Promises and reality

Pub date April 23, 2008
WriterSarah Phelan


The Lennar-financed "Yes on G" fliers jammed into mailboxes all across San Francisco this month depict a dark-skinned family strolling along a shoreline trail against a backdrop of blue sky, grassy parkland, a smattering of low-rise buildings, and the vague hint of a nearly transparent high-rise condo tower in the corner.

"After 34 years of neglect, it’s time to clean up the Shipyard for tomorrow," states one flier, which promises to create up to 10,000 new homes, "with as many as 25 percent being entry-level affordable units"; 300 acres of new parks; and 8,000 permanent jobs in the city’s sun-soaked southeast sector.

Add to that the green tech research park, a new 49ers stadium, a permanent home for shipyard artists, and a total rebuild of the dilapidated Alice Griffith public housing project, and the whole project looks and sounds simply idyllic. But as with many big-money political campaigns, the reality is quite different from the sales pitch.

What Proposition G’s glossy fliers don’t tell you is that this initiative would make it possible for a controversial Florida-based megadeveloper to build luxury condos on a California state park, take over federal responsibility for the cleanup of toxic sites, construct a bridge over a slough restoration project, and build a new road so Candlestick Point residents won’t have to venture into the Bayview District.

Nor do these shiny images reveal that Prop. G is actually vaguely-worded, open-ended legislation whose final terms won’t be driven by the jobs, housing, or open-space needs of the low-income and predominantly African American Bayview-Hunters Point community, but by the bottom line of the financially troubled Lennar.

And nowhere does it mention that Lennar already broke trust with the BVHP, failing to control asbestos at its Parcel A shipyard development and reneging on promises to build needed rental units at its Parcel A 1,500-unit condo complex (see "Question of intent," 11/28/07).

The campaign is supported by Mayor Gavin Newsom, Sen. Dianne Feinstein, and District 10 Sup. Sophie Maxwell, as well as the Republican and the Democratic parties of San Francisco. But it is funded almost exclusively by Lennar Homes, a statewide independent expenditure committee that typically pours cash into conservative causes like fighting tax hikes and environmental regulations.

In the past six months, Lennar Homes has thrown down more than $1 million to hire Newsom’s chief political strategist, Eric Jaye, and a full spectrum of top lawyers and consultants, from generally progressive campaign manager Jim Stearns to high-powered spinmeister Sam Singer, who recently ran the smear campaign blaming the victims of a fatal Christmas Day tiger attack at the San Francisco Zoo.

Together, this political dream team cooked up what it hopes will be an unstoppable campaign full of catchy slogans and irresistible images, distributed by a deep-pocketed corporation that stands to make many millions of dollars off the deal.

But the question for voters is whether this project is good for San Francisco — particularly for residents of the southeast who have been subjected to generations worth of broken promises — or whether it amounts to a risky giveaway of the city’s final frontier for new development.

Standing in front of the Lennar bandwagon is a coalition of community, environmental, and housing activists who this spring launched a last minute, volunteer-based signature-gathering drive that successfully became Proposition F. It would require that 50 percent of the housing built in the BVHP/Candlestick Point project be affordable to those making less than the area median income of $68,000 for a family of four.

Critics such as Lennar executive Kofi Bonner and Michael Cohen of the mayor’s Office of Economic and Workforce Development have called Prop. F a "poison pill" that would doom the Lennar project. But its supporters say the massive scope and vague wording of Prop. G would have exacerbated the city’s affordable housing shortfalls.

Prop. F is endorsed by the Sierra Club, People Organized to Win Employment Rights, the League of Conservation Voters, the Chinese Progressive Association, St. Peter’s Housing Committee, the Harvey Milk LGBT Democratic Club, Coleman Advocates for Children and Youth, the Grace Tabernacle Community Church, Green Action, Nation of Islam Bay Area, the African Orthodox Church, Jim Queen, and Supervisor Chris Daly.

Cohen criticized the coalition for failing to study whether the 50 percent affordability threshold is feasible. But the fact is that neither measure has been exposed to the same rigors that a measure going through the normal city approval process would undergo. Nonetheless, the Guardian unearthed an evaluation on the impact of Prop. F that Lennar consultant CB Richard Ellis prepared for the mayor’s office.

The document, which contains data not included in the Prop. G ballot initiative, helps illuminate the financial assumptions that underpin the public-private partnership the city is contemputf8g with Lennar, ostensibly in an effort to win community benefits for the BVHP.

CBRE’s analysis states that Lennar’s Prop. G calls for "slightly over 9,500 units," with nearly 2,400 affordable units (12 percent at 80 percent of area median income and 8 percent at 50 percent AMI), and with the San Francisco Redevelopment Agency "utilizing additional funding to drive these affordability levels even lower."

