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HomeMy WebLinkAboutAGENDA REPORT 2017 1220 CCSA REG ITEM 10H ITEM 10.11. CITV Of MOoRPARK,CALIFORNIA City Council Meeting of /A-010'Vet/ MOORPARK CITY COUNCIL ACTION: AGENDA REPORT /et.„&w;i4e, Li71. TO: Honorable City Council FROM: Joseph Fiss, Planning Manager DATE: December 13, 2017 (CC Meeting f 12/20/2017) SUBJECT: Consider Report on Economic Development Activities BACKGROUND/DISCUSSION On September 1, 2016, the City Council was presented with a report summarizing the City's economic development program. This report provides an update on the City's economic development activities. Local economic development can be described as the process of building strong, adaptive, and resilient communities. A thriving local marketplace of goods and services supports a sustainable community by providing opportunities for shopping, entertainment, and jobs. A growing local economy sustains a revenue base which allows the City to provide the community a high level of services and facilities. To this end, it is incumbent upon the City to provide services to retain existing businesses, address constraints to business, and attract new businesses. • Retention: Existing businesses and industries are retained when they are both supported by market conditions and valued by the community. The promotion of the City to its residents is one of the city's retention activities, as staff continues to work to increase the community's awareness of Moorpark businesses. This is achieved through a "shop local first" approach and outreach by staff. Moorpark residents and businesses are encouraged to patronize local businesses whenever possible. This not only supports local business, but builds relationships. Local businesses in turn support local causes and non-profits at higher rates than non-local businesses. Although nationwide more store closings have been announced in 2017 than any other year on record, stores have closed their Moorpark locations at a slower pace than in previous years. However, stores such as Payless Shoes, have done so as a part of a continued nationwide downsizing. Store closings have not been isolated to Moorpark as national chain stores that have so far in 2017 announced substantial store closings include Macy's, J.C. Penney, Kmart/Sears, Limited, Wet Seal, 83 Honorable City Council December 20, 2017 Page 2 Gymboree, J. Crew, and Teavana, continuing a multi-year trend of reduced demand for retail space. City staff conducts a number of telephone calls and face-to-face meetings with local businesses to explore their needs and see if there is anything that can be done by the City. After meeting with a business, staff researches any concerns that the business may have and, if feasible, work toward a solution. Often times, business contacts result in information regarding future plans for relocation, expansion, or contraction. One example was Carrara Pastries, which was using off-site warehouse space to supplement its restaurant. Carrara has recently started work on a new 5000 square foot restaurant in Tuscany Square. Staff worked with Carrara and the property owner on a development plan so they could successfully expand their business. The City continues to work with Tom Lindstrom RV on a Successor Agency-owned property on Los Angeles Avenue, by exploring options for the disposition of the property in a manner which would retain this business. Many businesses are not aware the City can provide contacts to the Economic Development Collaborative — Ventura County (EDC-VC), which can provide resources for business related to marketing, business planning, financing, or workforce development, resulting in retention. The City informs the businesses that they are eligible for free consulting services through the EDC-VC. All Moorpark businesses are eligible for this free consulting service because the City annually contributes to the EDC-VC. Over the years, dozens of Moorpark businesses such as Turbonetics, Pentair Pools, and Laritech have consulted with the EDC-VC. In addition to working directly with local businesses, staff has built an extensive network with the commercial real estate community. By doing so, staff is able to identify available and upcoming commercial or industrial space and work to create connections with potential tenants. No preference is ever given for one location over another within the City; however, these networks help businesses identify the size, type of space, and permitting processing which may be required. • Addressing Constraints: Barriers to conducting new business within any City are often unavoidable. Building Code requirements exist to protect lives and safety. Discretionary permits and design standards ensure land use compatibility and community aesthetics. The City's high standards are in place to create a safe, attractive, and enjoyable community. Nonetheless, over the years, the City has taken steps to reduce barriers. This