America's Cup

EDITORIAL: Local hiring, and purchasing

Zelda Bronstein
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Tomorrow’s Guardian editorial:

The local hire ordinance that the Board of Supervisors approved last week once again puts the city on the cutting edge of progressive policy. San Francisco’s law, sponsored by Sup. John Avalos, is the strongest in the country, and ultimately will mandate that 50 percent of all the people hired on public works projects live in the city.

The politics of the bill were tricky; the local building trades unions opposed it on the grounds that many of their members live out of town and that hiring decisions should be based on seniority, not on residence. But eight supervisors recognized that a local hire law not only benefits the large numbers of unemployed San Franciscans; it’s also good economic policy for the city.

Numerous studies have shown that money paid out to local residents gets spent in town, and circulates in town, and creates more economic activity. That translates into fewer social and economic costs for the city and increased tax revenue.

There are costs to the law. Someone has to monitor compliance, and that requires additional city spending. Training local workers for union jobs may raise the price of some projects. But in the end, the studies all show that keeping money in the community is worth the price.

Avalos deserves tremendous credit for negotiating with labor and other interested parties, accepting compromises that don’t damage the impact of the measure and lining up eight votes to pass it, so even if Mayor Gavin Newsom vetoes it, the board can override the veto.

Now the board ought to apply the same principle to a local purchase law.

One of the major complaints small businesses have in San Francisco is their inability to get city contracts. The qualifying process is complicated and expensive — and when big out of town corporations with plenty of resources to put together bids can also offer lower prices, locals get left out.

The city spends vast sums of money, hundreds of millions of dollars a year, buying goods and services. Every dollar that leaves town translates into far more than a dollar lost to the local economy.

In fact, a 2007 study by Civic Economics showed that 38 percent of the money spent on locally based retailers in Phoenix, Ariz., remained in town and recirculated in the local economy; only 11 percent of the money spent at chain stores stayed in town.

That’s a huge difference, and would translate into many millions of dollars for the San Francisco economy. (Over time, the impact of local hire and local purchasing laws would be much greater than the one-time burst of income expected from the America’s Cup race.)

There are complications with any local purchase law. Not everything the city needs can be bought locally. Nobody in San Francisco, for example, makes train cars or fire engines. But on everything from office supplies and cars to uniforms and consulting contracts, there are (or could be) local companies handling the city’s business.

As with the Avalos law, there would be costs. Some small local suppliers would be unable to match the price that big chains offer. But the overall economic benefits to the city would greatly exceed those price differentials.

San Francisco currently gives a modest preference in bidding to local firms. But if the supervisors applied the Avalos principle and mandated that, within five years, a certain percentage of everything the city buys would have to go to local firms, city officials would be forced to do what they ought to do anyway: look local first.

Every year during the holiday season, the mayor and business leaders urge residents to shop locally. When the new Board of Supervisors takes over in January, the members should start looking beyond rhetoric and start working on legislation that would keep the city’s money in the city.

Supes OK America’s Cup deal

Sasha Cuttler And Mary Magee
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Supes OK America’s Cup deal

At its meeting today, Dec. 14, the Board of Supervisors unanimously approved a host city agreement for bringing the 34th America’s Cup to San Francisco. However, it’s still unclear whether billionaire yachtsman Larry Ellison and the BMW Oracle Racing Team will select San Francisco as the host city for the next world-famous sailing match.

The agreement solidified a less costly plan and a dramatic improvement over a prior proposal, which the Guardian covered in-depth in a recent cover story. Under the new terms, the America’s Cup Event Authority (ACEA) would be granted long-term leases on commercially reasonable terms for Piers 30-32, Seawall Lot 330, and possibly Piers 26 and 28.

The ACEA would receive rent credits in exchange for investing $55 to $80 million in infrastructure improvements for San Francisco port properties, and San Francisco would benefit from an estimated $20 million boost in revenues from the event. The America’s Cup Organizing Committee would also raise $32 million to help defray municipal costs. The major difference from the prior plan is that Pier 50, a 20-acre waterfront parcel requiring costly renovations that would have been ceded rent-free to the ACEA with development rights for 66 years, was removed from the equation. The America’s Cup is expected to generate more than $1 billion in economic activity, plus create the equivalent of more than 8,000 jobs.

Board president David Chiu called the new plan, which shifts the race venue to the Northern Waterfront instead of the Central Waterfront, “much better, from a business perspective, for the city.”

Sup. Ross Mirkarimi, who supported early efforts to bring the Cup to San Francisco but expressed reservations about the original plan, commended city officials for working around the clock to hammer out a deal on an unusually short timeline.

