Day 2 of Oakland A’s owner John Fisher’s threat to hold his breath until he turns blue move his team out of town if he doesn’t get $855 million in “infrastructure” spending from the city of Oakland was all about the principals being interviewed on daytime TV and radio talk shows, apparently, which provided every bit as much enlightening journalism as you would expect. First off, we have A’s stadium czar Dave Kaval explaining to KNBR’s Papa & Lund (who “delight the Bay Area with their unique combination of loose and informative sports talk“) why the Oakland Coliseum site isn’t acceptable for a new stadium, if by “explaining” you mean “propagandizing”:
“The site here is really a manifestation of the 1960s design for ballparks and sports venues,” Kaval told Papa & Lund on Wednesday. “Destination, lots of on-site parking, just kind of like in a big parking lot. That was all over the country. That was in places like Atlanta-Fulton County Stadium (Braves) and Riverfront (Reds) and all these stadiums across the country. Candlestick was kind of like that.
“But that model has shifted. All the modern stadiums since the 90s and Camden Yards have really been built in these downtown urban corridors and been really successful. Obviously Oracle Park is an example of that, so is Petco Park down in San Diego, and that is really the model that we’re looking for in success in baseball.”
Except that’s not entirely true: The areas around the Baltimore Orioles‘ Camden Yards, the San Francisco Giants‘ Oracle Park, and the San Diego Padres‘ Petco Park are considered “downtown urban corridors” today, yes, but none of them especially were before the stadiums were built. And if we’re talking “all the modern stadiums,” then we have to include the Atlanta Braves‘ new stadium, which was built way out in the suburbs with a faux-urban mixed-use development around it; not to mention the New York Yankees‘ and Mets‘ new stadiums, neither of which is anywhere near downtown (and which in the Mets’ case is still surrounded by parking lots).
And more important, the Oakland Coliseum may currently sit in a sea of parking lots, but, especially in the red-hot East Bay real estate market, there’s nothing stopping Fisher from building a new neighborhood on that site the same way he hopes to at Howard Terminal, which is currently a sea of shipping containers. Kaval could have more honestly argued that the Coliseum site might not be as lucrative as building at Howard Terminal after Oakland taxpayers spent $855 million to spruce up the local roads, but presumably that didn’t play as well with the focus groups.
(I should also note that KNBR’s accompanying article misstated something itself about the A’s stadium plan, citing ESPN as reporting “the public’s share of the approximately $12 billion project at $2.2 billion,” a figure that’s been repeated elsewhere as well. That’s because ESPN’s Jeff Passan did some uncharacteristically sloppy writing in describing the terms of the deal, lumping together the $855 million in city infrastructure spending with projections of $450 million in community benefits to the city and $955 million in new general fund revenues for the city — those last two figures are likely pretty bogus for reasons we’ve covered previously, but either way they’re public benefits, not public costs. The taxpayer price tag on this remains $855 million, which is still a crazy amount of money, mind you, but it’s important to be accurate about these things.)
Moving over to KGO’s Midday Live (“More local news, more local weather, more local hot topics“), we find Oakland Mayor Libby Schaaf clapping back against Fisher’s demands by … okay, actually she pretty much made his case for him, saying she “appreciates” MLB commissioner Rob Manfred for emphasizing that “a new waterfront ballpark is the only path to keeping the A’s in Oakland,” and responding to a question about whether $855 million was too high a price tag like this:
“The A’s are privately financing the ballpark itself. But for this ballpark to be successful, we will need to make transportation improvements beyond the ballpark. And deliver community benefits that our community expects. Particularly to make sure this project does not cause displacement or gentrification…
“What we need is for our other regional partners to participate: The port, the county, the state. We all will see incredible revenues if this project gets built. Contributing some of those new project-based revenues is the key to getting this done. We have gotten a lot done over this year. I am confident we can get this over the finish line.”
Translation: I don’t want to spend $855 million in city money, but $855 million in city plus county plus state money? That’d be cool. Discuss amongst yourselves whether this is a massive betrayal of Schaaf’s principles that not a dime of public funds should be spent on sports stadiums or a clever gambit to get taxpayers in the rest of the state to pay for new roads and bridges in her city by piggybacking on Fisher’s threat.
KGO also has its own interview with Kaval in which he says that the $855 million in city money isn’t really city money, because “we pay the city that money, and then they use it for that infrastructure.” First off, hey, that’s the Casino Night Fallacy! And secondly, that’s not just the A’s owners paying the taxes that they’re demanding be kicked back:
(Area to be developed by the A’s is in gray.)
