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Soaring costs sink cruise ship terminal plan

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A $360 million state-of-the-art international cruise ship terminal for piers 30-32, which has been planned for more than six years, has been scrapped due to skyrocketing costs associated with retrofitting its rotting piers.

The James R. Herman International Cruise Terminal plan for the foot of Bryant and Spear streets, which included five-star restaurants, offices and waterfront promenades, will require about $80 million worth of necessary retrofit work, said John Doll, the project manager for the Port of San Francisco.

Rising construction costs, as well as declining commercial real estate rents, contributed to the decision to back out, said Paul Osmundson, project manager for the developer, San Francisco Cruise Terminal Inc., a joint venture between Australian developer Lend Lease and the Port of Singapore.

The cost of the retrofit work was the decisive factor that led to abandoning the plans, Osmundson said.

“We met with other developers” to discuss transferring the project to them, Osmundson said. “Those discussions were not productive.”

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The piers along The City’s seven-mile waterfront are rotting and need seismic upgrades or risk falling into The Bay, officials say. The cost to make the necessary repairs along the entire waterfront is estimated at more than $1 billion, port officials said.

The original plans for piers 30-32 called for a 100,000-square-foot terminal along with hundreds of thousands of square feet of office and retail space.

The cruise industry brings nearly 250,000 passengers traveling on more than 80 ships to The City each year. Each of those cruise ships generates between $750,000 and $1 million apiece for city businesses, port officials said.

The terminal at Pier 35 cannot accommodate larger cruise ships that are a trend in the industry, officials said. For instance, when the Queen Mary II arrives next year in January, it will have to go to Terminal 27, which is generally used for overflow uses and is not a dedicated cruise terminal.

Plans for piers 30-32 started in 2000, with the project slated for completion in 2011.

“We’re disappointed” they backed out, Doll said. “But with disappointment comes opportunity.”

Port Commission President Ann Lazarus said she wants to explore the possibility of having an events center at piers 30-32.

“There’s been some shift in the market,” Lazarus said. “We may have an opportunity to get something more current.”

The Port has about $39 million in its coffers to spend on the project since the sale of the Watermark tower condominiums south of the Bay Bridge along with the sale of port property, Doll said.

Consultant Philip Crannell, who specializes in cruise ship terminal work and has been hired by the port, said piers 30-32’s old platforms and necessary retrofits offer the most expensive project he’s ever encountered.

Crannell said The City needs two 120,000-square-foot terminals at piers 30-32 to accommodate the increasing size of cruise ships.

mcarroll@examiner.com

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