CITY OF OAKLAND

Interoffice Letter
To:

From:

Subject:

Agency Administrator/
City Manager

Henry L. Gardner

A t t e n t i o n : - - - - - - - - - - - - - Date:

December 15, 1992

Office of Economic Development and Employment

_

RESOLUTIONS APPROVING AND ADOPTING THE OAKLAND EQUITY POLICY (OEP)

_

Two resolutions have been prepared which authorize the City

Manager/Agency Administrator to implement and administer the
Oakland Equity Participation policy (the "Policy"). The proposed
policy is to assure that developments that receive substantial City
or agency assistance be required to demonstrate that they will
increase the numbers of minority/female and other disadvantaged
groups participating as owners, contractors or operators of Oakland
development projects and that the completion of these developments
will result in tangible public benefits to Oakland citizens. Such
benefits could include planning for balanced citywide development,
increased employment and affordable housing for residents, and
clear objectives for pUblic/private partnerships.
No specific
development would receive City assistance unless these benefits can
be demonstrated.
The policy calls for the creation of an Oakland Equity Commission
(the "Commission") which would be advisory to the City Council/ORA,
an Oakland Equity Fund (the "Fund"), and an Equity unit (the
"Unit").
The Commission would be a nine body organization, selected by the
Mayor with confirmation by the City Council.
It would report
directly to the City Council and would be responsible for
establishment of this equity point system and for recommendations
regarding the pUblic benefit of proposed developments.
The Fund would be a non-profit organization which would manage
moneys received from developers and other creative funding sources.
Ideally, the Fund would lend moneys to individuals or nonprofit
organizations seeking to be equity partners with a major developer,
and in turn would receive a certain return on its loan. The Fund
could also be used to subsidize the efforts of smaller developers
which might need capital infusion.
The overall management supervision of the policy will be under the
direction of the City Manager.
The day-to-day implementation of
the Policy would be facilitated by a new City unit of the Office of
Economic Development and Employment, entitled the Equity Unit (the
"Unit"). The City Manager/Administrator would be authorized to use
funding from the Community Development Block Grant program and the
Oakland Redevelopment Agency, and to solicit funds from the Port of

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Henry L. Gardner

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December 15, 1992

It--,

Oakland to create the unit.

To establish the unit, it is
anticipated it would require $120,000 dollars and 1.5 new staff
positions.
Issues
Particular progress has been achieved in three areas which are
components of the Oakland Equity Policy.
(Please see attached
Policy "Steps.") The Oakland Equity Policy is a system designed to
increase the numbers of minority/female and other disadvantaged
groups participating as owners, contractors or operators of Oakland
development proj ects to assure proj ects result in signif icant
public benefits.
The Equity Commission, the Point System and the Equity Fund
comprise the system.
The point system is a predictable but
flexible approach which allows a developer to put forward their
best plan to meet community and investor needs.
It does not
restrict the types of community benefits any developer chooses, but
requires that a bidder meet some minimum threshold conditions.
The Equity Fund receives
innovative sources of
community
development funding, identifies and targets development projects,
and fills the financing gaps for neighborhoods. The neighborhood
gaps include neighborhood commercial revitalization and small
business development.
Program Scenarios
The current effort by the consultant team has improved the
deliberations of the Minority Equity Participation Advisory
Committee.
Better def initions , improved focus of the Oakland
Equity Fund (formerly the Community Trust Fund) and a more detailed
Policy Benefits Point System have been created.
Another productive outcome, the Oakland Equity Policy SYmposium was
held on November 18, 1992.
The policy analysis, the non-profit
assessment report, the 1990 Policy Report and the original Balanced
Development paper constitute the Oakland Equity Papers, which
recognize the commitment of participants in the Equity Policy
process.
This sYmposium received contributions from the Kaiser Permanente
Foundation.
Over 75 attendees participated in the SYmposium and
received copies of the Oakland Equity Papers.
Several issues and concerns were raised: concerns about adding
another layer of development review and coordination with current
enterprise zone planning. Staff recommends that these concerns be
included in the regulatory phase authorized by adoption of the

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Henry L. Gardner

December 15, 1992

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policy. Overall, the Equity Policy was viewed as ripe for adoption
by the National Development Experts, by MEPAC and by the Local
Community Panels.
Conclusion
Based on extensive community, business and public review, staff
recommends that the Council/Agency approve the following actions
set forth in the policy adoption resolutions:
1.

