Proposition R - Pier 45 Policy Preference

What it does

Prop. R says that it shall be city policy to create an interpretive educational public use facility at Pier 45’s Shed A, with a mission to promote a greater understanding and respect for the bay, its delta, and its Pacific Ocean sanctuaries through exhibits, resource archives, educational programs, public forums, and outreach efforts. Its stated purpose is to attract San Franciscans back to Fisherman’s Wharf and to help maintain traditional maritime activities and employment. The operator is to be a not-for-profit organization. There are to be no city tax subsidies. The measure also calls on the Port Commission not to enter into any agreements for the use of Pier 45 until the Commission and the Board of Supervisors have determined that the proposed use is consistent with Prop. R.

Why it is on the ballot

Prop. R was placed on the ballot by four supervisors. It is a reaction to the Port Commission’s choice of a history-oriented attraction by the Malrite Corporation (first called “San Francisco at the Wharf,” now “The San Francisco Interactive History Museum”) instead of a “Bay Center” proposed by a new nonprofit backed by a number of environmental, civic and fishermen groups.

In August 1999, the Port issued a Request for Proposals (RFP) for Shed A, located at the bay end of the main row of Fisherman’s Wharf restaurants. The RFP sought a developer to lease the site for a public attraction which would have a quality educational/learning/interpretive focus; would significantly enhance the image of Fisherman’s Wharf; support the long-term future of the fishing industry; would draw new audiences and local visitors to the wharf and attract repeated visits with off-season (November to April) appeal; and would be family-oriented; and affordable. The RFP asked respondents to incorporate Bay- and maritime-oriented themes, and as many themes as possible on the ecosystem of San Francisco Bay and California, the heritage of the bay, the wharf and Aquatic Park, the environment and historical preservation. The RFP set achievement of the above development goals as the most important criterion in evaluating proposals. There were also specific planning, financial and design objectives, use restrictions and other terms.

Pros

Those who support this measure state:

• This is the only way citizens can effectively oppose a decision which perpetuates the tacky image of Fisherman’s Wharf.
• Proponents question the Port’s alteration of the risk analysis, and the risk of an urban entertainment concept that they feel has overtones of the nearby $40 million Underwater World, which failed.
• Although Malrite offers almost double the total rent revenues, it does so at much greater long-term risk.
• The not-for-profit Bay Center needs an exclusive option for the site before it can effectively raise its project capital, and name some deep-pocket philanthropists who are ready to give.

Cons

Those who oppose this measure state:

• The selection process was fairly won.
• Malrite has a fine track record in starting Cleveland’s Rock and Roll Hall of Fame Museum, and excellent people at the top.
• The Bay Center has had enough time to create a complete management structure and show that it can raise capital.
• Governor Gray Davis line-item vetoed state start-up money for the Bay Center from the budget.
• This policy measure seeks to interject the politics of the Board of Supervisors into what was supposed to be a technical decision. Such actions do not bode well for the public contract selection process in San Francisco.

SPUR's analysis

Part of the issue concerns the choice between the development proposals. Another part concerns the appropriateness of second-guessing the Port Commission.

The Bay Center fully meets the development goals; Malrite only does somewhat. For example, Malrite’s bay-focused exhibit was originally 2,000 sq. ft., since expanded to 3,000 sq. ft., out of a 71,000 sq. ft. total.

The feasibility of each project is hotly debated. The Port hired independent consultants Bay Area Economics, which concluded that the Bay Center had a slightly lower risk. The Port staff recommendation to the Commission reevaluated the risk factors enough to give Malrite the nod. The significant issue may be the timing of the risk. The Bay Center has to raise $36 million to construct its project. It plans to do so with a combination of philanthropic grants and state funds.

After that, its operating costs are relatively low, and it needs lower visitation to sustain itself. It wants the 50 year lease the Port offers. Malrite has its $31 capital investment in hand, but it needs significantly higher visitation to be profitable. It wants a ten year lease with five year renewal options, which would allow it an early exit from an unprofitable venture. Thus, the Bay Center’s greatest risk comes early— can it raise the money?— while Malrite’s risk comes later— can it attract enough people? And if it can’t, will it go downmarket to be profitable?

The Bay Center has a strong proposal, unproven financial capability, and moderate longterm risk. Malrite has an unproven program, strong finances and a higher long-term risk. There are significant questions whether the decision-making process led to a result that met the Port’s development goals. While Prop. R is a city policy statement which cannot bind the Port, which is a quasi-State agency, it would give the Board of Supervisors a lever to politically press the Port to reconsider its choice. The competitors have been discussing a compromise, and passage of Prop. R would strengthen the bargaining position of those who believe that Fisherman’s Wharf needs more attractions for San Franciscans, and which more fully support the fishing industry. Although we are reluctant to second guess the Port Commission, we believe they may have made the wrong decision.

SPUR recommends a "Yes" vote on Proposition R.