31 May 2007

Futbol Football

There's a bevy of articles about the 49ers' dealings with Santa Clara:
... and one in the Merc about the Quakes' dealings with San Jose.

For the Niners' stadium project, the previously unknown cost for moving and/or reconfiguring the on-site power substation now has a price tag: $20 million. In addition, a planned parking garage would need to be moved to accommodate the stadium. Demand estimates indicate that the area will face a shortfall of parking should football games run concurrently with Great America operating days. There will probably be 3-4 such conflicts every year. Remember that they have until July to figure this out. Glad it's not my decision.

Now on to the Quakes. Two months ago I put together a rough comparison of the A's ballpark village and the Quakes' project, which back then was a stadium shared with SJSU. Now the Quakes are going it alone, but the fundamentals are still there. A new memo from the City shows how the deal is structured, which really just confirms much of what we already know.

Two major differences exist between the plan as conceived for South Campus and the current one. Ancillary development next to the stadium is the big key. Almost as important is that Quakes and ancillary revenues will cover the city's $7.5 million per year in debt service on the recently purchased, 75-acre Airport West property. That effectively makes the deal a $7.5 million lease for the stadium and surrounding land. The iStar property proceeds will most certainly be used for the stadium and perhaps some of the ancillary development, but it's really important that revenues from new office, retail, and parking establishments foot the bill for the lease. It's unlikely that soccer revenues could contribute more than half of the lease requirement. One possible outcome: since a large amount of parking will be required for all of the various uses, I can see Wolff building a large multi-purpose parking structure which would also be used for airport long term parking. Airport officials have shown interest in using the existing long term lot for other airport operations.

Like the A's concept, it's a radical departure from typical stadium financing plans since the developer is taking the lion's share of the risk. If they can pull it off, more power to them.

29 May 2007

A's Outreach

As part of the A's efforts to win the citizens of Fremont over, an event was held today involving a representative of the team and the Chamber's Task Force (of which I am a member). It promises to be the first of many different types of events involving the A's and the community.

A pamphlet was handed out that summarizes the benefits that the project will provide the community. If you live in Fremont or the Tri-Cities area, you'll probably run into the pamphlet at one or more events this summer, leading off with Sunday's:
The Great Rotary 16th Annual Chili Cook Off
@ The Saddle Rack ($5 - ages 12 and under free, 11:00 AM - 5:00 PM)
benefiting the Tri-City Rotary Clinic, Washington on Wheels, and the Alisa Ann Ruch Burn Foundation
For those that don't know, The Saddle Rack is a country music joint very close to Pacific Commons. Should Nick Swisher stay through his new contract extension and beyond, I can definitely see the Saddle Rack being an establishment much to his liking.

Anyway, back to the pamphlet. My apologies in advance for not scanning it in, I seem to have misplaced the scanner's power adapter. The pamphlet is an 11 x 17 tri-fold with the overhead view of the Cisco Field rendering. Overlaid on the bottom half are the words, "Will you dream with us..." and the "Athletics" logo underneath.

Inside, at the top, in similar typeface are the words "Together, we could have..." followed by the bullet points touting the project. I've already gone into plenty of detail on most of those points so I won't rehash them now. There is one part that hasn't been covered much, so I'll quote it verbatim:
  • With Good Transportation
    • Create a transportation system that connects the urban ballpark village to the existing BART and other light rail systems, buses and plenty of parking
    • Generate fewer automobile rush hour trips than what is already approved for the existing property and roads
The first point is intentionally vague because no one - I mean no one - knows if/when BART will come down to Warm Springs. At the last city council session, a BART rep emphasized the desire for a BART link of some kind to be established, though BART did not suggest or endorse a specific type of connector (before you ask, getting BART directly there is completely out of the question). It might be buses, or BRT or a busway. It could be a people mover type of solution. Light rail is doubtful. And it's possible transfers could be done at the Union City Intermodal Station when it's completed, though Amtrak/ACE aren't designed to take large numbers of people short distances. During last week's council session, Vice Mayor Bob Wieckowski suggested a transit solution that makes it easier for all Fremont residents to get to the ballpark village - no specifics, however.

The second point is key to the political positioning of the ballpark proposal. If the developers can show that the ballpark village would have the same or fewer impacts than the original Cisco campus plan, they'll have a good shot at getting approval. Making such a case is no slam dunk, and the subject matter is well past my layperson's level of expertise.
A few other notes:

Task Force attendees included reps from FUSD's Board, Ohlone College, NUMMI employees, and others from various businesses in Fremont. There's a great sense of awareness about both the risks and rewards in City Hall and the private sector. FUSD wants to talk about an elementary school in the area - one that won't get fully funded by the projected $10 million development fees.
The 2,900 brownstones (emphasis on brownstones) will be in a gated community. I had speculated earlier that this would be required just for traffic control purposes, and that looks to be right on.
One other odd thing about the pamphlet: the line score on the inner rendering's scoreboard is:
  • .........1 2 3 4 5 6 7 8 9 - R H E
  • BAYLOR...0 0 2 1 0 2 0 1 0 - 6 8 2
  • TX TECH..1 0 2 0 2 1 1 3 . -10 15 1
Not sure what Big 12, Baylor, or Texas Tech baseball has to do with this, but Tech's Dan Law Field got a new Barco scoreboard 3 years ago. I guess it'll have to remain a mystery.

21 May 2007

Noll: A's Study "More honest than most"

(See? I can create completely distorted headlines, too.)

Argus scribe Chris De Benedetti got Stanford sports economist Roger Noll's take on the ERA economic impact report. The assessment:

The A's economic report on the proposed ballpark village in Fremont is "far better" than the 49ers' report presented to Santa Clara, said Roger Noll, an esteemed Bay Area sports economist.

However, Noll gives the report mixed reviews overall, knocking the study because its "analysis of fiscal impacts is about revenues only, and excludes costs."

