America's Cup deal was sweetened to bring race to San Francisco 

Larry Ellison had more to celebrate on the evening of Dec. 31 than the coming new year. The deal his yacht racing team signed that afternoon to bring the America’s Cup race to San Francisco in 2013 was much sweeter than the one The City floated just weeks before.

In negotiations with The City that occurred after the billionaire’s team made good on a threat to begin simultaneous negotiations with Rhode Island, Oracle Racing secured several potentially lucrative concessions.

The changes included elimination of a guarantee that The City would earn a small share of the revenues from the sale of condominiums to eventually be constructed on a waterfront property south of the Bay Bridge.

The City also clarified how it will get the state to lift restrictions on the 2-acre property so it can be sold outright to Ellison’s development team. And that team now has more flexibility about what it does with the $55 million it has agreed to invest in city property.

On Dec. 14, after a host of last-minute changes, the Board of Supervisors unanimously approved a host-city agreement that gave the mayor wiggle room to keep negotiating as long as The City wouldn’t have to spend any extra money. Yet the approval didn’t prohibit city officials from negotiating away potential income.

Ellison’s team won the America’s Cup in February, including the power to decide where the next race would be held.

Ellison said he’d like to bring the race to San Francisco Bay, and his team spent 10 months negotiating with San Francisco over a host-city agreement.

Port of San Francisco officials wouldn’t comment on whether the dalliance with Rhode Island was used as leverage to get more from The City. However, Port Special Projects Manager Brad Benson said the team desired greater certainty of return on its investment.

The final deal also allows the team to recoup its money if it invests more than $55 million. Developers are guaranteed 66-year leases if they invest at least $10 million in Pier 28 and $15 million in Pier 26.

In exchange for these concessions, Benson said The City received a promise that the team would invest the $55 million before 2013.

City Budget Analyst Harvey Rose, who has provided several critical analyses of prior drafts of the deal, said he would not be examining the final deal unless expressly asked to do so by the new Board of Supervisors.

How the deal changed

The America’s Cup Host City Agreement changed between the version approved by the Board of Supervisors on Dec. 14 and the version finalized by the Mayor’s Office on Dec. 31. Here are some of the changes:

  • Reduces revenues: Deletes a provision from prior drafts that would have allowed the Port of San Francisco to earn a small share of the revenues created when condominiums on the site are sold.
  • Enables property transfer: Laid out The City’s duties to remove all legal restrictions on Seawall 330, so that Ellison’s Oracle Racing team can own the property free and clear, rather than having to lease it for 75 years.
  • Clarifies developer revenues: Creates a mechanism for The City to pay back the developer for certain improvements on the waterfront, bringing the property back under city control. Spells out and speeds up the timeline by which an infrastructure financing district — a district that would allow developers to collect local taxes for public improvements to the waterfront property they’ve developed — would be proposed.
  • Established rental rates: Sets rates for the long-term leases of Piers 30-32 as $4 per square foot, and of Piers 26 and 28 as $6 per square foot.

About The Author

Katie Worth

Pin It

© 2019 The San Francisco Examiner

Website powered by Foundation