All agree on need for high-speed Internet service, better roads

Benicia Industrial Park needs some work, such as filling potholes and providing high-speed broadband Internet service.

But the park has features that could make it attractive to prospective tenants, and City Manager Brad Kilger urged increasing its industrial-zoned land by expanding the park, which has a reputation among some brokers of being “built out.”

At a special joint meeting Tuesday night of the City Council and Economic Development Board, Kilger said he did not always hold that point of view.

He said originally, he agreed with those who think such expansion would “cannibalize” tenants from the original park, and agreed with concerns those tenants might move to the newer development and leave part of the old park vacant.

“But,” he said, “that’s business retention.” And it would open up the opportunity to make improvements in the Industrial Park. “I think we can do that and succeed,” he said.

“The Industrial Park is the life blood of the city. What makes it work is manufacturing. We need to look at that niche. We’re going to continue to emphasize that,” Kilger said.

The Council and the EDB met to hear the results of a market analysis of the Industrial Park, which Economic Development Manager Mario Giuliani said he considers a logical step after the approval in 2012 of the Business Development Action Plan.

Giuliani reminded the panels how Benicia invested in its downtown commercial area, which had stagnant sales tax revenues and plenty of vacancies in 2002. After a marketing study, development of the Downtown Mixed Use Master Plan and establishment of the Business Improvement District, he said, sales tax revenues have improved.

By comparison, the sales tax revenues at the Industrial Park have slipped, even as it’s gaining tenants, he said. That’s because those new tenants are using the buildings for warehousing and distribution.

Neither of those uses need broadband, which much of the park doesn’t have, Giuliani said. But they don’t produce sales tax money for the city, either.

Audrey Taylor, president of Chabin Concepts, San Jose, and Debbie Kern, senior principal of Keyser Marston Associates, San Francisco, conducted the analysis of the park, which Taylor said is “very significant to the city.” It represents 70 percent of sales, property and utility tax and provides 7,000 jobs.

But the park had an 18-percent drop in sales tax revenue from 2009 to 2013, she said, and several key manufacturers have moved away or chosen other places for expansion when the park couldn’t accommodate them.

As the economy improves, some Industrial Park companies are considering how to expand, and others are looking to consolidate their operations at one site.

In addition, more than 3 million square feet of competitive industrial space is being created in Vallejo, Fairfield and American Canyon, while Benicia has just 23 acres, mostly small parcels, considered “shovel ready,” Taylor said.

“You are constrained by that,” she said.

Existing buildings in the Industrial Park aren’t made to meet the needs of expanding businesses, Taylor said, and most of the available space is in three buildings that primarily are leased for storage.

The lack of broadband and the aging infrastructure worry Industrial Park businesses, and brokers who think of the park as built out, are directing clients elsewhere, she said. Other limits are funding, particularly for redevelopment, as well as staff to meet and help park tenants and assure that local companies stay here.

On the other hand, the park is well situated, with a location near major highways, the Port of Benicia and Union Pacific Railroad, Taylor said. Valero Benicia Refinery is a park anchor and a draw to other industries, and the quality of life and schools here also can make the park appealing.

Taylor said the market for industrial space is being driven by area wine companies that need large warehouses and plenty of distribution space, but those aren’t major use-tax generators, and they wouldn’t help the city increase its sales tax base.

However, Benicia would be an ideal place for local manufacturing, she said. Some companies are growing and are looking to expand. Traditional and “high-value” manufacturing, such as technological companies, would be a good fit here, too, and would bring in sales, utility and property tax revenue, she said.

Taylor noted another element that helps Benicia: There are few true industrial parks that have places where light and heavy companies can operate, and the city might be able to capitalize on clients that places like Oakland no longer can accommodate.

She recommended the city work closely with Industrial Park businesses to see what they need, to assure that Benicia is trying to address the known deficiencies in broadband and infrastructure, and to find out what they, too, “can bring to the table” to help market the park.

She advised the city to target the types of companies likely to come to Benicia, to find “what is the inventory and what fills it,” and to understand why a company should want to move here.

Taylor also advised adding more land and buildings to that inventory of local industrial sites, and working with brokers, property owners and developers in doing that as well as seeking ways such development and renovations could be financed.

Beyond this, she said, the city should dig deeper into Industrial Park issues, and whether the city can take care of them.

To do nothing, she said, would be a detriment to both the park and its tenants.

“They’ll go somewhere else,” Taylor said, and the park would be viewed as obsolete.

Economic Development Board Chairperson John Johnsen, who owns NHT Audio in the Industrial Park, said Benicia needs to give “VIP services” to Industrial Park companies, particularly broadband. “I’m personally affected,” he said. “We need to get this discussion happening.”

Benicia Industrial Park Association President Jasmin Powell agreed, saying she needed high-speed Internet service so badly at her company that the business made its own costly arrangements with AT&T.

Johnsen said existing companies and brokers should help craft “the script” that could be used to entice new tenants.

EDB member Dennis Cullen urged the city to be aggressive, not only in “forward thinking on how to progress,” but also in innovative technologies, such as solar-paneled streets. However, he worried that property owners would “sell out to the easy tenant,” such as warehouse storage. “Get the property owners on board,” he recommended.

EDB Vice Chairperson Ann Lindsay agreed, urging conversations with property owners.

She said she also would like to know what could be done with the three buildings Taylor referenced that would make the structures more appealing.

On the other hand, the city needs to address the poor quality of the roads. “You have to seesaw to get around the potholes,” Lindsay said.

Sean Finn, another EDB member, said prospective tenants need to be seen not only as producers of sales tax revenue, but as potential draws of other companies, too.

Councilmember Tom Campbell said he, too, would like to see what types of businesses the city plans to target “and how we get them.”

Diversity at the park — “a business mix so we’re not as dependent on one business” — is Councilmember Alan Schwartzman’s goal. But making needed improvements would take money, he said.

Councilmember Christina Strawbridge said Tuesday’s meeting “helped clarify our direction.” She concurred with Taylor’s point that economic development efforts may need more staff, particularly since Giuliani has been busy working on the city’s successful Measure C campaign that added a penny sales tax to city coffers, and was heavily involved in developing the Business Improvement District for the downtown shopping area.

Vice Mayor Mark Hughes said, “I was shocked there’s that much square footage” that is being developed elsewhere in competition with Benicia. “The good news is there’s demand. The bad news is we’re not well equipped.”

He recommended the city meet with members of the Albert Seeno family that owns more than 500 acres of land on the city’s north side, “and share the report with them so they know the demand, and work with them.” Citing the report’s note that the city needs shovel-ready property, he said, “There it is, across the street.”

But Mayor Elizabeth Patterson wasn’t so ready to convert other property to industrial zoning. “Where does it end? Sky Valley? Interstate 680?”

She agreed, however, that the park needs high-speed broadband, saying that should have been available two years ago, and she urged consideration of alternatives to “a monopoly,” such as linking with Vallejo’s service that ends close to Benicia near Lake Herman.

American Canyon already is looking at fiber optic service from Vallejo, she said. “Benicia could form a relationship,” she suggested.

High-speed Internet is “critical. The biggest problem is uploading,” Patterson said.

Kilger assured the mayor that city employees are negotiating with a provider. “If we’re going in another direction, we need to talk,” he said.

Those negotiations include meetings this week, Giuliani said, explaining that the city has been facing financial challenges in obtaining the service. “We’re putting a $3 million project in a $700,000 hole.”