includes streamlining certain permit processes, for example eliminating Major and Minor Modifications to Permits by bringing minor changes to the Permit Adjustment level, allowing review by the Community Development Director, and eliminating Conditional Use Permit requirements for certain uses. Additionally, Business Registration fees were only modestly increased this year, and Home Occupation Permits remain a one-time permit, having been changed several years ago from a five-year perrnit, to a one-time permit, the same 84 Honorable City Council December 20, 2017 Page 3 as most other businesses. In order to further reduce barriers to conducting business, staff maintains relationships with local utility providers. These relationships are of particular importance when applicants are unfamiliar with permitting processes by improving communication between the utilities and businesses. • Attraction: Making the City an attractive place for businesses to locate is the most challenging activity. Retail chains often consider only population density when planning new stores. As noted in the Moorpark Commercial Market Overview report by Keyser Marston Associates, many retailers are reducing rather than expanding their brick and mortar stores due largely to internet sales. One of the most recent businesses to indicate they are coming to Moorpark is Grocery Outlet, occupying the space between the former Albertsons and the former Big Lots in Mission Bell Plaza. Staff is working with the property owner on creating new loading areas to accommodate this new tenant. The City cannot control the market and it cannot control what specific retail store or restaurant will open a store in Moorpark. The City is only able to guide businesses with its zoning authority to locate businesses and shopping centers in certain areas. Each district spells out what general type of business or use of the property that is allowed and provides certain standards and operational requirements. Therefore, the decision to locate a store or a shopping center in Moorpark is solely the decision of the landowner, business owner, or the investor. The City cannot legally prevent a business from occupying a structure if it meets all the requirements in the zoning district or require the owner to bring a certain brand or store type. A good past recruiting success story is Target. Moorpark was not on Target's radar for locating a store. Staff worked with the developer of the Moorpark Marketplace shopping center to get Target interested. Target required a freeway sign and access to Los Angeles Avenue (SR-118) to make a store feasible in Moorpark. Staff worked with Target to incorporate these needs and Target decided to build a store. Moorpark did not have a larger retailer in the City where residents could purchase consumable goods, as Kmart had closed its Moorpark location. If the Kmart store was still open, Target probably wouldn't have opened a store, and the City would not have either store as noted above. Kmart is continuing in 2017 its multi-year trend to close stores nationwide. A more recent success story is Tractor Supply Company (TSC) at 397 Los Angeles Avenue (Mission Bell Plaza). TSC filed a request to allow an approximately 3,370 square-foot outdoor display area for trailers and equipment and an approximately 6,470 square-foot outdoor fenced display area for merchandise (hay, bulk propane, welding gas, etc.) next to an existing commercial building (formerly Do-It- Center). Preliminary discussions had begun with the landlord on March 17, 2016 and an 85 Honorable City Council December 20, 2017 Page 4 application for a Permit Adjustment was filed on April 14, 2016. Planning and Building & Safety staff worked closely with the landlord, architect and contractor to meet their needs within the bounds of all codes while making the process as efficient as possible. As a result of cooperation on all sides, TSC was able to open their doors to the public on September 3, 2016, less than six months after the initial contact. Additional recent business relocations to the City include Lifetech Cosmetic Company and A Rental Connection. These two companies will contribute over 150 new employees to Moorpark's daytime population. High vacancy rates in the office real estate market implies that Moorpark has to compete with the larger cities of Thousand Oaks and Simi Valley for office businesses. The industrial market is healthier, but given the limited number of Moorpark's available industrial buildings, it is sometimes difficult to find a building that meets the specific needs of a business considering Moorpark as a location. The light industrial sector in Moorpark is currently very strong, with an estimated 3 percent vacancy rate. Several new light industrial opportunities are coming on line in the near future. Since the last report, the nation's economy has continued to recover. Job growth in California has outpaced that of the nation and regional trends are