Larry Ellison

Hearing called on America’s Cup “fundraising fiasco” as Mayor Lee talks about scaling back the event

Sasha Cuttler
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Hearing called on America’s Cup “fundraising fiasco” as Mayor Lee talks about scaling back the event

Amid reports that San Francisco taxpayers could be on the hook for more than $20 million in America’s Cup expenses because of anemic fundraising efforts by the America’s Cup Organizing Committee, today Mayor Ed Lee talked about scaling back the event and offering public naming rights to wealthy donors and Sup. John Avalos called for a Board of Supervisors hearing to look into the matter.

Following his monthly question time appearance before the Board of Supervisors, Lee was questioned about the issue by reporters, and he downplayed the idea that the city will go into the hole for its overzealous sponsorship of billionaire Larry Ellison’s big boat race.

“We’re not in the hole, but we will be if we don’t raise enough money. And I don’t want the pressure on the General Fund, and that would end up being an obligation that we have. By the way, while I’m raising, or helping to raise, some $20 million to cover that, I’m also asking all departments now that we have a, relative to what was going to be a larger race, now we don’t have as many boats, the expenses might be off so we have to kind of update it and reduce it. So with the combination of reducing the expense side and then raising some money as we’re doing from the private sector, we’re getting some new traction,” Lee said.

“We still have plans to spend upwards of $30 million to cover all the expenses, and we’re hoping that gets down to much less than that. But my goal right now is to get reports from all the departments about how to reduce their spending on this. I’m still going to try to raise the $20 million with the help of Senator Feinstein, Nancy Pelosi, and Lt. Gov. Newsom,” Lee said.

He also alluded to public goodies that he may offer to wealthy potential donors, including making a passing reference that “we’ve created some ongoing legacies, naming rights in areas that haven’t been named yet, we’ve cleared that with the Port to make sure it’s a very attractive package for them.” But ultimately, he said that city taxpayers are on the hook to pay for the impacts of this race: “This is a financial obligation that we signed on.”

Earlier in the day, the Telegraph Hill Dwellers – which has been active since the America’s Cup was first proposed in trying to ensure the event makes financial sense for the city – sent a letter to the board calling for a hearing and highlighting the ethically dubious actions by city officials that got us into this mess.

That letter follows in its entirety:

February 12, 2013

Supervisor Carmen Chu, Chair

Supervisor David Campos

Supervisor Malia Cohen

Government Audit and Oversight Committee

San Francisco Board of Supervisors

1 Dr. Carlton B. Goodlett Place

San Francisco, CA 94102

Re: Request for Oversight Hearing on America’s Cup Organizing Committee “Fundraising Fiasco”

Dear Members of the Government Audit and Oversight Committee:

As a northern waterfront neighborhood leader who has supported bringing the America’s Cup to San Francisco since Day One, I feel compelled to urge you to take urgent action to begin to restore a profound breach of public trust while there is still time left to salvage this event. 

News reports this week revealed the stunning news that San Francisco taxpayers may have to pay upwards of $20 million to subsidize the America’s Cup[1] despite public commitments stating that the event would not be taxpayer-funded and a signed contract designed to make that happen.[2]  In light of such astonishing news this close to the race, I request that you schedule a public hearing now to get answers to this critical question: what happened and how can we fix it?

Specifically, I encourage you to solicit testimony and an appearance before the Committee from the two individuals most responsible for the current $20 million shortfall out of the $32 million in private fundraising that was committed to prevent the need for taxpayer subsidies:  America’s Cup Organizing Committee Executive Director Kyri McClellan and America’s Cup Organizing Committee Chair Mark Buell.  These are the two individuals whose primary job it has been for the past two years to ensure that the America’s Cup Organizing Committee complied with its fundraising obligations.  Both Ms. McClellan and Mr. Buell have made numerous public statements over the past two years aimed at rebuffing all concerns about their ability to raise the $32 million. 

For example:

1)  “I have every confidence we will meet our obligations,” – Kyri McClellan, 6/13/11[3]

2)  “Yep, we are not running behind in the least bit,” – Kyri McClellan, 9/19/11[4]

3)  “I am confident that all the money will be raised,” – Mark Buell, 1/6/12[5]

4) “I’m busting my ass raising (money) for it.” – Mark Buell, 2/7/12[6]

5)  “we are confident that the agreement we have with the (America’s Cup) Event Authority coupled with our continued fundraising successes will ensure we meet our obligations to the city.” – Mark Buell, 2/7/12[7]

6)  “There is definitely more heavy lifting to be done, but we think we’re well-positioned to do that,” – Kyri McClellan, 2/8/12[8]

The role that Ms. McClellan has played in creating what is being referred to as a “fundraising fiasco”[9] should particularly be evaluated in light of the two ethics laws that were waived by the San Francisco Ethics Commission at the urging of members of the Board of Supervisors to enable her to shift seats across the negotiating table from her previous job working as the Mayor’s America’s Cup deal negotiator on behalf of the City into her private role working for the America’s Cup Organizing Committee.[10]  The twin dangers of reduced accountability and lax scrutiny that stem from this kind of “revolving door” between government and the private sector are precisely what the ethics laws that were summarily waived were put in place to prevent.  The question now must be asked whether the decision to waive ethics rules to allow someone playing such a central role to shift sides deserves a significant part of blame for the problems that have begun to come to light.

As a long-time supporter of the America’s Cup, I hope you will take swift action to get answers and correct the course of the event before it is too late.  Thank you very much for your time and consideration. 

Sincerely,

Jon Golinger

President

Telegraph Hill Dwellers

 

[1] America’s Cup could cost S.F. millions, Matier & Ross, S.F. Chronicle 2/10/13

[2] “[T]he [America’s Cup Organizing] Committee will endeavor to raise up to $32 million over a three year period from private sources, to reimburse the City for a portion of the City’s costs (including, without limitation, costs associated with CEQA review), and lost revenues, and City expenditures required to meet its obligations under Sections 8 and 10 (including resources from the police, and public works departments, the Port, DPT and MTA). The Committee’s fundraising targets for the three year period are $12 million for year one, and $10 million for years two and three.” – Section 9.4, 34th America’s Cup Host and Venue Agreement, 12/14/10

[3] America’s Cup Fundraising is Floundering, NBC News, 6/13/11

[4] America’s Cup reach tax exempt status, KGO ABC News, 9/19/11

[5] America’s Cup organizers hit first fundraising goal, SF Chronicle, 1/6/12

[6] America’s Cup needs ‘significant additional fundraising,’ SF Chronicle, 2/7/12

[7] ‘Significant’ fundraising needed for America’s Cup group, SF Business Times, 2/7/12

[8] Controller:  America’s Cup needs more fundraising to cover city costs, SF Examiner, 2/8/12

[9] City Pushes to Fill Fundraising Gap for America’s Cup, KTVU Ch. 2, 2/11/13

[10] “In order to accommodate McClellan, commissioners agreed to waive two post-employment restrictions for city officials.  The first is a yearlong post-employment communications ban, and the second prohibits former city employees from receiving compensation from city contractors for two years. . . . Asked what would happen if ACOC somehow failed to raise the agreed-upon funds, placing McClellan in the position of having to explain the shortfall or re-negotiate with her former coworkers, Ethics Commission Deputy Executive Director Mabel Ng allowed, ‘If something like that happened, there might be a conflict.’ And what justification was given for waiving the ban on former employees receiving compensation from city contractors? “For that one, in the law itself, it says the commission may waive it … if it would cause extreme hardship,” Ng explained. “There would be a hardship, because … this is a great opportunity for her, and there was a short timeline for her to do it.”  Pressed on that point, Ng confirmed that the “hardship” in this case was the possibility of being barred from a great job opportunity, not the threat of financial impact or job loss. The other issue, Ng said, was that without McClellan serving in that post, the committee’s fundraising effort might not be successful. “It just seemed like, you need to have somebody take charge,” she said. “The committee may suffer without her at the helm. If she were not able to do that, the committee — which plays a very crucial role in this — may not be able to meet its obligations.’” Mayoral staff member to direct America’s Cup Organizing Committee, SF Bay Guardian, 4/7/11

 

 

For $999, you can watch sailing, on public land

Zelda Bronstein
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For $999, you can watch sailing, on public land

Here’s the deal of a lifetime: For $999, you can get a ticket to watch the America’s Cup races. From beachers built on public land. Where the non-wealthy public won’t be allowed.

The America’s Cup Event Authority, run by Larry Ellison, who is the third-richest person in the world, has sent out an email soliciting buyers for this special early deal: Buy now, and you will be guaranteed a “reserved section in a preferred area of the bleachers,” as well as exclusive access to parties and events, and a chance to get your picture taken with the Cup.

Which, by the way, is having trouble raising money — and could leave the city on the hook for as much as $20 million. Which loudmouth critics like Aaron Peskin and Chris Daly warned about from the start. So we’ve gone from the races being a huge economic boon, worth billions to the city, to poor Mark Buell, who has to ask people to give money to underwrite Larry Ellison’s yacht party, saying that even if the city loses money, it will still all be worth it.

Those poor San Francisco plebians who don’t have $1,000 will be able to see the races, but Ellison’s team recommends spending the cash, now: “There will be a section of free-view bleachers,” the Event Authority’s Ryan Carroll told me. “But those seats will be limited, and we expect them to fill up quickly.”

And there may still be some cheaper seats coming; tickets for individual races will go on sale later, and seats at the prelims in June might not cost as much, Carroll said.

Other areas for public waterfront viewing “will be congested,” he said.

Jane Sullivan, marketing director for the America’s Cup Organizing Committee (which is the city’s operation, separate and distinct from Ellison’s), said it’s not neccessary to give Ellison a thousand bucks to see the sailboats whip by at 50 miles an hour: “The entire waterfront will not be filled up and congested,” she said. “There will be ample and lovely free viewing of all the races.”

So let me sum this up: The taxpayers spend $20 million underwriting Ellison’s race. Then Ellison’s team wants us to pay him $999 for the right to sit on a bench on public land and watch. Who does this gentleman think he is? (Oh right: He’s Larry Fucking Ellison.)

 

Who says sailing’s not a spectator sport? Hot America’s Cup action

Andrew Lam
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We brought nautical-themed beer and outfits to Crissy Field for the America’s Cup preliminary races, and had a great view of one of the turning points of the really big boats before the winning sailors aggressively sprayed champagne on each other. I’m not sure how many of the race’s subtleties our fellow spectators were getting, but it was clear the Team Prada had a lot more fans than Team J.P. Morgan. Say what you like about the economic benefits of millionaire’s sporting events in our city, but they are great excuses to wear peacoats, anchor jewelery, and visible chest hair. Arrrr! 

Lost at sea

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Lost at sea

cheryl@sfbg.com

AMERICA’S CUP Clear your mind, if you can, of brawls over San Francisco piers and other obscenely expensive parcels of waterfront real estate. Focus solely on the inevitability of the 34th annual America’s Cup.

Summer 2013, it’ll rip into town, offering self-described “adrenaline sailing at its best” to jet-setting yachting enthusiasts. In 2010, the 33rd contest was won in Spanish waters by Oracle Racing, headed up by billionaire Larry Ellison. In 2013, Ellison plans to defend his trophy as the competition (ironically, dealing with its own financial struggles; the San Francisco Business Times reported March 23 that America’s Cup officials laid off half their staff) makes its San Francisco Bay debut.

Of course, average San Franciscans — often found ransacking their couch cushions to scare up burrito funds — couldn’t give a rat’s ass about an event blatantly catering to the one percent. But they should, and here’s why: unless we want to see all those Top-Siders stride directly to wine country after each day of racing concludes, we need to give the visitors (estimates vary on the numbers: 10,000? 200,000?) a reason to hang out in SF, visit its neighborhoods, and spend money locally.

One idea: organize an arts festival with programming complementary to the America’s Cup races. Such an event would potentially offer a huge boost to the local arts scene.

The most passionate supporter of an America’s Cup arts festival has got to be Andrew Wood, executive director of the San Francisco International Arts Festival. Last fall, he announced the 2013 SFIAF would shift its dates from May, when it usually takes place, to July through September. That way, SFIAF could coincide with the race — and be a component in what he envisions as a much larger, citywide event.

“We first contacted the America’s Cup about including an arts component before they even confirmed San Francisco as the venue,” Wood remembers. “They’ve never really had a strong arts component to the America’s Cup before, but they’ve never tried to do anything like they’re trying to do here.”

He’s referring to this particular race’s unique appeal for “a land-based audience.” Geographically speaking, some America’s Cup races are viewable only to television audiences and anyone who happens to have a boat hanging out within sight of the course; the San Francisco Bay obviously offers far more viewing opportunities for landlubbers.

“If you do either of the two largest sporting events in the world — the Olympics and the World Cup — an arts festival is mandatory. You can’t even bid on the Olympics unless you have a festival that’s going to run alongside it,” Wood explains. “[The event will then] appeal to more people. People will stay in the locale longer and spend more money — [especially important for] the America’s Cup, where there’s only racing for an hour a day.”

Money is always a factor when planning for an arts festival of any size, particularly something large enough to entertain 200,000-ish people.

“We can raise a lot of our own money, but what we need is some type of agreement that says we can go out and raise it as the name ‘America’s Cup’,” Wood says, noting that he’s already broached the subject of fundraising with some of the consulates representing countries with boats entered in the race. He’d like to bring artists from all of the participating countries (so far: Italy, Spain, France, South Korea, New Zealand, China, and Sweden) to San Francisco to perform alongside Bay Area arts groups. His grand vision includes theme weeks for each country revolving around the various holidays that happen to fall within the race dates — for example, France’s Bastille Day, July 14.

 

AN IMPOSSIBLE DREAM?

Wood was optimistic after his first meeting with Mark Bullingham, then the America’s Cup director of marketing, in April 2011.

“Then I jumped into SFIAF in May,” Wood remembers. “When I came back in June or July, he’d resigned. We were never able to get traction with the America’s Cup after that.”

As time for fundraising grows short — and the America’s Cup deal shrinks and evolves as development plans are tinkered with; the latest incarnation was presented to the San Francisco Board of Supervisors March 27 — Wood holds out hope that an arts festival will be included in the deal. A little bit of hope.

“If they let the deal be signed without including an arts component — or even just mentioning ‘Well, we’ll have a future conversation around this’ — then Larry Ellison can do what he wants. Oracle can have some entertainment if they wish, or they can cut the entertainment if they wish,” he says. “The way the actual America’s Cup legislation is written at the moment, the city is going to let the America’s Cup Event Authority escape without having to commit to any type of arts program whatsoever.”

From the city’s point of view, that’s not entirely true. San Francisco’s Office of Economic and Workforce Development acknowledged the importance of having an arts component in a memo titled “America’s Cup Neighborhood Engagement Strategy” presented to the Board of Supervisors February 22, 2012 — though so far, that’s been the only official word on the subject.

“We’re still trying to get our approvals here so we haven’t really moved much beyond [what’s in the memo],” says the OEWD’s Jane Sullivan, Communications Director for the America’s Cup project. “I think what we in the mayor’s office are concentrating on is trying to make sure the economic benefits spread across the city, and probably using the neighborhoods as a focus of how to do that. But certainly that would include the arts component in the neighborhoods and maybe beyond.”

One promising idea outlined in the memo is to use a smart phone app to help alert visitors to neighborhood activities, including arts events.

“There’s an app that exists right now called Sfarts.org that is a project between the [San Francisco] Arts Commission and Grants for the Arts,” Sullivan explains, noting that working with the San Francisco Travel Association would be a way to market the app to visitors.

Though discussions are “ongoing,” Sullivan says the city is focused on “coordination and promotion, and then helping to develop or further develop a robust technology platform to support that.”

When asked if she thinks an official, large-scale arts festival would make its way into the America’s Cup deal, she’s straightforward: “I do not think that’s going to happen.”

 

X GAMES 2.0

Tony Kelly — facilities manager at Bindlestiff Studio, and a longtime participant in San Francisco’s arts and political scenes — believes that arts events are “the only way to save the America’s Cup” in terms of reaping any of the event’s promised neighborhood economic impact.

“It’s not just having arts events, it’s putting them in places to draw people to the neighborhoods,” he says. “If people go to the races in the afternoon, then you draw them out into the neighborhoods for arts events in the evening, then they actually stay in the city longer. They go to restaurants, bars, hotels, and merchants.”

However, he cautions, “If you think this many people are showing up, you better have things for them to do. If you don’t think this many people are showing up, you better create things so that people do show up. Either way.”

He’s concerned about the city’s strategy of promoting existing arts events without offering additional support to arts groups.

“If the city pretends that we have this ongoing international arts festival any weekend of the year, and therefore we’ll just promote what we already have, and that’ll be our festival during the America’s Cup, that essentially works as a budget cut,” Kelly says. “There’s a certain amount of funding that dribbles down to the arts right now. It is what it is. And then they’re like, ‘We’re gonna add this whole other thing, and we hope you guys can add capacity to handle this stuff, because here come all these people. But no, we’re not going to support it at all.’ That’s a classic unfunded mandate. ‘Oh, you can take this on too.'”

Kelly, Wood, and other members of the arts community have brainstormed a hypothetical list of festival events: an America’s Cup-themed parade, allowing Sunday Streets on Market Street throughout the weeks of racing, outdoor musical performances, an art walk along the Embarcadero, and more, tapping into publicly-owned venues around the city. A sample budget was also drafted.

“It is definitely an example of what could be done fairly quickly and efficiently in this year’s budget, if anyone at City Hall chose to do so,” Kelly says.

Unsurprisingly, Wood shares Kelly’s frustration with the city’s let’s-promote-what’s-in-place plan. “San Francisco has this enormous arts infrastructure that it isn’t using properly,” he says. “Why not hotwire the system to create a program of events that would also complement [arts events which are] already going on? There’s been no real effort to try and corral what’s going on and figure out how it fits together, so that’s what we’ve been trying to do.”

Kelly remains skeptical that the America’s Cup will even draw the promised crowds; he suspects its actual impact on the city will more resemble the X Games — which San Francisco hosted in 1999 and 2000 — than an event “as big as multiple Super Bowls.”

He also views the city’s reluctance to support an arts festival as part of a larger, long-standing problem.

“San Francisco is this great, hip, fun, creative city — why is that? It’s because of the artists. But housing prices keep going up, so more artists have to leave,” he says. “However, when there’s an event that’s counting on us to actually deliver this stuff to the neighborhoods, there’s no support for it. Push is coming to shove and has for a number of years now, and this is just one more obvious, obvious example of it.”

The America’s Cup meltdown

Zelda Bronstein
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The America’s Cup meltdown

The America’s Cup Event Authority — the operation that Oracle CEO Larry Ellison set up to run the business side of his personal yacht race — is melting down, laying off half its staff and scrambling around for new leadership as projected revenues continue to slide and the ultimate size and impact of the event remains in question.

The once-glorious event that was going to be almost as big as the Super Bowl and the World Cup is now shrinking, and the billions of dollars that were going to come in are looking more and more dubious. Doesn’t mean it won’t happen; the races will go on, because Ellison’s pride is involved, but attendance may be lower than expected.

And the net gain to the city could be limited. A new report by Budget Analyst Harvey Rose (pdf) notes that if the America’s Cup Organizing Committee doesn’t raise the $32 million that it’s supposed to dredge up, then the city could wind up losing $11 million on the deal.

Here’s the problem with that scenario: Mark Buell, the head fundraiser for the ACOC, has to go to rich people and ask them for money. But the really rich person behind this event, Mr. Ellison, hasn’t chipped in a penny to that fund — and now it appears that money raised by sponsorships will go to pay Ellison back for the money’s he’s spent on his racing team.

Poor Mark. He has to ask people for money to subsidize the sixth richest person on the planet. And if he can’t pull it off, the city ends up with the tab.

Good luck with that.

The struggle for housing money at City Hall

Zelda Bronstein
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The struggle for housing money at City Hall

It’s barely March, and the next election isn’t until June and that’s just primaries and the Democratic County Central Committee, but we just started getting political mail anyway. It’s a piece from the Board of Realtors, denouncing plans for an increase in the real-estate transfer tax “to provide subsidized housing to people who want to live in San Francisco but don’t have the means to do so.” Mayor Ed Lee, the flier says, is backing this “outrageous” plan.

What, exactly, is going on here?

Well, for starters, the mayor is distinctly NOT pushing for an increase in the transfer tax, not right now, anyway. What he is doing is meeting with housing advocates and legislators and trying to come up with a stable source of funding for affordable housing — yes, for families and low-income people, many of them longtime residents who are being forced out by Ellis Act evictions, others of them people who work in the city and would rather live here than commute from Pinole, which everyone with any sense agrees is a good idea.

