Hearing called on America's Cup "fundraising fiasco" as Mayor Lee talks about scaling back the event

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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

 

 

Comments

You'd have really hated on that.

Posted by Guest on Feb. 12, 2013 @ 5:34 pm

In fact, the best thing about getting the America's Cup is that it's a perfect window on what kind of economic cluster screw-up the Olypmics would represents.

Why are the Willie Brown "moderate" types -- what with their ostensible "fiscally-prudent" natures -- so seemingly hardwired to lead the city into economic debacle?

The gang that can't shoot straight will *never* learn to shoot straignt. F-ups.

Posted by lillipublicans on Feb. 13, 2013 @ 5:41 am

"5 pm Pinch myself, another day working on San Francisco’s America’s Cup, delivering legacy and local benefits for our community, a gift for a girl from the valley.

6:00 pm Attend San Francisco’s Junior League’s 100th anniversary celebration. League gave me my training… couldn’t do this gig without the skill set they taught me."

Interview with Kyri McClellan by Haute Living November 23, 2012 8:31 PM

Yep, couldn't do this gig. Truer words...

Posted by Sad on Feb. 19, 2013 @ 9:38 pm

Those "legacy" naming rights that Mayor Lee wants to give to wealthy donors who contribute to the America's Cup are assets that belong to the city's.

Giving away public assets instead of public dollars is a shell game. It's still a subsidy no matter what you call it.

Posted by Guest on Feb. 12, 2013 @ 10:17 pm

Those "legacy" naming rights that Mayor Lee wants to give to wealthy donors who contribute to the America's Cup are public assets that belong to the City.

Giving away public assets instead of public dollars is just a shell game to that still amounts to a subsidy. Calling it something different doesn't change anything.

Posted by Hunter Cutting on Feb. 12, 2013 @ 10:20 pm

Rec & Park president Mark Buell worked overtime with Rec & Park GM Phil Ginsburg to - with little care by the Board of Supes or the Mayor - to transform a nice living natural grass field in GG Park where soccer is also played into a 10 acre plastic dead zone filled with 300 tons of tiny toxic tire particles.

Apparently the City of SF is going to pay some party at least $12 million (and probably a lot more) - the party that the Fisher's City Fields Foundation picks to receive it (apparently they now effectively own that part of GG Park).

Since Mark Buell (in conjunction with Sup. Eric Mar and R&P GM Ginsberg) worked so hard to get this gift for the Fisher family that will cost SF $12 M, it's only right that Buell, Ginsberg, and Mar ask the Fisher family for some money.

Of course that's not gonna happen since the Fishers, Ginsberg, and Mar actually work for the Fishers and other big money interests. Supervisorial term limits is designed to do just that - make the politicians owned by the big money interests so those pols will work for those BM interests instead of for the ppl.

This story about the shortfall for the billionaires boat race on public property isn't surprising. I'm not sure term limits is the full explanation but it's made the Bd of Supes a big joke. Those clowns are working for their next state job from day one as a supe. You'll never get a guy like Quentin Kopp in there under this system - such a system would have destroyed his integrity too.

So anyway, Buell, Ginsberg, and Mar need to ask the Fishers to give back some of the $12 M that they'll be getting from the City of SF thx to those same three dummies.

Posted by Guest on Feb. 13, 2013 @ 1:04 am

The ruse was to promote democracy, but the reality is plain to see.

The reality is that supervisors are more often appointed to office by a strong mayor and then deal their spot for another appointment later on. The goal was to eliminate cronyism, but the false solution made the problem far worse.

Note also that reactionary tea-partiests are agitating for term limits in Congress. We must have meaningful campaign finance reform. Term limits only enhances the campaign financiers positions and enhances the status of lobbyests who thereby become more knowledgeable about the legislative process than the legislators themselves.

Power corrupts, that remains true -- and the need for oversight and sunshine as well -- but term limits are not a valid response to entrenched power.

Posted by lillipublicans on Feb. 13, 2013 @ 9:58 am

Jason Grant Garza here ... good luck getting an answer that ACCOUNTS ... this is the city THAT can (spin. lie. deceive, and then say we misspoke, made a mistake coupled with "NO INTENT" to harm.)

