The first news came yesterday, as it so often does these days, in the form of a tweet:
https://twitter.com/athletics/status/978275521661304832
On first glance, this sounded like a pretty good offer: The Oakland A’s owners would take the Coliseum and its debt off the public’s hands, and put it into private ownership where it would actually pay property taxes? Where do I sign? (Okay, I don’t sign because I’m not an Oakland or Alameda official, but you get my point.)
Read the fine print in that small-type attachment, though, and it becomes clear that there’s a rather large catch:
This letter serves as an indication of the A’s desire to assume control and purchase the Oakland-Alameda County Coliseum complex in exchange for paying all remaining debt service on the more than $135 million of debt ultimate owed by the City and County against the Coliseum complex.
Wait, the entire complex? Including the Oracle Arena and all the parking-lot land that has been eyed for development in the red-hot East Bay real estate market? (Admittedly the Coliseum isn’t exactly the most desirable location in the East Bay, but anything west of Nevada is considered commuting distance from San Francisco these days, so.) How much land is that exactly, anyway?
Matier and Ross in the San Francisco Chronicle (warning: page may not load properly thanks to the Chronicle’s weird-ass paywall) have the answer: 130 acres, including “the stadium where the A’s have played since 1968, the arena soon to be vacated by the Warriors, the parking lot — everything.”
The average sale price of land in Oakland, according to my new favorite study ever (thanks, correspondent who sent it to me!) was $1,412,000 per acre from 2005 to 2010, which would price the Coliseum site at $183 million — plus any inflation over the past decade. If you want more direct comps, here’s a seventh-of-an-acre vacant lot right across the road from the Coliseum that’s on the market for $150,000, which is about $1 million per acre, pricing the site at about $130 million.
So this looks to be a better offer than the New York Islanders‘ deal with New York state, and the Los Angeles Angels‘ rejected proposal to Anaheim, and probably the Denver Broncos‘ plan for their parking lot land as well. Though I would still want confirmation that the A’s owners would take title to the land and pay full property taxes, and to be sure that $135 million is a fair price for the site.
Fortunately, there’s an easy way to figure this out, which is to open the Coliseum site up to competitive bids:
A number of outfits, including Fortress Investment Group — a money management firm in San Francisco that boasts billions in assets — have approached the city and county about purchasing the land and possibly turning it into something besides a ballpark. The A’s fear they could quickly find themselves shut out.
City Council President Larry Reid, who sits on the city-county Coliseum Authority board, called the A’s offer “a pretty big deal. But other players have expressed interest in the property.”
He added, “The mayor, and I assume a majority of the Board of Supervisors, would like to have some control on what happens to that 130-acre site that the Coliseum sits on.”
The A’s owners, though, are trying to avoid this, proposing an “exclusive negotiating agreement” that would preclude taking other bids. Is finally ending the long A’s stadium saga — they’re not promising to build a stadium on the Coliseum site, but it would at worst be a viable Plan B if other sites don’t work out — worth giving up a shot at a possible better payday from another developer? Is estimating the value from other comparable properties good enough for government work? It’s a classic Monty Hall problem, only without Monty Hall there to know which door has the goat, which makes it a whole lot tougher to solve. Good luck, Oakland and Alameda officials!
The Coliseum redevelopment may be the last chance to keep the A’s in Oakland. Do the politicians care if they remain ( or leave like the Raiders and Warriors are doing)? The reality is this: The revenue sharing (aka Corporate Welfare) that the A’s are receiving is coming to an end, and if the A’s cannot turn a profit they will go somewhere they can.
They don’t have a lot of great places to go, though. So Oakland haggling over the price a bit shouldn’t be an obstacle if it comes to that.
“Do the politicians care if they remain ( or leave like the Raiders and Warriors are doing)?”
In a word: No. I mean they don’t actively want them to leave but for your average resident of Oakland having a baseball team is pretty low on the list of concerns and so it is fairly low (though not as low) on the list of politicians’ concerns.
