HomeMy WebLinkAboutMinutes - City Council - 2006-06-26 - Special Meeting
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City Council, Special Meeting
Council Chambers
777 Cypress Avenue
Redding, California
June 26, 2006 2:00 p.m.
The meeting was called to order by Mayor Murray with the following Council Members
present: Dickerson, Mathena, Pohlmeyer, and Stegall.
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Also present were City Manager Starman, Assistant City Manager Bachman, City Attorney
Duvernay, Transportation & Engineering Director Tippin, City Clerk Strohmayer and
Assistant City Clerk Sherman.
STRATEGY TO DEVELOP STILLWATER BUSINESS PARK
(E-050-500)
City Manager Starman explained that the purpose oftoday's workshop is to present the City
Council with a detailed overview of the Stillwater Business Park Project (Project) and to
determine if staff is proceeding with the Project in accordance with Council's direction. He
said staff will review the Project's history, current status, cost estimates, financing options
and what lies ahead.
Jim Zauher, Executive Director of the Economic Development Corporation (EDC) provided
a short history of the Project stating that in 1998, the City Council appointed a committee to
study the possibility of developing the Stillwater Industrial Business Park and in June 1999,
the EDC executed an option agreement on the 480-acre Sanders Property which would serve
as the Project site. A preliminary engineering analysis was prepared by consultant, SDS, and
the City Council initiated and recently completed the environmental process.
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Mr. Zauher introduced Jim Renzas of Location Management Services which prepared the
Current Market Conditions portion of today' s presentation.
Mr. Renzas explained that Location Management Services (LMS) helps companies identify
and evaluate potential sites for location or relocation of their businesses. Site selection, he
said, is the process of elimination in that LMS looks for reasons to disqualify certain
communities as potential sites based on such things as a skilled or trainable workforce,
proximity to interstate thoroughfares, demographics, incentives, energy costs, taxes and other
issues that affect profit margins, in order to determine the best possible site for its clients.
A community profile is then conducted, and interviews are held with residents to further
define and narrow the field. Mr. Renzas said that once the potential sites are reduced to two,
competing communities are encouraged to develop a complete economic plan, cultivate a
skilled labor force and include up-front incentives to the businesses as well as follow up
after relocation. He related that, primarily, manufacturers are looking to move in quickly in
order to sustain and maximize profit margins. They are looking for "shovel ready" industrial
sites that have infrastructure and zoning in place so that the manufacturer's level of risk is
removed entirely or significantly reduced. Competing communities are encouraged to make.
it as easy as possible for a business to move in.
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Mr. Renzas explained that today's mega companies and distribution centers need more
manufacturing capacity which translates into the need for large (ten to 100 acres)
manufacturing sites, and few, if any, have been built in the last 10 to 15 years. The primary
reasons for this is the public's desire for big box retail and its desire to keep "smoke stack"
industries out of their communities. They do not have an appreciation for the value of good-
paying, clean manufacturing jobs over minimum wage retail jobs and, in fact, many costal
communities in California are actively discouraging manufacturing growth.
Mr. Renzas then provided an overview of Manufacturing Production and Capacity
Utilization Indexes from January 2004 through May 2006. He said that 60% of
manufacturing companies will relocate to existing facilities in 2006 due in part to the effect
of foreign manufacturers relocating into new markets and a shift or expansion of the
customer base. He related that by the year 2050, the population in California will reach
55,000,000 and companies considering relocation will take a hard look at the capacity and
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140
economic development necessary for their operation to succeed along with negotiable
variables. He pointed out that the problems facing United States manufacturers are taxes,
state and local incentives, energy and health care costs, geographic location, lack of skilled
labor or skills mismatch, available sites and facilities, and even Homeland Security. He
emphasized that these are big questions for any company.
Mr. Renzas concluded saying that companies simply cannot afford to wait for available
properties to be developed or take a chance that the zoning and infrastructure will be
approved. He observed that Shasta County's geographic location between the Pacific
Northwest and California markets makes it ideally suited to serve both, and possesses a
strong supply of skilled and trainable labor and lower electric utility costs which are essential
for any intensive manufa,cturing operation. Mr. Renzas .s~id if Stillwater can be completed
within tbe next 24 months, it will attract business.
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In response to Council Member Pohlmeyer, Mr. Renzas said there have been instances of
large builds that offered a limited number of jobs and he suggested that Redding focus onjob
density and also look at smaller one- or two-industry businesses that are family friendly.
