Merry Christmas, Oakland! Our city has managed to get through a tough year, and with COVID-19 and its variants Delta and Omicron, and who knows what’s next, at least it had a few topics to be happy about. One of them was Howard Terminal, the planned new ballpark for the Oakland A’s at Jack London Square. And the news that the Howard Terminal Final EIR was released last week seemed to be interpreted as “It’s finished” and all that’s needed is the design approval and development agreement, and then an affirmative vote by the Oakland City Council. The fact is one big piece of work has been left out of the conversation: the Infrastructure Financing Plan.
Why Is A Howard Terminal Infrastructure Financing Plan Needed?
The Infrastructure Financing Plan is called for because The Howard Terminal Waterfront District Ballpark Project is said to intend to use Enhanced Infrastructure Financing District (EIDL) legislation. EIDL law was created starting with SB 628 Bealle in 2015, which was widely considered the replacement for the vast set of California Redevelopment Law codes 33000 through 33999 of the California Health and Safety Code. (And if you’re wondering, I’ve spend over 30 years of my life working on something related to California Redevelopment Law from my time as intern to Oakland’s Redevelopment Agency in 1987 to consultant to it and then the Emeryville and San Francisco Redevelopment Agencies, and many more engagements, including via ZENNIE62MEDIA, Inc., today. But I digress.)
Since the passage of, and Governor Brown’s signing of, SB 628 Bealle in 2015, there have been a set of EIDL laws formed around it, including the latest one called AB 464 and designed to allow tax increment financing to be used to funnel money to small businesses economically harmed by the Pandemic, and SB 293 Skinner, drawn up by the Oakland A’s and the City of Oakland specifically for Howard Terminal. But, regardless of the EIDL law formed, all have a few matters in common: 1) they exist to allow the use of tax increment financing or “TIF” revenue, 2) they allow that TIF revenue to be used outside the zone within which the property tax that normally goes to several “taxing agencies” like the City of Oakland and the County of Alameda in the case of Howard Terminal, is collected by a fiscal agency (called a “Public Financing Authority”), and 3) they must file an Infrastructure Financing Plan.
Howard Terminal’s Infrastructure Financing Plan has not been formed and there’s no evidence that the City of Oakland has a schedule of completion of the document. Yet, it’s required by EIDL law. Have doubts? Take a look at what the City of Sacramento did this year for its “City of Sacramento Aggie Square Enhanced Infrastructure Financing District”. The introduction on page 5 of the document clearly states the following:
California Government Code sections 53398.50–53398.88 (EIFD Law) enable cities and
counties in the State of California (State) to form enhanced infrastructure financing
districts (EIFDs) as a means of using tax increment financing to fund public and private
improvements that provide communitywide benefit. Formation of an EIFD is initiated by
a resolution of the legislative body of the city and/or county setting forth its intention to
dedicate to the EIFD all or a portion of its incremental property tax revenue within a
designated area. On October 27, 2020, the City Council of the City of Sacramento (City)
adopted a resolution of intention to form the “City of Sacramento Aggie Square Enhanced
Infrastructure Financing District” (Aggie Square EIFD).
A Public Financing Authority (PFA), established at the same time as the resolution of
intention is adopted, forms the EIFD and operates as the governing board of the EIFD.
Accordingly, the City Council has established the “Aggie Square Enhanced Infrastructure
Financing District Public Financing Authority” (Aggie Square PFA), consisting of
three members of the City Council and two members of the public chosen by the City
Council, for a total of five members, all as required by EIFD Law.
EIFD Law requires the Aggie Square PFA designate or direct an official of the City to prepare an Infrastructure Financing Plan (IFP). The Aggie Square PFA directed the City Manager to work with the necessary City staff and professionals to prepare a draft of the
IFP. This document is the IFP.
So, let’s break that down and put it in the context of Howard Terminal in Oakland. In other words, there is no Howard Terminal Public Financing Authority to even direct an Oakland official to prepare the Howard Terminal Infrastructure Financing Plan. The City of Oakland has done nothing in the way of setting up the Howard Terminal Public Financing Authority, even though SB 293 Skinner was signed into law on October 11th, 2019 by California Governor Gavin Newsom.
