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HomeMy WebLinkAbout2012.09.18 Economic Development Special Committee Meeting Minutes - FINAL CITY of SUMMARY MINUTES OF THE ECONOMIC DEVELOPMENT COMMITTEE DUBLIN SPECIAL MEETING - September 18, 2012 A special meeting of the Economic Development Committee was held on September 18, 2012, in the City Manager's Conference Room of the Dublin Civic Center. The meeting was called to order at 4:35 PM by Mayor Sbranti. 1. Call to Order PRESENT: Mayor Sbranti ABSENT: Councilmember Biddle 2. Public Comment No comments were made by any member of the public at this time. 3. Economic Development Strategy Update The City's Economic Development Consultant, Economic & Planning Systems, Inc. (EPS) presented the Committee with the Draft Economic Development Strategy (attachment to the Minutes) and a review of the proposed Strategy recommendations. The update also included a status of the upcoming Executive Roundtable, which will be held on Sept. 20 at Dublin Corporate Center. It is anticipated that a final draft will be presented at the November 6, 2012 City Council meeting. ACTION: The Committee accepted the verbal report. 4. Adjournment There being no further business to come before the Committee, the meeting was adjourned at 5:21 PM. Minutes prepared by Hazel L. Wetherford, Economic Development Analyst. Mayor ATTE* _ _ _ ' �� . onomic Development Analyst (443( 411144,41- Draft Summary Report City of Dublin Economic Development Strategy Prepared for: City of Dublin Prepared by: Economic & Planning Systems, Inc. EPS #21541 Table of Contents 1.I ...................................................................................................... 1 NTRODUCTION 2.B ....................................................................................................... 3 ACKGROUND Socioeconomics ................................................................................................... 3 Economy ............................................................................................................ 3 3.EDSF........................................................... 10 CONOMIC EVELOPMENT TRATEGY RAMEWORK 4.REDO................................................................. 13 EAL STATE EVELOPMENT PPORTUNITIES 5.SC ............................................................................... 15 TAKEHOLDER ONSIDERATIONS 6.SR ................................................................................. 18 TRATEGY ECOMMENDATIONS List of Figures Figure 1Dublin Employment Trend .............................................................................. 4 Figure 2East Bay Employment Trends and Projections .................................................... 5 Figure 3Dublin Employment by Industry ...................................................................... 7 Figure 4General Categories of Competitiveness ........................................................... 10 Figure 5Challenges, Goals, and Strategy .................................................................... 18 Figure 6Summary of Economic Development Strategy .................................................. 22 1.I NTRODUCTION Unlike most cities in the Tri-Valley, Dublin has room to grow, with a variety of opportunities for economic development and urban enhancement throughout the City. This 47,000-person municipality with over 19,000 jobs still has significant undeveloped land capacity and large infill sites for redevelopment. For residents and businesses, Dublin is a strategic central location in the still-burgeoning Tri-Valley Region. With about 35 percent of Alameda County population growth occurring in the Tri-Valley over the last 10 years, the region is evolving rapidly. While reputable forecasts indicate wide-ranging economic futures for the Bay Area, there is agreement that the regional economy has stabilized and is poised for growth. A review of well-accepted regional economic projections reveals that the East Bay (Alameda and Contra Costa Counties) will add 175,000 or more jobs over the next 20 years. This Economic Development Strategy offers realistic, implementable recommendations for the City of Dublin as it competes with other cities in the region to attract new jobs and grow its economic base. In addition to presenting proposed strategic activities for the City, this report presents analytical findings and rationale for the recommendations. Dublin’s Economic Development Strategy commenced in spring 2012. The process includes: Stakeholder interviews Economic research and analysis Real estate research and analysis Public workshops Strategy development City Council and Committee workshops Strategy documentation The City anticipates that the Economic Development Strategy will be adopted by the Dublin City Council, providing City staff with a plan of action for economic development activities. Currently, the City supports an Economic Development Department to implement economic development programs in Dublin. Through a diverse suite of targeted initiatives, the overarching activities of the Department include: Business attraction and recruitment Business retention and expansion assistance Business development support The goals of the Economic Development Department are to enhance the competitiveness of the City and to maintain a strong and diverse economic base. The Economic Development Strategy strives to achieve these goals in three primary areas: Continuation of existing economic development programs Enhancement and expansion of current economic development programs Evaluation and implementation of new economic development programs 1 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Through the Economic Development Strategy process, the City has identified that residents and businesses hope to sustain the “quality of life” and improve the “quality of place” in Dublin. For this reason, a key feature of the Economic Development Strategy is its emphasis on land use- and real estate-based strategies for urban enhancement. 