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The Future of the Marinship: Part II - Innovation

Posted by: Bob Silvestri - September 11, 2020 - 9:57 AM PDT


“An artist is someone who’s doing pure research” ~ Boz Scaggs

It’s always fascinated me that the minute some of the most practical, hard-nosed, and money-driven among us become rich, the first thing they do is buy art: something created by some of the least practical, most intuitive, and least money-driven people on the planet. I interpret this as an unconscious admission that their soul is aching for something that feels authentic. Or, as Pablo Picasso put it, “Art is the lie that reveals the truth.”

Industrial designers, tradespersons, software engineers, craftspersons, precision die-cutters, entrepreneurs developing new methods of servicing San Francisco fireboats, or someone converting pleasure boats to hybrid-electric power are, like artists, each in their own way, a part of the creative community. Their jobs may be less formal than the 9 to 5 world, but their work has value far beyond what can be surmised from a snapshot accounting ledger or a simplistic study like the one the Kosmont Group submitted.

The question before the City is how to properly value these stakeholders and plan accordingly.

In Part I of this series, I presented economic arguments for why the City should invest time and money to ensure the future of the Marinship’s industrial / manufacturing / maritime / artisan community. You may agree or disagree, but maybe we can agree that planning decisions need to be made based on facts. What makes no sense is for the the City to continue to allow the tail to wag the dog, where planning is driven by randomly generated, private development proposals that result in a haphazard conglomeration of uses, based on the belief that “pay-as-you-go” is a viable growth process.

The City’s approach to assessing the Marinship’s considerable physical challenges, so far, has focused too much on recording the “wish lists” of the various stakeholder groups (e.g., in the 2015 Placeworks Assessment Report), but avoided the feasibility of fulfilling any of them.

Under its current methodology, the City is betting (against all odds and historical precedent) that it will be able to address the Marinship’s enormous existential threats from sea level rise, land subsidence, coastal erosion, a rising, saline water table, flooding, and failing infrastructure (water and sewer lines, storm drains, and roadways) by transferring the costs of mitigation and maintenance onto the shoulders of individual landowners and developers.

Every consultant the City has hired over the past 35 years has stated, unequivocally, that the costs and resources needed to address and remediate the geological, hydrological, and public services challenges in the Marinship are far beyond the capacity of any one private owner or developer, or fixable on a case by case basis. The stark reality is that there is no middle ground for piecemeal responses. The existential challenges in the Marinship will only grow worse with time, and in some cases exponentially. Only a comprehensive, city-led effort can hope to “stem the tide.”[1]

To put it plainly, the City’s “unplanned” plan is not a plan. It’s a triumph of hope over reason.

All the studies, committees, and workshops in the world will not change that. Sausalito needs to face forward and embrace the responsibility for the mitigation of Marinship’s environmental challenges, head-on, with eyes wide open. Anything less is putting the cart before the horse and will not only fail to support the future of the working waterfront community but will sabotage any other kind of growth and development, as well.

Even if you disagree about what the future of the Marinship might be or want to see it filled with amusement parks, Ferris wheels, fast food restaurants, and gleaming condo towers, the challenges facing that development are the same.

The Placeworks Report, for example, identifies “Inability to attract investment” and “Critical need for infrastructure improvement” as the Marinship’s two major “Weaknesses.”

This shouldn’t surprise anyone.

No sensible, profit-motivated, private investor, who is made fully aware of the extent of the area-wide hydrological, geological, environmental, and infrastructure challenges in the Marinship, and the associated costs of mitigation, is going to make a significant financial investment there, without some assurance that the City, itself, has an overall plan in place to address them. The inaction embedded in the City’s General Plan Update doesn’t even come close to addressing that need.

Sausalito has spent untold millions of dollars over the past decades hiring consultants to assess the Marinship. Those consultants have been augmented by legions of committees, workshops, study groups, and so on. But, while all these repetitious studies and reports pile up and gather dust on the shelf, none of this has resulted in a single tangible improvement, other than essential maintenance when something completely breaks down.

No more studies or opinion surveys are required. The time to organize committees and announce high-minded “policies” has passed.

It’s time for the City to roll up its sleeves and start.

Innovation Zones

A group of local business owners, property owners, and individuals called the Sausalito Working Waterfront (SWW), describe themselves as

“A 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.”

They describe their vision for the Marinship as

"An area whose primary goal is to preserve and enhance maritime, light industrial, and artistic uses and jobs. These uses define the backbone of Sausalito’s cultural heritage."

