City Urges No Action in Tagami’s Failure to Make Payments on $12 Million Loan

By Ashley Chambers

Mayor Jean Quan’s staff has recommended that no action be taken against Phil Tagami’s company, Rotunda Partners II, which is currently four months behind in payments on its a 20-year $12 million loan with the City of Oakland to develop a parking garage, retail space, and temporary parking lot at the Rotunda building next to City Hall, according to city officials.

According to reports, Tagami’s company owes $80,000 in loan payments dating back to November, as of last week’s Community and Economic Development (CED) Committee meeting.

“Staff recommends that the (city) not exercise its rights” at this time to declare the project “in default for non-performance,” according to the Feb. 4 informational report prepared by city staff, which is ultimately responsible to the mayor,

The company should only be declared in default “if there is reasonable likelihood that such action will facilitate the development and is in the best interest of the city,”  according to the staff report, which was signed by Asst. City Manager Fred Blackwell.

At the CED meeting last week, Councilmember Lynette McElhaney said, “I would want to see staff put really strong timelines that are transparent and can be monitored with respect to getting people on track and to respond timely.”

Asserting that the city staff report and McElhaney’s statements are “inaccurate,” a managing partner of Rotunda Partners says the company is current on the loan and has made all its monthly payments on time.

At the same time that Tagami’s company allegedly has failed to make payments on its loan, he is being paid for multiple roles with the city as property manager, master developer, project manager, rail operator and finance broker on the Oakland Army Base development project.

Asked to speak to the Oakland Post about the Tagami’s failure to pay, Mayor Quan has remained silent. The Post has also asked the other mayoral candidates what their position is on the issue.

Not addressing the failure to pay, mayoral candidate Bryan Parker said, “As long as they’re performing, being transparent, and being inclusive, I’m for continuing with those partners.”

“We can ensure transparency by using objective metrics to measure results and making sure the contracts include strong audit provisions,” he said.

In fact, I have already started organizing meetings to ensure these goals are met, Parker said, adding, “My understanding is that the [Rotunda] loan payments are current according to confirmation from a city official.”

Mayoral candidate Dan Siegel said he is “concerned about conflicts of interest” with Tagami holding multiple roles in his partnership with the city.

“City employees and paid consultants should not also receive city grants and contracts,” said Siegel. “I think the city should demand that Tagami become current on his contractual obligations immediately. If he cannot do so, appropriate legal action should be taken.”

“The city should insist that he appear at a public meeting to answer concerns about his agreements with the city,” Siegel said.

While not answering the Post’s questions this week, candidate Libby Schaaf has said she expects transparency in the city’s financial agreements with Tagami.

“I always believe the public is entitled to detailed information about how the city is spending public money,” she said.

Candidate Joe Tuman did not respond to the Post’s questions.

In an email sent to The Post Thursday, on deadline, Mark Moss, a managing member at Rotunda Partners, said, “Rotunda Partners has made each payment on time.”

“The article repeated a councilmember’s allegation that the company is currently technically in default. Wrong – Rotunda Partners has made each payment on time and of course, is NOT in default,” said Moss, who did not explain why the company did not send a representative to speak at last week’s CED meeting where the default was discussed as part of the public agenda.

Disputing the public statements by another city councilmember who called for transparency in the city’s agreement s with Rotunda Partners, Moss said, “All Rotunda documents are public and available.”

“The city’s loan/equity partnership with Rotunda Partners is actually one of the best real estate deals the city has ever made,” he said in the email.

“Mr. Moss seems to be saying to be saying that Asst. City Administrator Blackwell and Councilmember McElhaney are both liars,” said Post Publisher Paul Cobb.