tv [untitled] October 5, 2010 2:00pm-2:30pm PST
huge decision point, whether or not we move forward, and i think it is the kind of decision point where there is no turning back if things start to move forward. if we approve this, this perhaps is the last vote we get before mr. ellison decides which of the three cities the finalists -- valencia, spain, some city in italy, and san francisco -- it may be the last vote we have on feasibility pursuant to the new language in their resolution.
the recently moved to a system of term sheets was so that -- the reason we moved to a system of term sheets was so that we would not go to the project with the only time -- only to reject something a huge amount of force has gone into. legally, there will be the opportunity before the ceqa is finished -- but let us be honest. if we adopt this term sheet before -- today, before the end of this year we are going to be very hard pressed for the next
sitting of this board of supervisors to actually say no to america's cup and the sailing community. we have done more analysis and this actually is not good for san francisco. it is not favorable. therefore we are going to say no, and hopefully you can get something together quick on the fly with valencia to host this thing -- sorry. let me say there would have to be literally an earthquake in san francisco for that decision to happen. that is probably the only thing that could force six members of this board and/or the mayor of san francisco to 180 degrees change course on this.
so this is a very important vote. i know in some arenas it is downplayed. it is just a term sheet and we are still working on it. i am sure that when we talk to the bmw/oracle team, and they say that once the term sheet is done they have this thing taken care of. i think we have to acknowledge there are both of those realities happening at the same time. as the representative of the area where a majority of the activity around the america's cup, including peer at 30 and 32, which will be the locus of the activity -- piers 30 and 32, and of pure 50, where the entries into the -- and of pier 50 where the entries into the cup will have their staging --
as representatives of 75,000 san franciscans most impacted in terms of what is going to happen in terms of traffic and congestion issues and real things that happen in the real estate market, when thousands of people move here for many years, when 2 million visitors come to san francisco. will there be an economic upside for the regional economy? will it be $1.40 billion? will this be good for san francisco? i am not so sure. when i asked questions about whether or not this will be good for the san francisco general fund, i think it is becoming increasingly clear that it will not be good for the san francisco general fund and that this event will cost san francisco millions. i am talking about the sense francisco general fund.
-- the san francisco general fund. probably tens of millions of dollars. although they assured chair at maxwell there would be written answers to all of my questions yesterday, she sent me this e- mail earlier this afternoon, or sent april on my staff is female. as i mentioned to you on the phone, we do not yet have solid answers to supervisor daly's questions about the impact. i took the liberty to try to make my own spreadsheet. i am trying to figure this out. i have chaired the budget here for a couple of times, so i know how to use excel. i know how to open it up and put some numbers in. this is my guess for what is going on at our level for this bid. i could be wrong.
i have not gotten answers to my questions. in terms of answers and non answers, america's cup has lots of questions and responses. questions were answered by the city attorney as to whether chapter 29 applies. it looks like it does, but perhaps not yet. we will have to make a finding at the board of supervisors before planning decides the ceqa application is complete. i assume that will be coming soon if this application passes. the planned $7 million of corporate sponsorship, we do not know. the $150 million in the structure they are asking -- is that included in the 270 figure or not? we do not know. will we be recent burst for staff times -- reimbursed for
staff times of city employees? we believe it will be another $2 million for taxes and items in the term sheet, which i assumed -- i am not sure what will be included in that $32 million. the staff are not really sure either. what are the costs to the port? we do not know. future infrastructure, financing mechanisms, actual cost for work at pier 80 -- this may or may not be in the $25 million of infrastructure work. pier 50 -- the cost of accommodating super kyats --
yachts, we do not know. there is an attachment of $890 million. i do not know if that is one year or what. we are not sure on that. the breakdown of the total city costs for america's cup -- we can take a look at that in the budget i prepared. is the city liable for ceqa preparation, yes. the cost of that document? i am not sure. is that $32 billion going to be raised before the 270? is the city protected first or mr. ellison protected first? do not know. for those of you who follow south beach development policy, you know that is the one that is worth something. it is actually on land.
there is that title trust issue. in this term sheet, there is a title and trust swap. what program are we going to put on that? we do not know. what is the value of that parcel? we do not know. piers 30 and 32, when improved or fixed, approximately $45 million. plans to sell any of the parcels -- we do not know. maybe ms. moyer -- supervisor mirkarimi asked about waterfront plans and she may be deflected. how will the board of supervisors make a decision without a budget analyst report or ceqa documents?
