DATE: February 10, 2015 TO

INFORMATION A
DATE:
February 10, 2015
TO:
Mayor and Members of the City Council
FROM:
Kathleen Diohep, Economic Development Manager
SUBJECT:
ECONOMIC DEVELOPMENT DIVISION PROGRESS AND PRIORITIES
RECOMMENDATION
Receive a presentation from the Economic Development Division on the City’s progress towards achieving its
economic development objectives and the current priorities for the Economic Development Division.
REASONS FOR RECOMMENDATION
Staff has committed to periodically inform the City Council on its progress on economic development projects
and priorities. This presentation will also provide background on economic development projects and priorities
in advance of City Council 2015 goal setting.
OVERVIEW
This report is the second periodic update on economic development initiatives. Unlike the presentation in
September 2014, that included the Planning, Building and Economic Development Divisions of the Economic
Development Department, this update focuses exclusively on the Economic Development Division. Two new
reports are presented that 1) summarize the status of projects in the City permit approval process and of 2)
major projects and economic development initiatives underway.
The attachments to this report include:
1. Economic Development Division Organization Chart – reflecting the expanded capacity in 2015
2. 2014 Economic Development Accomplishments
3. Summary of Major Economic Development Projects – providing an update on projects underway that
include City-owned land, development agreements or other economic development initiatives
4. 2014 Economic Development Summary – adapted from December 23, 2014 edition of Vallejo News
5. City of Vallejo Permit Applications In Process or Pending -- tracking the status of projects currently in
the City permitting process
6. Status of Implementation of the 2012 Economic Development Strategic Plan
7. Summary of the Economic and Real Estate Trends (Analysis from the General Plan economic
consultants)
Attachments 3 and 5 are new reports that will be updated on a regular basis to track economic development
projects.
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Date: February 10, 2015
Subject: ECONOMIC DEVELOPMENT DIVISION PROGRESS AND PRIORITIES
Page 2
DISCUSSION
Economic Development Division
The Economic Development Division (ED Division) supports economic growth in Vallejo. The division's
services include new business recruitment; referrals to technical assistance for existing Vallejo businesses;
business retention; facilitating and negotiating large development projects, such as the Waterfront Project;
managing the Mare Island conversion; asset management of City of Vallejo property; and, staffing the
Successor Agency to the former Vallejo Redevelopment Agency. The primary goals of the division are to
increase the tax base and employment opportunities in Vallejo.
The ED Division went from a team of six employees in 2007 to only one at the beginning of 2014. 2014 was a
year of rebuilding the necessary capacity to realize the plans in place and the projects that have been delayed.
ATTACHMENT 1 shows the current division organizational chart reflecting a staff of five with a contract asset
manager. ATTACHMENT 2 summarizes major accomplishments of the ED Division in calendar year 2014.
Many of these accomplishments were completed with assistance from other City departments and private
sector stakeholders.
ATTACHMENT 3 is a summary of the status of major projects and initiatives underway to advance economic
development. These include, but are not limited to, the development partnerships with Lennar Mare Island, the
waterfront development and disposition agreement with Callahan Associates, and the developer solicitation
effort underway for North Mare Island. Also included are projects associated with the dissolution of the former
redevelopment agency.
Summary of Current Economic Conditions
Vallejo is now participating in the economic growth of the greater region. In 2014, a significant number of
businesses started, expanded or relocated in Vallejo (see ATTACHMENT 4, the December 24, 2014 Vallejo
News, for a summary). Business licenses increased by 14% and Vallejo's (non-seasonally adjusted)
unemployment rate is estimated at 7.6% as of November 2014, down from 9.0% a year prior and 13.1% in
2009. A review of pending permit applications shows 17 projects currently being prepared or under review
(ATTACHMENT 5). The projects underway and recently completed in Vallejo have generally been
reinvestment in existing buildings with a few new retail construction projects. Two residential subdivision
projects have commenced sitework, reviving projects that stalled with the economic downturn.
Progress Toward Implementation of the 2012 Economic Development Strategic Plan
In October 2012, the City Council adopted the Economic Development Strategic Plan and Strategic Marketing
Plan (Strategic Plan) prepared by RDA Global Inc. Four targeted industry clusters were selected based on the
analyses of the City’s economic base and workforce composition relative to the County, region and country as
well as input received from the stakeholder group. The selected industry clusters are: manufacturing, tourism,
health sector, and higher education. The Strategic Plan identifies goals and actions focused on these targeted
industry clusters and an assessment of Vallejo’s economic development opportunities. The Strategic Plan did
not address major development projects and initiatives, including Mare Island, the Waterfront, Solano 360 or
Downtown.
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Date: February 10, 2015
Subject: ECONOMIC DEVELOPMENT DIVISION PROGRESS AND PRIORITIES
Page 3
Since the adoption of the Strategic Plan in 2012, the City initiated the Propel Vallejo efforts to update the
General Plan, develop the Sonoma Boulevard Specific Plan, and the Zoning Code update – all of which aim to
attract investment. The Strategic Plan is being used as a base document to inform these efforts.
ATTACHMENT 6 presents the goals and objectives of the 2012 Strategic Plan and an assessment of plan
implementation to date. While progress has been made toward some goals, other efforts have been deferred
until staff resources became available. Additionally, other efforts, such as the fiber optic initiative and a study
to resume the Army Corps of Engineers dredging of the Mare Island Strait Federal Channel, have been
initiated since the adoption of the Strategic Plan (and are identified in ATTACHMENT 3). Listed below are
initiatives recently begun by ED Division staff? Staff anticipates continued refining of the economic
development program and likely proposing new initiatives in FY 2015/16.
NEW ECONOMIC DEVELOPMENT INITIATIVES
The following are new or expanded economic development initiatives since the September 21, 2014 update to
the City Council.
Development Advocacy
ED Division staff is working with Planning, Building, and Engineering staff to monitor the development permit
pipeline and serve as an internal applicant advocate to ensure projects progress soundly through the review
process. ATTACHMENT 5 represents an initial output of this effort, identifying the status of proposed and
pending projects of significance and scale that ED is monitoring and offering coordination or advocacy as
necessary. An important next step will be compiling information about available locations for business to locate
in Vallejo and the development opportunity sites.
Business Retention Program
In March 2015, the ED Division will formalize a business retention program that will include on-site meetings
with Vallejo businesses, a survey of existing businesses, and other efforts to support the growth of local
businesses. In addition, staff actively pursue local businesses to apply for the Grow Vallejo Loan program,
which remains available as a tool to assist businesses with expansion in Vallejo.
Façade Improvement Program
The ED Division will launch a Downtown Façade Improvement Program by April 1, 2015. The funding for this
program was allocated through the first cycle of the City of Vallejo’s Participatory Budgeting (PB) Program. The
program will award matching grants of $5,000-$30,000 for eligible improvements to building facades in a
targeted area in and around the downtown.This program provides an opportunity to leverage $300,000 of
Measure B funds for a minimum of $600,000 of building upgrades and site improvements in the City’s
downtown. It is anticipated that the first awards will be granted by October 2015 and all improvements will be
completed by September 2016.
Economic Development Element of the General Plan
The Economic Development Element was last adopted in 2003, and will be updated as part of the General
Plan Update. The Economic Vitality Commission is responsible for advising the City Council regarding this
portion of the General Plan. The commission has held two meetings (September 10, 2014 and January 26,
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Date: February 10, 2015
Subject: ECONOMIC DEVELOPMENT DIVISION PROGRESS AND PRIORITIES
Page 4
2015) to discuss this plan. The Economic Development Element will reflect the economic and market
conditions in Vallejo, build on existing efforts and align with a future vision for Vallejo that includes the
attraction and retention of key industries, diverse job opportunities and enhanced quality of life.
ATTACHMENT 7 includes a work product prepared by Propel Vallejo subconsultant, BAE Urban Economics, to
underlie two upcoming General Plan components: the development of land use alternatives and the Economic
Development Element. In addition to providing an early deliverable related to the Economic Development
Element, it is useful generally as a broad look at economic and market conditions in Vallejo.
Social Sector Solutions Downtown Study
Vallejo was selected to participate in the Haas School of Business's Social Sector Solutions1 program, which
will engage a team of graduate students in business, public policy and regional planning studying downtown
Vallejo and recommending revitalization strategies. The focus of their work will be preparing an action plan for
the 2015 to 2020 timeframe. This 15 week program results in a consulting report for the City's benefit. The
report is expected to be delivered by May 4, 2015.
FISCAL IMPACT
Receiving an informational presentation has no direct fiscal impact.
ENVIRONMENTAL REVIEW
No action is requested and receiving this informational presentation is exempt from the California
Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a
direct physical change in the environment, or a reasonably foreseeable in direct physical change in the
environment, pursuant to CEQA Guideline section 15378.
ATTACHMENTS
1.
2.
3.
4.
5.
6.
7.
Economic Development Division Organization Chart
2014 Economic Development Accomplishments
Summary of Major Economic Development Projects
2014 Economic Development Summary (adapted from December 23, 2014 edition of Vallejo News)
City of Vallejo Permit Applications In Process or Pending
Status of Implementation of the 2012 Economic Development Strategic Plan
Summary of the Economic and Real Estate Trends (Analysis from the General Plan consultants)
CONTACT
Kathleen Diohep, Economic Development Manager, [email protected], (707) 553-7283
The course is a partnership with the Center for Nonprofit and Public Leadership at the Haas School of Business and
McKinsey & Company, a world-renowned management consulting firm. The course is co-taught by Dr. Nora Silver, a
professor at the Haas School of Business at University of California, Berkeley, and director of the Center for Nonprofit and
Public Leadership and Paul Jansen, McKinsey & Company Emeritus Director of the Global Philanthropy Practice.
1
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Attachment 1
Economic Development Division Organizational Chart
Kathleen Diohep
Economic Development
Manager
(707) 553-7283
[email protected]
Angelina Abella
Administrative
Clerk I
(707) 649-5452
[email protected]
Annette Taylor
Alea Gage
Erin Hanford
Lisa Spearman
Senior Community
Development Analyst
Economic Development
Project Manager
Economic Development
Project Manager
Real Property
Asset Manager
(707) 649-3510
(707) 649-5454
(707) 648-5419
(707) 648-4343
[email protected]
[email protected]
• Downtown Revitalization
• Business Retention/
Expansion
• Successor Agency/
Oversight Board
• ED Collaborations
•
•
•
•
[email protected]
Development Advocate
Business Attraction
Waterfront DDA
Economic Vitality
Commission
• Mare Island
‐ Lennar Mare Island
‐ Navy Agreements
‐ CFD oversight
‐ North Mare Island
5
[email protected]
• City-owned Leased and
Surplus Property
• Successor Agency
Long-Range Property
Management Plan
Attachment 2
Economic Development Division
2014 Accomplishments
Expanded Staff Capacity