Mayor appoint a nine-member Equity Commission to be confirmed

by the City Council
An ordinance establishing the Equity
Commission which will be advisory to the city Council/ORA can
be prepared once nominations are completed by Mayor and
ratified by City council. Due by March, 1993.

2.

Authorize the City Manager/Agency Administrator and the City

Attorney to prepare implementation guidelines for the Policy
and to develop the administration for implementation. Due by
April 1, 1993.

3.

Authorize an annual
October 1, 1993.

4.

Establish the Oakland Equity Fund, governed by a nine member

board to act as the periodic, partial beneficiary of financial
returns negotiated by the Agency and Port, as negotiated from
time to time. Due by March, 1993.

5.

Establish an Equity unit with funding from City CDBG funds,

ORA funds and request matching contributions from the Port of
Oakland. This unit will utilize existing staff, one (1) new
Urban Economic Analyst I, one ( 1 ) intern, and one ( 1 )
consultant.

evaluation

of

the

Policy.

Due

by

Recommendation
staff recommends approval of the resolutions by the Committee and
by the city Council/Redevelopment Agency approving and adopting the
Oakland Equity Policy.
staff recommends recognition of the work of the Minority Equity
Participation Advisory Committee and its chair, Ed Blakely, as well
as recognition for its Symposium hosts, David Glover, Don Duffy and

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Henry L. Gardner

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December 15, 1992

Mtangulizi Sanyika, and for the Equity Papers prepared by Ginette

Geer, Robert ScotIan, and Andreas 1IUV?r.

Esq.
APPROVED FOR FORWARDING TO
REDEVELOPMENT AGENCY

-~~

~A~y Adm nistrator/City Manager

Attachments

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EQUITY POLICY STEPS

The equity unit is housed in the Office of Economic Development/

Oakland Redevelopment Agency.
I.

How Does the Point system Work

Tasks

step #
step One:

Ident ify development market obj ectives .

Review; OSV; Economic model

(CNI

step Two:

Assign points to development project objectives

Step Three:

Evaluate project

step Four:

Determination of sUbsidy decision:

Yes
No
Conditional, etc.

If a project does not score the m1n1mum points required, no

subsidy will be provided or subsidy level can be decreased or
conditions for approval award may be outlined over time.
II.

operating RUles

Once the minimum point threshold has been reached, Bonus

Points may be achieved for exceeding the threshold in the
Primary Categories, and/or by making direct financial
contributions to the OCDEF.
Point system evaluates development proj ects over 50,000 100,000 sq. ft. in size.
Points depend on cost to City/ORA for sUbsidy
A minimum threshold of benefits points must be acheived
within one or more of the primary Categories.

Equity policy Steps

Paqe 2

III. From Concept to Project Review

1.

2.

3.

4.

Concept idea solicited from

developers, or presented by
developers to OED, OCD or ORA.

IDEA
(PROJECT CONCEPT)

Concept
is
reviewed
by
Development
Services
and
Planning Department to insure
consistency with General Plan,
Environmental,
Zoning
and
permitting issues.

REFINEMENT

Developer engages in financial

feasibility
analysis
with
investors
and
lenders
to
determine
debt
and
equity
levels the project can attract.

FINANCIAL ANALYSIS
(LENDERS,
INVESTORS)

Determination of bridge or gap

financing, or assistance needed
to make the project work. Is a
subsidy or form of pUblic
assistance
required
for
success?
If yes, Part IV is
used. If no, process ends.

SUBSIDY REVIEW
DECISION

Equity Policy Steps

IV.

From Subsidy Eligibility to

Development Disposition Agreement
1.

