Oakland A’s Ballpark At Howard Terminal To Cost $850 Million, Use “Ballpark Village” Financing Plan

Oakland A's Howard Terminal Ballpark

Oakland A’s Howard Terminal Ballpark

The design for the Oakland A’s Ballpark At Howard Terminal was introduced today, and to much excitement. The Bjarke Ingels Group Design has drawn immediate praise from observers, elected officials, and the press. But, with all of this excitement has come one consistent concern: “How are the Oakland Athletics going to afford it, and what does it cost?

Well, today, this blogger was told by an informed source that the price tag was “between $750 million and $850 million. And I don’t know if that includes the infrastructure improvements. I know it has to be built 3 feet above sea level, too,” the person said.

But what is not known to the public is how The Oakland A’s Ballpark At Howard Terminal will be paid for? A’s President Dave Kaval gave a giant hint when he said that the baseball organization needed to own the Coliseum Complex land in order to afford to build the Howard Terminal stadium. Here’s what Kaval’s thinking of when he says that and it’s called the “Ballpark Village” concept.

The Idea Of The Ballpark Village As A Way To Pay For Expensive Stadiums

The “Ballpark Village” idea has been around for some time during the 21st Century. It emerged in St. Louis as a way to replace giant public subsidies that had fallen out of favor with the electorate. “Ballpark Village” is shorthand for describing a mixed-use development that consists of the stadium, hotels, restaurants, shops, housing, and other uses.

The thought is that stadium construction revenue could be collected from the giant array of monies from sales and property taxes, office and retail rents, parking fees, the sale of land to be developed, and revenues from sponsorships, and sports-specific operations like e-sports and sports gambling, which is legal in America now. The total amount of monthly revenue would then be used to retire bonds that would pay for the stadium. In some cases, the bonds are backed by the local government issuer’s general fund; in other cases, by the stadium development complex itself.

Atlanta Braves Sun Trust Park Latest “Ballpark Village”

The latest example of the “Ballpark Village” is in Atlanta at Sun Trust Park, where the Atlanta Braves play. That stadium is the centerpiece of a 60-acre development, and while it’s slow to realize the revenue consultants said would flow from various taxes and fees, it’s not at all close to being fully developed. Still, the basic concept of using multiple revenue streams applies to what the Oakland A’s want to do from a financing perspective.

Mathematically, the more buildings the Oakland A’s control, and the larger the land they own, the greater the stream of annual dollars that would flow from those sources and could be used toward private bond issues to pay for construction of the ballpark. That’s why Kaval wants the Coliseum land. Like Lew Wolff before him, Kaval saw the revenue potential owning the Coliseum site offers, and pursued it.

Lew Wolff’s Ballpark Village Concept For The Oakland Coliseum

Yes, I did write “like Lew Wolff before him.” That’s because Wolff proposed a similar plan in 2005, when he was managing general partner of the A’s. In that case, the Oakland Coliseum land, at 108 acres, was not large enough to produce the annual revenue he needed, so Wolff’s staff formed a plan that called for acquiring extra land in the industrial area to the immediate north of the Coliseum North Parking Lot. All well and good, but there was one problem: the businesses there didn’t want to be relocated. The political mess caused by the idea led to a hue and cry so great that the A’s dropped the project.

The Original Oakland Coliseum City Concept Was A Baseball Village

Lew Wolff wasn’t the only Oakland-focused business person to come up with a baseball village approach toward a new stadium for the A’s, there was another group of developers who had a similar idea in 2004.

Robert Leste, Steve Lowe, and Frank Dobson, Leste once the owner of the MacArthur Broadway Shopping Center, Lowe the builder of Old Oakland, and Dobson a local architect, saw a need for retail at the existing Oakland Coliseum. To that end, the trio brought their idea to the City of Oakland, and then-Oakland Mayor Ron Dellums made their concept the focus of his Sports and Entertainment Task Force, which was one of four groups exploring ways to get a new stadium built for the Athletics in 2009.

This blogger was on the Sports and Entertainment Task Force and made this video-blog of Mr Leste, Lowe, and Dobson presenting the concept called “Coliseum City:”

Sadly, the Leste, Lowe, Dobson Coliseum City didn’t see the light of day, but the overall concept was hijacked by the City of Oakland (as the makers of the concept have said to this blogger) and reformed to a plan for what could be called a “stadium city” with office, retail, homes, and venues for the A’s, Oakland Raiders, and Golden State Warriors.

Meanwhile, Frank Dobson died from prostate cancer in Palm Springs in 2010, and with the feeling that his idea and project had been stolen from him by the City of Oakland without compensation and elevated by then-Oakland Mayor Jean Quan in 2010.