Council Member Mathena questioned the change in Redding's economic climate since
construction of the Mountain Lakes Industri(il Park twenty years ago. Mr. Renzas replied
that Redding is basically unknown at this time, and twenty years ago, building sites were
more plentif111 and acceptable. However, the surge in environmental awareness has spurred
a preference for re~ail over industrial bu~inesses, even though retail jobs pay less than good
manufacturing jobs.
In response to Council Member Dickerson, Mr. Renzas stressed that a community trying to
attract b~g business cannot dictate what a company will pay its employees. Most
manufacturing companies pay the market rate and will not negotiate to pay more. However,
he said some communities do key the incenHves they offer to the number of jobs and the
level of pay a manufa~turer will bring.
Mayor Murray que~tioned Redding's competition for these manufacturers. Mr. Renzas
pointed out that Redding must compete with other sites along the Interstate 80 (1-80) and
Interstate 5 (1-5) corridors south to Yuba, Marysville, Fresno and Merced and cities in
Oregon to the north. He added that anywhere along 1-5 is highly sought after. Redding
should focus on coastal companies that are moving from California to Oregon because there
are few alternatives. He said that while Sacramento is charging $10 to $12 per square foot
plus impact fees, they cont~nue to attract companies. The real key is labor and energy costs.
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Assistant City Manager Bachman related that staff is moving forward with Project design
and engineering. ~e City-paid Army Corps engineer position recently became vacant and
slowed acquisition of the 404 permit somewhat. However, staff is confident that the Permit
will be secured by the third quarter or end of the year. He related that there is some
environmental mitigation yet to be acco~plished and staff is working on acquisition for
rights-of-ways.
Transportation and Engineering Director Tippin said that staff is working full time on the
Stillwater Project. While Mr. Bachman has covered the items that have the most potential
to short circuit the time lines, som~ latitude exists in the way the Project moves forward.
However, completing Phase I and then stopping to review and analyze Phase n is not a viable
option. He provided an overhead presentation defining Phase I and Phase n and illustrating
the symbiosis between the two engineering Phases.
Mr. Tippin reported that estimates include roadways, drainage, bridges north and south,
water, wastewater , electric/gas, engineering and rights-of-way, environmental permitting and
mitigation. . However, he pointed out that not iricluded in the estimates are the Redding
Electric Utility (REV) 115 kv transmission line and substations, trails or secondary roads,
improvements to infrastructure outside the project limits such as Airport Road, Rancho
Road, Old Oregon Trail, etc., the Stillwater Wastewater Treatment Facility and future water
wells that will be needed.
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Assistant City Manager Bachman reported that the total project cost at build out is $68
million. While contingencies have been built into this amount, it is a conservative figure.
He broke it down saying that fixed costs including environmental, engineering, property, etc.
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amounts to $9.0 million, with construction opening at a minimum of $37 million, but added
that at full build out, construction costs could be as much as $59 million. Mr. Bachman said
that the project costs vs land value is for 333 acres of total marketable property for a per-
acre cost of $204,204 or $4.69 per square foot.
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Mr. Bachman reported that according to Chico State Center for Economic Development
(CED), the total economic impact to the community is likely to create as many as 3,568 jobs
at full build out with lesser levels at various stages. However, there is also off-site impacts
created as a result of the economic stimulus Stillwater will produce in the surrounding
communities which could mean as many as 10,861 jobs at 100% build out. He said there is
also an effect on the rest of the community in what is termed a. "roll effect." Off site, there
are generally two jobs for eve!)' one job on site and the total economic impact could equal
$1.335 billion at full build out. Total tax revenues could amount to $16.9 million at 100%
build out with the largest beneficiaries being SHASTEC, $11.8 million, Shasta County,
$2.43 million and the City of Redding, $2.36 million.
Mr. Bachman said that confirmed funding resources amount to $27.935 million in Federal
Grants, General Fund monies, City utilities and other miscellaneous funds with an additional
$22.8 million in anticipated resources from additional grants ($4 million), SHASTEC ($10
million) and City utilities ($8.8 million). Total resources amount to $50.735 leaving a
funding gap of $17 .265 million for full build out. Mr. Bachman was fairly confident that the
funding gap could be filled with proceeds from property sales, additional SHASTEC funds,
grants and General Fund money.
