South San Francisco

How the Harbor District gave up lease revenue and took on liability for a hazardous fuel system at Oyster Point

Perspective by Sabrina Brennan

The 20,000-gallon fuel system at Oyster Point Marina should be replaced as soon as possible to protect the safety of Harbor District employees and the general public.

On May 26, 2017, a report commissioned by the City of South San Francisco detailed numerous hazardous conditions identified during a fuel system inspection, including concerns about electrocution and water pollution.  In August 2017, Kenneth Dixon, Environmental Engineer & California Project Officer with the U.S. EPA said “Many releases are discovered during tank removal, so it would behoove California’s single-walled UST owners and operators to close/remove their tanks well before the end of 2024. Otherwise, they would not have sufficient time to submit a claim if the State opened a cleanup case ... The 2015 inspection revealed that aboveground piping was not being visually inspected on a daily basis, and that a leak was occurring. This tells me that the State of California--through either the San Francisco Bay Regional Water Quality Control Board or the San Mateo County Environmental Health Department—likely has the authority to open a leaking UST cleanup case.”

Over the past eight years a developer (Oyster Point Development or OPD) consistently declined to make repairs as required by their lease agreement with the Harbor District. Drakes Marine, the sub-lessee for the fuel system, repeatedly provided the developer with multiple estimates for repairs yet OPD failed to make them. The lack of repairs and maintenance has resulted in a dangerous and decrepit fuel system as noted in the May 2017 Anchor Report. This October, the same developer is planning to break ground on a 2.25 million square foot project that will be constructed in phases over the next decade or two. To grasp the scale of the project, imagine three 58-story Millennium Towers spread-out in mid-rise buildings over 80 acres on the Bay front in South San Francisco.

In 2011, the Harbor District and the City of South San Francisco Redevelopment Agency (RDA) entered into a Memorandum of Understanding (MOU) to facilitate development at Oyster Point Marina (phase IC and IIC). The MOU stipulated that when certain city-owned parcels managed by the Harbor District were transferred to the developer pursuant to a development agreement (DDA), that those now developer-owned parcels would automatically be removed from the JPA. As specified in the MOU the parcels to be removed from the JPA include Fuel Dock parcels E-3 and E-4 as well as landside parcels E, E-1, and E-2. In 2011, Harbor Commissioners, Robert Bernardo, Pietro Parravano, James Tucker, Leo Padreddii, and Sally Campbell approved the MOU.

On Aug. 16, 2017, Harbor Commissioners Tom Mattusch, Virginia Chang-Kiraly and Robert Bernardo approved an Implementation Agreement to transfer property to the City in accordance with the 2011 MOU. Their vote reduced the District’s annual lease revenue by $215,000 and put the public on the hook for more than $2.5 million for fueling infrastructure (parcels E-3 and E-4) that the developer was contractually bound to properly maintain and operate. Not to mention incalculable financial liability for the fuel system in its current state of disrepair.

In March and June 2017, the District sent two letters to OPD demanding that the infrastructure be improved and maintained. These letters clearly identified the numerous issues with the systems and promised legal action by the Harbor District if the developer did not immediately bring the fueling system into compliance with the safety standards. Six weeks after the District sent it’s June 19 demand letter to OPD the Implementation Agreement was favorably presented to the joint Liaison Committee on Aug 2, 2017. Remarkably, in a month and a half General Manager Steve McGrath made a 180-degree reversal in course. He went from demanding that the fueling system be fixed by OPD prior to initiating an Implementation Agreement, to recommending that the Harbor District take on all liability for the fueling infrastructure, as well as the stunning admission that the District may need to front at least $2.5 million for at least five years or more to build out a replacement system. Funding in the Agreement was hinged on the “hope” that SSF would create a new taxing mechanism known as a Community Facilities District (CFD) and then pay the District for the new fueling infrastructure some five or more years down the road. Funding by the CFD is not guaranteed in the Agreement.