we apparently can do that, but i do not know whether it is advisable. there is no response. if you flip over to the america's cup impact on the san francisco general fund, this is my best estimate. this is taken from four or five different sources, including the committee meeting yesterday, the resolution in terms sheet in front of us. we have some revenues. an increase in hotel tax -- trochophore dollars million from the study. the payroll tax increase -- $8.40 million. -- an increase in hotel tax -- $14.40 million from the study. the cost to the city for police or security, transport, and
recreation facilities during the event -- $11 million. i am not sure their methodology, but that was in the study. a figure of $32 million was mentioned in committee yesterday, which referenced the fees, the improvements, and the utilities. those were also reflective of revenue. i am not sure the assurances of that. i have looked on the revenue side as well. the court identified infrastructure work. the advertising revenue is $892,000. that is an attachment in our package. they said that are not sure about that. they do not know about the value of the legacy leases or the losses.
i know the piers are not sure how much revenue loss. i believe it is $10 million per year. we got that to the budget office from port staff. if we lose revenues in a four your time, i am not sure how to reflect that. i went with a four year time period of loss at $40 million. port relocation facilities on pier 50, we do not know. temporary berthing of super yachts, i do not know. the swap of seawall lot 330, we do not know. the financing may be included in the $32 million. i do not know. reimbursements to event authorities, helipad -- maybe that is included in the $325
million. maybe it is included in the $35 million. i do not know, i do not know, i do not know. it seems to me that colleagues and staff do not know the answers to these questions. so we are being asked on a committee meeting at monday and a board of supervisors' meeting the following tuesday to approve a term sheet. i have negotiated a couple of term sheets. a negotiated a term sheet on treasure island late into the night. the conditions have changed. but typically, term sheets that come in front of the sport have these types of questions answered. there are hard numbers associated with the terms. and i realize that mr. ellison is on a truncated timeline, but i think that in terms of our
last, best vote on this item, and there are more legally binding votes, but let us be clear -- it is going to be very hard to cast a vote against this once this vote is cast and once san francisco is selected as a host city. it would be really nice to have answers to these questions. i know that yesterday i talked a lot about process and there was sort of a he-said, she-said about my office. all of my records had been scoured. there is no record of the mayor's office asking to meet with me on the america's cup. we have sunshine at the mayor's office -- we have sunshined the mayor's office to ask if they have a record of asking me. that is all of the window. the mayor's office thinks i do
not exist. so what? let us take a look at the package. we have a massive problem in front of us. we have a lot of variables in the equation and a lot of unanswered questions. sometimes, when you start talking about things, folks to hear what you're saying start giving you additional things. colleagues, i have passed out an article for you from "bloomberg business week." typically, i do not pass out articles from "bloomberg business week." i also have an article from the cnn money section, which i usually do not focus on. the article from bloomberg is that sponsors are a billionaire
view. if you do not know the history of the last america's cup or how bmw/oracle wrestled -- that is something you say when you take the cup from one yacht club to another yacht club. they wrestled the cup from berkshire rally -- from berterelli's. he is roman but he lives in switzerland and sales of valencia, spain. he is an interesting european guy. he wrestled the cup from australia. there were some legal issues around that, i think. then, alison, who was the challenger, and berterelli -- they are all millionaires. ellison may be the sixth wealthiest man and berterelli
may have been the 28th will be this man in the world. they got engaged in a protracted legal battle over the terms of the passing of this cut in valencia. i guess supervisor ross knows about this stuff better than most, being from rhode island, but i am on a learning curve and trying to educate myself as much as possible. apparently, the challenger -- while the defenders sets the rules, there is a process by which the challenger, the first or first person who makes the challenge after the america's cup is one -- the challenger has certain rights to take issue to make sure the regatta sales. -- ails.