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Assistant City Manager Bachman said that engineering, permitting and financing are yet to
be completed and the City must eliminate legal challenges. While the legal implications are
not significant, there are currently three lawsuits tied to the Project: Two dealing with CEQA
will take minimal time, and the lawsuit surrounding the purchase of property by EDC has the
potential to delay the project slightly, but staff believes there is a low probability of this and
it seems likely that EDC will prevail. There are some minor property acquisitions and rights-
of-ways that must be completed as well as implementation of a marketing plan, the
annexation process and then the City will be able to proceed with the construction bid.
Dave Scott, Chair of Chamber of Commerce reiterated the Chamber's support and
commitment for the Project and the positive economic impact it will have on the community.
He pointed out if the sites are sold for less than $4.00 per foot, it should recover costs, and
the economic multiplier should place the cost per job at zero.
Carl Arness observed that the City has not developed a plan should the Project fail or how
the City plans to recover the money spent. He believed there should be an analysis of
providing jobs with a livable wage versus the incentives the City will offer and that the cost
estimate should be provided in line-item fashion.
Douglas Bennett, Chair of Citizens For Responsible Government, expressed skepticism in
developing a trained workforce to staff businesses in the Park pointing out that businesses
will continue to relocate or outsource manufacturing jobs to countries like Malaysia and
China where labor is cheap. He believed that the Park is a tremendous financial risk for the
City.
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Bert Meyers said that while he was skeptical about the success of the Project and its cost, he
obselVed that the City Council must make the determination to move forward or abandon the
project.
Jean Meyer expressed concern regarding negative effects on air quality and traffic created
by the Project. Mayor Murray responded that mitigation factors are built into Project plans
and Assistant City Manager Bachman emphasized the extensive and costly environmental
review process performed on the Project. He added that, if warranted, certain manufacturing-
type businesses wanting to locate to the Park may have to perform additional environmental
review at their own cost in order to secure a permit to operate.
Council Member Dickerson expressed confidence in the success of the Project and urged
community support to complete it in a timely manner. He said that the City should continue
to move forward on this Project to stimulate local econ~my.
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Council Member Stegall expressed continued support for Stillwater as a top priority and she
favored moving forward with Phase I. She expressed concern, however, with placing too
~uch econol11ic emphasis on o?e project to the detriment of other worthwhile projects such
as the new Library, Park Marina area. development, Downtown revitalization and the airports.
She also expressed concern regarding a trai,ned work force in the community and the
competition Redding will ,be facing.
Council Member Pohlmeyer fully supported the Project and while the process and cost are
mind :pumbing, he said the City must persevere. He applauded staff on the presentation,
expressed optimism in satisfying the funding gap and believed that the Project will be a
tremendous economic benefit to the coinmunity.
Council Member Mathena co~curred with Council Members Dickerson, Stegall and
Pohlmeyer believing t~at this Project wjll address ma,ny issues in Northern California and
enrich all of Shasta County. He asserted that good paying jobs will keep Redding's youth
in the comm~nity, and the revepue from this project will help fund other economic
development projects.
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Mayor Murray said that a m~nufacturing job at minimum wage is twice the job of working
in the servjce industry because it has more impact on the economy. He observed that the
Project makes great business sense and ~e fully support~d moving forward.
Council Meqlber Mathena suggested that referel!ce to Phase 1 and Phase 2 of the Project be
changed to Stillwater Bllsiness Park North and Stillwater Business Park South respectively.
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It was the consensus of the City COllncil that staff was proceeding according to plan for
development of the Stillwater Business Park, Phase I, and Council Members expressed
continu~d support for the projec~and directed staff to move forward.
POTENTIAL ALTERNATNES TO IMPROVE STREET MAINTENANCE
(S-:070-200) . ,
Transportat~on & Engjneering Dire((tor Tippin explained that the City Council and staffhave
long struggled to develop a solution to long-term street maintenance funding while
addressing the growing backlog of deferred maintenance. He said the purpose of today's
discussion will determipe if Counci.1 w~nts to consider alternatives to reduce the growing
street maintenance backlog apart 'from seeking more funding to perform maintenance on
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what curr~ntly exists.
