Oakland’s Billion Dollar Question

The A’s billionaire owner, John Fisher, is demanding the City of Oakland provide over a billion dollars in public funds for his private ballpark and luxury real estate development at Howard Terminal at the Port of Oakland. If approved, this project will drastically impact Oakland communities and draw resources from many other city and regional priorities. With so many challenges facing Oakland – including homelessness, affordable housing, and public safety – we should let Oaklanders vote on how critical public resources are spent.

While other developers are expected to pay their fair share, the A’s want to do the bare minimum for affordable housing, use public dollars to pay for community benefits, and spend over $900 million of public funds on infrastructure improvement to support their private real estate development project.

• Off-site Infrastructure Improvements – The City Council’s non-binding term sheet would use an estimated $351.9 million in public funds for off-site infrastructure. However, the Mayor’s TOWN for All infrastructure package seeks $431 million to be funded using various public funding sources (including a $150 million City limited obligation bond). These projects will in effect jump the line over all the other outstanding transportation and infrastructure projects that have been neglected for so long throughout Oakland.
  
  
• On-site Infrastructure Improvements – The A’s will front $495 million for the development’s on-site infrastructure and be reimbursed using up to 80% of the proceeds from the Howard Terminal (HT) Infrastructure Finance District (IFD). An estimated $860 million is expected to be generated from the IFD, which means $688 million could be paid back to the A’s. The A’s claim these are “but for” taxes, but it would be unwarranted for this amount of IFD financing to go toward a private development rather than serve the public good.
  
  
• Community Benefits – While the A’s initially promised $450 million in community benefits, they have since retracted and are now relying upon public money totaling $411 million from multiple sources over 66 years. Funding sources include the Port’s Social Justice Fund ($10 M), Howard Terminal IFD ($50 M), Payments in Lieu of Transportation Impact Fees ($11 M), and 0.75% condominium transfer fee ($340 M). The City of Oakland’s contribution to the Community Fund is expected to be $400 million in public funds, while the A’s would contribute only $11 million to this fund. This stands in stark contrast to other large development projects in Oakland and around the Bay Area requiring the developer to fund community benefits through private dollars.

Now, City staff have brought forward resolutions authorizing the city administrator to redirect hundreds of millions of dollars in California State Transportation Agency (CalSTA) grant funds from the Port of Oakland to the City to use in support of the Oakland A's luxury real estate development at Howard Terminal.

Despite claims by City staff to the contrary, the City's plan to use these dollars for the A's development is evident by the number of projects they intend to fund with this grant that exclusively serve bike, pedestrian, and visitor access to Howard Terminal--infrastructure that is only necessary if the entertainment complex is developed there. These funds are intended to benefit the Port of Oakland's supply chain, safety, and critical infrastructure needs – not just a billionaire's private real estate development.

September 20 City Memo

• On September 20, in lieu of the independent financial analysis of the proposal requested by the City Council, City Admin released this memo on the state of negotiations over the A's proposal. The memo revealed several startling pieces of new information, most importantly:
  • The A's vastly underestimated the cost of offsite infrastructure in their original term sheet. As a result, if the City were to move forward with the project, they would be responsible for hundreds of thousands of dollars more than the $350 million estimate. The discrepancy between the City's cost estimate and the A's is so vast that staff did not reveal the size of the gap, but did they did admit:

    • "The City’s cost estimate to construct and implement all offsite transportation infrastructure improvements, including grade separations and parking management, will significantly exceed the A’s previous estimate."

  • As development costs continue to rise, the City could find itself responsible for covering cost overruns. Despite their assurances that the city's general fund is not at risk, city staff also revealed:
    
    • "Under the current structure, there is a risk that the City would be required to fund the remaining costs as well as any cost overruns, each of which may prove significant."
      