I’ll admit it’s grading on a curve after what, 40 years of progressively worse stadium deals, but this strikes me as a good offer. If the city places some value on having a sports team (and it isn’t my community so I’m not saying they do/should/will) then it seems reasonable that you’d take less from the A’s knowing that they’ll build a stadium, pay off the debt of a looming (and ironic) white elephant, and pay property taxes.
That being said, the key words to even my own quick analysis are “strikes me” and “seems” – the Coliseum Authority absolutely should seek bids and proposals and if at the end of the day they’ve made the decision to take less because the A’s themselves are worth it, know what that difference is, don’t make hundred million dollar decisions based off what something feels like.
^This.
As Neil mentioned, there is no commitment to build a new stadium. A’s owners could realize (as most readers here do) that the land would be more profitable as housing and commercial development – leaving the stadium issue still unresolved.
*ANY* developable land would be more lucrative without a stadium. That is true not only of the Coliseum but also of Howard Terminal. So that’s not really an argument that can be used if you assume that a new stadium will eventually be built, which I think everyone does.
“Country clubs, stadiums and cemeteries are the biggest wasters of prime real estate! Baseball? There are on 81 home games. The rest of the year, the place is emptier than a Scottish pay toilet. Dead people? They don’t need to be buried nowadays. Ecology, right? Ask Wang. He’ll tell you. We just bought property behind the Great Wall. On the good side!”
– Al Czervik, Caddyshack
(updated forFoS)
That seems provably false. If any developable land would be more lucrative without a stadium people would knock down existing stadiums and develop the land. Yet, for example, the Cow Palace still stands despite many proposals for other development.
Arguably the Coliseum site would be more valuable with a stadium on part of it hosting events a good portion of the year. Now, it could also be said the site would be most profitably operated with the Oracle Arena left in place to host concerts and conventions and the rest developed as housing and businesses. The irony is that model might finally make the Cow Palace more lucrative without a stadium.
As just housing and businesses the site is hardly worthless. There is a BART station and freeway access right there, but it is hardly the most prime plot in the Bay Area.
I agree. As much as I would like to see a new stadium built they should do what is best for that land. There should be a benefit to cost analysis with solid numbers. I would personally like to see a downtown stadium and the current site converted from sports to mixed use development.
See above. From any objective economic analysis, there is no land anywhere in the Bay Area (or anywhere at all for that matter) that would best be used as a stadium site.
I would rather see a mega developer such as Related buy the land. It would be more beneficial long term and they would probably offer more money for the land.
250M should be the min Oakland should sell this public land for. A’s owner is holding the city hostage to make hundreds of millions in profit to build out this land.
It goes without saying that the Coliseum land is likely more valuable as a non sports entity ( see Hudson Yards versus a Jets Stadium). That said, any deal must include the A’s staying at the Coliseum Site for say 20-30 years, and some kind of Community Benefits Agreement. The biggest issues involving the A’s are these: 1: They cannot share the Bay Area like the NY, Chicago.and LA teams do. They are limited ( even more then the Islanders). Why? The Islanders could move into the Rangers “territory” of Brooklyn while the A’s cannot do the same in the Giants “territory” of San Jose. Were the Islanders successful in Brooklyn? No but at least they were allowed to try ( unlike the A’s). 2: Fairness: The A’s have waited over a Century since they had a first class facility ( 1914 in Philadelphia). So its not like the Braves 2 new Stadiums in 20 years. They deserve something nice and shiny for a change. 3: The condition of the Coliseum which is basically a dump.
The Coliseum was brand-new when the A’s moved there from Kansas City in 1968. Complain all you want about it now, but it was undeniably considered state-of-the-art at the time.
I love the historical irony of it too. They moved to Oakland and into a new multipurpose stadium that was considering cutting edge and the future of sports, only for history to show what a god awful idea combined football-baseball stadium were. Meanwhile, KC had already approved public funding for a new baseball only stadium for the A’s, which later manifested as Kauffman.