You can read more about the SWW by clicking here. The SWW has been promoting the socio-economic, environmental, and cultural value of the Marinship, for some time. As I’ve noted in previous articles, they have reminded the City that the Marinship provides unique services that are not available anywhere else in the San Francisco Bay. For example,

”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.”

Going forward, the major campaign they are urging the City to undertake is to designate the Marinship working waterfront as an “enterprise” or “innovation” zone.

“Innovation” is, of course, a very attractive word. I doubt anyone is against promoting innovation. But, how does one turn aspirations into reality?

An enterprise or innovation zone is defined as a designated area where policies to encourage economic growth and business development are codified. These policies generally offer things such as tax concessions, financial assistance, and project approval fast-tracking to attract public and private investment and promote the uses that are desired. And enterprise zone can also be used to finance the rehabilitation of infrastructure and the costs of mitigating major environmental challenges.

Some of the tools that have been employed to bring about desired outcomes, include,

Examples of waterfront enterprise or innovation zones are not hard to find. The rehabilitation of Port Everett in Washington, for example, though obviously a much larger undertaking, had similar priorities. Their Plan emphasized that their “top priority is to modernize the Seaport to meet 21st-century infrastructure demands.” This included developing specific business plans “to guide [public and private] capital investments”. They offered many of the types of incentives noted above.

Similarly, under New Jersey’s “Urban Enterprise Program” a participant is allowed the right to purchase certain targeted items or services without paying local sales tax. Certain businesses are allotted Tax credits for hiring new employees or making capital investments to support targeted uses. Other programs in Colorado, Ohio, and elsewhere offer similar tax credits and cost offsets for targeted investments, real estate renovation, and job training, as well as exemption from occupancy taxes and entitlement fees if the investment supports targeted uses or agreed upon infrastructure improvements (public benefits).

Some zones around the country even offer participation in employee health insurance programs available through arrangements made with for-profit corporate and foundations.

But, I can already hear the pushback even before going into details and specifics. That pushback is summed up as, “That sounds expensive! And, “We don’t have that kind of money!”

I’ve been involved with raising large sums of money in grants, loans, and subsidies, for nonprofit causes and for-profit ventures, for decades, and I can assure you that this pushback response is 100% incorrect.

If every noble cause or eventually profitable venture began with that premise, hardly anything would ever be accomplished anywhere in the world. Ideas and well-conceived business plans come first. Money is attracted to sound ideas and when it comes to government programs and foundation PRI (“Program Related Investment”), funding seeks to address opportunities to fulfill their goals, which are not about making a quick buck.

Put another way, if you don’t have anything to sell, you’re never going to find anyone to buy it. And there will be no “innovation” without funding.

So, what do you have to sell?

At the moment, the City of Sausalito has nothing to sell to anybody. They have no tangible plans, no projects, and no campaign to promote. As it is, they couldn’t even attract seed funding to take the first steps toward having any of those. So far, all the City has done is spin in place, spending precious funds on endless studies, workgroups, and consultants, all of which seem to result in recommendations that are quickly forgotten.

At this rate, the Marinship will be under three feet of water before the City can even decide to buy a bucket to put the water in.

The first step toward preserving the future of the Marinship, regardless of what version of the future one supports, is to hire a team of engineers and construction management advisors to develop what might be called a “Preliminary Infrastructure Improvement and Environmental Mitigation Work Plan” (a “Work Plan”) to address the challenges facing the Marinship.

The deliverables of this first phase include engineering analysis, surveying, and testing to evaluate the scope of work required (i.e., subsidence measurement, soils core samples, toxicity testing, infrastructure capacity testing, etc.), identifying the work tasks required, and suggest task sequencing, developing a preliminary work staging plan, an estimated project timeline, a proposed project management plan, a schedule of contractors and consultants required, costs breakdowns, and whatever else is needed to arrive at a point where the City has actual projects to evaluate, with viable alternatives, and a reasonable sense of the risks and rewards and the relative, estimated costs of each.

This Work Plan would give City the ability to publish RFQs (Requests for Qualifications) and RFPs (Requests for Proposals) to move to the next phase and receive project proposals, design/build proposals, and/or bids for specific work items. [2]

Yes, that will cost money. But sources for that funding are available.

The simultaneous commitment to create a “Marinship Enterprise Zone” would greatly expand the scope of those potential funding sources.

