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Sausalito 2040 General Plan Update – Part II - The Kosmont Economics Study

When a general plan is updated, city's hire consultants to review a variety of issues. Among those is an economic analysis. One hopes that the information they provide reflect the voices of stakeholders in the community.

In Sausalito, that's not the case. What they got, instead, are banal, cookie-cutter proposals, a trampling of the city's Marinship "working waterfront" history, and a failure to fully address a host of superseding hydrological and environmental concerns.

On February 21, 2020, the City of Sausalito posted the Sausalito Draft Land Economics Study, by the Kosmont Companies.

The Kosmont Companies describes itself as a nationally-recognized real estate & economics advisory firm serving hundreds of cities and local governments for over 33 years. Among other things, they offer a full range of economics & real estate advisory services including, Market and Feasibility Analyses, Fiscal Impact & Economic Benefit Studies, and Economic Development Strategies & Implementation.

They say they have a “winning track record of initiating and implementing projects for municipalities” and an “in-house team includes economists, registered municipal advisors, financial analysts, lawyers, real estate professionals, former city managers & economic development department heads,” combined with an “extensive network of brokers, investors and market data for real-time information, and industry leadership.”

In other words, this is not about creating a touchy-feely vision for City of Sausalito.

Kosmont’s charge was to evaluate the strengths and weaknesses of the City’s economic situation and to propose strategies to address that. And in doing so, they claim to have “reviewed 35 recommendations the City received from the Business Advisory Committee ("BAC"), the Hospitality Business Development Committee (“HBDC"),” and others as noted in “stakeholder” comments in Appendix A”[1]

Although their Study should not be confused with a land use “policy” document, it’s important because the 2040 General Plan Update may rely heavily on its recommendations. To read the DRAFT VERSION of the Kosmont Economics Study CLICK HERE

The Marinship Analysis

As noted in Part I of this series, the majority of the Marinship is zoned for industrial use, which consists of maritime businesses, light industry and manufacturing, applied arts, artists and artisans. There are some existing commercial uses (offices, a food store, etc.) and there are regulatory provisions for other uses on a limited basis, if they serve the other permitted uses. The main source of these regulations is encoded in the existing Marinship Specific Plan.

The 2040 General Plan Update is filled with promises about preserving the “objectives, policies, and programs of the Marinship Specific Plan.”[2] But, it appears that message was never fully conveyed to Kosmont.

The Kosmont Study starts out on the right foot, describing the Marinship as

“…a unique waterfront industrial / commercial area home to a diverse mix of businesses centered around the Maritime and Arts sectors, but faces significant land-use and infrastructure issues that need to be addressed to unlock the area’s potential.”

They follow that some stakeholders expressed a desire to

“…help the Marinship develop into an Innovation District, building off important maritime service industries, new “green” technology and expand existing micro manufacturing businesses.”

On page 26, under “Understanding Community Goals,” it talks about the importance of trying to

“…encourage and support industrial, arts and water-related activities in Marinship through inclusion of compatible uses that can adapt to changing economic conditions.”

That all sounds fine, but the Devil, as they say, is in the details of how you define “innovation.” And it is in this area that the Study ends up going off the rails and conflicts with the tenets of the Specific Plan and its goals and restrictions to the point of being self-contradictory.

Strengths and Challenges

The Kosmont Study discusses the strengths and challenges facing the Marinship.[3] Under strengths it describes the areas as having a

“Maritime cluster ranging from recreation, maintenance, education, to ship-building,” an “Arts cluster ranging from artist studios, working artisans, to applied arts professionals,” and that the “Marinship is well-positioned to serve important function as a working maritime waterfront and an innovation district for the Bay Area, with a thriving community of innovators and artists.”

Under challenges, the Study acknowledges that the Marinship has a fairly long list of unique and significant infrastructure, geological, hydrological, and environmental challenges.[4]

These include:

“Sea-level rise, subsidence, and flooding threaten the long-term viability of portions of the area, contaminated properties [toxins], such as the Machine Shop” that “will require expensive remediation, circulation / connectivity improvements” needed to “roads, pathways, and parking,” and how “existing residential lands uses” lead to conflicts with industrial users.

