Oakland Army Base - Phil Tagami v. Michael Johnson

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The giant 100-acre Oakland Army Base is the focus of a development competition between two groups led by people well-known to many Oaklanders: "AMB/CCG" (for AMB Property Corporation and the "CCG" is California Commercial Group) is directed by Phil Tagami, of California Commercial Investments, and who redeveloped two Oakland landmarks the Fox Oakland Theater and the Oakland Rotunda, and Federated Oakland Associates, who's boss is Michael Johnson, the developer of several multi-unit housing projects in the San Francisco Bay Area, and the builder of the San Francisco version of Yoshi's Jazz Club.

 

The Oakland Army Base 

The developers are engaged in a competition with the Oakland City Council as the final "decider". The winner gains the right to enter into an "Exclusive Negotiating Agreement" with the Oakland Redevelopment Agency, which will lead to the production of a kind of contract called the "Disposition and Development Agreement" or "DDA" that is the guiding agreement stating what developer and redevelopment agency will do. The objective is the creation of what will be a "new town in town" given the size of the land area.

Today (Wednesday) the Oakland Tribune reported that the City Council's Community and Economic Development Committee could not get the majority votes necessary to move to the full Oakland City Council with a recommendation on July 21st. The vote was 2-1-1: with Vice Mayor Ignacio De La Fuente and Councilmember Patricia Kernighan voting for AMB/CCG and Councilmember Jane Brunner and Councilmember Larry Reid voting abstaining and voting for Federated Oakland Associates respectively. Brunner said she needed more information and wanted it before the matter was brought before the City Council.

Just looking at the two proposals, I can tell you what's missing from both without having talked to anyone about them. A bit of background: it was my job to review such proposals for Elihu Harris when he was Oakland's Mayor. I worked for him in the capacity of "economic adviser" from 1995 to 1999, then from 1999 to 2001 headed on the Oakland Super Bowl effort.

My job for Mayor Harris was to represent him on the same Community and Economic Development Committee the Tribune referred to today. My specialization was in reading development spreadsheets because of my background in urban planning and experience with the Oakland Redevelopment Agency; I could comb through one and explain what the strengths and weaknesses of a proposal to council were. I could also determine what information was missing from a fiscal presentation or proposal.

AMB/CCG: Long on capacity, short on complete cash balance numbers


The AMB/CCG proposal touts the financial power and real estate development and acquisition experience of AMB Property Corporation. But the problem with the proposal is actually something Phil Tagami (who's my friend) and I used to talk about frequently: it has a lot of "pretty pictures" and little numerical substance, even in the proforma. What it lacks is a full 10-year presentation of the full cash balance - even if the results are in the "red" - which is a possible and expected fiscal picture of what is to be an enormous mixed-use development project.

In the main proposal there are a number of sheets that read "To Be Determined" in large letters, which sends up a red flag for anyone on the City Council, and certainly would for me. What the City Council wants to see is some assurance that a proposed development will throw off enough cash to pay for itself over time and if that's not the case, how much the Oakland Redevelopment Agency will have to contribute should it fall into the red (which means it has generates more in expenses than revenues).

That kind of fiscal presentation is what's missing from the AMB/CCG proposal. The proforma is there with the 10-year revenue estimates, but absent the overall cash balance (revenues minus expenses) forecast sheet. By contrast, its in the Federal Oakland Associates proposal itself (and they provide the proforma), and they're bold enough to show a positive net operating income over time.

While the Federal Oakland Associates proposal is long on the kind of concise fiscal representation the Council wants to see as well as the kind of minority representation the Council (at least part of it) wants to see, its short on the development power presented by the the AMB/CCG team. Not that Federal Oakland is weak - not at all - but Phil's adding of AMB Property Corporation to his team was a huge coup that he worked a long time to secure. But that written, financial power is no excuse for presenting an incomplete proposal. Yes, that's a harsh statement, but I go back to the large red letters in the AMB/CCG proposal itself that read "To Be Determined."

