Oakland (Special to ZennieReport.com) – The deal to sell the Oakland Coliseum to the African American Sports and Entertainment Group (AASEG) is done, but what’s not is the constant attempts to either sell the agreement or kill it. Why? Really because of the November 5th Election that could lead to the ouster of Oakland Mayor Sheng Thao.
The two sides that have developed around that political issue are represented here by two Oakland City Councilmembers: Nikki Fortunato Bas (District Two, City Council President) and Janani Ramachandran (District Four).
Nikki Fortunato Bas View Of City / AASEG Coliseum Deal
This is part of what Councilmember Bas wrote in her latest press release:
“I applaud the updated agreement between the City of Oakland and the African American Sports and Entertainment Group (AASEG), which includes a higher price for Oakland’s stake in the Coliseum and a faster timeline to develop the historic site for sports, entertainment, housing, and a thriving business corridor in East Oakland.
The restructured agreement for the sale of the City’s portion of the Coliseum will help launch Oakland’s boom loop of economic development and long-term, ongoing revenue for the City. The new terms, negotiated by the City Administration with direction from the City Council through an ordinance adopted on June 26, 2024, includes:
- Higher total purchase price of $125 million (versus $105 million);
- Payment of the City’s outstanding bond payments for the Coliseum and Arena, enabling the city to retire debt early, reducing our long-term liabilities;
- Payment of $50 million more in the current fiscal year ($110 million versus $60 million).
These additional funds within the fiscal year can be utilized to provide core city services as the City continues to work on the next biennial budget and address the structural deficit.
In addition, the agreement allows the developer to secure title for the entire site earlier, which enables the developer to draft a project proposal, apply for a development agreement, and negotiate community benefits sooner. I am proud to have added language to the June ordinance that ensures the sale includes deed restrictions requiring at least 25% affordable housing for low-income households and a community benefits agreement to address labor agreements, small, local business contracting, workforce and living wage, sustainable green development, and more.
As a Council, we owe it to our constituents to do our due diligence and to allow the City Administration and staff to prepare a full report for the City Council on this updated deal. Each Councilmember has received a copy of the amended Purchase and Sale Agreement, and has the opportunity to be briefed by the City Administrator. In line with our adopted Budget Resolution, my budget team will request that the City Administrator present a budget update, based on the new terms and payment schedule of the agreement, to the City Council so that we can consider any necessary changes to maintain a balanced budget.
With regard to the budget, according to recent reports from our Finance Department, the city’s cash flow remains strong. The city’s operating cash pool of over $2.2 billion has increased by over $70 million since June of last year. The City maintained sufficient short-term liquidity to meet day-to-day expenditures and it maintains a sufficient “cushion” in money market funds to meet unanticipated project expenditures. Credit ratings agencies have recently noted that Oakland’s economy and tax base remains resilient.
So, Nikki Fortunato Bas says the AASEG deal will bring in $110 million in the current fiscal year. She also says that the City of Oakland has enough short-term liquidity: “The City maintained sufficient short-term liquidity to meet day-to-day expenditures and it maintains a sufficient “cushion” in money market funds to meet unanticipated project expenditures”.
Councilmember Janani Ramachandran And Her 180 Degree Opposite Viewpoint On AASEG Deal
Oakland District Four Councilmember Janani Ramachandran has a nearly 180 degree opposite view of the City of Oakland AASEG Deal. In her Instagram post, she says that “Oakland has to make $48 Million worth of immediate Budget Cuts”.
Her entire point of view is based on the original budget resolution with respect to the AASEG deal. In her press release before the latest version of the City of Oakland AASEG Coliseum Land Deal, Councilmember Janani Ramachandran writes:
But I am also deeply concerned about the state of the city’s budget, and the urgent need for transparency in how the City conducts its business. Earlier this summer I expressed my frustration with Council’s irresponsible decision to use one-time funds from the anticipated sale of the Coliseum to fund basic city services before the deal was finalized. In that budget, Council included a provision for a “contingency budget” with drastic cuts to public safety – such as the temporary closure of fire stations, reduction in the number of budgeted officers to 600, freezing of violence prevention contracts, and more (more details in the city’s budget presentation). The clear, unequivocal language of this budget resolution was that this contingency budget would go into effect by October 1st if the City did not receive $15 million of nonrefundable payments towards the $105 million Coliseum sale price by September (read more in the resolution).
October 1st has now come and gone. We did not receive the entirety of the $15 million and we have no clear answers as to the future of the Coliseum sale nor the impact on our budget. Despite repeated questions from Councilmembers Reid, Gallo, and myself over the past few weeks to the City Administration and Mayor about the timeline for receiving the rest of the payments and the status of the contingency plan – especially the impacts to public safety – we have received no straightforward responses. While I have learned solely from media reports about a “newly restructured” deal – the fact is that anything materially changing the terms that Council approved earlier this summer must in fact return to Council for approval before being finalized – something that has clearly not yet happened.
