Try as Floyd Kephart and the City of Oakland tried to keep the Coliseum City proposal away from the public for 20 days, the key summary was revealed by BANG’s Matthew Artz late last night. As you might gather from the action to hide the documents from the public under a confidentiality arrangement, there was plenty to hide and precious little to tout. Kephart’s New City did get the documents to Oakland/Alameda County by the June 21 deadline, which is to be commended (somewhat). Beyond that, the whole thing sucks for a multitude of reasons.
Kephart’s New City Development pitched a $4.2 billion plan, which would include:
- $900 million Raiders stadium to be owned by team, land underneath to be leased by City to team for $250k per season
- Sale of public lands (Coliseum and surrounding) to New City for $116 million
- Proceeds would pay off Mount Davis debt
- Potential for additional proceeds to fund affordable housing subsidy; if not fully covered, bond issue
- Land reserved for an A’s ballpark through 2019
- 4,000 housing units
- 450,000 square feet of retail, 1.5 million square feet of office/R&D space
- 400-room hotel
- $100 million in new infrastructure (BART transit hub, roads), not including…
- $187 million in parking garages (financed by New City)
- Stadium and essential infrastructure completed by 2019, hotel by 2020, full buildout by 2022
- Sale of 20% stake in Raiders to New City for $200 million, half of which goes to into stadium
- Creation of “Stadium Company” to finance $300 million in debt for stadium (49ers have a similar entity)
- $500 million from the Raiders and NFL G-4 fund (combined)
The football stadium part of the plan has no magic bullet to cover the $400-500 million funding gap. The NFL and Raiders would their part, probably closer to $400 million. There remains an open question about how likely it is the Raiders would get that $400 million. It’s one thing to award the full $200 million G-4 loan (to be matched by the team) to the 49ers and Levi’s Stadium or the Vikings and Falcons, teams whose projects will certainly host future Super Bowls. The Raiders stadium would be smaller and less capable of hosting a Super Bowl and other big events. Its premium revenue-generating capacity would be much lower than other recently built stadia, which makes me wonder just how well the G-4 loan would be serviced. Chances are that the stadium would qualify for a smaller loan, perhaps closer to the old G-3 cap of $150 million. So when you really start to add it up, it’s much more realistic to expect $350-400 million as the “standard” private contribution from team and league. More than that is rather wishful thinking considering the stadium’s size and scope.
A “Stadium Company” would be created on the private side to manage funneling game revenues towards debt service. Its counterpart would be the Coliseum Authority (JPA) or its successor. If the sides ever got down to real negotiations, the real sticking point would be whether the debt would be issued publicly (tax free) or privately (taxed). On one page the Raiders are said to own the stadium, on another they lease the stadium. The model is similar to what the 49ers created for Levi’s, which means that the same questions would arise during the period leading up to the stadium’s opening. Can the Raiders and the various entities sell enough sponsorships and get a big enough naming rights deal to cover the gap? Or does this sound too much like Mount Davis?
Ancillary development, which has been already been dismissed by Mark Davis and NFL point man Eric Grubman, is still very much in play here. The worst part about it is that the money the ancillary development will generate won’t go towards paying for the stadium, or for affordable housing. New City would get to reap the rewards, pay a little towards infrastructure, not get saddled with the responsibility of financing affordable housing, and get a piece of the Raiders in the process. Sweet deal, eh? No wonder the NFL has been so averse to having “middle men” like Kephart involved in these deals. It prefers to have Goldman Sachs and big banks there as the established partner financing arms instead of deal makers.
The ballpark gets one whole line in the 19-page document:
Parcel 6 for development of the ballpark will be reserved through January 1, 2019.
I can’t blame Kephart for reducing the A’s to one line considering how Wolff disregarded him and the project at every turn. If Kephart’s gonna go out, he’ll go out guns-a-blazing. Wolff was never going to take part anyway, so this is at least a modest allowance. Yet what is Parcel 6? We’ll find out more in a couple weeks assuming the documents are released as expected. For now we don’t have an updated site plan. If Parcel 6 is the same one identified in the EIR/Specific Plan, it’s the Hegenberger Gateway shopping center anchored by Walmart and other properties along Hegenberger. How does that get repurposed for a ballpark? I’ll let you know when BART builds an Airport Connector station there to service the site, more than a mile away from the Coliseum BART station.
Lastly, there’s the sale of public land. The document cites $116 million as fair market value, though that is entirely dependent on use and density. $116 million is ridiculously cheap, at around $1 million per acre depending on how much is actually used for the ancillary development. Lew Wolff’s Coliseum North plan was derailed because he lowballed local business owners, offering the same value ten years ago. Two weeks ago the City of Oakland pushed through a $5.1 million sale of one acre on East 12th Street overlooking Lake Merritt for housing, with the developer agreeing to provide $8 million towards affordable housing elsewhere. City Council sessions got so heated that housing activists took over the Council Chambers in the first meeting, followed by the City blocking off public access in subsequent meetings. All that because the process was supposed to dictate that the sale of public land in Oakland mandated use for affordable housing (if housing was the intended use). Now we’re looking at an exponentially larger project in the Coliseum area. How’s that gonna go over?
With the stench this deal is serving up miles away from any actual deliberation over its merits, recent revelations about an exit strategy and a backup plan for City/County should come as no surprise. That’s both good and bad, as the millions spent on Coliseum City will have gone to waste while that backup plan will have only a few months to gestate. That’s a great recipe for a terrible deal, one even worse than New City’s vision Coliseum City. There’s always a renovation concept to fall back upon, and Wolff’s biding his time waiting for CC to collapse. Looks like you’ll be on the clock soon, Lew.