PETALUMA ECONOMIC DEVELOPMENT
STRATEGY
FINAL
NOVEMBER 15, 2010
Prepared for
City of Petaluma
Prepared by
Applied Development Economics
100 Pringle Avenue, Suite 560 Š Walnut Creek, California 94596 Š (925) 934-8712
2150 River Plaza Drive, Suite 168 Š Sacramento, CA 95833 Š (916) 923-1562
www.adeusa.com
In Association With
Allan D. Kotin & Associates
ECONorthwest
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ACKNOWLEDGMENTS
PETALUMA CITY COUNCIL
Pamela Torliatt, Mayor
David Glass, Vice Mayor
Teresa Barrett, Council Member
Mike Harris, Council Member
Mike Healy, Council Member
David Rabbitt, Council Member
Tiffany Renee, Council Member
ECONOMIC DEVELOPMENT ADVISORY GROUP
Melissa Abercrombie
Marty Bennett
Daymon Doss
Dick Herman
Gary Imm
David Keller
Marie McCusker
Onita Pellegrini
John Scharer
Mary Stompe
John Brown
PETALUMA CITY STAFF
John Brown, City Manager
Scott Duiven, Senior Planner
CONSULTANTS
Doug Svensson, AICP, President ADE
Kathie Studwell, AICP, Senior Associate ADE
Trish Kelly, Principal ADE
Peter Cheng, Senior Associate ADE
SUBCONTRACTORS
Allan Kotin, A.D. Kotin
Abe Farkas, ECONorthwest
Beth Goodman, ECONorthwest
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TABLE OF CONTENTS
Introduction and Summary ................................................................................................................... 1 Economic Vision and Goals ................................................................................................................. 9 Action Plan .............................................................................................................................................. 13 Monitoring Success ................................................................................................................................ 39 Appendices .............................................................................................................................................. 41 Appendix A: Economic Development ............................................................................................... 43 Appendix B: Analysis of Strengths, Weaknesses, Opportunities & Threats ................................. 47 Appendix C: Target Industry Analysis ................................................................................................ 57 Appendix D: Retail Analysis ................................................................................................................. 77 Appendix E: Tourism Analysis ............................................................................................................ 93 Appendix F: Transit-Oriented Development Guidelines ................................................................ 103 Appendix G: Assessment of Opportunity Sites ................................................................................ 113 Appendix H: Vacancy Reduction Approaches .................................................................................. 121 Appendix I: Technology Infrastructure .............................................................................................. 127 Appendix J: Persons Interviewed......................................................................................................... 133 Appendix K: Sample Business Survey................................................................................................. 135 Appendix L: Sample Project Scoring System ..................................................................................... 143 TABLES & FIGURES
Table C-1 Sonoma County Employment Trend by Industry Group ............................................. 58
Table C-2 Marin, Napa, Solano, and Sonoma Counties Economic Base Table, 2001-2008 ...... 61
Table C-3 Increasing Economic Base: Napa, Marin, Solano, and Sonoma Counties .................. 62
Table C-4 Emerging Industries: Napa, Marin, Solano, and Sonoma Counties............................. 63
Table C-5 Declining Economic Base: Napa, Marin, Solano, and Sonoma Counties ................... 64
Table C-6 Declining Non-Basic Industries: Napa, Marin, Solano, and Sonoma Counties ......... 65
Table C-7 Petaluma Cluster Employment, Establishments, Wages and Concentration ............. 68
Table C-8 Multiplier Effect by Industry Sector, 2009, Additional Jobs Created for Every 10
Direct Jobs .............................................................................................................................................. 73
Table C-9 Labor Income Effect by Industry Sector, Petaluma, 2009 Labor Income for Every
10 Direct Jobs ......................................................................................................................................... 74
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Table C-10 Output Effect by Industry Sector, Petaluma, 2009 Output for Every 10 Direct
Jobs ........................................................................................................................................................... 75
Table D-1 Petaluma Commute Pattern .............................................................................................. 79
Table D-2 Local Market Retail Spending Demand, 2009 ................................................................ 81
Table D-3 Visitor Spending, Sonoma County and Petaluma, 2007................................................ 82
Table D-4 Inflation-Adjusted Retail Sales Trends by Petaluma Shopping District, 1999 to
2009 .......................................................................................................................................................... 83
Table D-5 Inflation-Adjusted Retail Sales Trends by Retail category, 1999 to 2009 .................. 86
Table D-6 Petaluma Retail Sales Leakage and Net Capture, 2009.................................................. 90
Table E-1 Visitor Spending, Sonoma County and Petaluma, 2007 ................................................ 94
Table E-2 Petaluma Lodging Facilities ............................................................................................... 98
Table E-3 Inflation-Adjusted Transient Occupancy Tax Trends in Sonoma County, 2002 to
2009 (through Q2) ................................................................................................................................. 99
Figure 1 Strategy Timeline .................................................................................................................... 6
Figure A-1 Typical Net Fiscal Impact by Land Use.......................................................................... 45
Figure C-1 The Structure of Industry Clusters .................................................................................. 66
Figure G-1 Downtown Petaluma Station TOD Site ........................................................................ 115
Figure G-2 Corona Road TOD Site .................................................................................................... 117
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INTRODUCTION AND SUMMARY
PURPOSE
The purpose of this economic strategy is to guide the City in laying the ground work for
long-term economic sustainability. The Economic Development Action Plan guides the City
through this current economic recession, with recommendations for reversing the downward
trend in sales and property tax. It also provides guidance in meeting the City’s long-term
economic development goals as expressed in the General Plan 2025.
STRATEGIC ISSUES
The City of Petaluma is located in southern Sonoma County, about 40 miles north of San
Francisco. It was incorporated in 1858 on the shores of the Petaluma River, which empties
into the San Pablo Bay and provides a direct shipping connection to the San Francisco Bay
Area. The Petaluma River, combined with electric rail and steamship transportation, made
Petaluma a thriving center of commerce in the late 19th – early 20th centuries, enabling the
City’s early entrepreneurs, including farmers and manufacturers, a means to sell their goods
to the booming towns of San Francisco and Oakland. Today, the River is still used for
commercial and industrial purposes, with an additional focus toward tourism and ecological
preservation and recognition of the River’s significance to the history of Petaluma.
Petaluma’s location just north of Marin County and east of the Marin/Sonoma coastline still
provides economic advantages. The City is far enough north of San Francisco to provide
relatively affordable commercial, industrial and residential land, yet easy access to the rest of
the Bay Area. Its central location relative to the farm and ranch lands in Marin and Sonoma
Counties make it an advantageous location for food processing, especially for milk and
poultry products. In fact, not long ago, Petaluma was the source of eggs for all of northern
California. The weathered, but still standing, chicken coops from that earlier period can still
be seen on the outskirts of the city. As Sonoma County has become well-known for its wine,
Petaluma has been able to capitalize on its proximity to wineries by growing its hospitality
sector.
Today, Petaluma, along with the rest of the
nation, is facing one of the worst recessions
since the Great Depression. Forty percent of
office space and thirteen percent of industrial
space is vacant and housing values have
dropped. Retail sales, especially for automobiles
and luxury items have fallen. Development
impact fee revenues for the City have also
declined as little to no new development is
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taking place. The drop in sales and property tax and impact fees has resulted in vacancies in
all departments, reducing levels of service.
The City completed an update of its General Plan in 2008. The General Plan 2025
establishes goals for economic development, including continued growth in retail, office and
industrial development. Prior to adoption of the new General Plan, the City commissioned a
fiscal impact analysis of the proposed land uses. This analysis indicated that planned
development as proposed in the General Plan would add net revenues of $29.1 million to
available City funds between 2007/08 and 2025/26. In contrast, with no new development,
the revenues and service costs generated by existing land uses in Petaluma would result in a
$40 million deficit in the same time frame. The study also indicated that scenarios with 50
percent less non-residential development, or scenarios in which residential home prices fail
to appreciate at the historical seven percent annual rate, would also lead to deficits in the
City budget over time.
Unfortunately, with the current recession, which began just as the General Plan 2025 was
being adopted, the City has experienced these negative trends. A healthy public sector is an
important part of the local economy, not only in terms of providing key services to
businesses and residents, but also in terms of providing quality jobs in the community. It is
critical that the City economic development program moves forward in a proactive way in
order to reverse the fiscal decline the City is experiencing. The strategic plan recommends
that the City invest in an initial component of staffing and program resources for economic
development that will allow it to respond to the needs of growing businesses.
Despite the recent downturn, there are many trends that bode well for Petaluma’s future.
Petaluma is in an advantageous position to capitalize on tourism related to arts, wine,
culture, heritage and its natural areas, especially the marsh lands. Californian’s increasing
interest in and demand for healthy, good tasting foods has created opportunities for
Petaluma’s manufacturers of natural, organic and artisan foods and beverages, especially
dairy products. Manufacturing, long decried as dirty, smelly and unattractive, is now reemerging and can be a key to economic diversification and the provision of a range of high
quality jobs. Petaluma is in the position of being able to leverage its existing strength in
manufacturing to attract even more business activity. In terms of community livability and
quality of life, the increasing desire for more compact forms of urban development located
along transit corridors makes opportunities for new development, sparked by the
construction of the SMART train, a catalyst for Petaluma’s downtown.
A COURSE OF ACTION FOR PETALUMA
The economic strategic plan sets a course of action for Petaluma to recover from the
economic downturn and achieve its vision to be a diversified center of sustainable enterprise,
a destination with rich cultural and historic charm and a gateway to the lovely Sonoma
County landscape. Given current economic conditions and the wide range of economic
goals of the community, the program needs to be sequenced to achieve the most immediate
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objectives in the short term, providing a solid foundation for longer term efforts of more
fundamental significance.
The recommended sequence is as follows:
1. Develop basic organizational capacity.
2. Network existing resources and leverage available funding to create an arsenal of
economic development tools.
3. Develop a business retention and expansion program to focus on re-tenanting
existing building space.
4. Utilize technology to increase the efficiency of the program, including an economic
development website.
5. Design and implement a marketing program for targeted industries.
6. Stimulate development of key sites identified in the Central Petaluma Specific Plan,
particularly those associated with the SMART transit system.
7. Develop visitor-serving facilities, amenities and services.
8. Facilitate industry cluster development
9. Enhance the retail shopping mix and improve neighborhood commercial districts.
10. Coordinate with workforce development agencies to match business skill
requirements with local labor force training.
Clearly, there needs to be some overlap in the phasing of these steps. For example,
workforce development, while listed 10th and a longer term, fundamental effort, may also be
a critically important ingredient in the business expansion resources networked in Step 2.
However, generally, the sequence is intended to reflect the fact that the City is experiencing
severe economic dislocations currently that need to be addressed before longer term success
can be achieved. Specific vacancy reduction strategies are presented in Part D of the Action
Plan and in Appendix H.
In order to begin this course of action, the City must invest to develop the capacity
needed to undertake the program. The first recommendation, therefore, is to hire an
economic development manager and to convene business and community leadership
committees to engage in the work of stimulating business growth and expansion (Action
Plan Part A).
The first order of business for the economic development program should be to establish
business retention and expansion services focused on efforts to assist building owners to
fill vacancies. This includes business expansion assistance (such as technical assistance with
loan packaging and tenant improvements), business resource networking (provided, in part,
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through an economic development website), allowing alternate uses in business park space
and other vacancy reduction recommendations, and continuing to implement the City’s
Brownfields program. These services are further described in the Action Plan, Part B,
Business Outreach, Action Items 1-5 and Part C, Small Business Technical Assistance,
Action Items 1 & 2.
The central approach is to network existing business assistance resources
throughout the region and to leverage limited redevelopment funds with outside
funds, both public and private. This includes funding available through state and federal
economic development agencies, regional organizations, foundations and others that can be
combined together and utilized to facilitate business expansion. For instance, the City
receives Community Development Block Grant funding which can be used for economic
development planning and technical assistance as well as to fund infrastructure
improvements. It is important for the City to have identified an arsenal of resources with
which it can respond to business inquiries for new locations or expansion opportunities.
These resources are listed in the Action Plan, Part F, Facilitate New Development Within
the Central Petaluma Specific Plan Area, and Appendix F. Transit-Oriented Development
Guidelines, sub-section, “Commercial and Mixed Use Development Tools.”
With this arsenal in hand, the City can then design and implement a business retention and
attraction program, including development of a multi-use economic development website
as well as a marketing campaign. The economic strategic plan identifies a set of potential
target industries for Petaluma, including additional food processing, diversified
manufacturing, green technologies, innovation services (patenting law, finance, business
planning) and others. The website would provide information and links to resources for
existing firms as well as the information required by prospective firms.
The Action Plan recommends a system for prioritizing the types of projects that would
receive City assistance and suggests changes to the City’s Fiscal and Economic Impact
(FEIA) program to better focus on measurable economic information. The Action Plan also
recommends re-establishment of a zoning review committee to ensure that current zoning
standards support the economic development policies in the General Plan.
The City has a number of opportunities to increase the efficiency of its efforts by
expanding the use of technology for economic development. In addition to the
Economic Development website, the City should institute online permit processing and
other tools.
The Central Petaluma Specific Plan addresses a number of key opportunities that can be
implemented through redevelopment and SMART Transit TOD planning. The City is
actively engaged in the TOD planning process through the Station Area Planning Program
and this should continue to be a priority for City efforts. The economic development
strategic plan offers a number of recommendations for use of specific sites, both within the
redevelopment areas and elsewhere (See Appendix G).
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Tourism development is another initiative that can and should parallel the earlier steps in
the action plan. The City has approved entitlements and has also received proposals for new
lodging facilities, which would help the City capture a greater share of tourist and business
traveler spending and related public revenues. The private sector can move forward with
efforts to better brand the community as a tourist destination and create the visitor services
needed to make that a reality. The City should encourage these efforts and over the longer
term support initiatives such as a master plan for the Sonoma-Marin Fairgrounds to assess
opportunities to add business activities to that site that can complement the Fair’s mission
and service to the community.
Over the longer term, the City would benefit from actively engaging industry cluster
groups to enhance the business environment for job-generating uses. The Manufacturing
101 group, for example, serves in much this capacity currently and the City Economic
Development Manager should meet with this group, and others as developed, on a regular
basis to ensure that any available City services are utilized by local businesses. The City will
be most effective in this regard when it has fully developed its business resource network
and has an active business expansion and retention program underway.
Workforce development is not typically a function that cities provide, but it is essential to
the well-being and expansion potential of Petaluma businesses. Therefore, it is important for
the City to interact with employment training providers to advocate for resources where they
are needed and to be able to refer business inquiries properly when they occur. This is often
an important function of the industry cluster process as well, to promote specialized training
programs for fast changing business requirements. This topic is further discussed in the
Action Plan, Part I, Workforce Development, Action Items 1-6.
The City’s economic development program should be rounded out with continuing efforts
to enhance Downtown, enhance the retail mix, improve neighborhood commercial
districts, and plan for new uses along the riverfront. The City has approved major retail
projects and has had other major retail development proposals that would address some of
the significant market gaps currently in Petaluma. As these projects move forward to
implementation, sales tax revenues will increase and the City should focus on addressing the
goals in its General Plan for neighborhood and community quality services and
improvements to the built environment.
PROCESS, PUBLIC INPUT, AND TIMELINE
Successful implementation of an economic strategy is a product of community participation
in its development. Petaluma’s process was built around a multitude of ways to engage the
public, including a page on the City’s website devoted entirely to the economic planning
process. Other means of engaging the public included 65 interviews with diverse community
and business leaders, focus groups with businesses, the arts community, the Latino
community, the City’s Technology and Telecommunications Advisory Committee, a public
forum and five meetings with the ad-hoc Economic Development Advisory Group (see
Figure 1, below for overall project process and timeline).
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FIGURE 1
STRATEGY TIMELINE
Petaluma Economic Development Strategy Timeline
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Technical Work
Market Assessment
Fiscal Recon
Technology Infrastructure
SWOT
Opportunities
Goals
Action Plan
Public Input
Advisory Group (5)
Interviews (60)
Focus Groups (4)
Public Forum (1)
Web Site
City Council
Economic Development Advisory Group. The City Manager formed an 11-member adhoc committee comprised of representatives of business, labor, social services and arts
organizations to assist in the selection of an economic development consultant. This same
ad-hoc committee continued on after the selection of the consultant to provide input into
the development of the economic strategic plan. ADE facilitated five meetings with the
Committee starting in December 2009 and ending in Fall 2010. Summaries and/or
presentations from each of the meetings were posted to the City’s website.
Website. To inform and involve as many Petaluma residents and businesses as possible, the
City’s webmaster created, with guidance from the consultant, a web page devoted to the
economic development strategy http://www.cityofpetaluma.net/edr/econplan.html. The
webpage included an overview and timeline of the planning process, a calendar of upcoming
meetings, summaries of past meetings, announcements of focus group meetings and contact
information. This page will continue to provide information on economic development
activities and could serve as the basis for an expanded website that will help link businesses
with technical assistance resources and promote Petaluma to prospective new employers.
Interviews. Between December 2009 and April 2010, ADE interviewed more than 65
individuals, including local and regional non-profit and business executives, agency directors,
education partners, interest group representatives and community leaders. The members of
the City’s Technology and Telecommunications Advisory Committee were also interviewed
as a group. The interviews provided key information required for the completion of an
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analysis of Petaluma’s economic strengths, weaknesses, opportunities and threats (SWOT).
This information, together with the completed economic analyses, helped inform the
development of short-term and long-term economic development strategies.
Focus Groups. During February and March 2010, ADE facilitated seven focus groups to
better understand the trends and issues affecting Petaluma’s businesses. Each focus group
addressed a different set of businesses. These groupings were: food processing; diversified
manufacturing; arts and culture; small business; and Latino businesses. Information obtained
from these focus groups was used to further develop the SWOT analysis and the economic
development strategies.
Public Forum. On May 1, ADE facilitated a public forum at the community center.
Approximately 24 persons attended. The purpose of the community forum was to begin the
process of developing goal statements for the economic development strategy.
PLAN STRUCTURE AND ORGANIZATION
This Economic Strategy is organized so that the goals and strategies are at the beginning of
the document and all of the supporting research findings are in appendices. The Action Plan
is built on the foundation of the economic development goals expressed in the Economic
Health and Sustainability Element of the General Plan 2025. The Strategy is organized as
follows.
ƒ
Economic Vision and Goals
ƒ
Action Plan
ƒ
Monitoring Success
ƒ
Appendices
−
−
−
−
−
−
−
−
−
Economic Development
Assessment of Strengths, Weaknesses, Opportunities, Threats (SWOT)
Target Industry Analysis
Retail Analysis
Tourism Analysis
Transit-Oriented Development Guidelines
Assessment of Opportunity Sites
Vacancy Reduction Approaches, including an Assessment of Zoning Regulations
Technology Infrastructure
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ECONOMIC VISION AND GOALS
VISION
Petaluma builds on its authentic role as a historic river town, a hub of economic
activity and the gateway to Sonoma County to provide a strong business climate and a
quality of life that reflects its residents’ commitment to economic, educational, social and
environmental sustainability.
GOALS AND OBJECTIVES
Goal 1. Further Diversify the City’s Economic Base
Objectives:
1.1 Retain basic industries and attract new and complementary businesses to Petaluma. Basic
industries are those that sell the majority of their products or services outside the region.
Some local examples include: food processing; metals and plastics manufacturing; riverdependent manufacturing, fabrication and services; higher education and vocational schools;
specialized health care; medical and pharmaceutical research and development; and green
products, services and technology development.
1.2 Identify and support the development of emerging markets and new business sectors,
including environmentally responsible and green industries.
1.3 Identify industry clusters that are particularly important to the Petaluma economy. These
include diversified manufacturing; food and beverage processing; green technologies; visual
and performing arts; and tourism.
1.4 Recognize, support and expand the City’s agricultural support industrial base, and
expand organic and specialty food niches and agri-tourism linkages.
1.5 Encourage and support the expansion of primary and specialized health care services
within Petaluma.
1.6 Promote expansion of businesses that provide living wages and coordinate with
workforce agencies to help workers currently below self-sufficiency wages to progress to
living wage jobs.
Goal 2. Strengthen and Expand Existing Businesses
Objectives:
2.1 Coordinate with economic development partners to jointly implement a business
retention and expansion program (BRE) to strengthen and expand existing businesses and
industries.
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2.2 Help coordinate and network the available third party business services to provide
technical assistance, outreach and mentoring to small businesses, including the growing
number of minority businesses.
2.3 Help existing tenants to expand so as to reduce the vacancy rates in Petaluma’s industrial
and commercial areas.
2.4 Create an economic development website that provides useful information for
businesses and links to technical assistance resources.
2.5 Offer courses in the K-12 system that help meet the skill needs of existing and target
businesses.
2.6 Form partnerships with organizations and agencies to enhance workforce training to
complement needs of existing and target businesses. This includes Sonoma County
Workforce Investment Board, Santa Rosa Junior College, Sonoma State University, Santa
Rosa Hispanic Chamber and others. Ensure that Petaluma benefits from available regional
resources.
2.7 Ensure that the City is “tech friendly” to businesses, entrepreneurs, and residents.
Address gaps in availability of broadband services, both wireline and wireless. Map and
promote community public access locations.
2.8 Coordinate with local banks regarding meeting Community Reinvestment Act (CRA)
requirements in Petaluma, as well as coordinating with the Small Business Development
Center (SBDC) and governmental agencies to help increase local businesses’ access to capital
for business start-up and expansion.
Goal 3. Attract New And Complementary Businesses To Petaluma
Objectives:
3.1 Establish and implement a business attraction campaign
3.2 Coordinate with business organizations, including industry cluster groups, such as
101MFG, to attract new businesses, particularly suppliers of local manufacturers.
Goal 4. Increase Tourism
Objectives:
4.1 Leverage Petaluma’s unique historic, natural and cultural assets to promote heritage,
agricultural, ecological, and arts/culture tourism in Petaluma.
4.2 Encourage the restoration and future operation of the Petaluma Trolley and the Water
Street Trestle.
4.3 Focus on coordinating existing resources and facilities at the fairgrounds to ensure their
maximum use and benefit. Consider preparing a master plan for the redevelopment of a
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portion of the Fairgrounds to allow for more visitor-serving uses, such as lodging, culinary
tourism, wine and agri-tourism, and conventions and to support local distribution of locallygrown food products.
4.4 Form partnerships with regional tourism marketing groups, such as Sonoma County
Tourism Bureau, Farm Trails, on-line marketing and others.
4.5 Continue to promote Petaluma as a filming venue.
Goal 5. Create A Sustainable Economy That Maximizes Social and
Environmental Benefits and Minimizes Social and Environmental Costs
Objectives:
5.1 Foster compact urban development and joint planning of housing and transportation;
improve the balance of jobs to housing and encourage companies that provide living wage
jobs.
5.2 Incorporate green technologies in new infrastructure investments and buildings.
5.3 Use available Federal funds to clean-up Brownfield sites so they can be re-developed in a
sustainable manner.
5.4 Become a test bed for innovative natural resource management and restoration, such as
the Ellis Creek water recycling facility.
5.5 Build on Petaluma’s concentration of sustainable industries to create a Petaluma brand.
Goal 6. Strengthen Petaluma’s Retail Sector
Objectives:
6.1 Ensure residents’ easy access to shopping by attracting retailers that would expand local
choice and reduce retail leakage.
6.2 Encourage walkable neighborhood shopping centers throughout the community.
6.3 Identify and encourage retail activities that enhance local agricultural businesses and local
agricultural products.
6.4 Identify and encourage retail activities that sell other locally manufactured items.
6.5 Explore the use of EPA’s Brownfields funding as a means of redeveloping commercial
sites.
Goal 7. Enhance Vibrancy and Attractiveness of Downtown Petaluma
Objectives:
7.1 Maintain and expand Downtown as a hub of commercial and retail activity with
residential opportunities.
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7.2 Facilitate new development within the Central Petaluma Specific Plan Area
7.3 Support the expansion of downtown businesses through implementation of a BRE
program.
7.4 Support growth of tourism related activities, including a diverse choice of lodging within
the downtown.
7.5 Support the development and implementation of a SMART station area plan and
encourage transit-oriented development.
Goal 8. Ensure Fiscal Health of the City
Objectives:
8.1 Realize sufficient City revenue from its economic base to sustain and enhance the public
services and infrastructure needed by local residential, commercial and industrial activities
and to support non-profit social service providers.
8.2 Ensure new commercial development will complement Petaluma’s economy, existing
businesses, city finances, and quality of life.
Goal 9. Build Community Capacity For Economic Development
Objectives:
9.1 Develop internal capacity to implement economic development programs and activities
and build partnerships with local and regional organizations.
9.2 Capitalize on opportunities to attend workshops or education and leadership programs
offered by organizations such as League of California Cities, California Association for
Economic Development, American Planning Association and others. Be proactive in
bringing their ideas and resources to the community.
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ACTION PLAN
The Economic Strategic Plan for Petaluma is based on the nine goals and related objectives
outlined above. Generally the goals address five basic outcomes of economic development:
economic stability; economic opportunity; fiscal health; meeting the shopping and service
needs of the local population; and improving quality of life.
Economic stability refers to the ability of the local economy to withstand economic cycles
and is achieved by creating a diverse economic base. Economic opportunity refers to the
existence of a business climate favorable to the start-up and growth of businesses and the
opportunity to find meaningful work and career advancement. Fiscal health refers to the
existence of a tax base capable of meeting the public service needs of the community. The
shopping and service needs of the community can be met locally and have the secondary
effect of providing additional tax revenues. All of these outcomes help to improve the
quality of life. In addition, innovative goods and services produced in Petaluma, such as
organic food, alternative energy, medical research, etc., can help to improve quality of life for
society as a whole.
The economic development action plan for Petaluma addresses these goals in a sequence
that responds to the city’s current economic situation. The initial priorities are enhancing
economic opportunity by reducing commercial and industrial vacancy rates and improving
fiscal health. The initiatives related to these priorities are outlined first in the action plan,
followed by longer term strategies that will help to address comprehensive economic
sustainability for the City.
ECONOMIC DEVELOPMENT ACTION PLAN OUTLINE
Short-Term, High-Priority Economic Development Initiatives
A. Build an Economic Development Program
1. Financing Economic Development Program Functions
2. Establish Petaluma Criteria for Providing Incentives/City Assistance to Businesses
B. Design and Implement a Business Retention and Expansion Program
1. Identify types of businesses to target for business retention and expansion services
2. Form an ad-hoc business retention and expansion committee
3. Develop and implement a campaign to conduct on-site visits
4. Conduct an annual business survey
C. Provide Small Business Technical Assistance
1. Identify small businesses with capacity for growth
2. Provide business services through a network of service providers
D. Conduct a Business Attraction Campaign
1. Identify target industries
2. Develop protocol for new business prospects
3. Define what Petaluma has to offer new or expanding businesses
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4. Create marketing message and identify marketing channels & prepare materials
5. Create Economic Development Website
E. Reduce Vacancies
1. Coordinate delivery of business services, provide business outreach and loan programs
2. Plan for adaptive re-use of vacant buildings
3. Create additional flexibility in zoning
4. Review Impact fees
F. Facilitate New Development Within the Central Petaluma Specific Plan Area
1. Develop creative mechanisms for financing infrastructure replacement or extension
2. Establish partnerships with other agencies and organizations to help implement the
strategies
G. Expand Tourism
1. Package attractions
2. Encourage more full-service hotels and space for conferences
3. Leverage Fairgrounds as tourism asset
4. Conduct joint marketing
5. Market Petaluma as a green transportation hub
6. Track visitor trips
H. Develop a Fairgrounds Master Plan
Three to Five-Year Strategies
I. Facilitate Industry Cluster Development
1. Diversified manufacturing
2. Food and beverage processing
3. Construction and green building services
4. Hospitality and tourism
5. Health and wellness
J. Promote Workforce Development
1. Conduct joint marketing of workforce development opportunities
2. Enhance workforce training offerings
3. Work with Sonoma County Workforce Investment Board (WIB)
4. Enhance career technical training and school to work programs
5. Encourage green economy job training
6. Encourage vocational training in K-12 system
K. Enhance Technology Infrastructure
1. Make City’s website more user-friendly
2. Conduct thorough technology assessment
3. Assess emerging technologies and their uses
4. Promote City as “tech savvy community”
L. Expand Retail Diversity
1. Plan for transition of older retail centers
2. Support future expansion of Auto Plaza
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SHORT-TERM, HIGH-PRIORITY ECONOMIC DEVELOPMENT
INITIATIVES
This section of the action plan outlines and describes those economic development
strategies most likely to have the greatest effect on reducing vacancy rates and improving the
City’s fiscal health.
DISCUSSION OF STRATEGIES
A. BUILD AN ECONOMIC DEVELOPMENT PROGRAM
The success of an economic development strategy is dependent upon the degree to which it
is implemented. Currently, Petaluma does not have an economic development program.
While there is a Redevelopment Agency, there is currently only limited staffing to that
Agency through the City Manager’s office and no consolidated coordination and oversight
of programs, projects and administrative responsibilities. The City’s Affordable Housing
Program has been very active in the funding of many affordable housing units throughout
the City using in part the 20 percent housing set aside from Redevelopment TIF income.
The City will need to begin the process of building an Economic Development/
Redevelopment Program almost from the ground up. The recommended activities addressed
in this economic development strategy will require additional city staff dedicated full time to
implementing the action plan. The recommended first and second-year activities and
programs will require at least one full-time experienced economic development professional.
Until more funding is available to support full-time administrative staff devoted to the
economic development program, the economic development professional could be
supported by existing administrative and technical staff.
Economic development is, essentially, a collaborative activity requiring the cooperation and
participation of a multitude of organizations and agencies. Many of the strategies included in
this economic development action plan require working with other organizations, such as
the Petaluma Downtown Association, the Chamber of Commerce, the Sonoma County
Economic Development Board, the Sonoma County Tourism Bureau and the Small
Business Development Center.
The City is strongly encouraged to form an ad-hoc Economic Development Committee that
would represent the partnerships necessary for implementing the economic strategy. Such a
committee could provide needed advice and support on issues related to economic
development marketing, entrepreneurship development (including minority-owned
businesses), incubators, workforce training, tourism, and industry cluster development and
management. One possible suggestion for the composition of such a group would include
representatives of the City Manager’s Office; city council; industry cluster groups; the
Workforce Investment Board (WIB), which in Petaluma’s case is Petaluma People Services;
union apprenticeship program representatives; Sonoma County Economic Development
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Board (EDB); the Small Business Development Center (SBDC) at Santa Rosa Junior College
(SRJC); the Arts Council; the Petaluma Downtown Association (PDA); financial institutions;
the health care district; and the Chamber. Other alternatives also exist based on the
community’s needs and interests. This committee would also help the Economic
Development Manager oversee the activities of the Business Retention and Expansion
Committee. The role of City Staff would be to convene the full group or sub-committees on
a regular basis to collaboratively implement the economic strategy.
