Hard Choices at the
Port of San Francisco
Can we create a waterfront that people will
actually love and use, or must we continue
to watch it slowly rot into the Bay?
This report was reviewed, debated and approved as SPUR policy by the SPUR Board of Directors on June 20, 2007.
This article appears in the August 2007 SPUR Urbanist.
San Franciscans face hard choices at the
Port. Compared to the Ferry Building and other
recently completed high-profile projects, the
future challenges facing the Port are far more
formidable, and time is not on the Port's side.
The costs of repairing, seismically upgrading
and redeveloping the Port's iconic but rapidly
deteriorating finger piers are staggering.
Significant public investment above and
beyond what could be generated from proposed
development will be needed, and sources of
funding will have to be found. Painful priorities
will have to be set because of limited funds.
The numerous regulations to which the Port is
subject, including the City's own Proposition
H, will have to be revisited if there is to be real
revitalization. Hard choices will have to be made - and made soon.
Pier 36 in South Beach is a
blighted facility along the
beautiful Embarcadero
Roadway.
Since the 1970s,
the Port has lost 15 of
these historic finger piers.
Instead of the bustling harbor that once
characterized San Francisco, today's Port
is a collection of underused, aging and
deteriorating maritime facilities that separate
the city from the Bay. Nevertheless, as some
of the recently completed projects along the
Northern Waterfront have shown, these same
facilities provide unparalleled opportunities for
reuniting the city with its waterfront. Sensitive
and sensible development along the waterfront
could vastly increase both open space and public
access to the Bay, while contributing to the
economic vitality of the city and producing the
world-class waterfront all San Franciscans want.
But it won't be easy. City and state plans set
forth a vision for reconnecting the city with
the Bay. They call for adaptive reuse of the
Port's historic finger piers and other structures
with a mix of commercial and maritime uses,
connected by a series of waterfront open spaces
and view corridors to the Bay. While this is
a compelling vision, it is increasingly elusive
given the physical, regulatory, financial and
transportation constraints under which the Port
operates.
Nevertheless, there is no turning back. The
Port has embarked on a transition from its
largely industrial past to a future that maintains
maritime industrial uses in smaller, more
compact areas along the waterfront, making way
for mixed uses and exciting new recreational
opportunities along the water's edge.
In this report, SPUR details the physical,
regulatory, fiscal and transportation challenges
the Port faces, then presents a palette of possible
solutions for public consideration. There is no
panacea, no single solution that will revitalize
the city's waterfront. Rather, solutions will
require the diligent, concerted efforts of the City,
the Port, the Bay Conservation and Development
Commission, the State Lands Commission and
the public.
Introduction
Completed high-profile projects - including
AT&T Park, the renovation of the Ferry Building,
Pier 1, Piers 1˝-3-5 and Rincon Park - have
transformed the city's Northern Waterfront from
a dismal elevated-freeway corridor into one of
the nation's outstanding urban waterfronts. But
compared to the Ferry Building and other recent
projects, the future challenges facing the Port
are far more formidable, and time is not on the
Port's side.
The costs of repairing, seismically upgrading,
and redeveloping the Port's iconic but rapidly
deteriorating finger piers are daunting, to say
nothing of the hundreds of millions of dollars
in other pressing needs the Port has identified in its 10-year Capital Plan, published in 2006.
Significant public investment above and
beyond what can be generated from proposed
development will be needed, and sources of
funding will have to be found. Tough decisions
will have to be made about whether and to what
extent historic pier structures can be saved along
the Northern Waterfront. Difficult access and
parking questions on The Embarcadero will have
to be addressed. Painful priorities will have to be
set because of limited funds.
The numerous regulations to which the Port
is subject, including the City's own Proposition
H, will have to be revisited if there is to be true
revitalization. But even if all these regulatory
constraints disappeared, it would not be possible
for private development to absorb the enormous
expense of rehabilitating Port development sites,
while producing development even remotely
acceptable to the people of San Francisco and the
State of California, for whom the City and the
Port hold the waterfront in trust.
1 Hard choices
will have to be made - and made soon.
Fronting on one of the world's great natural
harbors, San Francisco has been a maritime
city since its founding. For almost 200 years, in
peace and in war, the city has defined itself in
terms of its relation to the sea. San Francisco Bay
has also provided the city with a physical setting
that few other cities, if any, can match.
Today, the Port enjoys the most diverse
maritime portfolio of any port in California. It
provides a key stopping point for cruise vessels
along the West Coast, burgeoning ferry service
across the Bay, ship repair in the largest floating
drydock on the west coast of the Americas, and
in its Southern Waterfront, significant breakbulk
and bulk shipping terminals and sand
and gravel processing. In the last four decades,
however, changes in shipping technology along
with direct access to intercontinental rail have
led to the relocation of container activity to
the East Bay. The bustling harbor that once
characterized San Francisco has been largely
replaced by underused, aging, and deteriorating
maritime facilities that separate the city from
the Bay.
But as some of the recently completed projects
along the Northern and Central Waterfront have
shown, these same facilities provide unparalleled
opportunities for reuniting the City with its
waterfront. These recent, high-profile projects
represent only a fraction of the vast and largely
untapped potential for redevelopment and public
access on Port-owned waterfront property.
Behind the imposing bulkhead buildings along
The Embarcadero lie more than a dozen historic
finger piers, long off-limits to the public, that
offer unparalleled views of the Bay. And at Pier
70 near Potrero Hill, the Port owns a property
large enough to support a new city neighborhood
and containing the most important collection
of historic industrial buildings in the
western United States. Sensitive and sensible
development along the waterfront could vastly
increase both open space and public access to the
Bay, while contributing to the economic vitality
of the City and producing the high-quality
waterfront all San Franciscans want.
But it won't be easy. Though the City gained
title to Port property in 1969, it wasn't until
2000 that the city, the Port, the San Francisco
Bay Conservation and Development Commission
and San Francisco citizens finally arrived at a
common agreement and blueprint for change,
reflected in the Port's Waterfront Land Use Plan
and BCDC's San Francisco Waterfront Special
Area Plan. These plans set forth a vision for
reconnecting the City with the Bay. They call for
adaptive reuse of the Port's historic finger piers
and other structures, with a mix of commercial
and maritime uses, connected by a series of
waterfront open spaces and view corridors
to the Bay. The vision they present, while
compelling, is increasingly elusive given the
physical, regulatory, financial and transportation
constraints under which the Port operates.
Nevertheless, there is no turning back. The
Port has embarked on a transition from its
largely industrial past to a future that maintains
maritime industrial uses in smaller, more
compact areas along the waterfront, making way
for mixed uses and exciting new recreational
opportunities along the water's edge. This
transition gives rise to some critical questions:
How should San Francisco relate to its
waterfront? How much should we invest in the
shoreline, and who should contribute? How
do we align the policy goals of the City and the
state? Are all of the historic finger piers worth
saving, and what is the best way to reuse them?
What should we do in the event of an earthquake
or if sea levels continue to rise?
Answering these questions will require San
Franciscans, as the stewards of the waterfront
for the people of California, to make difficult choices. In this report, SPUR details the
physical, regulatory, fiscal and transportation
challenges the Port faces, followed by a palette
of possible solutions for public consideration. There is no panacea, no single solution that will
revitalize the city's waterfront. Rather, solutions
will require the diligent, concerted efforts
of the City, the Port, BCDC, the State Lands
Commission and the public.
The Port's failing infrastructure
The Port holds a diverse property portfolio
covering some 600 acres that extend 7.5 miles
along the shoreline. Its holdings include 39
piers and wharves over water, 43 inland parcels
(called "seawall lots"), and 245 commercial and
industrial buildings that together comprise some
20 million square feet of buildings; miles of
streets, sidewalks and utilities; and large capital
assets such as maritime dry docks, cargo cranes
and heavy equipment.
Even under the best of circumstances, a
portfolio of this size would be a challenge to
maintain. But the advanced age of many Port
structures (often approaching a century), a history
of deferred maintenance, and the punishing
effects of wind and waves have caused much of
the Port to decline into a dire state of disrepair.
While the Port sustained manageable damage
during 1989's Loma Prieta earthquake, the
condition of the Port's historic structures means
that a large earthquake on the Hayward Fault or
another local fault could devastate the waterfront
and dramatically alter the image of the city.
The Finger Piers
Of particular concern are the Port's historic
"finger" piers. From Fisherman's Wharf to
Mission Bay, these piers extend out from The
Embarcadero, supported by wooden or concrete
piles. The piers are interspersed with "marginal
wharf " facilities that run parallel to The
Embarcadero. Many of these structures were
built in the period leading up to the construction
of the Panama Canal (1910), as San Francisco
positioned itself for a major expansion as the
West Coast's major port.
The finger piers were originally built to
function as cargo terminals for "break-bulk"
cargoes (individual products moved on pallets
or bundles). The cargo shed and decorative
"bulkhead" buildings that line The Embarcadero
sit atop the pier platforms and housed the
loading, storage and freight movement of cargo
in simple, utilitarian fashion. They are now
recognized as significant historic architectural
resources, among the last examples of a
collection of finger piers in the nation. The Beaux
Arts bulkhead buildings create the distinct
architectural form that makes The Embarcadero
a great urban boulevard.
