Oakland and Caltrans have reached a deal in a quarrel over waterfront property the state needs to build the new eastern span of the Bay Bridge.

The state will pay Oakland $11.6 million for the use of 26 acres south of the Bay Bridge Toll Plaza at Wharf 7 as a construction staging area for up to eight years.

Oakland will retake possession of the land when Caltrans finishes the bridge. If the state vacates early, it will earn a prorated refund. If it takes longer, the state will pay an additional $2 million a year.

Federal highway officials deeded the land to Caltrans on Feb. 13, employing for the second time a decades-old law to seize land from the military and give it to California for the new span.

In 2000, federal officials used the law to seize former naval property on Yerba Buena Island needed to permanently anchor the new eastern span.

The city and port of Oakland sued in March, saying the action threatened their development plans for the former Army base property and robbed them of lease income.

Oakland agreed to drop the lawsuit as part of the settlement.

Anxious to avoid further escalation in a $2.6-billion project that has already soared to twice its cost estimates, Caltrans initially balked at paying rent.

State officials are equally anxious about the delay.

The new span will replace the aging bridge that seismic experts agree will collapse in a major quake on nearby faults.

Political fights and bureaucratic bungling stymied the replacement bridge for more than a decade.

Caltrans finally awarded the first major construction contract in January, only to find itself barred from access to the staging site.

"This deal allows us to move forward without delay," said Caltrans Spokesman Dennis Trujillo. "Once we were made aware of the city’s needs, we worked out the issues."

It is cheaper and faster than finding another wharf site with easy access to the waters north of the existing span. Caltrans estimates it would cost $30 million to relocate the staging area.

State contractors began occupying the wharf Friday, moving equipment into place as they prepare to pound massive pilings deep into the Bay floor to support the span.

Construction will take five to six years.

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