consistent with the State's performance. Mark Schniepp of the California Economic Forecast states that despite record numbers of retail closures, the Consumer Confidence index recenily rose another 3.3 percent. That is the highest monthly reading since December 2000. He further states "Americans view their current and future job prospects very favorably; ditto their income growth and their spending levels. Consumers have been the strongest and most consistent source of growth in the current economic expansion." A slightly contrary and pessimistic view indicates consumers are tightening their belts in the face of reduced employment opportunities. In response to their own economic woes, middle-class consumers are shifting to discount retailers and these discount retailers are growing while traditional malls are shrinking. The shrinking middle class is exacerbated by widening income inequality. According to Pew Research, between 1971 and 2015, the share of U.S. income held by America's middle class earners has contracted from 61% to 50%. This affects our local retail sales in addition to the negative effect of online shopping. Current Economic Development Activities • City staff attends Chamber of Commerce Government Relations Committee meetings, Chamber Breakfasts, Chamber Mixers, and other special events. At these gatherings, staff informs local businesses of the City's role in assisting new and existing businesses through the permitting process. 86 Honorable City Council December 20, 2017 Page 5 • The City coordinates with the Economic Development Collaborative — Ventura County (EDC-VC) on regional economic development goals. The EDC-VC provides existing and potential Ventura County businesses services such as Business Consulting and Workshops, Loans & Funding Assistance, Manufacturing Assistance Program, and How-to on International Trade. Turbonetics and Laritech are two Moorpark businesses which have benefitted from the EDC-VC. • Staff has built relationships with commercial and industrial real estate brokers and property owners in order to ensure the City of Moorpark is continuously considered by businesses which are expanding or relocating. These relationships also help staff keep abreast of businesses which may be considering relocating out of Moorpark, allowing staff to reach out and offer assistance as necessary. Staff has received inquiries from businesses looking to relocate and has put them in touch with local brokers. Staff is currently working with a light industrial user employing 70-100 employees, which is still assessing its options. A hotel development, the Fairfield Inn and Suites, was approved at the Los Angeles Avenue exit from the SR- 23 freeway, and is currently grading, with construction expected to begin soon. • Staff works directly with local businesses on a daily basis. Staff works to ensure the Moorpark Municipal Code is applied fairly and consistently, providing an even playing field for all businesses. Use permits, sign permits, and other entitlements are processed in an expedient manner so businesses have the shortest amount of processing time. There are times when the permitting process becomes complicated for any number of reasons and a higher level of attention may be required. A successful example of this is Simi Valley Harley Davidson/Tri-County Powersports. After much success with their Harley Davidson line, this local dealership recently expanded to include Honda and Can-Am motorcycles, among others. Staff worked closely with them to ensure the shortest and most expedient processing possible, while still , respecting Moorpark's codes and standards. Signage was an important issue that needed to be addressed as part of this expansion. Staff recently worked with Turbonetics on the installation of new testing equipment and with Kish Rigging on a new addition for research. These businesses have made an ongoing commitment to remaining in the City of Moorpark. Although the center is for sale, staff is looking forward to continuing to work with any new owner of the Village at Moorpark shopping center (Petco, Dick's) on developing signage that would be more visible from the SR-118/SR-23 at Los Angeles Avenue. • Staff follows the local business climate and proactively reaches out directly to businesses that are expanding in the area. Staff has communicated directly with representatives of companies such as Stein Mart, Party City, Tuesday Morning, Pier 1, Stonefire Grill, and Sharky's Grill, among others. Many of these retailers have indicated they will consider Moorpark in their future plans. Staff has worked with commercial brokers who have indicated their outreach to users such as Harbor 87 Honorable City Council December 20, 2017 Page 6 Freight Tools, Trader Joe's, Ross Dress for Less, Lassen's Market, Sprouts Market, Big 5 Sporting Goods, 99 Cents Only, and Anna's Linens. • Staff maintains close relationships with local utility providers. Often, new businesses have