Omnibus Letter To Oakland

manatt
manatt | phelps | phillips

Barry W. Lee
Manatt, Phelps & Phillips, LLP
Direct Dial: (415) 291-7450
E-mail: BWLee@manatt.com
October 19, 2018 Client-Matter: 64517-031
BY E-MAIL
City of Oakland
Office of the City Attorney
Barbara J. Parker, City Attorney
Bijal M. Patel, Deputy City Attorney
One Frank H. Ogawa Plaza, Sixth Floor
Oakland, California 94612
Re: Notice of Claim Regarding West Gateway Project
Dear Ms. Parker and Ms. Patel:
The beneficial reuse plan for the former Oakland Army Base is at a critical and
potentially fatal crossroads. The development of the West Gateway property (“Project”) was
uniformly heralded across all levels of government and the public as bringing critical jobs and
economic activity to an underserved and disadvantaged community, while establishing new
technological and environmental standards for goods movement via rail rather than diesel-
emission-spewing trucks. At the time, this was viewed as a textbook “win-win” for all. But as a
report commissioned by the City of Oakland (“City”) in conducting diligence in advance of the
Project plainly stated, the ultimate success of the crown jewel of the proposed Project – a rail-to-
ship bulk commodity terminal – was far from a certainty and was wholly contingent on
identifying and partnering with a commodity provider with long-term needs for the capacity the
terminal could provide. Tens of millions of dollars and a decades long commitment to the
facility would be required of this yet-to-be-identified, though essential partner.
The proponents and developers of the Project have successfully identified and executed
binding contracts with such a commodity provider. But since that commodity provider finds it
commercially unfeasible to voluntarily forego the shipping and handling of commodities that
recently elected City officials and vocal special interests find politically objectionable, the City is
taking affirmative actions and refusing to honor its obligations under governing agreements that
will, unless brought to legal account and forced to specifically abide by the terms of those
agreements, likely cause the fatal demise of the Project. A federal district judge has already
ruled that the City’s actions in this regard are unlawful. Nonetheless, the City continues
undeterred, all to the great and tangible detriment and very viability of the Project, its
proponents, and as importantly, the community.
One Embarcadero Center, 30th Floor, San Francisco, California 94111 Telephone: 415.291.7400 Fax: 415.291.7474
Albany | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington, D.C.
manatt
Barbara J. Parker, Esq.

Bijal M. Patel, Esq.
October 19, 2018
Page 2
This letter identifies the currently known principal claims that must be addressed now,
together with a summary of key supporting evidence, if the Project is to survive. Absent an
immediate consensual resolution of these issues, Claimants will be left with no alternative but to
seek legal redress.
I. GOVERNMENT CLAIM
OBOT hereby presents a claim against the City of Oakland pursuant to Govt. Code §§
810-996.6. In accordance with Govt. Code § 910, OBOT presents the following claim
information. OBOT concurrently submits the form Claim Against the City of Oakland as
required by the Office of the City Attorney:
(a) The name and post office address of the claimant:
Phil Tagami
Oakland Bulk and Oversized Terminal (“OBOT”)
300 Frank H. Ogawa Plaza, Suite 340
Oakland, CA 94612
Mark McClure
Oakland Global Rail Enterprise (“OGRE”)
300 Frank H. Ogawa Plaza, Suite 340
Oakland, CA 94612
OBOT and OGRE are collectively referred to as “Claimants.”
(b) The post office address to which the person presenting the claim desires notices to be
sent:
Barry W. Lee, Esq.

Manatt, Phelps & Phillips
One Embarcadero Center
30th Floor
San Francisco, CA 94111
(c) The date, place and other circumstances of the occurrence or transaction which gave
rise to the claim asserted.
Further described below.

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(d) A general description of the indebtedness, obligation, injury, damage or loss incurred
so far as it may be known at the time of presentation of the claim.
Oakland has failed to perform under the Army Base Gateway

Redevelopment Project Ground Lease for West Gateway between
the City of Oakland and Oakland Bulk and Oversized Terminal,
LLC, dated February 16, 2016 (“Lease”). Oakland’s failure to
perform under the Lease has caused harm to Claimants, continues
to cause harm to Claimants, and excuses any non-performance by
Claimants under the Lease and/or the Development Agreement by
and Between City of Oakland and Prologis CCIG Oakland Global,
LLC Regarding the Property and Project Known as “Gateway
Development/Oakland Global” dated July 16, 2013 (“DA”).
Claimants’ injury, damages, and losses are further described

below.
(e) The name or names of the public employee or employees causing the injury, damage,
or loss, if known.
Further described below.
(f) The amount claimed.
The claim is well in excess of $10,000, and would not be filed as a

limited civil case.
Consistent with Section 38.13 of the Lease, OBOT will also be

seeking attorney’s fees incurred by OBOT in bringing the action.
If the City does not act upon this letter within 45 days, OBOT will consider the claim to
be rejected pursuant to Govt. Code sections 912.6(a), 912.4(c).
II. BACKGROUND FACTS
A. General Overview.
In 2008, the City of Oakland (“Oakland” or “City”) began considering a proposal by

California Capital & Investment Group (“CCIG”) and others to develop the decommissioned
Oakland Army Base. The Oakland Army Base is uniquely situated with its immediate proximity
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to both a deep-water port and existing rail capacity. The unique characteristics of the site allows
for significant international goods movement through a to-be-constructed bulk goods shipping
terminal that can receive, store, handle, and ship goods that are typically transported in large
quantities, such as cement, iron ore, coal, and petroleum coke (also known as petcoke or coke).
Utilizing existing and to-be-constructed rail infrastructure, transporters of bulk commodities will
not have to rely on trucks for transportation, which would remove truck traffic and long lines of
18-wheelers queued up and idling in and around the facility and the corresponding diesel
emissions that inundate the surrounding community.
OBOT’s predecessor-in-interest in the Project introduced the vision for the Oakland
Global Trade and Logistics Center, a model public-private partnership for an integrated, multi-
modal, and state-of-the-art facility. The Oakland Global Trade and Logistics Center includes a
portion of the Oakland Army Base referred to as the West Gateway. OBOT negotiated with
Oakland to develop the Project, which consists of a Bulk and Oversized Terminal, Rail
Improvements, and Wharf Improvements, as each is defined in the Lease (collectively,
“Facilities”). However, the City has since reneged on its contractual obligations and thwarted
development and construction of the Facilities.
At all times related hereto, the City was informed and aware of the universe of
commodities handled and processed by bulk commodity terminals, both in California and
throughout the world. At the time of adoption and execution of the Project entitlements in 2012
and 2013, for example, materials were provided to the City documenting that coal constituted 40
percent of the bulk commodities actively being shipped by such facilities. The City itself
acknowledged the types of commodities to be shipped by this project. A September 12, 2013
Report on Compliance prepared by Holland & Knight, the City’s then outside counsel,
confirmed mandatory compliance obligations of the City with regard to numerous outside
agencies, including the provision of a “Long Range Property Management Plan” (“LRPMP”).
That LRPMP spelled out explicitly what the subject facilities would be and the typical
commodities that would be shipped:
The proposed use of Parcel E is as part of a new working

waterfront and break bulk commodities terminal. See site plan
attached as Attachment D. The transition by the major U.S. ports to
container terminal and mechanized operations has forced break
bulk products, mainly commodities (e.g. lumber, coal, sulfur), to
be transported via truck to vessel, or to operate from secondary,
smaller ports (e.g. Stockton) both of which limit the capacity,
decrease the efficiency and increase the cost of these types of bulk
product shipping operations. The proposed Oakland Bulk
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Oversized Terminal, using Parcel E and other adjacent land, would

link rail to vessel break bulk shipping operations. (September 12,
2013 … Exhibit 4 [Oakland Oversight Board Resolution No. 2013-
12], Exhibit A [Long-Range Property Management Plan Oakland
Army Base], p. 8 [emphasis added].)
B. The Project at a Crossroads.
As a report and analysis commissioned by the City in early 2012 foretold, the ultimate
success and viability of the Facilities largely hinged on the ability to identify and secure the
commitment of a commodity provider with long-term needs for the processing and handling
capacity this terminal would provide over its 66-year useful life. This implicated tens of millions
of dollars and decades’ worth of committed engagement. The Tioga Group provided a
preliminary report to the City in April 2012 that concluded:
Tioga’s experience is that ventures such as OBOT and OGRE tend

to be too optimistic. The batting average for securing business is
rarely better than one in ten because competitive conditions and
market conditions are too frail and commodity values too cheap.
Of the ones that actually start to move product, only one in another
ten result in movements as large as full unit train volumes. Such
large movements tend to want/need dedicated facilities thereby
negating the ability of the service provider to obtain better asset
utilization across multiple customers.
Hence, obtaining a firm commitment of patronage is mandatory,

but nearly impossible before committing to erecting facilities.
Then, even when all operates well, a certain percentage fail due to
mismanagement, usually over capitalization, or inflexible terms, or
wrong location.
Finally, the true size and characteristics of the market for

overweight, deep draft services at the Port of Oakland are not
known. There is lots of talk, but only one known, current
movement is a candidate. It is difficult to find candidate
movements. Each commodity movement is its own story.
As the City well knows, OBOT and OGRE have secured binding contracts with just such
a commodity provider. However, because that commodity provider refuses to voluntarily and
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unilaterally refuse to handle and ship fully legal commodities to which the City has political
objection, the City has conducted an affirmative campaign of actions and omissions, in direct
violation of the many agreements between OBOT and the City, but especially the Lease. In its
zeal to keep legal but politically disfavored commodities out of Oakland, the City is at this
critical juncture implicating the fatal demise of the Project. At least one Federal District Judge
has told them they may not do so.
C. Overview Per the Federal District Court.
The Federal District Court for the Northern District of California (Chhabria, J.
presiding), recently heard and issued a ruling on claims by OBOT and OGRE that actions by the
City in this matter breached the July 16, 2013 Development Agreement (“DA”) between
OBOT/OGRE-related parties and the City, which DA gave OBOT vested rights to develop and
to operate a bulk-commodity terminal (“Chhabria Ruling”). The City appealed the Chhabria
Ruling, which is pending before the Ninth Circuit Court of Appeals. The following excerpts
from the May 15, 2018 “Findings of Fact and Conclusions of Law” in the Chhabria Ruling
accurately characterize the general history of this matter, Judge Chhabria’s findings of fact and
conclusions of law, and the events that led to the City’s numerous breaches of the Lease, as
further elaborated in the following sections:
 “After the Oakland Army Base was closed in 1999, some of its land
became the property of the City of Oakland. The City then embarked upon
years of planning to redevelop it, which culminated in contractual
agreements with a group of developers who were interested in building a
bulk goods shipping terminal. A bulk goods shipping terminal is a facility
that can receive, store, handle, and ship goods that are typically
transported in large quantities, such as cement, iron ore, coal, and
petroleum coke (also known as petcoke or coke). In 2012, Oakland
officially entered into a ‘Lease Disposition and Development Agreement’
with the Oakland Bulk & Oversized Terminal ("OBOT") to develop this
terminal. Lease Disposition and Development Agreement [citation]. In
July 2013, the City and OBOT entered into a "Development Agreement,"
which further established and elaborated OBOT's rights to build a bulk
goods terminal on this property. Development Agreement [citation].
(Technically, both agreements were signed by a legal predecessor of
OBOT, but OBOT has assumed all of the relevant rights and obligations
under the agreements, so for all relevant purposes, it is effectively the
contracting party.) Since then, OBOT has contracted with a company
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named Terminal Logistics Solutions1 to design and manage the terminal,

although OBOT remains the landlord. Collectively, OBOT, Terminal
Logistics Solutions, and their partners are considered the project
developers. ‘OBOT’ is used to refer to both the company and the bulk
goods terminal being planned.” (Chhabria Ruling, p. 3.)
 “At this stage, the most detailed description of OBOT's operations is

contained in its ‘basis of design.’ The basis of design is a set of documents
that the project developers gave the City in September 2015. These
documents describe, in general terms, how the terminal will operate, the
permits the developers will seek, and the rules and regulations the
developers believe they will have to follow. The basis of design is no more
than a basic framework for the project, with the details yet to be filled in.
It reflects the design process at 8 to 10 percent completion, meaning that
approximately 90 percent of the pre-construction process remains,
including further design and permitting.” (Id. at pp. 3-4.)
 “The basis of design lists goods that could be shipped through the terminal
but does not specify which of these goods the developers will actually
ship. Two of the listed commodities are coal and coke, and it is widely
understood that they are intended to be the primary goods to be shipped.
Although OBOT continues to say it is considering other commodities,
news articles have reported that Terminal Logistics Solutions has been
negotiating the transport of coal from Utah. [Citation.] Moreover,
Terminal Logistics Solutions, which was formed to operate bulk terminals
like OBOT, is a wholly owned subsidiary of a natural resources company
named Bowie Resource Partners that primarily owns coal mines in Utah.”
(Id. at p. 4.)
 “According to the basis of design, the developers are planning for roughly
5 million metric tons of coal and/or coke to pass through the terminal each
year. Both commodities would be brought to Oakland from other parts of
the country.” (Id. at p. 4.)
1
Since issuance of the Chhabria Ruling, the contractual relationship between OBOT and Terminal Logistics
Solutions (“TLS”) has been replaced with a relationship between OBOT and Insight Terminal Solutions, LLC. This
fact does not affect the conclusions of the Chhabria Ruling.
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 “In response to broader concerns about climate change and the

