The biggest fish - Page 4

The America's Cup would transform San Francisco's waterfront -- but is it a good deal for the city?

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The next world-famous sailing match could be held in San Francisco in 2013
PHOTO BY JEAN-BAPTISTE DANIEL

The Budget & Legislative Analyst's study predicts that the ACEA could opt to build a 250-unit condo high-rise on Seawall Lot 330, deemed the most lucrative use. Under the Host City Agreement, the city would be obligated to remove Tidelands Trust provisions from Seawall Lot 330, which guarantee under state law that waterfront property is used for maritime functions or public benefit. Tweaking the law for a single deal would require approval from the State Lands Commission, but Newsom, in his new capacity as lieutenant governor, would cast one of the three votes on that body.

The combination of construction, demolition, lost rent revenue, police and transit, environmental analysis, and other event costs would hit the city with a bill totaling around $64 million, according to the Budget & Legislative Analyst study. Since city government would recoup around $22 million in revenue from hosting the Cup, the net impact would be around $42 million. That doesn't include the potential $32 million assistance from ACOC.

At the same time, the city would stand to lose another $86.2 million by granting long-term development rights to 35 acres of Port property for 66 to 75 years without charging rent, bringing the total cost to $128 million. OEWD representatives played down that loss in potential revenue, saying past attempts to redevelop piers hadn't been successful because none could handle the upfront investment to revitalize the crumbling piers.

The Host City Agreement has raised skepticism among Port staff and the Budget Analyst that tempered initial enthusiasm for the event. "The terms of the Host City Agreement will require significant city capital investment and will result in substantial lost revenue to the Port," a Port study determined. Faith in that plan seems to be eroding and it may be scrapped for an alternative plan that's cheaper for the city.

The Northern Waterfront alternative substitutes Piers 19-29 as the primary location for the event and eliminates the Mission Bay piers from the equation. Under this scenario, ACEA would invest an estimated $55 million, instead of $150 million. In exchange, it would receive long-term development rights to Piers 30-32 and Seawall 330 on "commercially reasonable terms," according to a Port staff report.

Board of Supervisors President David Chiu requested that the Port explore that second option more fully, and the Port report notes that it would reduce the strain on Port revenue. The Northern Waterfront plan would cost the Port a total of $15.8 million, instead of $43 million, the report notes. Port staff recommended in its report that both the original agreement and the alternative be forwarded to the full board for consideration.

 

PHANTOM BIDS?

Under the competition's official protocol, Ellison, as defender of the Cup, has unilateral power to decide where the next regatta will be held. Race organizers have said it's a toss-up between San Francisco and an unnamed port in Italy — though it's anyone's guess how seriously a European site is being considered by a team headquartered at the Golden Gate Yacht Club, a stone's throw from the Golden Gate Bridge.

According to a San Francisco Chronicle article published in early September, Newsom issued a memo stating that San Francisco was competing against Spain and Italy to become the chosen venue. Valencia was said to be offering a "generous financial bid," and a group in Rome was rumored to have offered some $645 million to bring the Cup to Italian shores, the memo noted. It was a call for the city to present Ellison with the most attractive deal possible to compel him to pick San Francisco.

Speaking at an Oct. 4 Land Use Committee hearing, OEWD director Jennifer Matz told supervisors: "San Francisco was designated the only city under consideration back in July. Now we are competing against the prime minister of Italy and the king of Spain."

Comments

Great piece,

The two numbers that jump out are the 35 acres of Bay front that Ellison would actually control. Newsom's people had everyone thinking it was 3 acres.

The other one is that you have a very astute post on another of your threads about this issue (or is it on the Bay Citizen?) who has a serious big time real estate background and says that any competent Realtor could get 50 times the value at which the Mayor is valuing the property they're proposing to give away (in a poker game where there aren't even any other players!) ... Means, Ellison is getting over 5 billion in property and we're losing, what, 80 pier businesses and how many jobs?

Time for Mirkarimi to show for the first time in his career that he can admit to a mistake. This is an incredible debacle and Ross is the lynch pin. If he doesn't flip on the issue, SF loses billions in value and all he get's is a chance to have a martini with Larry Ellison. Choose one, Ross. The people. Or, the photo op.

