Ft. Mason Center Pier 1 Shed Restoration

Fact-Finding/ Gap Analysis
Prepared by Glenn Eugster, Assistant Regional Director, Partnerships Office, National Capital Region

Final: October 14, 2004

Introduction

On March 9 Director Mainella requested the National Capital Region to assist the National (NPS) Washington Office with an internal review of the fundraising campaigns for a variety of partnership construction projects greater than $5 million. The Fort Mason Center (FMC), Pier 1 Shed Restoration Project, in CA, within the Golden Gate National Recreation Area, was one of the projects identified for assessment. This document is a report on NPS's fact-finding/ gap analysis.

Background

NPS had a series of discussions between the National Leadership Council, the House and Senate Appropriations Committees, the Development Advisory Board, and some of our park and regional offices about the relationship between public and private partnerships, park projects and NPS funding. During these discussions it has become apparent that there are inconsistencies in the way NPS structures, manages, implements and monitors some partnership agreements, including fundraising agreements, plans and campaigns, the relationship between these efforts, priorities for funding park projects, and communication with the Congress.

Specifically NCR was asked to examine the Ft. Mason Center Pier 1 Shed Restoration partnership construction project, identify real and perceived problems and matters of concern, identify options to respond to the problems and concerns, and identify ways that NPS can assist parks and regional offices in building better partnership projects. This information is to be shared with NPS managers to assist them in their decision-making.

The approach used for this fact-finding and analysis involved a review of relevant documents made available by headquarters, the regional office and the park; personal and telephone discussions with key leaders; and analysis of the information collected. It is important to note that the time schedule for this analysis was limited. Further research may reveal different facts and lead to additional or different conclusions.

Individuals that were contacted and provided information to this report include:

Chris Jarvi, Associate Director, Partnerships, etc.
Sue Masica, Associate Director, Park Planning, Facilities and Lands
Ray Murray, Partnership Coordinator, Pacific West Region(PWR)
Joe Llewellyn, Business Management, GOGA
Jon Jarvis, Regional Director, Pacific West Region
George Turnbull, Superintendent, Ft. Mason Center
Jack Williams, Facility Manager, Pacific West Region

Interviews were requested with Randy Jones, Deputy Director, WASO;
Don Murphy, Deputy Director, WASO; Bruce Sheafer, Office of the Comptroller, WASO; and Dan Wenk, Denver Service Center but these individuals did not respond.

Facts

Park Name: Fort Mason Center, Pier 1 Shed Restoration Project

Project Summary: There are in fact two separate Pier 1
Projects. The first part is the Pier 1 Support Substructure Project which needs a seismic stabilization repair that will be funded through Line Item Construction at a cost of between $13-30 million to be determined based on an analysis of whether a low cost treatment technology can work. It is not a partnership project and will be the sole responsibility of the NPS to fund and complete. The second project is the Pier 1 Shed Restoration Project that will be funded through commercial financing and possibly some fundraising on the order of $14 million and implemented as a partnership project by the Fort Mason Foundation.

NPS proposes to undertake capital improvements for Pier 1 Support Substructure Project necessary to meet seismic, ADA, utility infrastructure replacement and code requirements. Under a proposed lease being negotiated the Fort Mason Foundation (FMF) will assume all responsibility for the maintenance, preservation and capital improvements of the pier with the exception of the seawall and pier support seismic stabilization. Once NPS is able to obtain appropriated funding for the substructure structural seismic upgrades the Fort Mason Foundation will obtain funding to renovate and restore the Pier 1 shed. A long-term lease of the property will relieve NPS of the responsibility for the long-term preservation, maintenance and capital improvements to the pier while enhancing public access, safety and programmatic enjoyment of the park.

Name of Partner: Fort Mason Foundation

PMIS: None for the Pier 1 Shed Restoration Project; # 59855 for the Pier substructure.

