Cinderella Plan Could Mean the End of Campbell Industries Shipyard : Development: But opponents question whether a hotel-marina proposal would provide long-term economic benefits to San Diego.

Campbell Industries’ proposal to tear down its aging shipbuilding and repair yard at the foot of 8th Avenue and erect a posh 500-room hotel, an upscale marina and a retail center has rekindled debate over the appropriate use of publicly owned land near the San Diego Convention Center.

The planned development, larger than the existing Seaport Village retail and restaurant complex, would be built on 13 acres of prime real estate that is owned by the San Diego Unified Port District. Campbell has not yet described the dollar value of the proposed project.

Port commissioners on July 30 agreed in principle to consider the proposal submitted by Campbell and PRP Development, Campbell’s Riverside-based partner. Port commissioners directed Campbell to determine how difficult it will be to clean up the parcel that is laced with hydrocarbons and other pollutants.

Executives at Campbell, which has 22 years remaining on its long-term lease on the property, stress that the proposal is in its infancy, and that it would be years--if ever--before the company obtains the needed zoning change and myriad permits required by local and state agencies.

But the plan has nonetheless prompted protests from a variety of observers:

* Organized labor has questioned whether the requested zoning change would provide long-term economic benefits for residents of San Diego County.

“You can’t have everyone in the county working at a hotel or restaurant,” complained Peter Zschiesche, an official with the International Assn. of Machinists, which represents about 200 Campbell workers. IAM officials will meet this week with Campbell executives to discuss the proposal.

* Environmentalists are skeptical about Campbell’s ability to remedy environmental damage that has occurred during decades of shipbuilding and repair work.

The Environmental Health Coalition has asked the Port District to withhold discussion of any zoning action until it conducts a full review of the toxic and hazardous materials buried on land and beneath the bay, spokeswoman Laura Hunter said.

The coalition and Citizens Coordinate for Century III, another environmental group, also are pressing the Port District to avoid changing zoning at individual parcels without first conducting a review of the overall master plan for port-owned land bordering San Diego Bay.

“We want them to look overall at what we have (remaining on the bay), said Citizens Coordinate for Century III President Karen Scarborough. “We don’t want them to look at this on a parcel-by-parcel basis.”

* Some observers question whether Campbell, despite its long-term lease, is the appropriate developer should the commissioners approve a zoning change. “We think the port should issue a request for proposals . . . if indeed the zoning is changed,” Hunter said.

Campbell has paired itself with PRP Development, which according to Campbell President Robert Allen, has developed real estate projects throughout Southern California. Allen said “two or three major upscale hotel companies” already have expressed interest in working with Campbell on the planned development.

During their July 30 meeting, port commissioners gave no guarantees that Campbell would receive the requested zoning change--or that the company would be awarded development rights if a zoning change is approved.

* The Manchester Group, owners of the nearby Marriott and Hyatt hotel properties, has questioned the wisdom of approving another large hotel near the Convention Center when local occupancy rates are at historic lows.

Campbell’s proposal “presents a major concern for us,” said Gina Zanotti, Manchester group vice president. “Another hotel could really upset our financial formula . . . and I don’t think the port wants to have two beautiful hotels on the water having financial problems.”

For Allen, the hotel-marina-retail project is driven by simple economics--and the growing realization that Campbell’s “loud and dirty business” of building and repairing ships is increasingly at odds with more-genteel uses that now dominate the waterfront near the Convention Center.

Long the world’s premier builder of large, commercial tuna-fishing boats, Campbell in recent years has lost ground to lower-cost foreign competitors.

In the fall, Campbell will complete work on a 250-foot, $15-million fishing ship ordered by an Italian company. But, beyond that, Campbell has no new orders for its specially designed ships, Allen said.

Employment, which rose to about 700 during the mid-1980s, has fallen to about 300. And, with tuna boat orders on the decline, Campbell has grown increasingly dependent upon military ship repair work. But, unfortunately for Campbell, just about every other shipyard in the country also is chasing Navy contracts.

The hotel-marina-retail complex would be a decided change for Campbell, which is owned by Marine Construction & Design Co. (Marco), a Seattle-based shipbuilder.

