Part I of of Port Story detailed the romanticized vision and real-life condition of San Francisco’s waterfront blight. Part II shines a light on those rising to the challenge, those who are planning ways to preserve and build public spaces, without compromising integrity or stability.
Building a Beacon of Trust
By Kristen BoleSpecial to Bay Crossings
Published: April, 2006
ust south of the Bay Bridge stands a sleek, 22-story tower, rimmed with glass and balconies. Inside, The Watermark’s 136 high-end condominiums represent the essence of luxury living for the well-heeled of San Francisco, with an Olympic-sized pool, spa, concierge and floor-to-ceiling windows offering expansive views of the Bay. For the Port of San Francisco, it represents a new lease on its future.
Not only has the project already generated substantially more revenue to the Port than the expected $20 million, even before its projected opening in April, it also has managed to clear some critical hurdles in both waterfront development and San Francisco approval.
Part of the $400 million project to develop the James R. Herman International Cruise Terminal at Piers 30-32, The Watermark is one of a handful of projects that promise to spread the beauty of the Port’s new Ferry Building and northern developments southward from the Bay Bridge.
That’s not an easy prospect in the wake of the failed Mills Project on Piers 27-31. But in this case, it might offer not only a ray of light for the cash-strapped Port, but also a lesson of how to do it right. It’s the only entitled development project we’ve got to upgrade our piers, Port Executive Director Monique Moyer said in an interview late last year. It’s our beacon.
Great Reason for Optimism
The Port, which announced a $1.1 billion, 10-year capital plan in mid-March to bring its piers into working order, is struggling to raise its head above its own high-watermark of debt and neglect. As Bay Crossings reported last month, the Port’s $55 million annual budget includes only $7 million for capital expenses, to serve 7.5 miles of aging waterfront, while its trademark finger piers have gone so long without repair that 31 of its 39 pile-supported piers face roughly $20 million apiece in renovations to be suitable for public use.
But while it doesn’t have cash, the Port does have one possession that’s envied the world ‘round: Almost every inch of San Francisco’s waterfront real estate. It is battered real estate, to be sure, but it is 1,000 acres, nevertheless.
That real estate offers huge promise. Following the successes of the Ferry Building, Pier 1, the Pier 7 walkway and SBC Park, the Port has a number of projects underway to provide the waterfront access that San Franciscans crave:
• Pier 14 is being transformed into a public pier similar to Pier 7;
• Piers 1 ½ /3/5 are under renovation for new office space, restaurants and part of a Bayside walkway that will run from Mission to Broadway;
• The Brannan Street Wharf, a $15 million, 57,000 square foot public park is moving into the next stage of the Cruise Terminal project and extending that open space into South Beach, and the Third Street light rail is improving public access.
• The Exploratorium is in discussions over moving into Piers 15 and 17 and already has gained approval from the Board of Supervisors to explore that further.
• Two new restaurants are projected at Rincon Park.
• Future developments include: a
13- mileBlue Greenway to run the length of the Waterfront, and a bold, mixed-use project around the ship dry docks at Pier 70.
There’s great reason for optimism, said Paul Osmundson, development director for Lend-Lease Communities, which is developing the Cruise Terminal. You’re seeing a modern day renaissance of the Port.
Once the province of boaters and dwindling maritime, the waterfront is finally open to the people of San Francisco, and they’re realizing it’s a treasure. Unfortunately, that treasure is not only restricted by the Port’s financial status, but also by state waterfront laws that severely limit its use.
The Public Trust Doctrine was designed to save places like Mono Lake, explained San Francisco Supervisor Aaron Peskin. It isn’t designed in a way that makes sense for a highly urban waterfront like the Port of San Francisco.
Among its limits are restrictions on private development on all Port property, waterfront or otherwise, including residential uses. The Port was able to get those limits waived for The Watermark by transferring like-value property into the Trust, but that’s not always possible.
Soon, the Port is expected to present draft legislation to the Port Commission, in an attempt to get the state to release non-waterfront Port properties from the Trust without having to transfer other property into it.
Other than that, it’s just the money.
There are good development ideas that can convert this waterfront to make it more of a resource for San Francisco. Not just public access, but also jobs, said Byron Rhett, the Port’s deputy director for planning and development. The biggest concern we have is whether there really are the resources out there to deal with the major infrastructure costs to make this a reality.
There’s one other concern, too. For those projects to work, we all need to learn the hard lessons from the Mills Project.
Portrait of a Failure
When San Franciscans voted in 1990 to develop a Waterfront Land Use Plan, they created a new vision for the Port, with open space and public access, alongside industrial and commercial space that would enable the projects to pay off.
