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Supervisor's Report

The America’s Cup and San Francisco’s piers: A missed opportunity

Over the past year, I’ve written about the America’s Cup and in particular its implications for the Marina and District 2, but in this column I want to address one of the larger citywide implications of the America’s Cup: namely its impact on our crumbling piers.

When San Francisco was picked to host the 34th America’s Cup, our city had many reasons to celebrate. Originally, the race was expected to generate an estimated 9,000 jobs and approximately $1.4 billion in direct economic benefits. The economics continue to be in flux, with benefits currently estimated at approximately $1 billion. However, the one benefit of the America’s Cup that was not discussed much until recently was the positive impact it was going to have on our piers and port infrastructure.

Background

When Mayor Gavin Newsom and Larry Ellison stood on the steps of City Hall to announce an agreement to host the America’s Cup in San Francisco, the legal document signed was called the Host and Venue Agreement. In this document, the basic economic and structural framework for the America’s Cup was agreed upon, including an implicit acknowledgement that the final details of the agreement had not been ironed out and, among other items, a formal development agreement would have to be passed by the Board of Supervisors at a later date.

This final development agreement was scheduled to be heard at the Board of Supervisors last month. Among other details, it articulated the financial terms for the America’s Cup Event Authority (ACEA, the official organization led by Larry Ellison that is organizing the America’s Cup race) to invest capital in our waterfront piers in preparation for the America’s Cup, and the financial terms by which they would be able to recoup this upfront investment.

In particular, it called for the ACEA to spend approximately $50 million to upgrade Piers 30–32 and invest an additional $50-plus million in infrastructure improvements throughout various piers that would be used during the America’s Cup. In exchange, the Port was going to provide the ACEA with development rights on Piers 30–32 for 66 years (with many restrictions attached), as well as leases for Piers 26 and 28 and seawall lot 330. When calculating the net value of the infrastructure improvements the ACEA was providing compared to the development and lease rights it was receiving in exchange, the difference in value was miniscule. It was an even exchange.

Of particular importance to the Port, as well as the ACEA, was the large infrastructure improvements proposed for Piers 30–32, which are located between the Bay Bridge and AT&T Park. The America’s Cup racing team bases would have been housed here, with public access provided. Piers 30–32 are 100 years old, consist of 13 acres of concrete, and are badly underused for parking since they cannot even hold heavy trucks due to their structural condition. The city has tried unsuccessfully to develop these piers but various proposals have never materialized. Without any improvements, the Port of San Francisco estimates these piers will be condemned in 10 years with project demolition costs of about $40 million.

Recent Developments

On February 27, 2012, it was announced that the ACEA no longer intended to develop Piers 30–32. Instead, they announced intentions to consolidate all of the racing team bases at Pier 80 – located near the border of the Dogpatch and Bayview neighborhoods. The envisioned spectator hub and team bases on Piers 30–32 are no longer a reality, nor are the thousands of construction jobs that would have been created refurbishing the dilapidated property. Instead, we are left with crumbling piers surrounded by chain link fences.

So what happened? In the context of reviewing this final development agreement, advocacy groups and critics of the project raised such a loud voice – including an environmental lawsuit filed by former Supervisor Aaron Peskin – that the ACEA decided that Piers 30–32 weren’t worth their investment. People inside City Hall started to demand legal language dictating that a certain percentage of construction workers hired on the development project be San Francisco residents, and that if condos were ever built on the properties the ACEA would have to dedicate one percent of the value of every condo to affordable housing in San Francisco. Great ideas, but they should not have been last minute conditions for the city’s approval – it’s the way projects have been done in the past, but it’s the reason San Francisco has such a bad reputation for doing business. As someone close to the project described it, no one likes getting henpecked to death.

The Reality of Our Waterfront Needs

The Port of San Francisco is a public agency responsible for managing over 1,000 acres and 7½ miles of San Francisco Bay shoreline. This includes heavily trafficked areas such as Fisherman’s Wharf, Pier 39, the Ferry Building, AT&T Park and all of the piers in between. They also oversee the lesser-used waterfront from AT&T Park all the way to India Basin in Hunter’s Point.

While San Francisco port property is dotted with well-recognized San Francisco landmarks, the reality is that the majority of the 1,000 acres is dilapidated land with crumbling piers with no near-term plans for improvement. The single largest impediment: over $2.2 billion in capital infrastructure is needed just to get the piers ready for development. I recently took a tour of Pier 80 where Oracle Racing set up its headquarters, and the state of the surrounding port property is dismal.

Despite decades of attempts and a current management team at the Port of San Francisco that is exceeding expectations, there is no plan in place to fund these infrastructure improvements. Aside from the Exploratorium, no major project or waterfront development had broken ground in nearly a decade until the Cruise Ship Terminal at Pier 27 started construction, and that project was accelerated due to the America’s Cup races in 2013.

The path forward is relatively simple: either we ask the public to fund the $2.2 billion in infrastructure through bonds (not going to happen), or we open our doors to incentivizing private sector partners, such as the America’s Cup Event Authority, who will be able to finance these capital improvements and develop our port property with appropriate uses that will revitalize our waterfront and open it up to visitors and San Francisco residents alike. We have great examples in our past, including the Ferry Building and AT&T Park, but these continue to be isolated examples and our waterfront would take centuries to develop at the current pace. In no way should we grant development rights without getting a fair deal as a city, and we must ensure that whatever is developed on our piers is an appropriate use for our waterfront, but ultimately we need to change our attitude towards private sector partners who are willing to invest alongside our city. It’s the only way we’re going to make significant forward progress.

Taking Action

San Francisco has one of the world’s most iconic waterfronts and I believe a legacy of crumbling, rotting piers is not only an eyesore but detrimental to future economic development. The people of San Francisco deserve to hear how our city is going to compensate for the lost investment from ACEA and the thousands of jobs lost at Piers 30–32 as a result of the breakdown in negotiations. Thus, I called for a hearing on the Port of San Francisco’s long-term vision and opportunities for development of the waterfront to transform and activate the waterfront area. It is currently scheduled for May 10, 2012 at 1:00 p.m. in Room 263 of City Hall.

I believe the public needs to hear the Port of S.F.’s plan to replace lost investment at Piers 30–32. The city is already trying to figure out a way to retrofit a small portion of these piers so at least a few America’s Cup boats can berth there, but it’s not enough. San Franciscans I’ve spoken with who have closely followed these negotiations want to know what the long-term vision is for developing our historic waterfront, ensuring greater public access, and protecting the public trust. The bottom line is that we need to think about how we approach this or else we are going to be staring at chain link fences and rotting piers for generations to come. In this challenging environment, we want a vision that is both realistic and sustainable over the long term.

The Show Must Go On

What happened around Piers 30–32 is just a road bump and, in my mind, a missed opportunity for San Francisco’s waterfront. We can work on the long-term planning issues. The America’s Cup itself is still going to be an incredible event for San Francisco, for District 2, and will highlight our city to the world. My office continues to be focused on how the races are going to affect District 2, both in terms of our local economy as well as the daily lives of our residents, and I look forward to updating everyone again in the near future. Please feel free to reach out to my office if you have any questions, concerns or suggestions.

Mark Farrell is the District 2 supervisor and can be reached at 415-554-7752 or mark.farrell@sfgov.org. His legislative aides, Margaux Kelly and Catherine Stefani, can be reached at the same number or at margaux.kelly@sfgov.org and catherine.stefani@sfgov.org.
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