https://www.youtube.com/watch?v=oc-L3hZeCZI
Oakland A’s Howard Terminal Update Zennie Abraham Points Out Century Urban TIF Revenue Report Errors
– video made by the YouTube channel with the logo in the video’s upper left hand corner. OaklandNewsNow.com is the original blog post for this type of video-blog content.
Oakland A’s Howard Terminal Ballpark Update Zennie Abraham Points Out Century Urban TIF Revenue Report Errors. Dave Kaval should see this.
The report by the Los Angeles-based consultant firm called Century Urban and that was presented by the City of Oakland at the Alameda County Meeting as containing the Howard Terminal Tax Increment Financing Revenue Estimate, in point of fact, did not do that.
The report states that there is an existing redevelopment area (the Downtown Oakland Redevelopment Area) that does not “sunset” or end until 2039. Read this from the report on page 6 of 19:
The City and A’s contemplate that an Enhanced Infrastructure Financing District (“EIFD”) will be formed over the Project site and certain project-generated revenues will be contributed to the Project. Should the County elect to contribute all or a portion of its share of project-generated property tax revenues to the EIFD, these amounts would be deducted from the total amounts projected in this analysis for the duration of the IFD term, which is typically 45 years. Furthermore, a majority of the Howard Terminal site is part of a former Redevelopment Agency area (“RDA”) and, as a result, property tax increment is currently and will continue to be captured by the RDA through 2039 to fulfill certain redevelopment obligations before any remaining tax increment is passed through to taxing entities or the EIFD. Based on the projections provided by the A’s property tax consultant and reviewed by Century | Urban, an average of 37% of annual property taxes generated by the new proposed development would be captured by the RDA to fulfill existing obligations. The remaining 63% would be passed through to taxing entities including the County. The RDA’s obligations are projected to be fully satisfied in 2039. Thereafter, all tax increment would flow to the taxing entities, and if an EIFD has been formed and the County has contributed all or a portion of its share of project-generated property tax revenue, this share would be captured for the benefit of the Project for the remaining duration of the EIFD term.
But rather than estimate a new tax increment financing revenue number for Howard Terminal’s TIF after 2039, Century Urban just plain stopped at 2039, after writing that their calculation period starts at 2020 and because the existing RDA ends in 2039 – and that’s that. The problem is that’s 19 years and not 45 years of revenue collection.
Century Urban Did Not Look At The Actual Redevelopment Project Area Map
And on top of that, Century Urban did not bother to LOOK AT the actual map for the Downtown Redevelopment Project Area. If Century Urban did, it would see that Howard Terminal is not within the Downtown Redevelopment Project Area! A giant error made even larger by the fact that the City of Oakland staff didn’t catch it.
Here’s the map, with Howard Terminal part of the shoreline zone marked in white – and not in the Downtown Redevelopment Project Area.
In short, Century Urban cost the Howard Terminal Project $800 million in bond proceeds (assuming $2 billion in assessed value for years 1-3, 4 percent rate of growth in AV, and 45 year bond period). If that were added to the $400 million in grants, $1.2 billion would have been raised for the Howard Terminal Ballpark Project, including community benefits and an offsite infrastructure improvements plan.
No Explanation Of Basic TIF Assumptions
There is no explanation of basic assumptions that are part of any tax increment financing revenue estimate: what the annual rate of growth in assessed value is and why; whether the base year will be before construction starts (thus allowing for the collection of taxes from unsecured property which will be the machines and vehicles used during the ballpark construction period); what the assessed value for each phase of construction is (they should give you the final number, instead, they give you the assessed value per square foot, but don’t break down how they arrived at those numbers for those specific years when the buildings are to be complete); and the identifiable final tax increment revenue estimate representing a simple-to-see 45-year-period.
The reference to “RDA” in the consultant report concerns the existing Former Oakland Redevelopment Agency Downtown Area, and not any new organization that’s called for to float bonds, collect the property tax, and launch the TIF Zone as per SB 293 Skinner.
This produced a misunderstanding when Project Manager Molly Maybrun was asked about the expected bond issue. Rather than say that they did not have a final estimate for tax increment financing revenues or a bond structure, she winged it. She claimed that $400 million in TIF revenue would be available for a bond issue, but did not say where that number came from.
