Supervisors advance 8 Washington waterfront deal amid dispute over public benefits, parking and enforceability of transfer fee

The Budget & Finance Subcommittee voted to move two related Port of San Francisco items forward to the full Board on Wednesday without a committee recommendation, setting the stage for a final vote on a redevelopment and land-swap transaction at Seawall Lot 351 (the "8 Washington" project).

The portstaff described a public-private development that would replace a surface parking lot and private Golden Gate Tennis & Swim Club uses with two residential buildings totaling 134 units, roughly 30,000 square feet of public open space, a rebuilt aquatics center, 20,000 square feet of retail and up to 255 underground parking spaces. Port development lead Jonathan Stern said the overall public-benefits package has a net present value the port estimates at about $144 million, including $11 million for affordable housing, $14.3 million in upfront port payments and approximately $12 million in land value conveyed back to the port.

Why it matters: the project would remove a large surface parking area from the Embarcadero and create permanent publicopen space and new housing, while also using an Infrastructure Financing District (IFD) to reimburse some public improvements. Committee members pressed staff and the developer on several points: how much of the IFD proceeds should flow to the port versus the general fund; whether the port should pre-pay $5 million to partially reimburse the developer for park construction; the enforceability and timing of a 1% condo transfer fee intended to fund future port revenue; and whether the city is getting sufficient affordable-housing value for the height and rezoning concessions requested.

What was said: Supervisor Kim asked whether the port would negotiate a minimum annual guarantee on the retail ground lease and pressed for a 20% reduction in the project's proposed commercial parking (about 255 spaces proposed). Port staff and the project sponsor said they would explore the reductions and negotiate a minimum annual guarantee and adjustments to construction-period rent. Deputy City Attorney Cheryl Adams said the city views the proposed transfer fee as a contractual term of the land sale and not a tax, and thus enforceable as a condition of sale.

Public testimony split sharply. Supporters including local housing and labor groups, architects, waterfront advocates and some neighbors described the plan as a rare source of affordable-housing funding, parks and jobs, and urged approval. Opponents, including former club members and nearby residents, described the swap as a loss of a community recreational asset, questioned the valuation of private-club improvements counted as public benefits, and warned the transfer-fee mechanism could be avoided by future owners.

The vote: the committee accepted an "amendment of the whole" to reflect recent Port Commission actions and CEQA/appeal history, and then voted 2-1 to forward items 7 and 8 to the full Board without recommendation; Supervisor Kim moved the motion (vote: Kim Aye; Chu Aye; Avalos No). The committee also directed the port, developer and the budget analyst to reconcile differing benefit calculations and to return with agreed figures and text ahead of the full Board meeting.

What happens next: the items are scheduled for the Board of Supervisors. Key outstanding issues cited by members that could affect the Board vote include the parking reduction, a proposed perpetual surcharge or fee on parking revenue dedicated to neighborhood traffic and streetscape mitigation, negotiation of a minimum annual guarantee for retail leases, an adjustment to the port's $5 million reimbursement proposal, and final confirmation of the legal form and enforceability of the transfer fee.