The costs issue hinges on two important details:
  • What additional infrastructure (schools, transit) will be required?
  • What are the mechanisms to pay for it?
When a developer puts up a new neighborhood somewhere, a deal is often made where the developer donates some amount of land for a school, and the new residents pay for the school's construction over time through school bonds or other public means. In Fremont's case, there's a large gray area in that the construction of a school is not mandated in the city's municipal code. Yet there will be such a large influx of students that not building a school could, over time, severely strain FUSD's current school infrastructure. Last week, I covered some creative ways to make this work, even within the framework of the existing redevelopment plan. But they'll still need the land somewhere either within or right next to the village, and that'll take some additional planning - and give-and-take. The report projects $10.7 million coming to the district in the form of development fees. $10.7 million alone won't build a school, but it's a good start.

As for ongoing services such as police and fire, I've given my two cents. I'm of the belief that the project tax revenues will pay for itself. I don't believe that the city will be flush with cash - at least it won't be if the TIF district continues indefinitely. The best way to make this work is to use TIF (if it has to be used at all) only for the school and transit hub. When both of those projects are completed - and the redevelopment agency has reached its tax increment cap - the mechanism should cease to exist. As a result, money would flow back to the city's and county's general funds, and FUSD as well. Only when the tax increment district expires will those groups really start to see serious money roll in.

19 May 2007

Fremont City Council Session 5/22 - Minor item

From a note sent out earlier today:



This is to advise you that an agenda item has been scheduled for the regular City Council meeting of Tuesday, May 22, 2007, on a proposed set of General Guidelines for use in negotiations on the Oakland A's proposed Ballpark Village Project. The City Council meeting begins at 7:00 p.m.

The meeting will be held in the City Council Chambers located at 3300 Capitol Avenue, Building A, Fremont, California.

If you have any questions regarding this agenda item, please contact Economic Development Director Daren Fields at (510) 284-4020 or at

I think I'll sit this one out and check out the webcast instead. I like process, but not that much.
Update: The Merc's Barry Witt has the scoop on the agreement up for consideration:
As part of a list of proposed "guidelines" to steer negotiations between the city and the A's, City Manager Fred Diaz said "there should be no future un-reimbursed general fund financial obligations or liabilities."
Sounds like a good public gesture for both parties. Of course, when they say "general fund" they're conveniently leaving TIF funds out of the agreement. That's not to say that usage of TIF is a bad thing. A few days ago I outlined a couple of ways TIF could be used for positive community benefit when the time comes. However, that requires a level of restraint and discipline that too often is not applied when TIF comes into play.

17 May 2007

Trading one casual fan for another

A couple of interesting news items before I rant a bit:
  • 106.9 Free FM (KIFR) is switching formats to classic rock, reviving the locally legendary KFRC call letters. Apparently there will be no change to A's coverage. Existing talk programming on KIFR will move to the weaker AM sister, KYCY-1550.
  • Hennepin County is prepping the Rapid Park site for August's groundbreaking of the Twins' new ballpark in downtown Minneapolis. They may be able to make the Spring 2010 opening date after all.
  • Mark your calendars for January 1, 2009. That's the date of the launch of MLB Network, which will be available on most major cable systems and DirecTV. MLB Network will reportedly be on either basic or digital tiers rather than on a sports tier, which means slightly higher monthly subscriber fees for those that get the channel. This positioning puts it on par with NFL Network (though Comcast is changing its arrangement with NFL Network). NBA TV only has such an arrangement on DirecTV, but is available only with League Pass on many cable systems. The deal is for four years with a three-year option that could bring the value of the deal up to $700 million. MLB is guaranteed $80 million per year ($2.3 million per team) with greater revenues coming with additional sales of the Extra Innings package. Ownership of the channel will be two-thirds MLB, the rest shared by the cable and satellite operators.
  • Liberty Media CEO Greg Maffei on his company's purchase of the Braves (approved by MLB today): " 'The taxes clearly made it attractive... but we're interested in seeing the value of the asset grow.' Maffei said Liberty is a strong believer in the value of sports as television programming, but noted that the Braves' TV rights already are committed long-term. 'We believe there may be some promotional opportunities.' " Well, at least he's being honest about the tax dodge - the team and several other assets were placed in a Time Warner subsidiary and were swapped for Liberty Media's 4% stake in Time Warner. Nothing screams passionate ownership more than "tax free asset swap," that's what I always say. (A chronology of the sale if you want the gory details.)

Last night I sat in the Plaza Reserved section just to get a flavor for the $2 seat again. From the looks of the crowd, the announced 16,242 were evenly split between fans in the main bowl and everyone else in the bleachers and Plaza Reserved.

The experience reminded me of how disinterested the $2 seat crowd is in the game. During the game the following happened:
  • One or two aborted wave attempts
  • Call-and-response between groups of fans singing "Happy Birthday" multiple times
  • Call-and-response between groups of fans chanting the old high school football refrain, "We've got spirit! Yes we do! We've got spirit! How about YOU!!!!" (ends with fingerpointing)
  • Teenage girls trying to distract Hiram Bocachica, who had no ML at-bats this season entering the game. The girls succeeded at least twice. I shook my head in shame. Bocachica looked overmatched in his 0-for-4 day with 1 K.
  • Random fan yelling, "Hey! Where's (insert DL'ed player here)?"
  • Numerous fans asking, "Who's this Cust guy?"
  • Greater misplaced excitement than normal about various A's hitting pop-ups.

Now I'm not a hardcore elitist type of fan. I frequently bring my casual fan friends to games and I don't care about how little or much they follow the team. That's their prerogative. And I'm happy to explain why (insert DL'ed player here) went down to anyone who asks. But that got me to thinking about what occurs on the other side of the bay.