Steve McGrath said that the turnaround was prompted by the threat of litigation. On Aug 14, 2017, two days before the Aug 16 Harbor District meeting McGrath told me that South San Francisco City Manager Mike Futrell threatened the SMC Harbor District with a massive lawsuit during a “heated exchange”. It appears that Futrell’s threat caused McGrath to suddenly veer into the role of being an evangelist for an Agreement that benefited the developer and the City.

This was not the first time Mike Futrell bullied the Harbor District. In 2016, Futrell demanded the Harbor District pay for mitigations required by the Regional Water Quality Control Board to address chronic flooding caused by landfill subsidence. On April 28, 2016, I pushed back as an appointed member of the OPM Liaison Group by providing a copy of the 1976 Oyster Point Geotechnical Report. I informed Futrell, the City attorney, and my fellow Liaison Group members that chronic landfill subsidence was expected per the City’s 1976 report that predated the JPA between the City and the Harbor District. The report proved that landfill subsidence and flooding mitigation were the responsibility of the City and the developer, not the Harbor District. A court reporters transcript of the April 28, 2016 joint Liaison Committee meeting is available.

Futrell’s role as a board Director on the South San Francisco Chamber of Commerce combined with his history of OPD related legal threats has the appearance of conflict. OPD is featured on the Chambers website as a prestigious Chairman’s Circle $10,000+ level contributor and Futrell makes staff recommendations regarding OPD to both the City Council and the OPM Liaison Group. From a public perception standpoint the City’s relationship with OPD looks uncomfortably cozy.

On Aug 2, 2017, Vice-Mayor Liza Normandy, in her capacity as chair of the OPM Liaison Group, blocked public comment regarding numerous fuel system safety hazards that OPD was responsible for fixing per their lease agreement with the Harbor District. Normandy walked out of the committee meeting three times in an effort to block me from raising significant concerns about the hazardous fuel system.

The afternoon meeting at SSF City Hall included a lengthy presentation by Futrell in support of the OPD project and the proposed Implementation Agreement. Harbor Commission Liaison Group members did not ask questions or raise any concerns about potential conflicts or safety hazards. Committee member Virginia Chang-Kiraly, an elected Menlo Park Fire District Director, as well as an elected Harbor Commissioner was befuddled by the complexity of the proposed agreement, recommended by Futrell and McGrath. Harbor Commission President Tom Mattusch did not ask any questions, or make any comments, about the Agreement or the development throughout the entire meeting.

  • VIDEO—Aug 2, 2017, Oyster Point Liaison Committee meeting 

All of which leads to the conclusion that the GM of the District used the inability of the District’s two Liaison Group members to absorb and understand the data to force through an Agreement that would not survive scrutiny were it to be fully vetted by impartial counsel and elected officials.

Further proof that this Agreement was pushed through by the GM is the fact that at the Liaison Group meeting both the City and the District agreed that the Implementation Agreement should be considered at the District and Councils September meetings. Instead, and in the face of mounting concerns about the safety of the fuel system and speculation about the Agreement, McGrath brought it to the Board just twelve days after the Liaison Committee meeting. Thereby ending important discovery, research and discussion, which were essential to protect County Taxpayers from the complex and apparent harm that this agreement brings to the District.

A growing number of people are concerned about the appearance of a conflict regarding Normandy’s role as SSF Chamber CEO. Normandy did not recuse herself from the Aug 2, 2017 Liaison Group meeting or Sept 6, 2016 City Council special meeting and staff recommendations that favored to the OPD project were made by Futrell at both meetings. To put it in context consider that Futrell is one of Normandy's bosses in her role as CEO of the Chamber and she’s one of his bosses In his role as City Manager and OPD is one of the largest financial contributors to the SSF Chamber.