And that

“Parts of the Marinship area will require significant infrastructure improvements to protect against sea level rise / flooding / subsidence, while others have little exposure. Kosmont recommends the City commission an engineering analysis of the costs associated with sea level rise protection by zone; subsidence stabilization by zone; and infrastructure costs for utilities, roads, sidewalks by zone.”

The Study also notes the City needs to understand that

“…major infrastructure projects - such as sea level rise protection, subsidence stabilization, and utilities, roads, sidewalks, and lighting - cannot be completed by any individual parcel owner. Rather, these would require area wide infrastructure plans, with public financing allocating a fair share to each parcel based on actual conditions and benefits.”[5] [Emphasis added]

As I’ll discuss in Part III of this series, this assessment is even more strongly stated in the Sausalito 2015 Housing Element, which calls sea level rise an “urgent” threat to the future of the Marinship.[6] One would think that the commencement of a major infrastructure rehabilitation project would then be first and foremost in the minds of those crafting a General Plan Update that is intended to project forward for the next 20 years, because, let’s face it, without it the rest of the discussion is moot.[7]

But, you would be wrong.

Despite Kosmont’s recommendations and the 2015 Housing Element’s warnings, the General Plan Update dilutes this all down to just another, un-prioritized list of policy goals[8]: to do more studies and analysis at some indeterminate time in the future, without any tangible, action plan to address the Marinship’s existential threats.

The Kosmont Marinship Market Analysis

A market analysis is a valuable tool to gauge the present and future potential of any city. However, when a market analysis becomes the sole basis of determining land use, the character and intangible strengths of a community always suffer in the long run. “Community” is about more than revenues.

The Kosmont Study looks at the dynamics and data of the various types of existing uses in the Marinship and attempts to assess their future trajectory. These include industrial, manufacturing, commercial, office, retail, and others.

Unsurprisingly, the Kosmont Study’s market analysis indicates that the existing industrial uses in the Marinship are the most promising uses to incentivize, based on market demand. According to their data, industrial vacancy rate in the Marinship is at 0%, after trending lower for the past 12 years.[9]

Regarding retail, as noted in Part I of this series, it’s no secret that retail space is in trouble. And, in the coming months, as more mom and pop businesses fold up shop and national chains close stores in malls in Marin, vacancy rates are going to get worse.

The Study notes that retail uses in the City of Sausalito have “seen dramatic swings over the last five years.” And that “vacancy is higher in Sausalito (6.7%) and more volatile with peaks over 12%, than other local submarkets.”[10] Meanwhile, commercial office vacancy in the Marinship is currently 20.1% and has been trending higher since 2013. It’s now the highest in 12 years.[11]

Logically, this would suggest that a Marinship land use plan should generally stay the course. But that’s where the Kosmont Study shifts from economic analysis to promotion of its own particular view about the future.

Using a reference to “The International Council of Shopping Centers (ICSC) just published a whitepaper entitled, “Retail Breathes Life into Innovation Districts,” as a jumping off point, the Study stresses “the importance of gathering places and ancillary uses for innovation workers (e.g. coffee, lunch, happy hour locations) to facilitate interactions and exchange of ideas among the local entrepreneurs.”[12]

It suggests the City

“…consider approaches that increase its visibility as a destination for overnight / conference / resort guests, who are likely to bring higher levels of spending and fewer impacts than day-tripping tourists.”

It notes that “Retail and office businesses generate a significant percentage of sales tax (+40%) and business license taxes”[13] in the Marinship. Then, pretty much out of the blue, it suggests that this strategy could include

“Bed-and-breakfast B&B / smaller format hospitality options on houseboats/concrete barges (Aqua Maison is a local Marinship firm specializing in new floating barge construction.”[14]

Then the Study pulls out all the stops. It gushes,

“Given the 225 acres in Marinship, the area could accommodate a range of uses that can help address many of the community goals outlined above.