The problem: For years, San Francisco used Redevelopment Agency tax-increment money for affordable housing. Now that money’s gone, since the governor abolished redevelopment agencies. Actually, the money’s not gone, technically — the increased tax revenue from redevelopment project areas still exists. It’s just that the state is now taking a bunch of it, and other taxing entities like BART and the school district get some of it, and now it’s impossible to send bonds and borrow money against it. So what was once tens of millions for affordable housing is now a few million.

“We might have $20 million a year in the general fund,” said housing activist Peter Cohen. “But that’s compared to the $40 million or $50 million we had in the past, and it still leaves housing short.”

Lee has promised repeatedly to fix that problem, to find a way to make sure that there’s enough money that the nonprofits who build housing can plan and develop for the long term. Right now, it’s being called a Housing Trust Fund, but nobody knows exactly how it will actually work.

Remember: The city’s own General Plan states that 60 percent of all new housing should be available at below market rate. All of the regional growth projections say that San Francisco needs to build more housing — for its own workforce, not just for the rich. (And the local workforce, for all the tech jobs the mayor keeps hyping, is still mostly public-sector workers and service employees, most of whom can’t possibly afford the soaring rents and housing prices in this city.)

A lot of the existing affordable housing money comes from the city’s inclusionary housing law, which mandates that market-rate developers set aside a percentage of their new units (usually 20 percent) for lower-income people. Most developers eschew allowing poor people into their condo enclaves, so they pay a fee into a city fund instead.
But if we’re aiming for 60 percent, and we’re getting (at most) 20 percent, we’re a long ways off. Oh, and the developers are starting to argue that the 20 percent rule is too onerous and they can’t build enough condos for the rich if they have to throw scraps to the poor and middle-class, too.

And some supervisors are squawking about building more housing for the middle class, and right now in a zero-sum game, that means less for low-income people.
This all adds up to a mess for the mayor, and it’s no wonder some advocates are talking about raising the transfer tax — which, after all, is paid by the seller of a residential or commercial building, and while there are absolutely some houses underwater in San Francisco (and there should probably be an exemption in the tax for that situation), overall home prices are rising again, and many, probably most home sales these days involve substantial profit. It’s not a perfect tax, but it’s a tax on a class that is (generally) better off to support a class that is typically not so well off.

Here’s the problem: If the mayor supports a transfer tax, and that’s part of the final package, the realtors and the commericial building owners will no doubt put huge amounts of money into defeating it. That would mean Lee would have to raise a bucket of money and campaign really hard to pass it. But Lee’s demonstrated that he’s not the fighting type; he wants something that nobody serious will oppose. Which is why my sources at City Hall say that he wants the transfer tax off the table.

That could mean that the Housing Trust Fund will be a basic set-aside, a budgetary mandate that a certain amount of money go into a reliable fund for housing. That’s one of the city’s most pressing needs (really, if this becomes a city of just the rich, even those of us who own houses or have rent-controlled apartments won’t want to live here any more. Mayor Larry Ellison? Eeew.) So I’m okay with that. I’m not a big fan of set-asides, but this is the whole future of San Francisco we’re talking about.

So the realtors can take a chill pill — the mayor doesn’t want to get in a fight with you. Sigh.

Sorting out the America’s Cup re-do

Zelda Bronstein
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Sorting out the America’s Cup re-do

I have to say this for Mayor Ed Lee: He’s not so stubborn or egotistical. He’s willing to listen. And when something really, really doesn’t make sense, he’s willing to let it slide.

Not like Gavin Newsom.

If Newsom were still the mayor (ick! gasp!), he’d be desperately trying to keep together the deal that gave five pieces of the waterfront to the sixth richest person on Earth for more than two-thirds of a century. He’d refuse to admit that maybe the promises of vast wealth accruing to the city from what’s really an untested event might be a little lower than projected. He’s be sucking up madly to Larry Ellison, promising him more and more city money if only His Larryness would bestow the greatness of his hotel, restaurant and condo manna upon us poor lowly San Franciscans.

The current mayor has a little more sense. But then, I don’t think Ed Lee spends much time dreaming about the Oval Office.

So now that Ellison’s team realized they weren’t going to be guaranteed enough of a profit on waterfront development and Lee realized that giving away any more of the store, or rushing this through any faster, was bad for the city, we have a deal that’s based on San Francisco hosting a sports event, not on extensive real-estate development on the waterfront. It’s better than it was, and I give the mayor credit for that.

But a few things are worth remembering:

The proverbial devil is in the proverbial details, and right now they aren’t so proverbial. There’s the minor matter of about $15 million worth of upgrades and repairs to the waterfront that’s needed for the race — and the city’s on the hook for it. Right now, it’s not clear where that money’s going to come from.

One option: The city could go back to giving Ellison some property or development rights. The Chron quotes Jennifer Matz, the mayor’s economic development director, saying that the rights to Seawall Lot 330 are still on the table (bad, bad idea). Stephanie Martin, spokesperson for Ellison’s operation, told me there are no long-term development plans included at all. Maybe the city will just pay cash from the General Fund to Ellison (seems unlikely; I’d love to watch that Budget and Finance Committee meeting.) Maybe the Port will sell revenue bonds and pay Ellison out of the projected new income from the event.

Or maybe some other deal that will be bad for the city and good for Larry will emerge, and we’ll all have to fight that one.

I realize that, if the attendance figures are anywhere near what’s projected, the city will still wind up millions of dollars to the good.

But I still don’t understand: Why are we paying Ellison to hold his race here? Yeah, it will bring tourists to the city — but as former Sup. Aaron Peskin points out, we don’t pay the Navy to bring Fleet Week and the Blue Angels to town. If anything, we should be charging these folks for the right to use so much public property for their own commercial gain. (Yes, the America’s Cup involves commercial gain. Ellison does it because he loves yacht racing and likes to win shit, but you don’t think that giant Oracle logo in 80 million pictures in newspapers and on TV isn’t worth a whole lot of money?)

Why isn’t a guy who counts as one of this generation’s great industrialists, with a fortune rivaling the Rockefellers and the Morgans and that gang, donating anything at all to San Francisco? Those old robber barons built libraries and museums and stuff for the benefit of the public. Come on, Larry — step up and help out here. Do the race, defend your Cup, then give something back to the city instead of asking the taxpayers to cover your tab.

PS: I read Randy Shaw’s attack (if that’s what this odd little piece was) on Aaron Peskin, and I wonder — what’s wrong with being a maverick who works from the outside to try to defend the city’s interests? I don’t always agree with Peskin (see: Home Depot) but I can tell you: There are a lot of people inside City Hall who are really, really happy that he’s out there doing what he’s doing. If nobody on the outside was taking on the America’s Cup deal, the city would absolutely be worse than it is. Peskin’s trying to save the city money. Why is that a bad thing?

Here’s what made me really laugh, though: Shaw criticizes Peskin for failing to support Malia Cohen and Jane Kim for supervisor, saying that he could have been mayor if he’d been working for candidates who ended up winning. Huh? Don’t progessives usuall go after pols who sell out their principles for political gain? If Peskin thought that Debra Walker and Tony Kelly would be better supervisors than Cohen and Kim, shouldn’t he be working for them instead of thinking about his own political future?

Odd where Randy Shaw is going these days.

 

 

Dramatic change in the America’s Cup deal

Zelda Bronstein
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25
Dramatic change in the America’s Cup deal

Mayor Ed Lee has announced dramatic changes in the deal for the America’s Cup race, essentially eliminating the massive real-estate development contract with Oracle CEO Larry Ellison.

Under the new agreement, the city will work with Ellison to host the race — but that’s about the beginning and the end of it.

“There is no long-term development,” Stepahnie Martin, spokesperson for the America’s Cup Event Authority, told me.

The previous deal, set for a Board of Supervisors vote Feb. 28, has been scrapped, so there won’t be any board action tomorrow, Judson True, an aide to Board President David Chiu, told me.

That deal would have given the world’s sixth richest person a swath of valuable waterfront property, with 66-year leases and development agreements, in exchange for Ellison investing millions in renovating the aging piers.

But criticism over what some called a huge giveway of public land was diverting discussion of the yacht race and threatened to undermine the city’s ability to serve as the venue host. Some supervisors were demanding more guarantees that the city wouldn’t lose money on the deal, and Ellison’s team was unwilling to budge.

In a Feb. 27 press release, Lee announced that the teams will be building a race village at Piers 27-29 and consolidating the boat launching facilities at Pier 80, on the southern waterfront. The race village will be temporary, and when the yachts leave, Ellison won’t have title to that property.

He won’t have title or development rights at Pier 80, either, and the plan to let him build on Piers 30-32, 26 and 28 as well as a lot across the Embarcadero appears to be dead.

So the America’s Cup is moving back to what it should be — a sporting event, a race on the Bay, and not some bloated development agreement that involves leases lasting more than half a century.

It’s still not clear how this happened — except that the numbers clearly weren’t working out for either side. The scaled-back agreement prevents the city from losing a fortune if the race doesn’t draw the anticipated crowds, and protects Ellison from losing money on waterfront development plans that regulators (including the Bay Conservation and Development Commission) might never have approved.

The city will still pay the ACEA about $16 million to fix a few things necessary to make the race work, and it’s not clear where that money will come from,

Aaron Peskin, a leading critic of the old deal, told me he’s cautiously optimistic. “It sounds promising, we’re getting this event down to the proper size,” Peskin said.

But he said that he hasn’t seen a written agreement “so it’s hard to tell what is and isn’t still in the deal.”

No mattter what the final agreement looks like, it’s clear that Ellison’s control of the future of the central waterfront has been radically reduced. And it’s clear that the deal former Mayor Gavin Newsom cut with Ellison wasn’t going to work for the city.

It also showed something that I’ve seen over and over again in these city deals with private parties: If the public refuses to go along, most of the time the Larry Ellisons of the world — the same people who insist they won’t move an inch and that the deal can’t be changed — will eventually back down.

 

 

What’s wrong with the America’s Cup deal? A lot

Zelda Bronstein
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What’s wrong with the America’s Cup deal? A lot

Let’s start out with a premise that even Larry Ellison’s minions have come to accept: The race is happening here. Too late now to move it to another city. Worst-case scenario, according to Stephen Barclay, the point person for the world’s sixth-richest man: “If we don’t meet those dates, the teams will be forced to relocate to other places around the bay.”

That’s right — the teams will relocate to other places around the bay. The host city will still, for all practical purposes, be San Francisco; the races will happen off SF’s waterfront (where the Coast Guard is willing to allow them and the conditions are right) and the rich tourists will stay here, not in Burlingame or Fremont.

If Ellison decides the city’s not giving him enough, he won’t put up $55 million to fix up some of the waterfront piers. The city may decide that a development deal of some sort with him makes economic sense. But it’s a real-estate deal at this point, not a deal for the race. At least, that’s what the Ellison team seems to be confirming.

And I fear that the real-estate deal that the Board of Supervisors Finance Committee sent forward yesterday, 2-1, is a bad deal for the city.

The terms are really complicated, and it makes my head hurt just trying to figure it all out — and still, the supes are expected to vote on the 120-plus-page document Feb. 28. Here’s what we do know, though:

The supervisors originally came to a deal with the America’s Cup Event Authority back in December. The concept was — and is — pretty straightforward, the same sort of deal the city has done (or, certainly, the Redevelopment Agency has done) many times in the past. In exchange for putting cash into renovating several piers, Ellison’s group would get long-term leases and development rights on the property. The idea: The city can’t afford to fix the piers. Ellison’s organization can. And once the property is renovated, the developer can make back that initial investment, and a profit, by building commercial space, condos and whatever else the Port decides to allow.

In a perfect world, San Francisco (and the state and the feds) would tax the hell out of people like Ellison, and there’d be public money to rebuild the waterfront as public open space, recreational facilities and the like. And wouldn’t that be utterly cool? Wouldn’t this city have the most awesome waterfront in the world?

But no: The only way the piers are going to anything but a place to park cars until they fall into the bay is if some private developer gets the rights to build something that I won’t like.

Supervisors Jane Kim and Mark Farrell, who don’t agree on a lot of things, both agreed with my basic analysis of the politics here: We shouldn’t let the excitement over the prospect of a boat race get in the way of analyzing this for what it is: A financing tool for the Port to get its infrastructure fixed up. Without a private investor, “they just don’t have the capacity to do that,” Kim told me.

So let’s just stipulate for a moment that this is the best, maybe the only way the city can restore the Port. Then it comes down to the real issue: Has the Mayor’s Office negotiated a good enough deal? Is San Francisco getting enough out of this? Or is everyone so hyper-buzzed about fancy carbon-fiber boats in the water (and I admit, they’re pretty cool) and free-spending tourists in the hotels and restaurants that we’re letting Mr. Ellison — who didn’t get so stinky rich by being a weak negotiator — walk away with most of the cookies?

Remember: Ellison’s not doing the city any favors. He’s only fixing up the piers that he will effectively own (as least for most of the rest of this century).

Back in December, the rough outlines looked like this: A corporation set up by Oracle, called the America’s Cup Event Authority, would put $55 million into repairing and renovating piers, then would get  66-year leases and development rights on piers 30-32, 26 and 28, as well as seawall lot 330, across the Embarcadero, which Ellison’s team wants to turn into more condos for rich people. If that’s not enough to pay for Ellison’s investment, Ellison’s heirs or successors get half the rent for the piers for another 15 years. That’s 81 years.

The original deal mandated that the city would collect a 1 percent fee on the re-sale of the new condos. It also had a requirement that Ellison share with the city any profits he made by flipping the long-term leases.

That’s a big deal, because almost nobody in the city actually holds onto development entitlements anymore. A developer wins the right to build an office building — and next week, he or she sells that right to somebody else. It’s almost certain that at some point, Ellison — whose sole goal here is going to be making a profit off city land — will decide that the best way to make money is to cash out. He’ll keep his 66-year leases for a few years, maybe lobby his way to approvals for office, condos, time-shares (gasp! yeah, they’ll do that if it’s legal) restaurants or whatever — then sell the remaining time on the leases, plus the development rights, to somebody else. And because he’s Larry Ellison, he’ll wind up making a nice tidy profit.

That used to be what happened with Port property (see: Pier 39) but lately, the Port’s gotten a bit wiser and has, in some cases, insisted that part of the profit from flipping a lease goes back to the city. In the original discussions, Ellison was going to have to pay the Port 15 percent of any net gains he made from the almost inevitable sale of the valuable leases.

But that’s gone now. After the board approved Newsom’s deal, the former mayor — who was always terrible at negotiation with the rich and powerful and always gave away the store — went back and monkeyed around with it. He and Sup. David Chiu insisted that the changes were just technical, not substantive enough to require a new board vote — but the current deal has no 15 percent cut for the Port, and the 1 percent levy on condo sales only applies after the second owner sells — which will be years down the road.

Then there’s the part where the city has to reimburse Ellison if the cost of renovating the piers exceeds what’s expected (oh, and we have to pay him 11 percent interest, which is about ten times what I get on my bank account; how about you?) There’s no cap on what the city might have to pay. And Ellison gets to develop a new marina.

And while Pier 29 is no longer a part of the deal, the city has to give Ellison $12 million — or rights to a pier to be named later. (Maybe Ellison figures that in a few years the people who opposed Pier 29 development will be out of office and he can convince the new mayor and supervisors to give Pier 29 back. It’s not legally excluded.)

Kim told me she’s going to insist that the final deal include a local-hire provision, which the rest of the board would be crazy not to support (and which Ellison, despite his company’s problems with local labor laws in the past, would be crazy not to accept).

But overall, Kim — who with Sup. Carmen Chu was part of the 2-1 majority sending the package to the full board — told me she thought the city got a good deal. “It took me a while,” she said. “But [Port Director] Monique Moyer convinced me that this was good for them.”

Sup. John Avalos, the dissenting vote on the Finance Committee, isn’t convinced. He’s got a long list of concerns, starting with the fact that he thinks the projected attendance and economic benefits are a bit delusional. “The figures seem farfetched,” he told me. “I’m seeing a lot of pumped up numbers. And those numbers drive whether this is a good deal for the city or not.”

He’d like to see the 1 percent rule apply to the second condo sale, not the third. He’d like to see the Port get 15 percent of the profits from any sale. And he’d like a cap on the reimbursements the city has to give to Ellison.

But here’s the problem: When the development agreement comes before the board, sitting as a Committee of the Whole Feb. 28, it will be hard to put any of that back in the agreement. This is a contract, and while the board can pass a resolution asking for more, in the end, it’s a matter of voting it up or down.

Vote yes and it’s done — more or less as is — although Kim says there will be another chance to make changes down the road, since the board and the Planning Commission will have to sign off on whatever type of development Ellison wants to do. The problem with that scenario? Ellison’s lawyers will wave this development agreement around like a Giants victory towel and proclaim that it binds the city and limits any ability to demand any more changes later. That’s how these people operate.)

Vote no and the ball goes back to Larry’s Court: His group can sit down with the Mayor’s Office and make some changes, or they can walk away (and build their boat sheds in …. where? Oakland? Foster City? Who’s got waterfront that can handle this?)

When the Finance Committee send the package to the full board, Avalos said, “we pretty much lost our ability to influence the agreement. Now we have to decide if we want to call [Ellison’s] bluff.”

PS: One of the lingering issues is whether the America’s Cup Organizing Committee can raise the $30 million-odd that is needed to make the numbers pencil out. If I were a rich person and Mark Buell, the ACOC point person, called me for money, here’s what I’d say:

How much is Larry Ellison contributing?

See, Ellison’s improvements on the waterfront aren’t charity. He’s looking to make a buck off everything he does. In past eras, the great robber baron capitalists would donate civic monuments — libraries and museums and stuff — and by any traditional standard of great wealth, Ellison ought to be writing a personal check for that $30 million. Or at least for some of it.

But so far, he hasn’t given a penny. The sixth richest man in the world isn’t actually donating anything to San Francisco. Yeah, he’s gracing us with his lordly presence, but cash? Nada.

Good luck with that one, Mark.

PPS: This whole concept that the city needs to fix the “crumbling” piers ought to be examined. First of all, nobody’s ever said that Pier 29 was in anything but fine shape. But beyond that, the Bay Conservation and Development Commission considers piers to be bay fill, and in the long term, wants San Francisco to get rid of some of them. “Maybe it’s a good thing if some of the piers fall into the bay,” former Sup. Aaron Peskin told me. “Then we’ll have more leeway with BCDC when we want to fix up some of the others.”

Research assistance by Royce Kurmelovs

Larry Ellison won’t miss $22 million

Zelda Bronstein
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Larry Ellison won’t miss $22 million

If the America’s Cup fundraising committee can’t come up with $32 million, the city’s going to be on the hook for a big chunk of change — as much as $22 million — budget analyst Harvey Rose says. Just for the record, I’d like to point out that the America’s Cup won’t just be an economic bonanza for the city (if it in fact turns out to attract a lot of people) — it will be a huge advertising and public-relations boon for Oracle Corp, which will have its singature logo and the sail of its boat. Larry Ellison, who will be helping skipper the boat, will be all over the news. You won’t be able to read a newspaper or watch the TV news or read anything online about the cup race without seeing the Oracle logo. You can’t buy that kind of exposure for any level of money.

And as far as I know, Ellison hasn’t contribute a dime to this fundraising committee.

For the record — and I’m pretty sure I have the math right — $22 million would be less than one tenth of one percent of Ellison’s net worth.

Larry, for god’s sake: Write out a check.

Ellison wins, SF loses

Andrew Lam
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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.

Guardian editorial: Ellison wins, San Francisco loses!

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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 arguing 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 in to 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 — will 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 a lousy deal for the city.

 

America’s cup: What does Larry get?

Zelda Bronstein
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America’s cup: What does Larry get?

The development agreement for the America’s Cup comes out next week, although the project is already under way. But there’s some concern that the number of visitors (and thus the revenue to the city) might not be as high as projected.

The project EIR is more conservative about the possible number of visitors than city officials had been at first, and now the Bay Citizen reports that “doubts are growing about the number of spectators who will actually come to the city this year and next.” Apparently the prelims in San Diego have been a bit of a bust — and there aren’t as many teams signing up for the challenge.

So here’s the question: If the city winds up taking in less money than expected, does Larry Ellison take a bath, too?

Of course, it’s not that simple: Ellison’s getting a lot from the city, but it’s not based on any revenue the city will get from the cup; it’s based on the investment he’s putting into the port. He’s getting a sweet deal from San Francisco — way too sweet in my mind. The guy’s the sixth-richest person in the world; he doesn’t need all the goodies the city’s handing over, and I’m not sure I want the arrogant, aggressive CEO of Oracle determining the future of a large part of the San Francisco waterfront. But in theory, since he’s renovating property that’s falling apart, he gets something in return.

