Excerpt from SFGATE.COM
San Francisco — Mayor Gavin Newsom struck a deal today with the U.S. Navy to transfer Treasure Island to San Francisco for a $55 million guaranteed payment over several years, plus additional considerations that could make the total deal worth more than $105 million to the federal government.
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The agreement paves the way for the city to undertake one of its most ambitious development projects - remaking the closed naval base on a man-made island in the middle of San Francisco Bay into a model of sustainable development.
“We can finally begin the hard work of making sure the city’s grand vision for Treasure Island can be realized,” Newsom said in a prepared statement announcing the deal with Secretary of the Navy Ray Mabus.
The agreement calls for the Navy to transfer almost all of Treasure Island and the northern portion of neighboring Yerba Buena Island - about 450 acres of land in all - to the city. Details of the handover will be negotiated over the next several months, Michael Cohen, head of the city’s economic development office, said from Washington D.C.
The city agrees to pay $55 million guaranteed over several years, plus another $50 million payment that both sides described as an “interim payment.” Cohen declined to discuss the details of that second payment, other than to say it “will be structured to allow necessary private capital to be invested in the project.”
The Navy was also given what’s typically know as an excess profits clause, where if the proposed development for the island performs extremely well, the navy will share in that profit.
The Navy agrees to cover the cost of environmental cleanup at the base, which closed in 1997. More than half of that cleanup has already been completed, and the remainder of the work, relatively speaking, is not very significant, Cohen said.
The city, facing a projected budget deficit of $522 million for next fiscal year, will use revenue generated from the development of the island to pay the Navy, Cohen said.
“With this agreement in hand, we would hope to have the development plans wrapped up by the end of 2010,” Cohen said.
The redevelopment of Treasure Island calls for a new commercial town center and neighborhood, three hotels, a new ferry terminal and hundreds of acres of parks and open space.
The plan is for 6,000 homes to be created through private and public financing. Development partners Wilson Meany Sullivan, Lennar Corp. and Kenwood Investments will stake $500 million with the city providing an additional $700 million in bond money financed by property taxes collected once the development is completed. The initial $1.2 billion will pay for the project’s infrastructure and some of the proposed housing.
Newsom’s office says the project will create thousands of construction jobs annually over the next two decades and 3,000 permanent jobs.
“This agreement is good for the American tax payer, will create jobs in the San Francisco region and will effectively transition Treasure Island to productive civilian reuse,” Mabus said.