Council Members Feign Ignorance of Documents
CM’s Treva Reid and Janani Ramachandran caused a firestorm last Tuesday when they questioned the payments of the Coliseum sale from AASEG in full council. Few questions could be answered at the time, because neither the sale nor budget were agendized and the Brown Act prevents the discussion of unagendized items in full council meetings. But is there any basis for the concern? For Council members, who have access to all the documentation for the sale that we’ll review in this article, there shouldn’t be. But for the public, the questions raised by Ramachandran and Reid may have caused confusion, and part of that stems from the fact that the Purchase and Sale Agreement [PSA] inked by the City and AASEG–which Ramachandran and Reid have seen—is running on a different timeline than the well-publicized Term Sheet for the sale published in late July. Meanwhile the budget legislation timelines and the actions they trigger were misconstrued to a degree that appears deliberate and politicized.
Purchase and Sale Agreement is On a Later Timeline Than the Term Sheet
The purchase and sale agreement executed by the City and AASEG actually sets the period for Coliseum sale payments on a later timeline than initially presented to the public in the well-publicized term sheet weeks ahead of the sale. The Term Sheet is the set of intentions to guide the ultimate execution of the sale, but its not the final agreement.
The City/AASEG’s term sheet set the first of September and November as the deadlines for first and second payments this calendar year.
But the PSA, the actual sale contract, has a later timeline—the payments are due in the contract by September 23rd, November 21st, with the last for this fiscal year to be made by February 4, 2025.
Thao can be faulted for describing the 21 day discrepancy as a “grace period” when it was essentially the proscribed due date agreed to by the parties. That may be causing some current confusion, because the agreement actually has a late-period “cure” process for any potential defaults on the contract deadlines by AASEG that is more properly characterized as a "grace period"—10 business days to cure the issue, i.e., meet the payment requirement for the September 23 deadline.
This means the last chance to pay the September amount is October 7, the day that AASEG’s director Ray Bobbitt has told media outlets the first payment will arrive by. The cure period extends for all the payment deadlines, meaning that if the parties follow the current agreement, the deal would not even be abrogated if a final payment of the fiscal year is made by February 14. Reporting from Shomik Mukherjee in the East Bay Times reveals that the City simply went straight to the cure period as the ultimate date for September because the negotiations for a full payment on a faster timeline were ongoing.
The Oakland Observer has obtained a copy of the executed PSA, which you can download below.
FY 24-25 Budget Amendment Legislation Doesn't Set Precise Budget-Cutting Triggers
Ramachandran began her claims at the Council meeting with the following statement:
“Today is October 1, the day that the city is supposed to go into a contingency budget with cuts to public safety, if our initial payment of $15 million from the proposed sale of the Coliseum was not received. So since every item on our budget today almost involves the budget and our general purpose fund, I wanted to understand what happens to our budget today, since it appears that we have not gotten this $15 million for the sale of the Coliseum.”
But Ramachandran’s claims about the budget legislation aren’t accurate. Though the dates in the legislation mirror the term sheet deadlines—September 1 and so forth—the language in the document doesn’t have the specificity Ramachandran claimed. Rather, the language is structured in such a way as to allow the City Administrator the choice of when and how to take cost-cutting measures whenever one or all of the three due dates outlined in the budget is potentially missed. The budget amendment legislation does require some series of cost-reductions if some or all of the September 1, November 1 and etc payment deadlines are missed, but it's up to the discretion of the City Administrator about when and how to implement them.
FURTHER RESOLVED: That the City Council hereby approves contingency budget amendments to the adopted budget as presented in Exhibit 3, in the case the $15 million from the sale of the Coliseum Site is not received by September 1st 2024, or in the case that an additional $15 million is not received by November 1st, 2024, or in the case that the remaining $33 million is not received by January 15th 2025; and be it
FURTHER RESOLVED: That if the $15 million from the land Sale of the Coliseum site is not received by September 1st 2024, or if an additional $15 million is not received by November 1st, 2024, or if the remaining $33 million is not received by January 15th 2025, the City Administrator is directed to: freeze the hiring of new positions; delay the beginning of new sworn trainee academies; halt the execution of unfinalized contracts and grant agreements funded from the General Purpose Fund and any Restricted Funds with structural imbalances; halt the approval of unapproved discretionary travel; take any other measures that they deem necessary to preserve the fiscal health of the City; and return to the City Council a plan to rebalance the City's budget with as expeditiously as reasonably possible [...]
