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Central Subway extraction deal in North Beach still up in air as decision looms

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Muni wants to extract Central Subway boring equipment at the site of the abandoned Pagoda Palace. - S.F. EXAMINER FILE PHOTO
  • S.F. Examiner File Photo
  • Muni wants to extract Central Subway boring equipment at the site of the abandoned Pagoda Palace.

With a crucial vote on the project scheduled for Thursday, Muni has yet to reach a deal with a North Beach property owner about bringing up its Central Subway boring equipment at an abandoned ?theater.

The agency wants to purchase a two-year lease of the Pagoda Palace on Powell Street so it can remove equipment for the $1.6 billion subway project. Originally, Muni planned on using Columbus Avenue, but changed course to ?alleviate neighborhood concerns.

Despite being in talks for months with theater owner Joel Campos, the agency still hasn’t come up with compensation terms for the property. Campos planned to build a mixed-use development and wants The City to pay for the increased construction costs he will incur from delaying it until 2015.

Ed Reiskin, transportation director of the San Francisco Municipal Transportation Agency, which operates Muni, said the deal will likely top $8 million, including $2.75 million for the 24-month lease. The agency would use reserve funds, operational savings and interest income from state bonds, Reiskin said.

Martin Kirkwood, property manager of the site, said a deal between the two sides was close.

“The negotiations have been very challenging,” he said, “but we hope to have a deal that will be a win-win for Muni and Mr. Campos.”

As part of the plan, Board of Supervisors President David Chiu — whose district includes North Beach — crafted legislation to create a special-use district. It would waive some height restrictions and allow for an extra 1,000 square feet at the restaurant Campos plans to eventually build. Residential units also are planned.

The Planning Commission is scheduled to vote on the special district Thursday, but the deal is contingent upon Muni and Campos reaching lease terms. A delay on the vote also would affect the approval schedule of the Board of Supervisors, which must sign off on the plan as well.

The testy negotiations between Campos and Muni aren’t the only issues facing the project. A lawyer representing SaveMuni, a group opposed to the Central Subway, sent a letter to the transit agency Tuesday saying additional environmental study of the Pagoda site is required before extracting the tunnel equipment there. The note came attached with testimony from consulting engineer Lawrence Karp saying that the project would unsettle groundwater levels, leading to extensive damage at nearby properties.

Paul Rose, spokesman for the transit agency, dismissed those claims, saying that the project has some of the best engineers in the world working on it.

Even if the deal were to eventually move through, local businesses have expressed concerns about the economic impacts.
“No one has really laid out the scope of the project to us, so we have no idea what to expect,” said Liz Ferro, owner of the Bottle Cap restaurant next to the Pagoda site. “Of course this scares us.”

The Central Subway project will extend Muni’s underground service from South of Market to ?Chinatown.

wreisman@sfexaminer.com