Oakland Raiders Stadium, Coliseum City Developer’s ENA May End

The Oakland Raiders Stadium hopes and the quest for a new facility for The Oakland Athletics are in danger of fading as the City of Oakland has expressed dismay with the current developers of what is called Coliseum City. Unless the real estate developers show considerable progress by a planned closed session meeting with the Oakland City Council in two weeks, their exclusive negotiating agreement may come to an end in October 6th.

Coliseum City is the giant project slated to eventually grow to 800 acres of office and retail development, all around stadiums for the A’s and The Raiders, and even a new arena for the Golden State Warriors.

In a letter dated August 29th, 2014 (and included here) and written by Gregory Hunter, the deputy director of Oakland’s Office of Neighborhood Investment and to Ed Mcfarlan, the Director and Architect at JRDV Architects, the lead organization of the Coliseum City Project, the City of Oakland was “very concerned about the (then) upcoming August 31st deliverable,” and at that point had still not received “past due” deliverables that were to be submitted on August 21st, and as per a letter dated July 21st.

“As per the 3rd amendment to the ENA,” Hunter writes, “your team committed to submit these deliverable by June 21st.” The two “deliverables” were a “Contracting Plan” and an “Investors Business Case.” The Contracting Plan basically concerns the design and construction phase and outlines the development schedule for the project. The “Investors Business Case” explains why the project is something the investors should put their money into.

City of Oakland Letter To Coliseum City Developers On ENA by Zennie Abraham

However, in reading the entire schedule, Mr. Hunter’s letter appears to imply that other communications were submitted and requesting documents which lay out the planned sources of money for the project. One can’t have a “sell document” for investors without first explaining where they believe the monies should come from, to make a case for getting those resources. One of this blogger’ sources close to the Coliseum City project said that “all of the necessary documents” were submitted between the August 29th letter and Saturday, September 13th, 2014.

These late document submissions by the developer have some Oakland elected officials more than impatient, and overly concerned with the capacity of the Coliseum City Developer Group to execute the project and see it to financing, construction, and completion. But closer inspection reveals a time-table that’s too tight, unrealistic, and politically motivated, coupled with a developer group which is quite literally “trying different” finacing ideas, and without a clear understanding of what needs to be done, and add to that, an unstable group, with one major developer out of the project, another not fully into it, and rumored financiers.

So far, the only person to come forward with any real money to invest in The Coliseum City Project is Mark Davis, the principal owner of the Oakland Raiders. As he said to this blogger at The Spring NFL Owners Meeting in Atlanta in late May, he has “$400 million to commit to the stadium” but said expressed frustration at the time that no one else stepped forward.

There has been no action by anyone to this date that would ease Mark Davis issues, save for the August 22nd release of the Draft Environmental Impact Report and Coliseum Area Specific Plan, and the Developer’s assertion that project financing would come from what real estate finance types call the “cash-on-cash” rent revenue Coliseum City would be projected to produce. That money source was quickly misread as a “subsidy” by some in the media, particularly one publication with a political opposition to stadium development so intense and reactionary, it commonly makes errors in the reporting of stadium projects.

The lack-of-investment problem has joined with the other afformentioned issues with the Coliseum City project to date, to form the situation that exists today, where the Developers could be jettisoned from the process. Here’s a quick recap:

May 2004 : The Coliseum City plan was created by architect Frank Dobson and Retail Leasing expert Bob Leste with Oaklander Steve Lowe and was first introduced that year. While it was presented to the then-new ownership group and A’s Managing Partner Lew Wolff, it went largely ignored by them. Mr. Wolff was then known to be in love with a concept called a baseball village and needed a lot of land to make that work, and eventually turned his attention to land owned by Cisco in Fremont. But the idea called for hundreds of acres of land, more than the A’s organization could afford given the economy at the time, and so needing public money turned to Fremont, which turned a deaf ear to their request.

March 2009: The Commissioner of Baseball announced a new committee devoted to determining the viability of baseball in the East Bay. In his statements Commissioner Bud Selig said that the A’s owners have exhausted their efforts in Oakland. As an answer, Dobson, Leste, and Lowe re-presented the Coliseum City concept to Oakland Mayor Ron Dellums. Wolff has not wanted to be in Oakland, but the Mayor’s Sports and Entertainment Task Force wants to maintain the A’s here in Oakland. To that end, it supported the Dobson, Leste, and Lowe plan.

