America’s Cup - City wants Cup, but analyst warns about costs

by John Upton on 22 Nov 2010 America’s Cup - For at least 43 days, Mayor Gavin Newsom proposes to turn San Francisco Bay into an arena for the America’s Cup, the world’s most prestigious yacht race. The water would be cleared of unauthorized boats and a no-fly zone imposed 6,000 feet above the Golden Gate Bridge, Fisherman’s Wharf and Angel Island.

Organizers estimate that as many as 600,000 spectators would crowd the shoreline and other parts of the city to watch the final race in the summer of 2013, the culmination of an event that they say could pump at least $1 billion into the area’s economy.

But Mr. Newsom’s proposal to make San Francisco the seventh host city in the 159-year history of the America’s Cup is creating tension between the mayor and the city’s chief budget analyst, who has raised questions about what some view as an extravagant incentive package from a city facing a $712 million deficit.

Although the mayor’s office initially said San Francisco needed to offer a rich deal to win out over bidders in Spain and Italy, the analyst, Harvey Rose, said recently that he had been unable to confirm that another city was competing with San Francisco to host the regatta.

On Thursday, Mr. Rose released an economic impact report estimating that the America’s Cup would cost San Francisco at least $128.3 million, with expenditures vastly exceeding tax revenue. He said the costs would include an $86.2 million loss from granting development rights and free leases on waterfront property to the Cup organizers, led by Larry Ellison, the billionaire Oracle chief executive.

'I think it is interesting that we would be spending city funds at the same time that departments are getting their budgets cut,' Mr. Rose said in an interview.

But aides to Mr. Newsom, who was elected lieutenant governor this month and will leave office in January, said the costs of staging the regatta would be offset by a windfall of economic activity and improved infrastructure on San Francisco’s waterfront.

'We strongly feel that the costs that are associated with this event are investments — they are not giveaways,' said Jennifer Matz, the mayor’s economic development director. 'We will continue to ensure that this deal is a good one for the city and the residents and the visitors that come here.'

Full story http://www.nytimes.com/2010/11/21/us/21bccup.html?_r=2&ref=us