1. Financing Economic Development Program Functions
An economic development/redevelopment manager and support staff, including benefits,
could require as much as $300,000 to $400,000 annually, including funding to develop a
website, printing of marketing materials and incidental travel. For FY 10-11, the City has
allocated $170,000 for this function which should be sufficient to get the program started.
This will be initially funded through the redevelopment agency budget. This staff would be
responsible for performing all the activities described in this Action Plan. Additional funding
would be required to conduct business recruitment marketing. For instance, a new website
could cost between $10,000 and $20,000 and a marketing implementation campaign could
cost at least $50,000 per year. It is recommended that the City not use its limited funds to
send staff to conventions or conferences to market Petaluma, but to market Petaluma
through on-line press releases, industry journals and other more cost-effective means.
The 5-year redevelopment plan includes about $9,000,000 for economic development1.
Some of these funds could be used to provide loans or grants to enable non-profits and
public institutions to fill vacant office space at below market rents and to make necessary
tenant improvements. In addition, some funds would be needed to administer an annual online survey of businesses using the new website. In line with the purpose of redevelopment,
the bulk of these funds should be used to leverage private investment in site development
and infrastructure for catalyst projects.
2. Petaluma Criteria for Providing Incentives/City Assistance to
Businesses
While the main economic development role for the City should be to coordinate and
network existing, available business resources, such as the Small Business Development
Center (SBDC), Junior College workforce training programs and federal brownfields
remediation funding among others, the Petaluma Redevelopment Agency also has some
ability to provide other direct assistance to businesses interested in expanding in or locating
in Petaluma. It is important that the City establish criteria for evaluating such business
assistance requests. Based on the goals and objectives identified in the economic strategic
plan process, the following indicators represent preliminary performance standards the City
may consider.
1 This figure accounts for the $5 million taken by the State this past May. An additional $1.1 million would be due to the
State in May 2011 under current State policy.
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1. Re-tenanting existing building space: The City can prioritize assisting businesses that
will occupy or expand in existing building space in Petaluma. In particular, loans and
grants to help reconfigure or improve existing space would help reduce vacancies.
2. Job creation or expansion: The number of jobs can be tied to the dollar amount
requested. For example, Economic Development Administration (EDA) funded
projects often are required to create 1 job per $10,000 in federal assistance, while the
Community Development Block Grant (CDBG) program uses a criteria of $35,000
per job and the U.S. Immigration service uses $50,000 per job as the minimum
allowed investment level.
3. Job quality: The City can prioritize assistance to businesses that create living wage
jobs, or a certain proportion of jobs above the County average wage. Similar
performance criteria include employer based training programs and participation in
first source hiring or labor peace agreements.
4. Fiscal return on investment: Projects that expand City sales tax revenues, or which
meet certain tax increment thresholds, can be prioritized. Often incentives of this
type are structured as reimbursements from tax revenues paid once the project is
built and operating, in order to avoid upfront investment of City funds.
5. Catalyst projects: The City has identified certain development sites, particularly
related to planned TOD development around the SMART station. The City should
focus its resources to work with developers on these sites, which can then have a
leveraging effect to stimulate other desired development in the vicinity.
6. Target industries: The City has identified target industries that meet community goals
to diversify the local economy and increase economic stability by reducing reliance
on a narrow group of business sectors. These industries are: food and beverage
processing; information and communications technology; diversified manufacturing;
tourism, recreation and hospitality; construction and green services and technologies;
innovation services; and health and wellness. Priority can be given to assisting
businesses in these targeted industries to expand or locate in Petaluma. (For a
description of these targeted industries, please see Appendix C, Industry Clusters.)
7. Environmental quality: This criterion can be supported in several ways. Green
industries are part of the City’s targeted industry group and so would be priorities for
assistance under the criterion above. However, the City may also wish to assist
development projects that meet higher LEED levels, or provide desired
environmental systems or amenities that can benefit the community. Such amenities
may include open space or habitat restoration, or storm water systems that help the
City meet federal standards, or energy efficiency/carbon reduction features that help
the community meet those goals.
8. Community planning goals: The City has established a number of goals in the
General Plan related to the vibrancy of the Downtown, the image and function of
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the river along various segments, and others. Projects requesting assistance should be
evaluated on their ability to support the pertinent community planning goals.
Along this continuum of potential performance criteria, the City will need to distinguish
between development standards and requirements that are imposed on all developments, at
the developer’s expense, vs. special conditions desired by the community that go beyond
standards required of all developments. Incentives should be used only to induce desired
project characteristics that the private market, combined with City development standards,
would not otherwise produce. For this reason, in addition to meeting the types of criteria
listed above, requests for business assistance should be required to file a business case to
justify the request. That is, there needs to be a financial reason why City assistance is
necessary to implement the project, in addition to the fact that it may support City goals.
The City will need to establish a priority order and weighting for the criteria that reflects
their relative importance. Based on current economic conditions, we believe the order of
criteria presented above would be an effective prioritization of City resources. This will help
greatly to focus City investments on projects that provide the greatest overall benefit. In the
appendix, an example of a similar scoring system adopted by Santa Cruz County is provided.
This particular scoring system is used to prioritize applications for EDA funding from each
of the jurisdictions in Santa Cruz County, but a similar approach would be appropriate for
the City to prioritize projects requesting City assistance.
Regarding the evaluation of proposed development projects, the City has adopted a policy to
require a Fiscal and Economic Impact Assessment (FEIA) for projects that meet certain size
and use criteria. ADE has reviewed this program and several of the studies that have been
produced under the policy and we believe the FEIA’s do provide valuable information to the
City in the area of fiscal impact and market competitiveness. The latter issue in fact is now a
matter of state law under CEQA, referred to as Urban Decay Impacts.
However, the reference in the resolution to quality of life impacts, which we understand is
derived from General Plan policy, as well as the emphasis on attempting to determine
anticipated benefits levels that may be offered to future employees of the projects, are really
outside the scope of economic impact and represent an unreasonable burden of proof on
prospective projects. Mainly, these subjects are necessarily highly speculative due to the
nature of most project proposals and we would recommend the City narrow the required
information to quantifiable economic indicators, particularly focused on CEQA
requirements for economic competitive impacts and the fiscal effects of projects on the City.
B. DESIGN AND IMPLEMENT A BUSINESS RETENTION AND EXPANSION
PROGRAM
Currently, the City of Petaluma does not have an economic development program focused
on business retention, expansion and attraction. In light of the high vacancy rates and the
poor fiscal condition of the City, developing and implementing such a program should be
Petaluma’s highest priority.
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1. Identify types of businesses to target for business retention and
expansion services
A successful Business Retention and Expansion (BRE) Program is built on a foundation of
defining clear priorities. As of 2009, there were over 2,600 businesses in Petaluma. Every
year, many new businesses start and many others close. A City’s BRE program must focus
limited City resources on those activities and services that will have the greatest return on
investment. As businesses grow and mature, they will need and want different levels of
assistance. For instance, a small, but growing company may need room to expand, as well as
access to a training program for new hires. This type of assistance could be provided
through other organizations including real estate brokers, community colleges and the
Chambers of Commerce. On the other hand, direct City involvement may be called for in
the case of a large employer or revenue generator. This kind of triage process is necessary to
maintain a reasonable level of efficiency in the program given the City’s limited resources.
The City’s BRE program will be most successful if it focuses its outreach efforts on
businesses in the following categories:
1. Businesses at risk of closing or moving, especially those with many employees.
2. Businesses with a significant impact on City finances, either large employers or large
revenue generators.
3. Businesses in targeted industry clusters, including: manufacturers of, metals, plastics,
communications and computing equipment food and beverage processors,
information and communications technology, innovation services, tourism,
recreation and hospitality services, construction and green services, health and
wellness.
In order to be effective, the BRE program will need to have visibility in the business
community. Numerous business assistance resources exist, which can be networked to focus
on business needs in Petaluma, but many businesses are currently unaware of these
opportunities. Administering an outreach program, through the BRE Committee, the on-site
visits, the business survey, and other means will help publicize the availability of services and
programs.
2. Form an ad-hoc business retention and expansion committee
The purpose of an ad-hoc business retention and expansion committee is to be able to
leverage the capacities and resources of a multitude of organizations and agencies for the
purpose of implementing a BRE program. This ad-hoc committee could be a sub-committee
of the Economic Development Committee and would be similar in composition. The
members of this committee would reach out to existing businesses to address local issues or
meet with prospective businesses. For instance, this committee could act as a rapid response
team to assist a company contemplating closing its doors or laying off a large number of
workers.
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3. Develop and implement a campaign to conduct on-site visits
In partnership with the Chamber of Commerce and the Petaluma Downtown Association,
conduct at least 25 business visits in the first year and another 25 in the second year on a
monthly or quarterly basis. Site visits are a pro-active approach to building positive
relationships and alliances and facilitating communications within the business community.
The businesses learn more about the benefits of staying and expanding in Petaluma and the
City learns more about the nature and dynamics of the businesses within the community.
The result, hopefully, includes mutually beneficial programs and policies.
For each on-site visit, consider the following:
ƒ
Tour the business to develop greater familiarity with business operations.
ƒ
Gather information on industry, employees, sales trends, market trends.
ƒ
Discuss issues or concerns related to conducting business within Petaluma. Identify
ways the City may be able to assist the business either directly or through referral to
other agencies and organizations.
ƒ
Discuss hopes and/or plans for growth and expansion. If appropriate discuss ways
the City can help with expansion plans; provide names of agency directors that
would be involved in reviewing necessary permits (post on City’s website as well).
ƒ
Distribute regional economic development and business assistance information.
ƒ
Document findings from visit; follow-through on commitments; send letter of
thanks to employer. Maintain communication with businesses about local and
regional issues that affect the business climate and market conditions.
4. Develop and administer an annual survey of Petaluma businesses
An annual survey will help the City and its economic development partners track business
service needs as well as regulatory or other issues, and the potential need for additional
commercial or industrial space or policy modifications. An online survey can be easily
administered on an annual basis if the City’s Business License requests email addresses when
licenses are renewed. (See Appendix K for a sample survey from another City) Analysis of
the survey results would inform economic development program planning for the next year
and provide input to an annual update of the economic strategy. It would be important for
all businesses to provide the email address of the proprietor or branch/plant manager on the
business license renewal form to facilitate distribution of a link to the online survey. The
economic development website can post the survey and ongoing results on the City’s
economic development program (see item D.5. below, economic development website). The
availability of aggregated responses to the survey could be an incentive for businesses to
obtain business licenses in that it will allow their perspective to be taken into account in
planning economic development programs and policies.
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Final - November 2010
5. Continue to assist businesses by explaining city entitlement process and other
processes related to getting necessary approvals to operate their businesses.
C. PROVIDE SMALL BUSINESS TECHNICAL ASSISTANCE
Large businesses usually have survived to a point where they have the resources to find and
pay for their own specialized services in business planning, marketing, HR, logistics and
other areas of concern. Small and medium-sized businesses do not yet have the resources to
pay for these specialized services, yet need them in order to expand. Research has shown
that small businesses create most, if not all, new jobs, generating 80 to 90 percent of all job
growth. Research on best practices has demonstrated that providing technical assistance
services to entrepreneurs and small business with high growth potential2 makes it more likely
they will survive and expand. Helping them succeed is the most cost-effective means of
growing the local economy. Small business technical assistance is typically provided through
a network of service providers, including the SBDC, the Chambers of Commerce,
community colleges, manufacturing extension programs and city and county economic
development programs. The elements of a successful technical assistance program include
the following:
ƒ
Outreach to small businesses with capacity and desire for growth, such as next
generation information technology entrepreneurs formerly employed with large
Information and Communications Technology (ICT) firms and green technology
start-ups that can take advantage of AB 811 opportunities.
ƒ
Business services provided through a network of local and regional services
providers, and promoted through multiple channels, including the internet, and
which include those that foster Latino entrepreneurship opportunities.
ƒ
A physical or virtual business incubator that serves as a one-stop center for business
development services and mentoring. This is a good use for vacant office space. This
may require collaboration with Sonoma Mountain Business Cluster to ensure there is
the requisite critical mass of business demand, which is essential for success of this
and other business services measures.
ƒ
Collaboration with the Sonoma County Economic Development Board and the
Innovation Council3 to support local entrepreneurs.
1. Identify small businesses with capacity for and interest in growth
To identify small businesses with the capacity for and interest in growth, the City and its
economic development partners could encourage businesses that request assistance to
complete a short business risk assessment. The assessment could be posted on the economic
Economic developers define “high growth potential” as being one or a combination of the following factors: a) within a
high-growth industry; b) having a goal of rapid growth; c) having the entrepreneurial skills and predisposition to grow
businesses.
3 The Council is an ad hoc advisory committee appointed by the Board of Supervisors. It is comprised of a broad-based
group of business and community leaders that oversees the development of an economic strategic plan for Sonoma County.
2
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development website and would include questions about the entrepreneur, company
management, industry, market size, capitalization, marketing activities, access to financing
and/or credit and sales. From this assessment, the Economic Development Manager would
be able to deliver the most appropriate level of services for each particular business. For
easier access, the risk assessment could be placed on the City’s Economic Development
Website and designed in a way to provide automatic feedback to both the business
proprietor and the Economic Development Manager.
2. Develop a network of business service providers
Providing the range of technical assistance needed by small businesses requires collaboration
and building of partnerships across economic development organizations in Sonoma
County. By partnering with the Small Business Development Center (SBDC) at Santa Rosa
Junior College, Sonoma County Economic Development Board (EDB), Chambers of
Commerce, the Petaluma Downtown Association (PDA), the Innovation Council, the
Sonoma Mountain Business Incubator and other organizations to offer workshops and
technical assistance, the City is in a better position to meet the needs of small businesses.
Links to these agencies’ websites should be a major feature of the new Economic
Development Website.
Petaluma is fortunate to have access to a multitude of small business assistance service
providers. These include, but are not limited to: the Small Business Development Center at
Santa Rosa Junior College, www.sbdcsantarosa.org; the Service Corp of Retired Executives,
www.score.org; the Sonoma County Public Library system, which offers business assistance,
especially for the purpose of market research using on-line databases, www.sonoma.lib.ca.us
and, the Sonoma County Economic Development Board, which has prepared a Business
Assistance Guide, available on-line at, www.sonoma-county.org/edb/busguide/indes.htm.
This business assistance guide is a compendium of links to local and on-line resources for
small businesses and provides information on business planning and management; filing
legal paperwork, taxes and licenses; finding an appropriate location; raising and borrowing
money; and, sources for technical assistance.
D. CONDUCT A BUSINESS ATTRACTION CAMPAIGN
Attracting businesses to Petaluma will require a well-thought out and integrated approach of
identifying targets and communicating Petaluma’s strengths to those targets.
22
ƒ
Tailor the marketing program to the target industries identified in the Economic
Development Strategy, particularly those that meet job quality standards. Identify
and encourage suppliers to local manufacturers to locate in Petaluma.
ƒ
Attract more green business by providing incentives to existing industrial and office
parks to go green and make green tenant improvements.
ƒ
Develop a system, or protocol, for responding to inquiries from new business
prospects.
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ƒ
Define the Petaluma product, or in other words, Petaluma’s strengths and
advantages as a business location and what it has to offer new businesses.
ƒ
Create a marketing message and identify marketing channels.
ƒ
Prepare marketing materials.
ƒ
Create an Economic Development website and post the message and materials on
the website.
1. Identify target industries
The results of the economic base and industry cluster analysis indicate that Petaluma has
several industries that it could focus on for business attraction targets. These industries are:
food and beverage processing; information and communications technology; diversified
manufacturing; tourism, recreation and hospitality; construction and green services and
technologies; innovation services; health and wellness. Priority can be given to assisting
businesses in these targeted industries to expand or locate in Petaluma, particularly those in
the manufacturing, technology and professional services categories where “middle skill” and
better paying jobs are concentrated. (For a description of these targeted industries, please see
Appendix C, Industry Clusters.)
2. Develop a consistent, well-defined and well-communicated protocol
for new business prospects
Many City departments play a role in responding to new business prospects as well as
organizations and agencies outside of City Hall. The Economic
Development/Redevelopment Manager should be the point person to address outside
business inquiries, and would have the necessary information on hand to address these
inquiries. In addition, all necessary information would be available through the City’s
economic development website.
The City’s business license office also plays a large role in establishing relationships with new
businesses. For instance the business license office can provide information on City
departments and specific personnel contacts for particular inquiries, especially inquiries
about use permits or construction permits. This is important because most business inquiries
go through the City’s business license office first. The City will want to work in partnership
with its economic development partners, including business organizations, such as the
Chambers of Commerce, PDA, Sonoma Mountain Business Incubator, Sonoma County
Economic Development Board and others to systematically address any inquiries that
originate through them. The Economic Development/Redevelopment Manager would be
the initial point person within the City to keep track of existing building vacancies and land
parcels. Any outside inquiries regarding space for a new business or a larger space for
business expansion should go through the Economic Development/Redevelopment
Manager. This role can also be divided up by type of land use (i.e. retail, industrial, or office).
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The Economic Development/Redevelopment Manager will want to work with other City
Departments to develop protocols for inquiries into funding assistance, city-owned property,
infrastructure, permit assistance, fee waivers, and other economic development tools that
might be applied on a case-by-case basis.
3. Define what Petaluma has to offer new or expanding businesses
The City’s economic development program, working in partnership with other City
Departments and outside agencies, such as the Chamber of Commerce, the Petaluma
Downtown Association and 101MFG, should develop a consistent message that describes
Petaluma’s advantages as a place to do business. (Please see Appendix B, Analysis of
Strengths, Weaknesses, Opportunities and Threats (SWOT) for more information about the
Petaluma “product.”)From this, the City can create marketing materials and content for the
economic development website. The definition of the product, that is Petaluma, would
consist of the following:
ƒ
Amount of available space, both appropriately zoned developable land and built
space with asking rents and lease rates on a per square foot basis. Ideally, the city’s
website would include a listing of available properties, kept up to date by the
Economic Development Manager working in partnership with other City staff and
real estate brokers.
ƒ
Infrastructure capacity and costs of hooking into the infrastructure as well as annual
costs. This is primarily for water, sewer, electrical, gas and other basic infrastructure.
ƒ
Labor supply within the commute shed, about 50 miles radius around Petaluma, that
includes workforce by occupation and average wage.
ƒ
Workforce training facilities and colleges, identifying specialized programs.
ƒ
Available workforce housing, including average rents and sales prices of homes
within commute shed.
ƒ
Quality of life factors, including measures of educational quality, parks, cultural
institutions, retailers, etc.
4. Create a Message, Create Promotional Materials and Promote Petaluma
as a Place to Grow a Business
ƒ Identify marketing communication channels to use in marketing Petaluma to target
industries. These will include the City’s Economic Development website, press
releases that will drive traffic to the website, well-placed articles in selected trade
publications (print and on-line), and local and regional events.
ƒ
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Prepare marketing materials that highlight key demographic and income
characteristics important to desired retailers.
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ƒ
Create general fact sheet and sales sheets targeted to key industries, using consistent
visuals, messaging and branding.
ƒ
Develop annual publicity plans to continually distribute information to the media
regarding Petaluma’s commercial real estate activity and its business assets.
ƒ
Implement advertising campaign for the North Bay business community and target
industry trade publications.
ƒ
Prepare direct marketing campaign for business attraction.
5. Create the Economic Development Website
The City of Petaluma has an award winning website that contains a wide variety of
information. This website focuses on providing information regarding the many resources
available to local residents. The City currently uses its website in a limited capacity for
communicating with prospective businesses. While the Petaluma website contains basic
information about the City, it does not provide current information about vacant properties
and available business space. Links to additional resources should be provided on the
website focused on both existing and prospective businesses. This website should be a highly
visible portal to information resources and on-line services, including permitting.
Site selectors, whether re-locating businesses or consultants working on their behalf, find
available expansion locations by searching the Internet. This is their way of narrowing down
their search. If a community does not have the information a site selector needs, they will
focus on other locations. More and more communities such as Portland, Escondido, Rancho
Cucamonga, and many others compile their available properties into a searchable online
database. Other websites also integrate the property data with an online GIS application that
links the property leads with the County Assessor database. Petaluma should do this as well.
Another alternative would be to work with local commercial real estate brokers and/or
LoopNet to advertise availability of space for lease or purchase. Create link from City
website to their website(s).
Together with making all necessary information readily available, the website needs to be
search-optimized and user-friendly for businesses, brokers and site selectors. Features, such
as tabs that read, “Why Petaluma?” “Redevelopment”; “Available Properties”; “Retail
Opportunities”; “Business Assistance”; and “News” would help prospective businesses
navigate the site.
E. REDUCE VACANCIES
High vacancy rates have an undesirable effect on the entire community, but especially nearby
properties, in that they convey that the market is deteriorated and unfavorable for
investment activity. From a city’s point of view, vacancies result in lower property
assessments and tax revenues. Vacancy reduction efforts should be focused in three major
areas: technical assistance; adaptive re-use and additional flexibility in zoning.
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1. Technical Assistance
For retailers, technical assistance and modest amounts of financial assistance can preserve
tenancies that would otherwise terminate, and can motivate tenancies that would not
otherwise occur. Tenant assistance can come in several forms: technical assistance in how to
reduce costs for inventory, energy, marketing and telecommunications; low cost loans for
either inventory expansion or refurbishment of the stores; or limited subsidies to landlords
to make up rent differences.
The form of tenant assistance that would be most useful would be a combination of a
resource center and a loan program. Resource centers in which the services are made
available either at public expense or at significantly reduced cost could be useful. In parallel,
a loan program at subsidized interest rates possibly with deferred payoffs would also assist
stores that could otherwise not refurbish their stores or perhaps even fund required
inventory.
In the case of office and industrial space, perhaps even more directly than in retail, there is a
nexus between economic development and increased occupancy. It should be possible to
provide both grants and low cost loan programs to tenants willing to relocate to currently
vacant space in these business and industrial parks. Possible sources of funding include the
Economic Development Administration (EDA), the Environmental Protection Agency
(EPA), the Community Development Block Grant Program (CDBG), Industrial
Development Bonds and others. Some sources are listed in Appendix F, Transit-Oriented
Development Guidelines.
As with retail, a resource center that dealt with such issues as tenant build-out, recruiting,
employee training (perhaps through local community colleges) could be a resource for
enhanced occupancy.
In this instance perhaps even more than retail, finding non-traditional tenants becomes quite
attractive. Among the classes of non-traditional tenants that are available are workforce or
vocational training and trade schools which often work fairly well in office buildings. Other
compatible uses include government facilities, and temporary offices for large projects.
2. Adaptive Re-use of Vacant Buildings
The City should recognize that some of the buildings may never be filled because of their
location, size or level of deterioration. There are three modestly well-established adaptive
reuses for vacant retail space that have some precedent.
ƒ
26
One emerging replacement use is health services. Key features of a good retail site
such as accessibility and adequate parking are precisely the same features that define
a good health services site. Clinics, physical therapy facilities, and other services that
represent relatively easily relocated medical services that do not require elaborate in
place infrastructure are good candidates for former retail buildings.
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ƒ
Another potential use would be workforce education and vocation training, which is
something easily done in many retail spaces. This can be physical education,
occupational training and other similar elements.
ƒ
A third possible use would be conversion to public agency uses. Examples include
the conversion of a vacant store into office or community recreation facilities. For
instance, the Petaluma School District occupies a former neighborhood shopping
center. Another example is Portland which converted a closed Sears store to Metro
Government headquarters..
ƒ
Another use which could be considered is to convert well situated space to lodging
facilities or, more likely, hospitality enhancing uses. Office or industrial buildings of
good quality which include relatively large clear span spaces can be converted fairly
easily to conference centers which in turn enhance hotel use.
The opportunities for adaptive reuse of office space that is truly office space are pretty
limited. At the same time, however, freestanding buildings which could be converted to
recreation uses or even clean industrial uses might be somewhat appealing. Even warehouse
uses for low-rise facilities with large interior spaces represent an alternative.
As is the case in retail, there is a risk in the diffusion of efforts to try and make all industrial
spaces more occupied. As uncomfortable as it seems, there should be some effort and
prioritization so that programs designed to aid tenants and provide additional inducements
are concentrated in places where they can materially change the appearance and character of
the space. Once again the likely criteria for prioritization would include the level of deferred
maintenance, considerations of design obsolescence and the willingness of the property
owner to commit to parallel efforts of project wide renovation.
3. Flexibility in Interpretation of Zoning
The Implementing Zoning Ordinance (IZO) was adopted in 2008 to provide consistency
with the newly adopted General Plan by establishing a zoning map, development standards
and allowable uses consistent with that Plan. That Plan was being developed at a time when
the Telecom industry had a much larger presence in Petaluma and it was thought that its
presence would remain or even grow. Since then the Telecom industry has gone through
major structural changes at a global level that has resulted in most of the firms downsizing,
consolidating or re-locating. As a result, Petaluma may have more office space and land
designated for Business Park uses than is needed for office uses. On the other hand, other
types of industries, including metal and plastic manufacturing, food processing, and technical
training have a greater likelihood of expanding in Petaluma.
More flexibility in the interpretation of the Zoning Ordinance may support the start-up of
new businesses, the expansion of existing businesses and enable more space to be occupied.
At the time the IZO was adopted, the City had in place a Development Code Advisory
Committee (DCAC), which was reviewing the need for zoning changes to achieve
consistency with the General Plan 2025. The committee did not complete the work to
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review all of the zoning standards that potentially affect economic development projects.
The committee should be reconvened for this purpose, and the City’s new Economic
Development Manager should work with the committee to ensure that development
standards do not impede business expansion unnecessarily.
4. Review Development Impact Fees
In addition, the City should review its development impact fees in comparison to other cities
within its market area to ensure that they remain competitive in today’s market. The City has
conducted such reviews in the past but this should be updated in today’s environment.
Based upon this comparative review, the City should consider whether it may offer discounts
to certain economic development uses, based on the community benefit criteria outlined in
section A.2. In addition, redevelopment tax increment funds may be used to leverage private
investment in catalyst projects and help reduce the financial burden of impact fees on key
projects.
F. FACILITATE NEW DEVELOPMENT WITHIN THE CENTRAL PETALUMA SPECIFIC
PLAN AREA
ADE and City staff together identified 31 opportunity sites within a half-mile radius of the
two future SMART stations. Many of these sites are within the Central Petaluma Specific
Plan area. Proposals or applications have been submitted for several of these sites, which are
now in the review and entitlement process. Some projects have been approved but are not
moving forward due to market constraints and lack of financing. In addition, the historic
buildings along Petaluma Blvd. lack fire sprinklers and must comply with a fire sprinkler
ordinance in the next few years. It is important for the City to support these developments
by assisting with the financing and construction of needed infrastructure, especially water
mains and streets. As discussed in the General Plan’s fiscal impact analysis, new
development will increase the City’s sales and property tax base, thereby improving its fiscal
health. In the current economic climate capital availability is highly constrained and the city
and land owners will have to work together to develop creative financing mechanisms to
supplement developers’ more limited financial means. The City will want to begin the
process of developing partnerships for the future development around the transit stations as
well.
1. Develop creative mechanisms for financing infrastructure replacement
or extension
The Central Petaluma Specific Plan indicates that, “the City should examine the use of a
variety of methods for [cost] distribution such as the CIP, benefit assessment districts, and
condition of approval of new development.” Downtown Petaluma has a Business
Improvement District (BID) that funds the staff and operations of the downtown
association. However, it is experiencing increasing delinquencies as business conditions
decline. One means of expanding the revenue base would be to convert the BID to a
Property & Business Improvement District (PBID), which would include the property
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owners as well as the merchants. The formation of the PBID must be initiated by a petition
of affected property owners, with at least 50.1 percent of weighted owners in support.
Weighting is based on the amount of property owned within the proposed District. Upon
submittal of the qualifying petition, the City Council may authorize a vote of the affected
property owners. The vote must also gain approval of 50.1 percent of the weighted property
owners. Once the PBID is formed, assessments can be levied on virtually any kind of
property within the District except residentially zoned land.
However, to fund large infrastructure such as the water main needed to implement the fire
sprinkler ordinance downtown, a more robust financing district would likely be needed. An
alternative infrastructure financing mechanism is the use of a Community Facility District
(CFD). If contiguous property owners are not in favor of forming a CFD, there is precedent
for composing a CFD of non-contiguous properties.
2. Establish partnerships with other agencies and organizations to help
implement the strategies
Recognizing that its resources are limited, the City should form strategic partnerships within
the next two years with other public entities who have a role in the TOD development
process. The steps in forming these strategic partnerships are:
ƒ
Identify who the principal public partners are for Transit Oriented Development
(TOD). These partners should include at least the City, SMART, MTC and the
County, given interest and resources to help achieve likely goals. Partners may also
include potential tenants such as educational institutions like Santa Rosa Junior
College.
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Clarify public objectives and expectations for TOD with the public among the public
partners.
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Get agreement on roles each entity should play in the TOD process and the tools
used for developing privately held sites. For example, SMART owns an important
TOD site. What role should the City and other public entities play in the disposition
and developer selection/negotiation process? While the City has land use authority
over the sites, which organization is best suited to managing the TOD development
process?
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Identify resources each entity can bring to the table and when they can do so.
Potential resources include land, money, or technical assistance. Potential timing for
the contributions could be at the front end of development, the back end, or
throughout the process.
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Outreach to the development community about the TOD process, public tools
potentially available for public and private sites, and get community input (see
Appendix F for TOD tools). Listening to a variety of perspectives and focusing on
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incorporating some of the new ideas into the project can improve the TOD and the
process.
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Secure agreement among partnered public entities on timing and type of solicitation
process for SMART site (e.g., RFQ, RFP, combination of the two, etc), evaluation
criteria and selection process, who would be the issuing party, and who should be
involved in negotiations with successful development team(s).
ƒ
Issue solicitation, evaluate responders, make selection, and begin negotiating a
development agreement for the SMART site.
