OAKLAND — Seeking to ease a financial crisis that some politicians have in comparison with the Great Recession, Oakland politicians on Tuesday approved budget changes that avoid drastic cuts but in addition depend on the still-pending sale of town's most useful real estate.
The City Council's hotly contested 5-3 decision temporarily resolves a large $177 million revenue shortfall that Oakland is suffering within the second yr of its $4.2 billion budget cycle – a crisis that Mayor Sheng Thao was determined to resolve without layoffs.
The project can also be based on the belief that the sale of half of the Coliseum property in East Oakland to a non-public development group will begin generating revenue this fall – a bet that can give town time to take into consideration longer-term budget decisions.
Nevertheless, the brand new budget calls for a complete of 34 police positions and various other vacancies in town, with those cuts depending on whether sworn cops leave the office or retire.
And while layoffs usually are not on the table, financial analysts are strongly warning against using proceeds from the sale of key assets just like the Coliseum to eliminate short-term budget deficits.
“We take our responsibility to the people of Oakland very seriously,” Council Member Nikki Fortunato Bas said before the vote. “We believe that this option, despite some very, very difficult decisions, best protects our services.”
The planned sale of the Coliseum to the African-American Sports and Entertainment Group, led by Oakland native Ray Bobbitt, is anticipated to bring town a minimum of $105 million, but final terms are still being negotiated.
The other half of the property – which incorporates the stadium, arena and large parking lots – is owned by the Oakland A's, who’re soon leaving the team and are also discussing a sale to AASEG, which might allow for a significant business redevelopment of the location.
Meanwhile, Oakland officials were faced with the duty of plugging a big deficit, largely as a result of revenues that fell far in need of forecasts, including from taxes on business licenses and real estate transfers, which had come under severe pressure throughout the pandemic.
Mayor Thao promised in May that the sale of the Coliseum would help ease town's budget problems over the subsequent two fiscal years: $63 million within the yr that begins July 1 and one other $43 million in the next yr, which begins next summer.
But with the deal still pending at the top of June, officials proposed a last-minute emergency budget that included much more severe cuts — halting construction on two police academies and renovating two fire stations — while the primary $15 million from the sale was to reach by September 1.
Council member Janani Ramachandran raised the alarm concerning the unfinished Coliseum sale and went further, urging that each one formal budget decisions be delayed until the top of July to present the council more time to contemplate recent findings.
“We just don't know when this incredibly complex deal is going to be finalized,” Ramachandran said at a gathering late last week, where the council postponed a final decision until Tuesday. She voted against the adopted budget changes together with council members Treva Reid and Noel Gallo.
Brad Johnson, Oakland's top budget analyst, warned that city officials would still should “walk on eggshells” until the autumn to avoid spending an excessive amount of money, though revenues may not arrive until later.
Bobbitt, the event group's founder, has stressed that a deal shall be finalized soon and financed by Loop Capital, a large black-owned hedge fund that’s backing the transformation of the Coliseum right into a recent center for live entertainment, nightlife, hotels and housing.
However, if something goes unsuitable, Johnson spoke ominously of a nightmare scenario.
“That would be incredibly serious,” he said. “We would essentially have to pull the emergency brake on the city.”
Proceeds from Oakland's sale of one other property – the Raiders' former training facility in Alameda – were alleged to help offset last yr's budget deficit, but quite a few obstacles have arisen since then.
Michael Forbes, a member of town's budget advisory committee, said town as a complete had developed “bad habits” that repeated themselves yearly and made Oakland's financial problems even worse.
Even the proposed rescue plan is little greater than a short lived solution, he noted at a gathering last week.
“This Coliseum revenue is multiple times greater than anything we've ever received,” Forbes said. “And unfortunately, it's going to disappear in about a year.”
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