Fresno City Hall: Planning and Development Department
Matthew B. Lopez, an architect for the city of Fresno, and service aide Vicki Hollingsworth work where plans are kept at the planning and development department in Fresno City Hall. Nick Yovino, the city's planning director, says that from beginning to end, the process to obtain a permit takes an average of 75 to 90 days.
Permit Pending
Some say lengthy process, lack of available land miss opportunity to draw jobs to Fresno.
(Updated Sunday, May 1, 2005, 12:57 PM)
The numbers were impressive: a distribution center the size of six Wal-Marts that could create 450 jobs.
But as industrial real estate broker Lou Ginise talked with the client, he realized that locating the center in Fresno would be a tough sell. The company wanted to begin construction in a couple of months, a timeline the city probably couldn't meet, Ginise says. So the client looked elsewhere in the Valley.
"It's obvious to me you could not do that in Fresno," Ginise says.
It's a growing problem.
Fresno, once a farm town but now a bustling city, has a permitting process that is too complicated and lengthy to meet the needs of businesses that are making fast expansion decisions, developers and brokers say.
There is also a shortage of desirable industrial land. Much of the available property is too small, not in the right area or not "shovel ready" -- equipped with necessities such as water, sewer lines and roads.
The result: Fresno, which had a 10.1% unemployment rate in March, is missing chances to create jobs.
City officials say they are trying to fix the problem. Plans are in place to prepare more land for industrial development, beginning with an effort to expand Roeding Business Park on the city's southwest side and to get 1,600 acres rezoned southeast of town.
And planning officials are seeking to streamline permitting -- a process that for years has been the subject of complaints by brokers, developers and businesses.
Fresno officials don't want to fall behind Sanger, Visalia and other Valley cities, which are competing for the same plants, warehouses and call centers -- and often winning.
"We have to do better than Visalia," Mayor Alan Autry says. "We have to find innovative ways to get it done as fast as we can."
Quick-draw recruiting race
Speed is often the deciding factor in the competitive world of business recruitment. Cities that can't respond quickly often lose.
Expansion decisions used to take about two years, says Delyn Meyers, vice president of corporate locations for the Economic Development Corp. serving Fresno County. But "now they want to see what you have right now" so they can break ground in a few months, she says.
Over the years, Visalia has gained a reputation for responding quickly, while Fresno has been viewed less favorably.
In 1998, Illinois-based Jim's Formal Wear was looking to build a 25,000-square-foot expansion center on the West Coast. The company wanted to open within months, in time for June weddings and graduations. Eager to please, Visalia city officials sent a plan checker to the company's headquarters.
"We saw what they would need and worked with their architect and engineer and got the building open ahead of schedule," says Bob Nance, economic development manager for the city.
More recently, Jo-Ann Stores, a fabric and crafts chain, was looking to build a 630,000-square-foot, $40 million West Coast distribution center. The company picked Visalia and moved into that city's industrial park in nine months.
The city of Fresno has at times shown the same initiative. When Gap was looking to build a California warehouse in the late 1990s, the city, for $2, sold the company 216 acres near Fresno Yosemite International Airport.
Last year, city officials persuaded LiDestri Foods to expand in Fresno, instead of moving some operations to New York. The food processing company had outgrown a plant in Selma.
But on the whole, Fresno's permitting process takes too long and is not simplified enough to handle aggressive timelines, brokers and developers say.
Ginise says it's been taking three months to get a site plan review completed in Fresno -- a process he says should take 30 days.
"Apparently, they're buried down there and can't get things done," says Ginise, of Grubb & Ellis/Pearson Commercial. "The process needs to be simplified."
Larry Fortune, owner of real estate firm Fortune Associates, agrees: "They don't think in terms of getting things done. They think in terms of dotting the i's and crossing the t's."
The way it works today, industrial permit applicants wait in the same line as residential developers. Planners process an office building one day, a subdivision the next.
They have to be versatile, says Fresno's planning director, Nick Yovino. "They play first base on Monday and outfield on Thursday."
And with the hot real estate market, workloads have increased.
The city approved 1,313 homes in 2002. Last year, the number soared to 3,142. At any given time, 22 planners each work on about 150 permit applications. That's a far cry from 1971, when 55 planners handled fewer projects that were less complex, Yovino says.
The city is taking steps to speed things up.
About two months ago, consultant Tim Bornemann of Fresno was brought in to examine planning operations. The planning department just about shut down for a week as staffers walked through each tedious step required to obtain some of the most common permits.
Planners detailed each phase, using colored sticky notes and red markers. At the end of the weeklong session, two walls were filled with about 300 sticky notes, each representing a part of the process. From beginning to end, it takes an average of 75 to 90 days, Yovino says.
