It is well known that officials in Mayor Gavin Newsom’s economic development office and those in the Board of Supervisors’ budget analyst’s office strongly disagree about the public costs and benefits of hosting the next America’s Cup sailing regatta.
Dueling reports published by the offices on Friday put a whopping price tag on their differences of opinion — $189.5 million.
Newsom’s economic development office, which has led the city’s efforts to secure the rights from Larry Ellison’s BMW Oracle Racing team to host at least 43 days of Cup racing on San Francisco Bay, released a fiscal responsibility and feasibility study that indicated the net benefit to the city of the proposal would be $88.1 million.
The benefits include $92.8 million from increased land value and tax revenues resulting from long-term pier redevelopment opportunities that would be provided to Ellison's team under the agreement.
The $88.1 million figure also includes $25.6 million in city taxes from spectator and visitor spending.
Costs identified by the office included $13.3 million in lost revenue from existing waterfront tenants and $17 million in city spending. The report assume that race organizers will raise $32 million from the private sector to offset the city’s costs.
The Board of Supervisors’ independent budget analysts, who have been issuing warnings about the risks and costs of a proposed host city agreement, released their own report early Friday that indicated the net loss and costs to the city of executing the agreement would be $101.4 million.
The budget analysts do not consider the long-term development of the piers to have a public benefit — instead they argue that the benefits would all flow to Ellison and that the city would incur $43.6 million in property-related losses on the deal. They also say there is no guarantee that the event organizers will raise any money to help offset city costs.
The budget analysts’ finding is lower than the office’s previous projection, based on an earlier version of the agreement, that the city would lose $128.3 million on the deal.
City officials are also pursuing a cheaper alternative arrangement for hosting the America's Cup, called the Northern Waterfront Alternative, and lawmakers are scheduled to debate both proposals at a Dec. 8 Board of Supervisors Budget and Finance Committee hearing.
Many of the economic development department’s assumptions were based on a report compiled by the Bay Area Economic Council. Many of the council's findings are refuted in the budget analysts’ report, including projections of 8,840 new jobs.
"[M]ost of those jobs would not be permanent full-time jobs and would not result in the hiring of 8,840 employees," the budget analysts wrote. "It is unlikely that any labor benefits would remain in the years after the America's Cup is completed."
The council represents large corporations, which are expected to secure windfalls from visitor spending associated with the event without being asked to shoulder the same risks as San Francisco.
Chief Budget Analyst Harvey Rose said he was not surprised by the economic development office's findings, which his office plans to review over the weekend. "We will defend our report to the hilt," he said.
Newsom’s economic development office did not immediately respond to a request from The Bay Citizen for comment. Other journalists were invited to a 12 p.m. “background briefing” at City Hall.
Newsom is scheduled to leave office next month. The America’s Cup agreement has been characterized by some critics as a public handout to a well-connected billionaire by a departing mayor.