While doubts arose over the weekend concerning whether or not the BMW Oracle Racing Team and billionaire yachtsman Larry Ellison would accept the latest plan, Port staff member Brad Benson told the Board that he’d met with Stephen Barclay, a representative of the race organizing team, for hours following a Dec. 13 special meeting of the Budget & Finance Committee held to consider the financial impacts of the latest draft.  “They would like to enter into an agreement by the end of this week,” Benson reported.

Sup. Chris Daly, who emerged as the most vocal opponent of the Cup in the early stages of the process, acknowledged that he had used “exciting language” to criticize the initial scheme. “The reason why I amplified the language is because I knew the city just could not afford that kind of financial outlay and cost,” he explained. Daly voted in favor of the revised deal because he said it would grant a “fair return for this city.”

Just before the vote, Daly likely caused representatives from the mayor’s office to groan when he announced that he wanted to propose one last amendment. “I need to borrow the Cup on Jan. 5,” he said. “I need a cup. To drink out of.” His joke elicited laughter. Daly will be the star of a roast scheduled for that date.

For more details on the improved America’s Cup agreement, see tomorrow’s issue of the Guardian.

The America’s Cup rip-off

Andrew Lam
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The America’s Cup rip-off

EDITORIAL Gigantic international sporting events tend to be great fun for the people who attend. They make great promotional videos for the host city. They can generate big revenue and profits for some private businesses.

But when the party’s over and the bills come due, these extravaganzas aren’t always a boon to the municipal treasury. And at a time when San Francisco can’t afford to pay for teachers and nurses and recreation directors, the supervisors ought to be giving much greater scrutiny to the deal that could bring the America’s Cup yacht races to the bay.

In 2009, as the city of Chicago was preparing an unsuccessful bid for the 2016 Olympics, the Chicago Tribune took a look at what the 1996 games had meant to another U.S. city, Atlanta. The Trib’s conclusion: lots of private outfits and big institutions did well — the Atlanta Braves got a new baseball stadium and the Georgia Institute of Techology got a new swimming and diving center — but the city itself didn’t get much money at all.

That’s exactly the way the deal that Mayor Gavin Newsom negotiated with Larry Ellison, the multibillionaire database mogul and yachtsman, is shaping up. A shadowy new corporation controlled by Ellison would get control of more than 30 acres of prime waterfront land worth hundreds of millions of dollars. The city could lose $42 million, and possibly as much as $128 million.

We don’t dispute the huge economic impact of holding an event that could attract more than 1 million visitors to the Bay Area. Those people will spend money in bars, restaurants, shops, and hotels. The waterfront improvements and increased tourism will create, according to economic reports, 8,840 jobs.

But as the Board of Supervisors budget analyst points out, those are not permanent, full-time jobs; much of the increased employment needs would be met by increased productivity (bartenders and waiters handling more customers than usual), overtime, and temporary jobs. And again: Most of the benefits will go to the private businesses in the tourist industry. The city’s increased tax revenue won’t be nearly enough to cover the expenses. Even if the America’s Cup group raises $32 million — and that’s not guaranteed in the deal — the city would still be down $10 million.

So in effect, San Francisco is preparing to spend $42 million of taxpayer money (and to forego as much as $86 million more by giving away waterfront land that could be developed) to benefit the sixth-richest person in the world, a new company he’s going to create and control, and the tourist-related businesses in town.

Oh, and to make it even juicier: the city is promising to seek state approval for Ellison to build condos or a hotel on the waterfront — something nobody else can legally do.

This doesn’t strike us as a terribly good deal.

It looks worse when you consider how the negotiations proceeded: The mayor and other city officials insisted they were scrambling to give Ellison everything he wanted to make sure that San Francisco beat out two other competitors. But as Rebecca Bowe reports on page 12, there were no other formal bids; Ellison’s team, based at the Golden Gate Yacht Club, was only negotiating with one city, San Francisco.

There are alternative proposals. The Telegraph Hill Dwellers Association wants to see the race complex moved from the Central Waterfront to the Northern Waterfront, and there may be ways of saving money. And Sup. Ross Mirkarimi points out that if Ellison wins the races in 2013 and comes back again the next time around, San Francisco could become what Newport, R.I., once was: a repeat host to an event that will bring more and more benefits as time goes on. That, however, involves a number of risks and variables that are far from certain at this point.

We’d like to know a lot more about what Ellison’s development plans are. We’d like to know who, exactly, will be running his new corporation that will get development rights for a couple of nice waterfront parcels.

But before the supervisors sign off on any deal, they need to set a bottom line: this can’t cost the city any net revenue. The San Francisco city treasury and local taxpayers shouldn’t be subsidizing an event created by and for the very wealthy.

 

The biggest fish

Andrew Lam
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The biggest fish

rebeccab@sfbg.com

Shortly after Larry Ellison, the billionaire CEO of Oracle Corp. and owner of the BMW Oracle Racing Team, won the 33rd America’s Cup off the coast of Valencia, Spain, in February 2010, a reception was held in his honor in the rotunda at San Francisco City Hall.

