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Some People Have All the Luck 

And then there's developer Michael Strausz

Wednesday, Aug 29 2001
On the unseasonably gorgeous afternoon of Aug. 16, San Francisco developer Michael Strausz was sitting high above home plate at Pacific Bell Park, talking -- much to the chagrin of his ballpark neighbors -- about the impact of recent zoning changes on one of his properties.

He was so engrossed in the topic, in fact, that it took a roar from all 41,000-plus in attendance to get him to look at the field, where he saw Barry Bonds rounding the bases, having just hit his club record-tying 52nd home run of the season.

"You're kidding," said the stocky developer in the thick black glasses and the tan Gatsby cap, making an exasperated, what-else-can-go-wrong face. After pausing in that posture for a moment, Strausz's whole body slumped.

"You know, back in the '80s I was at this really boring football game in Berkeley," he recalled, with a resigned chuckle. "Cal and Stanford were playing, and it was really boring so I left. I was about halfway through the parking lot when I heard this roar from inside. ... It turned out that the Stanford band had come on the field during the game." That's a convoluted description of the most famous finish in college football history -- in which Cal won by scoring on a play in which Stanford's defenders were blocked by their own marching band.

But Strausz -- who says he only goes to Giants games "for the garlic fries" -- has bigger problems.

His luck as a sports fan extends to his fledgling career as a San Francisco developer. After all, missing a few episodes of sports history is one thing; the threat of having your 175-unit housing project stuck behind a massive, polluting, and expanding power plant complex is another.

When Strausz plunked down $100,000 in early 1999 for the option to build 175 lofts on Illinois Street, he figured the ancient power plants sitting across the street wouldn't be there long. After all, there had been grumblings from Pacific Gas & Electric, which owned the plants before deregulation forced it to sell, that they could be closed down. What's more, study after study had identified that very portion of the city's central waterfront as ideal for housing.

On top of that, San Francisco was in the midst of an unprecedented real estate boom and beset by an enormous housing shortage. The relatively small-time developer saw an opportunity to make the first truly big-time deal of his life, and he jumped on it.

He and his partners were so optimistic that they paid another $150,000 to extend their option even after Atlanta-based Mirant Corp. bought the site's six power plant units from PG&E. After all, Strausz figured, the plants were relatively small, and the demand for waterfront housing in a fast-growing neighborhood like Dogpatch would still make the project worthwhile.

Then things got more complicated.

In November, a new, hostile-to-development Board of Supervisors was elected, and it promptly placed a moratorium on loft-building in the city. The builder that Strausz and his partners had been working with quit, and they switched their project to apartments, which meant the plans had to be redrawn from scratch.

And then things got worse. The state's energy crisis hit, which suddenly gave a boost to Mirant's efforts to add a new, far bigger plant to the site, a project the company had until then been quietly pursuing. Amid the state's frenzy to build new power plants, Mirant in February turned up the pace and profile of its project, which is now before the California Energy Commission. Strausz says his investors, who would provide the millions needed to build the units, have begun to get antsy.

"The plant wouldn't necessarily stop the project from going forward," he says. "But our investors are starting to pull back a little bit and ask, you know, why do we want to fund a project next to a power plant?

"We're hoping that the project slows down enough so that it outlasts the energy crisis," so the demand for the new plant will subside.

Strausz, of course, isn't alone in fighting the new plant. A glut of neighborhood groups and environmental activists have been warring against the project, hoping to either shrink or stop the new plant and to boost the city's use of clean, renewable energy resources. And an ordinance sponsored by the district's supervisor, Sophie Maxwell, attempts to mandate that any new project would have to offer a net loss of pollution in the southeast. For Maxwell, this would almost certainly mean that, at a minimum, a new Potrero plant would lead to the closure of PG&E's decrepit facility at Hunters Point.

But that's not enough for Strausz, who was lobbying hard -- and alone -- for an unlikely scenario at a recent Energy Commission hearing. Essentially, he wants the city to deal Mirant a plot of land at the airport in exchange for its central waterfront site, which it would abandon, plants and all.

According to Mirant, however, that scenario is pure fantasy. After all, the state's grid operator requires the city to have at least some of its power generated within its limits.

"Whether Unit 7 gets built there [at Potrero Hill] or not," says Marcus Young, a Mirant spokesman, "there will be a power plant there forever."

In the eighth inning, Bonds hit another blast, this one a towering shot over the right center field wall that won the game and broke Willie Mays' franchise mark for homers in a season.

"Well," Strausz said, joining the standing ovation, "at least I got to see one. ... Maybe it's an omen."

He probably shouldn't press his luck.

About The Author

Jeremy Mullman


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