What do I mean ... i still await ACCOUNTING, HUMANITY. COMPASSION or any sense JUSTICE from the OFFICIALS that BROKE the LAW ... go to http://www.myownprivateguantanamo.com to see a signed settlement agreement or as I call it a CONFESSION where the city BROKE FEDERAL LAW , had my case dismissed with FRAUD and TESTILYING (C02-3485PJH) only to sign the confession YEARS later admitting FAULT and GUILT ( why lie in court only to confess years later - unless they could against me and NOT the INSPECTOR GENERAL ... ha,ha ha... rigged COURT SYSTEM.) http://myownprivateguantanamo.com/ or http://myownprivateguantanamo.com/settle1.html

Now it has started all over again with DPH denying health care and committing CRIMINAL FRAUD http://www.youtube.com/watch?v=7cP3jCmJFRo

the SHERIFF being USELESS and the LAPDOG for DPH and telling me to go back ( cup of poison ) http://www.youtube.com/watch?v=uk7xpxL8QjI
and DPH agaIn BREAKING the LAW afterwards http://www.youtube.com/watch?v=VFd-KtS8Zss

WHAT IS THE CONSEQUENCE ... watch the youtube videos for the "HANDLING" but not CARE from ALL AGENCIES INVOLVED ...

So in the END there will be NO ACCOUNTING or HUMANITY just like the MAYOR at the ETHICS hearing or the FOUR SUPERVISORS found GUILTY of OFFICIAL MISCONDUCT ( Sunshine case # 10048 ) and the game. illusion, and deceit will continue as they retire and live the GOOD LIFE ...

Any questions ... look at the videos or go to the website

Oh and PS the "CONFESSION" did NOT come from the "GOODNESS or KINDNESS" of the city attorney years later ... it came from my continuation AGAINST ALL ODDS. This is something they do not count on as MOST go away ... as this article and its implications will pass also (that is what they count on.)

Keep DRINKING the KOOL AID. Billionaires get $$$ ... INNOCENT VINDICATED VICTIM gets NOTHING and the CITY commits the CRIME ... any MORE QUESTIONS ???

Posted by Jason Grant Garza on Feb. 13, 2013 @ 7:51 am

Can I buy the right to rename the SFBG "The Prancing Liberal Review"?

Posted by Chromefields on Feb. 13, 2013 @ 8:51 am

I'm surprised and dismayed by the comments posted and made publicly by opponents of hosting the America's Cup in San Francisco. I have always thought of this city as expansive and not a likely candidate for the NIMBY (not in my backyard) syndrome. The Cup is a high profile event and a job creator not just for the few months of its duration, but in terms of the people that will come to San Fransisco for the first time and thus may return again and again. But also think of it in terms of what it means to an entire industry. The U.S. boat-building industry used to be a major force in the world and a major exporter (think trade balance). The global economic crisis and cheaper labor and materials costs in China and Taiwan have taken a serious toll. Stop being envious of billionaires for a minute and think about the jobs and technology generated by this event and by the amount of money that will be pumped into the local economy by visitors. San Francisco used to have a huge working waterfront, now the boat and ship repair yards have dwindled to a few--that means good paying skilled jobs gone. I'll bet critics have no idea of the daily dollar impact that a single multi-million dollar yacht refit at a place like Bay Ship in Alameda has on the area's bottom line.
I work for a multi-national marine publishing company and we are the media partners for a superyacht event that will be held within the Cup Finals in September. This event will bring quality yachts and quality people to the city. They are not there, nor are any of the racing syndicates there, to trash the city, spoil its waterfront or defraud the city of a few million dollars. They are expecting a world-class event and it would be shortsighted to derail that. The City of Newport, RI, and the State of Rhode Island reported $38.2million positive economic impact for state businesses, 345 jobs and an estimated $2.5 million in general sales tax revenue for the America's Cup World Series event last summer--and event of much shorter duration. The full report is available here: http://www.riedc.com/news/2013/02/large-marine-events-benefits-assessmen...
In all, visitors – first-time and repeat – came from 600 unique zip codes in 41 states and 18 countries. The report found that the size of the visiting party and length of stay increased with the distance traveled.
The Rhode Island report notes that "Revenue came from four main sources: visitors who came to watch the event, organizers and sponsors who set up and operated the event, racing teams competing in the event, and media covering the event." The event was so successful that the City and State actively campaigned to win the right to be host city of a stopover in the next Volvo Round the World race, and thus establish an event to generate even more jobs and income for its citizens.
I sincerely hope that San Francisco's maritime community and its governing body are aware of the benefits that will come of this event and can allay the fears and gripes of a minority group who fail to see what this event will bring.

Posted by Guest Marilyn Mower on Feb. 13, 2013 @ 11:24 am

that rich people are quality people. What are the rest of us?

A PR event like the America's Cup will not bring back the shipbuilding industry to the US when the work is being done with cheaper labor elsewhere.

I have no doubt that this event will end up costing the city government money that could be better used for real social needs like education, healthcare, transportation, etc.

Newport, Rhode Island, is an entirely different type of community than a large city like San Francisco.

Posted by Eddie on Feb. 13, 2013 @ 11:46 am

Like Eddie below, most of the posters here are too joyless, envious, and provincial to see the benefits of events like America's Cup. They're still upset that burritos cost more than $3 now, and $3 is about the highest sum they can get their minds around without going crosseyed.