Estimated Gross Cost: Preliminary and noted as "speculative". $13 to 30 million

Targeted Completion Date: Uncertain

Breakdown of Funds Needed:
NPS Share: $13 to 30 million (estimated)
Other Federal Funds: None noted.
Private and Donated Funds: To be funded through commercial financing and possibly some fundraising on the order of $14 million.
State and Local Funds: None
Operation Funds Needed: Partner assumes these costs, as per lease.
Cost-Offsets: Funds from leases and revenues anticipated.


Chronology and Status of Planning, Partnership and Fundraising Activities

July 17, 2004 Fort Mason Center Draft Lease

June 2004 Development Advisory Board (DAB) review and approval of the business/preservation and development framework of the pending long-term lease agreement

June 4, 2004 Project Concept Report--GOGA, Fort Mason Center Lease Disposition Development Agreement (Lease)

March 26, 2004 Amendment to Cooperative Agreement Between Fort Mason Foundation and GOGA Approved by Superintendent O'Neill and Executive Director Zwissler
Status: The current Cooperative Agreement, which was due to expire in March 2004 and has been extended through 2009 or until the long-term lease is negotiated, does not cover Pier 1 in its current context. There is no fundraising agreement for Pier 1 because that is not how it will be financed.

Undated Handout--Fort Mason Center: Lease Disposition & Development Agreement (LDDA) and Lease Principal Terms

March 11, 2004 Fort Mason Center Draft Lease Disposition and Development Agreement

March 2004 Meeting between Alex Zwissler, Fort Mason Center; Martin Quinn, Fort Mason Foundation, and House Interior and Other Related Agencies Appropriations Subcommittee staff about NPS funding.

March 28, 1984 through March 28, 2004 Cooperative Agreement Between President Fort Mason Foundation and Superintendent GOGA

1977 Fort Mason Center opens to the public

1976 NPS and Fort Mason Foundation enter into a Cooperative Agreement

1976 Fort Mason Foundation formed to administer the emerging nonprofit center and a wide variety of nonprofit programs and events, and renovate lower Fort Mason

Background

NPS and the Fort Mason Foundation have had a twenty-seven year partnership for the management and operation of the 330,000 square foot cultural center--which includes three Piers--Pier 1, 2 and 3. The partnership is managed through a Cooperative Agreement. The last agreement, which expired in March 2004, was recently extended until March 2009.

A conditions assessment conducted in 1999 identifies in excess of $60 million in deferred maintenance and capital improvements necessary to meet seismic, ADA, utility infrastructure replacement and code requirements. Under the current agreement NPS is responsible for the major maintenance of structures, infrastructure and capital improvements to the facility.

As a result of the conditions assessment NPS is engaged in a program of phased seismic stabilization of the three historic Fort Mason Piers.

NPS and Ft. Mason Foundation are authorized to negotiate and enter into a long-term lease agreement for the preservation, management and operation of the Fort Mason Center in accordance with all applicable leasing authority of 36 C.F.R. 18.

Under the proposed lease being negotiated, FMF will assume all responsibility for maintenance, preservation and capital improvements of the facility with the exception of the seawall and piers 1, 2 and 3 support structure seismic stabilization.

GOGA is authorized to negotiate and develop the proposed lease with the use of outside consultants. The proposed Lease Disposition and Development Agreement is the precursor agreement to the executed lease agreement and contains all the requirements, "conditions precedent", that FMF must meet prior to NPS entering into a lease for FMC.

The purpose of this agreement is primarily to enable the FMF to secure commercial financing in addition to its philanthropic fundraising for historic preservation, renovation and capital improvements of FMC.

Pier 1: The Pier 1 renovation project will be undertaken by FMF when NPS completes the pier substructure seismic stabilization repairs.

A feasibility study will be done in 2005 to determine if the fiberglass wrap technology can be used for the Pier 1 support structure. Cost estimate range from $30 to $13 million if the wrap technology can be used.

PWR plans to conduct a feasibility study in FY2005 to see if a less-costly repair solution can be used for Pier 1 which has a deeper substructure with taller support columns. If it proves feasible, it could reduce the Pier 1 cost dramatically by one half to one third. This cost reduction would allow the Pier 1 substructure to compete more favorably for Line Item Construction Funds.