At the Sept. 6, 2017 7:00pm SSF Special Meeting Normandy abstained from voting on the Oyster Point Implementation Agreement resolutions. During the meeting the Vice-Mayor said, “I would like to advise my Council, with the recommendation and consulting with Jason Rosenberg [City attorney] that due to an email that was received, I will not be partaking in this vote. In the meantime I did want to inform the council and the audience that based upon my position as the Chamber of Commerce CEO and sitting on this body as Vice-Mayor we are seeking, through the FPPC, formal advice in reference to OPD because they are a member, a Chairman’s Circle member as well as a client of the City, so I will be abstaining from this vote.”

  • AUDIO RECORDING—Sept. 6, 2017 7:00pm South San Francisco Special Meeting, to hear Vice-Mayor Normandy explain why she abstained go to 1:36:20 in the City Clerk’s audio recording.

It's unlikely that the FPPC would find that Normandy has a disqualifying financial conflict based on her day job. However Futrell and the SSF Chamber's promotion of the OPD project raises some eyebrows. 

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Excerpts from the May 2017 Anchor QEA Condition Assessment Report recommending full replacement of the fuel system:

Utilities - page 6

The existing utilities on the fuel dock include fuel lines, which were reviewed by our fuel system subconsultant in a separate section, domestic water, fire protection, wastewater pump-out, and electrical conduits. These utilities are various states of disrepair. The domestic water and fire protection systems are in replace condition, the wastewater pump-out system is in replace condition, and the electrical system is in worn condition.

Domestic water, wastewater, and fuel flex lines should always be kept above the water line, but this was not observed on the fuel dock. Non-submersible electrical cables and conduits also must be kept 12 inches above the water line. Many of these pipes, conduits, and cables are supported by nylon ropes or bungee cords tied to cantilevered timber boards nailed into the deck, as can be seen in Photographs 5 and 6. Several conduits and cables were observed to dip into the water, creating the potential for hazardous stray currents, which can electrocute people and corrode metal boat components such as rudders, propellers, drive shafts, and even metal hulls.

Domestic water lines should never dip into the water to prevent the potential for contamination of the potable water supply. Fire protection lines, however, may be placed in the water, and if fire protection piping is PVC or HDPE plastic pipe, it is in fact required to be placed underwater to prevent it from melting in a fire. All fire protection piping above the water line is required to be made of metal such as stainless steel or copper. There was no indication that all the above water fire protection piping is metal pipe, except for the risers. Lastly, the wastewater pump-out line has been allowed to drop into the water in some locations. Although vacuum-style wastewater pump-out pipes are typically dry when not in use, they should be kept above the water to observe any leaks during operation.

Fuel System - page 9

However, there is no evidence of double-lined pipes or spill containment on the docks. In addition, the on-dock control panel/ emergency stop and land-to-dock transition piping are severely corroded and in otherwise decrepit condition. A timber frame and nylon ropes are supporting a portion of this transition, as shown in Photograph 7. There is no real transition to land, with pipes simply diving into the ground and simple sawhorse warning signs “protecting” this location. Fuel lines should transition in a vault at the shore. Overall, except for the tank fuel pumps and monitoring equipment, the fuel system is in replace condition.

Electrical - page 12

The critical utility issue, which should be addressed immediately, is submerged electrical wires and conduits.

Fuel System - page 13

The fuel system, except for the tank pumps and monitoring equipment, is not salvageable, nor are repairs anticipated to extend the remaining useful of the fuel system.

Click here to read the full report.

California is shrinking

By Sabrina Brennan

It’s time to accept that coastal California is shrinking. A new study from the Union of Concerned Scientists predicts chronic Bay Area flooding from rising seas as early as 2060. “Cities around the San Francisco Bay will begin to experience more frequent and disruptive flooding in the coming decades and will have to make tough decisions around whether to defend existing homes and businesses or to retreat,” said Erika Spanger-Siegfried, senior analyst in the Climate and Energy Program at UCS and a report author.

