We now know how Oakland will replace all of those lost redevelopment dollars: Foreigners! At least that’s the program according to today’s Trib report by Angela Woodall.
Before I go further, I have to give credit to Oakland Mayor Jean Quan for going this route. It has some potential, and it’s something that we’ve discussed on the blog previously as it pertains to a foreign investment in a new Sacramento Kings arena. While it’s unfortunate that neither she nor the City Council have had the “adult conversation” I argued for in the post, at least Oakland’s been resourceful enough to identify a path forward.
It makes sense for Oakland to look for creative, out-of-the-box methods to attract investment to the City, and the federal government’s EB-5 program is one of them. Quan has gone to China to look for investors, and may be onto something with EB-5. The program allows immigrants a green card if they put $1 million or more into a new or “troubled” American businesses. Investors also have to create 10 full-time jobs with each application. That money requirement goes down to $500,000 in the case of rural or high unemployment areas, Oakland being one of the latter. Pool enough of these together and a company may have enough capital to move forward.
The Bay Area Regional Center is a government-certified investment firm whose charter is to bring in foreign investment under the EB-5 program. Its service area is most of the Bay Area and Sacramento. Yet the projects it identifies as most ready for investment are three in Oakland. That’s not surprising because BARC is based in Jack London Square, with one of its principals being Oakland developer Jim Falaschi. In fact, BARC is trying to bring in nearly $70 million for Signature’s stalled Oak-to-9th project. (Signature is also trying to get Lawrence Berkeley Laboratory to build its next campus there too.) The Trib article notes that BARC was involved in the $8 million Tribune Tower deal, though records of actual foreign investment in the project are murky. An admission that BARC “is still looking” for a project 2 1/2 years after opening, while honest, is not encouraging.
That’s not to say that EB-5 programs don’t attract investment. Chinese investors put $249 million into the Atlantic Yards project in Brooklyn, though that money didn’t go directly into the Barclays Center arena. According to Bloomberg Businessweek, $1.5 billion has come into the U.S. from foreign investors through EB-5. Like any government program, it’s rife with bureaucratic delay. Applications have often taken months to process. One report this week indicates there are some kinks to work out as the program grows. It can be difficult for foreign investors to separate the good investments from the poor ones based on sales pitches from needy businesses who could easily inflate their projects’ potential.
As cities start to look for alternate avenues for investment, the market for foreign investment will start to get competitive. For Oakland, the biggest issue may be, well, Oakland. Foreigners can understand investing in New York, Los Angeles, or San Francisco. They also get things like ski resorts or wineries. Oakland, for obvious reasons, is a tougher sell. It’s possible that Oakland will need to claim multiple success stories before they can attract enough investors for a major project like Coliseum City. There’s still the problem of getting team owners and leagues to buy in. They’re the head while the foreign investors are the tail. Every application is an investment, not just $500k for a green card. It’s going to take a lot of selling – and even more believing – for Oakland to pull off major funding with EB-5. Or as economist Scott Barnhart, writing for EB5info, wrote in response to a NY Times editorial:
For example, if the 34 floor tower typically used for retail, office space and/or residential purposes did not qualify in New York, one can be assured that states with the highest unemployment levels are not likely close substitutes for a Manhattan address for either the developer or prospective investors, so this project would likely be shelved. Similarly, a large condominium in Florida will not sell if located in a high unemployment area away from the coast instead of a lower unemployment area on the coast, yet the labor will be imported to the site.
There’s a reason why O29 isn’t taking off. And it’s the same reason why Victory Court and Coliseum City probably won’t take off either. It’s still worth a shot, at least from the City’s perspective.
Finally, the EB-5 program is limited to 10,000 approved visas per year, potentially limiting investment. Compared to going the regular (and now shuttered) redevelopment route with its self-contained process, EB-5, with all of its marketing, multiple stakeholders, and delay, may be tantamount to climbing Mt. Everest.
To read more about EB-5, check out the EB5news site and Twitter feed, and EB5info.
