Pasadena, California City of Pasadena: - ULI Los Angeles

Transcription

City of Pasadena:
Pasadena Enterprise Center
Pasadena Development Corporation
A collaboration to assist small business development
Pasadena, California
A ULI Advisory Services
Technical Assistance Panel Report
©2009 by ULI—the Urban Land Institute
1025 Thomas Jefferson Street, NW
Suite 500 W
Washington, DC 20007
All rights reserved. Reproduction or use of the whole or any part of the contents
without written permission of the copyright holder is prohibited.
City of Pasadena
A collaboration to assist small business development
Recommendations for
City of Pasadena
Pasadena, California
March 26 and 27, 2008
A ULI Advisory Services
Technical Assistance Panel Report
ULI Los Angeles
444 South Flower Street, Suite 3880
Los Angeles, California 90071
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Acknowledgements
The panelists and ULI Los Angeles wish to thank the City of Pasadena for requesting the panel to
provide advice and guidance regarding the future of the Pasadena Enterprise Center and Pasadena
Development Corporation. The panel could not have proceeded in this endeavor without the
support of Gregory Robinson, Assistant to the City Manager for the City of Pasadena. Also thanks
to Pasadena Assistant City Manager Julie Gutierrez and PEC Board Chairperson Jacqueline JonesCorby for their contributions. And thank you to the individuals interviewed by the panel on March
26 for their time and insights.
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ULI Advisory Services
and the Technical Assistance Panel Program
The goal of ULI’s Advisory Services Program is to bring the finest expertise in the real estate field to
bear on complex land use planning and development projects, programs, and policies. Since 1947,
this program has assembled well over 500 ULI member teams to help sponsors find creative, practical
solutions for such issues as downtown redevelopment, land management strategies, evaluation of
development potential, growth management, community revitalization, brownfields redevelopment,
military base reuse, provision of low-cost and affordable housing, and asset management strategies,
among other matters. A wide variety of public, private, and nonprofit organizations have contracted for
ULI’s Advisory Services.
Each team is composed of highly qualified professionals who volunteer their time to ULI. They are chosen
for their knowledge of the topic and screened to ensure their objectivity. ULI teams are interdisciplinary
and are developed based upon the specific scope of the assignment. They provide a holistic look at
development problems. A respected ULI member with previous panel experience chairs each team.
Technical Assistance Panels, or TAPs, are conducted by the local District Council level of ULI. ULI Los
Angeles has been at the forefront in creating the TAP program, offering the expertise of local ULI
members to local government and nonprofit entities through one or two day panels. The TAP Program
guidelines are the same as those that govern the entire Advisory Services Program.
To date, ULI Los Angeles has conducted Technical Assistance Panels for the City of Beverly Hills, City
of Culver City, City of Pasadena, City of Whittier, University of Southern California, the Los Angeles
Conservancy, the Ports O’Call Village, First United Methodist Church of Los Angeles, and The Canaan
Group, among others.
A key strength of the program is ULI’s unique ability to draw upon the knowledge and expertise of
its members, including land developers and owners, public officials, academics, representatives of
financial institutions, and others. In fulfillment of the Urban Land Institute’s mission, this TAP report is
intended to provide objective advice that will promote the responsible use of land and in creating and
sustaining thriving communities.
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For more information about how a ULI Los
Angeles Technical Assistance Panel could
benefit your city or nonprofit organization,
contact Christine Aure, Project Manager, at
[email protected].
For more information about ULI Los
Angeles, a District Council of the Urban
Land Institute, contact Katherine Perez,
current ULI Los Angeles Executive Director,
at [email protected], or the ULI LA website,
www.uli-la.org.
ULI Project Staff
Thomas W. Eitler
Vice President
Urban Land Institute
Philip S. Hart
Executive Director
ULI Los Angeles
Paula Krake
Director of Programs
ULI Los Angeles
Jan Bryant
Manager
ULI Los Angeles
Ayanna Hart
Editorial Consultant
John Dlogelecki
Photographer
Jason Teske
Student Intern
California State Polytechnic University, Pomona
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Contents
Introduction
2
4
5
Panel Assignment
6
Master Plan
7
Four Primary Questions
9
Incubating Inner-City Biotech
13
ULI-LA Technical Assistance Panel Members
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About ULI
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1
Introduction
The City of Pasadena is a `majority minority’
city with close to 60 percent of its population
constituted by persons of color. The California
Finance Department estimated the Pasadena
population to be 146,166 in 2005, with 39
percent of the population being white, 33
percent Latino, 14 percent African American,
10 percent Asian, and the balance of 4 percent
`Other.’ This racially and ethnically diverse
community is one in which English is spoken by
only 55 percent of the residents over 5 years
of age.
Pasadena is a relatively well-educated
community. Nearly 80 percent of the population
are high school graduates and just over 41
percent of those persons above 25 years of age
have at least a bachelor’s degree or higher. In
2000 the median age of city residents was 34.5
years of age. The dependency ratio of the city
(those under 18 plus those over 65) was 35
percent in 2000.
There are over 100,000 jobs in a wide
variety of industries in the City of Pasadena.
In 2000, persons 16 years and older were
employed as follows: 48% managerial and
professional related occupations; 15.7%
service occupations; 23.3% sales and office
occupations; 5.1% construction, extraction
and maintenance occupations; and 7.8%
production, transportation and materials
moving technology occupations. Major
employers are Jet Propulsion Laboratory,
California Institute of Technology, Huntington
Memorial Hospital, Bank of America, Kaiser
Permanente, Pasadena Unified School District,
Pasadena City College, Countrywide Credit
Industries, City of Pasadena, SBC, and the
Ralph M. Parsons Company.
Small businesses play an important role in the
City of Pasadena and this report will focus on
two of the city’s small business assistance
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efforts, one of which includes a small business
incubator program. Business incubators
are designed to accelerate the successful
development of entrepreneurial companies
through an array of business support resources
and services, developed and orchestrated by
incubator management and offered both in the
incubator and through its network of contacts.
