A judge heard closing arguments Wednesday in the State Lands Commission’s lawsuit to overturn Proposition B, which requires voter approval for new construction on the San Francisco waterfront that exceed existing height limits. The commission, on which Lt. Gov. Gavin Newsom sits, filed the lawsuit in 2014 shortly after Prop. B passed.
Throughout the lawsuit, the state has argued that the Burton Act, the 1968 state law that delegated control of the waterfront to the San Francisco Port Commission, specifically does not allow direct voter involvement in Port decisions.
In her closing argument, Deputy City Attorney Christine Van Aken, representing San Francisco, said the state’s interpretation of the law ignores 50 years of practice on the waterfront. As an example, voters passed Proposition H in 1990 to prohibit hotels on Port piers, she said.
In a ruling issued in the case before trial in 2015, Judge Suzanne Ramos Bolanos seems to have already agreed and indicated voters may pass ballot measures affecting land use on the waterfront.
The state has further tried to show that Prop. B will cause the Port to receive less revenue on future waterfront projects. When projects require voter approval, the state argues, developers feel they need to make concessions—such as not building as tall as they might otherwise want, or increasing the percentage of affordable housing—to appeal to voters and gain support.
“The duty of the trustee is to do the best job it can for the beneficiaries, and Prop. B interferes with the city’s ability to do that,” said Deputy Attorney General Joel Jacobs in his closing argument.
“But do you have any evidence that Prop. B interferes in that way?” asked Bolanos, interrupting him. “You don’t have any evidence that absent Prop. B there would be more revenue, and other purposes that would be fulfilled.”
“As to the financial aspect, I believe there is considerable evidence,” said Jacobs. “I understand where the question is coming from, and it’s an important question. From a financial perspective, there was harm.”
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The state relied on an expert witness, Karen Weymann, who analyzed the two waterfront developments voters approved since Prop. B passed, and concluded that because of Prop. B, revenue declined.
But Van Aken disputed Weymann’s conclusions, and said her method of comparing the projects’ financial term sheets from before Prop. B to current versions of the projects “doesn’t make any sense.” A term sheet is an early snapshot, she said, and project proposals change up to the last minute before they are approved by the Planning Commission and finally the Board of Supervisors. Van Aken said the only person who defends the method is Weymann herself, whose analysis is entirely based on it.
Van Aken said that even if the projects’ term sheets are compared to the projects today, one project, Mission Rock, is projected to bring more revenue to the Port than anticipated at term sheet, and the other, Pier 70, is projected to bring in either the same or greater revenue.
Different conclusions have been drawn based on different ways sources of revenue can be calculated and accounted for. Many of those details were only presented to the court in closed sessions, to protect the confidentiality of ongoing negotiations surrounding the project. Van Aken argues Weymann focused on specific kinds of revenue and cherry-picked the worst numbers, “ignoring the good numbers.”
Jacobs disputed that claim. “If the city believes that there are other numbers which are good numbers that went up as a result of Prop. B, where are those numbers?” he said. “I don’t think we’ve seen them, just a big overall analysis.”
The role of affordable housing was also raised. After Prop. B, developers increased the percentage of affordable housing in the proposals before placing them on the ballot for voter approval. Because funding for the affordable housing in both projects is subsidized by the city and not the Port, “Port revenue is fully protected, and we have this other good thing,” Van Aken said.
But Jacobs took issue.
“Affordable housing is a city goal it wants to accomplish, and it is using these projects as a vehicle to accomplish those goals,” he said. “This is technically a form of self-dealing.”
“Promoting affordable housing is a form of self-dealing, but isn’t affordable housing a statewide interest?” Bolanos asked.
Jacobs contended that it is not a waterfront public trust issue. “Finding housing for the people of San Francisco is primarily a local interest, and not a public trust interest.”
“Even if it’s not a public trust interest, it doesn’t conflict with a public trust, does it?” Bolanos continued.
“Your honor, that’s the question,” Jacobs replied.
Outside the courtroom after closing arguments, former City Attorney Louise Renne said she’s hopeful the judge will rule Prop. B is valid. “I wasn’t able to sit in on the whole trial, but from what I saw, I didn’t think the state made their case at all,” she said.
“I found a lot of the state’s argument to be completely inconsistent, in my view, with the public trust,” she added. “The state was making a big deal about developers not getting their maximum amount of money because of Prop. B, but my question to that would be, since when does the public trust mean developers get top dollar for their projects? I didn’t think the public trust doctrine was about maximum profits for developers.”
Van Aken said she doesn’t know when a ruling may be issued, but does not expect a long delay.