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.
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.