environment, the City Council adopted a resolution expressing Oakland's
opposition to transporting fossil fuels through the city in mid-2014.
[Citation.] Soon thereafter, word began to spread about the developers'
plans to ship coal through the bulk goods terminal, which generated
significant public concern in Oakland. In September 2015 and May 2016,
the City Council held public hearings to receive testimony about the health
and safety effects of storing, handling, and transporting coal through
Oakland. Community members, organizations, and stakeholders from
across the Bay Area testified and submitted written comments. The City
Council asked its staff to evaluate the submissions to determine what
actions the City Council should take, if any. As a part of this undertaking,
the City Council authorized the City Administrator to hire Environmental
Science Associates ("ESA"), an outside consultant, to analyze the health
and safety effects of transporting coal through OBOT.” (Id. at pp. 5-6.)
 “ESA produced its report on June 23, 2016. The report summarized the
existing public record before the City Council and purported to estimate
the environmental impact of the proposed coal operations. A handful of
other reports in the record also summarized the public comments and
offered opinions on the health and safety question. For instance, one was
prepared by Dr. Zoe Chafe for City Councilmember Dan Kalb, and
another was prepared and sent to the City Council by a group of public
health professionals called the ‘Public Health Advisory Panel.’
Environmental organizations, such as the Sierra Club, also submitted
comments.” (Id. at p. 6.)
 “Based in large part on the ESA report, as well as the public testimony and
comments, the City Administrator recommended that the City Council
enact an ordinance prohibiting the storage and handling of coal at bulk
goods facilities in Oakland. It is undisputed that no such facility currently
exists in Oakland, and only one such facility has been contemplated –
OBOT. But the City appeared to operate under the assumption that this
new ordinance could not automatically apply to the OBOT facility because
of the restrictions in the development agreement. So the City
Administrator also recommended that the City adopt a resolution that
would apply the ordinance to OBOT on the grounds that it would be
‘necessary to prevent conditions substantially dangerous to the health
and/or safety of existing and/or future occupants or users of the Project
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and Adjacent Neighbors.’ These recommendations were contained in an

Agenda Report, which attached drafts of the proposed ordinance and
resolution, the ESA report, and other comments, and was transmitted to
the City Council on Friday, June 24, 2016. [Citation.] On Monday, June
27, 2016, the City Council held a public hearing, at which it approved the
proposed resolution and ordinance.” (Id. at pp. 6-7.)
Judge Chhabria reviewed the record that was before the City of Oakland at the time it
approved the Ordinance and Resolution. The court considered whether there was substantial
evidence that OBOT's operations would diminish air quality in Oakland and thereby endanger
human health. There was no such evidence. The court ruled that “the record before the City
Council does not contain substantial evidence that OBOT's proposed operations would pose a
substantial danger to the health or safety of people in Oakland.” (Id. at p. 8.) “The City was not
required to compile a perfect evidentiary record; far from it. But the gaps and errors in this
record are so numerous and serious that they render it virtually useless.” (Id. at p. 34.)
Ultimately, the court found that, “[t]he resolution applying the coal ordinance to the
OBOT facility is invalid, because it is a breach of the development agreement. The City is
therefore enjoined from relying on the resolution either to apply the ordinance to OBOT or to
restrict future coal operations at the facility. As a practical matter, this renders the coal ordinance
a nullity, because the only reason the City adopted it was to restrict OBOT's operations, and
OBOT is the only facility in Oakland to which it could conceivably apply.” (Id. at p. 37.)
Subsequent to the Chhabria ruling, OBOT entered into a sublease with Insight Terminal
Solutions, LLC (“ITS”), whereby ITS will develop and operate the rail-to-ship marine terminal
to be constructed as the West Gateway. As part of this effort, again OBOT submitted the basis
of design to Oakland on September 28, 2018. Despite OBOT’s continued efforts to honor its
contractual obligations and construct the Facilities, Oakland has engaged and continues to
engage in conduct that breaches the express obligations of the Lease, and breaches the covenant
of good faith and fair dealing.
In fact, the adoption of the judicially invalidated Ordinance and Resolution was simply
the culmination of a long and multi-faceted effort by the later elected Oakland City Council and
Mayor, collectively and individually, to thwart OBOT’s efforts to construct and operate the
Facilities. Council members and the Mayor herself stated expressly and publicly that they would
never allow and “do whatever it takes” to keep certain commodities from being shipped by and
through the Facilities, notwithstanding the provisions of the DA.
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OBOT has a vested right to build the Facilities, and OBOT will suffer irreparable harm if
Oakland prevents it from completing the Project in a commercially reasonable timeframe. At the
time Oakland agreed to provide OBOT with the vested right to build the Project, OBOT relied on
various factors including market demand, transport logistics, and site-capabilities to secure an
anchor subtenant. OBOT also relied on representations by the City regarding its financial
capacity to perform and representations that it was entering into agreements with the Port of
Oakland (a department of the City)2 necessary for the operation of the Facilities. The
circumstances that existed when the Parties negotiated the Lease and DA no longer exist today.
OBOT has spent in excess of $26 million (+$8.8 million of which is TCIF eligible, as defined
below)3 over the last ten years in justifiable reliance on the contracts between OBOT and
Oakland, and the vested rights therein. OBOT must obtain assurances that its justifiable reliance
on Oakland’s promises was not made in vain. Deadlines must also be tolled given the City’s
obstructive conduct in interfering with OBOT efforts to develop the Facilities, as well as
OBOT’s economic relationships with third-parties.
D. A Tale of Two Projects.
The City is remarkably inconsistent in its approach to and conversations regarding the
Project, depending on with whom it is speaking or reporting. As provided in greater detail in the
facts above and the allegations of omissions and breaches below, the City, by and through both
its elected officials and staff, have reiterated on numerous occasions that it will not allow a
facility to operate unless it complies with the now judicially invalidated “coal ban.” And its
threats are not just words. It has taken and continues to take actions to thwart progress in
developing the Facilities and interfering with essential contractual negotiations related to
financing, partnering, and leasing the Facilities for operation, all in contravention of the express
terms of the Lease as well as the implied covenant of good faith and fair dealing.
But unfortunately for the City (and Port), it has already accepted and expended millions
of taxpayer dollars from the state and federal government via grant funds, under an extraordinary
and progressive vision for a one-of-a-kind, state-of-the-art facility that will capitalize on an
existing rail corridor’s immediate proximity to a deep water port, allowing for the transport of
goods and commodities via rail, rather than emission-spewing diesel trucks. The Project
2
“The City’s Charter itself describe[s] the Port as a ‘department’ of the City of Oakland, rather than as an
instrumentality or entity of the State of California.” SSA Terminals, LLC, and SSA Terminals (Oakland), LLC
Complainant, v. the City of Oakland, acting by and through its Board of Port Commissioners, Respondent., 2011
WL 7143995 (holding that the Port “‘walks, talks, and squawks’ like a city-run facility instead of an arm of the State
of California.”).
3
This amount does not include the approximately $5 million dollars spent on the MH-1 Lease Area.
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promised to not only set a new standard for the industry globally, but also to be an environmental
boon to the local community.
Once significant dollars are handed over by the government, the government likes to
know that those dollars are being expended in a manner consistent with the understanding for
which they were initially granted. Central to the funding proposal for which the grant funds
were allocated was the bulk commodity terminal at the West Gateway.
As it so happens, the state has called for an audit of the City’s portion of the Project,
commencing Monday, October 22, 2018. The City is painting a picture for the state, as it has
repeatedly done, of the Project progressing as expected and portrayed in order to get the funds
that have long-since been spent. No mention of a politically driven Ordinance and Resolution
seeking to limit, on purely political bases, the operations of the Facilities, let alone the fact that
such action was invalidated by a federal court. No mention of the City’s threatening to subject
the Project to inappropriate additional layers of legal review with potential exposure for
litigation. No mention of the refusals to address essential prerequisites for permit submittals. No
mention of the failure and refusal to turn over the very premises that are to be improved. No
mention of intentional acts to thwart and interfere with funding and permitting efforts with
outside regulatory agencies. Indeed, no mention of the City’s myriad actions outlined below.
In fact, a recent state audit of the Port’s portion of the overall Army Base project resulted
in a finding that it had inappropriately expended and must remit back to the state $7,405,013.
The state’s audit is not just financial, but also programmatic. Even if the fund
expenditures and required matching contributions align, the state will also be assessing the
degree to which on-the-ground progress with the Facilities – i.e., whether the intended economic
and environmental benefits of substantial bulk goods movement via rail as opposed to diesel
truck – is happening on schedule. Unfortunately, based upon the affirmative actions and
omissions by the City designed to undermine and potentially kill the Project absent the
developer’s agreement to adhere to the judicially invalidated “coal ban,” the City cannot
demonstrate the necessary progress to the state. Anticipating this deficiency, the City requested
that OBOT and OGRE join it in proposing to the state that the bulk commodity terminal and
related rail service (including its attendant air quality improvements) be moved to a later phase
of the Project. OBOT and OGRE declined to do so.
Oakland’s acts, omissions, and breaches of its contractual obligation under the Lease are
set forth below.
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III. OAKLAND’S OMISSIONS AND BREACHES OF ITS OBLIGATIONS
A. OBOT Disputes it Committed an Unmatured Event of Default.
The City erroneously claims OBOT committed an Unmatured Event of Default by failing
to commence construction of the Minimum Project by the Initial Milestone Date, as such terms
are defined under the Lease, and that OBOT must cure this Default by October 22, 2018. As
described in detail in this letter, the City’s acts, omissions and breaches of its contractual
obligations to OBOT excuse any non-performance by OBOT under the Lease. In fact, the City’s
conduct has prevented OBOT’s performance.
In a letter dated August 20, 2018, the City accepted OBOT’s payment of Base Rent under
the Lease, paid under protest, despite OBOT’s inability to occupy the West Gateway lease area
due to the continued occupation by a separate third party with the City’s consent.4 In addition,
the City claimed that OBOT failed to satisfy the obligation to commence construction of the
Facilities and “at least one of the components of the Minimum Project Rail Improvements” by
August 14, 2018. The City acknowledged – but disregarded – OBOT’s notice that the City had
committed force majeure under the Lease.
Despite OBOT’s presentation of evidence to demonstrate that it has not committed any
default under the Lease, in a letter dated September 21, 2018, the City formally took the position
that OBOT had failed to comply with the Initial Milestone Date deadline under the Lease
resulting in an Unmatured Event of Default and demanded several unreasonable terms from
OBOT to extend the proposed Cure Period. Indeed, in its September 21, 2018 letter, the City
further breached its contractual obligations by demanding that OBOT comply with the City’s
illegal Resolution applying the coal ban Ordinance to OBOT. Moreover, the City further
demanded OBOT release all claims for damages against the City, the existence of which have
prevented and are preventing OBOT’s timely completion of the Project.5 While OBOT
continues to pursue completion of the Project in good faith, it rejects the City’s unreasonable
demands.
4
On July 30, 2018, and August 3, 2018, OBOT paid rent for the West Gateway under protest, expressly stating,
inter alia, that the City’s actions had created a Force Majeure Event as defined under the Lease.
5
Of concern to OBOT is the City’s disclosure of confidential settlement negotiations in a public document. It is a
breach of the City’s agreement with OBOT regarding settlement discussions, as well as a breach of the City’s
statutory obligations. OBOT reserves the right to pursue additional remedies for such disclosure.
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B. Force Majeure.
The City has prohibited OBOT from progressing with construction of the Project and
performing under the Lease. The City’s actions constitute Force Majeure, as defined by the
Lease, and, in addition to causing monetary damage to Claimants, excuse any delay or non-
compliance with the Lease by OBOT.
Section 6.1.1 of the Lease sets forth the schedule for commencing and completing
construction of the Facilities. However, the schedule is subject to extension provisions for delay
due to Force Majeure, as defined in Section 16.1 and Article 40 of the Lease:
16.1 Delay Due to Force Majeure. For all purposes of this