2.

jm3:cqllCpl

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Determination
made
on
eligibility for city subsidy
based on:
consistency with
Needs
Index,
Availability,
expected returns and risks,
level and type of sUbsidy
sought.
This step assumes
(OCD,
OED,
ORA,
etc.)
participating department or ORA
feasibility analysis.
Determination of points needed
to achieve subsidy, and Policy
benefits required to achieve
point level.

3.

Agreement
on
monitoring
requirements,
and
annual
reporting.

4.

Prepare Development Disposition

Agreement or Memorandum of
Understanding.

DETERMINE
ELIGIBILITY

DETERMINE SUBSIDY
VALUE, POINTS &
BENEFITS

AGREEMENT ON
MONITORING

PREPARE AGREEMENTS
DDA OR MOU

What is "Equity Participation"?

Equity Participation means a direct ownership stake and active involvement in Oakland's real estate development.
Minority equity participation refers to investments in real estate, or other development ventures, by groups who
have traditionally been under-represented in these economic activities: racial minorities and women. Likewise,
Community equity participation refers to community-:based organizations and other non-profit organizations as
equity participants in real estate or other economic ventures. Public equity participation refers to the City, or
agencies of the City, operating as direct equity participants in real estate development and other City-assisted
investment opportunities.

Who Benefits from the Oakland Equity Policy?

The policy delivers measurable benefits to the following groups affected by Oakland's Economic Development:
Community~Based

The City or Oakland

JSound planninl for balanced

citywide development
Enhanced business climate and opportunities for public/private ventures
Expandinl tax base
Development subsidies focused
to achieve policy priorities

Organi2atiOml, Minority, Low~Income,

and AIl Oakland Residents

Private Developers (both For profit

and NOD~profit)

Greater opportunities for local,

minority, and CBO ownership
Resources focused on community
economic development
Increased employment and affordable
housinl for residents

Clear objectives for public/private

partnerships
Predictability and flexibility in
meetinl City policy objectives
Inereased access to public and
other equity resources

How will the the Oakland Equity Policy be Governed?

-,:

There will be a small representative body, known as the Oakland Equity Commission, that will devise the
guidelines and implementation prQceclures for the Oakland Equity Policy. The Commission will assess the
eligibility of projects for City subsidies, according to the priorities of the Policy Benefits Point System.

What is the Oakland Community Development Equity Fund (OCDEF)?

The OCDEF is proposed as a new major vehicle for building community equity. The OCDEF would provide
financing for community economic development and neighborhood revitalization projects (such as housing and
neighborhood commercial development), as well as training and technical assistance for Oakland's communities.
OCDEF serves as a finance vehicle funded in part by City and Redevelopment Agency investments. The full
potential of the OCDEF will be realized when this fund develops as a vehicle for innovative sources of financing
- Community Reinvestment Fair Share loans, other types of community loan funds, and private foundation
investments. The disbursement of OCDEF funds will be governed by an Equity Fund Board and guided by a
Community Needs Index (CNI). The CNI, central to both the OCDEF and the Policy Benefits Point System, is
a tool designed to objectively measure community development priorities.
THE OAKLAND COMMUNITY DEVELOPMENT FUND
COMBINING
INNOVATIVE FUNDINC
SOURCES

for
Community Development
and
Neighborhood
Revitalization

TARGETING
DEVELOPMENT PROJECTS
AND PROGRAMS

t
Equity Fund Board

t
Community Needs Index

FILLING
THE FINANCIAL GAPS:

Neighborhood Commercial
Revitalization
Small Business Development
low-lncome Housing ConstnJetion
Training and Technical Assistance

THE OAKLAND EQUITY POLICY

for Minority, Community, & Public Equity Participation
City of Oakland Minority Equity Participation Advisory Committee

QUESTIONS AND ANSWERS:

What is the Oakland Equity Policy?
The Oakland Equity Policy (the Policy) is a unique approach to enhancing minority, community, and public equity
participation in Oakland's development. The Policy creates a system that uses specialired planning and
development tools to enhance the return on public investments in City-subsidized real estate development. Three
key components ofthe Policy - the Oakland Community Development Equity Fund, the Policy Benefits Point
System, and the Oakland Equity Board - are integrated into a comprehensive and flexible system that promotes
economic growth, balanced development and reasonable returns on City funds.