Neil: The points are still valid that Coliseum is a dump, and the A’s are limited about what they can do in the Bay Area. Laney College, Howard’s Terminal, San Jose and all the rest fizzled out, and playing in the Coliseum as is, will not happen forever. The day is coming when the A’s ( and for that matter the Rays) are getting something better then tbey have now.
And if it’s worth that much to them financially, they should be able to pay for it. Including land price.
The land price discount actually gives the City room to demand a commitment that the team stay in Oakland in actual contract language, and not just in feel-good hashtag slogans. You (where “you” is civic leadership) would prefer that the A’s buy the land and build there and stay for 20-30 years, than pay market rate for the land and do nothing with it after moving their team elsewhere. California property, even unused, is a solid investment, but unused empty tracts may be paying taxes yet don’t produce any employment.
I’ll beg to differ that the Coliseum was ever state-of-the-art. The failure to put in rotating lower level seats a la RFK, Shea, and the Astrodome, all of which opened earlier, created the massive foul territory that has always been there (to say nothing of the crappy football setup with bleachers in the outfield that existed prior to the Raiders moving to LA). Stylistically, the unpainted concrete, lack of a roof, and scoreboards that never worked got it called the Mausoleum for a reason. Oakland built a stadium on the cheap, and cheap is what they got.
The amenities at the Oakland-Alameda coliseum were consistent with those of other then-new facilities when it opened. Think Veterans, Shea, Three Rivers, Riverfront, stadium etc.
People might not like what ‘state of the art’ meant in the late 1960s/early 1970s, but that doesn’t change what level of amenities constituted state of the art at the time. If you were a fan used to any of the previous facilities in Phila, Pittsburgh, Cincinnati, or gone to see the Giants at the Polo grounds, I’d bet you would think that the new circular concrete ballparks (with actual working bathrooms and everything!) were wonders of the modern age.
That generation of facility is now gone (except for OAC). Prior to the modifications for the Raiders’ return, the coliseum was acceptable for baseball. No 50 year old facility (without major renovation) is ever going to be great.
Why do the A’s “deserve” taxpayer funding?
If this is based on the stupidity of Georgia politicians and the notion that every major league team should get what they get… when will California be changing all it’s corporate statutes to mirror those of Delaware?
No one said the A’s ‘deserve’ taxpayer funding … and they aren’t asking for any.
They have said, repeatedly, and for several years, that they will privately finance the new ballpark. You can argue that infrastructure spending is taxpayer funding, but that infrastructure will also benefit a very economically depressed area of East Oakland. *Any* development of the Coliseum complex will require infrastructure upgrades, not just a ballpark, and the city would be on the hook for infrastructure costs either way.
What David Brown said they ‘deserve’ is a nice, shiny SOTA ballpark … which they plan to pay for themselves.
If they were willing to pay for all of it themselves, the first step would be to appraise the land and then offer FMV for it.
Hiding behind claims that “infrastructure” that is “needed” anyway will be part of the public funding is not on. Can’t have it both ways… either they are paying for it all themselves or they aren’t.
Mr. Brown says they “deserve” something. If they deserve it and are paying the full shot themselves, we wouldn’t be having this discussion.
Can’t think of a single type of development that wouldn’t get public funding on the site. The options are don’t ever develop the site, or publicly fund the infrastructure just like every other development that gets built.
“publicly fund the infrastructure just like every other development that gets built”
In fact, that is not true. The infrastructure that services your home or business might have been paid for by the local municipality up front (more typically it is covered via bonds if the municipality does the building itself, or funded through a commercial loan if your municipality farms out development work to private businesses). However, part of the purchase price of the lot on which your home/business sits is the incremental cost of servicing and otherwise developing that site (this is true regardless of whether a private developer does the subdivision or the city does it itself).
That’s why raw land is so much cheaper than serviced land. The servicing does not come free and is not provided by ‘other’ tax payers.
