And that's the case regardless of how the supes vote.


In discussions of the fantastically complex terms governing the staging of the 34th America's Cup in this city — and the public money, property, and development rights that will flow to the Event Authority to make it happen — the phrase "The devil is in the details" comes up. Often.

Parsing the 126-page development agreement, however, it's clear that there are details and devils enough for an entire Hieronymus Bosch tableau.

At its simplest — looking past sections on "fires; floods; tidal waves; epidemics; quarantine restrictions; freight embargoes; earthquakes," etc. — the development agreement conveys money and property rights from the port to the Event Authority in exchange for infrastructure work on and around waterfront structures. The authority's first $55 million worth of work will earn it the title to Seawall Lot 330 — currently being used as a parking lot a stone's throw from the Bay Bridge — and 66 years of rent-free occupation of adjacent Piers 30-32, a deteriorating parking structure across the Embarcadero. Additional work by the authority will be repaid via port bonds and rent credits for other piers, or, potentially, future marinas.

These rent credits serve as coupons the Event Authority can use to recover its expenditures via long-term leases on Pier 29 and, possibly, Piers 26 and 28. But these coupons keep giving: The monetary value of unused rent credits owed by the port to the Event Authority will compound annually at the Tony Soprano-like interest rate of 11 percent.

The port anticipates the Event Authority will spend and seek reimbursement for some $111 million, and potentially up to $136 million — a total more than double the numbers bandied about during the 2010 run-up to sealing the early America's Cup agreement. And while the Event Authority may only be repaid via a finite stream of port resources, there is no formal cap on its reimbursable costs.

With just weeks left to influence the deal — and, of course, grandstand — the supervisors' most basic motivation is to figure out if the city is receiving enough in return for a growing investment. With confidence waning in much-quoted predictions that the race will spawn $1.2 billion in business and 8,000 jobs, this is a complex task. "I've always thought the projections were — 'outlandish' is not the right word, but 'extremely optimistic' is an understatement," says Supervisor Sean Elsbernd.

Apart from the augmented costs, the supes' main complaints figure to coalesce around three issues: The Event Authority stands to take long-term control of the choice Pier 29; the city and port will receive no cut from rents and business on the land handed over; and, similarly, the city and port won't get a percentage from future condo sales on Seawall Lot 330.

These are the specific objections of those who have problems with the finer points of the deal. Yet the most serious critics of the America's Cup question the very framework underlying the arrangement. The port and Event Authority portray the setup as an exchange of private capital improvements by Cup organizers to neglected port facilities for long-term rent-free use and development rights. But this sidesteps the question of whether these improvements truly benefit the port — or just Ellison.

Of the $111 million the port anticipates reimbursing the authority in the near- and long-term, the lion's share — some $91.5 million — is earmarked for work on Piers 30-32. The crumbling piers were long ago "yellow-tagged," meaning they're not fit for any use beyond parking lots. The port hadn't planned to spend any money on them in the foreseeable future; in 10 or 15 years they'll likely be totally unusable. Now, however, the port plans to pay Ellison's Event Authority nearly $100 million to spruce up the piers, then set up Ellison et al. with a rent-free lease for the new and improved space until today's kindergartners are in their 70s. And, even after 66 rent-free years, the deal may not be done. If the Event Authority hasn't recouped its investment, the port is required to turn over half the revenue generated by the piers for 15 more years. Since work may be deferred for up to 10 years after the America's Cup, it's possible that the port will still be reimbursing the Event Authority into the 22nd century.

For those who'd question this scenario, Jonathan Stern, the port's assistant deputy director and head of waterfront development, acknowledges "that's fair. If the America's Cup was never a possibility, we might have made different choices of how to invest our money." But, he continues, deals like this have to be considered "in light of the event."

This doesn't cut it for everyone. "Team Ellison is having their cake and eating it too by restoring a pier that every expert agrees should ultimately be removed," says Aaron Peskin, the former board president and a vocal critic of the current America's Cup deal. "If this was part of a rational plan, we'd be restoring piers that have a potential economic benefit to the port. But that's not what Mr. Ellison wanted." Piers 30-32, Peskin continues, aren't saddled with any historic structures and present "potential for a large, bold real-estate play." The stumbling block for would-be developers of the past was the scores of millions of dollars in necessary rehabilitation work — which the city is now funding. "If you can get it for two-thirds of a century and have the city pay to fix it up," Peskin says, "why not?"


