eugene gartland trust swap -- pier 70 trust swap. anytime there is a trust swap, the agreement needs to be authorized. assemblymember ammiano introduced the bill in february, sailed through without problems. this morning, it is up in state senate appropriations and is headed to the suspense file. we are optimistic about it coming off and being voted on the senate floor. over the past month, we have been negotiating a series of technical but important amendments with the california state lands commission staff. i will go over those in the presentation. for the public who may not be familiar with the public trust, the public trust is -- represents the port's mission as enshrined in law.

the doctrine originated in roman law, transmitted through the night mcartor, to the original 13 colonies. as each state was admitted to the union, it obtained public trust rights to, basically, the waterways in those states. in california, the public has certain rights in submerged lands and kind land between mean low and the nine died. whether those are filled or not filled. as we know, the san francisco waterfront has been filled over time. california had designated the california state lands commission to administer public trust lands. they administer lands around lake tahoe and in other areas of the state that have not been granted to local grantees, like the port of san francisco, and backed up by the california attorney general. the public trust doctrine is

basically a doctrine of uses that are supported by public trust lands. generally limited to those uses that are water-related or dependent. such as commerce fisheries and navigation, environment of preservation and recreation, habitat wildlife refuges, or open space, and then uses the promote public trust uses or accommodate the public uses of public land. we hold these lands not just for the people of the city and county of san francisco, but for the people of the state. one of the uses that this permit is visitor uses. this would be hotel, restaurant uses. people around the state could come to san francisco and enjoy the lands that we hold in trust for them. a bit of background about pier 70. a 60-acre site.

it has been in continuous use for ship repair and shipbuilding for 150 years. portions of the site have. not many people know that the federal government owned this site until 1967. it was a base closure before the concept of base closures. port staff undertook a several years long master planning process with the vision to create an historic district that could be listed on the national register of historic places with major waterfront open spaces, innovative for industries and the preservation of that important ship repair operation that employs so many workers in san francisco. the title history of pier 70 is a bit complicated, and really the reason that we need state legislation to resolve these issues, to allow development to go forward. the port acquired a big portion

of pier 70 through the burton act. another portion, as director moyer mention, from the bethlehem steel corp. portions of the site are historic uplands. there were never tidelands and were never subject to the common law of public trust. those areas are subject to the burton act requirement. several parcels have been in and out of private, state, and federal ownership. i am going to invite the person who has guided the port through this trust exchange discussion with state lands, outside cancel bill white, to walk through some of the slides at pier 70 and share some of the history with you. >> good morning, commissioners. brad has himself become an

expert in the public trust over the years. this may be the last time that i have to the system of public trust matters. the history of pier 70 is quite interesting. i will not get into many details, but i will walk through days maps that brad has prepared to give you a flavor of why we have this opportunity in the first place. as you know, most of the land that the ford owns in the portfolio is subject to the trust. virtually all of it came to the stadium the burton act. most of the land owned by the state in the city was subject to the trust. pier 70 is a major exception, and it has given us this rare our opportunity to do an internal trust swap without having to look outside of the port's own holdings to effectuate the trade. so let us look at one of the

earliest conveyances of property, here at the site, in the light green area at the bottom of the matp. the time the land portion of that rectangle down there was owned by the state. they were conveyed to the pacific mills co. back in the 1960's, one of the first industries in this part of san francisco. they had a major iron mill that was operating on the up land portion. they have perhaps already expanded into the tidelands. the state granted those lands to the company in, i think, 1863. it is not clear whether that grant was intended to free the tidelands from the trust or not. there are different opinions on

that. we have been conservative and treated those lands as potentially subject to the trust, not withstanding that private grant. so we have treated them as land within the trust today. just for a point of reference, the blue line that you see running through the property was the historic shoreline. that is a brandy high tide line was at the time of the statement. the green area shaded to the right of that is where land is granted by the state to pacific railway mills. the second grant that occurred in the 1860's, around 1868, was the yellow kerria that you see.

-- area that you see. this was a commission set up by the state, thailand commissioners, and they were responsible for mapping out the shoreline in san francisco in order to get to deeper water, and then selling off time the lands that were -- tidelands to create a better waterfront in san francisco. these lands were ultimately acquired by the predecessor to pacific mills. union ally in works. they became one of the greatest shipbuilding companies on the west coast, perhaps the greatest. and this is where it all happened. those lands we know from well- developed case law, are free of the trust.

