CITY OF OAKLAND

Interoffice Letter

City Manager
Henry L. Gardner
March 19,
1991To:
Attention:
Date:_

Office of Economic Development and

EmploymentFrom:_
OAKLAND EQUITY PARTICIPATION
POLICYSubject:_

Policy Summary

The proposed equity participation policy was presented to the City

Council's Committee on Economic Development, Community Development
and Housing on December 11, 1990.
At that time, the Committee
approved forwarding the pOlicy to the City Council for review and
approval in a work session.
In January, under the new City Council
committee procedure, the pOlicy recommendations were referred to
the Rules Committee and directed back to this Committee for a work
session.
The following information was presented on December 11, 1990, and
it is set forth again as a policy summary of the deliberations of
the City Council Task Force on Minority and Community Equity
Participation.
The Task Force was formed in February, 1989 to
recommend comprehensive policy concerning equity participation for
Council consideration.
Thirty-nine ( 39)
Task Force members,
representative of the Oakland community, were appointed by Mayor
Wilson.
They met as a full body for the past eighteen months, and
during that time convened three subcommittees.
Policy statements
were
developed
by
the
subcommittees
on
Community
Equity
Participation, Minority Equity Participation and Public Equity
Participation, with support from the Offices of the City Attorney,
City Manager and Economic Development and Employment.

Overall, the proposed pOlicy seeks to redress identifiable patterns

of discrimination in the availability of economic opportunities
arising from development activities.
It would direct the creation
of a community trust fund to further balanced community economic
development in Oakland's neighborhoods.
Program Components
Four elements provide the core of the equity participation program.

These four elements are a discrimination stUdy in development

practices, an advisory board, development incentives and an annual
report.
The goal of this program is to create opportunities for
investment reflective of the community's socio-economic structure.
It is recommended that the policy of the City require community,
minority and/or pUblic equity participation in all City subsidized

nn 'in

Henry L.

Gardner -

March 19,

2-

1991

projects.
The city subsidy should provide a reasonable return to
the community.
A reasonable return includes economic, employment,
civic, community, cultural, social or educational benefits.
In
unsubsidized projects, the city should encourage neighborhood and
community benefits consistent with this pOlicy and other city land
use policies.
The four policy elements are described in more detail below.
1.

Research
Process

study

on

Discrimination

in

the

Development

Recent United states Supreme court decisions require

clear findings of discrimination and tailored remedies
for such discrimination prior to the initiation of a
public policy to rectify the alleged discriminatory
practices.
As a result, the Task Force concludes that
the city of Oakland must hire independent consultants to
provide empirical evidence of the nature and extent of
discriminatory practices in real estate and related
economic
development
programs.
This
study
would
encompass programs where the city has acted directly or
through other government agencies to provide sUbsidy or
exclusive franchise rights to viable groups including
minorities
and
females.
The
specific
goals
and
timetables for the implementation and evaluation of the
recommended policy will be circumscribed by the findings
of this research, subsequent annual updates and other
periodic research.
2.

Advisory Board
An advisory board would be appointed by the Mayor with
the concurrence of the city council.
The role of the
board would be to ( 1) advise the Director of Economic
Development and Employment on the prudent operation of
the community Trust Fund; and ( 2) provide input on the
project selection point system.

The recommended advisory board would be comprised of nine

members:
three members from the community sector, three
from the development or business community, and three
representatives selected at-large. This board would make
recommendations regarding the Community Trust Fund and
the point system described in 2b below.
2a.

Community Trust Fund

The city should establish a Community Trust Fund to

act as the beneficiary of any financial return
negotiated by the City.
The Fund would be the

Henry L. Gardner -

3-

March 19,

1991

negotiated by the City .

The Fund would be the
vehicle
used
to
stimulate
community
economic
development,
emphasizing
partnerships
between
private
sector
firms
and
community-based
organizations,
where
appropriate,
to
stimulate
emploYment-generating small business and promote
strategic
commercial,
industrial
and
mixed-use
projects.
2b.

Point System
The city should adopt an equity participation point
system applicable to all development projects which
benefit from financial assistance from the City.
It would not be mandatory to have all three forms
of
equity
participation
in
every
development;
rather, this point system can account for project
benefits
generally
resulting
from
one
form
of
participation ( i.e. pUblic, community or minority)
in every instance.
As a quid pro quo for City
assistance,
developers
would
provide
for
an
expected financial return to the City that reflects
the
level
of
City
assistance,
or
demonstrate
minority,
community
and/or
public
equity
participation benefits based upon a standardized
point system.

3.

Development Incentives
The City should improve existing services or develop a
set of programs such as a Business Support Network which
acts as an information center to assist developers and
provides information on opportunities to participate in
neighborhood development, emploYment and training, and
other community participation vehicles.

The
City will
provide
market
data
on neighborhood
revitalization areas to the development community to
educate them on the priority locations where they can
contribute to general redevelopment efforts.
4.

Annual Report
These program recommendations are intended to provide for
an evaluative review resulting in the preparation of an
annual report.
This report should be prepared by an
independent third party consultant outside the city of
Oakland Office of Economic Development and EmploYment.
The consultant should be recommended by the Advisory
Board.

Henry L.

Gardner -

4-

March 19,

1991

community and Business Concerns

The
discussions
of
the Task Force
created
a
dialogue which
emphasized concerns of both the business community and communitybased non-profit corporations. Generally, business and development
interests preferred fewer restrictions on City-subsidized projects
and
promoted
strategic
economic
development
which
increases
economic activity in targeted sectors without regard for inclusion
of
minority
equity,
community
equity
or
pUblic
equity
considerations.
Community concerns indicated a preference for stricter requirements
enforcing equity participation goals, as well as community control
of the Advisory Board.
An additional consideration includes the
generation of new revenues from linked development fees, as opposed
to redirection of existing financial resources or future resources
such
as
pUblic
or
corporate
donations
of
land,
money
or
improvements.
Recommendations

staff has noted the divergent opinions, but recommends adoption and
implementation of the equity participation policy, acknowledging
that some areas of program improvement will be addressed on an
annual basis.

staff suggests that the Committee recommend to the City Council the
following actions which are set forth in the Policy:
1.

Direct
the
City
Manager
to
retain
a
qualified,
independent consultant to conduct research needed to form
the basis for a City Policy on Equity participation.

2.

Appoint a nine member Advisory Board on Local Equity

Participation to be confirmed by the City Council and
appoint a separate board to administer a Community Trust
Fund dedicated to community economic development.

3.

Direct
the
City
Manager
to
develop
implementation
guidelines for this policy, in consultation with the
Advisory Board.
These guidelines shall be approved by
the Council prior to implementation.

4.

Recommend that the Mayor appoint a board

members,
including
three
members
of
community Equity Participation Task Force,
implementation
of
the
discrimination
ownership and development of real estate

5.

Conduct an impact research study to determine if a nexus

of

up to nine
the
Minority
to monitor the
study
in
the
in Oakland.

AI

Henry L. Gardner -

March 19,

5-

1991

exists between the real estate project development and

legitimate burdens caused by the proj ect development.
This study would evaluate
if any reasonable
linked
development fees may be charged to finance the Community
Trust
Fund
program
which
mitigate
these
community
burdens.
6.

Coordinate the implementation of this pOlicy with the

Oakland Reinvestment Commission and the Linked Deposit
Program.

staff has prepared the attached program schedule which indicates

the amount of time required over the next two years to implement
the
six pOlicy recommendations.
with Committee
and Council
approval, staff will (1) identify resources,( 2) seek volunteer and
academic
contributions,
and (
3)
refine
the
scope
of
the
discrimination and development impact studies to further
the
Oakland Equity Participation
Policy.
City
and
Agency
budget
constraints dictate adjustments in the projected program cost.
These adjustments will be included .~ the implementation procedure.

rJUt.
Dir
Attachment

APPROVED AND FORWARDED TO THE

ECONOMIC DEVELOPMENT, COMMUNITY
DEVELOPMENT AND HOUSING COMMITTEE

City Manager
jm:eqpol icy

OWN,

Esq.

PROPOSED

PARTICIPATION

POLICY

1993

Implementation Schedule:

Appoint Advisory Board

and Community Trust
Fund Board

II

S'1

t:>

1'~~
oIl\..

i
J'

FOR

OAKLAND EQUITY

Month/Year

1.

PROGRAM SCHEDULE

2.

Prepare Implementation
Guidelines

3.

Appoint Panel to
Monitor Implementation
of study

4.