Where all this ends up is anyone’s guess, but fortunately in our modern world we have the gambling industry to make those guesses for us. A Forbes “contributor” (i.e., unpaid writer) notes that the betting odds (not clear on from which source) have the A’s eventual destinations ranked in this order: Las Vegas (7-4), Montreal (5-1), Charlotte (6-1), Portland (6-1), San Antonio (8-1), Nashville (11-1), Indianapolis (12-1), San Jose (12-1), Austin (14-1), Oklahoma City (14-1), Vancouver (14-1), Louisville (16-1).
You can also bet on whether the A’s will relocate by the end of 2022, and while the odds are slightly against it — a $100 bet on them moving will earn you $110 in winnings, while a $150 bet on them staying put will only earn you $100 — the very fact that none of those cities listed currently have stadiums for the A’s to move into or could build one in the next year and a half would seem to make a “no” bet some pretty easy money. Unless “relocate” means announce a relocation down the road, not actually pack up and go? Maybe better check the fine print before you put down your life savings on this one.
If the primary business model of MLB teams are no longer ticket sales, TV cable deals and concessions but complex mix use real estate deals then Vegas would have the inside track. If MLB has any interest in created a St. Louis Cardinals 2.0 (deeply support by the community) Portland is it best bet. I don’t think it does. The oddsmakers are dumb though. Craig Cheeks Portland Diamond is well funded and was scheduled for high level talks with MLB unrelated to this. If they can move expeditiously on zoning issues I give them 3 -1
$AN JO$E!!! After nearly 30 years (1992) since the A’s granted the Giants the territorial rights to Santa Clara County (so the G’s could move to $J), enough is enough! MLB needs to finally work out a deal to make SCCo/$J a shared territory (like other two-team markets) and allow the nations 10th largest city to join The Bigs. BTW, Schaaf not directly answering the $855 million question speaks volumes, LOL!
Hi. A’s fan here. Good analyses. The $855MM price tag is a lot, and I am bugged by Fisher using the public’s emotional attachment to their last remaining sports team as leverage to get this waterfront property. If he truly cared about staying in Oakland, the Coliseum (which requires 0 public money for infrastructural improvements) would still be on the table.
However. Are you familiar with the Jack London Square area? The Howard Terminal area produces 0 tax revenues now, and the Jack London financing district has languished for years with low tenancy rates, no anchor tenant, no real reason for existing. It’s an underperforming asset that would benefit immensely from a ballpark and the accompanying infrastructural improvements. The proposal isn’t for the A’s to siphon off existing revenues; it’s for diverting the revenues that would flow from the enrichment of the specific area surrounding the ballpark (i.e. revenue created in large part by the development itself). Furthermore, these two districts were specifically authorized by the state legislature to finance this project. My point being that it’s not like Fisher is rolling in with a bill of goods. This was always part of the plan.
While yes, the Coliseum should still be on the table, and yes, I resent the threats, Jack London Square is in such dire need of development. It’s been waiting for years for a moment like this, and would be great for Oakland as a whole. This may benefit Fisher inordinately, but this is how cities get built. Oakland either makes this capital investment in its future, or continues to throw money away on “initiatives” and other fleeting, transitory things.
Jack London Square has had a long list of successful developments over the last couple decades, with more in the pipeline, all without a stadium. The assertion that it needs a sports team as an anchor tenant to be successful isn’t backed by any evidence.
Been there recently?
Yes I have because I have multiple friends that live there. Strange that you’d think of that as some sort of gotcha.
If it’s your *opinion* that it’d be better with a ballpark, that’s fine. But asserting as a matter of *fact* that the area isn’t and can’t be successful without a ballpark is another matter entirely.
No gotcha… Just asking.
You are right that there are some new bright spots in JLS (Plank, the Forge) but I’ve been going there for the last 25 years and the loooong line of empty, tenantless storefronts hasn’t budged. They had A’s fanfest in 2020 there (used to be at the Coliseum) and I was shocked to see so many people there – most I can remember seeing, and I’ve been to the 4th of July there too. That kind of foot traffic is exactly what the ballpark will generate, and will finally fulfill JLS’ longtime purpose as a destination.
