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Griftin' on the Dock of the Bay 

How waterfront developer Carl Ernst fished for political influence to help his struggling Pier 38 project

Wednesday, Nov 20 2002
Carl Ernst Jr. is a man of great height and girth. At first, he seems to be a gentle giant, intelligent and slightly self-mocking. But behind the twinkle in his eyes lie wells of bitterness. In March, Ernst talked for an hour inside a cabin cruiser tethered to the rotting pier he leases from the city of San Francisco. The boat rocked as Ernst shifted his weight from side to side, trying to explain why a fellow with what amounts to a lifetime lease at low rent on a valuable waterfront property can't make the damn place spin off any real money. Ernst complained that what stood in his way was city officials waiting to be bought off before they would help him. To dramatize the point, he pirouetted and held out his hand, palm up, in the universal gesture for baksheesh, some grease, a touch of the green, baby.

Ernst said he does not play that game, which is, of course, illegal. He said he came by his city lease, and nearly $3 million in financial backing from the state of California, purely on the basis of professional merit. For the last seven years, he has dreamed of remodeling Pier 38, just north of Pac Bell Park, as a recreational marina and restaurant complex. And for seven years the pier has continued to rot into the bay as Ernst's project got permanently mired in the dream stage.

Ernst blamed Mayor Willie Brown for his troubles. The mayor is out to destroy him, he said, because he won't make payoffs. But Ernst, 64, has only himself to blame for the debacle at Pier 38. His story -- how he frittered away public money while failing to build his project, how port and state officials enabled his failure, how he played the political influence game at City Hall -- is worth telling because it shows, in microcosm, the way things get done, or not done, under the Brown administration.

Carl Ernst arrived in San Francisco in 1970, drawn by the beguiling promise of the Summer of Love. He held a doctorate in communications but had joined the crew of the hippie musical Hair and spent a few years partying. He especially remembers having fun at a nude beach south of the city, Gray Whale Cove. "We had cast parties on the beach, gay and straight, gals," he says. "I was only 30 years old." He enjoyed the secluded cove so much that he leased it from the state of California for two decades, pocketing entrance fees until the state took the property back in 2000.

Along the way, the versatile Ernst became a home builder and "the best of friends" with Joe O'Donoghue, influential president of the Residential Builders Association. In 1995, Ernst formed Pier 38 Maritime Recreation Center Inc. He appointed another house builder, Kenneth A. Hagan, nephew-in-law of then-Mayor Frank Jordan, as vice president of the corporation.

As Jordan was leaving office in 1996 -- to make way for Brown -- the San Francisco Port Commission granted Ernst a 36-year lease on Pier 38, at very low rents. The California Department of Boating and Waterways loaned the new corporation $1.5 million to construct a maritime recreation center to serve small boaters. The facility would offer slips for temporary docking, fuel, water, and sundries. Ernst promised to build rows of steel racks inside the pier's two-acre shed to "dry-store" hundreds of motorboats. The San Francisco Bay Conservation and Development Commission, a powerful state agency that controls the use of waterfront property around San Francisco Bay, OK'd Ernst's business plan, provided that he build a promenade around the pier for the public to enjoy.

Ernst and Hagan projected gross revenues of $5.6 million by their second year of operation. That meant they would have plenty of cash to remodel the crumbling pier, pay off the state loan, and take a profit. Seven years later, the state money is long gone and the restaurant, public promenade, and boat racks have not materialized. Ernst is running the business on a hand-to-mouth basis, scrounging dollars by charging hourly slip fees, storing a handful of small boats, subleasing office space, and parking cars owned by residents of nearby luxury condominiums -- the latter in violation of his city lease. Recently, Ernst entered into partnerships with a restaurateur and a yacht dealer, hoping to jack up his cash flow, but the relationships soured, leaving him unable to pay his debts.

The Pier 38 project is a dead albatross around the neck of its government sponsors. They all say it stinks, but they cannot get rid of it. For example, after bemoaning Ernst's chronic inability to earn his keep, the Bay Conservation and Development Commission launched an "enforcement action" against him two years ago for not providing public access to the pier. BCDC officials say they are still investigating the matter and have yet to assess any penalties. Port officials say the project is a financial and programmatic bust, yet they continue to champion Ernst, hoping for the best, even though they have excellent reasons to evict him.

Despite the pier's problems, Ernst's associate Hagan pocketed money from it. From 1996 to 1998, his company, Hagan Construction and Development, was paid more than $500,000 by Pier 38 Maritime Recreation Center to demolish rotted portions of the pier, build offices and public restrooms, assemble portable docks, paint and repair walls, and install windows. Much of this work was only partially finished, leaving a variety of holes in the pier. Hagan also got a $40,000 brokerage fee from the port when Ernst signed the lease, and has received tens of thousands of dollars in construction management fees, according to public records. Hagan, who did not return repeated calls requesting comment, appears to have parted ways with Ernst after the state loan money was exhausted in 1998.

Ernst paid $215,000 in state loan proceeds to his nude beach operation for contracting services and to purchase used equipment, including boat-launching gear, a forklift, and a rusty old barge, an eyesore tethered to the ballpark side of the pier. And port officials confirm that Ernst has permitted business activities on the pier that are prohibited by his lease.

About The Author

Peter Byrne


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