3. Brownfield Redevelopment
Petaluma has a long industrial history that included activities that may have polluted soil and
groundwater. These activities included tanneries, gas stations, power plants and ship yards,
some located along the Petaluma River. The City has mapped many of these sites, and in
2006, the City of Petaluma received a grant from the Environmental Protection Agency to
conduct an in-depth assessment of seven properties and the follow-on testing of soil and
groundwater on four of these properties. These initial efforts towards Brownfield
identification and remediation will facilitate the re-development of opportunity sites in the
Central Petaluma Specific Plan area and elsewhere. Recently, a revolving loan fund was
established to assist property owners or developers with clean-up of their sites.
In the short term, the Petaluma Economic Development Manager should facilitate the
redevelopment of opportunity sites by providing support for Brownfield site identification
and remediation through oversight of that program’s revolving loan fund. Several of the
opportunity sites addressed in Appendix G are priority sites for brownfields cleanup and
would be eligible for grant funded assistance.
G. EXPAND TOURISM
Petaluma should capitalize on the strength of the Sonoma County Brand and its
attractiveness as a destination for outdoor recreation, arts and culture, and the wineries.
Petaluma currently has a middle market position in Sonoma County’s tourism market, but
should strive to attract higher-end tourism. As the Central Petaluma Specific Plan is
implemented, the City should consider developing a concentration of higher-end lodging
around the downtown area. This would add market support to existing downtown retailers
while providing a boost to the TOT base. The countywide occupancy rate of 61 percent
indicates that there is demand for additional lodging within the County. (Please see the
Tourism Analysis in Appendix E for more information) And, as Petaluma’s arts initiatives
take hold, the community has a potential opportunity to attract more higher-end tourism.
Petaluma currently has only one historic hotel. A city with the abundance of historic
architecture found in Petaluma would seem to have numerous opportunities for developing
a bed & breakfast inn or other lodging based on reusing historic buildings.
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With 541 hotel rooms and only one relatively small full-service facility, Petaluma is at a
disadvantage for attracting larger groups and conferences. If the community wants to move
into a larger market for meetings and conferences, it needs to expand on its base of hotel
and meeting rooms.
While Sonoma County as a whole is known for wineries and high end restaurants, Petaluma
has established a unique niche as a center for dairy production and as a location for locally
grown agricultural products. This creates potential opportunities for expansion of the
markets for restaurants that feature locally grown food, dairies, and cheese producers.
Nearby outdoor recreation opportunities, made possible by an abundance of open space,
wildlife corridors, tidal marshes, fresh water creeks, upland habitat and the Petaluma River,
should be promoted as part of a comprehensive package of attractions and reasons to visit
Petaluma.
The Petaluma Visitor Center currently collects basic information from visitors who use the
facility. However, the Center lacks the staff resources to analyze the data, so it currently
remains un-tabulated. Accurate data that tracks Petaluma’s specific niche within the regional
tourism economy, and in addition, tracks convention business, would allow the community
to better ascertain its existing strengths and better plan for shifts in the visitor profile. The
City’s Technology Committee has been working with local business representatives on geotagging programs through social media. If implemented on a broad scale, detailed
information could be gained on visitor travel and purchasing patterns. Establishing some
way of maintaining a visitor database specific to Petaluma would go a long way towards
identifying Petaluma’s visitor serving role on an ongoing basis.
The following actions will help leverage Petaluma’s unique historic, natural and cultural
assets to promote heritage, agricultural, ecological, and arts/culture tourism and business
travel in Petaluma.
1. Package Attractions. Package all assets and conduct joint marketing with other tourism
promotion and marketing entities;
ƒ
Market Petaluma as a destination and as a gateway to western Sonoma and Marin
Counties, the coast, wineries, farms, ranches, beaches, open space and natural
habitat, Napa County, and the Petaluma River;
ƒ
Market Petaluma attractions and activities to other Sonoma County residents for day
trips;
ƒ
Promote culinary tourism;
ƒ
Support and promote the Petaluma Gap Winegrowers Alliance.
ƒ
Encourage the rehabilitation and future operation of Heritage Trolley.
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2. Increase Petaluma’s ability to attract business and leisure travel spending by encouraging
the development of full service hotels, especially within Downtown Petaluma, and the
development of meeting and convention facilities.
3. Leverage the Sonoma-Marin Fairgrounds as a Potential Tourism Asset. Consider
preparing a Master Plan for the redevelopment of a portion of the Fairgrounds to allow
for more visitor-serving uses, such as lodging, culinary tourism, wine and agri-tourism,
conventions, etc. (See further discussion of this item below.)
4. Joint Marketing. Form partnerships with regional tourism marketing groups, such as
Sonoma County Tourism Bureau, the Visitors’ Center, the Chamber of Commerce,
Petaluma Downtown Association, Sonoma County Farm Trails, on-line marketing and
others.
5. Promote Petaluma as a Green Transportation Hub. Consider ways to make Petaluma a
green transportation hub for the surrounding region, providing smart cars for rent or
other means to allow visitors to take day trips from Petaluma to the coast, the wine
country and other attractions.
6. In partnership with lodging facilities and other tourism organizations, establish and
maintain a mechanism for a database of visitor trips to Petaluma.
H. DEVELOP A FAIRGROUNDS MASTER PLAN
The Sonoma-Marin Fairgrounds site is located at the E. Washington interchange of Hwy
101 and is a within one mile of Downtown. The entire site, which includes about 64 acres, is
designated for Civic Facility, Open Space/Park and Mixed Use. It is adjacent to the former
Kenilworth Jr. High School site, a separate 35-acre property on which Regency’s East
Washington Place project was recently approved.
The facilities at the Fairgrounds are used extensively for events of all types. Existing uses
include Fairgrounds facilities such as meeting rooms, exhibition halls, and barns and a
charter school. A library and public swimming center occupy part of the northern onefourth. A street car raceway and other ancillary uses occupy the southern section.
The land is owned by the City of Petaluma and is leased to the Sonoma-Marin Fairgrounds
Board. The Fairgrounds’ lease runs out in 13 years in 2023. The site’s location provides
opportunities to implement the goals of this economic strategy by increasing the number
and types of uses at the site.
The City should commence the development of a Master Plan for the site that would
encompass a visioning process and a market feasibility study of selected alternative concepts.
A Master Plan process would allow for the development of a stronger mix of uses on the site
while still preserving the existing function of the fairgrounds. Uses that would build on
Petaluma’s existing strengths in food and beverage processing, especially the manufacture of
organic and natural foods, would complement existing uses at the Fairgrounds. The analysis
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should also consider industries that serve a regional market and provide living wage and high
value jobs. The site is large enough to accommodate a conference center and hotel, which
would allow for more business travel to Petaluma and enable businesses and organizations to
host conventions locally. It would be important to consider ways of strengthening the
connection of new uses at the fairgrounds with the SMART rail station. Other ideas for
appropriate uses would include a culinary arts center with opportunities for wine tasting,
cooking classes and demonstrations.
THREE TO FIVE- YEAR STRATEGIES
The strategies in this section will take longer to implement, although the efforts should get
underway in the short term as resources allow.
I. FACILITATE INDUSTRY CLUSTER DEVELOPMENT
Petaluma has existing industry groups that would benefit from organizing as industry
clusters. Clusters are geographic concentrations of firms that share common markets,
customers, suppliers, and talent. Firms within clusters compete with each other in the same
markets. Clusters include not only traded firms (that export their product or service), but
also firms that supply goods and services to these exporters. The role of the public sector is
to support the growth and success of cluster members through investments in education,
research and technology, infrastructure and regulation.
As described in Appendix C, Target Industry Analysis, Petaluma’s economic specialization
and strength is in food processing, especially of dairy products, and diversified
manufacturing. The hospitality industry, including lodging, restaurants, tourism services and
their suppliers, is also strong.
For instance, in the food processing cluster, the exporting firms would include the
creameries that sell their cheeses in other regions or to visitors from other regions. The
creameries purchase equipment and supplies, milk, culture, packaging supplies, water, and
expert services. The public sector and private utilities provide wastewater treatment,
roadways, internet, water, telephone and talented workers.
Formation of a cluster organization enables firms within a cluster to identify their common
competitiveness issues, develop a strategic action plan, and collaborate to jointly resolve
those issues. Cluster organizations provide their member firms a voice in the development of
policies and programs related to workforce development, land use permitting, infrastructure
development, research and technology, and entrepreneurship support services.
1. Diversified Manufacturing. The City of Petaluma should be involved on a regular
basis, with the activities of 101MFG as a means of staying connected with trends in
the industry and changing needs for space, infrastructure support, workforce
development and promotion. 101MFG.com is an industry cluster organization of
200 manufacturers in Marin and Sonoma Counties. Their website,
http://www.101mfg.com/, is a portal to information about suppliers, certifications
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and best practices, help with benefits, and news about activities of potential
customers. Membership is open to all Petaluma manufacturers.
2. Food and Beverage Processors A focus group, made up of several food processors,
came together to discuss the possibilities for growth of the food processing sector in
the Petaluma area as part of the development of this Economic Development
Strategy. The City should encourage the continued networking and the formation of
a food processing cluster as a means of supporting their expansion and attracting
other food processors to Petaluma.
3. Construction and Green Building Services. Sonoma and Marin Counties have an
especially large concentration of organizations, educational programs, private firms
and public entities with expertise in green building technologies. A focus group,
made up of several of these organizations came together to discuss the possibilities
for growth of the green building and clean technology sector in the Petaluma area as
part of the development of this Economic Development Strategy. The City should
encourage the continued networking of these organizations and businesses as a
means of supporting the expansion of existing small businesses in this field, and
attracting new businesses to Petaluma.
4. Hospitality and Tourism. The Petaluma Downtown Association serves as a means
for the hospitality and tourism industry to network and conduct joint marketing of
Petaluma’s attractions and events. The PDA could, with additional funding, enhance
its activities relative to supporting the growth of the hospitality and tourism cluster
by working with the industry to prepare an industry-specific strategic plan and
supporting the implementation of that plan.
5. Health and Wellness. As discussed in Appendix C, Target Industry Analysis,
Petaluma is under-served by medical services resulting in leakage of medical
spending to nearby cities, such as Santa Rosa and San Rafael. This provides Petaluma
an opportunity to meet growing demand for primary care and specialized health and
medical services through expansion of existing programs and services or attraction of
additional specialized service providers. In fact, the Petaluma Health Center received
$9 million in federal ARRA stimulus funding to renovate a recently purchased vacant
building, to double the number of patients served to 30,000. An alliance of health
and medical care providers could serve the purpose of identifying workforce
development needs, transit services to health care and other common issues across
the industry.
J. PROMOTE WORKFORCE DEVELOPMENT
Workforce development is a critical component of economic development. A community’s
available pool of skilled workers is its most important economic development asset. The
provision of vital workforce development services is the responsibility of multiple
organizations within Sonoma County. These include the County Workforce Investment
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Board (WIB), Sonoma County Human Services Department, Santa Rosa Junior College, the
K-12 school districts, the County Office of Education, private employers, union
apprenticeship programs and private training providers. Petaluma People Services Center
(PPSC) is an Employment Services Provider funded through the WIB. PPSC offers the
SonomaWORKS employment services program in partnership with Goodwill Industries of
the Redwood Empire, Circuit Rider Productions, and West County Community Services.
SonomaWORKS is an employment assistance and training and job retention program
developed to meet the needs of Sonoma County residents who receive TANF (Temporary
Aid to Needy Families). SonomaWORKS employment workshops and job search assistance
program offers a variety of services geared to helping participants prepare themselves to
compete for, obtain, and retain good-paying jobs and to become independent of public
assistance.
Santa Rosa Junior College and Sonoma State University are significant assets in development
of technology-based workforce skills. Though several innovative programs are being offered
through these institutions, there are still gaps in the area of technology-related skills. A study
by the Sonoma County Economic Development Board found that 29 percent of firms
surveyed for the 2008-2009 Technology, Innovation and Creativity Report had difficulty
finding employees to fill positions in IT/Computer Programming. Since, sixty percent of the
top ten fastest-growing occupations are tech-related, there is concern that the local education
system is not preparing students to qualify for high paying jobs in the Information and
Communications Technology industry and other technology-based industries. Business feels
there needs to be a better emphasis on technology-related skills development in both high
school and in college. The study identified technology-related courses that businesses would
like to see offered within the region. In light of the fast-growing Latino population in the
region, there should be efforts focused on skills-building for Latino youth.
A number of local craft unions have apprenticeship programs that provide valuable skills
development opportunities. These include the Carpenters Local 751, Machinists Local 1596,
Operating Engineers Local 3, and IBEW Local 551. The Carpenters apprenticeship includes
green building skills and the IBEW apprenticeship incorporates solar installation and other
renewable energy skills.
While workforce development is not typically a function of municipal government (except
for the training of their own workforce), promoting and supporting the provision of
workforce development services by other organizations is an important part of the City’s
economic development program. The following kinds of activities would be useful for the
City to affect training opportunities for its citizens.
1. Promote the availability of workforce development workshops and programs
through partner organizations through the City’s economic development website and
other communication channels.
2. Partner with organizations and agencies to enhance workforce training and skills
building to complement needs of existing and target businesses. These organizations
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include: Sonoma County Workforce Investment Board; Sonoma County Economic
Development Board; Santa Rosa Junior College; Sonoma State University; Petaluma
People Services; Sonoma County Office of Education and K-12 School Districts.
Identify additional funding sources to supplement current course and workshop
offerings. The City should ensure the participation of area businesses and the
community on the Workforce Investment Board.
3. Participate in Sonoma County Workforce Investment Board programs and activities
to ensure that Petaluma is included in workforce development initiatives and
connected to available resources. Strengthen relationships with the Innovation
Council to improve regional linkages with the business community.
4. Work with economic development, education and workforce development partners
to focus on career technical education, school to career partnerships, and
partnerships with the trade unions.
5. Become more involved with countywide green economy employment training
opportunities by helping to network Petaluma businesses to appropriate training
providers. These include renewable energy, energy efficiency and green building
competencies that require some technology-based skills and are potential
opportunities for apprenticeships as well as other skills-building.
6. As with other educational and training entities, the K-12 schools are independent of
City government. Yet it is important for the City to encourage the provision of
courses in the K-12 system to help meet the skill needs of existing and target
businesses. For instance, Petaluma High School’s Manufacturing Technology
department was awarded a national accreditation for its program by the National
Institute of Metalworking Skills (NIMS). PHS is the only school in California,
including community colleges and universities, that has the NIMS accreditation. The
award comes not only from NIMS but from the national Department of Labor and
the state of California’s Department of Education. A NIMS accreditation allows
students interested in following a career in metalworking or engineering to have a
significant advantage when looking for an apprenticeship, because it guarantees that
these students have gained invaluable experience and strong skills in their field. It
takes six years to make a proficient machinist, including four years for an
apprenticeship. So far PHS has issued more than 70 individual credentials to both
high school students and Petaluma Adult School apprentices.
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K. ENHANCE TECHNOLOGY INFRASTRUCTURE
Key areas on which to focus the City’s economic development technology-related actions
include:
1. Improve the City’s website as a more user-friendly portal, especially for marketing
economic development assets and providing access to effective e-government
services. Upgrade on-line permitting and planning processes.
2. Conduct a more thorough technology assessment as recommended to map baseline
conditions and develop an infrastructure deployment and resource strategy. There
are some infrastructure gaps which need to be better mapped and understood, and
aspects of unserved or underserved communities that need to be reached. An
example of a possible approach was presented to the Technology and
Telecommunications Advisory Committee.
3. Assess emerging technologies and their uses which will require new levels of
broadband capacity or other technological requirements throughout the City. The
California Emerging Technology Fund recommends this approach even as the
baseline of broadband infrastructure is currently good. The movement to mobile
media and applications such as video technologies which require very large levels of
bandwidth (not only for social uses but for critically important applications like
public safety, emergency services and telemedicine) will strain existing capacity for
most cities. The City needs to incorporate these emerging needs into its
infrastructure planning and work with local telecom providers to ensure that they are
making the appropriate investments in the City’s wireline and wireless infrastructure.
4. Promote the City as a “tech savvy community” and deliver on the promise, building
on its legacy as Telecom Valley. This is particularly important for the City’s image to
support the competitiveness of existing firms and to attract and support
entrepreneurs and new businesses in emerging technology-related fields, especially
green businesses, which need high levels of telecommunications capacity.
L. EXPAND RETAIL DIVERSITY
The retail market analysis presented in Appendix D indicates that new business development
in this sector should be focused on regional retail uses, such as general merchandise, home
improvement and home furnishings, as well as visitor serving businesses such as restaurants
and specialty retail stores. It is also critical to support the auto sales sector in the City, which
over the mid- to long- term may need to expand to compete regionally. The recently
approved East Washington Place project and the proposed Deer Creek Village project
address the largest gaps in Petaluma’s retail mix – general merchandise and home
improvement. If these projects are built, then the City will have filled an important niche in
terms of its regional retail competiveness.
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Retail development is presented here in the action plan as a longer term effort not because
action should be delayed or deferred in the short term, but rather to signal that there is a
longer term trend that needs to be addressed. The larger retail projects that are moving
through the City’s entitlement process currently do not compete with the older retail centers
on a dollar volume basis, because their retail niches are different and existing retail centers in
neighboring cities already provide competitive attractions to Petaluma shoppers. But it must
be recognized that the older centers represent a rapidly outmoded form of shopping
opportunity, and they will continue to lose shopper interest as more modern retail venues
become available.
As an action item, the City needs to begin to plan for the transformation of the older centers
to mixed use developments that will eventually reduce the retail square footage and add
residential and small office spaces to the mix. Many communities are moving in this
direction and indeed this is already a major emphasis for Petaluma in the downtown.
Regarding the Auto Plaza, in good economic times, auto sales are a major benefit for
Petaluma. Currently, this sector is one of the hardest hit by the recession. However, over the
longer term, it is important to recognize the revenue benefit of this sector when it occurs
and plan ahead to support its competiveness in the region. In auto sales, the trend is toward
greater consolidation and concentration. Therefore, as market conditions improve, the City
should consider ways to respond to auto dealers’ expansion needs. The proposed extension
of Auto Plaza Way to Old Redwood Highway, which will create better access to existing and
potential additional sites for future development at the Auto Plaza, is an excellent starting
point to support this sector.
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MONITORING SUCCESS
PROGRESS MEASURES
There are a number of indicators that can be used to measure the City’s progress in
achieving its economic development objectives. Tracking these indicators quarterly or
annually will provide insight into the health of the local economy and assist in re-prioritizing
the City’s short-term economic development objectives.
ƒ
Employment by target industry cluster; employment by major sector. This can be
provided by the California Employment and Development Department Labor
Market Information System.
ƒ
Retail sales per square foot or by City district or retail category and sales tax levels.
This information is available on a quarterly basis through the sales tax audit report.
ƒ
Number of lodging rooms, lodging occupancy rates and Transient Occupancy Tax.
The City Finance Director obtains this information on a monthly or quarterly basis.
ƒ
Business licenses and revenue. The city business license office can provide this
information to the Economic Development/Redevelopment Manager.
ƒ
Number and value of commercial and industrial building permits. The Building
Department can provide this information to the Economic Development/
Redevelopment Manager.
ƒ
Office, retail and industrial vacancy rates and lease rates can be obtained from local
commercial and industrial real estate brokers.
ƒ
City revenues, including property taxes.
ƒ
Non-residential entitlement timeline. The Planning Department can provide a
periodic report showing the time frames needed to process new construction and
business expansion permits.
ƒ
Business report card. An annual business survey would provide feedback on how
City operations and other factors are affecting the business climate. This could be
combined with an annual indicators report including the data points above.
RE-EVALUATING PRIORITIES OVER TIME
Using the indicators listed above, the City should re-assess its priorities in light of changing
conditions and opportunities. Over the next five years, economic conditions will change and
new opportunities may arise. While the overall objectives of this economic development
strategy may not change in the next five years, the priorities should.
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APPENDICES
A. Economic Development
B. Assessment of Strengths, Weaknesses, Opportunities, Threats (SWOT)
C. Target Industry Analysis
D. Retail Analysis
E. Tourism Analysis
F. Transit-Oriented Development Guidelines
G. Assessment of Opportunity Sites
H. Vacancy Reduction Approaches
I. Technology Infrastructure
J. Persons Interviewed
K. Sample Business Survey
L. Sample Project Scoring System
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APPENDIX A: ECONOMIC DEVELOPMENT
PURPOSE
An economic development strategy is but one of several tools that the City has for helping it
achieve its broader community goals. Other tools include the General Plan and Zoning
Ordinance, the Redevelopment Agency Implementation Plan, the Capital Improvement Plan
among others. The Economic Development Strategy is distinguished by its focus on
improving the city’s economic vitality. Due to the inter-relatedness of these plans, it is
important that each supports the other.
VITAL CYCLE
The vital cycle is a way of describing the inter-dependence of a community’s economy and
its quality of life. Wealth generated by successful businesses is available to support
community programs and services, including public safety, recreation, roadways, and
education. In turn, a community’s quality of life, as manifested in the quality of its
infrastructure, neighborhoods, schools, parks, libraries, safety, environment and commercial
core attracts further investment by businesses and entrepreneurs.
Economy
Community
Though every community is unique, there are four major reasons for economic development
that are common across all communities. These include economic stability; economic
opportunity; access to and choice in housing, shopping, services and entertainment; and,
sustainability in the provision of public services.
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ECONOMIC STABILITY
Economic stability is achieved when a region’s economy is based on a diverse set of
industries. Local economies totally dependent on one industry, such as tobacco in the
southeast or automobiles in the upper mid-west or gaming in Las Vegas, can be devastated
by the decline of that industry. Petaluma currently has a relatively diverse economy that
includes many types of industries, including food and beverage processing, manufacturing of
a diverse range of products from medical supplies and equipment to recreational gear, health
care, business services, information and communications technologies, construction and
tourism. It also is an attractive location for entrepreneurs and emerging industries and
technologies which could further strengthen its economic base. By supporting the growth of
a broad range of industries, Petaluma has a better likelihood of withstanding economic cycles
that affect primarily one industry.
ECONOMIC OPPORTUNITY
Another key purpose of economic development is to provide a business climate that
supports the growth and competitiveness of a diverse set of industries. Healthy, competitive
firms offer a range of career opportunities that allow workers to increase their skills and
income and standard of living over time. As businesses grow and expand, they can increase
their staffing levels and pay scales, enabling greater choice in employment for local workers.
CHOICE AND ACCESS TO HOUSING, SHOPS, SERVICES AND ENTERTAINMENT
A community is often valued for the selection and quality of its housing, shops,
entertainment, cultural venues and recreational opportunities. The combination of these
often defines the community as a place and just as importantly how it is perceived by both
residents and the outside world alike. Being able to meet basic household needs for goods
and services is fundamental to a livable community. Ensuring convenient access to these
goods and services forwards the goal of sustainability by making it more likely that shopping
will be done locally, limiting CO2 emissions. Supporting local businesses also increases the
revenues remaining in the community and can foster community character.
FISCAL BENEFITS
The current recession has brought into sharp focus the effect of reduced development levels
and deteriorating economic conditions on the community’s quality of life. As described in
the City Manager’s Budget Message from 2009-10, the overall goal for developing the
budget, “was to retain, to the degree possible, existing service levels. Nevertheless, impacts
to staff and services are unavoidable, given the magnitude of the current fiscal situation. The
recommended budget reflects reductions in every cost center in the General Fund and
contemplates exhausting General Fund reserves, [as well as providing] no General Fund
support for improvements to facilities or infrastructure. Neither of these conditions is
desirable; they reflect the difficult choices that must be made to balance expenditures with
diminishing resources.”
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The current fiscal situation directly relates to the dramatic reductions of revenue from
numerous sources. Sales tax revenues have fallen sharply since FY 07/08. Over the same
period of time, total revenues have also dropped markedly..
Cities in California have few options for raising the revenues they need to provide the level
of services expected by their residents. A major focus of most economic development
strategies is to ensure the continued health of the retail sector and commercial, industrial,
and residential property valuations.
The City’s economic base provides important benefits in terms of helping to fund municipal
services for its residents. Residential and non-residential land uses provide different levels of
local tax revenues and also exert differing demands for City services. The two main revenues
that cities depend on are property tax and sales tax. Residential uses tend to generate more
property taxes while commercial uses are the primary source of sales taxes.
While residential uses are the highest revenue generators, they also require the highest
expenditures for services. Comparatively, little service demand is created by non-residential
uses, although police protection of retail centers if often higher than for other business uses.
The net effect (see Figure A-1 below) is that most non-residential uses generate surplus
revenue over costs for the City’s General Fund, which the City uses to help pay for services
to the residential neighborhoods. Figure A-1 shows the average net revenue or cost for the
City General Fund per acre of development. This is typical of most California cities and
demonstrates one of the primary benefits of economic development. This illustrates the
benefit of sales tax producing businesses. In addition to retail and tourism sectors that hold
their own, Petaluma has a larger than average industrial sector. These types of businesses
contribute significant revenues toward the cost of services in the City.
FIGURE A-1
TYPICAL NET FISCAL IMPACT BY LAND USE
Net Revenue/Cost per Acre ($1000)
35.0
30.0
25.0
20.0
15.0
10.0
5.0
Service
Commercial
0.0
-5.00
Lodging
Industrial
Residential
Office
Retail
Business Park
-10.0
Source: ADE, Inc.
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Industrial development, in addition to the net fiscal benefit in terms of property and sales
taxes, and the number and quality of industrial jobs located in the City, provides a significant
positive economic impact. Workers’ wages are spent at local shops and restaurants and
provide a positive multiplier effect for the entire community. Businesses purchase supplies
from nearby businesses, further enhancing the multiplier effect.
As noted in the introduction to this economic strategic plan, the City prepared a fiscal
analysis of the proposed General Plan in 2008, which indicated that planned development as
proposed in the General Plan would pay for itself and create additional revenues to help pay
for community services for Petaluma residents. However, ensuring progress on economic
development goals is essential to achieve this outcome.
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APPENDIX B: ANALYSIS OF STRENGTHS,
WEAKNESSES, OPPORTUNITIES & THREATS
STRENGTHS (UNIQUE OR DISTINCTIVE ASSETS)
LOCATION
Central Location. In the early days of its history, Petaluma served as the collection and
distribution center for agricultural and industrial trade. Farm goods from throughout
Sonoma and Marin County went out of Petaluma via the river. Petaluma became the hub of
trade activity and many roadways connected Petaluma to Marin to the south and west, Santa
Rosa to the north, and interior farm regions to the east and south. This same system of
roadways will serve Petaluma’s growing tourism sector very well. It has already served to
bring dairy processing from Marin County to Petaluma.
Easy Access to Bay Area. Petaluma’s location helps with recruiting labor and for staying
connected to customers and employers and Bay Area network. Petaluma is a relatively easy
drive to most Bay Area destinations, even Silicon Valley. The advantage that Petaluma has is
the rural or small town feel, but with easy access to employment, cultural and knowledge
centers, and more affordable housing.
PETALUMA RIVER
The Petaluma River is an active commercial transportation corridor, still used by a handful
of companies to haul, by barge, heavy commodities, such as aggregates and, in the case of
Jerico Products, oyster shells. Hauling these
commodities by barge provides an alternative to
truck transportation, reducing automotive
congestion and wear on the roads. The amount of
commercial marine activity must meet a minimum
threshold for the Corp of Engineers to keep
dredging the river, which allows the barges to travel
up and down the river. Dredging also enables
leisure boating uses on the river which supports
tourism and purchases of goods and services within
Petaluma. There is also a row of industrial buildings that line the western side (the
downtown side) of the river, which support primarily food processing.
Along Water Street, which parallels the river in downtown, there are many restaurants and
bars with outside eating. The river is attractive as a place to have music and art festivals,
dining, entertaining and walking. For example, the Petaluma Yacht Club is a volunteer yacht
club that uses about 60 boat slips owned and maintained by the City. In addition, many local
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paddling clubs use the Petaluma River. Universities within the region use the river for rowing
racing and training.
The Petaluma River is fed by several creeks that drain the Sonoma Mountains and support a
marsh at the south end of Petaluma. The marsh is habitat for the protected salt marsh
harvest mouse and migratory birds. Flood prevention investments have begun, which are
anticipated to result in a decrease in the chance of flooding, changes to the FEMA 100-year
flood map and a reduction in the collective cost of flood insurance.
The future economic, social, cultural, and environmental health of the city is intertwined
with the river. A major policy objective articulated in the General Plan is to enhance
recreational and entertainment opportunities along the Petaluma River, through
implementation of the Petaluma River Access and Enhancement Plan, which acknowledges
the central and multi-faceted role that the river plays in Petaluma’s life.
QUALITY OF LIFE AND TOURISM ASSETS
Natural Habitat and Open Space Petaluma’s natural areas offer residents and visitors
alike opportunities for birdwatching, hiking, fishing, wildlife viewing and hunting. For
instance, the Petaluma River Marsh is the largest remaining natural tidal brackish marsh in
California, supporting primarily pickleweed, cordgrass, alkali bulrush, and saltgrass. The
upland habitat in the area supports deer, raccoons, jackrabbits, and foxes, among others.
Migratory bird species use the area most heavily during the fall and winter months, but many
can be found year round. Wetland bird species include willits, curlews, dowitchers, night
herons, and black-bellied plovers.4
Parks and open spaces comprise nearly 1,300 acres, or 18 percent of acreage within the
City’s Urban Growth Boundary (UGB). The Helen Putnam Regional Park, comprised of 256
acres, provides easily-accessible open space to Petaluma residents and visitors. In the future,
the recently acquired Tolay Lake Ranch, which includes the largest fresh-water lake in
Sonoma County will add over 1,700 acres to the total open space around Petaluma.
Small Town Feel. Despite its size of 56,000, Petaluma feels like a small town. The City is
considered by locals and visitors as friendly and welcoming.
Arts. There is a large arts community, including galleries, the Petaluma Arts Center,
Cinnabar Theatre, and The Mystic Theatre (both for live performances). The number of art
galleries in downtown is growing; at least two new art galleries opened in the last year. The
art galleries are instrumental in promoting the downtown and bringing attention to the
variety of events and amenities, including those related to Hispanic heritage.
Restaurants. Petaluma has an unusually large concentration of dine-in (white table cloth)
restaurants for a city its size, and opportunities for local food and beverage branding.
