Update 7:30 PM – Added link to Controller’s report.
Yesterday we got word that the 49ers and Santa Clara prevailed in its lawsuit to reclaim $40 million in redevelopment funds. Today comes the news that the State of California has ruled that land transfers from the City of San Jose to the Diridon Development Authority were ruled illegal.
The Controller’s ruling on the ballpark land seems to hinge entirely on the fact that the City/RDA didn’t enter into a sale agreement with A’s ownership until November 2011, after the June 28, 2011 cutoff when AB 1X 26 took effect.
The RDA made unallowable asset transfers of $29,137,727 to the San Jose Diridon Development Authority (Authority), a joint powers authority made up of the City and the RDA. All of the property transfers occurred during the period of January 1, 2011, through January 31, 2012 and the assets were not contractually committed to a third party prior to June 28, 2011.
The graf above comes from the 12-page report released today, a draft of which was sent to the City on November 15, 2012 to allow for a response. The City argued that “there is no statutory or legal support” for the 6/28/11 cutoff to no avail. The Controller disregarded this argument and directed the land be turned over to County-appointed Successor Agency, whose oversight board will make the final determination of what to do with the land. City has cutely shortened “Successor Agency” to SARA and for good reason. What does SARA stand for?
Successor Agency to the Redevelopment Agency of the City of San Jose
If the Diridon Development Authority is the “son” of revelopment, SARA is the daughter. What does SARA make of this mess?
Ordering the City to return the assets to the Successor Agency only to have the Oversight Board direct that they be returned to the City is simply form over substance and wastes valuable time, energy and resources to arrive at the same result.
Regardless of what happened with the Controller’s decision (which was expected) the City still feels that the land will end up with the A’s. If they had inked the sale agreement in March 2011 instead of November, the transfers would’ve been in the clear. Now they could sue the State the same way the 49ers did, but since that would be even more costly and the City and County are already working on a proper land disposition agreement, that seems like a terrible idea.
What will happen next? My guess is that the land won’t actually be sold. Instead, the parties will work on a lease agreement that would allow the A’s to build on the public portion of the ballpark site while the A’s buy the rest over time. The alternative is to sell the land for “market value”, with a yield large enough to be approved by the Controller. The purpose of this is two-fold: get a sale so that funds can be sent to the state, and ensure that the land is assessed at a value high enough to get adequate proceeds to the state, county, and schools. Mayor Chuck Reed, who is on the SARA oversight board, released a statement in response to the ruling just a few minutes ago.
I am disappointed in the findings made by the State Controller regarding certain properties transferred from the San Jose Redevelopment Agency to the City of San Jose, San Jose Diridon Development Authority, and City Housing Agency.
The properties transferred to the City include assets that serve a civic or government function, and likely will fall under the government use provisions of the new redevelopment dissolution law and my expectation is that the Oversight Board will make the same findings.
With respect to the Diridon Development Authority properties, the State Controller failed to recognize an Option Agreement validly entered into between the JPA and the Athletics Investment Group. Any transfer of these properties to the Successor Agency would be subject to the contractual rights of the Athletics Investment Group as required under state law.
The City Council and County Supervisors have both made their desire to have a ballpark built on the site known through formal resolutions in the past. My expectation is that we will continue to work together to bring the Athletics to San Jose regardless of the ultimate ownership of the JPA properties.
Coincidentally, an oversight board meeting is scheduled for tomorrow morning at City Hall. While this news came too late to make the meeting agenda, I would expect the matter to be discussed. I’ll attend and report back.
newballpark.org 
Wolff speaks (but not about the land deal)
http://www.ktvu.com/news/sports/baseball/oakland-s-owner-wolff-makes-case-move-san-jose/nWzS6/
Sweet more news for ML to digest and break it down Barney style for us.
Reading some reactions around the internet, you’d think this news built a ballpark in Oakland.
So in essence nothing really happened re the Diridon plots. A’s will still get the land, regardless of ruling today. I love your idea RM: Wolff/A’s lease acquired land from successor agency, buy the rest. As I mentioned in the past, could be said win, win for all involved in the South Bay. Haven’t read anything else online, but if some are somehow portraying this development as a win for Oakland…talk about laughable!
Nam, that’s what I’ve seen too. Weird since if anything it pushes the A’s closer to reaching SJ. Not directly, per se, but it’s just one more decision that needed to be gotten out of the way. Now they know who they need to work with for the land going forward and the folks that now have the land still want the A’s there.
“BTW – Not the best idea for Oakland partisans to celebrate the rollback. Oakland has its own upcoming rollbacks to deal with, like the HJKCC.”
Let’s not forget where Oakland turned to to get the money for the Kaiser deal. Oakland began diverting funds away from the approved Victory Court EIR in late spring of 2011 towards the purchase of the Kaiser convention center. Oakland-pols thought it was better business to do the Kaiser deal than to study building a new stadium to keep the A’s in Oakland. A study which is 100% necessary to build a new stadium even if the stadium were to be 100% privately financed. Even without a stadium the EIR could have proved useful for the city in regards to any development in that part of town. It should have been viewed as a win-win study, stadium or no stadium. Oakland chose the Kaiser deal over the A’s and or possibly area development – which is now in jeopardy. Well played.