The event drew members of Ellison’s sailing crew, business and political heavyweights such as former Secretary of State George Schultz, and other VIPs. Attendees posed for photographs with the tall, glittering silver trophy at the base of the grand staircase.

As part of the celebration, Ellison helped Mayor Gavin Newsom into an official BMW Oracle Racing Team jacket, and Newsom granted Ellison a key to the city, a symbolic honor usually reserved for heads of state and the San Francisco Giants after they won the World Series. Shortly after, the mayor and the guest of honor, whom Forbes magazine ranked as the sixth-richest person in the world, sat down for a face-to-face.

That meeting marked the beginning of the city’s bid to host the 34th America’s Cup in San Francisco in 2013. Since securing the Cup, Ellison has made no secret of his desire to stage the 159-year-old sailing match against the iconic backdrop of the San Francisco Bay, a natural amphitheater that could be ringed with spectators gathered ashore while media images of the stunningly expensive yachts are broadcast internationally.

Newsom and other elected officials have feverishly championed the idea, touting it as an opportunity for a boost to the region’s anemic economy. The city’s Budget & Legislative Analyst projects roughly $1.2 billion in economic activity associated with the event — the real prize, as far as business interests are concerned. It would also create the equivalent of 8,840 jobs, mostly in the form of overtime for city workers and short-term gigs for the private sector.

While the idea has won preliminary support from most members of the Board of Supervisors, serious questions are beginning to arise as the finer details of the agreement emerge and the date for a final decision draws near.

Ellison and the race organizers would be granted control of 35 acres of prime waterfront property in exchange for selecting San Francisco as the venue for the Cup and investing $150 million into Port of San Francisco infrastructure. But the event would result in a negative net impact to city coffers.

Hosting the event and meeting Ellison’s demands for property would cost the city about $128 million, according the Budget & Legislative Analyst, just as city leaders grapple with closing a projected $712 million deficit in the budget cycle spanning 2011 and 2012.

Part of the impact is an estimated $86 million in lost revenue associated with rent-free leases the city would enter into with Ellison’s LLC, the America’s Cup Event Authority (ACEA). In exchange for selecting San Francisco as a venue and investing in port infrastructure, ACEA would win long-term control of Piers 30-32, Pier 50, and Seawall Lot 330 — waterfront real estate owned by the Port of San Francisco, with development rights included. Seawall Lot 330, a 2.5-acre triangular parcel bordered by the Embarcadero at the base of Bryant Street, would either be leased long-term or transferred outright to ACEA.

The most vociferous opponent of the America’s Cup plan is Sup. Chris Daly, who has voiced scathing criticism of the notion that the city would subsidize a billionaire’s yacht race at a time of fiscal instability. “The question is whether or not the package that San Francisco’s putting together is good or bad for the city,” Daly told the Guardian, “and whether or not it’s the best deal the city can get.”

 

THE CREW

According to a Forbes calculation from September 2010, Ellison’s net worth is $27 billion, making him several times wealthier than the City and County of San Francisco, which has a total annual budget of about $6 billion. Ellison reportedly spent $100 million and a decade pursuing the Cup.

As soon as Ellison expressed interest in bringing the Cup to San Francisco, Newsom began charting a course. Park Merced architect and Newsom campaign contributor Craig Hartman of the firm Skidmore, Owings & Merrill was tapped to reimagine the piers south of the Bay Bridge as the central hub for the event, and soon Hartman’s vision for a viewing area beneath a whimsical sail-like canopy was forwarded to the media.

The mayor also issued letters of invitation to form the America’s Cup Organizing Committee (ACOC), a group that would be tasked with soliciting corporate funding for the event. ACOC was convened as a nonprofit corporation, and it’s a powerhouse of wealthy, politically connected, and influential members.

Hollywood mogul Steve Bing, who’s donated millions to the Democratic Party and funded former President Bill Clinton’s 2009 trip to North Korea to rescue two imprisoned American journalists, is on the committee. So is Tom Perkins, a Silicon Valley venture capitalist, billionaire, and former mega-yacht owner who was once dubbed “the Captain of Capitalism” by 60 Minutes. George Schultz and his wife, Charlotte, are members. Thomas J. Coates, a powerful San Francisco real estate investor who dumped $1 million into a 2008 California ballot initiative to eliminate rent control, also has a seat. Coates resurfaced in the November 2010 election when he poured $200,000 into local anti-progressive ballot measures and the campaigns of economically conservative supervisorial candidates.