Under Mayor Quan, Coliseum City grew to a full City of Oakland project, but the developers selected lacked the proper investment banking partners and so never realized development success. The highlight of this embarrassing phase of the history of the Ballpark Village concept in Oakland, was when Mayor Quan went public with the news that the Crown Prince of Dubai was backing Coliseum City, only to have to backtrack on her claims that he was partnered with housing builder Colony Capital and Hayah Holdings.

To be candid, these problems were borne of the City of Oakland’s and County of Alameda’s complete lack of understanding of how money flows are used to pay for bond issues for sports stadium projects. The Oakland elected officials, understandably fearful of crafting another “Raiders Deal”, wanted to avoid any thing that looked like it might use public money. But their lack of understanding of sports facility financing caused them to think that one had to find a rich person who would just pluck down a wad of cash to build a stadium.

The City of Oakland did not get that no one with that kind of money wastes it on paying for a stadium; tax revenues and amortized streams of money from different sources, backed by the municipality or the value of the development itself is the common approach. But the City insisted on the “let’s find the rich man” approach, which opened it up to a series of unfortunate missteps.

That bad path ended in 2017 when Fortress Investments created a feasible plan for Coliseum City and to build a new stadium in Oakland. Unfortunately, that effort ran up against the Raiders pursuit of a new stadium in Las Vegas, and in a fashion that’s leading to a possible lawsuit by the City of Oakland against the Raiders and the National Football League.

The New Approach By Dave Kaval Offers Real Hope For An Oakland A’s Stadium

Fast forward to today, and the dual-site plan containing Howard Terminal and the Oakland Coliseum gives Kaval and the Oakland A’s the land needed and that that Wolff didn’t have to make the Ballpark Village financing plan work. There’s no need to move any businesses out to clear land for development at the Coliseum, and the Howard Terminal / Jack London Square area provides an opportunity for a kind of redevelopment area.

The Ballpark Village By The Numbers

On April 4th, 2017, this blogger talked to Dave Kaval about the Oakland A’s Stadium Project. The purpose of my call was not to interview him, but to help out by giving him information based on my experience with the effort that goes back to 1997.

Kaval’s focus then was on a stadium that would not use a dime of public money. I asked if the Oakland City Staff talked to him about using tax increment financing. His response was that no one informed him of that option or how it worked. Kaval was also not aware of the 2010 Oakland Ballpark Study by Gruen and Gruen and for the “Let’s Go Oakland” group that formed the basis for a tax increment financing district to be made of the Jack London Square area. So, I created a spreadsheet financing concept and sent him a copy of the Gruen and Gruen study.

The spreadsheet I created you can see at this link, but below is a summary of sources:

Total Stadium Revenue For Construction: $524,360,000
Total Retail Revenue For Stadium Construction: $27,478,800
Total Hotel Revenue For Stadium Construction: $164,081,808
Total Parking Revenue 40 year Period: $78,720,000
Total Revenue Available For Stadium / Hotel Construction for 40yrs: $794,640,608

Oakland As Howard Terminal Ballpark Interior
Oakland As Howard Terminal Ballpark Interior

To summarize, the total available revenue for the stadium from the Howard Terminal District would be $794,640,608. That’s $57,259,392 short of the $851,900,000 needed at the top end cost for the project. In this, I am assuming that the cost breaks down like this:

Base Stadium Construction Cost: $600,000,000
Hotel Construction Cost: $78,000,000
Howard Terminal Land Prep and Infrastructure Cost: $140,000,000
Total Stadium Construction Cost: $851,900,000

So, using Howard Terminal only, we’re short by $57 million. But what happens if we use tax increment financing? The breakdown for a 40-year bond issue is in the spreadsheet that’s linked to. But for brevity, it produces $369,337,417.99 in bond proceeds for the stadium. 23 percent of that money could be set-aside for low-income and affordable housing – a provision allowed under California’s SB-628.

So, if Dave Kaval and the Oakland A’s were allowed to use tax increment financing revenue by the City of Oakland, it would not need to have the Coliseum land, and come out with $369,337,417.99 or if 23 percent of that money is used for affordable housing, $227,130,419.85 for the project.

Some Tax Revenue Is Needed By The A’s And They Will Ask For It

The idea that the stadium will be entirely privately financed is not really true. The A’s will ask for an abatement in paying property taxes and sales taxes – those, alone, are public contributions. The Port of Oakland may elect to give the A’s the land at a reduced cost, called a “land write-down.” That’s a common approach, and it’s not a gift of public funds. The City of Oakland, and Mayor Schaaf in particular, will have to come to grips with this issue of tax revenue for the project.

The extent to which the City of Oakland is ready to prove it has the collective will and initiative to complete big projects is under scrutiny here. The Oakland of the 80s proved it had it in building Downtown Oakland and bringing the Raiders back home. Can the Oakland of the 21st Century prove it has what it takes to not just keep the A’s here, but in a ballpark for the ages? We shall see.

Stay tuned.

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