|Proposition G on San Francisco's June ballot challenges the old rule that public policy should be done in public. Why is a major decision involving the transfer of public land and rezoning of a neighborhood ignoring public debate?
It's not the cumbersome process of public participation that is the reason. It is the fear of facing questions in public about the details and how they will translate even good intentions into good public policy.
If such a stealth campaign can succeed without facing rigorous debate and discussion, it will become the way to operate in other San Francisco important decisions - and likely be copied as a new model in other cities with equally eager consultants and special interests.
In the case of this June's ballot measure to convey hundreds of acres for free to the Lennar Corporation, there's a reason why this needed to be a stealth campaign.
The actual details - and lack of details - would send alarm bells ringing for every voter. In fact, the measure is unprecedented in any major land use decision in our City's recent history.
Claim: Voters are told that this measure will result in 8,500 to 10,000 units of new housing, with 25% of the units affordable for moderate to low-income buyers.
Fact: The real wording voters are asked to approve has no written agreement that requires 25 percent of the housing be affordable, or even that requires 8,500 to 10,000 new units of housing be built. It merely states "this Initiative encourages the development of new housing in the Project Site with a mix of rental and for-sale units, both affordable and market-rate."
Claim: Voters are told that this measure will result in 8,000 permanent new jobs for San Francisco residents.
Fact: The real wording voters are asked to approve actually repeals an earlier written commitment for as much as 50 percent of the jobs to be targeted for San Francisco residents in building out this site. Instead, the language weakly states "this Initiative encourages and anticipates construction and permanent jobs for local economically disadvantaged residents, particularly in the Bayview, and a range of economic development opportunities, including retail and commercial space."
Claim: Voters are told that this measure will result in new parks and open space.
Fact: The real wording voters are asked to approve will result in the loss of valuable waterfront parks and open space which now could be converted into commercial office space. The promised parks are actually replacements elsewhere of the lost parks and open space.
"This Initiative will permit the City's park property at Candlestick Point, including land currently used for Monster Park and associated surface parking, to be transferred for development....At the same time, this Initiative requires that any park property transferred by the City be replaced with other public park and open space property of at least the same size in the Project Site...." As news accounts confirm, park of the "parks" to be built include an astro-turf like area of grass embedded into synthetic mesh to double as stadium parking.
Claim: Voters are told that there will be no new taxes required.
Fact: The real wording voters opens the way for General Fund dollars to be used and specifically taps into other city funds. The language states that this project should "minimize any adverse impact on the City's General Fund relating to the development of the Project Site by relying to the extent feasible on the development to be self-sufficient." Other provisions state that the Project will tap into the City's Affordable Housing Fund, use tax allocation bonds, rely on the issuance of community facilities bonds, and tax exempt financing tools.
Claim: Voters are told that the new owner will pay to clean up toxics at this site.
Fact: The real wording voters are asked to approve calls for the cleanup to be paid from state and federal funds. It states "To the extent feasible, use state and federal funds to pay for environmental remediation on the Project Site and help pay for transportation and other infrastructure improvements, and provide ways for other development project outside the Project Site to pay their fair share for new infrastructure improvements." In short, taxpayers will pay to clean up the site.
Finally, it then discards even these weak and watered down goals by asking voters to approve that "market changes" and "economic feasibility" could take back every provision put before the voters in this measure if the developer decides it won't be profitable.
The language states "certain variables, including, for example and without limitation, market changes, economic feasibility and the timing of the 49ners departure from Monster Park," that "the final development plan for the Project Site may be materially different from the Project and the boundaries of the Project Site may be materially different ..."
This ballot measure actually repeals some of the hard-won provisions of the former Bayview Hunters Point plan, including its provisions to require
• a written commitment to provide an opportunity for 1,000 permanent jobs for recipients of general assistance who undergo a job training program,
• a written commitment for a good faith effort that 50 percent of the construction jobs go to residents of the Bayview Hunters Point South Bayshore community as well as 25 percent of the
• a written commitment that there be adequate labor union representation,
• a written commitment to adhere to the city's administrative code including nondiscrimination based on domestic partner status,
• a written commitment to pay any shortfall in property taxes needed to pay tax allocation bonds as a result of reassessed property values (the new proposal also relies on tax allocation bonds but without this guarantee)
• height limits to protect the waterfront from being walled off from the city by inappropriate highrise developments
• and a city determination that the city will provide no more than twenty percent of the project construction.
Those provisions were written in the 1997 measure because of due diligence by the Board of Supervisors who demanded specific promises in writing. While it applied to a different proposal for this site, those standards ought to be upheld in this measure.
One thing alone explains how such empty promises were put on the ballot. It came from a closed door arrangement without any competitive bids from other developers, was written by the hand-picked developer, and has had none of the public hearings or consideration by the Board of Supervisors that are expected of any major City deal.
"We didn't want to start over because we are on a remarkably quick timeline, so they were the right one," Michael Cohen of the mayor's staff explained to the Chronicle. The rationale was spelled out: the timeline was linked to ink a deal that could persuade the 49ners that San Francisco would provide the site for a world-class football stadium.
