.Phil Tagami is Not Backing Down

As Oakland appeals a court ruling in favor of the coal terminal developer, he critiques the city's political culture.

Developers are builders. Some view their role in grandiose terms, seeking projects and structures that will last the test of time. Few though are as brash as Phil Tagami, who has delighted in posing for pictures puffing from a fat cigar — a symbol of decadence reminiscent of a society once ruled by hard-charging men, straight whiskey on the rocks, and thick steaks cooked rare.

Tagami entered local lore during the Occupy Oakland demonstrations at Frank Ogawa Plaza in 2011, when he brandished a shotgun inside his nearby Rotunda Building to ward off protesters who were thinking about taking it over. “I’m trying to live that one down,” he said.

It demonstrates, nonetheless, how hard it is to stop Tagami. Three weeks ago, his hospital room at Summit Medical Center was a temporary office space. A poster-sized timeline of his effort to build a $250 million bulk commodity terminal at the former Oakland Army Base was taped on the wall beneath a television. Thick binders and other work materials were strewn near the window where he was seated. The day was gloomy and the clouds outside were about to burst with heavy rain. Tagami, however, was dressed for a summer day — a light knit blue polo, shorts, and running shoes, along with a few days of growth on his cheeks.

Last month, the 54-year-old developer suffered a stroke and seizure that revealed he was diabetic. In a 90-minute interview, the life force that has symbolized his charismatic run in Oakland remained strong, even though his health emergency had partially taken away the use of his left arm and leg. Despite his extended hospital stay, he continued to take business meetings while convalescing, and spent an hour or so per day tackling his inbox and texting his staff. He was discharged the day before Thanksgiving and returned to work at his office in Rotunda Building two days later.

Tagami now walks with a cane, though his strength is slowly returning. His prognosis is good, he said, but one thing will certainly have to change. “I’ll be replacing my cigars with celery sticks,” he said.

Before the controversy over potential coal shipments from his Oakland Bulk and Oversized Terminal raged, Tagami was known as an Oakland-born and raised developer who helped restore two of the city’s architectural gems — the Fox Theater and the domed Rotunda Building. Tagami was only 27 when he and his business partners began early work toward restoring the Rotunda.

“I’m purpose-driven,” he said. “These buildings already existed, they just needed to be restored to include modern standards.”

Although financing and building an oversized commodity terminal is a far cry from restoring old buildings, Tagami’s company was one of 13 developers to vie for the contract to transform the former army base, which was awarded in 2010. Job creation was a main part of the pitch.

“You have to remember, we were coming out of this horrible recession … when we were taking all the risk to go spend money and figure out what to do,” he said. “The courage and confidence was the belief that we could honor the covenants of creating good jobs for Oakland and build the project for our hometown.”

The groundbreaking for the terminal was held three years later. Gov. Jerry Brown spoke at the event, along with Rep. Barbara Lee and Mayor Jean Quan. Optimism was high.

By 2015, the politics were much different. By then Tagami had signed a lease with a company that planned to ship coal out of the facility. Environmentalists were raising alarms about the proposal, and Mayor Libby Schaaf and the Oakland City Council soon went on record as opposing the project.

To pinpoint the epicenter of Oakland’s coal controversy, you would have to travel to a community in Central Utah and a small community newspaper that could not have known how its article about shipping coal through a West Coast rail terminal would be akin to lighting a match to a railcar full of coal.

“The Richfield Reaper story and that whole kerfuffle in 2015 is what started the scuttlebutt,” Tagami said. “That’s when everyone went nuts.”

Reporters began calling Tagami for comment about his coal deal with Utah. “We don’t have a deal with Utah,” Tagami said. “I have a deal with the tenant.” Media coverage called it a secret deal. “It’s so not a secret deal,” he said. “It’s in the city staff report. And the elected officials were like, “I didn’t know.’ No one was going to say they knew. Instead, they said I tricked them. That’s a horrible thing to say. Can you read the long-range management plan? The city record is filled with it. The story is easier if they say they are a victim.”

In his first interview on the subject in years, Tagami had pointed words for Oakland city officials, whom he believes caved in to immense pressure from environmentalists to renege on his contract for the redevelopment of the Army Base.

After the city council voted in 2016 to ban the export of coal and petroleum coke from the facility, Tagami took Oakland to court. In May of 2018, U.S. District Court Judge Vince Chhabria sided with Tagami and overturned the ban. Chhabria found that the city failed to prove coal shipments posed a substantial risk to the health and safety of the community. Throughout the 37-page ruling, Chhabria was uncommonly harsh toward the city’s case.