At the time, the plan needed to be upgraded for 2009 from 2004, and a financing plan developed. It also lacked an economic impact analysis and a job development report. This blogger was a member of the Mayor’s Sports and Entertainment Task Force, and estimated that it would create 10,000 construction jobs and 4,000 permanent jobs. It called for a new stadium, a parking structure, and a retail structure at the Coliseum as well as an enlarged BART bridge. The total cost at the time was estimated at $440 million but we at the task force understoods that was a 2004 estimate.

The video shows much of Bob Leste’s presentation to the task force last Thursday and the discussion as well as the plan itself.

As the plan gathered steam, and the interest and support of Oakland District Seven Councilmember Larry Reid, it quickly became clear that Dobson was going to lose control of what was his idea. While Leste, Lowe, and Dobson lobbied Reid, Mayor Dellums and the Oakland City Council for a chance to try and make a go at developing the concept, Reid wanted what he perceived as bigger real estate players involved, and used his connections to start to form a team that he felt was just that. To this day, Lowe in particular is quite vocal about how he asserts Dobson was pushed aside by Reid.

But in defense of Councilmember Reid, Dobson himself admitted that he had no money of his own to put into the project; Frank had hoped the City of Oakland would do for him what it wound up doing anyway, giving a development team money to get started.

Later in 2009, Dobson left Oakland and retired to Palm Springs with his wife and long-time partner Diane. Then Mrs. Dobson passed way September 15th, 2009.

Frank Dobson, the creator of the Oakland Coliseum City concept, followed his wife to Heaven, August 28, 2010, in Palm Springs, California. He was 70 years old.

March 6th 2012: Oakland City Council approves $3.5 million to be spent to form a development and financing plan for Coliseum City, billed then as a new home for the Oakland A’s, Oakland Raiders, and Golden State Warriors. The development team then included Forest City Real Estate and HKS Architects, along with JRDV Architects.

January 27th 2013: Oakland Alameda County Coliseum Authority ads $1 million to the budget to form the development and financing plan for Coliseum City.

October 2013: Bay Investment Group LLC, headed by Rashid Al Malik and Hayah Holdings, and based in Dubai, and Colony Capital LLC were announced as the new Coliseum City investors. However, it quickly becomes clear that well-monied Colony Capital did not submit a document officially binding them to Coliseum City; the firm acted in the role of cheerleader.

December 2013: Forest City Real Estate was taken out of the project at the approval of the Oakland City Council. The reason was that, according to Hunter, Forest City was never interested in the stadium, only the office and retail portion. That was a signal to this blogger who has a background woking for the Oakland Redevelopment Agency, that had talk of making Coliseum City a Real Estate Investment Trust commenced, Forest City would have had incentive to stick around the project. Instead, the news is that a REIT structure has never (to this date) been considered – a strange bit of news considering what Coliseum City purports to do.

The idea behind the enormous size of Coliseum City is for the other office and retail developments to throw off enough cash over time to help pay for the stadiums and arena. The combining of cash-flows from different buildings into one investment vehicle is what a real estate investment trust is, and may are such that one can invest in them via the stock market. So, in effect, the players involved have been forming a kind of REIT, but this blogger’s contacts assert, never talked about it as an objective for the project.

By contrast, Boston Properties is bringing the financial power of its REIT to finance and build Salesforce Tower, part of the Transbay Transit Center Complex in San Francisco. The cost of that privately financed structure that will be the tallest building in San Francisco and on the West Coast? $1.13 Billion.

May 2014: Oakland City Administrator, and “glue” of the Coliseum City Project Fred Blackwell departed to become head of the prestigeous San Francisco Foundation. The move caused many to wonder if Blackwell had planned such a move as far back as December of last year. While many were upset that he left, if you look at his future, it was a logical move.

Poll numbers and anecdotal evidence point to Oakland Mayor Jean Quan not being reelected in November, although with Rank Choice Voting, and her untested position as Oakland’s first incumbent mayor to face scrutiny in an RCV setting, she could wind up being in the saddle for another four years. But that uncertainly didn’t sit well with the ambitious Blackwell, who took the job Quan offered him as CAO knowing that it was an unstable situation, then bolted the moment The San Francisco Foundation called his name.

