AC34 Host and Venue Agreement (cont...)

November 10, 2010

5. Event Facilities.

5.1 As set forth in the Space Plan, the City shall make available to the Authority the following Venues for the Event:

(a) The City (acting through the Port) shall provide the Authority with exclusive possession and control of Pier 28, Piers 30-32, Seawall Lot 330, Pier 48, and Pier 50 as the long-term Venues for the Event (the “Long Term Venues”).  The Long Term Venues shall be delivered to the Authority with all of the Infrastructure Work for which the City is responsible under Section 6 below completed by the dates specified in Section 6.  The Authority’s right to exclusive use of the Long Term Venues may, at the option of the Authority, continue until six months after the Match.  Furthermore, as is reasonably necessary, the use of these Long Term Venues may be extended for future America’s Cup events at the option of the Authority if the GGYC succeeds in defending the America’s Cup, is not then in Breach and, after negotiation of a new host city agreement, elects to hold subsequent, successive America’s Cup regattas in San Francisco (the “Successive Defense Option”).  However, the Authority’s use of Pier 48 under the Successive Defense Option shall be permitted only where not in conflict with the City’s obligations under the Exclusive Negotiating Agreement (“ENA”) with Seawall Lot 337 Associates, LLC (“SWL 337 Associates”), under which the City is obligated to negotiate exclusively with SWL 337 Associates for long-term development of certain City property under Port jurisdiction that includes Seawall Lot 337 and Pier 48 (the “337 ENA Area”).  Under the ENA, the Port is obligated to provide SWL 337 Associates with prior notice of any interim uses or rights on any portion of the 337 ENA Area.  If the GGYC succeeds in its defense of the America’s Cup, GGYC elects to exercise the Successive Defense Option, and the 337 ENA Area is still subject to the ENA, the City may limit GGYC’s right to extend its right to use any portion of the 337 ENA Area.  However, in such case, the City shall provide alternative space owned or controlled by the City that is functionally equivalent to the 337 ENA Area.

(b) The City shall make available for the Authority’s use other facilities for the Event, as further set forth in the Space Plan or the People Plan, for shorter or intermittent periods of exclusive or nonexclusive use, as needed in the Authority’s judgment to accommodate the Event (the “Short Term Venues”).  The Short Term Venues include: (i) use of the Brannan Street Wharf (which may include limited periods of exclusive use during the Event to the extent permitted under the bond financing covenants for the Brannan Street Wharf and/or requirements of public use for projects subject to tax exempt financing); (ii) exclusive use of one of the following at the City’s election: that portion of Seawall Lot 337 as shown on the Space Plan, or a functonally equivalent portion of Terry A. Francois Boulevard or other Mission Bay space within a one-half kilometer radius of Seawall Lot 337; (iii) those portions of the on-shore and on-the-water spectator areas as are subject to the Authority’s exclusive control (but only during such periods of exclusive control); and (iv) at the Authority’s election, exclusive use of Pier 38 or the water area between Pier 14 and Pier 22½, Pier 40 and/or Pier 54.  The Short Term Venues shall be provided under Venue Leases where the Authority will have exclusive use and control, and shall be provided under licenses or permits issued to the Authority where the Authority either will not have exclusive use and control or will have exclusive use and control for intermittent periods (and references in this Agreement to “Venue Leases” shall include such licenses or permits, except where otherwise expressly provided or required by the contest of usage).  The City shall deliver these Short Term Venues to the Authority by the dates and during the periods specified in Exhibit C to this Agreement.  The Authority’s right to use of the Short Term Venues subject to Venue Leases will continue for up to six months after the Match, as reasonably necessary.  However, the use of these Short Term Venues also may be extended at the option of the Authority in connection with exercise of the Successive Defense Option, except as provided above with respect to 337 ENA Area. If the physical condition of a Short Term Venue materially changes between the execution of this Agreement and the delivery of that Venue to the Authority, the City shall offer functionally-equivalent space subject to the approval of the Authority.

