The (bad) Warriors deal, by the numbers

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Rudy Nothenberg tells us about the Warriors deal

Rudy Nothenberg, who ran Muni and the city’s water system, was chief administrative officer, negotiated the deal for the Giants ballpark, and served under six San Francisco mayors, stopped by the office last week to talk to us about the Warriors Arena. We’ve had our fights with Nothenberg (as we would with anyone who was that close to Willie Brown and Dianne Feinstein) but the guy knows more about City Hall, public works, private development, and infrastructure finance than almost anyone alive. So we were happy to hear what he had to say.

Let’s be clear, here: Nothenberg lives near where the arena is slated to be built, and, as he was quick to tell us, he doesn’t want it in his backyard. But he also presented a compelling case that San Francisco is getting ripped off. And he had a few pointed things to say about the lack of negotiating skills among the members of Mayor Ed Lee’s administration.

Back when Nothenberg was talking to the Giants about a stadium at Third and King -- at that point a district of dilapidated and underused warehouses -- always kept a card in his back pocket. “I always knew that if things didn’t work out and we didn’t build the stadium, that would be okay too,” he said. In other words: You can’t get a good deal if you’re not prepared to walk away. And when it comes to the Warriors proposal, the mayor has made it so clear that this is his legacy that the team knows the city will never walk away. So one side of the talks can demand pretty much anything, and the other side has no leverage.

Oh, and it doesn’t hurt that just about every development lawyer, political consultant, and lobbyist in town is already working on the project. “They have co-opted everyone,” Nothenberg -- no stranger to the dark side of politics -- told us.

The exact terms of the deal are still not public, which is a bit odd since the city has already started its environmental review. (Can you really do an environmental impact report on a project when you don’t know what the project actually is? Two difference state courts have come to opposite conclusions, so for now the answer is: maybe.)

But there’s enough information out there for Nothenberg to give us a basic rundown on the financing -- and it doesn’t look good. “The Port is really not getting anything out of the deal,” he said. The city will get some increased sales and business taxes, and the Warriors will have to pay housing and transit fees. But there won’t be a lot of new property tax revenue, since that will all go to pay for the arena.

Here’s how Nothenberg laid out his analysis:

The Warriors have to spend $120 million to replace Piers 30-32. (Costs a lot to build such a huge structure over the water.) To make the team whole, the city will sell the Warriors a seawall lot on the other side of the Embarcadero for $30 million, then give the $30 million right back to the team. Then the city will set up an Infrastructure Finance District -- the 2013 equivalent of a redevelopment agency -- use the future tax increments to fund a $50 million bond. The Warriors get the bond money; the city pays it back. Oh, and then the city gives the team $30 million worth of rent credits, meaning the Warriors will probably never pay any rent at all for the use of that public property. And to make it sweeter, San Francisco will pay the Warriors 13 percent interest on the rent-credit money.

Meanwhile, the local taxpayers will have to come up with a huge amount of money to increase Muni capacity, since the existing transit can’t possibly handle the load of the new arena. Yes, the Warriors, like any developer, will have to pay a modest transit impact fee -- “but it’s laughable to thing that this will ever cover the capital and operating costs,” Nothenberg said.

To summarize: The wealthy owners of a professional sports team will get free waterfront land to build an immensely valuable new arena. The city will pay to bring the fans there and get them home, deal with the traffic impacts -- and get almost nothing in return.

Good one, Mr. Mayor.

Comments

And that's all that matters to our pals in the trade and service unions. You're on your own on this one Tim.

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Posted by Guest on Feb. 02, 2014 @ 11:06 pm

very close to the ballpark and the games are played off season to each other?

Seems to me more like this would even out the muni load thoughout the year.

How do you factor in the intangible benefits of this? What were the assumptions there? And what do you think the residents of SF care most about?

Posted by anon on Jan. 17, 2013 @ 4:33 pm

Nothenberg errs by assuming that Ed Lie is negotiating. He's in the business of shifting public resources from San Franciscans into the private pockets of the fabulously wealthy with a few crumbs thrown the way of labor and the nonprofits.

Posted by marcos on Jan. 17, 2013 @ 7:00 pm

anywhere else. The fact that they come anyway is despite that and not because their ROI is higher here.

It's fortunate for you and all SF taxpayers that they choose to do this, and I certainly do not begrudge them a profit for bring a pro sports team to SF.

I wish it were a better team, but maybe it will be once they are in a city that gives a crap, which doesn't apply where they are right now.

Posted by anon on Jan. 18, 2013 @ 7:52 am

Developers pay pennies of costs on the dollar of profit because the City shifts the downside costs of developer entitlements onto the citizenry at large.

That is not fair, not that life is guaranteed to be fair. But ongoing unfairness in governing portends political repercussions.

