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The Sausalito 2040 General Plan Update - Part III - Housing and the Marinship

Posted by: Bob Silvestri - July 16, 2020 - 1:57 PM PDT


“Housing: shelter, lodging, dwellings for people” ~ Merriam Webster

Housing is a controversial subject these days. But, this article is neither for nor against “housing," categorically. It is an analysis of land use, economics, and how real estate markets work.

Personally, I’m all for affordable housing, but it has to actually be affordable, be done correctly, and in places where it can have sustainable, positive impacts for all concerned. When it comes to the development of housing in the Marinship in Sausalito, the challenges and issues involved and how they relate to the published Sausalito 2040 General Plan Update are as complex as you'll find anywhere in the country. So, it is advisable that its consideration rely heavily on physical evidence and other available facts.

I should preface this by disclosing that as an architect and real estate developer, I’ve participated in the development of almost 2,000 of units of very low income, Section 8 housing, across the West in places like Casper, Wyoming, Las Vegas, Nevada, Denver, Colorado, Tulsa, Oklahoma, Victoria, Texas, Kennewick, Washington, San Diego, California, and others. As a writer, I’ve published investigative pieces about the corruption and neglect by the Marin Housing Authority and the Marin Board of Supervisors, who have subjected hundreds of Marin City families to live in substandard conditions, for decades, at the Golden Gate Village apartments.

Our nonprofit, Community Venture Partners, Inc., has brought together donors, materials, and community members, and worked shoulder to shoulder, hands on, rebuilding the Golden Gate Village community gardens and we are currently working on developing housing for very low income Marin residents with disabilities.

The Marinship Specific Plan: Residential, hotel, and other prohibited zoning

As it now stands, residential land use is not a permitted zoning designation in the Marinship, in Sausalito. Neither are hotels, large-scaled retail, or entertainment uses, and offices are grandfathered, non-conforming uses that can only be expanded under highly restricted circumstances.

The Marinship is primarily zoned for industrial uses. These include a wide variety of maritime industries, manufacturers, artisans, artists, tradesmen, tech startups, and supporting service industries or ancillary uses. The Marinship is Sausalito’s “working waterfront.” And, as such, it is unique in all of Marin County.

This is due to the Marinship Specific Plan (MSP), which was adopted by the Sausalito City Council in 1985, and updated in 1989, and a Traffic Initiative that was passed by Sausalito voters in 1985. For more discussion of this, please see Sausalito 2040 General Plan Update: Focus on The Marinship.

Both the 2040 General Plan Update Draft (GP Update) and its Draft Environmental Impact Report (DEIR) assure the public that the existing land use and zoning restrictions will be maintained. On Page ES-2 of the GP Update, under Project Description 2-1, it states,

“As part of the update process, the objectives, policies, and programs of the Marinship Specific Plan have been incorporated into the Land Use and Growth Management, Waterfront, Community Design, Historic and Cultural Preservation, Circulation and Parking, Health, Safety, and Community Resilience, Sustainability, and Economic Elements.”

As comforting as this paragraph sounds to those who have spent decades trying to ensure that the Marinship remains an industrially zoned “working waterfront,” some are concerned about what changes may be coming in the future.

In the Land Use Element, LU-4.2.2, The Sausalito 2040 General Plan Update declares among its “objectives,” states,

"Retire Marinship Specific Plan. Upon adoption of the revised zoning ordinance implementing the Marinship Vision, discontinue use of the Marinship Specific Plan as a regulatory document." [Emphasis added]

This means that the Marinship Specific Plan remains in full force and effect even after the 2040 General Plan Update is adopted by the City Council (scheduled to be in the fall). However, the MSP will no longer exist as a regulation after the City's adoption of a new, revised Zoning Ordinance, at a future date, which will probably come sometime next year.

But a lot can happen between now and then.

Housing in the Marinship

Certainly, affordable housing is a concern for us all. And, it's no secret that the State of California is currently applying enormous pressure on cities to meet their prescribed Regional Housing Needs Assessment housing quotas. Unfortunately, as reported by the Embarcadero Institute, in order to make projects “pencil,” new development is disproportionately and increasingly creating more and more luxury housing units.[1]

According to some, we should be building housing on every square inch of undeveloped land. In fact, pending state legislation (SB 902-Wiener) will even allow dedicated parks and open space in Marin to be converted/rezoned for high-density, multifamily housing: over-riding existing laws by a simple City Council vote. But, rezoning is a double-edged sword that often has unintended consequences. So, one should be careful what they wish for.