Go Niners!

h.

Posted by Guest h. brown on Nov. 30, 2010 @ 8:03 pm

A couple comments.

Firstly, is the city honestly going to consider losing the hosting of the America's Cup and its massive attendant benefits over a mere $10 million, out of a budget close to $6 Billion?? You ~have~ to be kdding me!

On the long term leases, the partner who already has half of SWL: 330, and built a condo there, renegged on a deal to resuscitate Pier 32. The numbers did not add up for him. Fortunately by some miracle this opportunity has arrived to salvage the idea, one that rescue the piers and also absolve the Port of a truly massive deficit problem with that, and maybe a couple other dilapidated, piers. How do you propose to raise city money to save those piers from crumbling into the ocean?

On the competition. Who knows who Alinghi put Daly in touch with, but Alinghi and their owner, spiteful and hurt billionaire Ernesto Bertarelli, just took a very serious beating at the hands of Ellison. Who do you think they tried to find for Daly? Someone who might support the Ellison cause? Of course not. Who they found is a nobody. Nobody has ever heard of this guy, I have looked into it too. To top that, the very next day after Daly posted the so-called non-proposal story from out of Valencia, the mayor of Valencia, Rita Barbera, said on live camera that her city had indeed offered 250 million Euros in (already) purpose-built facilities, but that the Americans had deemed the Italian offer to be stronger. Why would the ACEA have turned down the Valencia offer she spoke of, if the Italian offer was not in fact stronger? The fact that insiders in Rome are holding their cards close to the vest should be no surprise. They WANT this prize, believe me.

This is a very big deal. It is not going to solve other city budget allocation issues, decide who gets what from the $6 Billion. But it will, if wiser heads than Daly's prevail, generate an enormous boost to the city overall, as well as massive improvements to the waterfront that have no other good prospects for them at all.

Lastly: This is a about a fantastic, clean, beautiful, proud image for San Francisco. The America's Cup puts places positively on the world map like almost nothing else does. Yes, SF could use that about now! Quite frankly, articles like this do the opposite.

Posted by Guest on Nov. 30, 2010 @ 8:48 pm

You have one number wrong.

Ellison spent a decade pursuing the Cup at a total cost of $1 billion, not $100 million !!!

Posted by Stingray on Nov. 30, 2010 @ 9:29 pm

On one hand you mention hard economic times as an impact to raising sponsorship and a reason for not supporting a billionaires yacht race and yet on the other you fail to see that hard economic times are exactly the reason why the piers in question will continue to rot. So the lost rent figures are slightly skewed given that context.

Surely it's better to continue to improve the water front and host a world class event that will generate revenue you would never have seen anyway than hold out for another property developer that will be looking for a killer deal as well but will bring no new tourism to the city.

Posted by Guest on Nov. 30, 2010 @ 11:24 pm

Once upon a time, hosting the America's Cup was a prestigious thing. In fact, one of the reasons for competing for the America's Cup was to win the right to host the event the next time around.

It's a shame that the Golden Gate Yacht Club and Larry Ellison put the event out to tender. Instead, winning the Cup should have been the same as winning the right to host the Olympics. The citizens of San Francisco should have started planning to host the event the day after BMW ORACLE beat Alinghi.

Major events always cause these fights. People in Albert Park in Melbourne don't like the F1 Grand Prix there and it probably loses the city some cash, but it puts the city on the international stage for a couple of days a year and generates some tourism dollars. The UK people are ambivalent about the cost of the Olympics, but hopefully there will be some legacy infrastructure that comes out of it.

Some people are going to make money, some people are going to lose money. The Golden Gate Yacht Club should just announce with pride that they are glad to have won the right to hold the America's Cup in San Francisco, then everyone should get on with making it an incredible event.

Posted by Dave Fuller on Dec. 01, 2010 @ 2:23 am

These billionaires will not be satisfied until we begin to present them with a stream publicly funded of gold bricks.

-marc

Posted by marcos on Dec. 01, 2010 @ 9:58 am

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