Pier into the future

The City’s historic and perfectly located Pier 70 faces a massive cleanup. A new financial mechanism, which relies on anticipated revenues, could help San Francisco achieve its long-sought-after redevelopment.

Pier 70 sits on 65 acres of bayfront land. It’s home to a handful of the oldest and most photogenic buildings in The City. It often sees more sunshine in a month than the Sunset district does in a year.

The plot of land dates back to the Gold Rush and appears to be a veritable gold mine for developers. Instead, every investor that has reviewed the land has eventually turned and walked away, according to officials from the Port of San Francisco.

The trouble is its best assets — a rich past and prime location — are also its biggest liabilities. The cost of cleaning up toxins that have soaked in to the pier after generations of industrial uses, in addition to the hefty price tag associated with restoring the crumbling 19th-century masonry, make the pier worth less than nothing.

But necessity, they say, is the mother of invention. In the face of the continuing decomposition of the historic land, leaders at the perennially cash-strapped Port of San Francisco say they have been inspired to become exceptionally creative.

In November, voters will be asked to approve an unusual financing plan that has never before been attempted in San Francisco — or perhaps the nation. City leaders say if it passes, it could become a model for how to help finance the restoration and redevelopment of other major blighted areas of The City.

Proposition D would allow The City to borrow against future payroll and hotel taxes generated by the development of 50 acres of the land, which sits at the foot of Potrero Hill on a section of waterfront from about 18th Street to 24th Street.

While it is common practice to borrow in exchange for future property taxes — a method the Port will also be using — borrowing in exchange for other types of taxes has never been attempted before in San Francisco, said Gabriel Metcalf of the public-policy think tank San Francisco Planning and Urban Research Association. The plan, which banks on the project creating about 8,000 new jobs, must be approved first by voters and later by the Port and Board of Supervisors.

The vision is to maintain Pier 70’s 15-acre dry dock; create 20 acres of parks; restore several historic industrial buildings and convert them into museums, theaters or other cultural institutions; and construct about
3 million square feet of offices and retail space.

The pier’s history dates to at least 1862, when a Norwegian gold prospector-turned-industrialist began building ships on what was then called Potrero Point. By the 1880s, industrial giant United Iron Works had moved in. Some of the site’s earliest buildings date to that era, said David Beaupre, senior waterfront planner for the Port of San Francisco, and have miraculously survived both the 1906 and 1989 earthquakes.

In the decades that followed, the pier became a bustling dry dock and shipyard, so busy it even had its own hospital during both world wars because there was no time to send injured workers to San Francisco General Hospital, about 15 blocks away, Beaupre said.

After World War II, the shipbuilding enterprise slowed, and the last San Francisco-made ship sailed out of Pier 70 in 1965 — though a ship-repair facility continues to function. That 15-acre dry dock, which will soon be the only place on the West Coast to service ships too big to go through the Panama Canal, brings in more than $1 million per year for the Port.

Prop. D, however, would bring in about $76 million more for the Port and help maintain some of the area’s history. The project in its entirety should cost about $1.9 billion — most of which the Port hopes will be provided by a private investor, Beaupre said.

But even with the most generous private-investment scenario, public dollars would have to pay for about $600 million of cleanup, infrastructure and improvement.

Funding for much of the project has been identified, but even if Prop. D passes there will be a $55 million shortfall, Metcalf said.

He said borrowing against future payroll and hotel taxes is a tool The City “would want to use sparingly,” but if it works, might be considered for “a few other key sites.”

Michael Cohen, director of the Mayor’s Office of Economic and Workforce Development, described the restoration of Pier 70 as “the classic win-win situation.”

Cohen said Prop. D — though a nontraditional form of public financing — is necessary.

“Pier 70 has some extraordinary needs associated with it,” he said. “And those extraordinary needs require extraordinary measures.”


West’s only mega cruise-ship repair shop calls Pier 70 home

If you walk down The City’s bayside waterfront next week and find you’re in the shade, it might just be a 190-foot cruise ship blocking the sun.

San Francisco’s 15-acre dry dock at Pier 70 has recently become the only facility on the West Coast capable of fixing mega cruise ships — ships so large they cannot fit through the Panama Canal, said Gerry Roybal, the Port of San Francisco’s maritime marketing manager. The first such ship, the Princess Star, is scheduled to dock Sept. 26.

The dry dock, operated by BAE Systems, is the longest continually operated ship-repair facility in the nation. The Port plans to allow it to continue operating indefinitely while the other 50 acres on Pier 70 could be redeveloped.

The dry dock was treated to a $5 million upgrade this year, about $3 million of which BAE borrowed from Princess Cruises — San Francisco’s most frequent cruise visitor.

The Princess Star will spend about two weeks in port. Its 900 crew members will continue to live on the ship, while 1,400 craftspersons — some from the Bay Area, others flown in from around the world — raise the ship out of the water, repair its hull and renovate its decks, Roybal said.

The dry dock will receive about $28 million for the work.
— Katie Worth

The financial breakdown

The Port of San Francisco expects the complete renovation and redevelopment of Pier 70 to cost about $1.9 billion, $636 million of which the Port will pay for. Here’s how it plans to obtain that money:

Estimated cost to the Port for the project $636,000,000

  • Private investment –$115,000,000
  • Borrowing against future property tax on the site –$275,000,000
  • Proposition D (if passed in November) –$76,000,000
  • Sale of Seawall 337 near AT&T Park –$45,000,000
  • Historic preservation tax credits –$60,000,000
  • Funds from Parks Bond approved in February –$10,000,000
  • Shortfall; funding yet to be determined $55,000,000
  • Source: Port of San Francisco

By the numbers

Power plant hindering Pier 70 redevelopment plans.
  • 65 Acres of redevelopment space at Pier 70
  • 27 Acres of adjacent power plant site
  • 48 Years the power plant has been operating
  • 9 Years Mirant has owned the plant
  • 1 Power plant generator proposed to be switched off
  • 3 Backup generators proposed to continue operating
  • $26 million Mirant investment to reduce air pollution since 1999
  • $2 million City incentive previously offered to Mirant to shutter plant
  • $273 million Estimated cost of proposed new power plants
  • $1 billion Estimated Pier 70 redevelopment costs

Sources: Port of San Francisco, San Francisco Public Utilities Commission, Mirant Corp.

The life of Pier 70

The plot upon which Pier 70 now sits is a part of the pasturage of Mission Dolores.

John G. North, a Norwegian gold prospector-turned-industrialist, begins building ships on what is then called Potrero Point.

Pacific Rolling Mills builds the first large iron-and-steel mill in the West.

United Iron Works moves its foundry from First and Mission streets to Pier 70, and begins building ships.

The first ship built at Pier 70, a coal carrier, sails out of port.

The Machine Shop, one of the oldest standing buildings in San Francisco, is built.

United Iron Works is sold in an auction to Charles Schwab of Bethlehem Steel Corp.

During World War I, an average of three new destroyers are launched from Pier 70 each month.

Some 10,000 people work at Pier 70 building ships during World War II.

The last ship made at Pier 70, the USS Bradley, is completed.

The yard makes the steel tubes used in BART’s transbay tunnel.

San Francisco buys the shipyard for $1. Several plans for redevelopment fall through after The City’s purchase.

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