"We have a plan that we can finance -- no surprises,'' Newsom said in an interview. "I want to put pressure on the 49ers. I want to make it very difficult for them to leave our city,'' Newsom said.
That may account for the fact that this measure has more devoted to a potential stadium than it does to such basic community needs as schools, health clinics and libraries in a new community with tens of thousands of residents - none of which are even mentioned in this proposed measure.
Contrast that with the City's other major land deals - Mission Bay and Treasure Island - which were put out to competitive bid.
Mission Bay commits in writing to having 28 percent of the housing be affordable to moderate-low income residents.
Treasure Island commits in writing to having 30 percent of the housing be affordable to moderate-low income residents.
Under Prop G, Lennar makes no promises in writing. Instead, it only commits to "encourage" a 25 percent affordability standard. Anything more would be a "poison pill."
The City rushed into this deal with Lennar without being fully appraised of the corporation's fragile finances or of its record of broken promises.
Rushed is a mild description. The City announced its no-bid selection of Lennar on one day, and the next day Lennar announced that its earnings had dropped 73 percent in the first quarter of 2007.
In all, last year Lennar reported it lost $1.9 billion, its stock falling by two-thirds and plunging it into junk bond realm. It had to lay off 8,000 of its 14,000 employees, cancel 90 land-swap deals it signed with other communities, and recently had to deny financial media reports that it might be bought out by a United Arab Emirates investor group.
In this San Francisco ballot measure, there are no timetables for completing any housing, no default payments to the city if Lennar can't deliver, and - worst of all - no provision to keep Lennar from selling San Francisco's last remaining land for housing and jobs to another company that would have a guarantee in writing from the voters that it could ignore every single statement told to the voters in this campaign.
Lennar's Troubled History:
Lennar's record is that it repeatedly has been unable to uphold its end of the bargain. Lennar committed when it won the development rights for the first Bayview parcel that the result would be 700 units of affordable housing.
Before the first housing was even built, Lennar announced it couldn't afford to keep its end of the deal. It cancelled all 400 affordable rental units it committed to build, insisting it needed the higher profits from selling homes. The only affordable units being built, 300 of them, are being paid for by the San Francisco Redevelopment Agency.
Last month, Lennar was part of a Las Vegas consortium that got default notices in the mail for $765 million for a parcel there.
Three years ago, Orange County signed with Lennar for the former El Toro air base, in exchange for thousands of housing units and a major new public park. Now the housing hasn't been built, the funds don't exist for the park, and the community is trying to renegotiate its deal with Lennar.
One official there noted in the Los Angeles Times, "Some of us felt we needed a Plan B all along." As the Times notes, "Now Lennar has started to rethink some of its promises."
Recently Palm Springs called in an $8 million bond in its Lennar deal after the company halted progress on its commitments. As one city manager there told the local newspaper, "if Lennar does not perform, they either pay us the money or they perform the work."
Vallejo's Mare Island also is finding Lennar backtracking on its commitments, even asking city officials to use their offices to persuade state regulators to give Lennar an easy time in meeting state requirements.
And in the last week of April, a Lennar partnership to develop 15,000 acres of the former Newhall Ranch close to Los Angeles defaulted and appears ready to declare bankruptcy.
Morningstar, the eminent investment company, advised "with debt of about $2.3 billion spread among joint ventures employing recourse debt, Lennar could be on the hook for $917 million in the event of a total meltdown. On top of this, we'd expect significant legal wrangling if and when its other two large nonrecourse ventures sour.
Both Heritage Fields, its massive venture involving the El Toro military base, and Kyle Canyon, its large Las Vegas venture, employ nonrecourse debt. That said, it's not unreasonable to assume the banks involved in the deals are doing all they can to make sure it's as difficult as possible for Lennar to exit the ventures cleanly if it chooses to do so."
The business sections of newspapers from Florida to Texas tell the same story: Lennar enters into an agreement for a land-swap that locks up valuable acreage in exchange for a promise to deliver affordable housing and public benefits, but then delays come, and to often, Lennar has walked away.
Bayview Hunters Point constitutes our City's most marginalized community, yet sits aside some of the most valuable real estate remaining for development. Promises have been made, and promises have been broken.
Someone, somewhere, always had an idea. A homeport for a battleship would revive the industry, but the battleship went into the mothball fleet instead. A grand suburban-style shopping mall and new stadium would create jobs in an area with high unemployment, but the football team's owners bickered with each other and the project stalled and died. Now one of the nation's largest homebuilders sees an opportunity to bank hundreds of acres of prime real estate for free, with promises it has no obligation to keep.
There is no mystery about what ought to be done.
Bayview-Hunters Point needs more housing suitable for families with children, more affordable housing of all types, grocery stores and dry cleaners, schools and pre-schools, more open space and parks, health clinics and recreation and community centers. Community plans should also encourage small businesses, and particularly retain and enhance the artist community.
In short, it needs to become a new and valued San Francisco neighborhood that provides real opportunity in housing, jobs and a quality of life.
That kind of outcome requires hard work, community participation, solid financial planning, and enough guarantees to ensure that someone else's dream doesn't become San Francisco's nightmare - worming its way into San Francisco's future by stealth.