NYTimes: Oakland #5 on the top 45 places to visit in 2012. So when you say Oakland’s a hard sell… Just saying.
Here’s the only way I see a new ballpark getting built in Oakland:
* MLB turns down San Jose.
* Wolff then sells the franchise back to MLB
* MLB spends a year trying to find a new buyer willing to not just pay for the franchise but to also privately finance a ballpark in Oakland.
* When this inevitably fails, MLB tells Oakland to stage one ballpark vote, for Oakland taxpayers to pick up the tab.
* The vote miraculously passes.
…Under this scenario, we’d have a new ballpark in about 10 years. Would such a vote pass? Oakland voters have already voted over and over again for leaders committed to doing absolutely nothing for the A’s (Jerry Brown, Ron Dellums).
Does anyone know how much tourism business Oakland gets in a year?
according to KCBS this morning, Oakland made the top 5 due to its resurgent nightlife/restaurant scene, which is a good thing. Now, is that enough to counter protests and kids being killed senseless? Only time will tell I guess.
By the way RM, will cities like SJ also be utilizing this program? Doesn’t appear just relegated to Oakland.
re: Does anyone know…
…They get plenty from me, but not much from others, I’ll bet. Tourists go to Frisco, not Oakland (or San Jose, for that matter). Oakland Zoo rules (the bat exhibit alone is worth the price of admission). But not too many people know that, chances are. Anybody with kids under 8 around here. should be going to Children’s Playland, even though it’s not easy to get to.
Pjk, the Oakland Zoo is my personal favorite part of Oakland, followed closely by the 15th green at Chabot Golf Course.
Yes! The most spactacular view in/of the Bay Area!
The article stated that this is just one method being taken to possibly help fund these new sports complexes. I wonder what the other undertakings are? It’s good to know at least there is starting to be some serious effort, whether it is too late remains to be seen.
In regards to Oakland being able to promote itself, while it’s true Oakland can be a contrast between desirable destinations and grit/crime, it’s still a major city in the Bay Area. It’s not like it’s Bismarck, North Dakota.
Tourism has very little to do with EB-5. We’re talking about major commercial investment. That’s a completely different ball of wax. I encourage everyone to read at least a few of the links in the post, which is admittedly link-heavy.
Some serious effort? Really? (Oh boy). Looking forward to the next thread with actual substance (as it relates to building the A’s ballpark of course)…
@Tony D. Yes, serious. But don’t worry, if you start posting anything worthy of being taken seriously, I’ll give you some praise as well.
Don’t know if I’d qualify this as serious effort just yet. All they’ve done is suggest an alternate funding route that would pay a small part of the 2 billion+ price tag. It’s not anything more than their drawing a line around Victory Court and declaring that it is a “viable site.” Call us when they actually start actual work to get money from this program and identify the way(s) they’re going to cover the rest of the 2 billion…
Nailed it! Enough said on this.
Sorry, I was asking about tourism based on the NYT link in the comments.
There’s probably nothing that can be read into this, but the Raiders had a couple of cheerleaders signing autographs and selling calendars at the Silicon Valley Auto Show in San Jose today. Would they be doing this if the team was already bound for LA? Probably not. Maybe, if they’re bound for Santa Clara. (No 49ers cheerleaders were that that I could see, and we already know the 49ers are moving here.) FWIW, had the Raiders won their game last week, the cheerleaders would not have been available to sign autographs at the auto show because they would have been at the Coliseum.
@pjk The Raiderettes were in Concord the other week, so I’m not sure it signifies anything. They usually go throughout the Bay Area. Although it does seem like they are making an effort to win over the Bay Area populace with their recent increased charity work, something they might not be doing if they were having ideas of leaving the bay altogether.
I wish it were so, eb, but the Raiders lease runs through next year, so they are still going to continue to do community activities.
I hate to be so negative on this, but I just think it’s fait accompli that the Raiders move back down south – a no brainer with the ownership issues, with minority owners supposedly wanting to move back down to socal and Mark Davis perhaps not able to retain a majority interest after his mom passes.