Successful completion of a business incubation
program increases the likelihood that a start-up
company will stay in business for the long term.
According to the National Business Incubation
Association, 87% of incubator graduates stay
in business. In 2005 alone, North American
incubation programs assisted more than
27,000 companies that provided employment
for more than 100,000 workers and generated
annual revenues of $17 billion.
A couple of successful Los Angeles area
business incubators are LA-Boost and the
Pasadena Bioscience Collaborative. The
LA-BOOST program is a collaboration between
the Community Development Commission of
Los Angeles County and Los Angeles Southwest
College. The Program is hosted at Los Angeles
Southwest College and provides emerging small
businesses with professional training, outreach,
counseling, and advisory services delivered by
entrepreneurial experts in incubation and small
business development and growth. Each program
participant is provided the opportunity to network
with similarly situated business owners through
roundtable meetings and workshops.
The Pasadena Bioscience Collaborative (PBC)
is a non-profit organization created to support
the growing biotechnology industry in the
San Gabriel Valley. The PBC is a result of
planning by individuals from many different
sectors—government, education, non-profits
and private industry. The collaboration promotes
and supports new company formation by
providing low-cost, high quality WetLab space
and equipment to early start-ups. The PBC also
provides specialized education and training for
the biotechnology workforce, as well as access
to experts in business fields such as intellectual
property, law and financial planning.
Similarly, the Pasadena Enterprise Center (PEC)
and the Pasadena Development Corporation
(PDC) have worked in collaboration to assist
small business development in Pasadena,
California. The PEC is a small business center
which supports a small business incubator
program whose mission is to promote
entrepreneurship and job creation by providing
the assistance and resources necessary for
starting, growing and sustaining a successful
business. PEC was incorporated in September
1989, as a non-profit 501(c)(3) corporation.
PEC’s primary economic venture has been its
business center and small business incubator
program. This endeavor originated at 1460
North Lake Avenue as a 4,000 square foot
facility and grew to be the current business
center at 1015 North Lake Avenue in
Pasadena’s Northwest Enterprise Zone. Located
on a major commercial corridor in Pasadena,
the two-story business center is situated on two
parcels of land totaling approximately 29,826
square feet and contains approximately 14,650
square feet of rental office space for occupancy
by small business tenants.
PEC was originally a component of the PDC
which is a City of Pasadena sponsored local
non-profit development corporation. PDC
receives an annual allocation of funds from the
City’s Community Development Block Grant
(CDBG) program for the purpose of enhancing
economic revitalization in Pasadena by providing
opportunities for business development and
employment to low and moderate income and
protected class individuals. PEC and PDC are
both located at the business center.
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Pasadena Enterprise Center (PEC)
Purpose
1. To promote the social welfare of Pasadena and the West San Gabriel Valley by fostering business
development; provision of educational and technical services to businesses located in areas
needful of support and improvement and/or businesses likely to benefit low and moderate income
persons in those areas,
2. To organize and manage a small business incubator within the general geographic area of
Northwest Pasadena, and
3. To make every effort to secure financing to build or rent a facility to house companies which may
seek to do business within this incubator.
PEC Objectives
Require a minimum of twenty-five percent of the total number of businesses in the facility
participate in the small business incubator program.
Assist incubator entrepreneurs in creating twenty-five permanent or part-time job opportunities per
year for low to moderate-income persons.
Retain/maintain the number of women and minority owned businesses leasing space at PEC for
three years.
PEC is funded through private donations made by major corporations, small businesses and individuals as
well as receiving rent from small-business tenants. Currently, nearly twenty small businesses occupy space
at PEC. The small businesses include: America’s Best Home Health Care; Hankster, Inc.; NGOK Global
Consultants; Kimball DeVine Productions; Pasadena Area Liberal Arts Center; Pasadena Forward; West Tax
Financial Services; Special Events Staffing; Suba Management Solution; The Carter Agency; Law Offices of
Charles L. Smith and Joaquin Talleda; etc.
First Floor Corridor
PEC offers numerous business support services with the rental office spaces within the business
center including:

Second Floor Conference Room
Office space ranging in size from 60 to 1,800 square feet.
DSL connection
900 free copies per quarter
Unlimited fax and mail services
Conference rooms, presentation projectors and TV/VCR
Utilities (gas, water and electricity)
Free parking
Other PEC services include technical assistance, business coaching, and referral of business tenants to the
on-site small business assistance program administered by the Pasadena Development Corporation.
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Pasadena Development Corporation (PDC)
Pasadena Development Corporation (PDC) was founded in 1977 based on the desire of the City, Federal
Government and Chamber of Commerce to stimulate local job creation. PDC is a non-profit 501(c)(3) local
economic development corporation that utilizes federal Community Development Block Grant (CDBG),
Economic Development Administration Funds, U.S. Treasury Community Development Financial Institution
funds and private conventional bank funds to assist small businesses. PDC contracts with the City of
Pasadena to operate a Small Business Assistance Program which consists of a small business revolving loan
program, technical assistance and counseling services to micro and small businesses for the creation and/
or retention of jobs for low to moderate income individuals. The small business loans are for small businesses
and microenterprises located within the San Gabriel Valley and Los Angeles County. PDC is also a Certified
Community Development Financial Institution (CDFI) and this designation allows banks to receive credit
under the Community Reinvestment Act (CRA) for the provision of financial assistance to small businesses
in designated areas. Banks can also make equity equivalent investments in PDC to support its operation and
revolving loan fund (RLF).
PDC contracts with the City of Pasadena to operate a Small Business Assistance Program
which consists of a small business revolving loan program, technical assistance, and counseling
services to micro and small businesses for the creation and/or retention of jobs for low-tomoderate income individuals.