There is no doubt that large-scale land deals are complicated and take time to work out details. I voted for, and continue to support, the sale of the Coliseum to the African American Sports and Entertainment Group. But I did not vote for a budget that used this sale to plug holes in our deficit – and we are now facing the consequences of this rushed decision supported by a majority of the Oakland City Council. My utmost concern is that the uncertainty and lack of transparency around receipt of funds from the Coliseum sale is now impacting our already fragile budget – especially our funding for public safety.
Then Janani claims the following language from the original resolution reads that September 1st is the due date for first payment, and if that is not received, a set of budget cuts goes into effect:
That if the $15 million from the land Sale of the Coliseum site is not received by September 1st 2024, or if an additional $15 million is not received by November 1st, 2024, of if the remaining $33 million is not received by January 15th 2025, the City Administrator is directed to: freeze the hiring of new positions; delay the beginning of new sworn trainee academies; halt the execution of unfinalized contracts and grant agreements funded from the General Purpose Fund and any Restricted Funds with structural imbalances; halt the approval of unapproved discretionary travel; take any other measures that they deem necessary to preserve the fiscal health of the City; and return to the City Council a plan to rebalance the City’s budget with as expeditiously as reasonably possible.
Who Is Right About The AASEG Deal, Nikki or Janani?
So, is Janani’s claim correct? Is she right that money she claims was not paid by September 1st automatically triggers cuts. The simple answer is no, for Councilmember Ramachandran. The reason is that first $5 million dollars was paid, and that even if it was not, the wording of the resolution employs the word “or”. Take a look:
That if the $15 million from the land Sale of the Coliseum site is not received by September 1st 2024, OR if an additional $15 million is not received by November 1st, 2024, OR if the remaining $33 million is not received by January 15th 2025, the City Administrator is directed to: freeze the hiring of new positions; delay the beginning of new sworn trainee academies; halt the execution of unfinalized contracts and grant agreements funded from the General Purpose Fund and any Restricted Funds with structural imbalances; halt the approval of unapproved discretionary travel; take any other measures that they deem necessary to preserve the fiscal health of the City; and return to the City Council a plan to rebalance the City’s budget with as expeditiously as reasonably possible.
The way that part of the resolution is written, I can wait until January 15th, 2025 and then make all of the payments. It does not say that AASEG “must” make the payments in September or November, and it presents them as considerations, not mandates. The only part of the paragraph that is definite is the part that reads “if the remaining $33 million is not received by January 15th 2025, the City Administrator is directed to:” That means I can make all payments on January 15th, and stop the triggering of City Administrator action.
However, the District 4 Councilmember
Did Janani Ramachandran Forget Her Finding $50 Million Of Unpaid Business Taxes And The Ransomware Attack?
In all of this rush to say the City of Oakland does not have any money, Councilmember Ramachandran has completely forgotten about her finding of the missing $50 million in unpaid business tax fees. She also forgot about the squeeze put on Oakland businesses to cough up the money, leading to a surge of payments. Why did she forget to count that important revenue source in her concern about the budget in the middle of the AASEG discussion?
On May 3rd, Councilmember Ramachandran sent a press release to Zennie62Media that read as follows:
One of the key responsibilities of the city is to generate revenue to fund critical functions of government. Business license taxes are one of those sources of revenue. In a tough fiscal environment where the City is facing a $177 million budget deficit, I find it deeply problematic that Oakland’s Finance Department has not been pro-actively collecting revenue owed to us. The money owed – over $50 million – could go so far to provide basic city services that Oakland residents so desperately need right now – be it public safety, paving, parks, affordable housing, or protecting our commercial corridors.
This past March, staff presented a report at the Finance Committee with information about the $177 million budget deficit in the Mid-Cycle General Purpose Fund. I began a line of questioning to better understand what shortages in revenue were caused by businesses who failed to pay business license taxes. Unsatisfied with staff responses to my question, I conducted a deep dive into the issue that revealed that Council had not been getting an accurate picture of the City’s shortfall in revenue collection.
During this past Tuesday’s Council meeting, I presented my deep dive into Oakland’s revenue-generating programs which revealed that Oakland has left over $50 million on the table in uncollected business licenses taxes. I also presented a number of questions to staff, who will be providing responses at next week’s Council meeting.
And Janani Ramachandran forgot to mention that the reason for the delays in business tax revenues was related to the 2023 Oakland Ransomwear Problem. This is what the City of Oakland reported in May of last year, 2023:
Oakland “has made outstanding progress on our recovery efforts,” the city said. “To date, nearly all of our IT systems that were impacted as a result of this incident have been restored. Our internal IT systems are fully operational, and community members can once again use our digital services to submit applications and check the status of permits, OAK311 requests and crime reports, CPRA complaints, the Rental Adjustment Program, business licenses, contracting and bid opportunities, as well as make payments and engage with the City of Oakland per our normal channels citywide.”
Councilmember Janani Ramachandran should research and revise her view of the AASEG Coliseum Deal. The City of Oakland is not “out of money” contrary to her current claims. And why did Councilmember Ramachandran forget that she herself uncovered $50 million in revenue, this year – and that was based on the Oakland Ransomware Attack?
Stay tuned.