And, as Jane Sullivan, the spokesperson for the America’s Cup project at City Hall, points out, the fewer the visitors, the lower the city’s costs.

She also told me that “we don’t think the number of competitors will affect the number of visitors,” which is probably true — people will come for the spectacle, and Oracle will hype it beyond imagination, and nobody knows who any of these other teams are anyway. (The one team that might have gotten some press, aside from Oracle, wasn’t allowed to put in an application.)

But here’s the thing: This entire project, and the motivation to give Larry Ellison a bunch of really valuable city property, was the economic impact the cup is supposed to have on the city. The Mayor’s Office has been throwing around numbers like $1.4 billion in economic impact — that’s new jobs, full hotel rooms, packed restaurants, spillover employment benefits — and, of course, more tax revenue to the city coffers.

What it we give away the store to the Oracle pirates and we wind up getting a lot less money than we were hoping for? Nothing against the Cup; I love boats, and I love a big party (although I try to make sure that when the party’s over, I’m not completely broke). But it seems to me that the city’s the only one taking the risk on the downside. Larry gets everything he wants no matter how this all turns out.

We won’t know all the details until we see the agreement, but am I the only one worried about this?

 

But doubts are growing about the number of spectators who will actually come to the city this year and next to watch the races of experimental catamarans. Preliminary races held on 45-foot vessels in San Diego and elsewhere are failing to attract expected crowds or sponsors.

Source: The Bay Citizen (http://s.tt/15upW)

Capitalizing on the Auld Mug

Jesse Hawthorne Ficks
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Capitalizing on the Auld Mug

news@sfbg.com

The latest America’s Cup controversy arose with a complaint filed in state court in New York City on Dec. 12, alleging that the Golden Gate Yacht Club (GGYC), defender of the coveted sailing trophy and orchestrator of the prestigious international regatta in San Francisco, unfairly rejected an African American sailing team’s bid to compete as a defender candidate.

In a move that piqued the interest of close observers in the sailing world, the suit also takes things a step farther by challenging the legitimacy of including lucrative waterfront development deals into GGYC’s December 2010 agreement to host the 34th America’s Cup in San Francisco.

The suit invokes a 159-year-old document, the America’s Cup Deed of Gift, drafted after the schooner America won the treasured Cup — affectionately known as the Auld Mug — in a match off the coast of England in 1851. Executed under the laws of New York since the schooner sailed under the New York Yacht Club, the deed establishes the America’s Cup trust, and sets out guidelines that every recipient of the cup must abide by. The suit holds that accepting the cup made GGYC a trustee under the deed, and “each club holds the Cup as ‘trustee for the benefit of all potential challengers.'”

Because GGYC set up its own America’s Cup Event Authority, which stands to profit from San Francisco real-estate development deals without sharing surplus revenue among competitors, the lawsuit charges that the yacht club violated its fiduciary duties as trustee.

“It is clear that GGYC is strictly forbidden from using its possession of the Cup and its attendant duties as trustee … in a manner that directly benefits itself, any of its members, or any third party,” asserts the complaint, filed by Madison Avenue law firm McDermott Will & Emery LLP. “The law strictly prohibits self-dealing by a trustee.”

 

BLACK SAILING CREW

The lawsuit was filed on behalf of African Dispora Maritime (ADM), a North Carolina nonprofit organization founded by sea captain Charles Kithcart, who developed his skills as a mariner under former America’s Cup sailors and continues to pursue an ambitious dream.

Kithcart says he’s convened a sailing team to compete in the America’s Cup that includes African American Olympian sailors, and held discussions with a prominent Rhode Island yacht designer, David Pedrick, about constructing a qualifying vessel for his team. Pedrick, who’s designed America’s Cup racing yachts before, confirmed to the Guardian that he was willing to work with ADM.

GGYC accepted and later refunded ADM’s $25,000 application fee, but rejected the nonprofit’s proposal to enter the race, saying it wasn’t satisfied Kithcart’s team would have the necessary resources to compete. Kithcart claims to have a fundraising strategy for his America’s Cup bid ready to go, but his anticipated support appears to hinge upon being accepted as an America’s Cup competitor.

“You create a groundswell with the public,” he said. “This is the essence of our organization: It’s going to excite people’s imagination. Money can be generated, and there are people who will fund things.”

Kithcart’s vision extends beyond just racing in the elitist tournament, since that alone “doesn’t fulfill any of the social needs that are not only apparent, but glaring.”

ADM’s mission, he explained, is to train African American youth as competitive sailors, cultivate youth interest in math and science as it applies to nautical skills, and make a splash on the world stage by breaking into a predominantly white sport with a black-led team, á la the Jamaican bobsledders from the film Cool Runnings.

“We can really create inspired minds,” Kithcart said, enthusiastically describing field trips through church youth groups or Boys & Girls Clubs that would educate kids about the history of black mariners and offer the empowering experience of learning to helm a ship. “Our future is the youth.” Moreover, a yacht-building team would be a job-creation engine in tough economic times, he asserted.

The once-debt-plagued GGYC — which rocketed to sailing stardom after billionaire Oracle CEO Larry Ellison joined up, installed his crew members on the board, and clinched the 33rd America’s Cup with his Team Oracle Racing off the coast of Valencia, Spain in 2010 — has approved competitors from France, Spain, Italy, New Zealand, Sweden, China, and Korea for the 34th America’s Cup. The main event, a one-on-one match following all preliminary rounds, is to be held in San Francisco in the summer of 2013.

The foreign teams are known as challengers, but ADM applied to sail as a defender candidate — a U.S. team that would race against Team Oracle in a Defender Series in a bid to represent the U.S. in the 34th America’s Cup.

Under the race protocol drafted by the winners of the 33rd America’s Cup and an Italian team that has since withdrawn as the challenger of record, GGYC stated that it would consider applications from defender candidates. However, it would only accept “those it is satisfied have the necessary resources … and experience to have a reasonable chance of winning the America’s Cup Defender Series.”

Had GGYC accepted ADM’s application to compete, Kithcart’s African American led team would have sailed against Ellison’s Team Oracle crew — a spectacle Kithcart imagines would make fine fodder for national television broadcasts. He remains optimistic that it can happen. “We’re definitely going to get into the America’s Cup,” he told the Guardian in a recent telephone conversation.

That same confidence is conveyed in ADM’s lawsuit. “Indeed, ADM’s application showed that its proposed team quite obviously could beat Team Oracle Racing,” the complaint claims, “and certainly stood a ‘reasonable chance’ of doing so.”

The lawsuit alleges that GGYC ignored Kithcart’s repeated requests to be considered for entry into the competition almost until the deadline last spring, then rejected ADM on an arbitrary and unequal basis compared with its treatment of other competitors.

Three other teams that were accepted as competitors — including Club Nautico di Roma, the challenger of record — have since withdrawn, citing financial problems. The suit suggests these economically troubled teams were accepted as competitors without question even while ADM was rejected, and charges that GGYC made no attempt to determine the status of ADM’s team or fundraising plan.

What it all adds up to, according to ADM’s claim, is breach of contract and a failure to deal in good faith as a trustee. Nor is ADM shy about making demands. The lawsuit asks the court to compel GGYC to accept ADM’s application, reschedule all the planned races in order to hold a Defender Series, cancel the development rights afforded to the Event Authority, and pay ADM in excess of $1 million to compensate for the delay in building its yacht.

 

SO MUCH MONEY

John Rousmaniere, an America’s Cup historian who has authored several books about the sailing competition, regarded ADM’s case with skepticism. He seemed doubtful that GGYC could be forced to accept an application from a U.S. team.

“Golden Gate could invite other U.S. yacht clubs to compete for the right to defend, but it has chosen not to do that. Instead, it’s developing its own boat and crew. This is their right under the Deed of Gift,” he said. “The Deed of Gift is very clear — there is no obligation for another American boat to sail.”

He’s also dubious of the charge that GGYC breached its fiduciary duties as trustee by engaging in self-dealing, an argument that could have far greater consequences for Ellison in the long run. A similar dispute arose when the sailing tournament was held in New Zealand about a decade ago, he said, and the exact meaning of “trust” in the Deed of Gift has been debated before in similar arguments. “I don’t think it’s ever been resolved,” he added.

The lawsuit argues that the cup is held in trust for the benefit of all competitors, and that GGYC violated its duties as a trustee when it set up a real-estate deal benefiting its own interests without sharing the wealth. Under the terms of the Host City Agreement, the America’s Cup Event Authority (ACEA) has the potential to lock in leases and long-term development rights for up to nine piers along the city’s waterfront for 66 years, with properties ranging from as far south as Pier 80 at Islais Creek to as far north as Pier 29, home of the popular dinner theater Teatro ZinZanni.

The Event Authority is a California LLC, whose agent for service of process is listed as ACEA board chairman Richard Worth of Lawrence Investments LLC — a technology and biotechnology private equity investment firm controlled by Ellison.

Under the protocol and in keeping with America’s Cup tradition, competitors will share in any “net surplus revenue” earned by the America’s Cup trust. However, this excludes the commercial and real estate rights granted to ACEA, the private entity controlled by Ellison, which is separate from the America’s Cup trust.

“For the first time in America’s Cup history, it appears that valuable rights generated by a trustee as a result of holding the America’s Cup are being explicitly excluded from the Cup’s net surplus revenue and … being held elsewhere, to the detriment of the competitors,” ADM’s suit alleges.

Rousmaniere says this isn’t the first time a legal argument invoking the Deed of Gift has found its way into court amid an America’s Cup power struggle, and that the issue remains a point of debate. Part from the problem, he believes, stems from the fact that a 21st Century event is governed by a rather vague 18th century document.

“The defender really runs the thing,” he said, referring to GGYC and by extension, the powerful Ellison. The question is, “How much authority is he going to give the challengers?”

“These people have a lot of lawyers working for them,” Rousmaniere observed, referring to GGYC and Ellison’s Team Oracle Racing, which are closely related. “People are taking a big risk here, and they want to be protected. The stakes are so high because there’s so much money involved.”

America’s Cup spokesperson Stephanie Martin referred Guardian inquiries to Tom Ehman, Vice Commodore of GGYC, who communicated with Kithcart about ADM’s application to compete. Ehman, who was taking a holiday in Spain, did not return an email request for comment and could not be reached by phone. However, a statement attributed to GGYC appeared on the blog Sailing Anarchy, which published a report about ADM’s suit.

“GGYC was served today with a complaint filed in the Supreme Court, County of New York, alleging breach of fiduciary duty, among other baseless claims,” the statement noted. “We believe the lawsuit is utterly without merit and that GGYC will prevail.”

Kithcart, meanwhile, is keeping his eye on the prize. “We need to excite our youth and then stand back and get out of the way and see what they create,” he said. “I’m betting they’ll make a movie about this. I’m betting there’ll be books about this. I’m betting this is history. We’re going to be a story.”

Editor’s notes

Andrew Lam
-
0

tredmond@sfbg.com

My gut response to the America’s Cup was always like this: I love a party. I love a big party, and a party that brings lots of visitors and money into San Francisco is a great thing. But you have to remember that at some point the party will be over, and somebody’s got to clean up the mess and pay for the damage.

And right now, in San Francisco, when the party’s over, the big winner will be a multibillionaire named Larry Ellison, and the rest of us will be paying for it.

That said, the party’s going to happen. There may be a little bluster about the Environmental Impact Report, but the 34th America’s Cup race will take place in the waters of the San Francisco Bay, and a whole lot of people will be coming into town to see it.

So we better be ready, and I’m not sure we are.

I read the draft EIR section dealing with transportation and traffic, and it’s kind of crazy. The planners are projecting about 25,000 new vehicle trips a day — and that’s just into San Francisco. Sausalito and the East Bay cities will have their own issues. There are pictures of projected parking areas along the waterfront, including Crissy Field. There are plans to close the Embarcadero, but only the northbound lanes.

Additional Muni service will be able to handle about 1,200 riders a day. That’s way less than five percent of the number of people who are projected to be getting around by car.

So maybe San Francisco should try something radical that would last way beyond the sailing event. Why don’t we see what it would look like if we banned cars from the entire waterfront, closed all the streets and created a real transit-first city — at a time when the whole world will be watching?

No cars at all. Buses for seniors and people with disabilities. Everyone else walks, bikes, or takes a pedicab (that’s a whole lot of jobs, by the way, particularly for young people who can pedal). Could one of the most environmentally conscious cities in the world pull that off? It’s worth a try.

City Hall’s 2012 agenda

Andrew Lam
-
16

EDITORIAL There’s so much on the to-do list for San Francisco in 2012 that it’s hard to know where to start. This is a city in serious trouble, with unstable finances, a severe housing crisis, increased poverty and extreme wealth, a shrinking middle class, crumbling and unreliable infrastructure, a transportation system that’s a mess, no coherent energy policy — and a history of political stalemate from mayors who have refused to work with progressives on the Board of Supervisors.

Now that Ed Lee has won a four-year term, he and the supervisors need to start taking on some of the major issues — and if the mayor wants to be successful, he needs to realize that he can’t be another Gavin Newsom, someone who is an obstacle to real reform.

Here are just a few of the things the mayor and the board should put on the agenda for 2012:

• Fill Sup. Ross Mirkarimi’s seat with an economic progressive. This will be one of the first and most telling moves of the new Lee administration — and it’s critical that the mayor appoint a District 5 supervisor who is a credible progressive, someone who supports higher taxes on the rich and better city services for the needy and is independent of Lee’s more dubious political allies.

• Make the local tax code more fair — and bring in some new revenue. Everybody’s talking about changing the payroll tax, which makes sense: Only a small fraction of city businesses even pay the tax (which is not a “job killer” but is far too limited). Sup. David Chiu had a good proposal last year that he abandoned; it called for a gross receipts tax combined with a commercial rent tax — a way to get big landlords and companies (like law firms) that pay no business tax at all to contribute their fair share. That’s a good starting point — but in the end, the city needs more money, and the new system should be set up to bring in at least $100 million more a year.

• Create a linkage between affordable and market-rate housing. This has to be one of the key priorities for the next year: San Francisco’s housing stock is way out of balance, and it’s getting worse. The city’s own General Plan mandates that 60 percent of all new housing should be available at below-market-rate prices; the best San Francisco ever gets from the developers of condos for the rich is 20 percent. The supervisors need to enact legislation tying the construction of new market-rate housing to an acceptable minimum level of affordable housing to keep the city from becoming a place where only the very rich can live.

• Demand a good community-benefits agreement from CPMC. The California Pacific Medical Center has a massive new hospital project planned for Van Ness Avenue — and so far, CPMC officials are refusing to provide the housing, transportation and public health mitigations that the city is asking for. This will be a key test of the new Lee administration — the mayor has to demonstrate that he’s willing to play hardball, and refuse to allow the project to move forward unless hospital officials reach agreement with community activists on an acceptable benefits agreement.

• Make CleanEnergySF work. A recent study by the website Energy Self-Reliant States shows that by 2017 — in just five years — the cost of solar energy in San Francisco will drop below the cost of Pacific Gas and Electric Company’s fossil-fuel and nuclear mix. So the city’s new electricity program, CleanEnergySF, needs to be planning now to build out both a large-scale solar infrastructure system and small-scale distributed generation facilities on residential and commercial roofs and set the agenda of offering clean, cheaper energy to everyone in the city. The money from the city’s generation can be used to purchase distribution facilities to phase out PG&E altogether.

• Don’t let Oracle Corp. take over even more of the waterfront. The America’s Cup continues to move forward — but at every step of the way, multibillionaire Oracle CEO Larry Ellison is trying to squeeze the city for more. Mayor Lee has to make it clear: We’ve given one of the richest people in the world vast amounts of valuable real estate already. He doesn’t need a giant TV screen in the Bay or more land swaps or more city benefits. Enough is enough.

There’s plenty more, but even completing part of this list would put the city on the right road forward. Happy new year.

Guardian editorial: City Hall’s 2012 agenda

-
20

EDITORIAL There’s so much on the to-do list for San Francisco in 2012 that it’s hard to know where to start. This is a city in serious trouble, with unstable finances, a severe housing crisis, increased poverty and extreme wealth, a shrinking middle class, crumbling and unreliable infrastructure, a transportation system that’s a mess, no coherent energy policy — and a history of political stalemate from mayors who have refused to work with progressives on the Board of Supervisors.

Now that Ed Lee has won a four-year term, he and the supervisors need to start taking on some of the major issues — and if the mayor wants to be successful, he needs to realize that he can’t be another Gavin Newsom, or Willie Brown, mayors who were an obstacle  to real reform.

Here are just a few of the things the mayor and the board should put on the agenda for 2012:

+Fill Sup. Ross Mirkarimi’s seat with an economic progressive. This will be one of the first and most telling moves of the new Lee administration — and it’s critical that the mayor appoint a District 5 supervisor who is a credible progressive, someone who supports higher taxes on the rich and better city services for the needy and is independent of Lee’s more dubious political allies.

+Make the local tax code more fair — and bring in some new revenue. Everybody’s talking about changing the payroll tax, which makes sense: Only a small fraction of city businesses even pay the tax (which is not a “job killer” but is far too limited). Sup. David Chiu had a good proposal last year that he abandoned; it called for a gross receipts tax combined with a commercial rent tax — a way to get big landlords and companies (like law firms) that pay no business tax at all to contribute their fair share. That’s a good starting point — but in the end, the city needs more money, and the new system should be set up to bring in at least $100 million more a year.

+Create a linkage between affordable and market-rate housing. This has to be one of the key priorities for the next year: San Francisco’s housing stock is way out of balance, and it getting worse. The city’s own General Plan mandates that 60 percent of all new housing should be available at below-market-rate prices; the best San Francisco ever gets from the developers of condos for the rich is 20 percent. The supervisors need to enact legislation tying the construction of new market-rate housing to an acceptable minimum level of affordable housing to keep the city from becoming a place where only the very rich can live.

+Demand a good community-benefits agreement from CPMC. The California Pacific Medical Center has a massive new hospital project planned for Van Ness Avenue — and so far, CPMC officials are refusing to provide the housing, transportation and public health mitigations that the city is asking for. This will be a key test of the new Lee administration — the mayor has to demonstrate that he’s willing to play hardball, and refuse to allow the project to move forward unless hospital officials reach agreement with community activists on an acceptable benefits agreement.

+Make CleanEnergySF work. A recent study by the website Energy Self-Reliant States shows that by 2017 — in just five years — the cost of solar energy in San Francisco will drop below the cost of Pacific Gas and Electric Company’s fossil-fuel and nuclear mix. So the city’s new electricity program, CleanEnergySF, needs to be planning now to build out both a large-scale solar infrastructure system and small-scale distributed generation facilities on residential and commercial roofs and set the agenda of offering clean, cheaper energy to everyone in the city. The money from the city’s generation can be used to purchase distribution facilities to phase out PG&E altogether.

+Don’t let Oracle Corp. take over even more of the waterfront. The America’s Cup continues to move forward — but at every step of the way, multibillionaire Oracle CEO Larry Ellison is trying to squeeze the city for more. Mayor Lee has to make it clear: We’ve given one of the richest people in the world vast amounts of valuable real estate already. He doesn’t need a giant TV screen in the Bay or more land swaps or more city benefits. Enough is enough.

There’s plenty more, but even completing part of this list would put the city on the right road forward. Happy new year.

 

 

On Guard!

Andrew Lam
-
1
On Guard!

news@sfbg.com

ORACLE’S DIRTY SECRET

If wealth trickled down from Oracle’s OpenWorld conference in San Francisco last week, very little of it reached a small group of low-wage laborers hired from out of state to set up for a concert hosted as an event highlight on Treasure Island.

Oracle is a prominent Bay Area tech company helmed by Larry Ellison, the billionaire CEO who worked closely with top city officials to bring the America’s Cup sailing regatta to San Francisco.

The Oct. 5 Oracle OpenWorld concert on Treasure Island featured Sting and Tom Petty as headliners. Registration packages for the weeklong tech conference, which drew some 45,000 attendees to San Francisco, ranged from $1,395 to $2,595.

A member of the carpenters union contacted the San Francisco Office of Labor Standards & Enforcement (OLSE) Sept. 16 to formally complain that a construction crew assembling a large seating structure for the event was being paid less than the city-mandated minimum wage of $9.92 per hour, city documents show.

Josh Pastreich, an OLSE official, went to the worksite to interview crew members. Their names were redacted from public records, but Pastreich described them as monolingual Spanish speakers who travel from city to city building seating arrangements for major events.