Posted by marcos on Jan. 18, 2013 @ 11:39 am

The city needs this development at least as much as the developers need this city. Maybe more so since they can go elsewhere and we cannot. So the idea that we have to extort a pound of flesh from everyinvestor who wants to make this city better isn't obviouslt to many of us at all.

The city will be better off with the Warriors here than not here. Thats why we invest in such ventures.

Posted by Guest on Jan. 18, 2013 @ 12:29 pm

Developers use other people's money - not their's. My heart does not bleed for them as it apparently does for you. Frankly - they still come here because they make money even with the "onerous" fees of which you speak. Developers have only one criteria - money. If it pencils they do it.

Posted by Rob on Jan. 29, 2013 @ 4:57 pm

buying homes to house all your hippie friend in it, if you so choose.

So why not take some direct action yourself to provide affordable homes, rather than expect others to do it for you?

Posted by anon on Jan. 29, 2013 @ 5:11 pm

Anon - That is exactly what I do for a living. I work in the affordable housing sector - 320 units in teh past 2 years.
Glad to see you hide behind anon., and really do not know what you are talking about - for I am neither a hippie nor leach on the system

Posted by Rob on Jan. 30, 2013 @ 11:13 am

So you personally put up the money to pay for 320 homes?

Because that was what he was suggesting.

Posted by Guest on Jan. 30, 2013 @ 11:28 am

I know. Tim writes:

"the existing transit can’t possibly handle the load of the new arena. "

Despite the fact that it already handles the load for a larger baseball stadium, to which many people walk from the Ferry Building anyway.

Oops.

At what point do the PIB at the Examiner get sufficiently embarrassed by this type of 'journalism'? It is really sad already.

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Posted by Sree689 on Nov. 07, 2013 @ 2:35 am

"The wealthy owners of a professional sports team will get free waterfront land to build an immensely valuable new arena. The city will pay to bring the fans there and get them home, deal with the traffic impacts -- and get almost nothing in return."

As usual, Tim Redmond and the Bay Guardian gets it wrong again. The City gets a rebuilt pier that would otherwise be condemned and maybe fall into the Bay and not to mentions thousands of both permanent and temporary jobs and the sales and other tax revenue that comes with it. Can Tim Redmond explain how a condemned pier that contributes nothing is somehow better then an arena? Notherberg is against it because is is a NIMBY. Thats his right, of course, but lets be honest about where is opposition is coming from.

Posted by Guest on Jan. 18, 2013 @ 9:15 am

There is little reason for reading his particular reasons for opposing a particular development because he opposes every development on ideological grounds.

Precisely why he hates this specific deal realy isn't relevant, because he will always find some reason to hate even something that will bring happiness to tens of thousands of sports fan in the city AND bring in much collateral revenue.

Posted by Guest on Jan. 18, 2013 @ 10:04 am

The edifice of man's folly crumbling into the salty waters of the Bay illustrates the power of our mother earth as she reclaims what is rightfully hers. I find intense beauty in such a poignant scene - we should explore such tableau and incorporate them into our reality.

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Posted by Guest on Jan. 18, 2013 @ 11:19 am

I like it, too. It was the first time when I read about such thing.

Posted by Minkner on May. 21, 2013 @ 11:57 pm

It’s not the ball team that is in question. It’s the LOCATION of the arena that is in question. Is this the best place for the arena? People, this is your historic and picturesque waterfront. Tourists come from all over the world for the VIEWS. The environmental impact of an arena IN the bay is beyond astronomical. Let’s keep your waterfront intact, shall we? And find another location for the arena by all means.

So quick to jump on the buzz words and bring on the hate, too. You’re all in this together, people, and NIMBYism has nothing to do with it. Invest some money to save the pier and keep the historic context of your city’s waterfront! Support the arena and bring the Warriors to a suitable location that does not debase and deface your bay just to assuage a mayor’s ego! UNITE! Bring the Warriors, but NOT to the waterfront!

Posted by THINKAboutIt! on Jan. 19, 2013 @ 3:42 pm

It’s not the ball team that is in question. It’s the LOCATION of the arena that is in question. Is this the best place for the arena? People, this is your historic and picturesque waterfront. Tourists come from all over the world for the VIEWS. The environmental impact of an arena IN the bay is beyond astronomical. Let’s keep your waterfront intact, shall we? And find another location for the arena by all means.

So quick to jump on the buzz words and bring on the hate, too. You’re all in this together, people, and NIMBYism has nothing to do with this. Invest some money to save the pier and keep the historic context of your city’s waterfront! Support the arena and bring the Warriors to a suitable location that does not debase and deface your bay just to assuage a mayor’s ego! UNITE! Bring the Warriors, but NOT to the waterfront!

Posted by THINKAboutIt! on Jan. 19, 2013 @ 3:43 pm

Maybe the city can get the USS Iowa back from LA and berth it at the existing pier. The city that knows how sure blew that deal!

