OP ED: An Appeal to the San Francisco Giants
We all love our 2010 and 2012 World Champion Giants and wish them all the best in 2014. But I also want to see the team do right by San Franciscans.
The Giants built their ballpark for more than $350 million in 2000, and leases land from the Port. The 2012 property assessment was approximately $196.8 million, at least $200 million under value in my opinion, resulting in a property tax loss to the City in excess of $2.3 million annually. Yet the Giants are appealing even this $196.8 million assessment, seeking to reduce the value to $140 million, an additional revenue loss to the City of greater than $650,000 annually.
When I worked in the San Francisco Assessor’s Office years ago one of my assignments was to value the Giants ballpark. After construction was completed, a principle appraiser, a senior manager, and I met with Giants management in 2003 to finalize the ballpark value. I’ve worked with the Giants management numerous times; they’ve always been professional, courteous, and fair.
Both parties agreed that a cost approach would be the preferred method of valuation, and agreed on costs of around $350 million. The only difference in the final valuation being challenged was a marketing cost of $7 million in assessed value, reflecting $80,000 in tax revenue. The Giants agreed to a middle ground to increase the assessment by $4 million. I advised the senior manager to accept this middle ground since it was reasonable and the Giants had already agreed to the approximate $350 million construction cost. It was a win-win for both the Giants and the City.
The senior manager refused and wouldn’t budge on the $7 million assessed figure, reflecting a difference of only $35,000 in revenue. Giants management left the office very upset. I looked at the principle appraiser; he also couldn’t get over the fact that we wouldn’t work with the Giants. I’d worked closely with this principal appraiser over the years, and we always got the best and fairest value for the City. I left the office a year later. The Giants subsequently appealed and received a reduction of $200 million in assessed value. They’ve been receiving a reduced assessment ever since.
When a taxpayer files an appeal for a property value reduction under Proposition 8, it’s generally due to a decrease in value as the result of a stagnant economy. I can understand the Giants asking for a reduction if they could prove that their revenues had declined. Without the ballpark, the Giants wouldn’t receive revenues from the tickets, vendors, restaurants, advertising, cable television, and other profit centers. But its revenues continue to grow, which is wonderful. In my opinion and experience, the Giants should have never received a reduction in assessment.
The proposed reduction to $140 million makes no sense. The land assessment alone is at least $40 million from the capitalization of lease payments to the Port, leaving the balance of $100 million for the improvements. Naming rights were never assessed. Pacific Bell paid $45 million for those rights in 2000, rights that were subsequently transferred to AT&T. What are these naming rights worth today? Keep in mind that the 49ers/York and Levi Strauss & Co recently entered into a naming rights agreement for a 20 year, $220 million deal at $11 million annually. Are you telling me the Giants naming rights weren’t worth at least half this amount when its contract with AT&T expires?
I appeal to the Giants owners and management to withdraw all of their assessment appeals, which are insulting to San Francisco taxpayers, and to continue to be the class act that they are. This appeal is from a fifth generation San Franciscan who has been a Giants fan since I can remember, and who had the privilege to see the two Willies, Juan, the Clarks, Bobby and Barry Bonds and other Giants greats along the way. Everyone should pay their fair share.
John Farrell is a real estate broker and former assistant assessor with the City and County of San Francisco.
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