Until the repair work is done, Pier 1 cannot be occupied and will continue to remain empty. In the near term, "Save America's Treasure's" grant funds and Fee Demo monies have been used to repair the roof and properly seal up the Pier 1 shed until more substantial needed repairs can be made to the shed. The inability to occupy and have tenants and uses in Pier 1 is a frustration to both NPS and the Fort Mason Center,

Pier 1 will be outside the long-term lease between NPS and FMC until it is repaired with appropriated funds.

The estimate for the Pier 1 shed improvements may be higher. The Pier 1 support structure seismic retrofit has not received a high enough priority for NPS construction funds and the building is vacated.

Pier 2: The support structures under the Pier 2 shed has been going through a seismic strengthening project to repair damage from the Loma Prieta Quake. This effort, initially used FEMA funds and now is being funded by long-term construction funds, is nearing completion.

An alternative less-costly repair solution was worked out for the Pier 2 substructure that was less disruptive of current uses of the Pier 2 shed and less than half the original cat estimate.

The Pier 2 shed structures also needs repairs. The Pier 2 shed project will require $7.2 million for seismic retrofit and structural upgrade of the building. Both the Pier 2 and Pier 1 sheds need substantial structural repairs. There is spalling concrete and exposed re-bar among other problems. The estimate for Pier 2 shed repairs is $14 million.

Pier 3: The Pier 3 shed renovation project will be undertaken after the Pier 1 project is complete.

Performance of the Fort Mason Foundation in raising funds for the shed is contingent on federal funds becoming available for the substructure repairs.

Pier 1 is not part of the lease premises currently but will be added to the lease if there is sufficient term remaining after the substructure repairs are completed and Fort Mason Foundation is fully funded to rehabilitate the Pier 1 shed. It is worth noting in each Pier description that the shed repairs will be 100% funded by the Foundation. In addition, either project could occur at any time as funds become available to rehabilitate the pier substructures. They are part of phases 4 and 5 of the Lease Disposition and Development Agreement as referenced in Appendix E of that document.

Both Pier 1 and 3 projects are at a future date uncertain and no fundraising campaigns have yet been developed or implemented.

PWR/ GOGA have not talked about Pier 3 yet. It has been actively used by the Fort Mason Center for special events similar to Pier 2.

Park Partner: Lower Fort Mason is managed under a Cooperative Agreement by the Fort Mason Center who serves as the master nonprofit tenant with 40 nonprofit subtenants paying rent.

The Fort Mason Foundation, a 501(c)(3), and NPS are currently negotiating up to a 60-year lease for Fort Mason Center. The Foundation has sought the long-term lease with the intent of seeking bank loans to make these repairs and amortize the loans through tenant leases and paid parking revenues.

The Fort Mason Foundation fundraises for Fort Mason Center. The NPS and the Foundation are currently negotiating a long-term 60-year phased lease, which will enable the FMF to take out loans for larger capital improvement work.

This lease will incorporate individual structures, such as the Pier 1 shed, in phases on a structure by structure basis only after the FMC has obtained funds to make needed repairs through loans or other means for those structures. The FMC/FMF will likely fundraise for certain interior improvements. Structural work will be funded by bank loans, which can be retired with rentals and special event fees and parking revenues over time. The loans will be obtained by FMC through Lease Disposition Development Agreements that can assure the lender that FMC will be leased the structure for a sufficient period to repay the loan.

The lease and Lease Development and Disposition Agreement concept was presented to and approved by DAB at their June 2004 meeting.

In past years, the Foundation raised funds for building the Cowell Theater in Pier 2 and some fundraising may be involved in the Pier 1 and 2 shed structure repairs although this is hard to raise funds for. However at this point it has not been determined whether funds will need to be borrowed or whether funds can be raised. Regional office and park leaders believe, "It is premature to draw up or seek approvals and fundraising plans until the 60-year lease is signed, a determination is made of funds needed and whether the funds can be borrowed or raised. These projects will materialize over years and come into a sharper focus and there will be time to vet them as appropriate".


Assumptions

The context for this research includes the following assumptions, identified by NPS park, regional and headquarters leaders, about the fundraising campaign.