Division Manager, Kathleen Diohep, April 2014
Administrative Clerk, Angelina Abella, July 2014
Economic Development Project Managers, Alea Gage & Erin Hanford, December 2014
Restructured Asset Management contract; new Asset Manager, Lisa Spearman,
November 2014
Mare Island






North Mare Island Developer solicitation
Facilitated $1.2 million Federal grant for Mare Island sewer systems
Request to the Army Corps of Engineers to resume dredging of the Federal Channel
Submitted HUD 108 Loan application for $4.7 million for North Mare Island
Secured U.S. Economic Development Administration approval of Vallejo Economic
Development strategy, prerequisite for applying for EDA grants
Collaboration with LMI and Navy to further advance Mare Island conversion
Successor Agency




Long Range Property Management Plan (LRPMP): approved by Oversight
Board/submitted to DOF, May 2014
Empress Theatre: exercised right to acquire, Agency is now 49% owner of Empress; in
negotiations with Triad to secure full ownership
Amendment to Waterfront DDA: approved by Department of Finance, January 2014
Southern Waterfront: terminated existing tenants in preparation of remediation by PG&E
Economic Development/Business Attraction



Evaluation of development options for Cooke Site; City Council study session, continued
work with property owner/interested parties
Establishment of tracking system for major projects and regular monitoring to help
secure approvals
As part of Propel Vallejo initiative, consultant review of real estate and economic
conditions and held two Economic Vitality Commission meetings
Asset Management




