Let’s forget about whether or not the 13 percent rate return the City is proposing to pay the Golden State Warriors (GSW) on their reimbursable rehabilitation expenses for Piers 30-32 makes any sense for a moment. Instead, let’s look at how long it will take the City to repay those reimbursable expenses under the proposed conceptual financial framework which the Mayor has reviewed and endorsed.
As plugged-in people know, per the term of the City’s proposed financial agreement, the source of funds for the repayment of the $120,000,000 in rehabilitation expense for Piers 30-32 would be limited to rent credits, proceeds from the sale of Seawall Lot 330, and the sale of Infrastructure Financing District (IFD) bonds.
In order to minimize the reimbursable construction costs and interest expense, the Port will attempt to apply the expected proceeds of the Seawall sale ($30,400,000) and IFD bonds ($60,000,000) as early as possible, leaving an expected balance of $29,600,000 subject to the 13 percent interest rate and to be serviced by the aforementioned rent credits from the 66-year ground lease of the Piers.
Per the City’s proposed agreement, the fair market value of the rent credits for Piers 30-32 are expected to run around $1,970,000 per year. At the proposed 13 percent rate of return, the debt service on the outstanding $29,600,000 in reimbursable costs would be around $3,848,000 per year, an annual shortfall of $1,878,000 on the debt service alone.
Luckily, per the terms of the proposed agreement, “in the event that any debt remained at the end of the 66 year lease, the Port would not be required to pay any remaining debt to GSW.” That being said, we couldn’t find any language with respect to accrued interest.
Under the objections of a number of Piers 30-32 Citizens Advisory Committee (CAC) members, including the Committee Chair, San Francisco’s Budget and Finance Committee is scheduled to consider the proposed development framework this morning.
From the objecting members of the CAC:
While we have been very patient and willing to work with the process, the fact that we were not given an opportunity to meet as a body and discuss the details in the Fiscal Feasibility Report prior to its consideration by the Board of Supervisors Budget and Finance Committee leaves us little choice other than voicing our dissatisfaction and disappointment with what was intended to be the primary vehicle for community input about the Warriors Arena project.
More specifically, our concerns and requests for change are:
1. The CAC did not have a formally scheduled meeting to discuss the Fiscal Feasibility document and the details contained therein which is before the Board of Supervisors Budget and Finance Committee this Wednesday, November 14th. Since this report will form the basis of the development’s Term Sheet, we believe it is important for the CAC to be able to meet, to ask questions, and to get answers from City staff to our questions before the report is considered for approval by the BOS Budget and Finance Committee. We ask that the Budget and Finance Committee continue their consideration of the Fiscal Feasibility report for a hearing date that follows at least two Piers 30-32 CAC meetings which will first introduce the document and will second hold a meeting where the CAC receives answers to our questions that originate from the first meeting.
2. The CAC meetings seem to be scheduled on an ad hoc basis with no set schedule.
3. CAC meetings to date have been informational public presentations by the developer and various City departments. They do not allow for CAC members to engage in meaningful discussion of the details.
4. The CAC meetings have not considered the most fundamental question for this project and that is whether or not Piers 30-32 is a truly feasible, functional location, as it is located on an already congested primary roadway for many San Franciscans. We believe the first step the City should take before expending tremendous amounts of our, City staff’s, and the Warriors time and resources is to have the Planning Department provide at least two more locations they believe might be viable for EIR consideration, and which might require lower infrastructure cost reimbursements to the developer.
The objecting members of the CAC have requested 30-60 days to review, discuss and weigh-in on the Fiscal Feasibility report prior to the Board of Supervisors Budget and Finance Committee’s hearing of the report which is scheduled to take place in an hour.