2 Economic & Planning Systems, Inc. 2.B ACKGROUND Socioeconomics With buildable land, desirable communities, and strong transportation connections to the rest of the Bay Area, the Tri-Valley has grown rapidly in recent years. Population in the Tri-Valley increased by over 20 percent between 2001 and 2011, accounting for more than one-third of growth in the East Bay. Dublin grew by 44 percent during this period, adding about 14,000 residents. Over 30 percent of Dublin’s current population is attributable to growth over the past 10 years. Within the Tri-Valley, the only city that added more residents during this timeframe was San Ramon, a city which is now largely built out. With growth, Dublin has become more cosmopolitan. The City’s residents are increasingly diverse, well-educated, and affluent. Asian and multi-race persons have become a significantly greater share of the population, with Asian residents now accounting for over a quarter of the 1 City’s population. The educational attainment of residents has increased notably; over half of Dublin’s residents now hold a college degree (up 10 percentage points since 2000). Accordingly, the median household income in Dublin has reached $109,000 per year, in line with the Tri- Valley overall. Economy While employment levels in Dublin fluctuated dramatically during the 2000s, recent data indicate that total employment in the City is up. Despite two recessions, the technology bust in 2001 and the great recession of 2008-09, Dublin had over 19,000 jobs in 2010, more than in 2000. The jobs-housing balance in Dublin remains healthy at 1.4 jobs per household. However, most Dublin residents commute out of the City for work, with significant numbers going to San Jose, Oakland, and San Francisco. 1 Asian is defined by the US Census Bureau as a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent. 3 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Figure 1 Dublin Employment Trend 21,0008.00% 20,751 20,658 20,492 20,416 20,5006.00% 5.9% 20,199 20,187 20,130 5.3% 20,0004.00% 3.8% 19,598 2.6% 19,5002.00% Annual Employment Growth 19,385 Total Employment 19,004 19,0000.00% 0.4% 0.1% 18,412 18,500-2.00% -1.6% -2.3% -3.0% 18,000-4.00% 17,500-6.00% -7.3% 17,000-8.00% 20002001200220032004200520062007200820092010 Total EmploymentAnnual Employment Growth (%) Sources: National Establishment Time Series (NETS); Reference USA; CSER; and EPS Economic Outlook Regionally, the economic outlook is positive. Employment growth forecasts indicate potential for robust growth over coming decades, primarily in knowledge-intensive sectors that include professional services, health care, and education. While projections indicate that the manufacturing industry will continue to shed jobs, there are growth opportunities in specialized high-technology manufacturing sectors (e.g., medical technologies, electronic instruments, aerospace). A recent study conducted by the East Bay Economic Development Alliance (EBEDA) makes the case that: Professional, scientific, and technical services (PSTS) industries are strong and growing; Manufacturing – especially advanced manufacturing – still matters; and 2 Advanced manufacturing success is linked to strength in innovative PSTS industries. 2 Building on our Assets, Economic Development & Job Creation in the East Bay, East Bay EDA (2011) 4 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report The Tri-Valley has been and will continue to be a hotspot for “knowledge workers” in the East Bay. The EBEDA report highlights the fact that “companies like Oracle, WorkDay, Taleo, and Sybase are located in the Tri-Valley region which is now home to a significant software cluster.” The report also documents that the Tri-Valley offers a “large base of skilled workers” and has 3 “more affordable housing than San Francisco or the Peninsula.” While the regional economic forecasts vary in their quantitative estimates of job growth, they confirm the potential for economic expansion in the East Bay. This analysis evaluates five recently published and well-regarded forecasts, including Woods & Poole Economics (WPE), Moody’s Analytics, CalTrans, Association of Bay Area Governments (ABAG) projections from 2009, and the more-recent ABAG Sustainable Communities Strategy forecast from 2011. From 2010 through 2030, the forecasts indicate that the East Bay will add between 177,000 and 397,000 jobs (17 percent to 37 percent growth). Figure 2 presents the five employment growth 4 forecasts for the East Bay. Figure 2 East Bay Employment Trends and Projections 1,600,000 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 900,000 800,000 Woods & PooleMoody'sCalTrans 2012SCS 2012 (Draft)ABAG 2009 Sources: Woods & Poole Economics; Moody’s Analytics; California Department of Transportation; ABAG; EPS 3 Ibid. 4 Note that because of inclusion/exclusion of various employment types and differences between underlying data sources, base employment estimates vary considerably across the forecasts. 5 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Venture Capital Trends The recent trends in venture capital (VC) funding for East Bay firms support the notion of healthy employment growth in the future. Research finds that VC funding is correlated with measurably 5 faster growth. Total reported VC funding for East Bay companies increased to $1.46 billion in 2011, up 35 percent from 2010. Tri-Valley firms received nearly 40 percent of these funds, over $550 million, with more than $26 million going to Dublin-based Tria Beauty. The top 5 VC recipients in the Tri-Valley represent the breadth of emerging high-value economic activities occurring here, including energy development, high-technology manufacturing, and professional, scientific, and technical services:  Fulcrum BioEnergy Inc. (Pleasanton) - $175 million in early-stage/expansion funding for this developer of alternative energy facilities  BridgeLux Inc. (Livermore) - $102 million in late-stage funding for this manufacturer of LED lighting technologies  Workday Inc. (Pleasanton) - $85 million in expansion funding for this developer of software solutions for human resources  IntegenX Inc. (Pleasanton) - $40 million in late-stage funding for this manufacturer of complex analytical instrumentation  Tria Beauty (Dublin) - $26 million in late-stage funding for this developer of over-the-counter cosmetic medical products Significant new employment can be expected to accompany the growth of these and