Lobby area
PDC Objectives
Create and/or retain jobs for thirty low and moderate income residents annually
Interview 125 loan applicants annually
Package and approve fifteen loans annually
Counsel and/or provide technical assistance to 200 individuals/businesses annually to stabilize
business and promote economic development.
Mailboxes in lobby area
Problem Statement
In the last four years, the PEC has found it difficult to maintain and/or expand its business center,
especially its small business incubator program. PEC has had trouble with differing and ineffective views
on how to proceed with and further its non-profit corporate purposes. The business center has been
impacted by deferred maintenance and numerous required building improvements. PEC has experienced
reduced operating cash flow, staff turnover, limitations on the provision of business services to incubator
tenants and the continued existence of substantial indebtedness. The new PEC Board of Directors has
made a commitment to stabilize operations and formulate a new approach to the corporation’s business
practices especially its small business incubator program. Thus, the City of Pasadena requested the
Urban Land Institute of Los Angeles (ULI LA) to assemble a panel of experts to examine PEC’s finances,
building infrastructure, organizational structure and marketing strategy.
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Suite 100 (Office of Pasadena
Enterprise Center)
Panel Assignment
ULI LA’s assignment was to review PEC’s and PDC’s past and present operation along with the
Pasadena’s current economic environment in order to offer recommendations for the most appropriate
small business incubator technologies and corporate business policies, practices and procedures. ULILA and the City of Pasadena conducted a one and one half day Technical Assistance Panel on March
26 and 27, 2008. It was envisioned that ULI LA, with the support of the PEC Board, PEC tenants, PDC
Board, City of Pasadena, County of Los Angeles and local stakeholders (i.e. Chamber of Commerce,
Pasadena Bioscience Collaborative, Local Lenders, etc.) would suggest changes to effectively restart
both PEC and PDC towards paths to achieve their stated purposes.
In order to assess PEC and PDC, on the first day, the ULI LA panel interviewed government officials,
local stakeholders, current tenants, past and present members of PEC & PDC Board of Directors,
consultants and financial lenders. The panel also toured the facility and its general surroundings. The
following day the panel engaged in a thorough review and assessment of the information gathered and
prepared a Masterplan outline highlighting the panel’s findings and recommendations. The one and a
half day TAP provided the foundation for this and other reports focusing on market potential; planning
and design issues; development strategies; implementation plans; marketing strategies; and the
appropriate tenant mix for the PEC small business center and its small business incubator program.
The City of Pasadena asked ULI LA to answer four primary questions:
1.
2.
3.
4.
Copy room
What should be the purpose(s) of PEC and PDC?
What is the best use of PEC’s real property?
What is the optimal organizational structure?
What is the financial capacity of PEC and PDC?
The panel concluded its work with a presentation of the Masterplan outline to the PEC and PDC Boards
of Directors, the City of Pasadena Assistant City Manager and Assistant to the City Manager.
Panel Recommendations
Based on panel interviews with stakeholders and documents prepared by the City of Pasadena and
consultants, the panel presented a series of recommendations in response to the four questions posed
by the City of Pasadena, PEC and PDC Boards of Directors. The panel began by providing an overview
which consisted of a Masterplan outline focusing on short and long term strategies.
Corridor to 80± sf offices on first floor
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Short Term Strategies
Keep doors open. There continues to be a demand and need by small businesses and
microenterprises for the office space and services offered by both PEC & PDC. However, in the
short run a number of critical concerns exist which must be addressed given the limited cash flow
available to both organizations. PEC will need to enact an aggressive marketing effort to secure
new market business tenants as well as pursue new leases and the collection of unpaid rent from
existing business tenants. This requires the institution of an effective property management program
which will ease the organization’s immediate shortfall in cash flow.
Create credibility. The PEC Board of Directors needs to be expanded and strengthened. Continued
attention must be given to marketing, organizational development, financial management and in
general addressing those issues which have generated unfavorable perceptions of PEC by various
stakeholders, especially the business community, local, state and federal government agencies.
One Executive Director. It is desirable for the PEC to have an Executive Director who can focus on
the operations of the small business center and small business incubator program. Small businesses
and microenterprises participating in the small business incubator program should occupy 25% of
the available office space and market rate business tenants should occupy the balance. Market rate
business tenants should also have access to available business center services at competitive rates.
The potential for a single Executive Director to manage both PEC and PDC also exist and will be the
subject of further consideration regarding the prospects for merge of the two organizations.
Executive Committee. There should be an Executive Committee of the PEC Board that is
empowered to make policy decisions in lieu of waiting for the regular monthly or bi-monthly board
meetings. Consideration should also be given to the formation of an Executive Committee with
overlapping membership from both the PEC and PDC Board of Directors.
Incubator Manager. In order for the small business incubator program to work effectively there
needs to be an Incubator Manager working under the supervision of the PEC Executive Director.
Such a manager would work to identify appropriate small business incubator candidates for tenancy
along with the resources needed to make a small business incubator program success.
Boards have same members. There should be an overlap in membership on the PEC and PDC
Boards of Directors by those persons exercising policy direction for both organizations for activities
to be carried out by the respective staffs.
Boards recruit new members. It is essential that both PEC and PDC recruit new members
to their respective Boards of Directors. New members should be drawn from those representing
business, venture capital, community, civic, educational and cultural areas of interest in Pasadena
and the Greater San Gabriel Valley.
Best Practices-business center. A best practices small business center is an area designation
PEC should pursue. Ideally, a small business incubator program should provide an environment
where a firm has enough support to graduate within an 18-24 month period as it expands and
grows. The objective is to retain these graduating firms within the same geographic area as the
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PEC. This approach represents the best practices among small business incubators and is a
component that should be part and parcel of PEC at this Pasadena location.
Bring in incubator leaders. PEC should endeavor to solicit support and participation on the
part of incubator leaders in Pasadena and the San Gabriel Valley. This accumulation of incubator
brain power focused on this area of Pasadena can have multiple benefits in terms of business
development, job creation, and the general betterment of the community.