But the finger piers have long ceased to be
needed for their original maritime warehouse
purposes. The rise of container shipping in the
1960s and San Francisco's tardiness in investing
in appropriate technology began to drive
shipping toward the modernized and spacious
Port of Oakland. San Francisco's remaining
non-containerized cargo activity has been
consolidated in the Port's Southern Waterfront.
As a result, many of the finger piers fell into
disuse. Some of the aprons and the berths
alongside the piers continue to provide berthing
for non-cargo maritime tenants. But the Port
leases many of the piers on an interim basis
for short-term non-maritime uses. With the
exception of the recently restored Ferry Building,
Pier 1, and Piers 1˝-3-5, public access to the
finger piers is minimal to nonexistent. Restoring
and revitalizing the remaining finger piers and
opening up their perimeter aprons, sheltered
water basins, and historic interiors to the public
is one of the great redevelopment opportunities
in the city.
The City took a major step toward preserving
these historic resources when it succeeded in
2006 in listing the historic piers from Pier 45
in Fishman's Wharf to Pier 48 south of Mission
Creek, now the "San Francisco Embarcadero
Waterfront Historic District," on the National
Register of Historic Places.
Unfortunately, while these piers have become
icons for San Francisco, many are in an advanced
state of deterioration. The cost of maintaining
and restoring these pile-supported structures
over water is daunting. Surveys undertaken by
the Port show that its historic infrastructure is
crumbling: Numerous piers have been yellowtagged
(load restricted) or red-tagged (declared
unsafe for any use) by Port engineers, effectively
limiting their economic use. Within the past
year, the Port has seen two piers (or portions
thereof) literally fall into the Bay. Since the
1970s, 15 of the original historic piers have been
lost - approximately one every two years.
Pier 70 and the Southern Waterfront
The finger piers are not the only major
redevelopment opportunity on Port property.
The Port owns approximately 65 acres of filled
land and former uplands in the vicinity of Pier
70, just east of Potrero Hill and the Dogpatch
neighborhood. Pier 70 has been home to San
Francisco's ship-building and repair industry
for 150 years. The site is still home to the Port's
Drydock No. 2, the largest floating drydock on
the west coast of the Americas and the longest
continually operating drydock operation on the
West Coast. The remainder of the site contains
Victorian-era industrial buildings, including the
awe-inspiring Union Iron Works Machine Shop,
which collectively are eligible for listing on the
National Register. These buildings are failing.
South of Pier 70, the Port's piers are mostly
land masses built on fill created in the 1960s
and '70s to accommodate new container cargo
terminals. Since then, the Port has followed
the volatile global cargo-shipping industry and
adapted its cargo facilities at Pier 80 and 90-96
to accommodate non-containerized bulk and
break-bulk cargoes, which supply the city with
steel and sand and aggregates for concrete
production, among other imports. Built before
engineers understood the seismic performance of
fill, the cargo terminals could slough into the Bay
during a major temblor, eliminating deep-water
access in the Port's Southern Waterfront.
Natural Risks
In developed shoreline areas, the harsh
conditions of a tidal marine environment and
the structural interface between land and water
often dictate the need for special engineering
design and costly construction specifications.
In addition, projected changes associated with
global warming and new Federal Emergency
Management Agency efforts to map coastal
flood hazards in San Francisco will force the
City to conduct a comprehensive review of
how the waterfront and shoreline areas need
to be fortified to eliminate flood hazards and protect against rising Bay waters. The California
Climate Change Action Team's most recent
report indicates that sea level may rise by as
much as 39 inches by 2100. Unchecked, rising
seas would engulf major portions of the San
Francisco Bay shoreline, including Mission Bay.
If this increase in sea level comes to pass, it will
necessitate a dramatic rethinking and eventual
re-engineering of the city's waterfront, to protect
adjacent inland areas and replace vital wetlands
areas lost to rising seas.
This risk, however compelling in the current
debate over global warming, is remote compared
to the clear and immediate risk of a major
earthquake. While we don't often think of it, the
Port needs to function after an earthquake as
a harbor, bringing in supplies and aid, and as a
way of moving people, debris and construction
materials. The Port's harbor facilities may not
survive an earthquake to serve city residents, as
the Port did in 1906, and the consequences could
hamper the city's post-earthquake recovery
operations, potentially for years.
The Port's entire jurisdiction is located within
a U.S. Geological Survey seismic hazard area,
and most of the Port's facilities were built prior
to the adoption of seismic building standards.
Recent development projects, such as the Ferry
Building, Pier 1, Piers 1˝-3-5 and AT&T Park,
are built to modern standards. Nevertheless, the
risk of catastrophic damage along the waterfront
during a major earthquake is high. The City
can no longer afford to consider the Port as a
separate financial entity, the conditions of which
bear no consequence for the city at large.
The Port has conducted
facility-condition surveys for
all of its property. Many of its
facilities are load-restricted,
limiting their economic use, or
are condemned.
The Port's regulatory setting
With the decline of maritime cargo in
San Francisco, the non-maritime use and
development of Port lands and facilities has
become an increasingly important aspect of the
Port's role in the city, as well as a key source of
Port revenue. But because of the Port's proximity
to the Bay, its land use activities are subject
to layers of regulatory oversight and control
that are generally absent for development in
other areas of the city. These state, regional
and local restrictions have played an essential
role in protecting the Bay from fill and
overdevelopment, but they have also given rise
to considerable uncertainty as to what land uses
are possible on Port lands and to some extent
have contributed to their underutilization. Any
solution for the waterfront will need to include
strategies for harmonizing these sometimes
competing regulatory objectives.
The Public Trust and the Burton Act
Most San Franciscans think the City owns the
Port and the waterfront. While the City holds
title to Port property, the State of California
maintains a sovereign interest in the property
and can take it back if it finds the City has failed
to properly steward these lands.
When California joined the Union in 1850,
it acquired title to all previously unconveyed
tidelands and submerged lands within the
jurisdiction of the new state. These lands
were subject to a legal encumbrance rooted in
English common law called the "public trust
for commerce, navigation and fisheries." As
interpreted by California courts, the public
trust ensures that the state uses tidebands
and submerged lands for purposes that benefit
the people of the state. The state is not free to
use or dispose of trust lands for purely private
purposes that do not further the objectives of
the trust. Since 1879, the California Constitution
has prohibited the alienation of tidelands
and submerged lands within two miles of any
incorporated city. Since 1909, the Legislature
has prohibited the sale of any tidelands and
submerged lands anywhere in the state.
2 The state may, however, grant these lands to
municipalities subject to the public trust and
whatever additional restrictions the state
imposes.
Most of the lands within the boundaries of
the Port of San Francisco, filled and unfilled,
are subject to this public trust. In fact, the state
even administered the Port of San Francisco as
a state agency from the late 19th century until
1968, when the state Legislature adopted the
Burton Act, which granted the state's interest
in the lands to the City. The Burton Act grant
was subject to the public trust and subject to
additional trust restrictions contained in the act.
These restrictions have had serious implications
for the development of waterfront properties.
Most importantly, the public trust and the
Burton Act place substantial limitations on
the uses that can be made of Port lands. The
traditional triad of public-trust uses - commerce, navigation and fisheries - has been
interpreted by the courts over time to include a number of public and private uses beyond those
that are strictly maritime-related. Public parks,
open space, wildlife habitat and environmental
protection are all permissible trust uses. Uses
that enhance the public's use and enjoyment of
the waterfront - restaurants, hotels, wateroriented
recreation, visitor-serving retail shops,
public parking that is ancillary to a trust use - are also allowed. Fisherman's Wharf is a good
example of these uses. But uses that are neither
water-related nor visitor-serving are generally
not permitted. The most important of these
are residential, non-maritime office and localserving
retail uses. The state has also interpreted
the trust as limiting certain recreational uses
that are viewed as serving primarily local
residents.
These public-trust use restrictions have played
a critical role in protecting the Bay, reserving
the shoreline for uses that require water access,
and preventing privatization of the waterfront.
But they have also led to the underutilization of a
number of Port properties that would otherwise
appear to be appropriate for a wider range of
development options. Of particular note are
the "seawall lots": Port-owned parcels located
on the landward side of The Embarcadero and
surrounded by private residential and office
development. These have been used by the Port
primarily as surface parking lots, in large part
due to trust use restrictions.
The Burton Act (together with subsequent
amendments to the San Francisco Charter) also
established the Port Commission as an agency
of local government, with exclusive control
over the lands granted to the City. There was a
conscious effort by the state to establish a single
entity - separate from the rest of the City, but
operating as a City department - as both the
property owner and regulator of Port lands.
