Oakland Mayor Sheng Thao signed an agreement Tuesday morning to sell the city's share of the Oakland Coliseum to a local development company.
The $105 million sale provides much-needed cash to Oakland, which would have faced more than $60 million in cuts to municipal services if the agreement hadn't been signed in the next month.
"We're investing not just in today," Thao said after signing the agreement Tuesday at City Hall. "But we are investing in an Oakland for tomorrow."
Facing a significant budget shortfall, Thao proposed a controversial budget that used money from the then-incomplete sale of the Coliseum to fund city services. If the sale didn't go through by September, the city would face steep cuts, including some to its police and fire departments.
The City Council narrowly passed the budget earlier this month, setting up what Thao described as "high-stakes negotiations" with development firm African American Sports and Entertainment Group to sell the share of the Coliseum.
For selling its half share of the Coliseum, Oakland is set to receive $5 million from AASEG after signing the agreement. Then, it will receive another $10 million on Sept. 1 and $15 million in November. AASEG will pay the city $33 million in January and $42 million before June 2026. This payment schedule staves off the service cuts for this year, Thao said.
Ray Bobbitt, the developer's founder and an Oakland native, said that the city's financial challenges and potential cuts to its services gave him a personal reason to accelerate the negotiations.
"This is where we are born and raised," Bobbitt said. "So, whatever we have to do in order to ensure the safety of my grandparents is something that I'm obviously going to be ready to move forward with."
While the sale lets Oakland avoid services cuts this fiscal year, a nine-figure budget shortfall looms next year. Some critics of Thao, who faces a recall election in November, have criticized her budget for using the cash infusion from the Coliseum sale to close the short-term gap without addressing longer-term financial issues.
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"The [Oakland Police Officers Association] is doubtful the sale of the Oakland Coliseum will solve the mayor's and City Council's epic mismanagement," said Sgt. Tim Dolan, the OPOA vice president. "We are deeply concerned for the safety of residents, businesses, and our police officers."
But Thao said at Tuesday's signing that she sees the Coliseum sale not just as a one-time influx of cash, but as her way of opening new revenue streams for the city. Both Thao and Bobbitt touted the development firm's plan for a "multi-billion dollar" investment to build housing on the Coliseum site. When the City Council advanced the sale in June, it approved up to 4,000 units, with 25% of them affordable.
"It is momentous, because we have seen leaders and investors come and go in the city of Oakland," Thao said. "But the investments in East Oakland, in deep East Oakland never came to fruition."
AASEG's investment isn't yet fully materialized, either. Thao confirmed at Tuesday's signing that AASEG has received enough financing from Chicago-based investment bank Loop Capital Markets to cover the Coliseum sale. But Leigh Hanson, Thao's chief of staff, said that AASEG isn't likely to secure the multi-billion financing until its construction plans are drafted and approved a few years down the line.
However, Hanson said that the city was confident that Loop Capital had the resources to back the larger development once it reaches that stage.
The Oakland A's are in the process of acquiring the other half of the stadium currently owned by Alameda County. That sale isn't slated to be completed until 2026, according to the 2019 agreement.
But the A's are leaving Oakland for Sacramento next year, and Bobbitt said negotiations with the A's regarding the other share were "positive."
However, AASEG's deal with Oakland allows it to obtain land use rights for the site, Bobbitt said, which he described as "critical." This makes development easier for the company, Bobbitt said, but he couldn't yet commit to a timeline for the process.
"This is just a blessing for us," he said. "We see it as an incredible opportunity. But more, we see it as a profound responsibility."