“For example, the Santa Barbara waterfront is an area similar to Marinship, but without the major infrastructure challenges[15]. Santa Barbara’s “Funk Zone” shows how small commercial/entertainment nodes built slowly over 10+ years (within an active industrial zone) can help attract thousands of upscale visitors – without necessarily negatively impacting the existing industrial businesses. [Emphasis added]

“The Funk Zone today is a +30-acre blend of wine tasting, brewery, distillery, cafes, art galleries, and kayak rental through adaptive reuse of old buildings.” [Emphasis added]

And that

“When structuring an innovation-centered maritime area, the City could consider that recent innovation districts focus on blending industrial / R&D uses with a more urban-style street life involving restaurants, wine and cheese bars, coffee shops, retail, and event programming. This creates a desirable environment for workers and encourages companies to locate in the area.” [Emphasis added]

“Urban street life?” “Cheese bars?” Really? What’s next, a Ferris wheel and a rendering of kids with balloons?

How is this remotely connected to the Draft General Plan Update’s stated policy of “preserving the objectives, policies, and programs of the Marinship Specific Plan?” It even ignores Kosmont’s own findings on vacancy and market demand. It feels like Kosmont copied and pasted a dated, 1990’s vision of “commercial vibrancy” to arrive at a happy ending.

The Study ends up brushing aside its own hard data about immensity of the Marinship’s infrastructure and environmental challenges, and promotes a predictable, banal, soulless celebration of consumerism, bereft of character or sense of place.

And it’s downhill from there.

Kosmont ignores that the costs of the infrastructure / sea level rise preventative improvements to address its own dire assessment of these challenges are so far out of reach for a small city like Sausalito that those costs will have to end up on the backs of all Sausalito taxpayers and individual Marinship businesses. Instead, is falls back on planning platitudes and assigning blame.

It takes issue with the Marinship Specific Plan, saying that it is “hindering development / improvement in the Marinship area; based on old data / outdated plans; may need modernization to reflect community’s future goals.”[16] It criticizes the City’s Economic Development Office / Program, saying, “more proactive economic development initiatives can be beneficial to improve business climate.” It urges the City to consider making revisions to the formula retail requirements, including a full repeal of formula retail restrictions.”[17]

Things Change

Granted, the Marinship Specific Plan is decades old and all plans are reviewed and updated from time to time when there are specific findings that suggest that is needed. But there’s nothing in the Kosmont Study to suggest that new findings exist to drive the type or magnitude of change they are promoting, which defies their own Marinship market data.

Political ideas, demographics and business trends change over time. And there will always be new needs and new uses to accommodate. That’s the nature of change. What’s important is how a plan deals with that change. There are ways to craft regulations that protect existing uses and property owners, but are also conducive to change and private investment and public/private partnerships.

The Kosmont approach is to turn it into a place that looks like everywhere else, in order to fit a dated, consumption-driven economic model. It’s nonsensical.

Something is amiss here.

The City can’t, in good faith, have covenants in the General Plan Update about preserving and incorporating the “objectives, policies, and programs” of the Marinship Specific Plan, on the one hand, and embrace the proposals in the Kosmont Study on the other, or encoding them as “policies” about future studies about changes of use and zoning. The City should clarity its intentions to the public. Because, it’s a long stretch from the Specific Plan’s “working, maritime, waterfront” to Kosmont’s ‘Pier 39.’

A failure of imagination

More often than not, the dark art of city planning suffers from a dramatic failure of imagination.

After seriously addressing the Marinship’s hydrological and environmental challenges, it seems obvious to focus on incentivizing maritime trades and services, light industry and fabrication, tech-driven manufacturing, artists, artisans, and media. In other words, things that are presently thriving in the Marinship (0% vacancy) and what it has been historically known for, before fantasizing about turning the Marinship into a waterfront mall.

A group called the Sausalito Working Waterfront Coalition (“SWWC”) has laid out this proposition. The SWWC describes itself as,

“An interdependent network of maritime workers, business owners, property owners, employees, artists, craftspeople, inventors, artisans, educators, and many Sausalito residents who are concerned for the future of this unique community and its historic legacy.”