(c) The City shall provide to the Authority sufficient land, pier and water space at and around Pier 80: (i) to hold the America’s Cup World Series Pre-regatta(s) in 2011 and/or 2012; (ii) at any time after the City is selected as host city and until six months after the Match, to store, maintain, launch and berth USA 17, the yacht that won the 33rd America’s Cup in Valencia, Spain in February 2010; (iii) for the operation of a temporary heliport during the Event (the use of which shall be restricted to emergency services, media and regatta operations directly related to the Event); (iv) for race operations, staging and storage for the Event; and (v) for temporary facilities for Competitors and Officials during construction and development of facilities in other locations.  These uses may require the Authority to occupy all or a portion of one of the existing sheds on Pier 80.  The use of these facilities on Pier 80 shall be provided under a Venue Lease and also may be extended, as reasonably necessary, at the option of the Authority in connection with exercise of the Successive Defense Option.  The portions of Pier 80 and its surrounding waters available for the Authority’s use, and the dates and duration the same will be made available for the Authority’s use, are as set forth in Exhibit C.  The Authority acknowledges that Pier 80 is a Port maritime industrial complex designated as a port priority use area, and the Authority and the City shall, to the extent not inconsistent with the above, cooperate to avoid conflicts between the above uses and maritime uses of Pier 80 (or, where unavoidable, to minimize such conflicts).  The Authority shall use best efforts to return to the Port possession of Pier 80 as soon as the Authority determines in its sole discretion that Pier 80 no longer is needed for the Event (but subject to the Authority’s rights to re-occupy the same in connection with the Successive Defense Option).

(d) The Port has provided the Authority with facility condition reports for each of the Event facilities that may become subject to Venue Leases.  The Authority acknowledges receipt of these reports and agrees that, should the Venue Leases be entered into, the Authority will accept possession of all Event facilities under this Agreement in their “as-is” physical condition, with allowance for ordinary wear and tear and except as otherwise provided in this Agreement. 

(e) If the Authority’s use of the Event Venues is extended by exercise of the Successive Defense Option, then (i) as to all Venues other than Piers 30-32, Seawall Lot 330 and Pier 50, possession shall be returned to the Port during the periods such facilities are not reasonably required by the Authority for more than [one hundred eighty] days and the Port shall be entitled to all rental and other consideration during such periods as possession is with the Port, and (ii) as to Piers 30-32, Seawall Lot 330 and Pier 50, possession shall be retained by the Authority (or its nominee) during the periods such Venues are not reasonably required by the Authority for the Successive Defense Option, and the Authority shall be entitled to all rental or other consideration attributable to use thereof during such periods.  With respect to Event facilities returned to Port possession under clause (i), the City shall use the same (or permit them to be used) solely for purposes which are consistent with the Authority’s anticipated further use thereof (with no modification to or removal of alterations or improvements made by or at the direction of the Authority) and shall return the Event Venues to the Authority in the same condition as when possession is received by the Port, except for ordinary wear and tear and uninsured casualty.

5.2 Provided the Authority is not in Breach of this Agreement, the City (acting through the Port) shall grant to the Authority or its nominee(s) the exclusive right to possession, use and control of the Long Term Venues, the Short Term Venues, and the Pier 80 facilities described in Section 5.1(c), under separate leases and licenses in form satisfactory to the Authority (the “Venue Leases”) as follows:

(a) The City shall deliver all facilities subject to Venue Leases free of tenants or other occupants, with all personal property removed.  The City shall deliver the Venues strictly in their “as is” condition, provided the City shall not take any action from the date of this Agreement that would materially increase the cost to the Authority of using such Venue as intended by this Agreement. The City shall provide title insurance in form and from an issuer acceptable to the Authority covering the property to be leased under both the Venue Leases and Legacy Leases.

(b) The Venue Leases shall convey exclusive possession and control of the premises (other than as set forth in Section 5.1(b), and Pier 80), the demised premises shall include, to the maximum extent permitted by law, the surrounding waters extending in all directions from the outermost edge of the pier deck or apron to the maximum distance the Port owns.  The waters adjacent to Pier 80 included in the Venue Lease thereof shall be as specified in Exhibit C.

