Ft. Mason Center: Pier One Fact-Finding and Gap Analysis
Prepared by Glenn Eugster, Assistant Regional Director, Partnerships Office, National Capital Region
DRAFT---FOR NPS REVIEW
September 30, 2004
Introduction
On March 9 Director Mainella requested the National Capital Region to assist the 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, Pier One, 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 South Side of Ellis Island fundraising campaign, 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; a meeting with park and regional office managers; 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
Bob McIntosh, Associate Regional Director for Partnerships, NER
Chris Niewold, Acting Chief, and Shannon Stone, Partnership Staff, WASO Partnership Office
Ray Murray, Partnership Coordinator, Pacific West Region
Joe
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 One
Project Summary:
Name of Partner: Fort Mason Foundation, Fort Mason Center
PMIS: # None
Estimated Gross Cost: Preliminary and noted as "speculative". $13 to 30 million
Targeted Completion Date:
Breakdown of Funds Needed:
NPS share: $13 to 30 million (estimated)
Other Federal Funds: None noted.
Private and Donated Funds: Possible but not determined.
State and local Funds: None
Operations 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 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 Deb Weatherly, Clerk, House Interior and Other Related Agencies Appropriations Committee Staff about NPS funding.
March 28, 1984 through March 28, 2004 Cooperative Agreement Between President Fort Mason Foundation and Superintendent GOGA
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--that includes includes three Piers--Pier One, Two and Three. The partnership is managed through a Cooperative Agreement. The 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 (FMF) are authorized to negotiate and enter into a long-term lease agreement for the preservation, management and operation of the Fort Mason Center (FMC) 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.
GGRA 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, line item construction repair work has been prioritized 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 using FEMA funds and 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.
After repairs are made, it may come under the long term lease depending
how long a term is remaining and be operated by FMC.
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.
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 Center, a 501(c)(3), and NPS are negotiating a 60-year lease. The Center 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.
We just mailed two briefing statements on the Fort Mason Center, the Lease Disposition Development Agreements and the Pier Projects.
The Fort Mason Center has a Fort Mason Foundation which fundraises for FMC The NPS and the Fort Mason Center are currently negotiating long term 60-yr phased lease which will enable the FMC to take out loans for larger capital improvement work.
This lease will incorporate individual structures, such as the Pier 2 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 recently was "being shopped to DAB" according to Partnership Coordinator Murray.
In past years, the Center 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 can be borrowed or whether funds can be raised. 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.
Cost Estimate
According to Ray Murray, Superintendent O'Neill indicates that the $26 million 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. All three Piers were damaged in the Loma Prieta Quake but FEMA funds only enabled the Pier 2 repair.
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 I 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".
7-14-04 Discussion with Joe L. and Ray Murray
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 Regional Partnership Coordinator Ray Murray believes that "Lower
Fort Mason is one of the best partnership success stories in the National Park System. There is partnership case study on the NPS Partnerships Webpage you can check out".
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. 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.
Regional Partnership Coordinator Ray Murray believes that "Repairs
of the Pier substructures is an NPS, not a partner, financial
responsibility".
Regional Office leaders stated that "Technically it 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 at this point and for the near term. 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
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".
Costs: "We have yet to determine the exact cost to do that seismic
repair".
The Pier 1 partnership construction 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 One and $20-25 million from the DOI Appropriation for Pier Three. 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.
GOGA Lower Fort Mason Pier One Seismic Stabilization and Repair:
This project will be fully funded by NPS through Line Item Construction when it reaches a high enough priority. There is no partner participation is 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 South Side Ellis Island fundraising problems and concerns within the identified assumptions.
Wants priority ranking improved for construction projects. Does not
take into consideration partnership projects.
Logically, the major structural repairs and improvements should be
funded by Congress and the interior improvements and operation and maintenance through the FMC revenues, earned income and fundraising.
Park-partners need to coordinate communication with the Hill to
avoid confusion and concerns.
Other
Retrofitted by NPS. After Pier is done than NPS would provide a license. Three years to do substructure repairs. Foundation will do shed, through the lease agreement. Analysis next year in 2005.
Construction, minimum, from the time line item is approved and funded.
Foundation will step up then lender financing will be used--through the lease.
