ABAG-MTC provides support for achieving PDA visions through the PDA Planning Grant and Technical Assistance Program, Place making Initiative, One Bay Area Grant , East Bay Corridors Initiative, Resilience Program, and Entitlement Efficiency working group. PCAs are open spaces identified as lands in need of protection from urban development and other uses. Such spaces provide agricultural, natural resource, scenic, recreational, and/or ecological values and ecosystem functions. PCA identified lands are eligible for funding through the OBAG program. The PPA program would create a third land use designation in Plan Bay Area. Planning for non office businesses is often left out of the PDA framework. ABAG-MTC’s staff describes PDAs as places that bring housing, transit and economic services together. Thus, PDAs often are not specifically job oriented. Even when jobs are included in PDAs, the mixed-use environment and implied level of density is not compatible with most industrial jobs. The PPA program would provide an opportunity for regional planning to consider land use needs of a broader range of employment types and for cities to receive regional support for areas of importance to employment that do not have the housing and transit location characteristics of PDAs. The PPA program would also build off of the partnerships and knowledge pool that the Bay Area Urban Manufacturing Initiative has developed over the past three years.Through this ongoing effort, BAUM has developed tool kits to provide city staff, policy makers, and partner organizations with strategies to support manufacturing. While this effort is focused on manufacturing,planting table the PPA program provides an opportunity to continue and expand regional coordination around a broader set of industrial land uses. This report summarizes findings from an initial PPA program development phase that initiated outreach and engagement with local jurisdictions.
Interviews with eleven cities and four economic development experts in the region and secondary data analysis provided insight into how a PPA might work in different cities, the degree to which a PPA could benefit different jurisdictions, potential criteria cities could use to designate PPAs, and how transportation challenges around industrial land could be addressed through the PPA program. The findings discovered during this process will serve as a launching point for ABAG-MTC as they begin to shape the PPA program. Conversations with local jurisdictions revealed that city staff are interested in a PPA program that could address a number of challenges that cities experience with industrial land, including market pressures and competition with other uses, limited space, mixed-use districts, outdated zoning codes and policies, outdated infrastructure, environmental concerns, talent attraction, internal city government resources and structure, political barriers, and a lack of constituency. Staff expressed that the PPA program would be useful in addressing these challenges by elevating the profile of industrial land through a regional framework, focusing on employment issues, providing funding, and establishing a toolbox of regional best practices. Transportation challenges to, from and within industrial sites for both goods and people were identified as a primary concern across jurisdictions. Given ABAG-MTC’s role in transportation planning and financing, creating a transportation plan could be a key element of the PPA program. The following sections will discuss each of these issues identified by city staff in more detail and how they could shape the ultimate form of the PPA program. It is no secret that space in the core Bay Area is limited for all uses, and the housing crisis is rightfully receiving the spotlight. The ABAG Executive Board action on the PPA program acknowledges the need for both housing and industrial uses and the importance of a program that will not divert resources from addressing the under supply of housing.
The PPA program will seek to complement the existing development strategies for housing and office jobs in an effort to retain industrial spaces that provide operating space and support services for driving sectors or important local clusters in the Bay Area. The Industrial Land and Jobs Study for the San Francisco Bay Area , conducted by Professor Karen Chapple at the Center for Community Innovation , inventoried the region’s industrial land and examined its capacity for future growth, occupancy, and expected demand. Study analysis reveals that, although the supply of industrial land exceeds projected demand at a regional scale, there is a mismatch between available land supply and expected growth in demand in the urban core, where industrial lands are at risk of pressure to convert to other uses. Chapple defines industrial land uses to include production, distribution, and repair businesses – a definition adopted from San Francisco’s PDR industrial land preservation program. PDR uses go beyond what one may typically envision as industrial and the classic assumption that industrial means manufacturing. Chapple predicts the following industries, in rank order, as those that will contribute an additional 1,000 new jobs or more by 2040: Merchant Wholesalers of Durable Goods and Non-durable Goods , Repair and Maintenance , Transit and Ground Passenger Transportation , Waste Management and Remediation , Machinery Manufacturing , Truck Transportation , Support Activities for Transportation , and Warehousing and Storage . Furthermore, the types of businesses that constitute each of the PDR categories often varies by city and is somewhat in flux given evolving industries, especially tech and R&D uses that could be considered office or industrial. Chapple finds that industrial lands contain a high share, relative to the region, of jobs that provide middle-wage opportunities for workers without a college degree. Overall, middle-wage jobs were found to be sixty percent more concentrated on industrial land as in the region. Furthermore, in 2011, middle-wage jobs accounted for almost half of jobs on exclusive industrial land, while low-wages jobs accounted for 28%, and high-wage jobs for 28%; the study predicts that this distribution of employment is expected to remain similar through 2040 . This finding suggests that a loss of industrial land in the urban core could push out these middle-wage jobs in the PDR sector, exacerbating sprawl and equity issues.
