When cruise ships sail into the northern waterfront, they dwarf all they encounter. Thousands of tourists are disgorged from the building-sized vessels and proceed to Fisherman's Wharf to purchase shot glasses, fleeces, and soup in bread bowls before being terrified by that guy who leaps out from behind a bush. It's understandable why the city has, for decades, hoped to build a modern terminal that can accommodate more of these floating cities. But, in this game, you've got to spend money to make money.

The bundling of the America's Cup with the construction of the cruise ship terminal has been presented to the people of this city and its leaders as the development equivalent of the "You got your peanut butter in my chocolate!" "You got your chocolate in my peanut butter!" Reese's commercials. Here was a win-win scenario that gave everyone what they needed. Then the bill arrived.

The port's Stern notes that the city saved some money by combining pre-development and permitting costs of the combined America's Cup Village/cruise terminal projects. And the accelerated time frame kept "soft costs" — planning, designing, etc. — low. But there was a reason it took so long for the city to commit to building a cruise terminal: They're expensive.

As recently as 2009, the port's estimated cost for building the terminal on Pier 27 was $60 million. When the project was ceremonially initiated on Jan. 31, the price tag was announced at $92 million.

When asked how the costs increased by so much in just over two years, the port's reply is straightforward: That was then and this is now. "The simple answer is that initial or early estimates were based on rough drawings without complete knowledge of the existing conditions of the site, site and terminal requirements, etc." writes John Doll, the port's development project manager. The current estimate was "based on final drawings.... The more detailed the drawings, the more precise the cost estimate."

The discovery, in short order, that costs are surging by 50 percent might put the kibosh on a normal development project ("Frankly, the cruise terminal isn't worth the risk"), but not one lashed to the America's Cup like Ahab to Moby Dick. So when some $40 million in mitigation costs were added to the mix, the port had little choice but to soldier on.

To state that the world of San Francisco waterfront development is complex is akin to noting that an America's Cup catamaran is big. But, to greatly simplify, much of local waterfront development falls under the purview of the San Francisco Bay Conservation and Development Commission (BCDC), a state body. The BCDC weighs the impact on the environment and public waterfront access a project like the combined America's Cup Village/cruise terminal would create, and imposes offsetting mitigation projects. The BCDC estimates the cruise terminal's necessary mitigations will total $40 million — costs not included in the project's announced $92 million budget. This was the impetus for port director Monique Moyer's anguished staff e-mail. "I have thought about it and I can't see ... how I can commit the Port not only to prioritizing these items ahead of everything else, but also mortgaging itself to pay for it all," reads that Jan. 5 note. (Subsequent calls and messages for Moyer have not been returned.)

The BCDC did subsequently grant longer timelines for the port to complete the costly mitigations: "That provides them with a lot more time to find funding sources," notes Lindy Lowe, a BCDC senior planner. This is good — while the funding plans the port has thus far generated merit points for creativity, their feasibility is questionable. The port is gambling that a supermajority of voters will approve a bond measure — or, in another ploy, it proposes exploiting property tax payments from a development project that hasn't yet been approved, let alone built. There's also a somewhat fantastic notion about selling air rights to private developers, allowing them to build denser and taller. And if any of these speculative schemes fail, it may become incumbent on the city to swoop in and make up the difference out of its general fund.

"The port is committed to delivering these public benefits," said Brad Benson, the port's special projects manager, at a Feb. 2 BCDC meeting. "Our challenge is figuring out how to fund it."

Expect more sleepless nights for port leadership.


Bill Clinton got a lot of mileage out of parsing the definition of "is." Imagine what he could have done with "endeavor."

This year, the city left a $12 million hole in its budget in anticipation the America's Cup Organizing Committee would provide the funds seven days after the approval of the project's Environmental Impact Report in late January. That did not happen. As of press time, the city has not received "any portion of the $12 million in revenue that is assumed in the City's fiscal year 2011-12 budget," reads a subsequent evaluation from the controller's office.

Glancing over the fine print, however, the Organizing Committee needed only to "endeavor" to raise $32 million over the next three years to offset city costs, and was only required to "endeavor" to "meet its fundraising target of $12 million for year one no later than seven working days after completion of the environmental review." There isn't any language whatsoever in the contract noting when the fundraisers will "endeavor" to actually fork over the loot to the city. Ominously, the $32 million estimate of city-incurred hosting costs the Organizing Committee's contribution is meant to ameliorate appears to be low. The budget analyst now approximates those pending costs at $51.8 million.

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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

S_E_E_K___T_U-R-E___L_O_V_E_R___on__ 【M_I_X_E_D__s_i-n-g-l-e_._C_o_m]}--- The  best club for seeking rich singles,hot and sexy beauties. What's the  most important is that you don't have to be a millionaire, but you can  meet one

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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