February 10, 2012
Pier Pressure And The Price San Francisco Taxpayers Might Pay
The latest budget report analyzing the financial impact of the 34th America’s Cup to be held in San Francisco favors an outcry to remove Pier 29 from the deal between the city and the America’s Cup Event Authority. From the Examiner:
Under the terms of the current deal, the authority would initially invest $55 million in pier improvements in exchange for a 66-year lease at Piers 30-32 and ownership of Seawall Lot 330, a property already approved for condos.
The authority could then opt to do additional pier work and get 66-year leases on piers 26, 28 and 29, which would trigger repayment from The City with an 11 percent interest rate. The report recommends that a cap be placed on the amount race officials can spend on improvements, or else The City could end up being roped into repayment for up to 91 years after the event.
The report suggests The City should nix Pier 29, at the foot of Telegraph Hill, from being transferred to race officials after the event. Board of Supervisors President David Chiu has been pointing to the lucrative property as a problem spot in the deal.
The Event Authority, however, has a different take (so to speak).
Stephen Barclay, a board member of the authority and the group’s primary negotiator, has been talking tough in recent weeks, saying concessions have already been made to mitigate the financial stress on the Port. Barclay said on Tuesday he will "draw the line" with Pier 29, because it is essential to the authority seeing a return on the total $111 million it plans to spend.
Also according to the report, should the America’s Cup Organizing Committee fall short of their $32 million fundraising goal, San Francisco taxpayers will be on the hook for the vast majority of the difference. To date, The Committee has raised $8 million.
∙ Regatta deal might sink San Francisco's coffers [Examiner]
∙ Rendering Scoop: San Francisco's Major America’s Cup Venues [SocketSite]
∙ San Francisco’s Last Minute Giveaways To Get The America’s Cup [SocketSite]
First Published: February 10, 2012 8:45 AM
Comments from "Plugged In" Readers
The whole thing stinks. Sorry to threadshit first off, but I'm so cynical that the Pier 29 stuff sounds like a sop to the citizens to hide some other giveaway.
Posted by: EH at February 10, 2012 8:57 AM
11% interest!? That is one steep rate. Prime is currently 3.25%. Assume "the Authority" could borrow at Prime + 300. They borrow $50 million and make improvements on 26, 28 & 29, which at interest only would cost $3.125 million per year. But "The Authority" would charge SF $5.5 million (the 11% interest rate) and, thus pocket $2.375 million per year for their trouble. Am I missing anything?
Posted by: JustLooking at February 10, 2012 9:45 AM
Never thought I'd say this, but Chris Daly was right.
Posted by: Ugbugbug at February 10, 2012 9:56 AM
I like my doggles booned.
The scary part is that while tasked with raising 12 million in 2011, they got only 800,000. The 8 million is an internal transaction, and that ain't cash.
Posted by: Oasis at February 10, 2012 10:24 AM
I don't understand how these guys can be rich enough to build and race these amazing boats, but they can't raise more than $8 million? Larry Ellison could write a check for $32 mil and not even notice it. Of course, if the City is obligated pick up the difference, they don't have much incentive to raise those funds themselves, do they? Caveat emptor...
Posted by: James at February 10, 2012 10:27 AM
As someone who just returned from Aarhus Denmark, it was refreshing to see a city that does not concern itself by use of it's resources on sports venues, but instead has created one of the world's most livable cities. There are other ways of creating a better San Franicsco than an America's Cup event.
What most fascinated me about Aarhus is that it was a charming attractive historic city with a major active port still in use with shipping traffic that added to the energy of the city.
Posted by: anonfedup at February 10, 2012 10:28 AM
Am I missing anything?
Yes. If the City does it, it's "socialism".
Posted by: George Orwell at February 10, 2012 1:27 PM
From SFGate's special section on the America's Cup:
Hosting the America’s Cup could cost San Francisco taxpayers up to $21.7 million if fundraising by an independent committee fails to meet a $32 million target over three years to defray the city’s costs of hosting sailing’s premier regatta, according to a new report completed Thursday.
The city controller already has found that “significant additional fundraising” is needed to reach that target, although Mayor Ed Lee and other city officials have expressed confidence that the fundraising committee, headed by philanthropist Mark Buell, will raise the money.
The new report by the Board of Supervisors’ budget analyst, Harvey Rose, notes that the $8 million considered already raised for the current fiscal year is in pledged funds, not actual cash, and is short of the $12 million fundraising target set for Jan. 31.
“I deal in hard numbers,” Rose said Thursday. “We don’t have this money. In fact, we don’t have the $8 million that we’ve given him credit for. … You can buy a lot of stuff with hard cash, but not with pledges.”
Posted by: MM at February 10, 2012 1:39 PM
Why can't just give away public assets the old fashioned way: by building a new, useless football staduium. At least we would still have our waterfront. Oh well... I do take so comfort in the recent statement by the America's Cup Event Authority that my Brooklyn Bridge membership is good for life.
Posted by: VancouverJones at February 10, 2012 1:56 PM
MM: and of course it's only the city that is on the hook for anything. everybody else can just walk away.
Posted by: EH at February 10, 2012 2:18 PM
What's the big deal? SF can just hire fewer (or overwork the existing) teachers, cops and firemen so that one of the world's richest men can have his little backyard playground.
Posted by: The Chief (tm) at February 10, 2012 6:15 PM
i'm actually so upset at what we're looking at here that i'm actually almost thinking that i oppose the race. more and more, this whole america's cup thing seems like a weird scam to score a host of otherwise unattainable sf waterfront properties.
Posted by: david m at February 11, 2012 12:36 PM
Starting to stink like the Embarcadero on a Thursday after 2am.
The city has the upper hand and should take a MUCH harder line. Sounds like the event authority hasn't raised enough capital to be driving such a hard bargain.
In BillyBall's San Francisco, here's how it would play out:
The 66 year lease of Piers 30-32 should be contingent on their raising the $55 Million FIRST.
No sure why the city is "throwing in" a property with approved development plans. That kinda stinks.
The loan repayment should be equal to or lower than commercially available financing. 11% is out of the market, and NOTHING other than the event authority reaching into the city's coffers.
The "option" is cronyism, pure and simple. At a guaranteed repayment, it is a financial certainty that it will be exercised, due to the inherent profit margin.
Either the event is core profitable with reasonable developments, or it isn't....
...which leads me to my final point. The city has the event authority by the short and curlies. Its not as though, having announced San Francisco at this point, they can move to another city.
No, no gentle reader. The anchor keeping them in San Francisco is the epic immovable force that is the ego of Mr. Larry Ellison, coupled with the TV rights of a national sporting event against our bay backdrop.
They ain't going anywhere... The city has the upper hand and should play hardball.
Posted by: BillyBalls at February 12, 2012 8:42 AM
You people are just a bunch of spoilsports. The 99% should be humbled, honored, and grateful to subsidize their .001% oligarch overlords.
Posted by: two beers at February 12, 2012 1:54 PM
Hey, if this allows us to finally get some of that waterfront property at the base of Telegraph Hill developed, it is almost worth giving it away, just to keep the NIMBYs from THD from being able to stop it.
They should throw in the development rights to 555 Washington while they are at it.
Posted by: NoeValleyJim at February 12, 2012 3:22 PM
I can't help but be baffled as to why this wasn't negotiated a year ago.
Posted by: anon at February 13, 2012 2:05 PM