The effort was not totally successful. Three
other entities now have a major impact on
development of Port property: The City itself,
through its authority over non maritime
development; BCDC, through its permit process
regulating development in or over San Francisco
Bay and within the first 100 feet of the shoreline;
and the State Lands Commission, through its
oversight of the state tidelands the Port holds in
trust under the Burton Act. The three have often
complementary but sometimes contradictory
policies for waterfront use - and each has, in
effect, a veto over individual waterfront projects.
The Port is also subject to requirements imposed
from another quarter: the San Francisco
electorate.
The Port celebrated the grand
opening of Piers 1˝-3-5,
above left, in 2007. This
mixed-use development project
has received an award from
the California Preservation
Foundation. The Port’s Mission
Bay shoreline, above right,
contains “ghost piles” from
piers that have disintegrated
into the Bay.
Proposition H and the Waterfront Land Use Plan
In 1990, in reaction to simultaneous proposals
for hotel development on three different piers,
Proposition H was placed on the ballot and
approved by San Francisco voters. Proposition
H prohibited hotels on Port piers. More
importantly, it required the Port to develop a
"Waterfront Land Use Plan" with maximum
public participation for all its property bayward
of The Embarcadero.
The Port had participated in, but had not led,
previous waterfront planning efforts. In 1991,
the Port Commission decided that it needed
to chart its own course. The commission took
the unprecedented approach of establishing a
Waterfront Plan Advisory Board charged with
recommending a plan for the commission's
consideration. To ensure broad representation,
advisory board members were appointed by the
mayor, members of the Board of Supervisors,
and the commission. The mayor appointed the chair of BCDC as chairman of the Waterfront
Plan Advisory Board.
Over four years, the advisory board, its
committees, consultants and guest experts
met twice a month. The scope of work was
exhaustive: evaluating the needs of each
maritime industry, defining desired uses and
qualities to promote along the waterfront, and
creating waterfront subareas and "opportunity
areas" to define where and how development
should take place. The resulting plan was
embraced by the Port Commission, which
further directed its staff to develop more
detailed policies to address urban design, public
access and historic preservation, to accompany
the advisory board's land-use plan. Following the
completion of a program environmental impact
report, the Waterfront Plan was approved by
the Port Commission in 1997. Notwithstanding
this unprecedented effort, the success of any
plan relies on an intricate choreography of many
regulatory players in a very public arena.
City and County of San Francisco
While the Port Commission has "exclusive
jurisdiction" over Port property under the San
Francisco City Charter, other agencies and
departments of the City influence waterfront
development, both formally and informally. Since voters approved a charter amendment
in the late 1970s, the Board of Supervisors has
had fiscal approval authority over all contracts
in excess of $1 million and leases with a term of
more than 10 years (and, therefore, virtually all
public-private development projects).
The City's land-use regulations (zoning,
height, bulk, etc.), as administered by the Board
of Supervisors and the Planning Commission,
also apply to Port non-maritime land uses. Port
projects are further subject to environmental
review under the California Environmental
Quality Act as administered by the Planning
Department, with final CEQA determinations
appealable to the Board of Supervisors. In
addition, the Board of Supervisors recently
adopted an ordinance requiring fiscal-feasibility
review of projects costing more than $25 million
and requiring public subsidies of $1 million or
more. This ordinance requires Port projects
involving rent credits
3 to obtain an affirmative
finding from the Board of Supervisors that the
project is fiscally feasible, based on criteria such
as direct and indirect financial benefits to the
City and available funding for the project, prior to
commencing environmental review under CEQA.
Following the Port Commission's approval of
the Waterfront Plan, the Port worked with the
Planning Department to develop amendments
to the City's General Plan, Planning Code and
Zoning Map to align the City and Port's land-use
and urban-design policies for the waterfront.
These amendments were approved by the
Planning Commission and Board of Supervisors,
and provided the basis for a number of
waterfront development projects that have since
been approved, including the Ferry Building,
Pier 1, Piers 1˝-3-5 and Piers 30-32.
Recent history has seen fewer success stories,
as several high-profile projects have foundered in
the face of strong local opposition. In 2000, city
voters adopted an advisory measure urging the
Port to pursue a Bay-oriented public educational
facility at Pier 45 instead of the interactive, San
Francisco-themed museum proposed by Malrite
for that location. In mid-2005, the Board of
Supervisors lowered the height limits for the
site of a hotel proposed by the Port, effectively
stopping the project. And in late 2005, the Board
of Supervisors found that the mixed-use retail/
recreation project proposed by Mills Corporation
was not fiscally feasible, thus preventing the
project from proceeding to environmental
review.
The experience with these recent development
projects - specifically the time and predevelopment
costs that the existing City
regulatory process can consume - point up the
need for a stronger consensus within the City and with its regulatory community regarding
such development before the Port solicits private
investment in specific development proposals.
The principal reason for this is that the Port
cannot afford to finance its development projects
with high-risk capital.
Pier 70 has been home to ship
construction and repair for 150
years, and remains home to
the
largest floating drydock on the
west coast of the Americas.
The Union Iron Works
Machine
Shop at Pier 70 is an example
of Victorian-era industrial
architecture that is eligible
for
listing on the National Register
and is an ideal candidate for
adaptive reuse.
San Francisco Bay Conservation
and Development Commission
BCDC was created, with SPUR's guidance, as
a temporary state agency in 1965 and became
permanent in 1969. The deputy director of
SPUR became its first executive director. Under
the McAteer-Petris Act, BCDC is charged with
regulating all filling, dredging and substantial
changes in use within its jurisdiction. BCDC's
permitting jurisdiction includes all areas of
the Bay that are subject to tidal action up to
the mean high tide line, and a "shoreline band"
extending inland 100 feet from the mean high
tide line. The term "fill" includes replacement
and significant repair of pile-supported
structures. Use of fill must also be consistent
with the public trust and can be permitted only
for "water oriented uses."
For many years, BCDC allowed fill on
publicly owned land only for replacement of
pile-supported structures for "bay-oriented
commercial recreation and public assembly,"
and generally permitted only half the area of the
former pile-supported structure to be replaced.
This policy, known as the "50 percent fill rule,"
effectively prevented the historic preservation
of San Francisco's finger piers. Operating under
these criteria during the 1970s, ‘80s and ‘90s,
BCDC approved replacement fill for Pier 39 over
water, but not much else.
Once the Waterfront Plan was completed,
BCDC amended the rules contained in its Special
Area Plan for the San Francisco Waterfront to
make it consistent with the Waterfront Plan. The
amendment replaced the 50 percent fill rule
4
with new pier-specific requirements for public
access and open space under the new BCDC
Special Area Plan. BCDC can now approve any
project that is consistent with the public trust,
the terms of the Burton Act, the San Francisco
Waterfront Special Area Plan and the Waterfront
Land Use Plan.
The Waterfront Plan and the BCDC Special
Area Plan both attempted to bring more
certainty to the development-approval process.
But these plans assumed that all projects
subsequently approved would be consistent with
the public trust - a factor that would give rise to
its own set of uncertainties.
The California State
Lands Commission
The State Lands Commission oversees
the administration of the state's granted
lands, including the Port lands granted to the
City by the Burton Act. BCDC looks to the
commission for guidance on trust-consistency
determinations. Further, the State Lands
Commission can sue (and has sued) its grantees
when it believes trust principles are being
violated.
For many years, the State Lands Commission
played a relatively minor role in project review
along the San Francisco Waterfront. The State
Land Commission's participation in waterfront
project approval significantly increased as
major, nontraditional and mixed-use projects
were proposed in the 1990s. Project lenders
wanted certainty that a project lease approved
by the City would be honored by the State in
the unlikely event that the State exercised its
sovereign right to revoke the Burton Act grant
and retake title to Port property. Thus, projects
such as AT&T Park, Pier 1, the Ferry Building,
the Pier 30-32 Cruise Terminal, and Piers
1˝-3-5 drew the State Lands Commission and
the state Attorney General's Office ever more
deeply into complex trust questions surrounding
specific projects along the San Francisco
waterfront.
The State Lands Commission and the
Attorney General's Office worked closely with
project proponents, the City, BCDC, the Port
and the public to arrive at solutions that would
respect the values and objectives that the public
trust was designed to protect and advance. In
particular, the commission has determined
that in the context of a broader project that
promotes the public trust, historic preservation
is an exercise of the trust. In this way, the State
Lands Commission afforded San Francisco much
greater flexibility to incorporate non-trust uses
such as general office or non-trust retail into its
historic preservation projects than is allowed in
new construction on trust property.
Nevertheless, clear guidelines as to the trust
consistency of certain uses, and as to the proper
balance between trust and non-trust uses
allowed in historic preservation projects remain
absent. This has made closure on trust issues
complicated and time-consuming for specific
projects. A determination of trust consistency
often cannot be made until a project's uses
and design have been established at a high
level of detail, which usually occurs late in
the entitlement process, after considerable predevelopment costs have been incurred.
