How Cities Nurture Economic Development
DOWNEY Puts Contaminated NASA Property to Economic Reuse
In 1999, the federal government closed the 160-acre Downey NASA Industrial Plant. This ended 70 years of pioneering aerospace activities that encompassed construction of the Apollo moon modules and the nation’s space shuttle fleet. The site had significant soil contamination and faced an uncertain future.
Prior to the site’s closing, through the efforts of Senator Dianne Feinstein and former Congressmen Steve Horn and Jerry Lewis, legislation was passed that allowed the city to buy 68 acres under favorable terms. The city later purchased the remainder of the property from the federal government. An innovative private sector approach to site remediation and environmental insurance was utilized to begin economic reuse of the property.
Today, through the efforts of a city team of elected and appointed officials, the site is undergoing a $1 billion renaissance, with businesses and amenities that include:
Downey Studios. The largest portion of the site, 78 acres, has been redeveloped by Industrial Realty Group into the Downey Studios movie production facility, which contains the largest sound stages in Southern California. Many films have shot some or all of their footage on the site, including Spiderman, Catch Me If You Can, Austin Powers, Santa Clause III, The Italian Job and Lemony Snicket: A Series of Unfortunate Events.
Downey Landing Retail Center. The second largest portion of the site was developed as a 35-acre, 378,000-square-foot retail center, which has been operating for a year. Its tenants are already enjoying brisk business.
City Park. Next door to Downey Studios, the city is building its first public park in 35 years. The 11-acre park will provide Downey youth with a much needed sports complex of lighted baseball and soccer fields.
Columbia Memorial Space Science Learning Center. This $8 million facility is under construction on a two-acre site next to the park. The space center will honor the legacy of America’s space program through innovative educational programs, a visitor center and exhibits.
Kaiser Medical Center. A 30-acre, $700 million Kaiser Permanente hospital and medical office complex is also currently under construction. The one million-square-foot Kaiser facility will comprise two medical office buildings, a hospital, a central plant and parking structure. A 200,000-square-foot Kaiser office building was the first component
to be completed and opened in 2006. The Kaiser Hospital portion of the complex is currently the fourth-largest construction project in Los Angeles County.
This economically successful reuse project combined economic development efforts with open space planning and a wide array of community amenities that are popular with residents.
Contact: Gerald Caton, city manager, City of Downey; phone: (562) 904-7284; e-mail: <email@example.com>.
ONTARIO Utilizes Trade Missions As an Economic Development Tool
For cities and regions competing for economic development, international trade brings in new dollars that increase the overall pool of capital. It creates and retains jobs, raises skill levels, supports real estate values and increases tax revenue for public entities. With this understanding, the City of Ontario has been strategically implementing policies to position itself as a global gateway. Based on the tremendous growth of the Chinese economy combined with UPS cargo flights to China that originate from the Los Angeles/Ontario International Airport, the city chose China as the first of several international markets for a business-intensive trade mission program.
The objectives of this program are to enable small and medium-sized enterprises to explore opportunities in the Chinese marketplace and to arrange individual meetings with pre-screened Chinese businesses for each participating company. In addition, the missions market Ontario to Chinese investors as a place for foreign direct investment. Ontario works closely with trade offices in each Chinese city to facilitate “matchmaking” meetings.
Participants in the 2004 mission reported more than $20 million in contracts under negotiation. As a result of contacts made through the 2004 trade mission, an Ontario-based manufacturer of custom high-end vehicles is currently manufacturing a mobile crime-scene laboratory for the Hong Kong Police Department, valued at $115,000. The company is also in negotiations for two other contracts in China, potentially worth $700,000. As a result of the 2005 trade mission, a local manufacturer/recycler of copper and zinc sent out its first shipment to a Chinese company in the week immediately following the mission.
Metric Machining Corp., an Ontario-based manufacturer, joined the city on its 2006 trade mission. The trip was so successful that since returning, the company has opened an office in Shenzhen and hired a full-time engineer as a liaison with factories throughout China. These steps will help Metric facilitate business more efficiently with its customers in China.
Harry Smith, vice president of Metric, noted that the company’s efforts in China will permit him to grow his business and employee base in Ontario and abroad. “The city clearly has the best intentions for mid-sized companies like us. It values our business, recognizing that our success is its success,” Smith added.
Ontario has representation in Shenzhen, China, to facilitate transactions for Ontario companies and is considering expanding its mission program to include India, Brazil and Europe.
Contact: Mary Jane Olhasso, economic development director, City of Ontario; phone: (909) 395-2197; e-mail: firstname.lastname@example.org.
SANTA CRUZ Invests Locally
A locally owned business group in Washington state coined the slogan, “Think local, buy local, be local.” In Santa Cruz, being local comes naturally to the city council members and city staff, many of whom help small businesses work through the city’s regulatory processes. They hear concerns daily about creating the conditions necessary for businesses to flourish.
Santa Cruz Vice Mayor Ryan Coonerty says, “It’s important that we see ourselves as more than promoters and regulators of business; we’re also customers and investors. I serve on the board of directors of a local credit union. In meeting after meeting, I heard that with only a few more dollars, we could make more small business, home and car loans. These loans could go to borrowers who, because of their size or risk, had been overlooked by the larger banks.”