Department of Fish and Game, Petaluma Marsh Wildlife Area,
http://www.dfg.ca.gov/lands/wa/region3/petalumamarsh.html
4
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Architecture and Character. Petaluma is one of few communities in the Bay Area that
survived the great earthquake of 1906. Its downtown still retains a number of vintage pre
earthquake buildings within the mix of structures that collectively create a picturesque
community attractive to both local residents and out of town visitors.
Education. Petaluma has one high school district and a few elementary school districts.
The high schools differ in their ‘niches’. Petaluma HS offers industrial technology,
agricultural technology, woodworking, shop, etc. Casa Grande HS also offers specialized
courses. Residents support the schools with an education foundation and have passed
bonds, etc. to support them.
Filming Venue. Petaluma has served as the site for filming more than thirty motion
pictures since the late 1940’s, including films like American Graffiti and Peggy Sue Got Married.
More recently, Petaluma has been the site of the filming of hundreds of television
commercials. Petaluma’s rich film history provides interest for visitors and people interested
in film.
ACCESS TO TRAINED WORKFORCE
The Bay Area has an abundance of post-secondary education opportunities as well as world
renowned research universities (Berkeley and Stanford). Sonoma State University, a 4-year
university, is located in Rohnert Park, and Santa Rosa Junior College has a branch located in
Petaluma. The Junior College has specialized programs, one of which provides specialized
programs and skilled workers for Petaluma’s Telecom Valley. These specialized programs
include a Technology Academy which is a partnership with technology companies and also
provides private on-site training. Even though the telecom sector has declined, the City
retains a technically-skilled workforce, some of whom commute to jobs in the Bay Area but
are a local resource.
STRONG BASE OF MANUFACTURING
Food Processing
Food processing employs over 2,600 workers in Petaluma. The city has a concentration of
processors that produce organic or natural dairy foods, poultry, eggs, breads and cereals,
wine and beer. The cluster includes hundreds of suppliers, including poultry and dairy
farmers, seed distributors, and specialists. Major employers include Clover-Stornetta,
Petaluma Poultry, Cowgirl Creamery, Straus Dairy, Barbara’s Bakery, Alvarado Street Bakers,
and Lagunitas Brewery. Some offer tours and events which promote culinary and agritourism and strengthen Petaluma as a tourism destination.
Information Communications Technology (ICT)
The ICT cluster is comprised of telecommunications device manufacturers, related
electronic component manufacturers, software developers and related service providers. The
cluster employs over 2,300 workers in Petaluma. Major employers include Cyan and Calyx.
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Diversified Manufacturing
Diversified manufacturing includes manufacturers of recreational equipment (backpacks,
bicycle parts), biotech/medical research supplies, plastic components, metal parts and
machinery manufacturing, ready-mix concrete, asphalt, nutritional supplements, and more.
Major employers include Jerico Products, Protofab and Labcon.
THE SANTA ROSA AND PETALUMA AIRPORTS
The Charles M. Shultz Sonoma County Airport in Santa Rosa is a
commercial service airport that provides convenient access via
Horizon Air to/from Portland, Seattle, LAX and Las Vegas. The
airport master plan estimates that 400,000 passengers pass through the
airport annually. The Petaluma airport is a general aviation airport with
180 aircraft storage hangars and 130 tie down spaces and
approximately 60,000 take-offs and landings annually.
SONOMA MARIN RAIL TRANSIT (SMART)
There will be two SMART stations in Petaluma, one
at Lakeville Street between E. Washington and East
‘D’ streets, and the other at Corona Road and
McDowell Boulevard. SMART trains will have 28
stops per day in Petaluma, providing alternatives to
automotive transportation within Sonoma and Marin
Counties from Petaluma. The E. Washington station
is in the downtown area and could be a catalyst for re-development in the downtown as well
as the east bank of the Petaluma River. It could also have a positive impact on day travel to
Petaluma, facilitating it as a destination for tourism and business and as a “green” gateway to
the West County, and alleviate some of the traffic on Hwy 101. The Corona Road station is
primarily seen as a park and ride station in the near term. Commuters who work along the
North McDowell Boulevard corridor may stimulate demand for car sharing, bike sharing or
shuttles to the business parks and to the Junior College.
DEVELOPMENT TOOLS AND TRADITIONS
Petaluma has an extensive redevelopment area (approximately 2,965 acres) with a tax
increment cap of $800,000,000 and an outstanding indebtedness limit of $250,000,000.
Between FY06/07 and FY08/09, the Petaluma CDC (PCDC) had invested approximately
$14 million in circulation, landscaping and parking improvements and $4 million in public
facilities and infrastructure. As of June 30, 2009, the funds available for redevelopment
activities over the next three years is approximately $43 million (which includes $12 million
of additional bonding), less funds taken by the State. According to the Redevelopment
Implementation Plan Midterm Review, the PCDC anticipates investing about $12 million on
circulation, landscaping and parking improvements. Though the mid-term review estimated
there would be $14 million available for economic development, the loss of about $6 million
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to the State Educational Revenue Augmentation Fund (SERAF) has reduced the funds
available for economic development activities.
WEAKNESSES
STATE FINANCES
All communities in California have lost funds from their redevelopment budgets and general
funds to support state government programs, reducing local governments’ ability to maintain
levels of service in safety, transportation, education, recreation, public works, planning and
permit processing. In 2010, Petaluma paid approximately $5 million in redevelopment funds
to the state.
CITY FINANCES
The City of Petaluma’s revenues have dropped since 2007 and, as a result, the City has
reduced staffing. To prevent further staff layoffs, the City Council has authorized the
spending of city reserves, normally saved for catastrophic events. This puts the city at risk
should a flood, earthquake, fire or other catastrophic event occur that would both require
additional city funds and reduce revenues. Digging into reserves can also impact the City’s
bond rating causing it to pay higher interest rates on financing future capital improvements,
or maintaining existing infrastructure and public assets.
MOBILITY AND ACCESS
During commute hours, Hwy 101 congestion through Petaluma is particularly heavy.
Congestion is not only a problem for Petaluma residents commuting south to work in Marin
and San Francisco, but also for employees of Petaluma businesses coming from homes in
the north, including Santa Rosa, Windsor, Cloverdale and other areas where housing is more
affordable.
Also, there are a lack of connections between the east and west sides of Petaluma. Hwy 101,
the rail line and the Petaluma River divide Petaluma in half north to south. There are only
four corridors that cross the divide and these include:
ƒ
E. Washington Street
ƒ
Corona Road
ƒ
Lakeville Street
ƒ
Old Redwood Highway
The City is working on a cross-town connection and future interchange at Rainier Avenue.
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FIRE PROTECTION FOR HISTORIC BUILDINGS
Commercial use of historical buildings in the downtown is limited by the cost of required
code up-grades. This includes fire, seismic and other structural upgrades, electrical and
plumbing.
QUALITY OF LIFE
Parks—Limited availability of public park space, especially ball fields. There is a proposal to
build ball fields near the Petaluma airport, but the City does not yet have all the money it
needs for the project.
Schools—funding cuts have impacted class size and class offerings, as well as support
services, but this is true for public schools throughout California.
Housing—Petaluma is the southernmost city in Sonoma County, abutting Marin County to
the south. While housing prices are high relative to the rest of Sonoma County, they are
significantly lower than in Marin County. Housing prices have recently dropped resulting in
greater affordability.
BUSINESS CLIMATE
The City needs to promote the fact that it has changed its plan review and permit approval
process. Though the process was changed one year ago, there are still many brokers, realtors,
developers and business people who are unaware of the positive changes that have occurred.
Due to the lack of development activity, Petaluma reduced its planning staff. The City has
contracted with a planning firm to review all permit applications and development project
plans. The project reviews are handled on a cost-recovery basis.
VACANCY RATES
The high rate of office vacancies estimated at 40 percent is a challenge. This vacancy rate is
important for a number of reasons – 1) the amount of vacant square footage is very large
and will take considerable time to absorb, 2) its unlikely to be absorbed with office uses
alone – the city may need to modify zoning to allow other uses – e.g., hospitality,
institutional, etc. and 3) until existing office space is absorbed, building new offices as part of
a vertical or horizontal mixed use project outside the Downtown, where vacancy rates are
lower, is unlikely. While mixed use development in the Downtown may be a niche market
with some potential, it would likely further affect business park areas.
OPPORTUNITIES
AVAILABLE RETAIL, OFFICE AND INDUSTRIAL SPACE
The high vacancy rates provide opportunities for businesses that would have otherwise been
deterred from Petaluma real estate when rents were higher. High vacancy rates induce
landlords to lower their rents, increasing the ability to purchase commercial/industrial
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buildings/properties for lower rates. The city could use these lower rents as an opportunity
to be more strategic with its partners in taking advantage of this situation using options
(paying 1 or 2 percent of agreed upon price and working out a repositioning or
redevelopment strategy of a few key buildings or parcels).
HOUSING AFFORDABILITY
Housing prices in Petaluma have decreased to a point that makes it more possible for a
person making a “living wage” to afford a home.
FAIRGROUNDS
The Sonoma-Marin Fairgrounds lease runs out in 13 years, in 2023. This allows for planning
for additional, complementary uses that will enhance and capitalize on Petaluma’s existing
strengths.
TOURISM
A variety of opportunities exist to develop visitor services and amenities.
ƒ
Restaurants
ƒ
Artisan Foods and proximity to wineries
ƒ
Downtown
ƒ
Arts
ƒ
Heritage
ƒ
Nature/ecology
ƒ
Cultural, heritage, and eco-tourism
ƒ
Opportunity to increase supply of lodging. Silk Mill, Golden Eagle site, Chevron site
ƒ
River uses – boat house, shell races, and mini river tours
MEDICAL SERVICES
Currently there is an undersupply of medical services in Petaluma. People are either going
north to Santa Rosa or south into Marin County for medical care. The hospital is expanding
and the presence of the Hospital District creates an opportunity for future medical services
growth.
REDEVELOPMENT
The City of Petaluma has some bonding capacity through its Redevelopment Agency. This
bonding capacity could be used to facilitate the implementation of the Central Petaluma
Specific Plan as well as TOD development around the SMART station areas.
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THREATS
STATE FINANCES
The deterioration of state finances has resulted in the eroding of investment in key economic
infrastructure, including all levels of education, transportation, research and development,
housing, flood protection, water and power supply and others. Further deterioration of state
finances will increase pressure to raise local sales and TOT taxes, the only sources of revenue
in the control of local government. Further deterioration of state infrastructure projects
could make all of California a less desirable place for new business development relative to
other states that have continued to invest in their economic infrastructure.
COMPETITION
Nearby cities in Solano County, including Fairfield, Dixon, Vallejo and Benicia have more
aggressive economic development programs and have been successful in attracting new
firms to their communities. Their success is due to a combination of factors including more
affordable housing and commercial real estate, more pro-active branding and marketing of
their product, a faster and more predictable permit approval process and a community
college system that is very supportive of local business, especially biotech.
BUSINESS CLIMATE
A supportive business environment is important to the growth of local business. Perceptions
and mis-information about past difficulties obtaining development entitlements or building
permits, whether due to unclear requirements or lengthy review processes, have a significant
impact on the desirability of Petaluma to potential re-locating firms. There is a fragmented
business services delivery system making access to services and information a challenge.
Political challenges over growth that have been difficult to resolve are another challenge.
COMMERCIAL AND INDUSTRIAL VACANCY RATES
While high vacancy rates can be an opportunity for businesses to expand or re-locate to
Petaluma, they also have an undesirable effect on the entire community, but especially
nearby properties, in that they convey that the market is deteriorated and unfavorable for
investment activity. This has the insidious effect of feeding on itself and creating a
downward spiral. It is critical to fill these vacancies in the short term, even with less than
optimal tenants, if only to convey healthy economic activity.
There are fiscal impacts of empty office buildings as well. Fewer workers results in reduced
sales at local restaurants and gas stations. Vacancies impact the amount of property and sales
taxes collected. State income taxes are reduced as well which affects the amount of funding
that the state has available for services, such as education, health, welfare and infrastructure
investments. Filling these vacant spaces will require a comprehensive and integrated
economic development program.
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High vacancy rates in each of the three relevant categories (retail, office and industrial), is
not a recent phenomena. Much of the office and business park vacancy dates back almost a
decade due to a major industrial shift where certain types of high tech industries initially
locating in Petaluma moved away from the community. The information published by
Cassidy Turley suggests that vacancy rates in Sonoma County in the industrial category have
been over 10 percent for almost five years and were over 10 percent at the peak of the
economic boom in 2007 and early 2008. Current vacancy rates in industrial space as of the
fourth quarter of 2009 were approximately 15.4 percent in Petaluma, representing almost
800,000 square feet of vacant space out of an inventory of just over 5 million square feet.
With respect to office space, the situation is much worse. In Petaluma, the vacancy rate at
the end of 2009 was almost 35 percent, well above the county total of 29 percent. This
pattern has persisted for several years, since even in 2006, 2007 and 2008 the vacancy rate
was at or above 25 percent. A different source, Keegan & Coppin, puts the third quarter
vacancy in Petaluma at 35.2 percent without sublease vacancy and at over 41 percent with
sublease vacancy. This represents 1.3 million square feet out of a total inventory of 3.1
million. The same source, again for the third quarter of 2009, puts the vacancy rate for
industrial at 17.3 percent out of the inventory of 5.3 million.
Turning to retail, third quarter 2009 vacancy was 11.4 percent for the City of Petaluma
versus 9.2 percent for the whole county. In this instance, there was a vacancy of
approximately 300,000 square feet out of 2.6 million. Most of the vacancy has occurred in
older marginal space. It is interesting to note that there is almost 800,000 square feet of retail
projects in the development pipeline, including
notably Regency’s East Washington Place and
Merlone Geier’s Deer Creek Plaza. The
economic impact studies of these projects
suggest they will not compete directly with
existing retail centers.
However, retail vacancy will be very difficult to
cure insofar as there is a long term structural
contraction occurring in the amount of retail space needed to accommodate the same
volume of sales. The long process associated with the East Washington Place project, which
marks the first entry of certain big box retailers into the Petaluma market, may somewhat
mask this as Petaluma residents would be able to shop locally at stores that previously
required longer drives out of town. The recent economic crisis has masked other important
longer term trends as well. Industrial vacancy rates were high and growing in Petaluma for
some time.
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APPENDIX C: TARGET INDUSTRY ANALYSIS
RECENT EMPLOYMENT DYNAMICS
Between 2003 and 2008, Petaluma’s employment increased by less than one percent (please
see Table C-7).5 Employment growth was evident in several sectors, including metals and
machinery manufacturing, plastics manufacturing, green services, food and beverage
processing, tourism and hospitality, retail trade and education. There were also notable
decreases in employment as well. The Information and Communications Technology (ICT),
innovation services, and bio-medical manufacturing all experienced declines as did wholesale
trade.
The recession which started in the fourth quarter of 2008 and ended in the first quarter of
2010 had a significant effect on the national and global economy. To understand what the
impact of this recession had on the Sonoma County economy and, by inference, the
Petaluma economy, ADE analyzed county level data from the Employment Development
Department. Table C-1 below, indicates that, at the county level, that between 2008 and the
second quarter of 2010, employment decreased by 9.8 percent or slightly over 17,000 jobs.
Manufacturing lost another 2,800 jobs or about 12 percent of its 2008 total. Information
services lost 500 jobs, Retail lost 2,200 jobs and Leisure and Hospitality lost another 900
jobs. Education and Health services, however, gained 133 jobs. It can be safely assumed
then, that total employment in Petaluma decreased by about 5 to 15 percent since 2008.
5 This is based on the latest available employment data available at the city level from the California
Employment Development Department that disaggregates employment into 6-digit NAICS codes, a level of
detail required to conduct economic base and industry cluster analysis.
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TABLE C-1
SONOMA COUNTY EMPLOYMENT TREND BY INDUSTRY GROUP
Industry Group
Total, All Industries
Agriculture, Forestry, Fishing
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing & Utilities
Information
Financial Activities
Professional, Scientific & Technical Services
Management of Companies & Enterprises
Administrative & Support & Waste Services
Educational & Health Services
Leisure & Hospitality
Other Services
Federal Government
State & Local Government
2001
Empl
196,700
7,000
300
13,700
30,400
6,000
24,100
4,000
4,500
10,400
7,500
3,200
9,300
22,900
18,700
6,800
1,900
26,100
2008
Empl
192,000
5,800
200
12,800
22,000
7,700
23,000
4,400
2,800
8,500
12,500
1,900
8,500
24,200
21,000
6,400
1,700
28,700
2009
Empl
178,300
5,800
100
9,800
20,200
6,700
21,300
4,000
2,600
7,700
10,500
1,800
7,400
24,100
20,000
6,100
1,700
28,500
2010
Q2
Empl
174,933
5,900
100
8,433
19,600
6,467
20,733
3,933
2,300
7,400
10,033
1,800
7,400
24,333
20,067
6,467
2,100
27,867
2001
to
2010
Q2
Empl
Change
-21,767
-1,100
-200
-5,267
-10,800
467
-3,367
-67
-2,200
-3,000
2,533
-1,400
-1,900
1,433
1,367
-333
200
1,767
2008
to
2010
Q2
Empl
Change
-17,067
100
-100
-4,367
-2,400
-1,233
-2,267
-467
-500
-1,100
-2,467
-100
-1,100
133
-933
67
400
-833
2001
to
2010
Q2
Percent
Change
-12.4%
-18.6%
-200.0%
-62.5%
-55.1%
7.2%
-16.2%
-1.7%
-95.7%
-40.5%
25.2%
-77.8%
-25.7%
5.9%
6.8%
-5.2%
9.5%
6.3%
2008 to
2010
Q2
Percent
Change
-9.8%
1.7%
-100.0%
-51.8%
-12.2%
-19.1%
-10.9%
-11.9%
-21.7%
-14.9%
-24.6%
-5.6%
-14.9%
0.5%
-4.7%
1.0%
19.0%
-3.0%
Source: ADE, Inc., data from California EDD
Notes: Data for 2001 to 2009 represents seasonally adjusted annual averages. Data for 2010 only includes the average employment from
April to June, and is not seasonally adjusted.
STRUCTURE OF THE REGIONAL ECONOMY
Assessing Economic Roles
This section discusses industry sectors within the four county region of Marin, Napa, Solano,
and Sonoma Counties in order to more accurately assess the structure of the regional
economy and identify the roles specific industries play within the region. Identifying these
roles is important because many of Petaluma’s best economic growth and diversification
opportunities come first from those industries that have shown the best growth potential
elsewhere in the region.
Economic base theory is a generally accepted principle of economic development that
suggests that a region’s economic prosperity is a function of external demand for that
region’s products. The theory divides the economy into two sectors. The first is a basic (or
export) sector that includes all goods and services produced for non-local consumption. The
second is a non-basic (or local-serving) sector that includes all goods and services consumed
in the local market.
The theory assumes that the basic sector supports the non-basic sector by purchasing
production inputs and by paying its employees wages that are spent locally. Therefore,
greater demand for basic sector goods drives demand for the non-basic sector and the local
economy as a whole.
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To assess these sectors, ADE ranked the industries in the region on the basis of two key
economic indicators – job growth and employment concentration relative to the state. The
economic roles based on these indicators fall into one of four categories or “quadrants”,
which are described as follows:
Growing Economic Base Industries: These industries have shown recent job growth and
have an employment concentration greater than the state’s as a whole. They constitute the
strength of the economy and represent opportunities for growth in other areas such as
supplier industries.
Emerging Industries: These sectors have shown recent job growth, but still have relatively
low employment concentrations. These industries represent potential future growth
opportunities because they exhibit relatively fast employment growth relative to the state.
Industries in this category could be considered attractive business expansion and attraction
targets.
Declining Economic Base Industries: These industries continue to have a relatively high
concentration of employment, but have shown recent job losses. They represent the region’s
economic strength but have shown some recent vulnerability, and could be considered
business retention targets.
Declining Non-Base Industries: These industries have shown recent job losses and have
below average employment concentration. They do not have an especially notable regional
presence and do not have growth prospects as strong as the industries in the other
categories.
Employment concentration was determined using location quotient analysis. A location
quotient for a particular industry is simply a ratio that compares the percentage of
employment in a particular industry in a local economy (Napa, Marin, Solano, and Sonoma
Counties) to the percentage of employment in the same industry in a reference economy
(California). A location quotient greater than 1 indicates that the local share of employment
in an industry exceeds the state share. Conversely, if a location quotient is less than 1, the
local share of employment in an industry is less than the state share.
The top two quadrants list those industries with location quotients above 1 which are said to
have a high employment concentration. The bottom two quadrants list those industries with
low employment concentrations and location quotients less than 1.
In the right two quadrants, the growing industries are listed from highest employment gains
to lowest employment gains. In the left two quadrants, the non-growing industries are listed
from greatest decline to least decline.
There are some industries within the table listed in italics that denote relative rates of growth
or decline compared to the state as a whole. As mentioned above, industries listed on the
right-hand side-are those that are growing within the county. An industry in the right two
quadrants that is italicized indicates that that industry is growing more rapidly at the regional
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level than at the state level. That is: not only are there positive growth signals at the regionallevel, but that particular industry is more than keeping pace with statewide growth levels.
Similarly, the industries on the left-hand-side are declining within the region. Those listed in
italics on this side indicate that the rate of decline within the county is more severe than at a
state-level. This could mean either that the industry is declining at both a local and state-level
but declining faster at a local-level or that, at a state-level, the industry may actually be
experiencing positive rates of growth.
The results of the analysis at a 3-digit NAICS level are illustrated in the Table C-2 below.
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TABLE C-2
MARIN, NAPA, SOLANO, AND SONOMA COUNTIES ECONOMIC BASE TABLE, 2001-2008
GROWING INDUSTRIES
NON-GROWING INDUSTRIES
DECLINING ECONOMIC BASE INDUSTRIES
Concentrated (LQ>=1), and declining
111
339
238
524
441
453
621
623
444
442
624
Crop Production
Miscellaneous Manufacturing
Specialty Trade Contractors
Insurance Carriers and Related Activities
Motor Vehicle and Parts Dealers
Miscellaneous Store Retailers
Ambulatory Health Care Services
Nursing and Residential Care Facilities
Building Material and Garden Equipment and Supplies Dealers
Furniture and Home Furnishings Stores
Social Assistance
451
Sporting Goods, Hobby, Book, and Music Stores
321
333
327
447
236
112
445
Wood Product Manufacturing
Machinery Manufacturing
Nonmetallic Mineral Product Manufacturing
334
551
511
Gasoline Stations
Construction of Buildings
Animal Production
Food and Beverage Stores
DECLINING NON-BASE INDUSTRIES
Not concentrated (LQ<1), and declining
Computer and Electronic Product Manufacturing
Management of Companies and Enterprises
Publishing Industries (except Internet)
517
512
532
332
323
522
Telecommunications
Motion Picture and Sound Recording Industries
Rental and Leasing Services
Fabricated Metal Product Manufacturing
Printing and Related Support Activities
Credit Intermediation and Related Activities
446
314
523
Health and Personal Care Stores
Textile Product Mills
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
315
211
Apparel Manufacturing
Oil and Gas Extraction
533
322
Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)
Paper Manufacturing
324
483
Petroleum and Coal Products Manufacturing
Water Transportation
518
337
326
443
335
331
313
Data Processing, Hosting and Related Services
Furniture and Related Product Manufacturing
Plastics and Rubber Products Manufacturing
Electronics and Appliance Stores
Electrical Equipment, Appliance, and Component Manufacturing
622
GROWING ECONOMIC BASE INDUSTRIES
Concentrated (LQ>=1), and growing
Hospitals
311
Food Manufacturing
721
813
Accommodation
Religious, Grantmaking, Civic, Professional, and Similar Organizations
722
312
452
713
448
Food Services and Drinking Places
Beverage and Tobacco Product Manufacturing
General Merchandise Stores
Amusement, Gambling, and Recreation Industries
Clothing and Clothing Accessories Stores
325
212
454
213
237
114
487
Chemical Manufacturing
Mining (except Oil and Gas)
Nonstore Retailers
Support Activities for Mining
Heavy and Civil Engineering Construction
Fishing, Hunting and Trapping
Scenic and Sightseeing Transportation
541
EMERGING INDUSTRIES
Not concentrated (LQ<1), and growing
Professional, Scientific, and Technical Services
423
Merchant Wholesalers, Durable Goods
611
425
Educational Services
Wholesale Electronic Markets and Agents and Brokers
488
221
531
Support Activities for Transportation
Utilities
Real Estate
115
484
515
519
481
712
525
Support Activities for Agriculture and Forestry
Truck Transportation
Broadcasting (except Internet)
Other Information Services
Air Transportation
Museums, Historical Sites, and Similar Institutions
Funds, Trusts, and Other Financial Vehicles
113
336
486
316
Forestry and Logging
Transportation Equipment Manufacturing
Pipeline Transportation
Leather and Allied Product Manufacturing
424
711
HIGH
EMPLOYMENT
CONCENTRATION
Merchant Wholesalers, Nondurable Goods
Performing Arts, Spectator Sports, and Related Industries
Primary Metal Manufacturing
Textile Mills
LOW
EMPLOYMENT
CONCENTRATION
*Italics signal that industry employment is changing in size at a faster pace in the region than in the state overall.
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In addition to the omission of the public sector, several other sectors were intentionally excluded
from the table as they are predominantly locally-serving non-basic industries. Although a number of
these industries returned a location quotient above 1, it is unlikely that these products or services are
exported outside the county to meet external demand. The following is a complete list of these 3digit NAICS industries6:
ƒ
NAICS 485: Transit and Ground Passenger Transportation
ƒ
NAICS 491: Postal Service
ƒ
NAICS 492: Couriers and Messengers
ƒ
NAICS 493: Warehousing and Storage
ƒ
NAICS 561: Administrative and Support Services
ƒ
NAICS 562: Waste Management and Remediation Services
ƒ
NAICS 811: Repair and Maintenance
ƒ
NAICS 812: Personal and Laundry Services
ƒ
NAICS 814: Private Households
Growing Economic Base Industries
As noted above, the industries in the upper right quadrant represent the heart of the four county
economy, growing industries with comparatively higher concentrations.
TABLE C-3
INCREASING ECONOMIC BASE: NAPA, MARIN, SOLANO, AND SONOMA COUNTIES
INDUSTRY
Food Services and Drinking Places
Hospitals
Beverage and Tobacco Product Manufacturing
General Merchandise Stores
Accommodation
Amusement, Gambling, and Recreation Industries
Clothing and Clothing Accessories Stores
Food Manufacturing
Religious, Grantmaking, Civic, Professional, and Similar Organizations
Heavy and Civil Engineering Construction
Chemical Manufacturing
Nonstore Retailers
Mining (except Oil and Gas)
Support Activities for Mining
Scenic and Sightseeing Transportation
Fishing, Hunting and Trapping
2008
EMPLOYMENT
38,968
18,955
15,231
9,931
8,846
7,397
6,494
5,888
5,662
3,995
3,318
1,729
718
385
307
115
LQ
1.1071
1.5031
10.7084
1.0706
1.3101
1.3252
1.0795
1.2113
1.1650
1.5014
1.2961
1.3686
3.7869
1.0268
2.6402
5.9985
Source: ADE, Inc., IMPLAN
6 It should be noted that many tourism-related industries were included in the analysis as they are a special case whereby the good
being exported “tourism” is consumed locally.
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Emerging Economic Base Industries
Although the location quotients of the industries in this quadrant indicate a relative lack of
specialization, the positive growth rates may be an encouraging sign and help to focus business
attraction and expansion strategies.
TABLE C-4
EMERGING INDUSTRIES: NAPA, MARIN, SOLANO, AND SONOMA COUNTIES
INDUSTRY
Professional, Scientific, and Technical Services
Educational Services
Merchant Wholesalers, Durable Goods
Merchant Wholesalers, Nondurable Goods
Real Estate
Support Activities for Agriculture and Forestry
Truck Transportation
Wholesale Electronic Markets and Agents and Brokers
Utilities
Support Activities for Transportation
Performing Arts, Spectator Sports, and Related Industries
Broadcasting (except Internet)
Transportation Equipment Manufacturing
Museums, Historical Sites, and Similar Institutions
Other Information Services
Funds, Trusts, and Other Financial Vehicles
Air Transportation
Forestry and Logging
Leather and Allied Product Manufacturing
Pipeline Transportation
2008
EMPLOYMENT
29,645
8,049
8,014
6,079
5,890
3,921
3,161
2,076
1,674
1,635
1,364
935
676
344
299
287
200
62
59
21
LQ
0.8569
0.9231
0.7202
0.7482
0.9230
0.6646
0.8661
0.6187
0.8927
0.6050
0.6673
0.6100
0.1721
0.7159
0.2769
0.8137
0.1345
0.6769
0.4674
0.2216
Source: ADE, Inc., IMPLAN
Declining Economic Base Industries
These industries, while more concentrated at the county-level than at the state-level, are losing
traction in the region. Further, three industries listed in this quadrant are losing jobs faster within the
county than at a state-level (those listed in italics). As noted above, these industries may be excellent
candidates for business retention programs as a means of maintaining and strengthening the
county’s export base.
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TABLE C-5
DECLINING ECONOMIC BASE: NAPA, MARIN, SOLANO, AND SONOMA COUNTIES
INDUSTRY
Specialty Trade Contractors
Ambulatory Health Care Services
Food and Beverage Stores
Nursing and Residential Care Facilities
Construction of Buildings
Social Assistance
Crop Production
Insurance Carriers and Related Activities
Motor Vehicle and Parts Dealers
Building Material and Garden Equipment and Supplies Dealers
Miscellaneous Store Retailers
Miscellaneous Manufacturing
Sporting Goods, Hobby, Book, and Music Stores
Machinery Manufacturing
Nonmetallic Mineral Product Manufacturing
Furniture and Home Furnishings Stores
Gasoline Stations
Animal Production
Wood Product Manufacturing
2008
EMPLOYMENT
19,658
18,646
14,779
10,201
10,006
8,181
7,435
7,063
6,781
5,526
3,464
3,022
2,982
2,625
2,394
2,098
1,773
1,218
968
LQ
1.1945
1.0196
1.3687
1.3406
1.6765
1.2343
1.3269
1.0478
1.1063
1.4303
1.1409
1.0801
1.1510
1.0590
1.9353
1.1513
1.0564
1.2550
1.0897
Source: ADE, Inc., IMPLAN
Declining Non-Economic Base Industries
The industries in this quadrant are those for which the study region has no comparative advantage
evidenced by the consistent year-over-year decline in employment figures. Most notably, 12
manufacturing industries are listed in this quadrant accounting for 8,721 lost jobs in the region since
2001.