I’ve been to Jack London Square fairly recently as well. It could use some more activity, sure — but a baseball stadium that’s only in use 81 nights a year isn’t going to do much to provide that. So siphoning off tax revenues from JLS and attributing it to “we built it, so they came” would be pretty disingenuous. (I’m also not clear on what happens if tax revenues don’t go up — can Oakland return the new roads to Home Depot for a full refund of their $855m?)
You are the expert, but it seems like it’s pretty undeniable that baseball stadia generate business and enhance the areas they’re built in. That’s what happened in SF, which you surely know was also built with infrastructural improvements funded by future tax revenues. Should fisher have to pay for infrastructure? That’s the city’s core responsibility. If they want a ballpark down there (which we know the majority of the council and the mayor does) then this is the best deal they will ever get.
“it’s pretty undeniable that baseball stadia generate business and enhance the areas they’re built in”
This isn’t undeniable at all and several examples countering this “undeniable” claim were cite in this post alone!
“But a baseball stadium that’s only in use 81 nights a year isn’t going to do much to provide that”
Really? 81 nights a year is lots of activity.
Click on Data in the navigation menu above for a bunch of studies showing there is no evidence of stadiums providing a measurable boost to business.
As for 82 nights a year being a lot of activity: It really isn’t. The only time you can get sports attendees to go to a restaurant or whatever nearby is in a narrow window before and after games. So really you’re talking about a building that is dark 284 days a year, and may as well be dark 22 hours a day the rest of the year. You’d do better off locating your restaurant near a small supermarket.
The crowds for something like a Fanfest may look impressive, but they don’t do much to make for a sustainable business. When I’ve talked to restaurateurs, they’ve told me this as well.
If there is so much upside to developing the Howard Terminal area to then (cross fingers and say 12 Hail Mary’s) enhance Jack London square, why doesn’t the city open up to public bidding the development of the terminal area instead of giving a handout to the A’s so the footprint of the stadium could be used to generate more full-time jobs and revenue 365 days a year rather than part-time jobs just 90 days a year?
It’s not a handout. It’s the city’s responsibility to improve infrastructure. True, they wouldn’t have to improve that area (yet) without a reason like the ballpark development, but the revenues to find it are coming from the taxes generated by the development itself. How is this a handout?
This has been thoroughly explained not only on this site, but also by economists that have specific knowledge of the business of sports and its relationship to pubic entities.
Hey Anonymous, thanks for pointing that out. I can read. I happen to have a different opinion. If you think I’m wrong, go ahead and point out why. Thanks!
You’re wrong because as has been pointed out here (again, in this very post/thread) public money would be committed with the claim that it’d be paid back by tax revenue generated from the development over a very long period of time. But there’s absolutely no guarantee of that, and the public will be on the hook for the very possible (even likely) shortfall.
If you still think it’s a good idea, okay. Again, it’s fine to not care. It’s just not a matter of fact to say that there no public subsidy/handout or that it’s fine because the city will definitely get that money back.
“It’s the city’s responsibility to improve infrastructure. ” Uh, yah…fill potholes, water system maintenance, sewer services, etc., stuff like that. County and state usually pay for roads, highways and related maintenance. But $855 MILLION in public funds for stadium infrastructure?! Relegated to a small portion of the municipality to benefit a billionaire sports owner and his team?! Are you an Oakland taxpayer? Just curious.
It’s a handout because the plan is to take tax revenue from a huge area that is not the footprint of the stadium.
Granted, if a municipality wants to attract companies to area X to build corporate offices, tech centers, or whatever, they can, at their risk, lay some water and sewer pipe, electrical and fiber optic, improve roads, etc. The city is gambling on the future taxes of that X area to recoup their investment.
But this is something well beyond that. It’s robbing an entire area of tax revenue potential for another area that will not return the economic benefit.
Oakland does not need the A’s (nor did it need the Warriors or Raiders). They’ve been screwed before with Mt. Davis and should have learned their lesson.
Not to mention, East Oakland, near the Coliseum is not an area people would want to move into. Once you cross Fruitvale, Oakland becomes a whole different town.
I remember when they used to say that about Bushwick. (At which point they too used “people” to mean “white people.”)
The Mercury News/East Bay Times put out a lengthy editorial against the A’s proposal. Almost seems like they read and then copied Neil’s blog posts. Plagarism is the finest form of flattery.
https://www.mercurynews.com/2021/05/12/editorial-the-as-and-mlb-dont-care-about-oakland-only-profits/
Amateurs borrow, professional steal.
