passed by the legislature two weeks ago. Cities throughout the state are lawyering up, though it’s hard to see what settlement could arise since any compromise on the state’s part would have consequences for the budget.

Legal challenges or not, all cities have to deal with the repercussions of the budget passage. Redevelopment advocates have called the twin bills little more than an extortion scheme to allow them to continue to work, and they’re not wrong. As mentioned last Tuesday, here are the amounts that would have to be paid for cities and counties to keep their RDA’s functional:

  • Alameda County: $7.7 million
  • Fremont: $9 million
  • Oakland: $39.7 million
  • San Diego: $69.8 million
  • San Francisco: $24.6 million
  • San Jose: $47.6 million
  • Santa Clara: $11.4 million

The figures are the extortion amounts. See how the Oakland amount is nearly as high as the San Jose amount even though it has less than half the population? That’s because so much land in Oakland (most of the flats) is in one redevelopment zone or another. Oakland North reports that the ransom payment won’t be factored into whatever budget is passed by the City of Oakland, which is understandable since it’s such a recent happening. As of this writing, Oakland is still choosing one of several budget proposals to approve, with the tough battle to gain union concessions won by Mayor Jean Quan. For Oakland, the issue with redevelopment becomes a matter of what they’ll be allowed to do once October 1 hits. Unlike San Jose, Oakland hasn’t gone to the trouble of winding down ORA’s activities, which makes extracting ORA from City Hall difficult. Currently, 17 police officers have their salaries paid by ORA, as well as half the salaries of the mayor and city council (who serve on the ORA board). As they scramble to figure out how some of those needs will be met, it’s not hard to see how actual projects which haven’t started in earnest could fall by the wayside.

Worse, not operating a RDA doesn’t mean that the state won’t get its pound of flesh. It’ll still entitled to the $40 million, only it gets to decide at a later point how it will extract the money from the city. If a city decides it can “play ball” it can pay the vig this year and a smaller amount for next three years, and whatever’s leftover can be used for RDA uses by a successor agency, or as I called it previously, “Son of RDA”. If a city decides it can’t play ball, a successor agency will be created for them, much the same way a defendant can get a court-appointed public defender. That agency’s sole purpose will be to tally up and distribute tax increment as it comes in, none going to new projects. Most importantly, in the can’t-play-ball scenario cities won’t be able to issue new debt. That’s a killer for Oakland, which was counting on being able to tap into new bonds to pay for some of the Victory Court project (land/infrastructure) cost. It’s even more important now that ORA had to absorb some of the city’s budgetary cost by acquiring HJKCC. Without that ability to issue new debt, Oakland’s liable to say, at “Our hands are tied, sorry we couldn’t do more.” And they’d be perfectly within their rights to do so. Thanks for killing the A’s again, Governor Moonbeam.

Then again, there may be a loophole, one that some of the largest RDA’s have been looking to exploit – and one that may have the biggest legal test. When Oakland initiated $100 million in property transfers from ORA back to the city two weeks ago, my response was, “What took so long?” Los Angeles transferred $1 billion worth of assets in a similar fashion in January. While these transfers may have occurred before the 2011-12 fiscal year begins, language written into ABX 26, the redevelopment killing bill, allows state-appointed auditors to determine if any transactions done January 1, 2011 or later (effectively after Brown took office) to be reviewed. What that means for those assets is anyone’s guess at this point, and probably will be the focus of more legal wrangling should the state start looking to liquidate assets to get its revenue.

There’s also the case of San Jose’s newly and hastily created SJ Diridon Development Authority. All thats missing from the name is “Re”. The whole affair seems like an overreaction to Brown, though there may be some hidden wisdom in there somewhere. Regardless of whether work is done through the skeleton crew at SJRA or SJDDA, at some point San Jose will also have to decide if it wants to pay to play. Recently, Mayor Chuck Reed and Lew Wolff have been adamant that they will find the necessary funds to cover the rest of the ballpark land acquisition and infrastructure change, $27+ million total. However, San Jose will also have to pay its $47 million soon if they want to be clear of the state’s reach. That would preclude merely piecemealing the remaining land sales/buys, as they have suggested. Instead, the onus may be on Wolff to deliver on the $89 million price of the Airport West (Earthquakes Stadium) land renegotiated last December. That money isn’t due until 2015, yet here we are with pushed up deadlines thanks to the death of redevelopment. $89 million would provide enough cash for SJ to complete its work and fund other infrastructure in the area it wants to be known as Silicon Valley’s Times Square (I thought it was Grand Central?).