at least the ones that are filled. you can see one area that was never filled, despite their private ownership. so there is a little bit of a question mark as to the trust status of those lands. so everything in yellow, including, surprisingly, the streets. those lands were all confirmed within the ownership of the trust. consequently, those plans were never conveyed to the port to the state under the burton act. the remainder of the site is historic up plans. those are adjacent to what had been the pacific railway mills property. ultimately, pacific railway

mills sold that property to [inaudible] iron works. and they were another major producer of iron, had a major facility. ultimately, as brad mentioned, that was acquired by the federal government during world war ii. the federal government held the property until 1967, at which point, it was acquired by the state. we are not sure why it was acquired, but we know that for -- from record that it was. one year later, the state transfer that property under the burden act to the port. that is why the port is holding a major area of historic up plans not subject to the trust. these lands are subject to the burton act, which is why they

are not being sold into private ownership. but the burton act pressure actions on the use of those properties can obviously be modified by statute. that is one of the main reasons we have moved forward with ab 418. this is a composite picture of what the trust looks like on the property today. hot on the bottom you see land subject to the trust, including land pretty distant from the waterfront. you also see st. areas that were never conveyed by the state to private ownership, subject to the trust, to the port by the burton act. the yellow and gray are the area that we believe are not subject to the cost today -- trust today. the remainder, there is a

dispute as to what rules govern their. it was required by the port, supposedly with trust money, but it was only $1. suppose the bay, that came out of eugene gartland's pocket. so the port may not have to spend even $1 on the property. as you can see, a great deal of the waterfront itself is not in the trust, according to this that -- map. whereas back plans are shown in the trust. that is why this property was calling for the change. here is why -- what we think the trust should look like on the property. had the green area is what, at the end of the exchange, would be in the trust. one is in yellow would be out of

the trust. and when we take this trust out of the land through the exchange, we would be worth -- removing all of the restrictions imposed from the burton act. those lands could be sold by the port. they could be leased to private owners and they could be used for any purpose presidential, commercial, office, thing that you are typically prohibited from doing on trust land. the green is maintain the existing ship facility, series of waterfront parks, along with a couple of key street access ways that allows the public to get to the waterfront under this propos, the trust actually comes out ahead in terms of acreage. i just wanted to point out one

other aspect of the bill that makes ab 418 important. there are some major historic buildings close to this site. normally, buildings on trust lands are subject to the same use restrictions as other trust lands. so the state has been a bit more flexible. those buildings are pre- existing, and they do not want the space to go to waste, but they are still reluctant to allow uses other than trust uses, even though the cost of restoring those buildings are often astronomical. what we have done here, the red buildings are the historic buildings that are actually on trust land, where we have provided some flexibility in the statute to allow non-trust uses

so that the public can access them, ensure that they are returned to federal standards set forth by the secretary of interior. but some of the key historic buildings are in yellow. they are not shown it in a different color on this map. in those building we retain complete flexibility to use the inside for any purpose, whatsoever. that is really going to assist the port in the renovation and preservation of those buildings. that is all. thank you. i am here for questions if you have any. >> thank you so much, bill. the only thing i would have to correct from the presentation is that i did not prepare the maps.

i would like to thank my staff for producing those fabulous maps. i just want to go over a few of the other requirements of ab 418 related to pier 70. a lot of these are standard requirements for any trust exchange, so they are not unusual. the lands coming out of the trust have to be found useless for trust purposes. the monetary value of land added to the trust must be greater than or equal to the value of those that are removed from the trust. the exchange cannot interfere with trust uses. at pier 70, the example is we are preserving that ship repair function, enhancing it through the master plan. land impressed with the trust must provide a significant benefit to the trust. examples of that could be the shoreline parks that are being

created at pier 70 that will provide great public value and appreciation of the day -- bay. remediation issues needs to be addressed. karen has been working with the water quality control board, doing a state investigation of pier 70. the requirement is that you have a remedial action plan approved by the regional board before the swap can happen. state lands is there to make sure the trust does not received land that have no way of being cleaned up and used effectively. both the state lands commission and city must approve the exchange. after the bill is adopted, if signed by the governor, we would be back in front of the port commission with a final proposal based on some of the work you have seen today.

also, the board of supervisors would have to weigh in. the state lands commission does a lot of titles survey work associated with the exchange to make sure that everything is legal. a few of the other unique portions of the bill. the port could continue to hold non-trust lands at pier 70. this is unusual, really. after a trust exchange, the assumption is the grant to will sell the non-trust lands. actually, it took a lot of creative work with the state to get them comfortable with the idea that the port would hold these lands. one of the ways in which they became comfortable with the idea is that revenues from the non- trust areas would go into the carper fund. so that would be a benefit to the trust. they also agreed to allow the

port at its discretion to use port revenue bonds as a financing vehicle for publicly oriented improvements on those non-trust lands. pier 70, we are talking about infrastructure finance districts, and the ability to use port revenue bonds to make improvements to streets, utilities, historic buildings, parks, etc. that are on non- trust lands. but the park would have to first demonstrate that over all, trust was out of the entire pier 70 master plan. the trust was receiving more investment from non-trust sources than the port was investing of its proceeds in the non-trust land. we think that is a test that we will be able to meet by a long shot. the preliminary calculations put together by kathleen showed $300 million in benefits to the trust at pier 70 out of the master plan.