Neil,
Thanks for the detailed explanation of the whole situation, listening to Dave Kaval spew BS on all the local interviews made me sick, they need to stop comparing their issues to the Raiders and Warriors. I would like to know if they would consider the stadium only on the HT site, 3000 née housing units in the area would cause daily gridlock, BART is at least 1 mile from the site and know one is going to walk from West Oakland station without an armed escort.
I believe their proposal is so outrageous that they want it to fail so they can say “we tried” and relocate
I had the same misgivings about this project until I went to Fan Fest 2020. The crowds were immense. The stadium will draw the people, I have no doubt.
Though I still resent the threats and think the Coliseum should be on the table as part of good faith negotiations.
Unfortunately, we can probably expect to keep hearing about the Raiders and Warriors as long as this process continues Dave. Fisher wants to make sure everyone knows what a ‘nice little ball club you’ve got here and how it’d be a shame if anything should, you know, god forbid, happen to it”.
No easier way to do that than to keep mentioning the names of the teams that are no longer there. Eventually, he’ll start talking about the Golden Seals as well if necessary.
Let’s not forget the economic powerhouses and cherished civic assets (all sarcasm) that were the Oakland Clippers, Stompers, Invaders, or Oaks!
I can’t believe the relocation oddsmakers did not include Sacramento. Neil’s post yesterday showed Sacramento to have the 20th largest TV market, and it could still keep the current market in the East Bay. Sacto has what Kaval/Fisher have been spewing regarding HT — a large urban infill site at the Railyards with waterfront property and adjacent to downtown. You gotta give Sacto at least higher odds than Louisville!!
They have no biases… as soon as someone wants to bet on Sacramento, they will post odds. That’s why most odds makers include a “bar” number. It’s all about keeping the money balanced (or close to it) on each option and maximizing the house take.
But yeah! Why not Boise or Minot…
Sacramento. Not happening.
City’s coffers already looted for Golden 1 Center, Sacramento Convention Center (expansion and renovation. Now there’s a money making idea. Summer began early in Sactown the year. Been in the 90’s since May. Soon into the 100’s. Will be so until October. Still want to hold your convention here?), SAFE Credit Union Performing Arts Center (formerly the Sacramento Community Center Theater. Here in Sacramento, everything gets a corporate named plastered to it. After all, the craze began here in 1985 with Arco Arena 1, before it spread throughout the land) and the Memorial Auditorium (reconfiguration while the theater was out of commission).
Lastly, Sacramentan’s are no more likely to put up with spending $100’s of millions (on top of the above) in public monies for a new ballpark than Oaklanders are (it’s why Sacramento’s MLS deal collapsed. The most Sacramento Republic FC could get out of the city for a new soccer specific stadium was a $33 million tif).
Now Sacramento’s outlying suburbs in Republican El Dorado and Placer County’s, a horse of a different color (think Cobb County, Georgia).
To parrot, but yah, why not El Dorado Hills or Roseville!
Property taxes are meant to reflect the cost of providing “general government services” to a particular property or development (as opposed to providing water and sewer service or garbage collection, which are often billed separately).
Whenever a TIF or a similar instrument is created – even if the money syphoned off is just the net INCREASE in tax revenue deemed to be the result of the specific development for which the TIF was created – money that should be going to amortize the cost of providing government services is now being used to pay for the construction of the development itself. The unavoidable outcome of this is that someone “else” is paying the share of government services that should be attributable to the new development.
The same goes for a municipal government giving a property tax waiver to someone who is having a hard time… the gov’t never reduces it’s spending to account for the revenue loss, it simply spreads the levy over the remainder of the tax base… so they aren’t waiving anything, just redistributing the charges.
We can call it a handout or a subsidy or just plain welfare, but what it is emphatically not is “free”. If anyone wants to see this for the shell game it actually is, just apply it to your own home and demand that the city provide the money for your new swimming pool or kitchen because the swimming pool will increase the assessed value of your home and the city will eventually be paid back through increased property tax revenues.
It’s a ridiculous scheme meant only to confuse tax payers into thinking that wealthy people should be exempt from taxation because they create development.
Instead of thinking about how “unfair” it seems for the GAP heir to actually have to pay his taxes, I would ask people to think about how unfair it is to force other (dramatically poorer) people to pay his taxes for him… because that is what will happen if this goes ahead.
I have never been to the Bay area (or anywhere in Cali north of LA) so I just have some questions for the locals.
It seems to me as an outsider that most of the bay area (San Fran, San Jose, Santa Clara) has exploded economically with real estate soaring but that prosperity hasn’t spilled over to Oakland.