In the Marinship, this has particular relevance.

In speaking with members of the Marinship community, I’ve found that people are not, categorically, against providing housing for people in need, or housing in the City of Sausalito, in general. But, they argue that the Marinship is a different animal.

A simple matter of economics

Although Sausalito is best known for its downtown waterfront, its incredible views of San Francisco, and its promenade of shops and restaurants, it’s the Marinship that is the workhorse of the City. According to the data published by the City in the GP Update, the Marinship accounts for 41% of Sausalito’s overall commercial tax revenues…

9-2-Corrected.jpg

…and 53% of the entire City’s business property tax revenues.

Economic Element Table 9-5 Property Taxes

In other words, the current mix of uses in the Marinship is the City’s big moneymaker: something that should not be tampered with, lightly.

In addition, the Marinship’s ability to expand and grow those existing industrial / manufacturing / artisan uses looks very promising in this age of hi-tech, rapid prototyping and micro-manufacturing. Under its somewhat gray and weathered exterior, the Marinship remains an inspiring, and in its own way, beautiful place, where there is a lot more going on than first meets the eye.

One should also keep in mind that residential areas, generally, do not produce tax revenues that are as "profitable" to cities, because they require an out-sized amount of public services, such as police, fire, and emergency response, as well as schools, park maintenance, and other such public expenses. And, high-density, affordable housing, for example, which is predominately built by nonprofit companies using Low Income Housing Tax Credit financing, may pay reduced or no property taxes. In fact, these days, without increased bond debt, special assessment and impact fees, and other such revenue mechanisms, most cities could not afford increased residential development.

Therefore, it makes little sense to take the City’s highest revenue-producing area and turn it into housing. The City has far better opportunities to do that elsewhere. But, there’s more to the argument about why the Marinship’s present zoning and land uses should be preserved than just financial considerations.

Zoning

There's no question that in the past zoning ordinances and restrictive covenants were used aggressively as a tool to discriminate against Blacks and Hispanics and anyone else who was poor or considered undesirable, and the impacts of that on wealth accumulation are still evident today. But the history of “industrial” zoning, itself, is instructive.

It may surprise some to know that the first modern zoning laws in the US, evolved out of 18th and 19th century "nuisance" ordinances designed to protect people from public health hazards, manufacturing and industrial pollution, or other dangers. In fact, even ancient Rome had such laws. These ordinances were not primarily racially motivated, though they were certainly used to discriminate against some ethnic groups more than others, and selectively enforced (e.g., laundries run by Chinese immigrants in California in the 1800’s).

The Los Angeles City Council passed the first ever municipal zoning ordinance in the United States in 1908. The ordinance established a zoning map that separated industrial and residential zones. Dangerous businesses, such as warehousing explosives, were unregulated in L.A. before 1908, as were odorous land uses, such as slaughterhouses and tanneries. The ordinance also prohibited commercial manufacturing, lumber yards, and in general, any industry using equipment driven by motors, from locating in residential areas.

Other cities soon followed the Los Angeles model. By 1913, there were 22 cities in the US, with zoning ordinances.[2] Since that time, residential neighborhoods and industrial / manufacturing areas have been separated almost everywhere.

Housing is the death of the “working waterfront” goose laying the golden eggs

Today, there is a push by some Sausalito officials to develop multifamily housing in the Marinship. But, the potential impacts of adding residential zoning in the Marinship would be significant. As former city official in Sausalito put it,

“Without a manufacturing and light industrial base, we have condemned our working middle class to anemic service industry dead-end part-time "jobs" and revolving-door pay. The minute housing is approved in the Marinship, its manufacturing, light industry, working waterfront is a goner, because no one wants to open their window to the sounds and smells of a true working waterfront.

“A shipyard welding bolts on an Alcatraz ferry is quaint until you live a half mile away. Those new residents will start complaining as soon as they turn the key. Sausalito will lose so much, not only its history, but its economic diversity and employment base.”

