Historically, there have been two Oaklands: the city that gets things done, and the city that can’t. Which Oakland you prefer depends on whether you like what gets done. That’s what June’s mayoral election boils down to.
Thirty-five years ago, the Knowland machine dispensed with city business over porterhouse steaks and then pretended to convene city council meetings a few hours later. Those who weren’t in the club — like the tens of thousands of African-American residents who struggled for jobs and justice — got nothing. Starting in 1977, Mayor Lionel Wilson built a slim black majority on the council, bringing a modicum of democracy to Oakland. But aside from letting their friends snatch a few city hall sinecures, the council majority did little with their power, while Oakland sank into a swamp of crime, crack, and urban blight. Mayor Elihu Harris started to turn things around in the 1990s, but then the triumvirate of Jerry Brown, Don Perata, and Ignacio De La Fuente took control of the city, and the big boys were back in business cutting land deals.
The biggest deal of all is the 62-acre billion-dollar waterfront development scheduled to come before the city council in the next few weeks. If you like the Oak to Ninth project and how it was negotiated, the mayor’s race is simple; vote for Ignacio De La Fuente, a man who makes things happen. If you don’t, vote for one of his two opponents.
The Oak to Ninth deal is a fascinating tale of power politics. When Jerry Brown first came into office, he ran up against the Oakland port commission, which had absolute control over waterfront development as well as port operations. This arrangement, which dates back to 1927, was designed to insulate port business from a city council historically prone to corruption. In addition, the commission was stacked with Elihu Harris appointees.
Port commissioners immediately found themselves under assault on a number of fronts. City council members demanded that the commission let them have a say in waterfront development deals. Brown called for the resignation of two Harris appointees, John Loh and Becky Taylor. And state Senator Don Perata introduced legislation that would put the mayor on the commission, as well as empowering the governor to appoint two additional commissioners, upending the 72-year agreement. In 2000, the commission essentially agreed to give the city council veto power over waterfront deals; the only dissenters were Loh and Taylor, who were forced out a few weeks later and replaced with Brown’s close friends, developers Phil Tagami and John Protopappas.
In 2001, the new port commission reviewed two plans to develop retail and housing at the Oak to Ninth parcel, a massive tract of toxic land just southeast of Lake Merritt. The deal promised to make a fortune for whichever company landed it, and both candidates, the Shorenstein Group and Signature Properties/Reynolds & Brown, had sweetened the pot by contributing tens of thousands of dollars to the 3Rs PAC, a vast campaign war chest amassed by Brown and Perata a year earlier. The Signature/Reynolds & Brown consortium won the contract to build two thousand low-rise condominiums and an open-air marketplace. Reynolds general counsel Dana Perry told the Oakland Tribune that she envisioned “a leafy, bohemian community with narrow streets.”
By 2003, the deal looked decidedly different. The port’s appraiser reduced the price of the land from $63.6 million to $30 million, citing improvement costs the developer would incur in the course of building the project. In addition, the port commission essentially agreed to pay the cost of cleaning up the soil by knocking another $16 million off the sales price. Perhaps not coincidentally, Signature had hired lobbyist Lily Hu, a former aide and longtime friend of Perata’s.
For the past eighteen months, the Federal Bureau of Investigation has been investigating charges that Hu laundered kickbacks from developers on behalf of Perata. Signature president Michael Ghielmetti acts a little squeamish about his company’s relationship with Hu. “I’m very sorry this whole situation happened,” he says. “We never used a lobbyist before, but this is a complicated project, and there are so many groups out there, it’s been a challenge. I can’t meet with everyone out there, so the point was to have someone to help us.”
Today, the deal looks even more different. Signature scrapped the open marketplace and announced plans to build 3,100 condos, including a scattering of towers that could rise as high as 24 stories on the water. Just up the road from the project, Signature is currently selling townhouse condos on the estuary for $600,000 a pop. If the Oak to Ninth condos were to go at the same rate, Signature’s revenues would exceed $1.8 billion at the current market rate, to say nothing of what the properties will be worth years from now, when the condos are actually completed. And that doesn’t even include the rent from 200,000 square feet of retail space in the plan. Still, Ghielmetti said the project will barely make a profit. “All our costs are going up,” he says. “You’ve read the papers. China and India are sucking up all the steel. All the Sheetrock’s going to New Orleans.”
