What does the San Francisco waterfront mean to you? This question was posed to a panel of speakers, which included developers and City officials, at Bisnow’s San Francisco Future of the Waterfront forum on Tuesday. The answers were varied, but each speaker expressed the importance of access to and preservation of the historic and breathtaking 7.5 mile waterfront stretch.
San Francisco voters enacted Prop B, also known as the “Waterfront Height Limit Right to Vote Act”, as a local initiative on June 3, 2014. Prop B mandates a vote for any future increase in height limits applicable as of January 1, 2014, to the tide and submerged lands transferred by the State of California to the City and County of San Francisco for the public trust pursuant to the Burton Act, Chapter 1333 of the Statutes of 1968. The Burton Act provides that the “San Francisco Harbor and facilities shall be under the administration and control of the Harbor Commission of the City and County of San Francisco.” In response to the Legislature’s directive, the City established the Port Commission as the agency with day-to-day management authority over the lands. The State, acting by and through the Port Commission, retains oversight authority over the lands granted to San Francisco by the Burton Act.
Prop B is not the first attempt at regulating the height limits of the San Francisco waterfront, which generally range from 40 feet to 84 feet. Aaron Peskin, former President of the San Francisco Board of Supervisors and supporter of Prop B, had a history of involvement in development-related matters along the waterfront. In 2007, he unsuccessfully fought to guarantee that existing height limits along the waterfront be maintained in a bill by then-state Senator Carole Migden. Under Senate Bill (SB) 815, designated seawall lots 328, 330, 337 and 347S, including a portion of Mission Rock Street, ceased being used for the public trust pursuant to the Burton Act, and the Port Commission became authorized to lease all or a portion of the seawall lots, so long as the term of any lease does not exceed 75 years. Revenues generated from the leases are to be used exclusively to fund the preservation of historic piers and structures, and the construction and maintenance of waterfront open space. The passage of SB 815, which has a sunset date of January 1, 2094, was a pivotal moment in the waterfront’s development history.
Opposition to Prop B
Opponents of Prop B argue that the measure is inconsistent with the Burton Act and SB 815, and will jeopardize the preservation of the waterfront by requiring voter approval for every height limit increase, thereby potentially reducing the amount of waterfront development and revenue going into the port fund under SB 815. Two lawsuits have already been filed challenging the validity of Prop B. In February 2014, a group of individuals, backed by large developers and the San Francisco Giants, sued the City to restrain the Director of Elections from placing Prop B on the June 2014 election ballot. The lawsuit claimed that Prop B would intrude on the jurisdiction of the State and the Port Commission over the shoreline and waterfront. On March 19, 2014, Superior Court Judge Marla Miller ruled in favor of the defendants of Prop B and ordered the election to go forward. The appeal of Judge Miller’s ruling was denied without a hearing on March 27, 2014.
On July 15, 2014, less than two weeks after Prop B became law, the State Lands Commission, comprised of three officials, including Lieutenant Governor Gavin Newsome, sued the City seeking an order and declaration that Prop B is invalid. The lawsuit claims Prop B specifically targets State-owned tide and submerged lands over which the Legislature has expressly precluded the right of local initiative. Public Resources Code Section 6009(d) requires the Port Commission to “manage the state’s tidelands and submerged lands…without subjugation of statewide interests, concerns, or benefits to the inclusion of local municipal affairs, initiatives, or excises.” The Legislature adopted Section 6009 in 2010 “for the specific purpose of prohibiting local initiatives from interfering with the planning, management, and operations of California’s sovereign lands that had been granted by the Legislature to municipalities.” Development of waterfront lands requires collaboration and flexible planning. Prop B could hinder this process by providing voters a right of approval over every height limit increase. The lawsuit also claims that Prop B is invalid under the exclusive delegation doctrine by stripping the Port Commission of its exclusive authority over the lands granted by the Burton Act. In doing so, Prop B “usurps the [Port] Commission’s statutory mandated consultation and oversight roles and bestows them on the City and County of San Francisco electorate.”
Impact of Prop B
Prop B is already impacting waterfront development projects that have been in the pipeline for years. The San Francisco waterfront is a valuable asset and provides special maritime, recreational, cultural, and historical benefits to people from all over the world. As history has shown, the development and preservation of the waterfront have also been contentious issues. With the passage of Prop B last month, many developers and officials fear that the initiative will have a chilling effect on waterfront development and will threaten to delay or halt projects that are essential to the economic well-being of the City and the State. One such project is the mixed-used development at Pier 70 which would include several acres of new parks, 30% affordable housing, and newfound access to the waterfront. The project also proposes a height limit increase from 40 feet to 90 feet. Now that Prop B is the law of the land, the fate of the Pier 70 project, as well as other waterfront development projects, rests in the hands of the San Francisco electorate.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.