The Oxford/Brower Project is not only about affordable housing and a green center for environmental activists. It is also about municipal fiscal responsibility, sound downtown economic development, crucial downtown parking, respect for the taxpayer, and honest accounting on the part of public officials.
I have been following this project for several years and, yes, I did speak out about my increasing concerns, as did many other persons, including Former Mayor Dean, Councilmember Olds, even other councilmembers (who however, subsequently fell into line with the bosses). These concerns fell mostly on deaf ears, as the political powers-that-be and their temporary progressive allies were determined to shepherd this trophy project to completion—no matter the cost or complexity or risk. Arguably a plausible project at its inception, the Oxford/Brower Project has grown into the biggest boondoggle and public giveaway in city history, and has become a real estate transaction so malleable and so stupefyingly complex that I dare our mayor or any councilmember or any ardent proponent to accurately describe its legal and financial structure.
The Bait and Switch
Following are just some of the changes between the project’s inception (2003-2004) and the project’s fruition (2005-2007).
THEN, the project was to cost $43.7M, with a $6M city subsidy. NOW, the cost is $70M and rising, and the city subsidy is more than $25M (details below). THEN, there were to be 150 replacement public parking spaces, NOW there are 97. THEN, any risks associated with the project were to be borne mostly by the developer and a “guarantor”, while NOW most of the risk is borne by the city, and the multimillionaire Mill Valley guarantor is resisting any substantial commitment to shortfalls. THEN, there were purported lease commitments from several environmental nonprofits, eco-retailer Patagonia, and for an Alice Waters-assisted eco-restaurant. NOW, there are no known lessees (and hence no known cash flow), and a strong likelihood that our prime downtown space will be occupied by UC. THEN, Housing Director Barton said “the project is feasible and realistic”. NOW, he is hedging and hawing and protecting himself, and talking about the huge risks to the city. As late as December 2006, Mr. Barton said “the staff does not yet have clarity on all potential costs and risks”. As with the ill-fated Brower Spaceship Earth sculpture, Mayor Bates (along with his new progressive allies) is determined to make this flashy project happen. Luckily, Spaceship Earth exploded elsewhere, but, unluckily, the Oxford/Brower Project will explode right here!
Let’s get to the nitty-gritty—the true cost of the project. Note that a full tally of these costs has never been presented to our City Council or to the public by Mr. Barton or by our city manager or by the project proponents. All numbers are approximate, based on reasonable interpretation of conflicting, confusing and changing data, and reasonable speculation as to future potential costs.
Total one-time city costs range from $19.8M to $29M (if CDBG collateral and cost overrun coverage required) and more if other worst-case scenarios materialize. Ongoing city opportunity costs are also in the multi-millions of dollars.
One-time Costs to City
Housing Trust Fund $4.7M
Berkeley Redevelopment Agency $1.5M
(monies primarily intended for West Berkeley)
General Fund $1.5M
City Staff and Consultants $2.0M
Lost Parking Revenue (2.5 years) $1.36M
(based on 11/16/04 Council Report on
Oxford Lot Receipts of $545K annually)
Lost Sales Tax Revenue (2.5 years) $500K
(due to disruption of local business dependent
on Oxford Lot parking
Public Land Donation $8M
(appraised for $7M in 2005)
Annual interest on $11.6M above $690K
Additional One-time City Money
Unlikely to Be Recovered
Community Development Block Grant $4M
(pledged as collateral)
Liability for Cost Overruns $5M
Liability for Underground Garage $Unknown
Construction Maintenance/Leakage Problems
Opportunity Costs of Not Selling Property to For-Profit Developer
Transfer Tax on Land (1.5% of $8M) $120K
City Share of Annual Property Taxes $500K
on $100M project
Annual Business License and $500K
Sales Tax Revenue from New Uses
Nonmonetary Opportunity Costs
Creation of more appropriate use for prime downtown real estate.
Availability of millions more dollars for affordable housing at less expensive site(s).
Locating Oxford/Brower type project in area more in need of this type of revitalization.
Several concerned residents, including me, are circulating a referendum petition that might cause this project to be reconsidered. I hope that we are successful and that our City officials respect the referendum process. Even if the petition fails to get the required signatures, the numbers should give serious pause to our officials, who may want to reconsider the huge financial commitment and lost opportunities. It is not at all a sure thing that our highly-taxed populace will approve the any new taxes to make up for the Oxford/Brower expenditure, the $10-15M in free services to UC, and any compensation increases for City employees. And if new taxes should be approved, Berkeley’s dwindling middle-class homeowning population will further dwindle away.
Barbara Gilbert is active in several Berkeley citizen organizations and follows local government more closely than is good for her mental health.