“Everyone is being paid $8 an hour (except for the supervisors),” he reported in a city document. “Workers generally started at 6:30 am but there was a little confusion about quitting times.” At least one work day lasted 11 and a half hours, according to a timesheet. The workers were hired by subcontractors brought in by Hartmann Studios, an events management outfit working directly for Oracle.

“We made a phone call, and sent them some emails,” OLSE director Donna Levitt explained. “Nobody said, ‘we intended to pay them the [legal] rate,'” but the subcontractors increased workers’ hourly wages to comply with San Francisco minimum wage ordinance requirements, Levitt said. Since the company adjusted the rate immediately, no fines were issued. There were fewer than 20 workers on the project.

OLSE did not correspond with Oracle directly, but spoke to the subcontractors. One was T & B Equipment, a Virginia-based company. “We were not aware of the minimum wage there, but we fixed it before the payroll was done,” a T & B representative identified only as Mr. Waller told the Guardian. Lewmar, a Florida-based subcontractor, assisted with staffing for the job. Oracle, Hartmann Studios, and Lewmar did not respond to Guardian requests for comment.

Since the enforcement agency intervened, the laborers earned $9.92 per hour instead of $8 — still well below the average Bay Area payscale for similar work. Building bleachers is comparable to raising scaffolding for major construction projects, and the prevailing wage for unionized scaffolding erectors in California is $37.65 per hour, or $62.63 when benefits are factored in.

None of the workers were from San Francisco, which likely spurred the carpenters union complaint — Carpenters Local 22 has faced significant losses in membership since the economic downturn due to high levels of unemployment disproportionately impacting the construction sector. Represenatives from Local 22 did not return calls seeking comment.

Boosters of the America’s Cup have hailed the upcoming sailing event as an engine for local job creation, but Oracle’s use of low-wage, out-of-state laborers at its pricey, high-profile OpenWorld event raises questions. While the tech company is a separate outfit from the America’s Cup organizing team, Ellison holds leadership positions at both.

Ellison was named the world’s sixth wealthiest individual in a Forbes profile in 2010, with a net worth of $28 billion. His total compensation last year was listed as $70,143,075. That’s 3,399 times the amount a person earning $9.92 an hour would make in a year working 40 hours every week — before taxes, of course. (Rebecca Bowe)

 

LEE’S TELLING VETO

The Board of Supervisors approved legislation to close a gaping loophole in the city’s landmark Health Security Ordinance on Oct. 4, in the process forcing Mayor Ed Lee to promise his first veto and reveal his allegiance to business interests over labor and consumer groups.

Sup. David Campos sponsored legislation that would prevent SF businesses from pocketing money they are required to set aside for employee health care, seizures that totaled about $50 million last year. These health savings accounts are often used by restaurants who charge their customers a 3-5 percent surcharge, ostensibly for employee health care, instead simply keeping most of the money.

Despite aggressive lobbying against the measure by the San Francisco Chamber of Commerce — which went so far as to threaten to withdraw support for Prop. C, the pension reform measure it helped craft with Lee and labor unions — the Board of Supervisors approved the measure on a 6-5 vote on first reading (final approval was expected Oct. 11 after press time).

But then Lee announced that he would veto the measure, claiming it was about “protecting jobs,” a stand that was criticized in an Oct. 5 rally on the steps of City Hall featuring labor unions, consumer advocates, and mayoral candidates John Avalos, Leland Yee, Dennis Herrera, and Phil Ting.

Lee and Board President David Chiu — who voted against the Campos legislation, along with Sups. Sean Elsbernd, Mark Farrell, Carmen Chu, and Scott Wiener — have each offered alternative legislation that lets businesses keep the money but make some minor reforms, such as requiring businesses to notify employees that these funds exist.

Both Lee and Chiu talk about seeking “compromise” and “consensus” on the issue, but Campos and his allies say it’s simply wrong for businesses to take money that belongs to the employees, to gain a competitive advantage over rivals who actually offer health insurance or pay into the city’s Healthy San Francisco program, and to essentially commit fraud against restaurant customers.

“This money belongs to the workers and it’s something that consumers are paying for,” Campos said. “We have a fundamental disagreement.” (Steven T. Jones)

 

ET TU, DAVID CHIU?

In a press release on Oct. 6, mayoral candidate David Chiu stated his concerns over Mayor Ed Lee’s potentially illegal campaign contributions from employees of the GO Lorrie airport shuttle service. That company benefited from a decision by airport officials in September and then offered to reimburse employees for making $500 contributions to Lee, according to a Bay Citizen report.

“These revelations raise deeply troubling questions that merit a full investigation by state authorities. City Hall cannot be for sale. Pay-to-play politics has no place in San Francisco, and will have no place in a Chiu administration — you can count on that,” he said in the release.

But has Chiu — one of the top fundraisers in the mayoral field — been engaging in a little pay-to-play of his own? That was the question we had after we saw that he had received lots of donations from restaurant owners, whose side he took last week in opposing Sup. David Campos’ legislation to keep them from raiding their employee health care funds.

The Golden Gate Restaurant Association (GGRA) waged unsuccessful legal battles against the Health Care Security Ordinance and lobbied against Campos’ recent reforms of its loophole. And in the latest donation cycle, the GGRA donated the maximum $500 to the Chiu campaign. Other Bay Area food services contributed up to $5,950.

So the question remains, despite Chiu’s posturing against “pay-to play politics”— are these food service companies contributing to Chiu’s campaign because he’s doing their bidding in opposing the Campos measure and sponsoring an alternative that lets them keep most of the money?

When Liane Quan, co-owner of SF’s Lee’s Deli, was asked if the health care legislation was a reason she donated, she said, “Yes, that’s one reason.” She then hesitated to elaborate why. Members of the Quan family associated with Lee’s Deli contributed a total of $1,000 to the campaign.

Maurizio Florese, an Italian-speaking co-owner of Mona Lisa’s Restaurant who contributed $100, didn’t want to talk about his contribution or employee health care. Neither did his wife and co-owner, Filomena Florese, who is also President of Mona Lisa Inc., which manufactures chocolate and pastry products.

In fact, despite leaving messages at seven local restaurants who donated to Chiu, none wanted to talk. But we did finally get ahold of Chiu campaign manager Nicole Derse, who said Chiu has a broad array of supporters and his donations from restaurants had nothing to do with his stance on the Campos legislation.

“There definitely is no correlation at all,” she told us. “Any suggestion to the contrary is ludicrous.” (Christine Deakers)

The America’s cup confusion

Zelda Bronstein
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19
The America’s cup confusion

If the sponsors (and city officials) are right, the America’s Cup is going to be a huge event, attracting hundreds of thousands of spectators, many of whom will want to be on the San Francisco waterfront to watch. But it’s never been clear to me exactly how that’s going to work — how are all those (rich) people who are used to getting around in limos going to travel from their downtown hotels to the viewing areas? If the city wanted to do this right, we should close down the Embarcadero and some of the feeder streets to all vehicles (except ambulances — always needed when rich old people get excited) and force everyone to travel by pedicab. Buy up a fleet of several hundred of the human-powered vehicles and let all the unemployed teenagers get a shot at driving them. Job creation for youth; environmentally sound transportation; potentially fun bumper-car action with well-heeled patrons screaming in fear.


Remember: The f-line, even with improvements, can’t possibly handle the necessary traffic. And the AC types aren’t going to ride the train anyway. No way private cars can all fit without massive gridlock.


So: Pedicabs. My suggestion.


In the meantime, there’s this little problem of 8 Washington.


See, the developer of what would be the city’s most expensive condos ever is planning on excavating 110,000 cubic yards of soil for a massive underground parking garage — right along the Embarcadero, and right during the America’s Cup events. The Draft Environmental Impact Report for 8 Washington indicates that the dump trucks (about 20 big trucks per day, and possibly a lot more) would be using that roadway to get to 101 or 280.


Actually, if activist Brad Paul is correct, there’s no way the developer can excavate that much dirt in the time frame that it’s supposed to happen unless the number of trucks is closer to 300 a day. Imagine all of that happening while 100,000 people are trying to get to the waterfront to watch the show. Oh, and according to the DEIR for the America’s Cup, the Embarcadero will be CLOSED during that period.


The fact is, the 8 Washington project is not only a terrible idea (just what the city needs — more condos for mega-millionaires) but would directly screw up the whole America’s Cup effort. And the amazing thing is that the AC people and the Mayor’s Office don’t seem to be paying attention.


Paul has put together a lengthy critique of the whole mess that makes great reading if you’re into this sort of thing. So I thought I’d just post it all here. Warning: It’s long. Enjoy.


August 15, 2011                                                                                                         


Bill Wycko
Environmental Review Officer
San Francisco Planning Department
1650 Mission Street, Suite 400
San Francisco, CA  94103


Re: COMMENTS ON DRAFT EIR FOR 8 WASHINGTON STREET/
SEAWALL LOT 351 PROJECT    
Case No. 2007.0030E


Dear Mr. Wycko:


I am writing to my provide my comments on the Draft Environmental Impact Report (“DEIR”) for this project, a document that is incomplete, inadequate and in places quite misleading. I’ve organized my comments in sections beginning with a detailed discussion of how the project’s construction schedule has been greatly underestimated. This is followed by discussions of the DEIR’s failure to address key Housing and Population issues, misstatements regarding historic obligations related to Golden Gateway, comments on recreation issues, and more.  In general, I believe the DEIR fails to present objective information and analysis, it omits a number of relevant issues that are critical to the ability of public officials to make objective and informed decisions about the project and it is filled with judgments and assertions that are not supported by facts.


The DEIR is incomplete and inadequate in the following areas:


I. THE DEIR CONSTRUCTION SCHEDULE FOR 8 WASHINGTON IS BOTH INACCURATE AND MISLEADING.


The DEIR construction schedule is based on overly optimistic assumptions that are totally unrealistic; the ramifications of these erroneous assumptions need to be carefully considered as they will cascade throughout the project requiring major revisions to the DEIR before it can be considered accurate and complete.


At the bottom of page II.19 it states:
 
      Project construction, including demolitions, site and foundation work,
      construction of the parking garage, and construction of the buildings,
      would take 27-29 months. Assuming that construction would begin in 2012,   
      the buildings would be ready for occupancy in 2014. The first phase of the
      construction would take about 16 months and would include demolition       
     (2 months), excavation and shoring (7 months), and foundation and below
      grade construction work (7 months).


While the DEIR unequivocally states the project will take 27-29 months to construct, from 2012 to 2014, facts provided elsewhere in the DEIR together with current city policies,  the City’s America’s Cup Host and Venue Agreement and basic math indicate that this schedule is not tenable. The remainder of this section provides the data and analysis that lead to the conclusion that construction of 8 Washington will take much longer than 27-29 months, almost TWICE AS LONG, with excavation taking 2.5 to 3 TIMES longer.  


 


Table 1: Requested Changes to the overall DEIR construction schedule


          ACTIVITY             MINIMUM           MAXIMUM


    DEIR’s construction schedule: 27 months    to    29 months  


    Actual excavation schedule:  18 months           22 months
    — DEIR estimate for excavation – 7 months            – 7 months
    + Increased excavation time  11 months      to       15 months 
    + Archeology delays                .5 months      to         2 months
    +  America’s Cup delays                  2.5 months       to         5 months
    +  Weather delays                        .25 months      to         1 months


   ACTUAL CONSTRUCTION TIME 41 months       to      52 months



 
To refute the numbers in Table 1, project sponsors must present additional, verifiable data supporting their unrealistic assumptions, beginning with the claim that the first phase of construction takes 16 months with a mere seven months allocated for excavation/shoring.


A. The DEIR fails to accurately ascertain and analyze the excavation/shoring schedule.


The DEIR states on page II.20 that “approximately 110,000 cubic yards of soil” will be excavated from the site for an underground garage (approximately 90,000 cubic yards) and other foundation work during the seven (7) month “excavation” portion of the projected timeline. It later states excavation will take place 6.5 hours per day with an average of 20 truck trips per day (pg.IV.D.31). Assuming the average dump truck holds 12 cubic yards of dirt (typical payload for a dump truck), that would mean:


      · 110,000 cu. yards/12 cubic yards per truck = 9,166 truck trips


      · 20 trucks/day X 12 cubic yards/trip = an average of 240 cu. yards/day


      · 110,000 cu. yards/240 cu. yards per day = 458 working days for this task


Could this task be completed in seven (7) months as claimed in the DEIR?  NO.


     ·5 working days per week X 52 weeks = 260 working days per year
             – 11 holidays per year
                   249  total working days/year
   


     ·458 days to finish task/249 working days per year = 22 months  (not 7)
     
For this to take 7 months as the DEIR asserts, the following would have to be true:


   · 20 trucks/day X 7 months (145 working days ) = 2,900 total truck trips


   · 110,000 cu. yards/2,900 trucks = each truck must average 38 cubic yards/trip
Empirical evidence exists, however, proving the DEIR’s claim that the excavation portion of the schedule will take seven months is inaccurate and misleading:



             
        CASE STUDY #1: San Francisco General Hospital Rebuild Project


A recent SF General Hospital (SFGH) Newsletter reports the hospital’s contractor just finished hauling 120,000 cu. yards of dirt from the 45’ deep hole that was dug to build two basement levels and the foundation for a new hospital building. This is as close as anyone is likely to get to replicating what 8 Washington proposes, a three level 40’ deep underground garage accounting for most of the 110,000 cubic yards of dirt that must be removed from the site. 


A call to the SFGH Rebuild office revealed their excavation process took seven (7) months with an average truck load of 13 cu. yards per trip. How was that possible?


“The average truck load was 13 cubic yards. Some days we had
over 300 truck loads hauled in one day. This volume was possible
through use of a paved drive that allowed trucks to enter the side, be
loaded up then tires washed to prevent dirt on road causing storm-            
water pollution and dust.”


The SF General site is just a few blocks from U.S. 101 with direct access via Potrero Ave., thus minimizing potential traffic conflicts. The 8 Washington site will require driving long distances on city streets including “The Embarcadero, Harrison Street, and King Street… likely the primary haul and access routes to and from I-80, U.S. 101, and I-280 (pg. IV.D.31).” Imagine 300 trips a day on one of these streets.


 


        
               CASE STUDY #2: SF PUC’s New Hetch Hetchy Reservoir Tunnel


A recent Oakland Tribune story (4/8/11) describes construction of a new 3.5-mile tunnel designed to protect the water supply from SF’s Hetch Hetchy reservoir from major earthquakes by boring a 2nd, state-of-the-art tunnel from Sunol to Fremont alongside the existing 81-year-old Irvington Tunnel. The article states:


      “By the time the New Irvington Tunnel is completed in 2014, crews will have
        excavated about 734,000 cubic yards of material—the equivalent of 61,000
        dump-truck trips, said officials with the SF Public Utilities Commission.”


Dividing 734,000 cubic yards of soil by the 61,000 dump truck trips that the PUC says are necessary equals 12 cubic yards per truck trip. Given this job’s overall size and $227 million budget, it would seem to confirm the fact that the most efficient excavation equipment for the 8 Washington site will be 12 cubic yard dump trucks.



In light of these facts and the analysis provided above, the only way 8 Washington could meet its proposed seven (7) month excavation schedule would be to:


a) schedule up to 300 TRUCK TRIPS A DAY, over 10 TIMES the average number of trips per day (20) stated in the DEIR and 3 TIMES the absolute maximum of 100 truck trips per day (pg. IV.D.31)  along the Northeast Embarcadero during a period of time that directly overlaps with the major America’s Cup events and activities, something specifically prohibited by the City’s America’s Cup Host and Venue Agreement ,        


         OR


b) average 38 cubic yards of dirt per truck trip, 3 TIMES the average truck payload of both the PUC’s Irvington Tunnel project and SF General Hospital’s 120,000 cubic yard excavation project—assuming that 38 cubic yard trucks:  a) exist in sufficient quantity in   the Bay Area, b) would be available during that period of time described and c) would be allowed on The Embarcadero, Harrison St., King St., Washington St. and Drumm St. by     the City. [see photo comparison of 12 cubic yard vs. 30 cubic yard trucks below]


Unless the project sponsor can demonstrate that one of these two highly unlikely scenarios is possible, then the EIR must reanalyze a number of impacts (e.g. Land Use, Air Quality, Greenhouse Gases) based on a revised excavation schedule, one that takes 2.5 to 3 TIMES as long as the one described in DEIR to complete excavation work, and this 22 month timeline assumes NO archeological remains are found on site and the City imposes NO stop work orders related to America’s Cup (see below).


This 15-month difference between the excavation period analyzed in the DEIR and the ACTUAL time it will take to complete the excavation (22 months vs. 7 months) is a major deficiency in the DEIR with profound impacts.  For instance, some of the most significant unavoidable negative impacts described in the DEIR involve degraded air quality both during and after construction. Adjusting the environmental analysis to reflect how long excavation will actually take means significant air quality impacts related to excavation (with the greatest detrimental effect on seniors, children and people exercising) will persist for 2.5 to 3 TIMES LONGER than described in the DEIR.  This flaw also requires significant revisions to other sections of the DEIR.


In light of this new information, the next draft of the EIR must contain an analysis of    this longer overall construction period—two months for demolition; a range of 18 to 22 months for excavation (not seven months); a built-in range of time for the shutting down of the site when archeological artifacts are uncovered, documented and extracted (something the DEIR’s archeology consultant states is “likely” ); and the building construction period. Finally, given these overly aggressive excavation schedule estimates, all other estimates for later construction phases must now to be cross checked for accuracy by independent contractors (e.g. not working for 8 Washington developer    or the source of the prior DEIR excavation estimate).


B. The actual construction timeline for 8 Washington will be 41-52 MONTHS. 
If the project sponsors disagree with this assessment, they must provide the Planning Department with much more detailed information on how they expect to achieve a shorter construction period given the restrictions described in the DEIR itself as well as mathematical analysis described above. For instance,


– Did the developers err when they reported that the average number of truck
   trips per day would be 20 as analyzed in the DEIR?  If so, what number do they 
   choose to use now and how does that impact various aspects of the DEIR analysis
   such as air quality, conflicts with pedestrians, MUNI and America’s Cup, etc.. 


– Does the developer plan to raise the limit of truck trips per day from 100 (as
   per the DEIR) to 300 truck trips per day? If so, how often will this happen and 
   how will these changes impact various aspects of the previous EIR analysis (e.g. air
   quality, traffic/transit/pedestrian conflicts, America’s Cup)?


– Does the developer plan to lengthen the average workday or work six days a
   week? If so, how often and how would this impact the previous DEIR analysis?
   NOTE: The DEIR construction schedule (27-29 months) was not predicated on the
   trucks operating 6 days a week EVERY WEEK. But even if the developer ran dump  
   trucks 6 days a week for the ENTIRE excavation period it would still take TWICE AS
   LONG as the DEIR states to remove 110,000 cubic yards of dirt .


– Where is the project sponsor planning to route 100 to 300 trucks a day as they
   leave the site, particularly during the various America’s Cup trials (2012) and
   finals (2013) when vehicular traffic will be severely limited or prohibited?
   Washington Street? The Embarcadero? Drumm Street? Clay Street?, where exactly?


– Have the developers located a source of 30+ cubic yard trucks and secured
   city permission to use them on the specific streets described in the DEIR?
   It seems fair to assume the SF General Hospital’s excavation contractor would have
   done this if it were possible (and the SF PUC’s Irvington Tunnel contractor). See the  
   three photos below to get a sense of the size difference between a typical 12 cubic yard
   dump truck and the type of tractor-trailer rig required to carry 30 cubic yards or more.



As the questions and examples (SF General Hospital) above demonstrate, the DEIR’s claim that 110,000 cubic yards can be excavated in seven months defies the laws of physics and math, not to mention the America’s Cup Host & Venue Agreement between the City and Larry Ellison’s Oracle BMW Racing Team 


 A thorough reading of the DEIR’s Archeology section and the America’s Cup Host and Venue Agreement indicate that additional time must be built into the construction schedule for predictable work stoppages related to both issues.


KNOWN ARCHEOLOGICAL RESOURCES IDENTIFIED ON THIS SITE IN THE DEIR


On page IV.C.12, the DEIR’s archeology consultant, Archeo-Tec, identifies the Gold Rush ship Bethel as located under a portion of the site and states that “If discovered, the Bethel would be the oldest known (and perhaps most intact) archeological example of an early Canadian built ship (Pg. IV.C.3)”. On page IV.C.11, the archeology consultant states “Significant archeological resources are likely to exist at this site”.  The DEIR, goes on to state the proposed project will destroy a portion of city’s original Seawall causing “the largest disturbance of the Old Seawall to date”.


