America's Cup: Mayor May Make Large, Long-Lasting Changes to Deal
|Will Larry Ellison be San Francisco's Santa? Or the Grinch?|
The "final agreement" bid unanimously approved by the Board of Supervisors and signed by the mayor is actually neither final nor an agreement. So as Newsom continues negotiating with the sailing mavens to wrest the Cup away from Newport, Dubai, the Sea of Tranquility or God knows where else, he can alter the arrangement.
"According to Newsom, the negotiations are not over what piers to use or how much public money to spend," reported the Chronicle today, "but rather about tax increment financing and other financial details."
While "tax increment financing" sounds like a niggling detail, however, it could translate into millions of dollars spent out of city coffers and would affect the city's deal with big landowners for up to three-quarters of a century.
Tax increment financing -- also known as "incremental property tax" -- is something SF Weekly wrote about earlier. Essentially, it's a perk that would allow the "Event Authority -- the organization controlled by yachting billionaire Larry Ellison that's putting on the America's Cup -- or whomever owns the waterfront land the city is giving up to recoup investment costs.
So while the developers pay out at least $55 million in infrastructure costs for Piers 30 and 32 and Seawall Lot 330, they eventually get the money back -- and from city funds. Incremental property taxes mean the property owner is reimbursed the additional tax paid on land now assessed at high values due to that infrastructure work.
It's uncertain what, exactly, is being negotiated with regards to tax increment financing. But to shrug it off as trivial would be a cavalier assumption. "It could be very significant," says Fred Brousseau, a principal in the Budget Analyst's office who prepared multiple fiscal feasibility analyses regarding the city's America's Cup bid. "While it is speculative what aspects it's concerned with, it sounds like the discussion is about long-term development."
And that's the thing about long-term development. It's long-term.
Perhaps by the end of the year, San Francisco will know if it gets to host the America's Cup. Learning how much it's gonna cost us -- that may take far longer.