I was at the Oakland zoo today and never saw so many SF Giants hats & gear. I sure there’s a strong eastbay fanbase, but could it be SFer’s prefer the Oakland Zoo to SF’s? Closer? Really had me thinking.
No, it’s just that there are a ton more Giants fans these days. Most of the east bay has slowly switched allegiance or become a duel team lover over the last decade, punctuated by the Giants World Series win. It’s gotten so bad it often makes me wonder just how few A’s only fans are truly left outside of the few hardcore fans that are left.
Sad as it may be, it’s not cool to wear an A’s hat. I see Giant, Raider, 49er hats wherever I go in the Bay, rarely A’s hats as of late. It’s funny because when I was growing up, all I would see were A’s hats. Whenever I wear mine, I get people either questioning why I support the franchise or I get other lonesome A’s fans who give me props. It’s sad it’s come to this. This ownership group has A LOT of work to do, no matter what city the team ends up in. The Giants have a stronghold in the media that is very overwhelming.
I saw somebody wearing an A’s hat the auto show today. Anybody can be a front runner and put on a Giants hat but that’s the easy way out…Giants media stronghold is because of East Bay and Frisco writers who absolutely do not like San Jose becoming the region’s dominant city. Keeping San Jose as a minor league out post for Frisco’s Giants is exactly how they like it.
so eb5 is limited to 10,000 participants a year (If I am reading this correctly). The most anyone is going to invest is around $1M (Again, if I am reading this correctly), but it could be as low as $500k. So, assuming everyone who gets approved invests $1M, the most that the whole country can attract through this program is $1B?
And Oakland would be competing with opportunities all over the country (and really all over the globe if you think about it).
Shot in the dark?
Theres a group of young men that regularly wear A’s caps around here. Unfortunately, it has nothing to do with baseball. Apparently, members of the “XIV” street gang see the #14 if they squint at the A’s logo in just the right way.
@pjk – the oakland zoo is amazing. we’ll take the kids once or twice a year. however, we know many south san jose families in which mom’s refuse to go anywhere near oakland, great zoo or not, because of the town’s reputation.
@angelakalalo – oakland zoo > sf zoo
re: refuse to go anywhere near oakland
…yes, the green hills (or maybe yellow if it hasn’t rained in a few months) off 580 near the zoo in Oakland certainly are terrifying. We pretty much alternate zoo visits: Frisco one year, Oakland the next. Oakland is up this year and I like Oakland’s zoo better. We also drop in on Happy Hollow. Oakland and Frisco have better zoos because they developed before SJ, which is why they have MLB teams and San Jose doesn’t. But now it’s time for MLB to recognize its 2010, not 1960, anymore, and SJ is the Bay Area’s dominant city (except for tourists).
That’s one thing San Jose doesn’t have… a real zoo. Happy Hollow is interesting but it’s not much of a zoo.
With Frisco and Oakland zoos so close by and budgets tight, the recent upgrade to Happy Hollow is about we’re going to get. SJ also has spent a lot of $$ on its airport recently, but as someone who lives within a few hundred yards of the place, I can tell you air traffic has gone down a lot in recent years. Once again, SJ and Oakland developed as cities first, leaving SFO as the premier airport in the Bay Area. If you want to go to Vegas, Salt Lake City or maybe as far as Dallas and you live in the South Bay, SJ Airport is your place. If you want to fly any further than that, gotta go to SFO.
@pjk- I fly 100k plus miles per year- most to the east coast- I rarely use SFO- SJC is much more convenient- I agree that flights have been reduced but can still get to the east coast with one change in dallas
Having kids myself, and having taken them to both the SF and Oakland zoos, I gotta say that I like the Oakland one better. It has really nice exhibits, it’s laid out nicely, it very pretty, it’s in a nice area (right next to Oakland Hills off the 580), and it’s easy to get to.