Re-branding. PEC needs to re-brand the organization and its mission. This task is related to
turning unfavorable perceptions into a positive image such that the necessary support from the
City, LA County, other government agencies and the business community will be contributed.
Long Term Strategies
What kind of small business incubator? Some of the questions PEC needs to address as it
looks to the future are: What type of small business incubator should PEC become? What industry
cluster should be its primary focus? These and several other questions regarding the future of
PEC’s small business incubator program are especially critical as PEC endeavors to reserve and
occupy 25% of its rentable office space for small businesses needing incubation. A sampling
of successful incubator programs has indicated technology, entertainment, leisure, and small
manufacturing represent the types of incubator businesses more likely to achieve success.
Feasibility Study. It would be prudent for PEC to conduct a feasibility study to ascertain what is
needed to chart a path toward success. It would be particularly beneficial for the feasibility analysis
to determine what mix and type of small business tenants can sustain the on going operation of
a small business incubator program wherein business incubator tenants coexist with traditional
unassisted small businesses.
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Four Primary Questions
After the overview, the panel answered the four
primary questions posed by the City of Pasadena.
Each primary question had sub-questions, and
the panel provided detailed recommendations for
each inquiry.
1. What should be the purpose(s) of the Pasadena
Enterprise Center (PEC) and Pasadena Development
Corporation (PDC)?
View easterly of driveway on southerly
improved parcel
Should the success of either the PEC or the PDC be measured solely
by the increased number of small businesses and/or jobs created in
Pasadena’s lower income areas?
Success should be defined by numerous factors both qualitative and quantitative.
Among these factors should be the ability to promote small business development and
job creation in this sector of the City. These measures of success should be a critical
component of the operations of both PEC and PDC. In this regard, work done by the
Development Leadership Network (DLN) with its Success Measures Project can be
instructive. The essence of the DLN initiative was to develop success measures for nonprofit organizations, most particularly economic development entities, such as PEC and
PDC. Measures of success should also include the establishment and completions of
benchmarks set by the respective Boards of Directors.
View easterly on southerly
improved parcel
Should the focus be primarily women and minorities?
Maintain the existing mission of focusing on small businesses which provide business
development and employment opportunities for minorities and women, including job creation
and career development opportunities with sensitivity to issues of race, ethnicity and gender.
What are the best ways that PEC can identify and attract
prospective incubator businesses and attract start-up businesses to
become PEC tenants?
Re-evaluate the existing location
Determine the amount to invest in re-building efforts
Building versus people and business model-people first
View westerly of driveway on southerly
improved parcel
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Create a welcoming atmosphere with make-over
Upgrade bathrooms and kitchen, and paint
Technical upgrades—AV and computer amenities
Get ideas from students to create better environment (i.e. Art Center)
The ULI LA Panel recommends PEC strongly consider the renovation program and potential
development expansion submitted by Civic Technologies.
2. What is the best use of PEC’s real property?
View westerly of subject, southerly
improved parcel at left, northerly
parking lot parcel at right
View westerly of northerly parking
lot parcel
What restrictions exist on the use or sale of the real property parcels
owned by PEC?
There are both City of Pasadena/County of Los Angeles policy initiatives as well as legal
restrictions which affect the use or sale of the parcels.
Approvals by the County of Los Angeles, City of Pasadena, Pasadena Community
Development Commission, Pasadena Development Corporation and Pasadena Enterprise
Center in January,1992 and subsequently in May,1992 authorized the purchase of 1015
& 1027 N. Lake Avenue with federal Community Development Block Grant to support
economic development opportunities for small and microenterprise businesses via the PEC
small business incubator program to be located on-site.
The agency agenda reports and associated legal documents affirm the continued operation
of a bona fide small business incubator program on the real property parcels which
includes actual assistance in the form of reduced lease rates to eligible businesses for no
less than twenty-five percent (25%) of all improvements on the parcels. Said reduced lease
rate shall average no more than seventy-five percent of (75%) of the market lease rate for
comparable space in the area, or as otherwise approved by the City of Pasadena.
Sale of the real property is subject to approval by the County of Los Angeles, Community
Development Commission of Los Angeles, City of Pasadena, Pasadena Community
Development Commission and Pasadena Development Corporation.
What are the existing contractual arrangements between and among
PEC, PDC, City of Pasadena, County of LA, and any other parties (i.e.,
conventional lenders, consultants, etc.) that may affect PEC’s operation/
disposition of the real property?
Several multi-faceted and multi-party contractual arrangements exist with respect to
PEC’s continued ownership of the real property and operation of the small business
incubator program
Tripartite Agreements (CDC-72 & CDC-73) of Purchase and Sale and Joint Escrow
Instructions, as amended, between the aforementioned parties stipulate the terms of the
purchase and sale of the properties including execution of promissory notes and recordation
of associated deeds of trust.
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Purchase of these parcels was accomplished via the use of federal Community Development
Block Grant funds under the auspices of the U.S. Department of Housing and Urban
Development and require continued compliance with the applicable provisions of the Housing
and Community Development Act, as amended, and related Code of Federal Regulations
1015 N. Lake Avenue is encumbered by a County of Los Angeles Amended and
Restated Promissory Note and 1st Deed of Trust and a Pasadena Development
Corporation Amended and Restated Promissory Note and 2nd Deed of Trust. 1027 N.
Lake Avenue is encumbered by a Community Development Commission of Los Angeles
County Amended and Restated Promissory Note and Deed of Trust.
These promissory notes and deeds of trust affirm the continued operation of a bona
fide small business incubator program which includes actual assistance in the form of
reduced lease rates to eligible businesses for no less than twenty-five percent (25%) of
all improvements on the parcels. Said reduced lease rate shall average no more than
seventy-five percent of (75%) of the market lease rate for comparable space in the area,
or as otherwise approved by the City of Pasadena.
