Port of San Francisco Bypasses Proposals for Lease and Operation of Pier 70 Shipyard

Five Point Holdings, Candlestick, The San Francisco Shipyard, San Francisco, Shipyard Advisors

By Meghan Hall

After several months of deliberation, The Port of San Francisco announced today that it will not be recommending any proposal to the San Francisco Port Commission to award the contract for the leasing and operation of the Pier 70 Shipyard. The Port evaluated two proposals submitted by Vigor Marine of Portland and Kingston, Penn.-based Sustap LLC to reactivate the shipyard. However, the port officials determined that neither proposal was viable, and they did not conform to the standards laid out in the Port’s Request for Proposal.

“Unfortunately, we do not have a submission [that] we can bring to you,” said the Port’s Executive Director Elaine Forbes in a statement during a Port Commission meeting yesterday afternoon. “We determined they were infeasible in terms of having a sustainable ship repair enterprise.”

The Port released a Request for Proposals for the shipyard in April 2018 with the intent of finding a partner to lease and operate the Pier 70 Shipyard. The Shipyard is located at Piers 68, 70 and Seawall Lot 349 near 20th and Illinois Streets. This was the second RFP the Port had released; the agency issued a similar request in August of 2017 but closed the process after only receiving one application. The second RFP included a smaller footprint than its predecessor, with 10.1 acres of land and piers including 10 buildings. In total, the Pier 70 Shipyard consists of 13.7 acres of land and piers, and it includes 16 buildings. Operators, however, had the option to lease the remaining several acres and buildings should the space support their operations and business plan.

“Port staff is aware of a number of market indicators that may well reactivate Pier 70 in the near future, however it is apparent at this time that the operations of any anticipated new tenant would differ materially from the historic ship repair operations at Pier 70,” the Port said in a statement.

The Port currently has several projects in the works to update the shipyard, including a significant electrical system upgrade and power grid separation project and the construction of a new 19th Street extension off of Illinois Street. The demolition and removal of two buildings that the port has deemed “structurally insufficient” and a $5 million project to upgrade the lifting capacity of Dry Dock #2 were finished in the spring of 2018 and 2008, respectively. A project to include dredging beneath Dry Dock #2 to a depth of 60 feet and Warf 4 East to a depth of 30 feet is also currently underway.

A shipyard has operated at the port location for over 150 years and has employed roughly 250 craft persons across ten local trade unions over the years, according to public documents. The yard is just one of six remaining repair yards on the U.S. west coast that can accommodate post-Panamax-size vessels. The shipyard was previously occupied by BAE Systems San Francisco Ship Repair, Inc., and in 2015 the Port and BAE SF entered a new 20-year lease. In 2016, the Port agreed to the transfer of the lease to Washington state-based Puglia Engineering, Inc. Shortly thereafter, Puglia sued BAE SF, claiming the former occupant had concealed information regarding the condition of the dry docks. The ensuing litigation resulted in Puglia vacating the shipyard, closing out 150 years of continuous operation. The shipyard has since laid vacant, and the Port has been paying all expenses relating to the facility’s maintenance.

“Instead, we are looking to see what sustainable options we have for maritime, industrial activities at the site, and we will be looking closely at what options we can bring to the commission and to the public,” said Forbes. “We do believe there are market opportunities for maritime industrial work at the yard, and that it is its purpose, and we are going to do our very best to bring options to the commission.”

The Port plans to re-evaluate how to proceed and plans to present its findings to the commission in March 2019 to discuss what future options are possible.

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