Across China Basin Channel from our stylish new offices is a gritty triangle of land bounded by the channel and Third and Fourth streets. On part of it sits a metal warehouse that serves as home to a hockey rink for in-line skaters. The rest of the triangle is an ugly empty industrial lot. There aren't many people around -- just the ragtag denizens of the RVs that line Fourth Street, and some folks who own metal detectors.
The people with metal detectors scour the area, looking for valuable things in the refuse and weeds. Until recently, their persistencehad seemed faintly deranged even by San Francisco standards. What treasure would you find here? A bolt or nut from the long-gone industrial past? A stray Saturday Night Special used in some wine-fueled SOMA stickup?
But now, we have to admit it. The metal detection men were right, and we were wrong. There is treasure south of China Basin Channel. The Catellus Development Corp. has proved it.
Catellus is the real estate subsidiary spun off from Southern Pacific Railroad, and as the spawn of railroad robber-baronry, Catellus inherited a huge part of the remaining undeveloped portion of San Francisco. For the past couple of decades, the firm had been trying, and failing, to build on its SOMA and China Basin holdings.
Then Willie Brown was elected mayor. And now we have Mission Bay, a 250-acre-plus, mixed-use development that will bring prosperity to San Francisco, a UCSF campus to the foot of Potrero Hill, peace to Bosnia -- and an enormous, sickening pot of public subsidies to Catellus.
As part of the Mission Bay development, Catellus plans to put up a 500-room hotel on the land south of the China Basin Channel. And yes, that hotel will block the bay view from our stylish new offices. And yes, that impending obstruction does irk us.
But that's just irk. We can live with irk.
What outrages us is the scale of the public subsidies heaped on Catellus to help it build Mission Bay.
Again we find Mayor Brown dipping into the Redevelopment Agency's bonding capacity to assist multimillionaires. (So far, he's used the agency to subsidize the Giants and the 49ers, poor, needy, blighted companies that they are.)
David Prowler, the mayor's point person on Mission Bay, says that "by the end of the day" the agency will most likely cough up $100 million in tax-increment-style financing for the Mission Bay project.
Interviews and documents from the Redevelopment Agency suggest the financing scheme will work this way: Catellus will pay upfront to construct infrastructure
needed to support the Mission Bay development. That means the streets, sidewalks, sewers, and parks that will benefit the development and make it salable will be built by the developer -- as they should be.
It's only after Catellus builds the infrastructure that the public will be asked -- well -- to pay for it. As Catellus is building the infrastructure, the San Francisco Redevelopment Agency will be selling approximately $100 million of bonds. The agency will use the bond proceeds to reimburse Catellus for the cost of the infrastructure. The bonds will be paid off by the property taxes generated by the development.
This process is all very complicated and full of qualifications. In general, though, most of the first $100 million of property taxes paid by Mission Bay will go not to the city treasury -- where it would help everyone -- but to pay for streets and roads and sewers that will help Catellus create a development that will make the firm incredible sums of money.
This little money-recycling program brings us to a nagging question: Why does a multizillion-dollar real estate company like Catellus Development, operating in a boom economic climate in the most beautiful and desirable city in the world, need help in financing its construction projects?
And that question brings us back to a request that we've made before, and that we now repeat as a demand: The Grid wants some financing assistance, too, dammit. Create the Grid Redevelopment Zone, and we'll build ourselves even swankier new offices than we already inhabit, using tax-increment bonds that will be retired with the taxes we pay on the new digs. This is exactly the kind of deal the Redevelopment Agency has given to the Giants and now Catellus. The Grid is at least as credit-starved as either of those firms. And the Grid has something to trade.
Give us a redevelopment zone to call our own, and we'll stop writing about all the sleazy deals the Redevelopment Agency is facilitating at the mayor's urging. Promise.
Until we get a Grid Zone, though, we'll just have to keep looking into Mission Bay. There's a lot to look at.
Aside from redevelopment-financing shenanigans, the Mission Bay deal involves land swaps that smell faintly of bilge water.
Because Catellus needs a few city- and port-owned lots in Mission Bay, a real estate trade has been proposed. But at first and second glance, the swap looks just a tad one-sided. A letter from Mayor Brown to Nelson Rising, president and CEO of Catellus, says this swap involves 59 acres of city land and "approximately an equal amount of acreage" owned by Catellus. In the type of bureaucratic deadpan that makes any sane taxpayer guard his or her wallet, the mayor's letter goes on to make this assertion: "It is assumed that all of the land transferred will be an equal value per acre."
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