The resulting costs and lack of predictability
are a major disincentive to investment. Further,
the State Lands Commission and the Attorney
General's Office, mainly in response to proposals
from Southern California but pressed in part
by some proposals along the San Francisco
waterfront, have taken a careful and cautious
approach to public trust consistency. For
example, under the State's present interpretation
of the law, the public-trust consistency of a
project is determined on a structure-by-structure
basis, rather than on a project-by-project or on a
limited geographical basis - even though there
is some precedent in other states for a different
approach. Project-specific state legislation is
often required to resolve uncertainties as to
permitted uses.
But the State Lands Commission and the
Attorney General's Office cannot be expected to
be more flexible on matters of trust consistency
when trust-consistent developments - such
as the recreation, commercial and open-space
project proposed by the Mills Development
Corporation at Piers 27-31, or the hotel project
proposed at Broadway and Embarcadero - are
approved by the Port, the commission and the
Attorney General's Office, only to be rejected
by the Board of Supervisors in response to local
opposition. The City's pleas for greater flexibility
in the interpretations from the State Lands
Commission and the Attorney General's Office
must also ring somewhat hollow when the City
itself refuses to permit hotels - a clearly trust
consistent, revenue producing use - on Port
land bayward of The Embarcadero.
Fixing the land-use approval process for Port
development will require movement on the part
of all parties with a stake in the outcome: the
City, the state and the local electorate. The landuse
approval process must be streamlined, and
more flexibility on permitted uses is needed from
all sides. But this can only be accomplished if all
concerned are assured that their objectives will
be addressed and major conflicts will be resolved
early in the process.
A broken financial model
From its inception in 1969, the Port of San
Francisco has been an enterprise department
of the City
5 - that is, its operating and capital
budgets are derived wholly from the revenue
generated from its properties. Other than
occasional special purpose grants from state
agencies, it receives no resources from the
State of California or the City's General Fund.
Currently, the Port's revenues are nearly $60
million annually, virtually all in the form of lease
revenue from its properties.
In addition, when the City and County of San
Francisco took on the management of the Port
of San Francisco, it inherited a debt of more
than $50 million from the State. Ironically, this
debt - and a desire to fund maritime cargo
improvements in the Southern Waterfront - led
the City to propose dramatic and inappropriate
waterfront development that led to local downzoning
of the waterfront and a further decrease
in the value of Port assets.
Thus, from the outset, the Port has been able
to invest very little in its infrastructure. The
Port's negligible bonding capacity constrained its
ability to address long-term capital needs, even
though the Port has long known that its assets
were failing. However, the Port, the City and the
state did not have a full understanding of the
magnitude of the Port's infrastructure problem
until the Port produced its first 10-year Capital
Plan in 2006.
The Port's 10-year Capital Plan is based on a
comprehensive survey of the physical condition
of all Port properties under its ownership. The
Plan identifies the cost of bringing the Port into
basic compliance with health, safety, seismic and
Americans with Disabilities Act regulations, as
well as fulfilling waterfront open-space needs,
at nearly $1.5 billion. Almost one-third of the
costs identified in this Capital Plan are for
substructure repair and seismic strengthening of
the Port's pile-supported structures. The Capital
Plan is a basic fix-it plan, not the sweeping vision
of the Waterfront Plan. If all of the Capital Plan
improvements are made, the Port will still look
much the same as today, with the exception of
some new open spaces.
Yet, almost $1 billion of the Capital Plan is
unfunded. The actual and potential funding
sources identified in the Plan - tenant repairs,
budget allocations and development projects,
as well as Port-sponsored revenue and taxincrement
bonds - are not nearly enough to
implement the plan. While the Port spends
a greater percentage of its annual operating
budget on capital projects than most City
departments, that figure is only $7.5 million
annually. At this rate, it would take more than 200 years to implement the Port's Capital
Plan. Nor can the Port rely on bonds repaid
with Port revenues to finance Capital Plan
improvements: if the Port were to secure a
bond issue of $1.5 billion, it would require
annual payments totaling approximately
$118 million over 30 years. This far exceeds the
Port's current revenue-generating capacity
and bonding ability. In short, hard choices
need to be made regarding allocation of limited
resources.
When the Waterfront Plan was adopted
in 1997, it was understood that commercial
development within the opportunity areas
identified in the Waterfront Plan would not
generate sufficient revenue to absorb the cost of
upgrades to those piers remaining in maritime
use as well as fund open-space improvements
required by BCDC. There was, however, an
understanding that redevelopment of Port
property would increase revenue to the Port's
Harbor Fund. The Waterfront Plan Advisory
Board and the Port Commission explored
alternative funding sources, such as general
tax support, and the Advisory Board
recommended that such sources be pursued.
However, their task was to develop a landuse
plan, and they recognized that the plan
implementation was necessarily a work in
progress. As projects came on line, however,
the Port quickly realized that the financial
challenges were more severe than anticipated.
The Embarcadero Waterfront
Historic District, with
the Ferry Building as its
centerpiece, top, was listed
on the National Register of
Historic
Places in 2007,
enabling the Port to obtain
federal historic-preservation
tax credits for its adaptive
reuse projects. The 40-acre
Pier 90-94
backlands in the
Southern Waterfront, above,
is one of the few remaining
undeveloped industrial
sites zoned M-2 in the
city. Development of
this site
should relate to the Port’s Pier
90-96 maritime terminals
that are immediately adjacent
to the site.
The Ferry Building, Pier 1 and Piers 1˝-
3-5 all sit at the foot of Market Street in the
most transit-accessible location in the city.
Each of these structures was individually
eligible for listing on the National Register
of Historic Places, thus providing developers
with access to the Federal Historic Tax Credit
program. Nevertheless, the far-greater-thanexpected
costs of seismic and substructure
upgrades, combined with the enormous cost
of preservation of these structures consistent
with the standards of the secretary of the
Interior Department, resulted in great public
architecture and public spaces - but not in
significantly increased revenue to the Port.
As the costs of substructure repairs, seismic
upgrades and historic preservation rose, the
associated return on investment dropped. By
the time the Piers 1˝-3-5 Project was approved
for development in 2002, it was clear that Port
development projects were barely covering their
own development costs within the first 10 years
after project opening, and could not be relied
upon to generate substantial new revenues to
support the Port's core maritime functions and
develop costly new waterfront open space.
In 2006, San Francisco Piers LLC, a
subsidiary of Bovis Lend Lease, allowed its
exclusive rights to construct a cruise terminal
and associated retail and entertainment venue
on Piers 30-32 to expire, even though the
project had obtained most of its regulatory
approvals. The developer cited the increasing
cost of retrofitting and seismically upgrading the
rotting pilings of Piers 30-32 as the major factor
in its decision.
Further, the cost of construction is rising at
rates of up to 10 percent annually. It is generally
safe to say that the Port's historic piers have
negative residual land value. To put it another
way, it costs more - often approaching $200
per square foot - to seismically upgrade the
Port's finger piers and repair the associated substructure than it does to purchase
comparable private land in the city. This bleak
financial outlook calls into question the premise
of the Port as an "enterprise department" capable
of supporting itself through its own revenues.
The only factor offsetting this dismal picture is
that there is no land in the city that is comparable
to the piers and their dramatic location over
water. The piers establish an important transition
between the city's urban edge and the expanse
of San Francisco Bay. These unique qualities
provide the incentive for the kind of public and
private investment in the waterfront that will be
necessary to overcome the formidable constraints
on waterfront redevelopment.
But private development alone will never be
enough to generate the revenues needed to save
the finger piers and achieve the public benefits
envisioned in the Waterfront Land Use Plan.
Substantial public subsidy is needed. Indeed,
without it, the Port is unlikely to be able to
leverage the benefits of private capital in the first
place. If Port-wide revitalization is to occur, a
greater share of the tax revenues generated by
the Port must be directed back to the Port.
Access, parking and transit: The Embarcadero Roadway
Recent waterfront development projects have
been challenged not only by the regulatory and
financial constraints discussed above. The public
has little confidence in the ability of the City's
transit system to provide needed access, yet also
fears auto congestion and parking problems
arising from development.
This lack of consensus would appear to be
counterintuitive, since in 2000 a 20-year City
effort to convert the industrial road and railway
that once defined The Embarcadero culminated
in today's public promenade and public-transit
corridor. Nevertheless, while The Embarcadero
has been embraced by residents, the City has
been unable to fully exploit this transportation
facility. Notably, the level of transit service
along the center dedicated light-rail line falls far
short of its potential capacity. People love riding
the F-Market historic streetcars between the
Agriculture Building and Fisherman's Wharf,
but the currently low carrying capacity falls
short of what is needed.
The Embarcadero is designated in the San
Francisco General Plan as an important street
for all modes: It is a major arterial street, a
major transit corridor and a priority bicycle
and pedestrian route. Existing and new highdensity
development at the foot of Telegraph
Hill and in Rincon Hill, Mission Bay and South
Beach is predicated on increased waterfront
transportation capacity. Maximum public access
to the waterfront is also based on a transit-first
policy.
