DISCUSSION:
The public has been seeking more information about the status of the Craneway Pavilion along our Richmond waterfront. Information has been distributed from various sources, some of it incorrect. The City Council has requested that staff provide an open session update to the public at large on the current status of the Craneway and next steps, which report follows:
The City has been the source of most “incorrect information.”
A. BACKGROUND
The City is the current owner of the Craneway Pavilion. In 2004 the City and the State of California, acting through the State Lands Commission (“SLC”), entered into a Title Settlement Agreement to encumber the Craneway Pavilion with a Public Trust Easement, which restricts the uses of the Craneway and the surrounding parcel to ensure public access for certain activities related to overnight accommodations, restaurants and cafes, water-related industry and museums, visitor service retail, or boating and ferry services.
The public trust easement with its allowable uses is not a permit document but is only a restrictive document. Permitted uses are described in the CUP of 2004 pertaining to the property.
The Property was originally the Ford Motor plant which abandoned the property in 1956, and subsequent uses ceased in 1976, whereupon the property sat vacant for over 20 years and deteriorated. It was damaged by an earthquake in 1989. It became derelict with a fallen roof and standing water.
There was no “fallen roof.” The roof leaked, and there was water in the Craneway.
Renovation was proposed through private and public investment through Orton Development (“Orton”). The City, acting through its Redevelopment Agency, approved a disposition and development agreement (“DDA”) and a 55-year lease in 2004 for the Craneway which specified certain permitted uses that were consistent with the Public Trust Easement on the property. In addition, the City approved multiple use permits beginning with CU/V1100454 in 2004 to authorize a mixture of office, live/work, research and development, light industrial, retail, event and public gathering space and a variance to allow a reduction in the required parking and landscaping and increase in the allowable floor area ratio for the rehabilitation of the Historic Ford Assembly Plant, including the Craneway. In addition, CU1104689 (2008) as amended by PLN13-137 (2013), was also granted for the Craneway. CU1104689 authorized the sale of alcoholic beverages (type 47 license) for an eating establishment and as an entertainment venue. PLN13-137, amended CU1104689, by authorizing outdoor dining. Since then, the facility has operated as an event space with the Assemble Restaurant, including outdoor dining.
The former Ford Assembly Building was damaged in the 1989 Loma Prieta earthquake. The City sought FEMA funding for repairs and spent from 1989 to 2002 negotiating with FEMA over the appropriate amount, finally accepting $16.2 million. After securing the FEMA grant, the City issued an RFP for development of the former Ford Assembly Building. There was a succession of three developers selected through the RFP process, Orton Development being the third. The first one voluntarily terminated, and the second, Assembly Plant Partners was terminated after the City concluded the organization could not show sufficient financial strength to complete the project. The bulk of the FEMA funded work was done by Assembly Plant Partners. With Assembly Plant Partners out of the picture, a new RFP was issued in 2003, and a formerly rejected proposer, Orton Development, was selected to complete the project and subsequently entered into a Disposition and Development Agreement (DDA) with the City on November 18, 2003. The Ford Assembly Building, except for the Craneway, was sold to Orton for $5.4 million, and the Craneway was leased to Orton for $1.00 a year.
Specifically, CU 1100454, approved August 4, 2004, anticipated uses in the Craneway that never happened, including “a large display area, which would feature public displays by the Richmond Museum, the Rosie the Riveter Visitor Center and others . The Visitor Center was ultimately located in the Oil House, not the Craneway. Even the jazz club and restaurant were not anticipated as principal uses of the Craneway (“It is anticipated that some of the building’s uses, such as the restaurant and jazz club, would partially spill into the open craneway, which would be retained as an expansive interior open space with broad views of San Francisco Bay, Angel Island and the City of Oakland’s downtown in the distance.”).
The Ground Lease for the Craneway was executed December 9, 2004, and allows, “any lawful use consistent with the DDA and the uses permitted under the Public Trust Easement.” The “any lawful use,” clause also restricts the uses to those allowed in the CUP.
PLN13-137 was not “also granted for the Craneway. It specifically applies only to outdoor dining at Assemble Restaurant, which is located on APN 560-181-103. The Craneway is on a separate parcel, APN 560-181-114. The City even got the APN wrong, citing 560-181-103 instead of 550-181-113. No outdoor dining permit has been issued for the Craneway.
Orton undertook the development and completed all improvements in accordance with the agreements, including a blend of industrial, research and development businesses. Additional public service uses were provided including Rosie the Riveter Visitor Center, exhibition space, educational and cultural functions, retail and café uses, and public waterfront access.
B. CURRENT PERMIT
For many years Orton operated as an event venue and restaurant, but the event usage was declining even before COVID. Due to business losses, Orton sought new uses. In July 2023, an Administrative Use Permit (AUP) (PLN23-193) application was submitted to operate an indoor pickleball facility at the Craneway Pavilion for members and public use, including a retail pro shop and fitness/wellness lounge that would also offer healthy and quick service food and beverage items such as smoothies, salads, and wraps. Since this use represented a change from the restaurant/event center use and was not specifically listed as a permitted use in the lease, City staff ran this proposed project through State Lands Commission (SLC) for their opinion regarding the use’s consistency with the Public Trust Easement. The City received a response from SLC on July 31, 2023, that the proposed use was inconsistent with Public Trust Easement limitations, as the proposed use did not fall within the definition of visitor-serving retail or other enumerated uses within such limitations. Staff shared this information with the applicant and suggested they withdraw their AUP application as the City would not be able to approve it as submitted.