Park and regional office leaders stated that "A substructure seismic
stabilization repair is needed for Pier 1". The historic pier is deteriorating and unsafe and unavailable for public use.

The Regional Partnership Coordinator Ray Murray believes that "Lower
Fort Mason is one of the best partnership success stories in the National Park System. This partnership is posted as a national case study on the NPS Partnerships Webpage.

Regional Office leaders believe that "Congress will be fortunate if
the Fort Mason Center is able to relieve the NPS of the financial burden of these project improvements". They noted that "We also need to be mindful that the Center management of Lower Fort Mason Center saves Congress $130 million that it would otherwise have to fund through appropriations".

Park and regional office leaders believe that "Repairs
of the Pier 1 substructure is an NPS, not a partner, financial
responsibility".

Regional Office leaders stated that "Technically the Pier 1
Substructure Repair is not a partnership project in terms of shared funding and fundraising is not involved. The Pier 1 substructure seismic stabilization repair is neither a fundraising nor a partnership project. The repair funding is intended to come from Congressional Appropriations through Line Item Construction. Pier 1 will not be assigned or leased to the Fort Mason Center and will continue to be vacant and unused until the substructure seismic stabilization repair is completed".

Issues

The Pier 1 Shed Restoration Project was identified for NPS
Fact-Finding because of Fort Mason Center's written proposal to Congressional Appropriations staff and inquiry about when NPS repair funding for work on the substructure might be anticipated. A written proposal, provided by leaders from the Foundation and the Center calls for $20-25 million from the DOI Appropriation in FY 06 (subject to the Technical and Detailed Cost Estimate due in 2005) for Pier 1 and $20-25 million from the DOI Appropriation for Pier 3. According to Congressional staff comments, the private leaders indicated that "NPS leaders had promised $ 26 million in FY06 for this project". The project has not been identified as an NPS or Administration priority.

The immediate repairs to the Pier 1 shed roof and windows to seal
the shed were financed through a $341,000 Save America Treasures grant to the Foundation, matched 100% by the Foundation $341,000 and an NPS roof replacement Fee Demo project for $461,000.

PWR/GOGA has sought to obtain funds for this work at Pier 1 through
Line Item Construction funds. Partnership Coordinator Murray stated, "It has yet to compete successfully within the Line Item Construction Program for the next five years. Pier 1 has been red-tagged and is empty despite is prime waterfront location. Since it is empty and there is no risk to occupants it doesn't compete well on public use and safety criteria".

Although studies are underway and considerable study of the Pier 1
Substructure Repair has gone into this project park and regional leaders indicated that, "We have yet to determine the exact cost to do that seismic repair". According to Ray Murray, Superintendent O'Neill indicated that the $26 million cost-figure comes from an assumption that both the Pier 1 and Pier 3 substructure seismic stabilization repairs could be accomplished for $13 million each -- the cost of the Pier 2 substructure repair. At some point in the future PWR/ GOGA will do a similar feasibility assessment and estimate for Pier 3.

All three Piers were damaged in the Loma Prieta Quake but FEMA funds only enabled the Pier 2 repair.

Ray Murray indicated that "We won't know if Pier 1 and Pier 3
repairs can use the lower cost technology applied to Pier 2 until we complete a feasibility study in FY2005. Therefore any estimates prior to that feasibility study are speculative. If we have to use another technology, the costs could be 2-3 times higher. We don't yet know if what the seismic repair will cost. If could be more than $26 million or half of $26 million. When the feasibility study is completed, we'll have a more realistic cost estimate".

Superintendent O'Neill indicated to Mr. Murray that "the immediate repairs to the Pier 1 shed roof and windows to seal the shed were financed through a $300,000 Save America Treasures grant. The estimate for full repair of the Pier 1 shed is $14 million and would not be undertaken until the substructure repair is complete".

