Howard Terminal Update: Oakland Mayor Libby Schaaf Says “Sources – Uses” Financing Doc Not Done
– video made by the YouTube channel with the logo in the video’s upper left hand corner. OaklandNewsNow.com is the original blog post for this type of video-blog content.
Howard Terminal Update: Oakland Mayor Libby Schaaf Says “Sources – Uses” Financing Doc Still Not Done. It is almost 3 Yrs Late going back to October 12th 2019. Here, I present part of my talk with Oakland Athletics President Dave Kaval on this subject.
This video livestream basically takes up where Oakland Mayor Libby Schaaf and I left off during our talk about the progress of The Howard Terminal Ballpark Project. I started where the Mayor remarked that, basically, the document showing where monies were coming from and where they were going – in other words, what pays for stadium construction, and what pays for infrastructure, and what pays for community benefit, was not done.
She said that there were drafts she had seen, but the City of Oakland has yet to release an official document.
Well, that simple explanation has apparently been beyond the collective capability of the City of Oakland and its consultants. Moreover, SB-293 Skinner, the legislation that allows the use of tax increment financing at Jack London Square Howard Terminal, was signed into law October 11th, 2019. That sends a message that the City of Oakland intends to use tax increment financing for Howard Terminal.
In other words, it says “Hey the City of Oakland is going to use its share of property tax revenue collected via TIF, and will reach out to Alameda County, BART, AC Transit, and EBMUD for permission to use theirs” as well and because they make up the “taxing agencies” that normally get the property tax money from Howard Terminal.
When that happens, the City of Oakland is to immediately get the ball rolling by setting up meetings with each taxing agency if, and only if, it intends to use each organization’s portion of the total TIF revenue generated.
But the City of Oakland did not do that. It waited, and waited, and did not act until after Major League Baseball complained about the new ballpark completion year of 2027 in news put to MLB in March of this year, and started looking at Las Vegas. Only after that did The City of Oakland reach out to Alameda County.
So, as I and the Oakland A’s Dave Kaval were saying in the talk here, and before, the City of Oakland does not need the County of Alameda – its TIF share is at best 20 percent of the total. To adjust, the City of Oakland can add the necessary new construction to base year assessed value, and gain the same total revenue over the 45 years. The up-front-money bond issue would be based on the calculation.
Doing that would satisfy the County wanting to be out of the “sports business” yet it would still benefit from TIF revenue use in the community.
But Mayor Schaaf Does Not Want To Do Howard Terminal Without The County Of Alameda, So This Whole Episode Is Driven By Her Own Political Calculus, And Consultant Bad Advice. We Will Learn October 26th
The Mayor admitted that she does not want to move forward without the County of Alameda – finding a solution to TIF use without the County is not in her mind, thus the October 26th Alameda County Board of Supervisors Meeting. Out of that, this spaces hopes, comes a favorable outcome, where the County’s percentage share of property tax revenue from Howard Terminal as a TIF zone would be collected for use by an as yet not formed fiscal agency, and for a bond issue.
But, her reasoning, as expressed to me, has a major flaw.
The Mayor seemed to say she needed the County of Alameda to help drive enough revenue to help pay off a proposed bond issue. But the real problem is her consultants, led by Public Financial Management, or “PFM” have her with the idea that it’s the shape of the TIF district on a map that drives the TIF revenue, rather than assessed value. That’s major – league wrong.
A simple demonstration proves it:
If I start the tax increment revenue calculation with a base year of zero value, and then increase that value by 1 for the second year, 1 minus zero is 1 – times the tax rate of .01 gives us the first year TIF revenue of .01 . Got that?
OK. So, let’s do this. If I start the tax increment revenue calculation with a base year of 100 value, and then increase that value by 10 percent for the second year that is, 110 minus 100 or 10 – times the tax rate of .01 gives us the first year TIF revenue of 1.0. Got that?
