Boondoggle by the Bay

Why the tacky political giveaway called Pier 39 shouldn't be used as a model for the coming redevelopment of San Francisco's waterfront

To operate commuter ferries from the San Francisco Ferry Building, Blue and Gold pays the port a modest landing fee, but no rent. Contracts with Tiburon, Sausalito, Alameda, and Oakland also guarantee Blue and Gold millions each year in public transit subsidies.

Those subsidies help offset Blue and Gold's operating expenses. Last year, Blue and Gold paid $460,000 to lease Pier 41 from the Port of San Francisco -- an amount approximately equal to what the company receives in government subsidies to run ferry service between San Francisco and Oakland/ Alameda.

The Basses are probably the last people on Earth who need a break on rent.
The brothers began investing the family's modest $50 million Texas oil fortune in the early 1970s. Younger brothers Robert, Lee, and Edward followed oldest brother Sid, who was aided by Stanford Business School classmate Richard Raintree.

Quietly but aggressively, the Basses began investing in companies such as Texaco and the Walt Disney Co. Westin Hotels, Taft Broadcasting, and American Savings and Loan were among the Basses other holdings. By the end of the 1980s, the Bass fortune had grown to $4 billion.

Sid, known as the genius behind the family's vast wealth, largely withdrew from the business as he tended to a divorce and much-publicized affair with socialite Mercedes Kellogg. Meanwhile, Robert Bass, the third oldest, emerged as the most aggressive investor of the brothers.

Northwest Airlines, worth $5 billion, and the Walt Disney Co., which bought Capital Cities/ABC for $19 billion and became the world's largest entertainment company in 1995, are among the Basses' other holdings.

Longtime merchants in the Fisherman's Wharf area say that under the direction of the Basses, whatever little "San Francisco" character Pier 39 once had -- if any -- has disappeared. Chris Martin is general manager of the Cannery, a retail complex a few blocks from Pier 39.

"It is clear that Pier 39 is transforming itself into a regional theme park," says Martin. "And like Disneyland, it has no physical limits."

A look at the political connections of the people who control Pier 39 suggests why this "festival marketplace" has had a relatively charmed financial existence, because to say the Bass brothers are politically well-connected is like saying Willie Brown has a few friends. The Basses donate generously to numerous politicians, notably those who are in positions to make decisions that involve Bass investments, including Pier 39.

The Basses are longtime financial supporters of Sen. Dianne Feinstein and longtime clients of Feinstein's husband, investment banker Richard Blum. The relationship between Feinstein and the Basses raises questions about the senator's decisions on matters pertaining to Pier 39 during her term in city government.

The Basses were Blum's clients in 1981, when Feinstein was a member of the Board of Supervisors that approved the sale of Pier 39 to the Basses. They were still Blum's clients in 1987, when Mayor Feinstein endorsed Pier 39's much-contested plan to build UnderWater World, the overpriced fish-tank that has attracted far smaller crowds than expected and is, reportedly, on the verge of bankruptcy. (The following year, the Basses and their associates would contribute $123,000 to Feinstein's campaign for the U.S. Senate.)

The Basses' political connections in San Francisco extend beyond Feinstein, to the current mayor himself. In the late 1980s, Pier 39 retained the private legal services of then-Assembly Speaker Willie Brown to facilitate the development of the UnderWater World project. Brown persuaded the publicly owned Steinhardt Aquarium to drop its opposition to the Pier 39 proposal to build another aquarium. In exchange, UnderWater World agreed to pay the Steinhardt $1.2 million over UnderWater World's first six years of business.

At Pier 39's request, last summer the city Planning Commission -- all of whose members have been appointed by Brown -- voted to release Underwater World from a promise it had made to pay $100,000 each year toward developing public transportation to the Pier 39 area.

In 1996, Pier 39 and its affiliates donated $2,000 to Mayor Brown -- but also $3,000 to Brown's nemesis, Sen. Quentin Kopp, who lept to Pier 39's defense when the city announced it was reassessing Pier 39 for tax purposes.

Large corporations typically hire lobbyists to help ease their way through city government, and Pier 39 is no exception.

According to documents filed with the San Francisco Ethics Commission, Pier 39 and the Pier 39-owned Harbor Carriers Inc. employ lobbyist Marcia Smolens' firm, HMS Associates. In the 12-month period beginning in October 1996, Pier 39 and Harbor Carriers paid HMS Associates $108,000, including $24,000 for the amendment of the Pier 41 lease after the Red and White sale last summer.

Pier 39 would not say just what the rest of the $108,000 was for.
"The relationship is confidential," says Pier 39's spokeswoman, Alicia Vargas. "I'm not going to be able to talk to you about what we hire them to do."

Secrecy seems to be something Pier 39 is comfortable with. The Bass brothers acknowledge their control over Pier 39, and public records from California and Delaware show that investment banker F. Warren Hellman is a general partner of San Francisco Partners, a firm that has longtime associations with the Basses and is an investor in the Pier 39 partnership. John Scully, an investor in San Francisco Partners who went to Stanford Business School with Sid R. Bass, is an investment partner of Richard Blum, husband of U.S. Sen. Dianne Feinstein.

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