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America's Cup Plans Downsized

 
Event organizers will no longer get a 66-year rent-free lease on prime waterfront land

San Francisco Mayor Ed Lee announced that the city and America’s Cup event organizers have scaled back plans to develop part of the city’s shoreline, an acknowledgement that the sailboat racing series has lost significant political and popular support.

The announcement is a setback for billionaire Larry Ellison and the America’s Cup Event Authority, which had planned to redevelop Piers 30 and 32 in exchange for a 66-year rent-free lease on the prime waterfront land. Ellison, the CEO of Oracle and winner of the 2010 America's Cup, created the authority and pushed for the 2013 races to be held in San Francisco.

“We won’t really be needing those piers, and we figured that out over some good conversations we’ve had this weekend,” said Mayor Ed Lee.

Lee announces sweeping changes to America's Cup waterfront investment dealThe new agreement will save San Francisco approximately $80 million. It comes a day before the Board of Supervisors was scheduled to vote on the old plan, which would have required the city to reimburse event organizers for $111 million in redevelopment costs in addition to giving away long-term property leases.

Board President David Chiu acknowledged Monday some supervisors were concerned by the leases and rising event costs. Last week, the board's budget and finance committee grilled event organizers about the old deal, before eventually approving it by a 2-1 vote.

Chiu said the new deal may make it easier to settle a lawsuit with a group called Waterfront Watch, which sued the city last week over the certification of the project's environmental impact report, alleging the report was insufficient.

Earlier this month, Harvey Rose, the board's budget analyst, estimated that costs for Muni, police, and other city-related services for the event would be about $52 million, while revenues from hotel, payroll, sales and other taxes would be about $22 million, leaving the city with a potential deficit of $30 million.

The America’s Cup Organizing Committee has pledged to raise $32 million to cover the city's costs, but so far it has only raised $8 million, according to estimates from the city controller's office.

“Assuming the city’s cost remain the same, anything less than $30 million would result in a loss to the city,” Rose said. He declined to comment on the new deal because he has not yet analyzed it.

Under the new agreement, all four racings teams will be housed at Pier 80, which is currently home to Ellison's team.

Event organizers say they still plan to spend millions to develop Piers 27 and 29, which will host spectators, and to make improvements on and around Pier 80, said Stephen Barclay, chief operating officer for the authority.

“We are looking at a risk mitigation strategy, which is to base the teams here, which means we don’t have to put quite that much money into pier upgrades,” Barclay said. “I think it’s a better solution.”

Details of the new plan are expected to be worked out over the next two weeks and be presented to the Board of Supervisors for approval soon, said Mike Martin, the city's project manager on the event.

“We’re going to need to come back to the board with a lot of clarity,” he said. “The existing agreement structure will stay, it’s just what are the variables that go in to the costs we need to pay back.”

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