Why the Need for an Equity Policy?

The need for the Policy arose from concerns, based on fact and perception, that economic growth in Oakland has
been uneven: the downtown real estate expansion of the 1980's has not translated into social and economic
development within disadvantaged neighborhoods. Furthermore, the lack of a clear, predictable system for
evaluating City subsidies to real estate development limits financial and social returns on taxpayers' investments.
The Oakland Equity Policy has been designed to address these concerns in ways that (1) draw on input and
recommendations from Oakland citizens and (2) advance Oakland's dual goals of social equity and economic
development.

What are the Oakland Equity Policy IS Objectives?

To provide a clear and consistent policy that conveys explicit objectives and yields reciprocal incentives for
public/private equity partnerships.
To assure reasonable financial and social returns on public investments in real estate development.
To achieve balanced and equitable growth throughout the City, by creating linkages between Oakland's Central
Business District expansion and the social and economic development of disadvantaged neighborhoods.
THE OAKLAND EQUITY POLICY ApPROACH
Public Equity Participation
through City It
Redevelopment Agency Subsidies:
Land, Loans, & Grants from City,
State & Federal Funds

The Oakland Equity System

Proposed Real Estate

Development

Components:
Policy Point System
OCDEF
Oakland Equity Commission

Policy Benefits & Outcomes

Greater Public, Community, Neighborhood, and Minority I Women Ownership in Oaldand Development
Increased Finandng for Neighborhood Enterprises
More Jobs and Expanded l'Ocal Tax Base for Oakland Residents
More affordable Housing; Increase Human & Social Services

What is the Policy Benefits Point System?

In. short, the Policy Benefits Point System quantifies the relationship between the City's level of subsidy to
development projects and the public's expected benefits. When development projects are proposed for City
investment, the Benefits Point System assigns point values to the projects contributions to achieving Oakland
policy objectives. Projects reaching a minimum threshold level ofPolicyBenefits Points are eligible for investment
of public resources. The Point System is designed for flexibility and predictability, allowing developers to put
forward their best plans to meet community and investor needs. In particular: points can be earned in several
policy categories; the point values are pre-established; and point values will be regularly reviewed for consistency
with Oakland's development objectives. Four basic steps of the Point System process are outlined below.
I

How does the POLICY BENEFITS POINT SYSTEM work?

DEVELOPME'I0BJECTIVES

-~.

Primary Categories

DEVELOPM.

Community Needs Index

1. Jobs & Employment

2. Affordable HoUling

Sets priorities for

Community and
Economic
DeYeiopment needs

Economic Modeling

BJECTIVES

3. Minority & Community

Equity Participation
4. Small Busi... Dew:I.
ment & Neighbomood
Commercial RewitaliDlion
S. Incbtrial & Commercial
Development

&
Bonus Points Categories

Creates analytic
basis for Community
Needs Index

6. Human & Social Services

7. Quality of life

Improvements

Eval.::lposed

De~oject's

DEVELOp8 PROJECT

ELiGIBILI. SUBSIDY

Proposed Public/Private
Commercial Real Estate
DeYelopment

Does Project's Score

Meet Requirements

Translates the cost of

proposed City Subsidies into
a point value of policy

IF YES

retwns:

flexible system
minimum threshold
Bonus Points

Award subsidy as
requested

IFNO
Alter proposed project to
increase point score
and/or
Reduce subsidy to match
points achieved
or
Deny request for subsidy

8. Other Local Benefits

What are the Operating Rules olthe Policy Benefits Point System?

The Point System evaluates development projects above a specified size.

The number of points required to qualify a project for a subsidy depends on the relative cost to the City
of the requested subsidy.
A minimum threshold of benefits points must be achieved within one or more of the Primary Categories.
Oncethe minimum pointthreshold has been reached, Bonus Points may be achieved for exceeding the threshold
in the Primary Categories, andlor by making direct fmancial contributions to the OCDEF.

