By John Farrell
OPINION We all love our 2010 and 2012 World Champion Giants and wish them all the best in 2014. But I also want to see the team do right by San Franciscans.
The Giants organization built its ballpark for over $350 million in 2000 and leased land from the Port. The 2012 property assessment was approximately $196.8 million, at least $200 million under value in my opinion, resulting in a property tax loss to the city of over $2.3 million annually.
Yet the Giants are appealing even this $196.8 million assessment, seeking to reduce the value to $140 million, an additional revenue loss to the city of over $650,000 annually.
When I worked in the San Francisco Assessor’s Office years ago, one of my assignments was to value the Giants ballpark. After construction was completed in 2000, a principle appraiser, a senior manager, and I met with Giants management in 2003 to finalize the ballpark value. I have worked with the Giants management numerous times in the past and they have always been professional, courteous, and fair.
Both parties agreed that a cost approach would be the preferred method of valuation and agreed on costs of around $350 million up to that point. The only difference in the final valuation being challenged was a marketing cost of $7 million in assessed value, reflecting $80,000 in tax revenue.
The Giants agreed to a middle ground to increase the assessment by $4 million. I advised the senior manager to accept this middle ground since it was reasonable and since the Giants already agreed to the approximate $350 million construction cost. It was a win-win for both the Giants and the city.
But this senior manager refused and would not budge on the $7 million assessed figure, reflecting a difference of only $35,000 in revenue. Giant’s management left the office very upset. I looked at the principle appraiser and he also couldn’t get over that we wouldn’t work with the Giants.
I had worked closely with this principal appraiser over the years and we always got the best and fairest value for the city. I left the office a year later and the Giants subsequently appealed and received a reduction of $200 million in assessed value and have been receiving a reduced assessment ever since.
When a taxpayer files an appeal for a reduction in property value under Proposition 8, it is generally due to a decrease in value as the result of a stagnant economy. I can understand the Giants asking for a reduction if their revenues were going down and justify it.
Without the ballpark, the Giants would not receive its revenues from the tickets, vendors, restaurants, advertising, cable TV, etc. Its revenues continue to grow, which is wonderful. But in my opinion and experience, the Giants should have never received such a reduction in assessment.
The proposed reduction to $140 million makes no sense. The land assessment alone is at least $40 million, from the capitalization of lease payments to the Port leaving the balance of $100 million for the improvements.
Naming rights were never assessed. Pacific Bell paid $45 million for naming rights in 2000, which was subsequently transferred to AT&T. What are these naming rights worth today? Keep in mind that the 49ers/York and Levi Strauss & Co recently entered into a naming rights agreement for a 20-year, $220 million deal at $11 million annually. Are you telling me the Giants naming rights are not worth at least half this amount when its contract with AT&T expires?
I appeal to the Giants owners and management to withdraw all their assessment appeals, which are insulting to the taxpayers of San Francisco, and continue to be the class act that they are. This appeal is from a fifth generation San Franciscan who has been a Giants fan since I can remember and had the privilege to see the two Willies, Juan, the Clarks, the Bonds and other Giants greats along the way.
John Farrell, MBA, Broker/Realtor®, former Assistant Assessor, Budget and Special Projects