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Port asks Board endorsement for Pier 70 Twentieth Street rehab term sheet with Orton Development
Summary
The Port asked the committee to endorse a term sheet with Orton Development to rehabilitate Twentieth Street historic buildings at Pier 70; port staff said Orton's capital estimate is about $58 million (with up to $14 million developer equity and $1.5 million in port funds) and the Budget Analyst found the project fiscally feasible under Administrative Code Chapter 29 with conditions.
Port planning staff asked the Budget and Finance Committee to endorse a term sheet with Orton Development and to find the Twentieth Street Historic Buildings project fiscally feasible so environmental review (CEQA) and transaction documents can proceed.
Kathleen Dijap (Ports Planning and Development) described the site at Pier 70 (south of Mission Bay, east of Potrero Hill) and outlined the buildings to be rehabilitated, including the Union Ironworks machine shop and several brick warehouses dating back to the late 19th and early 20th centuries. Dijap said the Port ran a competitive process, selected Orton through review, and negotiated a term sheet that would be the framework for later lease and transaction documents.
Dijap said Orton's capital cost estimate for the work is about $58,000,000; the Port's prior capital plan carried $106,000,000 in estimated needs. The term sheet proposed a partnership structure under which Orton would commit up to $14,000,000 in equity and the Port would contribute $1,500,000 already budgeted; Port staff described a participating‑rent structure and a deferred base rent that would begin about 20 years after completion. Port staff and Orton said they have market interest from potential tenants and that the project could create an estimated 400–500 permanent jobs.
The Budget Analyst reported a net present value of $15.7 million in rent revenues over the proposed 66‑year ground lease and an estimated annual tax and fee revenue of about $919,000 at project completion. The analyst recommended amendments to require the project to meet the Secretary of the Interior Standards for historic treatment, to report revised cost estimates and underwriting when the ground lease is considered by the Board, and to make any material reopeners to the financial terms subject to Board approval.
Preservation and waterfront advocates urged support in public comment. Mike Buehler (San Francisco Architectural Heritage) and Corinne Woods (Port Central Waterfront Advisory Group co‑chair) said the buildings are historically significant and urged prompt action. Orton representatives described experience rehabbing similar buildings and plans to deliver shells with modern infrastructure to attract light industrial and maker tenants.
Committee members expressed excitement but asked for strict controls on cost verification and more detailed underwriting; the committee adopted the Budget Analyst's recommended amendments and forwarded the item with recommendation without objection.
Next steps: endorse term sheet, proceed with CEQA and underwriting, then return to the Board with transaction documents, revised cost estimates and financing details.