In SF, the Giants traded their younger, more boisterous, but unfocused casual fans for quieter, older, wealthier ones. Giants games without Bonds in the lineup tend to run similar in feel to Manhattan's Bryant Park during midday, with its lovely Parisian chairs and avid readers. It's gentrification in its most obvious form. Like Pac Bell, the first few years of Cisco Field will have numerous curiosity seekers and trendy types who simply want to be in the scene. Once the novelty has worn off they'll likely move on to something else. What will remain are the dwindling number of hardcore fans and the rising number of casual fans, and maybe some of the casual fans that have been converted into staunch supporters the process.

In the end, casual fans are casual fans. Some are louder than others. Some cause more trouble than others. Some fall asleep easily. They are all transient and replaceable by nature. True, the baseball IQ at Coliseum is inversely proportional to the number of fans there. But how much should that factor into the game experience?

Casual fans are there because baseball's a unique form of entertainment first, with "quality of baseball" being further down the list of desired attributes. So what does it really matter how many there are or what type? The younger crowd comes with more energy and inherent risk. The older corporate crowd is safer and duller. How is it possible to claim that one is better than the other without showing class/racial bias? And who's to judge? Certainly not me.

There are many who lament this particular path that baseball has taken. They're easy to point fingers at the commissioner or the owners for selling baseball out, and they're right to a great extent. But isn't it incumbent upon us, the longtime fans, the diehards, to evangelize about baseball? To bring those casual fans into the fold and mesmerize them with the game's wonder? I posit the notion that if we don't, we are derelict in our duty as fans. It is not just the owners or the players that are stewards of the game. As fans, we have our own rich histories with baseball, and unless we are content to be selfish with our own recollections of the sport, we also have the responsibility to shepherd the next generations of fans. If we are not to raise the next group of diehards, who will?

This rant was inspired by the dearly departed author David Halberstam, whose Summer of '49 sits dogeared and worn in my bookcase.

15 May 2007

Reading between the lines, Part IV - Police & Fire

Gauging the effects a project like the Ballpark Village will have on a city the size of Fremont is difficult to understand or project. On one hand, a large influx of new residents could severely strain already scarce resources. On the other hand, it's possible that new tax revenues could make up for the need for new resources.

One thing's for certain: Fremont is very stretched out city as it is. That doesn't mean its geographical size or sprawl - it's truly one of the least staffed city governments in the Bay Area. According to the city's
proposed 2007-08 budget, here's how Fremont's staffing per 1,000 residents stacks up against other Bay Area cities (discounting some services Fremont does not have in common with the other cities):
  • Fremont: 4.21 positions/1,000 residents
  • Palo Alto: 11.04
  • Oakland: 9.40
  • Newark: 7.01
  • San Jose: 6.27
  • Sunnyvale: 6.15
  • Pleasanton: 5.51
  • Livermore: 5.34
  • Walnut Creek: 5.16
  • Union City: 4.82
Fremont's ratio can be partially attributed to efficiency. In some departments, staffing is extremely low. This phenomenon is best represented by Fremont Police's ratio of sworn officers per 1,000 residents.
  • Fremont: 0.9 sworn officers/1,000 residents
  • San Jose: 1.4
  • Oakland: 1.8
  • San Francisco: 2.8
  • Pleasanton: 1.2
  • Alameda County: 1.4
  • National average: 2.5
It could be said that Fremont's historically low crime rate has reduced the need for a large police force, but Fremont's also notorious for its "verified response" burglar alarm policy, where officers do not automatically check out tripped alarms unless affected business/homeowners also call in to follow up. It should be said that the only jurisdications I found within the state that hit the national average are San Francisco and Los Angeles. On the flip side, the police department at college town Davis has a similar ratio to Fremont's.

The addition of 8,787 residents via the residential portion of the Ballpark Village would necessitate at least 9 additional officers to keep up with the low officer-resident ratio. A proportional number of administrative positions would also be required, perhaps 3-5. Given the greater amount of activity because of the retail/entertainment component (not including the ballpark), additional patrols and/or personnel would be required. According to budget docs, each position costs approximately $145,000. So adding 13 additional positions would cost $1,885,000, not accounting for inflationary adjustments.
Now let's look at the fire department. They are projected to have 161 full time positions for the 2007-08 budget year, 140 of which area assigned to Operations/Emergency duty. They've also been given a $1 million grant from Homeland Security, to be used to fill 8 additional firefighter positions for 2007-08. Even with that bump, Fremont will have a ratio of 0.7 firefighters per 1,000 residents, compared to a national recommended standard of 2-3 per 1,000 residents. Budget costs per position are similar to that of police, so using the 0.7/1,000 ratio, the ballpark village would need 6 firefighters and 1 administrative position. Those 7 positions would cost $1 million.

Fremont Fire has 10 stations spread out among its 77 square miles. It's likely that the village would just use the existing station in the area, Fire Station 7, on Grimmer and Auto Mall. If the demand is great enough for a new station in the area, there would be serious capital costs associated with it.
Combined, fire and police services would cost $2.9 million. Compare that to the numbers from my
Part II post. After the $1 million that the A's would pay to offset game-related costs, the city would get an average of $2.6 million. However, that figure is reflective of "net new to Fremont" sales revenues. By the time the residential buildout is completed, the city would actually get $3.8 million per year after the $1 million offset, which should cover police and fire. City services are more than just police and fire, but since police/fire takes up 81% of General Fund expenditures, it's a decent guess that the $900,000 remainder should be able to cover the rest.

The above is a simplified analysis of budgetary impacts. It should be used as a guide for discussions that will be better framed by other, more official impact analyses to be released by the city. The next installment will cover gameday expenses.

13 May 2007

Tickets@Phone - Get the kinks out

Yesterday I bought a ticket for the game online. Instead of going the will call route, I chose the A's new Tickets@Phone option, which sends a e-ticket to your mobile phone. The idea is that instead of waiting in line for will call tickets at the Coliseum, you could go straight to the gate and show the ticket on your phone. You (and your compatriots) would then be allowed in through the turnstiles.

Two days into this trial period, and I have to go with a phrase we commonly use down here in the Valley:
This product is not fully baked.
Ordering tickets is simple enough. You don't see the option until the last ordering screen where you put in your credit card info. Tickets@Phone costs $2.50 per order, the same price as the Print Tickets at Home option.

