Over the last two years, I had routinely criticized the A’s for not talking about the total cost of the Howard Terminal project. At some point they would have to let loose, but I didn’t expect it to be in a tweetstorm. Well, the cat’s out of the bag now. There’s no going back.
Motivation for this move may have been a need to garner public support as the EIR comment period was ending. Maybe it was as simple as the A’s wanting to capitalize on the wave the team on the field is riding at the moment. Regardless, we’re here now, so I wanted to take a moment to get some perspective. The Chronicle’s Roland Li helped me get that perspective when he tweeted this:
Inspired, I assembled a table comparing big stadium projects over the last several years plus Apple Park. I hope it gives you the same sense of perspective that it gave me.
The easiest thing to do is to get gobsmacked by the numbers, the scale of the project. It took me an hour to gather myself. I had to take a walk. The thing is, I saw it coming. When the project was unveiled in 2018/2019 I started adding the ballpark to the housing towers, then the office component, the retail aspect, and the performing arts center. I figured we’d hit $6 Billion. I was halfway there, at least.
As I mentioned in the last post, the $12 BILLION project cost figure is at the bottom of the 29th page of a 30-page document. It’s not on the opening pitch slide. Talk about burying the lede!
When you look at this from a historical context, burying that extremely important info at the bottom of the last text page makes more sense. During the redevelopment era (60’s-00’s), it was easy to get a certain part of a given city’s citizenry to buy into urban renewal plans, no matter how grandiose. Rebuilding downtowns was the key to urbanism and reversing the epidemic of white flight, which wasn’t entirely white when you think about it. After the last non-premium malls emptied out and the recent sports venue construction boom waned, it became less fashionable to talk about big dollars being doled out to benefit sports team owners and big developers. Redevelopment in California died a decade ago, though it keeps trying to be reborn. Thanks to project-targeted legislation, there are plans for at least two infrastructure financing districts to pay for the roads, bike lanes, sidewalks, and bridge(s) near Howard Terminal.
Oakland Mayor Libby Schaaf’s office knows public skepticism about these kinds of projects all too well. Tonight, her office released a statement in response to the A’s letter:
Tepid? Lukewarm? It’s not the ride-or-die spirit A’s ownership and many A’s fans are hoping for. For now the news cycle will be dominated by the sticker shock of the proposal. Soon it will be back to the EIR as written comments are published. Eventually they’ll converge into a full debate. And I wouldn’t be surprised if Schaaf and the City Council, worried about too heartily supporting or opposing the project, left it to a referendum. That’s the most Californian outcome I could conceive. It’s practically destiny.
ML once again thank you for thoughtful analysis.
Who is putting up the money for the $12 billion dollar investment? Based on the proposal from the A’s, I was hoping it would be as follows:
1. 1.2m sq. ft. ballpark: paid by revenue generated by the Oakland A’s. Any shortfall would be covered by the owners of the baseball team.
2. 3.3m sq. ft. residential development: paid by sales/lease/rent of the units. Any shortfall would be covered by private investors.
3. 1.5m sq. ft. office development: paid by sales/lease/rent of the units. Any shortfall would be paid by private investors.
4. 270k sq. ft. retail development: paid by retail lease/rent. Any shortfall would be paid by private investors.
5. 280k sq. ft. hotel: paid by the hotel guests. Any shortfall would be paid by the owner of the hotel.
6. 50k sq. ft. performing arts center: paid by concert revenue. Any shortfall would be paid they the owner of the venue.
7. Offsite infrastructure financed by an estimated $1.4b Howard Terminal incremental tax revenue and an estimated $860m JLS incremental tax revenue. Any shortfall would be paid by private investors.
It would seem like a risky investment…but what do I know? I don’t take risks which explains why I am not a millionaire/billionaire.
The best comparison is high speed rail transit. If what the A’s are proposing is similar to the Brightline High Speed Rail in Florida (Miami to Orlando International/Tampa) which is privately financed, this would be an exceptionally good proposal for Oakland. However, if what the A’s are proposing is similar to the California High Speed Rail proposal (San Francisco/San Jose/Fresno/LA) which is tax payer financed, the city of Oakland might want to ask, most respectfully, about proposal B or site B.
I am fine with the environmental impact (my opinion…others may disagree) as long as tax payers contributions are limited to incremental tax revenue from HT and JLS. The problem with the 1980s Oakland Raiders Coliseum remodel was that the city and county were stuck with the revenue shortfall. The city and county did much better with the Warrior’s Coliseum Arena remodel as the Warriors were stuck covering the revenue shortfall.
The ballpark is scheduled to be finished first, followed by some of the ancillary retail and commercial development, then the residential stuff. The ballpark is the anchor attraction to the whole project, and will benefit from some forms of indirect subsidy generated by the other parts of the project. The whole idea is to pay off the debt incurred for the ballpark as early as possible. As for putting all of the disparate projects into silos, that’s wishful thinking in the extreme.
As the ballpark is built, the A’s will auction off the dev rights for the other parts to the highest bidders. That’s how the entitlement process works. Entitlements (such as being able to build 3,000 housing units in Downtown Oakland) are as good as currency. There will be some negotiation because of affordable housing requirements, but it won’t impact overall profitability. And once the A’s sell that portion, it’s out of their hands. Who would fund the $11B non-ballpark development? New partners, preferred developers, real estate investment funds, hedge funds, etc.
The Brightline isn’t truly high-speed rail. It’s faster and newer than Amtrak and commuter trains. That’s all.
Saw that the ballpark is expected to cost $1 billion. Wasn’t the initial estimate about half that? No surprise, though. $1 billion sounds about right.
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