Lease, a Party whose performance of its obligations hereunder is
hindered or affected by events of Force Majeure shall not be
considered in breach of or in default in its obligations hereunder to
the extent of any delay resulting from Force Majeure, provided,
however, that the provisions of this Section 16.1 shall not apply to
Tenant’s obligation to pay Rent, including Additional Rent. A
Party seeking an extension of time pursuant to the provisions of
this Section 16.1 shall give notice to the other Party describing
with reasonable particularity (to the extent known) the facts and
circumstances constituting Force Majeure within (a) a reasonable
time (but not more than thirty (30) days unless the other Party’s
rights are not prejudiced by such delinquent notice) after the date
that the claiming party has actual knowledge of the scope and
magnitude of the applicable Force Majeure event or (b) promptly
after the other Party’s demand for performance.
***
Force Majeure means events which result in delays in a Party’s
performance of its obligations hereunder due to causes beyond
such Party’s control, including, but not restricted to, acts of God or
of the public enemy, acts of the government, acts of the other
Party, fires, floods, earthquakes, tidal waves, terrorist acts, strikes,
freight embargoes, delays of subcontractors and unusually severe
weather and, in the case of Tenant, any delay resulting from a
defect in Landlord’s title to the Premises other than a Permitted
Exception. Force Majeure does not include failure to obtain
financing or have adequate funds. The delay caused by Force
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Majeure includes not only the period of time during which

performance of an act is hindered, but also such additional time
thereafter as may reasonably be required to complete performance
of the hindered act. [Emphasis added.]
There have been several instances of Delay Due to Force Majeure caused by the City’s
actions precluding OBOT’s performance of numerous obligations under the Lease. OBOT first
informed the City of these Delays and their preclusive effect of OBOT satisfying its obligations
under the Lease on March 11, 2016, and again on April 10, 2018.
1. Health and Safety Hearing and Adoption of Resolution/Ordinance.
In 2013, after completion of CEQA and adoption of the vesting entitlements for the
Facilities, the Sierra Club and other special interests began a public campaign against the
transportation of coal through the terminal or elsewhere in Oakland. Oakland Global (OBOT’s
predecessor-in-interest) stated that its immediate commodity focus was on iron ore and copper
concentrate, which was accurate at the time. However, Oakland Global refused to make a pledge
to take coal and all fossil fuels off of the table as potential commodities to be handled by the
Facilities. To be viable in the competitive marketplace, Oakland Global explained that the
Facilities must be responsive to the demands of the market over the 66-year life of the Lease.
In mid-2014, the City first expressed concerns regarding the transportation of coal
through the Facilities. Oakland passed Resolution No. 85054 Opposing Transportation of
Hazardous Fossil Fuel Materials through Oakland. This 2014 resolution was not specific to nor
did it specifically identify the Facilities. Rather, it stated a general opposition to the transport of
fossil fuels through the City, notwithstanding the fact that coal was regularly transported through
the City by rail already. After passing the Resolution, the City approved the Third Amendment
to the Lease Disposition and Development Agreement (“LDDA”) and the Mid-Project Budget
Revise on December 16, 2014.
On September 21, 2015, the City convened an evidentiary Health and Safety Hearing
regarding the implications of potential coal shipments. The City kept the public record open for
two additional weeks, requesting that interested parties submit any additional material related to
the coal within that time period. The City continued to review the record after the meeting for
several months, and the City retained consultants Environmental Science Associates (“ESA”) to
analyze the record received on the matter and to evaluate options.
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On December 2, 2015, the San Francisco Chronicle reported on efforts of Mayor Schaaf
and her staff confirming “a plan . . . to stop coal from being shipped . . . .” Additional troubling
reports from the Chronicle article included:
 “City leaders have hired a consultant to come up with enough ammunition

to prove that coal is indeed dangerous, and thus allow Oakland to adopt a
health regulation that would essentially make the coal deal unworkable.”
[Emphasis added.]
 “The mayor believes Oakland has the authority to act as long as [the
developer] hasn’t taken out the final permits for the project. He isn’t likely
to do so until spring.”
 “‘The city has telegraphed its intentions in a way it hadn’t done before,’
Earthjustice attorney Irene Gutierrez said of Oakland’s possible move to
block coal shipments.”
In the wake of this reporting, the City set a hearing for February 16, 2016, to retain ESA
to review the record compiled to date regarding coal. In the proposed retention, the staff
recommended waiving all standard advertising, competitive bidding, and a request for
proposals/qualifications competitive selection requirements mandated in the Oakland Municipal
Code for such work. According to the proposed scope of work, the cost would be $208,000 and
would take seven to eight (7-8) months.
But just before the hearing was called to order, according to reporting by the East Bay
Express on February 17, 2016, Mayor Schaaf asked the Council to refrain from acting on the
proposal, “‘so that we may further evaluate other, potentially more effective options,’ to bar coal
shipments through Oakland. ‘I remain strongly opposed to the transport of coal and crude oil
through our city,’ Mayor Schaaf wrote in her letter.”
Later, the City revised the scope of work for ESA to include not only coal and petcoke,
but also “Fuel Oils, Gasoline and/or Crude Oil Products.” A new hearing on retaining ESA was
set for May 3, 2016. By this time, however, significant changes had been made to the proposed
ESA Scope. The staff recommendation still included a waiver of the Municipal Code mandated
competitive selection requirements, but the terms of the ESA proposal were different:
 The scope of review was substantially expanded to include the now almost
eight month old “record” on coal as well as the yet-to-be-compiled record
on “other hazardous fossil fuel materials;”
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 Notwithstanding the significant expansion in work and scope, the budget

for the effort was slashed from $208,000 to $120,000; and
 Notwithstanding the significant expansion in work and scope, the time

frame for completing the review and reporting back to the Council was
slashed from “7-8 months” to six weeks.
At the May 3, 2016, City Council hearing, not only did the Council approve the ESA
scope proposal, they also unanimously voted to override normal City Council scheduling
protocols for scheduling hearings through the City Rules Committee, and directly scheduled the
June 27, 2016 hearing on the proposed Ordinances.
And, apparently, the City could have saved itself the cost of the ESA report, a majority of
the Council having stated publicly that they would never allow coal to be shipped through the
Facilities. In May 2016, Council President Lynette Gibson-McElhaney issued a press release
stating that she “is unequivocal in her opposition to coal being exported from the City-owned
lands.” Then, from the dais on May 3, 2016 prior to consideration of the ESA proposal,
Councilmember Noel Gallo stated on the record in open session that he was “ready to vote no on
the coal.” And almost simultaneously, a fourth City Councilmember, Abel Guillen, posted a
picture on Instagram of himself holding a sign that said, “NO COAL IN OAKLAND.”
And Mayor Libby Schaaf repeatedly made clear to the public and press her adamant
opposition to coal being transported at and through the Facilities and her intention to do anything
necessary to prohibit it. And on at least one occasion in October 2015, she personally told a
principal of OBOT that she would do anything in her power to make sure that no coal would
come through Oakland, “even if it meant killing the entire project to do so.”
On July 27, 2016, the City held a hearing on the proposed Ordinance to ban coal and
petcoke in Oakland, and a Resolution applying the ban to the Facilities. Three days in advance
of the hearing (including Saturday and Sunday), the City disseminated a 225-page staff report
that included a report by ESA (later thoroughly and unequivocally discredited by Judge
Chhabria) and the proposed Ordinance and Resolution. OBOT sent a letter to the City on the
same day as the hearing to discourage the Councilmembers from breaching the DA by adopting
the Ordinance/Resolution, and criticizing the findings in the ESA report.
The City’s actions are in clear violation of the DA, which prevents the City from
imposing new regulations that will thwart the development and operation of the Facilities:
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3.4.1 Future City Regulations. Except as otherwise specifically

provided in this Agreement . . . City shall not impose or apply any
City Regulations on the development of the Project Site that are
adopted or modified by City after the Adoption Date (whether by
action of the Planning Commission or the City Counsel, or by local
initiative, local referendum, ordinance, resolution, rule, regulation .
. . that would: (i) be inconsistent or in conflict with the intent,
purposes, terms, standards or conditions of [the DA]; (ii)
materially change, modify or reduce the permitted uses of the
Project Site . . . (iii) materially increase the cost of development of
the Project . . . (iv) materially change or modify, or interfere with,
the timing, phasing or rate of development of the Project; (v)
materially interfere with or diminish the ability of a Party to
perform its obligations under the City Approvals, including [the
DA], or the Subsequent Approvals, or to expand, enlarge or
accelerate Developer’s obligations under the City Approvals,
including [the DA], or the Subsequent Approvals; (vi) materially
modify, reduce or terminate any of the rights vested in City
Approvals or the Subsequent Approvals made pursuant to [the DA]
prior to expiration of the Term.
2. Federal Case and Appeal.
On December 7, 2016, OBOT filed a federal lawsuit against Oakland for breach of the
DA for adopting the Ordinance and Resolution without any “substantial evidence” that
transporting coal through the terminal would present a “substantial danger” to people in Oakland.
OBOT also argued that the ordinance violates the Commerce Clause of the U.S. Constitution and
is preempted by a variety of federal statutes: the Interstate Commerce Commission Termination
Act, the Hazardous Materials Transportation Act, and the Shipping Act of 1984.6
The court considered the record evidence regarding the potential health and safety
impacts of operating the Facilities. “The most significant parts of the record before the City
Council focus on whether OBOT's operations would diminish air quality in Oakland and thereby
endanger human health. ESA used the evidence from the record to estimate emissions for the
project, which were then reprinted in the City Administrator's June 23, 2016 report
recommending that the City Council pass the ordinance and apply it to OBOT. [Citation.] ESA's
6
Given the court’s finding of breach of the DA, the court made no ruling on OBOT’s constitutional or preemption
claims.
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estimates, however, were almost completely unreliable.” (Chhabria Ruling, p. 11, [emphasis
added].) The court found the following findings to be unreliable:
 “ESA emphasized that there are no existing rules or regulations that would
require the coal operations to use covers. Other commenters, and later, the
City, echoed this point. But this simply begs the question. [Citation.] The
project developers submit that they are willing to obligate themselves to
accept only coal that is carried to the terminal on covered rail cars. That is,
OBOT could, and seemingly would, contractually require the terminal
operator, coal supplier, or rail carrier to use covers as a condition of doing
business. This would address any concerns about limits on local
governmental authority to impose constraints on the coal or rail
operations. [Citation.] And it appears that after the ordinance was passed,
OBOT did just that, requiring the terminal operator to use covered rail cars
as part of its lease agreement.” (Id. at p. 14.)
 “Alternatively, the Air District in the Bay Area could require OBOT to
mitigate emissions by using coal covers. As OBOT points out, the South
Coast Air Quality Management District recently adopted a rule requiring
covers. The rule requires facilities that store, handle, and transport coal
and coke to cover vehicles carrying these goods before they leave the
facilities. The rule also specifies the kinds of covers that are acceptable,
allowing alternatives only if they are capable of preventing fugitive
particulate matter emissions. [Citation.] Not only could the Air District in
the Bay Area require the use of covers as a condition of issuing a permit to
operate, but it could pass similar regulations that would apply more
generally.” (Id. at pp. 14-15.)
 “ESA excluded surfactants from its main emissions estimates because it

claimed it did not have objective scientific data about how well surfactants
would reduce coal dust emissions from rail cars. But instead of attempting
to estimate their effectiveness, ESA simply decided that surfactants would
not be effective and did not account for them in its final emissions
estimates. [Citation.] This again was a big mistake. Because the project
developers had told the City they would require surfactants to be used on
the coal arriving at the terminal, ESA should have made a meaningful
effort to incorporate them in its final estimates rather than deeming them
irrelevant.” (Id. at pp. 15-16.)
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 “ESA's final estimates thus wrongly assumed that emissions during

transport and staging would be uncontrolled. ESA provided rough
estimates of ‘controlled’ emissions earlier in its report, where it assumed
(without any meaningful analysis) an 85 percent reduction in emissions
during the transport and staging phases (Tables 5-2 and 5-5). But these
numbers were excluded from the final table (Table 5-7). Although these
earlier tables suggested the dramatic reduction in emissions that controls
might make possible, ESA, and later, the City, gave them little, if any,
weight. As explained earlier, the City Administrator reprinted Table 5-7 in
the June 23, 2016 Agenda Report and concluded from it that the emissions
from OBOT would pose a substantial danger to health and safety and that
the City Council should pass the ordinance. As the City Administrator put
it, ‘Per the table . . . the overall emissions from the OBOT project are
expected to exceed both the daily and annual PM 10 and PM 2.5 City of
Oakland CEQA Thresholds of Significance, which would be considered a
significant unavoidable impact under CEQA and thus presumptively a
substantially dangerous condition to health.’” (Id. at p. 17.)
 “Therefore, given the record before it, the City Council was not even
equipped to meaningfully guess how well these controls would mitigate
emissions.” (Id. at p. 17.)
 “The emissions estimates were further flawed because they resulted from a
misapplication of federal guidance and mistaken assumptions about the
type of coal to be transported to the terminal.” (Id. at p. 18.)
 “Despite the absence of any adequate air quality analysis, the City argues
that OBOT would cause impermissible exceedances of the national
standards. The record does not contain meaningful evidence to support
this assertion.” (Id. at p. 27.)
 “The City raises a host of other concerns about the terminal, including fire
hazards, worker safety, and greenhouse gases. But on these points, too, the
City's record lacks substantial evidence that the coal operations will pose a
substantial health or safety danger.” (Id. at pp. 30-31.)
 “It is facially ridiculous to suggest that this one operation resulting in the
consumption of coal in other countries will, in the grand scheme of things,
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pose a substantial global warming-related danger to people in Oakland.”