Billionaire Warren Hellman, San Francisco socialite Dede Wilsey, and former Newsom press secretary Peter Ragone are also on ACOC. There are representatives from Wells Fargo, AT&T, and United Airlines. One ACOC member directs a real estate firm that generated $2.5 billion in revenue in 2009. Another is Martin Koffel, CEO of URS Corp., an energy industry heavyweight that made $9.2 billion in revenue in 2009. There’s Richard Kramlich, a cofounder of a Menlo Park venture capital firm that controls $11 billion in “committed capital.” And then there’s Mike Latham, CEO of iShares, which traffics in pooled investment funds worth about $509 billion, according to a BusinessWeek article.

There’s also an honorary branch of ACOC composed of elected officials including House Minority Leader Nancy Pelosi, Gov. Arnold Schwarzenegger, Sen. Dianne Feinstein, and others. Their role is to help the Cup interface with various governmental agencies to control air space, secure areas of the bay exclusively for the event, set up international broadcasts, and bring foreign crew members and fancy sailboats into the United States without a hassle from immigration authorities.

ACOC is expected to raise $270 million in corporate sponsorships for the America’s Cup. That money will be funneled into the budget for ACEA. It’s unclear whether the $150 million ACEA is required to invest in city piers will be derived from ACOC’s fund drive.

The city also anticipates that ACOC would raise $32 million to help defray municipal costs. “However,” the Budget & Legislative Analyst report cautions, “there is no guarantee that any of the anticipated $32 million in private contributions will be raised.”

A seven-member board, chaired by sports management executive Richard Worth, will direct the ACEA, according to Newsom’s economic advisors, but the other six seats have yet to be filled. ACEA’s newly minted CEO is Craig Thompson, a native Californian who previously worked with a governing body for the Olympics and has helped coordinate major sporting events internationally. In an interview with sports blog Valencia Sailing, Thompson provided some insight on why major corporations might be inspired to donate to the cause. Basically, the Cup is the holy grail of networking events.

“It’s a very difficult economic situation we are going through, and it’s not the best time to be looking for sponsors for a major event,” Thompson acknowledged. “On the other hand, the America’s Cup is one of the very few activities … that offer access to really top-level individuals in terms of education or economic situation. The America’s Cup is a unique platform for a lot of companies that want access to those individuals that are very difficult to reach under normal circumstances. I can tell you for example that Oracle is very pleased with the marketing opportunity the America’s Cup has presented to them. They invite their best customers and are very successful in turning the America’s Cup into a platform for generating business. The same thing can be true for a lot of different companies that need access to wealthy individuals.”

But should San Francisco taxpayers really be subsidizing a networking event for the some of the business world’s richest and most powerful players?

 

TRANSFORMING THE WATERFRONT

Over the past four months, Newsom’s Office of Economic and Workforce Development (OEWD) has been negotiating with race organizers to hash out a Host City Agreement outlining the terms of bringing the America’s Cup to San Francisco.

The proposal will go before the Board of Supervisor’s Budget & Finance Committee on Dec. 8, and to the full board Dec. 14. A final decision on whether San Francisco will host the race is expected by Dec. 31. ACEA and ACOC will each sign onto the agreement with the City and County of San Francisco.

From the beginning, the event was envisioned as “the twin transformation,” according to OEWD — the America’s Cup would be transformed by attracting greater crowds and heightened commercial interest while San Francisco’s crumbling piers would be revitalized through ACEA’s $150 million investment in port infrastructure.

The plan paints downtown San Francisco as the “America’s Cup Village” during the sailing events, and a study produced by Beacon Economics estimates that the financial boost would come primarily from hordes of visitors flocking to the event — more than 500,000 are expected to attend. The city expects a minimum of 45 race days, including one pre regatta in 2011 and one in 2012 (or two in 2012 if the one in 2011 doesn’t happen), a challenger series in 2013, and a final match in 2013.

The transformation of the city’s waterfront would be dramatic. In addition to the rent-free leases for Piers 30-32, 50, and Seawall Lot 330, ACEA would be granted exclusive use of much of the central waterfront, water, and piers around Mission Bay, and water and land near Islais Creek during the course of the event. Under the Host City Agreement, race organizers would have use of water space spanning Piers 14 to 22 ½; Piers 28, 38, 40, 48, and 54, a portion of Seawall Lot 337, and Pier 80, where a temporary heliport would be sited.

Seawall Lot 330, a 2.5-acre parcel valued by the Port at $33 million, lies at the base of Bryant Street along the Embarcadero and has a nice unimpeded view of the bay. Piers 30-32 span 12.5 acres, and Pier 50 is 20 acres.

The Budget & Legislative Analyst’s study predicts that the ACEA could opt to build a 250-unit condo high-rise on Seawall Lot 330, deemed the most lucrative use. Under the Host City Agreement, the city would be obligated to remove Tidelands Trust provisions from Seawall Lot 330, which guarantee under state law that waterfront property is used for maritime functions or public benefit. Tweaking the law for a single deal would require approval from the State Lands Commission, but Newsom, in his new capacity as lieutenant governor, would cast one of the three votes on that body.

