Does Selling the Henry J. Kaiser Make Sense?

The potential sale of the publicly owned facility to Peralta Colleges raises the question of whether the City of Oakland used the venue to its full potential.

Facing a multimillion-dollar budget deficit, Oakland’s city council decided on February 16 to allow staff to look into selling the Henry J. Kaiser Convention Center. The historic venue — whose stage has seen the likes of the Grateful Dead, Red Hot Chili Peppers, and Primus — shuttered in early 2006 because it had been running at an operating loss that totaled hundreds of thousands of dollars yearly. The city had hopes that another operator would take over the facility. In the last five years, private businesses such as Live Nation and Trade Center Development Corp. and the Bay Area World Trade Center, as well as public entities such as Peralta Colleges Foundation and the Oakland Public Library have considered taking over the space. But none of those options panned out. Now that the city is desperate for cash, however, a permanent solution is more urgent — and it appears that Peralta Colleges is the preferred buyer of choice.

With its Laney campus just across the street, Peralta would use the space — which includes the 8,000-seat Kaiser Arena, 1,800-seat Calvin Simmons Theatre, the Olympic Room, Ballroom, and Goldroom — for the college’s theater and music programs, said Alton Jelks, special assistant to Peralta’s chancellor. “But we’d never use it to its full capacity, so we’d like to make it available for other community groups,” he added.

The city’s loss of the Henry J. Kaiser, which now seems inevitable, raises questions as to how effectively the facility has been managed over the years, and whether it was used to its fullest potential. The initial reason the venue was mothballed was due to high operating costs — partially the result of an expensive contract with the stagehands union, says Naomi Schiff, board member of the Oakland Heritage Alliance. In addition, the venue was being managed by one person — who also oversaw the Oakland Museum of California and the Alice Arts Center (now the Malonga Casquelourd Arts Center) — making it impossible to fully exploit the site’s potential. Jelks, who worked in the mayor’s office during Elihu Harris’ tenure, said that the facility was unable to attract the kind of acts necessary to pay the bills, while nonprofits found it too costly.

So why didn’t the city try to establish a nonprofit board to run the Henry J., similar to how the city-owned Paramount operates? “Nobody wanted to do it,” said Councilwoman Jean Quan. “I had considered and we discussed at the time to create a cooperative with joint bookings and staff with all the theaters.” But, unfortunately, “people were into turf wars,” she said. “It would be great to get everyone together to create a more vibrant area. But right now, just to reopen it, it’s just too expensive.”

Quan, who had spearheaded the unsuccessful effort to move the main library to the Henry J., said she doesn’t want to sell the convention center unless it will continue to be used for public cultural use. In general, she said, she isn’t in favor of selling public assets in a down market. But if Peralta ends up purchasing it, Quan said she wants a guarantee that they won’t flip it to a developer to make a buck.

Schiff said her organization is “extremely interested in this building and is not going to put up with anything bad happening with it. They don’t get to demolish this,” she said. “They’d have a fight on their hands. … It is a public asset. It should stay in public hands.” Schiff said that the building, constructed from 1913 to 1915, has valuable 1920s reliefs by sculptor Alexander Stirling Calder. It also has a highly prized vista from the Lakeshore side of Lake Merritt, which is about to undergo a huge beautification project that will also increase the property’s value.

But the Henry J. Kaiser’s value isn’t just historical, it’s also cultural. It houses one of the only mid-sized venues in Oakland, said Richard Cowan, an aide to Quan who’s also president of the Oakland Ballet Company. “When we put on a ballet and we do it at Holy Names College [University], we can’t possibly make money because we can’t put enough butts in the seats,” he said. On the other hand, “When we do it at the Paramount … we have to give away seats to fill the house.” Losing the Henry J. Kaiser to private interests would therefore be a blow to Oakland’s cultural and arts groups.

The biggest hurdle at this point is the cost. “That’s a huge debate,” said Quan. It’s estimated that the Henry J. Kaiser needs $3 to $5 million in repairs to replace an outdated boiler, as well as an update to the lights and sound system and to clean up damage caused by homeless people. The price has to be right for Peralta, said Jelks, who said he’s currently waiting for the city to appraise the building.

The Henry J. has already been used as collateral for another bond that the city did a long time ago. At the time, it was evaluated at $54 million, said Quan. “So if we were to sell, we would have to put something else up for collateral,” she said. “My worry is if all the buildings are up for collateral — let’s say we had an earthquake tomorrow — you don’t have that much flexibility.” Meanwhile, Quan said Peralta has offered $6 to $8 million. That’s a huge discrepancy from its estimated worth. “Yeah, it is,” Quan conceded. “But if we don’t have the money to reopen it, and they promise to reopen it to the public … maybe it could be a joint library.”

While maintaining the Henry J. Kaiser for public use would be ideal for civic leaders and arts organizations, it’s not clear that the option would be financially viable. “That’s the challenge,” said Jelks. “Can we figure out a way to keep costs low and make it work? We have a lot of things we have to contend with.”

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