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Mr. Tippin provideq a power point presentation relating that since the 1970's, the City has
been falling farther bepind each year on street maintenance resulting in a growing backlog
that continues to increase iJ;1 v()I~.lIlle ~p.d costs due tQ de(erral and inflation. The City adds
three additional miles of streets each year'through development in addition to sidewalks,
signs, bike lanes, signals c,lnd bridges; all of whic~ must be maintained and repaired ;with
limited funding. H,e reported th:;1t currently there are 402 miles of streets plus turn lanes,
parking lanes and bike lanes, 595111iles of curb and gutter'and 585 miles of sidewalk. While
the useful life of a street i,s between 10 to 15 years, Mr. Tippin said it can be extended by
regular preventive mainten.anc~. However, allowing streets to deteriorate through limited or
no maintenance, increast;s the cost and ~he level of rehabilitation necessary. He emphasized
that without substantial funding, it will be difficult to make meaningful change in deferred
maintenance.
Transportation & Engineering Director Tippin summarized alternatives for Council
consideration: 1) Continue the present course and allow the maintenance load to continue I
to grow in size and incr~ase in ~ost's; 2) . Adopt new standards to extend initi~llife of
pavement through'better compaction testing1 thicker base and asphalt sections, eliminate
"sliver widening," require overlay to eliminate multiple seams, implement minimum
distance 1?etweeri trenches, slurry seal road after widening or trenching, 3) Reduce street
wi~ths, privatize streets within developments; 4) Reduce the level of expectation on
maintenance by accepting a lower quality of street surface and providing maintenance to
arterials and collector streets only; and 5) Ge~erate additional maintenance funds through
pavement surcharge for heavy equipmenVvehic1es, itp.plement a trench fee, apply for grants
and other new sources of funding through <:;:alTrans/FHW A, lobbying efforts, sales tax,
additional General Fund contribution, etc.
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Mr. Tippin stated that a street rehabilitation program can be implemented to improve the
condition of the streets network and eliminate the backlog of deferred maintenance over a
long period of time. He said that an annual investment of $10 million per year over 15 years
will eliminate the backlog and return Redding's streets to optimal pavement condition.
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Mr. Tippin recommended that the City Council direct staff to finalize and bring back for
consideration the following: 1) Standards to extend the initial life of streets; 2) A program
to reduce the amount of existing public street area currently being maintained; 3) A program
to reduce the amount of public streets being accepted for maintenance; and 4) Code changes
to require wider planters, local street sidewalk maintenance to be performed by adjacent
property owners, maintenance district for new streets, and matching-fund programs for
existing streets and sidewalks.
Council Member Mathena expressed frustration that the only funding being applied to street
maintenance is that which is left over from other projects and it is minimal at best. He
believed that what citizens observe and drive on is a better measuring stick for the condition
of the streets than a rating system. Mr. Mathena expressed opposition to narrowing road
widths unless it was within a planned development and he favored concentrating street
maintenance and repair efforts in one area at a time. He stressed that the City must come up
with a creative, long-term solution for this ongoing problem.
Council Member Dickerson supported formation of a working group with community ,
participation to review the variety of ideas discussed and develop additional ideas and
recommendations for Council consideration. He believed that, as a community, it is
necessary to re-prioritize and rededicate efforts and funding to streets in cooperation with the
development community.
Council Member Stegall concurred with Council Member Dickerson and applauded the idea
of forming a committee to study options and alternatives. \
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Council Member Pohlmeyer also favored formation of a committee comprised of
knowledgeable individuals who will examine some of the ideas discussed and who can
develop methods to fund and extend the life of streets. He also did not, however, favor
reducing street widths.
Mayor Murray concurred with moving forward with a committee, but believed that reduced
street widths are acceptable provided that on-street parking is permitted within a
development. He suggested that developers construct small parking lots within a
development to discourage on-street parking but he opposed privatizing streets. Mr. Murray
acknowledged that heavy equipment/vehicles such as solid waste refuse trucks significantly
damage streets, and he sugge~ted that -a. pavement surcharge be assessed to these types of
vehicles and, where appropriate, that those costs be borne by the rate payers.
It was the consensus of Council that staff empanel a committee to discuss ideas brought
forward today, develop additional alternatives for street maintenance and funding and report
back to the City Council.
ADJOURNMENT
There being no further business, at the hour of 4:58 p.m., Mayor Murray declared the
meeting adjourned.
APPROVED
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ATTEST:
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City Clerk ( 1
6/26/2006