Let the Market Determine the Best Use of Oakland’s Waterfront

Way back in 2002, as part of the process of closing Oakland’s historic Army Base, 303 acres of Army-owned land were transferred to local government entities—168 acres to the Port Authority and 135 acres to the City of Oakland itself.

Located just south of the Bay Bridge, the two properties have remained in limbo ever since as officials dithered over what to do with them.

The list of proposals considered at one time or another includes a land-based Indian casino and a brand new stadium for the Oakland As. Concluding that their project would be incompatible with the decidedly downscale business operations of the neighboring port and a nearby sewage-treatment plant, Hollywood’s Wayans brothers backed out of a deal to build a movie studio and upscale shopping center on the city-owned parcel.

Seven years on, after failing to take advantage of the run-up in real estate prices, a fresh set of land-use schemes are on the table. Mayor Ron Dellums has given his blessing to a plan put forward by a private developer that would revitalize Oakland’s port by combining both parcels as sites for additional warehousing, packaging and distribution facilities. That proposal faces competition from yet another private developer who wants to begin work on a retail, hotel and office-space complex on the city’s 135-acre property.

The Port Authority, meanwhile, is in the process of choosing a developer to draw up plans for expanding the port’s cargo-handling infrastructure on its 168-acre parcel by, among other things, extending railway lines to facilitate intermodal (ship-rail) transit capacity. Because that developer will be granted exclusive negotiation rights, one can expect a sweetheart deal.

Facing an $80 million budget deficit, Oakland’s taxpayers ought to be dismayed at the prospect that city and Port Authority officials will decide how 303 acres of prime waterfront property ultimately will be disposed of. Politicians and bureaucrats have little incentive to allocate real estate or any other resource to its highest valued use. That best use can, however, readily can be determined by selling the property to the highest bidder. Such a sale not only would ensure value-maximization, but undoubtedly would generate revenue sufficient to close holes in the city’s budget for years to come.

William F. Shughart II is Research Fellow and Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice at Utah State University, past President of the Southern Economic Association, and editor of the Independent book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.
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