Disposition of the parcels is subject to the County of Los Angeles and Community Development
Commission of Los Angeles County approval of a new buyer and/or a PEC reorganization or
merger or consolidation as well as compliance with the Code of Federal Regulations.
If the public purpose objectives are met it seems reasonable that the real property issues, e.g.,
refinancing/restructuring existing indebtedness, can be addressed by all parties concerned.
What are the best options to maximize the utilization of the real estate
assets for stable and efficient business/economic development activities?
Integra Realty Resources, an MIA, valued the real estate assets at $2.75 million which
suggests that there is over $1.0 million of equity readily available.
Write-down the City of Pasadena and Community Development Commission/County of
Los Angeles indebtedness, or a percentage thereof, in exchange for continued payment of
property taxes, city fees and support of the public economic development purposes (i.e.,
small business center and small business incubator program).
Reduce the existing debt to make PEC donor worthy and create the potential to secure
future funding.
Funding and access to other resources would permit the initiation of an enhanced technical
assistance program, re-furbishing of the improvements, marketing of PEC efforts, and hiring
of necessary staff or contract employees.
3. What is the optimal organizational structure?
What reasonable options are available to provide and pay for the
immediate staffing and operational needs of PEC?
Partner with PDC
Create and implement a recovery plan in place
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Partner with local community organization(s) to provide resources including
administrative support
Implement a new board structure for the short-term with the President and/or Executive
Committee authorized to transact PEC business
Suspend the incubator business tenant only policy and allow a commercial broker(s) to
recruit new incubator and market rate business tenants
Devise a referral process to encourage and incentivize current business tenants to recruit
new business tenants
Given the urgency of the financial situation and the receptivity of both
PDC and PEC, should a merger of the two corporations be a short-term
rather than long-term option?
Retain two Boards, possibly with common members, and both with representatives of the
business industry and local community.
Board membership should consist of small businesses and large well established
corporations which will sponsor PEC program activities. Identified Pasadena groups to
be considered for potential board membership are:
City of Pasadena, County of Los Angeles, Federal & State Agencies
Kaiser Permanente, Jet Propulsion Laboratory, Jacobs/Parsons
Tournament of Roses Foundation, Non-profit community organizations
Cal Tech, Art Center, Colleges & Museums
Financial Institutions, Banks, Venture Capitalist
Retailers—Trader Joe’s, Vons, McDonalds
Local Businesses, Law Offices, Security Services
Form a tenant advisory group.
Incubator program graduates should serve as PEC marketers (evangelists).
Identify and hire a strong Executive Director to lead in the transition.
Executive Director must be a strong and passionate leader, and have the ability to execute
the PEC business plan.
Executive Director must have strong fundraising attributes and connections to the
local community.
Re-brand PEC with a distinctive trademark and product (small business development)
Solicit the Los Angeles Economic Development Corporation (LAEDC) to provide interim
management and technical assistance. ULI and LAEDC participation can enhance PEC’s
business credibility.
What role should the City of Pasadena and County of Los Angeles play?
Financiers, Creditors
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Strategic partners (referral partner)
Implement referral program—tap into existing City workshops
4. What is the financial capacity of PEC and PDC?
What are the respective financial positions of both the PEC and the PDC?
PEC currently has six months operating cash flow.
PEC’s financial statement contains comments my a Certified Public Accountant (CPA)
regarding its viability as a going concern
Annual audit is underway
PDC has diminished federal grants (EDA, CDBG) and conventional funding
PDC’s revolving loan funds are also limited
What should be the short-term economic strategy?
Be proactive in terms of leasing the space and collecting rents from existing tenants.
Adopt a plan which includes the required mix of incubator and market rate business
tenants. Such a plan should also address building upgrades, both internally and externally.
Where/how can additional working capital be obtained? Interim
conventional financing?
Implement a business plan to secure capital.
What are the most likely areas of entrepreneurial business ventures that
could lead to funding streams?
Perform a feasibility study to determine viable business sectors and potential grant donors.
(Step Two)
Develop programs for revenue sharing (non-equity, referral fees, etc.)
View southwesterly of front entrance
to subject
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Summary
State of Affairs
The success of existing and new small businesses remains a difficult challenge in this century
especially in light of the current economic climate. Although small businesses are the foundation
upon which the global economy resides many are in peril. Without the assistance of local
organizations like the Pasadena Enterprise Center (PEC) or the Pasadena Development Corporation
(PDC), numerous small and microenterprise businesses would not be operating today nor would
some of the most prominent and successful entrepreneurs have gotten their start. Similarly, our
communities would not have had the benefit of the provision of new jobs, accessibility to goods and
services, neighborhood revitalization and a host of tangible assets that are derived from a flourishing
small business community.
These realities make the case for the continuation of the purposes subscribed to by PEC and
PDC for viable economic development activities within the City of Pasadena, San Gabriel Valley
and County of Los Angeles. However, the need or demand for small business assistance and
development services does not and should not suggest a continuation of either organization if they
are not effective in addressing the immediate needs of their respective clients. Are the corporations
effectively responding to the needs of their target audience? This is and will be the core question to
be answered with respect to the survival of both PEC and PDC.
Vision
Fortunately, a vision does exist among the members of the Boards of Directors of the two corporations
for a new and prosperous future. As highlighted in the attached article “Incubating Inner-City Biotech”
it is clear the depth of goodwill and the tenacity required of the various parties to achieve success in
Boston and Los Angeles was tremendous. It is also easily recognized that the successful development
of small businesses is difficult, demanding, and oftentimes not fully appreciated by the local business
community or civic leaders. Albeit, the article in “Lesson Learned” gives wonderful guidance to those
committed to this endeavor- vision, location, flexibility, collaboration, reasonableness, communication,
understanding and patience. Similar to the experience of the Community Development Corporation of
Boston, Inc. (CDCOB), PEC finds itself at an opportune moment to chart a new path towards success.