other successful up-and-coming innovation firms. Accommodating this job growth locally should be a priority for Dublin and other Tri-Valley cities. Dublin’s Economic Composition Currently, five industry sectors account for the majority of employment in Dublin, including: Retail Trade - 17 percent of jobs; Professional, Scientific, and Technical Services - 11 percent of jobs; Manufacturing - 9 percent of jobs; Accommodation and Food Services - 9 percent of jobs; and Administration and Waste Services - 7 percent of jobs. 5 Building on our Assets, Economic Development & Job Creation in the East Bay, East Bay EDA (2011) 6 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Figure 3 Dublin Employment by Industry 0.1% Natural Resources and Mining 0.5% Utilities 6.3% Construction 9.3% Manufacturing 6.5% Wholesale Trade 16.6% Retail Trade 1.6% Transportation and Warehousing 3.0% Information 4.7% Finance and Insurance 3.1% Real Estate Rental and Leasing 10.9% Professional, Scientific, and Technical Services 0.1% Management of Companies and Enterprises 7.4% Administrative and Support and Waste Management and Remediation… 1.0% Educational Services 4.4% Health Care and Social Assistance 1.5% Arts, Entertainment, and Recreation 8.9% Accommodation and Food Services 6.8% Other Services 7.3% Government and Unclassified - 500 1,000 1,500 2,000 2,500 3,000 3,500 Employment (% of Total) Sources: National Establishment Time Series (NETS); Reference USA; CSER; and EPS Retail In addition to supporting more jobs than any other sector, retail establishments are an important amenity for Dublin businesses and residents. The City supports a diversity of retail offerings, including convenience and comparison goods. Retail establishments are found throughout the southern area of the City, particularly along the Dublin Boulevard corridor. In total, there are 3.8 million square feet of retail space in Dublin. While there is some vacancy (about 8.4 percent citywide), including some outmoded spaces, most centers remain well occupied and financially viable. Dublin’s retail sector produces greater taxable sales per capita than any other Tri-Valley city. Professional Services and Information Technology The well-established Professional, Scientific, and Technical Services (PSTS) and Information industries in Dublin offer skilled workers relatively high-paying employment opportunities. These sectors serve international markets and bring new wealth into the local economy. In Dublin, the PSTS industry makes up a larger share of total employment than in any other Tri-Valley City, 7 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report nearly 11 percent of jobs. While Dublin employment in PSTS contracted during the early 2000s, more recent trends indicate a return to growth in the sector. In the early 2000s, City leaders coined the term “Digital Dublin”, as major technology companies chose to locate in the City, attracted to new (built to suit) office buildings near the core of the growing cluster of software and information technology businesses in the Tri-Valley. On the heels of office development at Dublin Corporate Center (430,000 square feet in 3 buildings) and Emerald Point (415,000 square feet in 3 buildings), Sybase (previously of Emeryville) built a 400,000-square foot headquarters campus in Dublin. While it has been over a decade since office development has occurred, this analysis anticipates new office projects in Dublin are not far off. Regional employment growth in high-value professional services and information technology and the associated space demand, coupled with a paucity of available high-quality office space, likely will push lease rates to a level that will support new construction. If the economy picks up as the regional growth forecasts suggest, Dublin could see demand for as much as 200,000 square feet of office space annually, after vacancies in the regional market are filled. Manufacturing Manufacturing continues to play an important role in the Dublin economy, in terms of employment and output, and by contributing to overall economic diversity and stability. Though the share of total employment in manufacturing has been falling, manufacturing still accounts for almost one in ten jobs within the City. Many of these are good quality, well-paid jobs. Manufacturing is Dublin’s most significant industry from a gross sales perspective, generating nearly $570 million a year in economic output. However, manufacturing jobs in Dublin make up a lesser share of total employment compared with other Tri-Valley cities, such as Pleasanton where nearly one in five jobs are in manufacturing. Industry Subsectors and Economic Clusters Looking forward, the economic data reveal specialized industry subsectors with potential for growth, including select Professional, Scientific, and Technical Services jobs (e.g., scientific research, engineering, legal, and advertising) and Information jobs (e.g., software, data processing, and telecommunications). These subsectors have exhibited relatively rapid employment expansion in recent years. Also, notable economic clusters (i.e., concentrations of interrelated businesses/industries) have evolved in Dublin and the Tri-Valley, including: Information and Communications Technology Health Care and Biomedical Business and Financial Services Fast-growing industry subsectors and economic cluster are potential strategic target for the City’s economic development work. Business Establishments Dublin is home to a number of large corporations. Top employers in the City include:  Carl Zeiss – an international optics and opto-electronics firm; 8 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report  Sybase (an SAP Company) - enterprise and mobile software firm with global customer base; and  MicroDental Labratories – a fabricator of high-quality dental restorations, part of a North American network of labs (DTI) Small firms also play an important role in the Dublin economy. More than nine out of ten businesses in Dublin support fewer than 20 jobs. Both large and small businesses in Dublin offer great potential for employment growth in the future. Tri-Valley Labor Force Much recent economic success in the Tri-Valley has been attributed to the labor force. Even within the well-educated East Bay, the Tri-Valley is notably well endowed with highly-skilled workers, particularly in computer-related fields. Census data for the Tri-Valley indicate that a greater share of residents is employed in computer and mathematical occupations than the East 6 Bay overall, 6.4 percent versus 4.7 percent. When Fortune 500 firm General Electric decided to open a global center for software research in the Tri-Valley, a spokesperson for the company 7 noted that “proximity to talent” and “community” were important aspects of the decision. Anecdotal information from local business representatives reveals that the Tri-Valley is an ideal location for knowledge workers and their families, with excellent public schools, reasonably- priced housing, and community stability and safety. 