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Cities Protect Industrial Lands

In the face of never-ending demand for housing and concerns about eroding the job base, some cities are imposing regulations to protect their industrial lands.

The three largest cities in the Bay Area have all taken steps to prevent their industrial lands from getting consumed by uses that do not generate jobs. But the issue of industrial land preservation is not confined to the Bay Area.

"It seems to be a big topic all around the state," observed Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation (LAEDC). Public officials in Los Angeles, Orange and San Diego counties have all wrestled with the issue, although none has achieved great success, Kyser said. Los Angeles city planners, for example, put forth some policy recommendations "but they ran into a buzz saw of opposition from residential developers."

The cooling of the housing market, however, appears to have given planners and elected officials a chance to discuss the issue of conversion in a less charged atmosphere.

"When the housing boom was going on there was a great deal of pressure to use that industrial land for housing," said Oakland City Councilwoman Nancy Nadel. But the market downturn "has taken a little bit of whip out of the chariot."

What makes the subject challenging in many cities and counties is the fact that not all industrial land is equal, and neither are all conversions. A further complication is that many people incorrectly assume industrial property is unnecessary in today's economy, said Kyser.

For the most part, smokestack industry is gone. But that does not mean there is no need for industrial property. Kyser said Southern California's industrial properties are filled by technology manufacturing and research companies, light industrial companies that perform very specialized manufacturing, logistics companies, printing and communications businesses, and various parts of the television, movie and entertainment industries.

Those are the sort of businesses that Oakland would like to see. Much of Oakland's industrial land lies on the west side, near the waterfront. During the recent housing boom, developers took a run at relatively inexpensive industrial land in West Oakland. Among the proposals (which appears to have stalled) was a project with three 30-story towers featuring industrial uses on the bottom floors, with residential condominiums above. Although some people have been happy to see fresh investment in a rough part of town, others worried about loss of jobs and gentrification.

"The whole concept of smart growth is to have a jobs-housing balance, not to have all housing," said Nadel, who represents West Oakland.

Several years ago, the city adopted the West Oakland plan as part of a new general plan, which for the first time specifically segregated heavy industry from residential uses, Nadel explained. But implementation of the West Oakland plan was not a priority then-Mayor Jerry Brown, who actively promoted industrial land conversions. Under Mayor Ron Dellums, the city is proceeding with adopting zoning consistent with the West Oakland plan, said Nadel, who is trying to push along the process. "The idea of housing above industry is just as ludicrous as having condos next to industry," she said.

San Jose is the most recent big city to take action. In late October, the City Council unanimously approved a "framework for preservation of employment lands." San Jose officials have long complained that the city provides the housing for Silicon Valley without getting its fair share of the tech sector's economic benefits. Still, the city has routinely approved the use of employment lands for housing development. From 1990 through 2000, the city approved conversion of about 68 acres a year, and from 2001 through 2006, the city backed conversion of about 120 acres annually, according to the planning department.

The City Council in 2004 approved a framework for evaluating proposed conversions. Since then, the council has approved every major conversion proposal except one. At the behest of Mayor Chuck Reed, who took office in January, planners drafted a new framework. It "focuses on strategies for preserving employment lands instead of identifying criteria or sub-areas where conversion can be facilitated," according to a staff report for the October 23 City Council meeting. "Production is increasing again as part of the new industrial economy focuses on clean technology, and the city needs to maintain an adequate inventory of light and heavy industrial lands to accommodate these demands."

In general, economic development proponents back the new framework, while housing advocates are leery.

"We're all trying to figure out what the implications of it are," said Shiloh Ballard, director of housing and community development for the Silicon Valley Leadership Group, a business organization and frequent housing proponent. If the framework ends up blocking housing development near transit stations, for example, it could be a problem, she said.

"Mainly, we look at it through the lens of compatibility," Ballard said "If you're going to put a use next to an existing business that could threaten the existing business, you need to take a careful look at that. It doesn't mean our organization is against conversion. But we want to make sure those new residents don't become NIMBYs that complain about the existing business."

This was exactly the issue in nearby Milpitas, where the City Council in October approved Fairfield Residential's plan for 659 apartments and townhouses on 20 acres of vacant industrial land within the Milpitas Technology Center. Business representatives and the city planning staff decried the land use conflicts and lost economic development potential. But the council majority backed the project as smart growth, saying it would put housing within walking distance of jobs, retail shops and transit. Greenbelt Alliance endorsed the project as responsible infill.

In San Francisco, the city essentially halted residential development on 2,200 acres in a mostly industrial area south of Market Street where conversions were going strong. City planners recently released an Eastern Neighborhoods plan that proposes prohibiting new housing in areas designated for production, distribution and repair, and charging residential developers up to $4 for each square foot of industrial space converted to residential use.

None of these issues are new to the City of Berkeley, which has struggled with them for two decades, said Daniel Marks, the city's community development director. A number of years ago, the city adopted a plan for industrial-oriented West Berkeley to preserve industrial properties and jobs. The plan does this with "pretty Draconian" zoning that makes shifting uses away from industry very difficult, Marks said. The pressure in West Berkeley is not necessarily from housing, but from commercial uses.

"Still, the marketplace will have its way. There is a lot of vacancy down there now," said Marks, who noted that Peerless Lighting and Flint Ink have left town in recent years. Several "green" businesses have moved into the area, as have a large number of arts and crafts uses. All of that is popular in Berkeley, Marks noted. Now the city is revising the West Berkeley plan both to provide for a bit more flexibility, and to address the fact that zoning has constrained land values in the area. For example, the city might permit a new use if a landowner were to dedicate some permanent space for artists.

"How do you capture some of that windfall from a change in zoning for public purposes?" Marks asked rhetorically. "That's what transfers of development rights and planned developments are all about."

The long-term trend is difficult to predict. While numerous infill developers continue to pursue entitlements, the LAEDC's Kyser questions the overall demand, especially in Southern California cities that got swept up in condo-mania.

"What we have seen is a lot of residential developers rushing in to convert these industrial places to lofts or condos," Kyser said. "But I think these people got caught in the sucker trap. When it came to the actual market, they had problems. The next couple of years are going to be just as interesting for these folks as it is for everyone in the housing industry."

Contacts:
Oakland Councilwoman Nancy Nadel, (510) 238-7003.
Jack Kyser, Los Angeles County Economic Development Corporation, (213) 236-4820.
Daniel Marks, City of Berkeley, (510) 981-7400.
Shiloh Ballard, Silicon Valley Leadership Group, (408) 501-7859.
City of San Jose "Framework": http://www.sanjoseca.gov/clerk/Agenda/102307/102307_04.05.pdf

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