Industrial land has been converted in areas where the market values non-industrial uses over industrial uses and the city has permissive zoning codes. When land is in short supply, PDR businesses react in a variety of ways: some businesses will leave; others will increase productivity to compensate for increased land prices; and others may adapt their land consumption altogether, transforming their business model to relocate to high density sites downtown while outsourcing or moving their production facilities . However, while land availability will not drive industrial job growth single handedly, preserving space for industrial uses is key to maintaining the PDR sector’s role in the region . Once industrial land is converted to another use, it is highly unlikely that it will ever be converted back to industrial. Although the PDR sector may not stimulate regional job growth on its own, providing space for industrial uses is key to stabilizing the PDR sector that plays a critical role in two driving sectors in the Bay Area: high-tech and consumption needs for the creative workers. The interrelationships between these sectors enables agglomeration economies that support the regional economy and often provide value to city governments in the form of revenues. Additional clusters are supported through the PDR sector,cannabis indoor grow system such as the agricultural and food sector, as well as logistics. Industrial land preservation is expected to have several advantages . In 1986, Heikkila and Hutton suggested that an industrial land preservation policy offers the advantages of keeping rents low for businesses and providing certainty to developers about city intentions, particularly when the industrial district is economically viable, there is a high level of structural employment, and the industry generates negative externalities. Furthermore, Howland finds that industrial districts support the regional economy as job generators, providers of supplies and services, including back-office functions or automobile repair for businesses and households, and low-cost space. Chapple establishes a causal link between industrial land designation and job creation or retention that further supports the importance of industrial land preservation. Her analysis reveals that firm size plays the most important role in business dynamics, and the availability of industrial zones and large buildings also support firm expansion. Thus, retaining a reserve of flexible industrial zones that can accommodate a range of industrial businesses is critical to sustaining industrial agglomeration economies. Policy makers use industrial land’s role in regional agglomeration economies to justify public intervention in the market based on industrial land’s roles in regional agglomeration economies. However, there are also costs, or potential inefficiencies, of industrial land preservation.
Heikkila and Hutton suggest that preserving industrial land has a number of potential costs, including inefficient use of resources, inhibition of industrial transition, and impacts on the local tax base. Opponents also contend that the costs of the city subsidizing the land outweigh the benefits of the policy and dispute the regional growth claim by arguing that this policy slows relocation of industrial businesses to perhaps more economically efficient areas . Furthermore, zoning for industrial land has been accused of interfering with the market that may on its own generate more economically and socially optimal outcomes. However, zoning also is a means of correcting market failures, such as negative externalities generated by industrial uses. The fact that zoning and land use controls operate under local control calls for conversations with local jurisdictions to better understand industrial land across the region. A number of cities across the U.S. are often cited for their industrial land preservation policies or strategies. Chapple’s study highlights three cities that have established programs to preserve their industrial spaces through local land use controls: Chicago’s Planned Manufacturing Districts and Industrial Corridors, New York’s Industrial Business Zones , and San Francisco’s Production, Distribution, and Repair zones . In addition, Portland, Philadelphia, Boston and Vancouver, BC also have notable industrial land preservation regulations. The Puget Sound Regional Council provide tax incentives, assistance with workforce development, services for business retention and attraction, and assistance with site selection for businesses looking to expand or relocate . Regions that have taken a regional approach to industrial land use planning, namely Los Angeles and Seattle, are more relevant to the concept of the PPA program. The City of Los Angeles’ Industrial Development Policy Initiative frames its industrial land strategy withina regional and global context, recognizing that private and public policy forces at all scales influence industrial businesses and development. One of the primary categories within the city’s initial industrial land policy framework was “regional cooperation for economic development.” The Puget Regional Council , the MPO for the Puget Sound region, created a regional industrial designation in 2003, Manufacturing/Industrial Centers . Given PSRC’s role as a Metropolitan Planning Organization the recent legalization of cannabis in California. Additionally, in the current market, city officials suggested that developers prefer to outprice industrial users and turn industrial land into R&D office space, versus trying to intensify a higher-value site that is designated for office uses.Addressing the need for employment lands in the context of the current housing crisis is often not so easy in practice. For instance, San Jose city officials stated that they believe current real estate values for industrial spaces in their city include a premium within the cost of land, with the underlying assumption that at some point the city will allow residential on the industrial sites. Staff at the City of San Jose highlighted the challenges they face in preserving industrial land in this market, stating that “We’ve been consistent on holding the line on preserving industrial. But at the same time, we don’t really have anything that has enough teeth to […] put our foot down and really make it 100 percent clear to the market that these areas are going to stay for production.” They have found this to be particularly true in industrial areas near residential, as developers could eventually generate significant profit on housing at some point. The housing crisis in the Bay Area is a regional issue, yet the pressures are felt most strongly in the inner core areas. A conversation with the East Bay Economic Development Alliance emphasized that the political climate around housing will pose challenges in the inner core for the implementation of the PPA program: “[The PDR sector] is not going to succeed just because you set up some rules. It’s going to succeed if you have housing, if you have proper training for the workforce, all of those things.