Comprehensive review of leases for rent and insurance compliance
Negotiated conservation easement sale, $254,150 of revenue
Pilot project for Waterfront Vendors at the Vallejo Ferry Terminal, Spring/Summer 2014
Mare Island Brewery Tasting Room opened Spring 2014
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Attachment 3
Major Economic Development Projects
Project
Vallejo Marine Terminal/Orcem
Acres Location
39
790 & 800 Derr
Avenue
32
Along the Waterfront
between Mare Island
Way and Mare Island
Causeway
18
Along the Waterfront
from Santa Clara
Street and the Capitol
Street
23
South from Curtola
Parkway & west from
Sonoma Boulevard
650
Along the Mare Island
Strait from Mare Island
Causeway and Price
Way and inland up to
Railroad Avenue and
Flagship Drive
155
Bounded by State
Route 37 and the
North Gate on the
north; G Street and the
Causeway on the
south; Azuar Street on
the west; and Mare
Island Strait on the
east
City Contact: Andrea Ouse
[email protected]
(707) 648-4163
Northern Waterfront
Callahan Property Company
(925) 463-9205
City Contact: Alea Gage
[email protected]
(707) 649-5454
Central Waterfront
Callahan Property Company
(925) 463-9205
City Contact: Alea Gage
[email protected]
(707) 649-5454
Southern Waterfront - PG&E
Remediation of Former Manufactured
Gas Plant
January 30, 2015
Description
Status
WATERFRONT
The VMT Project would re-establish industrial uses on 34.3 acres
though construction of a modern deep-water terminal with
trucking and rail connections. The Orcem Project would involve
construction and operation of an industrial facility on a 4.83-acre
portion for the production of a high performance, less polluting
cement.
The Vallejo Waterfront Project incorporates a vision for a
waterfront promenade at the water's edge and a mix of uses
proximate to the waterfront to bring vibrancy to the area. The
Master Plan for the northern portion allows for: 175 residential
units, 22,000 sf of retail/office space, and 15.4 acres of open
space.
Environmental Review in progress - Project Draft Environmental
Impact Report to be released February 2015
City and Developer 5th Amended DDA under negotiation;
expected to be executed by 9/30/15.
City and Developer 5th Amended DDA under negotiation;
The Vallejo Waterfront Project incorporates a vision for a
expected to be executed by 9/30/15.
waterfront promenade at the water's edge and a mix of uses
proximate to the waterfront to bring vibrancy to the area. The
Master Plan for the central portion allows for: 426 residential
units, 127,000 sf of retail/office space, 200,000 sf of visitorserving uses, a 10,000 sf transit facility and 0.5 acres of open
space.
PG&E is conducting clean up of the site of contaminants resulting Expected to complete clean up in 2017.
from its former use as a Manufactured Gas Plant.
City Contact: Annette Taylor
[email protected]
(707) 649-3510
Lennar Mare Island
Lennar Mare Island, LLC
[email protected]
(707) 562-4000
City Contact: Erin Hanford
[email protected]
North Mare Island
City Contact: Kathleen Diohep
[email protected]
(707) 553-7283
MARE ISLAND
Lennar Mare Island's (LMI) portion of the Mare Island Reuse Plan
plans for 1,400 homes, roughly 7 million square feet of
commercial and industrial space, plus many recreational
amenities.
North Mare Island is a premier waterfront location of over 150
acres. The City is offering the opportunity to propose, entitle,
develop and operate a real estate development project pursuant
to a development agreement, long-term lease and/or disposition
agreement with the City of Vallejo. Currently entitled for 1.2
million gross building square feet. Approved for office, research
and development, light industrial and commercial uses.
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LMI is currently focused on environmental cleanup, commercial
leasing and earthquake repairs.
In commercial leasing, LMI reported 17 new businesses, 23
expansions and 18 renewals in 2014. This activity resulted in an
increase in permanent jobs, up 12% over the 2013 to 2,352.
The following infrastructure plans & improvements are
underway: storm drain system enhancements, planning for
Nimitz Ave. traffic re-route plans due to WETA Terminal, fiber
optic cable installation and an improvement plan for Azuar
Buffer.
On 1/15/15, the City Council directed staff to pursue an
industrial land use concept and commence further discussions
with three parties who advanced an industrial concept in their
proposal. Staff will report back to the City Council no later than
March 10, 2015.
Attachment 3
Major Economic Development Projects
January 30, 2015
Project
Acres Location
Description
Status
San Francisco Bay Ferry / Water
Emergency Transportation Authority
(WETA) - North Bay Operations &
Maintenance Facility
(415) 705-8291
*
The new facility replaces the existing maintenance facility
currently located approximately one half mile north from the
planned new facility on Mare Island Strait. The facility will include
an administration office, maintenance shops, fueling, berthing
space and passenger loading facilities for trips departing Mare
Island en route to Downtown San Francisco.
The landside structural abatement work was completed in
December 2013. Landside construction is underway with
completion anticipated in Spring 2015.
1,000 Mare Island
The Navy is undertaking environmental clean up of remaining
Economic Development Conveyance (EDC) Parcels (to be
transferred to the City) and Reversionary Parcels (to be
transferred to the State).
Staff monitors the Navy's clean-up of the remaining portions of
Mare Island. In 2015, the Navy anticipates transfer of the
Marine Corps Firing Range (MCFR) parcels totaling
approximately 46 acres.
N/A
Mare Island Strait
In November 2014, the City of Vallejo requested that the Army
Corps of Engineers evaluate resuming dredging of the federal
channel. Federal dredging would facilitate continued economic
growth of the maritime industrial users on the Strait.
The Army Corps has secured funding for this work is in the
process of determining a team for the study.
N/A
Citywide (possible
proof of concept
downtown)
City Contact: Bill Tuikka
[email protected]
(707) 648-5319
Navy Mare Island Land Transfer
City Contact: Erin Hanford
[email protected]
Mare Island Strait Federal Channel
Dredging
At the terminus of
Ferry Street after it
intersects with Nimitz
Avenue. The Project
site is at Building 165
within the area of the
former Mare Island
Naval Shipyard.
* 75,000 sf land side;
110,000 sf water side
City Contact: Kathleen Diohep
[email protected]
(707) 553-7283
Fiber Optic Initiative
City Contact: Will Morat
[email protected]
(707) 648-4109
Successor Agency to the Vallejo
Redevelopment Agency
N/A
City Contact: Kathleen Diohep
[email protected]
(707) 553-7283
Solano 360
Solano County
[email protected]
City Contact: Annette Taylor
[email protected]
(707) 649-3510
149
ADDITIONAL PROJECTS
The City aims to build a municipal broadband network by
expanding on Vallejo’s existing 30+ mile traffic signal
interconnect conduit & fiber network.
The design build team is completing the final design for the
waterside phase. Waterside construction is anticipated to
commence in Spring 2015.
A Fiber Advisory Board of community stakeholders began
meeting in Summer 2014. Currently, the Board is considering a
privately-funded proof of concept in the downtown area. The City
anticipates moving forward in 2015 with a master plan for a
phased approach to building a municipal network.
Various sites
With review of the Oversight Board and the California
Administration of the adoption of ROPS 15-16A and 15-16B;
Department of Finance, the Successor Agency manages the real amend and seek approval of Long Range Property Management
estate assets of the former Redevelopment Agency (RDA) and
Plan; address ongoing ownership and operation of Empress
coordinates with the Finance Department in administering the
Theater
Recognized Obligation Payments Schedule (ROPS) delineating
the enforceable obligations of the former RDA and their source of
payment every six months. ROPS are subject to the approval of
the local oversight board.
Crossroads of
The Specific Plan designates: 35 acres for fairgrounds, 26.9
Specific Plan and EIR approved. Solano County issued a
Interstate 80 (I-80) and acres for transit and parking center, additional parking and roads, Request for Qualifications in January 2015. Responses due
State Route 37 (SR6 acres for open space, 18.8 acres for entertainment mixed use March 14, 2015.
37)
(ie retail and office), 30.0 acres for major entertainment use that
requires a large undivided site.
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ATTACHMENT 4
2014—A Banner Year for Vallejo
Business Growth & Investment
The City of Vallejo is continuing its mission to strengthen economic vitality, encourage expansion
of existing businesses and bring new businesses to our community. During 2014, the City has
seen various new businesses make Vallejo their home, while other residing businesses have
made substantial upgrades to their facilities. Additionally, the City issues 1,042 business licenses
in 2014, as compared to the 912 issued in 2013, a 14% increase.
The following are some of the highlights:
Meyer Corporation
