After reading tweets and reactions, and finally listening to Floyd Kephart’s spiel at Lungomare today, I can use one word to describe the whole affair.
Unlike Kephart’s 50/50-or-less assessment of the project at this late stage, I can say with greater confidence – 80/20 – that this will be the last time you see Floyd Kephart in Oakland. He said that he’ll be there through the early part of October, but that doesn’t mean he has to come back if all signs point to no on the City’s part.
— Matthew Artz (@Matthew_Artz) August 25, 2015
There’s a rendering. It looks modern. Great. The next one’s more interesting.
— Laura Anthony (@LauraAnthony7) August 25, 2015
After reading Kephart’s spoken points and digesting them for a bit, I realized that what Kephart presented today, warts and all, was the most honest proposal anyone’s ever given in the four year saga of Coliseum City. Here’s why:
- It acknowledges that the A’s are likely to stay at the Coliseum for a considerable period, so the Coliseum stays intact.
- The arena stays as well, because the City wants it even if the Warriors leave.
- The project area was downsized to 132 acres, no planned phase west of the Nimitz.
- The funding gap, which according to Kephart would be $300 million, would be funded by a City-sponsored conduit bond.
The conduit bond is a tricky thing. This kind of financing has the tax-free, low borrowing cost benefits of regular municipal bonds, but municipalities aren’t on the hook for repayment, as Oakland and Alameda County were with Mt. Davis’s general obligation bonds. Instead, revenues from the development, such as naming rights and certain forms of tax increment on the project area would be used to the tune of $20 million per year. If this sounds familiar, that’s because it’s similar to the way the 49ers financed their gap through Goldman Sachs. During the pre-Harbaugh era, there was a legitimate question about whether the stadium could be paid for this way. A few playoff runs and highly renewed interest later and the 49ers were able to pull it off. The Raiders, well, they’re not in that position. The makes me wonder how the financing would work if there were revenue shortfalls. Who would be responsible, the Raiders? What if they defaulted? And why would the Raiders or the NFL approve such a plan, given the revenue uncertainty?
Kephart said a few other things I found noteworthy.
“Purchase of the (Coliseum) land is key to us staying. In the event that the Council says no…we’re not going to do the development.”
The land purchase is contingent on the City and County coming to an agreement on Oakland buying out Alameda County’s half.
“I’m on my 4th city administrator and 2nd mayor in 10 months. I’m under the 2nd ENA and I haven’t negotiated one significant thing except the ENA.”
That would’ve been a drop-the-mic moment if he was so frustrated that he wanted to quit. He wasn’t. But that’s a stunning admission of how little has actually been done. Kephart has been quick to blame the City, County, and team for his failure. Ultimately, it is his failure since he was brought aboard to bring everyone to the table and work out the deal, so this grousing seems like sour grapes. He made one more observation:
“I’m not the problem, and I’m not the solution.”
Kephart also claimed that it was the City’s responsibility, not his, to get the Raiders, A’s, or Warriors on board. That’s a complete backpedal on his part. Per the ENA, as part of the initial submittal due June 21:
(b) Proposed terms and conditions required to obtain a commitment from one or more of the Oakland Raiders, the Oakland Athletics, and/or the Golden State Warriors to the Project with an update on status of negotiations between New City and each team regarding its commitment to participate in the Project;
I don’t know when this all changed, but I got a hint of it a few weeks ago when NFL point man Eric Grubman was talking about Oakland on Fred Roggin’s LA radio show. Grubman mentioned that the City hadn’t presented anything to the Raiders, which sounded strange since I too thought that New City was responsible for signing the Raiders. Now it makes sense in terms of process, though no light was shed on why it evolved this way. Exactly how was the City selling this to the Raiders? And wouldn’t those efforts run in conflict with the City’s desire to “open” the process for alternatives?
Near the end, Kephart had a sort of kiss-off moment.
“While everybody might think that Oakland is the garden spot of the world, we have projects in three different continents and around the country. And I have lots to do.”
It’s true. The ponies aren’t going to wait for Floyd to come back to Del Mar, you know.