This is why the claim that “we just want what everyone else gets” annoys many of us so much. They don’t want what everyone else gets… they want to have the infrastructure but not have to pay for it.
It’s a starting point for a deal in my view. I doubt that $135m is FMV for this land, and there are many issues left unresolved.
Will the A’s commit to building a privately funded stadium?
Will they be on the hook for demolition costs for Oracle if it is demolished?
Do they take ownership of the arena or just the land it sits on?
Does taking control of the “complex” also mean they accept all liabilities for existing structures on the land? The list goes on… and no, ownership of the coliseum complex does not automatically include ownership of the structures and any long term environmental or other liabilities that may be present.
Even at that, though, this is a good starting point for negotiations on a transfer of this land. It would be nice if a competitive bid process was employed… however appraisers could tell the city what FMV is for this parcel (less any liabilities that the city/JPA hold).
It does make me wonder if the A’s aren’t dusting off the old Earthquakes airport land gambit… “we’ll take control of the land for a fixed price, redevelop it (or just sell it to other developers), then use the net profit generated to build a stadium which we will call privately funded even though you kind of gave us half or more anyway.
As I recall, Wolff’s SJE plan basically meant purchasing land for $25m and compelling the city to rezone for residential & light commercial, which would instantly have quadrupled the value of same. Since the city could have rezoned and then sold the land anyway, that isn’t really private funding… it’s the transfer of a taxpayer owned asset for less than market value to benefit a private business.
Anyway, it’s good to see Oakland and the team having constructive discussions rather than just adopting “no movement” positions in the press. Maybe they work this out, maybe they don’t. But at least from where I sit both sides appear to be trying to work together.
I think the whole FMC site where the Earthquakes built is zoned for Class A offices (first phase of which is done) and a hotel, not residential.
That is what I understand too. As I recall, originally Wolff was looking at land near the airport and was going to use the profits from selling homes on the rezoned land to fund a different stadium.
Some combination of public displeasure and the economic collapse of 2008/09 put paid to that notion.
Not that wikipedia is the most reliable, but here is an excerpt https://en.wikipedia.org/wiki/Avaya_Stadium:
“The proposal for the new stadium for the Earthquakes was brought before the San Jose City Council in June 2007. The proposal called for the city of San Jose to rezone a parcel of industrial land in the city’s Edenvale district to residential uses. The parcel is owned by iStar Financial, but members of the Earthquakes ownership group own an option to purchase the land. Rezoning the parcel would increase the value of the property by approximately $80 million. The site’s industrial capacity would be transferred to surrounding properties allowing those sites to increase the density of the developments on their land, eliminating early generation single level developments. This would also preserve the industrial capacity for the city in the Edenvale area. The option on the land would then be sold and the proceeds would be used to construct the soccer-specific stadium on the Airport West site (formerly the site of an FMC Corp. facility) at no cost to the city. Additionally, Wolff and his partners will be funding and building the mixed use development adjacent to the stadium out of pocket.
On April 15, 2008, it was revealed that a deal to sell the Airport West site to the group headed by the Earthquakes ownership had been reached. The ownership group would pay $132 million for 66 acres (270,000 m2) of the Airport West site, land San Jose purchased for $81 million in 2005. The deal was approved after the May 21 vote by the San Jose city council.[14][15] The purchase price was renegotiated between the city and ownership group in April 2009 to account for the lost value of the land due to the economic climate change since the original deal was struck. Additionally the Earthquakes and their partners have reduced the purchased land size from the full 75 acres (300,000 m2) of the Airport West site to a smaller 65-acre (260,000 m2) parcel further reducing their purchase price to $89 million.
Lewis Wolff’s ownership group’s purchase of the Airport West site from the city of San Jose also alleviated the city of $7.5 million in tax service the city was paying on the site annually. The Airport West site had previously been purchased by the city for a possible expansion to the San Jose International Airport infrastructure. However, as of November 2007, the airport had indicated that the land is no longer needed in any current or projected developments.
