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Tuesday, November 29, 2016

Oakland Raiders Reportedly Get 99-Year Lease In City's NFL Stadium Term Sheet Plan

Oakland Raiders Reportedly Get 99-Year Lease In City's NFL Stadium Term Sheet Plan
Oakland Raiders Reportedly Get 99-Year Lease In City's NFL Stadium Term Sheet Plan Oakland Raiders Owner Mark Davis can thank Oaklanders for a change in city law such that the City of Oakland and the County of Alameda are set to present a term sheet that includes an rare-in-the-NFL but not in sports 99-year-ground lease. (This news came on Monday evening from a well-placed public official who did not wish to be named.) On November 8th, Oakland voters passed into law “A measure to increase the city's maximum lease term from 66 years to 99 years”. The Oakland City Attorney wrote this analysis: Oakland City Charter Section 1001 currently authorizes the City Council to lease real property “owned or controlled” by the City of Oakland in accordance with procedures the City Council establishes by ordinance, but limits the maximum time period of a lease to 66 years. “Real property” includes land and any buildings or other improvements on land. Real property “controlled” by the City includes property the City holds under a lease from a property owner or under a court order for possession. This measure would amend the Charter to allow the City to lease real property that it owns or controls for a maximum period of 99 years. The Oakland City Council placed this measure on the ballot. A “yes” vote for the measure supports the passage of the amendment; and a “no” vote opposes passage of the amendment. A majority vote (i.e., more than 50% of the votes cast) is required to pass the measure. The measure passed 53.02 percent to 46.98 percent. On Tuesday, November 29th, the Oakland City Council meets in closed session to vote on the term sheet, which Oakland Mayor Libby Schaaf told this blogger she was “pleased” with last week. While such lease terms are not uncommon, they aren't common in the National Football League, and are normally used for federal land deals. The 99-year-long ground lease the Oakland Raiders and The Ronnie Lott Group are set to receive from the City of Oakland and the County of Alameda, have a number of advantages that can both lower the Raiders annual rent payments, and increase franchise value. This is because the lease payments can be stretched out far beyond the standard 20 to 30 year stadium lease. Normally, this kind of arrangement is also done where an outright land sale may not be deemed the best course of action; it serves to, for all practical purposes, allow the Raiders to be the property owners and (I'm told) team with the developers on other projects on the land. Indeed, it's very much like the stadium deal the Carolina Panthers enjoy. According to the “Carolina Panthers Fact Sheet,” the Panthers deal looks like this: Bank of America Stadium is owned by the Carolina Panthers and sits on land leased by the City of Charlotte. The land is provided at a value of $60 million with the payments at $1/ per year for 99-years, and a parking deck and training facility. So, the Oakland Raiders version of that deal will have a different land value (I'm told about $150 million) but the lease term of 99-years is the same and no new training facility. While this is a major part of the term sheet the Oakland City Council will review on Tuesday, it's not the only part of it. I wasn't given all of the other details. What I can report is that the Mayor of Oakland's happy with this, as are a number of elected officials. The way the term sheet is structured is such that the City of Oakland will pay most of the public cost over the County of Alameda, and that is because, as my source said, “the City will enjoy a large upside from this.” So, in closing, here are the “knowns” that I'm at liberty to talk about as of this writing: 1. Stadium cost in the ball park of $1.363 billion 2. Land value around $150 million 3. Term sheet with 99-year-ground lease, thanks to Oakland voters. 4. Stadium size of between 55,000 and 65,000 with 8,000 parking spaces. I'm also told the local labor unions are angling to play a positive role in the construction of the new Oakland Raiders NFL Stadium. I can't be more specific than that, but believe me, I'd like to be. Overall, this news is exciting and the lease deal makes for an exciting project. It also adds up to combining with the new stadium to provide the kind of increase in Oakland Raiders franchise value Mark Davis has wanted to realize for some time. This will easily catapult the team organization to at least $3.5 billion in value when the stadium is finished. Stay tuned.
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