By A.C. Thompson

On a recent spring afternoon, a hard sun beat down on the derelict railway station at 16th and Wood Streets in the flats of West Oakland. Chain-link and barbed wire fences encircled the structure, a crumbling beaux arts beauty constructed in 1912 as a depot for the Southern Pacific railroad and later used by Amtrak until postquake seismic issues shuttered it in 1989. Improbably, a planter brimmed with long-neglected flowers – shades of gold, fuchsia, and violet – in full, glorious, bloom.

Next door, scattered about a junk-strewn dirt lot, were an armada of 18-wheel trucks, some stripped to their steel bones. Clang-clang-clang-ing emanated from nearby machine shops. At Bea's New Hotel, a flophouse, the blinds in most rooms were drawn tight.

In many respects, the future of this hard-luck, largely African American neighborhood will be shaped by what happens to this territory. A pack of real estate speculators have purchased the station and surrounding land and are inching toward breaking ground on an elephantine new development scheme, a project that will plunk down some 1,500 units of residential housing in the heart of one of the toughest hoods in the East Bay. The overwhelming majority of the homes and apartments will be priced for the luxury classes, a wave of new, wealthy residents likely to transform the area – i.e., drive up rents.

But this isn't just another "here come the fucking yuppies" spiel. Start checking out the players behind the deal and scrutinizing the nuts and bolts of the project, and it becomes clear that something pretty strange is going on. And it will undoubtedly leave Oakland city government stuck with tens of millions of dollars in bills.

Insider trading

This plan to reinvent West Oakland is the brainchild of a developer named Rick Holliday. You're probably already familiar with at least one of his projects: 1000 Van Ness, the successful San Francisco movie theater complex. Holliday, who lives in Orinda, has also built a string of fairly generic live-works in cities all around the bay.

In 2000 and 2001, Holliday purchased the train station and a large swath of the surrounding terrain, 25 parcels in all. From property records, it's unclear just how much he paid.

Here's where things get a tad weird. Holliday sits on the board of Bridge Housing, a tax-exempt nonprofit focused on erecting housing for proles and plebes. Bridge bills itself as a creator of "high quality, affordable homes for working families and seniors."

In 2002, Holliday sold four chunks of the West Oakland property to Bridge, raising the obvious questions about conflicts of interest and self-dealing. Internal Bridge documents obtained by the Bay Guardian indicate Bridge paid $23 per square foot for the land; by our calculations, that would mean Bridge dropped $12.8 million on the deal.

Holliday was in China and unavailable for comment.

In a brief interview, Bridge executive director Carol Galante portrayed the transaction as totally legit. "It was all disclosed to the full Bridge board," she said. "I think we negotiated a good deal, but you never know, right?... We didn't get a break [from Holliday]." Galante didn't respond to follow-up phone calls or e-mails seeking comment on the other issues raised by this story.

In any case, Bridge didn't keep the land long. Property records show Bridge turned around and sold or gave the property to BUILD West Oakland LLC, a for-profit spin-off formed by Bridge and CalPERS, the state employees' pension fund.

Now BUILD, Holliday, and two other developers are itching to start throwing up houses and retail storefronts on the site, a 29.2-acre expanse stretching from 10th Street to West Grand Avenue. Given the steady increase in Bay Area real estate values – even in gritty hoods like West Oakland and the Bayview – the builders are poised to make a buttload of dough off the deal. Gallante said BUILD expects to net a minimum 10 percent profit for its portion of the development, roughly 500 units.

So, let's get this straight: We've got nonprofit execs – people who helm a do-gooder organization that enjoys tax-exempt status – buying property from an insider, launching a spin-off business, and cashing in on the real estate boom. That looks just a little sketchy to us.

Compared to other nonprofit bosses, Galante and other Bridge execs are already pulling down quite generous paychecks. Bridge tax returns for 2003 – the most recent year available – show Galante enjoyed $240,000 in total compensation, while Lydia Tan, a vice president with Bridge and BUILD, got $221,000.

Pity the poor real estate moguls

There's another twist to this plot. Interestingly, West Oakland's extreme makeover is being bankrolled by tax dollars. State rules require the developers to set aside a small portion of the 1,500 units for low- and middle-income folks. And rather than making the developers cover the cost of this affordable and quasi-affordable housing – standard practice in San Francisco and other California cities – the city of Oakland is picking up the tab.

"The subsidy could be as much as $40 million," said Dan Vanderpriem, who oversees the project for Oakland's Community Economic Development Agency. For that money Oaklanders will get 90 affordable rental apartments and as many as 135 units slated for sale to middle-class folks, households making about 80,000 bucks a year. If the city gets lucky, the subsidized units could come as cheap as $31 million.

In Vanderpriem's view, "It's absolutely critical to have this investment made in West Oakland. It will provide [home] ownership opportunities at a moderate price." He figures the well-heeled new residents, drawn to the development by its proximity to the office canyons of San Francisco's Financial District, will be a boon to struggling neighborhood businesses.

Not surprisingly, the hood's current denizens have decidedly mixed feelings about all of this. BUILD and company "act like they're the great white hope for black folks," neighborhood environmentalist Margaret Gordon said, adding that the project will lead to an African American exodus from the area. Donna Ward, another local, put it more bluntly: "They fittin' to run us out of here. By 'us' I mean blacks."

Others, like Junious Washington and Jabari Herbert, are optimistic. "Anything they build is fine with me," said Washington, who's lived in the district since the 1940s. "It'll help beautify West Oakland." Herbert is hoping his company, the Alliance for West Oakland Development, will get a slice of the project.

Commentary on the project ran till nearly midnight at a raucous May 17 City Council meeting, with a throng of Oaklanders sharing their hopes, fears, and, in some cases, quite nuanced critiques.

The council voted unanimously to green-light the project, though there are still some bureaucratic hurdles looming and certain aspects of the development will be coming back for scrutiny by the council.

Margaretta Lin, an attorney with the East Bay Community Law Center, worked with locals to wrench concessions out of the city and the developers, with some success: the current blueprints will preserve more of the train station and include more affordable housing than originally proposed. Lin is fairly pleased with the outcome. However, she expects to see similar development struggles for days to come because, she said, city leaders have a tendency "to see developers as the savior of Oakland."

The question, of course, is who are they saving it for?

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