So, with the addition of zeros, in other words the increase in base year assessed value, we see a higher TIF revenue. That proves you do not have to increase the map size to realize more TIF money. You plan for a target base year assessed value – in other words, what are you going to build there, and how much will it cost, and how will it be paid for? Ideally, you want the privately-financed ballpark to be “on-line” for base year, and make sure it and other buildings add up to that target assessed value.
But, and for whatever reason, the City of Oakland consultants are not having the City do that. It’s a huge mistake and under a time-crunch, considering the TIF negotiations should have started in 2019.
Here’s what an observer wrote to me about the Mayor’s comments:
This is fascinating… thank you for putting 2+2 together on this for me. are you basically saying that the whole “city says county is required” angle boils down to simple city budget priorities: City trying to maximize upside GF revenues and in so doing is eyeing jealously the County GF revenues remaining unencumbered, therefore they are unmoved by your arguments on how to achieve the same entitlement result without the county, because their motivation is not just the project, it is a project with maximized city revenues that are generated by county backfill of the postdevelopment payment stream to the A’s ???if I was the County and I sensed that this was the game, i wouldn’t take any actions on any of this until after the City had certified the FEIR in order to ensure that the project scope was set in stone regarding total project expenses
(As a note “FEIR” refers to “Final Environmental Impact Report”)
And my answer to my friend’s question is that it certainly looks like that. But I think to play one-up-personship with TIF revenue flows when a simple re-planning of the new development that would form the base-year-assessed value for Howard Terminal is a bad idea. Ok, so the County of Alameda gets to keep its share of the property tax from the area and not used for TIF revenue. To me, getting around the political issues that Alameda County brings is a better place to be. Oakland gets to build a ballpark without the County politics blocking it. I was under the impression the A’s and Mayor Schaaf wanted that.
Moreover, the discussion is born of a lack of understanding of what to expect to be finished on the site that would make up base-year-assessed value for a 45-year bond issue that will yield TIF revenue of well over 1 billion. Will the ballpark be part of it? It should be.
This also shows why the Mayor of Oakland should not be the spokesperson for the project: the dynamics of the deal are not, well, her expertise. Large – scale project point persons do what Libby is trying to do. She should let Oakland City Administrator Ed Reiskin or Project Manager Molly Maybrun meet with the media, and I wonder why Libby does not put them out there?
I know the answer: both are new to this project, having arrived at the City of Oakland in 2019. As I have said, Libby could have just said “I know a guy”, and called me,
I have experience at it with Oakland’s only Super Bowl Host City Bid. Yes, I would like to be the point person, but when someone knows you for over 30 years, your talent should be obvious to them. Given my knoweldge, to ask if “this is a job interview” was not necessary.
This is simply a matter of Oakland doing things right to build a ballpark. I continue to hold that the Howard Terminal Ballpark Project is still in crisis mode to do the lack of overall know-how on the side of The City of Oakland. The Mayor mentioned every aspect about the project except the most important one: financing, Since the City Council will not be (as of this writing) asked to vote to create a fiscal agency for TIF revenue, it looks like that action will not happen until some time in 2022.
Right now, no one knows when that time will happen – including the City of Oakland. And, with Major League Baseball forming a ballpark plan for Las Vegas, it feels like The Sword of Damocles is hanging over our collective Oakland heads.
Post-Script: The Work Of A Berkeley-Trained African-American Oakland Economic Development Consultant And System Dynamics Modeling Expert Turned Media Entrepreneur Who Cares And Is Right
As a post-script, it was not my intention to be disrespectful to Mayor Schaaf, but what came out was born of a frustration with how I have been regarded by her since 2015. Then, to make a long story short, Oakland Raiders Owner Mark Davis asked me to come up with a stadium plan for the Raiders to stay in Oakland. That Oakland Coliseum Reboot Website is here. A major investment baking firm, then called Piper Jaffray, blessed my idea and the spreadsheet – and held a six-person conference call on it. Then Oakland Coliseum JPA Director Scott McKibben and At-Large Councilmember Rebecca Kaplan went over it with a fine-toothed comb. With all of that, the Mayor never answered my email, looked at the spreadsheet, or had someone meet with me about it, let alone called me.
