Secret deals at the Point?!

10-15-2013 agenda.pdf

When those two items appeared on City Council’s closed session agenda for October 15, you could hear the alarm bells going off all over town:

  • What was Mr. Russo up to?
  • What kind of deal was he negotiating?
  • Charles Company and DeBartolo – just who were these guys?

Golf-war veterans could sympathize with the concern.  They remember all too well how the politicians schemed to negotiate the “price and terms” of the swap with Ron Cowan for the Mif Albright golf course in closed session and then spring the result on the public as a fait accompli.  What’s worse, when the chair of the Golf Commission confronted then-Mayor Beverly Johnson in open session with the story making its rounds at the golf complex that a secret deal with Cowan was in the works, the Mayor dismissed it as a mere rumor.

Were we going to see déjà vu all over again?

Fortunately, not.  Those of us outside the Inner Ring never know what happens in closed session meetings, so the Merry-Go-Round can’t report what happened on October 15 (or in a follow-up closed-session meeting with Charles Company on October 29).  The Mayor gave only the usual terse public report: “Direction was given to staff.”  But, as City Manager John Russo subsequently made clear, the closed session was just the first step toward an Exclusive Negotiating Agreement (“ENA”) between the City and the respective developers.  We were a long way away from a binding agreement for a specific project.

Nevertheless, Council recently has seemed intent on making the road to that destination more difficult for staff to traverse than Mr. Russo anticipated.  And he’s taken it personally. “There is this imbedded assumption in this entire discussion that staff is wanting to do mediocre work and wanting to have mediocre projects,” the City Manager sputtered at one point, adding, “We’re not going to bring forward something that’s shlock after all of these years.”  In the end, Mr. Russo managed largely to keep the fetters off his staff’s feet.  The reins remain securely in his hands.

It all started at the joint session between Council and the Planning Board on September 25 at which staff presented its disposition and development strategy for Alameda Point.  At that meeting, Planning Board member John Knox White, with the predictable support of Councilwoman Lena Tam, suggested that Council come up with “evaluation criteria” for proposed projects at the Point.  Staff would be required to use these criteria to report to Council on the projects it recommended for an ENA.  It wasn’t exactly clear what the criteria consisted of, but Mr. Russo agreed to have staff take a shot at drafting a list.

At the next Council meeting, staff came back with suggested “criteria” centering on whether the proposed project was “consistent” with previously adopted (or about-to-be-adopted) planning documents like the general plan and the Town Center plan.  True to Mr. Russo’s focus on financial issues, the criteria also provided for “greater attention [to be] paid to proposals that generate fiscal impacts beyond fiscal neutrality, resulting in positive net benefits to the City’s General Fund.”

And then the fun began.  Several Council members criticized staff’s proposed criteria as too perfunctory (or, to quote Councilwoman Tam, as lacking “granularity”).  Overcoming his initial exasperation, Mr. Russo responded, Fine. Tell us what additional criteria you want and we’ll add them to the list.  Alameda Point Chief Operating Officer Jennifer Ott dutifully took notes, and, two weeks later, staff presented a revised list incorporating the Council comments.

But Council still wasn’t satisfied.  Councilwoman Tam wanted any prospective developer to show experience with union-friendly project labor agreements.  Councilman Stewart Chen, D.C., insisted upon demonstrated “sensitivity to the environment.”  So more items were added to the list before Council finally approved it shortly before midnight.

The result is a mishmash of general and specific, abstract and concrete, profound and prosaic, objective and subjective.  Mr. Knox White very well may have intended the “evaluation criteria” as a guide for staff and a tool for Council, but we’re afraid that all we ended up with is a source for potential potshots at proposed projects.  (What, you mean this company has never built a LEED Platinum building?)  One seriously doubts that the “evaluation criteria” will have any effect on how staff selects projects or developers.

And then there’s the issue of when and how the public should be involved in the process.  Mr. Russo apparently envisioned a streamlined procedure whereby staff would select a developer to propose for an ENA for a specific site; if Council approved, staff would negotiate with the developer and ultimately present a Disposition and Development Agreement (“DDA”) to Council.  Public comment would occur at the meetings at which Council voted first on the ENA and later on the DDA.