      
  • The City does not have this funding in place, and is hundreds of thousands of dollars short of the needed grants. The City claims to have secured about $320 million in grants, which is not enough to cover the original infrastructure estimate, let alone the new, far higher one. However, most of the $320 million "secured" for offsite infrastructure comes from the $280 million in state money allocated to the Port of Oakland. There is no way the City/A's project will receive that much of that state port funding when there are hundreds of pre-existing port projects that need additional funds in order to keep the Port operating smoothly. Additional grant funding for the project is not assured.
  • As a result, the City is considering issuing a Limited Obligation Bond (LOB) to cover the remaining offsite infrastructure costs. An LOB would divert additional tax dollars, like sales tax revenue, towards the A's development and away from the General Fund.
  • Fisher continues to refuse to provide the bare minimum of 15% affordable housing onsite. Fisher is still trying to reduce the amount of affordable housing he has to include in the residential development included in the project and refuses to accept a 15% minimum as it is universally defined and understood in the development field. 

More information on public funding for the A's proposed development

Debunking the Myths of A's "But For" Dollars

The billionaire owner of the Oakland A’s, with the support of City Hall, claims that he is entitled to get over a billion dollars in public funds for his proposed private ballpark and luxury real estate development at Howard Terminal because he claims those public funds are “but for” dollars that would not exist without this project and therefore could not be used for other more pressing City priorities. But, like much of what we have been told by the A’s front office, this is only half of the story.

• Federal, State, Regional and Other Funding Sources are NOT “But For” Dollars – More than $350 million of public funds would be used for off-site infrastructure costs. These are projects whose primary purpose are to support the A’s Howard Terminal project. The Federal and state grants and other public funding sources that would fund these projects are NOT “but for” dollars and could be used to finally address all the other outstanding transportation and infrastructure projects that have been neglected for so long throughout Oakland.
  
  
• Moneygrab: A’s To Get Most of the “But For” Dollars – Up to 80% of the incremental tax revenues generated by the project through an Infrastructure Financing District (IFD) - the so-called “but for” dollars - would be used to reimburse the A’s for the cost of the on-site infrastructure, to the tune of almost $700 million. This is an unprecedented grab of funds as other major cities in California limit the share of property tax increment contributions to IFDs to 50%. With most of the incremental tax revenues directed to the IFD and the A’s, very little of these dollars are then available for the general fund to address the City’s priority needs such as homelessness and public safety. “But for” the A’s moneygrab, these funds could be used to tackle Oakland’s pressing needs.
  
  
• “But FORGET” Community Benefits – While the A’s initially promised $450 million in community benefits, they have since retracted and are now relying upon public money totaling $411 million from multiple sources over 66 years. The City’s contribution to the Community Fund is expected to be $400 million in public funds, while the A’s would contribute only $11 million to this fund. This stands in stark contrast to other large development projects in Oakland and around the Bay Area requiring the developer to fund community benefits through private dollars.
  
  
• “But FEW” Dollars for Affordable Housing – This project at its core is about luxury condos and high-rise office buildings – it’s “bigger than baseball.” But, it’s not about affordable housing. While the A’s have yet to agree to even the minimum affordable housing requirements, even the Howard Terminal Term Sheet approved by the City Council in a non-binding vote fails to adequately address critical affordable housing requirements and falls far short of the recommendations of the Housing Topic Cohort developed through the City’s own community benefits process.
  
  
• “But For” Vegas - The real “but for” story here is that “but for” the A’s bullying threats to move to Las Vegas, Oakland could have a new, world-class stadium without the need for massive public funding by building at the Coliseum site where the infrastructure already exists. Rebuilding at the Coliseum would mean that public dollars, including “but for” dollars, could then be directed to Oakland’s pressing public needs.

What are we asking for?

In April, the Oakland City Council Rules Committee unanimously agreed to schedule Councilmember Noel Gallo's resolution to commission an independent cost-benefit analysis of the financial plan for the A's proposed Howard Terminal project for September 20th. Five months later, the City has yet to even hire an independent third-party to do the analysis. 

We know that the A’s have walked away from negotiations with the community, and it seems that a deal on seaport compatibility measures, community benefits and affordable housing remains elusive. While the A’s are hoping to rush approval of their massive development before the November election, this is a self-imposed deadline and one which should not be used as an excuse to skip the council’s demand for an independent economic analysis.

The Oakland City Council must be held to their commitment to review an independent economic analysis and make it available to the public before a vote on the development agreement.