so i am going to segue here. seawall lot 330. the city entered the host agreement with the america's cup, to host the 34th america's cup in 2013. there is a court agreement between the parties that if the event authority invests in the waterfront to make it race- ready, that we will provide a long-term development rights at a number of locations as a means of repaying that investment. the core of those development rights are piers 30, 32, and seawall lot 330. a host of a new agreement is pretty explicit about a requirement for the city to use best efforts to remove the trust from seawall lot 330.

we are lucky that in 2007 we had gone and laid the groundwork for this with sb 815. it found seawall lot 330 and a number of other lots useless and lifted the restriction and allow the leases for non-trust uses. so we have been in discussions with state planned staff about how to revise those findings and requirements. this is a faded met. i am sorry about that. -- faded map. it shows seawall lot 330 in its entirety. you do not have this in your set of maps.

this was developed for the watermark condominium. a remaining 4.3 acres on the side that is used as a service parking lot right now, directly across the street from piers 30 and 32. ab 418 confirms that seawall lot 330 is useless to the trust. we have several decades of leasing history that shows the site has not been used for trust purposes. it permits sale based on the appraisal methodology called for in the host agreement. we have conducted at set of appraisals. the consideration, the price -- purchase price of the property can be provided in the form of improvements to other port property. that is likely to the improvements to piers 30, 32, no. waterfront, public assets --

access benefits. in addition, the port must identify 2.3 acres ofbay shoreline property that can be entrusted with the trust that is not currently encumbered by the trust. we would have to do that prior to the transfer of title of seawall lot 330. this is a fairly significant to. it fills one of the major city obligations, and we are hopeful that the legislature approves it and the governor signs it. that is my presentation. bill and myself are available for questions that you may have. >> thank you. we do have public comment. maryland's men's -- marilyn smith.

i am sorry. is there any public comment on this item? commissioners? brad, in your first slide, it says the bill was introduced february 2010. you said february 2011. >> i am sorry, 2011. it is not a two-year bill. that is me rushing after vacation. >> understood. you said it is in suspense but was hoping it would be passed. i do not remember all of my legislative history, so -- >> senate or assembly appropriations has a procedure called the suspense file. this is for bill that are deemed to potentially have a financial impact to the state. if they are deemed to have a significant cost, than they

normally go to the suspense file. they sit there and then they were voted off after a week or two has gone by. in this case, the committee consultant was primarily looking to make sure that the port entered a cost reimbursement agreement with state plans to cover the cost of doing the title history, review when the surveys, the other work that follows legislation, which we do as a matter, of course, anyway. we are currently in that kind of cost reimbursement agreement for pier 70. they were seeking similar agreements with respect to seawall lot 330, which only seems fair and appropriate. we agreed -- the author agreed to those proposed amendments. we have every expectation that it will be voted off suspense on

the 22nd, i believe, and then head to the senate floor. so far there has been no opposition registered to the bill. >> there was a bullet point somewhere about how the bill would permit the port to hold the land from which the trust is removed. that seems counterintuitive. why would state lands care? that would assume that we would turn around and sell it. why do you need permission to hold it? >> this goes to the issue -- the public resources code sets forth rules about how trust grantees have to keep separate revenues derived from trust lands and make an accounting to the state. so we, at the staff level, have

to look at -- as an example, how we purchase from the city for trust property -- and really be careful that any of those expenditures benefit the trust. state plans has run into problems where trust grantees want to use their harbor funds to spend on things that, in their view, do not benefit the trust. an example might be a southern california port wanting to fund a trend line largely of trust property that has a terminus on trust property. in that case, they viewed that as an inappropriate subsidy of a non-trust activity. so they are vigilant about this, always looking around the state to make sure grantees are following the rules. in this case, we were looking for something that was really antithetical to that position, which was that we would all

these non-trust land with a lot of non-trust uses on them, and they were worried that we would be using pork harbor funds to subsidize the activity. so we have been careful in the legislation to make sure we have separate accounting and that we have an overall equation that provides a financial benefit to the trust. >> thank you. questions, comments? >> i had a question regarding the need to have these sites cleaned up and whatever remediation. does that need to be completed, just a plan to do the remediation? >> typically, you need to have an adopted remedial action plan. so that has gone through the entire public process that the regional board or department of toxic subsidies controls and administers.

in this case, we are working with the regional board. we have gone through site investigations, identified the extent of the contamination, you have done a number of concepts about how you are going to approach remediation while managing on site or removing it, disposing of it elsewhere, and there has been appropriate public comment and review of the plan. it does not need to be entered before the transfer title occurs. >> how far along in the process are we? >> we are pretty much in the latter stages of this investigation piece that we have done. the uplands investigation. we have done some investigation of the hazardous materials in the building. i think our next step is to look at some