As a result of these DEIR findings, the archeology consultant should now be asked for an estimate of the time required to mitigate the discovery of the Bethel and other likely finds (e.g. original Seawall, other Gold Rush ships, original Chinatown). This “likely” work delay should be built into the construction schedule and stated as a range. For purposes of the matrix below (Table 1) we chose a time of two weeks to two months based on anecdotal information from other similar sites. Archeo-Tec, the archeology consultant, should be able to come up with a more precise estimate.


KNOWN AMERICA’S CUP SCHEDULING CONFLICTS


Based on recent MTA staff presentations on protocols for the America’s Cup, it seems clear that traffic, particularly construction dump trucks, will be banned from Washington Street, Drumm Street and The Embarcadero during major America’s Cup events that include, at a minimum, the America’s Cup World Series warm-up races (July/Sept. 2012), the penultimate Louis Vuitton Cup Series (July/August 2013) and the America’s Cup finals (Sept. 2013).  


This represents a minimum of 2.5 months that must be added to the construction schedule, something the DEIR authors should have included if they had read the America’s Cup DEIR which states there are 9+ weeks of races associated with this event in 2012/2013. The extra few weeks added to the low end range in Table 1 (below) are there to accommodate last minute weather delays and various large non-racing events held along the waterfront that will require closure of The Embarcadero, Washington Street, Drumm Street, etc.


Table 1 below lays out a more credible and realistic construction schedule based on the factors described at length above, taken directly from the DEIR or readily available from the city (e.g. America’s Cup DEIR) and the America’s Cup Host and Venue Agreement.


 
Table 1: Requested Changes to the overall DEIR construction schedule


          ACTIVITY             MINIMUM           MAXIMUM 


    DEIR’s construction schedule: 27 months    to    29 months  


    Actual excavation schedule:  18 months           22 months
    — DEIR estimate for excavation – 7 months            – 7 months
    + Increased excavation time  11 months      to       15 months 
    + Archeology delays                .5 months      to         2 months
    + America’s Cup delays                   2.5 months        to         5 months
    + Weather delays                        .25 months      to         1 months


   ACTUAL CONSTRUCTION TIME 41 months       to      52 months


To refute these numbers, the project sponsors must not only present a verifiable and detailed plan to remove 110,000 cubic yards (9,167 truck trips) in seven months that the City has signed off on but also produce a letter from the City and Oracle BMW Racing granting a waiver from Section 10.4 of the America’s Cup Host and Venue Agreement that would allow 20 to 300 trucks a day to drive along The Embarcadero, Washington Street   or Drumm Street during major America’s Cup events in 2012 and 2013.


D. Significant Transportation and Energy issues that were not addressed in DEIR.


More specific information related to the construction process needs to be provided and analyzed in the EIR, particularly regarding the far reaching impacts of those 9,166 dump truck trips, impacts that go beyond the immediate Northeast Waterfront.


The DEIR states “While the exact routes that construction trucks would use would depend on the location of the available disposal sites, The Embarcadero, Harrison Street, and King Street would likely be the primary haul and access routes to and from I-80, U.S. 101, and I-280”. At a minimum, The EIR needs to include information on where the two or three most likely disposal sites are located, based on recent experience (SF General Hospital excavation) so that one can analyze the extent of potential conflicts on the Bay Bridge or 101 South where other trucks will be transporting dirt to and/or from the Transbay Terminal project, Hunters Point Shipyard, Mission Bay, Treasure Island, etc. Without this information, the City could find itself creating significant traffic conflicts on the Bay Bridge or highway 101 that greatly increase air quality, traffic and transit problems without having analyzed these potential impacts in a flawed EIR.


Simply saying “While the exact routes that construction trucks would use would depend on the location of the available disposal sites” isn’t adequate or acceptable. Assumptions must be made regarding most likely disposal sites and routes to those sites and what additional cumulative impacts these routes (and 9,166 trucks) will create. The EIR must provide a MAP of the route to be used for hauling soil, all the way from the departure point at 8 Washington to the final destination(s) with an explanation of where trucks will drive and what restrictions there are on hours, size of payload, safety, etc. for the various streets, highways and bridges they will travel on. If the options include trucking the soil to San Francisco’s southern waterfront to transfer it to barges, then this needs to be disclosed and analyzed, including the potential routes and destinations of those barges.
In addition, to accurately compare the environmental impacts of the project sponsor’s ‘Preferred Project’ to the “No Project” alternative (energy consumption, traffic impacts, air quality degradation, etc.), one needs to know not only the destination of the approximately 9,166 dump truck trips but also the average miles per gallon of a typical dump truck. For instance, if the final destination for the soil was 100 miles away and a typical dump truck averages 8 miles per gallon of diesel fuel, then:



      9,166 truck trips X 200 miles per round trip = 1,833,200 miles for all dump trucks;


      1,833,200 gallons/8 MPG = 229,150 gallons of diesel fuel that would be burned. 


    
In other words, the city’s choices would be:



     229,150 gallons of diesel fuel used to transfer 110,000 cubic yards 1,833,200 miles


VS.


    ZERO (O) gallons of diesel fuel used if the NO PROJECT alternative were approved.


 


E. Importance of accurate, detailed information re: the construction process.


Given the above discussion, it is clear that the construction schedule set forth in the DEIR is inaccurate at best and has led, in many cases, to the significant understating of major negative impacts associated with this project. The lack of a detailed discussion of some of the key aspects of the construction process, e.g. the route and destination of 9,166 dump trucks, is also highly problematic.


Without a complete and thorough analysis of the impacts of a of an overall construction schedule that is TWICE AS LONG as the one analyzed in this DEIR, city officials will be missing much of the critical information they need to determine whether or not the developer’s ‘Preferred Project’ is necessary, desirable or feasible. A complete and factual analysis of this issue must be included in the next draft of the EIR which, given this and  other major inaccuracies and omissions (see below), should be recirculated in draft form.


 



II. THE DEIR FAILS TO DISCUSS OR ANALYZE ANY CRITICAL HOUSING ISSUES RELEVANT TO 8 WASHINGTON OR UNIQUE ENVIRONMENTAL AND ENERGY IMPACTS THOSE HOUSING ISSUES CREATE. 


A. Impacts of the project on the City’s Housing Needs were Not Analyzed in DEIR.  The DEIR states that potentially significant impacts to Population and Housing will not be discussed because the 2007 NOP/Initial Study found that the proposed project would not adversely affect them. Unfortunately the DEIR lacks the basic information needed to reach such a conclusion and, as we will demonstrate, an objective review of relevant 2008-2011 housing data contradicts this conclusion.


The world, particularly regarding housing, has changed radically since 2007. Relying   on housing and population information from 2007 ignores the financial and housing meltdown of 2008 and is simply indefensible. In addition, back in 2007, the EIR consultants were relying on stale, seven-year-old census data while today they have access to a multitude of fresh 2010 census data. No one can dispute that the housing environment today could not be more unlike the housing environment in 2007.
By relying solely on pre-2008 housing data from the 2007 NOP/Initial Study, this DEIR    lacks any of the basic information needed to conclude that this project would not have adverse effects on Population and Housing and must now revisit and thoroughly analyze these issues.


B. The DEIR fails to analyze how the type and price of housing proposed for
8 Washington determines whether or not it meets the city’s housing needs.


One of the project objectives (Pg II.14) is to “help meet projected City housing
needs.” How is that possible, given the fact that the developer has publicly stated
that these will be “the most expensive condominiums in the history of SF” ? With a
$345,000,000 project cost , 8 Washington’s 165 units will cost $2.0 million a unit
just to build . To secure financing and a ‘reasonable’ profit, each unit will have to
sell for $2.5-$5 million with penthouses selling for $8-$10 million.


Nowhere in the DEIR is ANY of this discussed. There is no analysis of how these
very high sales prices will determine who lives at 8 Washington (e.g. how many San
Francisco families could afford these prices?) and how the incomes of these new
residents ($250,000 to over $1 million/year) will dramatically change a number of
the environmental impacts of the project, with major implications for sustainability
and energy use, among other things.


The final EIR must state the average cost to build each unit and the range of
sales prices expected so that public officials can assess for themselves whether
the proposed condos will or will not  “help meet projected City housing needs.” 


The 2009 Housing Element, signed into law by Mayor Ed Lee on June 29, 2011, states that 61% of the housing need in San Francisco is for below-market-rate housing—serving families making 30-120% of Area Median Income (AMI), and only 39% of the city’s housing need is for market rate housing (120% to 500+% AMI).


As Planning staff and Commissioners know from their Housing Element discussions, the luxury condos proposed for this project are so expensive they will not help the city meet its current unmet housing needs. If this project objective (Pg II.14) is left in the final EIR, it should include a note explaining that the project, as proposed, is unlikely to meet this objective for the following reasons:


Condominiums selling for $2.5 million and more fall into the one segment of the city’s housing market that is currently overbuilt and has historically been over represented in relation to the state’s Regional Housing Needs Allocation (RHNA) goals that underpin the updated 2009 Housing Element of the city’s General Plan. An ABAG report on housing needs vs. housing production in SF (1999-2006) that came out in 2007—a report that should have informed the 2007 NOP/Initial Study for 8 Washington—states RHNA Allocations (Goal), Permits Issued (Permitted) and % of Allocation Permitted (% of RHNA Goal) by income category as follows:



Table 2: SF Housing Production (1999-2006)*


Housing Type  Very Low    Low              Moderate       Market Rate 
by Income    Income Income  Income           Housing
____________________________________________________________________________________________________________
  % of AMI:    21-50%  51-80%  81-120%         120-500+%
  Annual income: [21-50K] [57-81K] [85-123K]   [123K-$1million+]
———————————————————————————————————-
·RHNA Goal (units)   5,244       2,126   5,639                7,363


·Permitted    4,203       1,101      661                        11,474


·% of RHNA Goal     80%      52%       12%             156%


        * from a 2007 ABAG report entitled: A Place to Call Home



A chart like this, showing housing goals by income group (based on RHNA numbers from the State Office of Housing and Community Development), must be included in the DEIR so public officials can analyze what portion of the city’s unmet affordable and middle income housing needs, if any, the proposed project would meet. It illustrates something local housing experts have long known, that the city consistently comes in well above its RHNA goals for market rate condos, and has historically fallen short of its goals in all other categories for affordable housing, the housing that serves the 61% of San Franciscans that cannot afford ‘market rate’ housing.
C. Dramatic changes to the San Francisco housing market since the 2007 NOP/ Initial Study were not acknowledged and analyzed in the DEIR. All the traditional (pre-2007) sources of funding for the city’s affordable housing programs have dried up since the 2008 housing crash. Redevelopment tax increment funds will either be significantly reduced to pay the state to avoid closure of the SF Redevelopment Agency, or they will be eliminated altogether. Proceeds from the state’s $2.8 billion Affordable Housing Bond (Prop. 1C) are all spent. The federal Low Income Housing Tax Credit, a major source of funding for affordable housing, is under attack by House and Senate Republicans and may not survive.


This indicates that San Francisco won’t come close to meeting its pre-2007 affordable housing production levels  until we find a new permanent local source of funding for affordable housing. How long will that take? The DEIR must address this issue.


Another chart that must be included in the DEIR shows the city’s RHNA goals by income category combined with a summary of a recent SF Business Times (6/24/2011) chart showing all San Francisco residential projects under construction, permitted or  in the planning pipeline . Such a chart would look something like Table 3 below:


Table 3: Where does the city need help in meeting its RHNA goals?


          Extremely Low       Very Low            Low             Moderate          Market Rate   
                 Income          Income           Income            Income               Housing
         Below 30% AMI          31-50%            51-80%           81-120%              120-500+% 
      [21K-30K]         [35K-50]        [57K-81K]      [85K-120K]        [120K-$1M+]
____________________________________________________________________________________________________________


RHNA      439/yr.                   439/yr.           738/yr.            901/yr.                    1,632/yr.
Goals:      10.5%        +          10.5%      +      18%        +     22%  =  61%           39%
# of units                    of total        of total
% of goal
                             All Affordable Categories Combined            Market Rate_


Underway:          470 units                 1,557 units


Approved:                  8,751 units             30,878 units


In Pipeline:                   780 units                     4,184 units 
________________________________________________________________________
                          10,000 units             36,619 units 
            or                     or
          21.5% of all units                 78.5% of all units


                        56% of RHNA goals                                300% of RHNA goal
                in all affordable categories                        in market rate category
Some version of Table 3 must be included in the revised DEIR to help public officials determine whether the significant negative environmental impacts this project creates are outweighed by the ‘need’ for the type of housing that 8 Washington provides given the priorities set forth in the Housing Element of the General Plan and what the above-mentioned SF Business Times chart tells us about likely housing production for each segment of the city’s housing needs (from 2011-2014). 


Table 3 demonstrates that in a few years, if nothing changes, the city will have approved and built out 300% of its RHNA goal for Market Rate projects (such as 8 Washington) but only 56% of its RHNA goals for all other housing that serves San Franciscans making 30% AMI to 120% AMI. But given what we now know about the current lack of funding for affordable housing, the exact opposite of what was true in 2007 (when the city had significant amounts of Redevelopment tax increment and other affordable housing funds), many of the affordable housing projects listed by the Business Times are now on hold and unlikely to come on line by 2014. This means the mismatch between market rate (39% of need but 300% of production) and all categories of affordable will be even greater than Table 3 indicates.


To be fair, one could argue that some of the market rate housing on the Business Times chart may not be built soon either given that banks have been reluctant to lend money lately. However, a recent article in the SF Chronicle (8/11/11) entitled “Rents Go Through Roof” indicates that the city’s housing market is roaring back; Dennis Robal, property manager with Chandler Properties, reports “Noe Valley apartments that were $2,000 a month a year ago are now going for $2,400”. These kinds of increases, driven by new renters from the tech sector, are prompting major increases in investments by financial institutions in new rental housing.


Regarding the condo market, the one group of potential condominium buyers that
have not suffered financially from the economic meltdown are the very people who
caused it, the Wall Street investors, derivatives specialists, hedge fund managers,
etc. who are now making record salaries and bonuses. These are some of the people
8 Washington will be marketing to because they have the cash to spend $2.5-$10
million on a second, third or fourth home in San Francisco.


NONE of this housing analysis appears in the DEIR yet including it in the DEIR is
critical to the ability of public officials to make informed, rational decisions on this
project, particularly claims by the developer that this project will “help meet
projected City housing needs”. The information and analysis described above is
necessary to allow city officials and all readers to determine accurately and
objectively what portion of San Francisco’s unmet affordable and middle income
housing needs, if any, 8 Washington would meet.


Each year, as the City assesses how well it is meeting its RHNA (state) housing goals, the one area that has consistently over produced is high-end market rate housing affordable to people making $250,000 to $1 million+ a year.
How does building second, third and fourth homes for this demographic “help the city meet its housing needs?”


The unmet housing needs in San Francisco are for people making from 30%-50% of median income all the way up to 100-120%, not people making $250,000 to $1,000,000+ a year (200-500% or more of area median income). The DEIR needs to discuss the following questions to be considered complete, adequate and accurate, questions such as:


How does this project relate to the objectives, policies and goals of San Francisco’s recently enacted 2009 Housing Element of the General Plan?


What portion of San Francisco’s affordable and middle-income housing needs will this proposed project actually meet?


How many other projects under construction, approved or in the pipeline (see June 24,
2011 SF Business Times chart) will meet the needs of San Franciscans who can afford market rate housing vs. those that meet the needs of  the 61% of SF residents needing below market housing?


What percentage of “residents” of these condos will be using this housing as their primary residence vs. as second, third and fourth vacation homes?


Given that numerous studies show transit use goes down as income goes up,
how likely is it that these new owners will use public transit?


Again, the answer to each of these questions provides critical information that public
officials need to assess for themselves whether the proposed condos will or will
not “help meet the projected City housing needs.” 


Everything that’s happened since the 2008 economic/housing meltdown has made our housing problems worse, something the DEIR doesn’t attempt to analyze, arguing instead that a 2007 NOP/Initial Study—competed a year before the housing bubble burst—absolves it of all such responsibility, an argument that is factually absurd.


D. The DEIR fails to acknowledge, measure or analyze the unique environmental impacts generated by owners who can pay $2.5 to $10 million for luxury condos.


Building housing for this demographic has measurable impacts on transit and energy use that were not included in the DEIR. We know from national studies that low-and middle- income residents are far greater consumers of public transit than people with higher incomes. Imagine how much different public transit use will be when this inverse relationship includes people who can afford $2.5-10 million condos that come with             1-for-1 parking (costing almost $100,000 a space to build).


But a far greater environmental impact than driving private cars was not addressed in this DEIR, an impact resulting from lifestyle differences one can anticipate with some members of this highest of high-end demographics: owning and/or using private jets.


It’s reasonable to assume that five of the 165 condo buyers at 8 Washington (just 3% of   all buyers) are Wall Street hedge fund managers, derivatives traders or venture capitalists using these condos as second, third or fourth homes. It’s also reasonable to assume that these five buyers will use their condos 1.5 times a month on average and commute to and from SF aboard private business jets, a perfectly rational assumption for Wall Street executives making tens of millions in salary and bonuses each year. Why would they fly private jets rather than take Southwest…because they can. The fact that a handful of  people that are this wealthy will buy units at 8 Washington must be factored into any environmental analysis of a project that will explicitly market to this high-end demographic. That analysis must include, among others, the following:


 
                           Table 4: The Jet Fuel Burn Rate for Luxury Condominiums
___________________________________________________________________________
Mid to large size business jets used to fly cross country (e.g. Hawker 800XP, Gulfstream G2/G3, Bombardier Global Express) average 400 gallons of jet fuel per hour and take six hours to fly New York to SF and five hours to fly back for an 11 hour round trip  :


     · 11 hours X 400 gallons per hour = 4,400 gallons of jet fuel per trip
          a typical family car burns 1,200 gallons of gas per year so one flight from
          NYC to SF equals almost four years of driving a typical family car.
               ————————————————————————————————————————————————————————————————————-
       
        ·  1.5 trips/mo. = 6,600 gallons/mo. X 12 mo. = 79,200 gallons of jet fuel/year


        ————————————————————————————————————————————————————————————————————-
Using our example of 5 residents, the numbers over one year and 20 years are:


        ·  5 X 79,200 gallons/per year = 396,000 GALLONS OF JET FUEL A YEAR or
         equivalent to driving a family car 330 years, A THIRD OF A MILENNIUM, per year.


        ·  396,000 gallons/year X 20 years = 7,920,000 GALLONS of jet fuel in 20 years
         equivalent to driving family car 6,600 years, OVER 6 MILLENIUM, in 20 years.



Given these condos cost $2+ million to build and will sell for $2.5 to $8 million or more,    it seems quite reasonable to assume a mere 3% of these buyers—just five (5) buyers out of 165 —will be part-time residents wealthy enough to commute to San Francisco by business jet. If this is a reasonable assumption , then the DEIR must include the mathematical calculations above to show the true energy costs of this project. In fact, it would also be reasonable to assume a few other buyers will use private business jets to commute from LA, San Diego, Denver, etc. The only way to prevent this, forbidding buyers to own or use corporate jets, is of course impossible.
This is just one example of how housing prices—and who lives in that housing—greatly changes environmental impacts and why this analysis must be included in the DEIR for    8 Washington. As condo prices reach $2.5-10 million, it’s reasonable to assume a number of buyers will use them as a second, third or fourth homes and that some of those buyers will travel here by jet, not car or public transit. On the other hand, if units at 8 Washington were affordable or market rate rental or affordable-by-design condos (80%-150% AMI), it’s very unlikely any of its residents would own or use business jets. Price does matter with regard to energy consumption and transit use.


Given these facts, the 8 Washington DEIR must analyze such questions as:


How many solar panels do you need to make up for 396,000 gallons of jet fuel per year?


How many low flow toilets make up for 396,000 gallons of jet fuel per year?


How many double pane windows make up for 396,000 gallons of jet fuel per year?


How many on-demand hot water heaters make up for 396,000 gallons of jet fuel per year?


Looking at the longer term impacts of this excessive consumption of energy resources:


How many solar panels compensate for 7,920,000  gallons of jet fuel over 20 years?


How many low flow toilets make up for 7,920,000 gallons of jet fuel over 20 years?


How many double pane windows make up for 7,920,000 gallons of jet fuel over 20 years?


How many on demand water heaters make up for 7,920,000 gallons of jet fuel over 20 years?


Having this information in the DEIR is necessary for the Planning Commissioners or Board of Supervisors to make informed decisions about 8 Washington, especially when the project sponsor keeps touting it as state-of-the-art, sustainable, LEED certified (at Gold or Platinum level), etc. When added to the project sponsor’s insistence on building a 420-car underground (below sea level) garage, one has to question how one can call this a model of sustainable development or let the DEIR include sustainability as a project objective.