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TABLE C-6
DECLINING NON-BASIC INDUSTRIES: NAPA, MARIN, SOLANO, AND SONOMA COUNTIES
INDUSTRY
Credit Intermediation and Related Activities
Management of Companies and Enterprises
Computer and Electronic Product Manufacturing
Health and Personal Care Stores
Fabricated Metal Product Manufacturing
Electronics and Appliance Stores
Publishing Industries (except Internet)
Rental and Leasing Services
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Telecommunications
Motion Picture and Sound Recording Industries
Plastics and Rubber Products Manufacturing
Printing and Related Support Activities
Furniture and Related Product Manufacturing
Electrical Equipment, Appliance, and Component Manufacturing
Data Processing, Hosting and Related Services
Petroleum and Coal Products Manufacturing
Apparel Manufacturing
Textile Product Mills
Primary Metal Manufacturing
Textile Mills
Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)
Paper Manufacturing
Water Transportation
Oil and Gas Extraction
2008
EMPLOYMENT
6,600
5,626
3,529
3,261
2,614
2,359
2,327
2,118
1,983
1,862
1,374
1,317
1,147
834
637
603
505
243
145
115
80
73
60
22
2
LQ
0.7929
0.8534
0.3683
0.9480
0.5841
0.9354
0.7624
0.9119
0.6996
0.4941
0.2783
0.8034
0.6535
0.5697
0.6282
0.9586
0.9759
0.1072
0.3697
0.1502
0.2263
0.6861
0.0728
0.2203
0.0071
Source: ADE, Inc., IMPLAN
INDUSTRY CLUSTERS
INTRODUCTION TO CLUSTERS
Petaluma’s economy is comprised of businesses that provide goods and services to local, regional,
and in some cases, international customers. These businesses also provide employment
opportunities and wages for residents who then purchase goods and services in the local economy.
A useful tool for better understanding a region’s economy is through the clusters methodology.
Clustering is an analytical tool for understanding a regional economy. It is also a useful organizing
and engagement tool. As an analytical tool, the cluster methodology allows the analyst and their
clients to better understand the structure of their regional economy, to see the linkages between
industries. Further exploration through either interviews or input-output analysis, or both, allows for
an understanding of the buyer-supplier relationships between industries.
As an organizing and engagement tool, the cluster methodology allows firms within a cluster to
identify their common competitiveness issues, develop a strategic action plan, and collaborate to
jointly resolve those issues. Cluster organizations provide their member firms a voice in the
development of policies and programs related to workforce development, land use permitting,
infrastructure development, research and technology, and entrepreneurship support services.
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This analysis of economic growth opportunities is based on third-quarter 2009 employment data for
the City of Petaluma. Together, these clusters employ a total of 17,210 private sector workers, about
63 percent of total private sector employment in all industries that year (27,268).
The Figure below illustrates the structure of an industry cluster. Clusters are geographic
concentrations of firms that share common markets, buyers, suppliers, and talent. Firms within
clusters compete with each other in the same markets. Clusters include not only traded firms (that
export their product or service), but also firms that supply goods and services to these exporters.
The role of the public sector is to support the growth and success of cluster members through
investments in education, research and technology, infrastructure and regulation. For instance, in the
food and beverage cluster, the exporting firms would include the creameries that sell their cheeses in
other regions or to visitors from other regions. The creameries purchase equipment and supplies,
milk, culture, packaging supplies, water, and expert services. The public sector and private utilities
provide wastewater treatment, roadways, internet, water, telephone and talented workers.
FIGURE C-1
THE STRUCTURE OF INDUSTRY CLUSTERS
Outw ard
Oriented
Industries
Local Serving Industries
Technology
Human
Resources
Capital
Regulatory &
Tax Climate
Adv. Physical
Infrastructure
Quality of Life
Community Assets
The composition of each cluster, in terms of its member industries as defined by NAICS7 codes, is
based on an analysis of employment growth, employment concentration as measured by Location
Quotient8 (LQ) and an assessment of opportunities for growth both globally and locally.
NAICS, North American Industry Classification System
The Location Quotient is a tool for identifying a region’s specialization relative to other regions or nations. It is used to determine
which industries primarily export their goods, thereby generating wealth in the region. LQ is a measure of an industry’s employment
concentration. It is the ratio of a region’s employment in an industry (for instance food processing) as a share of total employment in
that region (in this case, Petaluma) divided by the ratio of the larger region’s employment in that industry (e.g. food processing) as a
share of total employment in that larger region (in this case, California). An LQ greater than 1 indicates that the study region (e.g.
Petaluma) more than meets the local need for that good or service and must be exporting excess goods or services outside the region.
7
8
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Seven industry clusters have been identified as economic growth opportunity areas. They include:
1. Construction and Green Services;
2. Diversified Manufacturing;
3. Food and Beverage Processing;
4. Health and Wellness;
5. Information and Communications Technology (ICT);
6. Innovation Services;
7. Tourism, Recreation and Hospitality.
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TABLE C-7
PETALUMA CLUSTER EMPLOYMENT, ESTABLISHMENTS, WAGES AND CONCENTRATION
27,268
17,210
2,353
849
2,587
692
284
331
145
3,398
2,891
508
2,608
3,103
2,311
1.0000
1.1434
1.2682
0.5931
1.2252
2.5476
1.2018
6.6747
0.5650
1.3980
1.3870
1.4641
1.8119
0.9883
0.8745
2003-2008
EMPLOYMENT AVG.
ANNUAL GROWTH
RATE
0.45%
-0.78%
-4.39%
-7.66%
-2.97%
1.63%
-6.41%
6.38%
-18.52%
0.06%
-0.86%
6.55%
0.73%
4.90%
-0.19%
929
2,364
1,554
94
3,298
1,159
1,134
0.8086
0.8627
0.7899
0.2409
0.9979
2.1907
0.8746
6.98%
0.64%
4.36%
1.72%
1.74%
3.12%
-3.08%
2008 Q3
EMPLOYMENT
Total Private Sector
Clusters Total
ICT
Innovation Services
Diversified Manufacturing
Metals & Machinery
Bio-Med
Plastics
Other Manufacturing
Construction & Green Services
Construction Services
Green Services
Food & Beverage Processing
Tourism, Recreation, & Hospitality
Health & Wellness
Non-Cluster Sectors
Wealth Management
Other Business Services
Personal Services
Art
Retail Trade
Education
Other Wholesale Trade
2008
LOCATION
QUOTIENT
2,628
1,363
109
133
170
25
12
6
14
411
370
41
190
192
158
4.75%
0.87%
-1.07%
1.58%
1.73%
0.82%
0.00%
3.71%
-7.79%
0.49%
-0.11%
7.17%
-1.02%
2.95%
1.87%
$303,958,920
$211,268,953
$51,483,385
$13,163,505
$36,618,183
$11,105,338
$5,005,164
$3,563,975
$1,521,861
$47,223,910
$39,829,428
$7,394,482
$24,682,131
$15,526,301
$22,571,538
2008
AVERAGE
ANNUAL
WAGE (1)
$44,588
$49,105
$87,507
$62,043
$56,626
$64,162
$70,413
$43,069
$41,982
$55,585
$55,115
$58,262
$37,851
$20,012
$39,068
121
162
554
23
240
55
113
8.90%
-0.84%
21.41%
1.84%
-0.17%
1.13%
3.75%
$13,974,914
$21,407,846
$10,419,672
$1,150,270
$24,624,901
$10,567,493
$15,421,845
$60,193
$36,223
$26,826
$48,948
$29,866
$36,461
$54,398
2008 Q3
ESTABLISHMENTS
2003-2008
ESTABLISHMENTS AVG.
ANNUAL GROWTH RATE
2008 Q3
PAYROLL
Source: ADE Inc., California Employment Development Department, IMPLAN
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CONSTRUCTION AND GREEN SERVICES
The Construction and Green Services Cluster includes firms that manufacture construction
materials and equipment, and the contractors that work with those materials in construction.
It also includes firms that manufacture the components of structures, such as windows,
doors, roof trusses and pipes. Green Services include firms that conduct environmental
consulting, recycling, remediation, waste treatment and servicing of HVAC systems and
manufacturers of HVAC systems.
As of 2008, there were 411 establishments9 in this cluster, which employed 3,398 workers.
This represents about 6.8 percent of regional cluster employment. Employment grew less
than one percent per year since 2003. Total payroll for 3rd quarter 2008 was $47 million with
an average annual wage of $55,585. Though employment increased by only 10, payroll
increased by 3.17 percent, meaning average wages have been increasing.
Employment in this cluster is fairly concentrated, with a Location Quotient (LQ) of 1.4,
meaning that Petaluma’s employment in this cluster is 40 percent more concentrated than in
the state as a whole.
DIVERSIFIED MANUFACTURING
Petaluma has a diverse base of non-food manufacturing. In all, there were 170 non-food
manufacturing establishments employing 2,587 workers in 2008. These establishments are
comprised of metals and machinery manufacturers (692 workers/25 establishments); BioMedical equipment and supplies manufacturers (284/12); Plastic components and supplies
(331/6) and other, including transportation and recreational equipment (145/14). Petaluma’s
employment in this cluster makes up more than 8 percent of all diversified manufacturing
employment in the 4-county region. Between 2003 and 2008 employment dropped by 420
jobs or nearly 3 percent per year on average. Manufacturing is highly concentrated in
Petaluma, relative to the State. In 2008, the LQ for this cluster was 1.22 meaning diversified
manufacturing employment is 20 percent more concentrated in Petaluma than the state as a
whole.
Total quarterly payroll is $ 36.6 million and the average annual wage is $56,626. Though
number of jobs decreased, payroll increased by nearly 2 percent annually.
FOOD AND BEVERAGE PROCESSING
The Food and Beverage cluster in Petaluma includes 190 establishments employing 2,608
workers in 2008. This cluster is comprised of 25 food processors employing 1,196 workers,
35 wholesalers employing 505 workers and 130 farms employing 907 workers.
The processing firms mostly manufacture dairy products and meats, mostly chicken. In
addition, there are firms that process wine and beer. Wholesalers include suppliers to both
9 An establishment, according to EDD is a single site that has workers on payroll. A firm may have more than one site in a
single city or jurisdiction. Establishments are the closest equivalent to firm that we have.
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the manufacturers and the farms. These include animal feed suppliers and food distributors.
For example some of the firms in this cluster are Clover-Stornetta, Petaluma Poultry,
Cowgirl Creamery, Petaluma Creamery and Straus Dairy.
Employment in this cluster is highly concentrated with an LQ of 1.8, meaning employment
in food and beverage processing is 80 percent more concentrated in Petaluma than in the
state as a whole. Most of the products of this cluster are exported out of the North Bay
region. Some are exported nationally. Petaluma has 6.4 percent of food and beverage
processing in the 4-county North Bay region. Employment in food and beverage processing
grew slightly less than one percent annually between 2003 and 2008, but payroll grew by
over 6 percent annually. Total annual payroll is about $99 million and the average wage for
this cluster is $38,000.
HEALTH AND WELLNESS
The Health and Wellness Cluster employs 2,311
workers in 158 establishments. This cluster is
comprised of the businesses that provide a full
array of medical, dental and other health services,
including offices of doctors, dentists,
chiropractors, physical therapists and other health
care providers, nursing facilities, senior care
facilities, specialty health care facilities and
hospitals. It also consists of their suppliers of equipment and other supplies, diagnostic
laboratories, and transportation. With an increasing emphasis on prevention, sports and
recreation clubs are also included. Employment remained flat between 2003 and 2008,
decreasing by only 22 jobs. However, payroll increased by 2.4 percent annually. The annual
payroll is $90.2 million and the average wage is $39,068.
While this is an important industry for Petaluma, employment is not as concentrated here as
in the rest of the state. The LQ for Health and Wellness is .87, meaning that employment is
less concentrated than in the state as a whole. This indicates that the provision of health care
services has not kept up with population growth and is a growth opportunity for Petaluma.
While Petaluma contains 6.5 percent of all jobs in the 4-county North Bay region, Petaluma
comprises only 4.5 percent of health and wellness employment in the region. The recent
ground-breaking for a major addition to the Petaluma Health Center will double the number
of exam rooms and patients. In 2009, the Center received $9 million in federal ARRA
stimulus funds, allowing it to renovate a recently purchased 53,000 square foot vacant
building. The Center will add 30 new health care providers and 90 new staff, adding to
Petaluma’s concentration in health care.
INFORMATION COMMUNICATIONS TECHNOLOGY
The Information Communications Technology (ICT) cluster employs 2,353 workers in 109
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establishments. This is a decline of 592 workers since 2003.
The ICT cluster consists of manufacturers of communications and navigational equipment
and electronic components, including audio and video equipment and semiconductors. It
also includes publishers and broadcasters, including software and internet publishers, and
computer system design and other information service providers. ICT is fairly concentrated
in Petaluma, with a current LQ of 1.2 meaning that ICT employment is 20 percent more
concentrated in Petaluma than in the state as a whole. Petaluma contains nearly 13 percent
of all North Bay employment in ICT.
Average annual payroll was $205.9 million and the average wage was $87,507. Since 2003,
payroll dropped by 4.4 percent annually.
INNOVATION SERVICES
Innovation Services consist of professional business service providers to other businesses.
These include professionals in the fields of law, industrial design, engineering, scientific
research, accounting and business management. In 2008, there were 133 establishments
employing 849 workers, a decline of 416 workers (one-third) since 2003.
Innovation Services is not as concentrated in Petaluma as other clusters. In 2008 the LQ was
.59, or only about 60 percent as concentrated in the state as a whole. In 2003, prior to
significant lay-offs, the LQ was higher, at 1.02. Petaluma is not a primary location for
innovation services as only 4.52 percent of the North Bay’s employment in this cluster is
located in Petaluma.
Total annual payroll is $ 52.6 million and the average wage is $62,043.
TOURISM, RECREATION AND HOSPITALITY
Tourism, Recreation and Hospitality is an important sector for Petaluma. This cluster
employed 3,103 workers in 192 establishments in 2008, increasing by almost 5 percent per
year. This cluster includes primarily bars and restaurants, hotels, transportation service
providers, and their suppliers, including linen supply.
Employment in this cluster is growing more concentrated. In 2008, the LQ was .98 up from
.85 in 2003. This could have a lot to do with the completion of the Sheraton Hotel. An LQ
below 1.0 indicates that Petaluma has potential to increase jobs in this cluster, possibly
through expansion of lodging facilities. Petaluma has 5.54 percent of North Bay employment
in this cluster.
Total annual payroll was $62.1 million in 2008, and the average wage was $20,012. This
cluster has the lowest average wage of all the clusters; employees are usually entry-level, parttime and seasonal. Despite the low wages, this cluster is important to the community for
other reasons, including the retail sales tax and transient occupancy taxes (TOT) generated
by restaurants and lodging facilities.
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ECONOMIC IMPACTS OF MANUFACTURING
Manufacturing has traditionally provided the bulk of median wage jobs in the U.S. The loss
of manufacturing jobs results in a decline in middle-income households as well as a decline
in the stability of the local and national economy.
Manufacturing makes up 15.2 percent of total employment and 20.4 percent of total payroll
in Petaluma. But this only tells half the story of the true impact of manufacturing on the
local economy. A business operation’s impacts are not limited to the activity that occurs onsite. In order to operate, a business initiates supplier relationships with other businesses.
Suppliers to manufacturing include capital equipment, business support services, inputs
(plastics, produce, metals, etc.), and repair services, among others. In addition, the workers,
through their wages, support economic activity through household spending.
The purpose of this analysis is to demonstrate the direct, indirect, and induced economic
impacts of manufacturing industries on the local economy.
METHODOLOGY
The analysis uses the IMPLAN3 input-output model to assess economic impacts, based on a
2008 dataset tailored to the three ZIP codes (94952, 94953, and 94954) in Petaluma. This
allowed ADE to analyze the impacts of Petaluma-based manufacturing operations on the
rest of the local economy.
The premise of an input-output model is to document direct impacts from a particular
business or industry sector, and estimate the potential economic effects that the direct
business activity has on other sectors. For example, business operations require purchases of
commodities and other supplier relationships with other businesses. In addition, employee
income will result in household purchases that increase the market potential for local-serving
businesses such as retailers and health care providers.
RESULTS
In general, the more supplies that establishments purchase locally, the greater their economic
impact on the local economy. This is borne out in the analysis. As seen in Table C-8, below,
food processing has the largest multiplier effect of all Petaluma-based industries.
For every 10 jobs in food manufacturing, there are an additional 30 jobs created within
supplier sectors such as farming, feed, chemicals, trucking, etc. In addition, the wages paid to
employees of food manufacturing firms and the employees of their suppliers are spent
locally for household goods and services creating an additional 51 jobs in those sectors.
Likewise, for every 10 jobs in the other manufacturing sectors, 14 jobs are created in the
businesses that these manufacturers purchase their supplies from and an additional 42 jobs
are created as a result of household purchases made by employees.
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The greater the amount of purchases made to local suppliers, the higher the employment
multiplier. For this reason, economic development programs tend to focus attraction efforts
on the suppliers to their existing manufacturers.
In contrast, 10 jobs in the retail sector provide only about 2 additional jobs in businesses
they purchase supplies from and 9 jobs in businesses that provide household goods and
services to their employees.
The difference between the employment multipliers for manufacturing and retail can be
explained by the tendency for manufacturers to purchase supplies locally, especially for food
processing, combined with their higher than average wages. On the other hand, retailers sell
items not made locally and tend to offer lower wages.
Retail employment multipliers could be increased by providing greater opportunities to sell
locally-made products at local stores. Again, the essential strategy here would be to promote
more small-scale manufacturing.
TABLE C-8
MULTIPLIER EFFECT BY INDUSTRY SECTOR, 2009
ADDITIONAL JOBS CREATED FOR EVERY 10 DIRECT JOBS
Industry Group
Agriculture
Food Manufacturing
Other Manufacturing
Wholesale Trade
Retail Trade
Services
Indirect
(B2B Purchases)
3.5
30.8
14.1
4.8
1.9
3.6
Induced
(Household Purchases)
10.6
51.4
42.1
20.9
9.2
14.0
Source: Data, IMPLAN3; Analysis by ADE
Food processing in Petaluma has not only the largest employment impacts, but also the
largest effect on labor income. Table C-9, below, tabulates the total labor income effect by
industry sector. The direct labor income for ten food manufacturing jobs is $635 thousand.
The indirect labor income effect of these ten food processing workers is over $1.4 million.
This effect is relatively large because purchases are made from local suppliers. The induced
effect, made through household purchases of food processing and supplier workers is over
$2.2 million. The total labor income effect of 10 food processing workers is $4.3 million.
The total labor income effect of ten workers in other manufacturing is $4.1 million, slightly
less than for food manufacturing due primarily to the larger amount of supplies purchased
from outside of Petaluma.
For retail trade the total labor income effect is much lower, at $933 thousand. This is a result
of two major factors, the lower wages in retail and the larger amount of supplies (goods that
are sold) imported from outside the region.
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TABLE C-9
LABOR INCOME EFFECT BY INDUSTRY SECTOR, PETALUMA, 2009
LABOR INCOME FOR EVERY 10 DIRECT JOBS
Industry Group
Agriculture
Food Manufacturing
Other Manufacturing
Wholesale Trade
Retail Trade
Services
Labor Income Effect for Every 10 Jobs
Indirect
Induced
Direct
(B2B Purchases) (Household Purchases)
$337,937
$170,816
$564,650
$635,838
$1,487,489
$2,254,688
$980,050
$905,555
$2,242,174
$738,068
$257,479
$418,045
$348,828
$97,590
$486,788
$474,556
$186,556
$744,970
Source: Data, IMPLAN3; Analysis by ADE
Table C-10, below, tabulates the total output effect on the local economy for every 10
workers, by sector. For every ten workers in food processing, output (total output of ten
employees) is $6.1 million. The effect of making purchases locally increases output by
another $5 million, which accounts for output of those supplier businesses. In addition, the
household purchases made by food processing workers as well as the employees of suppliers
to food processors increases output by another $7.4 million. Total output from food
processing activities in Petaluma equal $18.6 million.
Likewise, for all other manufacturing, direct output of 10 manufacturing workers is $4.6
million. For every 10 manufacturing workers, there is another $3.2 million in output
generated by purchases from local suppliers and $6.1 million in output generated through
household purchases. The total output impact for every 10 manufacturing workers is $13.9
million.
In contrast to the output effects of manufacturing, retail trade has much less of a local
economic impact10. The direct output of 10 retail workers is $833 thousand. Since the
multiplier effect of retail activity is relatively low, the indirect effect through purchases for
supplies is only $281 thousand. Likewise the induced effect of household purchases made by
retail workers and the employees of retail suppliers is $1.3 million. The total output impact
of 10 retail workers is about $2.5 million.
10
Not accounting for sales tax revenue to the City and County.
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TABLE C-10
OUTPUT EFFECT BY INDUSTRY SECTOR, PETALUMA, 2009
OUTPUT FOR EVERY 10 DIRECT JOBS
Industry Group
Agriculture
Food Manufacturing
Other Manufacturing
Wholesale Trade
Retail Trade
Services
Direct
$1,006,250
$6,152,803
$4,628,526
$1,890,242
$863,359
$1,330,315
Output Effect for Every 10 Jobs
Indirect
Induced
(B2B Purchases) (Household Purchases)
$567,910
$1,534,274
$5,044,284
$7,420,408
$3,204,710
$6,072,087
$746,990
$3,008,359
$281,352
$1,323,073
$550,391
$2,023,369
Source: Data, IMPLAN3; Analysis by ADE
THE ECONOMIC IMPACT OF MANUFACTURING: DEFINITIONS
This economic impact analysis works off the premise that a business operation’s impacts are
not limited to the activity that occurs on-site. In order to operate, a business needs to initiate
supplier relationships with other businesses. Suppliers to manufacturing include capital
equipment, business support services, and repair services, among others. In addition, the
workers support economic activity through household spending. A fuller documentation of
how a business economically impacts a geographic area needs to account for these supplier
relationships and household spending by estimating their economic multipliers.
This analysis calculates the multiplier impacts based on three economic measures –
employment, industry output, and employee compensation. These measures are defined as
follows:
ƒ
Employment indicates the number of jobs in manufacturing, and elsewhere in
Petaluma and Sonoma County as a result of manufacturing operations.
ƒ
Industry output represents the value of all economic activity being analyzed. This
activity includes all commodity inputs, labor income, property income, and other
value added components. Output also includes the value of commodities produced
by supplier businesses and demand created by local workers.
ƒ
Employee compensation represents the income generated through payroll.
The multipliers include the direct, indirect (B2B), and induced (Household Purchases)
impacts. These multiplier descriptions are summarized below.
ƒ
Direct Impacts represent the jobs and other economic impacts that are directly
generated through manufacturers.
ƒ
Indirect (B2B) Impacts represent the jobs and other economic effects that are
generated elsewhere in Petaluma and Sonoma County as a result of supplier
purchases made by these manufacturers. Suppliers would include any vendor of
consumables, durable goods, and services.
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ƒ
76
Induced (Household Purchases) Impacts represent the economic effects that are
generated through household purchases made in Petaluma and Sonoma County as a
result of employee spending. These induced impacts most typically occur in retail
and other local-serving industry categories such as personal services, education, and
health care.
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APPENDIX D: RETAIL ANALYSIS
The retail market analysis in this section estimates the local demand for retail goods, and
compares this to the sales patterns by the types of retail stores represented in Petaluma. This
information provides a baseline estimate of how well the local retail base currently attracts
local and regional retail spending. It identifies which store categories constitute Petaluma’s
strongest retail shopping attractors, and which categories have shortcomings that can
potentially be addressed with new retail store attraction. The results of the retail analysis
indicate that Petaluma is a significant retail center that attracts spending from throughout the
region, but has some shortcomings. In addition, some shopping areas have been heavily
impacted by the recession, in addition to competition from shopping areas in surrounding
communities.
Petaluma’s historic strengths have been with its downtown district, auto sales, and the
Petaluma Village Premium Outlets. Petaluma’s location draws from the above average
income of local residents, as well as the presence of employment centers in Petaluma and the
regional tourism economy in Sonoma County. In particular, Petaluma has been able to
establish a strong presence with locally oriented retail stores such as grocery stores.
While Petaluma has maintained success with specific regional spending niches, it has
numerous gaps, particularly with electronics/appliance stores and home furnishings types of
stores, categories in which neighboring communities have a much stronger presence. The
approved Regency project will address existing gaps in the general merchandise category.
Generally, overcoming shortcomings with local-serving retail stores is easier than attracting
regional spending.
Over the past decade, Petaluma had maintained its year-to-year retail sales on a real dollar
basis (i.e., inflation-adjusted). However, 2008 and 2009 saw significant decreases in
Petaluma’s overall retail sales. Much of this was driven by the recession, which had a
particularly significant impact on the automobile sector, a category that has been one of
Petaluma’s major retail strengths.
Even though regional retail has served as a major source for jobs and sales tax revenue for
Petaluma, there are challenges that should be addressed in order for the City to retain its
advantageous position and capitalize on new opportunities. The economic climate for retail
is complicated by the recession, which has had an impact across the entire retail sector, but
has impacted specific categories more than others. There are also ongoing structural changes
in retail demand that are anticipated to reduce or change the numbers and types of stores
that are needed in the future.
Petaluma’s strength with its local serving shopping areas has insulated the community from a
more precipitous sales decline, but the community’s dependence on automobile sales has led
to an overall retail sales decline. Even in better economic times, regional retail is a difficult
advantage to maintain because neighboring communities will inevitably try to recapture the
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spending that leaves their communities. This analysis will provide a background context
from which discussion of planning initiatives can begin.
1.
RETAIL MARKET ANALYSIS OVERVIEW
This retail market analysis consists of two main parts: an estimate of household retail
spending and a comparison of overall spending potential and sales by Petaluma retail
establishments.
The household retail spending totals are calculated from an analytical model developed by
ADE. This model estimates spending for 40 different store types and 100 product
categories. The taxable sales data is an annual total listed by retail category. The businesses
listed in the analysis encompass all of the retail businesses operating in the City of Petaluma.
The retail sales data comes from the California State Board of Equalization sales tax
allocation records, and the data was audited by MuniServices. Because certain retail items,
such as food and prescription drugs, are not taxable, the analysis includes a conversion that
calculates nontaxable sales.11
As described later in this section, retail leakage represents the gap between local market
demand (which includes household spending by Petaluma residents, and additional retail
spending by visitors and commuters) and retail sales by local retail establishments. This
leakage represents an existing shortfall, as well as an opportunity for both retail expansion
and possible attraction.
2.
PETALUMA’S RETAIL SETTING
Petaluma has a very healthy and diverse base of retail stores, with strong regional capture
across many retail sectors such as apparel stores, specialty retail, and automotive categories.
The major economic engine driving Petaluma’s retail economy is the automobile dealerships,
which accounts for the largest portion of retail sales among the city’s retail categories and
captures sales well beyond the city limits. In addition, Petaluma has a daily influx of
commuters who provide further market support for local retail stores, as well as a large
number of out-of-town visitors that come to Petaluma annually.
According to the California Department of Finance, the City of Petaluma has a population
of about 57,700 residents, with about 21,700 households. The estimated annual income for
Petaluma households is approximately $93,000.12
The 2000 Census identified a commute pattern for Petaluma showing that about 38 percent
of residents also work in Petaluma. The total labor force in Petaluma is approximately 29,200
workers, which means that over 18,000 of them commute out of the city for work.
Concurrently, Petaluma has over 32,400 jobs, which equates to a daily influx of more than
21,400 workers who commute to Petaluma from elsewhere.
The data provided to ADE did not include the sales data for individual businesses. All data reporting was done at the business category
level.
12 The retail analysis uses the income distribution from the 2000 Census, adjusted to additional income growth data from the Association of
Bay Area Governments (ABAG).
11
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TABLE D-1
PETALUMA COMMUTE PATTERN
Commute Pattern
Petaluma Labor Force
Petaluma Local Commute Rate (2000)
Petaluma Jobs
Estimated Local Workers
Estimated In-Commuters
29,200
37.8%
32,410
11,003
21,407
Source: ADE, Inc.; data from U.S. Census, California EDD
LMID, and ABAG.
3.
REGIONAL COMPETITION
Petaluma is situated in a highly competitive retail market in which surrounding communities
have developed strong concentrations of competing retail centers. Petaluma’s regional
advantage has been with its historic downtown, where sales have held up very well during
the current economic downturn, its community shopping centers, its automobile dealerships,
and the Petaluma Village Premium Outlets. These are retail niches where Petaluma has
clearly established a regional presence, and attracts spending from outside of the community.
Maintaining these regional advantages is key to sustaining the sales tax revenue that the city
has received for many years. However, competition from neighboring communities and
other regional attractions present significant impediments if the community wants to expand
on its existing retail base.
REGIONAL MALLS
Petaluma does not have a regional mall within the city
limits. Even though mall-based retailing has been in
decline since the 1990s, they still represent significant
commercial assets that communities can use to continue
attracting shopping dollars from throughout a given
region. Petaluma’s Village Premium Outlets has numerous specialty and apparel stores that
ordinarily fit in with a mall-based configuration. However, the discount orientation of the
outlets makes it a more unique retail offering, and a competitive advantage for Petaluma. In
effect, the outlet center serves many of the same functions as a mall, but it lacks the large
anchor stores and entertainment and dining options that malls typically have.
The most immediate mall-based competition for Petaluma is the two regional malls in Santa
Rosa. Santa Rosa Plaza is located adjacent to the downtown area and contains nearly 700,000
square feet and three anchor stores, one of which is currently vacant. That mall appears to
be in better shape than the older Coddingtown Mall, which is a 964,000 square foot center
with four anchor stores, two of which are currently vacant.
To the south, the closest mall is the 741,000 square foot Northgate Mall in San Rafael.
Another major mall is the Village at Corte Madera, which is relatively small at 430,400 square
feet, but has more of a high end selection of stores.
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AUTOMOBILE DEALERSHIPS
Petaluma has a concentration of automobile dealerships adjacent to Highway 101. The
Petaluma Auto Plaza fits the modern prototype of several dealerships concentrated together
into a highway-oriented auto mall. The Petaluma Auto Plaza is a significant source of
regional sales and exceeds local demand, which indicates a high degree of success at drawing
from neighboring communities. The City is planning an extension of Auto Center Drive to
connect to Old Redwood Highway, which will create better access to existing and additional
vacant sites to support expansion of the Auto Plaza.