Carlos Palacios, city manager of nearby Watsonville, served on the credit union board with Coonerty, and together they developed the idea of investing a small portion of their cities’ reserve funds in local financial institutions. The cities would receive the same return with the same security, but “instead of the money leaving the area to sit in some gigantic fund in San Francisco or New York,” says Coonerty, “it would literally be reinvested in our community.”
Their city councils agreed that investing locally was a sound concept. Due to conflict-of-interest laws, however, the credit union where Palacios and Coonerty served on the board was not eligible for such a program. However, another local bank and credit union agreed to participate. Dave Culver, then-finance director for Santa Cruz, worked with the financial institutions to ensure they met the criteria necessary for holding government funds. “Two years later, the funds are still in these financial institutions,” reports Coonerty. “Their CEOs were ecstatic not only because of the additional revenue, but also because it provided an opportunity for them to use the publicity to promote in-vesting locally.”
The City of Santa Cruz also gives extra credit to local firms on their proposals for municipal purchases and contracts, because additional sales tax revenue will be returned to the city. This means that dollars the city spends on paper, equipment and services stay in the local economy. In this way, Santa Cruz is investing in jobs, opportunity and the sustainability of its community.
RICHMOND Creates Transit Village Project With Mixed-Use Development
The Richmond Transit Village is a major urban redevelopment project undertaken by the Richmond Community Redevelopment Agency (RCRA), Bay Area Rapid Transit (BART) and regional transit agencies. The project’s goal is to create a transit-oriented urban village that provides residents with a convenient location and access to multiple modes of transit. The project is redeveloping underutilized, largely vacant property and will replace existing BART parking with structured parking, thus freeing land for the mixed-use transit village.
The concept of the Richmond Transit Village developed in the mid-1990s out of the RCRA’s goal to revitalize the area around the Richmond BART station. The neighborhood groups Iron Triangle Neighborhood Council, Belding Woods Neighborhood Council and the City Centre Neighborhood Council, along with the Richmond Downtown Merchants Association, participated in the community visioning sessions and identified the following elements to improve the station area: for-sale housing; retail; public space; and a station structure for area identity. These elements were incorporated in the 1996 Development Feasibility Study for the Richmond BART Station, which was reviewed by the neighborhood groups and merchants and approved by the BART and RCRA boards of directors.
The project is located on 16.7 acres around the BART and Amtrak stations in Richmond. The transit village is being constructed in two phases and includes 231 units of ownership housing, 27,250 square feet of retail, a 3,700-square-foot intermodal station, and a five-story, 800-space garage facility with 9,000 square feet of ground floor retail.
The RCRA has raised more than $35 million in grant funding and committed in excess of $14 million in agency funds for this project. In turn, these public monies will leverage more than $120 million in private capital for the completion of
Contact: Gary Hembree, chief, Redevelopment Projects, Richmond Community Redevelopment Agency; phone: (510) 307-8140; e-mail: Gary_Hembree@ci.richmond.ca.us.
SAN DIEGO Puts Its Money Where the Jobs Are
When small business owners are asked what the single biggest inhibitor is to business growth, the answer is often a lack of access to capital. The City of San Diego is proactively addressing this market gap by managing an innovative suite of targeted small business loan programs to demonstrate its commitment to such businesses, which currently represent almost half of San Diego’s job growth since 1991.
“The city benefits directly from the jobs that are created when a small business is given the opportunity to succeed, which gives us an incentive to be a little more flexible in our loan underwriting,” said William Anderson, director of the City Planning and Community Investment Department. “We can consider deals where a business might not be able to show its worthiness due to a lack of credit history and conventional experience, even though they have a good business plan. We see the potential and give that homegrown company a much needed infusion of funding that can really allow their business to take off — to the benefit of the community and city.”
What makes the city’s Business Finance Program unique is its ability to leverage three separate revolving loan funds to address the full spectrum of funding needs for small businesses, including:
- San Diego Technology Fund — A $1 million loan fund that provides capital to technology companies that have the capacity to generate follow-on investments, creating the potential for these companies to promote regional prosperity;
- San Diego Regional Revolving Loan Fund — A $3 million loan fund that provides loans for new construction, rehabilitation, leasehold improvements, equipment purchase and working capi-
- tal to small businesses located in targeted areas; and
- Metro Revolving Loan Fund — A $500,000 loan fund that provides funding to the underserved small business owner located in a low- and moderate-income census tract who needs start-up capital but can’t meet the terms of traditional banks.
To date, the program results have been very promising, with more than $4 million in capital made available to San Diego small businesses. Each fund has also maintained its capital base, which allows the money to continue to be recycled to new borrowers. Loan production has seen a marked increase since 2004, and has received national recognition as the winner of the U.S. Department of Commerce’s Excellence in Urban Economic Development Award.
Contact: Michael Lengyel, business finance officer; phone: (619) 533-5187; e-mail: email@example.com. For general information on the city’s business assistance programs, contact Eric Symons, communications manager; phone: (619) 533-5318; e-mail: firstname.lastname@example.org.