special needs, such as reliable high speed internet. Through these relationships, staff is able to help businesses find efficient solutions to specific challenges. • The City has re-acquired 2 acres on the south side of High Street from the Successor Agency to the former Redevelopment Agency to facilitate development. After the proposed Apricot Lane Farm (ALF) project decided not to move forward in May of 2017, the City has moved forward on a proposed mixed use project expected to be considered by the Council in early 2018. • • On November 11, 2016, the City placed a full page ad in the Moorpark Acorn promoting local shopping opportunities. This ad emphasized the benefit of shopping local by noting that, when money stays in the community, local dollars directly support jobs, nonprofits, schools, public safety, and street and park improvements. • On July 19, 2017, the City Council approved a Conditional Use Permit (CUP) and Modification No. 2 to the Warehouse Discount Center Commercial Planned Development to allow a 48-foot high cell tower with business signs for the site, along with a City "Welcome" sign at the top of the tower. An amendment to the sign regulations in the Zoning Ordinance was also approved as part of this application to allow for the signage on wireless facilities. On December 6, 2017, the City Council approved an agreement for the City Welcome signs on this tower. Final signage plans have not been submitted. • On December 6, 2017, the City Council appointed Councilmembers Mikos and Simons to a newly created Broadband Ad Hoc Committee. The goal of the Ad Hoc Committee will be to develop a stronger technical understanding of issues pertaining to broadband deployment throughout the community and then advise the City Council and assist staff in preparing a Request for Proposals (RFP) for the study identified in the City Council's Priority Objective related to broadband infrastructure, which is: "Conduct study of broadband in City to: a) identify infrastructure currently in place; b) identify gaps in the current broadband infrastructure; and c) recommend actions to improve infrastructure, determine funding needs, evaluate options to provide funding and other actions needed to achieve desired level of broadband services within the City with a report to the City Council by June 30, 2019." Strategic Planning for Economic Development An analysis of Moorpark's internal strengths and weaknesses, as well as its external opportunities and threats (i.e. national trends) reveals the following. Economic 88 Honorable City Council December 20, 2017 Page 7 development strategies should consider taking advantage of these strengths and opportunities, while being aware of weaknesses and threats. Strengths: • Geographic Location. Moorpark is centrally located in eastern Ventura County, and easily accessible via freeway or passenger rail. Shoppers and businesses value convenience. • Median Family Income. Moorpark has the highest median family income in Ventura County. Income is a major factor at which retailers look when considering business location. • Safe Community. Moorpark is the safest city in Ventura County. Public safety is understandably important to shoppers, but also to businesses in order to minimize losses. • Good Infrastructure. Freeway proximity provides good access to Moorpark's businesses for both customers and employees from outside Moorpark. Water and sewer services have been able to meet Moorpark's needs. • Home to excellent schools, parks, and Moorpark College. These help make Moorpark a desirable place for residents. • Low cost to do business. The Kosmont Rose annual cost of doing business survey has consistently recognized Moorpark as one of the lowest cost cities to do business in California. Weaknesses: • Low Population Density/Small Trade Area. Moorpark and the surrounding communities have a relatively low population density. A major factor at which retailers look is population within a certain radius. Typically, major retailers are looking for about 100,000 people within a 5 mile radius. Moorpark is currently at about 80,000 people within a 5 mile radius. As noted in the conclusions of the Commercial Market Overview by Keyser Marston Associates, Moorpark, being between two larger population centers, struggles with attracting businesses which rely on higher population densities. Traffic patterns also favor the US-101 corridor over the SR-118 and SR-23 corridor. • Jobs-Housing Balance/Low Daytime Population. Traditionally Moorpark has been considered a "bedroom community" with more of its working age residents leaving town to work than entering, resulting in a low daytime population. This is a challenge primarily for uses such as restaurants, which rely on serving meals throughout the day to offset high labor and product costs. 