Retain Consultant to
Conduct Discrimination
in Development Research

Conduct Research study

5........
on Development Impacts

Coordinate Implementation
II 6.........
with the Reinvestment
Commission ( on-going)

1/91

1991 4/91

7/91

10/91

1/92

4/92

7/92

10/92

j.j

v ()' I (\/

K' C ,

6 "/'

L /\!'\.,

113 I3ROADWAY

OFFICE OF ECONOMIC DEVELOPMENT AND EMPLOYMENT.\

1-,'~~,,.'.),\

OAKLAND, CALIFORNIA 94612

9TH FLOOR

415 273-3015

TDD 839-6451

OAKLAND EQUITY PARTICIPATION POLICY

CITY COUNCIL

TASK FORCE
ON

MINORITY AND COMMUNITY

EQUITY PARTICIPATION

TASK FORCE MEMBERS

AND STAFF
DIANE BANKS,

JENNIFER BELL, JAYNE BECKER,

B~ELY,
JULIA BROWN, JIM BROWN, LARRY
CHAN, RAY CHESTER, OSCAR COFFEY, COLLEEN
ED

CONNOR,

TED

DILIARD,
GLOYER,

DANG,

JOSE'

DON

EVELIO

ISAACSON,

JONES,

GLORIA

JOHN

BISHOP
LARRY

LONNIE

OYUY,

DOH

GRII>,

JANET HALLIBURTON,
DOUGLAS
HIGGINS,
JOHNSON,

DAVENPORT,

DUENAS,

DAVID

GUILLORY,

WILL HERZFELD,
HYNSON,
GLENN

JACKSON,

BISHOP

ALLEN

DAVID JOHNSON,. VICKI JOHNSON,

GERRY

LEO,

RAY

SISTER LOIS MACGILLIVRAY,

MARRON,
GEORGE
MEYER,
DORYANNA
MORENO,
JAY
PATTERSON,

REVEREND

LIST,

VICTOR MAR,

DON

LOH,
OWEN

JOHN
MORTENSEN,
MUSANTE,
C.
J.

FRANK

RAPPORT, ROBERT SHOFFNER,

JOHN

PINKARD,

CLIFF TAW,

EZRA
GLENN

STOREK,
RICHARD
STOREK,
LARRY
TAYLOR,
CHERYL WALLACE, HAROLD WILSON AND ALAN YEE

CITY OF OAKLAND,
CALIFORNIA

October 17,

1990

HE CITY OF OAKIAND ~

PARrICIPATION POLICY

Table of Contents
october 17, 1990

E:XEOJI'IVE SUMMARY

ON I-'!

HE POLICY AND PROGRAM < XH?ONENl'S

LA.

n1e Policy and Program ConpJnents

LA.I.

n1e City Policy on Local Equity Participation

I.A.2.

n1e Program C01Tp)nents

LB.

Policy Inplementation

LB.1.

Research Study

I.B.2.

2a.
2b.
2c.

an

Discrimination

In Developrent

Review Committee

Comrm.mi.ty Trost Fund

Point System
Research on Linked Developnei1t Fees

I.C.

Developnent Incentives

I.D.

Armual Evaluation

I.E.

Recomrcendations

SE:TION II - POLICY BACKGRaJND,

00NSTRAJNl'S AND ~

II.A.

Background

II.A.1

Task Force Charge

II.A.2.

Task Force Methodology

II.B.

Policy Constraints

II.B.1.

Legal Constraints

case
case

10

1a.

he Croson

lb.

n1e Nollan

II.B.2.

COlTpetitive Economic COnstraints

10

II.B. 3.

Policy Requ.irelrents

11

3a.

SUl:xxmnni ttee Policy Requ.irelrents

11

14

SKTION III -' IRE roLICY

lILA.

Rationale for the Policy

14

lILA. I.

Goals of the Policy

14

III.B.1.

City of oakland Fguity participation

Review Board

15

IILB.2.

Conm.mi.ty Trust Flmd

16

IILB. 3.

Port of oakland Revelving loan Flmd

17

IILB.4.

he Local Eijuity Participation Point System

17

IILB.5.

Point System Ilnplementation Procedure,

19

IILC.

Developnent rncentives

19

111.0.

Annual Evaluation

19

IILE.

Ilnplementation Responsibilities

20

APPENDIX A-

aJRRENI' roLICIES AND PROCEI:XlRES

1.
APPENDIX B-

OEDE Projects with M/CEP

aJR:RE:m' roLICIES AND PROCEI:XlRES m

1.

21

OIHER CrITES

22

Matrix of Policies in other Cities

APPENDIX C-

roLICY DEFINITIONS

23

APPENDIX 0-

SUPPORI'mG MATERIAIS

27

1.

Introduction of Task Force

a.
b.
2.

welcome Letter by Chairperson

Task Force Invitees and staff

Research I:bc1.ments

a.

oakland Business Data

1) Downsized Economy

b.
c
d.

2) small Business Trends

Ridmcnd Decision-Article-New York Times
City Attorney Opinion on RichnDnd v. croson
Research Parameters-Minority Equity

Participation study

e.

Li..nkage Article

EXEaJTIVE SUMMARY OF '! HE

QAK[AND ~

PARrICIPATION POLICY

he policy devised by the task force on Minority and CoImm.mi.ty E:;Jui.ty

Participation is intended to provide a frameYJOrk for the City of oakland in
developing flexible options that will assist the City in meeting the twin
plblic policy goals of social equity and economic development.

ll1ere are very few m::x:lels or examples for such a policy.

M:lSt nnmicipalities
in the United states have pursued separate policies and programs intended to
meet these goals, but few have developed an integrated approach to this plblic
policy area.'!
he task force is aware of the difficulties associated with any
attenpt to intervene in the develqxrent process.
Real estate development is a
risky procedure and real estate entrepreneurs are reluctant to participate in
economic developrent policies that limit or restrict their ability to p..IrSUe
any dev~lopment approach they deem appropriate.
City redeveloprent or
suJ:: sidized projects are very risky for any venturer to undertake.
the other hand, minorities and female residents, who are the intended
beneficiaries of public policy based economic developrent, have limited
opportmrlties to participate as equal partners in real estate developrent.
Ihese groups interested in active participation can and should benefit in
ways beyond employmant from governm:mt sul:sidized or sponsored projects and
include
the
potential
for
ownership.'!
he
goal
of
City-suJ:: sidized
develqxrent is to close the gaps in economic assets,
opportmrlty and
participation.
Q1

he Task Force Goals and Procedures

he task force was fonted in February 1989 to reconnrend a comprehensive policy

concerning equity participation for COlmCil consideration.
Mayor Lionel wilson
appointed thirty-nine ( 39) task force nembers representing the real estate
developnent interests, business, labor, plblic agencies, and COl1I'lIl.mity-based

he task force net for aver a year.'!

he task force Chair,
Professor Edward J. Blakely , divided the group into three subconnnittees.
Each
subcommittee was assigned the SPeCific YJOrk of investigating the range of
issues and policy options associated with one of the following three areas:

organizations.'!

1.

MinorityEiIUity Participation Individual participation in real estate

or other developnent opportmrlties by under-represented groups that
includes designated minorities and females.' Ihese groups possess the
capacity to participate but because
of
systematic or de
facto
discrimination
have
been
denied
opportmrlties
for
economic
participation.

2-

2.

community Equity Participation -

comrm..mity-based and other non-profit

organizations as equity participants in real estate or other economic

opporbmities.

3.

Public Participation- City or agencies of the city as a

direct equity

participant
in real
estate
investIrent opportunities.

City-assisted

developtent

and

other

Each subcommittee conducted its work separately after initial agreement as to

the nature of the assignment and the relationship; between these three foms of

participation.'!
he subconnnittees were supported by city staff from the Office
of Economic Developrrent and Employnent, the Office of the city Attorney and the
city Manager's Office.
All full task force meetings, as well as suJ:x::ommitt.ee
meetings, were open to the public; a full public hearing was held on December
6, 1989.

3-

SEC!' ION I-'

I.A.'

mE POLICY AND PROGRAM < XMPONENTS

Itle Policy and Program Components

LA.!.' Itle City Policy on lcx::al Equity Participation

It is the p:>licy of the City of oakland to pronote maxinum feasible
participation in real estate developtents through the establi.shnent of private
and public partnership:; and other strategies.' The City therefore declares that
its long-tenn p:>licy is to advance OOIl1lDLU'1i.ty , minority/female and/or plblic
equity participation in all City-subsiclized projects, where the City has a
direct financial interest.'
Itle goal of this program is to stilDulate
opportunities for investIne.nt reflective of the oozmm.mi.ty's socioeconomic
structure.
The presence of a City subsidy in any project necessitates a reasonable retw:n
to the community.
A reasonable return can include employnent , civic,
community , cultural, social, and/or educational benefits.'
Itle City will
develop incentives for participation of developers in efforts that will enhance
neighborhood COIt1IterCial revitalization.

LA. 2.' Itle Program Components

The p:>licy developed by the task force has four inter-related components:

1) an independent study to detail the extent of economic disadvantage and

discrimination experienced by gro~ within the conum.mity that have been denied
opportunity for investIne.nt in city-subsiclized real estate developnent and
other City-assisted investIne.nt OPfX>rtunities;(
2) an advisory l:x:>ard( s)
to
administer a trust ftmd and/or a developrrent project p:>int
includes a set of options for local equity participation;(

system which
3) increased

nmrlcipal developrrent incentives to attract additional develOpteTlt to the

city and particularly to neighborhoods and;(
4) an annual evaluation of
p:>licy irrpacts.' Ihese components are described below.
I.B. Policy Implenentation
I.B.1. Research Study on Discrimination in the Developrrent Process
Recent United states SUprema <: burt decisions require clear findings of
discrimination and tailored renedies for Sl.ll::h discrimination prior to the
initiation of a public p:>licy to rectify the alleged discriminatory practices.
result, the task force concludes that the City of oakland IIDJSt hire
imependent consultants to provide empirical evidence of the nature and extent
of discriminatory practices in real estate and related econami.c developnent
programs, where the City has acted directly or through other govermrent

As a

agencies to provide subsidy or exclusive franchise rights to economically able

group:; including minorities and females.'
Itle specific goals and tine tables
for the implenentation and evaluation of the reconmended p:>licy will be
circLnrscribed by the findings of this research and subsequent annual updates on
this data and periodic research.