6 American Community Survey, US Census Bureau (2005-9) 7 General Electric to take 125,000 square feet in Bishop Ranch, San Francisco Business Times, (November 17, 2011) 9 Economic & Planning Systems, Inc. 3.EDSF CONOMIC EVELOPMENT TRATEGY RAMEWORK This Economic Development Strategy focuses on potential actions that could be taken by the City of Dublin to improve its competitive position relative to other California cities. The Strategy views competitiveness as the City’s overall “value proposition” for businesses and residents, considering factors that influence the attractiveness of the City for commerce and living relative to the cost of the location. Competitiveness reflects a multitude of subjective measures. In general, competitiveness encompasses a city’s attractiveness to companies, attractiveness to individuals, reputation/brand, and innovation environment (i.e., potential for home-grown economic development). Figure 4 General Categories of Competitiveness Attractiveness Innovation to Companies Reputation / Attractiveness Brandto Individuals In addition to traditional economic development tools that focus primarily on cost-based incentives for business, a holistic view of economic competitiveness also emphasizes the importance of “quality of place” and “quality of life” factors in attracting companies and individuals, establishing a good reputation, and fostering innovation. Throughout California, the United States, and globally, City-regions compete with one another to attract skilled labor, new investment, and quality jobs. Increasingly, economic growth is driven by knowledge, skills, innovation, and entrepreneurship. Attracting talented people is imperative and in competing for talent, cities are distinguishing themselves by investing in urban development, improving quality of place and life for residents and workers. 10 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report In a recent report prepared for the US Department of Commerce, Economic Development Administration, the Council on Competitiveness states that: Perceptions about quality of life in a region can heavily impact attraction and retention efforts of companies, skilled workers, and entrepreneurs. Talent is mobile, and quality of life has assumed greater importance in economic development practices as many regions 8 have developed strategies to nurture the “creative class.” Cities around the world are embracing economic development programs aimed at bolstering quality of place and quality of life factors. In Toronto, the City’s economic development strategy acknowledges that “quality of place provides a competitive advantage.” Toronto’s strategy recognizes that: Producing, attracting and retaining knowledge economy workers is probably the most critical element for success in the contemporary economy. Entrepreneurs and skilled labor are increasingly mobile assets. Qualified knowledge economy business people and workers can choose which cities they will live and work in. The quality of place a city provides, which is often indicative of the quality of life offered, can be an important factor in their location decision… …a city’s arts and cultural amenities, including not just formal events and places like symphony halls or museums, but the vitality of its more informal amenities, like restaurants, street cafés, bookstores and outdoor festivals, become tangible assets that 9 play a role in fostering creativity and innovation. An increasing body of research supports the notion that quality of place can be a significant factor in site selection decisions and that the emotional connection to a community can be as important quantitative determinants.  A 2003 study from the Center for Urban and Regional Studies at the University of North Carolina concludes that quality of place is increasingly important in site selection and investment decisions, particularly for technology companies that rely on highly-skilled knowledge workers and are less sensitive to location-based factors such as proximity to 10 markets, raw materials, and inexpensive labor.  A 2011 study from the Silicon Valley Workforce Investment Boards considered the high- technology economy in the South Bay and found that the “Valley's high quality of life – including beautiful weather, good schools, and the ability to live and work in the suburbs— 8 Measuring Regional Innovation, The Council on Competitiveness (2005). 9 Toronto Economic Development Strategy, City of Toronto (2000) 10 The Importance of Quality of Life in the Location Decisions of New Economy Firms, Center for Urban and Regional Studies at the University of North Carolina (2003) 11 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report was a major advantage, making CEOs want to locate their companies there and attracting 11 talented workers and their families." Land use decisions are central to the City of Dublin’s capacity to compete for economic development. The community’s ability to develop new sites and reuse others, locate interrelated companies near each other, to encourage the growth in key business nodes, and to build vibrant, engaging, and contemporary places is central to its competitiveness. Promoting real estate investment and achieving desirable land use outcomes is critical to positioning Dublin for economic growth and long-term sustainability. According to a recent Urban Land Institute paper, “Investors and entrepreneurs want to see a community and its leadership moving to the future before allocating their time and capital. A city hoping to have a thriving and sustainable economy needs to be a place that demonstrates a track record of effective partnerships for this 12 type of ongoing innovation to occur.” 