How are Policy Objectives Categories and Their Point Values Established?
Community economic development objectives will be identified using economic modeling techniques and close
scrutiny ofsocio-economic data about Oakland. This infonnation will in turn be used to createa Community Needs
Index (CN!), an index ofrelative priorities among the City'spolicy objectives, and a tool used to assign pointvalues
to each of the Point System categories.

What Happens if a Project Does Not Score the Minimum Points Required by the Point System?
The level of requested City ~ubsidy may be decreased to match the total pollcy points achieved, andlor changes
can be made to the proposed project. For instance, the level of minority/community equity participation could
be increased, or the terms of tenancy for a proposed commercial project might be adjusted to encourage minority
and neighborhood business development.

How Does the Oakland Equity Policy Lead to Greater Equity Participation by Minorities,
Women, and Community-Based Organizations?
Equity Participation by these traditionally under-served groups can be expanded by directing resources through
the OCDEF toward development projects, training, and technical assistance needed within Oakland's community
districts. The Policy Benefits Point System also increases opportunities by offering points to proposed projects
that include significant equity participation within a flexible system, and in accordance with legal guidelines of
race- and gender- specific programs.
".

BACKGROUND AND EVOLUTION OF mE OAKLAND EQUITY POllCY

The Oakland Equity Policy has evolved through a long and deliberative process to incorporate the interests
of the various sectors which constitute the City. Collaborative efforts toward creating the Equity Policy
was stimulated by the report Balanced Development In Oakland, prepared by OCCUR and the Seven
Community Development Districts Boards. A formal policy development process was initiated through
a 39-member Task Force, appointed by the Wilson administration to examine policy options. Active
participation of the Oakland Chamber of Commerce, OCCUR, and the Seven Community Development
Districts has been influential throughout the Policy design process. In the Fall of 1990, the Task Force
reported their recommendations for the goals, objectives and potential mechanisms to comprise a
comprehensive policy. These recommendations serve as the platform for work of the current Minority
Equity Participation Advisory Committee (MEPAC). The eight MEPAC members, appointed by Mayor
Elihu Harris in the Summer of 1991, have worked with City Staff and a Consultant Team to develop the
implementation strategies needed to put Oakland's Equity Policy in place.

Minority Equity Participation Advisory Committee

Ed Blakely, Chair.........................................Professor/City & Regional Planning, UCBerkeley

David Glover............ExecutiveDirector, Oakland Citizens Committeefor Urban Renewal (OCCUR)

~nD~ .................................................................. AdvertisUng~er,lCai~P~ente

Ted Dang..........................................................Broker/Owner, Commonwealth Company

Don Davenport...........................ExecutiveDirectorSan Antonio Community DevelopmentDistrict
Jan Halliburton.......................................................Oakland Association ofRealtors, V.P.
Fle~lv.(~tI1: l?resici~t,~(;()~

Sister Marie de Porres-Taylor..........................................................Office ofthe Mayor

(Pnq~

4f/1lJIIJJII- of CD. . . . lUmHn tII'f llsU4101" In/ontlllJJolt, and 40 IIOt aprus 01" Imply 1M orranizllllolU' .ntlon.",."" 01 this rIpon)

Oakland Equity Project StafT

JuliaT. Brown, Esq................ Director, OfficeofEconomic Development and Employment (OEDE)
DiarleI,.ewis............................................................... Mar1ager, BusinessDivision, OEDE
Ja)'lv.l~te ..............................................................J\ssociatelJrlclanEcoIlClmicJ\Jtal)'st,C>EDE
VincentJones.........................................................................Assistant to the City Attorney
Ezra. Ra.pport...................................................................Assistant to the City Manager
ElisaBrown
Office ofthe City MaIlager

Oakland Equity Project Consultant Team

Mtau1g~:)~~..................................................................... ~

COllsultault
Andrea.s Fe.rreria Clliver...................................... ~ .......................... Project Consultant
CJinetbeCJeer..................................................................................Flesearch (:ClIlS1Jltant
Robert Scotian..................................................................Administrative Consultant
I

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