Committee presses port and city negotiators on post-Dec.14 changes to America's Cup host/venue deal

The subcommittee devoted much of its second half to a close review of modifications the city and port negotiated to the America's Cup host and venue agreement after the Board—s December 14 term sheet. Port staff and the Office of Economic and Workforce Development said changes were necessary to bridge concerns from the event authority and to secure a winning bid.

Brad Benson (Port special projects) and Jonathan Stern (Port planning and development) described the key negotiating outcomes: the event authority agreed to guarantee roughly $55 million in waterfront improvements up front, with those investments converting into long-term rights (a long-term lease on Pier 3032 and the ability to purchase Seawall Lot 330) or being repaid via infrastructure-financing and other mechanisms. Port staff said the $55 million figure was intended to ensure visible waterfront upgrades before the event and to limit the city—s exposure to open-ended obligations.

Budget & Legislative Analyst Harvey Rose and the controller—s staff took a different emphasis: their report catalogued a set of post‑Dec.14 changes that, in their professional judgment, alter the fiscal profile of the port and increase the risk that the City will forgo future revenue streams. The analyst highlighted four concerns: (1) deletion of provisions giving the port a share of long-term sale or condominium proceeds at Seawall Lot 330; (2) fixed base‑rent rates for certain piers ($4 and $6 per gross square foot) rather than appraisals; (3) contractual language that could allow the event authority to obtain long-term development rights at Pier 29 under certain conditions; and (4) authorization for the event authority to return venues to the port for interim leasing between the event and later entitlements. Rose—s office recommended the committee require adjustments in the MOU and extra scrutiny of term sheets, DDAs and appraisals when they return for Board approval.

Deputy City Attorney Rob Mayers told the committee that determining whether changes are "material" requires a facts-and-circumstances assessment and that city negotiators reached a reasonable basis for concluding the package of changes did not materially increase the city—s obligations. Multiple supervisors said reasonable minds could differ on that point and asked staff for clearer pro formas and third-party corroboration of lease assumptions.

Port staff agreed to provide more detailed rental comps, appraisal results and third‑party cost estimates as the parties move toward term‑sheet approvals this spring. The committee continued Item 4 to the call of the chair pending additional documentation; port and city staff committed to return with engineering estimates, appraisals, and pro formas to allow supervisors to test whether the aggregate package shifts revenue and liability in materially different ways than the December 14 package.

What happens next: staff will develop term-sheet/DDAs and independent cost/appraisal work over the spring; the committee asked for targeted follow-up briefings and recommended that significant changes be presented with third-party corroboration of rents and engineering cost estimates before any final long-term leases are approved by the Board of Supervisors.