(Id. at p. 33.)
Following a bench trial before Judge Chhabria, the court found in favor of OBOT on its
breach of contract claims. The resolution applying the coal ordinance to the Facilities is invalid,
because it is a breach of the DA. The City was therefore enjoined from relying on the Resolution
either to apply the Ordinance to OBOT or to restrict future coal operations at the Facilities.
The City was quite aware of the impact that the Ordinance and Resolution would have on
Claimants’ ability to survive as a business. From the time well before the City’s purported
“Health and Safety Hearing” on September 21, 2015, OBOT openly shared with the City its need
to finalize an option agreement and sublease for the Facilities with a bulk commodity provider
willing to make a substantial investment in the Facilities including tens of millions of dollars and
a decades-long commitment.
While OBOT initiated the lawsuit against Oakland, the City’s adoption of the Ordinance
and Resolution as well as its defense against OBOT’s action with no substantial evidence to
support the City’s position were acts of Force Majeure that delayed OBOT’s performance under
the Lease. Rather than resolving OBOT’s claims, Oakland vigorously defended its erroneous
position. Oakland continues to prosecute its appeal of the Chhabria Ruling, which interferes
with OBOT’s ability to perform timely under the Lease.
3. Permit Application, Pre-Meeting & Cappio Memo.
On November 6, 2015, Assistant City Administrator Claudia Cappio sent an internal

memorandum to the Oakland Planning and Building Department regarding Permitting for the
Facilities (“Cappio Memo”). The Cappio Memo represents a transparent effort by Oakland to
slow down or halt construction of the Facilities, contrary to the intent of the parties set forth in
the DA. The Cappio Memo provides that, “[d]ue to the high-profile nature of the project it is
important for the City Administrator’s Office to provide updates to the City Council on the status
of OBOT implementation,” and Cappio intends to notify the City Council whenever an
application for a building or construction related permit is submitted by OBOT. It is important
to note that no other development project at the Oakland Army Base has had a similar restriction
placed upon it, particularly one that modifies the regulatory scheme in place in violation of the
DA.
Cappio instructed the Planning and Building Department to notify City staff “upon
receipt of any building or construction-related permit application for OBOT (including, without
limitation, building permit, p-job permit, grading permit, creek protection permit, etc.)”
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[emphasis added] and further instructed that the Planning and Building Department that it may
not “deem the application complete or issue the permit until after consultation with” Cappio,
Rachel Flynn, the Director of Planning and Building, and Darin Ranelletti, the Deputy Director
of Planning and Building. OBOT is not aware of any other project in the City that is subject to
such direction.
Subsequently, during a pre-application meeting on March 9, 2016 at which the OBOT

team expected to discuss with City department heads the necessary components for a complete
application for a building permit for the Facilities, OBOT presented the basis of design to
relevant department heads and permit decision-makers. Oakland clarified that the purpose of its
stepped-up attention to OBOT’s permit applications is to subject OBOT to additional
discretionary approvals, notwithstanding the provisions of the DA. Section 3.4.4 of the DA
provides that the City “shall have the right to apply to the Project at any time, as a ministerial
act, the Construction Code and Standards in effect at the time of the approval of any City
Approval or Subsequent Approval thereunder.” [Emphasis added.] The purpose and intent of the
DA is to establish the existing regulations and permit requirements and shield the developer from
future changes in regulation with limited exceptions. The purpose of development agreements,
generally, and this DA, specifically, was aptly summarized in the Chhabria Ruling:
“As a general matter, development agreements are contracts

between local governments and developers that freeze existing
zoning and land use regulations into place. These agreements are
intended to provide developers with a measure of certainty that
new and unexpected government regulations will not stymie their
projects, particularly when the projects require years of investment,
government approvals, and construction. Consistent with this
general approach, the agreement between the City and OBOT
includes a provision that prevents the City from imposing new
regulations on the terminal project after the date on which the City
signed and adopted the agreement. Development Agreement §
3.4.1 (Ex. 584.0022-0023); see Save Tara v. City of W. Hollywood,
45 Cal. 4th 116, 138 (2008); Santa Margarita Area Residents
Together v. San Luis Obispo Cty., 84 Cal. App. 4th 221, 226-27
(2000).” (Chhabria Ruling, p. 8.)
In the March 9, 2016 meeting, the OBOT team questioned the City’s continued and
repeated references to the review being “discretionary.” OBOT’s concern was that discretionary
decisions by the City, in some instances, potentially re-opens analysis under the California
Environmental Quality Act (“CEQA”). But the CEQA analysis of the Facilities had long-since
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been completed, as evidenced by the dismissal of two lawsuits by the Sierra Club and others a
based upon the lack of timeliness of the challenge. Given the DA’s express provision that
review of the Facilities for permitting would be “ministerial,” OBOT informed the City that
designation of such review as “discretionary” in order to trigger new CEQA review, would
violate the DA.7 It was clear, nonetheless, that by subjecting each permit application to
increased scrutiny and discretionary review, the City was attempting to reopen CEQA review
improperly, all for the purpose of interfering with completion of the Project.
Additionally, the City stated at the March 9, 2016 that it was unsure of whether the
current Construction Codes and Standards were sufficient to address the issues that may be
raised by the construction and operation of a bulk terminal facility and that it was going to
implement a process to review the current codes and standards and determine if they need to be
supplemented for the Project.
On March 11, 2016, OBOT provided notice of the Force Majeure Delay caused by the
City’s inability to inform OBOT of the Construction Codes and Standards and applicable City
Regulations that will apply to Premises and Project Improvements. (See Stice Letter, dated
March 11, 2016.) Because the City stated that it was unable to provide the foundational
information set forth in the applicable Construction Codes and Standards and applicable City
Regulations as required under Sections 3.4.3 and 3.4.4 of the DA, OBOT was not able to
continue its work on the design of the Project Improvements beyond the preliminary stage. This
constitutes a Force Majeure event beyond OBOT’s control that results in actual delay of OBOT’s
performance under the Lease. Due to the City’s act of Force Majeure, OBOT is entitled to an
extension of at least two years of the Commencement Date with respect to the specified, material
lease obligations in order to complete the design and construction of the Facilities.
The core foundation on which any terminal will be constructed and operate is the Basis of
Design. The City was provided the Basis of Design in September 2015 to provide the minimum
construction and operational standards applicable to the terminal, regardless of commodity to be
shipped. Since that submittal, OBOT has consistently requested feedback and direction from the
City on specific requirements and expectations for a permit application, including that leading up
the March 9, 2016 meeting noted above. Never has the City provided any meaningful feedback
regarding the Basis of Design. In fact, OBOT expressed its concern to the City on September 24,
2015, that the Council was not being provided copies of the Basis of Design and that it was not
being included electronically with other documents in the administrative record for the Project.
7
There are legal principles that would justify re-opening of CEQA (e.g., a significant change in the Project proposed
by OBOT), but none of those principles were or are present in this instance.
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Additionally, under the terms of the DA, Section 3.4.3, the City had the obligation to
compile a record of all “existing City regulations” applicable to the Project in that one of the
primary points of the DA is to prohibit the imposition of new laws and regulations to the project.
Despite repeated requests, the City refused to provide the record of applicable regulations. The
following March 7, 2016 email from Phil Tagami to Claudia Cappio is exemplary of the
numerous frustrating attempts the Project made to get the record, from which a permit
application could be premised and brought forward:
My latest of several request, by e-mail of 2/23/16 now two weeks

old, for the “binder” (s) from the City to fulfill a city obligation
contained in the Development Agreement section 3.4.3 (page 19)
remains unanswered. The submittal is now almost 2.5 years late.
We do not want our design team, consultants proceeding with
design work, nor our prospective tenants making operational and
timing representations that are not consistent with the rules.
Time continues to slip past us on this request. Consider this as an

official plea for a written response with the status of the binder and
when we might get it.
How is one to be expected to apply for a permit when the permitting agency itself refuses to
verify which rules are applicable to the Project for which the permit is sought?
The Basis of Design, with other materials, were provided to the City again on September
28, 2018. In an October 18, 2018 response, the City acknowledged receipt of the Basis of
Design and other materials. However, the City stated that it was recognizing only “conceptual
drawings,” merely a portion of the full context of the Basis of Design, and is apparently
disregarding the rest. The City then went on to contend that the submittal is “incomplete,”
curiously asserting that “[t]he City’s response to this submittal shall in no way be construed as a
substantive response or acceptance of a cure or commencement of cure of the Unmatured Event
of Default described in the letter form the City Attorney dated September 21, 2018.” The
context and true facts related to “cure” provisions are addressed below. The City’s October 18,
2018 response is but the latest example of its efforts to obfuscate and to erect improper
roadblocks to Project completion. OBOT will be shortly responding in full to the City’s letter
separately.
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4. Threat to Reopen CEQA.
The Cappio Memo and the City’s subsequent representation that it considers each permit
application to require discretionary review raises the likelihood of the City’s anticipatory breach
of Section 3.5.1 of the DA, which permits the parties to rely on the Project EIR for review and
processing of subsequent approvals. This contradicts the terms of the Lease and DA, and
California law regarding CEQA review of ministerial decisions.
An EIR for the Army Base was prepared in early 2000s. The City prepared an
Addendum EIR in 2012 with the revised proposal from Oakland Global (OBOT’s predecessor-
in-interest), and adopted the Addendum. The Addendum included the imposition of an extensive
suite of mandatory mitigation measures and conditions of approval. Supported by the EIR, the
City adopted the first of the vesting entitlements for Oakland Global, a LDDA on October 23,
2012. The City relied upon and reaffirmed the EIR in connection with future approvals:
 Adoption of the Addendum EIR on June 21, 2012;
 Letter from City to stakeholders dated August 30, 2012 reaffirming the
adequacy of the CEQA review;
 Approval of Project grants by the California Transportation Commission

including reliance on the EIR, on October 24, 2012;
 Adoption of the DA on July 16, 2013;
 Adoption of the Third Amendment to LDDA and Mid-Project Budget Revision

on December 16, 2014;
 Adoption of resolution forming Community Facilities District in support of

development activities at Facilities on July 21, 2015; and
 June 17, 2016 City resolution authorizing the City Administrator to secure up to
$53 million in bridge financing to complete the public infrastructure project.
The 2014, 2015, and 2016 reliance on the Addendum in support of Project approvals
contradicts the City’s prior stance that further CEQA review would be necessary and appropriate
for Project permitting review in that the City, in these approvals, continued to affirm the 2012
Addendum as accurate and sufficient to support additional Project-related approvals.
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Per the terms of the DA, the certified EIR already addressed the environmental impacts
of the Project:
3.5.1 Reliance on Project EIR. The EIR, which has been certified
by City as being in compliance with CEQA, addresses the potential
environmental impacts of the entire Project as it is described in the
Project Approvals. It is agreed that, in acting on any discretionary
Subsequent Approvals for the Project, City will rely on the EIR to
satisfy the requirements of CEQA to the fullest extent permissible
by CEQA and City will not require a new initial study, negative
declaration or subsequent or supplemental EIR unless required by
CEQA, as determined by City in its capacity as the Lead Agency,
and will not impose on the Project any mitigation measures or
other conditions of approval other than those specifically imposed
by the City Approvals, specifically required by the Existing City
Regulations or by subsequent CEQA review.
In order to justify supplemental CEQA review under the law, the following criteria must
be present: (1) substantial changes in the project; (2) substantial changes in the environment; or
(3) new information that was not known or could not have been known at the time of CEQA
compliance. Pub Res Code § 21166; Melom v. City of Madera (2010) 183 Cal.App.4th 41, 48.
None of those circumstances are present here.
While CEQA review does not require the City to evaluate the impact of particular
commodities transported through the Facilities, the City was aware that coal was one of the bulk
commodities that would be transported through the Facilities prior to approving the DA. Coal
was identified in each of the following materials reviewed by the City:
 Kinder Morgan PowerPoint from 2011 identifies “Bulk Tonnage Breakout” and
lists coal.
 April 19, 2012 report to the Oakland Community and Economic Development
Agency (“CEDA”) regarding “OBOT and OGRE as of April 19, 2012” by the
Tioga Group, Inc.
 June 2012 video of comparable facility in Long Beach featured coal.
 May 8-11, 2012 email exchanges between Port staff expressly referencing coal as
a potential commodity to be shipped.
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 Port-funded review dated May 31, 2013 by Lautsch Davis, expressly including
coal as one of several commodities on suggestion list.
 September 12, 2013 letter from Betsy Lake attaching a copy of the Long-Range
Property Management Plan for the Oakland Army Base that shows the proposed
use of Parcel E is a bulk commodities terminal for commodities, “(e.g. lumber,
coal, sulfur)” to be transported from link rail to vessel.
 September 15, 2013 emails between staff members at BCDC and Development
Commission to attorney at Earthjustice and forwarded to attorney at Sierra Club,
noting that coal had been expressly included in discussions regarding potential
commodities at OBOT.
No further permits that are required to develop and construct the Facilities require
discretionary review, absent a request by OBOT for changes beyond the scope of the existing
entitlements. Nonetheless, in both the Cappio Memo and at the March 9, 2016 meeting, the City
indicated that it would require OBOT to obtain a Creek Protection Permit, which is unnecessary
under the scope of the Project. This is particularly befuddling considering that the Addendum
(prepared for and adopted by the City as lead agency) expressly states that a Creek Protection
Permit is not needed: “In conclusion, waters in the project area are not defined as a creek by the
Creek Protection Ordinance. This finding is consistent with the 2002 EIR findings that there are
no creeks in or near the project area, and conditions do not exist that could cause a conflict with
the City’s Creek Protection Ordinance.” (2012 Oakland Army Base Project Initial
Study/Addendum, at 183). Thus, the only reason for the City to require OBOT to obtain a creek
permit would be to subject the Project to further, unnecessary discretionary review in bad faith.
5. “Ban-Compliant Facility” Mandate.
The City has insisted that OBOT construct a facility that complies with the illegal Coal
Ban. However, in the federal litigation regarding the Coal Ban, the court ruled that application
of the Coal Ban to the Facilities is invalid, constitutes a breach of the development agreement,
and the City may not rely on it to restrict operations at the Facilities.
Under Section 12.4 of the Lease, OBOT has the right to sublet the Premises without the
City’s consent. The City’s position that the Facilities comply with an illegal Ordinance that has
been found to be invalid as applied to the Facilities constitutes anticipatory breach of the DA and
Lease. See Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes (2010) 191
Cal.App.4th 435, 441 (city’s insistence that developer resolve FAA objections before moving
forward with the development agreement, which resolution was not a condition for performance
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in the development agreement, constituted anticipatory breach of the DA and the developer was
entitled to money damages).
6. Fence Permit.
Among the responsibilities originally allocated to the City was the provision of perimeter
fencing to secure the site. When it was clear the City was either incapable or unwilling to
provide the fencing on the schedule that would allow the Project construction to continue, OGRE
agreed to provide the fence. The City stated that construction of the fence would require a
permit from the City. In the course of evaluating the permit application for the fence, the City
departed from the previously agreed upon plan for the placement of the fence in the public right
of way and instead insisted that the fence be constructed on Claimants’ private leased lands.
Additionally, though the design of the fence had been long-since agreed upon, the City insisted
on a new review of the proposed fence, including revised plans and design drawings. Even after
Claimants acquiesced, the City continued to drag its feet on processing the fence permit, which
has still yet to be issued.
In addition to the City permit, the fence implicated the need for authorization from the
Bay Conservation and Development Commission (“BCDC”). As a separate and independent
claim of breach by the City as addressed below, the City affirmative interfered with and sought
to thwart OBOT’s efforts to secure BCDC’s authorization for the necessary work and
improvements.
7. Additional City Breaches.
To the extent the City breaches set forth in Sections I(A) and (C) – (K) have delayed
OBOT’s performance under the Lease, OBOT is entitled to a corresponding extension of the
time for required performance.
C. Non-Disturbance Agreement.
Under Section 12.5 of the Lease, the City has an obligation to issue a Non-Disturbance
Agreement for the Subtenant (“NDA”) who will operate the Facilities.
12.5.1 Conditions for Non-Disturbance Agreements. From time to