The combination of construction, demolition, lost rent revenue, police and transit, environmental analysis, and other event costs would hit the city with a bill totaling around $64 million, according to the Budget & Legislative Analyst study. Since city government would recoup around $22 million in revenue from hosting the Cup, the net impact would be around $42 million. That doesn’t include the potential $32 million assistance from ACOC.

At the same time, the city would stand to lose another $86.2 million by granting long-term development rights to 35 acres of Port property for 66 to 75 years without charging rent, bringing the total cost to $128 million. OEWD representatives played down that loss in potential revenue, saying past attempts to redevelop piers hadn’t been successful because none could handle the upfront investment to revitalize the crumbling piers.

The Host City Agreement has raised skepticism among Port staff and the Budget Analyst that tempered initial enthusiasm for the event. “The terms of the Host City Agreement will require significant city capital investment and will result in substantial lost revenue to the Port,” a Port study determined. Faith in that plan seems to be eroding and it may be scrapped for an alternative plan that’s cheaper for the city.

The Northern Waterfront alternative substitutes Piers 19-29 as the primary location for the event and eliminates the Mission Bay piers from the equation. Under this scenario, ACEA would invest an estimated $55 million, instead of $150 million. In exchange, it would receive long-term development rights to Piers 30-32 and Seawall 330 on “commercially reasonable terms,” according to a Port staff report.

Board of Supervisors President David Chiu requested that the Port explore that second option more fully, and the Port report notes that it would reduce the strain on Port revenue. The Northern Waterfront plan would cost the Port a total of $15.8 million, instead of $43 million, the report notes. Port staff recommended in its report that both the original agreement and the alternative be forwarded to the full board for consideration.

 

PHANTOM BIDS?

Under the competition’s official protocol, Ellison, as defender of the Cup, has unilateral power to decide where the next regatta will be held. Race organizers have said it’s a toss-up between San Francisco and an unnamed port in Italy — though it’s anyone’s guess how seriously a European site is being considered by a team headquartered at the Golden Gate Yacht Club, a stone’s throw from the Golden Gate Bridge.

According to a San Francisco Chronicle article published in early September, Newsom issued a memo stating that San Francisco was competing against Spain and Italy to become the chosen venue. Valencia was said to be offering a “generous financial bid,” and a group in Rome was rumored to have offered some $645 million to bring the Cup to Italian shores, the memo noted. It was a call for the city to present Ellison with the most attractive deal possible to compel him to pick San Francisco.

Speaking at an Oct. 4 Land Use Committee hearing, OEWD director Jennifer Matz told supervisors: “San Francisco was designated the only city under consideration back in July. Now we are competing against the prime minister of Italy and the king of Spain.”

However, the veracity of those claims came into question in mid-November. Daly, incensed that the Mayor’s Office never communicated with him about the Cup despite wanting to hold it in his sixth supervisorial district, launched his own personal investigation. He fired off an e-mail to Team Alinghi, a prior America’s Cup winner, and began communicating with other European contacts until he got in touch with someone in Valencia’s municipal government.

“I got a call back from a representative who basically said I should know something,” Daly recounted. Valencia, his source said, never submitted a bid to host the Cup. At a Nov. 13 press conference, Valencia’s mayor Rita Barbera confirmed this claim, according to a Spanish press report, expressing disappointment that the city had been eliminated from consideration as a host venue. “There was no formal bidding process,” she charged. She also denied reports that any money had been offered.

Meanwhile, the Budget Analyst was unable to find any concrete evidence that other host city bids had been submitted. “We have nothing to confirm that other offers have been made,” Fred Brousseau of the Budget Analyst’s office told the Guardian.

In response to Guardian queries about whether the Mayor’s Office had evidence that Italy had indeed submitted a bid, Project Manager Kyri McClellan of the OEWD forwarded a one-page resolution from the Italian prime minister assuring race organizers that there would be tax breaks, accelerated approvals, and other perks guaranteed if the Cup came to Italy. However, an Italian journalist who looked over the resolution told the Guardian that the document didn’t appear to be a formal bid, merely a response to a query from race organizers.

Daly has his doubts that either Valencia or the Italian port were ever seriously considered. “I think they were phantom bids,” he said, “created by either Larry Ellison or the Newsom administration … to place pressure on the Board of Supervisors.”

A representative from OEWD told the Guardian that officials have no reason to doubt that the European bids, and accompanying offers of money, were real. However, the city wasn’t privy to race organizer’s discussions about possible European venues. A final decision is expected before the end of the year.

Daly hasn’t held back in voicing opposition to the America’s Cup and blasted it at an Oct. 5 Board meeting. “This tacking around Sup. Daly will not get you in calmer waters,” Daly said. “I told myself I was not going to make a yachting reference. But I will bring a white squall onto this race and onto this Cup, and I will do everything in my power starting on Jan. 8 to make sure these boats never see that water.”