The goal is to streamline the process, cutting it to between 45 and 65 days. Everything is being examined -- even the number of footsteps to move from one task to the next.
Employees made 54 recommendations, some of them fairly simple, such as relocating a copy machine and moving keys to city vans closer to the planners.
"We have to constantly improve," Yovino says.
Among the major changes is increasing the hours of the "application assistance center," where representatives of various city departments gather during mornings to meet with developers.
The goal is to have all of the departments review applications at once, possibly accelerating the process.
The center is open from 8:15 to 9 a.m., but Yovino wants to keep it open all day. With representatives from various agencies more available, applications would not get hung up in one department. A manager would act as a traffic cop of sorts, coordinating the flow.
"You should be able to walk out of here with all your questions answered," says David Padilla of the city's traffic engineering department. Padilla recently staffed the application assistance center, also known as the bullpen.
Also, because planners are buried in permit requests, the city plans to hire outside consultants to handle some of the workload.
Yovino has started meeting with architects, engineers and others who file 90% of the applications. The group, called The Planning Director's 90% Club, meets every other Friday to ensure applications are complete.
At a recent meeting, city planners met with about 20 industry leaders and detailed efforts to improve the system.
Rod Anaforian, director of property management for the development firm Lance-Kashian & Co., praised Yovino for trying to simplify a process that he calls "extremely cumbersome and, in many ways, redundant."
Waving a hand at the sticky notes, Anaforian says it takes courage to change. Yovino is "looking to find a way to make the process more manageable and more user friendly," he says.
Fresno County's planning office also is feeling the effect of the housing boom.
The office is charged with approving developments in unincorporated parts of the county. The county processed 4,361 building permits in 2004, up from 3,248 in 2001.
"I expect to see this continuing for at least another three years," says Bernard Jimenez, division manager.
It takes between six and 10 weeks to issue a county building permit. Before the housing uptick, the process took between four and six weeks, Jimenez says.
Seeking to speed permitting, the Board of Supervisors recently approved four new staff members for the division. But the county is having a hard time filling the positions because demand for urban planners is so strong -- from governments and private industry.
Ten of the 59 positions in the division were vacant as of mid-April. The county has recruited from as far away as North Carolina for the jobs, which pay an entry-level annual salary of $37,000.
The division constantly tweaks its process to speed turnaround, Jimenez says. Soon, the county will allow applicants to fill out simple permit requests over the Internet. And like the city, the county allows developers to speed permitting if they pay for staff overtime.
Developers can shave two or three weeks off the normal permitting time by paying $49 an hour to the department, which is 90% self-funded. It's an option that many choose, says Jim Pierce, chief building inspector.
"There's times we turn it down because we have just too much overtime."
In search of the right land
An improved permitting process does little good if the business has no place to go.
"It's just very, very difficult to find land right now," says John Hans, an industrial real estate broker with Fortune Associates.
That may be hard for some people to believe. After all, land is what this Valley is known for. Its farmland is the most fertile in the world, and builders are turning thousands of acres every year into homesites.
But industrial companies cannot find suitable acreage. The land may be zoned correctly, but the parcels are too small, oddly shaped or in the wrong area, Yovino says.
Perhaps the biggest issue is a shortage of large industrial properties.
Says Fred Burkhardt, the city of Fresno's economic development director: "If a company wants 100 acres with railroad access, it would be tough."
There are only five vacant industrial sites of 100 acres or larger for sale in Fresno County, according to listings on the Economic Development Corp.'s Web site, where some brokers list available land.
Most everyone agrees on the need to find more industrial land. The debate is over how to do it.
Some developers and brokers say Fresno should buy land and build a city-owned industrial park, complete with curbs, gutters, streets and utilities.
But others say that with land prices climbing and municipal budgets shrinking, the likelihood of that happening is low. So Fresno is left with the alternative -- assisting private developers and businesses as much as possible.
Speeding up the permitting process is one way to do that. The other way is to annex more property, rezone it and bring in roads, sewer and water, if possible, so that private developers find it attractive.
But the major stumbling block is that much of the land is in the hands of hundreds of owners. For example, the 967-acre Roeding Business Park has 238 property owners.
Envisioned 15 years ago as an industrial hub, the park has not lived up to its billing. Only a handful of companies have moved to Roeding since it was established near Fresno Chandler Executive Airport on the city's southwest side.
Much of the park is a patchwork of older businesses, modest homes and empty land. But portions show promise. Two distribution centers, Central Sanitary Supply and Stanislaus Distributing, recently opened in the park. Also, a developer is building the first phase of a 151,000-square-foot industrial complex on 9 acres.
