Oakland escalates fight with developer
City wants to reclaim site proposed for shipping coal
Oakland officials say the city’s lease with developer Phil Tagami to build a marine terminal that would ship coal and other materials overseas will automatically terminate this week after the project repeatedly failed to meet deadlines.
With the agreement unraveling, the city wants Tagami and his people to vacate the site, surrender the premises and pay $1.6 million in damages.
Lawyers for Tagami, a longtime friend of Gov. Jerry Brown, countered that Oakland has thwarted their every attempt to move the project forward after they refused the city’s request to refrain from hauling “commodities that recently elected city officials and vocal special interests find politically objectionable.” They said the delays are the city’s fault.
The finger-pointing means the two sides could be headed back to court. A previous
legal battle that erupted after Oakland banned the handling and storage of coal in city limits — and retroactively applied the prohibition to the terminal project — ended in May when a federal judge sided with Tagami.
U.S. District Judge Vince Chhabria said the city violated its contract with Tagami and failed to show that coal and petroleum-coke operations posed a “substantial danger” to residents of Oakland. The city is appealing the decision.
But City Attorney Barbara Parker said the lease issue “isn’t about coal.”
“This is about the developer’s failure to meet its obligations and perform the work it agreed to do,” she said in a statement.
The 66-year lease, signed in 2016 between the city and Tagami’s Oakland Bulk and Oversized Terminal company, laid out plans to develop 34 acres known as the West Gateway at the former Oakland Army Base. It was billed as a state-of-the-art, rail-to-ship logistics center with access to a deep-water port that would bring needed jobs to West Oakland.
But minimum project milestones are months behind schedule, and the city has yet to receive needed paperwork for construction to begin, city officials told Tagami in a September letter alleging his default on the lease.
A week later, Tagami submitted binders with schematic drawings of the terminal and wharf and rail improvements that he had to carry out under the lease. City officials said the plans were incomplete and that he failed to provide detailed information on subtenants and business partners.
“OBOT had years to move this project forward and has used every excuse in the book to justify its failure to perform,” Parker said. “This terminal is a critical project that will be an economic engine for West Oakland, our entire city and the region. The city must move this project forward with partners who are able to get the job done.”
The actions of Oakland officials could cause the “fatal demise” of the project, according to Tagami’s attorneys, who have filed a claim against the city in what could lead to a settlement or another lawsuit.
“If you take the city attorney at face value, you’d think this site is barren,” said David Smith, a lawyer for the project.
In fact, Smith said, tens of millions of dollars have been spent installing infrastructure and land grading. He said rail materials are stockpiled and “ready to go today,” but the city hasn’t given workers access to the land.
Oakland officials have said Tagami misled them about what he intended to ship through the terminal, and many in the city have questioned whether the developers have the financial capital to complete the project.
City Councilman Dan Kalb said Tagami told him in 2013 at City Hall that the facility wouldn’t be handling coal because of how much Tagami cared about climate change.
“He was very passionate about it. He explicitly told me and other people that he wouldn’t be doing coal,” Kalb said. “Either he lied or he changed his mind.”
Smith said his client made no such promise.
“It never happened,” he said.
For months, Smith said, the city has denied the development team’s repeated requests for meetings, which are standard for projects of this magnitude.
“We want to get the project back on track,” he said. “We believe there are people in the city — people on the council — who will move this project back on track, and they need to be empowered to meet with us.”
Environmental groups, meanwhile, cheered Oakland’s move to terminate the lease.
Ted Franklin, a retired attorney and member of the grassroots No Coal in Oakland group, said the claim filed by Tagami’s attorneys is an attempt to blame the city for the developer’s inability to pay for the project.
“There is no future for this product. Coal is a dying commodity,” Franklin said. “It has all the appearance of a getrich-quick scheme that’s coming off the wheels.”
Luis Amezcua of the Sierra Club, which signed on to the appeal of the coal decision and was an intervenor in the litigation, said Tagami should build the facility he promised — one that doesn’t involve coal.
“If Tagami hadn’t wasted so much time fighting with the city over whether the terminal should handle and store coal,” Amezcua said, “perhaps he wouldn’t be behind schedule in the first place.”