Soon, a coalition of the ten largest cities in the state (including SF, SJ, and Oakland) will put together a lawsuit to vigorously challenge Brown’s redevelopment pay-to-play-or-die scheme. Their case is supported by the passage of Proposition 22 last November, which prohibits state-based redirects of property taxes. Legal murkiness started during the gubernatorial transition when Governors Schwarzenegger and Brown signed off on declaring a fiscal state of emergency, which set the framework for the redevelopment reform bills. Which has greater precedence, a new law or an even newer declared state of emergency? That’s what the courts will have to decide.

26 thoughts on “Onus

  1. @ML–great summary—guess the bottom line though, in addition to these challenges, is does bs really care—beginning to think more and more that he is drinking the neukom kool aide that says the gints are the only bay area team that matters—and this could give him the ammo he needs to say it a new ballpark cant be done in the bay area—gives him the easy out–which we all perceive is what he is looking for

  2. yes, it’s really starting to look like its Oakland or nothing when it comes to a new ballpark in the Bay Area for the A’s. And nothing is going to be the easy winner.

  3. It’s up to San Jose to provide the counter-pressure. June is almost over…

  4. GoA’s and pjk,
    Common fellas! What’s with the constant doom and gloom? How many times must it be stated that the Giants aren’t in control here or favored?
    I guess being “involved” in this for nearly 7 years gives me a different perspective on this entire saga.
    Yes, pressure on Wolff and by extension San Jose; always has been. In fact, I’ve used the “onus” word many times to describe SJ effort on all this.
    I’m confident SJ (and by extension Wolff) will finally get their $hit together soon.

  5. There’s no reason to be optimistic. I think the A’s will be gone from the Bay Area in a few years. Oakland is never going to get a new ballpark under the terms its wants (free) and San Jose is idiotically prevented from pursuing the team. So where does that leave us? Neukom’s plan is working to perfection. And when the A’s leave, Frisco and East Bay columnists will blame Wolff, instead.

  6. It’s more annoying than doom-or-gloom from my perspective.
    .
    I think we’re only waiting for Oakland to throw in the towel. Once that happens, Bud tells the rest of MLB, “Hey, we tried Fremont, we tried Oakland” and then pushes for them to move to SJ. Any mention of moving out-of-state is only leverage to get the owners to to agree to vote to rescind the territorial rights. Owners don’t want the A’s moving anywhere that would affect their ability to draw fans or TV money, so they’ll turn on the Giants. We’ll get something close to a 29-1 vote.
    .
    This would have been done a couple years ago if it hadn’t been for Oakland getting back in the game.

  7. Agree with LS,
    However, I’ve been of the opinion that when SJ guarantees a MLB ballpark (land acquired, successful referendum OR no vote) we would get a “decision” from MLB; regardless of how the Giants feel or what happens in The O.
    I’ve also been of the opinion that a “decision” has already been determined by the committee and Selig; just waiting to see what happens in the Bay Area.
    One other note: ballpark has been scheduled to open in April 2015 for some time now. Whether we heard from MLB two years ago or hear from them in two months, the ballpark is scheduled to open in 2015.
    Just some food for thought.

  8. a few data points to consider—in addition to the 2+ years of study and the obvious who gives a shit about the A’s…bs never “acknowledged” the 75+ SV CEO’s who sent the letter to him regarding allowing the A’s to move to SJ…as Carl Guardino put it–must be nice to have a monopoly. After 2013 the A’s dont have a home and sure there are plenty of scenarios for where they could play last I heard was that oakland rejected LW’s request for 1 year extensions thru 2017…..says something about opening day 2015. As many have said this isn’t a competition between SJ and Oakland….thats already been decided–but what hasn’t been decided is how to lift the TR rights in SJ—and the only person who can do this, is the person I have the least faith in–bs—his lack of leadership is unbelievable….not to mention that he is supposedly retiring in less than 6 months.

    Negative….doomsday…don’t think so–just stating the facts…and btw—SJ failing is not about Oakland winning…in no scenario do I see a new privately funded ballpark being done in Oakland for all of the reasons that have been cited repeatedly on this blog….absent AT&T show me another ownership group that has been willing to take the risk of privately financing a ballpark….

  9. …if the A’s leave, lets hope these CEOs punish MLB and discontinue any and all business with any of the clubs. If Selig is so disrespectful that he can’t even be bothered to respond, he doesn’t deserve the business. Apparently, he’s willing to leave the Silicon Valley $$ on the table, anyway. Would be great to see all that Silicon Valley $$ now going to the Giants diverted to a new 49ers stadium, instead…Only in a monopoly could a CEO as pathetically unresponsive as Selig be able to keep his job.

