ONN – Phil Tagami City of Oakland Coal Lease Lawsuit – Interview With His Lawyer David Smith of Manatt, Phelps, and Phillips.
This is an edited version of the full transcript of our talk, today. Where there were words that were not correctly recorded by the YouTube system, I didn’t make the effort to translate them. I highly recommend you listen to the actual video, above.
Note: Insight Terminal Solutions is the new partner with Oakland Bulk and Oversized Terminal
With that, here goes.
Zennie Abraham: Hey everybody welcome to Zennie62 on Veterans Day! Happy Veterans Day to everybody and without any further ado it is my pleasure to introduce the counsel on the Oakland Vulcan oversized terminal project, David Smith.
Dave, welcome, how are you? Did I get that right? Thank you! I appreciate that you’re here hey tell my viewers what the situation is that prompted the letter from you to the City of Oakland (referred to as “the City”) regarding the Oakland Army Base lease and then of course the city’s subsequent action to ostensibly terminate the lease.
David Smith: They are contentious to multiple ways in which the city’s affirmative conduct or failure to perform mandatory obligations under the lease has boarded the project from going forward. Let’s not forget the city has already been ordered by a federal district court out of San Francisco that its prior actions to date with regard to the terminal are illegal and in violation of its agreement with the developer.
Since then we have made multiple efforts to try to get the project back on track. We made offers to the city request to my request for phone calls – previously the project team would meet weekly with the city sometimes those meetings were productive sometimes not so much. But the city unilaterally several weeks ago just decided to terminate those meetings and they’ve never been reestablished.
We’ve asked for them to be reestablished and they’ve said no.
Zennie Abraham: If I may, did they give you a reason?
David Smith: Did they give a reason? No. We asked the notice of the meeting to be set when and where and they say there won’t be the meeting and this and this is just we believe is any aware we’re getting growing more and more concerned that in fact the actual facts on the ground the offers of settlement the material terms of settlement that the project have made are not actually making their way up to the council members.
We think if the council members themselves knew the exact status of what was going on what we’ve proposed I’m not sure we ever would have gotten to this point and we also think it’s the path forward to get it back on track moving forward.
But we are gravely concerned and the more we try to engage the more that concern about the lack of communication up from the staff and City Attorney’s Office frankly to the council members themselves is part of the issue potentially.
Zennie Abraham: Who is it that who’s the main point of contact that you’ve been working with that is responsible for this if I may ask?
David Smith: Right now we’re not even sure. Everybody…It’s almost as if they pulled staff off of it. We had regular points of contact and now it’s all that seems to have devolved just to the attorneys which is never a good thing for progress on a project when least when we sent our letter on the 19th as you’ve seen 51 pages of concerns – that was the last resort.
We don’t want a lawsuit. There’s a lawsuit already underway in which the city lost miserably. And if you read the opinion: 37 pages of just how patently absurd the city’s prior actions were, and yet in fairness, all acknowledge they have that up on appeal in the Ninth Circuit – we’ll see where that goes.
But the concerns articulated in our current letter are relate to their conduct relative to the ground lease the last lawsuit was about the development agreement.
I don’t want to get into legalese – feel free to ask whatever you want.
Zennie: I am curious though. Clarify for my viewers that the City (of Oakland) did indeed know and was aware, as I have made a point of explaining time and again, that the facility was to handle coal.
David: It and has remained is the facility needs to be able to move whatever the market is demanding in that day and at the time the agreements were being entered into in 2012 and 2013, coal was 35 to 45 percent of the market of the bulk commodities being shed globally. It was no secret to anybody.
The city was provided pie charts of what’s being said they were provided videos of facilities from which this was pattern showing coal among other two commodities being ships. And most recently saying we found it (I wish we had seen this earlier) there was a comprehensive report. As you know, the project took hundreds of millions in state money for that, the city took hundreds of millions .
There is a report called a long range property management plan – they describe was to be built out on the parcel: a bulk commodity terminal. And then the city’s own language says bulk terminal, shipping things like lumber, coal, and sulfur.
And in fact this we also learned that the City (of Oakland) in 2012 commissioned a report from a company called a Toyota group to assess the market viability of a facility like this, and in the conclusion that report Cayuga basically concludes that the success hinges on the ability to land a single tenant that needs to move those types of commodities, and says that during that period of time they were only aware of one commodity that commanded the market that drastically, and that commodity was coal.
Interestingly we knew of that report. We asked the city for that report repeatedly and it will end they denied that it ever existed and it wasn’t until they were forced to produce it in the context of a subpoena.
Zennie: I’m curious why doesn’t the city offer an alternative viable land use within the (land use) parameters that were set decades ago and a company that would pay California Capital Group in Oakland and both Bulk and Oversize Terminal Group to establish a facility? I mean I don’t I don’t get the city’s logic or is there a logic all?
David: We keep hearing the term “ban compliant facility” – you need to produce a ban compliant facility. Well, again, the federal court ruled that the ban is illegal and that ruling stands.
Ban compliant? Okay? You’re taking one of the dominant commodities on the world market off (market). Okay, what is going to be the politically disfavored commodity two years from now? Five years from now? Ten years from now?
Zennie: Hey for someone who may be hearing this for the first time who is a new (Oakland) councilmember can you explain to them how this situation happened in your words?
David: Sure I’ll try to be succinct. Back in 2012 and 2013 the projects after a long history before that which everybody can read about the city accepted the proposal for a logistics terminal here. The beauty of this, and this promise remains, not just jobs and that economic activity but the promises this was the unique circumstance of Oakland being a deep-water port with immediate proximity to existing rail lines.