Posted by Chromefields on Feb. 13, 2013 @ 2:02 pm

Right Marilyn, don't let legitimate questions about taxpayer $$ goad you into examing the issue from diverse points of view. Take your cue from a troll. And if it does end up costing SF taxpayers a pretty penny, don't bother your pretty little head with the numbers. Isn't that what Chromefields is telling you?

Posted by Joyless Provincial ;) on Feb. 13, 2013 @ 2:30 pm

to pay the monthly rent on your hotplate, JP.

Posted by Chromefields on Feb. 14, 2013 @ 10:08 am

Ellison ruined his own race by using his endless cash to buy the highest tech boat available. That forced those 9 teams to drop out because in order to compete you need to have the same type of vessel. Reminds me a spoiled child on a playground demanding that all the kids play with his toy Rolls Royce. Mark Buell, the phoney environmentalist that Gavin Newsom made President of SF Rec and Parks right before he left office, so he could help Ellison ram this through, and our uber slick Rec and Park Director, Phil Ginsburg, are equally to blame for deceiving the public at every turn.

Any pretense that the little guy was going to benefit from the Landgrab Cup is gone.... Ellison, Buell and Phil Ginsburg planned all along to siphon the extra food, housing, transportation business to their buddies, so only pennies would be left for anyone else. I wish we had just their public relations budget to feed and house our homeless! Did you see those Muni ads telling us how good the Cup was going to be for SF?

Shame on Mayor Lee if he doesn't investigate this corruption and stop these robber barons in their tracks... Fire Ginsburg, it's long overdue! And send Buell back to Marin where he lives, especially as he loves to complain how he doesn't get paid enough to do his job as Rec and Park Commission President. Seriously, Buell, you are a native and you should be honored to serve the citizens of SF, not be raping them with every privatization deal you can find.

Posted by Guest on Feb. 13, 2013 @ 12:40 pm

To Mark Buell, Larry Ellison, Gruesome Newsom and Phil Ginsburg:
Karma's a female dog, isn't it?

Posted by Guest on Feb. 13, 2013 @ 12:42 pm

The greed and ego of Ellison is out of control. The AC72 is too expensive a boat for most of the countries that would ordinarily compete for the Cup. The overall size of the course is almost too small for these super boats. These boats are so fast that the races will last for less than 15 minutes and therefore the viewers will be quite restless.

The fact that these boats also must be highly maneuverable as well as fast makes them very dangerous and even more expensive to design and build. Ellison's team learned just how fragile these boats are last October when the Oracle boat capsized.

If the Oracle team and Ellison had not been so stubbornly ambitious, they would have used the AC45 for the Cup and they would have had an ample sized regatta with more entries, more interesting races, a longer more exciting schedule of races, and a larger world wide audience. There would be more international visitors coming to SF and therefore more money coming into the city.

I am not a SF resident, but I have followed the America's Cup races since the 1980's and have traveled extensively to see the races. It seems to me that the cost of the shortfall, the loss of revenue, as well as the extra expenses should be covered by the perpetrator of this problem, Larry Ellison.

I am sure that France's Energy team, BAR, the Koreans. and the Chinese would have participated if the cost of the super boats had not been prohibitive. This is all due to Ellison and his Oracle team. Place at least some of the blame where it truly belongs

Posted by Guest on Feb. 13, 2013 @ 7:45 pm

"5 pm Pinch myself, another day working on San Francisco’s America’s Cup, delivering legacy and local benefits for our community, a gift for a girl from the valley.

6:00 pm Attend San Francisco’s Junior League’s 100th anniversary celebration. League gave me my training… couldn’t do this gig without the skill set they taught me."

Interview with Kyri McClellan by Haute Living November 23, 2012 8:31 PM

Yep, couldn't do this gig. Truer words...

Posted by Guest on Feb. 19, 2013 @ 9:36 pm

"5 pm Pinch myself, another day working on San Francisco’s America’s Cup, delivering legacy and local benefits for our community, a gift for a girl from the valley.

6:00 pm Attend San Francisco’s Junior League’s 100th anniversary celebration. League gave me my training… couldn’t do this gig without the skill set they taught me."

Interview with Kyri McClellan by Haute Living November 23, 2012 8:31 PM

Yep, couldn't do this gig. Truer words...

Posted by Sad on Feb. 19, 2013 @ 9:37 pm

I was born and raised in San Francisco and I love the city, but not the direction it has been going over 20 years or so. I don't live there any more. I moved out of California six years ago because I saw the direction was not motivated by the people for the people. Funny, I also read another article today about the 20 definitions of narcisstic personalities. It's not only in San Francisco, it's a worldwide problem.

It's a sad day in San Francisco. The mighty have struck out.

Posted by Guest Leroy on Feb. 20, 2013 @ 9:46 am

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