Still, development has been slow.
Developers William Lyles and Ed Kashian were the first to recognize Roeding's potential.
They tried to gain control of much of the land years ago, vowing to develop it in phases over 20 years. Under the proposal, they were to be exclusive developers and property was to be acquired in part through eminent domain -- government seizure at fair market value of private property for a perceived greater public benefit.
The plan came before the City Council in 1996, shortly before Fresno went to a strong-mayor form of leadership. It failed in large part because former Mayor Jim Patterson opposed eminent domain.
Now a smaller version of the same proposal is being pitched.
The city's Redevelopment Agency is in the final stages of negotiating with a proposed master developer to develop 50 of the park's 967 acres. In return, the developer would be given preference to develop a second phase of 150 acres and a third phase of 60 acres.
The master developer would be required to buy long-term options on the 50 acres, with the city available to help if private negotiations fail. The hope is that with a master developer in place, the land will be easier to sell to businesses demanding more acreage.
Dave Spaur, president of the county's Economic Development Corp., says finding a developer for the 50 acres is just a start. Yovino, the planning director, says that is the catalyst behind early efforts to annex and rezone an additional 700 acres next to Roeding.
With more available industrial land, Fresno could compete better with other cities, Spaur says.
Sanger, for example, has a 78-acre industrial park owned by the city. With roads, sewer, water and other improvements in place, the park, which gained its first business in 2002, now has eight companies in various stages of operation, says Dan Spears, the city's economic development director.
One of those is the 85-employee M.C. Truss Inc., which moved from Fresno in 2002. President Larry Nisbett says the business, which makes housing components, was unable to find affordable property in Fresno. He bought 10 acres in Sanger and could expand to 17 acres.
M.C. Truss would probably have stayed in Fresno, but "this type of industrial park was not available," Nisbett says.
Mike Betts knows all about the land situation. Betts Spring Co. wants to expand its plant in Fresno and add 100 workers, but it is having trouble finding a place.
He says the problem is not with finding space: "It's being able to find the right space with the right layout on the right piece of property."
Betts Spring, which makes springs and other components for vehicles, opened a manufacturing plant in south Fresno in 1992. The company has room to expand on its 12-acre site, but that would require operating out of two buildings instead of one.
"We are in a building that houses two businesses, and we want to add four more business units. We want to see if we can get under one roof," says Betts, president of the company.
City officials pointed Betts to Roeding Business Park as a possible site.
Betts says: "We're making assessments of the best way to go for us."
City seeks prime property
Although it receives the most attention, Roeding is not the only site that the city of Fresno is targeting for industrial growth. Other locations are:
Freeway 99 and Golden State Boulevard.
A south industrial area near Elm Avenue and Freeway 99.
About 4,000 acres near Fresno Yosemite International Airport.
In addition, city officials are looking to gain control of 1,600 acres south of downtown. The city this year tried to bring the land under its sphere of influence. But officials withdrew the initial application to the Local Agency Formation Commission after LAFCO officials questioned claims that the city needed the land to keep a federal water contract.
Each of the targeted industrial sites is suited for different uses. For example, the airport area is considered ideal for aviation businesses and light manufacturing, Burkhardt says.
Recently, most demand is coming from companies looking to build distribution centers. Companies are attracted to the central San Joaquin Valley because UPS and other shippers are able to reach most of California overnight from here. Gottschalks, Wal-Mart and Kraft are some big-name companies with warehouses here.
Population growth is fueling much of the demand.
Lured by cheaper homes, residents of the Bay Area and elsewhere are moving to the Valley. Businesses, seeking to be closer to the growing customer base, are looking to build warehouses in the region to distribute everything from shoes to electronics.
Home building "has been so strong that it is driving everything else," says Ron Stoltenberg, vice president of the industrial division at Grubb & Ellis/Pearson Commercial.
Terry Evans, whose job is to find sites for clients, says he knows of at least 10 companies looking to build large warehouses in the Central Valley. At a half-million square feet, each warehouse has the potential to employ 100 to 500 people. But sites, he says, are in short supply.
"You can go from Bakersfield to Sacramento and have only a handful of sites that are truly developable," says Evans, a senior director with Cushman & Wakefield, a global site selection firm.
The land that is available is being sold to home builders, Stoltenberg says, "because residential is just worth a lot more money." Residential land is selling for $150,000 an acre, compared with between $65,000 and $80,000 an acre for industrial land, he says.
While land for housing is demanding the highest prices, economic officials want to ensure there are enough sites for the burgeoning warehouse demand.
