Oakland Mayor, Port Developer in Dispute Over Plan to Ship Coal

Oakland Mayor Libby Schaaf and the powerful developer behind the city's ambitious redevelopment of the old Oakland Army Base are embroiled in a dispute over a proposal to use a new cargo facility to export coal -- a rift the developer says could threaten the success of the $500 million project.

The disagreement, which prompted Schaaf to rebuke developer Phil Tagami for pursuing the coal plan over the city's objections, is detailed in a series of emails and other documents that the Sierra Club's San Francisco Bay Area chapter obtained through a state Public Records Act request.

The issue of whether coal will be shipped through the new cargo terminal has long been a subject of concern for community leaders, especially in West Oakland, which suffers disproportionate rates of respiratory disease linked to heavy ship and truck traffic to the Port of Oakland.

The City Council last year passed a resolution opposing coal shipments through the new facility. And for his part, Tagami had met earlier expressions of concern with what sounded like definitive assurances that coal shipments would not go through the terminal he's in charge of building. About two-thirds of the overall project's half-billion-dollar pricetag will come from local, state and federal funds.

"It has come to my attention that there are community concerns about a purported plan to develop a coal plant or coal distribution facility as part of the Oakland Global project," Tagami said in the project's December 2013 newsletter. "This is simply untrue. The individuals spreading this notion are misinformed. CCIG is publicly on record as having no interest or involvement in the pursuit of coal-related operations at the former Oakland Army Base."

CCIG stands for California Capital and Investment Group, the commercial real estate firm Tagami heads and which in 2012 won the right to develop the city's portion of the old Oakland Army Base. By early this year, CCIG's stance on "coal-related operations" at the new facility had changed from "no interest" to very interested.

That happened after four Utah counties said they'd like to invest in part of the port project called the Oakland Bulk and Oversize Terminal. The counties want to help pay for the terminal as a way of guaranteeing their ability to ship the "energy commodities" they produce -- coal -- to overseas markets. In April, a state community investment board approved a $53 million loan to the counties, which they plan to use to become partners in the Oakland bulk terminal.

The board's meeting featured a brief appearance by Mark McClure, a principal in Tagami's CCIG. McClure actually spoke after the Utah Permanent Community Impact Fund Board had voted to approve the $53 million loan and pointed out virtues of the new port relative to rival facilities elsewhere on the West Coast.

"One of the key components that people forget is that you can have the product, and you can have an outlet on a port, but we're very dependent on the rail lines to move the product from one place to another," McClure told the board. He added that the two railroads serving the port, Union Pacific and Burlington Northern, both have direct routes west to the Bay Area from Utah.

Details of the Utah counties' investment in the port -- they are supposed to get an equity stake in the port in return for their cash -- still remained to be worked out after the vote.

But the deal gradually made its way into the media -- first in Utah and by late April in the Bay Area.

Tagami, who had earlier dismissed concerns about development of a coal-shipping facility at the new port facility, now suggested that the matter was out of his hands. That's because his company, CCIG, had transferred its rights to develop and operate the planned Oakland bulk cargo facility to another party, Terminal Logistics Solutions. The firm was created last year and is headed by Jerry Bridges, a former executive director of the Port of Oakland.

On May 11, Schaaf attended a breakfast of the city's business and community leaders. During the get-together, Bridges apparently talked about coal coming to the new bulk cargo terminal -- again, something that Schaaf and a majority on the City Council were already on the record as opposing.

We don't know what Schaaf said to Bridges during breakfast. But thanks to the Sierra Club, we know just what she had to say to Tagami. In an email written immediately after hearing Bridges, Schaaf started with the subject line "stop all mention of coal now." Then she wrote:

Dear Phil,
I was extremely disappointed to once again hear Jerry Bridges mention the possibility of shipping coal into Oakland at the Oakland Dialogue breakfast. Stop it immediately. You have been awarded the privilege and opportunity of a lifetime to develop this unique piece of land. You must respect the owner and public's decree that we will not have coal shipped through our city. I cannot believe this restriction will ruin the viability of your project. Please declare definitively that you will respect the policy of the City of Oakland and you will not allow coal to come through Oakland. If you don't do that soon, we will all have to expend time and energy in a public battle that no one needs and will distract us all from the important work at hand of moving Oakland towards a brighter future.

Best,
Libby

Schaaf was not addressing a stranger. Tagami is an Oakland native who endorsed Schaaf's mayoral run last year. He has also become a larger-than-life figure in the city by leading a couple of the downtown area's signature redevelopment projects: the Rotunda Building, the landmark building that his California Capital and Investment group owns and manages, and the Fox Oakland theater. He has also served on the city's Planning Commission and on the Port of Oakland board of directors.

In a letter on May 13, Tagami told Schaaf that for the new cargo terminal to be financially viable, it "needs to handle whatever legal bulk goods the potential customer may need to pass through the facility." What's more, Tagami said, the city's earlier approvals have essentially given him permission to go ahead as he sees fit.

Tagami urged the city -- especially Schaaf and members of the City Council -- to "keep its proverbial powder dry for the moment" and refrain from making "any irretrievable public statements or actions" until discussions had taken place.

Nearly two months later, the matter appears to be unresolved, and now, neither Schaaf nor Tagami have much to say about the dispute publicly.

In a statement last week, Tagami said no commitment has been made yet to ship "any particular commodity" -- presumably including Utah coal -- through the new bulk cargo facility. But he repeated his earlier insistence that developing the bulk facility as he wants to is necessary "to ensure the viability of the entire revitalization plan for Oakland’s working waterfront."

In her own written statement, Schaaf would only say, "I am working with our business partners on the redevelopment of the former Oakland Army Base to find a mutually acceptable way to move forward that respects our city policy and honors Oaklanders' commitment to protecting our environment and the health and safety of this community."

That's not enough for the local chapter of the Sierra Club, which wants the issued aired publicly.

Jess Dervin-Ackerman, the group's conservation program manager, says not only are port developers "doing something that clearly Oakland doesn’t want, but they’re also doing it very sneakily, where there’s no opportunity for the public to weigh in."

She says the city will lose its leverage to stop coal shipments through the new port once the terminal operator signs a deal with the Utah counties that would like to ship coal through the new facility.

West Oakland Councilwoman Lynette Gibson McElhaney has planned to bring a resolution to the City Council “to consider the health and safety impacts of a possible deal to bring thousands of coal-filled rail cars from Utah to be shipped out of the Port of Oakland.”

But nothing’s on the schedule yet.

The Sierra Club and supporters plan to protest outside City Hall on July 21 at the City Council's last meeting before its summer recess.