Improving transit capacity along The
Embarcadero will be a challenge. As discussed
in previous SPUR reports, there is a major
structural defect in the way San Francisco funds
and supports public transit. Current assessments
indicate that the Municipal Transportation
Agency requires an additional $100 million
annually in operating funds to provide the
drivers, supervision and maintenance capacity
to support current levels of transit service in the
City. With its Transit Effectiveness Project, the
MTA is studying how existing resources can be
managed better to yield increased service.
Where transit does not work, people drive
cars and need to park them. Port, BCDC and
City plans all promote locating new parking
structures inland, away from the piers, to protect
pedestrians strolling down Herb Caen Way and
bicyclists in bike lanes. Port efforts to carry out
this policy have met with strong resistance by
transit advocates who oppose construction of
large parking facilities. The Port has attempted
two different proposals to develop parking
structures on inland property, both of which
failed.
The failure to solve these transit and parking
questions continues to plague consideration of
new development. Nowhere has this problem
been more evident than along The Embarcadero,
where Herb Caen Way and waterside
developments have attracted so many new
visitors and residents to enjoy the Bay.
Project-by-project battlefields are not an
effective forum for real solutions, and waterfront
redevelopment cannot solve the transit deficit
along The Embarcadero. Ultimately, the City,
the Port and the MTA must find a way to develop
and fund an approach to integrated land use and
transportation planning. But the Port cannot
afford to wait that long for transportation
relief. Shorter-term solutions are needed. The
Embarcadero provides an ideal laboratory for
testing transportation ideas that could benefit
both the Port and, if successful, the city at large.
A way forward
There are stark truths about San Francisco's
waterfront that government, private developers
and the public must confront.
First, it is essential that the process for
waterfront development be streamlined and
made more certain. The multiple layers of
approval from public entities with distinct and
sometimes overlapping mandates, together
with uncertainty as to permissible uses, have
substantially increased the risk for private
capital. Lengthy processes for project approval
eat up huge amounts of pre-development
costs that would be better spent on public
improvements. Developers respond to rising
pre-development costs by proposing more
private uses, which in turn provokes greater
stakeholder opposition. Developers also pass on
the increased risk premium to the Port, further
decreasing the Port's limited return.
What is needed is increased public planning. An integrated planning process that brings
together state, regional and local agencies can
provide a road map for identifying the right
mix of public and private uses within defined
areas of the waterfront that will bring greater
certainty, attract private capital, and ensure
that public benefits and uses are established.
Second, attaining public-oriented
redevelopment of the waterfront will require
significant public investment. The Port's capital
needs are too great and cannot be met through
project-generated revenue alone. Both the City
and the state must provide funding to help
accomplish the public program they envision
for the waterfront.
Third, developers must understand that
development of the waterfront is not an
opportunity for maximizing returns on
investment, even with public subsidy. Waterfront
projects must be, first and foremost, public
in orientation. Developing along the water's
edge must be understood by developers as an
invitation to create great architecture for the
city and great public spaces on the waterfront.
And finally, not everything can be saved.
Even under the best-case scenario, the
combination of public and private resources
will not be enough to preserve every historic
pier and structure on the waterfront. There
simply isn't enough money available to fund
a $1.5 billion 10-year Capital Plan. These
recommendations can only reduce the hard
choices that must be made, not eliminate them.
The Waterfront Land Use Plan: A Subarea Planning Approach
Proposition H, approved by voters in 1990,
required both the adoption of the Waterfront
Land Use Plan and a periodic review of the
plan every five years after its adoption. The
plan defines policies and locations for the Port's
diverse portfolio of maritime industries. This
issue was a primary concern to San Francisco
voters when they approved Proposition H.
Consequently, the 27-member Waterfront Plan
Advisory Board gave priority consideration to
meet maritime business needs.
Heavy industrial, land-intensive maritime
uses (ship repair and cargo shipping) are
located primarily in the Southern Waterfront.
Other commercial maritime uses, such as
cruise vessels, harbor support, fishing, ferries,
excursion boats and marinas, are located
primarily north of China Basin. Almost all
maritime industries require some form of Port or
public financial support, because lease revenues
from these uses are insufficient to fund capital
improvements and maintenance.
To help address this shortfall, as well as to
create authentic new development to reconnect
the city with the waterfront, the Waterfront
Plan identifies 13 development opportunity
sites and several transitional maritime areas
in the five subareas of the waterfront. In these
locations the plan seeks to preserve or restore
maritime operations and berth facilities, finance
preservation of the Port's historic resources, and
create development activities and public open
space that attract the public to experience and
enjoy the Bay.
Some of the Port's recent development failures
demonstrate market and financial challenges,
while others reflect changes in the public's
understanding and expectation of waterfront
development projects. Over the past five years,
the Port and waterfront constituents have
improved their understanding of what it takes
to successfully implement projects, as well as
the unique physical and economic challenges
facing the Port. Those lessons learned should
inform any review and update of the Waterfront
Plan, in order to reduce or avoid the types of
controversies that have hampered some of the
Port's projects.
SPUR recommends that the Port update
the Waterfront Plan to incorporate lessons
learned, reflect current forecasts for maritime
uses on the Port's property and develop more
specific transportation policies. An update of
the Waterfront Plan could also incorporate performance measures or benchmarks that could
allow the Port to measure its progress in specific
areas that are relevant to the entire waterfront,
such as maintaining and expanding the Port's
maritime portfolio, improving public access to
the water, historic preservation, and wildlife
habitat restoration. This update should be
overseen by the Port Commission with a robust
program for public involvement.
SPUR also recommends a new planning
approach that focuses on individual subareas
and involves the State Lands Commission and
BCDC at the planning stage. This approach
would have several advantages that could help
overcome some of the obstacles facing projects
today.
First, a subarea planning effort would provide
a way to refine the Waterfront Plan in stages
without having to revise the entire plan all at
once - a daunting task by any measure. The Port
simply does not have the staffing resources to
conduct reviews for each area of the waterfront
simultaneously. Subareas provide a coherent
and manageable planning unit. A public process
focused on a subarea is also likely to draw the
greatest amount of stakeholder participation,
which will help resolve important local and
citywide issues early in the process.
Second, subarea planning can be done at
a greater level of specificity and resolve some
issues that would otherwise arise at the projectapproval
stage. This provides an opportunity to
streamline the local review process. Under this
model, the Board of Supervisors would set policy
at the level of zoning and general plan approvals
for subarea plans. The Board of Supervisors
would also maintain fiscal-feasibility review
for projects involving public subsidy. However,
city voters could consider replacing the Board
of Supervisors' fiscal review of leases for Port
development projects that are consistent with
adopted subarea plans with fiscal review of such
leases by the Controller's Office. This might
result in better financial oversight and add
further certainty to the development-approval
process. Environmental review could also
be streamlined through the use of program
environmental-impact reports for subareas,
which would facilitate project-level CEQA
review. However, the planning process should
not delay projects already under discussion or in
the pipeline.
Third, and most importantly, a subarea
planning process provides an opportunity for a
new approach to public trust review by the state.
A subarea is a discrete planning unit that is
ideal for addressing public trust considerations
more comprehensively. Involvement of the State
Lands Commission and BCDC at this early
stage would help provide certainty on the key
issue of trust consistency. It would allow the
commission to simplify its review of individual
projects by shifting from structure-by-structure
trust consistency to plan trust consistency. In
addition, by increasing certainty in the public
uses and benefits to be provided in each subarea,
the subarea plan would provide a basis for
increased flexibility on the mix of trust and non-trust uses within the subarea. Using this
approach, the state could determine whether the
development program for each subarea, taken as
a whole, is consistent with the public trust.
Building on the Waterfront Plan process, the
City, BCDC, and the State Lands Commission
should cooperate, possibly through a jointpowers
agreement, to create a structure and
process for the creation of subarea planning
committees that include appointed citizen
representatives. To build support for an updated
Waterfront Plan, the agencies should work
closely with waterfront stakeholders to develop
a planning process that is inclusive and, at the
same time, holds everyone accountable to the
schedule and program that is agreed on. The
subarea committees should conduct staffed
workshops to present and discuss the most
critical issues that should inform subarea plans.
The subarea committees should oversee a
public planning process to develop a shared
vision, resolve conflicting public priorities
(to the extent feasible), and develop specific
development goals and objectives. During
this process, the subarea committees should
generate land-use scenarios for each subarea
to test what combination of revenue-producing
uses (office, retail, hotels and housing) will meet
Waterfront Plan objectives (maritime, historic
preservation, open space/recreation, seismic
retrofit, environmental) in a financially viable
manner. The subarea committees should seek
public comment on scenarios for a subarea
to create a process that balances competing
objectives.
The Pier 90-94 backlands area
is home to the city’s construction
materials industries, including
two of the city’s three concrete-batching
plants.
What should a Waterfront Plan update and
subarea planning involve? The review should
focus on addressing the Port's capital and
economic crisis, and should balance the different
revenue- generating capacities of each area of
the waterfront with the different capital needs
described in the Port's 10-year Capital Plan. SPUR recommends answering the following
major questions during these planning efforts:
Maritime: Which pier sheds, aprons and
berths need to be preserved for maritime use?