To Councilman Tony Daysog, this process didn’t provide for sufficient citizen input.  So he proposed that a “blue ribbon committee” be created to review proposed projects before staff even sought to enter into negotiations for an ENA.  He later renamed the committee the “Pre-ENA Alameda Point Catalyst Area Working Group” and even drafted a flow chart showing how the process would work.

Mr. Knox White then got into the act.  Through his amanuensis, Councilwoman Tam, he urged Council to set up a system that, like Mr. Daysog’s, would bring the public into the process at the outset.  Under Mr. Knox White’s plan, staff first would identify the “specific special innovative use” involved in a proposed project – without naming the developer — and the public would be given the opportunity to comment.  Having heard those comments, Council would vote in open session whether to hold a closed session to decide whether to hold an open session to enter into an ENA.  (Or something like that – listen to the video yourself).

Although Mr. Russo had been willing to allow Council to monkey around with the staff-generated list of “evaluation criteria,” this time he put his foot down.  Not only was the extra step proposed by Mr. Knox White unnecessary, he insisted, it was unwise, because it would “scare away” developers.  No Council member was eager to choose between Mr. Russo and Mr. Knox White, so they ignored the proposal and reserved their fire for Mr. Daysog.  In the end, neither the Daysog nor the Knox White plan was adopted, and the public’s involvement in the process remained the same.

So where are we?  Essentially where we started.  True, Council got its list of “evaluation criteria,” but Mr. Russo and staff can move forward in pretty much the way they intended all along.

A staff-led process in which the politicians and the public are precluded from “interfering” indeed may produce progress more quickly.  (And, no, Mr. Russo, we don’t fear staff will deliver a bucket of shlock).  But it relegates Council to the role – which the Mayor and others seem quite willing to accept – of ratifying staff’s actions rather than making policy decisions itself.

It didn’t have to be this way.  If Council had wanted to play a useful part in the process, it could have taken the suggestion – all right, it was the Merry-Go-Round’s suggestion – to identify and rank the goals it wants to accomplish at the Point.  It could then ask staff to grade any project proposed by a developer on how well it advanced each goal.  The developers who would be considered for an ENA would be those who get the highest total score.

(This is, as we are sure Assistant City Manager Liz Warmerdam will confirm, similar to the way a rating agency like Standard & Poor’s assigns ratings to municipal bonds:  Its methodology identifies the factors relevant to creditworthiness and gives each of them a weight.  An analyst then grades the proposed issue on each factor.  The bonds with the highest weighted average get the best ratings).

It is, of course, too late for that.  But maybe a more modest version is doable.  Mr. Russo has focused on the financial aspects of development proposals.  He wants projects that not only provide funds to pay for infrastructure but also generate revenue for the general fund.  This is why staff listed “attracting retail and business-to-business” as the top priority in the disposition and development strategy.  It is also why staff proposed in its draft “evaluation criteria” to give “greater attention” to projects that promised these benefits.

So why not give Mr. Russo his head?  We agree with your emphasis on economics, Council could say.  So spend staff time only on projects that will meet both of the financial goals you’ve identified.  Develop a method for ranking each project, and then bring us those with the highest total score.  And while we’re at it, why not make the rankings public? That way, Alamedans would know why staff decided to pick one project and developer over another.  No one could claim that a particular outfit got the nod simply because it had a Council member in its corner.

Too much deference to, and reliance on, staff?  Perhaps so.  But that’s how this administration conducts business anyway.  Too simple? Too simple-minded? Maybe so.  But it would get things moving.  And isn’t that the point?

Sources:

September 25, 2013 staff report re disposition and development strategy: 2013-09-25 staff report re disposition strategy

October 15, 2013 staff report re evaluation criteria:2013-10-15 staff report re evaluation criteria

Daysog flow chart: 2013-11-05 ex. 1 to staff report re evaluation criteria

November 5, 2013 staff report re evaluation criteria: 2013-11-05 staff report re evaluation criteria

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in Alameda Point, City Council, Development and tagged , , , , , , , . Bookmark the permalink.

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