  10. Could we get some perspective? Here’s what Selig has actually said in the past 2 years since the panel was commissioned:

    1. We want to exhaust every opportunity in the A’s territory.
    2. Territorial rights are extremely important and not easily wiped away.

    That’s it! Everything else is a rumor or secondhand.

  11. @ML–agree with a little perspective but lets also add a little perspective–there is no one that believes that 2+ years to figure out if oakland works is reasonable—call it what you want…but exhausting all opportunities in A’s territory is a front for I cant figure out the tr issue–and what doesn’t come easy for bud means that he typically just ignores it…steriods as a case in point–

  12. @GoA’s – We can agree that Selig’s M.O. has been to let events dictate his course of action, not the other way around. This is a MAJOR event that will influence him to some degree.

  13. Agree 100% with ML. My take, or opinion, is on what’s really going on behind the scenes aside from what Selig has said in public.
    (emphasis on the word opinion).

  14. Instead of making a decision Bud’s just been waiting for either Oak or SJ to throw in the towel. Hopefully both cities don’t throw in the towel at the same time.

  15. One other opinion: the Giants territory will not be wiped out, just become shared with the A’s, reverted to pre-1992 status.

  16. @ML–not sure what you mean by MAJOR….redevelopment agencies going by the wayside or the A’s need to build a new privately funded ballpark in an area that can support the requirements to do so…he surely wasn’t influenced by the demise of the redevelopment agencies only making the prospect of a new ballpark anywhere just a tad more difficult….he surely hasn’t been influenced by the demise of the A’s being in a holding pattern, rotting at the o.com coli while the giants take advantage of the situation to broaden their fan base—-guess the “some degree” that he is influenced by is pretty darn small at this point with not any signs that he will change his attitude in the near future. He knows who his cash cows are….and the A’s aren’t one of them….so why piss off one of your cash cows by providing parity in a 2 team area—-now that would be more MAJOR than he can handle—

  17. @GoA’s – Like it or not, most everyone else in the country doesn’t give a rat’s ass what happens to the A’s on a year-to-year basis. Selig knows that all too well and it influences him. He has the latitude to take the long view on the A’s, even if it makes us suffer much longer than we should. Don’t mistake nothing happening in public as nothing happening. If you look at the Dodgers’ situation, he’s willing to absorb the P.R. heat to create an easier to manage situation in the end. The A’s are no departure from that except that it has many more variables, making it more complex.

  18. @ML–agree completely on your first statement—A’s are nothing more than an annoyance to bs—they are not a cash cow for MLB—and their request is to impact one of the cash cows domains…but saying the A’s situation is more challenging than the Dodgers—nah—you have 3 different corporations owning the parking lots, ballpark and the team down in LA…you have just the team going bankrupt meaning that selling the team doesn’t get you the ballpark and/or parking…you have a divorce situation…and you have one of the cash cows…or as bs said himself…one of MLB’s crown jewels—-this is by far more difficult than the A’s situation that says they move 4 miles over an arbitrary border into Santa Clara County and that is off limits–most rational minds would say pretty easy to solve—especially when the bay area is the outlyer for 2 team markets–

  19. @GoA’s – Dodgers is “easier” because there is precedent. The Rangers provided the blueprint – auction the team, let everything else stay with the bankrupt previous owner. If bidders want in on the stadium and parking lots – great. If not they’ll still be knocking each other down for a shot at the Dodgers @ $600 mil. Either way Selig gets the ending he needs.

  20. done debating but just add that there is precedence for how to handle 2 team territories—which should make this pretty damn easy—except for bs—

  21. “yes, it’s really starting to look like its Oakland or nothing when it comes to a new ballpark in the Bay Area for the A’s. And nothing is going to be the easy winner.”

    Then it’s going to be nothing with the end of redevelopment. Maybe we should all start preparing for the demise of the A’s either through contraction or relocation.

  22. Well hopefully ML is right this redevelopment demise will spell the end of Oakland’s half assed attempt to stop the A’s from leaving and MLB will finally make that decision on San Jose.

  23. Wolff and Quan have talked and will meet next month!

  24. Maybe he’ll finally tell her why it won’t work ($) in Oakland.

  25. That’s terrible news. All it can mean is more false hope and delay, decreasing the chance the park will be built anywhere.

  26. @bartleby – Not really. There’s no chance any decision will be made before the end of the regular season anyway. It may be a really fruitful meeting, a photo-op, or it could be a “don’t break your pick” moment.

    Also – recap of interview is up in a new post.

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