Thursday, December 29, 2011

New Ruling, New Rules, New Era

So the day of reckoning has come. On Thursday, the state Supreme Court voted to uphold AB 1X26, which will eliminate Redevelopment Agencies (RDAs), and to strike down AB 1X27, which would have allowed the RDAs to exist but required them to make payments to the state. For further reading, check out this San Jose Mercury News article as well has the Supreme Court ruling. Also, the KQED Capital Notes Blog has an excellent take, as well.

Now, how does this affect the A's in Oakland? On December 9, we talked to Oakland's assistant city administrator Fred Blackwell after Mayor Quan's press conference. At the time, he expected that the ruling on the lawsuit filed by California cities would uphold the existence of redevelopment agencies and everything around ballpark financing would go on as planned. If the cities lost, then they would have to make a payment to the state. Blackwell said that Oakland planned to make its payment and still issue the needed bonds to complete its proposed projects.

From all reports, that is no longer the case. Now it appears RDAs will be dissolved, and raising the money needed for land and infrastructure will range from difficult to impossible in this new climate. It's unfortunate. However, the proposed Coliseum City project may be less affected than other sites for the following reasons:

(1) The land is controlled by the City/JPA; (2) Environmental costs would be lower due to the fact that that site already has a sports facility and no new reports would have to be generated due to "existing use"; and (3) The infrastructure is already in place. Not that it's all there yet, but it's much further along since it has been a sports facility for the last 40 years. While Victory Court is the ultimate win-win for everybody, we are also realists here.

The death of RDAs has serious implications for San Jose as well. Recently the San Jose Redevelopment agency transferred all its assets to the Diridon Development Authority (DDA), which is an RDA of a different color. With mounting legal battles over the land, it's obvious that the DDA was only put together to protect its assets from the state money grab. Any challenger to the San Jose ballpark plan can use today's court decision as ammunition against the stadium plan. SJ backers are also leaning very heavily on Lew Wolff's statement that he is supposedly going to pay for "everything." Well, not only would that be nearly a first for sports owners, but it also would be very questionable coming from Lew. To this date, Lew has never indicated how he intends to pay for any of his stadiums, going all the way back to his "attempts" to build in Oakland, or later Fremont. It's also true about San Jose today (both the Quakes and the A's). Also, Wolff has been the king of trying to squeeze low-ball deals. He managed to low-ball the city of San Jose not once but twice when he got San Jose to fork over $132 million worth of land for just $81 million for the Quakes stadium deal. He also tried to low-ball San Jose State University for a potential stadium site. A's fans everywhere should be very skeptical of this guy.

What happens next? Who knows? The financial landscape is very different now than it was just a few days ago. I assume we are going to get more details and quotes from the A's and officials from both cites in the next few months. We are entering a new era, kids, so hold on.

1 comment:

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