The partially hidden paragraph under them menu says this:
If you have selected the Tickets@Phone delivery method. Please enter via the Luxury Suite and Westside Club entrance on the Plaza Level when using Mobile Phone Tickets
IMPORTANT: Remember to save the message on your mobile phone, as this will contain your ticket(s).
Please read the following Terms and Conditions
Mobile Phone Ticketing FAQ
Before you click the Buy Tickets button, you must select your carrier and phone. The technology supports many WAP-enabled phones on Cingular, Verizon, and Sprint/Nextel.

After you've finished the transaction, you'll wait a minute or so in suspense. Relief will come in a WAP Push Alert, which contains a super-special address that you can only reach with your phone. Click on the link and you get this:

Underneath the Harmon Killebrew silhouette (yes I know MLB denies it) is a small, illegible square. That's your barcode, also called a Data Matrix.

The order instructions tell you to go to the Luxury Suite/Club entrance. This is where the positive experience ends. I brought up the e-ticket on my phone and showed it at the gate. The ticket taker had to awkwardly connect a printer to her PDA and a power supply to the printer. Once that was all connected, she took my phone and attempted to scan the barcode. After 30 seconds of futility, she handed the phone back to me and asked me to recite the alphanumeric code underneath the barcode. After another 30 seconds of fumbling with the soft keyboard on the PDA, she got the congratulatory ding! from the PDA, signifying a successful scan. She printed out a paper ticket and handed it to me. After checking with others, she directed me to walk down to Gate C (it was a Plaza Level seat in 208). Confused, I followed her orders and was routinely rejected when I got down to Gate C. According to them the ticket was already scanned (the ding!), so I had to walk back up to the Luxury Suite/Club entrance. After I explained what happened, they let me through - though I was told not to go through the turnstile. I took the elevator up to the Westside Club, completely bewildered.

Obviously, the A's and kept this trial small so that it wouldn't impact regular ticketholders. There are problems that could prevent real acceptance:
  • The gate experience is much more complicated than Tickets@Home or Will Call.
  • Ticket takers don't have a self-contained scanning solution that would make their lives easier. What they have is incredibly kludgy.
  • Instructions for dealing with Tickets@Phone users weren't clear for Coliseum staff.
  • There's no feedback mechanism for Tickets@Phone users. I expect this post to eventually circulate back to the proper parties, but not everyone has the forum I have.
  • Eventually, the technology will morph into ordering/upgrading via mobile phone. Yet there are numerous warnings that Tickets@Phone users should have a printer available and print out a backup just in case. Not everyone who orders via this method will have a printer readily available
My experience is no reflection on the courtesy of the staff. They were quite friendly, just unprepared. There were others who used Tickets@Phone on Saturday, so I couldn't have been alone.

There are simple ways to enhance the experience so that it's smooth for all concerned. Once they address the concerns above, they'll be well on their way. Until then, the product is half-baked.

12 May 2007

Reading between the lines, Part III - TIF

In the last installment we covered the impact of new retail development and the increase in sales taxes the ballpark village would provide. This time out we'll turn our attention to housing. It's the key to the whole deal, as it's assumed that housing proceeds will largely fund the ballpark. Housing is where A's consultants ERA are claiming the greatest amounts of benefits for Fremont. Are they blowing smoke here, or are their claims actually achievable?

The story starts with Prop 13, the landmark piece of legislation passed in 1978 that greatly limited assessments and property tax levies. Faced with severe budget crunches, cities started to look for other methods to preserve tax revenue. Arguably the most popular method was to create redevelopment districts. Originally the intent was to rehabilitate so-called "blighted" areas. A redevelopment program starts when a city identifies blight in an area. A redevelopment district is then created, which allows the city to freeze property assessments within. In following years, property taxes above the frozen level are captured by the city and used for redevelopment efforts. These funds are called tax increments. If the redevelopment agency sees a big ticket item that needs to be funded, it has the power to raise bonds, which are secured by tax increments. This instrument is called tax increment financing, or TIF.

In 25 years after Prop 13 cities took the concept to often absurd degrees. San Jose's redevelopment area in 2001 consisted of 8713 acres spread over 20 square miles, which is slightly larger than the entire Stanford University campus. Oakland's redevelopment arm is wrapped in a huge bureaucratic body called the Community and Economic Development Agency, or CEDA. To improve many truly blighted areas of Oakland, CEDA designated most of West and East Oakland as redevelopment areas.

In many cases, redevelopment efforts have rejuvenated economically depressed areas. However, it has also choked off property tax dollars that would normally go to education. As municipalities played round after round of "robbing Peter to pay Paul," state leaders started to reconsider the efficacy and value of redevelopment programs. Over the past several years, redevelopment agencies all over the state have scaled back both their programs and the size of their agencies.

Fremont's redevelopment agency has been less aggressive than San Jose's or Oakland's. It has been focused on three key areas:
  • Revitalizing commercial centers in three districts: Centerville, Irvington, Niles
  • Capturing tax increments to help finance highway interchange improvements for the Industrial district, in which Pacific Commons and the Ballpark Village site lies.
  • The creation and administration of affordable housing throughout the city.
I can't comment on the effectiveness of the first initiative above, but the second has shown results. All of the 880 interchanges serving the Industrial area are complete with the exception of the 880/Mission/Warren interchange, which is due for completion in 2008. The project doesn't fit within the definition of blight, which goes to show how loose the term is. It has worked out well for both businesses and residents, who prior to the revamp were forced to use cramped, old, poorly designed ramps that were in place decades before old Highway 17 was converted into Interstate 880. Even though the project was conceived without an eye towards a ballpark, this new infrastructure will serve fans extremely well.

Debt service on the highway infrastructure is expected to be retired in the next several years, yet the redevelopment district expires in 2023. That means that for the 3,000-acre Industrial district, there is a huge, dormant potential for tax increment revenue already in place - if someone were to take advantage by developing part of the area a certain way.