time upon the request of Tenant, Landlord shall enter into
agreements with Subtenants providing generally, with regard to a
given Sublease, that in the event of any termination of this Lease,
Landlord will not terminate or otherwise disturb the rights of the
Subtenant under such Sublease, but will instead honor such
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Sublease as if such agreement had been entered into directly

between Landlord and such Subtenant ("Non-Disturbance
Agreements"). . . (v) if Tenant is then in default of any of its
obligations under this Lease, Landlord may condition its
agreement to provide a Non Disturbance Agreement on the cure of
such defaults as Landlord may specify either in a notice of default
given under Section 18.1 or in a notice conditionally approving
Tenant’s request for such Non Disturbance Agreement (and if an
Event of Default or Unmatured Event of Default on the part of
Tenant then exists, then Landlord may withhold or condition the
giving of a Non Disturbance Agreement) . . .
Because a form of NDA was not attached to the Lease, OBOT submitted a form of NDA
to the City four times. After the third submission, on August 24, 2018, the City finally
responded by making redline interlineation changes to the form previously submitted. OBOT
and OGRE executed the NDA and submitted it to the City; however, at the conclusion of a
meeting with the City on August 29, 2018, the City indicated that it needed to make additional
changes to the NDA, stating that it would have the changes to OBOT and OGRE later that day.
After a week and a half of following up with the City, but no response, in a letter to the City
Attorney dated September 7, 2018, OBOT and OGRE rescinded their respective signatures and
provided suggested revisions to the NDA to correct the items orally raised by the City, as well as
to make corrections to bring the NDA back into conformance with the language of Section
12.5.1 of the Lease.
On September 27, 2018, the City refused to issue a NDA with respect to the proposed
sublease between OBOT and OGRE, notwithstanding the City’s contractual obligation to do so.
As a pretext, the City predicated its refusal on Section 12.5.1 of the Lease and the City’s
incorrect claim that it is entitled to withhold or condition the grant of a NDA to a Subtenant
because OBOT has committed an Unmatured Event of Default related to the Initial Milestone
Date. The City argued that OBOT may renew its request for an NDA for the OGRE Sublease
following “resolution of the Unmatured Event of Default.” As demonstrated in this letter and
prior correspondence to the City, no Event of Default or Unmatured Event of Default exists
given the City’s actions, omissions, and breaches of its express and implied contractual and legal
obligations.
Additionally, as noted in the City’s September 27, 2018 letter, the September 7, 2018
submission by OBOT and OGRE was not only a request for the City to enter into an NDA, but,
consistent with Section 12.5.2 of the Lease, included a copy of the form of NDA showing
requested interlineations or deletions to the form of NDA previously circulated by the City.
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Importantly, Section 12.5.2 of the Lease requires the City to approve or specifically disprove the
requested interlineations or deletions within twenty (20) days. That Section also provides:
“Failure by Landlord to approve or disapprove of specific interlineations, deletions or other
modifications requested by a Subtenant within such twenty (20) day period shall be deemed to be
approval of the requested changes . . . .” (Emphasis Added).
Unlike Section 12.5.1, the City’s obligation under Section 12.5.2 to comment upon
requested changes to a form of NDA is not conditioned upon the absence of an Event of Default
under the Lease. As such, the City was notified that OBOT and OGRE deemed the City’s non-
response as approval of the requested changes to the form of NDA. Despite the plan language of
Section 12.5.2, in an October 17, 2018 letter, the City rejected this assertion, claiming that the
City’s refusal to issue an NDA somehow relieves it of its obligations under Section 12.5.2.
Again, for the City to comply with Section 12.5.2 of the Lease, it is required to specifically
approve or disapprove the requested changes. A blanket “I refuse to comment” is not sufficient.
This only further evidence the City’s total disregard to the bargained for process and OBOT’s
rights under the Lease. 8
Moreover, concurrent with the execution of the ITS sublease, on September 28, 2018,
OBOT submitted a request to the City for an NDA in favor of ITS. No legitimate reason exists
for the City’s refusal to provide the requested NDA. To reinforce this point, on October 3, 2018,
Manatt sent a letter to Oakland notifying the City that its refusal to issue the NDA has and will
continue to cause substantial damage to OBOT and OGRE, and it is interfering with their
business and contractual relationships with third-parties. Despite these aforementioned
warnings, on October 17, 2018, the City circulated a letter stating that it was once again refusing
to provide an NDA to OBOT in favor of ITS based upon its alleged Unmatured Event of Default.
OBOT—and by extension, OGRE and ITS—are entitled to an NDA according to the

terms of the Lease. The City’s failure to issue the NDA is causing damage to OBOT and its
subtenants.
8
It is worth noting that when Ms. Bijal Patel—Special Counsel for the City and the author of these letters as well as
most (if not all) other letters sent to OBOT by the City—first met OBOT in or around October 2017, one of the very
first things she stated was that she thought the Project was a horrible deal for the City, and that if she had been
around when the parties negotiated the agreements, the deal would have never happened. Such a sentiment truly
typifies the City’s ongoing efforts (even before Ms. Patel’s involvement) to renegotiate the deal despite the City’s
binding contractual and other legal obligations.
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D. Estoppel.
Under Section 26.1 of the Lease, the City has an obligation to provide an Estoppel
Certificate at OBOT’s request certifying that the Lease is in effect and other basic facts.
26.1 Estoppel Certificate by Landlord. Landlord shall execute,

acknowledge and deliver to Tenant (or at Tenant’s request, to any
Subtenant, prospective Subtenant, prospective Mortgagee, or other
prospective transferee of Tenant’s interest under this Lease),
within fifteen (15) Business Days after a request, a certificate
stating to the best of Landlord’s knowledge (a) that this Lease is
unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as
modified, and stating the modifications or if this Lease is not in
full force and effect, so stating), (b) the dates, if any, to which Rent
and other sums payable hereunder have been paid, (c) whether or
not, to the knowledge of Landlord, there are then existing any
defaults under this Lease (and if so, specifying the same), and (d)
any other matter actually known to Landlord, directly related to
this Lease and reasonably requested by the requesting Party. In
addition, if requested, Landlord shall attach to such certificate a
copy of this Lease and any amendments thereto, and include in
such certificate a statement by Landlord that, to the best of its
knowledge, such attachment is a true, correct and complete copy of
this Lease, including all modifications thereto. Any such
certificate may be relied upon by Tenant, any successor, and any
prospective subtenant, mortgagee or transferee of Tenant’s interest
in this Lease.
On September 28, 2018, OBOT requested of the City estoppel certificates for both ITS
and OGRE. As permitted under item (d) of Section 26.1 of the Lease, for the OGRE estoppel,
OBOT asked for a list of matters affecting the status of the Rail Right of Way, including, without
limitation, the date when City will turn over the Rail Right of Way to OBOT, as well as OBOT’s
ability to enter onto lands identified as owned by the Port to perform the rail improvements
contemplated under the Lease. On October 18, 2018, the City provided an estoppel for OGRE,
which erroneously references the Unmatured Event of Default; however, the City refused to
provide an estoppel for ITS.
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On October 18, 2018, the City issued responses to the requests for estoppels as to ITS and
OGRE, respectively. As to ITS, though acknowledging that the Lease is in full force and effect
and that OBOT has been paying rent, it improperly and erroneously states that OBOT’s sublease
with ITS is invalid and reiterates the assertion that an Unmatured Event of Default is pending.
Accordingly, the City wrongfully states, ITS may not rely on the estoppel. The response to the
request for estoppel as to OGRE is similarly mistaken and violates the City’s clear obligations
under the Lease. In neither response does the City address, other than to summarily dismiss,
OBOT’s assertion of repeated force majeure events knowingly and intentionally caused by the
City. While OBOT and OGRE will respond directly to these latest communications from the
City separately from this letter, the October 18, 2018 letters serve to reinforce the City’s goals—
to continue to impose unreasonable and improper delay and costs on OBOT in the hope that
completion of the Project will become financially and commercially impossible.
OBOT—and by extension, OGRE and ITS—are entitled to unconditional Estoppel

Certificates according to the terms of the Lease. The City’s failure to issue the Estoppel
Certificates is causing damage to OBOT and its subtenants.
E. ACTC Funding Withdrawal.
In 2014, Alameda County voters approved Measure BB, authorizing an extension and
augmentation of the existing transportation sales tax (Measure B). Measure BB is projected to
generate approximately $8 billion in revenues from April 2015 to March 2045 for transportation
improvements for Alameda County. In addition to monies set aside for the City, ACTC
allocated $22 million of funds generated by Measure BB to the Project as part of its goal of
recognizing the economic importance of the Port of Oakland and providing connections between
goods and markets with minimal impacts to residential neighborhoods.
The City asked OBOT to support Measure BB, which it did. Measure BB passed but no
funds have been disbursed to aid in development of the Project to date. The City must request
disbursement of the funds from Alameda County Transportation Commission (“ACTC”),
however, Councilwoman-at-large Rebecca Kaplan refuses to request the funds because she does
not want to support the Project absent a promise to not ship coal or petcoke. On June 13, 2015
Councilwoman Kaplan introduced a resolution at an ACTC Board meeting to prevent the ACTC
funds from being released for the City Funded Wharf Improvements.
Pursuant to Section 6.3.1 of the Lease, Oakland has an obligation to identify and pursue
third party funds, like ACTC monies, necessary to construct the Facilities.
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6.3.1 Pursuit of Additional Funds. The Parties shall cooperate in

the identification and pursuit of third party funds necessary to
Complete the following improvements (the “Additional Funds”):
the Pre-Closing Off-Site Improvements, the WGW Additional Site
Preparation Work and the City Funded Wharf Improvements (the
“Unfunded Improvements”); provided, however, such obligation
shall not require either Party to (i) provide its own funds or (ii)
secure debt to pay the required costs. The Parties’ obligations with
respect to the identification and pursuit of Additional Funds shall
terminate upon the earlier to occur of (a) the date that the
Unfunded Improvements have been fully funded and (b) April 16,
2019, as such date may be extended pursuant to Force Majeure
events, but only to the extent such an event (1) first occurs after
February 16, 2016 and (2) only if notice is provided within thirty
(30) days of the event triggering the claim of Force Majeure. For
the purpose of this Lease, the term “Additional Funds” shall
include the $166,661.31 payment made by Tenant to the City
pursuant to Section 5.6 of the LDDA Third Amendment.
If Additional Funds have been identified by the Parties and

allocated to City prior to the April 16, 2019 deadline but have not
yet been received by City, City’s obligation with respect to such
previously identified and allocated Additional Funds shall continue
until City has received such Additional Funds.
Additionally, on July 31, 2015, Mayor Libby Schaaf and Council President Lynette
Gibson-McElhaney co-signed a letter to the Executive Director of ACTC in which they
differentiated between public versus private improvements at the former Oakland Army Base.
They expressly highlighted that “the potential for the export of coal and related product is an
extremely controversial issue” related to the “private improvements.” Distinguishing their
request for funding for the public improvements from that allocated for the private
improvements, the letter states: “Please be advised, however, that our efforts to appropriately
address the coal export issue related to the developers [sic] private improvements do not affect
the City’s request for ACTC grant funding for the public infrastructure improvements at the
Army Base.” (Emphasis in original.)
In spite of the foregoing, on October 31, 2016, the City applied for +$27.46 million in
ACTC funding for wharf improvements at Wharf 7 on the OBOT WGW lease premises—
improvements that would need to be made no matter the type of bulk commodity handled by the
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Facilities. However, in yet another act of bad faith, Rebecca Kaplan, City of Oakland
Councilmember at large and Alameda County CTC Commissioner, used her influence with
ACTC to block the funding of the +$27.46 million over the coal and petcoke issue.9 Thereafter,
the City has failed to make any effort to pursue the ACTC funds or to locate any other source of
funding, instead electing to engage in a campaign of obstruction.
The City’s failure to cooperate to obtain additional funds from, instead affirmatively
acting to rescind funds specifically allocated for this Project, constitutes a breach of the Lease
and causes millions of dollars in damages to OBOT. Moreover, as the Measure BB funds are
specifically allocated to the Project, the City is permitting tax-payer dollars to go to waste.
F. BCDC.
San Francisco Bay Conservation and Development Commission (“BCDC”) is a