One company responding to the need is Diversified Development Group, which is building a 384,000-square-foot warehouse near Cherry and North avenues on the city's south side.
"In terms of small to medium warehouse distribution facilities, we have a number of products ready for that," says Dan Fitzpatrick, a developer and former executive director of the Fresno Redevelopment Agency.
But some officials say the city needs larger parcels to accommodate a wide array of industries. Spaur, the Economic Development Corp. president, wants industrial parks for whatever opportunity comes forward -- a manufacturing plant, warehouse or call center.
Finding space is the tough part.
"There's a lot of industrial land in Fresno," Fortune says. But "it's all small. That's the problem." He says Fresno needs a 1,000- to 1,500-acre site.
Improving the sales pitch
One solution is to have the city buy more land, some brokers say. The problem is that most of the vacant land is held by many owners, some of whom are reluctant to sell.
With the splintered ownership, developers or businesses must negotiate with multiple parties, an often lengthy and clumsy process.
That makes it difficult to assemble a large industrial tract. Some of the landowners, Fortune says, are immigrants who have an "Old World mentality" about owning land.
It's easier to buy land in the United States than in other countries, so when an immigrant gets land here, it's a precious asset.
"Your parents told you if you own land, never sell it," he says.
But as the land is passed through generations, sometimes it gets easier to part with, says Alan Kasparian, a real estate agent and first vice president of the Fresno County Farm Bureau.
He knows firsthand. His parents recently decided to sell 33 acres in Selma to a commercial developer. The Kasparian family has been growing raisin grapes on the land since 1941, the year Alan's grandparents, who were Armenian immigrants, bought it.
"Your attachment is not what their attachment was," he says of his parents. This year, the family is going through its final planting and harvest -- a fact he reminded his parents about recently.
"When I said that, I could see emotions set in, and it was almost like they didn't want to talk about it."
Despite the challenges of assembling land, some city officials say that if the right company came calling, they could find the space.
Last fall, Fresno began a push to lure a Toyota hybrid car assembly plant. The bid is considered a long shot -- Toyota Motor Corp. isn't even shopping for sites -- but city officials say that if the automaker had expressed interest, they would have found land.
"We could've found the 1,500 acres," says Burkhardt, the city's director of economic development. Indeed, the proposal presented to Toyota included a specific site. Burkhardt, who recently announced his resignation, declined to reveal the location.
More recently, Fresno set its sights on an Airbus aircraft manufacturing plant. About 80 cities are bidding on the plant, which could employ 1,100 people. Again, officials identified a specific site -- about 145 acres near the airport on land that is now the Airways Golf Course.
But the proposed Toyota and Airbus sites are far from plant-ready.
Burkhardt says it might not make sense for the city to buy and prepare land that might never be used: "Do you spend taxpayer money to sit on 1,500 acres ad infinitum? It's a tough question."
John Boyd, a national corporate site selector, says cities should not fashion economic development strategies around attracting corporate behemoths because "in reality, there are very few trophy projects."
In most cities, he says, industrial land is held by private developers. Whether privately or publicly held, available land is a key factor that companies consider during site searches, says Boyd, whose New Jersey-based firm, The Boyd Co., has worked with many Fortune 500 companies.
A city, he says, can have a solid labor market, good highway access and a low-cost environment, "but if there's no piece of ground to put the plant on, it's the end of the hunt."
There are other, and some say more important, factors that keep companies away from Fresno and other California cities.
The state's high energy costs and expensive workers' compensation insurance rates are among those most cited by businesses. In Fresno, an unskilled work force has been a long-running issue.
"It's tougher in California than it is in Oregon, Washington [state], Nevada and Arizona," says Evans, the site selector.
Despite the business impediments, California offers the kind of lifestyle that has historically drawn the nation's top companies. That is enough to encourage competing states to hustle more to attract companies, Evans says. "It's always the bridesmaid that works harder at getting the next deal."
Fresno must work just as hard if it wants to attract companies and lower unemployment rates, economic development officials say.
Making the region more business-friendly is a goal of the Fresno Regional Jobs Initiative, a mostly volunteer effort seeking to create 30,000 jobs in the region by 2009. Improving customer service of local governments is one of its priorities.
"The public sector needs to come in and meet the demands that the private sector creates," says RJI Chief Operating Officer Ashley Swearengin.
Government's role, she says, is to "be the cowcatcher on the train -- to remove obstacles and provide incentive for business competitiveness.
"We've got to pull out all the stops to become competitive because we've not been for some time."
The reporters can be reached at snax@fresnobee.com, eschultz
@fresnobee.com or (559) 441-6330.