“The record is riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses, to the point that no reliable conclusion about health or safety dangers could be drawn from it,” he wrote. One target of the judge’s disdain was an environmental study commissioned for the city that disregarded any potential mitigations for transporting coal, such as covering railcars. “The city was not required to compile a perfect evidentiary record; far from it,” Chhabria wrote. “But the gaps and errors in this record are so numerous and serious that they render it virtually useless.”

Tagami feels vindicated by the victory, although he knows the battle is far from over.

“His finding of fact, as well as what the law says, is pretty clear,” Tagami said. “The city abridged the agreement.” Oakland officials simply did not want to acknowledge that they always understood that the terminal might end up shipping coal, he said.

For more than a decade, Tagami noted, the Oakland Bulk and Oversized Terminal project has been amassing funding and approvals — first and foremost a $242 million state grant. Hundreds of permits have been approved, extensive public meetings have been held, and its environmental impact statement has been examined by the city council and the port. “During that tolling period no one filed a lawsuit,” Tagami said. “This is a vested right. I don’t have the right to build condos, or an amusement park, or a shopping center. I have an obligation to build a multi-commodity bulk terminal.”

“We never hid what types of commodities would come through the port,” he said, pulling out a pie chart from 2013 showing that roughly one-third of the stream of commodities proposed to flow through the terminal would be some form of coal.

“The argument crowed in the newspapers and by elected officials was ‘Phil Tagami lied,'” he recalled with still-obvious annoyance.

His critics, however, contend that he did lie. Tagami’s statements in a newsletter for the Oakland Army Base project in 2014 assuring that coal would not be shipped through the bulk terminal have been highlighted by environmentalists as proof of his dishonesty. Tagami acknowledges those statements today, but said he was not then aware of his tenants’ intentions.

“I’m not here as a proponent of coal, but as a practical matter, I’m saying this a multi-commodity facility; it was never planned for just one commodity,” he said. “Question now: Is the city saying, ‘Okay, you can have a Target store, but you can’t sell anything made in China?” he said. “So you can have a bulk commodity terminal, but you can’t ship coal? Then you would stop and say, ‘Well, look at the market. That’s almost half the market. In essence, there’s no way to underwrite that asset.”

Tagami calls it obstruction for the city to refuse to issue permits as required under its lease agreement since it precluded the terminal’s tenant, Insight Terminal Solutions, from closing its latest round of funding. “Their funding is there,” Tagami said. “They just can’t close, and you would argue that is obstruction and that’s a breach. There are a number of other acts that have occurred, which constitutes a lack of cooperation and the city not engaging in good faith and fair-dealing.”

As a younger man, Tagami contem­plated a host of professions, including athletics, the priesthood, and music. He once was a roadie, but there was little glory in the job. Had his life turned out differently, a life in public office could have been a possibility.

As Tagami gained a reputation in real estate, he also began to amass an impressive resume in Oakland city government, which included stints on the Oakland Planning Commission, the Mayor’s Economic Emergency Task Force, and the Oakland Environmental Affairs Commission. He later served four years as a commissioner of the Port of Oakland. The spate of civic activity, along with a growing real estate empire, often gave way to whispers he could be eyeing higher office in Oakland. Tagami said he seriously pondered that career path. Rumors that he is interested in running for mayor are periodically whispered every few years.

His affinity for public service hasn’t dissipated despite his long-running dispute with city leaders. Last year, he applied for a seat on the Oakland Police Commission, but failed to make the cut. The Oakland Police Department needs reform and little will change without it becoming more introspective about its problems, he said.

“You have to inspect what you expect,” he said. “OPD needs daylight. How do address the problem? Where some people might feel irritated by the exchange, it has to occur. It’s part of the process.”

Although Tagami was once known as being BFF to Mayor Jerry Brown — a friendship that led some critics to contend that his power and access to public money was derived from that relationship — his frustration with Oakland City Hall is clearly evident today. Tagami believes Oakland city government suffers from an institutional abhorrence of accountability. He is also quite disappointed with Oakland Mayor Libby Schaaf, whom he has known since high school.

“I think she is well-intended,” he said. “I think like a lot of people who are in elected office, I think they can get into a bubble and listen to certain advisors because they are focused on a political trajectory and higher political office and not really balance what is real, pragmatic, or practical.”