89 Honorable City Council December 20, 2017 Page 8 • High Housing Cost. Housing costs affect economic development in two ways. More income spent on housing results in less disposable income available for retail sales. Additionally, larger employers look at employee housing costs when considering locations for their businesses. • Overbuilt Commercial for Population. As noted in the Commercial Market Overview by Keyser Marston Associates, Moorpark has enough vacant retail space to accommodate demand for the next 20 years, giving a negative appearance to some of the local shopping centers. • Lack of Hotel. Some businesses depend on a local hotel as an amenity to support business. This will change soon with the upcoming Fairfield Inn hotel. • Limited opportunity for urban expansion. Although there is currently sufficient space within Moorpark to accommodate growth for the next 20 years, staff projects that large parcels of land will not be available after this timeframe. Opportunities: • Residential Growth. Moorpark's strengths continue to make the City an attractive place for continuing residential development. Well planned residential communities have the potential to add population without straining public services. This population growth will support and provide a labor force for existing and future businesses and employers in addition to adding customers for retailers, restaurants, and service providers. • Available Retail and Industrial Space. Although current vacancies in the commercial sites are high, this can be viewed as an opportunity for companies which are expanding or relocating. Moorpark's retail and industrial stock is relatively modern, making it attractive for users choosing to relocate from areas with older outdated buildings. As noted by the Commercial Market Overview prepared by Keyser Marston Associates, some of the vacant commercial land should be considered for reuse with non-commercial uses, such as residences, which would help support existing businesses. • Entrepreneurship. Current demographic changes and new housing have the potential to bring in entrepreneurs who will invest in new local businesses. Studies are finding that small-scale, locally owned businesses create communities that are more prosperous, entrepreneurial, and connected. Sales per square foot and employees per square foot are typically higher at small businesses than "big-box" businesses. 90 Honorable City Council December 20, 2017 Page 9 Threats: • Relocation. National trends show that not only manufacturing, but industries which rely on services such as call centers have moved those jobs to lower paying states and countries, resulting in large vacant warehouse space. • E-Commerce continues to change retailing. Not only will websites such as Amazon continue to grow, traditional "brick and mortar" retailers such as Macy's and Nordstrom are considering stores with smaller footprints which will carry very little inventory. Sales will be made and goods delivered directly to one's home. • Improvements in warehousing and distribution logistics. A revolution in inventory management, known as "Last Minute Inventory Management" or "Just in Time (JIT)" inventory management, is taking place where materials or products are produced or acquired only as demand requires, leading to less inventory maintained on-site and thus less retail square footage. This has already been seen in the Moorpark Target store, which has added groceries, Starbucks, a pharmacy, and an optical department without sacrificing product variety. In addition, Target has eliminated their garden center, which they plan on developing in the future as additional in-line retail square space. Amazon's same-day delivery and grocery delivery also take advantage of improvements in inventory management. • Demographic changes. Retailers have been reconsidering their suburban growth models, concentrating instead on stores in higher density "gentrifying" areas. This has been seen locally with Trader Joe's, which is concentrating on an urban model, resulting in greater sales per square foot. "Big-Box" stores such as Walmart are building smaller stores and Best Buy is expanding into in-line and mall locations with much smaller stores. • The "Sharing Economy". Companies such as Uber, Lyft, and Airbnb have affected the growth of traditional businesses. Ridesharing makes it much easier to conduct business, shop, and dine in other areas by bundling trips. Homesharing softens the need for a hotel for short stays. • Short-Term Business Leases. Uses such as banks and department stores no longer build and own their own buildings, opting instead for 5 to 10 year leases in shopping centers, for lower start-up costs and flexibility to meet changing demands. Accomplishments In Fiscal Year (FY) 2015/2016 there were 59 new business registrations, exclusive of home occupations, outside businesses, such as contractors, and temporary businesses, such as those special events and the now closed Community Marketplace. In FY 2016/2017, 68 new business registrations have been issued, approximately a 15 percent increase. 