Photo Credit: Lennar Corp.
A hilltop view from Parcel A, the 63-acre first phase of the ambitious redevelopment of San Francisco’s Hunters Point Shipyard, offers a panoramic look at this property’s toxic past, a nearby neighborhood’s blighted present, and the uncertain future of a project that, from day one, has been steeped in controversy.
Called “the most important development project in the history of San Francisco” by Michael Cohen, the city’s director of economic and workforce development, Hunters Point has been a work in progress for more than 30 years. The Navy walked away from the shipyard in 1974, and the Defense Department closed it for good in 1991. Two years later, Congress authorized the cost-free transfer of the land’s ownership to the city and county, which presented San Francisco with nearly 500 acres of prime waterfront real estate available for redevelopment. That land, though, is highly contaminated and its cleanup by the Navy could take decades to complete.
The Navy and the EPA deemed Parcel A—the first of five stages—ready for residential reuse in 2004. Soon afterward, the city signed a development pact with Lennar, which in 1999 outbid several other companies to become the master developer. San Francisco’s Redevelopment Agency handed the land over to Lennar, which has spent more than $100 million on Hunters Point’s redevelopment so far. Lennar has also spent $1 million on public relations, some to defend itself against allegations of cronyism, project mismanagement, deception, and environmental indifference.
Those accusations grew louder last summer when the city’s supervisors approved the framework of a proposal to merge Hunters Point with the revitalization of nearby Candlestick Point. The combined projects would redevelop 771 acres along San Francisco Bay with 8,500 to 10,000 homes, of which as many as 3,500 homes would be priced affordably for buyers earning up to 120 percent of the market’s median income; 350 acres of parks and open space; an 8,000- to 10,000-square-foot arena; 700,000 square feet of commercial and retail space; an artists’ village; research and development facilities; and possibly a new football stadium. Kofi Bonner, president of Lennar’s Urban Land division for Northern California, estimates the total “horizontal” cost of Hunters Point and Candlestick Point at $1.7 billion and the “vertical” cost at $6 billion. Lennar could have its first homes completed by 2009.
That is, if Lennar doesn’t pull out of the project, which it’s threatened to do if San Franciscans vote for Proposition F, which calls for half of the homes to be priced for buyers earning between 30 percent and 80 percent of the city’s median income. A competing Proposition G, which the city and Lennar support, requires 25 percent affordable housing. The city was obligated by law to submit the redevelopment proposal to voters because it wants to convert recreational land for non-recreational use.
Photo Credit: Lenna Corp.
At the city’s request, the CBRE Consulting/Sedway Group division of CB Richard Ellis analyzed Proposition F and concluded it would reduce Lennar’s revenue by at least $1.1 billion. “There are levels of economics and difficulty to pull off, and 50 percent would overburden a project that is, frankly, already overburdened,” Bonner told Builder during an interview in April inside the company’s trailer at the shipyard site.
Saving a Neighborhood
Hang around the Bayview section that straddles Hunters Point for a few days and you discover that this project is about more than redeveloping land. Proponents see Hunters Point as the salvation for a tough neighborhood, one-fifth of whose 35,000 residents lives below the poverty line. About 46 percent of those 35,000 residents are black, and they have watched the black population dwindle to 6.5 percent of San Francisco’s total in 2005, compared to 13.5 percent in 1970, according to Census Bureau estimates.
Gary Evans, a liaison between the community and small businesses, says he’s received commitments from 380 companies to come into the neighborhood if this project goes forward. “Hunters Point can be the economic engine that drives this neighborhood,” proclaims Dr. Arelious Walker, pastor of the True Hope Church of God in Christ and one of Lennar’s strongest boosters. Walker and others here praise the builder for its willingness to stick with a troubled project during the housing downturn. “What the city, with Lennar, has done is somewhat incredible,” says Angelo King, chairman of the Bayview Hunters Point Project Area Committee. Lennar’s community outreach, says Bonner, includes a $27.3 million fund, funneled through the city, to help finance mortgages for homes in Bayview over the next eight years; $30 million in contracts with local construction companies; and $8.5 million for apprentice training programs.