 

WIND IN WHOSE SAILS?

The America’s Cup would undoubtedly bring economic benefit to the area and create work at a time when jobs are scarce. Police officers would get overtime. Restaurant servers would be scrambling to keep up with demand. Construction workers seeking temporary employment would get gigs. Hotels would rake it in. Pier 39 would be booming. However, the Budget Analyst report cautioned: “It is unlikely that any labor benefits would remain in the years after the America’s Cup event is completed.”

Certain small businesses would catch a windfall. John Caine, owner the Hi Dive bar at Pier 28, didn’t hesitate when asked about his opinion on the city hosting the Cup. “Please come fix our piers. It’s a shout-out to Larry Ellison,” he said. Caine said he supports the America’s Cup bid 100 percent, and is excited about the boost it could give his business. The Hi Dive would not be required to relocate under the proposal, he added.

At the same time, other small business would be negatively affected, particularly those among the 87 Port tenants who would be forced to relocate to make way for the America’s Cup. The Budget Analyst’s report also notes that retail businesses in the area whose services had no appeal to race-goers might suffer from reduced access to their stores, since crowding and street closures would shut out their customers.

The sailing community has rallied in support of the Cup, and Newsom has received hundreds of e-mails from yachting enthusiasts from as far away as Hawaii and Florida promising to travel to San Francisco with all their sailing friends to watch the world-famous vessels compete.

Ariane Paul, commodore of a classic wooden boat club called the Master Mariners Benevolent Association, told the Guardian that she was excited about the opportunity for the America’s Cup to showcase sailing on the bay. “In the long term, it’s a win-win,” Paul said. “It would be great to have that boost.” As for the financial terms of the deal, she remained confident, saying, “I don’t think that the city is going to let Larry Ellison walk all over them.”

Sup. Ross Mirkarimi is often politically aligned with Daly, but not when it comes to the issue of the America’s Cup. As a kid growing up on the island of Jamestown, a tiny blue-collar community located off the coast of Rhode Island, Mirkarimi learned to sail and occasionally spent summers working as a deckhand. Every few years, the America’s Cup would come to nearby Newport, transforming the area into a bustling hub and bringing the locals into contact with famous sailors. It left an everlasting impression. When the BMW Oracle Racing Team secured the 33rd Cup off the coast of Valencia, Mirkarimi did a double-take when he saw a photograph of the winning team — his childhood friend from Rhode Island was on the crew.

Mirkarimi told the Guardian he supports bringing the Cup to San Francisco because of the economic boost the area will receive — if the Cup continues to return to San Francisco as it did for 53 years in Newport, he said, the city could look forward to a free gift in improved revenue associated with the event, and that could help quiet the tired annual debates over painful budget cuts.

At the same time, he acknowledged that the Budget Analyst report had prompted what he called healthy skepticism. “I think the onus is on the city and Cup organizers to make sure the benefits far, far outweigh the investment,” Mirkarimi said. “This effort is not just about making one of the wealthiest men in the United States that much more wealthy … That can’t be the case,” he said. “It has to be about what will the Cup do in order to be a win-win for the people of San Francisco.” Mirkarimi said he expected scrutiny of the details of the agreement at the Dec. 8 Budget and Finance Committee hearing: “Naturally, in this time of economic downturn … people want to know, what’s the outlay of cost, and what are we going to get in return?” 

Cash not care

Andrew Lam
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Cash not care

sarah@sfbg.com

With the general election just days away, campaign disclosure reports show that downtown interests are spending huge amounts of money to create a more conservative San Francisco Board of Supervisors and to pass Proposition B, Public Defender Jeff Adachi’s effort to make city workers pay more for their pensions and health insurance.

Much of the spending is coming from sources hostile to programs designed to protect tenants in the city, including rent control and limits on the conversion on rental housing units to condominiums. An ideological flip of the board, which currently has a progressive majority, could also have big implications on who becomes the next mayor if Gavin Newsom wins his race for lieutenant governor.

At press time, downtown groups were far outspending their progressive counterparts through a series of independent expenditure committees, most of which are controlled by notorious local campaign attorney Jim Sutton (see “The political puppeteer,” 2/4/04) in support of supervisorial candidates Mark Farrell in District 2, Theresa Sparks in District 6, Scott Wiener in District 8, and Steve Moss in District 10.

Prop. B has also been a big recipient of downtown’s cash, although labor groups have pushed back strongly with their own spending to try to kill the measure, which is their main target in this election.

But the biggest spender in this election appears to be Thomas J. Coates, 56, a major investor in apartments and mobile homes and a demonstrated enemy of rent control. He alarmed progressive groups by giving at least $250,000 to groups that support Farrell, Sparks, Wiener, Moss, and Prop. G, legislation that Sup. Sean Elsbernd placed on the ballot to cut transit operator wages and change Muni work rules.