Buoyed by the availability of several resources particularly the commitment of its Board and its real
estate asset, a unique situation has presented itself for the corporation to start anew. Overcoming
existing obstacles will not be easy but the MasterPlan denoted herein by the ULI LA Panel along with
the Panel’s responses to the series of questions posed by Boards provide an outline of key steps to
be taken to obtain the vision.
14
Best Practices Example
By Philip S. Hart and William J. Gasper
Incubating Inner-City Biotech
Biotechnology, or biomedical research, stands to be one of the
growth industries of the 21st century. Biotechnology fosters both the
better understanding of biological mechanisms and the improvement
and creation of products in a variety of sectors, such as
agriculture, food processing, and pharmaceutics. Besides “classic”
biotechnology—for example, baking bread and brewing beer with
the help of yeast—there is also “modern” biotechnology, principally
based on the knowledge of gene function; genetically modified
organisms (GMOs) are the products of this latest biotechnology.
Biotechnology is a body of methods and techniques that employ as
tools the living cells of organisms or parts or products of those cells
(such as genes and enzymes).
Given the growth of this industry over the past 30 years in both the
university and commercial sectors, related land use and development activity has been generated. The
nature of this land use and development activity in relation to “modern” biotechnology has generally
been centered around research universities, medical campuses, venture capital sources, public
research funding, and a skilled workforce. Much of this activity has taken root in the Boston/Cambridge
area, the San Francisco Bay Area, and San Diego, while more recently other municipalities have sought
to become competitive in this arena.
Boston’s Success
Biomedical research is not often associated with inner-city locations. However, in the Lower Roxbury
and South End neighborhoods of Boston, a viable university and commercial biotechnology presence
has been developing over the past 20 years. This “inner-city biotech” development is the focus of this
article, which describes successes and lessons learned that can be applied to other inner-city locations
interested in participating in this 21st-century industry.
Boston’s inner-city biotech story began with the land clearance for the proposed Southwest
Expressway right-of-way in 1966. In 1972, community pressure led to the cancellation of the
Southwest Expressway, which opened up more than 200 acres (81 ha) for redevelopment in
Boston’s southwest corridor. By 1980, a new urban industrial park, CrossTown Industrial Park
(CTIP), sited on 40 acres (16 ha) in Lower Roxbury, got its first tenant, Massachusetts computer
giant Digital Equipment Corporation (DEC).
Meanwhile, during the early 1970s, in the South End neighborhood of Boston, adjacent to Lower
Roxbury, the Boston University School of Medicine (BUSM) strategically solidified its relationships with
its two neighboring hospitals, Boston City Hospital and University Hospital. Today, BU’s schools of
medicine, dental medicine, and public health (collectively referred to as the Boston University Medical
Campus or BU Medical) and Boston Medical Center (BMC)—the result of a merger of Boston City
15
Development Administration (EDA) Title IX grant,
CDCOB began the shell and core renovation of
the two factory buildings as speculative office
and research and development space. BU took
note of the activity at these vacant buildings a
quarter mile down the street from BUSM and,
seeking to expand its biomedical research
space for both BUSM research and educational
programs and partnerships/incubation initiatives
with biotech companies, partnered with CDCOB
to plan and execute the development of an innercity biotechnology facility at 801 Albany Street in
lower Roxbury’s CrossTown Industrial Park.
Given the location of
the university medical
presence in needy urban
neighborhoods, it is
important to provide local
residents with the education
necessary to move into the
biotech industry. CityLab
is a biotechnology learning
laboratory that provides
access to state-of-the-art
laboratory facilities and
curriculum in biotechnology
for middle and high school
teachers and students.
Hospital and University Hospital in July
1996—constitute a vibrant academic medical
center with an inner-city community focus.
The Community Development Corporation of
Boston, Inc., (CDCOB) was organized in 1969
as the economic development arm of the city
of Boston Model Cities Program. Once the
Model Cities demonstration period ended,
CDCOB became an independent 501(c)(3)
economic development organization that then
turned its focus from making investments in
local businesses to developing a long-range
economic development strategy of creating an
urban industrial park—CTIP—as a way to spur
job creation and business development in the
distressed Lower Roxbury neighborhood.
In 1984, CDCOB purchased a 50,000- squarefoot (4,651-sq-m) paintbrush factory that
occupied two industrial buildings just across
the street from the DEC plant located at 801
Albany Street for a mere $60,000. Even with this
modest purchase, CDCOB was unable to secure
a conventional bank loan for this transaction
as the city’s downtown banks largely ignored
Roxbury. Three years later, with the support
of a U.S. Department of Commerce Economic
16
CDCOB’s agenda for 801 Albany Street was
to continue bringing emerging technologies
into this urban industrial park, so BU Medical’s
interest was timely. The building opened in
1989 as a biotechnology facility. In so doing,
CDCOB and BU had to gain approval from the
Boston Redevelopment Authority (BRA) to allow
BU Medical to locate a facility on the Lower
Roxbury side of Massachusetts Avenue from
the South End prior to completing the medical
campus master plan. BUSM occupied 90 percent
of the structure on a long-term lease, which
extends to 2014. CDCOB occupied the balance
of the building with its corporate offices. From
the beginning, BU’s concept for this biotech
facility was to provide a home for BUSM’s
Program in Biomedical Laboratory and Clinical
Sciences, which prepares students for careers
in biomedical technology; additional institutional
research/clinical laboratories; and space to
support joint venture relationships with biotech
companies/commercial laboratories, including
incubation of biotech startup companies.
BU’s collaboration with CDCOB at 801 Albany
Street was a harbinger of BU Medical’s “near
campus” development of biotech space. Soon
after the opening of 801 Albany Street, BU
commenced planning for a 35,000-squarefoot
(3,256-sq-m) biomedical research facility at
609 Albany Street (which opened in 1992)
and joined with University Hospital (today, part
of BMC) to develop city- and state-owned
land at 650 to 700 Albany Street, which was
being used for surface parking. These parking
lots have since become BioSquare, Boston’s
only research park devoted exclusively to life
sciences research and commercialization.