California state planning and regulatory agency with regional authority over the San Francisco
Bay, the Bay’s shoreline band, and the Suisun Marsh. In general, it is necessary to obtain a
BCDC permit prior to undertaking work in the Bay or within 100 feet of the shoreline, including
filling, dredging, dredged sediment disposal, shoreline development and other work. BCDC
retains jurisdiction over certain portions of the premises, and OBOT must obtain certain BCDC
permits related to aspects of the Project.
Under Section 37.9.1 of the Lease, the City has an obligation to use “commercially
reasonable efforts” to obtain third party permits for the construction of the Public Improvements,
including permits from BCDC.
37.9.1 Third Party Approvals. City shall use commercially

reasonable efforts to obtain all third party permits or approvals
necessary to construct the Public Improvements in accordance with
the dates set forth in Exhibit 37.9.1, and shall cooperate with
Tenant in Tenant’s pursuit of third party permits and approvals
related to the Improvements to be constructed by Tenant under this
Lease. Notwithstanding the preceding provisions of this Section
37.9.1 or Exhibit 37.9.1, the timing of construction of the Public
Improvements by City shall be governed exclusively by Section
37.9.2(b).
9
In another example of inconsistent behavior, Counsel Member Kaplan, this time in her role as a board member of
the Bay Area Air Quality Management District, advocated for OGRE to obtain a grant through Carl Moyer program
to purchase a Tier IV locomotive for use at the Oakland Army Base.
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On June 5, 2014, the City obtained an amendment to the BCDC Permit previously issued
for a portion of the Public Improvements (the “BCDC Amendment”). The BCDC Amendment
included, at the City’s direction, (a) the installation of the re-aligned Burma Road that will
provide primary vehicular access to the West Gateway and (b) certain driveway, parking and
public access improvements located to the west of the West Gateway (the “Public Access
Improvements”). The BCDC Amendment characterized the Public Access Improvements as
both part of the permitted improvements and the required mitigation.
The City has now objected to the previously agreed upon Public Access Improvements
that were included in the BCDC Amendment. BCDC has stated that it will not permit the use of
the Burma Road improvements that are required to provide access to the West Gateway and that
it will not process the additional BCDC permits that are required for the development and
operation of the Project until the City constructs the Public Access Improvements required under
the BCDC Amendment. But the City is now refusing to honor its prior commitments with regard
to the funding of such mitigation measure improvements as set forth in the Master Plan and is
actively interfering with OBOT’s ability to obtain the BCDC permits necessary to continue with
the Project. The City’s refusal to cooperate with BCDC constitutes a breach of Section 37.9.1 of
the Lease.
G. Community Facilities District.
The Mello-Roos Community Facilities Act of 1982 permits the establishment of a Mello-
Roos Community Facilities District (a “CFD”), which, in turn, allows for financing of public
improvements and services.
Section 37.9.3 of the Lease acknowledges the establishment of a CFD:
37.9.3 Special District. The Parties acknowledge that a

Community Facilities District (CFD) final ordinance was approved
by City on July 30, 2015 in accordance with the terms of Section
3.6 of the LDDA (the “Special District”). The Special District
shall be managed by the City Council in accordance with the
Mello-Roos Community Facilities District Act of 1982 (as
amended from time to time).
The parties negotiated which public improvements are designated as OBOT obligations
under the CFD. The parties’ agreement is set forth in Exhibit C to the DA. However, the City
has indicated that it intends to renege on its agreement and expects OBOT to incur additional
public improvement costs under the CFD. For example, the City has represented to OBOT that it
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considers any mitigation measures required by BCDC to be allocated to the CFD. Additionally,
even though the Master Plan contemplated the Port be included in the CFD, and the Port is
receiving beneficial use of the public infrastructure within the CFD’s jurisdiction, the City has
not yet added the Port to the CFD.10
H. Budget/Funding Shortfall.
OBOT has acted in good faith in its interactions with the City throughout the Project
process. In contrast, the City has taken advantage of OBOT’s cooperation for its benefit. For
example, the City and OBOT/Prologis cooperated to obtain Trade Corridor Grant funds from the
State of California. While OBOT has helped Oakland to comply with the grant requirements by
providing extensive required financial reporting on the Project, the City has not demonstrated
that it will support OBOT in developing the Project or that it will allocate the funds Oakland
received from the Trade Corridor Grants to the Project.
1. Mid-Project Budget Revise.
In an April 24, 2014 letter, Fred Blackwell, the then City Administrator, itemized various
categories of funding deficiencies in City accounts relative to the original agreements for the
project. Specifically, he noted:
The City is looking to both to [sic] the City’s Agent and Developer to work
collaboratively with the City to solve the funding shortfall, through value engineering and other
means and methods to help address Attachment 6 [of the LDDA regarding public improvements]
and additional environmental cost concerns. City staff is also prepared to make any necessary
recommendations to City Council at the appropriate time regarding the application and
acceptance of any additional grant funding for the Public Improvements. As discussed, City staff
is also prepared to evaluate advantages of termed pre-paid rent scenarios for the purposes of
generating up-front capital as a back stop measure to help close the gap on the City obligation to
the state to realize the necessary vertical private match prior to April 2019. . . . While we would
like to focus on moving forward to close the gap, we will arrange line by line walk through to
better understand the City’s loss of Tax Increment, accounting, short and long term needs. (April
24, 2014 letter from Fred Blackwell, City Administrator, to Phil Tagami and Mark Hansen.)
CCIG, as the City agent and Manager of the City’s public improvement obligations for
the Project, responded to the City’s April 24, 2014 letter on July 8, 2014:
10
OBOT acknowledges that the City has stated it intends to add the Port to the CFD in the future, but OBOT has no
adequate assurances when or if that will be done.
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CCIG notes that previous iterations of the budget funding sources

have not included tax increment funding, but have nonetheless
identified sources sufficient to meet the City’s $54.5 million
contribution. In a city agenda report dated May 3, 2013, Progress
of Oakland Army base Development Project, City Match Funding
Sources are identified as : [TIGER II] Planning Grant ($1.6
million); Tidelands Trust Burma Road Fund ($4.1 million); Joint
Environmental Remediation Fund ($5.7 million); Leasing Program
and Fund Balance ($9.0 million); Joint Infrastructure Development
Fund ($16.1 million); and, Land Sale Proceeds ($18.0 million);
enclosed herein as Attachment 2. CCIG requests a clarification of
current City Match Funding Sources.
...
CCIG requests that the City provide accounting documentation for

the Tidelands Trust Funds. CCIG notes that there have been major
inconsistencies regarding the inclusion of Tidelands Trust Funds in
City accounting of the Project’s Sources & Uses. The above-noted
city agenda report from May 3, 2013, Progress of Oakland Army
Base Development Project, included $4.1 million in funding from
the Tidelands Trust Burma Road Fund [ ]. However, the Residual
Fund Balance Scenario Analysis for Funds Available for
Construction Base on FYTD Fund Balance Summary, dated June
30, 2013, provided here as Attachment 3, identified $7,019,000 in
Tidelands Trust funding as being available and unencumbered for
use. The most recent Sources & Uses put forth by the City,
contained within Attachment 1, did not identify any money as
coming from the aforementioned Tidelands Trust Funds. If these
funds exist outside of the project budget, they may only be used for
purposes consistent with the tidelands trust; in which case, CCIG
recommends that Staff seek authorization to apply these funds
within the scope of the project budget.
Per section 2.2 of the 2007 Amended and Restated Memorandum

of Agreement (ARMOA), these funds are required to be held in
separate City trust accounts: $3,000,000 for the use of Gateway
Development Area Public Park and related public access purposes;
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October 19, 2018
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and $4,019,000 for the benefit of tide and submerged lands granted
to the City.
...
CCIG notes that the city agenda report from May 3, 2013,
Progress of Oakland Army Base Development Project, identified
$9.0 million in the Leading Program and Fund Balance
(Attachment 2). However, in the City’s April 24th letter, LDDA
First Amendment Section 3.3.2.5 Accounting provided here as
Attachment 1, only identifies $4.5 million in leasing revenues
allocated to the project budget. If there is indeed $9.0 million in
the Leasing Program and Fund Balance, then these additional
funds are required to be expended in the redevelopment of the
army base . . .
Additional accounting irregularities and funding discrepancies identified in CCIG’s July

8, 2014 letter include:
 Failure to separately account for funds to be distinguished between disparate

segments of the overall project;
 Questions regarding allocation of third-party legal expenses.
In a November 4, 2014 letter, Doug Cole provided a further update on the project, City
finances, and the respective responsibilities of the parties under what had been termed the “Mid-
Project Budget Revision”:
To better position the Public Improvements schedule to meet the

construction completion and grant matching deadlines set forth in
the CTC grant agreement, the City and Developer have agreed to
pursue a “Mid Project Budget Revision” which re-sequences the
Public Improvements GMP Phases 1 and 2 (currently referenced as
the “above the line” and “below the line” GMP scopes).
...
To re-sequence and accelerate the completion of the Public

Improvement components listed above (Phase 1), the City and
Developer have created Attachment 3, which sets out the sources
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October 19, 2018
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(monies available as a result of re-sequencing) and uses (monies

required to complete the re-sequenced project elements), which is
intended to form the basis for the final budget. The final budget
revisions for the re-sequenced Phase 1 must remain within the
GMP and sources of funds currently available and the source and
uses must also balance.
With respect to funds available, the City has completed its

accounting review as required in the First Amendment to the
LDDA and has identified that approximately $8 million was
clawed back by the state in the Redevelopment Agency dissolution
process. In addition, CCIG, as the City’s Manager, [h]as identified
additional remediation costs that are excluded from the GMP and
do not qualify for the Joint Environmental Remediation Fund.
Therefore, the Public Improvements phasing must be planned to
ensure the costs stay within the City’s available and anticipated
sources of money.
Specifically, in accordance with the LDDA, the City is obligated to

contribute (1) its share of the $5.7 million Joint Environmental
Remediation Fund, which is a “first come first serve” account
shared with the Port, (2) $3.8 million as the City’s contribution to
the planning of the Port’s rail yard, which money has been spent
on the design documents, and (3) $45 million, which amount has
been reduced by the approximately $8 million claw back. As of
September 5, 2014 there is approximately $3.55 million remaining
in the Joint Environmental Remediation Fund (which amount is
also available to the Port), and all but approximately $12 million of
the City’s Contribution resulting from projected land sales
proceeds has been spent on the Public Improvements to date. In
response to Developer’s letter dated July 8, 2014, there is no
separate tidelands trust account; rather, the tidelands trust monies
are accounted for in a separate project budget within the Joint
Infrastructure Development Fund. (November 4, 2014 letter from
Doug Cole to Philip Tagami.)
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2. Joint Environmental Remediation Fund.
A joint account between the City and Port was established to fund the environmental
remediation for the entirety of the former Oakland Army Base reuse plan. Remediation of areas
essential to the core operations of the Facilities were and remain an essential prerequisite to
being able to construct and operate the Project on formerly contaminated lands.
The U.S. Army made the initial contribution to the Joint Environmental Remediation
Fund (“JERF”) in the amount of $19,000,000. The City and Port made additional contributions.
The JERF was used by the City and Port for consultants and remediation work. A memorandum
of agreement between the City and Port stated that separate consultants for the respective entities
(i.e., City versus Port) were required. This doubled consulting costs far in excess of what was
originally estimated and budgeted.
The Project budget expressly excluded environmental remediation costs, but Project
funds were utilized by the City initially. Later, funds acquired from ACTC for “public
infrastructure” costs (as opposed to “private,” still being withheld at the request of the City) were
used to pay back to the Project the funds inappropriately used for some of the remediation work.
We are uncertain of the exact amount of Project funds inappropriately utilized for remediation
activity and the amount of ACTC funds used to reimburse some or all of such Project funds. The
City is requested to provide and comprehensive accounting of such funds and activities.
Additionally, we note that both the City and Port are required to yearly certify to the state
that funds exist for any further remediation necessary for the Project. This year, in both cases,
they refer to the JERF. In fact, all funds in the JERF have long-since been exhausted.
I. Rail Related Force Majeure Events.
The use of rail to transport bulk commodities to and from shipping vessels is a linchpin of
the Project. The City, the Port, OBOT, and OGRE all have repeatedly acknowledged the
importance of rail to the Project. The core vision for this Project—converting diesel-truck-
transported shipments to and from the Port to rail for substantial air quality and other
environmental improvements—was central to the obtaining a grant for the Project from the
California Department of Transportation, Division of Rail Trade Corridors Improvement Fund
(“TCIF”). In addition to the TCIF grant, the Federal Railroad Administration provided funding to
the Port through FRA’s TIGER program to supplement the construction of the multimillion
dollar Port Rail Terminal, a facility that, due to the City’s delays, is currently siting largely
underutilized.
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What is more, the 2012 EIR Addendum describes the state-of-the-art rail facilities that
will be constructed to support the international, national, regional and local movement of goods.
(See Initial Study/Addendum, at 29.) Moreover, the Bay Area Air Quality Management District
(“BAAQMD”) provided a +$1.7 Million grant to OGRE to purchase a Tier 4 locomotive. The
BAAQMD grant was premised upon the rail traffic assumptions for the Project outlined in the
City’s Master Plan. The City has repeatedly represented to the State of California, to the
developers, and to the community, that the Project is to be rail served, including the clear
statement that “[t]he proposed Oakland Bulk and Oversized Terminal . . . would link rail to
vessel break bulk shipping operations.” (See City Of Oakland, Long-Range Property
Management Plan Oakland Army Base at 8 (2013).)
Nevertheless, for years the City has intentionally blocked and interfered with OBOT’s
efforts to acquire rights for, to access properties for, and to rehabilitate essential rail
improvements. The City’s refusal to advance and often outright hindrance of the rail
improvements not only blocks Project progress, it jeopardizes the essential funding from State.
The most egregious refusals by the City include the City’s failure for over six years to process, to
secure and to provide the Rail Access Agreement, the City’s failure to turn over to OBOT areas
of rail right of way (ROW) to allow rail construction and operations, and the City and Port’s
active interference with OGRE’s efforts to obtain approvals from the Surface Transportation
Board (STB) to facilitate track rehabilitation.
1. Rail Access Agreement.
Section 5.2.3 of the Lease provides:
5.2.3 Rail Access Agreement and other Third Party Agreements.