There is little question that this assessment is correct. Residential development, hotels, entertainment, consumer retailing, and restaurants, by necessity, cater to the higher end of the market and drive out gritty industry, manufacturing, maritime services that are dirty, messy, smelly, and noisy.

One need look no further than the decimation of manufacturing and industrial services in San Francisco’s Mission District, and the wholesale displacement of lower-income and otherwise disadvantaged local residents and small, family-owned businesses over the past decade, to prove that point. What were once cohesive and essential, blue collar, working-class neighborhoods have been completely replaced by what’s now marketed as “vibrant, walkable, and hip.”

The introduction of high-density, multifamily housing in the Marinship, which will inevitably be followed by a demand for hospitality, retail, entertainment, and dining, basically guarantees the same fate.

However, again, the Sausalito 2040 General Plan Update makes a big deal about “preserving” and “supporting” the Marinship and its unique character. The Plan is filled with supportive statements, such as,

Objective LU-3. Promote and Enhance Industrial Economic Viability

Policy LU-3.1. Marinship Industrial. Encourage industrial use of the Marinship as described in Table 1-1, General Plan Land Use Categories, and shown on the General Plan Land Use Map, Figure 1-1

Policy LU-3.2. Marine Industrial Uses. Promote and encourage new marine industrial uses.

Policy LU-3.3. New General Industrial Uses. Promote new general industrial uses that are small scale, low traffic generating, non-polluting, and contribute to the economic sustainability of the Marinship.

Policy LU-3.4. Marinship Preservation. Preserve the heritage, history, and existing vibrant industrial community.

The Waterfront Element, Page W-8. “Noisy and industrial uses are common in the Marinship Waterfront, and new development should not crowd out these traditional uses in the neighborhood.

So, why worry?

A “One-Way Communication”

Everything about the GP Update tries to reassure the Marinship that nothing will change. It makes no mention of housing in the Marinship other than references to existing housing units, liveaboards, houseboats, and the occasional, industry-related live-work unit. There is no mention of a changing major parcels in the Marinship into residential zoning or proposals for high-density, multifamily development. And, although the GP Update does say that zoning and land use may be re-examined during what it calls a “public process to revise the zoning ordinance to incorporate land use policies and development regulations contained in the 1989 Marinship Specific Plan” (See LU-4.2.1. Zoning Ordinance), there is no mention that this means adding new residential zoning.

The subsections of the Plan’s Land Use section also contain a long list or reassuring statements about facilitating “the interrelated nature of the Marinship’s maritime, light industrial, and artist communities,” and accommodating ”the stipulations of Ordinance 1022, the Fair Traffic Limits Initiative,” and other such restrictions and conditions contained in the Marinship Specific Plan.

In other words, a layperson reading the GP Update documents could not be faulted for coming away with the impression that adding residential, high-density zoning was off the table, and certainly not something that the city was actively working on.

But, they would be wrong.

While the City has been holding public hearings to discuss and take comment on the Sausalito 2040 General Plan Update and attesting to that layperson’s assumptions about preserving the Marinship’s status quo, they have at the same time been working behind closed doors and out of the public’s eye, to do the opposite.[3]

Some weeks ago, CVP obtained a copy of a confidential memo, entitled a “One-Way Communication,” from the Sausalito Community Development Department to the Sausalito City Council, dated June 11, 2020, which laid out a site-specific proposal for rezoning some of the largest parcels of land in the heart of the Marinship, for residential high-density, multifamily housing development.

Some of the potential development sites in this study, include Site 2: Sausalito Post Office at 150 Harbor Drive (owned by the US Postal Service), Site 6: Waterfront Private Property in Marinship at 2350 Marinship Way (the Sausalito Shipyard and Marina; zoned industrial and waterfront), and Site 7: RV Parking Area on Marinship Way at 2340 Marinship Overlay (zoned industrial).

So, not only has the City, essentially, been misleading the public at public hearings when questions about residential projects in the Marinship come up, by denying those allegations and failing to disclose the existence of this study, but it is clear that the study is not just a casual idea.

It states that it was undertaken

“In response to an inquiry from Senator McGuire regarding where such housing could potentially be located, assuming zoning and logistical issues could be resolved,”

And it is being done now

“in anticipation of financial support from the State of California in the form of competitive housing grants available as early as 2021.”

