The Tsunami is barely over and the world keeps turning. This article should come as no surprise to those of you who are familiar with the America’s Cup. But Newport should count their lucky stars that they were not successful. ( Governor Chaffee gave his state of the state address this past week and is looking for ways to close a large budget gap)
written by John Cote for the San Francisco Chronicle
(03-11) 04:00 PST San Francisco (03-11) 10:10 PST — San Francisco agreed to a deal that could cost the city millions more dollars to host the next America’s Cup regatta than the one the Board of Supervisors unanimously approved in December, according to a disputed report from the board’s budget analyst released Thursday.
San Francisco’s final agreement to host the prestigious sailing races was negotiated between race organizers and outgoing Mayor Gavin Newsom’s administration and port officials in the final days of 2010. The agreement was materially changed from the version the Board of Supervisors had approved two weeks earlier, despite city officials’ assurances that the agreement had not been fundamentally changed, the report by Budget and Legislative Analyst Harvey Rose said.
“We ratified a decent deal, but the proposal changed significantly by Dec. 31” said Supervisor Ross Mirkarimi, who commissioned the report. “The impact of those changes have been completely unknown until now, and those who negotiated on behalf of the city have some serious explaining to do. There were substantial increases in obligations and liabilities for the city.”
Members of the city’s negotiating team vigorously defended the final agreement Thursday, noting changes had been approved by the city attorney’s office. They also said Rose’s report was faulty.
“We tried to be fully transparent about the changes as soon as the negotiations were complete,” said Jennifer Matz, head of the mayor’s office of economic and workforce development. “The changes did not go beyond the scope of what we were authorized by the board to do.”
The deal approved by the board on Dec. 14 allowed for further modifications that did not materially increase the obligations or liabilities to the city. Rose’s report said that “some of the modifications represent material changes in process from what was approved (at the board).” Other changes could have “a material impact on port revenues and costs.”
Matz said she agreed with much in Rose’s report, but ultimately the changes did not materially increase the obligations or liabilities of the city as a whole.
The race is expected to bring more than $1 billion to the local economy, and the deal gives race organizers, led by billionaire Oracle CEO Larry Ellison, long-term development rights to up to three piers and another waterfront parcel in exchange for paying at least $55 million to shore up aging piers to house race facilities.
With a $55 million infrastructure investment, race organizers will receive development rights and a 66-year lease on piers 30-32, a single conjoined pier, and the deal commits the city to obtaining state approval to transfer title to Seawall Lot 330 across the Embarcadero to race organizers.
The team will also have the option of paying at least $25 million more to shore up nearby piers 26 and 28 in exchange for 66-year leases on them. It will also have the option of developing piers 16, 23, 27, 29 and 80 if the team’s improvements exceed $55 million and the city agrees to the development.
The report said the board did not agree to giving race organizers the right to unilaterally establish a long-term lease on Pier 29 or to changing the calculations for the rent race organizers would pay from a fair-market system to one locked in at $4 or $6 per square foot. Supervisors also did not sign off on the deal involving Seawall lot 330. The negotiated provision calls for the city to transfer the title of that parcel to race organizers. If that doesn’t happen, the city would lease that land to race organizers for 75 years for $565,000 per year, which is the same rent the port currently receives from a parking lot.
Rose, in an interview, said there were too many variations to give a total dollar amount that the changes represent for city coffers. One change – not requiring rent payments on Piers 30-32 because race organizers have committed to completing $55 million in infrastructure improvements – could result in the loss of about $2.2 million a year if race organizers are reimbursed for the $55 million through the rent credits and still owe rent, the report said.
Brad Benson, a port official and a central figure in the negotiations, said “the budget analyst is incorrect” in asserting race organizers had a unilateral right to lease Pier 29.
“It’s not a unilateral right,” he said.
A spokeswoman for race organizers said she had not reviewed the report and couldn’t comment.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/03/10/BAL51I8SQ0.DTL#ixzz1GL5wWwOf