Orton’s claim about business losses is specious and not supported by any evidence. Orton sold the Ford Assembly Building in 2022 for $103.7 million, $98.3 million more than he paid for it. The amount he invested in rehabilitation has never been disclosed, but a number ranging from $25 million to $40 million has been rumored. It is also rumored that he benefitted from historic preservation tax credits, reducing the rehabilitation cost by as much a $10 million. The immediate previous person engaged by Orton to manage events at the Craneway has stated that such events were profitable, and Orton was paid $100,000 a month for the use of the Craneway as an emergency medical facility during COVID. It is clear from the CUP that the Craneway was never intended to be a profit center, but was intended to be, “the open craneway, which would be retained as an expansive interior open space with broad views of San Francisco Bay, Angel Island and the City of Oakland’s downtown in the distance.”). Once Orton sold the Ford Building, he no longer had the collocated profit center to support maintenance of the Craneway, but that’s on him.
On January 12, 2024, the City received an email from Craneway tenant withdrawing the AUP application. Following receipt of the withdrawal letter, on January 22, 2024, City staff met with Eddie Orton and Rachel Hong (manager of the Assemble Restaurant and Craneway Pavilion) to discuss proposed revisions to their project to align the use with the existing City approvals and Public Trust Easement limitations. Mr. Orton and Ms. Hong proposed to keep the restaurant use throughout the facility and introduce games (specifically pickleball) within the restaurant which is permitted under CU1104689 and is consistent with the Lease. The facility would operate a full-service restaurant from 7 AM to 10 PM, daily, but seeks to offer as an accessory use commercial entertainment gaming activities, including 12 pickleball courts, 3 ping pong tables, and 1 on-the- ground giant chess board for customers to enjoy with their food and/or beverages.
Again, the CUP never anticipated a restaurant as a principal use of the Craneway, even though it is allowed by the public trust restrictions. (“It is anticipated that some of the building’s uses, such as the restaurant and jazz club, would partially spill into the open craneway, which would be retained as an expansive interior open space with broad views of San Francisco Bay, Angel Island and the City of Oakland’s downtown in the distance.”).
RECENT MEETINGS
City staff met with Ms. Hong at the Craneway on March 4, 2024, to visit the project site and discuss the proposed floor plan. City staff informed Ms. Hong that the City is in the process of seeking an opinion from SLC to review and approve the proposed use of the Craneway under public trust limitations. During the site visit, City staff recognized that the floor plan being installed differed from the floor plans provided to the City on January 30, 2024. Due to this difference, the City requested that it be provided with an updated floor plan for review by the City and SLC. The City received updated floor plans and project descriptions on March 7th and 8th. Orton contends the square-footage space allocated to the games area covers less than 30% of the total square-footage, which includes space allocated for outdoor dining.\
There is no CUP allowing outdoor dining at the Craneway. Counting outdoor dining as restaurant space to calculate the games area as only 30% is a specious and fraudulent misrepresentation.
Pursuant to the proposed floor plans and discussions with Ms. Hong, seating for the restaurant will be offered throughout the Craneway Pavilion, restaurant dining room, and outdoor patio area. Food and drinks will be ordered from the restaurant and bar via quick-response (“QR”) code and delivered to guests within the restaurant, bar, games area, and outdoor dining areas. The restaurant will include over 300 hundred seats available to guests in several forms, including two, four, and six top dining tables, communal high-top tables and lounge seating. The proposed floor plan also includes a small retail area that will include sports and Craneway-related themed merchandise.
On March 1, the City Attorney advised Orton that as SLC had on July 31 ruled the use was inconsistent with the Public Trust Easement, he would need to submit the modified use for review. In response, on March 3, Orton stated that the new revised proposed use of the Craneway Pavilion pursuant to the revised floor plan was (i) consistent with Public Trust Easement limitations, and (ii) is materially consistent with the existing entitlements under the Lease agreement with the City, which allows Orton as tenant to use the Craneway Pavilion as an event space and restaurant. It appears that Orton does not intend to submit to the SLC. Due to the delay in obtaining the revised floor plans, to verify the areas of use, the City has not sought an opinion from the SLC as to whether the proposed use is in fact consistent with the limitations imposed by the Public Trust Easement that currently encumbers the Craneway.
NEXT STEPS
1. Weekend Event
Orton has been promoting a weekend event for March 23-24. Given the lack of definition in the CUPs and Lease over permissible events, Staff believes this is likely a permitted activity.
2. SLC
City has sent a letter to the SLC seeking a consistency (with Public Trust Easement) determination.
3. Conformance of Plan with Zoning
Based on the current plan, Staff believes the space allocated to pickleball exceeds the 33% permitted for accessory uses and Orton must eliminate some of the courts, or approach the matter as if the pickleball use was the primary use, leading to other uses.
There is no CUP allowing outdoor dining at the Craneway. Counting outdoor dining as restaurant space to calculate the games area as only 30% is a specious misrepresentation.
4. Potential Resolution
The City Attorney has discussed several alternative approaches with Mr. Orton which could be implemented through a compliance agreement. Both parties share the desire to bring more visitors to the Craneway Area. Terms of the agreement may include:
