San Francisco, Pentagon to meet on possible Treasure Island deal

San Francisco Mayor Gavin Newsom is scheduled to meet with high-level Pentagon officials on Wednesday in an effort to strike a deal over a much-coveted piece of military land.


The topic of discussion: Treasure Island, a shuttered Navy base atop a man-made island that has San Francisco city planners seeing dollar signs.
Newsom, along with other city representatives, are expected to meet with Secretary of the Navy Ray Mabus and Deputy Undersecretary of Defense for Installations and Environment Dorothy Robyn.

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San Francisco officials and the Navy are moving closer to an understanding over the transfer of the former base, according to a Defense Department official.

Discussions at a preliminary meeting on Tuesday went well and could lead to an understanding, the official said.

An understanding would follow years of stalled negotiations and numerous interventions from House Speaker Nancy Pelosi (D-Calif.), who has personally fought and engaged with the Navy over the land transfer. California’s two Democratic senators, Dianne Feinstein and Barbara Boxer, also lent their weight to the discussions in support of San Francisco.

Newsom and other city officials will not meet with Pelosi during the trip, but staff members are in touch about Treasure Island, a Pelosi aide said.

San Francisco submitted a request to buy the Treasure Island property for an economic development project, and has been squabbling with the Navy over a fair market price for the last six years.

The Navy has appraised the cost at $240 million, while San Francisco appraised it at $14 million. The city recently commissioned an independent appraisal by auditor KPMG that pegged the value at $22 million, which the city offered to pay to the Navy. The Navy had consistently argued that the city is not offering a fair market price for the land.

Robyn, who is responsible for military installations, has been trying to broker a deal in which the Navy would accept a small payment for Treasure Island up front and then allow the city of San Francisco to provide payments down the road as a share of profits from the commercial developments on the former base, according to two defense sources familiar with the issue.

It is unclear what a final deal would be and a spokeswoman for Robyn did not comment for this article.

Such an agreement could open the door for other cities to broker similar deals, potentially leaving the Navy with little to no direct payments for the land sales up front. The Navy has relied on the use of land sales for cleaning up its bases slated for closure.

Mabus must sign off on the plan, however. His position has been that San Francisco should pay an equitable price for the land and that any proposal ultimately has to represent a good value for the taxpayers, the Defense Department official said.

Navy spokeswoman Lt. j.g. Laura Stegherr confirmed that Secretary Mabus will meet with Newsom on Wednesday.

The San Francisco mayor’s office did not respond to repeated requests for comment by press time.

The meeting comes two months after intense negotiations between the House and the Senate Armed Services panels over a provision in the House version of the 2010 defense authorization bill drafted by Rep. Sam Farr (D-Calif.) and supported by dozens of lawmakers in more than 25 states.

The provision sought to direct the military services to transfer the land at no cost to local authorities for economic development. Cities and other local authorities could put off paying for that land until it is developed, and the value will be determined at that point.

Pelosi strongly supported the provision, which would have forced the Navy to accept a sweetheart deal for the city that would have involved no immediate payment for the land.

The Speaker engaged the White House on the issue of conveying military land for no cost, particularly after Feinstein urged the Obama administration to support that approach. Pelosi has also engaged Mabus on the matter.

Senate defense authorizers, including Sen. Carl Levin (D-Mich.), strongly opposed the House language, which ended up being the last issue House and Senate negotiators resolved as part of the 2010 defense policy bill. Ultimately, the transfer of land at no cost was rejected as part of the final bill amid intense lobbying among lawmakers, who saw great benefits for economic development in their districts.

Levin told reporters on Oct. 7 that conferees had reached a “middle position” that he described as “fair and neutral.”

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“We don’t state a preference for getting fair [market] value, but we also don’t state a preference for a conveyance for free,” Levin told reporters at the time. “We go back to what we think is the right approach, which is that the Department of Defense can work on these situations, which differ from each other dramatically on a case-by-case basis, doing what they think is best.”

Congressional aides argue the bill will allow stalled negotiations to move forward. They said the intention was not to have legislation favor one side or another, and to shut down lobbyists and consultants promising local communities that the government would give them the land for free.

Pelosi wrote a letter to Levin on Oct. 30 asking the Senate chairman to answer a litany of questions regarding the language in the bill that President Barack Obama signed into law. Pelosi indicated in her letter that she had a “brief conversation” with Levin about the transfer of military land during an unrelated White House meeting Oct.6 — the day before conferees reached a final deal on compromise language.

“You suggested the outcome was beneficial for Naval Station Treasure Island in my district and the numerous other former bases that are similarly situated,” Pelosi wrote to Levin in a letter that has not been reported previously.

In the letter, Pelosi also made the case for the House’s no-cost provision, albeit after the fact.

“Negotiations for the transfer of these bases have been stalled far too long, for over a decade in some cases. For Treasure Island, ongoing delays have prevented the creation of over 2,600 permanent jobs and over 21,000 temporary jobs during construction,” Pelosi wrote.

 In a response letter to Pelosi on Nov. 10, Levin stressed that conferees took a position that would be beneficial to both the Department of Defense and local communities. He explained that the department has the authority to decide to accept consideration at or below fair market value, or without consideration for all former bases. The conferees also included specific authorization for the Pentagon to accept “back-end” funding in the form of revenues received from third-party buyers or lessees from sales and long-term leases.

In effect, the provision in the 2010 defense authorization bill allows for more flexibility in negotiations. The meeting between the Navy and San Francisco officials is one iteration of that flexibility that could lead to windfall profits for the city and developers.


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