This process sounds pretty far along for something that supposedly doesn’t exist.

Putting the public in harm’s way

The Marinship is uniquely different from almost anywhere else in Marin, in that it faces every conceivable hydrological, geological, environmental, life safety, and infrastructure challenge possible.

The short-list of those challenges includes:

Page ES-1 of the Executive Summary of The Sausalito 2040 General Plan Update Draft EIR, states

“Public agencies are charged with the duty to consider and minimize environmental impacts of proposed development where feasible and have the obligation to balance economic, environmental, and social factors.”

And under Project Description, 2.5 Objectives of the proposed 2040 General Plan, Page, 2-4,

“Safeguard the natural environment and ensure community health, safety, and resilience, including addressing the inherent risks of climate change, sea level rise, and subsidence.”

This considered, the combination of the hazards and conditions listed above will need to be addressed before any future development is undertaken, and the intensity of many of these hazards is predicted to only get worse. For housing, in particular, this amounts to an existential threat to habitability.

Significant tidal flooding in the Marinship is already the norm along the waterfront and in the northern sector, during the winter months. Residents regularly encounter up to a foot of standing water on Gate 5 Road. But that’s the least of the area’s concerns.

The Sausalito 2040 General Plan Update Draft, under Flooding, in the HEALTH, SAFETY, AND COMMUNITY RESILIENCE ELEMENT, page HS-18, states,

“Subsidence is an issue throughout the city, but it is of concern in the Marinship which is sinking at a rate of 0.5 to 0.75 inches per year according to the Waterfront and Marinship Committee’s 2010 Sausalito Waterfront and Marinship Vision. Subsidence can lead to groundwater intrusion and intensify flooding and the effects of sea level rise, making development and infrastructure in these areas more vulnerable.” [Emphasis added][4]

This means that a good portion of the Marinship that is already underwater in normal tidal flooding events, will be 10” to 15” lower than it is today, 20 years from now. That equates to almost 2 feet of flood water, on average, at high tides. How will storm drains and old, broken, waste sewage lines function under those conditions? And this doesn’t even take into consideration sea level rise.

According to The Sausalito 2040 General Plan Update’s Sustainability Element, Page S-5,

“BayWAVE projects that Marin County could experience 10 inches of sea level rise by 2030, 20 inches by 2050, and 60 inches by 2100. Sea level rise will exacerbate the impacts of other coastal hazards, such as storms, flooding, and erosion.”

The Sustainability Element goes on to say,

“BayWAVE’s estimates show Sausalito with as much as 149 acres, or 11 percent of the City’s land area, exposed by the end of the century. This would include most of the industrial land in Sausalito, which could lead to serious financial problems – particularly as many of those industrial sites may require expensive cleanup in order to prevent contaminants from entering Richardson Bay. Sea level rise could be understood as an existential issue for Sausalito.” [Emphasis added]

But, this is supposed to be a 20-year plan, right? The cumulative effects of this evidence suggests that major parts of the Marinship will be under about 3 feet of water in 10 years and almost 4 feet of water in 20 years, during a normal, winter, king tide, when sea level rise is factored in.

All of the proposed, high-density housing sites identified in the Community Development Department’s “one way communications” housing study are impacted.

Further, it’s readily acknowledged in the GP Update and elsewhere that the cost of mitigating combined development and existential threats facing the Marinship are staggering and more than any one project developer can possibly bear. Even the pro-growth Kosmont Study notes 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.”[Emphasis added]

Yet, the GP Update, generally, ignores these predictable consequences, makes no actual assessments or analysis of the potential impacts, and offers no tangible solutions other than to say future committees should "study" it.

Housing laws and development financing

The implications of the aforementioned challenges are more than just the costs and the threats to lives and property.

We’ve gotten used to living in a world where it doesn’t matter how much something costs, it only matters how much profit it makes. If the math works, someone will lend you the money to do it. However, that’s changing faster than many people realize. As a result, in my opinion, it’s going to become much harder to finance real estate development in places like the Marinship.

Housing development is an increasingly complicated business and the myriad of new laws recently passed in Sacramento put significant pressure on cities to build high-density housing in any areas that are already zoned for residential development: even if that zoning is for single-family homes.