Posted by Guest on Jan. 19, 2013 @ 10:34 pm

Jason Grant Garza here ... Yeah, the CITY that KNOWS BEST ... what a farce.... what the city knows is that there is NO ACCOUNTABILITY if one of it own does WRONG. What about the CRIME LAB FIASCO, what about the COMPUTER (Cobra - city computers) FIASCO and what about the DPH FIASCO?

What do I mean ... LOOK at this SIGNED SETTLEMENT/CONFESSION for BREAKING FEDERAL LAW which admits fault and guilt and then LEAVES it INNOCENT VINDICATED VICTIM for DEAD ... did the CITY ATTORNEY, LYING EXPERT, COURT JUDGE pay the PRICE or just the INNOCENT VICTIM ... mind you the SIGNED CONFESSION was not OUT of the CITY'S GOOD HEART since it was YEARS later upon me continuing against ALL ODDS and ALL INHUMANITY ... http://www.myownprivateguantanamo.com/settle1.html

So again more RECENTLY DPH BREAKS the LAW AGAIN ... http://www.youtube.com/watch?v=7cP3jCmJFRo

Then I go to the Sheriff (Ross) and the GAMES, false help, false concern, false compassion start again and I drink his CUP of POISON and return to DPH ...
http://www.youtube.com/watch?v=ZYC-syG0D7Y ... notice WHO ELSE this there nd NOTICE NO RESTRAINING ORDER ... then see below DPH on 12/19

Then per ROSS on 12/19 I go to DPH where they BREAK the LAW again ....
http://www.youtube.com/watch?v=VFd-KtS8Zss

and as of TODAY after requesting followup meeting with ROSS ... NOTHING.

Surprised ... why? What is the CONSEQUENCE to them? What was the CONSEQUENCE to the CITY ATTORNEY, LYING EXPERT, JUDGE in case C02-3485PJH ??? Where was the CORRECTION .... oh coarse not ... just move on to the NEXT VICTIM.

What is the CONSEQUENCE since as ROSS puts it ... if the DA and CITY ATTORNEY do NOT wish to support you in this LAW BREAKING activity .... there is NOTHING his office (Sheriff) can do. Well, it seemed they can again be DPH's LAPDOG and violate my rights as what happened on 12/19. What is the CONSEQUENCE ... my, I can not even get followup meetings ... Where should I go DIE?

So the CITY that KNOWS BEST ... knows it does NOT have to PLAY by the RULES. LAWS or assembalance of HUMANITY since there will be NO CONSEQUENCE ...

They will do whatever, spin it as helping you, retire and live the good life, give the store away and swear that they did all they could. Great GAME, Great ILLUSION, great INHUMANITY ... remember YOU ARE NEXT and if this is WHAT they did to me who went ALL the DISTANCE .... what will they do to YOU?

Enjoy ....

Keep DRINKING the KOOL AID.

Posted by Jason Grant Garza on Jan. 21, 2013 @ 7:21 am

is any discussion of whether we need to bring the Warriors in at all. Before this whole controversy, I'd never even heard of the Warriors. I still have no idea who they are. All I know is that the city is paying *them* to come use our city property! These warriors must be very special if we're paying them to take valuable real SF real estate. Maybe they are, but color me skeptical. I got along just fine without warriors, so why do I need them now?

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Posted by kelly123 on Jul. 01, 2013 @ 5:56 am

I disagree with Nothenburg. San Francisco has little leverage in these negotiations. This a much different situation than what he had when he was dealing with the Giants. Because Frisco still had the Niners in town during that time. With the Niners leaving San Francisco for Santa Clara in a few years. I don't think San Francisco can afford to say no to a Pro Team that is basically paying the city the majority of the money to build the stadium. With the jobs that will be lost when the Niners leave. The city has to make up for that lost some how.

Also some of you people don't realize that the Warriors have other options besides Frisco. Namely a certain city that is ironically also from the Santa Clara County Area. A city called San Jose. With a growing population (that has currently passed San Francisco I might add) and a strong Economy. San Jose is perfect place for an NBA city. They also have a modern stadium available(HP Pavillion) which will save the Warriors the trouble of building a new one. Oh and to top it off most of the fans that go to Warriors games. Are from the San Jose area. So I don't think the residents there will mind that they will have to travel less to see their favorite team.

Posted by Guest on Jan. 26, 2013 @ 6:43 pm

SJ does not have more in attendance at Warrior games than the East bay! Flat out lie man! Warriors belong in Oakland. Home of nba talent. SJ nor SF has that.

Posted by Bauce on Feb. 01, 2013 @ 10:56 am

No its not a lie. You can thank the High Crime Rate and the bad Economy in Oakland for that. Two of the biggest factors why Warriors want to leave Oakland. Just like the Athletics and the Raiders.

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Posted by mady on Dec. 23, 2013 @ 9:29 pm

TIL there is a sports team in san fran called the warriors. I thought it was just a movie from the 70's. It does sound like the city is getting ripped off though.

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