One of the largest cookware manufacturers in the world, Meyer
Corporation, has completed interior renovations to its corporate
headquarters in Vallejo. After investing several million dollars into the
renovations, its corporate headquarters has created a new office
space in order to accommodate the increased amount of staff with
new offices, conference rooms and a brand new showroom. Meyer
utilized its space by expanding into its warehouse and fashioned new
working space to their headquarters.
The biggest attribute of the renovations is the new Showroom, which features displays of the
current season’s hottest trends from its top brands including Circulon, Anolon, Farberware,
Rachael Ray, Paula Deen, Cake Boss, and Bon Jour.
Sears Home Appliance Showroom
The new Sears Home Appliance Showroom provides
customers with access to a full suite of top-brand home
appliances and mattresses without having to set foot in a
mall. The store, which celebrated its grand opening last
February, also offers installation and repair services from
trained technicians and gives customers the option of
ordering online to have their product shipped directly to the
store.
Medic Ambulance
Solano County’s emergency ambulance service, Medic Ambulance, is currently expanding its
headquarters. The building is undergoing a $3.7 million remodel, adding 8,600 square-feet of
space and doubling the original size of the complex. With the new space, Medic Ambulance will be
upgrading their technology and vehicles in order to better serve the community.
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9
Blu Homes
The ecological leader of prefabricated homes, Blu
Homes, relocated its corporate headquarters to its
Mare Island facility. The company erected its first
Vallejo display home with a design and sales team
to provide assistance for interested buyers.
The signature 2,871 square-foot “Breezehouse” is a full-sized compound,
designed for prospective buyers to get a feel of what their home would
actually look like.
Smart & Final Extra
The store invested $1.4 million in expanding and renovating its existing
location on Sonoma Boulevard. The small warehouse store expanded
into the vacant lot next door and completely remodeled the interior,
transforming Smart & Final into a “Smart & Final Extra.” The business
extended about 7,500 feet into the vacant adjacent lot, creating a new
21,000 square-foot warehouse store.
Avery Greene Honda
In order to accommodate the ever-growing inventory of new Honda cars
and used vehicles, Avery Greene Honda upgraded to an all-new service
facility and sales center.
Additionally, Avery
Greene Honda has
leased 95,000 squarefeet of space in Building
527 on Mare Island for
extra storage space.
Mare Island Brewing Company
A creative conversion of a Mare Island Coal Shed (Building 151) has
resulted in the Mare Island Brewing Company’s warehouse storage of its
own brew. Plans are in the works to renovate the Coal Shed into a fullfunctioning brewery. The business offers its four original products at its
Taproom located inside the Vallejo Ferry Terminal.
The Lighthouse
2
Lighthouse is Vallejo’s newest waterfront event venue,
opening its door in June after extensive renovations.
Built in 1910 and originally located on Mare Island, the
building once served as a lighthouse to mark the
entrance to the Carquinez Strait. Perfect for marriages,
birthday parties, and other gatherings, guests also
have the luxury of staying in the beautifully appointed 3
bedroom house itself with ample entertaining space
and an upper expansive deck.
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Propel Vallejo
In 2014, the City established Propel Vallejo, an
effort that will contribute
to Vallejo’s economic
future and create a community that is vibrant,
safe, healthy and a
source of pride for all.
The project is made up
of five components that
will be completed in
phases throughout 2016.
The current phase is to
update the General Plan
to guide future decisions
about development and
conservation throughout
the city, tie together existing specific plans, and
promote economic vitality and public health and
safety. On a daily basis,
the City is faced with
tough choices about
growth, housing, transportation, neighborhood
improvement, and service delivery.
An updated General
Plan will provide a guide
for making these choices
by describing long-term
goals for the City’s future
as well as policies to
guide day-to-day decision. The end product
will be a road map to
guide the City toward the
Vallejo established now
and the Vallejo sought
after in the future.
Six Flags Discovery Kingdom
Six Flags launched a new wet and wild water
ride, Tsunami Soaker, a spin on the classic
teacup ride that creates a disorienting yet
exciting soaking wet experience. Six Flags also
announced it will be developing another new ride,
the Dare Devil Chaos Coaster, coming in spring
2015.
SolTrans
In response to increased ridership and other considerations, SolTrans is
making extensive renovations to establish a new Park & Ride Hub at the
corner of Curtola Parkway and Lemon Street. The project involves four
phases, the first of which includes the construction of the new transit
terminal, a safety and customer service center and improved amenities
for transit users. The project is under construction with the first phase
expected to be completed by February 2015 and expected project
completion by June 2016.
Mare Island Update
Mare Island has been booming with job growth and business
development with the Island being home to more than 2,300 full-time jobs
ranging from maritime to manufacturing and industrial to professional.
Mare Island has welcomed development from more than 20 new and
existing businesses, covering more than 200,000 square-feet of space
this last year. Hosting more than 100 businesses and approximately 3.5
million square-feet of space occupied, the following are some of Mare
Island’s highlights:
North Mare Island Development Opportunity
North Mare Island is a premier waterfront location of over 150 acres. The
City is offering the opportunity to propose, entitle, and develop a real
estate development. This portion of Mare Island is the largest
development opportunity on the Island and in Vallejo as a whole, offering
the opportunity for a significant jobs-centered development.
Newly Opened
Businesses in 2014
Bobby Spade’s Ink &
Iron
Buzrd Knucklz Custom
Apparel
Cuban Rhythm and
Rumba
Dead People’s Stuff
Domino’s Pizza
Gourmet Grocery
Haute Dog Boutique
and Bakery
LifeGear Design
The Lighthouse at Glen
Cove Marine
Littlefour&friends
Little Imaginarium
Mare Island Brewing
Company
Sears Home Appliance
Snell Studio and MiniArt
Starbucks on Sonoma
Boulevard
Tommy’s Tacos
U.S. Forest Service
Ranger Station
The Unconventional
Garden
3
11
North Mare Island is currently approved for 1.2 million square-feet of
business park development, including office, research and development,
light industrial, and commercial uses. In seeking development partners
for NMI, the City is pursuing a modern industrial concept with a mix of
uses that will generate jobs and bring growth to the City. To assist with
the development of North Mare Island, the City demolished several
buildings in 2014.
WETA Groundbreaking
The Water Emergency Transportation Authority (WETA) has broken
ground on its new Ferry Terminal on Mare Island. The new $28.5 million
facility will be the northern anchor of WETA’s regional ferry operations in
Solano County. The facility will handle all routine servicing and
maintenance work for WETA’s North Bay and will eventually provide
passenger boarding on a regularly scheduled service between Mare
Island, the Vallejo Terminal and Downtown San Francisco. The project is
expected to be completed in fall 2015.
Newly Opened
Businesses in 2014
cont.
Legacy at Sonoma
(Formerly Casa de
Vallejo—
under new ownership)
Vallejo Bookstore
(Formerly Koham
Press—
under new ownership)
Chik-fil-A
(under construction)
Chipotle
(under construction)
Americ Machinery Corporation
CVS Pharmacy
(under construction)
The international construction equipment supply
company moved its corporate headquarters to Mare
Island, opening a new office and equipment yard. The
company buys, sells, and trades equipment around the
world and has approximately 20 employees. The
company plans to continue its expansion in 2015.
Custom Valve Solutions
This new company, which focuses on repair of large-scale industrial
valves and components, has set up shop on Mare Island. Custom Valve
Solutions provides valve and component replacements and other valve
services for industrial clients, requiring a large, unique manufacturing
10,000 square-foot space. The business has nine employees and has its
sights set on growth during this upcoming year.
LifeGear Design
LifeGear Design Corporation has moved its
company’s headquarters to Mare Island,
utilizing a historic officer’s mansion for their
day-to-day operations. The company, which
designs LifeGear—a variety of bags, totes
and other travel necessities—offers its
products to local retailers and online.
LifeGear’s headquarters is now located at 1195 Walnut Avenue on
Officer’ s Row, where officers at the former Mare Island Naval Shipyard
once lived.
4
12
Business Upgrades
and Renovations in
2014

