Port to Give Tagami $600 Million Exclusive

Feb 9, 2014

Posted in Army Base Jobs

Former Commissioner Recommends Seeking Partner with Funds

By Ken Epstein and Ashley Chambers

The Port of Oakland is scheduled next week to decide on signing a new exclusive negotiating agreement (ENA) with Oakland developer Phil Tagami and his partners to develop the 170 acres of old Oakland Army Base that are owned by the port.

Under the agreement, which is on the Port Commission’s agenda for Thursday, Feb. 13, the port would attempt for six months to negotiate a development agreement with Tagami’s California Capital & Investment Group (CCIG) and his partner Prologis, a global leader in developing industrial real estate.

So far, the port does not have the developers or the funding to go ahead with the development of its land – to build the facilities, including warehouses and a new railroad terminal, which would allow the seaport to grow and capture more business.

Two previous ENAs awarded to Tagami failed to produce a written agreement, primarily because he could not produce the private funding or grants to finance the project, and the port was unwilling to take on the debt, according to observers who are familiar with port operations.

Phil Tagami

There is nothing to indicate, so far, that Tagami and his partners are now coming to the table with private sources of money, nor explain why the port is considering him for a sole source agreement.

Though Tagami’s past development projects have been paid by the city, supplemented by state and federal grants, the port is not in a position to go into debt to foot the bill for the estimated $600 million for this project.

The port is already struggling to pay nearly $1.3 billion it owes for past deals that resulted in multimillion-dollar losses.

The port is working with the City of Oakland on phase one of the development project, which broke ground late last year, for rail, road and utility infrastructure. Tagami serves as the master developer for the city’s Army Base property.

Tagami’s previous negotiations with the port expired, failing to produce a development contract, because he did not come up with the private money, according to West Oakland community and environmental activist Margaret Gordon, who served on the port commission from 2007 until 2012 and is familiar with Tagami’s past ENAs.

“His ENAs expired because he did not have the financing,” said Gordon. “He wanted the port to take on all liability for the financing and find all the grants.  He never was able to produce what should have been a private-public joint venture.”

Gordon continued: “I was the first one (on the commission) who asked when he got the ENA, ‘Where is your money? Where is your check?’ They kept telling me don’t worry about it, but I wanted to know, where is the private money?”

Rendering of Army Base Project

Gordon said he believed that her outspoken skepticism at the time was part of the reason why Mayor Jean Quan did not reappoint her to the Port Commission in 2012.

Gordon also criticized Tagami for his development projects in Oakland, which she said lacked transparency and did not result in sufficient local hiring and opportunities for local small businesses. In addition she said, he and the city developed the city’s Army Base project in a way that led to many local companies being forced out of business.

Responding to reports that the city is backing Tagami for the port project, Gordon says city support makes no sense considering Tagami’s record on past projects.

“Why would the city administrator’s staff and the mayor’s office want the port to get into bed with someone” with such a history, she said “There’s something wrong with this picture.”

Contacted by the Post several times, Mayor Quan did not respond to questions about giving Tagami an ENA.

However, several of the mayoral candidates who are running against Quan did weigh in on the issue.”

“As mayor, I will ensure that all city contracts are issued based upon public requests for proposals so that contracts may be awarded on the basis of what is best for the people of Oakland,” said Oakland civil rights attorney Dan Siegel.

“No one should be excluded from submitting proposals, but a developer’s performance on previous city projects should be one criterion to be considered in awarding new contracts,” he continued.

Declining to comment on the proposed ENA, Councilmember Libby Schaaf, who worked with the port for two years, said she was not well informed about the agreement.

But she did support the public’s right to question Tagami on his current and past projects in Oakland. ,  “I’ve always been a champion of transparency in government. I always believe that the public is entitled to detailed information about how the city is spending public money.”

Candidates Joe Tuman and Bryan Parker, who sits on the Port Commission, did not respond to the Post’s questions. Tagami also did not reply to the Post’s questions.