Both proposals lack an economic impact analysis report

Something else missing from both proposals is an economic impact analysis report. In other words, what's the employment estimate per year, revenue from all taxes and fees, total population, and municipal costs to service the population will be. That's not a hard task to complete; when I was fresh out of Berkeley's planning grad school I created something called "The Area Redevelopment Economic Model", a spreadsheet program such that one could have both a fiscal and an economic impact report of any redevelopment project in the State of California. I used it to evaluate the then-Coliseum Redevelopment Survey Area. (Now, it's a full redevelopment area.)

The Oakland Redevelopment Agency should have insisted on this being part of the proposals from both teams. It would give the Oakland community a complete idea of what to expect from something that will completely alter the landscape of the city. Yes, some environmental impact reports have such a section, but this is too big an undertaking to wait for that. Moreover the council needs to be able to compare economic impacts of the proposals - it can't do that right now.


The City Council should combine AMB/CCG and Federal Oakland Associates

The Oakland Redevelopment Agency / Oakland City Council is not bound by the competing teams as they're presented; working as the Oakland Redevelopment Agency, the council can combine the groups into one. Let's be real honest here: this is a competition between a largely white group and a mostly black and "of color" one in an Oakland with a history of supporting minority business efforts. That to some extent is what's holding up the Council's vote; it's not said publicly, but for anyone who knows Oakland's political development landscape, that's the issue to a degree. The best way to end that racial division is to fuse the groups into one.

The new group would have to mate its development plans: take out those land uses which will not "pencil" (make money over time) and keep those plans that will. Personally, given America's push toward increasing its manufacturing base, the AMB/CCG plans look better, but the proforma numbers in the proposal support what is basically an educated guess at this point and need to be placed into a full cash balance spreasheet. I'm not at all comfortable with the lack of a real cash balance presentation in the AMB/CCG main proposal; if the project's going to be in the red or the black, show it.

Of course, they will show it in the black (making money).

Having a theater complex in a proposal - as Federal Oakland Associates does - is a terrible bet given the placement of movie content online and the negative impact that technological development is having on the theater industry overall (But at least they have the cash flow estimates installed in the proposal!) I can't see how anyone could justify the assertion that such a development would pay for itself over time. Talk about a rosy scenario!

If you want to compare the proposals yourself, you can download them here: Oakland Army Base Information Page

Chevron Richmond issue: meet the real "little guy" Dennis Roos

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On July 1st, Contra Costa Superior Court Judge Barbara Zuniga issued a decision that altered Richmond, California's economic course for the future. She ordered the oil giant to rewrite its environmental impact report (EIR) because of environmentalists' contention that the EIR was flawed and that a newly refurbished Richmond refinery would not produce lower carbon emissions than the current facility.

Her decision was hailed as a victory for "the little guy" by my friend San Francisco Chronicle Columnist Chip Johnson. But his column made me ask "Who's really the little guy, here?" So in a search for the answer to my query, I did some digging and found a person who represents the real "little guy": Dennis Roos. But before we meet Roos, a brief recap is in order.

Two Sides To A View

A year ago the Richmond City Council narrowly approved a development agreement allowing Chevron to refurbish the existing refinery. The contention with the approval, according to community activists, is that Chevron's working to use a "dirtier" yet cheaper to produce grade of crude oil. Chevron's claim was that the new process would result in cleaner air.

The approval set off a lawsuit filed against Chevron under the grounds that the refinery EIR did not meet California Environmental Quality Act (CEQA) quidelines. The Judge agreed and handed down the ruling which called for construction of the new facility to stop until the problem with the EIR was solved.

I think what's forgotten by many is the current state of the refinery. It's old and dirty, right now, and needs to be upgraded which will not happen because of this tribal culture we live in. What the real problem is, frankly, is that every time there's a development project there's someone who crafts a reason to stop it mainly because they're jealous that someone has done something big. Think about it. My point is not to poo-poo environmental concerns, not at all, but to get at something I've noticed and now have to ask bluntly: why are all the activists poor and struggling and always working against an organization or person they view as wealthy? It's a common theme. Some of these activists don't want to work with organizations to improve anything; they'd rather just stop them cold. Period. But why can't they pay the rent, these guys?