AT&T—New
technology
emphasized
showroom

Avery Greene
Honda—New
showroom and
additional leased
space on Mare
Island

Blu Homes—New
“Breezehouse”
display home

InShape on Lincoln
Educational Institutions Continue to Expand
California Maritime Academy
California Maritime Academy (CMA) has made
several campus improvements last year. A new
Physical Education and Aquatics Complex
which opened in October, alongside a new
Police Operations Center, have made for a
stunning entrance to South Vallejo.
Additionally, CMA purchased the Vallejo Inn
which was demolished to make way for (shortterm) additional parking while CMA develops a long-term plan for the
space.
Business Upgrades
and Renovations in
2014 cont.

Medic Ambulance—
Interior renovations
and technology upgrades

Meyer Corporation—
Office expansion
and new showroom

Motel 6—Security
upgrades, fences
and cameras

Napoli’s Pizzeria—
Interior and exterior
renovations

Six Flags Discovery
Kingdom—Tsumani
Soaker

Smart & Final—
Expansion and renovations

SolTrans—New Park
& Ride Hub under
construction at Curtola Parkway and
Lemon Street

WETA—New Ferry
Terminal groundbreaking—currently
under construction
Touro University California
Touro launched its brand new School of
Nursing last fall with 32 students whom
entered into an 18-month program to
earn their mater’s degree in nursing. The
new nursing program is utilizing Building
760, a 3,660 square-foot space with an
open classroom space and a large
conference room. Currently, Touro’s Mare Island Campus hosts
approximately 1,400 students in graduate programs including
osteopathic, medicine, medical and health sciences, education and
pharmacy.
Solano Community College
Solano Community
College’s Vallejo
Campus has expanded
their programs and
facilities to include an
Automotive Technician
Training Program,
offered in a 16,000 square-foot leased facility located at 1301 Georgia
Street. The location is temporary until the permanent facility is
constructed. Additionally, SC has acquired the land located on the 1600
block of North Ascot Parkway to assist in the expansion of the Vallejo
Campus. The property will be used for parking and athletic fields to
support the continued growth of the Vallejo campus.
Kathleen Diohep
Economic Development
Manager
(707) 649-5452
kathleen.diohep@
cityofvallejo.net
5
13
Attachment 5
City of Vallejo Permit Applications Preparing for Submission or Under Review
Project Progress
Project Details
Project / Location
1 Hiddenbrooke Phase III
Hiddenbrooke Pkwy & Sky Valley
2 Regal Collision
5170 Sonoma Blvd
Description
Status
Residential subdivision of 70 units ranging from Pre-Application
2,254-3,009 sf per unit
14,400 sf automotive repair shop and training Pre-Application
center
3 Vallejo Marine Terminal/Orcem
790 & 800 Derr Avenue
Development of deep water marine terminal &
industrial processing facility
Pre-Application
4 436 Georgia Street
Downtown commercial building red-tagged from
8/24/14 earthquake
New Construction of a 95,000 sf multi-storage
facility (925 units)
Renovation of 133,000 sf for light industrial /
construction of 1,280 sf for retail
Pre-Application
Planning Approvals
Complete
Planning Approvals
Complete
New construction of a major amusement ride
Building Permit Pending
Tenant improvements for car rental facility
Building Permit Pending
Tenant improvements for 1,1114 sf of retail
Building Permit Pending
5 Anchor Self Storage
1050 Sonoma Blvd
6 Mare Island Ale Works
720 L St., Bldg 751, N. Mare Island
7 Six Flags Discovery Kingdom
1001 Fairgrounds Dr
8 Enterprise Car Rental
3270 Sonoma Boulevard
9 Menchie's Yogurt Shop
976 Adm. Callaghan Ln, Ste 972
10 Western Dovetail
1101 Nimitz Ave #126
11 Chick-fil-A
Columbus Pkwy/Admiral Callaghan
12 Chipotle
Columbus Pkwy/Admiral Callaghan
13 CVS
Columbus Pkwy/Admiral Callaghan
14 Bordoni Ranch/Waterstone
Columbus Pkwy & Regions Park
15 Garthe Ranch
Columbus Pkwy & Garthe Ct
16 WETA M.I. Terminal
1080 Nimitz Ave
17 Soltrans Vallejo Transit Center
801 Curtola Pkwy
January 30, 2015
Notes
Public Works reviewing Final Map applications.
Public Works completed review of Final Map on 1/14/15. Next
steps for applicant: 1) record final map and 2) apply for Planning
approvals.
Draft Environmental Impact Report scheduled for release in
February 2015. Planning Commission & City Council approval
required.
Demolition permit issued on 10/7/14. Next step for applicant:
apply for Planning approvals.
City Council approved on 12/9/14. Next step for applicant: apply
for permits from Building.
Planning Commission accepted amendment to the approved unit
plan on 10/20/14. Next step for applicant: apply for permits from
Building.
Tenant improvements for 18,025 sf of industrial Building Permit Pending
New construction of 4,500 sf for quick service
restaurant w/ drive-thru
New construction of 2,200 sf for quick service
restaurant w/ drive-thru
New construction of 16,500 sf for retail
store/pharmacy w/ drive thru
Building Permit Pending
Residential subdivision of 89 units ranging from
2,400-3,200 sf per unit
Residential subdivision of 105 units ranging
from 1,818-2,500 sf per unit
Multi-functional public facility-office, ferry
maintenance, passenger loading facilities
Multi-modal public transportation facility
Under Construction
Construction is ongoing as final maps are approved.
Under Construction
Construction is ongoing as final maps are approved.
Under Construction
Landside construction to be completed in Spring 2015.
Waterside construction to commence in Spring 2015.
Planning Commission approved on 5/7/11. Project completion
anticipated in June 2016.
Building Permit Pending
Building Permit Pending
Under Construction
Applicant responding to pending items & conditions from plan
review. Building Permit anticipated in Spring 2015.
Applicant responding to pending items & conditions from plan
review. Building Permit anticipated in Spring 2015.
Applicant responding to pending items & conditions from plan
review. Building Permit anticipated in Spring 2015.
Site and elevation improvements to convert 1
Building Permit Finaled 99 Cent Store
store into 4 retail spaces.
1/8/15
3684 Sonoma Blvd
New construction of 1,900 sf for coffeehouse
Building Permit Finaled Starbucks
11/19/14
3455 Sonoma Blvd
This table tracks the following types of projects: residential subdivisions, multi-family development, significant commercial development and major public improvements.
Projects below the double line completed the permitting process within the prior 90 days.
14
Page 1 of 2
City of Vallejo Proposed & Pending Projects
January 30, 2015
(see related table for addresses & descriptions)
15
Page 2 of 2
Attachment 6
Revised 2012 Economic Development Strategic Plan
Reflecting Progress as of January 2015
2012 Goal
1. Establish a
business
retention and
expansion
program.
2012 Objectives
2015 Status
1. Establish a coordinated business visitation program to
assess the needs of existing companies in Vallejo
and connect business owners and managers with
resources to grow their businesses including
resources for access to capital, innovation, market
development, cost reduction, and sustainability
through efficient use of raw materials, water, and
energy and reduction in solid waste.

Ad hoc business retention efforts are occurring on
an ongoing basis.

In early 2015, ED will formalize and expanded the
business retention program.

“Economic Gardening” deferred for later
implementation.
2. Establish an “Economic Gardening” program to
grow the Vallejo economy through
entrepreneurship.
2. Attract new
businesses
and
investment to
Vallejo.
3. Operate City
government in
a way that
prioritizes
economic
development.
1. Maintain a Vallejo marketing plan that actively
manages public perception of Vallejo and promotes
awareness of Vallejo’s strategic advantages. (See
First-Year Marketing Plan for details).
2. Establish and aggressively promote advantages
of doing business in Vallejo and position Vallejo
as the Bay Area’s lowest cost place to do
business.
3. Consider short-term incentives to attract new
investment such as deferral of impact fees for
qualified new investments.
1. Ensure consistent, understandable, and predictable
regulatory framework.
2. Continuously improve the efficiency of City government
services to businesses.
Page 1 16

Marketing plan has not been implemented yet
due to staff resources.

Staff to propose a marketing initiative in the
2015/16 budget.

Use of incentives has not been evaluated and
can be considered with General Plan
implementation, if at all.

General Plan and Zoning Code Update address
regulatory framework, seeking to reduce
regulatory constraints where possible.

