This is the latest blog post effort by Zennie62Media’s Oakland News Now to bat down the wave of completely wrongheaded so-called news “articles” regarding Howard Terminal. Without naming names, the latest of these sad anti-Oakland attempts to kill a ballpark idea the authors clearly don’t understand was titled “What the Oakland A’s Howard Terminal ballpark proposal means for taxpayers”. The title, alone, is meant to imply that the A’s project is going to cost something.
In all, reading what I could of it before I threw up, reminded me of that recent New York Post piece that, as it turned out, was issued to put out false information about Vice President Kamala Harris. The reason why it’s so bad is it assumes that what the A’s issued was correct, and never bothered to even check it against the law that governs the development of Howard Terminal, SB-293 Skinner. Before I go any further, let me explain that the Howard Terminal Ballpark is not going to cost taxpayers a dime. Now, here’s why and where that New York Post-style piece completely missed the mark in trying to make the project look bad.
The article says that the A’s project has a total budget of $12 billion. Let’s look at that.
First, that’s 100 percent wrong. The fact is the $12 billion is not a “total budget” but the A’s guess at what the entire district’s land value will be at full-buildout. Generally, in my something like 37 years of urban planning experience going back to my 1984 internship with the City of Fort Worth, Texas and my 1985 internship with the City of Dallas, Texas, no project ever reaches full buildout. It’s 2021, and Las Colinas outside of Dallas still has huge land segments that are empty, but were filled with office buildings in models I saw at the time.
Fast forward to 2021: the only certain project at this point is the Howard Terminal ballpark itself and either one or two of the buildings behind it. The rest of the proposed district (the boundary of which should be drawn up by a city-formed agency and not the Oakland A’s, and in accordance with SB 293 Skinner AKA “The Project Bible), building development amounts to a giant wish. The A’s made a mistake in even putting that number in and then releasing it to the public. In using the mention of $12 billion, Dave Kaval made a giant error here, and today’s research-allergic media only proved it was that by repeating his error.
The author of “What the Oakland A’s Howard Terminal ballpark proposal means for taxpayers” went off about the supposed $12 billion, called it a “budget” and then so did not know what they were doing, that they failed to write that the entire $12 billion in building value was all in a tax increment financing zone. Do a little TIF Revenue Calculation magic, and that produces a $9.5 billion result – if the whole of $12 billion of construction goes on line. As I said above, that’s not happening. But if it did, anyone who knew what they were doing would have to then report that the $12 billion of construction produces over $9 billion in TIF revenue. You can rebuilt most of Downtown Oakland with that money.
Second, let’s stick to what we know: the A’s plan to privately finance their stadium, and since the post I am referring to does not even mention tax increment financing (and because the author does not understand what it is) it’s ignored. That unbelievable fact, alone, renders the entire work useless because it does not even consider the main financing mechanism that’s at the heart of Howard Terminal and SB 293: tax increment financing.
To anyone who’s lived in Oakland since the 1980s, tax increment financing is a familiar tool that was once the heart of California Redevelopment Law. Of all of the sections 33000 to 33999 of the California Health and Safety Code that comprised California Redevelopment Law, Sections 33401, 33492.140, 33607, 33607.5, and 33607.7, formed the basis for the use of and calculation of tax increment revenue, and net of the “taxing agencies” that normally get property tax revenue in an area. In turn, “taxing agencies” in the Howard Terminal discussion are the County of Alameda, BART, AC Transit, and EBMUD Flood Control District.
Tax Increment Financing works like this:
First, the agency the City of Oakland is supposed to establish under SB 293 and to float bonds and form the tax-collecting, tax increment financing-using district, negotiates with the Oakland City Council and (in this case) the A’s and area property owners and the taxing agencies in the effort of establishing the actual industrial financing district, and set what’s called the base year assessed value. This is where tax increment financing math comes in. Each year, that base year assessed value is increased by the Alameda County Assessor, and that assessed value for each year is subtracted from the base year assessed value. In turn, that difference between base year assessed value and current year, is multiplied times the tax rate and the we get the resuling TIF Revenue for that year, which is then added to the cummulative total TIF Revenue. So, if we’re collecting for 45 years, then the total TIF Revenue collection is done in the fashion I described, and then stops at year 46.
(As a note, the City of Oakland has the habit of thinking its supposed to wait for the TIF Revenue to grow before a bond issue is floated. That’s way beyond wrong and winds up harming the vary monetary power of the TIF project revenues. You calculate and forecast the revenue stream, then use a debt coverage ratio of two to plan a bond issue using half of that money. A bond issue with a debt coverage ratio of three uses one-third of the TIF Revenue.)
Second, some property owners may not want their land or buildings in the zone, and some taxing agencies may want to collect their share of the total TIF revenue. (In the past, the County of Alameda, in particular, was notorious for trying to take more than its logical fair share of TIF revenue from Oakland Redevelopment Agency Project Areas, and the same thing could happen today given the inexperience of current City of Oakland staff in these matters.) But those resistant stances should not be seen as a stop but what they are: points from which to start district formation negotiations.
Third, once those talks are done, a boundary is designed, and the Alameda County Assessor signs off on it, and a resolution drawn up, and tax increment financing revenue final calculations installed in a staff report to Oakland City Council.
Fourth, now that the tax increment financing revenue stream is known, a bond issue can be designed around it. Ideally, that will include the various projects: infrastructure for the A’s stadium area, and city-wide projects, again, in accordance with SB 293 Skinner.
Fifth, at this point, a municipal investment banking financial advisor is called in to work on the bond issue. Given that this has a giant planning component and because of the large amounts of money available that can be used for “projects of significance to the community” as per SB 293, that’s going to take time, and call for a larger staff for the new Oakland development agency (my advice is to go the contract route because those engagement focus on meetings and data-gathering). Also, that financing plan should be adjustable: if tax revenue in the zone zooms because of a new truck or trucks, and there’s extra projected TIF revenue, the plan should be changeable to use that revenue.
Sixth, the agency representative and the Oakland A’s President must meet with Oakland City Councilmembers to go over the project and iron out any issues before a vote. By this time, the public will see that this will actually lead to a new tool for urban economic reformation, and express the appropriate excitement.
Seventh, City Council votes on the project, which includes the A’s ballpark.
Eighth, the Howard Terminal Project Bond Issue is floated and property tax from the A’s and other private land and lease-holders is collected by the new agency. I estimate that proceeds from that bond should come in at $700 million. Since many of the A’s infrastructure needs are the needs of the district, the agency should have a plan to gain and use money from the American Jobs Act Legislation. That way, more of the $700 million is not tied up in A’s-related infrastructure costs. Indeed, the objective should be to get as close to zero as possible.
The A’s start construction and the district agency works on land-sales for project development, and on implementation of financing of the pre-determined community-wide projects. Given the wide-latitude of revenue use, the efforts to fund a new way of policing, small business grants, and rental assistance programs can be financed around Oakland. Each Councilmember should get to work on this, right now.
So, now, think: what does the Oakland Hills or Oakland Flatlands homeowner have to pay in taxes for this? Nothing. Nada. Ziltch. Claims to the contrary should be ignored and laughed at. No degree of prejudice should be allowed to creep in. Some think the ballpark is for sports use but savvy community players know better and will start carving out deals with the A’s to have their meetings at the meeting rooms in the ballpark. Others will want to use it for outdoor convention space. And giant concerts will be staged and to the delight of even the worst detractors of the idea of a baseball stadium at Howard Terminal. Meanwhile, the unhoused will be housed, and the hungry will be fed. This will be Oakland moving forward and finally realizing its lofty potential.
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