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13 comments
supertamsf
supertamsf

I love the graphic of the Japanese great wave woodblock print & boat. Love it.

Elizabeth Frantes
Elizabeth Frantes

Or, it could be that many Occupants are just going to act without warning . ... I would have fun pirating those yachtholes!

dvd
dvd

San Francisco giving away millions to billionaires: they must be laughing their heads off!

Congratulations, really, the America's Cup has been a joke for decades: boring racing between two boats followed by never ending law-suits between the sailing teams. It is mostly an occasion to boast the ego of billionaires. Now it is also a way for the same people to make huge amount of money at our expenses.

Elizabeth Frantes
Elizabeth Frantes

Oh, come on now, it was SenateWhore FineSwine, as Mayorette, who ran amok with the tear down SF and economically cleanse the City . ... no good jobs, no affordable rents, because all she and her minions want is a lot of desperate white young folks ripping each other for sinecure jobs in corporateland who do nothing useful . .. as a tourist destination, this ain't even Disneyworld . .. we lost the 49ers but got this? And putting up buildings where FEMA says is suicide, such as the waterfront, Mission Bay .. I guess they feel that since the next generation will have to pay to deal with this mess we've got, overbuilt on the worst landfill at a time when the ocean is rising . ..let the Public pay for the infrastructure, the sea walls ... private profit, public liability. Too bad no one checked FineSwine for gunshot residue that day. She had to have Harvey out of the way because he never would have stood for what she did. Too bad no one wants to bother with history and its inevitability. Causality is a casualty of modern life.

Pdw
Pdw

If it's any consolation//interest to those concerned about attendance at the America's Cup, here's some info. I'm a sailor who's actively following all the America's Cup action. My wife and I have already made plans to travel to SF for the AC Finals. We're renting a condo for 2 weeks in the city or in Marin. We'll have a rental car (paying taxes on it.) We'll eat in restaurants at least 2-3 times per week, probably more. We'll buy souvenirs (sales tax.) We'll travel to Wine Country (fuel taxes.) Thus, I expect our America's Cup trip will run in the neighborhood of $10,000. Also, it's possible that we'll have another couple joining us, so the numbers could double, just for us.

Multiply that by thousands of visitors for the America's Cup (especially, over a 3 month period) and you'll be getting some SERIOUS influx of $$ to the local economy -- exactly the premise of the ACEA in its negotiations with the City.

I hope that neither side gets greedy in this or gets so dogmatic that there's no flexibility for compromise. If everyone works together for the "greater good" of San Francisco, the America's Cup can be a truly positive influence on the City. I hope my plans for 2013 come to fruition.

Elizabeth Frantes
Elizabeth Frantes

So, if there are only a few million more like you, but fact is, even if you are telling the truth, it still won't pay for all the damages, esp the collateral damages this mess will create. As for greed, that's been the main motivator in this City and with corporations for decades. Hey, why don't you ask YOUR town to host this mess? Heck, why not give this to Santa Clara and keep the 49ers?

Serenslover
Serenslover

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Guest
Guest

No, NO, No...

Any time they start talking about using General Fund Revenue, you know it is going blow-up big-time!

Let the 1%ers pay the whole bill for this boat race, if they really want it, I think the real grab is Ellison wants the Port real estate...

Elizabeth Frantes
Elizabeth Frantes

Not only that, but we, the people, will end up paying for the infrastructure and the plain fact is we shouldn't build ANYTHING on that landfill. And when it collapses, it makes evacuation of casualties and egress of rescue workers impossible. Since we dumped the Army and Navy, which WAS our plan for disasters, we've cut back on ALL EMERGENCY SERVICES and what little National Guard we have left are miles away.

pacocornholio
pacocornholio

Then bring in some more races to make the attendance numbers. Don't just give up because the Cup might flop on its own. Put the pedal down and let's have a good event.

njudah
njudah

It's a pity that "Occupy SF" is so posessed with the idea of camp sites in SF at public parks. I suppose if they gave a damn about their whole 99% and would realize that we're literally subsidizing a billionaire for his stupid race with no guarantees about ANYTHING, they might mobilize.

Instead, they're just a pack of hippies smelling up the joint and worried more about where they can cook their s'mores. #epic2012failbytheyouth

Fuckers.

 
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