At least that's what consultant ERA claims. The implementation plan for the Industrial district does not call for housing within the area. They assume that the land would remain dormant for at least the next decade if the Ballpark Village were not developed. Cisco is looking to expand, but is more interested in the area around its corporate HQ in North San Jose than it is in Fremont. This is in keeping with a recent trend of Valley "mega-campuses" being sought by Google, Yahoo!, and Apple. There's no need for another power center shopping mall there. Virtually all of the big box stores that would normally fill a new power center are already spoken for in Pacific Commons or in the surrounding area. So that assumption is largely correct. I reproduced the table at the end of the report that shows how tax increments would increase as the Ballpark Village was built. Over the length of the project, the net tax increment would equal $58.6 million.

There is a flaw in the numbers above. ERA assumes that tax increments should be calculated based solely on the 1983 assessments, which have the 143-acre main parcel valued at $4 million ($28,000 per acre). Currently the parcels are assessed at $588,000 per acre, which means they're worth $85 million. The difference means that at a 1% taxation rate, tax increment would be $810,000 more than if ERA were basing their study on the current assessments. Over the construction period, that equates to $4.9 million in property taxes. Mind you, this is an interpretation of ERA's data, but it's something to mull over as we analyze the figures further. I point this out because using ERA's methodology inflates the true potential benefits.

Whether we're talking $58.6 million or $53.7 million (adjusted), it's a lot of money. The bulk of this would be generated by the 2,900 townhomes. The housing alone will bring in almost $20 million per year in tax increment. The numbers are realistic due to the high cost of real estate in the Bay Area. One thing to keep in mind is that this money has to be allotted for redevelopment projects or stay within the agency. It can't be used for city services or other general fund uses, nor can it be used to shore up the general fund.

Redevelopment has other smaller tasks for the Industrial district that go beyond the highway infrastructure:
  • A Learning Center on an approximately 4-10 acre parcel in the Project Area to provide advanced technology life-time learning facilities and resources that are accessible to businesses locating in the Project Area and to the broader Fremont community
  • A station and related facilities and services to provide commuter rail and bus service to the Project Area (where Auto Mall meets the Union Pacific tracks)
  • Widening of Fremont Boulevard from Cushing to Warren (already underway)
Notice how they use the words "Learning Center" as opposed to "school." There's no indicator what public/private body would build and run the Learning Center. The only definition is this:
The Agency will assist in the development of an advanced technology life-time learning center on an approximately 4-10 acre parcel in the Project Area that is accessible to businesses locating in and near the Project Area and to the broader Fremont community (the "Learning Center").
Now that sounds like an adult education center or technical college. It could be run either publicly or privately. Surrounding private property owners would not be required to provide anything towards the creation of the Learning Center. But since the implementation plan would change once the ballpark village was incorporated, it leaves room for a change to the Learning Center concept. It's quite possible that a public elementary school could be co-located with the Learning Center. It could be conceived in a way that maximizes land use and available space, while also consolidating costs. If it were a joint effort of City/Redevelopment, FUSD, and either Ohlone College or UC Extension, it could be a very fruitful effort. Cisco, via its foundation, could get a huge amount of positive PR by contributing technology and expertise. The A's would have to donate some of the land they're purchasing, but the city has 40 acres of its own nearby that it can swap because the A's covet the land for parking. The complicated part would be that redevelopment would have to authorize and issue bonds to cover this part of the project. But securing those bonds would be a slam dunk because $58 million is certainly enough to cover both the Learning Center and the transit hub. If not, tax increment projections beyond the year 2016 would total approximately $100 million through 2023 end date.

That said, the city doesn't have to do this at all. The municipal code only calls for new students from new developments to be fit into the existing school infrastructure. Adding nearly 700 students to schools that are divided from the village by a freeway and an aerial mile is not a good long-term solution. When Wolff talks about creative solutions for the city, I think this is one a possibility. I don't talk to him or his staff so I don't know if they've explored it, but it's a more than reasonable way to spend tax dollars.

Do you think this is a smart way to go? Does this sound like Wolff squeezing the city for a subsidy? As discussed previously, the two big pieces missing from the plan are a school and a transit hub. Redevelopment has mandated the transit hub be built, while there's an opening for a school if every party were to play ball (pun intended). To me it's downright fortuitous. As recently as a month ago I said that TIF potential was limited. After further review, it's much greater than I had initially thought
- at least if it's used for non-ballpark activities. The best part is that Fremont would only be doing what they already have planned, with a few changes to make accommodations for the ballpark village.

All of this possible through housing related tax increment. To paraphrase a former president, "It's the housing, stupid."

The ballpark's contribution to tax increment is uncertain, probably nil. Wolff said during his progress report that ownership of the stadium hasn't been determined. What the A's and MLB probably want is what ERA cites in its study:
The ballpark is assumed to have some form of underlying public ownership, and not be on the property tax rolls.
If the ballpark is publicly owned, the city would miss out on collecting property taxes as San Francisco does with AT&T Park, where the stadium is owned by the team on city-owned land. Depreciation rates are difficult to determine, but at 5% over 30 years, that translates to over $70 million in unrealized property taxes. Over the six-year build out period, that's nearly $24 million. In case you're wondering, property tax and insurance are two huge sources of overhead that actually make private ownership of a stadium unattractive. Sure, a team can partly write off those costs, but not all of them.

The next installment will cover city services, including fire and police. I'm putting off the economic benefits (multipliers) piece until next week.

10 May 2007

A's sign Fremont land deal

Chron's Patrick Hoge reports:

The owners of the Oakland A's announced today that they have signed a contract to buy 168 acres for a proposed ballpark development in Fremont.

Lew Wolff, the team's managing partner, said the deal will allow him quickly to submit an application to the city for a roughly 32,000-seat stadium, surrounded by housing and high-end commercial development.

