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Port Commission approves MOU to reimburse Port for America’s Cup-related revenue losses
Summary
The Port Commission approved a memorandum of understanding authorizing the Port Executive Director to accept city reimbursements for estimated rent losses and race-related costs tied to hosting the 34th America’s Cup, with staff estimating about $6.7 million in lost-rent reimbursement over three fiscal years.
The Port Commission on Tuesday approved a resolution authorizing the executive director to execute a memorandum of understanding (MOU) with the City and County of San Francisco to reimburse the Port for revenue losses tied to hosting the 34th America’s Cup.
Deputy Director Elaine Forbes told commissioners the America’s Cup is expected to generate significant regional benefits — she cited an estimate of $1.4 billion in regional economic activity, roughly $19.5 million in additional city tax revenue and an estimated $6.7 million in lost-rent reimbursement to the Port spread over three fiscal years. Forbes said the MOU also contemplates a city contribution of $6.5 million toward the cruise terminal project and assumes new Port debt of $15 million for core and shell work.
“For our purposes the MOU provides for the reimbursement of lost rent, which based on our estimates will total $6,700,000 over three fiscal years,” Forbes said, describing mechanisms to analyze and remit actual numbers and offset payments by revenues the Port continues to earn.
A representative from Dutra Group, Dan Chow, asked how the Port will review and assess revenue-loss claims that contractors or tenants might cite for downtime or other event-related disruptions. “I’d like to get a clarification as to what the process will be, in terms of the Port’s review and consent of the various activities, which in fact may lead to some of this revenue loss,” Chow said.
Executive Director Moyer responded that Port staff has been involved in negotiating the host-city agreement and would be involved in decisions affecting revenue loss, adding, “the answer to that is yes.” She and staff said venue leases and long-term development leases tied to event use will be subject to Port Commission approval and, where the City Charter is triggered, Board of Supervisors approval.
Forbes said the MOU relies on Charter Section B7.3.20 and is structured so that in-lieu payments to the Port are treated as a budgetary set-aside governed by the MOU’s terms. Staff recommended an amendment to strike a clause and to consult with the city attorney; the Commission approved the resolution as amended by voice vote.
The MOU also contemplates contingent reimbursement of other Port expenses to the extent private funds raised by the America’s Cup Organizing Committee are available. Forbes said the committee has pledged to raise $32 million to offset city expenses, though the timing and availability of that private funding will affect how much the city and the Port ultimately provide.
The Commission approved the resolution by voice vote. The MOU will proceed to the Board of Supervisors and other city budgeting steps as provided under the Charter.
