The plan for a massive floating pool on S.F. piers is moving forward, despite

The entitlement process for the planned redevelopment of two aging piers and a nearby parking lot at the San Francisco waterfront into housing and a floating swimming pool in the bay is expected to kick off with a public hearing next month, following nearly three years of behind-the-scenes efforts to advance the plan amid growing economic turmoil. 

In January, development partners Strada Investment Group and Trammell Crow Co. are slated to seek the Port Commissions’ approval of a term sheet, or a nonbinding agreement that lays out the basic terms and conditions and provides the framework for a future disposition and development agreement for the project, according to a memo issued by the commission’s staff this week.

And while the execution of this first transaction document represents a milestone in terms of advancing the project — which calls for transforming Piers 30-32 and Seawall Lot 330 into a swimming pool in the bay surrounded by office and retail space and hundreds of new homes — its developers are still facing a roughly $125 million financing gap, per the Port’s memo. 

The gap is a result of swelling project costs: The cost of the project’s infrastructure work alone has increased by over $90 million over the past three years. 

When the developers last appeared in front of the commission in early 2021 and were granted exclusive rights to negotiate their project with the Port of San Francisco, which owns the properties, infrastructure and required “resilience improvements” were expected to cost $369 million. 

The Port says that price tag has grown to about $460 million, which does not include vertical development. It is now working with the project’s developers around creating special tax districts in the project area as one means to pay for its construction. 

The Port selected Strada and Trammell Crow in 2020 through a competitive bid process to redevelop Pier 30-32 and Seawall Lot 330 — the latter is currently home to a navigation center for the homeless. A stipulation of the project was that the teams must fund sea level rise and seismic work at the piers and seawall and restore a deep water berth, located at the project site, for maritime uses. 

The project’s design has been heavily modified in recent years in order to achieve compliance with state regulations, which may also have caused the financing gap to widen. Strada and Trammell Crow’s original plan called for an 850-unit residential complex on Seawall Lot 330 and the demolition of Piers 30-32. The developers wanted to rebuild the piers as two smaller finger piers at roughly half the size, with about 375,000 square feet of office and 30,000 square feet of retail space. 

The project’s residential portion is envisioned to help subsidize the costs of the other components. Taken together, the infrastructure and resiliency work plus vertical construction has been estimated to cost about $1.2 billion. But, pushback from neighbors of the proposed residential complex resulted in the developers shaving 137 units off of its design, which earlier this year was reconfigured as a single, 713-unit tower that would rise 230 feet.

But even that design is not yet certain: Questions remain regarding whether the developers will be able to use the State Density Bonus law, which allows certain developments to exceed local height and bulk limits in exchange for an increase in the percentage of affordable housing, to achieve the building’s planned height, which exceeds local height limits. 

According to the Port’s memo, the development team has “also designed a building with a maximum height of 105 feet, which would decrease the number of units and potentially negatively impact the funding gap and project affordability.” 

Moreover, questions by state regulators over whether the proposed office space was consistent with the Public Trust Doctrine, which governs the use of California’s sovereign waterfront properties and requires that they benefit the public and encourage maritime use, forced a redesign of the original plan for the piers as well.

The issue sparked new legislation proposed by Sen. Scott Wiener, Senate Bill 273, which essentially determined that the balance of the trust benefits…