As City Ignores Federal Court Ruling, Developer Works to Keep Project Viable

OAKLAND, Calif., Nov. 16, 2018 /PRNewswire/ -- The City of Oakland ("City") through an abuse of power is seeking to block the approved reuse plan for the former Oakland Army Base ("Project").  And now, there may be reason to believe that the City Attorney and other staff have withheld the details of the Project and proposed settlement terms from Council members.  The proponents of the development plan forge ahead on the multi-commodity Terminal Project as approved.

On Friday, October 19, 2018, attorneys representing Oakland Bulk and Oversized Terminal ("OBOT") and Oakland Global Rail Enterprise ("OGRE"), delivered to the City a letter detailing  intentional acts and patterns of conduct by the City designed to block the Project.   At approval by the City, the Project had nearly unanimous support across government and private sectors for its economic and environmental benefits, bringing sorely need jobs as well as replacement of diesel-emission-spewing 18-wheelers in the neighborhoods of West Oakland.  But on May 15, 2018, the Federal District Court ruled that the City had violated its contractual obligations by trying to block the Project's development.  

The claims presented in the new October 19, 2018 letter focus on separate and distinct breaches by the City related to the ground lease for the Project ("Lease").  Shortly after receipt of OBOT's claim letter, the City responded by asserting that OBOT is in default under the Lease, notwithstanding years of certifying full compliance by OBOT and the payment of rent to the City.  OBOT vigorously rejects any claim of breach or default on its part.

To confirm the economic legitimacy of the Project, the City in 2012 commissioned a report from the Tioga Group, Inc.  It concluded that the Project faced a highly competitive global market for the handling of bulk commodities and would require a commodity provider willing to invest decades and hundreds of millions of dollars to the long-term success of both the rail and terminal operations over the Project's 66-year useful life, noting that only one commodity at the time, coal, commanded a requisite share of the global market for such a facility.  (Incredibly, City staff and the City Attorney's office repeatedly denied the existence of the Tioga Report, seemingly failing to even share it with the Council, until forced to turn it over as a part of the Federal lawsuit.)

Additionally, when the City voluntarily adopted the vesting approvals for the Project, both staff and elected officials were fully informed of and understood the universe of legal commodities shipped in the bulk market and the commodities that dominated the market then and now.  The City's own documents affirm this fact.  In fact, the City's 2013 "Long Range Property Management Plan" goes so far as to list examples of potential commodities that may be handled by the Project: "lumber, coal, [and] sulfur."    

OBOT's counsel, David Smith, said: "The record is clear – what a multi-commodity bulk terminal is and which commodities the market demands were openly and repeatedly presented to the City before they approved this Project.  Either they failed to review their own materials then or they are not being truthful today."  

Most recently, the City has gone so far as to say it will withhold its cooperation unless OBOT and OGRE agree to a list of outrageous demands, including abandoning and dismissing their victories in the Federal lawsuit and waiving any and all claims they may have against the City for its abuse of power to date.  OBOT and OGRE are unable to meet these commercially unreasonable demands.

Perhaps most troubling is a growing concern that the City Attorney's office and staff under the City Administrator's office withheld and continue to withhold from members of the City Council critical information as to status of the Project, such as the Tioga report, and good-faith settlement terms proposed by the Project proponents.  "Had the Council been fully informed of the status and circumstances at every stage of the Project, we don't think we'd be in this position," Smith said.  "And we do not think it is too late to get the Project back on track with full, transparent, and mutual communication to the true decision makers, the Council members themselves," he added.  

OBOT's repeated requests that the City Attorney convene a meeting with the Mayor, City Administrator, and City Attorney to explore resolution options continue to be ignored and go unanswered.

The October 19, 2018 Notice of Claim Regarding West Gateway Project letter accompanies this release.

SOURCE Oakland Bulk and Oversized Terminal (OBOT)