And going back to a few comments about people wearing Giants caps (many), vs people wearing A’s caps – few and far between, even in the east bay – went to Discovery Kingdom in the fall, and the place was lousy with Giants caps, and I saw one A’s cap.
It has everything to do with the Giants’ world class stadium, in a dream location, and the Giants recent WS victory. People are bandwagon jumpers.
Back in the Bash Brother days, you could see A’s caps all over the place. Back then, the Coli was pretty decent (before Mt Davis and before proliferation of beautiful new baseball only ballparks), and of course the A’s were awesome then, while the Giants were stuck in horrific Candlestick.
Once the A’s get a new stadium and when (if) they start getting competitive again, the A’s caps will come out of the woodwork.
Another thing that has caused the A’s to lose the hearts and minds of a lot of BA fans is the constant rebuild cycle. While usually justified (for various reasons that are already well covered), the rebuild cycle kills fan interest, especially casual fans (of which there are hoards of ’em for the Gnats).
On that note, regardless of what happens with the stadium situation, I really really hope that this latest rebuild cycle, which is one I agree with, is the last one for a long time. Going forward, the A’s are going to need to develop and retain talent, and bring in some more talent. Otherwise, fans don’t know who’s on the team worth watching, and much less care.
I think he was implying direct flights. You can fly anywhere from SJC, but it almost always involves changing planes in Chicago, Denver, Dallas, Atlanta, or Newark. All 5 of which suck at one time or another during the year due to weather or in Newark’s case just plain sucking.
@Dan- just saying that I would prefer to make that transfer than go to sf for a direct flight-
I flew in from Philadelphia last year to SJC. All it took were changes in Denver (where they changed the flight I was supposed to be on) and then in LA before finally landing in SJC. An all-day endeavor, obviously.
@pjk- you need a better travel agent 🙂
Note to self: When writing about a topic that I feel commenters won’t be able to contribute toward, shut down comments.
Oakland already has 3 projects looking to raise a combined total $108 million in EB-5 funding. Add to that the fact that these EB-5 sponsored projects sometimes fail, resulting in the loss of the foreign “investment” without the granting of the green card, and it’s easy to see how Oakland is going to have a tough time convincing foreigners to place their faith in these projects.
Also, how are these regional centers funded? Does part of the EB-5 money go back to the regional centers? How much goes toward the actual project?
Found the link below to also be useful:
As someone who frequently travel overseas to China, Taiwan, etc. with many friends (as well as family there), the desire for a US green card from Asians has declined significantly in the past 5 years with the huge growth in economy and living standards there. There are still certainly foreigners still willing to invest, but the appeal of a US residency isn’t what it was before and in fact many Chinese now laugh at our dire economic situation as it pertains to the budget deficit, congressional stalemates, and general outlook (that’s the state controlled media spreading its propaganda for you!). As many have said to me, why would they want to invest in the U.S. when Chinese growth outpacing it substantially and they prefer their usual dwellings there…..anyhow food for thought.
Maybe that’s the answer, move the A’s to Beijing and be done with it…
a stadium in Oakland would be a safe investment for EB-5 investors due to the fact that the stadium will without a doubt create many jobs in the ballpark itself. EB-5 investors dont get tthe green card unless jobs are created. I wonder if most of these rich foreigners even care if they get the money back as long as they get into the country.
Actually would a new ballpark in Oakland even create new jobs? Don’t all the people who work in the Coliseum now who already have jobs just be moving over to the new park?
I guess if they pick something other than Aramark, they would be destroying jobs for one company, and creating them in another. However, I would guess that those people laid off from Aramark would be hired by the other company pretty easily. Jobs created!
@Dan, the stadium construction alone would create new jobs.
Stadium construction is temporary jobs though. The permanent jobs are created when the construction is done and the area receives more traffic from events. Those people patronize the nearby businesses and the business owners have to hire more people to handle the increased demand. New restaurants and stores would open up, seeing opportunity.
If they build on the Coliseum spot, but they don’t create the retail/apartment/restaurant areas, I see about zero permanent jobs created.
Does it need to be permanent jobs?