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Barriers and solutions for infill development in Sonoma County

4 key barriers

1. Market uncertainty due to unknown demand for infill in key cities and urban areas in Sonoma County.

2. Lack of demonstrated viability and financing for infill and car-free living

3. Lack of supportive policy and process.

4. High costs and fees to build infill.

7 near-term priorities

1. Pilot projects with public partnership with possible concessions regarding fees, land purchase and streamlined entitlements.

2. Rent guarantees for employees from employers to boost demand for infill.

3. A joint powers agency (JPA) or renewal enterprise district (RED) to guide and fund infill development.

4. Zoning, parking requirement and development fee reforms to encourage rather than stymie infill development.

5. Improved availability of public sector infill financing and enhanced access to sales and use taxes.

6. California Environmental Quality Act (CEQA) streamlining for qualifying infill (e.g., AB 2267).

7. A market study and project development navigator to help streamline infill investment and deployment.

Source: “Accelerating Infill in Santa Rosa & Sonoma County,” Council of Infill Builders, November 2018 (nbbj.news/sonomainfill)

Sonoma County’s two largest population centers have big plans moving forward to tackle the tricky business of keeping the local economy humming amid ultralow unemployment and scant options to house enterprises and their employees.

“Though the economy is quite good, it has resulted in low availability of workers,” said Ethan Brown, business retention and expansion program manager for the Sonoma County Economic Development Board.

A bigger proportion of the Sonoma County workforce is employed than in California and the nation as a whole. The county unemployment rate ended last year at 2.6 percent, lower but on par with where it was a year earlier (2.8 percent), according to the most recent state figures. To put that in perspective, December joblessness was 4.2 percent for California and 3.9 percent for the nation.

And when the October 2017 firestorms wiped out over 6,000 North Bay homes, including about 5 percent of Santa Rosa’s housing stock, that made the already challenging task of holding onto and attracting employers even more difficult than it was before the wildfires, according to Brown and his counterparts in Santa Rosa and Petaluma. “Not a lot of huge companies are looking to move here, knowing what the housing and employment situation is,” Brown said. Rather, the newcomers tend to be smaller companies, often marketing and design firms, that launched elsewhere in the Bay Area, and the principals are looking to relocate to Sonoma County for lifestyle reasons, he said.

A few years ago, county research found that more than three-quarters of local businesses employ fewer than 10.

“We tend to look to large employers as drivers of the economy, but small employers are where most the job creation happens,” Brown said.

County and city business boosters have been moving rolling out initiatives to tackle the dilemma of short supply of housing and suitable workers. The Sonoma County Board of Supervisors approved the Strategic Sonoma (strategicsonoma.com) five-year effort last July.

Two goals of that plan were the creation of the Sonoma County AgTech Innovation and Manufacturing Alliance and the Talent Alignment Council. The alliance is meant to take input from local producers in various industries and connect them with resources such as the 101mfg and California Manufacturers Council trade groups, Brown said.

Fifteen local manufacturers attended the first alliance meeting, held Jan. 16, and another session is planned for the next two months.

Brown has been working with a local manufacturer that had been planning to move out of state, partly because of staffing challenges. He said it looks promising that the employer will stay local via programs such as the California Competes tax credits, manufacturer sales-tax exclusions and recruitment help from Sonoma County JobLink.The first meeting of the Talent Alignment Council — a joint effort with employers, Sonoma State University, Santa Rosa Junior College and Empire College to retain local graduates — was late last year and another is planned for mid-March, with the goal of meeting quarterly, Brown said.

“It’s about pursuing opportunities for what used to be called internships but is now called experiential learning,” Brown said.

On a parallel track is the North Bay Construction Corps program, now in its third year, which trains high school graduates in the trades. It’s backed by North Coast Builders Exchange, CTE Foundation Sonoma County and Sonoma County Office of Education.

Barriers and solutions for infill development in Sonoma County

4 key barriers

1. Market uncertainty due to unknown demand for infill in key cities and urban areas in Sonoma County.

2. Lack of demonstrated viability and financing for infill and car-free living

3. Lack of supportive policy and process.

4. High costs and fees to build infill.

7 near-term priorities

1. Pilot projects with public partnership with possible concessions regarding fees, land purchase and streamlined entitlements.

