Public entity’s ability to get low-cost loans seen as key to building of recreation area
In exchange for an indoor-outdoor recreation area on piers along the Embarcadero, which will include a swimming pool, soccer fields and water sports, developers say they need $70 million in public financing.
The latest plans to create a recreation area on the 19 acres along piers 27-31 come after five years of controversy surrounding a former plan that failed to garner political and public support. That project called for a mix of offices, restaurants, stores and a YMCA near Fisherman’s Wharf. Critics lobbied against the plans, saying they amounted to little more than a glorified mall that would produce a traffic nightmare.
In the wake of that debate and the ultimate rejection of the plan by the Board of Supervisors last year, the former developer, Mills Corp., sold the rights of development to SF Piers LLC in February.
On Tuesday, SF Piers unveiled plans for a $446 million project that has about 440,000 square feet of office space, about 200,000 square feet of indoor recreational space and nearly 300,000 square feet of outdoor recreational space on the piers between Francisco and Battery streets.
The near doubling of retrofitting costs of the piers prompted the new developer to seek public funds from the city-run port to help pay for the project.
Originally the cost of the piers’ substructure repair was estimated at around $77 million, but those costs have since risen to about $145 million, said Kirk Bennett, project manager for the Port of San Francisco. 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 around $1.2 billion, port officials said.
It would mark the first time the port would help finance a private project on public land, said Tina Olson, deputy director of finance and administration for the port. The financing plan calls for the port to issue about $60 million in bonds and forego nearly $10 million in rents to help pay for the $446 million project. The bonds would be paid back over time by rising tax assessments on the property.
According to Olson, the port has the ability to take out a less costly loan than the developer. As a public agency, the port can secure a loan at about 5 percent interest as opposed to a developer who would likely pay a bank 10 percent for the loan, Olson said.
The port, whichowns the land, has argued that a large-scale project at piers 27-31 could inject $127 million into the local economy, provide $6.2 million a year into The City’s coffers and create hundreds of permanent jobs.
The Port Commission is slated to vote on the new proposal next month.