Does Mills make sense?

Peskin measure gives supervisors an early say over a controversial waterfront development

It wasn't supposed to go like this.

 When Virginia-based mall developer Mills Corp. used political pressure by then-mayor Willie Brown and a partnership with the YMCA to narrowly win Port of San Francisco approval, in 2001, for the exclusive right to build a shopping center and office park at Piers 27-31, the project was supposed to slide right through.

 The Board of Supervisors was effectively cut out. All that elected body – which includes some supervisors who have been critical of the Mills project – could really do was tinker with the environmental impact report, or maybe just refuse to certify it and risk getting sued.

 But that was before a little-noticed change in a fairly noncontroversial ordinance put the board in the driver's seat.

 Now a clearly concerned Mills Corp. has launched an aggressive lobbying and public relations campaign – including a series of full-page newspaper ads – urging the public to convince the board to certify that the project makes long-term financial sense when supervisors consider the matter next month. Otherwise, the project could be dead even before its EIR is complete, setting up the port to chose another developer when the Mills contract expires next year.

 Board president Aaron Peskin won approval last year for his Fiscal Responsibility and Feasibility Ordinance. "The whole notion of the ordinance is before you go headlong into these projects, let's make sure the city has the resources to maintain it over time," Peskin told the Bay Guardian, noting how many projects in the city get built without solid plans for the long-term operating funds needed to maintain them.

 The ordinance covers projects that get over $1 million in public funds and other taxpayer-backed subsidies, and in July of this year, with the Mills project in mind, the board modified the measure to include in its definition of public funds the lucrative rent credits Mills is getting.

 "I think [Mills executives] are scared. They didn't expect the board to be able to weigh in on this before the end," said Jon Golinger, who is leading the opposition to the project. "The board now gets to assess whether we can trust this company to do what they say they're going to do."

 And trust seems to be a key issue in this case. Under state law and Prop. H, in which San Francisco voters required a recreation plan for the northern waterfront, Piers 27-31 are supposed to be geared toward offering recreational amenities to San Franciscans. Mills and port officials say the project's YMCA and the "recreational retail" focus of its shops will meet that requirement.

 Critics in Golinger's group say the project is little more than a glorified mall using the recreation label to pass legal muster, an accusation that Mills Corp.'s 2003 annual report does little to contest, calling the project "an attractive entertainment, dining, shopping and office center" and never once using the word "recreation" (a word added to the label in its 2004 report).

 An otherwise breathlessly laudatory economic study commissioned by the developers and released in July also indirectly raises the question of whether the 164,700 square feet of office space in the project will generate enough cash to pay for all the developer's promises. Based on statements made by Mills executives, the report notes, "the project is unlikely to be built unless it can achieve minimum net rents of $35 per square foot which represents a major premium over current rents, that few if any existing tenants would be able or willing to pay."