BANG’s Matthew Artz has a story late tonight about Bay IG (the group working on Coliseum City) asking the JPA not to approve the lease and to allow the remaining study work to be completed through the end of the ENA period, which is this October. For whatever reason the letter doesn’t come from BayIG or its members, Colony Capital or JRDV, but rather from the law firm of Wendel, Rosen, Black & Dean. Strangely, the lone signatory is a lawyer at the firm, R. Zachary Wasserman, not one of the regular BayIG representatives. Regardless, the letter sends a strong message to not cave in to Lew Wolff’s and MLB’s demands, citing the ongoing Coliseum City work and the money already spent on the project, which has been all public money so far. The letter:
Re:A’s Lease Extension Negotiations and Coliseum City ENA
Dear Mayor Quan, Council Members and Mr. Gardner:
We have had a chance to briefly review the proposed new lease with the A’s released by the JPA this week. The “out clause” as it is written in Section 7.2.2 will make it impossible to complete the obligations of the development under the Exclusive Negotiating Agreement (“ENA”) with the City. The ENA requires our team to produce a deal with at least one of the teams. As you know, the only team that has been willing to engage in active negotiations with us is the Raiders.
The City has spent three years and $4 Million to adopt a plan and an EIR that would allow a major new development at the Coliseum site creating a new environment that can keep both the A’s and the Raiders in Oakland. The City entered into the amended ENA with our client Bay Investment Group and JRDV and HKS. Our clients relied on the City’s good faith for almost six months in continuing to fulfill their obligations before the ENA was executed. We do now have a fully executed ENA and the proposed A’s lease will make it impossible to fulfill the ENA development team’s responsibilities under that agreement.
The A’s have until the last few weeks expressed no interest in talking about the Coliseum Project. The Raiders who have clearly said they want to stay in Oakland in a new facility have been meeting regularly with representatives of the ENA team. We believe that we will have an agreed upon term sheet with the Raiders making the Raiders the anchor of a new multi-use football stadium on the Coliseum Site by the end of the summer. This will allow the ENA team to meet its obligations to have an agreement with the City in October.
As you know, it is the Raiders desire and plan to play in a new facility in Oakland for the 2018 football season. They are making arrangements to play elsewhere for the intervening time. It will be critical to demolish the existing stadium in 2015 not only to construct the new multi-use Raider’s facility but also to simultaneously construct the associated developments including a hotel, retail and office buildings. These ancillary developments are critical to support both the developer’s ability to fill the gap on the cost of the multi-use Raider’s facility and to create the necessary tax benefits for the City and the County and create a new major economic engine for Oakland.
The approval of the new lease as proposed, allowing the A’s to remain on the site would frustrate these negotiations with the Raiders, frustrate the purpose and language of the ENA and prevent the effective development of the Coliseum City Project. It is not necessary to choose between the teams. The goal of the ENA and the goal of our team is to provide the necessary support for both teams – and much more. The ENA, which is valid through October 2014, provides the City and ENA team a period of time for preliminary study and exclusive negotiations over a proposed project at the Coliseum site (which includes and encompasses the area subject to lease negotiations with the A’s). Terms requiring a two year “Out” notice in the A’s lease will violate the ENA agreement between our clients and the City of Oakland. All we are asking is for the time to perform that is provided in the agreement you have approved..
The “out clause” in the proposed A’s lease would be triggered by the presentation of a “Raider’s Construction Plan” – this term is not defined. If it means a detailed engineering plan, then this would allow the A’s to remain in place for two years beyond when the developer and the Raiders would be ready to start construction – which clearly does not make sense. In addition, the A’s would not be required to leave until 60 days after the conclusion of the second baseball season following the notice – so if notice were given in September of this year, based on the current design plans, the A’s would not have to vacate until late summer of 2016, which means that the new facility and the ancillary development could not be completed until fall of 2019. But if there were any serious thought of giving notice this year, the new lease – including the economic terms – makes no sense at all.