Really? It sounds different from what the Argus's Chris De Benedetti reported earlier today:

There is no new information regarding the land transaction, a Cisco spokeswoman said. ProLogis spokesman Arthur Hodges declined to comment.

Meanwhile, Wolff has been meeting with Fremont staff members as often as twice a month since December to discuss the project. The A's are scheduled to meet again with city staff members May 17, Fremont officials said.

As to when the A's might submit a development application or a formal plan, that step is "probably a few months away," Wolff said.

Alrighty then. Here's the obligatory map if you want to familiarize yourself. The A's are buying the yellow section.

This is a pretty big move. Not "done deal" definitive, but rather "planting their stake in the ground" serious. That stake has to be worth around $200 million. Correction: According to the press release and Barry Witt's report, the A's have amassed 226 acres. Land value is around $500 million.

Reading between the lines, Part II - Ballpark begets Pottery Barn

It's amazing what happens when you're not trying to sell the moon. While some of the projections in the economic impact report fall into the half-full (vs. half-empty) classification, many of the assumptions are well grounded and make a good foundation for the case the report lays out.

Since neither the city or county are being asked to cough up a large tax-free bond, there's little need to make the outlandish claims normally foisted upon the public with other stadium initiatives. Here are a couple of examples:
  • Player salaries are largely exempt from claims about economic impact. It is assumed that each player on the A's 25-man roster will spend only $100,000 of their salaries in the area. The rest will go towards homes out of the area and other investments.
  • Projected attendance is only 2,150,000 per year through the turnstiles on an averaged annual basis. That's less than 27,000 per game. By not projecting constant sellouts through the first x years, there's little risk of not delivering on those projections. Of course, since those projections don't translate into revenue for the city/county, it doesn't really matter that much.
  • Additional non-A's game events such as concerts and facility rentals are not discussed at all. As a result there's no inflation of benefits.
There's a rule-of-thumb when writing reports like this: Throw out a bunch of numbers, the biggest ones will stick. This tends to obfuscate the true impact of such a project, which should really be measured in hard tax dollars. The problem is that with most stadium projects, we know where the money goes - to the team. It disappears down a rabbit hole and into millionaires' bank accounts. The task at hand, then, is to wade through the hype and get to those numbers.

Let's start with what the report calls "Gross Sales at the New Ballpark." This covers non-ticket stadium revenue (concessions, merchandise, parking). The projected figure is $32 million per season, or $14.32 per attendee. As mentioned previously, this revenue stays with the team, so neither the city nor county sees any direct benefit. They get the satisfaction of knowing that the money is being spent within city and county limits, but little else.

The Ballpark Village Retail projections are where it gets more interesting and compelling. The Fremont (Tri-Cities) area is ripe for high-end retail along the lines of Santana Row. Pacific Commons is 15 miles from Valley Fair/Santana Row and 16 miles from Stoneridge Mall, putting it in a unique position. The combined population of Fremont, Newark, Union City, and Milpitas approaches 400,000 and is steadily gaining affluence.

Final retail space after build out will be 550,000 square feet. The mix of retailers should produce $400 per square foot of annual sales (less than I had estimated earlier), resulting in $220 million in gross sales. Of that figure, 75% of sales, or $165 million, is expected to be new to Fremont due to many of the fact that many of those retailers don't have a location in or near Fremont. If 90% of those sales were taxable, sales tax revenue would equal at least $1.4 million per year.

Is that projection realistic? Moreover, does this area need yet another Pottery Barn? The answer to the latter is subjective, but for the former, probably yes. Consider this map:

Yes, that's a map of Pottery Barn locations in the Bay Area. The red star indicates the location of ZIP code 94538, home to Pacific Commons. Notice the gap between #1 and #3? The closest location is arguably a $4 toll away, in Palo Alto.

Now look at these tables. The first has big box (warehouse) stores such as Costco. Wal-Mart and Fry's are somewhat anomalous due to political or private concerns, but the other retailers have extremely good coverage all over the Bay Area.

We certainly don't need another Target. But when we switch to high-end retailers, everything changes.

Notice that the further you move to the right on the table, the further you get from Fremont. There's a huge gap in the area. It's one that won't get filled on its own due to market inertia. It would take a big ticket item like a ballpark and an influx of high-income residents (via the ballpark village) to make it attractive for those retailers to set up shop.

The argument should be made that without the ballpark as an anchor, these retailers wouldn't come to the area. In fact, the report argues that without the ballpark village, the land wouldn't be developed at all for at least a decade. Conversely, the area's not such a slam dunk that it sells itself based on location alone.

Hotel taxes would bring in up to $300,000 per year. Another $400,000 would come from property transfer tax for transactions within the project area. Still other miscellaneous local tax revenue sources make up the balance. Add to that the $1 million that the A's will pay towards city services and you get to approximately $3.6 million per year.

Assuming that the $1 million is a wash because it'll be used to pay for game-related city services, is the rest enough to make it worthwhile? Fremont is one of the safest cities in America, so how much additional police and fire protection will be required to keep up that standard with the ballpark village in place? In other words, does that remaining $2.6 million per year make the whole exercise worthwhile? That's for Fremont's leaders to decide.

...but wait, there's more! Later today or tomorrow I'll cover the ever mysterious TIF funds and those dreaded and confusing multipliers.

09 May 2007

Reading between the lines, Part I

It's bad form, but I'm going to start off with a few sidebar items because they're rather interesting. Advance ticket sales account for 80% of all tickets sold. The remaining 20% is walkup sales. Here's a geographical breakdown:
  • Oakland accounts for 8.8% of advance ticket sales
  • San Francisco accounts for 13% of advance ticket sales
  • Fremont's share is 2.3%, Santa Clara County is at 10.5%
  • Alameda County in total buys 27.3% of advance tickets
  • Contra Costa County buys 20.7%
  • 10.4% comes from outside the nine-county Bay Area
  • 8.2% comes from outside California

The San Francisco number has to take into account certain factors such as Giants fans' impact on attendance during the 3-game set played at the Coliseum every year (rough estimate: 1.5-2% of ticket sales). One has to wonder what negative impact will come with the lack of BART access, especially for SF residents who have no other public transit alternative.