The city estimates that the total development of both the Airport West and iStar site would bring approximately $1.3 billion worth of capital investment to San Jose and would bring in millions of dollars in tax revenues. The development would also provide new research and development, retail, and hotel jobs to the city. The iStar site would be developed with a mix of residential and commercial uses, while the Airport West site would be developed by Wolff with two hotels, as well as residential, research, and retail developments.”
So it would appear that the residential development did pay for the stadium. It would appear the city made a (small) profit and got some tax relief. Not sure if the Quakes are paying property taxes.
And as a follow-up, two new office buildings next to Avaya are up, one is now leased and development along the street is accelerating. https://www.mercurynews.com/2018/03/27/san-jose-airport-office-complex-readies-expansion-8×8-lease-google-apple-facebook-microsoft-samsung-amazon-linkedin/ The last plot on this stretch is part of Santa Clara and there is a large residential complex proposed. So the promised $1.3B in capital investment and millions of dollars in tax revenues are potentially on most certainly on their way.
And all of this development was most certainly spurred by a soccer stadium. Other cities should be so lucky.
LOL.
Correct me if I’m wrong, but even that Wiki info is all prospective, right? The city believed the project “would” generate that much money — there’s nothing about whether it actually did?
[@Neil: My is above your’s b/c since there was no Reply button below your reply.]
Yes, those were all prospective estimates.
There is indeed building going or in the works for the half-mile+ of land to the north of the stadium. Is it $1.3B worth and is there a windfall of tax revenue on its way? Who knows.
My closing comments were mostly tongue in cheek. I am waiting for someone to claim the $1.3B is all because there is now a stadium with a huge outdoor bar in it anchoring the development.
> Will the A’s commit to building a privately funded stadium?
See my above comment.
On that parcel and as part of this deal?
Or are they free to develop/sell off the existing property, pocket the cash and look to build elsewhere?
If they are paying FMV for the land that would be fine. If they are getting $200-225m worth of land for $135m because “they are the A’s and we have to help them”, then a stadium should be part of this development and the $60-90m in profits handed over included as part of the public funding.
The Athletics (or any other business) saying they are going to do something and actually being contractually required to do it are two completely different things.
Wolff and company worked out a deal to avoid paying property taxes on Avaya Stadium, which is technically public property leased by the Earthquakes. Might they try something similar with the Coliseum site, if they end up choosing it for the A’s new stadium? Otherwise, they can buy it, most likely at a discount, if they have exclusive negotiating rights, and then flip it later for profit.
The most telling fact of the whole scenario is how derelict public officials were in negotiating remodels for the Raiders and Warriors that would allow those teams to leave with public debt still remaining.
Can you cute any evidence of the property tax break? Not saying your wrong, but it would be good to know. I haven’t seen that.
cite, not cute.
I closely follow the team and am relying on my memory. This article probably contains confirmation, but it is behind a paywall: https://www.mercurynews.com/2009/05/05/san-jose-oks-reduced-land-deal-for-earthquakes-soccer-stadium/
Here’s what the article says:
“Facing up to the harsh reality of a slumping real estate market, the San Jose City Council on Tuesday unanimously agreed to cut $43 million from a land deal in hopes of keeping alive plans for a San Jose Earthquakes soccer stadium.
Team owner Lew Wolff and his partners will now pay $89 million for 65 acres near the airport, pledging to build a $50 million to $60 million soccer stadium in the next two to three years while waiting until the economy rebounds to develop the rest of the land into a sprawling office and retail development. Without the revised deal, the developers warned they would walk away from the project.
While that’s far less than the $132 million deal the council initially approved in May 2008, it’s more than the $81 million the city paid for the land, plus 10 additional acres, in 2005. Needed improvements and other costs brought the city’s total price tag to $100 million.”
No info about property taxes.