The most significant regional competition comes from comparable auto mall developments
in Santa Rosa and Novato.
POWER CENTERS
In the regional retail market, Petaluma faces significant competition from surrounding
communities that have developed large-scale “power center” developments, which are
anchored by large-scale discount retailers. Even though the community has a concentration
of local-serving shopping centers, most of these centers do not have the types of anchor
tenants that will attract shoppers at a regional level. The recently developed Redwood
Gateway center, with Kohl’s department store serving as the anchor, is the closest that
Petaluma has to a power center development.
Power centers became the dominant retail development prototype during the 1990s, and
have led to a significant decline in retail market share for traditional mall-based retailers. This
type of retail center has entailed both new development, as well as renovations of aging
shopping centers, but it generally relies on large land tracts located close to freeway exits.
Petaluma’s most formidable competition comes from the Wal-Mart Plaza center and the
Costco development in neighboring Rohnert Park. These developments are anchored by
stores that are not represented in Petaluma, which leads to retail leakage. The other
significant competitors include the 590,000 square foot Vintage Oaks power center in
Novato, and the numerous power center developments lining Highway 101 in Santa Rosa
and San Rafael.
4.
LOCAL RETAIL SPENDING
The local retail market spending for Petaluma totals approximately $747 million. This market
consists of Petaluma households and out-of-town visitors to Petaluma.13
LOCAL HOUSEHOLD SPENDING
Based on data from ADE’s retail demand model, the estimated annual retail spending by the
approximately 21,700 households in Petaluma totals about $573 million, as shown in Table
13 The retail analysis also considered commuter spending. However, because Petaluma does not have a large net influx of
commuters, relative to the number of local residents who commute to jobs outside of Petaluma, the commuter spending is
not included in the local retail spending.
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D-2. It should be noted that not all of this spending occurs in Petaluma because neighboring
communities might provide retail offerings not available locally, and because many local
residents commute to jobs outside of Petaluma. This commute pattern indicates that at least
some portion of household spending will likely continue to leave Petaluma.
Household spending among Petaluma residents is distributed across the full range of retail
store categories. The largest retail store spending categories are department/discount stores,
new car dealers, restaurants/eating places, gasoline service stations, and grocery stores. Each
of these retail store categories accounts for over $50 million in household spending.
TABLE D-2
LOCAL MARKET RETAIL SPENDING DEMAND, 2009
Retail Group
Total
Apparel Store Group
Women's Apparel
Men's Apparel
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores
Other General Merchandise
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists
Photographic Equipment
Records & Music
Books & Stationery
Office Supplies/Computer Equipment
Jewelry
Misc. Specialty Retail
Food, Eating & Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials & Home
Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Nurseries & Garden Supply Stores
Lumber & Other Building Materials
Home Centers and Hardware Stores
Paint & Wallpaper
Automotive Group
New Cars & RVs
Used Car Dealers
Gasoline Service Stations
Mobile Homes & Trailers
Auto Parts & Accessories
Other Vehicles
Household
Spending
$573,383,898
$25,610,747
$6,889,931
$1,871,303
$11,956,565
$4,892,947
$106,723,470
$52,698,266
$31,070,446
$22,954,757
$40,200,918
$2,384,482
$5,256,760
$1,030,635
$531,569
$2,162,873
$5,356,135
$5,949,958
$4,060,065
$13,468,441
$149,243,430
$83,333,421
$2,369,459
$4,094,951
$59,445,599
Visitor Spending
$72,876,551
$9,370,389
$2,915,713
$4,664
$5,266,375
$1,183,637
$8,677,870
$3,651,328
$0
$5,026,542
$9,901,815
$745,237
$858,550
$109,434
$41,961
$168,872
$793,482
$934,292
$220,713
$6,029,274
$39,646,246
$4,782,689
$90,290
$59,221
$34,714,046
Total Retail
Demand
$646,260,449
$34,981,135
$9,805,644
$1,875,967
$17,222,940
$6,076,584
$115,401,340
$56,349,595
$31,070,446
$27,981,299
$50,102,733
$3,129,718
$6,115,309
$1,140,070
$573,531
$2,331,745
$6,149,617
$6,884,250
$4,280,778
$19,497,715
$188,889,677
$88,116,111
$2,459,749
$4,154,172
$94,159,646
$64,029,162
$18,933,651
$12,289,562
$1,281,806
$6,035,375
$15,627,668
$9,042,955
$818,145
$187,576,172
$104,783,792
$7,704,605
$64,550,111
$49,505
$6,207,774
$4,280,385
$166,269
$0
$0
$166,269
$0
$0
$0
$0
$5,113,961
$0
$0
$5,113,961
$0
$0
$0
$64,195,431
$18,933,651
$12,289,562
$1,448,075
$6,035,375
$15,627,668
$9,042,955
$818,145
$192,690,133
$104,783,792
$7,704,605
$69,664,073
$49,505
$6,207,774
$4,280,385
Source: ADE, Inc., data from California State Board of Equalization, MuniServices LLC, U.S. Census Bureau,
California Department of Finance, California EDD, Dean Runyan Associates, International Council of Shopping
Centers, UW-Extension, and U.S. Bureau of Labor Statistics.
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VISITOR SPENDING
Sonoma County’s estimated visitor spending across all expenditure categories for 2007
totaled approximately $1.3 billion, as shown in Table D-3.14 This visitor spending includes
overnight accommodations, transportation, recreation, entertainment, as well as retail
spending. More than half of the countywide visitor spending goes towards retail stores (retail
stores, food stores, food service, and ground transportation/fuel).
TABLE D-3
VISITOR SPENDING, SONOMA COUNTY AND PETALUMA, 2007
Visitor Spending by Commodity
Total
Accommodations
Food Service
Food Stores
Ground Trans and Motor Fuel
Arts, Entertainment, Recreation
Other Retail Sales
Sonoma County
$1,298,500,000
$239,600,000
$312,500,000
$43,500,000
$201,400,000
$245,800,000
$255,800,000
Petaluma (Estimate)
$101,636,116
$17,061,988
$37,041,900
$5,156,232
$6,112,485
$5,942,493
$30,321,018
Source: ADE, Inc., data from Dean Runyan Associates, California Board of Equalization, and
U.S. Economic Census.
Based on the city’s share of the countywide transient occupancy tax and taxable retail sales
receipts, the estimated annual visitor spending that occurs in Petaluma totaled approximately
$102 million in 2007.15
Adjusting the data to 2009, the estimated visitor spending impact on the retail sectors totals
about $73 million.16 Among the individual retail store categories, restaurants are by far the
largest beneficiaries of visitor spending, with about $35 million in retail demand generated by
out-of-town visitors.
5.
PETALUMA SHOPPING DISTRICTS
The shopping districts in Petaluma each fill a distinct retail niche, and differ in the types of
retail stores that they offer.17 The retail sales in Petaluma are spread throughout the City,
with no single district dominating the sales totals. Washington/McDowell and Old Redwood
Highway have the largest concentration of retail sales.
The sales trends shown in Table D-4 also illustrate the effect that the recession has had on
retail sales in Petaluma, as every shopping district showed a significant decline in 2009, with
Dean Runyan Associates; Travel Impacts by County; 2008.
The countywide visitor spending data separates the spending by visitors requiring overnight accommodations from other
visitors. Petaluma’s spending by overnight visitors was based on the city’s share of countywide transient occupancy tax
(TOT) receipts. Spending by other visitors was based on the city’s share of countywide taxable retail sales.
16 At the time of the analysis, the latest available visitor spending data was for 2007. The estimate for 2009 visitor spending
assumed that the retail spending patterns would approximate the retail sales trend for Petaluma that occurred between 2007
and 2009.
17 Geographic definitions for each shopping district were defined based on information in the sales tax audit recorded
provided by MuniServices LLC.
14
15
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most districts also losing ground compared to a decade earlier in real dollar terms.18 Old
Redwood Highway, which primarily consists of automobile dealership sales, has lost nearly
half of the sales that it generated five years earlier in 2004. These losses constitute the
majority of the sales that Petaluma as a whole lost during this period.
TABLE D-4
INFLATION-ADJUSTED RETAIL SALES TRENDS BY PETALUMA SHOPPING DISTRICT,
1999 TO 2009
Area
Petaluma Retail Sales
Downtown
Factory Outlet Center
Lakeville Highway
Old Redwood Highway
Petaluma Boulevard North
Petaluma Boulevard South
Washington McDowell
Balance of Petaluma
1999 Retail
Sales
$1,005,553,315
$67,653,250
$55,738,361
$92,046,831
$269,789,083
$84,906,645
$16,892,751
$140,703,936
$277,822,457
2004 Retail
Sales
$1,082,265,763
$61,059,389
$48,645,381
$88,920,408
$312,288,035
$87,804,655
$18,009,746
$163,985,610
$301,552,540
2008 Retail
Sales
$894,526,105
$64,170,464
$52,136,448
$77,776,593
$186,722,986
$56,235,389
$16,549,874
$161,412,282
$279,522,069
2009 Retail
Sales*
$806,827,260
$61,035,607
$52,793,682
$67,620,945
$157,836,527
$49,642,888
$15,824,462
$149,148,743
$252,924,407
Percent
of Total
100.0%
7.6%
6.5%
8.4%
19.6%
6.2%
2.0%
18.5%
31.3%
Source: ADE, Inc., data from Board of Equalization, MuniServices LLC, and U.S. Bureau of Labor Statistics.
Notes: All figures are adjusted for inflation using the Consumer Price Index, and include an adjustment that estimates sales
from nontaxable items.
Retail sales do not include business-to-business categories, part-time businesses, and service establishments.
Because data for the 4th quarter was not available at the time of the analysis, 2009 retail sales include the period between the 4th
quarter of 2008 and the 3rd quarter of 2009.
DOWNTOWN PETALUMA
Petaluma’s historic downtown is a primary
visitor attraction, and in 2009, retail stores in
the downtown area generated about $61
million. This represents about a five percent
sales decline from 2008, and a larger decline
from the 1999 sales levels. However, the overall
trends for downtown indicate that despite the
recession, the area has held up relatively well,
indicating continued patronage from local
residents and visitors.
Downtown is primarily a destination for dining, food stores, and specialty retail. As the
center of the community’s emerging arts cluster, store types such as art galleries, bars and
entertainment venues, and antique stores show up in the retail sales data. The dominant
retail categories in downtown Petaluma are listed below.
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Eating places
Grocery stores
Auto parts
Because data for the 4th quarter of 2009 was not available at the time of the analysis, 2009 retail sales cover the period
between the 4th quarter of 2008 and the 3rd quarter of 2009.
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Books and stationery
Miscellaneous specialty retail
Used merchandise
Hardware stores and home centers
FACTORY OUTLET CENTER
Petaluma’s Village Premium Outlets is one of its more visible retail centers along Highway
101, and one of the few shopping districts in Petaluma that primarily serves a regional
consumer base. The outlet center in 2009 generated retail sales of about $53 million, and
actually increased its sales compared to 2008. During recessionary conditions, the outlet
center’s discount orientation probably helps the center maintain its sales levels.
The Petaluma Village Premium Outlets is dominated by apparel stores and specialty retail.
Apparel stores alone generate about 77 percent of the outlet center’s overall sales. The
dominant retail categories in the Petaluma Village Premium Outlets are listed below.
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Family clothing
Women’s apparel
Shoe stores
Miscellaneous specialty retail
Department stores
LAKEVILLE HIGHWAY
The commercial area along Lakeville Highway roughly east of Lindburgh Lane generated a
retail sales total of about $67 million of retail sales in 2009. The recession has had a
significant impact on the sales totals, as it represents a loss of more than $10 million
compared to 2008 and more than a $20 million decline in sales since 2004. This district’s
sales are focused almost entirely on the retail categories listed below. During this time, the
Yardbirds/Home Depot store closed, affecting building material sales in this area.
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Grocery stores
Eating places
Gasoline service stations
Lumber/building materials
OLD REDWOOD HIGHWAY
Old Redwood Highway is a largely industrial area with few retail stores. However, it is
Petaluma’s highest volume generator of retail sales because this district includes Petaluma
Auto Plaza, which has most of the city’s automobile dealerships. Consequently, the recession
has hit this shopping district harder than any other area in Petaluma. The 2009 retail sales in
the Old Redwood Highway district totaled $158 million, which is roughly half the $312
million in retail sales that the area generated in 2004.
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Automobile dealership sales alone accounted for 82 percent of the total retail sales in this
district. Other retail sales categories with significant sales in this district include gasoline
service stations, lumber/building materials, and miscellaneous specialty retail stores.
PETALUMA BOULEVARD NORTH
This district covers the area along and immediately adjacent to Petaluma Boulevard north of
the downtown area. Its retail sales totaled about $50 million in 2009, which represents a
decline of nearly $38 million from the 2004 retail sales total. The categories that dominate
this area’s retail sales are listed below. The closure of Hansel RV sales affected this area
significantly.
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Grocery stores
Eating places
Automobile dealerships
Other vehicles
PETALUMA BOULEVARD SOUTH
The commercial area along Petaluma Boulevard south of the downtown district generated
about $16 million in retail sales during 2009. This represents a slight decline from the 2008
retail sales, and a decline of about $2 million compared to 2004. The retail sales in this area
are spread across a broad range of different retail categories. The largest sales categories for
Petaluma Boulevard South are listed below.
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Grocery stores
Eating places
Furniture stores
Garden supply stores
Gasoline service stations
WASHINGTON/MCDOWELL
This shopping district covers the area immediately adjacent to the corner of Washington
Street and McDowell Boulevard, northeast of Highway 101. This area includes the Plaza
shopping centers and the Washington Square shopping center. This area generated a
combined retail sales total of $149 million in 2009. The overall sales trend for this district
show a significant decline compared to 2008 and 2004, but an overall growth compared to
1999. The retail store types represented in this area include a combination of local-serving
stores and more regionally oriented stores. The major sales generators for Washington
McDowell are listed below.
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Family clothing stores
Department stores
Drug stores
Office supplies
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Miscellaneous specialty retail stores
Grocery stores
Eating places
Gasoline service stations
PETALUMA RETAIL SALES
In addition to the amount that local households spend at retail stores, the other component
that defines the local retail market is the retail sales generated by local stores. Sales tax data
from the State Board of Equalization was used to calculate the retail store sales by store
category for the City of Petaluma. The City’s finance department provided an audited record
of this data, from which ADE estimated the retail sales.
After adjusting the sales tax data to account for nontaxable item sales, the 2009 retail sales by
businesses in the City of Petaluma totaled approximately $807 million, as shown in Table D5. The two largest retail groups are food/eating/drinking, and automotive. Each of these
groups accounted for more than $250 million in sales, and together accounted for more than
two-thirds of the total retail sales in Petaluma.
TABLE D-5
INFLATION-ADJUSTED RETAIL SALES TRENDS BY RETAIL CATEGORY,
1999 TO 2009
Retail Group
Total
Apparel Store Group
General Merchandise Group
Specialty Retail Group
Food, Eating and Drinking Group
Building Materials and
Homefurnishings Group
Automotive Group
1999 Total
Retail Sales
$1,005,553,315
$48,169,815
$104,481,762
$75,950,485
$286,769,494
2004 Total
Retail Sales
$1,082,265,763
$49,446,615
$94,977,546
$78,764,211
$312,396,427
2008 Total
Retail Sales
$894,526,105
$63,033,400
$81,234,629
$74,099,136
$299,974,347
2009* Total
Retail Sales
$806,827,260
$61,724,500
$71,638,497
$71,041,927
$289,754,774
Percent
of Total
100.0%
7.7%
8.9%
8.8%
35.9%
$81,428,357
$408,753,401
$82,664,709
$464,016,256
$68,087,943
$308,096,651
$54,575,961
$258,091,601
6.8%
32.0%
Source: ADE, Inc., data from Board of Equalization, MuniServices LLC, and U.S. Bureau of Labor Statistics.
Notes: All figures are adjusted for inflation using the Consumer Price Index, and include an adjustment that estimates sales from
nontaxable items.
Retail sales do not include business-to-business categories, part-time businesses, and service establishments.
Because data for the 4th quarter was not available at the time of the analysis, 2009 retail sales include the period between the 4th
quarter of 2008 and the 3rd quarter of 2009.
The overall trend shows a significant loss of sales in 2009 compared to the other benchmark
years. The automotive group alone accounted for the vast majority of the retail sales decline
in Petaluma. The general merchandise and building materials/home furnishings groups each
declined by more than $20 million between 2004 and 2009. Findings for retail sales by major
store group are summarized below.
APPAREL STORES
Petaluma generated a total of $62 million in apparel store sales. More than half of these sales
($38 million) occur in family clothing stores. In contrast to the general decline in retail sales,
apparel stores have increased since 2004 and showed minimal decline between 2008 and
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2009. Much of this can be credited to the Petaluma Village Premium Outlets, with its
discount orientation, weathering the recession very well.
GENERAL MERCHANDISE STORES
Petaluma’s general merchandise sales totaled $72 million in 2009. Department stores also
include discount stores, and the sales for the three stores in this category totaled $35 million.
Drug stores in Petaluma generated another $36 million in retail sales. It should be noted that
Petaluma does not have any other general merchandise stores, such as variety stores or
warehouse clubs.
The sales trend in this category has shown a significant decline over the past decade, with
sales declining by more than 31 percent since 1999. Department stores alone declined by 40
percent between 1999 and 2009. This likely reflects a combination of increased regional
competition from discount stores such as Target and Wal-Mart that are not located in
Petaluma, and major store closures such as Mervyns.
SPECIALTY RETAIL STORES
Specialty retail stores include a broad cross-section of different product offerings and store
types. These stores generated a sales total of $71 million in 2009. Among the individual store
categories, the largest sales generators are miscellaneous specialty retail stores, gifts and
novelties, sporting goods, books and stationery, and office supplies. Miscellaneous specialty
stores alone accounted for more than $40 million in sales. This category includes a wide
range of retail store types, and includes sales from art galleries. The miscellaneous specialty
retail store category also showed a slight sales increase since 1999.
The sales trend among specialty retail stores shows about a 10 percent decline since 2004.
The specialty retail categories with the largest sales declines include florists, photographic
equipment and music.
FOOD, EATING, AND DRINKING GROUP
Food-oriented retail stores generated about $290 million in retail sales in 2009, with $190
million in sales coming from grocery stores and $91 million coming from restaurants/eating
places. Grocery stores represent the largest retail store category in Petaluma, even though
they generate less sales tax than automobile sales due to their large proportion of nontaxable
food sales.
The sales trends show relatively minimal change in this retail group. From 2004 to 2009, the
overall sales for this group declined by 7.2 percent, and about 3.4 percent between 2008 and
2009. However, the group also increased retail sales between 1999 and 2009. Grocery stores
in particular showed a mixed sales trend, with sales declining by 10 percent between 2004
and 2009, but increasing by 5.6 percent during the ten-year period beginning in 1999.
Restaurants and eating places showed a largely unchanged long-term trend, however sales
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did decline by 4.6 percent between 2008 and 2009. This indicates that restaurants have
performed well over the long-term, but the recession has had an immediate impact on sales.
BUILDING MATERIALS AND HOME FURNISHINGS GROUP
The building materials and home furnishings group includes stores that specialize in home
improvement products, and also includes electronics/appliance stores, furniture stores, and
used merchandise stores. In 2009, these stores generated about $55 million in retail sales.
Much of the sales in this category occurred with home improvement businesses, which
together generated about $45 million in sales. Other store types such as
electronics/appliances, furniture, and used merchandise stores generated comparatively low
sales.
In general, stores in this category are susceptible to economic downturns because the
product offerings are generally discretionary purchases that get deferred during periods of
economic uncertainty. In addition, a large portion of sales for home improvement stores in
particular come from construction activity. For Petaluma, the stores in this category showed
a nearly 20 percent decline from 2008. Over the long-term, this category declined by about
one-third during the last decade.
AUTOMOTIVE GROUP
Retail businesses in the automotive group include new and used automobile dealerships,
gasoline service stations, auto parts stores, as well as dealers for other vehicles such as boats,
motorcycles, and trailers. In Petaluma, the sales in this group are dominated by new
car/RV/trailer dealerships ($159 million) and gasoline service stations ($81 million). The
sales in this group totaled $258 million in 2009.
The sales trends in this retail group show steep declines for the group as a whole, with the
automobile dealerships and other vehicle sales driving the decline. Automobile sales in
particular declined by more than half during the five-year period between 2004 and 2009.
Between 2008 and 2009, automobile sales declined by about 15 percent.
Gasoline service stations showed sales increases over the long-term, even though lower gas
prices likely drove a 19 percent sales decline between 2008 and 2009.
The decline for the automotive group has serious implications for Petaluma because the
automobile sales make up the vast majority of the retail sales decline for the city as a whole.
In addition, this group is the largest single generator of taxable sales, which has fiscal
implications.
7.
RETAIL LEAKAGE AND ATTRACTION POTENTIAL
Retail leakage represents the mismatch between local market spending and the retail sales by
Petaluma retail establishments. Leakage indicates both an existing shortcoming in terms of
local retailers not meeting existing household demand, as well as an opportunity because
unmet retail demand can create opportunities for retail expansion. Conversely, those store
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categories with net capture of regional sales extend their market reach into the surrounding
region.
RETAIL LEAKAGE AND NET CAPTURE
Overall, Petaluma’s retail sales total of $807 million exceeds the local consumer spending
total of $646 million, as shown in Table D-6. This means that Petaluma has an overall net
capture of regional sales where local retailers attract spending from outside of the
community. The sales leakage trend identified in the analysis shows a mixed trend as
Petaluma is a net regional retail provider in some key retail store categories, but also
experiences significant retail leakage in other major store categories. The retail store
categories where the sales exceed the local market spending attract a total net capture of
$258 million in regional sales, while the retail store categories where sales fall short of local
market spending generate a total of $97.2 million in retail leakage.
In general, Petaluma is a regional provider for apparel stores, specialty retailers, food stores,
and automobile sales. These retail groups generate sales that far exceed the local market
spending, and they generally confirm the strong regional presence of the downtown area,
Petaluma Auto Plaza, and the Petaluma Village Premium Outlets.
The largest net capture of regional sales occurs with automobile dealerships and grocery
stores. With $158 million in net sales capture, these two categories alone account for over 60
percent of the net regional sales capture for Petaluma, and therefore make up the
community’s biggest competitive advantage. Other strong performing retail store categories
where Petaluma attracts more than $10 million in sales from outside of the local market
include miscellaneous specialty retail stores, family clothing stores, gasoline service stations,
and home centers/garden supply stores.
The retail categories with the largest retail leakage are generally in the general merchandise
and home furnishings categories. While the leakage in some of these categories is likely large
enough to support attracting new retail establishments, any discussion of retail attraction
needs to be tempered by the existing regional competition and the existing economic climate
that has disproportionately impacted some of these retail categories.
For general merchandise stores, the leakage exists because Petaluma has only one discount
retailer and one traditional department store (the other business classified as a department
store is an outlet store), and lacks any other general merchandise stores such as warehouse
clubs and variety stores. The City recently approved a new Target discount store, which
would likely reverse much of this trend and attract some regional spending that currently
goes to neighboring communities.
The recent general retail market decline also impacts short-term attraction potential for
home improvement, appliance/electronics, and furniture stores, since those stores depend
on a growing market for home construction and remodeling projects.
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TABLE D-6
PETALUMA RETAIL SALES LEAKAGE AND NET CAPTURE, 2009
Retail Group
Total
Apparel Store Group
Men’s and Women's Apparel*
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores
Other General Merchandise
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists
Music and Photo Equipment*
Books, Stationery, Office Supplies*
Jewelry
Misc. Specialty Retail
Food, Eating & Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials & Home
Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Garden Supply/Hardware Stores*
Lumber/Building Materials Stores
Paint & Wallpaper
Automotive Group
New Cars, RVs, Trailers*
Used Car Dealers
Gasoline Service Stations
Auto Parts & Accessories
Other Vehicles
Local Market Area
Spending
$646,260,449
$34,981,135
$11,681,611
$17,222,940
$6,076,584
$115,401,340
$56,349,595
$31,070,446
$27,981,299
$50,102,733
$3,129,718
$6,115,309
$1,140,070
$2,905,276
$13,033,868
$4,280,778
$19,497,715
$188,889,677
$88,116,111
$2,459,749
$4,154,172
$94,159,646
Petaluma Retail
Sales
$806,827,260
$61,724,500
$15,820,800
$38,076,700
$7,827,000
$71,638,497
$35,151,331
$0
$36,487,166
$71,041,927
$5,638,197
$6,115,115
$978,392
$1,914,600
$13,786,300
$1,571,672
$41,037,652
$289,754,774
$192,637,651
$3,605,354
$2,207,325
$91,304,444
Sales Leakages
$97,237,048
$1,747,967
$1,747,967
$0
$0
$52,268,710
$21,198,263
$31,070,446
$0
$3,966,723
$0
$194
$161,678
$1,095,745
$0
$2,709,106
$0
$4,802,048
$0
$0
$1,946,847
$2,855,201
Net Capture of
Regional Sales
$257,803,859
$28,491,332
$5,887,156
$20,853,760
$1,750,416
$8,505,867
$0
$0
$8,505,867
$24,905,917
$2,508,478
$0
$0
$105,069
$752,432
$0
$21,539,937
$105,667,146
$104,521,540
$1,145,605
$0
$0
$64,195,431
$18,933,651
$12,289,562
$1,448,075
$15,078,330
$15,627,668
$818,145
$192,690,133
$104,833,296
$7,704,605
$69,664,073
$6,207,774
$4,280,385
$54,575,961
$2,742,886
$4,493,700
$2,223,700
$32,155,175
$11,041,800
$1,918,700
$258,091,601
$158,617,100
$1,825,500
$81,490,801
$11,614,500
$4,543,700
$28,572,495
$16,190,765
$7,795,862
$0
$0
$4,585,868
$0
$5,879,105
$0
$5,879,105
$0
$0
$0
$18,953,025
$0
$0
$775,625
$17,076,845
$0
$1,100,555
$71,280,573
$53,783,804
$0
$11,826,728
$5,406,726
$263,315
Source: ADE, Inc., data from California State Board of Equalization, MuniServices LLC, U.S. Census Bureau, California Department of
Finance, California EDD, Dean Runyan Associates, and U.S. Bureau of Labor Statistics.
Notes: Categories marked with asterisks (“*”) are aggregated due to confidentiality restrictions with reporting sales tax data.
Data include an adjustment that estimates sales from nontaxable items.
Retail sales do not include business-to-business categories, part-time businesses, and service establishments.
Because data for the 4th quarter was not available at the time of the analysis, 2009 retail sales cover the period between the 4th quarter of
2008 and the 3rd quarter of 2009.
8.
KEY RETAIL ISSUES
ADDRESSING ECONOMIC COMPETITIVENESS OF AUTO DEALERSHIPS
The current recession has had an across-the-board impact on automobile dealerships across
the country. The economic competitiveness of Petaluma’s dealerships has a direct
correlation to the City’s fiscal health. The key issue with the automobile dealerships is
making sure that the current sales declines are due more to the recession than other
competitiveness issues specific to the Petaluma Auto Plaza and the local business climate.
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Once the economy recovers, it is important to make sure that the existing dealerships are
positioned to compete and increase sales. Some of the questions to ask include the adequacy
of the existing spaces, whether expansion is feasible, whether additional land is needed to
support certain dealership functions (e.g., auto body shop, repair, storage, etc.), adequacy of
visibility and access, and any other systemic issues that might force the dealership to relocate
or close. As noted earlier, the extension of Auto Center Drive will create additional
opportunities for expansion of the Auto Plaza.
DECIDING WHETHER TO EXPAND REGIONAL RETAIL
The analysis indicated that many of the categories that currently experience retail leakage in
Petaluma are regionally oriented. The City has already decided to address a portion of this
retail leakage by approving the Target discount store. If the City wants to recapture lost sales
in other regional retail categories, it entails developing large-scale retail centers and
potentially luring existing stores away from surrounding communities. Thus far, the City of
Petaluma has focused more on strengthening its downtown and smaller scale shopping
centers. It should be noted that the retail categories in Petaluma most heavily impacted by
the economic downturn have been regionally oriented retail categories. However, large sites
existing on McDowell Boulevard could support additional regional retail.
Moving more into more regionally oriented retail also has the potential of creating impacts
on local retailers. However, many of these impacts are already imposed by the regional mall
and power center developments that exist in Rohnert Park, Santa Rosa, and Novato.
ADDRESSING COMPETITIVENESS ISSUES WITH EXISTING RETAIL CENTERS
Petaluma’s locally oriented commercial centers have been relatively insulated from the
recession because demand for local staple items such as groceries and household items does
not decline as much as other purchases during economic downturns. However, some of
Petaluma’s retail centers have seen increased vacancies and show signs of physical
deterioration.
Centers such as the Plaza North shopping center have not had recent renovation activity,
while others such as Washington Square have seen the departure of key anchor tenants. As
newer centers such as the Redwood Gateway add to the commercial square footage in
Petaluma, it creates competitive pressures on older retail centers. Planning initiatives in other
communities have addressed these market pressures by allowing for greater flexibility to
convert commercial spaces to other uses with potentially greater market demand such as
offices and housing. In general, many communities have developed more commercial space
than the market can accommodate, and converting these spaces to other uses allows for
underutilized spaces to be productive.
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APPENDIX E: TOURISM ANALYSIS
1. INTRODUCTION
Petaluma is part of the world famous Sonoma County tourism market. The community
serves a somewhat different niche than other destinations located north of Santa Rosa, but it
is a popular visitor attraction, and has a multitude of assets that serve the community well
for future expansion of its visitor-serving economy.
Sonoma County is synonymous with the California Wine Country. Indeed, any mention of
the “wine country” would need to at least include a portion of the county. While Petaluma
has its own assortment of wineries, the tourism emphasis in Petaluma covers a multitude of
activities outside of the wineries.
Petaluma’s visitor niche is varied, but it is focused around the attributes that set Petaluma
apart from other nearby communities. Some of Petaluma’s distinguishing characteristics are
listed below.19
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Opportunities for outdoor recreation, particularly along the Petaluma River and in
the regional parks;
Strong image built around food and agriculture, including dining and cheese
production;
Cultural heritage, with many historic buildings that survived the 1906 earthquake;
Filming locations attract fans of American Graffiti;
Small community with a fully developed arts scene, including live theater and music
venues;
Community of local artists and musicians.