Noting that Prop. G. yields a "minimally acceptable return" of 17 to 18 percent in profit, CBRE estimates that Prop. F would means "a loss of $500 million in land sales revenue" thanks to the loss of 2,400 market-rate units from the equation. With subsidies of $125,000 allegedly needed to complete each affordable unit, CBRE predicts there would be a further cost of "$300 million to $400 million" to develop the 2,400 additional units of affordable housing prescribed under Prop. F.

Factoring in an additional $500 million loss in tax increments and Mello-Roos bond financing money, CBRE concludes, "the overall impact from [the Prop. F initiative] is a $1.1 to $1.2 billion loss of project revenues … the very same revenues necessary to fund infrastructure and community improvements."

Yet critics of the Lennar project say that just because it pencils out for the developer doesn’t mean it’s good for the community, which would be fundamentally and permanently changed by a project of this magnitude. Coleman’s Advocates’ organizing director Tom Jackson told us his group decided to oppose Prop. G "because we looked at who is living in Bayview-Hunters Point and their income levels.

"Our primary concern isn’t Lennar’s bottom line," Jackson continued. "Could Prop. F cut into Lennar’s profit margin? Yes, absolutely. But our primary concern is the people who already live in the Bayview."

Data from the 2000 US census shows that BVHP has the highest percentage of African Americans compared to the rest of the city — and that African Americans are three times more likely to leave San Francisco than other ethnic groups, a displacement that critics of the Lennar project say it would exacerbate.

The Bayview also has the third-highest population of children, at a time when San Francisco has the lowest percentage of children of any major US city and is struggling to both maintain enrollment and keep its schools open. Add to that the emergence of Latino and Chinese immigrant populations in the Bayview, and Jackson says its clear that it’s the city’s last affordable frontier for low-income folks.

The problem gets even more pronounced when one delves into the definition of the word "affordable" and applies it to the socioeconomic status of southeast San Francisco.

In white households, the annual median income was $65,000 in 2000, compared to $29,000 in black households — with black per capita income at $15,000 and with 14 percent of BVHP residents earning even less than $15,000.

The average two-bedroom apartment rents in San Francisco for $1,821, meaning households need an annual AMI of $74,000 to stay in the game. The average condo sells for $700,000, which means that households need $143,000 per year to even enter the market.

In other words, there’s a strong case for building higher percentages of affordable housing in BVHP (where 94 percent of residents are minorities and 21 percent experience significant poverty) than in most other parts of San Francisco. Yet the needs of southeastern residents appear to be clashing with the area’s potential to become the city’s epicenter for new construction.

San Francisco Republican Party chair Howard Epstein told the Guardian that his group opposed Prop. F, believing it will kill all BVHP redevelopment, and supported Prop. G, believing that it has been in the making for a decade and to have been "vetted up and down."

While a BVHP redevelopment plan has been in the works for a decade, the vaguely defined conceptual framework that helped give birth to Prop. G this year was first discussed in public only last year. In reality, it was hastily cobbled together in the wake of the 49ers surprise November 2006 news that it was rejecting Lennar’s plan to build a new stadium at Monster Park and considering moving to Santa Clara.

As the door slammed shut on one opportunity, Lennar tried to swing open another. As an embarrassed Newsom joined forces with Feinstein to find a last-ditch solution to keep the 49ers in town, Lennar suggested a new stadium on the Hunters Point Shipyard, surrounded by a dual use parking lot perfect for tailgating and lots of new housing on Candlestick Point to pay for it all.

There was just one problem: part of the land around the stadium at Candlestick is a state park. Hence the need for Prop. G, which seeks to authorize this land swap along with a repeal of bonds authorized in 1997 for a stadium rebuild. As Cohen told the Guardian, "The only legal reason we are going to the voters is Monster Park."

As it happens, voters still won’t know whether the 49ers are staying or leaving when they vote on Props. F and G this June, since the team is waiting until November to find out if Santa Clara County voters will support the financing of a new 49er stadium near Great America.

Either way, Patrick Rump of Literacy for Environmental Justice has serious environmental concerns about Prop. G’s proposed land swap.

"Lennar’s schematic, which builds a bridge over the Yosemite Slough, would destroy a major restoration effort we’re in the process of embarking on with the state Parks [and Recreation Department]," Rump said. "The integrity of the state park would easily be compromised, because of extra people and roads. And a lot of the proposed replacement parks, the pocket parks … don’t provide adequate habitat."

Rump also expressed doubts about the wisdom of trading parcels of state park for land on the shipyard, especially Parcel E-2, which contains the landfill. Overall, Rump said, "We think Lennar and the city need to go back to the drawing board and come up with something more environmentally sound."

John Rizzo of the Sierra Club believes Prop. G does nothing to clean up the shipyard — which city officials are seeking to take over before the federal government finishes its cleanup work — and notes that the initiative is full of vague and noncommittal words like "encourages" that make it unclear what benefits city residents will actually receive.

