The state-operated Oakland Unified School District announced this week that a black-owned, New York-based real estate company has been chosen to negotiate with for the potential sale of the OUSD Administration Building and some 8.25 acres of prime Lake Merritt area property.
But the real power behind the deal may be an old school New York real estate and investment firm with a $4 billion portfolio and ownership of exclusive Park Avenue office buildings.
In a Wednesday press announcement, OUSD Public Information Officer Alex Katz said that a Letter of Intent has been signed with TerraMark/Urban America Team, giving that company the first rights to negotiate for the purchase or lease of the OUSD properties, which include the administration building and several schools.
The text of the Letter of Intent and TerraMark/Urban America Team’s proposal for the OUSD Lake Merritt properties has not yet been released by the district.
UrbanAmerica was founded in 1998 by Richmond McCoy, the son of a Harlem landlord. According to a recent Time Magazine profile, McCoy initially founded the McCoy Realty Group, which Time said “had become the largest real estate management firm controlled by an African American, [with a] Park Avenue headquarters in Manhattan [that] catered to Wall Street bigs.” Time said that involvement with helping churches develop property in poor neighborhoods led McCoy to the development of UrbanAmerica, which the magazine called “the first real estate investment company to focus on distressed urban areas.”
In 2000, UrbanAmerica spent $19.5 million purchasing the Eastover Shopping Center in the Washington D.C. suburbs, its largest acquisition.
But last year, McCoy launched a second venture, UrbanAmerica II, with what the Forbes/Slatin Real Estate Report last year called “a powerful partner in hand: Fisher Brothers, a multi-billion-dollar New York-based family development and ownership organization” founded in 1915.
Forbes/Slatin article said that “McCoy isn’t shy about leveraging his new partner [Fisher Brothers]’ name and reputation to the max … He takes pains to stress that Fisher is involved as a ‘significant owner of the general partnership. This is not a strategic partnership or joint venture,’ he declares, adding that Fisher has pledged to invest up to 10 percent with the limited partners in any development undertaken by the fund.”
The UrbanAmerica II partnership is targeting development projects in Daytona Beach, Florida and Kansas City, Missouri, where McCoy’s original UrbanAmerica already has investments, as well as northern and southern California, Phoenix, and parts of Texas.
Meanwhile, after keeping the public in the dark for more than a year while negotiations went on with developers over the original RFP, state and local officials have now pledged to open the process to the public.
State Senator Don Perata (D-Oakland), whose SB39 bill in 2003 is the foundation for the state takeover of the Oakland Unified School District that has led—directly or indirectly—to the proposed sale of the Lake Merritt area properties,this week released the text of a letter to State Superintendent of Public Instruction Jack O’Connell, in which Perata asked O’Connell to hold public hearings on the proposed sale.
“[I]t is important that appropriate public review and comment precede final decision on the sale. It is imperative that local residents—particularly parents —are shown how the sale might affect the primary mission of the district,” Perata wrote. “For example, one board member has questioned in the media the wisdom of selling this administration complex, intimating that it would force the district to convert existing school sites as replacement facilities. Concerns like these can be allayed by a public presentation by the state administrator at a public hearing held before any formal sale negotiations commence.”
In the release announcing the selection of TerraMark/Urban America Team, Katz said that “plans for three public hearings [on the proposed sale]—in July, August and September—are well underway.”
In his letter to O’Connell, Perata said that an amendment was placed in SB39 allowing the use of the sale or lease of the property to pay back the state loan to the Oakland Unified School District “at the district’s request.” Perata, however, did not identify which OUSD officials made the request to put the provision in state law allowing the sale proceeds to go toward the loan repayment or when that request was made.
The Oakland Unified School District has been run by the state of California since 2003, since it was forced to accept a $100 million line of credit from the state to stave off bankruptcy. Of that line of credit, $65 million has actually been loaned to the district, with another $7 million in loans pending. There is speculation that money from the proposed sale of the Lake Merritt area properties could be used to help pay off the state loan, but it is unclear whether a significant paydown of the loan would lead directly to a return to local control of the schools.