The Pacific Institute calculates that San Mateo County will lose more in property value than any other county in the state. Property damage in the county is estimated to be in the region of $39 billion, with sea level rise projected to affect more than 100,000 residents.

In July, the Mercury News reported that San Mateo and Marin Counties and the City of Imperial Beach filed a lawsuit in Marin County Superior Court. The suit alleges that, “major corporate members of the fossil fuel industry, have known for nearly a half century that unrestricted production and use of their fossil fuel products creates greenhouse gas pollution that warms the planet and changes climate.”

The suit argues that 37 oil, gas and coal companies actively worked to “discredit the growing body of publicly available scientific evidence and persistently create doubt” in “a coordinated, multi-front effort.”

The suit asserts what many of us already accept as fact, that fossil fuel companies “have promoted and profited from a massive increase in the extraction and consumption of oil, coal and natural gas, which has in turn caused an enormous, foreseeable, and avoidable increase in global greenhouse gas pollution.”

Armoring the coast and building levees in the Bay will be an unimaginably expensive public undertaking, and that doesn’t include relocating highways, railways, airports, and other critical infrastructure.

Last month, the Guardian reported that Mayor Serge Dedina said that up to 30% of Imperial Beach could be affected by climate change. “As the lowest-income, highest poverty-rate city in San Diego County, we have no capacity to pay for the extensive adaptation measures.” Within 15 years flooding could affect tens of thousands of Marin County residents and cause upwards of $15.5 billion in property damage. “This lawsuit is intended to shift those costs back where they belong – on the fossil fuel companies,” says Marin County supervisor Kate Sears.

A well-funded army of lawyers is organizing to defend deep-pocketed multinationals that include San Ramon-based Chevron, ExxonMobil, BP, and Shell, while at the same time the Plaintiffs continue to approve new development within sea level rise inundation areas. These new developments will add to the already huge cost of removal and replacement of hospitals, schools, airports, fire stations, police stations, ports, roads, railroad tracks, pump stations, sewage treatment facilities, power plants, utilities, hazardous material sites, and more.

As communities become dependent on costly levee systems to stay dry, and climate projections continue to worsen, we will soon be spending exponentially larger sums of money to protect development now being built in inundation zones. One good example is the 8-mile long levee do-over in Foster City that is now budgeted for $90 million. That levee must be rebuilt three feet higher or residents will be required to buy costly flood insurance.

In addition to suing oil companies our elected representatives have a responsibility to protect the public from the huge financial burden sea level rise will bring to coastal California. They can do this by using their powers to implement policies that limit development in known inundation areas and to prohibit future shoreline armoring in favor or wetland restoration.

Suing the fossil fuel companies is a great start to holding those responsible for the coming disaster to account, but that must only be a beginning. Without common sense and practical pragmatic legislating any legal action becomes nothing more than a show. If they really want to leave a lasting legacy current local legislative bodies must show through use of their powers that they have an understanding that development in inundation zones is literally pouring money down the drain. Anything less is going to be an expensive and complex disaster.

Published in the Daily Journal on Aug 14, 2017 and on the Everything South City website. Published in the Half Moon Bay Review on Aug 23, 2017. 

Oyster Point Marina JPA Considerations

By Ed Carter

This is in response to recent meetings, Staff Reports, 5 Year Capital Improvement Project Summary (CIP) and proposals involving a possible Oyster Point Marina (OPM) JPA Rewrite/Update by South San Francisco (SSF) and the San Mateo County Harbor District (HD).

I strongly suggest that the Harbor District limit any JPA update to the current term of the JPA and make no new capital investments at OPM.

SSF has publicly threatened to push for dissolution of the HD if it does not “go along” with funding massive new capital investment at OPM. This undermines any future partnership and strongly suggests that SSF was involved in the Grand Jury inquiries and other behind the scenes maneuvering to dissolve the HD. This antagonism should caution the HD commissioners against extending the JPA.