Demographically, Petaluma primarily draws middle aged visitors and families, but the
outdoor recreation and music also appeal to younger visitors. Petaluma is currently situated
as a middle market destination.
2. SONOMA COUNTY VISITOR MARKET SETTING
VISITOR SPENDING TRENDS
According to Dean Runyan Associates’ most recent travel impacts study, Sonoma County’s
tourism sector accounted for approximately $1.3 billion of total impact on the regional
economy in 2007. This created about 16,800 jobs.
Using Petaluma’s share of the transient occupancy tax and taxable sales as a measure, the
impact on the local economy totaled about $102 million. This tourism spending grew
19
Interview with Marsha Trent, Petaluma Visitor Center.
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steadily during the past decade, however all indicators by 2008 were pointing towards a
significant slowdown in the visitor economy.
TABLE E-1
VISITOR SPENDING, SONOMA COUNTY AND PETALUMA, 2007
Visitor Spending by Commodity
Total
Accommodations
Food Service
Food Stores
Ground Trans and Motor Fuel
Arts, Entertainment, Recreation
Other Retail Sales
Sonoma County
$1,298,500,000
$239,600,000
$312,500,000
$43,500,000
$201,400,000
$245,800,000
$255,800,000
Petaluma (Estimate)
$101,636,116
$17,061,988
$37,041,900
$5,156,232
$6,112,485
$5,942,493
$30,321,018
Source: ADE, Inc., data from Dean Runyan Associates, California Board of Equalization, and
U.S. Economic Census.
According to Economy.com, macro factors that will continue to put downward pressure on
the tourism market in Sonoma County include a slowdown in business travel spending, and
declines in international travel.20 Projected recovery for the tourism market will not likely
occur until 2011, but the long-term forecast indicates that Sonoma County’s long-term
prospect look good. This is because of the region’s growing reputation as a world class
destination. In addition, as the wine industry grows, Sonoma County’s role as a prominent
wine producing region benefits its tourism market. Other factors working in Sonoma
County’s favor include local food production and health and wellness activities in the region.
ROOM OCCUPANCY INDICATORS
Sonoma County’s room occupancy in 2008 was just over 61 percent, a drop of roughly
around two to three percent from the levels maintained in 2006 and 2007. The county’s
tourism demand increased during this time, but did not result in an increase in the
occupancy rate because new rooms came online during that time.
In addition to the drop in the room occupancy, the average room rate also decreased in
2008, dropping down to about $122 from a peak of about $127 in 2007. While this average
room rate remains above the room rates from years prior to 2007, the drop is an indicator
that discounting was needed just to keep the occupancy rates at the 61 percent level.
While an occupancy rate above 60 percent is generally considered a healthy lodging market,
the recessionary conditions have definitely slowed down the previous growth trends. Despite
these indicators, about 1,200 new hotel rooms were either under construction or going
through the approval process in 2009. However, the County’s most recent transient
occupancy tax reports show that the development timelines for many of these projects have
been pushed back with only 15 percent of these rooms expected to come online by the end
of 2010.21 The report from the previous quarter indicated that 35 percent of the rooms
20
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Sonoma County Economic Development Board; Annual Tourism Report, 2009.
Sonoma County Economic Development Board; Transient Occupancy Tax Report, Q2 and Q3 2009.
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would come online by the end of 2010. Although these projects remain in the development
pipeline, the recession has clearly impacted the construction phasing.
3. SONOMA COUNTY TOURISM SURVEY FINDINGS
The Sonoma County Economic Development Board conducts a visitor survey annually. The
2008 survey asked respondents to indicate their place of origin, purpose of visit, and
interests. Some of the more relevant findings are summarized below.22
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The majority of visitors to Sonoma County come from California, with about 32
percent of visitors coming from the San Francisco Bay Area.
The top three reasons for visiting Sonoma County are scenic beauty, relaxation, and
food or wine.
Length of stay averages 3.7 days and 2.3 nights.
The top three visitor interests among Sonoma County visitors are outdoor recreation
(67 percent), wine (66 percent), and arts and culture (60 percent).
In addition to the visitor survey, the County also updated its survey of tourism industry
representatives in 2008. Some of the relevant findings are summarized below.
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International tourism has generally fared better than domestic travel.
Eco-tourism, international, and Gay, Lesbian, Bisexual, Transgender/Transsexual
markets were rated as Sonoma County’s best opportunities.
Most respondents indicate that the region’s tourism potential remains high, and the
strongest asset outside of wine is the area’s scenic beauty.
Local government can best make a positive difference by assisting with licensing and
permitting, and workforce education and training.
4. VISITOR SERVING ACTIVITIES IN PETALUMA
WINERIES
Compared to other destinations in Sonoma County,
Petaluma does not have nearly as broad or
developed a base of wineries. The Petaluma Visitor
Center identifies six wineries open to the public.
Most of these local wineries are open by
appointment only, but at least two of them have
regular tasting room hours that are open to the
public. In addition, the Vine & Barrel tasting bar is
downtown and includes a selection of wines by Petaluma wineries. Petaluma also has a
winegrowers alliance that hosts vineyard tours.
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Sonoma County Economic Development Board; Annual Tourism Report, 2009.
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ARTS
One of the primary points of emphasis in Petaluma’s tourism marketing is its emerging arts
community. The arts in Petaluma encompass a full range of activities including the
following:
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Art galleries
Art walks
Art exhibitions
Art classes
Live music
Live theater
Museums
Poetry walks
Downtown Petaluma has emerged as a center for art galleries, which complements the area’s
long standing concentration of antique stores and other unique specialty stores. The
downtown area is also the focus of the many arts events that different organizations host on
a regular basis. The cross-section between the historic architecture and the emphasis on the
arts has created a distinct visitor destination.
The arts community includes a combination of private businesses, non-profit organizations,
and City-sponsored activities. Supporting organizations include the Petaluma Arts Council
and the Petaluma Arts Association. Venues for these activities include some of facilities
listed below.
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Arts Center
Cinnabar Theatre
McNear’s Mystic Theatre and Music
Hall
Petaluma Historical Library and
Museum
Petaluma Wildlife and Natural Science
Museum
OUTDOOR RECREATION
Outdoor recreation is another one of Petaluma’s primary attractions for visitors. Petaluma’s
location along the Petaluma River makes the community a popular destination for water
activities such as boating, fishing, kayaking, bird-watching and hunting for fowl. Petaluma is
unique in that it has the largest remaining natural tidal brackish marsh in California,
supporting habitat that attracts willits, curlews, dowitchers, night herons, and black-bellied
plovers.
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In addition, the community has multiple facilities for golfing, as well as trails for hiking,
equestrian activity, and biking. Shollenberger Park includes wetlands along the Petaluma
River, and allows for nature tours.
SHOPPING
Downtown Petaluma is the primary visitor destination for shopping and dining
opportunities. The district’s mix of specialty retail stores, historic architecture, art galleries,
entertainment venues, and restaurants make it the area best situated for serving the visitor
market. The Petaluma Visitor Center identifies a total of 15 shopping areas in Petaluma. As
mentioned in the retail market analysis, most of Petaluma’s shopping centers primarily serve
the local market. Although not directed to the visitor market, many of these local services
can also serve the needs of overnight visitors and daytrippers.
The Petaluma Village Premium Outlets is another unique visitor shopping destination in
Petaluma in that no other community in Sonoma County has an outlet center. These types
of shopping areas can be visitor destinations in their own right. Cross marketing between the
Downtown and the Outlet Center can help to make both areas a combined shopping
experience for visitors.
DINING AND AGRITOURISM
Petaluma has developed a strong core of restaurants that appeal to visitors as well as local
residents. In addition to Petaluma’s variety of restaurants, the community is a center for food
production with businesses producing cheese, olive oil, chocolate, and other food products.
Visitor services include facility tours and
retail spaces. In addition, Petaluma hosts
an annual artisan cheese festival.
All of this activity has led to Petaluma
developing a strong reputation as a destination for agritourism, with a strong emphasis on
locally grown produce and farm products.
5. PETALUMA’S LODGING MARKET
The lodging market in general basically consists of all types of transient accommodations
outside of private residences. The lodging market consists of hotel/motel establishments,
bed and breakfast facilities, and campgrounds.
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Hotel/motel establishments have a wide range of facilities, rooms, amenities, and
price ranges. At the lower priced end of the market, budget hotels and motels simply
provide a room with a private bathroom and basic amenities such as a TV, phone,
and closet space. The middle market hotels typically have better appointed room
with more amenities, while full service hotels typically add conference facilities,
restaurants, distinctive architecture, and/or resort amenities.
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Bed and breakfast establishments are different from hotels and motels in that they
often more closely resemble a private residence. This means that the rooms are not
always private or separated from the rest of the facility like they typically are in a
hotel or motel. The majority of B&B owners live on the premises with very little
absentee ownership. Often, B&B rooms have shared restrooms and/or a common
dining area. In addition, they typically accommodate no more than 20 rooms in a
single facility. Currently, Petaluma has only one B&B still in operation.
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Campgrounds are used conjunction with outdoor recreational uses. They typically
provide limited site amenities, and rely on campers bringing their own shelter and
other equipment.
PETALUMA OVERNIGHT ACCOMMODATIONS
Petaluma has a small but diverse lodging market that
serves most major lodging niches. The community has
a total of seven facilities for overnight lodging. Not
including the 312 spaces at the KOA Campground,
Petaluma provides accommodations with a total of 541
guest rooms.
As shown in Table E-2, the lodging facilities in
Petaluma encompass the full range of amenities and
costs. The Sheraton hotel is a full service hotel that includes Petaluma’s primary space for
business meetings and conferences, as well as two middle market facilities with a more
limited range of services and two economy facilities that offer basic rooms at low prices.
Petaluma’s overnight accommodations are rounded out with the historic Metro Hotel and
the KOA campground.
TABLE E-2
PETALUMA LODGING FACILITIES
Lodging Facility
America's Best Value Inn
Best Western Petaluma Inn
KOA Campground
Metro Hotel
Motel 6
Quality Inn
Sheraton
Total
Total Guest Rooms
Guest
Rooms/
Spaces
50
73
312
14
121
103
180
853
541
Facility Type
Budget
Limited Service Hotel
Campground
Historic Hotel/B&B
Budget
Limited Service Hotel
Full Service Hotel
Source: ADE, Inc.; data from Petaluma Visitor Center
Some potential niches that are current not served in Petaluma include the high-end boutique
hotel and full service resort categories. However, the proposed Silk Mill hotel will eventually
add 95 new hotel rooms close to downtown Petaluma, and it has been situated for the
boutique hotel market, which places more of an emphasis on personal service and unique
architectural amenities.
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MEETING SPACES
Petaluma has multiple meeting rooms scattered throughout the city. The Sheraton hotel has
the largest facility with a total of 10,000 square feet that can be divided into multiple spaces.
The Metro Hotel also has a meeting room with space for 75 people. No other lodging
facility provides spaces for meetings and conferences. This limits the potential market for
Petaluma hosting larger conferences and groups.
Other rooms with capacity for 500 people or more include Herzog Hall (up to 900) at the
Sonoma-Marin Fairgrounds, Mystic Theater (800 capacity), Petaluma Community Center (up
to 639 capacity), and the Veteran’s Memorial Building (800 capacity). Several other facilities
can support groups of about 200 to 400 people, including restaurants and dedicated banquet
facilities.
Clearly, Petaluma is well situated to serve the market for small to midsized groups, but has
limited facilities to serve larger markets. Even if Petaluma develops a facility that can
accommodate larger groups, the lodging in Petaluma currently lacks the room capacity
needed to move into a larger market.
REVENUE TRENDS
Between 2007 and 2008, Petaluma’s transient occupancy tax (TOT) revenues dropped by 11
percent. This is a steeper decline than the countywide average, which declined by less than
four percent. This indicates that Petaluma’s lodging market had a weaker position than the
surrounding communities. For example, Rohnert Park’s TOT receipts grew by nearly five
percent during this period, while Santa Rosa’s TOT receipts declined by 8.1 percent.
As a whole, Sonoma County’s lodging market is different than other regions in that much of
the revenue is generated in the unincorporated areas. This is because many of the high end
lodging establishments are located outside of the cities.
TABLE E-3
INFLATION-ADJUSTED TRANSIENT OCCUPANCY TAX TRENDS IN SONOMA COUNTY,
2002 TO 2009 (THROUGH Q2)
City
Petaluma
Unincorporated
Cloverdale
Healdsburg
Rohnert Park
Santa Rosa
Sebastopol
Sonoma
Windsor
2002
$996,573
$6,629,795
$27,389
$1,015,510
$1,619,405
$3,715,709
$290,731
$2,033,284
$0
2007
$1,556,292
$8,075,058
$157,766
$1,826,048
$1,835,823
$4,071,246
$345,225
$2,624,638
$774,607
2008
$1,383,314
$7,790,934
$175,222
$1,867,014
$1,925,611
$3,741,864
$290,747
$2,549,053
$768,366
2009
(Through Q2)
$562,518
$2,730,848
$66,130
$640,581
$728,306
$1,336,059
$95,483
$794,313
$473,748
2007 to 2008
Percent
Change
-11.1%
-3.5%
11.1%
2.2%
4.9%
-8.1%
-15.8%
-2.9%
-0.8%
Source: ADE, Inc., data from Board of Equalization, MuniServices LLC, and U.S. Bureau of Labor Statistics.
Notes: All figures are adjusted for inflation using the Consumer Price Index, and include an adjustment that estimates
sales from nontaxable items.
Retail sales do not include business-to-business categories, part-time businesses, and service establishments.
Because data for the 4th quarter was not available at the time of the analysis, 2009 retail sales include the period between
the 4th quarter of 2008 and the 3rd quarter of 2009.
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6. TOURISM EXPANSION ISSUES
MOVING UPSCALE
Petaluma currently occupies more of a middle market position in Sonoma County’s tourism
market. The County’s tourism reports indicate that visitors to the region primarily go to
Sonoma County for outdoor recreation, arts and culture, and the wineries. In fact, outdoor
recreation was slightly more frequently cited than even the winery activities. This puts
Petaluma squarely at an advantage for two of the three most common activities among
Sonoma County visitors.
Only with the wineries does Petaluma fall short of other Sonoma County destinations.
However, the areas with the higher concentrations of wineries also attract a higher
proportion of the TOT receipts, an indicator that those areas provide a greater amount of
lodging and potentially cater to higher end visitors.
As Petaluma’s arts initiatives take hold, the community has a potential opportunity to further
solidify its regional role. The question is whether Petaluma wants to focus more on higher
end tourism, and whether Petaluma can capture that end of the market to begin with. A
potential indicator is with the upcoming Silk Mill hotel, which is projected to open as a
higher end boutique hotel. If this project succeeds, along with the City’s plans to establish a
mixed use district just outside of downtown along Washington Street, then it could indicate
that Petaluma has extended its appeal towards the higher end of the market.
STRENGTHENING PETALUMA’S UNIQUE AGRITOURISM NICHE
Regionally, there is a trend towards locally grown produce and farm products. While
Sonoma County as a whole is known for wineries and high end restaurants, Petaluma has
established a unique niche as a center for dairy production and as a location for locally
grown agricultural products. This creates potential opportunities for expansion of the
markets for restaurants that feature locally grown food, dairies, and cheese producers. It also
provides diversification opportunities for other agritourism activities such as farmstays,
where farms would host overnight visitors.
SHORT-TERM LODGING MARKET CONSTRAINTS
Sonoma County has had an expanding lodging market for most of the past decade, even as
rooms continue to be added. Current plans indicate that the supply of rooms will continue
to expand, even as demand has weakened during the recession. This potentially limits the
market for expansion of the lodging market in Petaluma. With 541 hotel rooms and only one
relatively small full service facility, Petaluma is at a disadvantage for attracting larger groups
and conferences.
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If the community wants to move into a larger market for meetings and conferences, it needs
to expand on its base of hotel rooms. The issue is whether the regional market is healthy
enough in the short-term to support the new development already planned in addition to
anything else in Petaluma beyond the planned 95-room Silk Mill hotel.
IDENTIFYING NEW LODGING OPPORTUNITIES
Petaluma currently has only one historic hotel. A city with the abundance of historic
architecture found in Petaluma would seem to have numerous opportunities for developing
a bed & breakfast inn or other lodging based on reusing historic buildings.
Another potential opportunity would be developing a concentration of higher end lodging
around the downtown area as the new mixed-use district takes shape. This would add market
support to existing downtown retailers while providing a boost to the TOT base. As noted,
this will have to be more of a longer term initiative due to the declining market conditions
that currently exist.
TRACKING EXISTING VISITOR ACTIVITIES
The County currently tracks visitor activities as well as business development trends among
tourism businesses at the county level. This data serves as a very useful tool for identifying
what visitors do while visiting Sonoma County, and how these activities evolve from year to
year. However, this data is not separated by city or community. Accurate data that tracks
Petaluma’s specific niche within this regional economy would allow the community to better
ascertain its existing strengths and better plan for shifts in the visitor profile. In addition, the
County does not currently track convention activity, but plans to produce a market study of
the arts in Sonoma County later in 2010.
The Petaluma Visitor Center also currently collects some basic information from visitors
who use the facility. However, the Center lacks the staff resources to analyze the data, so it
currently remains untabulated. Establishing some way of maintaining a visitor database
specific to Petaluma would go a long way towards identifying Petaluma’s visitor serving role
on an ongoing basis.
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APPENDIX F: TRANSIT-ORIENTED DEVELOPMENT
GUIDELINES
Transit-oriented development (TOD) is the creation of places that bring together a variety of
higher density buildings, and a mix of uses, often including
residential, commercial and open space that are served by
alternative transportation modes with an emphasis on
mass transit. Successful TODs are more than a collection
of buildings near a transit facility. They are vibrant centers
of activity, with amenities and a clear sense of place, and
will often have an organizing principle, such as a central
open space or a gateway, that make them special areas.
The following guidelines for developing TODs in Petaluma are based on work done by the
Urban Land Institute (ULI) and our experience planning and developing TOD projects in
various cities.
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Develop a vision. Developing a TOD requires a clear vision to guide development
and to shape the sense of place created in the TOD. The vision should clearly
articulate how the TOD will be connected with adjacent areas and the role that the
TOD will play within the city.
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Consider the market. TOD needs to be market-driven and transit-enhanced. A
transit stop alone is not sufficient for stimulating TOD. There must be a market or
the strong potential to create a market for the mix of uses—retail, housing, office,
and other uses that comprise the TOD.
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Plan for a mixture of uses. TODs provide greater potential for a mix of uses, both
vertically and horizontally (including open space), and for a mix of incomes in
residential elements. The transit component is woven into the fabric of TODs,
creating opportunities for well designed higher density buildings, which benefit from
the pedestrian traffic generated by both the uses on site and the access provided by
transit.
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Create transit connections within the city. Transit connections should connect
the TOD with transit in greater Petaluma, as well as connecting Petaluma to the
greater Sonoma and Marin County region. Successful TODs require strong
connections to transit and alternative modes of transportation with other higher
density residential and/or commercial areas within the City. Transit between these
areas should be reliable and, preferably, frequent. These connections can be made by
rail transit or with a well-programmed bus system that uses quality vehicles and has a
regular schedule.
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Form public private partnerships to implement TOD. Partnerships between
private and public sectors are fundamental to achieving the TOD vision for several
reasons. First, the higher densities developed in TODs are often more costly to
develop, especially if the development requires structured parking. In addition,
infrastructure in TODs may be more expensive than in other areas because of the
need to relocate or bury utility lines and/or the need to limit access to developments
to accommodate the transit. Finally, obtaining financing for development in TODs
may be more difficult and costly than for other types of development because
lenders often view TODs as higher risk developments than in more traditional
developments. Providing infrastructure, financing, and land assembly are most
effectively done through collaborative public-private efforts as a result of these
factors.
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Include balanced parking. Parking will remain a critical ingredient on TODs,
allowing greater access to the TOD. Successful projects will accommodate a balance
of parking—enough to support market viability for the uses in the TOD while
factoring in the benefits brought from transit. If economically viable the parking
should be in structures, ideally below grade but if this isn’t possible for
environmental or economic reasons, then in structures that integrate other uses.
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Design and build sustainable quality. TODs should be special places if they are
going to succeed on multiple levels (financial, vibrancy, connectivity, sustainability,
etc). The more a community and its developers can devote attention to and invest
resources in quality design of sustainable buildings and open spaces, the more special
these places can become and the greater receptivity and use they will have for
residents, businesses and visitors.
OPPORTUNITIES FOR TRANSIT-ORIENTED DEVELOPMENT (TOD)
The Sonoma-Marin Area Rail Transit (SMART) is a 70-mile rail system being built in
Sonoma and Marin Counties. The system will have 14 rail stations, two of which will be
located in Petaluma, with each station accommodating a total of 28 daily train stops.
Petaluma’s SMART stations will be located at:
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Downtown Petaluma Station. This station will be located at the renovated historic
rail depot, adjacent to Lakeville Street, between East Washington and East D Streets.
This station will provide easy access to the Turning Basin, as well as the downtown
area. It is also located near the new Copeland Street Transit Mall. SMART owns the
4.7 acre site adjacent to the station and which will become a pivotal parcel in the
TOD.
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Corona Road Station Area. This station will be located in northeastern Petaluma,
near Corona Road and North McDowell Boulevard. The proposed station site is a 7acre parcel which SMART is currently seeking to acquire and will be primarily
devoted to a park and ride component for the foreseeable future.
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CENTRAL PETALUMA STATION AREA
Development around the Downtown Petaluma Station and Copeland Street Transit Mall
presents opportunities for catalyzing development on vacant and underutilized sites around
the transit facilities. Figure 1 shows the location of the Downtown Petaluma Station and
surrounding area. Coordinated, deliberate planning of these facilities and the adjacent
properties will help assure the City a better mix of uses for both horizontal and vertical
developments. This approach can help the City achieve a broad cross-section of community
goals, such as providing housing for households with a range of incomes, easier access to
jobs and shopping and more mobility options. A deliberate approach to planning
development within this TOD can increase the likelihood of retail and other uses that will
both support capturing a greater market share and complement downtown uses, rather than
competing with downtown.
TOD DESIGN
Development of the SMART site can better serve urban, economic and community
development interests by optimizing connectivity and fostering high quality, sustainable
design for residential, commercial and institutional projects as well as open spaces. Together,
these elements should create a sense of place where people want to be. Creating these
opportunities requires special considerations for the design of the TOD area.
Ideally TOD station sites should have an organizing principle, such as a green space, urban
plaza, gateway feature, or some other special indicator that announces the site. In Petaluma’s
case, the existing historic buildings that serve as the TOD ticketing areas, art center, and
visitors’ center can perform this function.
The design and layout of the streets within the TOD are important as well. TOD areas
should encourage greater connectivity particularly for pedestrians. This large area, Site 21
owned by SMART, can better address these objectives if it is divided into at least two blocks
of about two acres each, with a “complete” street splitting the lots. A complete street
accommodates all users safely and to the extent possible equally and can take many forms
including a narrow paved street often with no sidewalks that accommodates slow auto
traffic, some on street parking, pedestrians and, bicycles. It can, and usually does include
street art of some kind. If possible, this street should continue through adjacent large blocks
to the south (Site 22 the Haystack site), creating a strong pedestrian environment on these
blocks as well.
This street configuration provides more corners, encouraging more opportunities for
commercial success, building and design variety, enhanced pedestrian flow and greater
connectivity. Corners are preferred locations for retailers because they are visible and
accessible on two street sides. Corner locations for multifamily residential and office uses
rent or sell for higher amounts, which can support better designed and more financially
successful buildings. In addition, people often like to hang-out or meet one another at
corners, particularly if there are dining establishments or cafes associated with the corner.
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Buildings within the TOD should be designed to distinguish them from downtown, giving
the TOD its own identifying character. To promote connectivity, a strong pedestrian
orientation and a more vibrant street presence, buildings should conform to the CPSP
SmartCode.
TODs need to reinforce sustainable development for the built environment. The publicly
owned SMART site should strive to achieve high standards of sustainability and should
explore incorporating features such as distributed energy (e.g., district heating and cooling).
The site is also large enough to accommodate shared structured parking for residential and
commercial uses, meeting some of the parking needs of surrounding blocks. Parking should
be incorporated into mixed-use structures, if economically viable. The sustainability features
could be one of the hallmarks of the entire TOD.
POTENTIAL USES IN THE DOWNTOWN SMART STATION AREA TOD
Uses for both the SMART owned transit site and the Haystack parcel should be planned
collaboratively. Their development should be coordinated to optimize market potential,
minimize the needs for structured parking (by factoring in shared structured parking
alternatives), incorporate complementary design elements, and increase opportunities for
open space. Uses on and around the sites could include:
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A mixture of multi-family housing types, such as apartments, condominiums and
townhomes. These types and unit mixtures should accommodate diverse household
incomes and sizes. Consideration should be given to reducing the average unit size
which will assist overall affordability as well as energy efficiency.
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Retail that provides neighborhood services, should occupy much of the ground floor
spaces in the vertical mixed-use buildings. Active ground floor uses are essential in
retaining a vibrant environment, offer opportunities to local businesses and
entrepreneurs, and can help the pro formas of many developments. Over time retail
and other active ground floor opportunities may include a grocery store, restaurants,
fitness center, day care facilities, and small specialty stores. The mix of retailers and
other active ground floor uses can help give the TOD a distinct identity that invites
visitors as well as serving residents.
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The focus or organizing principle of this TOD could be as an arts district that builds
on the existing arts center on the site. Potential uses that would complement an arts
district could be an arts school, culinary school, music school, arts supply shop,
galleries, wine tasting shop, music and musical instrument shop, and other related
businesses.
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Even if an arts district is not part of this TOD site, art should be incorporated as a
feature that helps define the area. It can help to distinguish and celebrate the TOD.
This can be a combination of street and open space art, as well as art that’s
incorporated into the buildings.
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Institutional uses, such as schools and medical facilities, should be considered as
parts of the TOD. People who rely on rail and bus systems will be more easily able
to access these services. Developing educational facilities within the TOD, such as
community college branches or portions of an elementary or preschool, can reduce
reliance on automotive transportation to access these facilities. Any of these uses can
be incorporated into the mix of a mid rise building.
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The Tourism Analysis (see Appendix V.) suggests that there is potential for a
boutique hotel (either free-standing or part of a mixed-use project) within the TOD
Since Petaluma is currently underserved by hospitality facilities. Having a hotel on a
rail line offers added convenience for visitors to the area and compliments denser
urban housing that’s part of and surrounds the TOD.
IMPLEMENTATION PHASING
Using a phased development approach separates project components of the TOD and
allows the TOD to evolve at a pace consistent with market demand for various uses and
product types so that newly built spaces are effectively absorbed.
The initial phases of development should be focused on the SMART site, as well the
Haystack mixed use site. Key infrastructure improvements (e.g., complete streets, structured
parking and utility upgrades) should be designed and implemented to accommodate
development on both of these sites.
These two large sites could be broken up into at least four parcels and be redeveloped in
phases. By looking at these two sites comprehensively, public resources can be used to more
effectively leverage private investment and influence the types of uses. It also provides
opportunities for public input on structured parking, streetscape improvements, open space,
and various utilities. These improvements could, through a development agreement with
private developers, help leverage greater development densities by removing some of the
private costs for these amenities. Better quality, sustainable, denser development could be
more profitable for the developers and would generate more taxes and fees for the City, as
well as help create a more invigorating environment.
The 7.5-acre site of the Golden Eagle Shopping Center currently houses a cluster of onestory retail. This site could be the next phase of the TOD development. Depending on
economic conditions, once the initial phase of the TOD is completed, there may be
additional demand for more intensive mixed use development. Sensitive redevelopment of
the Golden Eagle site would offer more walkable and enjoyable connections between the
SMART and Haystack sites, the River and Turning Basin, as well as Downtown. Depending
on timing and market conditions, the Golden Eagle site may lend itself to a mix of uses that
includes retail, housing, hospitality and office.
Other parcels in the area (between East Washington and Madison Streets) have a variety of
development, including industrial and retail. While these uses can (and likely will) be
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redeveloped over time, redevelopment is likely to occur in 7 to 13 or more years. If the City
wanted to expedite redevelopment of these parcels it could explore taking options on some
of these parcels, or facilitate establishment of a horizontal development entity among the
owners, though this may involve tenant relocation expenses and/or lease buyouts.
Development of the other, mostly small, opportunity sites within the TOD is likely to occur
as the TOD area builds momentum. Some of the parcels, especially those with approved
uses, may develop relatively soon while others may take a longer time to redevelop.
The TOD needs to include more than just the SMART site. The vision for the TOD should
integrate potential development on sites adjacent to and within a half mile (about a 13 – 15
minute walk) of the Transit stations. The area with greatest potential for TOD development
near the Petaluma Station is located between Lakeville Street and the Petaluma River and
between Madison Street and the end of Jefferson Street. This area is about 25 to 30 acres in
size.
CORONA ROAD STATION AREA
POTENTIAL USES
Demand for TOD at the Corona Road site, beyond the SMART station, may lag until the
market for office and residential uses recovers from the current recession. Opportunities for
TOD development within the Corona Road Station Area include:
ƒ
SMART’s current plans for the 7 acre SMART site is to develop a park and ride.
Initially there will be no charge to park here, though SMART intends to monitor
activity and over time should assess a parking fee as market conditions change.
ƒ
The corner of Corona Road and North McDowell Boulevard should have an active
use. The most likely prospect in the next few years is retail uses. Over time, as the
office vacancy rate in Petaluma decreases, there may be demand for office or mixed
use development at this corner.
ƒ
Potential uses over time, on Site 7 and portions of the SMART site include: a
hospitality facility (e.g., a well-designed hotel), vertical light industrial, and/or
institutional facilities.
IMPLEMENTATION PHASING
TOD development on the Corona site should occur in phases. The first phase of
development will be as a park and ride. During this phase of development, which may last 10
or more years, the focus in this TOD area should be on absorbing the existing office and
industrial space on nearby parcels. Given the extraordinarily high office vacancy rate, some
of the existing office space will likely need to be converted to other uses (e.g., hospitality,
institutional), at least temporarily, in order to be absorbed.
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As office space is absorbed in Petaluma, decreasing the office vacancy rate, SMART should
work with the City to craft a redevelopment strategy for the Corona site that brings a mix of
uses and structured parking to accommodate both the new uses as well as the park and ride
needs. Over time bus service to this area will also increase which should be factored into the
redevelopment strategy.