Subject to the Parties' cooperation as set forth in Section 5.2.2.2:
(a) City shall use commercially reasonable efforts to

enter into a “Rail Access Agreement” (as defined in the Amended
and Restated CSA11) with the Port which shall provide a definitive
written agreement regarding (i) the rights of use with respect to the
Port Rail Terminal to be reserved in favor of the West Gateway,
New Central Gateway Lease Area, MH-1 Lease Area and East
Gateway (including, if applicable, the CE-1 Lease Area and CE-2
Lease Area), (ii) the services to be provided by the Port Rail
Terminal Operator, and (iii) the parameters for the rates to be
11
CSA means that certain Amended and Restated Cost Sharing Agreement, dated June 19, 2012, between City and
Port.
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October 19, 2018
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charged for such services, all as contemplated by the Amended and

Restated CSA (the “Rail Access Agreement”). Notwithstanding
the preceding provisions of this Section 5.2.3(a) or any other
provision of this Lease to the contrary, in the event that,
notwithstanding City’s exercise of commercially reasonable
efforts, City is unable to enter into the Rail Access Agreement,
then, Tenant may elect, upon not less than ninety (90) days prior
written notice to Landlord and as Tenant’s sole and exclusive
remedy for such inability to enter into the Rail Access Agreement,
to terminate this Lease, whereupon (A) the Parties shall execute
and record a quitclaim deed or other instrument necessary to
remove the Memorandum of Lease from the Premises (which
obligation of the Parties shall survive such termination); (B)
Tenant shall promptly quit and surrender the Premises to Landlord
pursuant to Section 30.1 (which obligation of Tenant shall survive
such termination); and (C) except for those obligations which are
expressly stated in this Lease to survive termination of this Lease,
all of the Parties’ obligations under this Lease shall terminate.
Despite OBOT’s written demands, including its recent letter dated July 20, 2018, the City
has failed to use and refuses to use commercially reasonable efforts to pursue a written Rail
Access Agreement. After four years of stagnation, Claudia Cappio committed in October 2016
for the City and Port to meet and discuss the draft Rail Access Agreement by early November
2017. To OBOT’s knowledge, such a meeting did not take place until August 29, 2018, nearly a
year after the date originally promised. And while the City, Port, and OGRE met on three
occasions during August-September 2018, it became apparent that the City and Port were
attempting to collude to expand the access rights of the Port beyond what had previously been
agreed to by the parties, depicted in all drawings, and represented to the State and Federal
governments. On September 26, 2018, the City elected to discontinue any regularly scheduled
Rail Access Agreement meetings. To OBOT and OGRE’s knowledge, no further meetings to
discuss the Rail Access Agreement have been held. Instead, as further discussed below, the City
and Port have joined forces to interfere with OGRE’s efforts to rehabilitate the rail.
Alternatively, even if the City and the Port fail to enter into the Rail Access Agreement,
OBOT still believes it has the right to use the Port Rail Terminal through a transfer of the City’s
rights. Specifically, Section 11 of the Amended and Restated CSA provides as follows: “If the
Port operator is unable to deliver the rail services as provided in the preceding paragraph, the
City shall have the right to provide such services for its own uses of the Port Rail Terminal using
its own operator.” The Port has previously represented to OGRE that it is unwilling to enter into
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October 19, 2018
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a Rail Operating Agreement for rail service at the Port Rail Terminal until the Rail Access
Agreement is executed. At this time, there is no permanent rail operator at the Port Rail
Terminal. Thus, the Port is currently unable to provide the City rail service to the Port Rail
Terminal and, despite a failure to finalize the Rail Access Agreement, the City and its rail
operator still have the right to use the Port Rail Terminal. Additionally, because the City granted
to OBOT (and OGRE) the City’s “rights to access and use the Port Rail Terminal” under Section
1.5.1 the Lease, OBOT (and OGRE) currently have the right to use the Port Rail Terminal. This
is consistent with Section 2.2.2 of that certain Army Base Gateway Redevelopment Project
Lease Disposition and Development Agreement, stating that if the City is entitled to exercise a
self-help remedy under the CSA, the City shall assign such remedy to the developers—in this
case, OBOT. Therefore, in the absence of an executed Rail Access Agreement, OBOT and
OGRE request that the City acknowledge in writing OBOT’s and OGRE’s right to use the Port
Rail Terminal.
2. Failure To Deliver the Rail Right of Way.
The City’s bad faith is further evidenced by how it has handled the delivery of the Rail
Right of Way (“Rail ROW”) to OBOT/OGRE. Upon the threat of default, in a July 24, 2018, the
City demanded that OBOT pay rent for the West Gateway, including the Rail ROW, going back
to February 16, 2018. In an instance of the left hand not knowing what the right was doing, up
through September 31, 2018, the City and its contractor were performing public improvements
within the Rail ROW and neither OBOT nor OGRE had beneficial use of this area. To avoid a
claim by the City, OBOT paid and continues to pay rent to the City for the West Gateway
(including the Rail ROW) under protest. OBOT and OGRE have diligently and in good faith
attempted to pursue the physical work necessary for rail access to the Project and the
rehabilitation of pre-existing rail on the Project site. OBOT/OGRE hired a contractor to perform
the rail work, are working to obtain an industrial track agreement with Union Pacific Railroad12,
and have expended over $1.6 million on rail materials and labor, with the materials currently on
site waiting for installation. Yet, all of this is in vain because the City has still not turned over
the Rail ROW to OBOT. On October 9, 2018, the City confirmed that it was not prepared to turn
over the rail corridor to OGRE, citing an uncompleted survey of the facilities. As recently as
October 18, 2018, the City stated that the Rail ROW had not been turned over. This clearly
constitutes a Force Majeure claim against the City.
12
The City also has caused extended delays related to the Northern Interface, where the rail meets the northern edge
of the Project, in turn delaying the Industry Track Agreement with Union Pacific Railroad for that area.
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October 19, 2018
Page 43
3. The City And The Port’s Failure To Cooperate At The STB.
OGRE’s engagement with the Surface Transportation Board (“STB”) for the
rehabilitation and operation of the rail goes back to 2015. Each time OGRE has attempted to
move the rail forward with the STB, the City, the Port, or both have objected despite
representations to the State and Federal government concerning the importance of rail to the
Oakland Army Base project and the foundation of hundreds of millions of dollars in grant
money. Most recently, in May 2018, OGRE filed a petition the STB, seeking confirmation from
the Board that no additional Board approval was required to construct the rail improvements at
the Oakland Army Base, primarily those the City obligated OBOT/OGRE to construct under
Section 6.1 of the Lease; OGRE expressly noted in its petition for declaratory order that it would
be seeking operation exemption from the STB under a separate application. Under the Lease, the
City is obligated to cooperate in good faith to obtain regulatory approvals, such as the approval
sought by OGRE from the STB.
Section 5.2.2.2 of the Lease provides:
5.2.2.2 Cooperation. Without limiting the requirements set forth in

Section 5.2.2.1, the Parties agree to communicate regularly and to
cooperate in good faith regarding Tenant's efforts to obtain
Regulatory Approvals for the Project from any regulatory agency
other than City. The Parties' obligation to cooperate in good faith
shall include, but not be limited to, meeting and conferring as
necessary, joint invitations to and attendance at meetings, copies of
correspondence, and execution of mutually acceptable applications
as owner and applicant where necessary and appropriate to
implement the Project and this Lease; provided, however, that
Landlord shall have no obligation to make any expenditures or
incur any expenses in connection therewith other than reasonable
administrative expenses.
Despite the City’s clear obligation to cooperate in obtaining STB concurrence with
OGRE’s request, the City and the Port (a department of the City) have actively opposed OGRE’s
efforts to obtain STB’s agreement that the agency’s approval is not required prior to the
rehabilitation of the existing rail at the Project site as agreed between the City and
OBOT/OGRE. In violation of Section 5.2.2.2, where the City and the Port should have
cooperated with OBOT and OGRE, instead each filed papers with the STB to oppose and to
delay a ruling on OGRE’s STB petition. Now, what should have been a relatively easy and
quick endeavor has turned into an elongated process with OGRE forced to spend tens of
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October 19, 2018
Page 44
thousands of dollars in legal fees to clarify for the STB the City (and Port’s) misrepresentations.
Moreover, at this point, the only reason for the City to object to OGRE’s petition is a fear that
the STB’s ruling will give it jurisdiction over the rail, thus prohibiting the City from attempting
to enforce the Ordinance. This is yet another event of Force Majeure under the Lease.
4. City and Port Property Rights Issues Affecting OBOT/OGRE.
When OBOT and the City entered into the Lease, the City represented that it had
easements with the Port that would allow OBOT and its subtenants the right to enter upon Port
property (see Lease Sections 1.1.1, 1.1.2, 1.5.1, and 1.5.2) to construct and use this segment of
Track. Indeed, Section 6.1 of the Lease requires OBOT to make improvements to “WGW Lead
Track No. 2 that is located within the Port Rail Easement,” “The portion of WGW Lead Track
No. 2 to be constructed on the Port property located east of the Railroad R/O/W Property and
north of the Port Rail Terminal,” and “[t]he rail Improvements designated as Industry Drill Track
No. 1” which track is depicted in Exhibit 6.1-B of the Lease as located on Port property. In
filing its opposition with the STB, however, the primary argument by the Port for why OGRE
should not be allowed to rehabilitate the rail is that “OGRE has not yet obtained the property
rights that it needs from the Port to build any track on Port property . . . .” (See Port of Oakland
Comments in Response to Oakland Global Rail Enterprise Petition for Declaratory Order,
Docket No. 36168, at 13.) The Port goes on to argue the following:
OGRE does not have the property rights necessary to construct any
portion of [the] West Gateway Lead No. 2 track on the Port’s
property. The City did have a temporary easement from the Port to
perform some ongoing preparatory work on this portion of Port
property as part of the OAB redevelopment project, but that
temporary easement expired and no permanent easement allowing
OGRE to proceed with any track construction on the Port’s
property has been negotiated by the parties. (Id. at 7.)
This is problematic for two reasons. First, to the extent the Port is correct, and
OBOT/OGRE do not have the right to enter upon Port property to make the Rail Improvement,
the City has materially misrepresented the property rights granted to OBOT under the Lease.
Moreover, the obligations contained in Section 6.1 are illusory as OBOT has no way under the
Lease to perform the same. Second, is the concept of “Port property”. As set forth above, the
Port is a department of the City.13 Additionally, the Charter of the City of Oakland specifies that
13
The Charter of the City of Oakland (as amended through November 2016), Section 700.
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October 19, 2018
Page 45
“[a]ll real property acquired by the City shall be held in the name of ‘The City of Oakland.’”14
Consequently, the concept of “Port property” is a misnomer as title to all property is legally held
by the City of Oakland. This also means that any purported easement between the City and the
Port (or vice versa) would automatically merge—in a meeting with Ms. Patel she argued the
same. Thus, electing this door, the Port (a department of the City) misrepresented its property
rights before the STB. Either way, there are material issues once again providing OBOT a claim
of Force Majeure under the Lease.
The City and Port have failed to deliver access to the Project by rail as promised, and
have failed to execute the Rail Access Agreement contemplated by the CSA, thereby thwarting
OBOT and OGRE’s ability to move forward with the project. Moreover, the City and the Port
have opposed and interfered with OGRE’s efforts before the STB to rehabilitation of the railroad
ROW at the Project. These are breaches on the part of the City and/or the Port under their
agreements with OBOT and OGRE, as well as constituting Force Majeure under the Lease.
J. Development Agreement Annual Review.
Each year since executing the DA, OBOT has an obligation to provide a summary of its
efforts to substantially comply with the terms of the DA. For the first time, on August 27, 2018,
the City claimed that OBOT has not met its obligations under Section 3.3 of the DA, to “develop
the Private Improvements for each Phase of the Project in accordance with the ‘Minimum
Project’ description, scope, schedule and sequencing set forth in the Ground Lease for each
Phase.” The City claimed that OBOT failed to submit schematic drawings or a building permit
application to the City for review prior to the Initial Milestone Date. As discussed above, the
City prevented OBOT’s ability to progress with construction of the Project. Furthermore, the
City’s assertion that OBOT failed to comply with the Initial Milestone Date was premature
because the DA expressly provides that the annual review is meant to be a retrospective review
of compliance over the prior year and it should not include a review of the current year’s
compliance. Nevertheless, to demonstrate its good faith in complying with the DA, OBOT re-
submitted a basis of design on September 28, 2018, and seeks cooperation with the City to obtain
the necessary building permits.
14
Section 1204. Under the Charter, the powers of the Port include the ability “[t]o acquire in the name of the City
by purchase, condemnation, gift, lease, or otherwise take over and hold all lands, property, property rights, leases, or
easements, and personal property of every kind, necessary or convenient for the development and operation of the
port, or for the carrying out of the powers herein granted to the Board. Whenever the Board determines that any
lands owned by the City within its jurisdiction have become unnecessary for port purposes or harbor development, it
may in its discretion transfer such lands to the control of the Council, free from all restrictions, or it may sell or
exchange such lands, by ordinance subject to the referendum provisions of this Charter.” Section 706(15) (emphasis
added).
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October 19, 2018
Page 46
Pursuant to Section 6.3 of the DA, if the City does not agree with OBOT’s response, it
must commence a meet and confer/mediation process. Despite repeated requests to meet, the
City refuses to do so, constituting another breach of the DA. Instead, the City contends that
OBOT is obligated to “cure” the purported Unmatured Event of Default by October 22, 2018. In
responding to the City’s claims of an Unmatured Event of Default, OBOT does not waive its
rights under the Section 6.3 (or any other section) of the DA.
K. Rail Right of Way Edge Conditions.
As OBOT and OGRE have previously notified the City in writing, there are several edge
condition items that need to be addressed by the City, including, without limitation the failure by
the City’s contractor to install a proper slope along the majority of the W. Burma Road portion of
the rail right of way (leaving an unsafe condition and insisting that it is now OGRE’s problem to
deal with), grading and drainage issues, and the encroachment of the East Bay Municipal Utility
District property into the rail right of way.
L. Cooperation Agreement.
In order to induce OBOT and the other developers to pursue their respective projects, the
City represented that it had entered into a Cooperation Agreement with local community groups
in West Oakland, as well as various labor organization. As represented by the City, the purpose
of the Cooperation Agreement was to make sure the neighbors and labor groups supported the
Project in exchange for job’s and other concessions, including, without limitation, a job center
located in West Oakland. Although OBOT and the other developers were not parties to the
Cooperation Agreement, the City mandated that the related cost and obligations be borne by
OBOT and the other developers. Once the community groups and labor received the benefit of
the bargain, however, they refused to honor their obligation to support the Project, and instead
were quick to interfere with the Project. The City’s failure to enforce compliance with the
Cooperation Agreement delayed Project completion and caused monetary damage to Claimants.
IV. OBOT’S CURE OF ANY UNMATURED EVENT OF DEFAULT
Assuming, arguendo, the City had correctly (it has not) asserted a claim against OBOT
for an Unmatured Event of Default based upon the fact that OBOT did not Commence
Construction on the Minimum Project on or before August 24, 2018, OBOT has commenced the
required cure within thirty (30) days of the City’s September 21, 2018 notice and is prosecuting
the cure with diligence and dispatch to completion.
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October 19, 2018
Page 47
Section 18.1.7 of the Lease provides as follows:
“18.1.7 Tenant violates any other covenant, or fails to

