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Day After Oakland Bans Coal Exports, Developer Changes Tone

The Oakland City Council has made its move, effectively blocking a developer's plan to ship massive amounts of coal from the city's port.

By Rachel Swan

The Oakland City Council has made its move, effectively blocking a developer's plan to ship massive amounts of coal from the city's port.

Now, all eyes are on developer Phil Tagami and his project team, whose members repeatedly threatened to sue the city in what could become a costly, drawn-out court battle.

On Tuesday, the day after the City Council voted unanimously to bar the black fossil fuel from being stored or handled in the city's port, Tagami's business partner, Mark McClure, expressed hesitation when asked if his team was going to file a lawsuit.

"We're really committed to getting the project done," McClure said. "That's probably a more likely outcome than some big battle."

It was a markedly different tone from what Tagami's crew had been saying.

In a sharply worded letter sent to the council just hours before the vote, Tagami's lawyer David Smith claimed that if the council banned coal, it would breach its 2013 development deal for the Oakland Bulk and Oversized Terminal -- and each councilmember would violate his or her oath of office.

Smith had warned that by approving the ban, the council would subject Oakland taxpayers to "hundreds of millions of dollars in legal liability." Aside from having to pay damages to the developer, Smith said the city would have to return $150 million in state funding if the project unraveled.

"That certain elected officials are committed to 'do anything' to keep coal (and apparently a long list of yet-to-be-disclosed other politically disfavored commodities) out of Oakland may land them political support and votes, but they must also realize and own that such actions breach existing and binding legal obligations, exposing the City to potentially unprecedented legal liability," Smith wrote.

His letter was part of a bullish campaign by the development team and a community group called Jobs 4 Oakland, which has helped broadcast the developers' message that a coal ban could stymie the port project and potentially cost the city thousands of jobs.

Tagami, too, was reticent to speak Tuesday. He said in a statement that the development group "will continue to honor all of our commitments to the city of Oakland and our partners to deliver on the promise of the Oakland Army Base development."

The planned shipping terminal, which would be privately owned and operated on city waterfront land, is a key piece of a much larger development that Tagami's company, California Capital & Investment Group, is undertaking at the Army base in West Oakland.

Many officials have championed the overall project, even though they denounced the coal exporting plan that came to light in 2014, after Tagami's shipping operator, Terminal Logistics Solutions, entered talks with four coal-mining counties in Utah.

"What we want the developer to do is use his engineers, his construction workers and his development expertise to move this project forward, instead of using lawyers to slow things down," said Councilman Dan Kalb, who co-sponsored the coal ban alongside Mayor Libby Schaaf.

Kalb declined to discuss the pending litigation.

(c)2016 the San Francisco Chronicle

Caroline Cournoyer is GOVERNING's senior web editor.
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