The City has spent over $4 million dollars in a far sighted and thoughtful effort to create a new, amazing, and absolutely possible development that will create a major new tax base for the City and County, produce thousands of jobs and make it possible to retain at least two teams in Oakland.Permitting the A’s to remain in the existing facility beyond 2015 under the terms of this proposed lease would make the City’s expenditures and efforts a waste of public funds. The current proposal also simply allows the A’s to buy more time to find a site outside of Oakland. frustrate Bay IG’s efforts to develop the site and disrupt the ability to deliver a stadium for the Raiders and the ancillary developments adjacent to that stadium.
We ask you to honor the terms of the ENA and allow the development team the time to meet its obligations in October. Approving the A’s lease as proposed now will make that impossible. Any decision on this proposed lease should not take place until the ENA team and the Raiders have been allowed the agreed upon time to perform and to create the opportunity that will benefit the A’s as well as the Raiders, their fans and the entire City and County.
Along with the City, the ENA team wants the A’s to remain in the City of Oakland and at the Coliseum site. We welcome the opportunity to discuss this with you and any representatives of the JPA and we are certainly open to discussions with the A’s about how we can work together.
Very truly yours,
WENDEL, ROSEN, BLACK & DEAN LLP
R. Zachary Wasserman
The “Raiders Construction Plan” is defined in the lease terms, under section 44.32:
“Raiders Construction Plan” means a bona fide plan for construction of a new football stadium for the Oakland Raiders on current Complex property, adjacent to the current Complex property, or otherwise located sufficiently near to the Stadium such that it will materially impact Licensee’s operations, which bona fide plan must include, as pertains to such stadium project, a fully executed development agreement with a third-party developer and the Licensor for development of a new Raiders stadium, supported by a non-refundable deposit from the developer and received by the Licensor of at least Twenty Million Dollars ($20,000,000.00).
Now, the term “bona fide plan” is subject to some interpretation. Basically it refers to the Disposition and Development Agreement for the land, Master Lease, and any other supporting documents needed to produce the deal. The 49ers and Santa Clara went through the same thing for Levi’s Stadium, so it’s not as if there’s some mystery here. Wasserman is a well-known, respected real estate and land use lawyer. He knows full well what all of this entails.
Matier and Ross have a new item up regarding this letter, including some key quotes. I’ll just present them here.
Nate Miley: “We (the City/County) still owe about $180 million on the stadium. This is either smoke and mirrors, or they are on crack.”
A’s VP Ken Pries: “From our position, we just don’t think that (Raiders project) is going to happen – we are betting it doesn’t.”
After 2014, the amount owed on the Coliseum will be closer to $138 million, much smaller than Miley states but still quite sizable. Miley has been the biggest skeptic on Coliseum City among the JPA board, and has shown no signs of wavering. Larry Reid noted that BayIG has the backing of the City, but not the JPA, so it appears that the two are at loggerheads over more than just a lease agreement. It makes me wonder how the two could come to any kind of consensus. Miley could also step up his rhetoric on having the City buy out the County, though the City doesn’t have the funds (a recent budget surplus isn’t nearly enough).
Speaking of funds, the BayIG letter mentions $4 million in public (JPA) funds spent on Coliseum City studies. To date, I am unaware of any money that has been spent by BayIG other the funds that have been released to them. Colony Capital, the financial muscle behind the plan, hasn’t raised a single red cent. Maybe the biggest objection, not mentioned in the letter, is the A’s lease agreement’s demand of a $10 or 20 million, non-refundable deposit from the eventual developer. Such a deposit would show BayIG had real skin in the game.
As for Pries, it’s the first real statement we’ve heard from the A’s that they don’t think much of Coliseum City’s prospects. It’s really nothing more than to confirm why they had no interest in the project as it’s being conceived. The A’s have laid down their cards – they’re calling out BayIG and seeing if they can deliver. It’s yet another way to shake up the tree. BayIG says it will have all of the lingering questions answered by the end of the ENA period. The A’s are betting they don’t. The Raiders? Well, Mark Davis seems content to go with the flow. For now, at least.