Unless the DEIR seriously and objectively addresses questions of how the price of housing and who lives in that housing impacts environmental sustainability, we risk creating a backlash against things like LEED certification and terms like “sustainability”. They could easily become just another example of slick marketing and “greenwashing”. Everyone agrees that building 10,000 s.f. McMansions in the Sierra Foothills on 2-acre lots—even if they’re LEED certified at the highest level—is NOT sustainable development. Why is it any less absurd to use “green” and “sustainable” to describe $2.5-$10 million condos built as second and third homes for extremely wealthy part-time residents, some of whom commute from their primary residence by private jet?


The DEIR must provide public officials with the data and information they need to analyze all the significant impacts that units this expensive have on the environment. With this information, decision makers might choose to require a much smaller garage or no garage at all (insisting on more efficient use of nearby existing garages). They might also choose to support a much smaller project or no project at all, based on the lack of demonstrable need for this housing type and all the other negative impacts described above. But they cannot make any of these decisions in a rational and objective manner without all the facts, many of which are missing from this DEIR.


E. The DEIR confuses project “objectives” with city mandated requirements with regard to Inclusionary Housing, then fails to discuss any of the relevant issues around this city policy.


The project objective (Pg II.14) that talks about the project’s ability “to help meet
projected City housing needs” reads in full:


 “To develop a high-quality, sustainable and economically feasible
   high-density, primarily residential, project within the existing
   density designation for the site, in order to help meet projected
   City housing needs and satisfy the City’s inclusionary affordable
         housing requirement;” 


Satisfying the city’s inclusionary affordable housing requirement, for this or any market  rate housing development, IS NOT an Objective, and stating it as such is misleading. It is,  in fact, legally mandated by city ordinance. The developer doesn’t have a choice in the matter and it should be stricken from this Objective. However, this reference to inclusionary housing leads one to ask several questions that are never addressed in the DEIR but should be. An Inclusionary Housing section must be added that answers questions such as:


What are the specific requirements for including permanent below market rate (BMR) units in all market rate projects and how many would be required on-site for this one?


Did the developer ever consider building on-site BMR units and if not, why not?


If the developer did consider and reject on-site BMR units, why?


If the developer has decided to pay the in-lieu affordable housing fee, what would it be and how and where (e.g. within a 1-mile radius of the project) would it be spent?


Given that the in-lieu fee charged developers to buy out of providing BMR units on-site is based on construction costs and sales prices for “average” condos, how will the extraordinarily high construction costs and sales prices for these condos impact the in-lieu fee? If it doesn’t impact the fee, would an appropriate mitigation measure be amending the Inclusionary Housing policy so that it does?


Mentioning the inclusionary requirement as part of an objective stating that the project seeks to “help meet projected City housing needs” is misleading and inaccurate. It tries to infer that the funding for 30 affordable units provided by the developer’s inclusionary requirement is helping to meet this objective when, in fact, relying on inclusionary payments to advance the city’s affordable housing goals will only drive the city further   out of compliance with its state mandated RHNA goals. The following example clearly demonstrates the validity of this claim:


TNDC’s proposed affordable family apartment project at Eddy and Taylor Streets is typical of the projects now stalled in the city’s affordable housing pipeline due to the lack of affordable housing funding from traditional sources. But the Eddy and Taylor project is a 150 unit development, not 30 units. For it to go forward, you would need the inclusionary housing funds from FIVE market rate projects like 8 Washington. What would that do to San Francisco’s RHNA goals:


         If:  165 market rate units are needed to fund 30 affordable units,
  Then:   825 market units (5X) are needed to fund 150 affordable units (975 total units).
      
         If:  out of a every 975 new housing units, 825 are market rate & 150 are affordable,
   Then:  for each new 975 units built in SF: 85% are market rate, 15% affordable.


But the 2009 Housing Element of San Francisco’s General Plan (based on the state RHNA goals) calls for 39% OF NEW HOUSING TO BE MARKET RATE (NOT 85%). Relying on Inclusionary Housing off-site payments to fund affordable housing clearly runs counter to the housing production goals set forth in the 2009 Housing Element in the General Plan as well as the RHNA goals for San Francisco established by the state of California. Furthermore, as SB375 Sustainable Development funding criteria begins influencing state funding decisions, by driving our RHNA numbers toward 85% market rate, projects like 8 Washington could jeopardize San Francisco’s ability to apply for and receive state and federal infrastructure and transit funding.


The only way to bring San Francisco’s housing production numbers back into line with the goals in the Housing Element (and RHNA numbers) is to create a new local permanent and dedicated source of funding for affordable housing. These relevant facts regarding the impacts of inclusionary housing must be included in the DEIR.



III. THE DEIR IGNORES THE GENTRIFICATION/DISPLACEMENT IMPACTS OF THIS PROJECT THAT WILL RESULT IN THE LOSS OF HUNDREDS OF RENT CONTROLLED UNITS IN THE GOLDEN GATEWAY BY ENCOURAGING THE FURTHER HOTELIZATION OF ITS 1,200 RENTAL APARTMENTS


The other ‘partner’ in this project is Timothy Foo, who bought Golden Gateway from Perini Corp. about 20 years ago. Only 20% of the 8 Washington site is on Port land, while 80% of the site is on land owned by Mr. Foo and currently occupied by Golden Gateway’s community recreation center. However, Mr. Foo’s only mention in the DEIR is in a footnote to the first sentence of the Introduction which states: “On January 3, 2007, an environmental evaluation application (EE application) was filed by San Francisco Waterfront Partners II (the “project sponsor”) on behalf of the Golden Gateway Center*”. That footnote says “*Golden Gateway Center, Authorization Letter from Timothy Foo, December 27, 2006”).


In addition to violating the original Golden Gateway development agreement that required Perini (and future owners) to preserve the recreation center in exchange for deep discounts in land prices charged by Redevelopment, for some time now Mr. Foo has also been converting rent controlled apartments in the Golden Gateway to short term rental use (e.g. on one floor of a high-rise tower, a third of the units are rented this way). These conversions have been documented by the Golden Gateway Tenants Association, the Affordable Housing Alliance and the San Francisco Tenants Union. While such conversions are not unique to the Golden Gateway Center (see attached Bay Citizen article), they are illegal and violate city zoning, rent control and apartment conversion ordinances.


The DEIR must address this issue by posing the following questions to Mr. Foo and incorporating his answers into the DEIR. He must provide this information because as the owner of 80% of the underlying land that comprises the 8 Washington site, he has had and continues to have a direct financial stake in this project. He must be asked the following questions:


How many of Golden Gateway’s 1,200 rental apartments are currently being used as hotel rooms and/or short-term rentals and/or rented to persons other than those using them as primary residences or directly related to the person residing there (e.g. corporations, business organizations, apartment brokers).


Has Mr. Foo consulted with either the Rent Board or the Planning Department as to the legality of his use of apartments in Golden Gateway as hotel rooms or short-term rentals under applicable city zoning codes, the San Francisco Rent Control ordinance or the city’s Apartment Conversion Ordinance?


Upon receiving and analyzing this information from Mr. Foo, the DEIR must then answer the following questions:


Is the ‘hotelization’ of Golden Gateway and other large apartment complexes likely to increase with the approval of 8 Washington, a development that:


a) builds 165 high-end luxury condos ($2.5 – $10 million each)
 on Mr. Foo’s property—creating a much more upscale
environment adjacent to his Golden Gateway apartments;


b) provides Mr. Foo with $10-15 million (what he’s likely to
be paid for his 80% of the site) that can be used to upgrade
his rent controlled apartments at Golden Gateway in order                             to attract even more higher paying hotel users; and


c) if no mention of these conversions is made in the DEIR, after                     these written comments have been submitted, will send a clear
message to Mr. Foo and others that the City has no intention of
enforcing its own zoning, rent control and apartment conversion
ordinances, thereby encouraging even more conversions.


If conversions like those at Golden Gateway are not stopped soon, the city is at risk of losing thousands of residential apartments in its downtown neighborhoods.


What kind of mitigations would prevent the further hotelization of the Golden Gateway’s 1,200 rent controlled apartments?


With larger apartment complexes such as Golden Gateway, Parkmerced and Fox Plaza, owners get around the current prohibition on renting residential apartments for less than 30 days as hotel rooms (an action that is legally prohibited by the San Francisco Apartment Conversion Ordinance) by leasing them for more than 30 days to third parties (e.g. corporations, apartment brokers). These intermediaries then rent the apartments for anywhere from a day or two to a few weeks to a month or two.


A simple amendment to the Apartment Conversion Ordinance that changes “you cannot rent an apartment for less than 30 days” to “you cannot rent or occupy an apartment for less than 30 days” would prevent Golden Gateway and others from renting apartments for anywhere from a few days to up to four weeks. Preventing 30-60 day rentals would be a more complicated matter.


The DEIR must address how constructing 8 Washington could encourage, help fund and accelerate Mr. Foo’s conversion of the 1,200 units at Golden Gateway from rent controlled apartments to hotel use as well as the impacts this would have on the city’s housing goals as set forth in the San Francisco’s 2009 Housing Element and its RHNA goals. For instance, if we’re converting housing to non-housing (hotel) uses as fast or faster than we are creating new housing units, we will never dig ourselves out of our current housing crisis and that outcome would have catastrophic impacts on the environmental and economic sustainability of San Francisco as a city.


The DEIR must also describe, in detail, the kind of mitigations (see above) that, if enacted, could mitigate the potential impact of losing more that 165 rent controlled apartments at the Golden Gateway, erasing the gain, on paper, of 165 luxury condos.



IV. FREQUENT USE OF THE WORD “PRIVATE” AS A MODIFIER OF THE GOLDEN GATEWAY RECREATION FACILITIES THROUGHOUT THE DEIR  IS BOTH MISLEADING AND INNACCURATE IN LIGHT OF THE RECENT PRIVITIZATION AND FEE STRUCTURES IMPOSED ON THE CITY’S “PUBLIC’ RECREATION FACILITIES AND SWIMMING POOLS.


The current fee structure for public recreation facilities in San Francisco results in situations where the cost of attending ‘public’ pools can often exceed fees charged by    the “private” Golden Gate Tennis & Swim Center (GGTSC).


The use of the term “private” in this context throughout the DEIR appears to be an attempt to justify the loss of GGTSC facilities for the 3-4 years that it would be shut down if the “preferred project” were approved (see section I.A for actual construction schedule) as well as the permanent loss of five of nine tennis courts, the basketball court and the current, family-friendly ground level swimming pools, Jacuzzi and open space.


In the past, the city’s public recreation facilities, including its swimming pools, were  “public” in every sense of the word—open long-hours, open 6-7 days a week and “free” to residents. In recent years, however, the San Francisco Recreation & Parks Department has increased resident user fees, reduced hours and increased the privatization of its facilities in response to ongoing budget deficits. Today, both the ‘private’ Golden Gateway facility and ‘public’ pools are open to anyone, anyone who is willing to pay   the fees that they charge. Neither is free.


A. The DEIR fails to discuss the privatization of the City’s  recreation centers: According to a 7/9/11 SF Chronicle article, the city is now leasing 23 of its 47 recreation centers to outside interests (e.g. nursery schools, private classes) with the city staffing only a dozen (12) of the 47 former “public” recreation centers. Seven (7) of the remaining recreation centers are under renovation and five (5) are vacant, unavailable for any kind of use “because no one has leased them and there is no money for city workers to run them”. Out of a total of 47 city recreation centers, only 12 are staffed by city workers who run programs for residents, many of them for a fee, during reduced days and hours.


The City also runs nine “public” swimming pools in neighborhoods such as North Beach, the Mission, Bayview, Visitacion Valley, etc. These pools used to be open five or six days a week and were free for residents. Today, residents pay $5 for each swim and $7 for adult swim lessons/water exercise. Children under 17 pay $1 per swim and $2 for swim lessons/water exercise ($3 for a swim & a class together).


Active Recreation Facilities: Public vs. Private… is there a difference anymore?


Each time a family of two adults goes to a city pool it costs $10 per visit to swim and up to $14 per visit if they participate in swim lessons or water exercise. If that family went three times a week, it would cost them $120-$168 per month depending upon how many times they took a swim vs. participated in swim lessons/water exercise. That comes to at least $1,440 dollars per year. Additional swim lessons/water exercise classes drive costs of using a “public” pool even higher.


Now imagine a family of two adults living at the Golden Gateway who currently       swim every day at the Golden Gate Tennis and Swim Center. At the city’s North Beach (public) pool, it would cost them $200 a month ($10/swim X 20 days) to swim Tuesday through Saturday (the pool is closed Sunday/Monday) and their schedules would have to match specific windows each day when the pool is available for adult lap swimming. Compare that to the two pools at the Golden Gateway Tennis and Swim Center—one just for swimming laps; one for kids, families and seniors that are open seven days a week for longer hours.


B. Comparative Costs. Because our hypothetical couple live at the Golden Gateway Apartments they automatically receive a discounted membership of about $170  per month ($85 each) to use the two pools, full gym across the street and have the ability to reserve tennis courts at $20 per use. Since the Golden Gateway was built (1960’s), residents have always received discounted membership at this facility, one of two community benefits Redevelopment required, along with Sidney Walton Square, in exchange for entitlements to build both the Golden Gateway (1,150 rental units) and the adjacent Gateway Commons (condominiums). Redevelopment felt both amenities were needed to meet the open space and active recreation needs of what was to become one of the densest residential communities in San Francisco and discounted the land for the GGTSC and Gateway Commons in exchange for the owner maintaining an active recreation facility at the GGTSC in perpetuity.


Even for those who don’t get the Golden Gateway resident discount, memberships to the Tennis and Swim Center that don’t include automatic access to the tennis courts cost about $220 a month to swim 30 days a month, the same price two adults would pay to swim only 20 days a month at the North Beach pool, a facility with no gym and only   one pool and therefore greater restrictions on when they could swim laps. It should also be noted that over 300 “guests” are admitted free to the Golden Gateway recreation facility each month, a total of 3,000 to 4,000 guests each year. We are not familiar with   a similar policy for free guests at the North Beach pool (or any other city pools).


Clearly, the recent privatization and escalating fee structures at the city’s “public” recreation centers/swimming pools have erased any real distinctions between public facilities and private facilities as viewed by local families and residents. But one of          8 Washington’s main justifications for closing the Golden Gateway Tennis and Swim Center for 3-4 years during construction—and downsizing the replacement facility—
is that it is a “private” club maintained for the selfish interests of the few.


Putting aside the fact that 8 Washington’s condos will cost $2 million each to build  and will sell for $2.5 to $5 million each and up (for upper floors), making them unaffordable to 97% of all San Franciscans (talk about catering to “the few”), the issue of who uses the current recreation facilities on this site is an important one that the DEIR must address. The similarities outlined above between today’s Golden Gateway recreation facilities and the City’s current “public” recreation centers/swimming pools contradicts the impression created by the DEIR in its current form with so many derogatory references to GGTSC as a ‘private’ club.


It is imperative that public officials have the information outlined above regarding the current costs of “public” recreation in front of them so they can decide for themselves what distinctions, if any, exist in today’s world between this ‘private’ club and so called “public” alternatives. This information is precisely what an EIR is suppose to provide to officials charged with making these kinds of decisions.


For these reasons, we must insist that you provide—in the Comments and Responses document—a clear, complete explanation of this issue, with a chart (see attached for potential template) that compares the facilities, hours, programs and costs to San Francisco residents of the city’s nine (9) “public” swimming pools with the current Golden Gateway recreation facility fee structure. Without such an analysis critical information will be lacking, information that Planning Commissioners, Park and Recreation Commissioners, Port Commissioners and the Board of Supervisors will clearly need as they assess the validity of the developer’s claims about who is served by the current facilities (and what environmental impacts they have) versus those who’ll be served by the proposed project (and its environmental impacts).


Without this information, it will be difficult for these public bodies to make informed decisions as to whether to grant or not grant the conditional use authorizations, upzonings and dozens of separate approvals and permits needed for this complicated and controversial project to proceed.


V. THE DEIR FAILS TO ADDRESS OR ANALYZE ANY OF THE MAJOR ECONOMIC ISSUES RELATED TO THIS PROJECT, ISSUES THAT HAVE SIGNIFICANT ENVIRONMENTAL AND FINANCIAL IMPACTS ON THE NEIGHBORHOOD AND THE CITY.


Several of the project sponsor’s and the Port’s objectives for this project speak to the “economic” benefits of the project for the developers, the Port and the City. The DEIR and other Port documents talk about the need to develop SWL 351 in order to generate revenue for badly needed Port infrastructure work. But the Port’s financial term sheet for this project is unrealistic, misleading and relies on depriving the city of $32 million in general fund dollars as part of a proposed Infrastructure Financing District.


This section addresses the DEIR’s lack of analysis or scrutiny regarding the ‘alleged’ financial benefits of the project as described in the Port’s Term Sheet for Seawall Lot 351 with San Francisco Waterfront Partners (“Term Sheet”) and how that Term Sheet, if executed, would have very real environmental impacts with regard to transit, open space, recreation, housing and population.  An examination of the Term Sheet demonstrates that the stream of income on which the term sheet’s finances rely cannot be achieved.  An objective analysis of “payments” described in this Term Sheet leads one to a much more pessimistic set of income projections than those presented in the September 23, 2010 Director’s Recommendation to the Port Commission. That report describes three payment sources as follows:


(1)  a land lease with annual payments of $120,000 per year;
(2)  future payments triggered by resale of condos created by the Project;
(3)  a to-be-established Infrastructure Financing District (IFD) that allows
              a portion of growth in property taxes to be reinvested in public facilities;  
 
That third source of funding is particularly troubling since it requires a sizeable appropriation of City General Fund revenues ($32 million) by the Port for its own purposes. We will now examine each of these proposed “payment” schemes to determine how realistic they are as well as the potential environmental and economic consequences they create for San Francisco’s residents and taxpayers:
1.  Lease Payments. It is easy to refute the likelihood of the $120,000/year lease payment for parcels to be used as open space with related facilities.  The second paragraph of Director’s Recommendation (page 5) states: “If engineering and cost analyses deem additional funding is needed to finance agreed upon public improve- ments, the Port agrees to designate some or all of the $120,000 per year park rent to augment financing of these public improvements.”  If the developer produces “engineering and cost analyses” showing “additional funding is needed to finance agreed upon public improvements,” the Port will “designate some or all of the $120,000/year in park rent to finance public improvements,” improvements that the developer is responsible for.  Suddenly this $120,000 of alleged “rent” could become no rent. Is that likely to happen? You be the judge:



A Little Recent History


The developer of 8 Washington is San Francisco Waterfront Partners, a partnership between Pacific Waterfront Partners and CALSTRS, the same partnership that  developed Piers 1½, 3 and 5 across the street. According to the Port’s rent rolls, San Francisco Waterfront Partners makes rent payments for Piers 1½, 3  and 5 of  $41,666.67 per month or $500,000 annually. But 90% of this is wiped out by a rent credit of a $450,000 annual rent credit ($37,500.00 per month). This means that the actual rent for Piers 1½, 3 and 5 paid by San Francisco Waterfront Partners isn’t $500,000/year, but $50,000/year or 1/10 of the original rent. Knowing this, it seems highly likely that the Port will grant a similar rent credit to 8 Washington, a credit that it has already offered in the Term Sheet approved last year.



The DEIR needs to discuss this and ask the following questions to help establish for public officials whether or not 8 Washington has the possibility of generating resources to fix up the Port’s historic infrastructure.


Was the $450,000 rent rebate given Piers 1½, 3 and 5 given for “public improvements” in the same way the 8 Washington Term Sheet proposes to give      8 Washington an up-to-$120,000/year (100%) rebate for “public improvements?


How much of this $120,000/year lease payment to the Port is guaranteed?


Based on recent history with this developer (see above box), it would appear that claiming a $120,000 per year lease payment is, at best, a gross overestimate.


2.  Future payments triggered by resale of condos (aka increased transfer tax). The second source of payments (around $25 MILLION over life of the lease) involves the developer recording covenants “committing all owners to transfer payments to the Port of ½ percent of sale value for all sales of the residential condominiums and all re-sales of commercial condominiums” (from Director’s Report, Page 4), in other words, a ‘voluntary’ increase in the transfer tax.  