11 Silicon Valley in Transition: Economic and Workforce Implications in the Age of iPads, Android Apps, and the Social Web (July 2011) 12 Building on Innovation: The Significance of Anchor Institutions in a New Era of City Building, Urban Land Institute (2011) 12 Economic & Planning Systems, Inc. 4.REDO EAL STATE EVELOPMENT PPORTUNITIES With Dublin’s Class A Office vacancy rate now at only 5 percent, new office development will be essential to support job creation within the City. Dublin’s General Plan and more detailed Specific Plans (e.g., Downtown Specific Plan) envision additional commercial development in the City. The City has sites, both in the East and West, proximate to BART and the highways, which are ideal for new office space. In step with countywide trends, Dublin enjoyed a commercial office building boom in the late 1990s and early 2000s, with delivery of nearly 1 million square feet of new office space occurring in the City. Between 1999 and 2002, office development in Dublin accounted for almost a third of Alameda County’s new supply. With a return to economic growth and regional job creation, Dublin is still well positioned to enjoy further commercial development. The Dublin City staff is poised to provide support services to facilitate commercial real estate development. Dublin never established a Redevelopment Agency and today, while many California cities grapple with legislative changes associated with the dissolution of California’s Redevelopment Agencies, Dublin’s development services continue uninterrupted. In fact, the City staff has continually improved services based on feedback from local business stakeholders. There are two areas within Dublin that the Economic Development Strategy envisions focused st City efforts to develop workplace communities for the 21 Century:  East Dublin - In East Dublin, at the Eastern Transit Center, Alameda County controls un-built sites entitled for 2.2 million square feet of commercial office space and accepts purchase offers through a competitive bidding process. The Alameda County Surplus Property Authority oversees this land disposition process, seeking to maximize revenue to the County’s Surplus Property Development Trust Fund (i.e., the “Emerald Fund”). In recent news, publicly-traded retail REIT Regency Centers is negotiating to acquire a 14-acre site to be developed with a Whole Foods-anchored retail center. Nearby corporate centers include a number of notable software and professional services firms.  West Dublin - On the west side of Dublin, in the Downtown Specific Plan Area, a number of large parcels offer opportunities for redevelopment proximate to BART. Downtown is where the Essex Property Trust real estate company is developing an new urban infill housing project, with 309-units provided in a mid-rise format. Other Downtown development projects are moving forward with project planning and the City is implementing a streetscape improvement and beautification project on Golden Gate Drive. In considering the potential for future commercial development in these strategic areas, it is essential to consider the competitive landscape of the real estate market. Currently the primary competition for major commercial tenants comes from two large-scale business parks in the Tri- Valley, Bishop Ranch in San Ramon and Hacienda Business Park in Pleasanton.  Bishop Ranch – Home to the global headquarters of Chevron and major tenants that include AT&T and Toshiba, Bishop Ranch is a well-known and highly-desirable office cluster. The 13 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report marketing material for the business park indicates that “Bishop Ranch is home to 550 thriving companies in more than 30 industries, from Fortune 500 companies…to exciting small businesses in growing areas like social software and clean tech.” In recent months a number of noteworthy leasing deals with firms expanding in the region (e.g., General Electric, Five9, Tiburon) have reduced the quantity of vacant space at Bishop Ranch to less than 5 percent, signaling that new development may not be far off.  Hacienda Business Park – The 875-acre Hacienda includes over 10 million square feet of mixed-use space occupied by roughly 475 companies that employ approximately 18,000 people. Similar to Bishop Ranch, Hacienda is home to a number of Fortune 500 companies as well as lesser-known small- and medium-sized firms. Currently about 20 percent vacant, Hacienda has struggled to lease large spaces in recent years. With many buildings built during the 1980s, building formats are dated and in some cases offer indivisible blocks of space. While there has been recent leasing activity from small-space users, Hacienda’s building stock appears to be somewhat out of step with the current market. With Bishop Ranch near full occupancy and available office space Hacienda slightly misaligned with current market demand, the commercial real estate market may be nearing a phase of new product development in the Tri-Valley. However, there are challenges associated with new development that must be considered, primarily related to the financial feasibility of new construction.  Real Estate Development Economics – In the current market, office lease rates do not justify the cost of new office development. During the last major construction cycle, in the late 1990s and early 2000s, Alameda County Class A full-service office rents topped $3.50 per square foot per month. Today, rents are less than $2.50. Local commercial real estate experts indicate that $3.00 rents are needed to support new office development. As the availability of competitive office space declines, rents are likely to rise to levels necessary to support new projects.  Infill Development Cost Premiums – Dublin envisions commercial development Downtown, an area previously developed with automotive, industrial, warehouse, and other low-density uses. Redevelopment of Downtown parcels may involve demolition, environmental remediation, unique site constraints (e.g., configuration), parcel assembly, and other development challenges that create a cost premium over greenfield development, which worsens development feasibility.  