City-wide efforts to improve customer service are
underway.
Attachment 6
Revised 2012 Economic Development Strategic Plan
Reflecting Progress as of January 2015
2012 Goal
4. Increase retail
sales, capture
sales tax
leakage in key
sectors, and
increase local
employment at
retail shopping
and dining
businesses.
5. Maintain the
competitiveness
of Vallejo’s labor
force by
increasing the
skill level of the
workforce.
2012 Objectives
2015 Status
1. Within the Vallejo General Plan update, establish
well-defined locations for retail corridors serving
targeted consumer market segments including
residents, visitors, and the people who work in
Vallejo.

Propel Vallejo initiative identified Opportunity
Areas, some with retail capacity. Evaluation of
land use alternatives will include a fiscal analysis
to assess their impacts on City services and
revenues.
2. Improve underperforming retail centers.

Sonoma Boulevard Specific Plan designed to
foster retail growth.

Working with parties interested in Cooke site.

Ad hoc efforts to support new retailers interested
in Vallejo.

Business attraction/promotion efforts have not
been implemented; consider in 2015/16.

Efforts to date have been through collaborations
with other parties:
3. Strategically recruit retailers and dining establishments.
4. Promote Vallejo as a shopping and dining destination.
1. In partnership with the Solano Workforce
Investment Board and Solano Community College,
promote and prioritize job training that results in
professional credentials and certifications.
Working with Vallejo Education and Business
Alliance to expand educational opportunities for
Vallejo residents of all ages.
2. Partner with Solano Workforce Investment Board to
aggressively pursue funding and technical
assistance opportunities through state and federal
economic development programs.
Serving on the Vallejo City Unified School District
Wall-to-Wall Academy Advisory Board to ensure
students have clear pathways from preschool to
college and career.
3. Encourage Vallejo residents to finish high school.
4. Make Vallejo attractive to talent from elsewhere.
5. In partnership with Solano Workforce Investment
Board and other local educational, apprenticeship
training and employment-related service providers
ensure continued investment in education and the
job-related skill sets of the resident workforce.
Page 2 17

PB Economic Development Committee
developed a scholarship program for
graduating high school students to pursue
higher education. 68 scholarships were
awarded in June 2014.
Attachment 6
Revised 2012 Economic Development Strategic Plan
Reflecting Progress as of January 2015
2012 Goal
2012 Objectives
2015 Status
6. Increase the
availability and
visibility of
investmentready land and
attract new
development
1. Improve the visibility, understanding, and marketing
of existing properties available for investment.
7. Make Vallejo the
Bay Area’s
premier site for
manufacturing.
1. Support growth in international trade and export sales
that creates jobs and potentially increases City sales
tax revenues.
North Mare Island developer selection process
underway as well as significant building
demolitions.

PG&E remediation of Southern Waterfront
(readying that site for eventual development)

ED staff to prepare inventory of properties
available and reach out to landowners as part of
the Propel Vallejo initiative.

Job growth on Mare Island and targeted for NMI
includes manufacturing

Propel Vallejo initiative to address manufacturing
land uses in the Zoning Code Update

ED Staff collaborates with Solano EDC but has
not initiated a business attraction plan

US Army Corps is reevaluating dredging of
Federal Channel at the request of COV

Enhanced shipping, transport & logistics proposed
in the Vallejo Marine Terminal project.
2. Support brownfields redevelopment.
3. Establish a high-priority plan for development on North
Mare Island.
2. Improve ability of manufacturers to ship from Mare
Island across all transportation modes.
3. Update land use policy in the General Plan that
supports manufacturing growth on Mare Island and in
other industrially-zoned areas.
4. Attract new investment from businesses that are linked
to regional manufacturing sectors promoted by Solano
County EDC including food and beverage production,
life science manufacturing, clean technology and other
manufacturers creating high-wage jobs.
5. Establish and promote an Expedited Plan Review
Service for qualified manufacturers investing in Vallejo.
Page 3 
18
Attachment 6
Revised 2012 Economic Development Strategic Plan
Reflecting Progress as of January 2015
2012 Goal
8. Grow a family
tourism sector in
Vallejo by
strengthening Six
Flags Discovery
Kingdom as a
driver of demand,
building Vallejo’s
total tourism
product, increasing
overnight visitor
stays, and
increasing visitor
spending.
2012 Objectives
2015 Status
1. Establish a Vallejo Tourism Master Plan to guide
development of Vallejo’s tourism economy.

Six Flags participates in Vallejo Interagency
Partnership on a monthly basis.
2. Enhance Vallejo’s Naval Heritage Experience as a
Driver of Tourism Demand.

Convention & Visitors Bureau running promotions
and doing web and print advertising.
3. Regularly meet directly with Six Flags management
to identify and take action on any issues that affect
visitor experiences at the park.

Occupancy in Vallejo’s hotels increased over 10%
in 2014.

Funding the organization of events for the
downtown and waterfront districts.

Downtown Arts & Entertainment District

Solano 360 is conceived of as a destination,
prioritizing family and youth oriented uses.

Deferred for later implementation.
4. Consider establishment of an entertainment district
near the waterfront, in downtown, or near Six
Flags to cluster hotel, dining, and entertainment
venues in close proximity to one another.
5. Locally promote the importance of a strong,
diverse tourism economy by communicating
directly with key public and private officials, and
garnering the support of the media.
6. Support the Vallejo Convention and Visitors Bureau to
build visibility and improve awareness of Vallejo’s
assets among the target market segments.
9. Increase
investment in
healthcare
services and
life-sciences
manufacturing
in Vallejo.
1. Consider ways to strengthen relationships between
local research universities that support technology
transfer and business start-ups in Vallejo including
the potential for Vallejo to support a business
incubator at a life science business park.
2. Further develop health and life science training
opportunities in Vallejo and promote these
resources in marketing materials on the economic
development department website.
3. Partner with Solano EDC, brokers, and developers to
market sites that are suitable for manufacturing
investment related to the life sciences sector.
Page 4 19
Attachment 6
Revised 2012 Economic Development Strategic Plan
Reflecting Progress as of January 2015
2012 Goal
10. Support growth
linked to higher
education
institutions in
Vallejo.
2012 Objectives
2015 Status
1. Each of the three higher education institutions in
Vallejo may experience expansion in the future,
however costs linked to redevelopment of existing
structures poses a difficulty for expansion of research
space at Touro University and could pose a problem
for other institutions looking to expand their facilities.
These challenges are addressed through the land
development section of the plan which provides
support for redevelopment of brownfields sites.
2. Institutions noted the lack of high quality dining,
entertainment and retail shopping in Vallejo as a
limiting factor affecting the ability to recruit students,
faculty, and staff. These concerns are addressed
through the retail development and tourism sector
strategies.

General Plan update will assess opportunities at
a high level for achieving these objectives.

Study by Haas School of Business Social Sector
Solutions will evaluate strategies related to
improving mix and quality of businesses in
downtown.