What that means is we can get those diesel emissions spewing 18-wheelers off of the streets of West Oakland for once and start transporting stuff via rail which has far less emissions and doesn’t clog up the streets. And that was the beauty of this, and that was what was pitched to the state of California: why everybody rallied around it, and every every jurisdictional level supported this project the transportation to covering transportation Commission’s the ratification, city, BCDC having signed off on a multiple agencies, and there’s still a ways to go.
But what was approved was a bulk commodity terminal and what a bulk commodity terminal does is ship whatever comes on to be the legal commodity the market is demanding at the time.
The analysis at the time it was approved was to ensure that this would be a facility that could implement whatever safety measures would be required for whatever commodity was proposed.
Zennie: No, I’m curious what about these reports this idea the city has terminated beliefs ah because I couldn’t get I didn’t get a press release on that from the city I called the chief of staff for city attorney Barbara Parker
David: What’s happening here from your point of view you get a letter or something it’s out there I think I saw a post from you earlier which made it available and so it’s anyone should be able to get to it.
Shortly thereafter, The city issued to us a formal notice of defaults under the lease. it’s that letter that’s been referenced in at least one press report claiming the lease has been terminated, and frankly that’s just wrong.
It’s actually wrong the notice of default – in the midst of all this we certainly contend that there has been no act of default so you have no clock ticking and there’s no issue of termination but even under the City Attorney’s letter which is dated October 23rd and was referenced in this particular story, even on the face of it, it does not claim to be terminating the lease.
(It’s a) letter that’s designed to scare you – contention of default which we vigorously dispute.
There has been a press report in the sense in which city attorney Parker was quoted and that press claims the lease has been terminated and that is factually incorrect and it’s facially inconsistent with the letter we received from the city so no
What’s the next step?
We hope that we can get through to better thinking minds that the city that there is a path forward that there’s a productive future for the facility that will benefit everyone involved and that we can get this thing back on track if that doesn’t happen and we’re forced to confront assertions of default by the city formally we most certainly will do that in court and counted on a quorum and as that 51 page letter lays out we think the facts overwhelmingly demonstrate that any notion of a surreptitious claim of default and termination is just laughable laughable.
Zennie: I’m curious has anyone connected with the city or affiliated with the city given any kind of idea or designed directives regarding how they want to see the land used as opposed to something called, you know, as opposed to the current and approve proposed Oakland Bulk and Oversized Terminal?
David: The initial thing earlier – the initial vision and impetus for this combining the deepwater port with the proximity of rail to actually reduce emissions and get trucks off the streets? Who wouldn’t love that right now. It’s only again this advent since the 2012 council took its binding action by ordinance it was 2013 actually and bound the city to a vested right to this terminal that for absolutely political reasons the leader council changed their mind well you don’t get to just change your mind mm-hmm and again this isn’t
I think one of the things that the city attorney said in that last article this isn’t about coal. I agree with her about that for different reasons: I don’t think it’s what she meant but I agree it is about a viable facility operating on Oakland’s working waterfront for the benefit of the community for the benefit of the environment for the benefit of jobs.
And as the market sorts out what is and isn’t an appropriate demand for a commodity that the market will speak to that and the facility will continue to ship the appropriate thing based on again market forces – politics.
Zennie: You know what? I just have to observe as a person with a economic development background it seems like the city has forgotten how to do economic development, and only knows how to use the law to essentially do the economic development or make the kind of economic development decisions that past city administrations have made.
I would like to know your thoughts about that. Am i right or am I wrong?
David: I would phrase it differently than “they’ve forgotten how to do economic development.” Very smart people at this be very very knowledgeable and inform people at the city.
I don’t think this was forgetting or bigger oversight. I think it was a very conscious choice and decision to elevate a political policy over a legally binding ordinance commitment.
Zennie: And, well, that begs the question: when did the shift in thinking happen from your point of view?
David: Again, not being an insider at the city, I can’t tell you. We just responded in real time as a very open and vigorous campaign.
Zennie: Let me explain where I’m coming from so I don’t I’m not perceived as trying to move your thoughts or comment one way or the other: I’m not. I recall, in 2014, the rise of the – I call the money activists, who first attacked a similar issue in Portland and then it seemed to spread down through the west coast into Oakland.
And around that time it quite literally seemed like there was a seismic shift in the direction of development of the Oakland army base but adjunctly related to that seismic shift was this idea that oh we didn’t know the Oakland Bulk and Oversized Terminal was to handle commodities: iron ore core and so on.
And some of the people who said that, they were actually at the groundbreaking for Oakland global and I was there, but I have them on video, right? So that’s why I asked that question. It seems like there’s a an untold story here of the genesis of this political change and who started it, and how the city was really impacted by it.
David: What is irrefutable that at the time the city made its decision, the record was more than solid and complete and in the city’s own words and summaries of the project knew what what the market the majority of the market was moving at that point in time.
Zennie: So as we sit here today in the face of those denials it would seem that it’s one of two things: either people who were there at the time did not do their homework and understand what they were approving or they’re intentionally today changing their story
Out of respect for your time, is there anything else you want to add? I want to respect your time. I don’t know how much more time you have.
David: So I just think we’ve squandered enough on lawyers, it’s time to get the project back on track. The city already took a hit with the federal lawsuit, we’ll see what happens with its appeal the current lawsuit.
Zennie: I’m gonna come back to you later if that’s okay?
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