May. 29, 2002

Historic deal on salt ponds

Mercury News

In a historic deal that could return most of the southern shores of San Francisco Bay to natural conditions not seen since California became a state, agribusiness giant Cargill has agreed to sell 16,500 acres of industrial salt ponds to become a public wildlife refuge for birds, fish and other species.

The ponds, an area the size of Manhattan where salt has been made through evaporation since the 1850s, make up about 20 miles of the South Bay's waterfront from Hayward to San Jose to Redwood City.

Diluting them, filling them and restoring them to healthy marshes over the next 20 or more years will rank as the largest wetlands restoration project ever attempted on the West Coast and one of the largest in the United States, rivaled only by projects to restore the Florida Everglades and Chesapeake Bay.

Sources familiar with the negotiations told the Mercury News on Tuesday that Cargill will sell the ponds for $100 million to the federal and state governments.

Private appraisals placed the ponds' value at $243 million. The deal is scheduled to be announced this morning by Sen. Dianne Feinstein, Gov. Gray Davis and the Bush administration, delivering on a 40-year dream of biologists and environmental groups.

``This is one the things that makes my job great,'' said Feinstein, who oversaw three years of negotiations on the purchase. ``Just seeing something done like this, that's the thrill. I'm very excited about this. It is a dream to see the bay become all that it can be.''

For Feinstein, the deal marks the third major California land transaction she has negotiated since the mid-1990s. In 1994 she closed the Desert Protection Act, establishing three national park units across millions of acres of Southern California desert. In 1999, she supervised the tortuous negotiations that led to the government buying the ancient redwoods of Headwaters Forest in Humboldt County.

Under this deal, Cargill will cease salt production on all 16,500 acres to be sold. The company's ponds are well-known to thousands of airline passengers flying over San Francisco Bay every day, who spot them because of the algae that gives their briny waters a reddish tint.

Roughly 8,100 acres in Alviso, Sunnyvale, Mountain View, Fremont and East Palo Alto will be added to the federally run Don Edwards San Francisco Bay National Wildlife Refuge, based in Newark.

An additional 7,000 acres, located south of the San Mateo Bridge near Hayward and Union City, will go under state ownership. And about 1,400 acres of salt crystalizer beds near the Napa River also will become a refuge.

Cargill will continue to produce salt in the Newark area on another 11,000 acres. None of its 200-person staff will face layoffs, said Cargill spokeswoman Lori Johnson.

The company offered the land for sale to consolidate its operations, Johnson said, ending a low-value business along the Peninsula that made road salt to focus instead on refined salt for food and pharmaceuticals from its Newark facility.

``There is a renaissance going on around the bay,'' Johnson said. ``This will be a legacy for future generations. The scale is absolutely extraordinary. I don't think many of us thought five or 10 years ago it would be possible.''

Funding will come mostly from the state.

California will pay $72 million toward the deal from parks and water bond funding. The largest private foundations in Northern California, including the Packard, Hewlett, Moore and Goldman foundations, will together contribute $20 million toward the purchase price, and an additional $15 million over five years to pay for a restoration plan.

The federal government will chip in $8 million.

Two years ago, San Francisco leaders including Mayor Willie Brown and Senate Speaker Pro Tem John Burton attempted to block any funding for the salt ponds buyout unless plans were approved to build new runways from San Francisco International Airport into the bay.

Feinstein said Tuesday that ``there is no linkage to the airport.'' Controversy over the runways made it critical that the two efforts be separated, she said. For the first time, Feinstein, who has been a runways supporter, also expressed reservations about the largest runway proposals, which could fill in nearly 1,000 acres of the bay near Burlingame.

``I am very much in favor of the airport solving its safety problem,'' Feinstein said. ``I am not in favor of the airport expanding its size. I've seen no final proposal yet on the runways. If they want my support there has to be a minium of expansion.''

Despite the landmark nature of the salt ponds deal, major challenges remain.

The biggest: who will pay to do the restoration work.

Scientists and officials with agencies such as the U.S. Fish and Wildlife Service estimate it will take at least 20 years -- perhaps up to 50 -- to fully restore all the salt ponds. Cargill did not sell two ponds known as bittern ponds, which contain the saltiest liquids -- water 10 times as salty as the ocean and highly toxic to bay animals.

But some of the ponds in the deal are several times saltier than background bay water. They will have to be gradually diluted over years. Also, some ponds, particularly near Alviso, are up to eight feet deep. They must be filled with millions of cubic yards of bay mud from ship channels so native plants can come back.

``Some of these ponds should be relatively easy to restore to tidal wetlands that provide much better habitat for a wide array of plants and animals,'' said David Lewis, executive director of Save San Francisco Bay Association. ``Other ponds will be more difficult and time consuming. But all of this area can be managed for the benefit of wildlife and water quality as a primary goal instead of making salt.''

Earlier this year, Lewis' group, a strong supporter of the deal, issued a study predicting that restoring two-thirds of the ponds to tidal marsh would cost between $148 million to $228 million over 20 years.

Another study, by San Rafael wetlands consultant Stuart Siegel, places the restoration cost at $130 million to $420 million, with work taking 50 years because dredged materials are already in demand for wetlands restoration projects in Napa, Marin and Solano counties.

``Seeing them pull this off is great,'' Siegel said. ``But over the long term we will need funding for management maintenance and planning. This is the beginning of the process. There's a lot of work ahead.''

For many bay advocates, the deal represents a Holy Grail.

San Francisco Bay has lost nearly 80 percent of its tidal marshes since 1850, from 190,000 acres to 40,000 acres today, because of diking, filling and development. Restoration of the salt ponds would provide wildlife habitat, filter pollution and improve water quality, they say.

In 1999, a group of 100 scientists recommended that another 65,000 acres of wetlands be restored in the bay over the next 20 years to ensure healthy wildlife and water quality.

``This acquisition is nearly one quarter of that. It gives us tremendous hope,'' said Grant Davis, executive director of the Bay Institute, an environmental group in Novato. ``To get this level of restoration is a huge achievement.''

Salt has been commercially harvested around San Francisco Bay since 1854.

Cargill acquired the lands in 1978 after it bought out Leslie Salt. Based in Minneapolis, Cargill is the largest privately owned company in the United States, with sales last year of $49 billion -- more than any technology company based in the Bay Area. The company is involved in many kinds of business -- Cargill is the largest grain exporter in the United States and is the third largest poultry and meat processor.

Two years ago, the company first sought to sell up to 19,000 acres of South Bay salt ponds to the government for $300 million. But Feinstein, citing tight budgets, cut out two costly areas to make the deal happen -- 1,400 acres at Redwood City and 850 acres in an area known as pond A18 near San Jose's wastewater treatment plant.

``The bay didn't get the way it is overnight,'' said a Bush administration official who requested anonymity. ``Restoring it will take a lot of time and money. It has to be done right. It is going to be hard. But this is a great project. It is a wonderful opportunity.''