EDITORIAL San Francisco’s not going to lose the America’s Cup. Oracle CEO and yachting billionaire Larry Ellison is too excited about the prospect of bringing the sport (and his company’s logo on the sail of his boat) to a mass audience for the first time in history that he’s not about to abandon San Francisco Bay. The process is too far along; that much is a done deal.
But the development agreements for the city’s waterfront is not a done deal at all — in fact, the proposal could wind up giving Ellison effective control over five piers and a valuable waterfront lot that he could develop for condos. And the city won’t get anywhere near enough out of the deal.
The development agreement is really just a sideshow in the cup planning; nobody’s disagreeing that Ellison’s America’s Cup Event Authority will need space to stage the race, and that will require the renovation of some waterfront property. And nobody disputes that the event will bring tourism and revenue to the city, which will offset some of the cost of allowing Ellison rights to the waterfront.
The rest of it is purely a real estate deal: Ellison’s offering to put millions of dollars into renovating crumbling and underused piers, and in exchange the Port of San Francisco — which lacks the money to rebuild the waterfront and has no credible plans for a good part of its property — could give Ellison long-term low-cost leases and development rights on Piers 26, 28, 30-32 and possibly 29, as well as Seawall Lot 330 at Embarcadero and Bryant.
The city’s never been terribly good at cutting tough deals with real-estate developers, and the history of San Francisco is littered with examples of the taxpayers losing out to the speculators and builders. And in the furor of excitement over the America’s Cup, this development agreement could become the latest sellout.
The original projections for the economic impact of the event are looking more and more questionable; it’s entirely possible that San Francisco will wind up with far less than the $1.4 billion in spending and the thousands of jobs that cup promoters have promised. It’s still going to be a big deal, and the city (particularly the hospitality industry) will do well — but it’s not the answer to all of San Francisco’s problems. By the end of 2013, the event will be over — and Ellison will have essentially taken title to a huge amount of public land, for as long as 60 years into the future. And he won’t be paying the city the normal development fees, the normal impact fees, or even reasonable annual rent to the Port.
The supervisors need to put aside the hype around a sailing regatta and look at this for what it is: A real-estate development agreement with one of the world’s richest people. And right now, it’s not a good deal for the city.