"Prop. G’s supporters are pushing the misleading notion that if we don’t give away all this landincluding a state park — to Lennar, then we won’t get any money for the cleanup," Rizzo said. "But you don’t build first and then get federal dollars for clean up! That’s a really backwards statement."

The "Yes on G" campaign claims its initiative will create "thousands of construction jobs," "offer a new economic engine for the Bayview," and "provide new momentum to win additional federal help to clean up the toxins on the shipyard."

Michael Theriault, head of the San Francisco Building and Construction Trades, said his union endorsed the measure and has an agreement with Lennar to have "hire goals," with priority given to union contracts in three local zip codes: 94107, 94124, and 94134.

"There will be a great many construction jobs," Theriault said, though he was less sure about Prop. G’s promise of "8,000 permanent jobs following the completion of the project."

"We endorsed primarily from the jobs aspect," Theriault said. The question of whether the project helps the cleanup effort or turns it into a rush job is also an open question. Even the San Francisco Chronicle, in a January editorial, criticized Newsom, Feinstein, and Pelosi for neglecting the cleanup until "when it seemed likely that the city was about to lose the 49ers."

All three denounced the Chronicle‘s claims, but the truth is that the lion’s share of the $82 million federal allocation would be dedicated to cleaning the 27-acre footprint proposed for the stadium. Meanwhile, the US Navy says it needs at least $500 million to clean the entire shipyard.

Sup. Ross Mirkarimi said the city should wait for a full cleanup and criticized the Prop. G plan to simply cap contaminated areas on the shipyard, rather than excavate and remove the toxins from the site.

"That’s like putting a sarcophagus over a toxic wasteland," Mirkarimi told us. "It would be San Francisco’s version of a concrete bunker around Chernobyl."

Cohen of the Mayor’s Office downplays the contamination at the site, telling us that on a scale of one to 10 among the nation’s contaminated Superfund sites, the shipyard "is a three." He said, "the city would assume responsibility for completing the remaining environmental remediation, which would be financed through the Navy."

But those who have watched the city and Lennar bungle development of the asbestos-laden Parcel A (see The corporation that ate San Francisco, 3/14/07) don’t have much confidence in their ability to safely manage a much larger project.

"Who is going to take the liability for any shoddy work and negligence once the project is completed?" Mirkarimi asked.

Lennar has yet to settle with the Bay Area Air Quality Management District over asbestos dust violations at Parcel A, which could add up to $28 million in fines, and investors have been asking questions about the corporation’s mortgage lending operations as the company’s stock value and bond rating have plummeted.

To secure its numerous San Francisco investments, including projects at Hunters and Candlestick points and Treasure Island, Lennar recently got letters of intent from Scala Real Estate Partners, an Irvine-based investment and development group.

Founded by former executives of the Perot Group’s real estate division, Scala plans to invest up to $200 million — and have equal ownership interests — in the projects, which could total at least 17,000 housing units, 700,000 square feet of retail and entertainment, 350 acres of open space, and a new football stadium if the 49ers decide to stay.

Bonner said that, if completed, the agreement satisfies a city requirement that Lennar secure a partner with the financial wherewithal to ensure the estimated $1.4 billion Candlestick Point project moves forward even if the company’s current problems worsen.

Meanwhile, Cohen has cast the vagaries of Prop. G as a positive, referring to its spreadsheet as "a living document, a moving target." Cohen pointed out that if Lennar had to buy the BVHP land, they’d get it with only a 15 percent affordable housing requirement.

"Our objective is to drive the land value to zero by imposing upon the developer as great a burden as possible," Cohen said. "This developer had to invest $500 million of cash, plus financing, and is required to pay for affordable housing, parks, jobs, etc. — the core benefits — without any risk to the city."

But Cohen said the Prop. F alternative means "nothing will be built — until F is repealed." He also refutes claims that without the 49ers stadium, 50 percent affordability is doable.

"Prop G makes it easier to make public funds available by repealing the Prop D bond measure," Cohen explained. "But Prop. G also provides that there will be no general fund financial backing for the stadium, and that the tax increments generated by the development will be used for affordable housing, jobs, and parks."

But for Lennar critics like the Rev. Christopher Mohammad, who has battled the company since the Islamic school he runs was subjected to toxic dust, even the most ambitious promises won’t overcome his distrust for the entity at the center of Prop. G: Lennar.

In a fiery recent sermon at the Grace Tabernacle Community Church, Mohammad recalled the political will that enabled the building of BART in the 1970s. "But when it comes to poor people, you can’t build 50 percent affordable. That will kill the deal," Mohammad observed.

"Lennar is getting 700 prime waterfront acres for free, and then there’ll be tax increment dollars they’ll tap into for the rebuild," he continued. "But you mean you can’t take some of those millions, after all the damages you’ve done? It would be a way to correct the wrong."