Historic Sperry Mill site on Vallejo’s waterfront is still being used by industry without permits

VALLEJO — A construction company continues to use a piece of Vallejo's waterfront, despite a lack of permits that would allow it to do so.

The Historic Sperry Mill site on the southern Vallejo waterfront has been in limbo ever since General Mills, Inc. ceased operations in 2004. Proposals for the site have bounced between multi-use developments with residential, retail, community and educational facilities and a waterfront park, to a bid to build a “green” cement plant and deep water shipping terminal. 

The current unpermitted industrial use of the land has dragged on for nearly five years, putting the city of Vallejo’s intent to change the site’s general plan designation from industrial to multi-use on hold, blocking the public from land rights granted by the Public Trust Doctrine, and thwarting potential developers like California State University Maritime Academy from using the site’s historic buildings. 

The 30-plus acre site includes a small peninsula, fronted by the remains of a wharf, and a paved area where warehouses and a towering grain silo are backed by a verdant hillside.

Flour milling was first established on the site by Captain Abraham Dubois Star in 1869. Starr Mills was sold to Sperry Flour Company in 1920, which was then purchased by General Mills in 1929.

The mill achieved its peak employment of over 300 workers during World War I. Subsequent modernizations and ebbs and flows in demand led to a gradual reduction in the workforce. By the mid-1960s the mill had 150 employees, and only 40 by the time it closed in 2004.

The site is now occupied by A&B Construction which, along with Proven Management and other affiliates of Vallejo Marine Terminal owners Alan Varela and William Gilmartin, has been suspended from contracting with the city of San Francisco until 2026. Still the site has been used for industrial vehicle storage and maintenance without permits since at least August 2019.

Varela and Gilmartin were charged with bribing a San Francisco Public Works official in 2020. They both pled guilty in 2021. Varela was sentenced to two years in prison in 2021 and Gilmartin to eight months in January, 2024. 

The two paid Mohammed Nuru — former director of the San Francisco Department of Public Works — with a combination of lavish dinners, home improvements, a John Deere tractor and cash, to ensure that their company, Proven Management, would be selected for a lucrative contract to build and operate an asphalt recycling plant at the Port of San Francisco. 

A mix of oversight

Much of the land where the industrial activities are taking place was granted to the city of Vallejo by the state, with oversight by the California State Lands Commission, which was formed in 1938 to protect public access to California’s waterways. A portion of the site that is allegedly privately owned is also subject to a public easement under the Public Trust Doctrine, which protects the public’s right to use California’s waterways for navigation, fishing, boating, natural habitat protection and other water-oriented activities. In addition to city permits, commercial uses of Public Trust lands must be approved by the State Lands Commission.

In 2007, three years after General Mills abandoned the site, the lease was transferred to Cherokee Brooks Street, LLC. That company proposed an ambitious mixed-use plan that included housing, adaptive reuse of the site’s historic structures and public waterfront access, but it went bankrupt during the housing crash of 2008. The site sat idle again until the lease was transferred to Vallejo Marine Terminal, LLC with a 33-year extension in 2012. 

Vallejo Marine Terminal’s partnership with Orcem California, Inc. to build a “green” cement plant drew the ire of community groups who claimed it would create a lot of noisy truck traffic, pollution and very few jobs. They decried the environmental justice issues of placing the plant in a low income neighborhood near a school.  

Executive Assistant to the City Manager Narcissa Wilson responded to concerns raised by councilmember Tina Arriola about unpermitted activity at the site in an email dated March 13, 2023. “Code Enforcement and the Planning Division recently inspected the property and the City is in the process of putting together a violation notice,” Wilson wrote.

But the only notice issued was for fire code violations. The notice dated June 5, 2023 and signed by Alan Varela, shows that A&B Construction is using the site for industrial operations. 

The list of violations includes several entries noting improper storage and labeling of hazardous materials, including gasoline and propane. The violation notice also demands they “provide adequate spill control to prevent flow of liquids to adjoining areas” and “material susceptible to spontaneous combustion, such as oily rags, shall be stored in an appropriate listed metal container.”