4-

I.B. 2. City Equity Participation Review Board

Ihe Review Board will have ~
members and will be balanced by the
following representation:
four persons from the COllIlt'IlIDi ty developnent
sector; three persons from the development or business conununity; and two
representatives from the at-large category.

In order to develop a pl:ograIn that is flexible yet accountable, the task force
proposes the establi.shItent of at least one nine person Review Board,
aPfX>inted by the Mayor with the concurrence of the City COuncil.'!
he role of
the Review committee will be to establish a point system for determi.ni.ng
developnent
projects
and
equity
investment
opporb.mities
goals
for
participation ( minority, oomnn.mity, public) on the basis of the research
data provided to it by the independent consultant's research described
above.
second,
a
Trust
F\md
Board
will
be
established
for
the
administration of a COImm.mity Trust F\md. which will be responsible for the
investnent of
resources
dedicated
to
i.nplenenting community
economic
developne1t.

I.B. 2.a.' Ihe City of oakland Community Trust F\md

It is the goal of any City-sllpIX>rted economic developrent activity to
increase the total wealth of the community and to increase the market
potentials of all areas of the conummi.ty.'
Ih:is process should benefit the
largest number of residents of the City.
Resources particularly
financial resources must be available from sources to accx:mlPlish the
objective of increasing and spreading developnent benefits.'
Ib this end,
the task force recommends the establishment of a Community Trust F\md.'!
he
Community Trust F\md is designed to act as the repository for a portion of
the City's return beyond.: meeting the obligations of debt service and
operational costs and designated tax revenue , derived from city equity in

City-subsidized developrent.
he composition of the Trust Flmd Board should reflect strong 00Jl1lllD'1ity
representation as \\ lell as technical investment expertise.

5-

1. B. 2. b.'!

he lDcal F.l;JUity participation Point System

City-subsidized real estate developnent is important to oakland to create a

strong commercial and industrial base.'
nle task force recognizes how
important it is that the city provi~ a
stable and straightforward
envirornnent in which to do business.
Timeliness and clarity in the
developmnt of housing, cx:mmerce or industry are important to reaching the

City's developlellt goals.

Clear policies require a systematic and long
tenn approach that is not susceptible to drastic fluctuations and provides
both the appearance and reality of fair dealing anong all potential
participants .
In order to meet the these objectives, the task force pl:oposes that the
City adopt a local equity participation point system applicable to all
developnent projects in which the City of oakland is a direct financial
participant.'!
he point system provides for a mriform assessnent for evaluating
project proposals.
he point system is a neans by which potential investors can bid or negotiate
for projects with the City with a clear Specification of the fonns of equity

participation, and the financial, risk, and return objectives of the City.
Ihese Specifications would be pre-stated in the form of neasurable criteria and
objectives the City wishes to achieve including standards of risk, project
size and conplexity and project feasibility with respect to a particular

developmnt or a class of developmnt projects ( such as office buildings,

neighborhood housing or conunercial developlellt, etc.).'!
he criteria for
awarding points for projects will be established_ for a three year period.
he criteria will be changed only with after one full year of notice.
No
particular form of local equity participation ( Le. p.Jblic or community or
minority) shall be required for anyone project; all three options would be
open to all project proposers in every instance.
In recognition of City subsidy, any developers' proposal must provide for:
1) an opportlmity for the City to realize a financial return that reflects the

net level of City assistance;(

2) minority, community or p.Jblic equity
investment opportlmities; and/or,( 3) benefits to the broader community, such
as generating new jobs,
creating business opportlmities for
minority
contractors and suppliers, or investing in the COrnmurri.ty Trust F\md.

I.B. 2 C.

Research on Linked Develor::nent Fees

he City will

engage in research to determine if a

develor:: nent burdens and appropriate fees

plOgtams which mitigate those burdens.

nexus exists bebJeen

which would be

used

to

finance

6-

1. C. City of oakland Develop.rrent Incentives

No city can be successful in encouraging economic developnent without providing

a range of incentives and benefits to potential investors. cne of the principal
benefits to any investor is the knowledge that the city is aggressive in its
pursuit of new business opporbmities.
oakland is no exception.' n1e city of
oakland nust i.:nprove its overall invest.nent climate if it is to maximize the
opportunities for its citizens.
he task force urges the City to take seriously its responsibility to put
economic and employmant developnent am:>ng its highest priorities.
It should
develop a set of direct prograrrs that present an aggressive approach to
investors.
One such approach is designing a new One-Stop Business Information
center to provide infonnation on and assist developers in opportunities to
participate in neighborhood developnent, employment and training, as trJell as
other community participation options.
the task force proposes that the City provide market data on the
neighborhood revitalization areas to the development c:x:mmtUI'lity to identify the
locations where they can best contribute to general redevelopnent efforts.'! he
task force endorses this approach and believes that this conponent nust be
i.:nplenented with the remainder of the policy.
Further,

l.D. Annual Policy Impact Evaluation

When

the

Policy on local Equity Participation is

adopted,

the

task

force

recommends that an armual evaluation program be implenented at the sane tine.

Annual evaluation will provide the City Council,

Mayor, and City staff with

empirical evidence on the effectiveness of various components of the policy.
his report will be prepared by an independent third party consultant
recxmmended by the Advisory Board and selected by the City Manager with
concurrence of the City COtmcil.'!
he armual report will be a public dccunent
and reported directly to the council by the Advisory Board with that Board's
recomnended .policy and program nodifications consistent with this policy.

I.E. Recx:nmtendations to the Mayor and '! he City council

1.

Instruct

the

City

Manager

to

retain

qualified,

i."lC1epende.nt

consultant to conduct research needed to form the basis for a City

Policy on IDeal Equity Participation.
2.

Appoint
a
nine
nemtP..r
Advisory
Board
on
IDeal
Equity
Participation to be confirmed by the City Courx::il, and to ag:x>int a
separate board to administer a Comnnmity Trust Flmd dedicated to
comnn.mity economic developnent.

7-

3.

Instruct the city Manager to develop implenentation guidelines for

this policy,
in consultation with the Advisory Board.'
lhese
guidelines shall be approved by the Council prior to implenentation.

4.

Rec:: onmehd that

5.

the Mayor appoint a panel of up to nine nembers,

including
three
nembers
of
the
Minority
Cbmunmity
Equity
Participation Task Force, to nonitor the iDplenentation of the
discrimination study in the ownership. and developtent of real
estate in oakland.'
Ibis research is supervised by the Office of
the city Attorney,
pursuant to the policy direction herein
provided.(
see st1II'Ilm'Y by City Attorney on Minority Equity
Participation study Research Paraneters in the Appendix.)

Conduct an inpact research study to determine if a nexus exists

the real
estate
pro; ect develotlllt and legitimate

between

comnn.mity burdens directly caused by the project developmt.'!

his
study \1lOuld evaluate ifany reasonable linked developtent fees may
be charged to finance the cammuni.ty Trust Flmd program Mrich
to help mitigate these COllIlnl.mity burdens.

6.

exists

Coordinate the implenentation of this oolicy witil the oakland

Reinvestment Commission and the Linked Deposit Program.

8-

S~ON II - roLICY BACKGROOND, CONS'rnAINTS AND ~

II.A. Backgr01.md

to develop a long-term policy to address the

economic options and opporbmities that arise from real estate and business
develqmant Pl:'OC;p:ans where the city of oakland has a d.i.rect financial interest.
be task force incorporated the eliverse c::onoepts and ideas from task force
members as \ VeIl as knowledge gained from other carmm.mi.ties facing similar
problems.'
Ibis section provides a review of the background of the process and
the constraints that served as the context for the 'WOrk of the task force.
the task force's mission was

II.A.l.

the Task Force Charge

In
February
1989,
the
city
council
convened
the
Task
Force
on
Minority/COImnuni.ty EtJUity Participation.'
Ihirty-nine task force members I
representing a broad segrrent of the oakland COl'llml.mi.ty ware appointed by Mayor
Wilson.'!
be task force was responsible for developing a policy on minority and
c:cmummi.ty a:;IUi.ty participation for real estate and non-real estate ventures in
the city of oakland in three situations:( 1) where the City has the right to
provide exclusive franchise; or ( 2) where the land is owned by the City; or ( 3)
where the City is a developtent partner. exposed to financial risk.'!
heir task

was
to
recommend
comprehensive
and
responsible
policies
conceming
minority/carmm.mi.ty equity participation for consideration by the City council
in the Fall of 1989.'!
he Task Force was representative of all the diverse
elements of the City.

II A.
. 2.

the Task

Task Force ~ thodology

Force YJOrked

like a

ccmnnission,

with

IJPmbPXS

providing input at

m.:>nthly neetings through three subcommittees.'!

he task force 01air I Professor
Edward J. Blakely I Depa.rtnent of City and Regional Plarming of the university
of california at Berkeley chaired the discussions. A research assistant from
the Depa.rtnent of City and Regional Planning and city staff from the Office of
Economic Developrrent and Eq>loynent, the Office of the city Attorney, and the
Office of the City Manager have provided staff support.
Specific presentations
on legal and economic issues and current pr<Xledure \ ere provided by consultants
and City staff.
Recorders have CXJlIpiled minutes ltIhich summarize
the
deliberations of the Task Fbrce and the presentations of staff.
Each
subcommittee developed policies to fit the following paraneters:

a.