This undertaking, these first steps, are so fundamentally important to the future of the Marinship and, therefore, the financial viability of the City that final planning decisions and any zoning changes being contemplated need to be postponed until this Work Plan is in place because the process of creating the Plan will likely have unforeseeable implications about those decisions and changes.

So, a Work Plan is the first step. However, in order to do that, two critical components need to be in place.

These are,

(1) Leadership: Determining who the individuals are who will lead the team that will drive this process forward; and

(2) An Entity that can access and receive funding from every possible available for-profit or nonprofit source.

A Vehicle for Change

There is nothing that can replace the continuity of dedicated leadership. But, to execute an undertaking on this scale, individual efforts will need organizational and institutional support. The type of entity that can best take full advantage of the myriad of ways to fund and finance such an undertaking is a government-sponsored agency. Therefore, it is logical to propose that the City establish a new community foundation to be that entity, governed by a board that includes elected leaders and prominent community leaders, business owners, and property owners.

Its funding would be entirely separate and fire-walled from the City’s General Fund and its governance would be independent, though, obviously, it cannot reasonably function or succeed without the City’s full cooperation and political support.

Such an entity would have the ability to seek funding in the form of grants, loans, subsidies, pass-through funding, and collaborative for-profit and nonprofit partnerships. This “Sausalito Marinship Foundation,” if you will, would be an appropriate vehicle to advance the mission of economic, cultural, and environmental stewardship of the Marinship.

Fundraising and Collaboration

In my decades of raising funds for for-profit and nonprofit endeavors, I’ve learned that there is a myriad of ways nonprofits, for-profits, corporations, government agencies, and other institutions can work together in structured financial collaborations for mutual benefit. There is no one correct way. There are also professional nonprofit assistance organizations, right here in the Bay Area, that regularly raise hundreds of millions of dollars, and sometimes even billions, to support cities, counties, and major institutions (universities, hospitals, etc.), who have a demonstrable need and can make a convincing case for funding it.

I also believe current political forces suggest that funding for infrastructure rehabilitation and sea-level rise mitigation is about to become a major area of interest for government and private funders.

Fundraising is a journey. Cold calls result in learning about the current funding environment. Some lead to referrals to other prospects and networks, and grants managers often refer callers to other grants managers, who are funding what you’re doing. Government agencies help determine the funding options available. And funding often comes from the most unexpected places.

Even if the funding sought is just to take the first step of creating the Work Plan, a community foundation can approach state and federal agencies, private corporations, and nonprofit foundations for grants and collaborative assistance to accomplish that, so long as they are presented with clearly articulate Work Plan.

In other words, it all starts with having a story to “sell.”

The following are just a few examples of funding sources that may be available to fund a Marinship Infrastructure Improvement and Environmental Mitigation Work Plan, led by a newly formed Sausalito Marinship Foundation.

It is by no means an exhaustive list, but only meant to suggest places to begin.

The US Department of Commerce Economic Development Administration makes grants (up to $3 million) to jump-start infrastructure engineering and improvements. As noted in their guidelines,

The Economic Development Administration's (EDA's) mission is to lead the Federal economic development agenda by promoting innovation and competitiveness, preparing American regions for economic growth and success in the worldwide economy. EDA fulfills this mission through strategic investments and partnerships that create the regional economic ecosystems required to foster globally competitive regions throughout the United States. EDA supports development in economically distressed areas of the United States by fostering job creation and attracting private investment. Specifically, under the Economic Development Assistance programs (EDAP) Federal Funding Opportunity (FFO) announcement, EDA will make construction, non-construction, and revolving loan fund investments under the Public Works and Economic Adjustment Assistance (EAA) Programs.

EDA’s Economic Development Assistance Programs support economic development, job creation, and private investment for eligible activities. Their two categories of funding are for public works and economic adjustment assistance, both of which include infrastructure projects like what’s needed in the Marinship.

The 2020 EDA Public Works and Economic Adjustment Assistance Programs, including the CARES Act Funding, offer cooperative agreement grants of up to $30 million to “provide investments that support construction, non-construction, planning, technical assistance, and revolving loan fund projects.”

And the Program will,

“support work in Opportunity Zones and will support the mission of the Department by, among other things, leading to the creation and retention of jobs and increased private investment, advancing innovation, enhancing the manufacturing capacities of regions, providing workforce development opportunities, and growing ecosystems that attract foreign direct investment.”