The current Cooperative Agreement, which will be replaced by the
almost-completed long term lease, between the NPS and the Fort Mason
Foundation authorizes the Foundation to "seek funding". Article I. (f) of the agreement indicates that "In connection with the support, maintenance, and operation of the facilities, and with respect to appropriate staffing and development of the Foundation's programs, the Foundation agrees, as a matter or policy, that it will seek funding from private foundations, individuals, corporations, as well as from Government departments and agencies.

There is close collaboration between the Foundation and the park on plans that will involve fundraising. The Foundation aspires to, at a later date yet to be determined, undertake an on-going Capital Campaign to assist in funding the phases of preservation and development of the Fort Mason Center as required of them under the Lease Disposition and Development Agreement. The Foundation will cooperate fully with NPS in seeking NPS approval of its fundraising plan in accordance with all NPS processes, procedures and requirements contained in, or in addition to Director's Order #21.

The Cooperative Agreement, as written, authorizes the Foundation to seek funds at all levels of the government, including NPS funding.

Although the Foundation is authorized to seek funding for NPS there does not appear to be an approved fundraising agreement or plan for this project or the Foundation's other activities.

GOGA Lower Fort Mason Pier 1 Seismic Stabilization and Repair:
Partnership Coordinator Murray indicated, "This project will be fully funded by NPS through Line Item Construction when it reaches a high enough priority. There is no partner participation in this project despite the fact that it was discussed by the Fort Mason Center with Debbie Weatherly. The Pier has not been assigned to the Fort Mason Center under the current Cooperative Agreement that will be replaced by the long-term lease currently under negotiation between GOGA and the FMC. Pier 1 will not be added to the lease until after this project is completed and that will be 7-10+ years out".

Options

The following options can and should be taken to address the Ft. Mason Center Pier One fundraising concerns within the identified assumptions.

NPS-GOGA, PWR and headquarters, and the Fort Mason Foundation,
should coordinate communications with the NPS House and Senate Appropriations Committees to avoid confusion over the description and priority of this project, it's readiness for NPS funding, the total cost of the project, and the roles and responsibilities of the partners.
Well-intentioned meetings between park partners and NPS Appropriation's Committee staff often send signals about NPS projects, their priorities and budget requests. Without restricting the ability of nonprofit organizations to speak to elected officials and there staff, NPS and their partners need to work together on all aspects of partnership projects.

NPS should confirm, reconfirm, or establish a policy that it is
logical, permissible, and often desirable to fund major structural repairs and improvements by Congress and the interior improvements and operation and maintenance through the FMC revenues earned income and fundraising.
The partnership work at Fort Mason Center appears to help clarify what an appropriate role is for government and the private sector in working on a partnership construction project. This aspect of the Ft. Mason Center approach may have merit for other projects nationwide.

NPS headquarters should consider a way that construction projects
can be given priority ranking when partnership arrangements add tangible values or dollars to the overall project.
It appears that projects like this one may have difficulty securing federal funding through the NPS process for construction projects and receive no, or little value, for having a fund-producing partnership.

In the event that the Pier 1 Shed Restoration Project requires
fundraising, GOGA and PWR should work with the Fort Mason Foundation to prepare appropriate fundraising agreement and plans, including a Donor Recognition Plan, for this project and Fort Mason Center.
It is anticipated that the Shed Restoration would be primarily funded through commercial loans to be repaid by use fees. It is premature to develop fundraising plans and donor recognition plans until it is determined that fundraising will be involved. DO#21 largely is written for specific fundraising projects. Lower Ft. Mason is atypical in that it very multifaceted and involves different funding and partnership initiatives over a 15 year+ time frame. It may be more realistic and more manageable to submit specific projects and fundraising campaigns for DO#21 and building better partnerships compliance at a later point when they can be defined.

The NPS National Partnership Office should clarify agency policy on
park partners seeking funds to reach a better understanding between partners about appropriate and inappropriate federal fundraising activity.
NPS, at the park level, authorized the Fort Mason Foundation to seek funds from government agencies and departments. This general provision gives NPS partners considerable discretion on seeking federal monies and empowers them to seek NPS money. Clarifying in agreements that authorize fundraising what NPS fundraising activities are appropriate and inappropriate would help to avoid conflicts with approved agency budget and priority setting procedures.