Moreover, Sacramento is far from the only city or county in California to employ EIFD law and establish a Public Financing Authority. Napa, California activated its EIFD District, called The Napa EIFD, and did so this year, with its first meeting held October 20, 2021. Moreover, the webpage presents a correctly (but does leave out stated assessed value increase assumptions) written tax increment revenue spreadsheet, showing the base year of assessed value for the project and the expected annual tax increment revenue for its initial eight years.
The City Of Oakland Wasted Two Years In Not Implementing SB 293 Skinner By Avoiding Setting Up The Howard Terminal Public Financing Authority
So, The City of Oakland spent two years (and counting when one considers the signing of SB 293 Skinner on October 11, 2019) avoiding two key components of EIDL law: setting up the Howard Terminal Public Financing Authority and getting started on the Howard Terminal Infrastructure Financing Plan. In fact, the first time any public discussion pointing to a Howard Terminal Public Financing Authority was during the October 6th 2021 presentation to the County of Alameda. And while the City of Oakland did receive the County of Alameda’s vote to support using its share of TIF revenue from the Howard Terminal Ballpark District for a tax increment financing-based bond issue, that agreement was not binding. There was no other action called for by the County, when what should have been done, right there, was call for a set of steps to make the Howard Terminal Public Financing Authority.
Instead, both the City of Oakland and the County of Alameda picked up a brief discussion over the seats called for on the Public Financing Authority, the County expressed concern that there were not enough mentioned in the law from its perspective, Oakland failed to offer a plan to add a seat (no one will throw the City in jail for doing so), and they went on to other questions.
So, where are we on Christmas Day? Still nowhere. If you talk to Oakland officials involved with the project, no one knows the details or progress toward a Public Financing Authority and an Infrastructure Financing Plan. The Infrastructure Financing Plan is particularly important because it tells you and me where the Howard Terminal TIF Revenue is coming from and what it’s going to be used for. In other words, it’s the “sources and uses” document Oakland A’s President Dave Kaval called for a long time ago.
The City of Sacramento’s IFP clearly spells out the “sources and uses” of money for the project. By contrast, we have Century Urban consultants releasing a report that is all kinds of wrong regarding Howard Terminal TIF Revenue:
- It fails to use the EIFD 45-year bond period.
- It calls for using the City’s existing but supposedly dead Downtown Redevelopment Project area from before the time Jerry Brown killed California Redevelopment Law (not even clear we can do that) and..
- Failed to clearly explain the assumptions regarding base-year assessed value of and rate of growth over a 45-year period – because they don’t even use a 45-year period in their estimate, even though their own damn report says they’re going to use one! And when they present assessed value numbers, they’re just written, and not part of any checkable calculation that shows they understand how to calculate TIF Revenue. In other words, you can’t go by what they presented at all.
In short, Century Urban gave the City of Oakland and Alameda County a report that’s clearly wrong to anyone who has experience at TIF and its calculation and use. The trouble is, the City of Oakland chased away its staff expertise in TIF and its calculation and use – even as other California cities like Sacramento managed to maintain some staffers who know what they’re doing. The City of Oakland has admitted this deficiency more than once, yet done nothing about it.
So, where we are is still months behind in the completion of the pre-development phase of Howard Terminal. Finishing the EIR is all well and good, but as one City official said to me recently, “You’re saying we don’t have a way to show we have the money to do the project”. The money is certainly there and my calculations reveal a $1.6 billion TIF revenue stream, but the City has done nothing at all to check and use my work. The math is the math – it’s not going to change. But there’s been a lot of bad math tied to Howard Terminal and it’s past time it stopped.
Oakland needs to get started on forming the Public Financing Authority to finance the project and the Infrastructure Financing Plan, which determines the money to be used to form the project financing. Meanwhile the Oakland A’s are going to keep gazing at Las Vegas. We need to get our act together.
Stay tuned for updates.