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Port may need to subsidize historic Pier 70 repair to seek new operators

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A dilapidated ship pier is seen near the property of the Pier 70 shipyard in the Dogpatch district. The shipyard closed last May. (Jessica Christian/S.F. Examiner)

The saga to find a new operator for the historic Pier 70 shipyard has reached a turning point.

The Port of San Francisco may use its own funding to revitalize the aging shipyard in order to entice potential operators, Port Executive Director Elaine Forbes told the San Francisco Examiner on Thursday.

Last year, two former operators of the shipyard, Puglia Engineering, Inc. and BAE Systems, ceased operating the yards and became embroiled in a legal tussle centering on Pier 70’s dilapidated state — and who was responsible for it.

Though previously the Port hoped a new operator would revitalize the yard if rent was made free, Forbes said the need for further funding was revealed in talks with the only shipyard bidder and potential future operator, Vigor Industrial, LLC, a self-described “ship repair powerhouse” with operations in Alaska, Oregon and Washington.

Those talks were warm, Forbes said, but “in conversations with them, we felt it was clear … the Port would need to move forward with some kind of compensation.”

Forbes likened the funding to a “subsidy” in order to bring the shipyard back into operating capacity — and to restore 300 or so union jobs lost when the shipyard shuttered last May.

But rather than make an offer directly to Vigor, Forbes said the Port made a “judgment call” to make that offer to all bidders, including smaller, local shipyard operators, which previously did not make offers.

“Other shipyard bidders with that information may submit a bid or may compete in a different manner,” Forbes said. “We realized we wanted to be fair and put [the bid] out again.”

The Port will re-issue a request for proposals to run the shipyard in early 2018, targeting Feb. 27 for Port consideration.

Funding levels have not yet been assessed. The extent of repair to the two dry docks at Pier 70 will depend on who ultimately operates the yard, and what size of ship the operator intends to repair.

Each dry dock is configured to repair a particular size of ship, from 54,000-ton cruise ships to small vessels. Forbes said that some bidders may request reconfiguring the smaller dry-dock to service even smaller vessels, such as ferries.

That may be a wise business move, she said, because local ferry operators are on the cusp of major expansion.

“A successful ship repair operator will see where the market is going,” Forbes said.

Peter Dailey, deputy director of Port maritime operations, told the Examiner that repairs are currently underway at the shipyard, including to demolish old buildings and upgrade the electrical infrastructure.

“Whoever gets the yard,” he said, “will hit the ground running.”

The shipyard had been in operation under different names since the Gold Rush. Pier 70 steelworkers repaired World War II battleships and built BART’s Transbay Tube there in 1971.

Revitalizing Pier 70 was also a major priority for the late Mayor Ed Lee, whose office told the Examiner previously that Lee was personally involved in the effort to restore union jobs at the shipyard.

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