This idea of obligating future owners to a special transfer “fee” was already tried, unsuccessfully, several years ago by then Mayor Gavin Newsom’s office as a way to provide ‘stimulus’ for large condo developers with approved projects who were trying to get financing. In exchange for agreeing to binding future condo owners to ‘voluntarily’ pay a 1% increase in the real estate transfer tax (but not calling it a “tax”), the Mayor’s Office proposed relieving the developers of 1/3 of their affordable housing requirement. That idea failed to get off the ground for both legal and political reasons. Regarding this proposal:


How does the Port plan to argue this increase in the real estate transfer TAX is not really a tax and do so in a way that convinces the Pacific Legal Foundation, Howard Jarvis Taxpayers Association and SF Board of Realtors not to sue?
Mayor Newsom’s failed proposal did trigger an multi-stakeholder discussion of a broader, legally defensible strategy, going to the voters for a permanent, across the board increase in the transfer tax on ALL real estate transactions (above the median home price) generating tens of millions of dollars a year for affordable housing. A portion of this new money would fund traditional affordable housing built by non- profit housing development corporations, but a portion would also be available to for-profit housing developers to buy down their affordable housing obligations. All sides agreed to this compromise and to place it on the November 2010 ballot, because it HAD to go to the voters, just as the ½% transfer tax increase proposed     in this Term Sheet would need voter approval.


NOTE: The reason that this proposal was not on the ballot that November, as reported in the New York Times, was because Mayor Newsom refused to support it or ANY tax increase, no matter how much support it had, for fear of giving his Republican opponent in the Lt. Governor’s race an issue to use against him in the 2010 election.


If the best legal and political minds in the city couldn’t figure out a way to “voluntarily” increase the real estate transfer tax without going to the voters then, how does the Port propose to do the same thing for 8 Washington now?


3.  New IFD Funding Mechanism. The third weak link in this financing plan is the as yet “to-be-established Infrastructure Financing District (IFD) that will allow a portion of growth in property taxes to be reinvested in public facilities.”  Port Director’s Recommendation, page 2.   While the concept is an interesting one, it is in its infancy in San Francisco. The Board of Supervisors is in the process of setting up a pilot IFD with seven or eight property owners on Rincon Hill to test this model.


To date, citywide discussions about the use of tax increment financing tools, such as the IFD, have linked their use to funding a larger set of neighborhood infrastructure needs and public benefits previously identified through adopted Area Plans such as Eastern Neighborhoods, Market Octavia and Rincon Hill and not for the specific needs of individual projects or developers (e.g. 8 Washington).


Looking ahead, it isn’t hard to imagine the kind of criteria the Board of Supervisors might adopt to determine what developments could avail themselves of IFDs. Those with significant legal, political and financial challenges, such as 8 Washington, would not score well.  Nor would projects that dramatically reduce and eliminate active recreation facilities serving middle-income families and seniors for over 45 years.  Finally, projects that undo decades old community benefits agreements, provided as part of a Redevelopment plan (e.g. Golden Gateway’s permanent active recreation center), probably wouldn’t pass muster .


Assuming the city eventually creates IFDs in certain circumstances, how does the Port make the case for THIS project, given the growing political and legal opposition to it, the long standing community resource that it destroys and the fact that the Board of Supervisors won’t give up $32 million for it (see below).


 4. Diversion of property taxes from the General Fund to the Port. The majority of the 8 Washington/SWL 351 site is NOT Port property, but under the jurisdiction of the City and County of San Francisco. Exhibit A of the Term Sheet shows the boundary of the 0.64 acre under Port control (SWL 351) and the 2.51 acres portion currently privately owned by Golden Gateway on AB168, 171, 291 (80% of the site). SWL 351 (the Port land) is only 20% of the total development site.


While these blocks were under the jurisdiction of the Redevelopment Agency, the property tax increment was diverted from the City’s General Fund to that Agency.  Following termination of the Redevelopment project area several years ago, however, ALL property tax revenue from this land flows to the General Fund.  The Port now proposes to divert the property tax increment from the portion of this site NOT UNDER PORT JURISDICTION away from the General Fund and to the Port.


The Port Director’s Term Sheet Recommendation on page 6 proposes “a new Port IFD” covering both SWL 351 and the Golden Gate Tennis and Swim Club (WHICH IS NOW ENTIRELY UNDER THE CITY’S JURISDICTION AND TAXING AUTHORITY).  Under the “new Port IFD” all the property tax increment from development on non-Port property would be diverted FROM the General Fund TO the Port.  Toward the end of the Term Sheet recommendation the Port Director does state that the Board of Supervisors would have to agree to this arrangement, which prompts several questions that should have been asked and answered in the DEIR:


Who from the city, not the Port, agreed to including these IFD financial terms in the Term Sheet?


Which members of the Board of Supervisors were consulted regarding this planned appropriation of property tax revenue from the city’s general fund?


What would lead the Port to think ANY current or future Board of Supervisors would  ‘voluntarily’ turn over $32 million in General Fund dollars to the Port, providing a $32 MILLION CITY SUBSIDY FOR LUXURY CONDOS when the Board is struggling with massive budget deficits, layoffs and cuts to vital city programs?


The DEIR must address whether or not this project is financially viable because if it is not, then the public facilities and infrastructure the project has promised to provide cannot be built. The DEIR must also assess the likelihood of the Board of Supervisors turning over $32 million in General Fund monies as a subsidy to the Port for this and other Port projects and analyze what environmental impacts this loss of $32 million to the city would create over time: what parks wouldn’t be maintained, which parks and recreation centers closed, what transit lines discontinued or run less frequently, etc.; actions that would not have been necessary had the city kept that $32 million. Specifically, the DEIR must answer the following questions:


Can 8 Washington’s public facilities (e. g. Jackson Commons, other open space) ever  be built with IFD funding, given that:


a) the IFD is predicated on the Port capturing 100% of the tax increment generated by 8 Washington even though the Port only owns 20% of the site, and


b) according to recent testimony before the Planning Commission by Michael Yarne (OEWD), under state law IFD’s are prohibited on land that “is currently,  or was previously part of a redevelopment area”?
 
Under what circumstances does the Port anticipate that the current (or a future) 
Board of Supervisors would voluntarily give up its 80% of this tax increment
($32 million out of $40 projected by the Port) to fund public improvements for   
LUXURY CONDOS at 8 Washington or other Port projects?


Has the Port had any discussions with the Board of Supervisors regarding this?


If so, what was the Board’s reaction?
    
Has the Port or project sponsor had state legislation passed (or introduced) that
provides the necessary waivers from the current state prohibition against
setting up IFD’s in former redevelopment areas?


Again, this is information that public officials must have to make informed, objective
decisions about the impacts of this project.


 


 


 


VI. THE DEIR FAILS TO DISCLOSE THAT 8 WASHINGTON IS THE FOURTH ATTEMPT TO CONVERT THE GOLDEN GATEWAY TENNIS & SWIM CLUB FROM CITY MANDATED ACTIVE RECREATION USE TO CONDOMINIUMS. IT PRESENTS VERY BRIEF AND MISLEADING INFORMATION REGARDING THE HISTORIC RECORD SUPPORTING THE REQUIREMENT TO PRESERVE THE CURRENT ACTIVE RECREATION FACILITIES ON SITE IN PERPETUITY.


The DEIR addresses this issue very briefly in a footnote on page II.3 that states:


2 The original development agreement governing the Golden Gateway Center Lots required the developer to provide non-profit community facilities as part of the overall development with the Golden Gateway Center. In Section 4 (a) of the Agreement for Disposition of Land for Private Development (“Agreement”) between Perini-San Francisco Associates (the “Developer’) and the Redevelopment Agency, dated August 27, 1962, the Developer agreed to maintain “community facilities of  a permanent nature… designed primarily for use on a nonprofit basis” (page 25 of the Agreement). Subsequent to the Agreement, the Agency and Golden Gateway Center (the successor to the Developer) entered into a Second Supplement and Amendment to the Agreement (“Second Supplement”) on March 14, 1976. Section 1(d) of the Second Supplement deleted Section 4(a) of the agreement (page 12 of Second Supplement) and thereby removed the requirement to maintain community facilities on the property in exchange for the dedication of Sydney Walton Park for perpetual use as a public park.


This interpretation of those documents contradicts evidence previously by individuals with intimate, first hand knowledge of those Golden Gateway redevelopment agreements. Those comments are attached as:


Exhibit A: A May 9, 1984 letter from then Mayor Dianne Feinstein that begins:“As a supervisor and as mayor, I have a long history with the redevelopment plan and agree with those who maintain that this site has always been considered set aside for recreation and open space.”


Exhibit B: An August 8, 1990 letter from Robert Rumsey to then redevelopment director Ed Helfeld that states:


  “I happened to be Deputy Director of Redevelopment in the late 1950’s and early  
    1960’s when the Golden Gateway redevelopment plan was adopted by the city and
    when Perini Corp. was subsequently selected as the developer of the Golden Gateway
    over eight other competitors… I feel it is important to place on the record the view of  
    the staff and commissioners of the agency at the time of selection: The provision of that
    open space and recreational space was a significant factor in the selection of the
    Perini proposal. And clearly, the space was presumed to be kept that way in
    perpetuity” (underlining Mr. Rumsey’s).


 


Exhibit C: A January 24, 2003 letter from Senator Dianne Feinstein reiterating that: 
  
   “I have a long history with the redevelopment area at Washington and Drumm Streets     
    and concur with those who believe this space was intended for recreation and open
    space. Please oppose further development of the Golden Gateway Tennis & Swim Club.”


These letters came in reaction to THREE previous unsuccessful attempts to develop the Golden Gateway Recreation Center as condominiums. Those attempts included:


1. Perini Corp. (early 80’s). The original developer of the Golden Gateway project proposed replacing the Golden Gate Tennis & Swim Club (GGT&SC) with a 9-story condominium project, in violation of its original approvals for the larger project that called for the GGTSC to serve as one of two major community benefits (along with Sidney Walton Sq.) in perpetuity. NOTE: This took place after the Second Supplement and Amendment to the Agreement referenced in Footnote 2 (above) was executed. Clearly, then Mayor Feinstein, had a very different interpretation of the Second Supplement than that of the author of Footnote 2 when she says in her letter that  “I agree with those who maintain that this site has always been considered set aside for recreation and open space.”


2. Perini Corp. (early 90’s). Again the owners of the Golden Gateway proposed replacing the project’s active recreation center with a condo project. This time, a letter from former Redevelopment Director Robert Rumsey date 8/8/90 provides extensive evidence that the interpretation of events contained in Footnote 2 is neither complete nor accurate. His detailed first hand description of that transaction which took place in the 1970’s is quite instructive. In addition to his comment that:


     “I feel it is important to place on the record the view of the staff and commissioners  
      of the agency at the time of selection: The provision of that open space and
      recreational space was a significant factor in the selection of the Perini proposal.
      And clearly, the space was presumed to be kept that way in perpetuity”


his letter states that “if it is now proposed that there is a loophole permitting that space to be invaded by condominiums, I would consider that to be most unfortunate for the city” and describes the land use negotiations that allowed Perini to substitute 155 low-rise condos for the four remaining high-rise rental towers that were suppose to be built as Phase III of the redevelopment plan. According to Rumsey, the agency finally, “albeit reluctantly” agreed to let Perini make this change “because some seven years had elapsed since completion of Phase II and there was otherwise no prospect for building on those long-barren blocks”.


Rumsey then states that the Agency’s October 28, 1975 minutes show the debate over what the Agency should charge Perini for the land that made up Phase III (now Gateway Commons condominiums) focused on “whether it should be $8.45 a square foot, the price established 15 years earlier, or a more realistic 1975 price of $15-$20 a square foot”. He then states:


      “My new successor, Arthur F. Evans, said he might agree with the higher number if
      the land was offered without restrictions, such as requirements of open space. And
      he added: Amenities such as Sidney Walton Square and the Golden Gateway tennis
      courts were on land that was not income producing, and since no one could build
      highrise buildings on this area, its value could be considered zero.”


As a result of this discussion, according to Rumsey, “Evans and the commission agreed to hold the land sales price to the original $8.45 a square foot, as the agency continued to view the open and recreation space to be in perpetuity.”


Based on Rumsey’s letter and substantial community opposition, this second attempt to replace the GGT&SC was defeated.


3. John Hamilton, developer (2003-04). In the mid-90’s Perini sold Golden Gateway to Timothy Foo and a group of investors. In 2003, developer John Hamilton proposed another condo tower on the site. Senator Feinstein’s January 24, 2003 letter was responding to that proposal. After reiterating her conclusion that “this space was intended for recreation and open space”,  she goes on to say, “increasing the height of the Club would drastically change the picturesque panorama of the Bay and would create shadow effects on the newly constructed Embarcadero. Further, development of more residential units would increase traffic noise and pollution, and disregard the original understanding between City officials and area residents that open space and recreational amenities should be preserved.”


4. Current 8 Washington Street/SWL 351 proposal is the 4th Attempt (2006-present) to develop condos on this site and demolish the Golden Gateway’s active recreation center, a facility that’s successfully fulfilled its intended purpose for almost 50 years.


In his written comments on 8 Washington’s DEIR dated August 11, 2010, Mr. Edward Helfeld, Director of the Redevelopment during the second attempt to demolish the Golden Gateway Tennis and Swim Club speaks to the original purpose of the facility, how it has successfully served San Francisco’s recreation needs for over four decades and how relatively inexpensive it is compared to other tennis facilities in the city. He also writes that “As Executive Director (1987-1994) I was in total support of retaining Golden Gateway Tennis and Swim Club”.


Any public official or member of the general public reading the current DEIR would have no knowledge of these three previous attempts to build on this site, their outcome and the role former city officials have played in confirming that the Golden Gateway active recreation center was meant to be preserved as an active recreation center in perpetuity. The Comments and Responses to the 8 Washington Street/SWL 351 DEIR must include this historic information in order to be considered accurate, complete and objective.


 


 



VII. ADDITIONAL COMMENTS ON THE 8 WASHINGTON DEIR


A.  The DEIR’s Introduction presents confusing and conflicting information regarding how, when and by whom environmental review for this project was initiated. The first two paragraphs of the DEIR’s Introduction (pg. Intro.1) raise some troubling questions about how environmental review for 8 Washington was carried out that need to be addressed more completely and forthrightly. The timeline for environmental review is described as follows (quoting from the DEIR):


1. “On January 3, 2007, an environmental evaluation application (EE application) was filed by San Francisco Waterfront Partners II (the “project sponsor”) on behalf of the Golden Gateway Center for a project at 8 Washington Street and the adjacent Seawall Lot 351, which is owned by the Port….(the Port is not a co-sponsor of the proposed project, but has authorized San Francisco Waterfront Partners II to submit an EE application that includes Seawall Lot 351).”


2. “On August 15, 2008, the Port issued a Request for Proposals (RFP) for the development of Seawall Lot 351. Two parties submitted timely proposals: SF Waterfront Partners II and a development group led by Dhaval Panchal (which later withdrew its proposal).”


3. “On November 10, 2008, the Port reissued the RFP for this project.”


4. “On February 24, 2009, the Port Commission authorized Port staff to enter into an exclusive negotiating agreement with SF Waterfront Partners II, finding that the proposal submitted by SF Waterfront Partners II meets the requirements of the RFP and meets the Port’s objectives for Seawall Lot 351.”


It appears from this timeline that the ‘project sponsor’, SF Waterfront Partners, was selected to carry out the 8 Washington project on January 3, 2007 when they were “authorized” (by the Port) to submit an Environmental Evaluation (EE) application officially beginning environmental review. However, there’s no explanation in the DEIR as to why, 18 months later (August 2008), the Port decided to issue an official RFP to select a developer for Seawall Lot 351.


This makes no sense given that Seawall Lot 351 was included in the January 3rd EE application submitted by SF Waterfront Partners (if not as designated developer, then in what capacity?). Then three months later (November 2008), we’re told the Port reissued the RFP with no explanation as to why. Finally, on Feb. 24, 2009, twenty five months after SF Waterfront Partners filed the EE application and began the environmental review process, the Port Commission authorizes staff to enter into an exclusive negotiating agreement with SF Waterfront Partners (SFWP) to develop  SWL 351. This raises troubling questions that need to be addressed in the DEIR to give public officials (and the general public) a clearer sense of the appropriateness, completeness and legality of the current environmental review process.


The DEIR must explain:


1. Is this how environmental review is normally sequenced? Is it routine for a developer that has not yet been selected by the Port to undertake a specific project, let alone negotiated an Exclusive Negotiating Agreement (ENA) with the Port for said project, to submit an EE application to Planning for this project that they haven’t yet been selected to develop and then for the Port, eighteen months later, to issue the first RFP to select a developer for the project and have a developer other than the one who submitted the EE respond to the RFP—then drop out (with     no explanation why in the DEIR), then have the RFP reissued six months later and then finally,
25 months after the current developer of 8 Washington submitted the EE, the Port finally selects said developer (SFWP) as the official developer of 8 Washington and begins negotiating an ENA? Is this NORMAL procedure?


2. How could the Port authorize SFWP’s EE application without a written agreement designating SFWP as the approved developer of SWL351? Is this standard procedure in these matters?


3. If this EE process was, in fact, legal prior to August 2008, why did the Port reverse course on August 15, 2008 and issue an RFP for SWL 351 (a site already included in the EE application filed 18 months earlier)? Doesn’t the initial applicant in the EE process have to be either the property owner or his designated developer and be able to demonstrate site control? How would that have been possible back in January 3, 2007 for SWL 351?


4. What role did SFWP play in drafting the RFP (and Port’s objectives for SWL351)?



5. What reasons did the second respondent to RFP give for “withdrawing his proposal?”



6. Why was the RFP reissued on November 10, 2008?



7. When on January 3, 2007, the Planning Department accepted an environmental evaluation application (EE) “filed by San Francisco Waterfront Partners II (the “project sponsor”) on behalf of Golden Gateway Center for a project at 8 Washington Street and the adjacent Seawall Lot 351”, was Planning aware that San Francisco Waterfront Partners had not been and could not be legally designated as “project sponsor” for SWL 351 at that time?


8. Why didn’t the fact that SFWP had no legal basis to claim that it was the “project sponsor” for SWL 351 invalidate the EE application? The DEIR states that the Port “authorized San Francisco Waterfront Partners II to submit an EE application that includes Seawall Lot 351” but wouldn’t that imply SFWP would eventually be selected as the developer and discourage other developers from submitting responses to the Port’s August 15, 2008 RFP given that SFWP had been working with Planning staff on the environmental evaluation for 18 months already?


9. Is what happened in January 2007 legal? If not, when did the Planning Department become aware of this problem and what did it do about it?


10. Having now publicly described this chronology in the DEIR, what legal impact does this have today on the environmental and project review process?


11. Would any other developer be allowed to begin the environmental review process on a project for which they had neither been designated developer nor had site control?



These questions MUST be answered in the DEIR given the bizarre and confusing chronology that now appears in it regarding how environmental review was initiated for this project.


 


B. In other Port documents related to 8 Washington, San Francisco Waterfront Partners II is described as a partnership between Pacific Waterfront Partners (PWP) and California State Teachers Retirement System (CalSTRS). However, the involvement of CalSTRS in this project appears nowhere in the DEIR. Given that CalSTRS has already spent over $23 million dollars in predevelopment funds for 8 Washington, the DEIR must contain some mention of CalSTRS as a member of this partnership and the fact that the same partnership (PWP and CalSTRS) developed Piers 1½, 3 and 5 across The Embarcadero from this site.


Finally, the first sentence of the Introduction to the DEIR refers to the fact that “on January 3, 2007 an environmental evaluation application (EE) was filed by SF Waterfront Partners on behalf of the Golden Gateway Center   for a project at 8 Washington”. That footnote references “Golden Gateway Center, Authorization Letter from Timothy Foo dated Dec. 27, 2006.”


For this DEIR to be complete and accurate it must address several key questions including:


1. Who is developing this project? Pacific Waterfront Partners?  CalSTRS? Golden Gateway Center (Timothy Foo)? What are their relationships to each other and the proposed project?


2. What precisely is the relationship between these three entities and the Port?


3. What was the understanding between SFWP, Timothy Foo and the Port when SFWP submitted its EE application on behalf of Golden Gateway Center? All three are mentioned in the relevant discussion in the DEIR.


C. The DEIR is inadequate and incomplete due to its failure to include A Community Vision for San Francisco’s Northeast Waterfront. The DEIR is inadequate and biased in discussing the Planning Department’s Northeast Embarcadero Study (NES), while failing to include an equally detailed discussion of the background and recommendations of the study prepared by Asian Neighborhood Design entitled A Community Vision for San Francisco’s Northeast Waterfront, dated February 2011, which was presented to the Planning Commission on July 7, 2011. 


The second sentence in the third paragraph of the Introduction states that the purpose of the Northeast Embarcadero Study (NES) was “to foster consensus on the future of Seawall Lot 351 and at other seawall lot properties on the northern waterfront” and leaves the reader with the impression that it succeeded in this goal by stating how many public workshops were held (five) and “on July 8, 2010, the San Francisco Planning Commission adopted a resolution that it ‘recognizes the design principles and recommendations of the Study’ and urges the Port of San Francisco to consider the recommendations of the NES when considering proposals for new development in this area”.