Land Costs – In some cases local land owners are unwilling to sell land at prices supported by the current market, commonly waiting for market conditions to improve before seeking to dispose of their assets. Land value expectations must fall in line with current real estate values in order for developers to pursue new projects. 14 Economic & Planning Systems, Inc. 5.SC TAKEHOLDER ONSIDERATIONS Interviews with stakeholders in Dublin offer valuable insight into the strengths, weaknesses, opportunities, and threats facing the City today and in the future. Through one-on-one interviews, focus groups, and public meetings, this study collected opinions from engaged citizens and business representatives. Major considerations for economic development cited include those listed below: Economic Development Strengths in Dublin  Location at 580/680 – Well-connected by freeways to the rest of the region, including the South Bay  BART access – Well-connected by public transportation to Oakland, San Francisco, and other regional centers  City’s strong fiscal condition – Experienced leadership team, recent budget surplus, and no RDA dissolution process to burden City  Housing value – High-quality new housing, competitively priced relative to most Bay Area markets  Retail offerings – Diverse suite of local and national retailers, well distributed throughout the City  High-caliber public school system – Well regarded Dublin Unified School District offers new facilities and a growing number of Advanced Placement classes  Open space and recreation – High-quality local and regional parks, including Fallon Sports Park, the City's newest park and a premier sports facility  Public safety – Stable, low-crime community supported by ample police and fire emergency services  Small-town feel – Long-time local businesses, farmers market, and City events (e.g., St. Patrick’s Day Parade and Festival) foster community character and vibrancy Economic Development Weaknesses in Dublin  High development fees – Relatively high cost associated with new real estate development projects  City permitting process and cost – Lengthy, uncertain permitting process, particularly challenging for small businesses pursuing tenant improvement projects  Limited City experience with infill – City planning and development services have primarily addressed new projects in undeveloped “greenfield” areas 15 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report  Uncertain market demand for attached housing – Local housing developers indicate that current market forces are pushing developers to pursue traditional single-family housing  Limited available office space – There is minimal office vacancy, making it difficult to grow existing companies and attract new firms to Dublin  Challenging economics for new office development – Despite low vacancy, rents have not appreciated to the point where developers are pursing new office projects  Difficult environment for new small businesses – Small businesses struggle to navigate City permitting processes Economic Development Opportunities in Dublin  Significant vacant land at Dublin/Pleasanton BART – Undeveloped land at the Eastern Transit Center is well-suited for significant new office developments  Large redevelopment sites at West Dublin/Pleasanton BART – Reuse sites near the West Dublin station offer potential for infill within the City’s now burgeoning Downtown  Business and leisure hospitality needs – The Tri-Valley currently lacks a high-end hotel and regional conference center, potential future opportunities for centrally-located Dublin  Paragon outlet visitors – With 8 million visits per year projected (40 percent originating outside the Tri-Valley), the new Livermore retail center is a potential driver of “spinoff” economic activity in Dublin and the Tri-Valley overall  Kaiser Permanente – The healthcare giant has “banked” land in East Dublin for a medial facility that could create spinoff economic activity, possibly including medical services and retail amenities  Camp Parks and the County courthouse – New public facilities (DoD and County) in central Dublin could create new opportunities for economic development  Surplus land – The City’s surplus land holdings may be appropriate for development that generates public benefits Economic Development Threats in Dublin  Lack of identity within the Tri-Valley – A relatively young city, Dublin has struggled to establish a clear defining character, distinct from other nearby municipalities  Competition with neighboring cities – Other cities in the Tri-Valley are also well positioned for economic development  Over-regulation – Policies such as the recently-proposed tobacco sales ordinance could affect the business climate in Dublin  Air quality-related development restrictions – Bay Area Air Quality Management District regulations related to development near freeways could affect development potential 16 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report  Technological infrastructure – City preparedness to meet demand for power and communications infrastructure from high-technology companies is a concern  Safety and congestion issues – Along with economic development, programs to manage traffic and promote public safety should be considered 17 Economic & Planning Systems, Inc. 6.SR TRATEGY ECOMMENDATIONS This Economic Development Strategy seeks to improve the City of Dublin’s competitive position and maximize potential for employment growth in the City. The Strategy embraces the current practices of the City and proposes areas where City service enhancements, strategic partnerships, and new programs may be effective. The top priorities for economic development activities in the city include:  Marketing and Branding  Small Business Growth  Downtown Dublin Development  Eastern Transit Center Development The strategy offers measures specifically intended to generate benefits related to these City priorities, as well as to offer tools that promote economic development citywide. The strategy endeavors to address