(c) The Venue Leases shall require that the Venues be used for purposes reasonably related to the Event, including: (i) Competitors’ bases (including an adjacent mooring area and mooring facilities and on-shore working facilities); (ii) Officials’ base(s); (iii) Event Sponsor, Commercial Affiliate and other hospitality areas; (iv) berthing and associated services and facilities for spectator vessels; (v) media center; (vi) America’s Cup Village (public information recreation and commercial area/facilities); (vii) ACRM offices; (viii) the Authority’s offices; (ix) accreditation center; (x) volunteers’ center; (xi) a temporary helipad on Pier 80 to be used solely for emergency, media and regatta operations; (xii) storage facilities; (xiii) appropriate parking facilities for the Authority, Authority Affiliates, Competitors, Event Sponsors and Commercial Affiliates and the media; and (xiv) other uses incidental thereto where reasonably related to staging of the Event.

(d) No rent, additional rent or other like charges shall be payable to the City, including its Port, under the Venue Leases.  The Committee shall pay: (i) to the City, all possessory interest taxes, utility taxes and other taxes, fees or charges imposed by the City or any Governmental Authorities for or with respect to the possession and/or use of the Event Venues and all improvements, fixtures and personal property located thereon, excluding any personal property taxes levied on the race, tender, spectator, or other vessels; and (ii) to the applicable utility provider, the costs of all electricity, natural gas, water, sewage and refuse removal (the "Utility Costs") under the Venue Leases, but only to the extent of customary for the Event use, including vessel mooring utility services, but specifically excluding Utility Costs associated with large scale removal or demolition of vessels or equipment, and construction work relating to the Infrastructure Improvements under Section 6, and (iii) to the applicable service provider, the costs to connect fiber-optic cable for telephone and data communication services to the Venues as reasonably necessary for the Event.  The Authority shall take appropriate actions to moderate and limit the consumption of water, electricity and gas to the extent feasible consistent with the operation of the Event and otherwise in accordance with commercially reasonable and environmentally responsible practices.

(e) So long as the Authority is not in Breach, the Venue Leases shall impose no restrictions on the assignment thereof to any of the Authority Affiliates or any sublease to any Authority Affiliate or Event Sponsor for uses consistent with the Event Plan.  The Port shall have no right to receive any of the consideration payable in connection with any assignment of or sublease under a Venue Lease.

(f) The Venue Leases shall obligate: (i) the City to protect, defend, indemnify and hold harmless the Authority, its nominee(s), Authority Affiliates, and others regularly occupying the premises with the Authority’s permission or agreement (collectively, “Authority Users”) from all Losses that are attributable to the presence of Hazardous Materials on the premises at the commencement of the applicable Venue Lease, and any Hazardous Materials subsequently brought upon or otherwise impacting such premises by the act(s) or omission(s) of the City, its employees, agents and contractors (collectively, “City Agents”), except to the extent that Authority Users exacerbate any such Hazardous Materials contamination; and (ii) the Authority to protect, defend, indemnify and hold harmless the City and the City Agents from all Losses that are attributable to the presence or alleged presence of any Hazardous Materials on the premises where caused by the Authority or Authority Users or, where any Hazardous Materials condition is exacerbated by the Authority or Authority Users, the obligation of the City and the Authority to protect, defend, indemnify and hold harmless one another (as well as, respectively, the City Agents and the Authority Users), shall be apportioned in accordance with the degree of fault.

(g) The remaining terms and conditions of the Venue Leases shall be no less favorable to the Authority than what the Port has agreed to with other highly sought after, “credit” tenants making significant improvements to the premises and/or whose presence significantly enhances maritime and visitor-serving uses in or about Port properties.

(h) The parties acknowledge that certain of the facilities proposed for Event use are subject to existing leases and other contracts that may conflict with this Agreement.  To the extent permitted by law, the City at its sole expense shall modify, suspend or terminate such leases and other contracts insofar as necessary to eliminate such conflict. If the City is not able to eliminate such conflicts, the City shall provide functionally-equivalent space subject to the approval of the Authority.  Nothing in this Agreement shall require the City to exercise its powers of eminent domain.