The City began making some cost-cutting measures beginning on September 1, mostly a hiring freeze and a ban on discretionary travel, according to brief comments made by City Administrator Jestin Johnson at the Tuesday meeting. But the language of the document doesn’t require them on any one of the specific dates. The term "or" means that if the first deadline is missed, action would be discretionary on the part of the City Administrator, just as it would be in the second. As Thao stated in early September during a press conference, some of the cost-cutting measures enumerated in the legislation were in fact already in place long before October 1.
Misrepresented Scheduling Claims
In her comments supporting Ramachandran, CM Reid said that she, Noel Gallo and Ramachandran had drafted legislation requiring a report back from the City Administrator, but were barred from scheduling it.
“[we] have requested an information item to come to have public conversation and discussion on this matter that affects these items today and rules has been canceled for Thursday,” Reid said, implying that there was an intentional attempt to somehow cut off the trio’s ability to ask the questions.
But according to emails reviewed by this publication, it was CM Ramachandran who caused the Rules committee meeting to be canceled. The Rules committee of four council members requires a minimum quorum of 3 to discuss business. Several weeks ago, one of the committee members, Dan Kalb, had already asked for an excused absence on that day. On Monday, according to the emails, Ramachandran said she would only be able to attend the first hour of the meeting, functionally preventing the committee from completing all of its required processes. With Ramachandran’s knowledge in real time, the committee meeting was canceled via email.
At the council meeting, Council President Nikki Fortunato Bas informed Council members that any legislation can still be considered after a Rules committee is canceled by Rule 28, which requires review from the Rules Chair and the City Administrator. Bas told this publication that the trio did submit legislation intended to place a report back on an already scheduled special meeting on October 7 at 9:30am, but that she and City Administrator Johnson had rejected it because they believed a meeting would be more productive after a closed session update and that the two day timeline didn't allow enough time to prepare a report.
"Myself and City Administrator Johnson did not approve the Rule 28 request to schedule the Coliseum item on Oct. 7. I believe it's important to be consistent with our practice of hearing real estate negotiations in closed session first, before hearing them in open session. That is also in line with what the Administration has shared publicly and at Tuesday's Council meeting - that this topic would be heard in closed session and then at Finance & Management Committee. This also allows staff to prepare the written report that the CMs request," Bas wrote in an email Friday, also noting that she would schedule a closed session this coming week.
Monday's 9:30 am meeting was specifically scheduled weeks ago to expedite the second reading of Ramachandran’s campaign finance increase legislation and was meant to be a simple second hearing vote to finish the process and allow the potential limits to be increased as soon as possible given a November 5 election day.
CMs Use Little Noticed "Rule of 3" Provision to Schedule Special Meeting
At some point Friday, three Council Members, Ramachandran, Reid and Noel Gallo, scheduled a special meeting for Monday morning directly after the previously scheduled special meeting. The CMs used an often unnoticed Charter section that allows three council members to jointly direct the clerk to schedule a special meeting. * The agenda for the "rule of three" meeting is dated 10/4 and lacks an informational report. The only document included in the document packet is the three CM’s request for a special meeting. A query about the noticing time to the Council President sent Sunday was not responded to by publication time.
As a reflection of the short notice, according to the Council's own rules, by the time the item was scheduled Friday, it was too late to submit an electronic public speaking card to address the meeting via zoom.
AASEG Continues Its Process for Acquiring the Coliseum
As Mukherjee reported in the East Bay Times, part of the delay stems from the fact that the City is also considering a new version of the agreement whereby AASEG would pay the entire amount for the sale this fiscal year, by May, 2025. Sources with direct knowledge of the negotiations tell this publication that one reason for a one time payment would be to avoid a long drawn out period of investing money in the payment plan with the potential for the Coliseum to become unavailable for whatever reason before the deal is done. The agreement gives no ownership control to AASEG even as the developer makes payments. An immediate payment would allow AASEG to take control of the site, and to dissolve the current version of the JPA to have greater control over the site—although some sort of joint powers body would be necessary due to the regular public use of the arena.
AASEG is still wrapping up the last stages of its deal with the A’s, which also requires the County approving the transfer of the development agreement to AASEG. A lawsuit from Communities for a Better Environment ostensibly opposing the sale to the A’s on the grounds that the state surplus land act was not followed could be settled soon, as well, according to sources—the site changing hands to a developer with a guarantee of affordable housing may satisfy the original intent of the suit by the organization.
*a previous version of this article stated that there were questions about the noticing for the meeting. However, Council President Bas has since responded to the query and noted that the Sunshine Ordinance allows for noticing of a Monday special meeting by noon the preceding Friday:
C. Notwithstanding the requirements of 2.20.070(A) and (B), if a special meeting is called for a Monday, notice shall be deemed timely made if the filing, posting and distribution requirements of subsections (A) and (B) are made no later than 12:00 p.m. (noon) on the preceding Friday.
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