Minority Equi.ty Participation Individual

participation by
economically disadvantaged groups that include designated minorities
and females.

9-

b.

Community
Equity Participation Community
based
and other
non-profit organizations as collective equity participants in real
estate or other developrre.nt opportunities.

c.

Public Participation City or agencies of the city as a

equity participant in developnent activities.

direct

Dle three subccmnnittees presented their initial reports for deliberation at the
ItEeting of the task force in July.'
lhese reports are included in the ~
for reference purposes.
Using these reports as a foundation, staff and the task
force have fashioned a policy report with program reconnnendations.

II.B.~ licy Constraints

II.B.1. legal Constraints
he oakland Equity Participation ~ licy requires thorough study to establish
the legal. constraints for the policy.
staff from the Office of the City

Attorney sununarized the inpact of bJo relevant and recent u. s.

cases: J. A. Croson Co. v. the city of Richm:>nd. Virginia;

SUpreme Court.
and NeIlan v.

california Coastal Conunission.

Based on the i.nplct of these bJo SUprene Court cases, the Task Force ooncludes

that the city of oakland must conduct an independent analysis to provide

empirical evidence of the na'bJre and extent of discriminatory practices in real
estate and related economic developnent programs, in which the City has acted
directly or through other goverrment agencies to provide sul:sidy or exclusive
franchise rights to economically disadvantaged minorities and/or females.'
Dle
goals or targets associated with this policy will be circumscribed by the
findings of this research.'
Ibis research study will fonn the basis for the
program guidelines.'!
he i.np::> rtant elenents of the cases are set forth below.
II.B.1. a.'!

he Croson Case

Briefly sununarized, the Croson decision requires that for the City to establish
a race preference program, it must find that minority group:;, intended to be

benefitted by such a ple>g1am have been discriminated against on the basis of

their race, which discrimination, past or present, has adversely affected their
participation in markets or business opporb.mi.ties which the City participates
in and that race-neutral alternatives are not reasonably available to renEdy
the effects of the discrimination.' Dle following step:; should be undertaken to
neet the requi.remants of the Croson decision:
1)'

Dlere DD.1St be empirical evidence that serves as the

determining effects of Past or current discrimination.

2)

Empirical

data,

both

statistical

and

direct

basis

testinDny

denonstrate that the identified group:; in that industry

on the basis of race or sex.

TNere

for

nust
excluded

10-

3)'!

he specific industry for which the City is contemplating a policy

e. g., COI'lI11'eI"Cial or housing developnent) must be clearly shown as
requiring a rerredial policy for the affected group.

he participatory eq:uity or developnent issues must be specified as

4)'!

the basis for developing a City policy that affects a targeted group

e.g.) minority or female as defined herein.

5)

If sufficient enq:> irical data exist, to make a finding of past or

current discrimination, a race neutral altemative must be pursued
before mre direct measures are used.

6)

If race neutral measures are unsatisfactory or unable to meet the

requisite goal, then otheralternatives may be pursued.

II-B.l.b.'! he NeIlan Case

he Nollan decision:
1)

Specifies that if the City requires land dedication or other

including financial)
exactions,
it must make
findings
that
denonstrate a link between the burden caused by the developnent and
the proposed dedication or exaction.

2)

Requires that exaction fees imposed by the jurisdiction must bear

some resemblance to cost of the actual mitigation the jurisdiction is

seeking to accomplish.

II.B. 2. Conpetitive Economic Constraints

situated in the Bay Area approximately ten miles east of san
Francisco, the traditional economic core of the region, and is surrO\mded by

oakland is

suburban municiPalities and adjacent to the booming central Valley region of

California.
Although oakland c:x:mpares favorably to other Bay Area cities in rents and land
costs, additional burdens ex>uld force the prospective finn to reconsider its
relocation, expansion, or investIIent in oakland.
Of particular concern is the
OO11JJetition provided by certain llIlD'li.ciPalities for the businesses oontemplating

11-

expansion or restructuring that have no need for the benefits provided by a

downtown or core Bay Area location.'

1hese numicipalties offer lower costs for

land, housing or taxes.'!
he advantage the inner Bay Area has in the quality
of life must be considered as advantageous.
Nonetheless the City must be
prepared to conpete with other jurisdictions with the economic advantages of
lower~t.
nle current policy discussion is set in a competitive context where oakland
must be capable of pragmatic and flexible decision-making to achieve its
i.npJrtant socioeconomic goals.'
nle City must recognize its inherent advantages
and disadvantages in competition with other regions for businesses and
developnents with specific geographic requi.rem:mts.
he changing legal environnrent requires flexible approaches for developrent,
cxmtracting or services, providing options when valid at:stacles exist for some
forms of equity, service or other mandated Participation.
Nevertheless, it is
clear that the need for involvement of minorities in all aspects of developtel1t
remains critical , within economic considerations.

II.B. 3 Policy Requi.reJtents

In order to focus

intensively, the task force divided into subcommittees to

focus on COInmLmity Equity Participation ( CEP), Minority Equity Participation
MEP) and Public Equity Participation ( PEP).

ILB.3.a. SUbconnni.ttee Policy Requi.reJtents

Each subcommittee

developed a

set of

associated with its resPeCtive focus.'

policy requi.renents

and

definitions

1hese are reported here because they are

essential to understanding the policy presented later

Public Equity Participation (PEP)

a.'!

he City of Oakland is an active Participant in the venture process

as a

representative of the comtmmi ty.

In this role the City must

becone llDre entrepreneurial.

In those instances when a project would
proceed only with city or goverrmental subsidy, the City or a
designated goverrmental entity should invest as an equity partner or
as a lender.
b.'

nle City,

in its entrepreneurial approach,

DUSt keep in mind the

macro economy of the Bay Area and adopt an inoentive-based awroaeh

to \ YOrking with developers,
punitive requi.renents.

rather than

an

awroaeh laden with

12-

c.

The city's entrepreneurial approach requires a clear strategy whiCh

takes advantage of its economic strengths.

d.'!

he City noJSt recognize the level of competition in both the labor

market and the regional economy and develop the following:( 1) a

short-tam program to match oakland's semi-skilled. labor force with

various industries where employnent demand exists for that type of
labor; and ( 2) a long-tenn program for upgrading skills of the local
labor force through education and training.
conm.mi.ty Equity Participation ( CEP)
a.'!

he City should establish a Comnumity Trust Fund capitalized and

supported by private and public developll::! l'lt within the City.

b.

Funding for the COrnrnlmity Trust Fund should

00lIE

from a variety of

sources, with a lending focus that encompasses new developrent but is

not limited to that sector alone.

c.

d.

Comrmmity equity participation should be an encouraged option for

both City-subsidized. and unsubsidized. projects.
COImnunity

equity

participation

should

incentive-based,

be

not

pmitive to new developnent or the business camrmmity.

e.

system

of

linked developrent

investigated as a

fees

or other charges

should be

source of capital for the COImmmity Trust F\md,

subject to requirenents mandated by the Nollan decision and other

cases comprising the current legal enviro:nnent.

f.'!

he

COI11rm.mi ty

Trust

Fund

should

be

overseen

by

special

city

advisory body that reflects the diverse comnnmity interests.

g.'!

he purpose of the COImmmity

Trust Fund should be to facilitate

neighborhocxi residential and c::x::mmercial revitalization;

OOllUlerCial, housing, and mixed-use projects;
employnent and training opp::> rtunities.
h.

affordable

as well as increased

The equity participation policy values those enterprises that use the

Hire Oakland First" or the Private Industry Council ~ og: taI' lS in

order to encourage hiring of unenployed and UOOeremployed oakland
residents as a responsible business practice.

Minority Equity Participation (MEP)

a.'!

he percentage of minority equity participation in a given project or

enterprise nnJSt be based

on the value of

net assistance

to

the

project from the City, the quality and sotmdness of the developteI'lt
and its team, risk and project feasibility.!

bEver, the City and the

developer may through negotiation achieve higher levels of minority

equity participation in any project.

13-

b.'!

his p:>licy language should not be interpreted as an implication that

MEP is a burden on the development team or that it seeks to place a
maxi.nn.mt or mi.nimum level of participation by minorities in City
assisted projects.

c.

COnmensurate with hisjher financial interest and risk in the project,

the
individual
minority
investor
shall
participate
in
the
decision-making process Passive and limited investment without any
risk would not qualify as local equity participation as stip.1l.ated in
this p::>licy.
The minority participation can be acconplished by cash
investmant, an exchange of professional services or a oambination for
a recx:lgl'li.zed. percentage of ownership.
The developer can provide a
nenu of participation options for minority investors that best meet
the objectives of the City and the requi..renents of the project.

14-

SEX:TION III -'!HE POLICY

III.A.

Rationale for the Policy

he policy seeks to redress certain patterns of discrimination in access to

economic OPlX'rtmUty arising from developnent.'

