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OUSD Could Make Less Than Planned in Land Sale

By J. Douglas Allen-Taylor
Friday July 14, 2006

The Oakland Unified School District held the first of three public hearings Wednesday night on the proposed sale of 8.25 acres of OUSD Lake Merritt-area properties, but a key component of the proposal was only available to those who later followed a trustee’s suggestion to look up the actual development proposal on the district website. 

As a component of the OUSD development, New York-based TerraMark’s original proposal indicates that a least as soon as a year ago, it was receiving “positive feedback from City of Oakland officials” about a proposal for a long-term lease of the Kaiser Convention Center, located close to the OUSD properties. 

That information was not revealed at the public hearing, and the proposal was only revealed after Trustee Gary Yee directed audience members to OUSD’s website so that they could see the full proposal for themselves. 

TerraMark officials were not available following the meeting, and it is not clear if negotiations with the city for the Convention Center are still going on. 

Meanwhile, an OUSD facilities staff analysis showed that if the entire parcel is sold to TerraMark developers of New York, the district could net as little as $25 million on the deal, even if the full $60 million pricetag is reached. The TerraMark deal is based on several contingencies that could significantly lower the price it would eventually pay to the district. 

On Wednesday night, TerraMark officials told OUSD State Administrator Randolph Ward, OUSD Trustee Advisory Board members, and a packed auditorium of skeptical citizens that it is proposing five high-rise luxury towers for the OUSD properties in a mixed residential-commercial development. 

This was the first of three proposed public hearings to be held by mid September when State Superintendent Jack O’Connell—who operates the Oakland schools under a 2003 state takeover—must decide whether to accept the TerraMark proposal. 

Wednesday’s hearing was also the only hearing which will be attended by current state-appointed OUSD administrator Randolph Ward. Ward is scheduled to take his new job in mid-August as superintendent of the San Diego County Office of Education, and said that either an interim or a full-time successor appointed by O’Connell will advise the State Superintendent on the proposed sale. 

On Wednesday, TerraMark Chief Executive Officer Paul Bucha told OUSD officials, “We wanted to develop something in Oakland that would make people walk by and say ‘Oh, wow.’” 

But as Bucha showed a PowerPoint presentation that swirled around enormous 27 to 37 floor high-rise towers that would dominate the Lake Merritt and Oakland Estuary skylines, several people sitting in the OUSD audience could be heard saying “Oh, Christ!” 

Bucha got a similar reaction when he told of TerraMark’s plans to put an “80 foot by 50 foot waterfall cascading over the parking garage” planned for the five-tower facility. 

“We believe people will come from all over to walk by this waterfall, just to see it,” Bucha said. 

Several public speakers referred disparagingly to the proposed waterfall portion of the project, with one student—a recent graduate of the MetWest High School which may be displaced by the TerraMark development—breaking down in tears as she asked how the district could consider replacing her school with a waterfall. 

As part of the deal to purchase the OUSD Administration Building and five adjacent school sites, the website-posted full proposal reveals that New York-based TerraMark developers once negotiated with the City of Oakland for the long-term lease of the Kaiser Convention Center. Proposed for the Convention Center are a hotel “that could inaugurate a West Coast branch of the Heisman Trophy Museum and newly branded Heisman Steak House.”  

In its 2005 proposal, TerraMark said it had “received positive feedback from City of Oakland officials” concerning the Convention Center lease. The proposal said that “a copy of that written reply” from Oakland City officials would be included in the proposal index, but no such letter was included with the proposal posted on the OUSD website. 

TerraMark calls the proposed joint Kaiser Convention Center and OUSD properties development “the Trophy.” 

Inspired by the OUSD property’s proximity to the Laney College Athletic Field where the Oakland Raiders first played in 1960, TerraMark says it wants to “dedicate the residential project to those Oakland Raiders who had won Heisman awards.”  

At Wednesday night’s OUSD hearing, reaction to the TerraMark proposal was similar to what Oaklanders now think of the original Raiders deal. 

OUSD Trustee Board President David Kakishiba charged that while trustees originally agreed in early 2005 to put out an RFP for the possible sale or lease of the Lake Merritt-area properties, “the conditions of the RFP were changed [by State Superintendent Jack O’Connell’s office] in Sacramento” without the knowledge or consent of OUSD Trustees. Kakishiba said that the “intent of the [original] RFP was to look at rebuilding” La Escuelita Elementary “and to reduce the debt.” 

Kakishiba did not give details on how he believed the original RFP was changed by O’Connell’s office. 

The trustee president added that he was “stunned” by the information provided by OUSD staff at the hearing that relocating the five schools from the property site could cost the district as much as $35 million out of the deal’s proceeds. “That would take away 50 percent of those revenues,” Kakishiba said. “That’s stunning. We would lose the largest acreage in this area to build a school. At this point, it doesn’t look like a good business deal.” 

Trustee Noel Gallo said that the proposal “hasn’t been properly explained to us. What are we doing, and why do we have to do it?” Gallo said that the TerraMark proposal “doesn’t make good business sense and it doesn’t follow good education practice.” 

And trustee Greg Hodge added that “if Jack O’Connell wants to sell this building, he should come through the people of Oakland to do it. He should be invited to attend the next hearing.” 

And repeating her earlier-stated position that even if the deal is approved by O’Connell “it still has to go through the city approval process,” Oakland City Councilmember Pat Kerningham, who represents the district where the OUSD property is located, said in public comment session that “I’m not in favor of selling all the” OUSD property, “particularly the part of the property on which the schools sit.” 

Assistant Superintendent for Facilities Tim White told trustees that a requested independent appraisal of the proposed sale properties, as well as an enrollment projection report to tell how many classrooms will be needed in the East Lake/Chinatown area in the coming years, will not be available until the last public hearing in September, shortly before the Board and the new state administrator will make their recommendations to O’Connell about the sale of the properties.