Heavy construction equipment and large vehicles stored at the property can be seen from the water, and are routinely observed entering and leaving the site. Co-founder of the Vallejo Kayaking and Biking Group Stephen Souza said he saw heavy equipment and double axle semi trucks parked there during a ferry ride only a week ago. 

Vallejo Marine Terminal’s 2013 proposal to partner with Orcem California, Inc. to build a “green” cement plant and deep water port at the site was terminated in May 2019. That November, the Vallejo City Council voted to amend the General Plan to change the Sperry Mill site land use designation from industrial to mixed-use to reflect the vision of the General Plan 2040 Working Group. 

That working group had expressed the desire to change the city’s southern waterfront to allow a mix of land uses, including business, retail, hotel, residential, and — eventually — a continuous pathway along the waterfront that would extend from Cal Maritime Academy past the downtown waterfront to River Park and White Slough. Because the site’s existing zoning designation was industrial and the Orcem Project had an application in process before the General Plan was finished in 2017, the pre-existing industrial zoning for the site had been grandfathered in.

But although Orcem was gone, Vallejo Marine Terminal was not.

Cease and desist

A cease-and-desist notice was issued to Vallejo Marine Terminal in August 2019 for operating a heavy equipment maintenance operation without a required major use permit. It cited the presence of dozens of heavy equipment vehicles, including cranes, excavators and backhoes. An employee was seen power washing equipment near the waterfront, which raised environmental concerns.

The notice also says “The foreman told city staff that Proven Management has started operating this location as the ‘bay area hub’ for your company which conducts heavy equipment repair maintenance. Staff were told that there were two other operations on site, one that was observed handling iron beams on the property towards the waterfront, and another that involved the storage of tractor trailers.”

A second cease-and-desist notice was issued to Varela and Gilmartin on May 21, 2020. The pair began negotiating  with the city for an administrative use permit that June. It is not clear from the available public records that such a permit was ever granted, or if any changes in use that support scaling back to a less stringent permit type were proposed, but it is apparent that industrial use resumed during the early months of the permit negotiations.

On October 8, 2020, Vallejo Marine Terminal submitted a “Sperry Mill Site Redevelopment Plan Status Update” that explores two mixed-use site development options that would be compatible with the city’s General Plan 2040 amendment. It envisions shoreline improvements, a waterfront walkway, a public park, food service, research and development facilities and residential buildings.

The plan also mentions meetings with California State University Maritime Academy representatives about potential uses that could accommodate the school’s research and development efforts and community services. “VMT also believes providing accommodations for complementary CSUM and public uses will help assure fulfillment of the Public Trust for the Property’s City-leased lands,” the plan states.

But the last two pages of the document propose interim uses during the pre-construction phase of the project with a sublease to ORO Equipment, LLC, a construction equipment provider for Varela and Gilmartin’s company, Proven Management.

According to the plan, because the proposed interim uses will make productive use of the land for a time period of no more than five years, and Proven Management's servicing of statewide public agency maritime construction projects support commerce, industry and navigation, the authors say they believe the proposal is consistent with the public trust.

But that belief is contradicted by a State Lands Commission statement that says short-term nontrust use is generally recognized as acceptable, provided that the use does not prohibit public access or interfere with public trust uses. There has been no public access to the site at any time during the Vallejo Marine Terminal lease.

A history of unpermitted use

Vallejo Marine Terminal applied for a permit for temporary vehicle and equipment parking, maintenance and repair of automotive heavy equipment, temporary construction storage, and minor building materials assembly in October 2020. 

Vallejo Marine Terminal changed their name to Sperry Mill Group, LLC the following month “to more accurately reflect the proposed future site development and cut association with the previously proposed marine terminal industrial use.”

Documentation of Vallejo Marine Terminal’s unpermitted industrial use of the site dates back nearly five years, and the redevelopment plan proposed by Vallejo Marine Terminal in 2020 appears to have been abandoned. 

On December 2, 2020, the City of Vallejo Planning Division notified Vallejo Marine Terminal that the permit application status was incomplete. 

The application status letter requests a public works encroachment permit pertaining to hauling activities, and an agreement to pay for pavement restoration on the streets used to access the site. 

But the only active permit for the site revealed by a public records request from the Vallejo Sun is from the building division for the replacement of a leaking water line.