To be accurate and truthful, the DEIR should mention the level of anger and frustration expressed by the majority of the public that attended these five workshops who felt the Port, who was paying for the NES, was dictating its conclusions in order to facilitate the approval of the
8 Washington. For example, when 30-40 people at a workshop opposed the notion advanced by Planning staff that The Embarcadero needed a “hard edge” and that “higher heights” were appropriate for the 8 Washington site and only 6-8 people expressed support for these ideas, the notes from that meeting would later say that opinion was divided on these matters. To its credit, the Planning Department states clearly in the final draft of the NES that they failed in their goal   of achieving consensus on the future of SWL 351.


The DEIR needs to include this information to provide a more accurate representation of the outcome of the NES process.


People were so upset by what they perceived as a transparent attempt to ‘justify’ 8 Washington, that they began their own community-based planning process to address the larger issues of reconnecting Chinatown, North Beach, Russian Hill and Telegraph Hill to the Waterfront; healing the wounds left by the ramps to the Embarcadero Freeway by making Broadway, Washington and Clay Streets more pedestrian, bicycle and transit friendly; and fostering consensus on the future of Seawall Lot 351 and at other seawall lot properties on the northern waterfront.


Four major community organizations representing thousands of local residents, small businesses        and property owners became the primary sponsors/organizers of this “Community Vision for the Northeast Waterfront” and hired Asian Neighborhood Design to assist them in developing it.    These organizations included: Friends of Golden Gateway; Golden Gateway Tenants Association; Telegraph Hill Dwellers and Barbary Coast Neighborhood Association. Stakeholders from Chinatown, Russian Hill, Nob Hill, Fisherman’s Wharf and other neighborhoods also participated.


On July 7, 2010, when the Planning Department staff presented the NES to the Planning Commission, AND and the four sponsors of the “Community Vision for the Northeast Waterfront” were invited to present a summary of their planning work to date.


The DEIR fails to make any mention of the alternative plan created by these four community groups with AND’s help. It needs to describe this study, how it differs from Planning’s NES and include it in the final EIR so public officials can evaluate the merits of both studies for themselves.
 
The DEIR must describe the reasons why this alternative community planning process was undertaken and include a detailed discussion how the proposed project would or would not conform to each of the recommendations contained in A Community Vision for San Francisco’s Northeast Waterfront?


I am attaching a copy of the AND Study: A Community Vision for San Francisco’s Northeast Waterfront to these comments and ask that it be included in the EIR so that readers and public officials can gauge for themselves if it was more successful in “fostering consensus on the future of Seawall Lot 351 and at other seawall lot properties on the northern waterfront” than the Planning Department’s Northeast Embarcadero Study (NES).


D. The DEIR tries, unsuccessfully, to minimize the loss of iconic views of Coit Tower and Telegraph Hill from in front of the Ferry Building with its argument about ‘episodic’ views and a new claim that “trees” already obscure the views of Coit Tower from in front of the Ferry Building, views enjoyed by millions of tourists, residents and office workers each year.  As demonstrated in Figure IV.B-3: View B (page IV.B.7), the height and mass of the proposed project would completely obstruct views of Coit Tower and Telegraph Hill currently seen from the Embarcadero Promenade at the northern end of the Ferry Building. This significant adverse effect on the visual quality and scenic vistas enjoyed by the public puts the project in direct conflict with a number of city and Port planning policies. The DEIR’s conclusion that this would not create a substantial adverse effect on a scenic vista because “Coit Tower and Telegraph Hill would continue to be visible from numerous vantage pointes in the vicinity of the Project site and the City” is a biased and subjective judgment that is not based on fact. This ‘episodic’ argument could be used to claim that NO building ever blocks an important view because if you walk far enough past the offending structure, you might get the view back.
The comment about trees blocking the view of Coit Tower from in front of the Ferry Building must be stricken from the document. I just came from standing at the main entrance of the Ferry Building and I could clearly see Coit Tower and most of Telegraph Hill. While several trees in front of the F-line stop across the street did impede the view around the edges, these trees could easily be pruned to eliminate the problem.



E. The DEIR’s Traffic and Transit Data is Seriously Out of Date.


The traffic data relied upon by the DEIR in reaching its conclusions is incredibly stale, having been based on surveys done in 2006-2007 and with 2000 census data (page IV.D.5 of the DEIR).  These studies must be updated.  For example, the assumptions made in the DEIR that the existing conditions at the Embarcadero/Broadway and Embarcadero/Washington intersections are “satisfactory” (at LOS D) defy logic.  Anyone familiar with the real time conditions at these intersections knows that this assessment could not be based on a factual analysis of current conditions at peak periods which, by the way, often occur on weekends (not studied in DEIR).


Also out of date is the transit information relied upon by the DEIR in reaching its conclusion that the project would not result in significant transportation impacts to transit systems (Impact TR-2), having been based upon data on capacity and utilization of individual MUNI lines from 2007 (page IV.D.9 of the DEIR).  This data should also be updated. For example, whoever was responsible for the assumption in the DEIR that the F-Line is not at capacity during peak periods has never ridden the F-line at peak periods. The America’s Cup will only make this worse.



F. The DIER belittles Pedestrian Safety Issues. The DEIR states that: “Conflicts between pedestrians and vehicles could occur at the project garage driveway, which could cause the potential inbound vehicles to queue onto Washington Street. Outbound vehicles would queue inside the garage and would not affect street traffic. Conflicts between outbound vehicles and pedestrians could still occur, but their effect on pedestrians would be reduced because pedestrians on the sidewalk have the right-of-way.” (page IV.D.25). I’m sure the fact that pedestrians have the right-of-way is of great comfort to families of children and seniors who’ve been struck and killed by cars. This statement is insulting and MUST be stricken from the DEIR. It’s also not true.


In the very next paragraph the DEIR makes the following statement about these potential vehicular and pedestrian conflicts at the garage driveway:


“The number of vehicles and pedestrians per minute are relatively small (about one vehicle and three pedestrians every 30 seconds on average) and it is therefore not anticipated that the proposed project would cause any major conflict or interfere with pedestrian movements in the area.” (page IV.D.25)


These numbers translate to 2 cars and 6 pedestrians every minute or 120 cars and 360 pedestrians an hour (or approximately 1,440 cars and 4,320 pedestrians coming into potential conflict in any given 7 am to 7 pm period).  The DEIR’s conclusion that such conflict between vehicles and pedestrian movement would be “less than significant” makes no logical sense and is simply not supported by the facts presented in the DEIR. 


G. The DEIR must include a new fence around the Golden Gateway Tennis and Swim Club in its NO PROJECT Alternative. Finally, the comments often heard about the “ugly green fence” around the GGTSC reminds us that the DEIR must let the reader know that it is the owner of the property, Mr. Timothy Foo, who is responsible for the ugly “green fence”. First, he has put the GGTSC operator on a month-to-month lease making it difficult for them to make a substantial investment in a nicer fence. Second, Mr. Foo himself stands to gain financially if 8 Washington is approved, so he has no incentive to fix the fence since its unsightliness is being used as an argument for demolishing the current facility. This simplest way to correct this bias would be to:


Include a rendering of the site with a new, attractive fence in the NO PROJECT alternative .


For the reasons stated in this letter, I believe this DEIR is seriously incomplete and inadequate to address the potentially significant impacts of this project.  I urge you to revise the document and re-circulate it in draft form.


Sincerely,


 


Brad Paul


 


 


 


 


 


 


 


 


 


 


 


 


 

The super-wealthy want our waterfront

Sasha Cuttler
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13
The super-wealthy want our waterfront

We are at the Guardian have been raising questions about the deal that the city cut to bring the America’s Cup here – which involves turning prime waterfront property over to wealthy developers with long-term leases – since it was first proposed. But our valid concerns have been largely drowned out by economic development boosterism and the view that we need to simply accept whatever billionaire CEO/sailor Larry Ellison and his partners say they want.

So we were as cheered as we were dismayed to read writer John King’s article in this week’s San Francisco Chronicle about how race organizers are trying to build a harbor for the super-rich to park their yachts so they can watch the races right in the middle of the Embarcadero’s longest stretch of open water and unobstructed bay views, a harbor that would likely be permanent.

King supports the race and its economic benefits. “But we also need to remember that it never hurts to look a gift horse in the mouth. And the open water along Rincon Park is not a cavity that needs to be filled,” he writes. This proposal is so appalling that even Chronicle readers and blog commenters – usually a conservative and curmudgeonly lot that bristles at the idea of asking anything of capital – have overwhelmingly criticized the idea, filling most of today’s Letters the Editor section.

Hopefully, that’s a sign that this idea – which the EIR on the America’s Cup incomprehensibly concluded was not a “significant impact” – is dead in the water. But given how far city leaders like Mayor Ed Lee and Board President David Chiu have been willing to bend over backward to give race organizers what they want, I wouldn’t be so sure.

At its best, the America’s Cup could be a great opportunity to showcase San Francisco and bring in much-needed tax revenues. But if journalists, citizens, and city leaders don’t remain vigilant and skeptical, this race might be remembered most as the ruse that the greedy rich used to sully and exploit one of San Francisco’s most valuable public resources.

You can’t trust Ethics

Jesse Hawthorne Ficks
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2

By Larry Bush

OPINION Proposition F, a measure on the November ballot, is supposed to clean up some provisions of the law that requires political consultants to register and make disclosures about their clients and their work. It was approved by all 11 supervisors.

But Prop. F has some serious problems. For starters, it grants authority to the Ethics Commission to make any other changes it wants in the law.

As the Voter Handbook says:

“A yes vote means: You also want to allow the City to change any of the campaign consultant ordinance’s requirements without further voter approval.”

Why should you oppose that? Because the Ethics Commission can’t be trusted.

The reason San Francisco has a law forcing political consultants to register and make disclosures is because the voters demanded one. City Hall fought against it every step of the way.

Former Supervisor Tom Ammiano introduced the measure in 1996, and it won board approval. Then-Mayor Willie Brown vetoed it. Ammiano rewrote the measure 1997 to meet Mayor Brown’s objections. Brown vetoed it again. And the supervisors who had voted for the law refused to vote for it again and overturn the veto.

So Ammiano and several other supervisors put the measure on the ballot. The political consultants raised a war chest to defeat it and spent more than $100,000 in direct mail, billboards and other voter contacts.

It passed with 61 percent of the vote.

What kind of clean up does Ethics plan now on the political consultant law? You can bet it won’t come down on the side of greater disclosure.

In 2009, two years ago, the Ethics Commission decided to write a clean up of the city lobbyist law. Just like they want to do with the political consultant law now.

And what happened with that law?

It changed one little aspect that didn’t get any real attention. It changed what is defined as a lobbyist — a person or entity who seeks to influence administrative or legislative decisions.

And what is the result?

Now the San Francisco Chamber of Commerce no longer has to file and disclose its lobbying. Neither does Lennar. Neither does the America’s Cup or Larry Ellison.

All those groups had to file under the old rules.

The bottom line is that a sleeping watchdog that can’t be trusted wants the right to change the laws governing political consultants — without any further oversight or public vote.

The former Ethics Commissioners who also are opposing this measure are Paul Melbostad, who served on the commission when the political consultants act was passed; Bob Dockendorff; Joe Julian; Bob Planthold; and Eileen Hansen, who just completed her term and was the only commissioner who voted against the pay-to-play rewrite.

I urge you to join them in opposing this measure.

Larry Bush is the publisher of Citireport.com, a City Hall watchdog.

Smooth sailing for developers

Andrew Lam
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3
Smooth sailing for developers

rebeccab@sfbg.com

It’s a mad dash at San Francisco City Hall to put all the pieces together in preparation for the America’s Cup, the prestigious regatta that will culminate in the summer of 2013 along the city’s northern waterfront. But once that spectacle is over, the biggest impact of the event will be a massive, lasting, and quite lucrative transformation of the city’s waterfront by a few powerful players, a deal that has been modified significantly since it was approved by the Board of Supervisors.

As negotiations on the fine terms of the development agreements continue to unfold, the future landscape of a huge section of the San Francisco waterfront is in play. If the America’s Cup Event Authority (ACEA) — the race management team controlled by billionaire Oracle CEO Larry Ellison — aims high in its investments into port-owned infrastructure, it has the potential to lock-in leases and long-term development rights for up to nine piers for 66 years, with properties ranging from as far south as Pier 80 at Islais Creek to as far north as Pier 29, home of the popular dinner theater Teatro ZinZanni.

The possibility of securing long-term leases and development rights to Piers 19, 23, and 29 — provided race organizers sink more money into infrastructure improvements — was added to the deal in the last two weeks of 2010, just before San Francisco won its bid to host the world-famous sailing match. The possibility of obtaining rights to portions of two additional piers, 27 and 80, were also added at the last minute. Race organizers and city officials negotiated the final modifications after the Board of Supervisors signed off on the Host City Agreement on Dec. 14, 2010.

Not all board members knew that three additional city-owned piers were being added as possible extensions of the land deal, and those properties weren’t mentioned in any of the earlier documents that went through a public review process in the months leading up to the approval of the agreement. Yet Board President David Chiu was evidently appraised of how the last-minute negotiations were unfolding and he quietly offered his support.

On Dec. 22, 2010, Chiu sent a letter to Russell Coutts, CEO of Oracle Racing, the team that won the 33rd America’s Cup and is an integral player in laying plans for the 34th. “I understand that Mayor Newsom and the city’s team have been working directly with you since the board’s approval of the Host City Agreement to make the necessary adjustments and clarifications to the agreement to ensure it meets your needs. I am aware of these changes and support them,” Chiu wrote in a letter that was not shared with his fellow supervisors.

Quoting from a section of the agreement that explains that ACEA is ensured long-term development opportunities in exchange for funding improvements and upgrades, Chiu’s letter went on, “This section specifically applies to … Piers 30-32 and Seawall Lot 330, as well as Piers 26 and 28, and if mutually agreeable could apply to Piers 19, 23, and 29. To obtain the community’s support and agreement for future development rights to piers on the northern waterfront, you will need to invest in a strong partnership with the community … I am prepared to help facilitate that relationship.”

Former Board President and Democratic County Central Committee Chair Aaron Peskin, who has closely followed the America’s Cup land deal and has for decades been actively involved in land-use issues along the northern waterfront, interpreted Chiu’s letter to Coutts as a backroom deal.

“There is no question that the president of the board, without the authorization of the majority of the Board of Supervisors, went behind closed doors, out of view of the public, and committed to [long-term development] for three piers,” Peskin said, highlighting the fact that no other supervisors were copied on Chiu’s letter. “That he has done this unilaterally, without the consent of a board’s vote at a board meeting, is not good governance. If there’s one body that’s supposed to do all of its work for the public, it’s the Board of Supervisors.”

Chiu defended the letter by emphasizing the part that asked for a partnership with the community. “This was all within the broader framework of the Host City Agreement that we signed in the middle of December,” he told the Guardian when presented with the letter during an interview and asked to comment. “They had questions about, well, can we develop on these other piers? And what I said was, ‘Well, as I think the language here specifically says if mutually agreed upon … you could possibly do this.’ And we specifically said you’ll need to invest in a strong partnership with the community.”

He added that specific development plans would still have to be approved by the Board of Supervisors. Proposals for each parcel will be made in separate Disposition and Development Agreements, subject to board approval.

On hearing Chiu’s response, Peskin was still critical of the lack of transparency in this deal: “My position is, if it walks like a duck and quacks like a duck, it’s a duck.”

Meanwhile, an analysis prepared by Budget Analyst Harvey Rose in mid-March suggests that the final amendments did reflect new commitments for the city that go well beyond what was discussed publicly. “No city approval of the Event Authority’s selection of Pier 29 for a long-term lease is required in the agreement, as modified by the Mayor’s Office and other city officials,” the Budget Analyst’s report notes. “This entire provision … was not included in the agreement of Dec. 14, 2010 as previously approved by the Board of Supervisors.”

Brad Benson, special projects manager at the Port of San Francisco, explained the Pier 29 provision slightly differently. “The city would have to be acting in its reasonable discretion to say no,” he said, emphasizing that ACEA would have to invest well above the $55 million threshold to obtain rights to Pier 29.

At a time when a new era of civility is being hailed at City Hall, two elements of the city family are essentially agreeing to disagree on the broader question of whether the 11th-hour modifications to the deal resulted in a greater hit to city coffers than supervisors approved. While Rose stated in public hearings that the modifications would deal a greater blow to city revenues, City Attorney Dennis Herrera, a mayoral candidate, has stood with the Office of Economic and Workforce Development in his assessment that the changes did not significantly exceed the scope of what was approved by the board. Fred Brousseau of the Budget & Legislative Analyst chalked it up to “a difference in opinion,” reflecting “the auditor’s standard for materiality versus the city attorney’s.”

Legalese aside, it’s clear that the race organizers stand to gain some highly desirable waterfront property in exchange for investing in the piers and bringing an event to the city that is expected to generate substantial economic activity. If ACEA invests a minimum threshold of $55 million for infrastructure improvements, it can likely secure long-term development rights for Piers 30-32, a 13-acre waterfront parking lot where Red’s Java House is located, plus win the title to Seawall Lot 330, a two-acre triangular parcel along the Embarcadero that has been discussed as the site of a future luxury condo tower that has already cleared city approval for that use.

A high-rise next door to Seawall Lot 330, called the Watermark, currently has condos going for $1.2 million apiece on average, according to a calculation of online listings. Under the America’s Cup deal approved by the board, the port would have received 1 percent of each condo sale plus 15 percent of transfers or subleases made by ACEA. “Such required payments … have been entirely removed from the agreement as modified by the Mayor’s Office and other city officials,” the budget analyst’s report points out.

Waterfront real estate in San Francisco, always expensive, has recently soared to even higher values. According to a June 22 article in the San Francisco Business Times, Farallon Capital Management recently put up for sale a 3.36-acre parcel in Mission Bay zoned for life science and tech office space — and it’s expected to fetch around $90 million. This past April, BRE Properties shelled out $41.4 million for two Mission Bay residential development sites entitled for 360 residential units, and last year, Salesforce.com acquired a 14-acre Mission Bay property for $278 million, or $140 per buildable square foot.

By comparison, the $55 million that ACEA must invest to be granted a two-acre waterfront parcel on the Embarcadero, plus long-term rights to lease and develop an additional 13 acres across the street, sounds like a good deal. “We’re using an appraisal approach. It’s not going to ridiculously undervalue the property,” Benson said. Under changes made to the deal after the board signed off, base rent for Piers 30-32 will be $4 per square foot of building area. Rent for all other possible piers will be $6 per square foot of building area.

The ability to transfer city-owned Seawall Lot 330 outright to the ACEA is predicated on the approval by the State Lands Commission to strip that property of constraints placing it, like all coastal properties, in the public trust. Lt. Gov. Gavin Newsom, who pushed the deal as mayor, is one of the three members of that commission.

Under a provision in the agreement, the ACEA’s $55 million investment will be applied toward rent credits on city-owned parcels — and depending on how much the company puts in, that credit balance can increase by 11 percent every year. Benson described this as a typical arrangement, saying, “It’s not out of the line with other rent-credit deals the port has done.”

Two former mayoral advisors from OEWD, Kyri McClellan and Alexandra Lonne, have since gone to work for the America’s Cup Organizing Committee (ACOC), a nonprofit entity working in tandem with the city and the ACEA to secure financial commitments for hosting the race. Newsom has also been named ambassador at large for the America’s Cup effort.

Meanwhile, an OEWD budget proposal includes $819,000 in staffing costs for four management-level positions relating to America’s Cup planning. A refund is expected in the form of $12 million that the ACOC has committed to fundraise by the end of 2011, with an ultimate target of $32 million by 2013. So far, ACOC has only raised $2 million, but plans to seek higher donations once it gains tax-exempt status. “I think the $2 million is a really good start,” said Mike Martin, who transferred in February from the San Francisco Public Utilities Commission to OEWD to direct the America’s Cup effort. “They’re building a foundation for an effective pitch.”

For now, city departments are scrambling toward completing the environmental review process for the infrastructure improvements, expected to be complete sometime in November. “It’s incredibly compressed,” Martin said. “There’s a lot to be done in a very short time.”

Peskin, for his part, seemed be keeping a watchful eye on the unfolding America’s Cup plans. “What we, the citizens of San Francisco, have to watch out for is that we’re not being taken advantage of,” he said. “We’ve got to be vigilant that we don’t get taken to the cleaners.”

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