Chevron's not the best neighbor in all of this either. As one who's worked in government, I can say the best companies work years to gain the community's trust and to make sure that the needs of the people are met when they don't need anything. From people I've talked to for background information, this was the Chevron of Richmond's past.

Chevron would contend they're working with the community now, and their Richmond plant website gives a good presentation of what they're doing and have done in that community. From the website one can gather the idea that Chevron has been a major and positive part of Richmond's culture, or has tried to be. Somehow this news isn't reaching the community activists, but perhaps they're not listening or reading it to begin with. Maybe Chevron should try Twitter?

What happened? Why is it, particularly in California, we have "sides" to an issue that consist of people who don't talk to each other? Moreover, it consists of people who just don't like to think at all; they'd rather toss insults or lawsuits than have an intelligent conversation that leads to a workable agreement. It's all so tribal this new culture - one side puts out its view, the other has a view and we in the middle have to figure it out - it's done nothing to improve our economy or quality of life, and it cost Dennis Roos his job. I'm frankly sick and tired of this dumbed-down culture we've allowed to form. Whatever caused it, it's time for a push-back.

The Activist Mayor of Richmond

Richmond Mayor Gayle McLaughlin says the victory is a win for Richmond. But which Richmond? The people who need the jobs don't think it's a win at all and neither does the city's finance director Jim Goins, who said the ruling will "have an impact." (Hey, I guess Richmond's doing fine in this recession, huh? Someone needs to tell Mayor McLaughlin her city's unemployment rate is 10 percent and that the number of Richmond jobs has decreased 65 percent since 2007. Richmond's in trouble.

This is what I'm vexed about: the desire to "get a win" seems to have overruled any idea of "getting to yes" where both parties can agree and improve a community. Shame on Mayor McLaughlin for acting less like a leader and more like an activist. Mayor McLaughlin should talk to one of her own people about this so-called "victory": Richmond's Dennis Roos.

Dennis Roos is the little guy

Roos is a union electrician (with the International Brotherhood of Electrical Workers local 302 in Martinez, California) who grew up in Richmond and started working for Chevron there when he was in his 20s as a researcher of sorts. Then Roos took a series of jobs, building a reputation as an electrician who specializes in new facilities and remodeling (or what he calls an "inside wireman"), like the one Chevron had planned to build before Judge Zuniga handed down a questionable call. I talked to Roos about what happened and how it's effected him.

Roos explained that he'd already been released by Chevron and didn't know what he was going to do for income considering his normal obligations and the fact that he has two daughters: one in college and the other just graduated from high school. At any rate Roos said he was laid off, he thought prematurely, and without other job prospects forced to go on unemployment. "It's pretty detrimental to the economy (of Richmond and myself) and I'm reduced to what I call necessity spending." Roos recently bought a new home and as a result of that and the court action against Chevron, he's not in the best financial shape at all. (He's looking for work, so please contact me if you have any opening and I will relay that information to him.)

A terrible decision 

Judge Barbara Zuniga could have resolved this issue in a way that helped all parties. Rather than order a stoppage of work to solve the environmental impact report problems, Judge Zuniga should have ordered the formation of a group of community activists and environmentalists to work with Chevron and then install the project change orders necessary to make sure the refinery's production process was "cleaner" in its emissions release than before. This would have saved the 1,000 jobs that have been removed - and perhaps even the 3,000 total refinery jobs that are now in question as Chevron considers moving production south to El Segundo - and made sure Richmond got the $61 million in community benefits from Chevron it negotiated for, which by the way lead to more jobs. Instead, Judge Zuniga made a terrible worst case call that harmed Richmond, Chevron, and workers like Dennis Roos.