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America's Cup Costs to Be Revealed

 
Budget analysts will assess the impact of changes made in closed-door meetings after the city's bid was approved

More than a month after San Francisco and America’s Cup officials hashed out an agreement behind closed doors to hold the sailing regatta on San Francisco Bay, city taxpayers could soon find out how much it will cost their city to host the event.

Supervisor Ross Mirkarimi on Tuesday directed the Board of Supervisors’ budget analysts to review the host city agreement, which was finalized and signed Dec. 31, and compare it with the bid that was approved by city lawmakers two weeks earlier.

Waterfront neighbors whose lives and property values will be most dramatically affected by the catamaran races counted more than 100 last-minute revisions to the city’s bid that they say could increase taxpayer costs by millions of dollars. 

The changes were made in the final days of 2010 in a Ferry Building meeting room, where negotiators and their attorneys exhaustively reshaped a host city bid that had been unanimously approved Dec. 14 by the Board of Supervisors and the mayor, but was opposed by regatta officials who characterized it as cheap.

“It’s great that the Cup is coming here, but the devil is in the details,” said Vedica Puri, president of the politically powerful Telegraph Hill Dwellers, a neighborhood group representing residents of the city’s northern waterfront.

The final host city agreement, for example, contains a new clause that prevents the Port of San Francisco from receiving fair market rental income for some of the America’s Cup waterfront development sites for at least a decade by capping rent payments based on current levels, which are deflated by widespread economic woes.

It also compels the authority to demolish and replace buildings that were previously slated for rehabilitation, increasing costs that event organizers will recoup through waterfront rent credits.

Puri said the group had unsuccessfully urged its City Hall representative, board President David Chiu, to direct the board’s budget analyst to analyze the final agreement.

“When you hear that the latest version of the host city agreement is not going to be vetted by the budget analyst, it’s odd. It’s a cause for concern. That signals something,” Puri said last week. “We are entitled to know what is really happening and what the real impacts will be.”

But on Tuesday, Mirkarimi, a progressive lawmaker who has been closely involved in efforts to secure the event, submitted a formal written request directing the budget analyst’s office review the final agreement.

“There were modifications and amendments to that deal and there has been no vetting of that since,” Mirkarimi told The Bay Citizen. “Periodic hearings are imperative so that this remains a transparent and public process.”

The budget analysts created a public maelstrom that helped drive down the public cost of hosting the event last year when they found that an initial proposal, which had been aggressively supported by then-Mayor Gavin Newsom and his press office, could cost the public a staggering $128 million to execute.

The new report is expected to be published by late February or early March, according to budget analyst Fred Brousseau. A related Budget and Finance Committee hearing is also planned. 

If last-minute bid revisions sweetened the deal for America's Cup organizers, who under the agreement will receive long-term leases and ownership of valuable swaths of waterfront property to help recoup construction and infrastructure costs, then the revised bid could go back before the Board of Supervisors for a contentious and potentially disruptive approval process.

City officials involved in the Ferry Building negotiations insist that the alterations did not substantively affect the value of the bid for race organizers or the city.

“We strongly believe that the changes don’t materially increase the city’s obligations or liabilities in any way," San Francisco's chief economic development official Jennifer Matz said.

But the final agreement has not been formally analyzed to validate or rebuke those claims.

An earlier analysis by the Board of Supervisors’ budget analysts found that the host city bid approved by lawmakers in mid-December would cost the public $12 million to execute. Those costs could be offset by planned fundraising drives.

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