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Real Estate Reporter

The time value of money

Professional sports is sometimes about real estate more than about sports, as Oakland fans are finding with the A’s search for a new home. Photo: Amy K. Posner

Recently in the news there was a story about the Oakland A’s baseball team lining up political support for a new stadium to be built (they hope) at the Howard Terminal on the waterfront. The plan is opposed by unions and other groups who prefer to have it built closer to where the current stadium is located. San Francisco residents and sports fans certainly know all of the political vitriol and horse-trading that can go into approving and designing and building a sports stadium, whether it’s the Giants’ beautiful park or the new Warriors stadium. It might be about ball games, but it involves political arm-twisting, neighborhood pressure, and public venting by critics.

And sometimes it involves stopping time.

This reminds me of a story told to me by a real estate power broker back in Illinois. In the mid-1980s, Chicago White Sox owner Jerry Reinsdorf — who made his fortune in real estate — was threatening to move the team to Florida if he didn’t get a publicly funded deal to help him build a new Comiskey Park. The deal was a complex matter that involved a new state agency called the Illinois Sports Facilities Authority to build and run the new ballpark, and it had to be completed in the first half of 1988. Literally, before July 1, 1988. Unfortunately, politics is a messy thing, and come the evening of June 30, 1988, the state legislators were still arguing over the bill. The state’s powerful governor, “Big Jim” Thompson was reportedly working the floor of the legislature trying to get the needed votes. And as it got to midnight — it didn’t. Just a couple minutes before the clock was to strike midnight, the head of the Illinois House of Representatives stopped the clock. Froze it. The roadblocks to the bill were then worked out and it was passed, after actual midnight but before midnight by the bizarro rules of Illinois politics.

And thus new Comiskey Park was built, and 30 years later you can still find Chicagoans and other Illinoisans complaining about taxpayers being on the hook for the stadium that was rammed through the legislature with stereotypical Chicago political style. But they’re probably Cubs fans.

AND OTHER TRICKS

Meanwhile, in San Francisco’s local legislature, solons are considering a plan to fine owners of retail establishments if they don’t rent them. Owners of vacant housing could face similar punishment. I hope they’ll do some comparison research before fine-tuning the legislation.

Bloomberg reports on the situation in Vancouver, Canada, where a new tax on empty homes has foreign owners — many of them from China — renting expensive homes to college kids at bargain-basement prices just to avoid the unit being taxed for vacancy. Good for the college kids, not helpful for the families and working people who were probably the reason for the tax in the first place.

A better course of action might be one suggested months ago by Marina Times editor Susan Dyer Reynolds in these pages. She looked at cities that had passed extra taxes on foreign buyers of local real estate. The goal was to prevent new housing construction from being snapped up by overseas buyers simply looking to park their money in a safe investment, with no intention of occupying or even renting the unit. In a large city with lots of empty lots and space for housing, that might not matter much, but in a place like San Francisco, with limited space and unaffordable housing for many people, it could make good sense to institute such a tax or alternative disincentive for foreign buyers.

When people have lots of money and too few places to invest it or if they don’t trust their local banking system or government, they look for safe havens. If the stock market tumbles, that would create another wave of money looking to be parked somewhere.

Bloomberg reports that housing prices have fallen in Vancouver as foreign buyers look for someplace friendlier.

QUOTE UNQUOTE

“Uber’s blockbuster public filing revealed more than $1 billion in planned real estate spending in San Francisco, where it is the third-largest private tenant.

“In the past decade, the ride-hailing company grew to own and lease 1.7 million square feet across four neighborhoods: Mid-Market, Mission Bay, the Financial District and Pier 70 in the Dogpatch. Only Salesforce and Wells Fargo have more real estate.

“About 1 million square feet of that space is unoccupied and under construction in four adjacent buildings in Mission Bay, which will become the company’s headquarters when it opens next year.

“The bulk of Uber’s office spending is tied to two of the Mission Bay office buildings, which total 580,000 square feet and are part of the Warriors arena complex. Uber said it will pay $1 billion to lease the buildings over 20 years, or $86 per square foot annually.”

—Roland Li, San Francisco Chronicle

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