Yet the fact is, the city and the port are in the process of selling a piece of prime, publicly owned waterfront property, on which a Perata-connected developer will see at least $1.8 billion in revenue, for the paltry sum of $18 million.
That’s the dim view of the deal. Here’s the upside: The project will utterly transform a dismal stretch of waterfront. Oakland desperately needs more apartments — rising rents have long been gentrifying the city, and aside from the city’s barely functioning rent-control program, the only way to stabilize prices is to increase housing stock. An entire neighborhood of parks — possibly as many as thirty acres of them — shops, bistros, townhouses, and marinas will rise out of toxic industrial land that has lain fallow for years. The number 11 AC Transit line will bring in working-class residents to walk along the water and enjoy the sun. Thousands of new residents will shop along Grand and Lakeshore avenues, boosting sales tax revenue and flooding money into commercial corridors. The property transfer tax will put millions into the city’s coffers.
In-fill, mixed-use projects, the grand idée of smart-growth policy wonks, are notoriously difficult to build. Developers must typically contend with NIMBYs worried about parking and traffic. But because I-880 separates Oak to Ninth from other neighborhoods, the Signature consortium has a unique opportunity to create a community from scratch, a grand civic experiment the likes of which Oakland has rarely seen.
If big-city machine politics mean that a well-connected developer can spread campaign contributions around and get a big piece of public land on the cheap, it also means grassroots interest groups can band together and try to force the developer and the city to accommodate their demands. For the last two years, organizations such as Urban Strategies and the Asian Pacific Environmental Network have been pressuring the consortium to set aside 20 percent of the housing for families making less than fifty grand a year, donate $1.65 million to job training programs, use union labor, and reserve three hundred jobs for Oakland residents trying to get a start in construction. Ghielmetti has agreed to almost all of these conditions. On the affordable housing, he’s meeting his critics most of the way, although he’s found a way to make some serious money by selling six acres back to Oakland. According to De La Fuente, the final deal should be finished in the next two months, and both sides will have to compromise more.
Still, Oakland is about to get some working-class housing as part of a vast new city filled with parks, stores, and restaurants, built by union labor. It’s the biggest development deal in decades, one that will bring in an army of middle-class residents and a fortune in tax revenue. And yet the process by which it was hammered out stinks of power politics, money, and cronyism.
Strong mayors are good for two things: they fire bureaucrats who don’t do their job, and they land big business deals. Everything else is window dressing. Ignacio De La Fuente makes no apologies for doing whatever he can to bring developers like Ghielmetti to Oakland. “I believe that private investment is gonna help us transform and clean up this city,” he says. “My job as mayor — and I will be better than Dellums or Nadel — is to leverage our resources with private resources, so we can bring those areas back to life.”
He’s speaking, of course, about former Congressman Ron Dellums and City Councilwoman Nancy Nadel, his opponents in the mayor’s race. Nadel thinks the port made a mistake by letting the developer change the size of the project. She also fought the good fight when the city council was making noises about seizing land adjacent to the Oak to Ninth project and wiping out the funky artist community that lives there in order to accommodate Signature Properties. It’s a safe bet she will never be one of the boys cutting deals at Jack’s Bistro. As mayor, she plans to pass a law setting aside a percentage of new housing for affordable units, and require developers to hire local residents and contractors. “All of those will be a part of my negotiating style, which I think will be very different from Mr. De La Fuente’s,” she says. “He’s not interested in any of those things.”
As for Dellums, he already spooked homebuilders around the Bay Area when he declared in January that “market-driven development doesn’t embrace diversity.” According to his spokesman Mike Healy, Dellums is all for new development. “His only concern was that we don’t see an overgentrification of the area, which would mean forcing people out.”
It’s a canard that no one wants to know how legislation and sausage are made. But Oakland voters don’t have a choice, not if they want to make an informed decision this June. Development deals are in the works all over the city, and more are being drawn up every day. If De La Fuente leads Oakland through the next few years, such projects will look like Oak to Ninth. If Nadel or Dellums come to power, they’ll look very different — if they happen at all.