91 Honorable City Council December 20, 2017 Page 10 Many of these new businesses include independent contractors working within another business, or name changes to an existing business, such as a restaurant. Nonetheless, there are several discrete new businesses, showing a commitment to providing goods and services to the community. Some new businesses of note that haye come to Moorpark in the past year include Simi Valley Adventist Hospital, 1-Mobile, Mission Burrito, Hot Spot BBQ A Taste of Punjab, and Panaderia Frances. As mentioned above, staff maintains an open line of communication with local businesses to see if there are any gaps in service with which the City can assist and has reached out to several existing businesses. Over the last few years there have been many changes in the sporting goods market. Chick's Sporting Goods was acquired by Dick's Sporting Goods, which has been expanding. Last year, Dick's opened a large store in Thousand Oaks, and all indications were that the Moorpark store would be closing when the new store opened. At the same time, two major sporting goods chains, Sport Chalet and Sports Authority, filed bankruptcy and closed all of their stores. This major change to the sporting goods market left the Moorpark Dick's as the only large sporting goods store between the San Fernando Valley and Oxnard, until the store at the Thousand Oaks Mall opened. As a result, Dick's local management has indicated they intend to keep the Moorpark store open at least 5 more years, through the term of their lease. Staff continues to work with owners and leasing managers of all the local shopping centers to help find prospective tenants although many national chains continue to overlook Moorpark due to its relatively low population density. • The long-stalled Fairfield Inn and Suites on White Sage Road, east of SR 23 is moving forward and is currently grading. • Phase 2 of the Patriot Commerce Center was modified to better meet market demands and has completed construction. • Lifetech Cosmetics, bringing 70-80 employees to the City, is under construction at 700 Science Drive. • Grocery Outlet is in negotiations for a space in Mission Bell Plaza. • New owners of The Secret Garden on High Street are redeveloping the site. • The Moorpark West Studios project continues to work with an unnamed development partner, however due to changes in the global economy, large scale international investment remains scarce. Road widening and infrastructure planning for the project continues to move forward, indicating confidence in the development of the project. • The three former Kavlico industrial buildings on the west side of Princeton, south of Highway 118 have recently been sold. The southernmost building will remain occupied by Turbonetics and the other two buildings are currently being updated in order to make them more marketable. 92 Honorable City Council December 20, 2017 Page 11 • Nearon is developing a 35,000 square foot light industrial building at 400 Science Drive, north of Los Angeles Avenue. Economic Development Incentives Often, there is discussion regarding providing government "incentives" for business attraction. The efficacy of such incentives is often debated. Giving a business an incentive to locate in the city doesn't make a bad project good. Incentives are most effective to further strengthen the finances of a good project. This approach shows the business that the City wants a relationship and is willing to work with them on their business needs. ICMA, the International City/County Management Association notes: • With few exceptions, incentives will not effectively influence firm location decisions. • The truly important factors in business location decisions are transportation considerations, labor quality, and markets. • The best way for government to influence firm location is to create and sustain quality communities. Incentives cannot mask a community's long-term deficiencies and do little to improve marginal projects. The City of Moorpark continues to work to improve its deficiencies through infrastructure investment, community participation, and long term planning. Some such investments include planned improvements for High Street, widening and improving Princeton Avenue, and widening of Los Angeles Avenue. The City co- sponsors events such as Country Days and works collaboratively with the Moorpark Foundation for the Arts to stimulate and inspire place-making for downtown Moorpark with the High Street Arts Center. Additionally, the City is continuously evaluating long term commercial, industrial, and residential land use trends to ensure a balanced community with a strong foundation. This includes evaluating options such as mixed- use development on High Street, transit-oriented development, and effective re-use and rezoning of older commercial centers. Economic Development responsibilities were recently transferred to the City Manager's office. STAFF RECOMMENDATION Receive and file report. 93