specific challenges in Dublin, particularly issues affecting the City priorities (e.g., development of strategic areas). Figure 5 summarizes the priority strategy considerations, specific goals for economic development, and recommended strategy concepts. Figure 5 Priorities, Goals, and Strategy 18 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Strategy 1: Maintain and Enhance Current Economic Development Practices – Continuing Efforts to Enhance the Competitiveness of the City and Maintaining a Strong and Diverse Economic Base The City of Dublin has a number of economic development programs in place. With no additional cost (or risk) to the City, Dublin could commit to administering these programs, codifying overarching policies in an Economic Development Element of the General Plan. Particular economic development programs to consider for inclusion in the General Plan are the following: Business Incentive Programs – The City offers a number of incentives that respond to current economic conditions and serve to attract and retain business activity in Dublin. While programs should evolve over time to adapt to changing economic challenges, examples of Dublin’s current programs include: –Sales Tax Reimbursement Program - For businesses that generate more than $10 million in taxable sales, the City offers a program to help offset site or building improvement costs. –Fee Deferral Program - The City offers a program for non-residential development that allows developers to pay the Traffic Impact Fee before occupancy. –Sewer Capacity Assistance Program - The City offers financial assistance to businesses that require new or additional sewer capacity, up to 25 percent of capacity fees. –Commercial Façade Improvement Grant Program - For commercial businesses located in the Downtown, the City offers a grant program to offset costs associated with exterior aesthetic improvements.  Business Seminars - In partnership with the Dublin Chamber of Commerce and the Alameda County Small Business Development Center, the City offers business seminars to support business owners.  Roundtable Programs – The City hosts roundtable meetings with local business groups, including the real estate community and small business owners.  Coordination with Regional Entities – The City is an active participant in regional economic development activities, including i-GATE, Innovation Tri-Valley, the Tri-Valley Convention and Visitors Bureau, and the East Bay Economic Development Alliance.  Business Recognition Program – The City formally recognizes local businesses for significant anniversaries and notable contributions to the community.  Business Visitation Program – The City meets one-on-one with businesses to assist with retention and expansion and to market other City services.  Marketing and Branding – The City prepares marketing materials, maintains socioeconomic and other community data, and attends conferences and other events to promote the City.  Ombudsman Services – The City facilitates permitting and other interactions between the business community and local government. 19 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Continuation and enhancement of these current programs is critical to the City’s economic development. In particular, marketing and branding must be continually updated to refresh the City’s outward identity, publicizing the evolution of Dublin’s Downtown, Eastern Transit Center, and new business community members. While the City has produced a brochure (Dublin – A Great Place to Grow) and City representatives frequently attend conferences and other events to promote the city as a place for business, a comprehensive marketing and branding plan and budget should be established. This plan would establish a marketing identity for the City and specify appropriate Bay Area media outlets for promotion. Relative to current efforts, more focused marketing may be cost effective. The Strategy analysis presents a number of industries and economic clusters that may be appropriate marketing targets. The City should also build on the Business Visitation program by strategically targeting high- 13 growth companies (e.g., “Gazelle” companies). Retaining these high-growth companies is a priority, given the potential they hold for job creation within the city. The visitation program offers a method for the City to identify local challenges to business growth, an essential first step in identifying economic development issues, problem solving, and establishing greater economic stability. In addition to the specific programs above, the City should also maintain current efforts to leverage City and regional strengths, amenities, and demand drivers, including exploring connections to the Livermore Valley Wine Region, enhancement of local open space and recreation areas, and coordination with Camp Parks. In particular, the City should consider increased participation with i-GATE (Innovation for Green Advanced Transportation Excellence, a regional public-private partnership) including exploring the potential to host i-GATE-affiliated programs in Dublin. Strategy 2: Expedited Permitting and Enhanced Development Services – To Improve Business Conditions for Small Businesses and Other Project Proponents Interviews with local businesses point to shortcomings in City processes related to project permitting, particularly tenant improvement projects. For minimal additional cost (or risk), the City could asses and refine current development service practices to ensure that the City provides a full continuum of service (from inquiry to occupancy). This program update would require planning and some moderate start-up resources. The benefits of the enhanced service might include:  Improved application and permitting process, potentially including an information technology system (e.g., software to track permit process status) and procedural refinements and improvements  Streamlined process that assigns an applicant to work with one team, whose members are involved in the project from beginning to end 13 Gazelle companies are those with $500,000+ in sales revenue and more than 20 percent sales growth over the past five years. There are 57 Gazelle companies in Dublin. 