Although Coates declines to identify with a political party on his voter registration, he donated $2,000 to President George W. Bush in 2004. More significantly, he was the biggest individual donor in California’s November 2008 election, when he contributed $1 million to Prop. 98, which sought to repeal rent control in California and limit the government’s right to acquire private property by eminent domain.

Coates, who is also a yachting enthusiast and sits on San Francisco’s America’s Cup Organizing Committee (ACOC), donated $100,000 on Oct. 20 for Farrell, $45,000 for Sparks, $45,000 for Moss, and $10,000 for Wiener through third-party independent expenditure committees such as the Alliance for Jobs and Sustainable Growth.

The group has already received thousands of dollars in soft money from the San Francisco Police Officer’s Association, the Building Operators and Managers Association, the Golden Gate Restaurant Association, and SEIU-United Healthcare Workers, which supports a high-end hospital and housing complex on Cathedral Hill.

Those downtown groups have spent close to $200,000 on English and Chinese language mailers and robo calls in support of Sparks, Wiener, and Moss in hopes of securing a right-wing shift on the board.

Progressive groups including California Nurses Association, the San Francisco Tenants Union, and the SF Labor Council have tried to fight back in the supervisorial races. While downtown groups spent more than $100,000 promoting Sparks in D6, labor and progressive groups spent $13,000 opposing Sparks and $72,000 supporting progressive D6 candidate Debra Walker.

In D8, progressive groups that include teachers, nurses, and transit riders have outspent the downtown crowd, plunking down $40,000 to oppose Wiener and $90,000 to support progressive candidate Rafael Mandelman. So far, downtown groups have spent about $100,000 to support Wiener.

But in D10, the district with the biggest concentration of low-income families and communities of color, downtown interests spent $52,000 supporting Moss and $5,000 on Lynette Sweet while the Tenants Union was only able to summon $4,000 against Moss. The SF Building and Construction Trades Council spent $4,000 on Malia Cohen.

But that’s small potatoes compared to what downtown’s heavy-hitters are spending. The so-called Coalition for Sensible Government, which got a $100,000 donation from the San Francisco Association of Realtors, has already collectively spent $96,000 in support of Sparks, Wiener, Moss, Sweet, Rebecca Prozan in D8, Prop. G and Prop. L (sit-lie) and to oppose Prop. M (the progressive plan for police foot patrols) and Prop. N (a transfer tax on properties worth more than $5 million).

The Coalition for Responsible Growth, founded by Anthony Guilfoyle, the father of Mayor Gavin Newsom’s ex-wife, Kimberly Guilfoyle (who now works as a Fox News personality), has received $85,000 from the Committee on Jobs, $60,000 from the Realtors, and $35,000 from SF Forward. It has focused on spending in support of Prop. G and producing a voter guide for Plan C, the conservative group that supports Sparks, Wiener, Sweet, and Moss

Coates’ donations raise questions about his preferred slate’s views on tenant and landlord rights. A principal in Jackson Square Properties, which specializes in apartments and mobile homes, Coates is the founding partner of Arroya & Coates, a commercial real estate firm whose clients include Walgreens, Circuit City, and J.P. Morgan Investment Management. In 2008, when he backed Prop. 98, Coates told the San Francisco Chronicle that rent control “doesn’t work.”

Ted Gullicksen, director of the SF Tenants Union (SFTU), which has collectively spent $30,000 opposing Sparks, Wiener, and Moss, is disturbed that Coates spent so much in support of this trio.

“Coates was the main funder of Prop. 98,” Gullicksen explained. “His property is in Southern California. He’s pumping a lot of money into supervisors. And he clearly has an agenda that we fear Moss, Sparks, and Wiener share — which is to make the existence of rent control an issue they will take up in the future if elected to the board.”

That threat got progressive and labor groups to organize an Oct. 26 protest outside Coates’ San Francisco law office, with invitations to the event warning, “Be there or be evicted!”

Sparks, Moss, and Wiener all claim to support rent control, despite their support by someone who seeks to abolish it. “I answered such on my questionnaire to the SFTU, which chose to ignore it,” Sparks told the Guardian via text message. “In addition, I’ve been put out of apartments twice in SF, once due to the Ellis Act. They ignore that fact as well.”

Records show that in May 2009, Moss — who bought a rent-controlled apartment building near Dolores Park in D8 for $1.6 million and he lived there from the end of 2007 to the 2010, when he decided to run for office in D10 — served a “notice to quit or cure” on a tenant who complained about the noise from Moss’ apartment. Ultimately, Moss settled without actually evicting his tenant.

