Arrested Development

Mayor Brown is pushing for quick approval of a Hunters Point Shipyard redevelopment plan that gives a lot to homebuilding giant Lennar, and not nearly enough to the city or the shipyard's neighbors

The Hunters Point Shipyard was closed in 1974, leaving 8,000 people unemployed. In the politically turbulent era toward the end of the Vietnam War, San Francisco public opinion did not favor the military, so the shipyard was a fairly easy target for closure. But the move left deep resentment among blue-collar workers who felt sacrificed for the city's left-leaning politics.

For years, the former shipyard just sat, with the occasional promise of future development. Under federal law, the Navy is responsible for cleaning up the property, which is polluted in some form or fashion by most of the chemicals used in 20th-century industry. The shipyard was also home to a major nuclear research laboratory, and an assessment of possible radiation contamination is scheduled for completion early next year.

Environmental cleanup at Hunters Point has started and stalled repeatedly over the years, alternately plagued by budget fluctuations and prodded by activist lawsuits. Finally, with a shove from San Francisco's congressional delegation, the military began a serious effort to clean up its mess in the mid-1990s, in anticipation of transferring the property to the city.

Hunters Point Shipyard is broken into six 
parcels for transfer to the city, starting with 
Parcel A.
Hunters Point Shipyard is broken into six parcels for transfer to the city, starting with Parcel A.
ARC Ecology Director Saul Bloom (left) 
talks to the city's Jesse Blout at a 
community workshop on the shipyard 
James Sanders
ARC Ecology Director Saul Bloom (left) talks to the city's Jesse Blout at a community workshop on the shipyard project.

The deal to develop the former shipyard property was struck a few years later, when two things happened. In 1997, the San Francisco Redevelopment Commission, whose members are appointed by the mayor, decided to convert the shipyard property to civilian use by hiring a master developer, meaning that the agency would hand off the property to one developer to plan and create a new community. Later, the commission selected Lennar, under what might be called curious circumstances.

Lennar Communities is a part of the Miami-based Lennar Corporation, one of the nation's largest homebuilders. In recent years, the company has also ventured into the military base rehabilitation business, building new communities on former Department of Defense land.

In 1998, the San Francisco Redevelopment Agency invited developers to bid on the Hunters Point project, and then hired the financial services firm of KPMG, LLP to review the bids. Lennar partnered with Mariposa Management, a San Francisco developer, and Luster Inc., a local construction management firm, to form Lennar/BVHP Partners. (Mariposa and Luster had bid on the project as a separate entity before combining with Lennar.) KPMG recommended another bidder, Forest City Enterprises Inc., which had partnered with Oakland-based developer Em Johnson Interest, as the best choice for the job. (Another group led by Mission Bay Developer Catellus Corp. also was a finalist.) "Forest City has the most relevant urban, large-scale mixed-use experience and an established track record of economic revitalization of blighted areas," KPMG stated in its recommendation.

But the San Francisco Redevelopment Commission, citing the supposed wishes of the community adjacent to the shipyard, chose the Lennar group, effectively ignoring its own consultant. The 1999 vote followed a parade of Bayview residents -- many of them well known as supporters of Mayor Brown -- to the commission's microphone, where they extolled the virtues of Lennar, which had spent many hours and much money wooing certain members of the community. The Redevelopment Commission's decision to go against its own consultant's recommendation caught the attention of the FBI, which was investigating city contracting abuses at the time. According to the San Francisco Examiner, FBI agents requested records related to the Lennar deal from the city's Human Rights Commission, but no charges were ever filed.

The Redevelopment Agency entered into an exclusive negotiating agreement with Lennar/BVHP, meaning that the city could no longer talk to any other developer about the shipyard. In exchange, Lennar began reimbursing San Francisco for its costs, including the time that city attorneys and staff members spent negotiating with the Navy for cleanup and transfer of the land and planning the development deal. This meant that the city was off the hook for much of the expense of the shipyard transfer -- and that Lennar was paying the salaries of the people who were representing the city in the deal.

While the Navy's cleanup dragged on long beyond any of its initial time estimates for transferring the shipyard property to city control (mostly because of unexpected environmental problems) city officials worked on the development plan with Lennar. So, now, the city has a plan, but no shipyard. Lennar has paid the city some $6.5 million, and spent another $13 million or so creating the deal.

And, it's fair to say, the developer wants to make its money back.

Years ago, the Hunters Point Shipyard was divided into six parcels for the purposes of transfer from Navy to city. Before the first shovel of dirt can be turned for development at the former base, the Navy has to finish cleaning up the property, and state and federal environmental regulators must approve the cleanup. But there's a problem: The Navy's cleanup plan is not necessarily in sync with the city and Lennar's development plans.

And that's only one of several basic development hurdles that still hinder any attempt to civilianize the shipyard.

As far as the Navy is concerned, a deal to transfer any shipyard property to the city hasn't been struck yet, according to Lee Saunders, environmental public affairs officer for the Navy's Southwest Division, which oversees the Hunters Point cleanup. The agreement that governs the transfer of base property, hammered out by city and federal lawyers, staffers, and community representatives, has not been signed, Saunders says, and the Navy still considers itself in negotiation with the city over such transfers.

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