In a series of letters submitted to the City, they call for the expansion of the types of uses that already exist or could be incentivized to locate in the Marinship. Some of those businesses include boat building, servicing, dockage, engine servicing and replacement, sail work, canvas work, bright work, hull repair, bottom painting, pump out, fuel docks, marine electrical and marine plumbing system repair, diesel ferry to hybrid conversion services, specialized manufacturing of maritime technology products, and inducements for increased recreational boating such as improved slips, launch ramps, and boat storage.

They remind the City that

“Currently, San Francisco Fireboats, SF Airport Fireboats, Alcatraz Ferries, Commercial fishing Boats from Half-Moon Bay, The Matthew Turner Tall Ship and most other large local and bay area commercial and recreational vessels up to 250 tons are hauled out in Sausalito.”

As for non-maritime industries, the SWWC lists “prototype fabrication, apparel manufacturing, micro-manufacturing and suggests attracting technology innovators in robotics, drones and automation” (tech software development, 3D printing and biotech also fit in this category). Other existing users include, “auto body and repair, plumbers, printers, welders, building contractor shops, and other mechanical services providers,” not to mention at least 400 artists, craftsmen, and artisans presently at working full-time and part-time in the Marinship, and the much-loved Sausalito Arts Festival.

The Kosmont Report – and the General Plan Update, for that matter --only refers to these existing users in broad, generic categories, and then only with regard to how much revenue they bring into the City. In the view of the Kosmont Study, these existing users end up being quaint “dancing bears” that drive shopping and entertainment.

The Bottom Line

The vision proposed by the Kosmont Study is grossly incompatible with the “objectives, policies, and programs of the Marinship Specific Plan.” If the City is even considering going in its direction, it needs to make its intentions crystal clear, now, before the public process goes any further, so the residents of Sausalito can weigh in and comment on the Draft Environmental Impact Report in an informed way.

If Kosmont’s “Funk Zone” vision is the goal, the 2040 Draft General Plan Update needs a vigorous re-write.

But, this is not the only area where the 2040 General Plan Update appears to be less than candid with Sausalito residents.

Support the work of Community Venture Partners

Please CLICK HERE to DONATE to the "Marinship Fund"

CLICK HERE to read PART I - Focus on the Marinship

CLICK HERE to read PART III - Housing and the Marinship

[1] Kosmont notes that they “participated in over two days of meetings in November 2019 and a dozen phone interviews with stakeholders, primarily comprised of local business owners, property owners, city staff, and members of the City Council, BAC, and HBDC.”

However, CVP was told that neither the General Plan Advisory Committee (GPAC) or the M-Group consultants were included in this outreach.

[2] 2040 Draft General Plan Update– Land Use and Growth Element, page LU 23

[3] The Kosmont Draft Land Economics Study; Page 19

[4] The Kosmont Draft Land Economics Study; Page 22

[5] The Kosmont Draft Land Economics Study; Page 21

[6] The 2040 General Plan Update fails to inform the public that the2015 Housing Element is an integral part of the 2040 General Plan Update and, as such, its “findings” and policies cannot be ignored.

[7] One also has to consider that any major development along the Marinship waterfront will deal with the potential release of toxic substances in the landfill into the Bay – an undertaking that may have to pass muster with and involve permitting by the Army Corps, the EPA, the San Francisco Bay Regional Water Quality Control Board, BCDC, among others.

[8] See S-1.4.2.Capital Projects, S-1.1.3 (page S-13), HS-1.9.2 (page HS-56), and S-1.6. (Pages S-4 to S-15).

[9] The Kosmont Draft Land Economics Study; Page 85

[10] The Kosmont Draft Land Economics Study; Page 57

[11] The Kosmont Draft Land Economics Study; Page 85

[12] The Kosmont Draft Land Economics Study; Page 6

[13] The Kosmont Draft Land Economics Study; Page 21

[14] The Kosmont Draft Land Economics Study; Page 8

[15] And without the major environmental challenges

[16] The Kosmont Draft Land Economics Study; Page 102

[17] The Kosmont Draft Land Economics Study; Page 104

Bob Silvestri is a Mill Valley resident and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded only by individuals in Marin and the San Francisco Bay Area. Please consider DONATING TO CVP to enable us to continue to work on behalf of Marin residents.