How can the City best preserve the M-2 zoning
and the maritime industrial terminals at Pier
80 and Piers 90-96? How can the Port expand
its inland-waterway portfolio (ferries, harbor
services, etc.)? Which piers and open land are
not required for the Port's current and projected
maritime needs?
Historic preservation: If certain historic
piers in the proposed Embarcadero Historic
District are too expensive to redevelop or the mix
of uses required to make redevelopment feasible
is not acceptable to the community, what should
happen to these facilities? If some piers are
removed, how would this affect the integrity of
the Embarcadero Historic District?
Open space and recreation: What is our
vision of major open spaces along the water?
How can we accommodate the Blue Greenway in
the Port's industrial Southern Waterfront? How
do we secure adequate funding resources for
implementation?
Wildlife habitat, biodiversity and
connection to the Bay: What opportunities
exist for habitat restoration and education about
natural areas? How do we build upon the Port's
record of wetlands enhancement at Heron's
Head Park and Pier 94? How should the Port
coordinate with San Francisco Recreation and Park Department and the California Department
of Parks and Recreation to maximize habitat
and wildlife-watching opportunities at locations
such as India Basin and Yosemite Slough?
Other public trust uses: How do visitor-serving
uses such as hotels and hostels fit into
the Port's public-trust mandate? Where should
such uses be authorized?
Financial: How do the projected capital costs
and revenues from a given subarea fit into the
Port's overall financial plan? What mix of uses
and how much of each major use type, including
revenue-generating non-trust uses, is required
to preserve historic resources in the subarea and
to support the Port's maritime and open-space
maintenance requirements? Which development
opportunities are likely to yield the most
significant early infusion of funds to address the
Port's capital needs? Starting with the funding
needs outlined in the Port's 10-year Capital Plan,
what level of public investment is required?
Transportation: What is the best
combination of public transit, bike, pedestrian
and parking resources that will serve new
development, and how will it be financed?
How can new development best add to transit
capacity along Muni's F and E lines? How can
improved transit reduce the need for additional
parking? If new parking is required, where
should it be located and how should it be
designed? How can the Port effectively expand
waterside transportation such as ferry service
and water taxis?
Economic access: How do we ensure that
development efforts serve and are affordable to
residents and visitors of all incomes?
Environmental sustainability: How can
Port development meet or exceed the City's
sustainability policies? How can we ensure
that low-impact development technologies
(such as the vegetated swales at the Pier 90-94
backlands) will be incorporated into the Port's
entire water management system? Can an
"eco-industrial park" concept, combining
industrial recycling enterprises that make use
of each other's products and byproducts, work
for the Port's Pier 90-94 backlands?
Public orientation: What makes a waterfront
project successful? How can future waterfront
development projects become destinations for
both residents and visitors?
Subarea planning efforts may yield
recommendations for:
> changes to the Waterfront Land Use Plan
> modifications to the BCDC Special Area
Plan and/or the Seaport Plan
> other land use changes, such as amendments
to zoning controls, if required
> priorities for development-opportunity sites
and required staffing and resources
> changes to transit, bicycle, pedestrian or
parking policies or designs
> possible changes in the orientation and levy
of public-benefit exactions for Port projects
> state legislation to permit the State Lands
Commission and BCDC to address public-trust
consistency issues on a subarea basis rather than
structure by structure
The subarea committees should produce final
recommendations for the Port Commission,
BCDC and the California State Lands
Commission regarding their proposals. After
subarea plan adoption by each agency, the State
Lands Commission should be able to review
individual Port development projects within a
subarea for consistency with the subarea plan
previously reviewed and approved for trust
consistency.
SPUR cautions that while a planning process
is necessary to resolve conflicting visions for
our waterfront, the San Francisco waterfront
is a citywide and statewide asset. Therefore, it
is essential that the planning process include
voices representing these broader interests.The Port should investigate varied approaches
to enhancing public participation in planning
exercises beyond the planning workshop
format, including but not limited to weeknight
and weekend forums co-sponsored with
neighborhood or public-policy groups, and active
outreach to citywide interest groups.
Expand allowable uses on Portlands
For subarea planning to be effective, a
broader mix of uses on Port property must be
made available. In their current form, state
and local use restrictions, though designed
to protect important policy objectives, can be
fairly blunt instruments and at times work at
cross-purposes.
The seawall lots, for example, are subject to
public-trust use limitations even though they
are on the landward side of The Embarcadero
and are generally not needed for trust purposes.
Their use for surface parking degrades what should be a powerful urban form along the city's
edge, and substantially limits the Port's ability to
raise revenues for important trust projects such
as preserving the finger piers.
This graphic shows a possible
breakdown of public versus
private investment if SPUR’s
recommendations are
implemented, as applied to
a cross-section of major Port
development opportunities
that are likely to become viable
with public investment. It
shows that the recommended
public subsidies would leverage
private equity to redevelop
the waterfront. Under this
scenario, the ratio of private
to public investment would be
approximately 5-to-1.
The piers themselves are afforded a greater
level of use flexibility within the historic sheds
and bulkhead buildings under the State Land
Commission's current interpretation of the
trust, but not enough to attract the private
investment needed to undertake costly structural
improvements. Recent pier development projects
such as Pier 1 and Piers 1˝-3-5 have relied
heavily on a use usually not permitted on trust
lands - general office - as a primary revenue
generator to pay for historic preservation and
public-access improvements. At the same time,
hotels - one of the few trust-consistent uses
capable of generating substantial revenue in San
Francisco - were prohibited on piers by the local
electorate under Proposition H. As enacted, the
hotel ban applies even where the use is entirely
contained within a historic pier building.
SPUR believes that current use restrictions
can be modified to allow for greater flexibility to
reduce conflict and to produce more successful
subarea plans, without undermining the public
orientation of the waterfront:
> Remove seawall lots and other surplus land
from the trust. The City and the state should
jointly pursue legislation that would lift trust
use restrictions from those seawall lots that are
surplus to the trust. The Port has estimated that
development of nine vacant seawall lots free of
the trust could yield up to $12 million in new
revenues annually. In particular, Seawall Lot 337
in Mission Bay is the most promising revenue
opportunity and should be prioritized for development
first. The proceeds from development
of these sites could be earmarked for historic
preservation and other trust-consistent projects
for which funds are desperately needed, and can
be used to leverage new debt for public purposes.
The Port also owns a number of surplus "paper
street" fragments that are not used or not needed
as rights-of-way, several of which have been built
upon. Legislation should be sought allowing the
Port to dispose of these paper streets and use the
revenue to implement its Capital Plan.
> Amend Proposition H to allow hotels
bayward of Embarcadero under certain limited
circumstances. The City should place a measure
on the ballot to modify the hotel ban under
Proposition H. Exceptions to the ban should be
limited to a few hotels consistent with the existing
historic district. Approval of any hotel must
be contingent on (a) the completion of a subarea
planning process like the one recommended
earlier in this paper; and (b) a design that takes
advantage of its Bayfront setting and meets the
highest aesthetic standards.
> Allow for broader mix of non-trust uses
within historic structures. The Port should have
wider latitude to lease portions of the historic
piers and other historic buildings to help finance
preservation. Criteria can be developed through
the subarea planning process to ensure that
public-trust purposes are not compromised.
For example: placing public trust uses in the
bulkhead buildings and the front of pier sheds;
concentrating non-trust uses away from The
Embarcadero or on the second floor of proposed
projects; providing public access around the shed and within the bulkhead buildings; and ensuring
public views of historic features of shed interiors.
Subject to these criteria, and in the context of
an adopted subarea plan that has been reviewed
and approved by the State Lands Commission,
the Port should be able to devote a greater portion
of historic buildings to non-trust uses.
Taxes Generated at the Port Should Be In vested in the Port
The Port's real problem is the lack of financial
resources necessary to address waterfront
blight. Cities commonly combat blight with a
combination of tax incentives and reinvestment
of new taxes generated in blighted areas. San
Francisco needs to employ these and related
tools to rejuvenate and preserve its historic
waterfront.
In 2005, the California Legislature passed
a measure enabling the Port of San Francisco
to establish an Infrastructure Financing
District to capture the local City and County
of San Francisco share of increases in property
tax (possessory-interest tax) collections from
Port property, subject to Board of Supervisors
approval. IFDs function much like redevelopment
project areas, and do not involve tax increases.
In contrast to redevelopment law, the IFD
legislation does not require the public agency
to make a finding that a subject area is blighted
(although such blight clearly exists along the
waterfront) or require a set-aside of a portion of
the tax increment for affordable housing (except
when the projects to be financed through the
IFD displace housing). Further, adoption of an
IFD does not affect the land-use requirements or
zoning designations for the area.
SPUR recommends the following measures,
some of which are currently being pursued by
the Port staff, to facilitate the elimination of
waterfront blight and to preserve those historic
resources that can be saved.