The FEMA “Building Resilient Infrastructure and Communities” program has a budget of $500 million to provide funds

“For the purpose of implementing a sustained pre-disaster natural hazard mitigation program to reduce overall risk to the population and structures from future hazard events, while also reducing reliance on federal funding from future disasters.”

The National Science Foundation’s Civil Infrastructure Systems grants program funds “research necessary for designing, constructing, managing, maintaining, operation, and protecting efficient, resilient, and sustainable civil infrastructure systems. Research that pertains to transportation systems, construction engineering, infrastructure systems, and infrastructure management.” This includes maritime and waterfront projects.

HUD’s National Resource Network “Strong Cities, Strong Communities” program offers similar grants to help cities tackle large-scale, economic challenges. Innovative solutions “may be applied to capacity issues related to local economic development, land use, transportation, workforce development, community development, and public safety.”

Similarly, the US Department of Transportation recently announced a fund to provide grants for infrastructure improvements, and we can expect that funding to grow in the coming year.

Finally, the Environmental Protection Agency offers a variety of “Green Infrastructure Funding Opportunities,” including funding for “Water Infrastructure Finance and Innovation.”

Properly presented, the Marinship’s hydrological, geological, and environmental, sea-level rise, and subsidence issues and a plan to address them would certainly qualify for many of these types of funding assistance.

Government agencies are, of course, the most obvious prospects, but the world of private and corporate foundations is vast, eclectic, and extremely unpredictable. The good news is that the San Francisco Bay Area probably has more recently established, modestly-sized (less than $25 million in assets) private foundations than anywhere on the planet.

New Cities, for example, is a nonprofit aggregator organization that offers a variety of types of assistance under its “Financing Urban Infrastructure Initiative.” And there are dozens of website aggregators that list smaller, private grantmakers ($1 million and under), like Wells Fargo Bank, to help agencies find support for coastal waterfront initiatives. Major, private funding aggregators like the Tides Foundation and the Marin Community Foundation also participate in and manage networks of corporate and private funders.

Enterprise Zone Incentives

When it comes to partnerships and funding to support incentives to private investors in enterprise zones, The California Office of Business and Economic Development is a place to start. California offers the “California Competes Income Tax Credit” program, which is “available to businesses who want to relocate, stay, or grow in California.” And the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), which offers “advanced transportation and manufacturing sales and use tax exemption:” a tax exclusion to manufacturers that promote alternative energy and advanced transportation solutions (maritime being one of them).

These programs are designed to stimulate and guide public and private investment. A Sausalito Marinship Foundation could work to build strong relationships with local corporate foundations and technology partners, and organizations like the California Capital Financial Development Corporation and act as a liaison and a funding clearinghouse for businesses the enterprise zone wishes to retain or attract.

Each type of land use has its own universe of funders and collaborators, and its own unique financing methods and hybrid for-profit/nonprofit collaborative arrangements at its disposal. For example, regarding the Marinship’s maritime uses, there are avenues for partnerships and collaboration with nationally respected organizations, such as the National Working Waterfront Network, and learn from case studies they publish about how other cities have used innovative finance, found grants, issued bonds, and created ballot measures to achieve their goals.

Time to Begin

Sausalito has a once in a lifetime opportunity to save the Marinship. But it won’t last, forever. In twenty years, having failed to act boldly and proactively, the present unmitigated, environmental, and infrastructure challenges will likely have become so overwhelming that mitigation may no longer be financially feasible. If the City mismanages its growth and planning policies, today, it could potentially lead to a fatal flight of private capital and threaten the viability of land-based development in the Marinship, in the future.

Great things can be accomplished. But, they don't happen by accident. It’s always the result of a relentless, methodical process.

The first step is to decide to begin it.

[1] Geological Background Report - Marinship Specific Plan – December 1985; Kosmont Group Study - 2020

[2] Similarly, the 2015 Placeworks Report directed the City to “Inventory and characterize the condition of physical infrastructure (roads, civil, above water and underwater), and identify current and future vulnerabilities. Analyze vertical change in sediment in the Marinship (based on available data) to identify “trouble spots,” and forecast potential on-going subsidence and how it might affect infrastructure and potential development plans on land and at the water’s edge. Identify the range of sea-level rise currently predicted in Richardson Bay and assess potential impacts to facilities above and in the water and to land-based civil infrastructure including roads, sewer, power, potable water and storm water facilities.”

CLICK HERE to read The Future of the Marinship - PART I

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 California residents.