Insiders had hoped Mr. Hunter would be elevated to a position of higher visibility and responsibility when Fred became CAO, and that’s exactly what has happened since Blackwell’s departure, and happened because Blackwell was promoted to City Administrator to start with.

Later that month of May, this blogger attended the NFL Spring Owners Meeting in Atlanta, in Buckhead. There’s Mark Davis personally said that he had $400 million to spend on Coliseum City, but didn’t know who else had money. “You got any?,” Davis asked.

June 22nd 2014: The Oakland A’s 10-year lease deal was approved, although the politics that led to that outcome divided the City of Oakland and The County of Alameda, which control the Coliseum JPA. The developers also let slip the idea that the Oakland A’s would be without a home in order to make room for a new stadium for the Oakland Raiders. In the process of smoothing over the hard-feelings that formed, Oakland’s At-Large Councilmember Rebecca Kaplan became Lew Wolff’s new political ally, and she wasn’t shy about taking laps around the track announcing it, as she is also running for Mayor of Oakland. Kaplan claims she saved the A’s for Oakland.

August 22nd 2014: The Coliseum Area Specific Plan and DEIR are released. But with that come Oakland Mayor Jean Quan’s drop of the idea that there has been, as one friend who’s working on Coliseum City put it, “found money.” It’s not – just the projected revenues from full Coliseum City buildout. The Quan Mayor’s Office has been playing fast and loose with the Coliseum City numbers, and sending the giant signal that they may be rushing the developers to meet demands that, given the scope of the project, are unreasonable.

If Quan’s people really understood what they were doing, a giant, multi-agency and multi-elected official task force would have been formed, and the Mayor and other Oakland and Alameda officials would have been working as a united front with the development group. Instead, it looks like Quan’s show, with Jean constantly trying to work what little mainstream media there is into believing that a Prince from Dubai will step in, or that the existing Raider Bonds would be paid off using Coliseum City (a claim that makes the developers’ stomach’s ache because it’s not true), combined with the occasional cameo by Councilmembers and Oakland JPA reps Reid and Kaplan, with Reid unhappy with the pace of the process, and Kaplan constantly implying she’s the sports czar of Oakland.

And then we have the Alameda County Board of Supervisors, which seems partly indifferent to Coliseum City, even, at one point in 2013, stating “This is Oakland’s project.”

Conventional Financing Thinking Is The Problem; The REIT Answer

So what have the Coliseum City minders been doing to the end of forming a financing plan? They are reportedly considering a “number of bond options” but it’s clear to anyone trained in this area, that what the planners are looking at are conventional financing options that involve government and municipal bonds.

From personal experience going back to serving as Economic Adviser to Oakland Mayor Elihu Harris from 1995 to 1999, and then heading the Super Bowl: Oakland effort, the problem with talking to municipal bonds planners is they don’t want to consider any type of approach that smacks of private financing. Muni Bond planners schmooze and contribute to elections, all to be able to get the City or the County to cough up public tax money – that’s something Oakland Councilmembers are allergic to doing for Coliseum City.

This blogger has asked, and on several occasions, if an Industrial Revenue Bond has been considered. The answer from sources has been “we’re not certain.” An IDB can be combined with a REIT in such a way that the bond issue that’s let by the City of Oakland does not fall back onto the tax payers should it default. But to get that special deal, the City of Oakland has to lobby the State of California for consideration; only a handful of projects are approved for California IDBs annually.

Coliseum City Developer’s D-Days Coming

The Coliseum City Developer’s D-Days are coming up and specifically in closed session in two weeks. If they can convince a collectively testy (but for different reasons) Oakland City Council they’re on the right track, then, by the second week of October they should be able to proceed without the political pressure they currently face.

But, from the words of the people who’ve given a lot of background for this blog post, they’ve got their work cut out for them. Mark Davis reportedly has made another trip to San Antonio, where that city government is putting together what is said to be a creditable bid to get the Raiders to move away from Oakland.

On that, what the Coliseum City Developers are focused on is getting a signed agreement from Mark Davis. They say they’re “80 percent there,” as much as some Oakland elected officials scoff at that idea.

Stay tuned.