BioSquare covers 16 acres (6.5 ha) with a
planned 2.5 million square feet (232,558 sq m)
of laboratory, office, and support space, of which
approximately 1.3 million gross square feet
(120,930 sq m) have been developed to date,
inclusive of three biomedical research buildings
and two parking garages with a combined
2,400 parking spaces. The first of these
buildings, the Center for Advanced Biomedical
Research, opened in September 1993. In
addition, construction began in March on the
most recent BioSquare project, the $180 million,
192,000-square-foot (17,860-sq-m) National
Emerging Infectious Diseases Laboratories.
This project, in which high containmentlevel research will be conducted to develop
diagnostics, vaccines, and treatments for
dangerous infectious diseases, whether natural
in origin or introduced through bioterrorism,
is not without controversy. In early August, a
Massachusetts commonwealth judge ruled
that Boston University must file an updated
environmental review. However, construction
continues, and the university remains confident
that the project will proceed as planned, with a
2008 opening.
Meanwhile, over the past 17 years, significant
Boston University and biopharmaceutical
company research activity has occurred at 801
Albany Street, much of which relates to diseases
that afflict inner-city residents. For instance:
During the early 1990s, BUSM Cancer Center
researchers made important advances in the
development of new therapies for the two
most common genetic diseases in the world,
sickle cell anemia and thalassemia.
As of this writing, 801 is the headquarters
for the Inner-City Asthma Study and the
Inner-City Asthma Consortium, which are
conducting investigations and clinical trials
regarding interventions for asthma among
inner-city children.
School of Dental Medicine research faculty
are conducting cutting-edge research on
restorative dental materials.
NitroMed, Inc., a publicly traded company,
was a tenant at 801 in the mid-1990s,
and developed and is marketing BiDil, a
drug that treats Congestive heart failure in
African Americans.
BioSquare at 710 Albany
AdipoGenix, Inc., a startup biopharmaceutical
company founded by BUSM faculty members
and a current tenant at 801, is focused on
the development of novel therapeutics for the
treatment of disorders of fat tissue such as
obesity and diabetes.
This biotech facility in Lower Roxbury has
also met BU’s objective of facilitating joint
venture relationships with biotech companies
and incubating biotech startup companies.
In addition to the two companies mentioned
above, CombinatoRx, Inc., a publicly traded
company that identifies new disease targets
and new medicines from combining already
approved drugs, was incubated at 801 until
it grew out of its space in 2001. In the
meantime, the original 40-acre (16-ha) urban
industrial park has grown to 75 acres (30
ha) and comprises office, industrial, retail,
public utility, and textile manufacturing uses;
the DEC building and adjacent property have
been replaced by CrossTown Center, which
includes Boston’s first black-owned hotel, a
parking structure, and two office buildings,
17
801 Albany Street
with the first one now in construction with BU
Medical as anchor tenant; and a planned 265unit residential complex with first-floor retail
space. Also, in contrast to 1984, when CDCOB
could not secure a bank loan to purchase 801
Albany, banks are now very active in Lower
Roxbury and its surrounding neighborhoods.
Soon after the opening of 801 Albany Street, BU
began collaboration on BioSquare, a 16-acre
(6.5-ha) research park with three biomedical
research buildings and two parking garages.
The laboratory at 670 Albany Street opened
in November 2005 (top left), and in March
construction commenced on the National
18
Emerging Infectious Diseases Laboratories facility
(top right), scheduled to open in 2008.
Los Angeles Moves Forward
In Los Angeles, plans are gaining momentum
for the development of an Urban BioMed
Research Park sited in the distressed East Los
Angeles neighborhood near the County-USC
(University of Southern California) Hospital.
The USC Health Sciences Campus is a
major medical campus in East Los Angeles,
encompassing Norris Cancer Center, USC/
LA Hospital, Doheny Eye Center, USC Medical
School, and other university-affiliated centers.
The proposed BioMed Research Park would
cover more than 1.6 million square feet
(148,837 sq m) of space and is to be built in
phases over a period of ten or more years.
USC is slated to be the major anchor tenant,
with current construction plans totaling
585,000 square feet (54,418 sq m) in the
first five years of the phased development
process. USC’s commitment to the project has
been demonstrated thus far with extensive
investment in site preparation, infrastructure,
and new medical research facilities.
This East L.A. neighborhood is predominantly
Latino; Roxbury is mostly African American.
Both of these inner-city neighborhoods, which
are 3,000 miles (4,830 km) apart, have
public housing and jail facilities within a short
distance from major medical facilities governed
by important private research universities.
The East L.A. site under consideration for this
Urban BioMed Research Park comprises over
1,000 acres (404 ha) and its development is
to be governed by a city of Los Angeles and
Los Angeles County Joint Powers Authority. The
first phase of the USC portion of this public/
private biomed research park is to be built on
a 40-acre (16-ha) site and is to be a stemcell research center supported by renowned
business leader and philanthropist Eli Broad.
Compared with the Boston/Cambridge area’s
biomedical industry, Los Angeles’s is relatively
young, with more than half its companies having
started during the last 15 years. Despite the
youth of the industry in Southern California, its
future there is bright, as numerous economists
and political leaders see biotechnology as a
key growth engine for the 21st century. With
a recent $3 billion stem-cell ballot initiative
approved by the voters in November 2004,
the state of California has become one of
the strongest supporters of the biosciences
industry in general and stem-cell research in
particular. It is expected that Los Angeles’s
biomed industry as a whole will benefit from
this initiative.
