IV. Jurisdiction Surveys

B. California

1. Port of Oakland

The City of Oakland has been working on its redevelopment plan for a couple decades. One example of this planning shows the city’s emphasis on public/private partnerships for its waterfront development. The Port of Oakland built a multi-level parking structure (to hold about 1,000 cars) in the waterfront area. See Restaurant/Nitespot/Capital Investment/Lease Funds Subject to Repayment Provisions Owner Participation Agreement (Restaurant), Exhibit A, 1. Besides supplying parking to the waterfront area, the Port and the City also planned to bring cars to the lot. They planned to lease some of the property within the structure to an entertainment business that might help to make the area more of a destination. See id.

To jumpstart the area, Oakland had to make the lease more enticing than the area seemed. It did so by instituting a “Lease-Back Agreement.” The Redevelopment Agency of the City of Oakland, a public body (the Agency), entered into an agreement with Oakland Portside Association, which is a California limited partnership (the Owner), and the City of Oakland, acting through its Board of Port Commissioners (the Port). See Restaurant, 1. The redevelopment agency agreed to assist Portside in the development of property in the Central District Urban Renewal Area as long as the Portside made certain improvements on the property. See id. Portside desired to build a 22,000 square foot jazz club and restaurant, and could not do so without help from the Agency. See id. The company that would lease the jazz club and restaurant from Portside was not part of the agreement. See Restaurant, 2.

The Central District Urban Renewal Plan for Oakland was adopted on June 12, 1969, and most recently amended, as of 1994, on March 27, 1990. See Restaurant, 1. The plan let the Port retain “complete and exclusive power and duty with respect to the Port Area,” and any agreement that the Port had made to allow any of the Port Area in a redevelopment area also must be respected and retained. See id.

The property is on the ground floor of a parking structure, all of which is owned by the Port. See id. The Port leased the property to Portside, and the Agency then subleased the property from Portside, and prepaid the entire lease at once for $2 million for 30 years from the date the restaurant and club open, but no later than Jan. 1, 2026. See Restaurant, 2 and 3. If Portside had not signed a further sublease with the company that plans to run the restaurant/club by March 30, 1995, the Agency could have terminated the sublease. See Restaurant, 3. The rest of the financial responsibility for the $3 million development project belongs to both Portside and the sublessee. See Restaurant, 12. The Agency supplied $2 million, Portside paid $800,000, and the restaurant lessee paid $200,000. See id.

Immediately after entering into the sublease, the Agency and Portside had to create a “Lease-Back Agreement” for the property. See id. Already established, however, was that once a year, Portside will pay the agency 75 percent of all rent it received from the restaurant/club in a lease year. See id. Portside can sublease to someone else if the new business’s financial responsibility is at least as good as the restaurant on the date of the execution of the lease-back, if it has similar projected revenues, and if it will not cause any expense or liability to the Agency. See Restaurant, 7. Portside also agreed that it would try to only sublease to entertainment businesses and to keep the Agency informed of any possible changes in either the sublessee or to the property. See Restaurant, 5, 7 and 8. The Agency can object to changes to the structures on the property if they do not seem to be relevant to the marketing of the business, or if they were not structurally sound. See Restaurant, 8. Portside can always request a meeting to discuss the objections, and many efforts will be made for an agreement to be found. See id.

Many rules provided roadmaps to the execution of the long-term deal. To get the prepaid rent, the restaurant had to submit final construction plans within 160 calendar days after the agreement, and Portside had to indemnify the Agency for any liability during construction. See Restaurant, 9. Within 90 days, Portside had to give the Agency the restaurant’s sublease. See id. At least five days before construction was to begin, Portside submitted performance bonds to the director of the Agency for the total cost of construction and the labor required to perform that construction, giving some security that construction would be completed. See Restaurant, 10. Portside was also responsible for obtaining all building permits and government approvals. See Restaurant, 11. Once all the permits and approvals were received, the project’s construction had to begin within 30 days, and every attempt should be made to complete the construction within a year, with the Agency receiving monthly progress reports. See Restaurant, 12 and 13.

2. Long Beach

One of the largest public/private development partnerships underway in Southern California is Queensway Bay in Long Beach Harbor. See Urban Land (UL), February 1999, 49. The 300-acre, $500 million development includes a harborfront promenade, a marina, an aquarium, and 495,000 square feet of retail and entertainment space. See id. The City of Long Beach provided the required infrastructure, a public/private partnership is building the retail entertainment portion, and the aquarium is another public/private partnership. See id.

3. San Diego

When Pete Wilson was first elected mayor in 1972, he promised a revitalization of San Diego’s downtown. See Urban Land (UL), April 1994, 1. In 1974, a developer was hired to bring retail back to the center of downtown through the creation of the Horton Plaza shopping mall. See id. In 1975, the city council created a public, non-profit organization, Centre City Development Corporation (CCDC), to focus on downtown redevelopment. See id.

CCDC’s main source of funding was to be tax increment financing (TIF). See id. For example, the Horton Plaza Redevelopment Project area was assessed in 1972 and its property taxes valued at $187,720. See UL, April 1994, 7. For fiscal year 1992/93, that same property, with all its improvements, had property taxes of $4,674,880. See id. The difference between the two ($4,487,160) went to the developer’s share of development debts. See id.

Four areas of the city were isolated to be developed toward their specific strengths and goals. See UL, April 1994, 1. Horton Plaza promised large-scale retailing in downtown; the central business district was to be extended to the bay, with a major convention center; the Marina area focused on residential projects; and the Gaslamp Quarter provided a showcase for the city’s heritage. See id. Each of these elements added a different color to the quilt of the city, each with a purpose and an aesthetic style. The CCDC coordinated all of the efforts to make them symbiotic and synergistic, over two decades creating an integrated city with integrated, yet identifiable parts.