A follow-up email from the planning division sent on March 11, 2021 requests a copy of written consent from all property owners, including the City of Vallejo. 

The email also asks if Sperry Mill Group’s proposed tenant, ORO Equipment LLC, had already begun using the site. It reminds them that they had proposed to get the city’s written consent for a sublease before bringing a tenant on board and cites a document that shows that almost all uses are already currently operating.

Sperry Mill Group responded to the city that, in their view, the city’s consent during the preliminary stage for the application process is premature, and that they’d enter into a sublease agreement with ORO Equipment once the site development permit was approved. 

They did not mention the other request for consent letters from property owners, which appears to refer to the project in general and not to consent to the sublease. 

In response to the Planning Division’s question about who besides ORO Equipment is storing equipment at the site, Sperry Mill Group replied that the equipment is owned by one of four companies, “ORO Equipment LLC, Tierra Management LLC, Proven Management LLC or A&B Construction. These companies are either owned or supervised by SMG Principals Alan Varela and Bill Gilmartin.”

The Planning Division email also mentions “The applicant requests to establish the temporary uses for a period of 5… years. It is advised that it’s unlikely that the City would consider a term longer than 12 months for an interim use.” Sperry Mill Group’s response to the Planning Division does not address the 12-month term.

It does not appear that the city took any action on the site, even after the lack of permits was brought to the public’s attention in a Vallejo Times-Herald article on July 21, 2021. 

Reports of heavy equipment traveling to and from the site persist, and a Google Satellite image from August 23, 2023 shows vehicles, equipment and material storage similar to the Vallejo Marine Terminal/Sperry Mill group proposed interim site use application.

Vallejo’s Public Information Officer responded to the Sun’s request late last month saying that the company’s permit for industrial use is still incomplete and has not been approved. “The City has sent an incomplete letter and we have not heard back from the applicant as of yet. It is up to the applicant to move their proposal forward.”

Neither the Public Information Officer nor Assistant City Manager Gillian Haen responded to the Sun’s query about why A&B Construction is conducting business at that site when the permit application is incomplete.

A&B Construction and Varela likewise have not responded to a request for comment. 

A California State Lands Commission official told the Sun the city has the “day-to-day management responsibility. We are working with the City on this matter, as is our practice, and will continue working with the City on future plans for the site.” 

A California State University (CSU) Maritime Academy spokesperson told the Sun that there has been no discussion about a partnership with them since the 2021 Times-Herald article. 

In recent months, thick concrete block walls have been erected in front of the entry gate, and an A&B Construction sign has been mounted on the chain link fence surrounding the area.

A community group called Fresh Air Vallejo that launched in 2015 to oppose the Orcem cement plant did extensive research on the land and uncovered a number of irregularities. 

In addition to environmental concerns, the group sought to preserve the historic buildings on the site, some of which Orcem had proposed to demolish, and discovered that it wasn’t clear who actually owned the land. They state that there is no clear evidence that General Mills ever owned what appears to have previously been city-owned property, now claimed by Vallejo Marine Terminal/Sperry Mill Group.

Fresh Air Vallejo found that an amendment to Vallejo Marine Terminal’s lease redefined almost 20 acres of land that were previously leased to General Mills as “private property.” Their investigation led the city and State Lands Commission to survey the area. The survey showed that land Vallejo Marine terminal thought they owned and planned to lease to Orcem was actually Public Trust land.

Don Osborne was involved in the Fresh Air Vallejo investigation. He said that the correct land boundaries revealed by the State Lands survey should have required a revision to the lease.

Fresh Air Vallejo also questioned the legality of the General Mills “zombie lease” that was twice transferred to different entities after a years-long abandonment and a foreclosure.

Osborne said that it may be too late to resolve some of the property issues because they’re past the statute of limitations, but that’s not the case with the lease assignments. “The time, the expense of tracing it all down, and the ability to research and fight and bring in legal people. I think that's the big issue with the ownership,” he said. “And with the lease, it doesn't help that the city has knowingly allowed unpermitted activity there for years.”

The Fresh Air Vallejo report summarizes the issue: “It is our intention that the issues raised will call for a rigorous investigation that we feel can only result in the reclaiming of Public Land that was improperly privatized.”