Moreover, she talked about it being the “present value” of the income stream, but that’s not how tax increment financing revenue is expressed and for two simple reasons: 1) “present value” calculations just take out the interest rate that would be applied to a bond, but the tax increment revenue increases by rate of growth in assessed value including the County-allowed two-percent increase. So, one could have a scenario where the removed bond interest rate is offset by the annual rate of growth in assessed value. Thus, a wash.
What the project manager should have explained is what the bond debt service would be versus the infrastructure cost, and the community plan, and show any remaining revenue, or not, and explain why.
None of that is explained by Century Urban, and yet the County Administrator allowed the malpractice to continue by repeating the Century Urban numbers.
And that brings me to another point: the City of Oakland must make clear what legislation is being used, or if SB-293 Skinner needs to be amended.
As the person who created the concept of redevelopment phasing in 1996, I know how this can be done. (Read: https://www.bizjournals.com/sanfrancisco/stories/1996/07/29/story3.html)
To Repeat: Century Urban Did Not Present The Right Tax Increment Financing Estimates, And May Have Been Told Not To By The City of Oakland
Folks, I have to repeat this: the bond issue period for the Howard Terminal Project is supposed to be 45 years. 2020 to 2039 is just 19 years. Got that?
So, guess what? Century Urban did not give us anything like what we were told to expect – the only way one would know that is if they had experience at tax increment financing like I do.
The City’s project manager Molly Maybrun clearly missed this, as did the City of Oakland’s City Administrator’s Office and the Alameda County Administrator’s Office and the Alameda County Counsel. With that, the Alameda County Administrator’s Office just used Century Urban numbers without checking them. That means Alameda County Administrator’s Office had zero idea what it was looking at, even to catch the error.
So, we have no numbers to go by and for all of this time, this is the best the City of Oakland can show for all of this. As one who’s first job out of Berkeley grad school was with the Oakland Redevelopment Agency, and who learned tax increment financing there in 1987 and then worked for a number of clients in the area of tax increment financing, it’s sad to see my city fall and fail in this way.
I have asked to be the consultant on this, and now you should see why, if you did not see it before. If Steve Kerr can be grabbed from the broadcast booth to coach the Warriors, there’s no reason I can’t be tabbed for this project. None. Oakland needs help here.
Stay tuned for part two on how these numbers should look.
UPDATE: Century Urban claims that the old Downtown Redevelopment Project Area was still in existence and collecting tax revenue for the retirement of a bond and the debt service schedule runs to 2036. But the fact is, the total remaining to be paid is $53.2 million if the annual debt service remaining is rounded to $3.8 million. Under the new redevelopment laws for EIFDs, including SB293 Skinner, there is no prohibition on the use of tax increment revenue from the new zone being used in part to retire the debt of the old one. Thus, Century Urban made a giant error.
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Note from Zennie62Media and OaklandNewsNow.com : this video-blog post demonstrates the full and live operation of the latest updated version of an experimental Zennie62Media , Inc. mobile media video-blogging system network that was launched June 2018. This is a major part of Zennie62Media , Inc.’s new and innovative approach to the production of news media. What we call “The Third Wave of Media”. The uploaded video is from a YouTube channel. When the YouTube video search for “Howard Terminal Ballpark” finds a video it is automatically uploaded to and formatted automatically at the Oakland News Now site and Zennie62-created and owned social media pages. The overall objective here, on top of our is smartphone-enabled, real-time, on the scene reporting of news, interviews, observations, and happenings anywhere in the World and within seconds and not hours – is the use of the existing YouTube social graph on any subject in the World. Now, news is reported with a smartphone and also by promoting current content on YouTube: no heavy and expensive cameras or even a laptop are necessary, or having a camera crew to shoot what is already on YouTube. The secondary objective is faster, and very inexpensive media content news production and distribution. We have found there is a disconnect between post length and time to product and revenue generated. With this, the problem is far less, though by no means solved. Zennie62Media is constantly working to improve the system network coding and seeks interested content and media technology partners.