That said, there's no better representation of how regional the team is than the table the above information comes from on page III-10.

Page III-6 has a graph showing historical attendance. Surprisingly, they use both paid attendance and turnstile attendance figures in the comparison. Since the start of the A's run of success in 2000, actual (turnstile) attendance has run only 80% of paid attendance. Since sellouts are sellouts, that can only mean that those Monday/Tuesday night April series openers draw even worse than you'd think (or they'd announce). The upshot is that concessions sales are behind the curve.

Now onto housing. Start saving your pennies, prospective buyers. A townhouse will run on average $675,000 at the Ballpark Village. Some units will obviously be cheaper and others much more expensive, but they put the number out there. Construction on each new residential unit is estimated at $380,000. Other important figures:

  • The 600 first units would be available in 2011, in line with the opening of the ballpark.
  • 600 units would be sold each year through 2014; 500 would be sold in 2015 to finish the rollout
  • The residential portion would bring in 8,787 new residents to Fremont

This is the point where the questions come up. The first is about tax increment financing. From Page VI-4:

The projections in Table VI-3 assume that the County and other affected agencies will agree to raise the cap for this project area. If the cap is not raised, less future money will flow into the Redevelopment Agency, and somewhat more will flow into the City’s General Fund...

The assumption here is that the Redevelopment Zone would remain for some time. I have to correct myself on this. In the past I noted that the zone's existing debt would be retired in 2014. However, the zone itself would expire on November 22, 2023, long after the ballpark village has been built. The city's redevelopment arm would accrue over $58 million in property tax increment just through 2016, possibly $150 million through the end of the zone's life. What would happen to that money?

The area redevelopment plan shows a transit hub as a requirement. That's pretty much a given with this project. How expansive would the transit hub be? It's one thing to have a rail platform, some bus stalls and a parking lot. Would they also consider additional road or rail infrastructure?

Speaking of infrastructure, something needs to be done to make sure new kids in the area have access to schools. The report touts the infusion of $10 million into FUSD's coffers. But it also says this:
New enrollment will be directed to existing school facilities as efficiently as possible to balance the student population with capacity.

The area is projected to have 684 new K-12 students. The statement above implies that all of these new students would have to be bussed or driven to existing schools on the other side of 880. Two schools in that area have around 500 students, so the impact could be enormous. We're talking about adding a new neighborhood's worth of students without a new school. That makes very little sense.

Schools are not cheap. Don Callejon School, which was built as part of the Rivermark development in Santa Clara, cost $26 million to construct. Even then, I don't think price is so much the issue as available land is. If the ballpark village core takes up 25 acres and housing takes up 120, that leaves precious little land for parking, required park facilities, or a school. Will someone pony up for a school in the project area?

Next, do a search for the term "affordable housing" in the report and you'll get no results. There's no reference to Fremont's requirement that all new residential construction have 15% of the project be available at affordable housing cost. There's also no reference to various incentives that the city gives to developers to encourage them to build affordable housing.

This is the one issue I can see becoming a real sticking point. How would the A's and their partner developers tackle this? It's great that Fremont offers a density bonus, but the lack of information about how the requirement would be fulfilled is troubling. It's something that frequently holds up other housing developments, since it affects developer profits.

In the tabulation of tax increment revenue, it is mentioned that there's a mandatory set aside of around 20% of the revenue for low and moderate income housing. Is that money under consideration to fulfill the requirement? If so that's quite an endaround.

The next post will cover direct and indirect economic impact.

08 May 2007

Economic Impact Report now available

The big takeaway from Wolff's progress report tonight was that the Economic Impact Report for the project is now available. I've only barely scanned through it so far and here are some key points:
  • Ballpark is still 30-34,000 seats, cost = $450 million
  • The 2,900 housing units will be spread over 120 acres, for a density of 24 units per acre. There would be a mix of brownstone-type units and higher density development adjacent to the ballpark, cost = $1.1 billion
  • 550,000 square feet of "high quality mixed-use/retail," the majority of which would be in a "lifestyle center" (a.k.a. outdoor mall); the remainder would be "entertainment retail in a 'Main Street' environment activated by the residential neighborhood and the ballpark. Cost = $198 million
  • High-end boutique hotel with only 100 rooms, cost = $30 million
  • Total project cost would be $1.8 billion
  • Total economic impact (using multipliers) would be $3.2 billion
Next I'll quote verbatim from the report from its summary of economic impacts:
  • The direct economic impact on Alameda County will be approximately $109 million per year from the operations of the Athletics franchise, the operations of concessions within the ballpark, the net new retail spending captured by the Baseball Village retail, and the net new spending captured in the county from the new households in the Ballpark Village.
  • Including the indirect and induced “multiplier” effects, the Ballpark Village will generate over $191 million per year in total economic output for Alameda County, and create approximately $50 million each year in personal earnings, which in turn supports approximately 1,762 incremental jobs within Alameda County.
  • The net present value over the next 30 years of the total expansion in economic output of Alameda County will be between $700 million and $2 billion, depending upon the discount rate used, as a result of implementing the Ballpark Village proposal.
  • Construction of the Ballpark Village is estimated to cost approximately $1.8 billion in today’s dollars. Over the several years it will take to build and absorb the project, over 13,000 full-time equivalent annual jobs will be created, along with almost $600 million in earnings for those workers. Alameda County will experience a one-time economic expansion during the construction period of almost $3.2 billion.
  • For the Fremont Unified School District, over $10 million in development fees will be collected from the project.
  • For the City of Fremont, over $3.6 million per year will be generated after build out in General Fund revenues. While the costs of providing General Fund municipal services cannot be estimated until a formal development application is submitted, these General Fund revenues will be unrestricted in their use for offsetting costs. Additional revenues will be generated for the City in the form of fees and charges to offset non-general fund services provided, and by the Special Services tax levied within the Pacific Commons development area.
  • The Fremont Redevelopment Agency, upon project build out, will be collecting over $15 million per year in today’s dollars in the form of property tax increments and set-aside funds for low- and moderate-income housing.
I need to read more before I post any significant analysis. A couple of notes however:
  • Tax increment is mentioned, though not as a method to pay for the project; rather it's used as positive economic impact for the city and county (the usual skepticism applies).
  • Additional tax revenue sources are identified, though not the gross receipts tax I found earlier.
The report is 60 pages long and is chock full of tables. Enjoy.

