America's Cup: Budget Analyst Says It'll Still Lose City $101 Million
|Vincent Van Gogh|
|Will the latest report take the wind out of the city's sails?|
In mid-November, the Budget Analyst released a report based on the stipulations of a nonbinding "term agreement" approved by the Board of Supervisors. Between costs for hosting the event and revenue not realized by giving away land lease-free to Larry Ellison's "Event Authority" for development, the report predicted losses of up to $143 million in the long term.
Based on the current terms of the "Host City and Venue Agreement" -- which provides more malleability in where to erect venue sites -- the most recent report predicts losses of only $101 million.
Here's how that shakes out:
In giving away development rights to prime waterfront real estate to Ellison's group, the city stands to reap some $66.1 million in increased tax revenues over the next 75 years. But it loses out on nearly $110 million in potential revenues from leasing out the land to someone else under more favorable terms. Add it up and you're out $101.4 million.
Not insignificantly, both Budget Analyst reports predict the generation of $1.2 billion in private business during the course of the race.
And while the city's Office of Economic and Workforce Development "anticipates" some $32 million in private funds will be raised to offset the city's losses, the report notes "there is no guarantee, whatsoever" this will happen. As Budget Analyst Harvey Rose told SF Weekly last month, "not one cent" is guaranteed.
The Port Commission on Nov. 30 adopted a pair of proposals that would be significantly cheaper for both the city and the Event Authority. Fred Brousseau, a principal at the Budget Analyst's office and the lead author of both reports, notes that these deals would both need to be agreed upon by the city and the Event Authority -- "definitely not a surefire thing."
His report contends that both plans will still cost San Francisco many millions in the long run because of the loss of property taxes on the land ceded to Ellison's group for 66 to 75 years.
Even without the land deal, the report pegs the cost to the city from the Port Commission plans at between $11.6 million and $47.6 million, depending upon whether the Event Authority assents to pick up the bill for necessary dredging.
The Board of Supervisors Budget and Finance committee will take up the issue at its Dec. 8 meeting.
The Budget Analyst concludes with several suggestions. Among them:
- If Ellison's group does have the event here -- and wins -- insist he hold the next one here, too. Make this a "requirement" and tie it to long-term development rights;
- Insist on "fair market rent" for those 66-to-75 year land deals;
- Set up an assessment district around the race to receive additional revenues from businesses benefiting from the race, and set up a joint powers agreement to receive funding from neighboring communities benefiting from San Francisco's largess.
Finally, the report declares hosting the 34th America's Cup to be "fiscally feasible" -- provided the city is okay with using "General Fund and other City monies to pay for costs to be directly incurred..."
To paraphrase the Jimmy Cliff song, "You can get it if you really want. But you must pay, pay and pay, pay and pay. You 'succeed' at last."
Update, 3 p.m.: Mayor Gavin Newsom's economic development office released an America's Cup number-crunching of its own today. And it predicts the regatta would benefit city coffers to the tune of $88 million -- a divergence of nearly $190 million with the Budget Analyst's report.
Cheaper development options not covered in either report may be taken up by both the city and Event Authorities. In any event, the Dec. 8 Budget and Finance Committee meeting covering the America's Cup bid promises to be interesting.