20 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report  Front-loaded project review to resolve planning and code-related deficiencies without impacting the delivery of the project The primary purpose of Enhanced Development Services is to provide all permit applicants a clear roadmap and timeline for interactions with the City. By promoting a streamlined and transparent process, project applicants will benefit from reduced project uncertainty and risk. The program would endeavor to minimize unnecessary permit costs for entities doing business in the City of Dublin. Implementation of enhanced development services could occur over two years, with the near- term goal (year 1) of program planning and a medium-term goal (year 2) of piloting the updated program. Strategy 3: Increase Partnerships with Real Estate Developers and Landowners – To Entitle Sites to Meet Current and Future Market Demand and Provide Marketing Support Despite available development sites, marketing of specific real estate development opportunities in Dublin is insufficient. There is an opportunity for the City to partner with real estate developers and landowners to position sites for expedited land development and to promote the development opportunities. A program of this nature would be new in Dublin and would require staff and consultant effort, with an appropriate budget for the program to be determined. The benefits of strategic City partnerships with landowners could include:  Early capture of real estate development demand  Improved partnership with Alameda County Surplus Property Authority to maximize development potential and expedite employment-supporting development  Repositioned sites based on upfront real estate feasibility, planning, and design work to address current market opportunities and improve developer/tenant interest in new development The goal of establishing strategic partnerships with landowners is to position sites for commercial real estate development, including job-supporting uses such as office and retail spaces. In coordination with owners, parcels could be pre-entitled and marketed to best meet current market demand factors. The effort would, to a greater degree than is currently the case in Dublin, establish “shovel ready” sites that are competitive with those found at the top tier business parks in the region. The City could assist with marketing development sites, including through internet listings, electronic and hard copy brochures, and in-person meetings and conference engagements. With market-tuned sites positioned for expedited development, the City can promote speculative and build-to-suit development with a highly-competitive lead time for occupancy of new space. Implementation of a strategic partnership program could occur over two years, with the near- term goal (year 1) of planning the program, identifying strategic partners, and commencing marketing activities. The medium-term (year 2) goal might include supplementary pre- development and entitlement work, as needed for specific sites that prove difficult to market without repositioning. 21 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Strategy 4: Explore Economic Development Corporation – To Expedite Development Progress Downtown and Optimize Conditions for Entertainment Uses As discussed above, quality of place and quality of life factors are increasingly critical to economic development strategy. To maximize the City’s potential to promote and guide private sector development activities toward creating new, unique, and character-rich place in Dublin, the Economic Development Strategy recommends the City explore the benefits and costs associated with formation of a local Economic Development Corporation (EDC). While an EDC program could be expensive and risky relative to other strategies, an EDC would provide the City with a tool for active participation in urban enhancement through real estate development. The EDC would require dedicated operating funds and staffing, as well as investment capital, and EDC real estate development projects could expose the City to investment risk. However, the potential benefits of an EDC might include:  Proactive real estate development and investment partnerships with private-sector actors  Access to additional funding sources, including Federal funds  Accelerated private sector investment, particularly in challenging infill locations At the heart of the EDC proposal is the desire of the City of Dublin to expedite Downtown development activities and attract businesses that create a rich urban fabric, support street-level vibrancy, and establish a unique urban character and quality of place. Drawing entertainment uses to Downtown, a community priority, hinges on the repositioning of the area, from low- density commercial uses to a high-density mix of uses. To accelerate projects Downtown, the Strategy recommends that the City explore taking a leadership role in select catalytic development projects there. New Downtown development and associated increases in vibrancy and economic activity will set the stage for the Downtown envisioned by the City in its Specific Plan. Concept evaluation and initial implementation of an EDC program could occur over two years. In the first year, the City would explore the concept, weigh costs versus benefits, and make a go/no-go decision regarding the program. If a go, the medium-term goal (year 2) would be to establish a business plan and create a new legal entity. Operations would begin in year 3. Summary of Strategy Recommendations Figure 6 presents a summary of the primary Economic Development Strategy elements. These recommendations offer potential short- to mid-term actions across a spectrum of cost and risk to the City. Some components of the Strategy are already underway, including the codification of current practices in an Economic Development Element of the General Plan. Other components, particularly the recommendation that the City should evaluate the feasibility of an Economic Development Corporation, requires Council adoption and initiation. 22 Economic & Planning Systems, Inc. City of Dublin Economic Development Strategy Draft Summary Report Figure 6 Summary of Economic Development Strategy 23 Economic & Planning Systems, Inc.