That plan included a mixed-use recreational area at Piers 27-31, which drew two bidders: mall developer Mills Co. and recreational developers Chelsea Piers. There are many tales of backroom deal making that purportedly led to the final handshake with Mills. What’s significant now is not how they won, but how they lost.
Jon Golinger heads Citizens to Save the Waterfront, a coalition of more than 100 groups and individuals, ranging from property developers to Pier 39 shopkeepers to environmentalists, who very vocally opposed the Mills project. Golinger said the project was far from the recreational center the community had been promised, and ultimately failed due to Mills’ inability to develop an appropriate plan, accurately gauge the Supervisors’ response or collaborate with the public.
It’s true the Mills plan changed in the last few years, but it never overcame its flaws, he said, calling Port staff the unsung heroes for their attempts to make something work. It remained a mall with far more retail and restaurant space than any groups in our coalition thought was good.
As Board of Supervisors President Aaron Peskin said, when asked what lessons we learned from Mills: Don’t get cute with the electorate. Don’t make promises and change mid-way.
While local activists had real concerns, much of the failed project’s problem was, ultimately, its image, and its inability to garner public trust and support. Moyer, from the Port, said the Port, too, learned some lessons.
The port has extremely limited resources, so we’ve relied on our developers to build consensus on their projects, she said, shortly before the project officially ended. That, essentially, turns over the port brand to a third party, and we won’t do that again. We need to control our brand.
Going Forward
In Feb., a new solution surfaced: A $9 million deal in which two San Francisco companies, Shorenstein Development LLC and Farallon Capital Management LLC would pay Mills for the rights to the project. The Port Commission voted Mar.14 to transfer those rights.
To some, that’s the perfect solution: They’re local, experienced with public input, and are planning to move their own headquarters to the site. That’s likely to create something that will mimic the other renewed properties at Piers 1 to 5: beautiful but not high-traffic.
That doesn’t mean the Mills impact has ended. Overturned after nearly a decade of Port work, the failure sends a clear message to prospective developers that this is not an easy city in which to do business.
This is very discouraging for quality developers, said Osmundson. In most real estate, the risks are a question of when, not if, you’re going to get your project entitled… At the end of the day, the number of qualified developers who will take that on gets reduced to zero.
The good news is that several of the current projects and proposals have already learned those lessons: The Women’s Museum, Exploratorium and current Cruise Terminal projects all submitted proposals to the Board of Supervisors during initial stages in their planning, saving years of effort if they were to be turned down. None were. The Port Commission also required Shorenstein to immediately obtain the Supervisors’ approval once the Port gives the initial OK.
The Cruise Terminal also suggests an innovative – and transparent – solution to financing the project. Not only does it limit the developer’s returns to 12.5 percent of its investment, but also provided $9 million in cash up front to the Port, for the land. Extra condo sales proceeds will go straight to the Port, earmarked specifically for the Cruise Terminal project.
Most importantly, projects are including community input much earlier in the process.
We listened very carefully to what South Beach wanted to see in a development, Osmundson said, noting the unanimous support by the Supervisors as a result. We engaged them up front and we’ve constantly adjusted our plans to what the neighborhood wanted.
The Pier 70 plan, while early, also offers some good examples. One of the Port’s few remaining maritime sites, Pier 70 is home to BAE Systems Ship Repair, NorCal Recycling and the City’s car tow-yard, as well as decrepit Victorian-era buildings. Those are all part of a bold, $460 million plan, developed by San Francisco environmental design firm EDAW Inc., for a working waterfront that includes offices, parks, artist lofts and studios and esplanades around the gigantic ships under repair.
Through a collaboration with SPUR, the Port contributed $250,000 to sponsor EDAW’s summer internship program last year, in which it brought the best and brightest graduate students, plus world-renowned mentors, to tackle the project.
That led to a complete design and financial analysis for Pier 70, which the group released a few weeks ago. The result is a 56-acre plan that includes broad public input.
The key advantage to the students is they listen better, explains EDAW’s Alma De Solier, who co-managed the internship last summer. All they want to do is the right thing, so the stakeholders around them participate in a more open way. They’re not suspicious.
Perhaps that’s the real lesson from Mills.
I think trust underlies it all, said Golinger. Before the Port’s going to be able to really get out of their hole, they’ll have to reestablish trust with the community.
This is one of those watershed moments, he said. It’s got to include asking the people of San Francisco to help. It’s got to include asking the state legislature. And it’s got to include re-establishing trust with the community and the Board of Supervisors.
After that, the bottom line is very positive.
The future looks incredibly bright for the waterfront, despite the challenges they’re facing—and they’re huge, said Osmundson. It’s incredibly bright, though. It just comes down to money; and a lot of it.
“Concept Vision Plan” proposes open space while preserving the original historic character of Pier 70.