But, there are many other factors that determine development feasibility, other than zoning.

By and large, affordable housing projects won’t "pencil" (show enough profits for investors) or be able obtain construction and permanent financing (show enough net operating revenues to lenders) unless the project can benefit from the variety of density bonuses, grants, tax credits, removal of local zoning restrictions (height, FAR, parking, setbacks, etc.), and most recently what is called “streamlining.” Streamlining means that a project gets “ministerial” review by the city’s zoning administrator—no public hearings, required.

The Department of Housing and Community Development (HCD), in Sacramento, recently determined that the City of Sausalito made sufficient progress toward its lower (very low and low) income housing goals but made insufficient progress toward its above-moderate income housing “goals” (its state mandated quota). Therefore, HCD has determined that the City is subject to Senate Bill 35 streamlining for proposed developments with at least 10% affordability (rents from 30% to 120% of Sausalito’s median income, which is over $100,000).

There is also presently a major push in Sacramento to add even more layers of state laws to eliminate local control of planning and zoning and permitting. However, with regard to the Marinship, what is being overlooked is that all of the new laws before the State Legislature, and the other 18 housing laws that Newsom signed last year, which grant all types of development incentives, do not apply to development in flood zones or other hazard zones.

For example, in Senate Bill 35, SEC. 3. Section 65913.4. (a) (6), it notes that a proposal is eligible for “streamlining,” so long as it is not located in a “coastal zone,” considered “wetlands” (US waters), in a ”delineated earthquake fault zone,” or “within a flood plain as determined by maps promulgated by the Federal Emergency Management Agency.”

This exclusion of projects in flood zones also applies to SB 330, the Housing Crisis Act of 2019, which is much loved by organizations who sue cities for failing to build enough housing.

In SB 330, SEC. 8. Section 65941.1. (a) (8) it notes that a proposal is eligible for the ability to enforce private development rights so long as it is not located in “(B) Wetlands, as defined in the United States Fish and Wildlife Service Manual, Part 660 FW 2 (June 21, 1993) or “(D) A special flood hazard area subject to inundation by the 1 percent annual chance flood (100-year flood) as determined by the Federal Emergency Management Agency in any official maps published by the Federal Emergency Management Agency.”

More than half of the Marinship currently sits in the 100-year flood zone, or worse, and that area will probably increase significantly in the next FEMA map update.

Even the granddaddy of them all, Senate Bill 375 (Steinberg), passed in 2018--the law that launched the “Sustainable Communities Strategy” concept—states, under Section 65080.1 (a)(7), that its provisions do not apply in

“an area subject to flooding where a development project would not, at the time of development in the judgment of the agency, meet the requirements of the National Flood Insurance Program.”

At the rate things are changing in the Marinship and at a time when the Inspector General is investigating FEMA for insuring lost causes, how long will most of the area even be able to qualify for flood insurance?

Without a developer being able to take advantage of the benefits of all this legislation, feasibility is essentially impossible. And even if one could argue that a project were feasible, it is increasingly unlikely that any bank will finance it or that it would be able to obtain insurance against the other hazards on the list, above. It’s taken a long time but climate change is finally being taken seriously by those who can end up holding the bag: banks and insurance companies. And litigation, based on liabilities due to climate change, is also seeing more success.

Furthermore, it is looking increasingly unlikely that the federal government and HCD will approve Low Income Housing Tax Credits being issued to projects that could be impacted by flooding and sea level rise. The possibility of financial loss and loss of lives is mounting.

Finally, affordable housing development approvals typically require deed restrictions and covenants whereby the developers/owners have to affirm that they will provide and maintain the units they build, as affordable, for periods as long as 50 years.

How does one do that in good faith, if you know your property will be underwater in less than 20 years?

So, the question of the moment is, under the circumstances and knowing all of this in advance, why would the City of Sausalito choose to risk promoting housing in the Marinship?

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 II - The Kosmont Study

[1] The Embarcadero Institute

[2] Wikipedia.org

[3] There are some concerns about illegal, seriatim meetings by City Council members on the subject of housing.

[4] This finding is corroborated by the Sausalito 2015 General Plan Housing Element.

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.