What worries Bayview residents is the prospect of Proposition F passing and Lennar leaving, which could set back the redevelopment another 10 to 15 years. “If this project is put off, you can forget about affordability down the road,” predicts James Walton, a local real estate broker.
Suspicions Raised
Opponents, on the other hand, see the expanded redevelopment plan as a land grab by a politically connected builder whose supporters are conflicted. (Walker, for one, is part of a group that has a joint venture with the builder to construct affordable housing on Parcel A, according to the San Francisco Bay Guardian.) Some opponents also don’t trust Lennar after it reneged on promises to build affordable rental units. (The builder has since agreed to build at least 300 rentals, says Bonner.)
Lennar does have political allies: Bonner once worked for former Mayor Willie Brown. Laurence Pelosi, the nephew of Rep. Nancy Pelosi and cousin of Mayor Gavin Newsom, worked for Lennar from 2002 to 2005, but wasn’t involved in the Hunters Point deal, says the builder. California’s senator Dianne Feinstein favors this project, as does the district’s supervisor Sophie Maxwell.
But the builder didn’t win any friends when, months into the grading of Parcel A, it discovered that equipment its subcontractors set up to monitor how much asbestos dust was escaping into the air wasn’t working. “We spent a considerable amount of time and money to find out what happened,” asserts Bonner. Christopher Muhammad, a minister who runs a school near the shipyard, accused Lennar of willful negligence and disputed claims by the Department of Public Health that dust levels didn’t pose a health risk. (Muhammad did not respond to Builder’s request for comment.)
Photo Credit: Lenna Corp.
Retaining a Franchise
Everyone’s motives have been questioned, including those of supervisor Chris Daly, who—after failing last year to convince his colleagues to shut down this project—raised 8,000 signatures to get Proposition F on the June ballot. Bayview leaders resent Daly’s interference in a district he doesn’t represent and point out that Daly has never demanded anywhere near a 50 percent affordable-housing threshold for projects in his own district. “All he’s trying to do is kill this project,” asserts Al Norman, president of the Bayview Merchants Association. Cohen derides Proposition F because it’s being presented without any cost analyses and does not ask the city to switch developers or delay the project on public health grounds, even though he says Daly has made statements to that effect in the press. (Daly declined requests by Builder for an interview.)
Voters also had to consider how either proposition might influence the San Francisco 49ers, whose owners intend to relocate the team to Santa Clara. The city, through Proposition G, is trying to win back the 49ers by offering to build a stadium on Hunters Point (even if the financing is up in the air). But Cohen says the mayor and supervisors “recognize that this [redevelopment] is too important to let the 49ers’ indecision hold it up.” If the team exits, the land on Hunters Point would be used for science and technology facilities. Proposition G also calls for razing Candlestick Park stadium and the Alice Griffith Housing Project on Candlestick Point, and replacing them with parks, commercial facilities, and a mix of 800 to 1,000 market-rate and affordable houses.
A Long ROW to Hoe
Regardless of which proposition passes, everything still hinges on how quickly the Navy remediates Hunters Point. (The city has informed the Navy it needs 100 acres every three years.) The public will be asked to kick in between $900 million and $1 billion for the redevelopment through tax-increment financing. And it’s anyone’s guess who would complete construction if Proposition F passes. Assuming Proposition G passes and Lennar stays, market-rate homes on Parcel A could be priced from $485,000 to $700,000, based on local Realtor estimates. Bonner would only say about the affordable component that at least 50 units would be available to buyers earning 50 percent of the city’s median income at prices from $125,000 to $145,000.
For King, who lives with his wife and two children in subsidized housing, the redevelopment promises a better life for his family and the community. “I want us to be on the city’s visitors’ map again,” he says.