Indeed, Los Angeles already has a large base
of biomedical research activity, including
its universities as well as private research
institutions. Thousand Oaks, California–based
Amgen—the largest U.S. biotech firm, with
over 7,000 employees worldwide and $3 billion
in annual revenues—is the cornerstone of the
commercial biotechnology industry in the L.A.
area. (Amgen opened its first Massachusetts
research facility at BioSquare in 2000,
taking advantage of BioSquare’s facilities,
collaborative environment, and access to
biomedical support services, until it moved to
an Amgen-owned facility a few miles away.)
Southern California has a number of other
major manufacturers of pharmaceuticals and
medical devices, but it has not produced other
strong biotech companies. The metropolitan Los
Angeles area falls well behind the San Francisco
Bay Area and the San Diego area in venture
capital, initial public offerings, and fast-growing
biotechnology companies. Similarly, Los Angeles
lags well behind the Boston/ Cambridge area on
these same measures.
19
With both the more mature inner-city
biotechnology activities in Boston and
theembryonic work in L.A., private research
universities with medical centers are at the
root of this effort. Given the location of this
university medical presence in two needy
urban neighborhoods—Lower Roxbury and
East Los Angeles—it is critically important
for each university to provide local residents
with the education necessary to move into
the biotech industry. This is why the BU
program in Biomedical Laboratory and Clinical
Sciences, which has been located at 801
Albany Street from the very beginning, bears
replication in the L.A. Urban BioMed Research
Park. Indeed, this program has brought much
recognition over the years to Boston University
and to 801 Albany, as a result of CityLab
and CityLab Academy, two highly successful
educational programs.
CityLab is a biotechnology learning laboratory
that provides access to state-of-the-art
laboratory facilities and curriculum in
biotechnology for middle and high school
teachers and students. With support from
federal and private funding agencies, tens
of thousands of students and teachers have
attended workshops held at 801. The tenyear-old CityLab Academy, based at 801
Albany Street, is a nine-month biotechnology
skills training and education program
designed for economically and academically
disadvantaged students. It is offered on a
full scholarship basis for eligible high school
graduates interested in pursuing a career
and further education in biotechnology. Upon
successful completion, graduates are provided
with assistance in securing entry-level
biotechnology jobs.
Lessons Learned
What lessons can be learned from the inner-city
biotech success story in Boston that can be applied
to Los Angeles and other municipalities interested
in attracting and/or developing this 21st century
industry? These lessons include the following:
Vision. In Boston, the visionaries included
Boston University and the Community
Development Corporation of Boston.
Location, Location, Location. Normally,
suburban locations are regarded as more ideal
sites for biotechnology development. Boston
and now Los Angeles are angling to tell another
story about ideal locations for such activity.
Be Flexible. Be prepared to change direction
if the initial plan is not working.
Collaborate. Work with and not against
federal, state, and local officials and agencies,
as well as the local community; view them
as partners. This lesson is going to be
particularly important in East Los Angeles as
USC, the city of Los Angeles, and the county
of Los Angeles endeavor to jointly plan and
develop a major urban biomed research park
in a challenged neighborhood.
Be Reasonable. Be reasonable and
fair, particularly in negotiating financial
terms with partners, tenants, contractors,
consultants, etc.
Communicate Well. Poor communication will
bring confusion into every phase of the project.
Know Your Customers. Understand the
needs and desires of your tenants/occupants
and do your best to satisfy them. This includes
your university researchers doing sponsored
research as well as the commercial biotech
and commercial laboratory tenants.
Be Patient. Remember—it is a marathon
and not a sprint to the finish line.
20
Philip S. Hart is president/CEO
of Hart Realty Advisors, based in
Hollywood, California.
William J. Gasper is associate vice
president for financial and business
affairs at Boston University Medical
Campus. Hart and Gasper began
working together nearly 20 years
ago to help create inner-city biotech
activities in Boston.
Reprinted with permission from Urban Land
Institute, September 2006, pages 166 –169.
21
ULI Los Angeles
Technical Assistance Panel Team / PEC-PDC
Richard Gentilucci, Chair
Medinah Adal
President/CEO
BTG-Advisors
Burbank, CA
Principal
KTGY Group, Inc.
Santa Monica, CA
Tunua Thrash Thomas
Jon Curtis
Senior Consultant
RCLCO-Green Door Advisors
Century City, CA
JBC Ventures
La Cañada Flintridge, CA 91011
Sandra Kulli
David Flaks
President
Kulli Marketing
Malibu, CA
Director, Policy Initiatives
Los Angeles County Economic
Development Corporation
Los Angeles, CA
David Waite
Ed Rosenthal
Attorney
Jeffer Mangels Butlerf & Marmaro LLP
Los Angeles, CA
First Vice President
CB Richard Ellis
Los Angeles, CA
Philip Hart
Executive Director
ULI Los Angeles
Los Angeles CA
22
About ULI
The Urban Land Institute
ULI–the Urban Land Institute is a nonprofit research and education organization that promotes responsible
leadership in the use of land and in creating and sustaining thriving communities worldwide.
The Institute maintains a membership representing a broad spectrum of interests and sponsors a wide
variety of educational programs and forums to encourage an open exchange of ideas and sharing of
experiences. ULI initiates research and anticipates emerging land use trends and issues and proposes
creative solutions based on that research; provides advisory services; and publishes a wide variety of
materials to disseminate information on land use and development.
Established in 1936, the Institute today has more than 40,000 members from 92 countries,
representing the entire spectrum of land use and development disciplines. Professionals represented
include developers, builders, property owners, investors, architects, public officials, planners, real
estate brokers, appraisers, attorneys, engineers, financiers, academics, students, and librarians. ULI
relies heavily on the experience of its members. It is through member involvement and information
resources that ULI has been able to set standards of excellence in development practice. The Institute
has long been recognized as one of America’s most respected and widely quoted sources of objective
information on urban planning, growth, and development.
This Advisory Services program report is intended to further the objectives of the Institute and to make
authoritative information generally available to those seeking knowledge in the field of urban land use.
Richard M. Rosan, ULI President Worldwide
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