The company has built and repaired ships at the 13-acre, bayfront site since the 1920s. “We’re shipbuilders,” said Allen, a long-time Marco executive who joined Campbell eight years ago. “And, if it’s possible, we’d like to continue building ships. But the outlook is not bright.”

For years, Campbell had used its proprietary ship designs and advanced technology to remain competitive with lower-cost foreign builders. But orders have slowed worldwide in recent years, in large part because of a glut of capacity in the tuna-fishing industry.

Campbell’s competitive edge eroded even further during the 1980s, when the tuna fishing industry moved offshore.

The U.S. developed the technology for tuna boats, said one tuna industry observer, “but the industry has moved overseas . . . the fishing boats are owned by foreigners and the canneries are all overseas,” the observer said. “I just don’t think that Campbell can compete anymore.”

Zschiesche, however, argues that the port should turn the yard over to another operator if Campbell wants to throw in the towel.

“I’m not convinced that someone else couldn’t come in and do ship repair there if Campbell really wants to close down,” Zschiesche said. “If (Campbell) wants out, why not give someone else a shot?”

However, Coronado boatyard owner John Sawicki believes that the quadrant of the bay near the Convention Center has outlived its industrial character. . . . “You’ve got concerts in the parks and the Convention Center. . . . Shipyards have become environmentally incompatible with the surroundings.”

Campbell isn’t the only industrial tenant near the Convention Center to see the handwriting on the wall.

“It’s pretty clear that the growth pattern for certain uses in the harbor has pretty well been determined,” said Ray Carpenter, president of R.A. Staite Engineering, a marine engineering firm that is situated on a small, waterfront parcel directly opposite the Convention Center. “And the (port) has no choice other than to accommodate the Convention Center’s needs,” Carpenter said.

Carpenter has asked the port commissioners for permission to relocate Staite’s marine engineering activities to a waterfront parcel in the South Bay. The company also is seeking permission to build a facility near the Convention Center where ferry boats and harbor cruise vessels could dock.

Sawicki has won port approval to build a small docking facility on an acre sandwiched between Staite and Campbell that will be utilized by water taxis, private boats and harbor cruise vessels. The dock will open early in 1992, Sawicki said.

“That parcel is the wedge, and the others (Staite and Campbell) will follow,” Sawicki said. “It’s only a matter of time.”

Although the port commission agreed to let Campbell initiate an environmental study and prepare a more detailed development plan, Port District Chairman Robert Penner underscored that Campbell has not received formal approval to move ahead with its planned project.

Allen acknowledged that environmental mitigation will be the toughest aspect of Campbell’s proposal. The company believes that it will take about two years and $2.7 million to mitigate environmental damage at the site.

But Hunter predicted that it will be far more difficult to clean up the chemical soup that has built up over the decades. “It’s severely contaminated . . . a much more serious problem” than has been suggested, Hunter said. “They’ve mentioned lead, but every single heavy metal that they tested for is elevated there.”

In addition to environmental concerns, observers are pressing the port to give strong consideration to a development proposal that would retain some of the harbor’s longstanding industrial and maritime flavor.

The impact of a single proposal must be reviewed in the context of the entire San Diego Bay, Scarborough said. “The bay has had a historical emphasis on shipyards and Navy uses . . . which is (in danger of being overwhelmed) by the focus on tourists.”

Documents release by the Port District during its July 30 meeting indicate that the port commissioners stand ready to protect the industrial-maritime activity south of the port’s terminal building on the 10th Avenue Pier, less than half s mile south of the Campbell site.

‘We’ve drawn a line in the mud at 10th Avenue, if you will, and we’re saying that, south of that line, we’re not going to change anything,” Penner said. “However, we’re not definitely saying that we’re going to change anything north of it.”

Campbell’s proposal, “should it occur, will be a buffer between the convention center and the maritime commercial activity” that dominates the shore below the 10th Avenue Pier, Penner said.

Although Penner declined to predict whether Campbell’s proposal will be approved, he said his “gut feeling” is that the existing industrial uses no longer fit very well with the Convention Center.