Build high-quality Waterfront Parks
The Port is public property that belongs to all
Californians. Therefore, SPUR strongly supports
development of high quality parks along the
water's edge. Dramatic waterfront parks can
leave an indelible impression on visitors and add
to the quality of life in the city in a way that is
impossible to measure in financial or economic
terms. The success of the Hudson River Parkway
in New York, Millenium Park in Chicago and
Crissy Field locally are excellent examples of the
striking potential of waterfront recreation.
As the City pursues voter approval of new
general-obligation bonds and applies for
Proposition 84 and Proposition 1C funds, it
should prioritize funding for high quality parks
on Port property. Realizing the type of vision
currently being pursued for the Hudson River
Park Greenway, due to its enormous expense,
would require the type of private fundraising
that Chicago accomplished with Millenium Park.
John Bryan, the former president and Chief
Executive Officer of Sara Lee Corp., led a private
fundraising effort that raised $205 million of
the total $475 million capital costs to build
Millenium Park, including 85 gifts of $1 million
or more.
One way to attract more funding for
waterfront parks may be through partnership
with park agencies. San Franciscans enjoy an
amazing legacy in the successful effort led by
SPUR and Sierra Club members - now almost
40 years ago - to establish the Golden Gate
National Recreation Area, which preserved
the lands surrounding the Golden Gate. While
the GGNRA incorporates major coastal and
Bayfront areas in San Francisco, its reach
does not extend to San Francisco's Eastern
Waterfront.
The Port and the City should investigate a
high-level partnership with the GGNRA or the
California State Parks Department to provide
future stewardship for natural areas such as
Warm Water Cove and Heron's Head Park, and
perhaps also for areas that should be preserved
as unique maritime historic assets.
Waterfront and Bay Recreation
With the construction of Herb Caen Way along
the waterfront, San Francisco enjoys a new,
urban facility for biking, running and strolling
along the Bay. Herb Caen Way is an urban park
for the 21st century and is extremely popular
with residents and visitors alike.
The Port and the City should develop a
continuous path connecting the Northern
Waterfront from Crissy Field to Hunters Point,
including a Blue Greenway through, or at least
with views of, the Port's industrial lands in the
Southern Waterfront. Continuous pathways are a
significant public value for purposes of recreation
and open-space planning, as we have seen in
efforts to establish the San Francisco Bay Trail. In planning for this effort, the Port and the City
should revisit the design of The Embarcadero
Roadway to create Class 1 bike paths physically
separated from cars. One retrofit option that may
be relatively affordable would be to build bike paths between the sidewalks and the parked cars
along the entire length of the roadway.
Residents of the city's eastern neighborhoods
need more opportunities to swim and enjoy
recreational boating. For more than a century,
the city has been cut off from its northern
and eastern waterfronts by major industrial
operations along the water, including the
former rail yards in Mission Bay. The city's
Sunset, Richmond, Presidio, Marina and North
Beach neighborhoods all have a close, physical
connection to their respective waterfronts.
South of AT&T Park, residents and visitors enjoy
very limited opportunities to enter the water
for recreational boating purposes and even
fewer opportunities to swim in the Bay. As the
Port plans recreational access in the Southern
Waterfront, it should place a premium on
opportunities for residents to enjoy swimming,
sailing and hand-powered boating along this
stretch of the Bay.
Sadly, the city's Eastern Waterfront is seriously
contaminated by historic industrial activities.
Attaining the water quality necessary to allow
safe water contact cannot be accomplished by
the Port alone, and will require the cooperation
of the federal government, the Regional
Water Quality Control Board or the California
Department of Toxic Substances Control and the
San Francisco Public Utilities Commission.
There are a number of potential
funding sources for preserving
historic piers along the
waterfront. The estimates
are
based on financial modeling
performed by the Port assuming
likely development scenarios
for each case. As
shown in
the table, the major financing
strategies recommended in
this paper would be sufficient
to make specific
development
opportunities on Port property
viable. In some cases, the
proposed public subsidies
do not provide a
solution for
extraordinary substructure and/
or seismic strengthening costs.
Wildlife Habitat and the Enjoyment of Nature
San Francisco is fortunate that part of its
shoreline remains free of a seawall - where
land and water are allowed to meet, and the
tide can go in and out as well as up and down.
In these areas, where the elevations are right,
there exist remnants of the extensive tidal marsh
system that provided a rich bounty of seafood
and waterfowl for this area's first inhabitants
and many who came afterward. Although the
wetlands at Mission Creek, Islais Creek, Pier 94,
Heron's Head Park, India Basin and Yosemite
Slough are located considerably bayward of the
natural shoreline and are tiny slivers compared
with the marsh acreage of the 1700s, these Port
holdings and shared holdings offer the same
biological diversity and values as the indigenous
Bay-edge ecosystem.
Preserving, restoring and interpreting this
natural heritage and associated human uses such
as the Ohlone shell middens and Chinese fishing
camps are as important to many people as
preserving the historic resources of the northern
waterfront. The Port has done an admirable
job of working with community groups on the
enhancement of the wetlands of Piers 94 and
98, and in its cooperation with Literacy for
Environmental Justice on the soon-to-be-built
LEED
6 Platinum Living Classroom at Heron's
Head Park.
Tidal marshes serve as the nurseries that
support much of the aquatic food web, including
the fish that provide recreational angling or a
source of protein for many. They also serve as
habitat for a huge diversity of bird life (avocets,
egrets, great blue herons, pelicans, and many
more) that has been drawing wildlife watchers
to the Southern Waterfront shoreline for many
years. The Port's wetlands are also the site of
many ecological-stewardship work parties,
another form of recreation. The Port and the City
should pursue opportunities to expand shoreline
natural resources and the recreational and
educational uses that depend on them, including
the removal of the Hunters Point power plant.
As the Port develops new open spaces, it
should utilize resources such as BCDC's 2007
publication "Shoreline Plants: A Landscape
Guide for the San Francisco Bay" as guides for
natural landscaping appropriate to the Bay
setting.
The Embarcadero Roadway and
Transportation Solutions
Individual Port development projects cannot
solve the transportation shortfalls along The
Embarcadero, so until the City addresses
congestion and transit along The Embarcadero,
the Port is unlikely to be able to develop active,
publicly oriented uses along the water that draw
new visitors.
The Port and the Municipal Transportation
Agency are cooperating to analyze the
constraints of The Embarcadero Roadway and
to design new parking management systems - including new parking meter technology. As
this effort continues, SPUR urges City decisionmakers,
and in particular MTA and the Port, to
view The Embarcadero as a transit corridor on
which the City can test funding and operational
solutions for possible implementation citywide.
Possible ideas to test along The Embarcadero
include:
> use of modern low-floor, high-volume streetcars
as companions to historic street cars on the
F-Line and on the E-Line, as a means of increasing
transit capacity along The Embarcadero
> a Class 1 bicycle path separated from traffic,
like the Hudson River Greenway in Manhattan.
> a waterfront transportation assessment
district to fund higher levels of Muni service and
the purchase of new low-floor vehicles along the
waterfront. (The City, State and federal governments
spent a combined $560 million on The
Embarcadero Roadway transportation corridor,
enhancing property values along this corridor
dramatically. It is time to recapture some of that
investment.)
> implementation of the policy - defined in
the BCDC Special Area Plan - of moving parking
from the piers to land, as the Port considers
development of its seawall lots on the landside of
The Embarcadero
Herb Caen Way should be a pedestrian resource
with as few vehicles crossing as possible.
This may entail the construction of structured
parking in some locations. If this is necessary,
the Port should pursue structures that are below
grade, wrapped with other uses, or otherwise designed
to present the best architectural face possible
to the street and surrounding structures.
Development Priorities
SPUR offers the following policy considerations
to guide the Port and the City as the Port
pursues future waterfront development. First
and foremost, it is critical that the Port pursue
near-term development strategies to increase
annual revenues and thus its revenue bonding
capacity. This means focusing on relatively easy
opportunities, such as completing the Seawall
Lot 337 planning process (Lot A in Mission Bay)
or leasing or developing the Southern Waterfront
backlands. As it pursues these development
opportunities, the Port should establish a goal
of achieving the highest environmental-performance
standards for development that Port
projects can afford.
Pier 48 to Pier 70: The Port should prioritize
planning and development for the area from Pier
48 to Pier 70 above all other development opportunities.
Pier 48 and Seawall Lot 337 in Mission
Bay represent substantial potential leasing value
to the Port, and the area around these sites is developing
rapidly. Seawall Lot 337 is 14 acres and
represents perhaps the single most valuable piece
of property in the Port's real estate portfolio.
The Port is poised to capture the upside of land
values in Mission Bay if it moves expeditiously to
develop appropriate uses in this area.
Continuing further south, Pier 70 is an
industrial brownfield site with multiple hurdles
to productive reuse. However, it is the site of
what is likely the most historically significant
collection of Victorian-era industrial buildings
west of the Mississippi. There is no other way to
describe it: Pier 70 is a gem and has the potential
to become one of the city's most distinctive
neighborhoods.