1) Is that true? If so why?
2) Is the lack of infrastructure around Howard’s terminal that the A’s are asking the city to address impeding ANY development in that area? What I mean is the A’s are saying “put in $900 million in infrastructure and we will build $12 billion worth of stuff” if the city doesn’t do that would someone else put in $12 billion worth of stuff or some other amount or would development there just not happen?
3) If Howard’s Terminal didn’t get the development (not just the stadium but any of it) would it really go to other parts of Oakland, would it go to other parts of the Bay Area, or would it go to other Regions? With costs of living rising in the Bay area is it a case where people and companies are being priced out and they are getting to the point of leaving?
Pardon my ignorance but I literally don’t know much about the area so I am curious
Aqib. Apologies. No one got back to you. Here’s the short answers.
1. All depends where you live in Oakland. Oakland flats (East/West Oakland). Not so much. Oakland Hills and Piedmont. Oh yes, expensive.
2. HT? Who can say. I’ve seen neighborhoods develop and gentrify that I’d though no way in a million years is anyone going to live there, much less businesses locate there. https://sf.curbed.com/2020/2/20/21122662/san-francisco-bay-area-nimbys-history-nimby-development
3. Yes and No. The Bay Area is so prohibitly expense, people are buying homes in Elk Grove, Stockton and all throughout Californian’s Central Valley and commuting to the Bay Area (super commuters). In my opinion (mine only), think it’s only a matter of time before developers discover HT, its affordability, its close proximity to San Francisco and it begins to gentrify with affordable condominium towers (similar to Emeryville). I know I’d love to wake up every morning, open my condo to a cool Bay Area breeze and be able to look directly at a cargo crane (smile emoji here).
The Bay Area is probably one of the most climate, ecologically / geographically, ethnicity and income diverse areas in this nation (apologies Neil. New York City is as well). Contradictions abound everywhere. Wealthy neighborhoods across from low-income neighborhoods. Summertime. Cold and foggy in San Francisco. Get off Bart (Bay Area has a very good public transportation system) in Walnut Creek 30 minutes later and it’s 90 degrees. The city one moment. Muir Woods the next. At last check, Marin County was the 3rd wealthiest county in the nation, votes heavily Democratic. Caucasian? You’ll find yourself the ethnic minority in many parts of the Bay Area. Basically, the Bay Area is the New York City of the West Coast.
Probably doesn’t answer your questions. Difficult to given all the Bay Area contradictions.
East Oakland is a food desert. The cost to the City of Oakland to put in a grocery store would be much less. And it certainly would provide economic and other benefits far greater to the 25,000 residents of East Oakland. If the old Coliseum parking lot doesn’t work, built it and I’m sure John J Fisher will come.
There are readers who really want the A’s to move to Portland. Some of those will say all sorts of things about how wonderful Portland is as a candidate. For those who don’t know anything about Portland’s efforts to land an MLB team, please note that Portland does not have a stadium. Also note that stadium-backers will find similar resistance to public funding of sports venues in Oregon as in California. Finally, while it is great that Portland supposedly has lined up some wonderful deep-pocket investors, the A’s owner has expressed zero interest in selling the team. That means an expansion team may be more realistic for Portland.
Co ….. rect.
As an “elitist” West Coaster for 51 of 63 years of life, Portland’s (I admit it, I was born in Oregon) has a couple of issues. https://en.m.wikipedia.org/wiki/Delta_Dome
Then there’s that other issue in Portland. Rain (it’s why we’d pull our cars out in the rain to wash them, then drive back into the garage and dry them off). Long stretches without rain, even just a passing shower, are uncommon. It’s why we’re called ducks (water off a duck’s back). https://weatherspark.com/y/757/Average-Weather-in-Portland-Oregon-United-States-Year-Round
Unless John J Fisher or Craig Cheeks are going to build a ballpark with their own funds, Portland’s a no go.
Of the interviews I watched Craig Cheek and PDP officials, they claim well over $3 billion in capitalization. They have repeatedly stated they will build it privately. My issue is that they was very mum when this was announced. I do believe MLB likes the market
Back to my point, why does it matter that there are folks in PDX supposedly willing to put up big money to build a privately-financed ballpark if the A’s owner is not interested in selling the team to them or anyone else?
We are admitting that stadiums stimulated economic activity, jobs and general prosperity in Baltimore, San Fran and San Diego. Progress!