Ihe task force believes there
is sufficient justification for the City to develop specific goals and targets
for community, minority, and plblic equity participation.
For instance, a
recent study commissioned by the City identified persistent patterns of credit
discrimination conmonly known as " redlining."'! he lack of credit available to
minorities, c:x:nmmmi.ty groups governed by minorities or by plblic jurisdictions
with significant poIXliations of minorities contributes to less than full
economic participation in the developnent of real property.'
lhere is, at the
minimum, an indirect link between the credit gap and the ownership gap.'!
he
relative ab;ence of minority involvement in ownership of real property may
exacerbate oPlX'rbmity gaps in enploynent and contribute to the perpetuation of
higher levels of poverty and lower levels of net w:>rth by certain minority and
disadvantaged poIXliations.

III.A.!. Goals of the Policy

he task force understands that establishing a program consistent with current

law is superior to developing a policy which might restrict the City's options
in the future.'
Ihe task force recognizes the following: research is required to
establish minority investor goals; that those goals may have a lang time frane;
and that each project must be examined on its nerits and clearly include levels
of local equity participation and structure for that participation.
he goals of any equity participation policy must ac:c::onmJdate the need for
timely decision-making.'
Ihe process outlined herein aims to be responsive both
to the community interests and thenore time-eritical market requirenents.'! he

task force believes the City of oakland should develop neasurable goals and
targets for local equity participation in City and City Redevelopn-ent Agency

assisted projects.
As mentioned earlier, the requirenent for participation can
be satisfied in a variety of ways such as by a retunl on City invested dollars
that flow from sane fom of cxnmm.mi.ty benefits such as jabs or neighborhood
projects, or by direct ownership by active local minority investors.'!
he task
force proposes a flexible and responsive policy system, descriJ::led below, that
is intended both to neet the variety of circumstances that typically arise
during the economic develoJ;XDe1lt process and to provide a stable e.nvirormelt for
potential investors.
he local equity participation policy is triCJ3erErl when City funds are used

as a direct sutsidy for real estate and related developteT1ts.'!

funds may originate from state, federal or other government sources.

he

city

15-

The policy is designed to rreet the following objectives:

a.

city policy and procedures should prom::>te, facilitate and. encourage

evidence of local equity participation in city-sul::sidized COllUterCial,

industrial, and residential developments. In detennining whether any
developtent receives City or Agency sul:: sidy, the City recognizes that
the economic benefit of such sutsidy is reduced by the cost of
special levies, assessments or conditions placed on the develop.teI1t.
b.'

Ihe City's equity participation policy should achieve broad comrmmity

economic developne.nt objectives rather than aiming to benefit only a

small number of minority individuals or cx:mmu.m.ity grolJl:S.

Clear and consistent written procedures are necessary to clarify the

c.

negotiation prcx::ess for developers.

d.

Negotiating

regarding

para1lEters

equity

participation

for

each

project should be established early and negotiations should conclude

as quickly as possible, provided ~ ver, that sufficient flexibility

is retained to rreet legal requirenents mandated by the Croson and
Nollan decisions and competitive market constraints.

e.

The

full

range

of economic developrent

subsidies

including

land

write~,
governnent sul:: sidies, employment and training progzanB,
as well as other incentives should be used to encourage public,
minority, and community equity participation.

f.

Program guidelines must provide flexibility to allow local equity

participation in a variety of develOJXleI1t projects, accomplished in a

variety of acceptable formats.
To the extent pennitted by law, City policies should give major

g.

considerations and/or preference to qualified local developers and

investors, minority or otherwise,

investors from outside the City.

over qualified

developers

and

IILB.l. City of oakland ~ ty Participation Review Board

he Mayor,
oakland

with concurrence of the City COuncil, will awoint the City of

Equity Participation Review Board to guide the Director of the

Office

of Economic Developne.nt and Employment on the operation of the

QJmmunity Trost Fund.'!
he review panel will be comprised of nine 1IeIIlbP...rs:
four ll'Ifmlbers
from the Ccmm..mity
Developnent
sector,
three from the
developne.nt or business cx:mmmity, and two representatives from the at-large

category.'!

he

Developoont

and

Board will' advise

Director of the Office of

of the Point System
jmplenentation with respect to City assisted projects.
Employnent

on

the

the

design

Ekx:nJmic
and its

16-

III.B. 2. community Trust F\md

he City should establish a' communi.ty Trust F\md and Trust Fund Board to
act as the beneficiary for any financial return negotiated by the City.
he F\md would be the vehicle used to facilitate community economic

developrent,
emphasizing partnerships bebJeen private sector finns and
CX1I1JI1!mity-based
organizations
to
sti.nu.llate
employment,
generate
small
businesses, and pronote strategic c::: omnercial,
industrial,
and mixed-use
projects with low and affordable housing develotl'IeTlts.
he task force recomnends that the City of oakland establish the O;mntmity
Trust F\md.'! he Flmd is intended as a long-term nechanism to effect balanced
developrent within the City.'!
he fund would : receive capital from a variety of
sources.'!
he Fund would m1dertake a wide range of activities intended to
i.nprove community and neighborhood revitalization such as neighborhood
ocmunercial incentives, land banking, shopsteading, and low and affoniable

housing developroonts.
he

Fundi must

be further

capitalized by

sources

in

addition

to

pz:oceeds

receiVed through City financial Participation in developnent projects.

Q1e
source of capital the task force recomnends, is an appropriation from the
City's general fund.
For this appropriation, for example, a PlaSed elimination
of the five-year business tax abat.enents for new downtown developrent could be

set aside, with the additional revenue stream being put in the CoImmmity '! rUSt
Fund.
As a centralized vehicle for economic developrent investnents in the
City, the F'lmd could be capitalized from several other sources including the
following:
a.

Private grants of capital or other aSsets, such as land.

b.

other federal economic developrrent programs.

c.

other state economic development pl:ograms.

d.

CoImmmi.ty. Development Block Grant allocations.

e.

Redevelopnent AqerK:y Funds.

f.

Repaynent of Urban Developrent Action Grant loans.

g.

Contribution of City owned land to the Trust Fund as collateral.

h.

Surplus land donations from other p.lblic agencies.

i.

Development fees or related sources.

he level of capitalization for the Fund will depend upon the aIlDlD"lt of i..noone

generated from economic devel~t investnents in the city.' Ib insure the

responsiveness of the COJmm.mity Trust Fund, an amual report by an independent

17-

consultant on its activities is recomnended.

The report should measure the
year-to-year progress of the quality, quantity and distributive benefit of its

activities and projects.'!

council
by
the
Director

his report shall be transmitted to the city

of
the
Office of
Economic
Developrent
and

Employrrent, and be available to the public,

III B.
. 3. Port of oakland Revolving loan Fund

A parallel effort by the Port of oakland should fmld a revelvi.ng loan fmld to
provide financial assistance to small, minority and wonen businesses in
connection with the small business concerns' Port related activities.'
Ihrough
the revolving loan fmld, the Port should provide economic assistance to Port
related small business conoems by making needed loan capital available and by
pronoting involverrent in Port related activities by under-represented segnents
of the business comrm.mi.ty, particularly minorities and wonen.
It is understood
that the fmld would be capitalized with cash distributions made to oakland
Business DevelopteTlt COrporation ( OEOC) for use for trust ftmd p.n:poses in lieu
of paynents to the Port of mini.murn and percentage rents all in accordance with
the tenns of certain agreem:mts entered into between the Port of oakland,
with the Joint Venture of Guilltone Properties, Ltd., and OEOC.
he

Task

Force

reo ijju,ends

that

the

Port

consider

other

sources

for

supplenenting the revolving loan flmd and further review the Policy to identify
activities in which the Port may jointly participate with the City to ilnplenent
the task force's recomnendation.
III.B. 4.'! he IDeal Equity Participation Point System
The City will adopt a

local equity participation point system to be applied to

all developtent projects that benefit from direct City financial assistance.
All foms of equity participation by minority, comrm.mi.ty, or public entities
are penni.tted.'!
he points would be awarded for project benefits generated that
resulted in any form of participation ( Le. public, OOIlUDl.D'li.ty, or minority).
As
a quid pro quo for City assistance, developers will provide an agreed upon
financial return to the City that reflects the level of City assistance, or
provides increased minority, COl'lln'Iln'lity, and/or public equity participation.
he Advisory Board will rec:x:mmend to the director of OEDE the criteria to be

used for at least a three year period for the assigrnnent of points to projects.
New criteria will be added to the point system with one year of notice.
Annual
goals are to be established for the fonns of participation described in this

policy ( Le.

minority, comrm.mi.ty or public).

18-

he city will recognize multiple participation benefits, with developers

earning points for providing equity participation options including but not

limited to the following:

a.

b.

Equity
participation
by
a
local
minority
individual
minority-oontrolled business, in the form of an active
interest which is at risk.

or

Equity participation by a CXJltlrnllJlity organization in the form of an

active interest which is at risk.

c.

Equity participation by a p.Jblic entity in the form of an active

general partnership interest or a limited partnership interest.

d.

e.'

Pre-leasing set- asides or rent sutsidies to minority tenants,

conummi ty organizations, or civic entities in c::cmmercial, industrial
or mixed-use projects.
EXchanging of equity interests
services rendered by minority
businesses, or conummi ty groups.

in the project for professional

individuals, minority controlled

f.

