Oakland taxpayers stand to be stuck with the tab to subsidize A’s proposed Howard Terminal Ballpark Complex

Despite promises by Oakland City officials that the $12 billion Oakland A’s ballpark and condominium complex at the Port of Oakland’s Howard Terminal will not require taxpayer funding, there is growing concern that Oakland taxpayers may be required to foot part of the bill.

“The right question to ask is: … ‘Who’s stuck with the tab?”
Mike Jacob, Vice President & General Counsel, PMSA

A September report authored by Nola Agha, Ph.D., a professor of sports management at the University of San Francisco, is entitled “Evaluation of the revenues, costs, and impacts of the proposed Oakland Waterfront Ballpark District at Howard Terminal” concluded that:

“In summary, the City is offering at least $603 million in diverted property tax revenues to the A’s, and the public will subsidize at least $850 million in additional infrastructure as public funding for the Howard Terminal Project.”

The report was prepared for the Pacific Merchant Shipping Association (PMSA) which opposes the A’s Howard Terminal project.

Who Is Stuck With The Tab?

In an interview with AJOT, Mike Jacob, Vice President & General Counsel, PMSA said: “The right question to ask is: … ‘Who’s stuck with the tab? … So, even though the City (of Oakland) is trying to find additional grant money from federal and state sources for funding, they have been very explicit in stating that they don’t want to be the backstop. They don’t want the City general fund to bear the brunt of the cost of the project if something goes wrong, or an estimate is off, or a cost increases, or the timelines get delayed, or the project isn’t as robust as was estimated. At that point, the question is: ‘Who’s going to backstop the deal?’”

And as Jacob notes: “The A’s have never said that they want to backstop the deal.”

Jacob says this raises some additional questions: “You want to do a $12 billion project but you’re nickeling and diming the City of Oakland. You want a 60+ year lease but you finance that over multiple decades? There’s no way they’re (A’s) that undercapitalized.”

So, Jacob asks the final question: “Is this really just about: ‘I don’t want to do this deal if I don’t get a public subsidy?’”

San Francisco Chronicle Report Also Raises Concerns

Initially, the proposed Howard Terminal complex was received positively, especially by Bay Area sports writers.

A reflection of the growing media scrutiny of the project is the San Francisco Chronicle’s September report warning of the cost to Oakland taxpayers: “While the team is “privately financing” the stadium, taxpayers are likely to put hundreds of millions of dollars into surrounding infrastructure if the project gets approved and built.

Concerns about the issue bubbled up when Oakland released a memo Sept. 20 that detailed the status of negotiations with the team and outlined a number of regional, state, and federal grants the city is securing. Those government grants total $321.5 million to help pay for off-site infrastructure. But that funding might not be enough.

In July, Oakland officials committed to applying for public funds to pay for off-site infrastructure, which at the time, the A’s estimated would cost $495 million. The A’s estimated that on-site infrastructure would cost $360 million, which would be paid for through an infrastructure tax district.

But in the memo, Betsy Lake, an assistant to the city administrator, said the estimated costs of off-site infrastructure are expected to “significantly” exceed the A’s earlier estimates, and officials later said the city doesn’t yet have an estimate of those costs.

The memo raises questions about the overall cost of the project and how much Oakland could be on the hook for. City leaders have been adamant that a final development agreement would not leave the general fund at risk. And any taxpayer funds put toward the project wouldn’t be city tax dollars. Nonetheless, the amount of public funds that would be required could be significant. And if there are cost overruns, it’s unclear how Oakland would pay for it …

Nola Agha, a professor of sports management at the University of San Francisco, analyzed the project in a report — commissioned by the project’s opposition — that concluded the off-site infrastructure could cost about $850 million. Agha estimates that on-site infrastructure costs could rise to $603 million due to inflation.

In addition, she said the city is overly optimistic with its projections because it’s assuming the full build-out of the A’s proposal, but it’s possible that the A’s never complete a full build-out due to a recession or inflation. She said other sports stadiums nationwide, like the Brooklyn Nets, haven’t finished building out what they promised.”

Two Lawsuits Filed Against Howard Terminal Complex

There are two lawsuits filed against the Oakland A’s Howard Terminal ballpark and condominium complex. These cases will not be decided until 2023, according to PMSA’s Mike Jacob: “The lawsuit against the project’s Environmental Impact Report (EIR) is at the Court of Appeals. So, both the industry groups and labor groups challenging the EIR and the City of Oakland on the other side have appealed. Both are challenging the ruling in September made in the Alameda Superior Court that found that the EIR was deficient with respect to wind impacts. We appealed because we think there are a lot more deficiencies in the EIR then just wind impacts. And the City and the A’s have appealed because they don’t think provisions made for wind impact in the EIR were inadequate.”

Jacob expects a hearing followed by a decision by the Court of Appeals sometime in February 2023.

He said the plaintiffs include PMSA, the International Longshore and Warehouse Union (ILWU), California Trucking Association, Schnitzer Steel, the Harbor Trucking Association. Opponents also include members of the East Oakland Stadium Alliance who oppose the Howard Terminal ballpark and condominium complex at the Port of Oakland.

Complaint Against Bay Conservation and Development Commission

The second lawsuit was filed against the Bay Conservation and Development Commission (BCDC) which voted on June 30th to remove the Howard Terminal site from the Port Priority Use Designation. The decision, if upheld, would allow the site to accommodate construction of the ballpark and the condominiums as proposed by the Oakland A’s.

“So, the same East Oakland Stadium Alliance Petitioner Group, including ILWU, PMSA, Harbor Trucking and Schnitzer Steel appealed the decision made by BCDC,” Jacob said.

Prior to its June 30th vote, BCDC staff had overturned the Seaport Planning Advisory Committee vote which had rejected changing the Howard Terminal designation.

The BCDC staff decision was hailed by the Oakland A’s on its www.athleticsnation.com site: “Back in March, hopes for a new ballpark at Howard Terminal took a hit when the Seaport Planning Advisory Committee (SPAC) recommended that the San Francisco Bay Conservation and Development Commission (BCDC) reject removing Howard Terminal’s designation for port activities. Were the BCDC to follow this recommendation in a binding vote to be held in June, the ballpark project would be dead.

Thankfully, BCDC staff rejected the SPAC recommendation in a report released earlier this week that recommends “Removing the Port Priority Use designation from 56 acres at Howard Terminal at the Port of Oakland.” This means the authors of the report believe that Port of Oakland operations would not be adversely affected if the new ballpark and surrounding developments go forward.

If the commission’s June 30 vote follows this recommendation it will effectively remove a big hurdle that has threatened to block the A’s new stadium plan.”

Jacob says the lawsuit against BCDC’s decision is based on three main complaints:

• The environmental analysis by BCDC was not adequate.
• “The BCDC decision was ‘arbitrary and capricious, which means that they didn’t have the evidence to support the conclusion that they reached.”
• The third complaint is a charge of conflict-of-interest aimed at the BCDC Chair, Zack Wasserman, who was a former attorney for the Oakland A’s and therefore “represented the developers.”

On LinkedIn, Wasserman describes himself as follows: “I work with private businesses and public agencies to negotiate and draft complex real estate and financial structures. Working frequently with state and local regulatory and permitting agencies, I represent clients before a variety of administrative bodies to enable clients to complete some of the region’s most intriguing projects.”

Jacob concludes that the court “will figure out when they want to have a hearing and that will be well into 2023 … could be the first half of 2023.”