“I read about Coats’ [sic] contribution in Bay Citizen,” Moss wrote in an e-mail to the Guardian. “This donation was made to an independent expenditure committee over which I have no control and almost no knowledge. I have stated throughout the campaign, and directly to the Tenants Union, that I believe current rent control policy should remain unmolested.”

But Moss is with downtown on other key issues. He supports Newsom’s sit-lie legislation and the rabidly anti-tenant Small Property Owners Association, whose endorsement he previously called a “mistake.”

Yet Moss, who sold a condo on Potrero Hill in 2007 for the same price he paid for the entire building in 2001, seems to voice more sympathy for property owners than renters, who make up about two-thirds of city residents. He told us, “Landlords feel that they are responsible for maintaining costly older buildings and that they are not provided with ways to upgrade their units in ways that share costs with tenants.”

Another realm where downtown seems to be trying to flip the Board of Supervisors on a significant agenda item is on health care, particularly the California Pacific Medical Center proposal to build a high-end hospital and housing project on Cathedral Hill in exchange for rebuilding St. Luke’s Hospital in the Mission.

The project has divided local labor unions. UHW supports the project and a slate of candidates that its parent union, Service Employees International Union, is opposing through SEIU Local 1021, which is supporting more progressive candidates. The California Nurses Association also opposes the project and candidates such as Wiener who back it.

“A recent mailer by CNA falsely says that CPMC is closing St. Luke’s and Davies,” CPMC CEO Warren Browner recently complained in a letter to the Board of Supervisors. “We are not. We are committed to building a state-of-the-art, high-quality replacement hospital at St. Luke’s and continuing to upgrade Davies.”

But the CPMC rebuild is contingent on the board approving the Cathedral Hill project. So the CNA mailer focused on what could happen if the city rejects the CPMC project: “We could lose two San Francisco hospitals if Scott Wiener is elected supervisor.”

SEIU-UHW’s alliance with downtown groups and its use of member dues to attack progressive candidates places it at odds with SEIU Local 1021 and the SF Labor Council, which has endorsed Janet Reilly in D2, Walker in D6, Mandelman in D8, and Cohen (first choice) and Chris Jackson (second choice) in D10.

“We’re really disappointed that there are labor organizations that feel they have to team up with Golden Gate Restaurant Association, which is against health care [it challenged the city’s Healthy San Francisco program all the way to the U.S. Supreme Court], and with CPMC, which is working to keep nurses from joining a union,” Labor Council Director Tim Paulson said. “This alliance does not reflect what the San Francisco labor movement is about.”

Paulson said that the Labor Council values “sharing the wealth … So we don’t want Measure B [Jeff Adachi’s pension reform] or K [Newsom’s hotel tax loophole closure, which has a poison pill that would kill Prop. J, the hotel tax increase pushed by labor] or L [Newsom’s sit-lie legislation],” Paulson said.

CPMC’s plan is headed to the board in the next couple months, although Sup. David Campos is proposing that the city create a health services master plan that would determine what city residents actually need. Hospital projects would then be considered based on that health needs assessment, rather than making it simply a land use decision as it is now.

Moss told the Guardian that UHW endorsed him because of his positions on politicians and unions. “I agreed that politicians should get not involved in union politics,” Moss said. “The United Healthcare Workers seem to be a worthy group,” he added. “All they said was that they wanted to make sure that they had access.”

But CNA member Eileen Prendiville, who has been a registered nurse for 33 years, says she was horrified to see UHW members recently oppose Campos’ healthcare legislation. “I was shocked that they were siding with management,” she said.

Prendiville believes UHW is obliged to support CPMC’s Cathedral Hill plan, which is why it is meddling in local politics. In his letter to the board, Browner noted that his company and its parent company, Sutter Health, can’t legally do so directly. “The fact is that CPMC and Sutter Health are 501(c)(3) not-for-profit, nonpartisan organizations, and we neither endorse nor contribute to candidates,” Browner wrote.

“When UHW settled its contract with its members [as part of its fight with the rival National Union of Healthcare Workers], they had to publicly lobby for Cathedral Hill,” Prendiville claimed.

SEIU 1021 member Ed Kinchley, who works in the emergency room at SF General Hospital, is also furious that UHW is pouring money into downtown’s candidates and measures. “UHW isn’t participating in the Labor Council, it’s doing its own thing,” he said.

Kinchley said UHW, which is currently in trusteeship after a power struggle with its former elected leaders, is being controlled by SEIU’s national leaders, not its local membership, which explains why it’s aligned with downtown groups that have long been the enemy of labor.

“Sutter wants a monopoly on private healthcare and people like Rafael Mandelman and Debra Walker have been strong supporters of public healthcare,” Kinchley said. “I want someone who can straight-up say, here’s what’s important for families in San Francisco, especially something as important as healthcare. But it sounds like UHW is teaming up with the Chamber and supporting people who are not progressive.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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