Now for a few observations about the progress report:
  • The $500K paid last month was reimbursement for process work
  • The best method for owning the stadium has not yet been determined, whether public, private, or a mix
  • Traffic and environmental impact reports are meant to show that the project would have the same or fewer impacts than the currently planned use (office park)
  • Jane Gothrop was the last of two speakers and expressed her concern about environmental impacts, urging the council to make sure the project had a full, complete, transparent, open review. To that end, Mayor Wasserman replied that the project would indeed have such a review.
  • Council were mostly positive, mostly champing at the bit - especially Anu Natarajan and Bill Harrison, who by trade is a CPA.
I've got some reading to do. BTW, Wolff reads this site. And the comments.

04 May 2007

Ballpark Village Progress Report - Tuesday, 5/8

From the Fremont City Clerk's office (I used bold for emphasis):
Subject: Ballpark Village Project Progress Report




This is to advise you that an agenda item has been scheduled for the regular City Council meeting of Tuesday, May 8, 2007, to hear a progress report from Oakland A's owner Lew Wolff on the Ballpark Village Project. The City Council meeting begins at 7:00 p.m.

The meeting will be held in the City Council Chambers located at 3300 Capitol Avenue, Building A, Fremont, California.

If you have any questions regarding this agenda item, please contact Economic Development Director Daren Fields at (510) 284-4020 or at


Dawn G. Abrahamson
City Clerk

Office of the City Clerk
See y'all there. For those of you who won't be there, check out the webcast.

02 May 2007

Ballpark Village comparison

Ask and ye shall receive. Bleacher Dave suggested that I compare different ballpark village developments around the country. Luckily I waited until NYC mayor Michael Bloomberg announced his aggressive development plan for the Willets Point neighborhood east of Shea Stadium/CitiField, adding one more point of reference in the process.

For this comparison, I've strictly observed developments around major league ballparks. While there are several examples of village-type projects near minor league facilities, they're typically much smaller in scope and potential economic impact so for now, I've left those out. New Yankee Stadium is also not included because the ancillary development mostly consists of garages and parkland placed near or atop those garages.

The four markets being covered are:

  • San Diego's Ballpark District, at the edge of the trendy, gentrified Gaslamp Quarter
  • St. Louis's Ballpark Village, on the site of the previous incarnation of Busch Stadium
  • Willets Point in Queens, home to mostly junkyards and auto repair shops that are visible from the Shea Stadium parking lot
  • Fremont, the only undeveloped site of the four and the only one not in an urban environment

Not to be forgotten is that the first three projects have access to good public transit infrastructure. Fremont may have at best indirect access to BART or commuter trains.

San Diego's Ballpark District actually covers some 26 blocks north and east of PETCO, but it has been scaled back significantly since its inception. $300 million in public financing for the ballpark was exchanged for a promise by Padres owner John Moores to develop much of the surrounding area. The delayed opening of the ballpark occurred before the start of the real estate downturn in the San Diego market. The area's housing prices have flattened or dropped over the last year or so as new construction and conversions have come online, creating a glut of sorts. This phenomenon doesn't affect the ballpark's financing, but San Diego has had plenty of other fiscal problems, namely its debt load and accounting scandals. The city's damaged credit rating (from its $1.4 billion pension crisis) held until March, when the ballpark bonds were refinanced to reflect an interest rate drop from 7.66% (!) to 5.23%.

The Ballpark Village next to new Busch Stadium may look large at $650 million, but it's far smaller than the other projects. Development is being driven by the Cardinals and partner firm The Cordish Company, but last year Cordish requested a subsidy to keep the project moving forward. In February, the city approved a $115 million cash infusion into Ballpark Village. Cordish is a name to watch for as it specializes in large urban redevelopment efforts and pulls in major subsidies in the process. The original agreement between the development partners and the city called for the first block of development to open in 2007. That date has slipped to 2009. In the meantime, the price tag has grown from $300 million to $650 million.

The Willets Point (a.k.a. "Iron Triangle") section of Queens is known for its run down auto shops and junkyards. Previous city leaders have targeted it for massive projects, most notably the 2012 Summer Olympics bid. After MSG/Cablevision effectively killed all hope for Jets/Olympic Stadium on Manhattan's West Side, attention turned to Willets Point for a stadium and press center. The new site of CitiField is sandwiched between the existing Shea Stadium and the Iron Triangle, further propelling Bloomberg to redevelop the area. Existing business owners have pledged to fight eminent domain proceedings to the very end, but we know how that often turns out...

That leaves us with the Cisco Field project. Aesthetically and politically, it has little in common with the other three plans except for that it's a ballpark with ancillary development. In adherence with the path of least resistance concept, it would appear that it has relatively few obstacles for its completion.
  • No upfront public money (bonds) is being requested for either the ballpark or ancillary development (as far as we know).
  • There are no eminent domain or other major land acquisition problems that could delay development (factoring in the Scott Gas situation).
  • Repayment of any privately raised bonds is likely dependent on ancillary development beginning quickly, forcing the developer to mitigate or eliminate any delays associated with the project.
Knowing that these elements should help put the project on the relative fast track, one would hope that Wolff and his people would focus even more attention on transportation solutions, as that's the obvious weak point in the proposal. Even then, there's only so much that can be done.