-- sails. i never knew i would know this much or be this interested in sailing. what happened was a nasty three- year legal battle. in the end, apparently the folks in new york in the 1800's and must be pretty smart. in the end, if all else failed, the best three regatta -- two out of three winner takes the cup. maybe this is what mr. ellison wanted the whole time through his legal challenges. this cut out a lot of qualifying regattas or a lot of the work out of it. last time, in valencia, the
lawyers are the ones that figured out the preliminary rounds. oracle took two out of three, took the first two in the event. the outcome of that for valencia was a huge loss in revenues. apparently, they could not even sell the tv contract on it. they were giving it away free on the internet. at an event where according to the $270 million figure, an event that had previously cost somewhere in that neighborhood, at 230 million euros in 2007, it cost $11 million, not including
the cost of the most expensive boat ever built or the most expensive legal battle in sailing history. but the cost of putting on two races was 8 million euros. that was the last america's cup. i guess a question to staff -- i am not even sure who the challenger is for 2013. what happens if there are not perks? there are some yacht clubs who are choosing not to participate in this one because of this very issue, because of the nasty history of the last america's cup. i understand that a lot of questions have not been answered and there are a lot of variables. but what happens if we move forward with our didn't -- our
bid and the oldest sports competition -- what happens if it ends up in the courtroom steps? and, by the way if you have any answers to my other questions, i can give these to you. i just gave them to my colleagues. please educate me. >> i am the director of the office of economic and work force development. we would welcome answering. many of the questions you have put forward -- to be clear, you have before you today the resolution asking the board of supervisors to endorse a non-
binding term sheet. the term sheet essentially calls the question on whether or not the city family wants to move forward in its negotiations or discussions with the america's cup committee on the city pursuing a bid in order to cause the america's cup. as you know, we are the only city chosen in the united states to be considered. we are competing against the country's italy and spain. we believe the term sheet represents the outlines of the potential offered we would be bringing back before you for a vote that would bind the city in form of a hosting agreement. we are very cognizant we are asking you for a lot of support around three broad concepts. one is the intention to use certain port assets that require approximately $150 million of infrastructure in exchange for the investment that would be made by the america's cup team.
that is not part of the $270 million that would be raised in corporate sponsorship. i can explain them more. in exchange for $150 million of infrastructure investments to use certain assets for the america's cup program, we would in turn give the america's cup long-term leases in order to have them recoup the cost incurred on our assets. the other is you introducing the concept of creating a nonprofit entity, the america's cup organizing committee, that would be responsible for raising, in conjunction with the authority, corporate sponsorship. in addition, there would be obligated to raise $332 million that would be used to backstop
and pay for city costs that are anticipated in the term sheet. that is things like environmental review and pulling permits. lastly, the third thing that the america's cup committee has asked us to look at is consistency and coordination between federal, state, and local agencies. they are asking us to commit to making this event feasible giving the -- given the multi- jurisdictional qualities. we are aware there are a lot of fiscal qualities that need to be fleshed out before we would come to you with a binding agreement. we have a broad stroke overview of why we think this is a good deal for the city. rich hill from my office is prepared to talk about some of that an answer specific questions we did not go over at the hearing yesterday. supervisor daly: i was at the
hearing for a little while and then i had to go, but i watched the hearing on sfgtv video on demand. it is handy. i appreciate the answer to one question which you just answered -- the $150 million in infrastructure costs is not separate from the $750 million. i did learn about the 21 $32 million in addition to the $270 million. i did learn about the 232 -- i did learn about the $232 million in addition to the $270 million. i dummied up this budget on general fund impacts. ultimately, the bottom line of almost $53 million negative impact on the city's general fund -- maybe that number is
incorrect if, for example, any of the port infrastructure work is included in that $233 million figure yesterday. that is the first heard of that figure. there is language in the term sheet about taxes and fees. this will come out of it. i assume some of the ceqa costs will come out of that 232. i am not sure about the study commissioned about what is included in the $11 million in terms of the cost of running the city when a major event is in town and what that adds and takes out of the city in terms of the cost of providing the muni services, rec and park services, police services, etc.
i am just trying to get a spreadsheet, so i made one. you can borrow my electronic version and fixed it for me. >> we did the same analysis. i apologize. the numbers were there yesterday. they may not have been all in one place. it is similar to the analysis you did, supervisor. we took on the same thing and showed somewhat the opposite. there will be somewhere between $30 million and $60 million of net benefit. i think we agree the hotel sales payroll tax is somewhere between $19 million and $22 million. we think those numbers are conservative. we think hotel rates will go up.
>> but in your term sheet there is the agreement that we will work with the business bureau to make sure that the lowest discounted hotel rates, the best convention rate specifically, are available. >> we recommend $19 million to $23 million for general fund increases. what i do not think is included in your spreadsheet is we are projecting the event of authority to have a negative value. supervisor daly: i know you do not hang out in budget and finance as much as you do in some other committees, but this is an analysis for the general fund. the port is an enterprise
department. i understand it is all one city. i understand it is everyone's property and money. this is specifically focused on the impact on the general fund, which we do give a good bit of attention in budget and finance, because it is where the more discretionary dollars are. it is a bit of a taking of the temperature. i understand there is a port fund and there are liabilities. there are some potential upsides to dealing with a huge potential liability in terms of the port. this spreadsheet is aimed at figuring the impact on the general fund, which is separate from the port budget. >> it looks like you