The LAFCO Municipal Services Review (MSR) and Grand Jury Report both cite a long history of HD operating deficits as justification for its dissolution. The OPM JPA is a significant contributor to these deficits. Continued revenue deficiencies may lead to dissolution of the HD if the San Mateo County Board of Supervisors decides to do so. There has been no economic study completed of the projected return on investment of the HD’s proposed OPM CIP items. I would argue that an accurate projection is impossible until after the OPD project is completed and fully leased for a year or more. Failure of any additional capital investment in enterprise projects, to produce adequate revenues, would further jeopardize the future of the HD.

JPA land that previously provided revenue to the HD has been transferred to a private developer. This revenue will not be replaced. Reduction in the land area in the JPA and development of adjacent, previously JPA controlled property, by others (Oyster Point Development, OPD) makes prediction of future productive use of the remaining “substandard” JPA property very difficult. The Marina has long had excess capacity, over 20% of the berths are not currently rented. Future parking for the existing western berths will be reduced by fifty percent. Therefore, access to these berths will be more difficult.  Existing boat maintenance facilities will be gone. No one can predict how these changes will affect  the demand for marina facilities.

SSF appears to believe the HD will supply all of the capital for future development by the OPM JPA. The HD does not own the land or have a long‐term lease (nor should it want either) to justify any more capital investment at OPM.

The JPA has not developed the landside facilities of the marina significantly since its inception. There is no reason to believe this will change in the future. The OPM CIP includes $250,000 in Planning, specifications and engineering investment in landside development in 2017‐18 without a hint as to the nature of successful enterprise activity that might be developed there.

JPA property has been reduced to only the most exposed and unstable area of the old landfill. Barriers to future landside development include the landfill legacy problems of hazardous waste, subsidence and geotechnical issues complicated by projected sea rise. Extension of the JPA may also result in HD being held responsible for problems associated with hazardous waste deposits at the site that existed before the JPA was formed. These issues will result in limitations on what can be built including increased costs of construction. Further, the proposed 40,000 square feet available for new development in the remaining JPA Property is: small, irregular in shape, landlocked and otherwise limited in its use by adjacent trails and planned hotel development on adjacent property.

The HD has challenging issues at Pillar Point Harbor (PPH), including: the demand for more and larger berths, implementation of the PPH 5 year CIP, water quality improvement, landside development supporting existing enterprise activity tenants, expansion of enterprise activity, ADA compliance, dredging and beach enhancement. The HD should utilize all of its available and future capital resources at PPH in order to fulfill its mission statement: “To assure that the public is provided with clean, safe, wellmanaged financially sound and environmentally pleasant marinas”. If it continues in the OPM JPA with a business as usual approach the operating losses will continue and the HD will not be able to fulfill this mission at either PPH or OPM.

Conclusion

Given the above it is difficult to understand the apparent willingness of the HD to expend its resources on this failed JPA partnership. The HD should set future priorities based upon the LAFCO MSR and Grand Jury comments. This will help direct staff and make future planning fact based and goal oriented

HD has experienced consistent operating losses under the JPA. Future marina development and landside enterprise activity at OPM should be left to the landowner, SSF. All future HD tax revenue should be reserved for use at PPH.

While it may be desirable for the HD to have a continued presence at Oyster Point it is under no obligation to invest in additional capital projects at OPM. It makes no sense to build SSF and their developer partner OPD a shiny new marina with San Mateo County Taxpayer money.

The currently proposed OPM CIP should be suspended. The HD should limit its future involvement with the JPA and OPM to operation and maintenance of the marina under a cost plus contract, with SSF funding all CIP and operating losses. The HD should look for partners and other funding sources to support its public access and marine safety activities at OPM. Without implementing these strategies it may be impossible for the HD to achieve revenue neutral operations at OPM.

Oyster Point Marina Underwater

Please checkout my presentation about chronic flooding at the Oyster Point Landfill.

The map below indicates the area the color photo were shot.

Please click the map to see a larger version. The map photo represents a low tide.