Financial contributions to the community Trust Ftmd.

g.

Additions
to
the
city's
housing
stock
by
rehabilitation of sales and/or rental housing.

h.

Using minority individuals and/or finrs or commmity organizations as

providers of professional service providers or vendors of supplies.

i.

Generation of local sales or similar tax revenue.

j.

Creating or retaining of increased employnent or

employnent opporb.mity over the life of the project.

k.

Redeveloping or rehabilitating envirormentally-or Iilysically-blighted

properties .

1.

IDeation in oakland of a new strategic industry or revitalization of

a major strategic industry in the City of oakland.

ID.

Hiring through the Hire oakland First (HOF) program or surscribing to

the policy goals of hiring local residents..

n.

Contributions to job training programs for oakland residents.

construction

or

significant.

19-

III.B. 5.

Point System Implenentation Procedure

Once the equity participation guidelines are developed and published, the point
system \\'Quld be implenented by the following:

a.

Developers seeking City financial assistance for pl:oposed projects

will be subject to a negotiated or an open competitive process that
provides for local equity participation.

b.

c.

or the appropriate City department offering any developer

financial assistance for the project will calculate the net present
value of that assistance for the purpose of determining the type,
aIrOunt and degree of local equity participation.
OEDE

In exchange for the public sul:sidies described in this

policy, OEDE
participation program with the
City based upon: the value of the net assistance: the quality and
soundness of the develo:r;ment and its develo:r;ment team: financial
frisks: and project feasibility.
and the developer will negotiate a

d.'!

he developer can reduce the financial contribution to the Trust Fund

by providing equity participation benefits, thereby achieving points

as set out in the published guidelines.

e.'!

he Council, through its evaluation consultant, shall armually review

the equity participation policy to insure that the city remains

economically c:onpetitive with other oormm.mities and to maintain the

legal integrity of the program.

III.C.

Developrent Incentives

he city should iJnprove existing services or develop a set of programs such as

One-stop Business Infonnation center to assist developers and provide

infonnation on opportunities to participate in neighbortlood developtent,
enployment, and trainingI as well as in other 00IDmlmi.ty participation vehicles.
the

he city will provide market data on the neighl:x:>rtlood revitalization areas to

the developnent community to educate them on the priority locations where

contributions may be made to general redevelopleI1t efforts.

III-D.

Annual Evaluation

Ihese recxmm:mdations are to guide the progJ:am inplementation.'!

he p::og:t'am

will be armually evaluated and result in the preparation of an independent

report by an independent consultant recxJlIJIIS1lde by the Advisory Board and

selected by the city Manager.

20-

III.E. Implenentation Resp:msibilities

he Office of Economic Develo}; Xl'ellt and Enq:lloyment ( OEDE)
is the City's
negotiating agent with. respect to equity participation on commercial or
industrial projects.
In the case of residential projects, the Office of
CCJmnnmi.ty Developrent ( OCD) is designated as the City's negotiating agent.
In
the case of mixed-use projects, the City Manager shall determine the lead
department for the role of of negotiating agent.
Acting in this role, OEDE or
OCD should consult with relevant COJtD.TB.n1ity and business interests in developing
guidelines for the inplenentation of this policy.

21-

APPENDIX AA.

CURRENT roLICIES AND PROCEI:lJRFS

CUrrent Policies and Procedures in the city of oakland

City of oakland's current policy is to use loan subsidies and property

disp:>sitions to obtain EqUity participation oommit:mants from developers.
staff negotiate a variety of DeC'bani.sms which generally result in either
minority or comnu.mity equity participation in each developJeT1t project.
llle flexibility afforded by the atsence of strict formulas and procedures
enhances the City's ability in negotiations to make
local equity
provisions part of particular projects.'
llle current practices in
iltplerrenting EqUity participation policy are
consistent with the
City's 1988 overall Economic Developtent Plan.
procedures
offer flexibility
in negotiating equity on a
project-by-project basis. Nonetheless, there are disadvantages which
result from the lack of clear or consistent guidelines, including the
following:

CUrrent

1.

Protracted negotiations over equity participation requirements may

delay projects, increase costs, and obviate a conpetitive timing or

marketing edge.

2.

Negotiation impasses,

occurring after nost other elements of the

project are agreed upon, may weaken the City's return or sacrifice
the quality of the developnent product for minority or commmity
participation.

22-

APPENDIX B-

aJRRENT POLICIES AND PROCECURES

rn

OIliER CITIES

Fortunately or unforbmately, there are no real policies or procedures from .

other cities on which oakland can m::xiel their ~
ty participation policy.
Fortunately, because oakland is unfettered by precedents in its search for an
equity participation policy that is tailored to its specific circumstances and
needs.
Unfortunately, because oakland nust break new ground in c::onstruct:ing an
equity participation policy.

A number of other cities use various measures to encourage group and area
developtenti these measures range from minority/female, and ocmm.mi.ty-owned
businesses to low-cost housing and enterprise zones.
M:>st of these are stop-gap
measures rather than policies ai.ned at the long-term economic health of the
entire community.'!
he mechanisns vary from first-source hiring in seattle to
housing~veloptent linkage pt:ograns in San Francisco, Boston, and seattle.
Boston also has a linked development program that requires, in exchange for
exceptions for developtent on prime downtown parcels, a develoPer also to build
in very depressed areas.'!
he Boston for Boston program is a joint vent.me
program,
supported by city and developer funds), in which develOPerS and the
I (

Boston Chamber of COrcmerce develop a

develoPerS predict will be created.

job training pt:ogram for jabs that the

Atlanta has a program that seeks 25 percent minority ownership in city invelved
land sales and 20-25 percent participation in imple:rrentation team; for the
related development projects.
San Jose also has a first-source policy in its
Enterprise Zone which complenent its Small Business Incubator Project.
Philadelphia has a
policy anendnent to its contracting ordinance that

encourages equity participation in Authority projects".

It also encourages

Philadelphia First", a hiring program, but has no legislative authority in the

fom of written ordinances.

In

Baltinore,

the

Baltinore

Development

credit

Corporation,

private

non-profit organization, distributes loans to " disadvantaged" small businesses.

a certain
machanism is
participatory ground-leasing as practiced by entities such as c.AI.rmANS or Los
Angeles County.
In addition, many of the federal programs over the years, such
Nurrerous cities across the country have prograrrs that set aside

percentage

of

city

contracts

for

WBFs

and

MBEs.

Another

as Connmmity Develo~t Block Grants ( 1)006), have been ai.ned at creating job;
and pronoting communi. ty developrent.'
Ihe land use planning nechanisrn of housing
density bonuses has been used across the country ( california and Florida) and
might be adaptable to an equity participation policy.
ltbst often used to
encourage low-cost housing, or to provide a plaza or open space,
bonus could be given for equity participation.

density

23-

APPENDIX C.

roLICY DEFINITIONS

be following definitions act as a franev.urk for the policy proposals.'

are:

nlese

1.

City Participation - refers to ail forms of City subsidies including

federal block grants, state of California program:; and direct uses of
City of oakland credit and/or its other financial resources.

2.''

Minority''in the scope of this policy includes the following:

A1rerican Indian or Alaskan natives; African-Anericans ( Black), not of
Hispanic origin; Asian-Anerican; and Hispanic-Anericans persons i.e.
of M3xican, Puerto Rican, CUban, central or South Anerican or other
Hispanic culture or origin, regardless of skin color . Individuals
born in Spain or Portugal or their descendants are excluded fram the
Hispanic category.

3.''

Minority Equity Participation"- refers to direct or indirect

ownership or equity participation as well as opportuni.ties to support
ownership for certain citizens in the City of oakland.'
lhese
citizens are those who may belong to categories shown by research to
have suffered from economic discrimination because of race, ethnicity
or sex as defined by state of California statutes.
Minority equity
participation may be via services to developtent projects, cash or
cash equivalent contributions, or other considerations.
Minority
equity participation program:; may be voltmtary or required depending
upon the involvenent of '! he City of oakland, state, Q)tmty or Federal
governnent in the project using taxes, land, or other financial
incentives.
Any fonn of ownership or equity participation carries the
full risk of ownership for the participants, although the city of
oakland bears no responsibility for individual losses or gains in
such arrangenents.

4."

Minority E:;J:uity Participation"- neans that for a minority to be

considered a participant tmder this policy he/she must possess a
direct ownership stake with attendant and active participation as an
investor in the project's .develoIMS1t and/or managenent processes.

5.''

Minority E:;J:uity Participants"- are person such as females of any

ethnic or racial group racial minorities, and/or businesses in which
females or other minorities own controlling inteIest.
Individuals may
be classified in only one category of minority.
OWnership by
community developrent corporations, non-profit institutions and
p..1blic agencies is excluded fram this definition.

24-

6."

COlmnuni ty Equity Participation"denotes an arrangenent where the

intent is to provide opporbmities and support of ownership for
oakland residents who are economically disenfranchised.'
Ibis may
operate on an individual basis, for a particular district of the city
or for a racial minority organization.
It may also be aimed. at
providing enq:> loynent opporbmities to local residents that ot:heIwise
tiOuld have been denied to them.
In pursuing comnumi.ty equity or local
enq:>loynent approaches, the comm.mi.ty Trust Fund will act as a channel
or using contributions for the purpose of assisting c:x:nmmmity
projects ( housing, and small or minority/female businesses) as
SPeCified by the City or other trustee.
In addition, this form of
participation may be satisfied by setting SPeCific local enq:> loynent

or related goals.
7."