$135M might be a reasonable price if your comp is reasonable (I know nothing about the Northern California market) – they wouldn’t be buying land, they’d be buying two obsolete sports facilities that need to be demolished before anything else can be built. $20-$30 million in demolition and remediation isn’t a bad estimate to get the site developable.
Oracle Arena may be “obsolete” by the standards of the NBA but it is still very viable as an arena for concerts and other events. It is potentially like the Forum in LA in that way. I mean, heck, the Cow Palace still is standing despite being much, much worse and less conveniently located. There is substantial residual value in that structure.
The Coliseum, in contrast, is indeed effectively worthless if both the A’s and Raiders leave.
The Forum works for concerts because there are no luxury boxes, and so it’s basically one big bowl. I don’t buy that Oracle is obsolete for basketball (the Warriors just think they can make more money in SF), but it is pretty awful from the upper deck for concerts with the two level of suites below you.
The sad saga continues in Joke-land…
https://twitter.com/matierandross/status/979075216885231616
“Scoop: #Oakland A’s and city agree to exclusive talks over ballpark development — both Howard Terminal and Coliseum in play. Stay tuned.”
ENA’S for both the Coliseum and Howard Terminal
Not sure how much REAL demand there is for the Coliseum site given that the Walmart site across the 880 from the Coliseum remains vacant (although the In N Out adjacent to the vacant Walmart store is doing well!).
Sounds like a negotiating ploy by the city to suggest the A’s are not the only interested party for the site hence the exclusive negotiating rights just announced by the Mayor with the A’s.
We keep hearing contradictory info on this point don’t we?
Sometimes the response is “Oakland is gentrifying!” Demand is huge”.
At other times it’s “that land is worthless, no-one wants it and anyone who takes it should be paid to do so”.
I’m not sure which is true (if either, which I doubt). But both can’t be…
To play devil’s advocate, it is possible for Oakland to be gentrifying and East Oakland to have severe economic problems. This is in fact the case.
That said, saying the land is “worthless” is certainly hyperbole, but just because the demand for avocado toast in Rockridge is through the roof doesn’t necessarily mean that parcel is crazy valuable. Location, location, location or something.
Sure. I’m not from Oakland, but I keep hearing from others (who presumably are or know the area better) that, relatively speaking, the existing site is not the “barren wasteland” miles from anything that it once was considered to be.
As others have noted, the support infrastructure for either housing and commercial development or a stadium (with or without ancillary development) is already in place (I mean transit and the like, not necessarily that a new stadium will reuse the existing stadium’s plumbing etc).
Regardless of site, one of the fundamental contradictions we always see in the discussion about stadia needing to be ‘downtown’ is the that of surrounding development/redevelopment. You can build a ballpark village around a ballpark anywhere if that is what is desired/necessary. I see no reason why a mixed use development on the current site (with or without the arena) can’t work. It’s not like it’s 35 miles from downtown, right?
It’s not 35 miles from downtown.
It is, however, basically in between the Oakland airport and one of the most dangerous neighborhoods in Oakland. There has been a lot of gentrification in Oakland. However, parts of North Oakland and the hills are already pretty swanky, Downtown Oakland and the Jack London Square area has gentrified, and hipsters have moved into previously very poor West Oakland. East Oakland has seen rents rise as less well-off folks have been pushed out of other areas but it is still not the best part of town.
The net of the gentrification is there’s plenty of money to spend on sports and entertainment and this site is, in fact, close to transit. However, without some sort of draw the more likely scenario would be affordable housing, light industry or maybe an office park. The reason a developer might choose a stadium is by bootstrapping entertainment in the area they could build higher-end and thus more profitable housing.
That all said, Oakland needs affordable housing and plenty of folks would rather have low income housing and some industry on the site than a stadium and luxury condos. However, if Lew Wolff is going to build a stadium with his own money to tap into more of that money in other parts of Oakland anyways, the luxury condos are far more profitable than the affordable housing.