Link to East Bay Business Times article

East Bay Business Times
From the August 22, 2005 print edition
Ballpark village plan designed to win allies, public funds
Wolff swings for the fence
by Eric Lai

Oakland A's owner Lew Wolff may insist he's a businessman, not a politician. But by linking his desired new baseball stadium with an ambitious mixed-use redevelopment of a tatty industrial slice of East Oakland, he has shrewdly widened the political and popular support he needs for both projects to succeed.

Like a rider to a popular legislative bill that opponents are disinclined to oppose, the proposed 35,000 seat stadium is just a small section of Wolff's magnificent vision of a new "ballpark village" on a site as large as 140 acres, replete with thousands of condos, dozens of shops and restaurants and a hotel, that Oakland officials, including Mayor Jerry Brown, would not have dared dream of a week ago.

Correctly reading the mood of Oakland taxpayers still feeling burnt by the $150 million spent a decade ago to bring the Raiders back, Wolff's plan wisely avoids requiring the city to pay for any of the stadium's anticipated $400 million price tag.

Tying the development of sports facilities to larger redevelopment plans is a trend, said Rick Horrow, a Miami-based consultant who helps sports teams arrange stadium financing. He points to Washington D.C., where city leaders, including former Oakland city manager and current D.C. City Administrator Robert Bobb, hope to redevelop the area surrounding a planned baseball stadium.

Many issues remain in Oakland, including subsidies Wolff still wants the city and county to grant, and whether business and government groups can respond fast enough to meet Wolff's one-year deadline.

But Wolff is winning support from those in Oakland's business and political community aching to transform the once blue-collar port city into a middle-class technology-driven town.

Wolff, along with co-owner Gap Inc. heir John Fisher, has formed "a very powerful, capable group with a sense of vision," said Jim McMasters, vice president for Colliers International in Walnut Creek.

A long-time retail broker in Oakland, McMasters said even with this week's opening of a Wal-Mart nearby in Hegenberger Gateway Shopping Center, East Oakland remains "dramatically under-retailed." McMasters thinks an outlet-type mall as Wolff is proposing has a good chance of succeeding.

Revenue from mall store leases and sales, along with sales and rentals of condominiums and apartments, would help pay for the A's new stadium. But Wolff is still seeking millions of dollars in incentives and tax breaks for both the stadium and the mixed-use development.

In his Aug. 12 presentation to the Joint Powers Authority, an Oakland-Alameda County body that oversees the Coliseum, Wolff asked the city and county to consider waiving permit fees, charges, assessments and other costs pertaining to building a stadium. He also asked for a rebate of all real estate tax and sales tax.

That is a common practice, said Neil deMause, a sports business journalist.

"As public opposition raises to putting public cash into sports facilities, sports owners have said it's easier to say 'We'll spend on the stadium, but give us breaks on taxes and fees'," said deMause, co-author of "Field of Schemes," a book critical of publicly financed stadiums.

Another skeptic, Stanford University sports economist Roger Noll, argues, "If the redevelopment sans stadium is worth doing, it is more worth doing without the stadium."

How much Oakland can assist Wolff, whose firm Maritz, Wolff & Co. redeveloped large parts of San Jose's downtown, with redevelopment funds is also in question.

Oakland's director of redevelopment, Daniel Vanderpriem, who says that he has not met with the A's or Wolff about the proposed project, said the city already is involved in many redevelopment projects, some of them expensive. At the very most, the city could contribute about $27 million over the next several years to any new project by issuing bonds itself.

Any more money, Vanderpriem said, would involve "project-based revenue bonds" issued by the state and arranged by the city. Their size and repayment would be solely the developers' responsibility.

"If the bond payments cannot be met, the city won't backfill them with any money," he said, pointing to the $100 million project bond being issued to Forest City Development CA Inc. for the Uptown condominium project as an example.

Wolff's dream is much more ambitious and expensive. His proposed mixed-use development would take over a 140-acre area dominated by dozens of light industrial businesses - tire shops, lumber yards, warehouses and a flea market at an old drive-in movie theater - some of which have been around since the area was developed in the late 1960s, says Michael Barry, a longtime commercial real estate broker in the area.

Old-timers who own their property may resist leaving, especially because they would be hard-pressed to find cheap equivalent space nearby.

Take Bay Area Contract Carpets Inc., a successful carpet wholesaler in the area. Based on what Barry says is the going rate of $120 per square foot for buildings in that area, owner Ken Scott said he probably would not sell his 15,000-square-foot building for less than $2 million.

According to an East Bay Business Times analysis, acquiring all 107 parcels in the 140 acre area bordered by High Street to the north, Interstate 880 to the west, 66th Avenue to the south, and the Union Pacific railroad tracks to the east could cost as much $315 million, based on that rate.

Even if the city or A's officials were able to convince property owners that their buildings were tear-downs and they should accept something closer to $20 per square foot of land as compensation, the total bill would still come to nearly $123 million.

"It'd be a daunting task to get and buy it all," Barry said.

That excludes the $110 million that BART officials say it would take to build a station one mile north of McAfee Coliseum to serve the development and the new stadium.

Reached at his Los Angeles office Aug. 15, Wolff said, "What the BART station is, needs to be defined," implying that instead of a full train station, BART could consider a cheaper alternative: extending the planned two-mile monorail from Oakland International Airport to Coliseum BART all the way to the new stadium.

Problem is, the $260-million monorail is in limbo, having failed to get federal funding from the Department of Transportation in late June.

Wolff has set a one-year deadline for garnering the political and monetary support for his project. That assumes unrealistically quick cooperation from a wide range of government bureaucracies, critics say.

"Lew might have come up with something so big in order to see Oakland fail," said Zennie Abraham, a former Oakland mayoral adviser and sports business owner.

Having made his best effort, Wolff would then be free to negotiate moving the A's to a city such as Portland, Sacramento or Las Vegas, all of which are clamoring for a Major League Baseball franchise and willing to pony up more money than Oakland is.

elai@bizjournals.com | 925-598-1405 San Francisco Business Times reporter Eric Young contributed to this story.

quote:

Having made his best effort, Wolff would then be free to negotiate moving the A's to a city such as Portland, Sacramento or Las Vegas, all of which are clamoring for a Major League Baseball franchise and willing to pony up more money than Oakland is.

Hmmmm... Oregon has already committed up to $150 million from SB5, and Portland has a vetted, flexible plan to help cover the rest of the stadium costs. Oh yeah, and two great downtown sites primed for redevelopment.

Sacramento and Vegas? They have yet to commit to ponying up anything.