Working with Vallejo Education and Business
Alliance to expand educational opportunities for
Vallejo residents of all ages.
3. A review of growth strategies for university towns
suggests that most economic development strategies
linked to universities are designed to capitalize on
discoveries and new technologies developed at
research universities. Vallejo has one research
university, Touro, and is in close proximity to UC
Berkley and UC Davis. The Health Sector growth
strategy includes an objective to evaluate the
feasibility of a business incubator in connection with
a life sciences business park located near Touro
University.
11. Maintain an
environment
that is
conducive to
economic
development.
1. Maintain public safety.
2. Maintain a high quality built environment.
3. Support improvement in high school graduation rates
and a strong public education system.
Page 5 20
These conditions are important for quality of life and
economic development and are being addressed
through City and School District initiatives.
Attachment 7
Economic & Real Estate Trends
Prepared by:
bae urban economics
for the General Plan Update
January 26, 2015
OVERVIEW OF BAE PRESENTATION
 Economic trends
 Real estate market trends
 Leveraging opportunities
 Conclusions and policy considerations
21
ECONOMIC TRENDS
VALLEJO POPULATION &
HOUSING TRENDS
 Slower population growth than Solano County or Bay Area since
2000 -- have not shared as much in the region’s economic growth
 Vallejo is a diverse community, nearly evenly split in ethnicity/race
 28% of residents are foreign-born, suggesting that workforce
development strategies should accommodate immigrants’ needs
 Vallejo has similar educational attainment to the County, but lower
than Bay Area
• 38% of adults have no college; 29% some; 9% Associates; 23% Bachelors
 Homeownership rates in Vallejo have dropped, from over 63% in
2000 to 55% in 2012
ECONOMIC TRENDS
WAGE &
EMPLOYMENT TRENDS
 Vallejo’s median annual household income in 2012 at $52,400 is
lower than Solano County ($62,100) or the Bay Area ($76,200)
 Unemployment as of July 2014 is higher in Vallejo at 9% (County
7.2%; Bay Area 5.8%; State 7.8%)
 Almost half of Vallejo jobs are held by residents, yet a moderate
number of jobs means a low job-working resident ratio of 0.62
• More than half of employed Vallejo residents commute to jobs elsewhere
 Key sectors for employment are health care, retail, government,
tourism-related jobs, and construction. Many jobs are low-wage.
• Smaller sectors: Information, Manufacturing, and Professional/Tech Services
22
ECONOMIC TRENDS
JOB RECOVERY
 Recovery in Vallejo employment: 2013 saw 2,451 more jobs than
in 2009. 6% rate of growth in new jobs from 2009 - 2013
Job Growth for City of Vallejo, 2005-2013
27,500
27,023
27,000
Number of Jobs in Vallejo
26,500
25,993
26,000
25,500
25,000
24,572
24,500
24,000
23,500
23,000
2005
2009
2013
Source: California Employment Development Department (EDD)
REAL ESTATE MARKET TRENDS
HOUSING CONSTRUCTION &
FOR-SALE RESIDENTIAL
 Housing production has yet
to recover, unlike the rest of
the Bay Area
Vallejo Residential Building Permits
700
600
500
400
300
200
0
200
0
0
200
1
0
200
2
125
200
3
0
200
4
201
200
5
93
200
6
114
200
7
48
200
8
4
200
9
0
201
0
0
201
1
0
201
2
0
201
3
13
Single-Family 487
363
459
236
475
331
85
70
9
45
38
25
27
0
Multi-Family
Source: US Census, 2014.
2011
Vallejo
Source:
23 DataQuick, 2014.
2012
Benicia
Fairfield
2013
Solano County
$251,000
$270,500
$413,000
$186,000
$193,000
$220,000
$307,500
$148,250
$185,000
$200,000
Median Home Sales Prices, Vallejo & Other County Cities, 2011 - 2013
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
$280,000
 Rate is lower than other County
locations
 Vallejo remains more affordable
than other County locations
 Foreclosure rates are down,
however still impacting prices
100
$139,000
 For-sale residential prices
are increasing
REAL ESTATE MARKET TRENDS
MULTI-FAMILY RESIDENTIAL
 Rental rates have recovered and increased above prerecession levels, although they remain low compared to
other markets in the region
 Potentially attractive to employers, although discourages developers
from new projects.
 Low vacancy rates – now 3.2% -- likely to lead faster rent increases.
Eventually rents would rise enough to support new development
Vallejo Average Rent Trends, 2006 - 2014
$1,200
$1,180
$1,160
$1,120
2011
$1,110
2010
$1,074
$1,057
$1,000
$1,096
$1,020
$1,085
$1,040
$1,114
$1,060
$1,054
$1,080
$1,171
$1,100
$1,045
Average Monthly Rent
$1,140
$980
2006
2007
2008
2009
2012
2013
2014
Source: RealFacts, 2014.
REAL ESTATE MARKET TRENDS
OFFICE
 Market is flat. Vacancy rate outside Mare Island is good, rents
are low, below the level needed to support new development
 2 million square feet of office space in the City, excluding Mare Island
 Mare Island has 1.4 million square feet of space, with substantial vacancy
Office Space Absorption, Mare Island and Balance of Vallejo, 2007 - 2014
Balance of Vallejo
SQUARE FEET ABSORBED
Mare Island
2007
2008
Balance of Vallejo 132,755 (11,405)
Mare Island
86,841 (66,210)
Source: CoStar Group, 2015
2009
(9,164)
16,906
24
2010
2011
15,182 (16,800)
(15,182) 3,964
2012
2013
2014
28,846
418
(10,373)
(33,675)
(1,203)
18,655
REAL ESTATE MARKET TRENDS
INDUSTRIAL / WAREHOUSE
 CoStar: Vallejo has 1.5 million sq. ft. of industrial/warehouse
space. Mare Island has 4.5 million sq. ft., not all viable for reuse
 Bay Area market is tight. Existing buildings with reasonable rehab costs can
be competitive -- including for flex/R&D space
 Vallejo has 6% of County inventory of warehouse space – further assessment
of existing inventory and gaps to meet modern requirements should be done
2007
2008
2009
2010
2011
Balance of Vallejo 83,150 (58,532) (27,335) (44,333) 45,378
25,582
(24,418)
10,535
45,378
(44,333)
(27,335)
(58,532)
83,150
Industrial/Warehouse Space Absorption, Vallejo Excluding Mare Island , 2007 2014
2012
2013
2014
10,535 (24,418) 25,582
Source: CoStar Group, 2015
REAL ESTATE MARKET TRENDS
RETAIL
 Retail sales are recovering from recession. New space is due
to retail and food chains purchasing, developing sites, rather
than leasing vacant space
 City opportunities for General Merchandise, Food & Dining, Auto Dealers
Taxable Retail Sales, 2009 – 2012 (not inflation-adjusted, shown in $1,000s)
$200,000
$150,000
$100,000
$50,000
$0
Bldg.
Matrl. and
Garden
Equip. &
Supplies
$57,723
Clothing
General
Gasoline & Clothing
Merchandi
Stations Accessorie
se Stores
s Stores
Food
Services
and
Drinking
Places
Other
Retail
Group
2009
$144,615
Home
Furnishing
s and
Appliance
Stores
$38,849
$58,329
$107,571
$36,554
$136,833
$108,293
$69,709
2010
$148,291
$41,652
$62,117
$57,064
$126,445
$36,312
$144,223
$105,250
$75,441
2011
$161,682
$42,484
$73,369
$59,808
$151,452
$34,771
$150,761
$111,461
$79,584
2012
$201,172
$41,792
$74,068
$62,217
$158,428
$33,841
$158,506
$117,472
$90,017
Motor
Vehicle
and Parts
Dealers
Food and
Beverage
Stores
Source: CA State Board of Equalization, 2014
25
REAL ESTATE MARKET TRENDS
HOTELS
 Vallejo’s scenic waterfront, visitor assets, education, gateway to
Napa suggest long-term potential for one or more new hotels
 Currently 863 economy rooms, 578 midscale rooms, no upscale/luxury rooms
 While improving, occupancy and rate levels do not presently support new hotels
Hotel Average Daily Rates and Occupancy Trends, Vallejo, 2006-2014
$70.00
60.0%
$60.00
50.0%
$50.00
40.0%