Tagami called the controversy surrounding Schaaf’s decision to challenge the results of Measure AA, last November’s failed parcel tax initiative to fund early education a “real embarrassment for the city.” The measure fell short of gaining a two-thirds majority for passage, but Schaaf led an unsuccessful effort through the courts to argue that the measure only required a simple majority of support. “We want a different outcome, so we moved the goalposts,” Tagami said, laying out the progression of what occurred next. “We’re going to get sued. We lose the lawsuit. Instead they should have just put it back on the ballot and they’d win.”

Piling on, he called a recent audit’s finding that the administration used city services and facilities for the mayor’s Oakland Promise education initiative further proof of impropriety. “Now the question is, ‘Who believes they are above the law?’ So no one wants to cast the Donald Trump-kind of behavior at any elected official, but I’m seeing a lot of that behavior coming out of City Hall right now. That somehow they don’t think the rules apply to them.”

Mayor Schaaf declined to respond to Tagami’s criticisms.

Tagami said Oakland’s lawsuit to stop the Alameda County Board of Supervisors from selling its interests in the Coliseum to the Oakland Athletics also felt eerily familiar. “You’ve seen, through media reports, what the A’s having been going through with the city, and the literally arbitrary and capricious nature of the city attorney’s office when it’s related to how they have dealt with the A’s and the county,” he said. “And the mixed messages. They say they want the A’s here, but at the same time they file lawsuits without communicating.”

While there have been suggestions that Tagami is seeking a settlement with the city rather than moving forward in the courtroom, he said Oakland officials have thus far avoided making any attempt to negotiate with him. “I’ve had people in the community call me up and say, ‘Phil, you know, we think you’re a pretty reasonable guy. How come you’re not sitting down with the city and working this out? Has the city ever come to the table?” Tagami said. “And the answer is no, they haven’t.”

Despite Tagami winning his lawsuit against the city last year, staff has on several occasions asked him to present them with a new proposal. “You don’t take the losing ticket and go to the winning window,” he scoffed.

Tagami views the Sierra Club as main deterrent to Oakland officials sitting down with him and talking. He fully acknowledges the effectiveness of the environmental group’s city council lobbying effort in paralyzing progress on the terminal. But he said the group’s unwavering advocacy against his proposal has made the odds of reaching a settlement extremely remote.

“The Sierra Club will not give a hall pass to elected officials if they were to negotiate or engage in some way, in something that did not meet their criteria,” he said. “As a former dues-paying member of the Sierra Club, I don’t think the members are ill-intended. I think the strategy that they’ve used has been extremely effective in their campaign to basically stop the shipment of fossil fuel on the West Coast, no one can say they haven’t been. Now you have to ask, ‘Were they honest?'”

Tagami said Sierra Club officials gave him an ultimatum to withdraw the coal plan. If he did not, they said they would launch an extensive effort to lobby the city council.

“If a private businessperson went to the city council and threatened they would not get elected unless they got their outcome, that’s some form of extortion,” Tagami said. “For some reason, certain labor units and certain activist groups can bring that to bear and that’s considered political pressure. I look at it and consider it unseemly.”

The public perception of him in some quarters as a greedy traitor to the city and the environment bothers Tagami. “It would be disingenuous to say that it didn’t trouble me when someone burns my name in effigy,” he said. “I’ve been protested at my home, my office. Those protests haven’t stopped our lawsuits one bit. They are protesting the wrong people. I don’t own coal. I was obligated to build a bulk marine terminal, designed, entitled, and gone through all the steps. I’ve signed the lease and paid the city a lot of money.”

Oakland lobbyist Greg McConnell, whose client is Insight Terminal Solutions, the Utah-based outfit that hopes to ship Utah coal through Tagami’s terminal, said if the initial court ruling is upheld, the outcome will mean that his client can ship as much coal as it wishes to ship. In other words, it’s winner-take-all.

However, McConnell confirmed that his client has proposed a compromise that proposes limiting coal shipments to five million metric tons per year over the next decade, followed by three million tons per year over the following 10 years.

Last month, the city’s appeal of Judge Chhabria’s ruling was heard in the Ninth District Court of Appeals. Nonetheless, several local public officials interviewed for this article expressed skepticism about the city’s chances of winning its appeal. They predict the city is likely to be on the hook for damages to make Tagami financially whole. Some opponents of coal believe the legal fight will continue no matter the appeal’s outcome — keeping most of the former Oakland Army Base fallow for years to come. But Tagami is undaunted.

“We’re going to see this through,” he said, noting that his company has so far spent $13 million fighting the city in court. “We’ve planned for a long, cold winter.”

Tagami declined to speculate about a rough dollar figure in damages the city would have to pay him.

Yet McConnell was not so hesitant. “Put it this way,” he said. “I think Oakland could become Tagami-ville.”


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