Piracy on Treasure Island

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By Christian Bourge and Jim Robbins

Politicians with ties to land developers are trying to force the Navy to hand over one of the most valuable pieces of property in the country for free. The House version of the 2010 Defense authorization bill scheduled for conference today contains language that would speed the transfer of Naval Station Treasure Island to the city of San Francisco at no cost.

Treasure Island is a 535-acre man-made island in San Francisco Bay owned by the U.S. Navy. The naval station was selected for closure in 1993, and Navy operations ended there in 1997. Some of the property was transferred to the Federal Highway Administration, the Labor Department and U.S. Coast Guard, and the rest is open for development.

However, problems have arisen over the terms of the transfer, specifically Treasure Island's fair-market value. One would expect it to be a highly valuable piece of property, given the island's size and location and the potential for waterfront lots with spectacular views of San Francisco. The Treasure Island Development Authority, the local redevelopment agency acting on behalf of the city, valued the land at $13.8 million, and the city offered the Navy a $40 million in-kind deal.

The Navy commissioned two independent estimates, by the firms Ernst & Young Global Ltd. and Duff & Phelps Corp., which returned a fair-market value of $250 million. These assessments were reviewed and verified by the General Services Administration.

Nevertheless, members of Congress have come back with their own offer: nothing. In 2008, legislation was introduced that would have compelled the Navy to convey Treasure Island to the local redevelopment authority at the cost offered by the city. This effort failed. The current attempt hinges on Section 2711 of H.R. 2647, the House version of the Defense authorization bill. This section would, among other things, eliminate considering fair-market value for property conveyed under the Defense Base Closure and Realignment authority in favor of a "no-cost economic development conveyance" - if it survives House-Senate negotiations.

The provisions were drafted by Democratic Rep. Sam Farr of Carmel, Calif. Mr. Farr defends the measure as a way of helping cash-strapped communities threatened by base closure. "Rather than offering these lands to communities for economic development," Mr. Farr said, "the Defense Department wants to squeeze more money by demanding [that] communities pay yet again for the land."

House Speaker Nancy Pelosi, who represents San Francisco, hailed the legislation as paving the way for affordable housing and extensive commercial development on Treasure Island. Mrs. Pelosi claims development will create 2,500 long-term jobs and attract $5 billion in public and private investment. A Pelosi spokesman stressed that she did not author the provision, but her involvement is unmistakable. Mrs. Pelosi was behind the 2008 provision that sought to force the Navy to hand over Treasure Island, and Mr. Farr is an important Pelosi ally. "This is something the city has been trying to do for a very long time," said her spokesman Drew Hammill. "It could be a major job creator for the city."

But Treasure Island is not a case of a small town that has relied on a local military base for its livelihood for decades. It is a land grab by politicians for well-connected developers. Tony Hall, the former executive director of the Treasure Island Development Authority, told us the city's effort to develop the island is a "den of corruption." Treasure Island Community Development, the prospective developer for Treasure Island, was granted a no-bid contract by the city.

At the core of Treasure Island Community Development are high-powered California Democratic lobbyist Darius Anderson and supermarket magnate Ronald W. Burkle. Both are well-known financial backers of San Francisco's Democratic Mayor Gavin Newsom, whose political aspirations are now set on being California governor.

Mr. Hall, a former member of the city's Board of Supervisors, butted heads with Mr. Newsom's office over the issue after the mayor hired him to oversee the property transfer, leading to his 2005 dismissal after barely a year in office. "When I started I could see this thing was never going to be developed," Mr. Hall said. "The whole concept of Treasure Island being developed by the city and county of San Francisco is questionable. I suspect this is why the Navy had never kicked it over."

Mr. Hall claims the process has been used by Mr. Newsom as a political tool to rally support, financial and otherwise. Mr. Newsom has dismissed the accusation as "laughable," but the specter that a sweetheart deal is being protected by Mr. Newsom's Democratic allies in the House cannot be avoided.

The potential for abuse of the process has come to the attention of the White House. President Obama has been subjected to an intense lobbying effort by members of the California delegation. Sen. Dianne Feinstein, California Democrat, appealed to the White House in a letter dated Feb. 19, calling the Treasure Island transfer an "extraordinary opportunity" and one of her "top priorities" for the year. The senator claimed that "expediting the transfer of Treasure Island through a no-cost economic development conveyance" would stimulate investment [and] infrastructure improvements and create "permanent jobs." But Dorothy Robyn, deputy undersecretary of defense for installations and environment, speaking for the administration, wrote to the Senate that the proposed language would create "potential windfalls for certain communities with high-value property and for private-sector developers working with those communities." In essence, no-cost conveyance would not be a gift to needy communities but a contractor windfall ready for flipping.

There is good reason for skepticism. A proposed Treasure Island development plan slates 90 percent of the developed acreage for residential use, 7 percent for commercial property and 3 percent for parking. An illustration shows about a dozen high-rise blocks of shoreline condominiums with stunning views of the city, plus 300 acres of park and recreation land. This would hardly be "affordable housing," the $5 billion investment that Mrs. Pelosi claims would have to be recouped by the developer. The only long-term jobs created from this plan would be for maids and doormen for the high rollers privileged enough to live there.

The Navy merits praise for holding the line in defense of a market-based transfer of Treasure Island. Cloaking this land grab under a measure to help local communities suffering the disruption of military base closure is disgraceful. Senate conferees would do well to reject this measure and force the Treasure Island pirates back out to sea.

James S. Robbins and Christian Bourge are senior editorial writers for The Washington Times.