Pat Cashman, who was one of the project managers at the time, talked about my plan on the phone (I called him), which included a 1,000-room hotel, and said that he told people in a meeting I was not told about that new hotels in Oakland would not pencil out. In other words, Pat basically said no one would stay at a first-rate hotel at the Coliseum Stadium, regardless of what was happening, like a concert or sports event.
I kid you not.
That was a complete 180-degree view of the opinion of the Executive Director of the San Francisco Hotel Council, Kevin Carroll , who loved my plan. So who’s view are you going to take? the boss of the San Francisco Hotel Council or the City of Oakland Project Manager (who happened to hire me to work for the City of Oakland in 1986 as an intern)? Most would take the word of Kevin Carroll; the Mayor of Oakland, my friend for 30 years, did not.
Then, in 2016, I befriended a number of people tied to the Clark County (Nevada) Stadium Bond Issue and made a trade of my Raiders plan for information on what they were planning for the Raiders Stadium in Las Vegas. What I realized was the planned hotel stadium tax rate of .088 of 1 percent was too small to pay off the stadium bond debt. My concerns reached the Clark County Finance Director Jessica Colvin, who (unlike Mayor Schaaf), did set up a private meeting, In the meeting, Colvin believed the tax rate would be enough. What they were trying to do was keep the rate low enough that hoteliers would not pass it on the customers in the form of higher average daily room rate.
So, no adjustment was made to push-up the hotel stadium tax rate, but local media picked up my blogged and vlogged concerns and so, when the $645 million Clark County (Nevada) Stadium Bond Issue bond went on sale April , 2018, by the 13th of the month, KNTV already had this headline:
“February room tax revenue for Las Vegas stadium falls short”
The Las Vegas Stadium Authority says tax revenue to fund the construction of the Oakland Raiders’ future home has fallen short of projections.
The Clark County hotel room tax generated $3.3 million in February, nearly 14 percent less than the income expected for the month.
The February shortfall marked the fourth month out of the last five that tax revenue for the stadium has been below projections.
Guests of hotels and other lodging in the Las Vegas area are paying a room tax that’s expected to contribute $750 million for the NFL team’s stadium.
The Raiders want to start the 2020 season at the $1.8 billion stadium being built across the freeway from the Las Vegas Strip.
The new Allegiant Stadium did open, but the tax revenue rates never improved, the debt service reserve was dipped into twice, and The Pandemic only made the already existing problem, worse. Had they followed my advice, the 1 percent tax rate I called for would have given the Raiders Stadium bond underwriters a nice cushion.
I was just trying to help. Just like in Oakland.
Note from Zennie62Media and OaklandNewsNow.com : this video-blog post demonstrates the full and live operation of the latest updated version of an experimental Zennie62Media , Inc. mobile media video-blogging system network that was launched June 2018. This is a major part of Zennie62Media , Inc.’s new and innovative approach to the production of news media. What we call “The Third Wave of Media”. The uploaded video is from a YouTube channel. When the video is “liked” by Zennie62 YouTube, then it is automatically uploaded to and formatted automatically at the Oakland News Now site and Zennie62-created and owned social media pages. The overall objective here, on top of our is smartphone-enabled, real-time, on the scene reporting of news, interviews, observations, and happenings anywhere in the World and within seconds and not hours – is the use of the existing YouTube social graph on any subject in the World. Now, news is reported with a smartphone and also by promoting current content on YouTube: no heavy and expensive cameras or even a laptop are necessary, or having a camera crew to shoot what is already on YouTube. The secondary objective is faster, and very inexpensive media content news production and distribution. We have found there is a disconnect between post length and time to product and revenue generated. With this, the problem is far less, though by no means solved. Zennie62Media is constantly working to improve the system network coding and seeks interested content and media technology partners.
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