Public ( Le. City goverrnterlt) Equity Participation"refers to the

ownership stake of a local entity directly as local government or
through a sponsored developnent corporation.'!
his ownership stake may
result in income or other benefits to the camrm.mi.ty as a whole via
SPeCific neighborhood projects, employnent and training programs, or
investJtents in comnumi.ty level economic developnent, or minority and
camrm.mi.ty ownership opporbmities as defined above.

8."

Procuretrent Equity Participation"- means equity participation by

minorities in the form of cash or in-kind investJtents in lieu of
charges for goods or charges for services.
Furt:herm:lre , City policy
should recognize
that minority equity participation
can
be
sul::stantially enhanced by City procurenent policies that encourage
CCJJlPetitive participation by minority-owned vendors, and by City
policies and procedures that effectively advance equal employment
opporbmities and atfinnative action in hiring and pronotion of
minorities .

9."

Disadvantaged Business Enterprise or DBE"-is a small business

concern [ as defined pursuant to section 3 ( 15 U.S.C. 632(a) of the
Small Business Act. and inplem3Ilting regulations] that is owned and
controlled by one or mre minorities or TNOIDel1.
For the purpose of
this definition, owned and controlled means a business that is:

a.

at least 51 percent by one or nore socially or

economically disadvantaged individuals or, in the case of a
publicly C7WIled business- stock owned at least 51 percent by one
or nore socially or ecanamically disadvantaged individuals; and

b.

Managed and operated on a daily basis under the control of one

OWned

or nore such disadvantaged individuals.

25-

10.''

Minority or WOllen Business Enterprise ('' MBEjWBE'')_''- A small

business concem [ as defined pursuant to Section 3 ( 15 U.S.C. 632(a
of the Small Business Act. and ilnplenmting regulations] that is owned
and cxmtrolled by one or m::>re minorities or WOllen, as the case may
be. For the puqx:lSes of this Policy, owned and cxmtrolled neans a
business that is:

a.

owned at least 51 percent by one or m::>re minorities or women,

or, in the case of a 1XJblicly owned business, where at least 51

per cent of the stock is owned by one or m:>re minorities or

OIlel'l; and

b.

Managed and operated on a daily basis under the cxmtrol by one

or m::>re disadvantaged individuals.

Wonen who are minorities may
be exmsidered as women or minorities but shall not be considered
as roth.
In determi.ning whether a business enterprise qualifies
as an MBE or WBE, the eligibility standards shall awly as
currently set forth in Title 49, Code of Federal Regulations,
Part 23, 23.53 ( a)( 2) through ( 4).
11."

First Source Enployment"is a cxmtractual or voluntary pIogJ:am

sul:scribed to by a developer who seeks a City or other govenm:mt
loan or financial aid for a building project.
SUch a pIogl:am calls
for a specific referral arrangenent with a local enploynent aqercy
for all or SOlIe prop:>rtion of job; within the project for a set
period of tiJne.

12."

Job Training"is the required or voluntary job training related to

or set as a condition to developrent projects within a locality.

13."

InvestItent
or
Developrent
Bonus"
denotes
the
specific
extraordinary provisions to benefit a locally based or minority
developer for a specific set of projects in certain localities or

with

govenm:mt Participation.'
Ihese bonuses may provide for
additional building site coverage, lowering of mitigation fees
or special competitive bidding opportunities.

14."

set Aside Programs"provide a set number, target number, or

percentage of projects or cc:JI1iX>nents of projects to meet certain
minority, local, or other conditions to gain awroval.

15."

Linkage Programs"are those specific exactions associated with

private developrents to offset social, economic, or physical costs
related to the prop:>sed developoent.

16."

camrntmity Trust F\md"is a fund established

neighborhood based and ccmmnmi.ty projects.

to

invest

in

26-

17."

Developer Fast Track"- is where the local goveJ:TIl'lel1t provides speedy

approval of projects that meet certain predetennined goals.

18."

Socially and Economically Disadvantaged Individuals" refers to

persons who are pennanent residents of the United States and who meet
the criteria cited earlier with respect to minority status as
indicated by the SInall Business Administration under section 8 ( a) of
the Small Business Act, as amanded ( 15 U.S.C. 637 ( a.

27-

APPENDIX D-

SUPPORI'ING MATERIAIS

Introduction to Task Force Docurtentation

force convened m::>nthly neetings from February 1989 through June

1hese m::>nthly neetings required periodic IlEeting materials which
have been collected in this section to provide documentation of the task
he

task

1990.'

force endeavor.

SUMMARY

ON

OAKLAND

EQUITY

PARTICIPATION POLICY

Committee Charge

Determine mechanisms for Equity participation in all projects in

city
Define participants and circumstances of participation
Examine policy approaches in other similar communities
Develop a City Policy
Requirements of Policy
Insure Oakland remains ca~petitive
Clear policy that includes:
Incentives
Provides equal access
Impacts total community
requires Participants to be " At Risk"
Uses vehicles to build Neighborhood/Community Bene~its
Policv Goals

1.

Improve Oakland's Competitive Position in the Region

Require Equity Participation in all City Subsidized Projects
3. Options and opportunities to Use Equity Participation
Instruments, but not required
4. Insure no project or Program Reduces City Fiscal Returns or
comm~, ity Benefits
2.

Policy Components
1.

Research Study on Discrimination in citY-Subsidized

Development and other related investment opportunities
Identifies segments of the community which ave experienced
discrimination in obtaining participation in business

opportunities.
Sets percentage goal, if warranted to redress discrimination
2.

Advisory Board
Recommend Point system
Applies to Subsidized Projects
Any form
Minority
Community
Public
Other Benefits
cant=ibutians to Community Trust

Administer community Trust Fund

Redevelopment and other Public Funds
Neighborhood Revitalization
3.

Development Incentives
One- stop Business Information Center
assists developers and business persons with information on
neighborhood development and employment programs
market data on neighborhood revitalization areas
strongest form of encouragement for broad-based equity
participation

4.

Annual Report
Annual Evaluation Report analyzes the results of the policy
Prepared by an outside consultant
Recommends areas of improvement

OCCUR
OAKLAND CITIZENS' COMMITrEE FOR URBAN RENEWAL

Members

To:

of the

City Council

Community Development

Committee

on

Economic

Development,

and Housing.

Oakland Citizen's Committee on Urban Renewal ( OCCUR)

From:

City's Task Force Proposal of Policy on Minority/Community/Female

Re:

Equity

Participation
March 19, 1991

Date:

A policy such as the one the Task Force is presenting to this City Council Committee
has been long overdue for Oakland.

The City needs to guarantee that future development

in Oakland will be balanced and that all areas of the city and all of its socially and culturally
diverse residents

will benefit from it.

patterns of discrimination
population.

A development

policy must also serve to remedy

which has effected much of Oakland's predominantly

minority

It was with this vision that OCCUR along with other representatives

of the

community first proposed a policy for balanced development in Oakland, which has served
as the incentive for the Task Force process.
OCCUR has continued its commitment to the policy developmentprocess, by having
one representative on the Task Force and devoting staff time to ensure that the community's
interests would be served.
equitable

distribution

We are supportive of any policy which has as its main goal the

of benefits

industrial development

in Oakland.

if designed and implemented

provided

by increased

real

estate,

commercial

The Task Force policy has that potential.

and

However,

incorrectly it could serve no other purpose than to give the

City of Oakland only the appearance that it has a commitment to its low income residents,
mainly minority population and depressed neighborhoods.
While we support
concerns

especially

with

this policy as being a viable framework,

regards

to

the

point

system

and

we still have some

policy design,

community

participation, its assumptions about Oakland's position in the regional economy, the linked
development

fee component,

and the policy development

process.

As a result of these

concerns, we have put together this response to the policy as it being proposed by the Task
Force. This can be seen as a minority report, whose conclusions we feel are shared by many

representatives

and leaders of the community.

In the first section we have outlined our

general concerns and in the second section our comments

related to the Task Force's policy.

parallel and are specifically

PART I: GENERAL CONCERNS

1)

REOUIREMENTS

VS. INCENTIVES

The Task Force policy recommendation

is a flexible policy which allows developers

to

choose which kind of equity they would want to participate in. While we at OCCUR agree
that a policy should have some flexibility, we also believe developers should be required to
meet a specific set of equity participation criteria which are consistent with goals for

economic development.

2)

A SERIOUS

COMMITMENT TO LINKED DEVELOPMENT

FEES

As a way of generating new revenue for increasing Oakland's low-income and affordable
housing stock, and for the revitalization of depressed neighborhoods, both of which are in
many instances adversely affected by Downtown development,

the City should seriously

consider implementing linked development fees. This policy offers an excellent opportunity

to research the viability of such fees for the development process.

3)

STRONG COMMUNITY

PARTICIPATION

IN THE POLICY DEVELOPMENT

A policy whose primary goal is to spread the benefits of development to minority and lowincome residents
representatives
opportunities

representatives

representation

4)

and

neighborhoods,

should

into the policy development

for the

public

to

speak

incorporate

process.
but also

these

communities

and

their

This not only means having many

the

on the advising and decision-making

incorporation

bodies

of community

of the policy.

