Oakland A’s Agreeing To An Iffy Las Vegas Ballpark Tax-Credit Means They Want Out Of Oakland

The Oakland A’s are sending the preliminary message that they so badly want out of Oakland and want to be in Las Vegas, they’ll take a low Clark County public financing deal that includes an iffy “how the heck did they agree to that” tax credit.

If you don’t know the story as it stands, the The Oakland A’s have spent the last month hammering out the final details on a stadium financing package so they can break ground on the anticipated $1.5 billion, 35,000 seat stadium at what is now Tropicana Hotel land.

As it stands, the agreement tentatively includes $180 million in tax credits and $120 million in bond proceeds (which could mean a bond cost of around $300 million). All of that is great for Clark County, and if the A’s sign on the dotted line, Las Vegas gets a baseball team that once belonged to Oakland.

But the deal, as it’s reported (and remember, there’s no documented legislation released, just drafts of what is to be called the Southern Nevada Tourism and Innovation Act), is far less money that the A’s would have gotten in the Oakland Howard Terminal example, especially when we consider what that agreement was starting to look like when tax increment financing (TIF) law SB-293 Skinner was signed by California Governor Gavin Newsom on October 11th, 2019.

In the Oakland Howard Terminal example, the A’s were looking at a base year assessed value of $2 billion, a 45-year property tax collection period, a 1 percent property tax, and a final tally of $1.6 billion in TIF revenue, of which $800 million could be used for a bond issue, and of which $325 million the Oakland A’s would have received for sea-level-rise mitigation-related infrastructure improvements.

But all of that got chopped down by the 1) Oakland City staff’s lack of familiarity with tax increment financing (by the word of Oakland Mayor Libby Schaaf),…

… a consultant that wrote a report leaving out 20 years of the 45 year TIF estimate, and then not properly modeling the resulting revenue such that it could not be counted on (the project manager at one point said it was $400 million, but never produced a public spreadsheet to back her claim), and the passage of time and political frustrations that cause Mayor Schaaf to eventually break down and seek help from Washington, only to watch that $180 million get cut out of the final government subsidy plans for the end of the 2022 year. The A’s, who were not familiar with TIF or the California implementation process, watched all of this play out as Major League Baseball’s clock was ticking. Finally, MLB’s clock hit the alarm bell last year, when Commissioner Rob Manfred said they were “done with Oakland” and announced that the A’s were planning for a move to Sin City.

Originally, Oakland A’s President Dave Kaval and Team Owner John Fisher entertained the idea of getting a $500 million subsidy via a version of the same stadium hotel tax that fueled the $645 million bond subsidy and $750 million total payment to the Raiders to help build Alligiant Stadium. But the realities of a COVID-19-impacted economy and a Nevada that turned from red to blue caused the A’s to quickly junk that idea. But if one looks at tax increment financing and the possible $1.3 billion in revenue over a 35-year-period and the $600 million in procceds the A’s could realize, the question must be raised: how did they get down to just $120 million and a tax-credit that is $180 million in current dollars.

Real estate developers normally want as much cash up front as they can get in public private partnerships where stadiums and convention centers are the focus. TIF, with its fantastic doubling formula, allows the smart builder to negotiate a great money pass-through to the government partner for roads, schools, and transportation. But there’s one catch: the real estate developer has to be willing to pay the annual property tax. The A’s are allergic to such responsibilities. They were in Oakland and are in Las Vegas. So, it’s hard to use TIF if the real estate developer doesn’t want to pay the money that makes it work.

That fact caused Clark County ballpark deal players a lot of headaches, and one person I know is eager to get as far away from the matter as possible, now that it’s in the hands of the polticians. John and Dave can come up with demands in a negotiation so wild at times that they can drive a tee-tolaler to drink. At times the standard parameters of municipal financing seem completely foreign to them, from what I have gathered by personal discussions (and matched with my own experience).

Plus, there’s the reality that the Oakland A’s don’t have a $325 million sea-level-rise problem to worry about in the Las Vegas context, and they clearly lack the cash and appropriate partners (let alone good economic conditions) to even think of rebuilding the Oakland Howard Terminal city-within-a-city plan in Las Vegas. So, the whole matter was scaled down to what it is now: a ballpark connected to retail and other uses (like a hotel) built by Bally’s. And a deal that contains tax-credits.

Personally, any deal that doesn’t give me cash up front is not a good deal, and tax-credits by their nature ask you to first, pay the tax, then get some payment later. That means the present value of the future payment is less than what it would be if it was a simple subsidy. But I have to believe part of that aspect of the deal came up because the A’s didn’t understand how to make tax increment financing be their negotiating tool, where they could offer to pay for roads and schools and transportation, yet were upseting everyone from the Governor to the local bar owner with demand after demand after demand. In other words, this deal is just not friendly to the Oakland A’s. But the good news is the A’s have development partnerships in Las Vegas they did not have in Oakland. And that equals investors willing to put money into the development, and make it something exciting.

If This Is Too Much Money For The A’s, Explain The Raiders Las Vegas Deal?

In all, the Governor is bragging that the deal with the A’s is one of the lowest in recent sports history. From that response, it’s hard for any opponent to call for a less expensive aggreement, and easy for the Nevada Legislature to pass. If that’s the case, then one would have to check and see what level of support those critics have given to the Las Vegas Raiders. If they’re season ticket holders, then it’s all just rubish. The Raiders got the highest subsidy in sports history to date; the A’s deal is about 1/3rd what the Raiders agreement was.

A Win For The Oakland A’s In Las Vegas

If this goes through, then we have to congratulate John and Dave for lowering their expectations and being team players with Clark County. It was a rough go, and there are some hard feelings, but the best way to smooth them over is to create a facility Las Vegas, Southern Nevada, Nevada, and Major League Baseball will be proud of. The hard part is almost over.

A Loss For Oakland, Which Refuses To Look At How It Does Anything

I have said it before, and I will say it again: Oakland’s approach is the definition of insanity. Strong Mayor has chased away the Warriors, Raiders, and now the Oakland A’s. The role of the elected official is too great in Oakland, and thus too rife with the appearance of corruption. Smart, talented people, especially African Americans, are discouraged, gamed, and chased away. I am a good example of that fact, with 37-years of emotional scars to prove it. I can list the horrible actions done to me while I worked for the City of Oakland, countered only by the chance to hit home-runs for Oakland, time after time.

But the one that stings the most is how then-Oakland Mayor Jerry Brown fired me and took the $80,000 set aside for the Oakland-Alameda County Sports Commission I created from scratch, and all because I accused him of treating me as if he did not like me for being intellectually agresssive, as opposed to, as one might put it, “acting black”.

Jerry’s action was illegal as per California Labor Code section 98.6, but at the time, 24 years ago, I was frozen as to what to do. I started what became Zennie62Media because I was certain the white mainstream media was not going to tell my story. With the exception of Monte Poole, who was Oakland Tribune Columnist at the time but not today, that was and has been true.

While Jerry appologized for what he did, it didn’t bring back what I built, or restore the $80,000 Oakland Economic Development Director (at the time) Bill Claggett set aside for me for shocking the heck out of everyone and getting Oakland to one of three finalists for the right to host the 2005 Super Bowl. We lost to Jacksonville.

Now, San Francisco gets to host the Super Bowl again, and Oakland has no NFL team or major pro sports team. A sad end, that Oakland doens’t care about, even as I and a few others, do.

Stay tuned.