S.F. hopes for berth of a new era

After two massive developments failed to materialize on The Embarcadero last year, the Port of San Francisco is in a bit of a crunch to create a new cruise terminal before the existing one deteriorates completely.

While plans for a mixed-use development surrounding a double-berthed cruise terminal at Piers 30 and 32 will not go forward after developers pulled out, The City will nonetheless build a new cruise terminal at Pier 27.

The existing terminal at Pier 35 will most likely be too decrepit to operate within five years, Port Planning Director Byron Rhett said. In a city that counts tourism as its largest industry and where officials have worked hard to increase cruise traffic in recent years, a solid terminal is necessary to secure the roughly 200,000 tourists that the ships bring to call.

The project may end up being the final note in two failed developments on San Francisco’s central waterfront. In February, a commercial and recreational development by Mills Corp. at Piers 27 to 31 did not gain city approval. Meanwhile, the massive proposed new cruise terminal and commercial center scheduled to be built at Piers 30 and 32 evaporated last fall when the developer bowed out.

A panel of city officials, industry and labor representatives and neighbors concluded that Pier 27 would be the ideal site for the new terminal because it is the longest pier in The City. At 1,400 feet, it is the only pier that already meets The City’s specifications for a new terminal. The pier and its shed are in relatively good condition, Rhett said, and an adjacent “valley,” or paved area between piers, could provide bus access.

“Right now, the notion is to have about 100,000- to 120,000-square-foot building on a single level, with another 25,000-square-foot mezzanine where passengers would come on and off the ship,” Rhett said. “The main area would be for passenger check-in and baggage check.”

The cruise terminal by itself would cost about $70 million to $80 million in city money.

But the project could look far different if The City closes a deal with real-estate developer Shorenstein Properties LLC, which last year bought the rights to develop Piers 27 through 31 from Mills Corp. If the developer partners with The City on the project, the new development could cover Piers 27 through 31, creating a $500 million mixed-use project that generates income from office space. The master tenant: Shorenstein itself, along with its partner company, Farallon Capital Management.

Under the mixed-use plan, the developer would pay for the new cruise terminal, but it remains to be seen whether the project would be profitable for Shorenstein.

“We’re trying to find the right formula that can produce the right economics and be able to provide the financing for the cruise ship terminal," Shorenstein Executive Vice President Tom Hart said. “Lots of moving parts.”

The Cruise Terminal Advisory Panel is scheduled to make its official presentation to the Port Commission on Sept. 25.

“We’re trying to use that as a goal to reap some sort of agreement on how a public-private partnership that would lead to a terminal on Pier 27 would work,” Rhett said.

Last decade’s spike in cruise ship traffic starting to wane

As San Francisco works to renovate its cruise ship terminal, The City’s cruise traffic has increased during the last decade, but has declined recently.

During the last 10 years, cruise ship traffic has more than tripled in San Francisco, going from 27 calls in 1998 to an expected 60 in 2008, according to the Port of San Francisco’s Web site. In 2004 and 2005, the number of calls by cruise ships peaked at 84.

The increased traffic stems from a boom in cruises to Mexico that started in 2003, said Michael Nerney, maritime marketing director for the Port.

“Up through and including 2002, San Francisco was primarily a cruise port that served Alaskan ships, occasional port-of-call ships and occasional world cruise ships,” Nerney said.

But in 2003 and 2004, Liberty Cruises, then Princess Cruises, started running Mexican trips from San Francisco.

“We got ships going northbound and southbound,” Nerney said.

In 2007 and projected in 2008, cruise traffic declined slightly, with 60 ships projected to visit each year. Nerney said the drop had to do with fewer cruises to Mexico running. But Nerney pointed out that fewer ships do not necessarily mean fewer passengers passing through The City.

In 2005, according to the Port’s statistics, 211,646 passengers visited San Francisco during 84 cruise ship calls. In 2005, 223,615 visited in 81 cruise ship calls.

Despite the drop in cruise traffic this year, workers at the Port are staying busy. This week, the Port announced that between Sept. 25 and Sept. 29, 10 cruise ships will call on The City. “It keeps the peoplewho service the ships on their toes,” Nerney said of the increased traffic.

The new cruise terminal being planned by the Port is important to the future of the cruise industry in San Francisco, Nerney said.

“We feel it would help us to nurture the business, so I think with a new facility we would expect to see traffic increase,” he said.

amartin@examiner.com

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