Historically, the Port and the City have
focused their collective attention on the
Northeast, Waterfront and, more recently, the Central, Waterfront. Meanwhile, residents of
the southeast neighborhoods remain isolated
from the Bay by blighted industrial lands. The
Port, which is in the midst of master planning
for Pier 70, should continue its commitment to
the southeast neighborhoods by prioritizing Pier
70 redevelopment before engaging new development
opportunities in the Northern Waterfront
(with the exception of those projects, such as The
Exploratorium proposed for Piers 15-17, where
the Port has a current development partner).
Piers 90-94 backlands: The Piers 90-94
Maritime Terminal enjoys a 44-acre "backlands,"
or upland area, the site of a former city landfill.
While land uses on this property are constrained
by its proximity to active maritime uses and
geotechnical considerations, property zoned
M-2 for industrial use in San Francisco is scarce,
and this site represents a significant additional
revenue opportunity for the Port.
Cruise ship berthing facilities: Tourism is
San Francisco's largest industry, generating more
than $7.5 billion in revenue in 2006. The Port is
a significant direct contributor to that industry:
from 2003 to 2006, the Port averaged 82 cruise
calls and 193,000 passengers per year.
The visit of the majestic Queen Mary II to Pier
27 in the spring of 2007 - and the San Francisco
residents and workers who spilled out onto
the Golden Gate Bridge, Crissy Field and The
Embarcadero to view its arrival and departure - speaks to the need to maintain cruise berthing
along the waterfront and illustrates a serious
financial challenge for the Port. The Queen Mary
II visit resulted in berthing fees of $50,000
to the Port. Meanwhile, the Port expended $2
million for dredging and other improvements
to make the Pier 27 berth operable. While the
success of the visit has resulted in rebooking
the Queen Mary II for 2009, Port berthing fees
will never cover the costs of maintenance and
dredging for Port cruise facilities.
The Port is conducting its own review of cruise
needs, possible locations for cruise facilities and
public investment required to build terminals.
Concurrent with this review, the Port has found
that its main cruise facility at Pier 35, home
to two cruise berths, is deteriorating and may
require load restrictions or major repairs in as
few as five years. The Port should contemplate
cruise facilities located at more than one place
along the waterfront in order to disperse traffic
impacts and to fold this important trust use into
other appropriate projects. Also, the City and
the Convention and Visitors Bureau should work
with the Port to develop a funding stream to
sustain the City's cruise industry.
The Port after an earthquake
and other disaster scenarios
SPUR will further investigate the following
issues in its analysis of disaster preparedness,
but there are a few disaster-related issues affecting
the Port specifically that are worthy of note.
Most importantly, the Port and its facilities need
to function as follows after a major localized
earthquake:
Ferries: Ferry service from surrounding Bay
Area counties is a critical path for the City's
Operation Return, whereby City employees
return to the city to participate in post-disaster
recovery efforts. If the Golden Gate Bridge, Bay
Bridge or San Mateo Bridge become inoperable,
the need for passenger ferry service to and from
San Francisco will increase dramatically. The
Water Transit Authority is developing emergency
operation plans and emergency float capacity
to meet this need, and the City and Port should
coordinate with the WTA to ensure that Port
facilities designated to serve expanded ferry
capacity in the aftermath of such an event are
retrofitted to current seismic standards.
Debris: Moving major debris out of the City
will require access to water and freight rail, both
located on Port property. The City's Department
of Public Works currently designates the Port's
backlands as a major debris-removal site. The
City and Port should be equipped with rockcrushing
capacity year-round to process debris
from a major earthquake.
Construction materials: Rebuilding after
a major earthquake will require the major
importation of construction materials, including
structural steel (imported at Pier 80), lumber
and concrete (both of the city's concrete batching
plants are located on Port property at Pier 94).
The City and the Port should cooperate to
conduct a seismic risk analysis of major Port
facilities such as the locations listed above - and the
seawall along The Embarcadero - to determine
expected performance during scenarios such as
a major earthquake along the Hayward Fault or
San Andreas Fault. Similar analysis has recently
been conducted on the Municipal Pier, under
federal jurisdiction in Aquatic Park adjacent
to Port property. That analysis concluded that
Hard Choices at the Municipal Pier, constructed after many
of the Port's finger piers and in a similar state
of disrepair, would not perform well during
an earthquake like the 1906 earthquake.
Conducting such a seismic-risk analysis is the
natural next step to refine capital priorities in
the Port's 10-year Capital Plan.
With respect to the more remote natural
risks of flooding and sea-level rise, future Port
planning should evaluate the need for raising
seawalls and other constructed features that will
eliminate flood hazards and protect the city from
rising seas.
If the Federal Emergency Management Agency
maps coastal flood hazards in San Francisco (as
it is expected to) and the City chooses to join the
National Flood Insurance Program (a likely next
step), the floodplain-management ordinance
that would be required of the City could pose a
significant impediment to redevelopment of the
Port's finger piers. This is because floodplainmanagement
ordinances typically prohibit
building seaward of the mean high tideline for
anything other than "functionally dependent"
(water-oriented) uses. Such a restriction would
threaten the viability of the Port's Waterfront
Plan, which relies on mixed uses to redevelop
the piers (i.e., water-oriented and commercial
uses). Since it is likely that the Port's finger piers
are higher than expected flood elevations, in
consideration of a flood-management ordinance
the City should include appropriate protections
or exemptions to allow for the redevelopment
of the Port's finger piers in a commercially
viable manner. The City should also examine
the practices of other coastal cities that have
successfully redeveloped historic finger piers in
flood hazard areas, such as Boston.
As the risk of sea-level rise becomes more
evident, nationwide competition for federal
funding will intensify. Coastal jurisdictions that
have high property values, specific strategies
for building flood protection and local funding
sources will undoubtedly compete better
for federal funding. San Francisco should
begin positioning itself now for this worstcase
scenario by analyzing options for flood
protection, including larger setbacks from the
water's edge.
On the waterfront
This report sets forth both the challenges
and the opportunities facing the Port. Subarea
planning needs to begin immediately, so that
the hard decisions that need to be made about
what is to be built, what is to be saved, and what
cannot be preserved can be made as quickly
as possible. The exciting opportunities for new
public and private development of some of the
most spectacular publicly owned real estate in
the world must be seized now. New sources of
revenue for the Port must be found. BCDC, the
City and the State Lands Commission must
use the subarea planning process to develop a
more consistent and collaborative approach to
the regulatory oversight of the Port, including
a more flexible approach to the public trust
and the uses permitted. For example, the City's
ban on hotels bayward of The Embarcadero
should be revisited, as well as the question of the
array of uses that should be permitted within
historic structures. Pier 70 cannot be allowed
to deteriorate further. The seawall lots should
be freed of trust restrictions since they are no
longer needed for trust purposes and could
provide a vital additional source of revenue to
the Port. The transit and access opportunities
presented by The Embarcadero need to be tested
and successful solutions implemented as soon as
possible.
While time is not on the Port's side, there is
still time to make the right decisions if those
decisions are made promptly.
In the history of waterfront development,
competition among multiple interests
has typically resulted in a stalemate. But
Port constituents have never had a clearer
understanding of the Port's financial
predicament. And Port regulators are
demonstrating the flexibility and specific
engagement that are predicates to coordinated
planning and oversight.
Most importantly, the removal of the
Embarcadero Freeway and the extraordinary
renaissance at the foot of Market Street have
given tourists and residents a taste of the
potential of San Francisco's Bay waterfront.
The crowds congregating at the Ferry Building
Farmer's Market exemplify the Port's underlying
mission of connecting people with the water's
edge in a unique and exciting way. This is the
buzz of a successful city.
Opportunities for change arrive infrequently.
Political winds shift. Development controversies
eclipse the broad vision of waterfront potential.
San Francisco and the state should seize this
moment to restore the waterfront to its rightful
place as one of the city's most important assets
for its residents, workers and visitors.
Thank you, task force members:
Mike Wilmar, Teresa Rea, Will Travis, Sean
Randolph, Ann Lazarus,
Anne Halsted,
Bill White, Diane Oshima, Brad Benson,
Tina Olsen, Jennifer Clary, Byron Rhett
SPUR staff:
Gabriel Metcalf, Executive Director
(Endnotes)
- If the market were permitted to determine
development along the waterfront now with
no restrictions, the most likely result would
be a plethora of general office development.
- Except for certain unnecessary street
fragments no longer used for street purposes,
sometimes referred to as "paper streets."
- A rent credit is a reduced rent obligation,
typically granted in consideration for
physical improvements to Port property
made by a Port tenant.
- The BCDC San Francisco Waterfront Special
Area Plan modified the 50 percent rule for the
area from Pier 35 in the Northern Waterfront
to China Basin in Mission Bay.
- San Francisco International Airport
and the San Francisco Public Utilities
Commission are also enterprise agencies
within the City government, but provide
monopoly services locally.
- Leadership in Energy and Environmental
Design (LEED) is a trademarked system for
certifying the environmental performance
of buildings, developed by the U.S. Green
Building Council. Platinum is the highest
rating that is offered under this system.