Oh, they didn’t stimulate them in the slightest. (You think Pac Bell Park created SoMa?) But they did take advantage of them, same as the A’s could do if they wanted to build out a new neighborhood at the Coliseum.
Build out a new neighborhood at the Coliseum? Have you been there Neil? I’ve been going to the Coliseum since 1968 – it will not work. Ask Walmart.
JLS is the solution. For crying out loud, let’s get Fisher, the mayor and civic leaders together. Get this done. Or better yet, have MLB force the sale of the A’s to Marc Benioff – the man knows how to get things done in the Bay Area!!!
I’ve been there tons, both pre- and post-Mount Davis. I’ve also seen some of the ridiculous places people will buy townhouses in way out in Contra Costa County — by contrast, the Coliseum site is a prime location.
For the sake of argument, East Oakland is not and never will be “prime location”. I have never in my 58 years EVER heard anyone who lives in the Bay Area refer to East Oakland as “prime location”. Bay Area real estate is like no other – if it were prime, it would have been developed already.
You know where else wasn’t a prime location for real estate? China Basin, Mission Bay, Candlestick Point, Hunters Point, Bay Meadows, the Tasman planning Area, Brooklyn Basin, uptown Oakland, Brisbane Baylands, and a long, long list of other sites in the Bay Area. And yet all of those listed and many more beyond them have been, are in the process of, and/or have plans for huge (re)development.
The A’s have literally proposed a massive mixed use developments at the Coliseum site. They are on record as believing it will work.
Neil:
Your analysis leaves out the impact of California’s unusual property tax system. Property taxes don’t flow directly to the local jurisdiction where the property is located; they get sent upstream and then redistributed among cities, counties, and special purpose districts. Per the Alameda County assessor, local cities only get 18 cents of every dollar of property tax revenue: https://www.acgov.org/assessor/documents/2018-2019_Annual_Report.pdf
Obviously, that doesn’t change the calculus for the public as a whole, but it makes a big difference from Oakland’s perspective. Paying the $855M with a funding stream of which 80% would otherwise be going to your richer neighbors is an appealing proposition.
Interesting point, Chris. As a native Cali, I was not aware of the redistribution to that extent.
Curious, to whom is this an appealing proposition? Are you saying the 80% would flow back to Oakland/Alameda County? If so, I’m on board!
Right, so we’re back to “betraying her principles, or figuring out how to stick a different set of taxpayers with the bill, or both?”
How about – let’s build something our city can be proud of, that will build civic pride? Yes, it might mean tax payers have to pony up. I’m an A’s fan. i want the thing built in JLS. Oakland will be fine. It’s located in one of the most desirable places in the world.
My dude, you literally just said run down parts of Oakland aren’t prime or desirable. Now they are? Pick a lane.
Come on man, everyone in the East Bay knows East Oakland is run down. JLS has promise Anonymous. No lane to pick – easy call in my opinion.
Right, but from the perspective of an Oaklander, who has had to deal with lean city budgets because of a) commercial leakage to neighboring rich jurisdictions, and b) a ton of noxious but necessary infrastructure for the broader region concentrated in town, getting the long end of the stick for once is appealing.
I care about the taxpayers of Dublin and Pleasanton exactly as much as they care about Oakland taxpayers–i.e., not one whit.
There’s also still the question of who’s the backstop if those excess TIF revenues don’t pour in fast enough to pay off the infrastructure costs. I’m guessing it won’t be Pleasanton.
Yes, I’d agree that the structure of what happens if there’s a default on the bonds is key (and would be helpful area of reporting).
If the bonds are issued by the districts alone, such that if the tax-increment revenues are insufficient the bondholders eat the loss, the deal looks pretty good for Oakland, imo. If they’re issued or guaranteed by Oakland itself, obviously a much riskier deal.
Man, I would demand a crazy-high interest rate on bonds backed only by TIFs, given the risk of default. But I guess people have bought far dumber things.
Neil;
Aren’t municipal bonds by default backed by the general fund of the issuing authority?
It’s sort of a ‘full faith and credit’ promise isn’t it?
If cities or counties could issue Michael Milken level paper, well, a lot less infrastructure (both useful and useless) would have been built over the years.
They can structure the bonds however they want, I believe. But they can’t make anyone buy them if the only collateral is “future taxes, maybe?”
I’ve got an idea on how Oakland can pay for their portion. Bonus – Vegas would also lose a casino in the process, but hey, they can tighten up the slots and get it back.