Those all sound like little things, but no one really maintained the place beyond the superficial things that the managers of the coworking spaces did to keep it livable. I remember there were divers from the city (state?) inspecting the pilings and foundation a few times while we were there.
Desks were $500 each and this place was not creating jobs (as some other people have said) but they did offer something that really felt homey after moving from Seattle, and being part of that community made transplanting myself a lot easier and more fun. I'm sad it is shutting down.
I'm not sure what you could do with land around here that would net you more money than being a trendy startup hub.
Edit: great details posted by guelo suggests the story is not quite what I'd heard, the owner seems like a ridiculous person - it seems the city didn't care to certify his construction work at all at first but now wants to - http://www.sfweekly.com/2002-11-20/news/griftin-on-the-dock-...
http://articles.sfgate.com/2011-05-29/bay-area/29596184_1_po...
I have done a few significant conversions / redevelopments, and zoning issues I've faced had absolutely nothing to do with actual problems with the property. They are more often a way for city employees and the city to make some money, and often the city architects/building inspectors are in on the game. It is the only form of outright bribery I've seen firsthand in this country, but for my contractor friends it is a part of everyday life. Typically you pay some fee for the city to look at drawings before you do anything and then if you want the building inspector to actually show up and rate it well you might be asked to grease the wheels to speed up the process. It's pretty unfortunate and I didn't think these types of things happened but they definitely do.
My properties are in Chicago and Pittsburgh and that is certainly the case in those cities (much worse in Chicago), not sure if it's the case in SF, but I would be willing to guess that it is.
Translated: The proper bribes were not paid to city officials.
Just as engineering students learn skills while working summer internships, architectural students learn how to offer a bribe.
As it was explained to me: Everyone in the transaction must maintain plausible deniability. For example: For a house inspection, move a $100 bill from one pocket to another when something out-of-code is found. If the inspector tell you he'll overlook it, then the $100 is dropped someplace conspicuous.