5.3 The Authority shall be entitled to conduct further due diligence on the proposed Event Venues to determine their suitability for the Event and the timing and cost of repairs, alterations and improvements to be performed by the Authority to utilize the Event Venues for AC 34 (including the Infrastructure Work under Sections 6.2(a) and 6.2(b)).  The City shall cooperate fully with the Authority in making available all data in the City’s possession (or under the City’s control) regarding the Venues for the Event (including any alternate venues considered as part of the CEQA review), and providing reasonable access to the Authority and its consultants to inspect and investigate such Venues. 

6. Infrastructure Works.

6.1 If the Venue Leases and the DDAs for the Legacy Leases and Transfer Agreement are entered into by the City and the Authority, the City shall perform or cause to be performed the following:

(a) The City shall cause the US Army Corps of Engineers to demolish and remove Pier 36 by no later than January 1, 2013.

(b) The City shall remove the substructure, pilings and footings at, or adjacent to, Pier 36, and shall dredge the water area between Piers 30-32 and Pier 38, or, in the alternative, the water area between Pier 14 and 22½ if agreed by the City and the Authority, to a minimum depth of five meters by no later than January 1, 2013. However, if the Authority obtains a cost estimate to perform this work and it is less than the City's estimate to perform the same work, the Authority may (but is not obligated to) perform such work at the City's cost, not to exceed the amount of the Authority's cost estimate.

(c) The City shall remove Sheds A, B, C and D from Pier 50 as soon as possible but no later than six months following CEQA certification. However, if the Authority obtains a cost estimate to perform this work and it is less than the City's estimate to perform the same work, the Authority may (but is not obligated to) perform such work at the City's cost, not to exceed the amount of the Authority's cost estimate. The City and the Authority, prior to finalizing their scopes of work for their Infrastructure Works, will meet to coordinate schedules so that work by both Parties may proceed simultaneously if possible.

(d) The City shall complete the Brannan Street Wharf by no later than June 30, 2013.

(e) The City shall ensure under the People Plan, whether by temporary traffic controls or temporary or permanent pedestrian crossing improvements, that the movement of people across the Embarcadero roadway near Piers 30-32 can be accommodated safely and efficiently.

6.2 Under the applicable Venue Lease, the Authority shall perform or cause to be performed the following:

(a) All pile replacements, substructure strengthening and deck repairs on Piers 30-32 and Pier 50 as may be required by applicable laws and other work required for the staging of the Event or as the Authority otherwise deems necessary or appropriate.

(b) The construction of breakwaters generally as shown on the Space Plan, with such modifications thereto or deletions thereof as the Authority determines to be necessary or appropriate for the Event.

(c) All repairs and improvements to the other Event facilities as the Authority deems necessary or appropriate.  The Authority may refrain from making any repairs or improvements (except as required by Sections 6.2(a) and 6.2(b)) so long as the Authority’s use of the particular Event facility lawfully can be accommodated without such repairs or improvements. The City shall cooperate with the Authority in regard to mitigating repair and improvements costs for the Event facilities that will not be subject to the Legacy Leases, it being understood that the City is not expecting the Authority to undertake significant repairs or permanent improvements for the Event other than as required under Sections 6.2(a) and 6.2(b).  In addition, the Authority has the right to defer the infrastructure work under Sections 6.2(a) and 6.2(b) to the start of the applicable Legacy Lease so long as the Event facilities can be used for the Event in accordance with applicable codes.

6.3 The City expects that the Authority or the Authority Affiliates will expend $150,000,000 or more in both hard and soft costs of performing the Infrastructure Work for which the Authority is responsible.  In negotiating the Venue Leases, the City and the Authority shall identify a minimum scope of work under Section 6.2 (the “Authority Infrastructure Work”) that satisfies the pile and strengthening requirements including seismic upgrade City’s expectation. 

6.4 The work in Sections 6.1 and 6.2 is collectively referred to as the “Infrastructure Work.” Before the commencement of any Infrastructure Work, the Party responsible for such work shall obtain from their contractors' sureties, customary payment and performance bonds for the completion of such Infrastructure Work. Any proceeds from the performamce or payment bonds will be used to complete the Infrastructure Work.