perform any other obligation to be performed by Tenant under this
Lease (including, but not limited to, any Mitigation Measures) at
the time such performance is due, and such violation or failure
continues without cure for more than thirty (30) days after written
notice from Landlord specifying the nature of such violation or
failure, or, if such cure cannot reasonably be completed within
such thirty (30)-day period, if Tenant does not within such thirty
(30)-day period commence such cure, or having so commenced,
does not prosecute such cure with diligence and dispatch to
completion within a reasonable time thereafter;”
The alleged default, failure to timely Commence Construction of the Minimum Project,
cannot be reasonably cured within thirty (30) days. Section 6.1.1.1 of the Lease provides as
follows:
“6.1.1.1 Initial Milestone Date. Commenced Construction

of the Bulk and Oversized Terminal and at least one of the
components of the Minimum Project Rail Improvements listed in
Section 6.1(b) above prior to the date that is 180 days after the
Commencement Date (the “Initial Milestone Date”);”
As the City understands, OBOT intends to have its sublessees complete the Minimum
Project improvements. As such, the actions required to complete the cure include, but are not
limited to, the following:
a) With respect to the Minimum Project rail improvements required by Section

6.1(b) of the Lease (the “Rail Improvements”):
(i) Complete the construction drawings for the Rail Improvements;

(Completed, City has approved the drawings prepared by HDR in conjunction
with the Public Improvements.)
(ii) Enter into the Sublease with OGRE; (Completed.)
(iii) Obtain the required NDA so that OGRE may secure its right to the
sublease premises in order to justify the required expenditures needed to complete
the Rail Improvements; (Requested, See Section III(C) above.)
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October 19, 2018
Page 48
(iv) OGRE to obtain the required clearances from the federal Surface
Transportation Board to confirm that no federal permits are required for the
construction of the Rail Improvements; (Petition submitted, See Section III(I)(3)
above.)
(v) OGRE to obtain the City’s approval of the HDR rail improvement plans
pursuant to Section 6.2.1 of the Lease; (Complete per (i) above.)
(vi) OGRE to obtain the required materials for the construction of the Rail
Improvements; (Substantially complete, materials have been ordered and stored
on site.)
(vii) OGRE to obtain the City’s approval of the Construction Plans and Air
Quality Plan (construction) for the Rail Improvements pursuant to the applicable
SCA/MMRP; and
(viii) OGRE to obtain BCDC permit for the construction of the Rail
Improvements;15
(ix) OGRE to enter into a contract with the applicable contractor for the
construction of the Rail Improvements; (Substantially complete, parties have
agreed upon form and contractor completing final amendments to scope of work.)
(x) City to complete the rail improvements included in the Public

Improvements and surrender possession of the applicable rail right of way;
(Pending.)
(xi) OGRE to confirm that the rail portion of the Public Improvements have
been completed pursuant to the applicable plans; and
(xii) Contractor to mobilize and commence construction on the Rail

Improvements.
b) With respect to the terminal improvements required by Section 6.1(a) of the Lease
(the “Terminal Improvements”):
(i) Enter into a sublease for with the terminal developer (ITS); (Completed.)
15
The City does not issue permits for rail improvements, so no City building permit is required.
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October 19, 2018
Page 49
(ii) Obtain the required NDA and Estoppel Certificate necessary to satisfy the
conditions set forth in the ITS’ financing; (Requested, Section III(C) above.)
(iii) ITS to obtain the City’s approval of the Terminal Improvements plans
pursuant to Section 6.2.1 of the Lease; (Basis of Design submitted for approval)
(iv) ITS to advance the design for the Terminal Improvements from the Basis
of Design to final construction plans and obtain required City approvals/permits;
(v) ITS to obtain the City’s approval of the Construction Plans and Air
Quality Plan (construction) for the Rail Improvements pursuant to the applicable
SCA/MMRP;
(vi) ITS to obtain regulatory permits for the Terminal Improvements;
(vii) ITS to enter into a contract with the applicable contractor for the
construction of the Terminal Improvements; and
(viii) Contractor to mobilize and commence construction on the Rail

Improvements.
As stated above, OBOT has commenced the cure with respect to both the Rail and
Terminal Improvements and requires the City to act (in both its regulatory and proprietary
capacity) in order for OBOT and the sublessees to complete the cure. In the best of
circumstances, and with the City’s full cooperation as required by the Lease and the DA, it will
take approximately six to nine months for OGRE to commence construction of the Rail
Improvements and substantially longer for ITS to commence construction on the Terminal
Improvements. These schedules will be materially extended if the City continues to frustrate
OBOT’s and its sublessee’s efforts.
Because OBOT has commenced the required cure in a timely manner and continues to
prosecute the cure to completion, the City cannot continue to assert that the originally alleged
Unmatured Event of Default relieves the City of the obligation to issue the required NDA and
Estoppel Certificates that are necessary to complete the cure.
V. CONCLUSION AND CLAIMANTS’ DEMANDS
For the better part of ten years, Claimants (or their predecessors) competently and
diligently worked to complete construction of the Facilities, investing more than $26 million in
the process. They did so with respect for the City’s goals, and equally important, for the needs
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October 19, 2018
Page 50
of the surrounding community and its citizens. Other than to accommodate requested changes
by the City, Claimants honored all of their obligations, and satisfied all of the conditions within
their control stemming from the heavily negotiated Project documents, including the LDDA, DA
and the Lease. The same cannot be said for the City.
Beginning with the Ordinance and Resolution aimed at stopping development of the
Facilities and continuing with its “slow roll” consideration of Claimants’ submissions, including
its instructions not to process any applications without approval from specific individuals and its
declaration that ministerial approvals recognized in the Project documents now will be viewed as
discretionary, the City has repeatedly breached its contractual and legal obligations. To redress
the City’s failures to perform, Claimants seek declaratory, injunctive, and monetary relief
against the City that can be summarized as follows:
 Declaratory relief that no Unmatured Event of Default by OBOT has occurred

under the Lease;
 Specific performance of all obligations set forth in the DA and Lease;
 Enjoining the City from requiring any further discretionary reviews for Project
completion, absent a change in scope by OBOT/OGRE;
 Declaratory relief as to the parties’ rights and obligations under the DA and
Lease;
 Tolling of OBOT’s obligations under the Lease for at least a period of two (2)
years (as extended by the City’s continued Force Majeure actions);
 Monetary relief consisting of, among other things, delay damages, labor and
material cost escalations, lost profits, attorneys’ fees, and interest; and
 Such other and further legally recoverable relief.
We are available to discuss these matters.

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October 19, 2018
Page 51
Very truly yours,
Barry W. Lee
cc: Oakland Bulk and Oversized Terminal c/o Phil Tagami

Oakland Global Rail Enterprise c/o Mark McClure

Omnibus Letter To Oakland

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Omnibus Letter To Oakland

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manatt

manatt | phelps | phillips

October 19, 2018 Client-Matter: 64517-031

Re: Notice of Claim Regarding West Gateway Project

Dear Ms. Parker and Ms. Patel:

Barbara J. Parker, Esq.

(a) The name and post office address of the claimant:

OBOT and OGRE are collectively referred to as “Claimants.”

Barry W. Lee, Esq.

Further described below.

Barbara J. Parker, Esq.

Oakland has failed to perform under the Army Base Gateway

Claimants’ injury, damages, and losses are further described

Further described below.

(f) The amount claimed.

The claim is well in excess of $10,000, and would not be filed as a

Consistent with Section 38.13 of the Lease, OBOT will also be

II. BACKGROUND FACTS

In 2008, the City of Oakland (“Oakland” or “City”) began considering a proposal by

Barbara J. Parker, Esq.

The proposed use of Parcel E is as part of a new working

Barbara J. Parker, Esq.

Oversized Terminal, using Parcel E and other adjacent land, would

B. The Project at a Crossroads.

Tioga’s experience is that ventures such as OBOT and OGRE tend

Hence, obtaining a firm commitment of patronage is mandatory,

Finally, the true size and characteristics of the market for

Barbara J. Parker, Esq.

C. Overview Per the Federal District Court.

Barbara J. Parker, Esq.

named Terminal Logistics Solutions1 to design and manage the terminal,

 “At this stage, the most detailed description of OBOT's operations is

Barbara J. Parker, Esq.

 “In response to broader concerns about climate change and the

Barbara J. Parker, Esq.

and Adjacent Neighbors.’ These recommendations were contained in an

Barbara J. Parker, Esq.

D. A Tale of Two Projects.

Barbara J. Parker, Esq.

Barbara J. Parker, Esq.

III. OAKLAND’S OMISSIONS AND BREACHES OF ITS OBLIGATIONS

A. OBOT Disputes it Committed an Unmatured Event of Default.

Barbara J. Parker, Esq.

16.1 Delay Due to Force Majeure. For all purposes of this

Barbara J. Parker, Esq.

Majeure includes not only the period of time during which

1. Health and Safety Hearing and Adoption of Resolution/Ordinance.

Barbara J. Parker, Esq.

 “City leaders have hired a consultant to come up with enough ammunition

Barbara J. Parker, Esq.

 Notwithstanding the significant expansion in work and scope, the budget

 Notwithstanding the significant expansion in work and scope, the time

Barbara J. Parker, Esq.

3.4.1 Future City Regulations. Except as otherwise specifically

2. Federal Case and Appeal.

Barbara J. Parker, Esq.

 “ESA excluded surfactants from its main emissions estimates because it

Barbara J. Parker, Esq.

 “ESA's final estimates thus wrongly assumed that emissions during

Barbara J. Parker, Esq.

pose a substantial global warming-related danger to people in Oakland.”

3. Permit Application, Pre-Meeting & Cappio Memo.

On November 6, 2015, Assistant City Administrator Claudia Cappio sent an internal