$40.00
30.0%
$30.00
20.0%
$20.00
10.0%
$10.00
$0.00
0.0%
2006
2007
2008
2009
2010
Vallejo Avg. Daily Rate (ADR)
2011
2012
2013
2014
Vallejo Occupancy
Source: Smith Travel Research, 2014
LEVERAGING OPPORTUNITIES
INTERVIEWS: KEY ECONOMIC ASSETS
 Location, location, location
 Vallejo offers great value
 Housing, other types of space
 Educational institutions
 Community character – ambiance, waterfront, walkability
 Infrastructure, including fiber optic
26
LEVERAGING OPPORTUNITIES
INTERVIEWS: KEY CHALLENGES –
CONTRIBUTING FACTORS
 Perception issues – crime, schools, bankruptcy
 Regulatory hurdles – City approvals
 Lack of economic identity for City as well as industry clusters
 Need a more active Downtown, with more business diversity
 Costs for Mare Island expansion – infrastructure, building rehab
 Concerns over appearance of North End of Mare Island
LEVERAGING OPPORTUNITIES
DEVELOPMENT FEASIBILITY
 Development feasibility requires four factors:
 Sufficient market demand (buyers and tenants) supporting high-enough
sales prices and rents;
 The value of the completed project is greater than the total cost of
development;
 Equity investors and lenders are willing to provide project financing on
acceptable terms; and
 Community support for the proposed project, including a willingness to
approve any needed entitlements
 Without all four, projects are infeasible and will not be built
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LEVERAGING OPPORTUNITIES
DEVELOPMENT FEASIBILITY
 There are a wide range of factors that also influence
development feasibility:
 Feasibility is not static – it is continually shifting
 Differences in developer specialties and requirements
 Macro-economic factors – the overall US economy
 Micro-economic factors – e.g. construction costs
 Parking requirements and parking costs
 Community objectives, community concerns, and local political environment
 Development is risky – why developers focus on maximizing
return, minimizing risk
 Push for projects that work, rapid approval
 Unwilling to pioneer new projects, do projects in unproven markets
LEVERAGING OPPORTUNITIES
DEVELOPMENT FEASIBILITY
 “Pro forma” models of prototype projects can show relationship
between what is allowed, cost, revenues, and feasibility
 Work for Sonoma Blvd. Specific Plan shows residential rents
need to increase up to 50%+ before development can occur
Current vs. Break-Even Rents/Sale Prices for Prototype Development Projects in the
Sonoma Boulevard Specific Plan Area, 2014
Rents/Sale Prices (a)
Retail - $ per sf/yr
Office - $ per sf/yr
Live/Work - Sale Price
1-BR Apt - $/mo (Surface Parking)
1-BR Apt - $/mo (Podium Parking)
2-BR Apt - $/mo (Surface Parking)
2-BR Apt - $/mo (Podium Parking)
1-BR Condo - Sale Price (Surface Parking)
1-BR Condo - Sale Price (Podium Parking)
2-BR Condo - Sale Price (Surface Parking)
2-BR Condo - Sale Price (Podium Parking)
3-BR Condo - Sale Price (Surface Parking)
3-BR Condo - Sale Price (Podium Parking)
3-BR Townhouse - Sale Price (Surface Parking)
3-BR Townhouse - Sale Price (Podium Parking)
4-BR Townhouse - Sale Price (Surface Parking)
4-BR Townhouse - Sale Price (Podium Parking)
Current Market
$9 - $19
$9 - $22
$380,000
$1,200
$1,200
$1,400
$1,400
$170,000
$170,000
$210,000
$210,000
$240,000
$240,000
$275,000
$275,000
$325,000
$325,000
Feasible Rents
$24
$24
$470,000
$1,600
$1,800
$2,150
$2,350
$250,000
$285,000
$320,000
$350,000
$360,000
$385,000
$410,000
$450,000
$470,000
$510,000
Difference Percent Change
$6
25%
$7
29%
$90,000
24%
$400
33%
$600
50%
$750
54%
$950
68%
$80,000
47%
$115,000
68%
$110,000
52%
$140,000
67%
$120,000
50%
$145,000
60%
$135,000
49%
$175,000
64%
$145,000
45%
$185,000
57%
(a) Podium parking is used in mixed-use developments with residential above ground floor commercial and parking.
Townhouses units with podium parking are a component of a larger mixed-use project and use the project parking.
Parking is per standards proposed for the draft Specific Plan, and is lower than current City standards.
Sources: Opticos; BAE, 2014.
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LEVERAGING OPPORTUNITIES
FISCAL IMPACTS
 Need to ensure new fiscal revenues from development covers
new service costs, on a City-wide basis for all General Plan uses
 Infill development, smaller scale projects often generate new
revenues, have minimal costs due to existing service capacity
 Example from recent analysis of “Cooke” site in Northgate area:
New Annual Fiscal Revenues
Per Acre/Year
Auto Dealership
$79,000
Retail
$49,000
Hotel
$58,000
Medium-Density Residential
$14,000
Higher-Density Residential
$20,000 - $23,000
New Fiscal Service Costs
$11,000 - $12,000
Revenues include: property taxes; sales taxes; and transient occupancy taxes.
Sources: City of Vallejo; BAE, 2014.
CONCLUSIONS AND RECOMMENDATIONS
MARKET-MAKING VS.
MARKET-TAKING
 Attracting new investment and development will require
coordinated public action – “market making”
 Different than building off what has been working in the past –
“market taking”
 Need for targeted public investments and actions that will
attract and leverage private investment
 Projects that prove Vallejo’s potential
 Build momentum to attract more investment
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CONCLUSIONS AND RECOMMENDATIONS
MARKET POSITIONING
 Create a new brand that builds on Vallejo’s identified strengths:
 Strategic location with ambiance and available land
 Creative college town offering diverse housing: lofts; Downtown; multifamily
 Advanced manufacturing opportunities
 Tourism destination
 Diverse and dynamic population
 A repositioning and promotion strategy is needed as
recommended by the 2012 ED Strategic Plan
 Use the General and Specific Plan process to expand housing,
industrial, retail and hotel opportunities
 Focus activity in key areas: Downtown/Waterfront; Mare Island; Solano 360;
Northgate
CONCLUSIONS AND RECOMMENDATIONS
MAJOR CATALYTIC
OPPORTUNITIES
 Downtown/Waterfront
 Position it as a “21st Century College Town”, with diverse housing, work
spaces, arts and culture, events
 Use waterfront and enhanced public realm to attract visitors, residents
 Mare Island
 Building reuse opportunities – assess costs
 Facilitate existing and new tenant interaction to build its identity as a
unique industrial, manufacturing hub
 Industry cluster opportunities, e.g. modular building
 Discovery Kingdom / Solano 360
 Leverage Fairgrounds project to enhance area, attract development
 Enhanced local transportation for visitors
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CONCLUSIONS AND RECOMMENDATIONS
IMPLEMENTATION
STRATEGIES
 Central challenge is how to build momentum for new investment
 Generate activity that builds on itself, is self-reinforcing
 Recognize that strategies can take time to have an effect, and that the City’s
influence may be limited in the near-term
 Focus on catalytic development projects
 Demonstrate potential, stimulate other projects – e.g. workforce housing
 Targeted financial assistance to select projects
 As resources are available, establish a strategic ED fund to invest in projects
that need support to happen – but not projects that would otherwise happen
 City owned land is a key catalyst (recognizing resource constraints)
 Reduce risks and costs for projects
 General Plan, Development Code Updates reduce uncertainty, time to process
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