Since the bulk of the comments here have nothing to do with the subject matter, I will delete them.
Marine Layer – “My guess is that the land won’t actually be sold. Instead, the parties will work on a lease agreement”
To me this seems like another Gimmick that will also get rejected by the state controller. I don’t see how a lease is any better than this proposal that was just rejected. The state ordered the successor agency to pay off debts and local services during an economic downturn, not collect tiny rents as a long term landlord.
I also have a hard time seeing Lew pay full fair market value for all of the land by himself with no public help.
@johnjahafanclub – The deal doesn’t have to be gimmicky at all. All the City, County, and SARA have to do is ensure that the ROPS is fulfilled. If it means sticking in a slightly higher land lease to cover the payment, so be it. And market value, as appraised last year, was $15 million. That’s an extra $1 million per year over 30 years.
I think Selig wants for these side issues with San Jose to be out of the way, before approving a vote for the A’s to move there. We are getting another step closer to the vote and approval.
I doubt Wolff would balk at paying the full market value of the land as it currently stands. Certainly not if it removes red tape that he might run across. In the long term it would be fewer issues later on when whatever lease was signed was up.
It’s been so long that I forget. What was the point of the A’s owning the land again? IIRC the original plan was to have the A’s lease the land, but somewhere along the line that changed.
@gojohn10 – Once RDA funds ran dry, the cleanest deal would’ve had the A’s buying all of it. Sale of the property would help pay off remaining RDA debt.
@jjfanclub,
Someone doesn’t want to see a ballpark at Diridon, or perhaps San Jose for that matter. Oh we’ll, it’s gonna happen, so live with it!
@Tony D
LOL Tony if we dont see any REAL resolution by the end of the year… i want you aand all you san jose supporters to shut up… now i realize the only way the A”s and Raiders stay in Oakland, well is what Frank Blackwell said.. “new ownership”, we need new ownership blood that will re invest in Oakland/East bay.. whether we deserve it or not…
@berry
No city needs or deserves a sports franchise. If anything the A’s deserve better fan support and a city (who is not $1 billion in debt) who is willing to have a viable location for the team.
And while the partisans continue to do battle, those of us who follow the A’s but want the matter resolved one way or another are stuck knowing we’re likely not close to an answer, unless that answer is “not in the Bay Area.”
berry, until a shovel is in the ground, no side should stop supporting the team moving to wherever, whether that’s in Oakland, San Jose, or some other destination. To suggest otherwise is arrogant and idiotic at best.
@Berry,
Yeah, someone needs to shut up alright…and its not me or other A’s, San Jose supporters. Been wanting/championing MLB in San Jose since 2005; I ain’t stopping until the day I’m sipping a cold one at Cisco Field!
seriously guys, don’t feed the trolls like Berry…btw> Merc updated their article )http://www.mercurynews.com/bay-area-news/ci_22840291/state-controller-orders-san-jose-return-ballpark-land) with LW quotes:
“It’s what I anticipated,” said the 77-year-old businessman, who dismissed the land decision from state Controller John Chiang as an insignificant concern in the team’s four-year quest to call San Jose home.
“Frankly, if we’re approved by baseball to relocate to San Jose, we’ll buy the land from any entity that has it if they want to sell it to us,” Wolff said, even if the sale price were higher. “Whatever it is, it’ll be a small part of the total cost of the ballpark.”
I think both the SJ and LW knew they were on shaky grounds (LW is a developer after all), but realized they were a little late trying to do this deal, but tried anyways. These quotes must sting Oakland proponents though, since he’s basically saying that he doesn’t want to spend a dime in Oakland, yet willing to go deep into the cookie jar for SJ…
Wow can’t believe LW is 77 yrs old. Time flies when you are waiting on MLB to get their stuff together.
@anon and tony d
Lol probably some geeks acting like a internet tough guy….yet lew Wolff has his butt still in Oakland , either build or send the team outta state…in fact ill do everything in my power to make sire they dobt see San Jose…blame tony d and anon for being stupid…don’t beilve me just watch sucka
I sense a good ole fashion BAN may be forthcoming here. Your right anon; no sense in troll feeding. Gotta keep this board professional, regardless of which side of the A’s spectrum you reside on..
I can count on berry to change his mind when the wind changes direction. No ban.
@ ML – I think Berry would change his mind even if someone farted.
@Tony D. – Hey, we need some entertainment around here once and a while, right? Nothing like a few flip-floppers to provide a few hearty laughs.
@Im drinking a beer and smoking with my chick.. not worried about you nerds.. just going to support the A’s in Oakland or another place, not san jose… and at least im sure A’s players feel the same way…
night yall