Chapter 4. Can the Waterfront be More than a Port?

The junction of land, sea and air transportation on our Waterfront gives Oakland a powerful competitive edge in economic development, but legal restrictions upon the use of tidelands and a lack of coordination between the Port and the City of Oakland may prevent us from realizing the Waterfront's full potential.

This chapter explores the evolution of Port transportation facilities and the institutional problems which are impeding development of the Waterfront.

The Waterfront as a Public Trust

In 1892 the United States Supreme Court bestowed a special legal status upon tideland areas, in the case of Illinois Central R.R. v. Illinois:

"[T]he State holds title to soils under tidewater by common law. . . . But it is a title different in character from that which the State holds in lands intended for sale. . . It is a title held in trust for the people of the State that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein freed from the obstruction or interference of private parties."

The public trust doctrine restricts the use and ownership of tidelands in California. As the California Supreme Court declared in a 1929 case (City of Oakland v. Williams}, the use of tidelands ". . . must have some relation to and connection with, or be promotive of, the accomplishment of the main purpose, to wit, and development of improvement and up building of a harbor. . ."

These cases, along with the State Tidelands Act, define the scope of the public trust doctrine. Recent changes in the law recognize that the public's interest also includes water-related recreation and conservation.

Beginning shortly after Oakland was incorporated, the State of California passed the tidelands to the City in about twenty separate grants. These lands must be operated under the public trust doctrine and in conformance with the terms of each original grant.

Today more than five thousand acres in Oakland are subject to this public trust doctrine, as administered by the Port of Oakland. This includes the shoreline, filled tidelands and vast dry land areas that were acquired with funds from wharf and other revenue-producing uses of the tidelands. Some parts of this area extend more than a mile inland from the water. Nearly all of Hegenberger Road, the land west of Highway 880 and more than two thousand acres of West Oakland are within Port jurisdiction.

Establishment of the Port of Oakland

In 1854 Oakland was incorporated and Horace W. Carpentier became its first mayor. At that time Carpentier was operating a ferry to San Francisco and a bridge across Lake Merritt. Within thirteen days after becoming mayor, Carpentier was granted "exclusive" use of the waterfront for thirty years. In return he pledged to pay the city five dollars plus two percent of wharfage fees. Citizens rebelled and expelled Carpentier from office in 1855. Under a new mayor the grant was repealed, provoking a lengthy court battle.

In 1868, when Oakland was being considered as the Western terminus for a transcontinental railway, the dispute was settled by Carpentier agreeing to deed his rights to the Oakland Waterfront Company. Only later was it discovered that Carpentier was president of the Oakland Waterfront Company. It was not until 1907 that the courts finally determined city ownership of the waterfront, ending the fifty-five year reign of Carpentier and the Central Pacific Railroad.

At a special election in December 1926, city voters enacted a Charter amendment transferring administration of the tidelands to the Port of Oakland, a new semi-autonomous agency governed by a Board of Port Commissioners. The Charter amendment granted the Port II . . . the complete and exclusive power. . .to do certain things, including take charge of and control the tidelands. . . granted to the City in trust by the State of California for the promotion and accommodation of commerce and navigation."

Evolution of the Waterfront

In 1909 voters approved a $2.5 million bond issue to build the first concrete pier on the West Coast. In 1925 voters approved another $9.6 million in general obligation bonds for major harbor improvements. During the next decade new terminals were also built at Grove Street, Fourteenth Street, and Ninth Avenue.

In 1941 the Army and Navy took control of the Outer Harbor and more than four hundred acres of land for a military supply base serving the Pacific basin. The Naval Supply Depot and the Oakland Army Base remain in operation today, although the Port is considering converting part of the Naval Supply Depot to Port use.

In 1962 the Port embraced the new concept of containerization in intermoda1 transportation. By constructing container facilities ahead of other West Coast ports, cargo volumes grew rapidly and the Port of Oakland assumed a leading position in world trade. The Port now handles ninety percent of the container traffic in San Francisco Bay and is the fifth largest container port in the United States.

An airport was first established on the Waterfront in 1927, dedicated by Charles Lindbergh only twenty-nine days after he completed his historic solo flight across the Atlantic Ocean. In 1955 the voters approved a bond issue for construction of the Oakland International Airport. The former airport, North Field, remains in operation as a general aviation facility.

Oakland International Airport is now among the fastest growing airports in the nation<11, having served more than six million passengers last year. It is also the fifth largest air cargo facility in the nation.

Aviation operations have attracted subsidiary enterprises that provide a large number of jobs in Oakland. These include the United Airlines maintenance facility, (2,000 employees), Federal Express distribution center (375 employees), Alaska Airlines' maintenance facility (250 employees), National Airmotive Corporation (400 employees) and many service jobs in the restaurants and hotels along Hegenberger Road.

The Port is also responsible for development of any land that is not needed for aviation or maritime facilities. This includes commercial developments at Jack London Square, Embarcadero Cove and the Airport Business Park and Distribution Center.

In all, airports and marine terminal facilities occupy 3,218 acres of the Waterfront, commercial real estate comprises another 462. 7 acres and 185 acres remain undeveloped. In 1991, Port revenue totaled $103 million, of which 51.5% was derived from aviation operations, 40.2% from maritime facilities and 8.3% from commercial development.

An Economic Development Void?

As the next chapter will discuss, transportation facilities on the Waterfront account for only a small portion of the jobs derived from Port operations. By far the greatest number of jobs are created by industries which rely upon the transportation facilities. For example, the Federal Express and the airline maintenance facilities employ substantially more people than the airport itself.

Therefore, in order to tap the full potential of the Waterfront, it is important to mount an economic development strategy aimed at attracting and retaining employers that rely upon the transportation facilities of the Port. However, two factors - both arising from the application of the tidelands trust -- confound economic development of Oakland's Waterfront.

The Responsibility Vacuum:

Traditionally, the Port of Oakland has focused its efforts narrowly on developing transportation facilities, rather than on the broader goal of economic development. The City of Oakland bears primary responsibility for the city's economic development strategic planning. However, the City concentrates its efforts on property outside the Waterfront. Consequently, although superior transportation is commonly viewed as one of Oakland strongest competitive advantages, there is little coordination between the Port and City in tapping this strength. There is also little concentrates in planning other uses of the Waterfront, such as housing and recreation.

The Incentive Void:

The tideland trust also alters the incentives for developing the Waterfront. Land operated by the Port is exempt from real estate taxes and is not. encumbered with debt (although aviation and maritime facilities, such as terminals and cargo cranes, are encumbered by debt incurred in their construction). Nor are Port facilities required to produce a return on investment, as would be required of private investments in land or capital. In a free market system, debt service, land taxes and rate of return impose financial pressures which compel owners to place the land in the most beneficial use. Lacking such incentives, large tracts of Port land remain undeveloped or underutilized.

The existence of the tidelands trust and the clear definition of the Port of Oakland's mission has produced one of the finest intermodal transportation facilities in the world. Ironically, the very nature of this public trust and its single-minded pursuit by the Port may have prevented Oakland from realizing the full potential of a Waterfront city.

< Previous Chapter | Table of Contents | Next Chapter >