Another private development proposal sinks. Piers are falling into the water. Is the Port of SF broken?
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Another setback to the Port of San Francisco's plan to allow development of Piers 2731 has brought about a new round of soul-searching at the beleaguered agency, as well as calls to change what may be allowed along the waterfront.
Last month the port's latest private development partner, Shorenstein Properties, withdrew its plan for a mixed-use facility that relied on large amounts of office space to recoup the cost of renovating the dilapidated piers. The State Lands Commission, which watchdogs new waterfront construction for adequate maritime and public recreation uses, signaled in November 2006 that it would not support the office-heavy design. The port's previous development partner, Mills Corp., pulled out last March after half a decade of public Sturm und Drang over its plan for a shoreside mall.
For years the Port Commission has looked to Piers 2731 as a magic bullet for its financial woes. The port receives relatively little money from actual port operations, and as an enterprise fund department, it receives no subsidies from the city's General Fund. Moreover, when the state transferred jurisdiction to the agency by way of the 1968 Burton Act, it handed down a good deal of debt and deferred maintenance.
Estimates now put the cost of fixing the port's crumbling piers and properties at around $1.4 billion, with the vast majority of those costs not yet funded. With construction costs rising between 8 and 10 percent every year, port and city officials are starting to realize that even if Shorenstein's plan eventually makes it through the gauntlet of government agencies and public oversight, the one-time infusion of cash it would provide would not be enough.
"It is a pretty dire situation," the port's executive director, Monique Moyer, said at a Feb. 13 commission meeting. "And we do need all hands on deck" to try to solve the problem.
Board of Supervisors president Aaron Peskin, whose district includes Piers 2731, has answered Moyer's call. In the last several weeks, he has floated two new ideas that could have a wide-ranging impact on the 7 1/2 miles of shoreline under port control. As reported in the San Francisco Business Times, Peskin told a Hotel Council luncheon on Jan. 17 that he and Moyer have been discussing hotel development on the city's piers, something Proposition H, passed by voters in 1990, currently prohibits.
Peskin told the Guardian his hotel concept is in the very early stages and stems from the fact that the State Lands Commission considers hotels to be allowable uses of waterfront property. He stressed that the proposal, which would require a new ballot initiative, is "not by any means a wholesale abandonment of Prop. H." It would instead seek to designate certain piers for hotels after consulting with neighborhood groups and other stakeholders.
"The question is are we willing to have a couple [or] three of them in the right places? That's it," Peskin said, voicing his opinion that the "right places" would probably fit somewhere between South Beach and Pier 27. "Fisherman's Wharf does not need any new hotels."
Peskin's second idea involves replacing much of Shorenstein's proposed office space at Pier 27 with a year-round cruise ship terminal. For years the port had a public-private partnership similar to the one with Shorenstein to build a new terminal at Piers 30 and 32. But its development partner, the Australian firm Lend Lease Corp., backed out of the deal last year. Shorenstein officials did not answer numerous requests for comment, but Peskin told us the company has expressed some interest to him in going forward with a cruise terminal design.
Not surprisingly, hotel industry representatives enthusiastically backed Peskin's plan to revisit Prop. H. Hotel consultant Rick Swig highlighted the benefits of letting hotel developers rehab the waterfront. Any new hotels would be "built with somebody else's money," he reasoned, "and generate tax fund money which goes to the General Fund of the city of San Francisco."
Others weren't so excited. John Rizzo of the Bay Area chapter of the Sierra Club lamented the port's reliance on private development as a means of solving its problems.
"There's this massive infrastructure [problem], and the city [is telling] the port that you have to go out and find money with the resources you have, and what can they do? The resource they have is the waterfront, and the only thing they can do is develop it," he told us.
Rizzo called for the port to "be freed from [the] financial restrictions" of its enterprise agency status in order to preserve valuable open space from development. "We're forcing [the port] to take this waterfront and put big buildings on it, and that's not really what we want."
Jon Golinger of Citizens to Save the Waterfront, one of the groups that actively opposed the Mills Corp. mall, also cited problems with the port's reliance on development. The infrastructure crisis, he told us, is "a bigger problem, and we can't develop our way out of it alone. Certainly one project at a time is not working for the port or the community."
Neither Rizzo nor Golinger will comment on Peskin's ideas until their groups have studied them. But Golinger did say, "Any big ideas like hotels need to be part of a much bigger solution." For example, he cited the San Francisco County Transportation Authority, which receives funding from a dedicated half-cent city sales tax. He added that other port agencies are partially subsidized by public money, such as the Port of Portland in Oregon.
Port officials seem to be coming to grips with the magnitude of their predicament and the failure of their reliance on private development. The conclusion to the latest update on the port's 10-Year Capital Plan puts it bluntly: "The Port's private/public partnership development model is broken."
At the Feb. 13 commission meeting, port staff proposed several new methods for finding cash, including tapping into future city Recreation and Park Department general obligation bonds. Moyer told the commissioners that such an arrangement would be a "paradigm shift" in the way the port funds projects, not only because it would use the city's bond money, but also because the agency does not want to reimburse the General Fund, as it has been obligated to do since its inception.
One thing all parties agree on is something must be done. As Peskin told us, "The fact of the matter is, if we do nothing, we're going to lose a lot of these resources." *