There

should be the largest of all the " public" participants.

ASSUMPTIONS

OF REGIONAL

COMPETITIVENESS

The Task Force policy assumes that Oakland's competitive position is very fragile and that
any type of regulations will prevent developers from locating in Oakland.

OCCUR believes

that Oakland position is much more complex and that other factors such as an unskilled
labor force represent a much greater threat to oakland's economic growth than stronger

regulations. In this light we feel that the City should pursue an aggressive policy that will
serve to meet the goals of balanced development.

5)

LOCAL EMPLOYMENT

REOUIREMENTS

The main obstacle facing Oakland's economic growth is a high unemployment

lack of job skills.

rate and a

A policy which deals primarily with economic development as this one

does must directly address this problem through creating incentives for providing both job
skills and employment for Oakland residents.

The policy, theway it is framed now, only

marginally deals with this problem.

6)

ROLE OF AND AMOUNT OF MINORITY

EOUITY PARTICIPATION

The Task Force assumes that by simply having greater minority equity participation
minority community will benefit as a whole.

the

While we agree that a strengthening of the

minority investor community is a positive goal in and of itseH, we also maintain that
minority investors being helped by the community need to reinvest in their neighborhoods
to make it beneficial to their communities.

However, these minority investors should not

be given a double burden and the City should pursue creative ways in which to guarantee
that both goals are achieved.

Pending the results of the Crossen research, the City should

establish levels of both minority/female

7)

TYPES OF PROJECTS

and community equity.

AFFECTED

The Task Force's policy recommendation

BY THE POLICY

is relevant only to those which are subsidized by

the City. OCCUR believes that all development projects should be included in a balanced

development policy.

8)

CITY POLICY DEVELOPMENT

PROCESS

Of great concern is the urgency of realizing such a policy. A policy of this nature has been
recommended

for the City of Oakland

for over five years, and the formal process of the

Task Force has taken close to two years. During this time much development has occurred
which has not been affected by such apolicy. If this trend continues then there will be very

few projects especially in the downtown area which will be affected by the policy when it is
finally implemented.

We feel that a policy of this nature be a top priority for the Council

in 1991 and that the Council make every effort to have it operational by the end of this

year.

We also encourage that this Committee recommend that the entire City Council

discuss and debate this policy at a working session no later than this spring.

PARTll: SPECIFIC COMMENTS OF TASKFORCE POLICY

In this section we will be commenting on specific sections of the Task Force policy.

The comments are consistent with the general concerns outlined in section 1. It is meant
to be read alongside the Task Force policy. On each comment we first give the section we
are referring to, then we state our concern or problem with thatsection, and finally we give
a recommendation

on how to

deal with that problem/concern.

COMMENT#!
Task Force Policy Section: LA.I.

THE

CITY

POLICY

ON

LOCAL

EQUITY

PARTICIPATION
Problem/Concern:

A policy of this type should also apply, in some form, to non City-

subsidized development

Recommendation:

projects.

Development projects which receive City assistance should be required to

meet certain equity objectives.

Those that do not get assistance from the City should be given

incentives to meet the City's equity objectives.

COMMENT #2
Task Force Policy Section: LA.I.

THE

CITY

POLICY

ON

WCAL

EQUITY

PARTICIPATION
Problem/Concern:"

Neighborhoodcommercial revitalization"( NCR) is to narrow a concept

for community economic development.

Recommendation:

It should be clearthat what this policy is tryingto encourage is community

economic development in general and not only a specific fonn of that development such as
NCR.

COMMENT #3
Task Force Policy Section

Problem/Concern:

LA.2. THE PROJECT

COMPONENT

Although the policy encourages research on linked development

fees,

it is absent from this section and thus does not carry the same weight.
Recommendation:

We suggest that research on linked development fees be as important a

policy component as the four others mentioned in this section.

COMMENT #4
I.B.2.b.

Task Force Policy Section:

THE

LOCAL

EQUITY

PARTICIPATION

POINT SYSTEM

Problem/Concern:

Task Force has decided to leave the development of the point system,

its implementation,

and the development

Manager and the Review Board.

of criteria used for judging projects to the City

However, we feel that there are some guidelines which

this committee could recommend.

Recommendation:

We recommend that there be minimum

requirements for development

projects in the form ofa cenain amount ofpoints which all projects must meet. Although some

requirements can only be set after research has been completed, such as the amount ofminority
equity, a well developed point system can guarantee that cenain objectives of balanced
development can be met.

While a policy has to have some flexibility, it should also establish

some minimum criteria and guidelines so that the objectives laid out in the policy can be met.
Developers should be required to meet a minimum number ofpoints and then be able to get

additional points in any manner they choose.

This also eliminates the dilemma of what to do

when development rights are issued on a non-competitive basis.

COMMENT #5
Task Force Policy Section:

I.B.2.b.

THE

LOCAL

EQUITY

PARTICIPATION

POINT SYSTEM
Problem/Concern:

In paragraph three of this section the policy states," No particular form

of local equity participation

shall be required for anyone section".

with the Task Force's apparent

This is not consistent

decision to leave the more " political" issues of the policy

point system design, criteria for the awarding of points, implementation)

up to the City

Manager and the Review Board.

Recommendation:

We urgethat this City Council Committee not include this recommendation

and allow for junher discussion of this point by the Council and the Review Board.

COMMENT #6
Task Force Policy Section:
Problem/Concern:

I.C. CITY OF OAKLAND DEVELOPMENT

This section

all but ignores the most serious problem

Oakland's ability to attract more business development.

presented

INCENTIVES
influencing

The main problem which has been

in a number of reports is the lack of a trained and skilled labor force.

Recommendation:

The main Hincentive " for businesses which this section should be concerned

about is a commitment to a development of a serious job training program in Oakland.

COMMENT #7
Task Force Policy Section:
Problem/Concern:

II.A. BACKGROUND

There is no mention

here of the role played by the community

in

providing the incentive for a policy of this nature through the original OCCUR proposal for
balanced development.
Recommendation:

It is imponant to recognize this fact so that a policy ofthis lUUure has a

serious commitment

to

the population who it is really intended to benefit.

COMMENT#S

Task Force Policy Section:

Problem/Concern:

II.B.2. COMPETITIVE

ECONOMIC

CONSTRAINTS

Oakland's position is much more complex than that presented

in the

discussion in the policy. It is doubtful that increased regulation will not have a major effect
on firms locational

decisions.

In fact some developershave independently

expressed a

desire to incorporate many elements of minority and community equity into their projects.

Recommendation:

Oakland does not have an independent economy but is pan ofa regional

one and its fate is tied up with the regions development as a whole. While it is true that
Oakland is in competitive position with some ofthe surrounding areas, the reasons have less to

do with regulations and more with the labor force make-up.

Oakland has the potential to

attract firms which need a strong downtown presence and a centralized location with good

transponation and infrastructure provisions, and yet cannot afford or are unable to locate in San

Francisco for reasons ofcost and limits on development. While it is clear that the policy need
some degree offlexibility, the City should not be intimidated by the specter of disinvestment in
developing and aggressivepolicy design. Having well defined regulatory guidelines will also serve
to benefit serious developers in their own planning.
COMMENT #9
Task Force Policy Section:

II.B.3.a. SUBCOMMITTEE

POLICY REQUIREMENTS

pEP SEC. B, CEP SEC. D, AND MEP SEC. A.)

Problem/Concern:

The

incentive

based

nature

of the policy is based

on a set of

controversial assumptions about the negative effect of regulations on the economic growth
of the area.
Recommendation:

The City should not pursue an " entrepreneurialapproach" but should have

a committed approach to the most needy and effected residents ofthis city. The city should be
bold enough to pursue a policy which will guarantee that benefits ofdevelopment are shared by

all of the population, and that will require developers to ensure that their projects meet those
goals.

COMMENT #10
Task Force Policy Section:
Problem/Concern:

lILA. RATIONALE

FOR THE POLICY

This section only acknowledges the problem of "discrimination in access

to economic opportunity arising from development".

While this is a crucial problem that

must be addressed by a policy of this nature, it is by no means the only one.

Recommendation:

The development process as it occurs in a free-market system inherently

contains a number of market externalities which cause development

unbalanced.

to be uneven

and

there are certain groups of low-income and minority residents and those of

depressed neighborhoods which do not benefitform the Cities economic growth. A policy ofthis

type must make it clear that one of the primary objectives is to ensure that development is
balanced and equitable.

COMMENT #11

Task Force Policy Section:

Problem/Concern:

ILA.I. GOALS OF THE POLICY

Absent in the policy is also any reference to the applicability of the

policy to development projects which have been awarded in the past but due to reasons of

insolvency or abandonment
Recommendation:

must be re-negotiated.

We recommend that development agreements not be " inherited" and that

a new agreement be worked out which reflects the objectives of the policy.

COMMENT #12
Task Force Policy Section: IILB.5. POINT SYSTEM IMPLEMENTATION
Problem/Concern:

There

is no mention

of the consequences

PROCEDURE

of violating the equity

agreements.

Recommendation:

It should be explicitly stated that there are strictpenalties for not complying

with the equity agreements laid out in the contract.