2. Rent guarantees for employees from employers to boost demand for infill.

3. A joint powers agency (JPA) or renewal enterprise district (RED) to guide and fund infill development.

4. Zoning, parking requirement and development fee reforms to encourage rather than stymie infill development.

5. Improved availability of public sector infill financing and enhanced access to sales and use taxes.

6. California Environmental Quality Act (CEQA) streamlining for qualifying infill (e.g., AB 2267).

7. A market study and project development navigator to help streamline infill investment and deployment.

Source: “Accelerating Infill in Santa Rosa & Sonoma County,” Council of Infill Builders, November 2018 (nbbj.news/sonomainfill)

In the North Bay’s largest city and the fifth largest in the Bay Area, it is a two-pronged effort to get more than 5,000 homes rebuilt and to lay the foundation for long-term economic growth, according to Raissa De La Rosa, economic development manager for Santa Rosa.

A year before the fires, the city’s move to become a commercial hub for the legalized cannabis industry had the benefit of transforming industrial spaces from sometimes challenging to market to a hot commodity. While the rush to grab such real estate started entering a pause last year, it has started developers toward building new space, De La Rosa said.

Real estate experts such as Al Coppin, president of Keegan & Coppin Co. Inc./Oncor International have been forecasting that industrial land opportunities were dwindling.

“We knew we would see compression of availability of industrial zoned land and units, but it compressed earlier than we thought,” De La Rosa said.

And part of the work city officials did in helping to keep employers such as Keysight Technologies, Medtronic and Kaiser Permanente operational after the fires also helped the city learn more about what such businesses need to continue to call Sonoma County home, she said.

A common refrain is the need for downtown housing to attract professionals such as engineers and physicians, but infill developers active in the Bay Area have been reluctant to move forward with downtown projects because of existing city policies, according to De La Rosa. And a common request for services that would support downtown residents is a grocery store, but a frequent challenge in recruiting such a commercial tenant is the lack of residential density at the urban core, she said.

The city has been talking with Indianapolis-based Simon Property Group about redeveloping the now-vacant Sears store building at the Santa Rosa Plaza mall to include a grocer. Meanwhile, there also have been discussions with Cornerstone Properties, which owns The Press Democrat publishing offices at 427 Mendocino Ave., about redeveloping that site for a higher-density mixture of housing and other uses as well as redeveloping SMART property next to the downtown train station.

Coming out of the spring 2018 joint economic-development sessions that helped spur Strategic Sonoma was a planning effort through Sacramento-based Council of Infill Builders. The group completed a report in November that outlines four key impediments to downtown revival and seven solutions.

At the same time, the City Council approved the Up Downtown initiative aimed at such long-lingering problems. Two actions were cutting the design and permitting process while reducing fees by nearly two-thirds.The fires also underscored an unforeseen economic challenge for Santa Rosa: care for young children of employees, De La Rosa said. Around 800 child care spots were taken out of action overnight during the firestorm, and schools were closed for days. The city is working with Santa Rosa Metro Chamber on a consortium of providers.

“People say, ‘Why don’t you do what Healdsburg has done downtown, but our daytime population downtown is twice the population of all of Healdsburg,” De La Rosa said. “We’re a different entity in this rural county. Our efforts and initiatives are going to be different from other cities.”

In Sonoma County’s second largest city, the food and beverage sectors have helped to send retail and industrial property vacancies below 5 percent and office vacancies below 10 percent.

“We feel we have a strong business environment,” said Ingrid Alverde, Petaluma economic development manager.

A key example of such growth is the filling up of the 280,000-square-foot Cader Corporate Center industrial development soon after construction was complete. That allowed for expansion by Clover Sonoma, Scott Laboratories and Cowgirl Creamery. Other transplants have been Miyoko’s Kitchen, Point Reyes Cheese Company and Revive Kombucha.

The city is ramping up its attractiveness to food and beverage companies with upgrades, nearly complete, to its wastewater treatment plant, Alverde said. That will allow North Bay vintners and other producers of process wastewater that’s too strong to send to normal sewers the option of trucking it to Petaluma instead of the usual destination: East Bay Municipal Utility District.

Jeff Quackenbush covers wine, real estate, construction and other industries. Contact him at jquackenbush@busjrnl.com or 707-521-4256.

Correction: Simon Property Group is based in Indianapolis.