IMPLEMENTING TOD IN PETALUMA
The following section presents TOD development tools that can be used in Petaluma. The
list of tools is not meant to be an exhaustive list but to give the City ideas for tools that other
cities have used for developing TODs.
COMMERCIAL AND MIXED USE DEVELOPMENT TOOLS
The following list of tools can be used to support commercial and mixed use development
within the TODs.
ƒ
Tax increment financing can be used to assemble land, provide infrastructure
improvements that support development (e.g., streets, sidewalks, open space, or
parking garages) and low-interest loans/grants to rehabilitate or develop residential,
commercial and mixed-use buildings.
ƒ
Tax credits permit investors to receive a credit against Federal and sometimes state
income taxes for making qualified investments in development or redevelopment
projects. These tax credits provide equity for the eligible projects which helps to
finance them.
ƒ
HUD Section 108 Loan Guarantee Program is a source of subordinated lowinterest loans for economic development projects.
ƒ
Expediting permits for projects that meet or exceed City specific objectives, such
as sustainability, job creation of family wage positions, or other objectives. The City
would need to work with private developers to agree on these standards.
ƒ
Sole source impact fees would allow impact fees from a project area to be
reinvested within that area to reduce the cost of key infrastructure improvements
needed to facilitate additional development in the area.
ƒ
Land write-downs on parcels owned by SMART or the City can reduce the sales
price or ground lease rates and encourage a greater mixture of uses on publicly
owned land owned.
ƒ
Revenue bonds can be used to pay for some development costs. These bonds can
include 63-20, 501c3, and parking revenue bonds.
− 63-20 bonds can be used to pay for up to 100 percent of development costs of
projects that have at least 90 percent public uses, including medical, educational,
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and government facilities. The cost of land acquisition can be included in the
bonded amount, assuming that there is revenue from the development to service
the dept incurred.
− 501c3 bonds are similar to 63-20 bonds but are available only to eligible nonprofit organizations.
− Parking revenue bonds can only be used to build public parking structures. They
can be worked into private projects through partnership agreements, where a
portion of the parking is available to the public.
ƒ
Local tax policy changes provide opportunities to raise revenue in support of
TOD. Examples of potential changes to local tax policies include increasing transient
occupancy tax.
ƒ
Options for land or building acquisition allow the redevelopment agencies or the
City to control more strategic sites with a commitment of fewer dollars. Options can
be used to secure land for an agreed period of time (e.g., one to three years or more)
for a small fraction of the cost of that land or building. This buys the public agency
time to issue a solicitation (e.g., request for qualifications) to the development
community to redevelop these strategic sites. The private developer that secures the
site from the City then pays the remainder of the land cost.
RESIDENTIAL DEVELOPMENT TOOLS
The following list of tools can be used to support residential development within the TODs.
Availability of funding is dependent on the economy.
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ƒ
Tax increment financing can be used to assemble land, provide infrastructure
improvements that support development (e.g., streets, sidewalks, open space, or
parking garages) and low-interest loans/grants to rehabilitate or develop residential,
commercial and mixed-use buildings.
ƒ
HUD Section 202 and 811
ƒ
Low-income housing tax credits can be used to build housing developments that
are affordable to low- and very-low-income households. Projects using these tax
credits can include some market-rate units.
ƒ
Affordable housing property tax abatement can eliminate or reduce property
taxes for affordable housing units owned and operated by non-profits, helping to
make and keep the units affordable.
ƒ
Land trusts provide opportunities for affordable housing development on land
owned by the trust, reducing the costs of owner-occupied units.
ƒ
CDBG
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ƒ
HOME
ƒ
Commercial Linkage Fee
ƒ
In-Lieu
ƒ
Nonprofit partnerships
ƒ
Land write-downs on parcels owned by SMART or the City can reduce the sales
price or ground lease rates and encourage a greater mixture of uses on publicly
owned land.
POTENTIAL PARTNERSHIPS
The TOD sites in Petaluma offer potential for a variety of partnerships to help secure the
high quality, sustainable development that is appropriate for these sites. There are many
potential approaches to public-private partnerships for developing Petaluma’s TODs.
One possible approach would involve agreement among public sector players about
disposition and development of publicly held TOD sites. For sites that are already publicly
owned (by SMART or the City), the first partnership would be among the public agencies.
The first step is that SMART, the City and other public agencies that have interests in the
sites would craft an agreed upon vision for the kind of development they want to achieve on
these sites. The vision needs to address not only the publicly owned parcels, but connections
to surrounding properties. Petaluma applied for and was granted a Station Area Planning
Grant which will be used to articulate this vision and involve other property owners and
stakeholders within these areas to take advantage of SMART as a catalyst for TOD.
Next, the public entities involved need to develop an intergovernmental or joint powers
agreement that describes the roles and obligations each agency has in helping to achieve the
visions. Issues covered by this agreement should include: (1) identify the development tools
that they are willing to use to achieve the vision, potentially including additional assistance
with land assembly, low interest loans, and infrastructure, and (2) secure agreement on key
development goals and standards (e.g., sustainability, job creation, etc), type of developer
solicitation process, who will lead in negotiations and similar issues.
Once the public agencies are organized and committed, they can solicit for private TOD
development. While there are many ways to solicit private developers, numerous cities have
found that a request for qualifications process (RFQ) can be a better vehicle for them than a
request for proposals (RFP). The RFQ enables public agencies to select development teams
that demonstrate experience and expertise in the kinds of development the community
wants. It also enables both the public and private entities to avoid over promising and then
not delivering on a project. By selecting a qualified team, the public entities negotiate to
develop an understanding of what the market can deliver to a site and what kinds of
assistance are needed if the market (e.g., tenant types, financing, etc) cannot perform.
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Building designs and qualities will be shaped by resources that the private and public
partners are able to deliver.
The public—private TOD partnership is memorialized through an initial memorandum of
understanding (MOU). The MOU obligates the parties to work with each other and provides
an outline of preliminary non-binding commitments to the mix of uses, financing, tenant
types, the range of affordability ( if housing is in the mix), open space and sustainability
goals, as well as other desired outcomes, such as jobs and prevailing wages. The MOU
becomes a legally binding arrangement, with a disposition and development agreement
(DDA), once both public and private entities have worked through due diligence and
developed the refined development program from the concept plan. The MOU will include
a time table, terms for land disposition, stronger preliminary commitments to financing and
tenants, and agreed upon penalties for each side if performance objectives are not met, etc.
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APPENDIX G: ASSESSMENT OF OPPORTUNITY
SITES
ADE worked with City of Petaluma staff to identify and analyze opportunity sites
throughout the City. An opportunity site is a parcel or set of parcels that are either
undeveloped or under-developed and, due to their location, provide opportunities for the
City to implement the General Plan, the Central Petaluma Specific Plan or the future
SMART station area plans through development or re-development so as to realize
economic development objectives.
This assessment of opportunity sites is divided into three parts as follows:
1. Sites within one-half mile of the Downtown SMART Station Area
2. Sites within one-half mile of the Corona SMART Station Area
3. Sites outside of these two SMART Station Areas
1. OPPORTUNITY SITES WITHIN ONE-HALF MILE OF THE
DOWNTOWN SMART STATION AREA
ƒ
SMART property. A 4.7 acre site of largely vacant land between the Petaluma
Station and the Copeland Street Transit Mall. The site is located between Copeland
and Lakeville Streets and East Washington and East D Streets. The Downtown
Petaluma Station will be located parallel to Lakeville Street and the Transit Mall
located along Copeland Street. This parcel is shown as Site 21 in Figure G-1.
ƒ
Haystack Mixed-Use Project. A 4.1 acre largely vacant site is the location of the
proposed Haystack Mixed Use development, located adjacent to the Copeland Street
Transit Mall between Weller and Copeland Streets. The uses in this proposed
development are 100 townhomes and 40,000 square feet of retail. The developer’s
proposal for this site will be heard by the Planning Commission soon. This parcel is
shown as Site 22 in Figure G-1.
ƒ
Golden Eagle Shopping Center. A 7.5 acre site located about two blocks from the
proposed transit site, south of East Washington Street and west of Weller Street.
This site is made of two parcels, with the largest parcel (7.3 acres) part of the
shopping center. The improvement to land ratio for this parcel is 0.6, suggesting that
this site may be ripe for redevelopment. It has also been identified as a brownfield
site in the City’s mapping program. The parcels are designated Mixed Use in the
Central Petaluma Specific Plan and zoned Urban Core This parcel is shown as Site
23 on Figure G-1.
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ƒ
Mostly vacant underutilized land southeast of the transit station. A 3.8 acre
site, located adjacent to the proposed transit site, east of East D Street, and South of
Lakeville Street. This site is comprised of eight parcels, with some improvements on
two of the parcels. The uses to the southeast of this site are predominantly industrial.
This opportunity site is shown as Site 26 on Figure G-1.
ƒ
Single story retail/commercial site with surface parking northwest of the
transit station. This area includes three opportunity sites (single-story buildings with
surface level parking), on a total of about 8.1 acres that could be looked at
individually or as a whole. The area is located between Copeland and Lakeville
Streets and Madison and East Washington Streets. This area includes 9 parcels, with
6 owners. The parcels are designated Mixed Use in the Central Petaluma Specific
Plan and are zoned Urban Core and have a Mixed Use General Plan designation.
These sites are shown as 18, 19, and 20 on Figure G-1.
ƒ
Other sites within ½ mile of the SMART station. Figure G-1 shows seven
additional sites located within ½ mile of the SMART station, which may provide
opportunities for transit-oriented development.
− Sites 15 and 16 are located on the west side of the River. Site 15 is 4.3 acres in
four parcels with three owners. The approved project for the site is the North
River Landing-194MFD an 80-unit assisted living facility with 20,600 square feet
of commercial space. Site 16 is 2.4 acres, with four parcels and one owner. It has
been identified as a brownfield site. The approved project on this site is for the
Water Street Live Work development with 107 units and 5,000 square feet of
commercial.
− Sites 17, 24, and 25 are each small sites (0.6 acres of smaller) located on the west
side of the River. The approved project on Site 17 is an expansion of office and
commercial space and the proposed project on Site 24 is a boutique hotel. Both
projects are struggling with obtaining financing. Site 25 is a brownfield and
former gasoline station.
− Sites 27 and 28 are each small sites located east of the SMART station. The
approved project on Site 27 is redevelopment and adaptive reuse of the existing
building into a 95-room hotel and restaurant. Site 28 is vacant, with no proposed
use.
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GO
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Legend
LAKEVILLE ST
Half Mile Radius Around SMART Station
Central Petaluma Specific Plan Area
Urban Growth Boundary (UGB)
25
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issu an ce o f a Le tte r of Map A men dm en t (L OMA)
or a L etter o f Ma p R ev isi on (L OMR ).
HA
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Opportunity Sites
28
21
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City Limits
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Corona Ely Specific Plan Area
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Opportunity Areas & Sites
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FIGURE G-1
DOWNTOWN PETALUMA TOD SITE
31
PCDC-Redevelopment Area
Floodway*
100-Year Floodplain*
b
a
750
Planned SMART Rail Station
Existing Bus Transit Mall
375
0
.
750 Feet
DISCLAIMER
These maps or plans were compiled and or digitiz ed via electronic
means utilizing many source documents . It is intended to be
representative of c ertain physical, legal and geometric features
within the City of Petaluma, CA and its environs. The existence or
location of fac ilities must be field verified and this document does
not imply or guarantee neither adequate c apac ity nor the availability
of service. The City of Petaluma assumes no responsibility regarding
the accuracy of the information presented herein for legal
documentation, representations of ac tual construc tion or for any
other purpose for which this map was not intended.
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Final - November 2010
2. OPPORTUNITY SITES WITHIN ONE-HALF MILE OF CORONA
ROAD STATION AREA
The Corona Road Station Area presents different opportunities for TOD than the Central
Petaluma Station Area. The Corona Road station is located in the northeastern quadrant of
the City, at the intersection of Corona Road and North McDowell Boulevard. Development
near the Corona Road site includes residential, office space, industrial uses, a brewery, and
other uses. To the north of the site is a possible UGB expansion area. Opportunity sites
within the Corona Road TOD include:
ƒ
Transit Station. A 7 acre site for Corona Station. The site is located at the
intersection of Corona Road and North McDowell Boulevard. SMART has not yet
purchased this site but is in the process of doing so. The current zoning on the site is
Mixed Use 1 B, with a Mixed Use General Plan designation and a Transit overlay.
This site is shown on Figure G-2 as Site 6.
ƒ
Site 7. A 5-acre site adjacent to the proposed SMART site, across North McDowell
Boulevard. The current zoning on the site is Mixed Use 1 B, with a Mixed Use
General Plan designation. The existing uses on this site include residential units and
an automotive repair shop. This site is shown on Figure G-2 as Site 7.
ƒ
Other sites within ½ mile of the SMART Station include the following three
sites, which are not adjacent to the SMART Station parcel:
− Site 3 is a 3.1 acre site located northwest of the SMART Station on North
McDowell Boulevard. The General Plan designation is Business Park and the
Zoning is Business Park. Site 3 is in one parcel and has one owner.
− Site 4 is a 2.6 acre site located northwest of the SMART Station. Site 4 includes
four parcels and has two owners. The General Plan designation is Industrial and
the Zoning is Industrial.
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FIGURE G-2
CORONA ROAD TOD SITE
Mixed Use, Commercial, & Industrial
Opportunity Areas & Sites
EDWO
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- DRAFT March 3, 2010
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L
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fro m the Sep temb er 1 98 9 Flo od In su ran ce R ate
Map (FIR M) a nd a re su b jec t to re vis io n thro ug h
issu an ce o f a Le tte r of Map A men dm en t (L OMA)
or a L etter o f Ma p R ev isi on (L OMR ).
Potential Project
Vacant Land
Underutilized Land
EL
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NOCentral Petaluma Specific Plan Area
MA Ely Specific Plan Area
Corona
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OU
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Boundary (UGB)
TA
UGB Possible Expansion
IN Area
PK
PCDC-Redevelopment Area
W
Floodway*
Y
Planned SMART Rail Station
Existing Bus Transit Mall
375
0
.
750 Feet
DISCLAIMER
These maps or plans were compiled and or digitiz ed via electronic
means utilizing many source documents . It is intended to be
representative of c ertain physical, legal and geometric features
within the City of Petaluma, CA and its environs. The existence or
location of fac ilities must be field verified and this document does
not imply or guarantee neither adequate c apac ity nor the availability
of service. The City of Petaluma assumes no responsibility regarding
the accuracy of the information presented herein for legal
documentation, representations of ac tual construc tion or for any
other purpose for which this map was not intended.
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Final - November 2010
3. OPPORTUNITY SITES NOT WITHIN SMART STATION AREAS
In general there are five areas with significant sites not affected by potential TOD
development: a) the business parks on Lakeville Highway; b) the north side of Petaluma
River near Highway 101, c) North McDowell Blvd. near Rainier; d) south of the freeway
near the Factory Outlet Center and the Auto Plaza; and, e) near the intersection of North
McDowell and Old Redwood Highway.
a) ADE recommends retaining the business park area for business park type uses
wherever possible. Over the long term, the City will want opportunities to locate job
generating businesses, even though the short term market prospects may require
allowing other uses in vacant buildings. There has been some housing development
off of Casa Grande Rd. and Site #34 is designated mixed use in the General Plan. A
mixed use development combining ground floor office with residential would
provide a transition between the existing housing and the existing office buildings to
the west.
On the east side of Casa Grande, Site #33 is designated for neighborhood
commercial. This may be a logical long term use but in the current market and with
the limited market access to this site we would not expect demand in the short term
to redevelop this site. The existing older industrial uses are an appropriate interim
use. The City needs some sites available for these types of yard uses and it would not
be appropriate to allow them to locate closer to the center of town.
b) These major sites (#30 and #31) have been industrial (and are identified as
brownfields sites) but #31 is now proposed for a housing project. The City should
attempt to maintain some capacity to support river dependent, or compatible,
industrial in this area, which can perhaps be accomplished with site #30. However, if
so, buffering should occur on Site #31 to avoid conflicts and to preserve the
maximum utility of the industrial site.. As discussed in the SWOT Analysis
(Appendix B), the fact that there are river dependent commercial uses in Petaluma
helps to maintain Army Corps maintenance services, which has flood protection
benefits as well as allowing more recreational use of the river. River dependent
industrial uses include transportation of bulky products and materials by barge, or
manufacturing that uses materials from the water or the Bay. Since the Downtown is
also adjacent to the river, and recreation uses downstream are important, the City
needs to maintain performance standards for industrial uses that avoid noxious
odors or excessive noises, as well as pollution of the water itself.
In our opinion, the McNear Peninsula, across the river from Site #32 should be
preserved for open space. Access to the site currently exists from its western end,
where a small interpretative display and trailhead exists. Such a large expanse of open
space in proximity to Downtown should be considered a major amenity and
preserved.
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c) Sites #10, #11 and #12 are proposed for major retail, hospital and medical office
uses, respectively. In our opinion, these are very suitable uses for the sites and are the
types of developments that would enhance the business mix in Petaluma. Site #10 is
proposed for a major home improvement center and this is identified as an existing
retail gap for Petaluma in Appendix D. In addition, site #10 offers the scale that
would help to implement the proposed freeway underpass at Rainier, which would
also improve access to site #9 and generally increase mobility through this part of
Petaluma.
Site #11 is planned for the Petaluma Valley Hospital expansion and Site #12 is
planned for additional medical office space. These developments are critical to
bolstering a very important sector for Petaluma. The City is currently underserved
for medical services, and with further expansion this sector could become a
significant economic engine for the City.
d) Site #9 is a natural retail site from the perspective of freeway visibility and proximity
to other major retail; however, it suffers from low elevation next to the river and a
lack of access, until the Rainier underpass can be built. We do not believe there is a
short term solution for this site, because any use will need to deal with the flooding
issue and the short term retail market may only allow development of Site #10 and
the Regency project until market conditions improve.
The use of Site #5 for expansion of the Auto Plaza will be made possible when Auto
Center Drive is extended to meet Old Redwood Highway. As discussed in the retail
strategy (Appendix D), this would be very important for the health of the Auto Plaza
when market conditions improve.
e) We recommend the City support the proposed Clover Stornetta annexation. The site
is adjacent to existing business development in the City and Clover Stornetta
represents a signature industry for the City and the region.
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APPENDIX H: VACANCY REDUCTION
APPROACHES
As part of a larger economic development strategy effort by Applied Development
Economics (ADE), Allan D. Kotin & Associates (ADK&A) has prepared this discussion of
mechanisms for reducing the extensive vacancy that characterizes the retail, office and
industrial space inventories in the City of Petaluma.
Vacancy reduction as considered here is for the most part a short term rather than a
structural change in the economy. The development strategy is necessarily more concerned
about the structural changes and the long term impact. At the same time, lowering vacancy is
critical not merely as a manifestation of economic growth or health but perhaps even more
important to halt the infectious aspect of vacancies on the value and viability of nearby
occupied properties.
At the same time, however, this discussion of vacancy does incorporate several elements
which bear directly on the long term economic development strategy for the city, for
instance, reshaping the mission and activities of the redevelopment agency to address the
issue of filling vacant space rather than creating new development.
BACKGROUND AND CONTEXT
High vacancy in each of the three relevant categories (retail, office and industrial), is not a
recent phenomena. Much of the office and business park vacancy dates back more than five
years to a major industrial shift where high tech industries, such as Telecom, initially locating
in Petaluma moved away from the community. The information published by Cassidy
Turley, suggests that vacancy rates in Sonoma County in the industrial category have been
over 10 percent for almost five years and were over 10 percent at the peak of the economic
boom in 2007 and early 2008. Current vacancy rates in industrial space as of the fourth
quarter of 2009 were approximately 15.4 percent in Petaluma representing almost 800,000
square feet of vacant space out of an inventory of just over 5 million square feet.
With respect to office space, the situation is actually much worse. In Petaluma, the vacancy
rate at the end of 2009 was almost 35 percent well above the county total of 29 percent. This
pattern had persisted for several years since even in 2006, 2007 and 2008 the vacancy rate
was at or above 25 percent. A different source, Keegan & Coppin, puts the third quarter
vacancy in Petaluma at 35.2 percent without sublease vacancy and at over 41 percent with
sublease vacancy. This represents 1.3 million square feet out of a total inventory of 3.1
million. The same source, again for the third quarter of 2009, puts the vacancy rate for
industrial at 17.3 percent out of the inventory of 5.3 million.
Turning to retail, third quarter 2009 vacancy was 11.4 percent for the City of Petaluma
versus 9.2 percent for the whole county. In this instance, there was a vacancy of
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approximately 300,000 square feet out of 2.6 million. At the end of 2009, several retail
projects were approved or proposed, potentially adding 773,000 square feet of retail space.
The three projects are East Washington Place, Deer Creek Village and miscellaneous mixed
use projects totally 80,000 square feet. So far, most of the vacancy has occurred in older
marginal space as discussed below in the discussion of flight to quality. This trend could
continue into the future if owners of older strip-commercial centers do not continue to
invest in the up-grading of their properties. According to the FEIA’s completed for the East
Washington Place and Deer Creek Village proposals, these projects are positioned to capture
regional sales and should not significantly affect existing local spending. However, as noted
below, other changes in consumer demand are occurring that will affect the competitiveness
of older retail centers.
The recent economic crisis has masked certain important longer term trends. Industrial
vacancy rates were high and growing in Petaluma for some time. Furthermore, retail vacancy
at one level will be very difficult to cure insofar as there is a long term structural contraction
occurring in the amount of retail space needed to accommodate the same volume of sales.
There has been a long term reduction in the amount of retail area needed to accommodate
demand that is being masked right now by the recent entry of retailers particularly at the
Regency center which has just been approved.
The source material for this includes interviews with the business community. These
interviews were particularly relevant in that they provided insight as to why the vacancy was
occurring and what some of the obstacles were to filling the space.
RETAIL
Special Context and Structural Change in Local Mix
Petaluma retail exists in two very different configurations, one a restored downtown retail
characterized generally by smaller local tenants and two, a major retail corridor of the more
traditional chain store type east of the river along the McDowell and Lakeville corridors.
In the City of Petaluma as well as elsewhere, there is a pattern that may be characterized as a
‘flight to quality’. In a healthy and growing market, retail tenancy typically is distributed
among at least three classes of shopping centers. Sometimes referred to as A class, B class
and C class and at other times designated as regional, community and neighborhood at
different levels. This distinction tends to preserve the most desirable A class centers for large
chain tenants and only local tenants with significant ability to pay high rents. What happens,
however, in a downturn, be it a cyclical or structural one, is that as the volume of available
tenants shrinks, the A class centers are much more willing to accept local and smaller tenants
that they would not have otherwise taken. This tends to create a situation in which B and C
class centers are de-populated disproportionately not merely due to the contraction in the
economic cycle but to the upward migration of their tenants. One of the important
implications of this distinction is that a broad undifferentiated effort to preserve retail
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occupancy is doomed to failure and there should be some inherent element of prioritization
to focus on those B and A class centers which have a reasonable prospect of survival.
In this regard, it is particularly important to remember that the City will be much better
served by one abandoned shopping center and two relatively full centers, than three
shopping centers all of whom have very high discernable vacancies. One possible basis for
setting priorities is to favor those centers which have the least deferred maintenance and
design obsolescence in the absence of any major renovation commitment by the center
owner. For the city to aid merchants in centers where the owner is unable or unwilling to
commit to renovation may only be postponing the inevitable.
Applicability of Alternative Solution Scenarios
Generally speaking there are three categories of alternative solutions: technical and financial
assistance; marketing to non-traditional tenants of retail space, and adaptive re-use.
Assistance
Retail is an area where technical assistance and modest amounts of financial assistance
can preserve tenancies that would otherwise terminate, and can motivate tenancies that
would not otherwise occur. Tenant assistance can come in several forms: technical assistance
in how to reduce costs for inventory, energy, marketing and telecommunications: low cost
loans for either inventory expansion or refurbishment of the stores; or limited subsidies to
landlords to make up rent differences.
The form of tenant assistance that would be most useful would be a combination of a loan
program and a resource center. Resource centers in which the services are made available
either at public expense or at significantly reduced cost could be useful. In parallel, a loan
program at subsidized interest rates possibly with deferred payoffs would also assist stores
that could otherwise not refurbish their stores or perhaps even fund required inventory.
Non-traditional Tenants
Another class of solutions is finding non-traditional tenants. In general, the two classes of
non-traditional tenants that are eager to occupy retail space and who will not harm adjoining
retailers and may in fact enhance them are non-profit corporations and artists and artisans.
At selected locations, the city could actually sponsor art or artisan centers. Using an empty
store as a gallery is a very useful thing to create certain amount of visual interest that can be
done at low cost and gets away from the appearance of decay and decline.
Non-profit service providers of social services, advice, legal services etc. are natural
occupants of street front retail space although they often cannot pay full retail rents. In
implementing the strategy of this type, the city or redevelopment agency may consider a loan
program or a limited subsidy program to the landlords or to the non-profits to allow them to
occupy space they could not otherwise afford.
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Adaptive Reuse
The third major category of the solution scenarios is adaptive reuse. There are three
modestly well-established adaptive reuses for vacant retail space that have some precedent.
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One emerging replacement use is health services. Key features of a good retail site
such as accessibility and adequate parking are precisely the same features that define
a good health services site. Clinics, physical therapy facilities, and other services that
represent relatively easily relocated medical services that do not require elaborate in
place infrastructure are good candidates for retail.
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Another use is education. Training, as distinguished from regulated school education,
is something easily done in many retail spaces. This can be physical education,
occupational training and other similar elements. Under certain circumstances, retail
spaces can actually become schools although the standards imposed by the California
Education Code make that difficult.
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A third possible use would be conversion to public agency uses. Examples include
the Petaluma City School District which occupies a former neighborhood center as
their administrative offices.
OFFICE AND INDUSTRIAL
As background, it is important to establish some level of context and structural change. The
proliferation of high-end business parks and office campus type facilities that occurred in the
1990s, created an oversupply that seems to be fairly permanent in nature. Many of these
buildings along McDowell Boulevard or in the Redwood Business Park are clearly designed
to accommodate large employers with extensive highly paid technical staff. These employers
no longer are locating in the Sonoma County or Petaluma area and, as a consequence, much
of the space remains unoccupied.
The Applicability of Alternative Solution Scenarios
In this instance, perhaps even more directly than in retail, there is a nexus between economic
development and increased occupancy. It should be possible to provide both grants and low
cost loan programs to tenants willing to relocate to currently vacant space in these business
and industrial parks.
Creating such a program and providing it to the owners and landlords for use in recruiting
tenants could bear some useful benefits.
Once again, a resource center that dealt with such issues as tenant build-out, recruiting,
employee training (perhaps through local community colleges) could be a resource for
enhanced occupancy.
In this instance perhaps even more than retail, finding non-traditional tenants becomes quite
attractive. Among the classes of non-traditional tenants that are available are education
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facilities which often work fairly well in office buildings, government facilities, and
temporary offices for large projects.
The opportunities for adaptive reuse of office space that is truly office space are pretty
limited. At the same time, however, freestanding buildings which could be converted to
recreation uses or even clean industrial uses might be somewhat appealing. Even warehouse
uses for low-rise facilities with large interior spaces represent an alternative.
Another use which could be considered is to convert well situated space to hospitality or,
more likely, hospitality enhancing uses. Office or industrial buildings of good quality which
include relatively large clear span spaces can be converted fairly easily to conference centers
which in turn enhance hotel use.
As is the case in retail, there is a risk in the diffusion of efforts to try and make all industrial
spaces more occupied. As uncomfortable as it seems, there should be some effort and
prioritization so that programs designed to aid tenants and provide additional inducements
are concentrated in places where they can materially change the appearance and character of
the space. Once again the likely criteria for prioritization would include the level of differed
maintenance, considerations of design obsolescence and the willingness of the property
owner to commit to parallel efforts of project wide renovation
SUMMARY OBSERVATIONS AND RECOMMENDATIONS
Review of the finances of the Petaluma Redevelopment Agency suggests that there is a
financial reserve adequate to launch and fund loan and assistance programs. Such programs,
or analogues to them, were a part of agency budgeting but have not been used and could be
restored without creating a major new precedent.
Clearly, a set of financial programs need to be developed for re-tenanting vacant space. They
include loans to new tenants to finance their tenant improvements at low cost rates. Such
loans might be forgiven on a pro rata basis as a function of additional employment
generation. This has been done in other redevelopment areas. The city could also help
eligible potential users by identifying alternative non-city financing which could help to
finance projects that would be owned by non profit and other public entities – e.g. 501(c) 3
and 63-20 revenue bonds)
There exists also some opportunity for direct assistance to either landlords or tenants to
attract new tenants who are particularly beneficial from a physical point of view or
alternatively job generating.
Finally and perhaps most important is the creation of resource centers for both office
industrial tenants at one level and retail tenants at another, where they can get assistance in
both identifying where space is, what programs are available to assist them and resource
assistance for those aspects of their business which will make them more efficient and better
able to pay rent.
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One of the great truisms of economic growth is that the vast majority of new jobs are
created in very small firms. At the same time, neither Petaluma nor most jurisdictions are set
up to assist small firms. This is why resource centers which become the funnel for both
technical support and financial assistance may be particularly desirable.
Depending on the resources available and interest of other entities, these resource centers
could take two forms. They could be small offices and web sites with a good publicity
program but where the primary contact was initiated by merchants, employers or property
owners in need of support. Alternatively—or perhaps at a later stage—the resource center
and its services could be combined with a business outreach program undertaken jointly with
the community college district as a potential source of specialized required training. This
outreach or visitation program would target various business clusters that the city is most
interested in expanding and/or assisting. (Please see discussion regarding Business Retention
and Expansion and Technical Assistance in the Action Plan, Parts B and C.)
A systematic search for non-standard tenants of both retail and office industrial space would
also be helpful. Identification of non-profits capable of paying some rent but not full rent
would be useful. Identifying artists, artisans and sources of gallery exhibitions which would
add to the appeal of retail space and, under certain circumstances industrial space as well,
could also reduce some of the pernicious effects of visible vacancy even though they would
not necessarily generate revenue.
In this environment of economic constraint and high vacancy, it is particularly important
that regulatory staff be perceived as helpful and assisting. In the past, contrary observations
have been made but the City has taken steps to create a more customer friendly approach in
the development entitlement process. This is an encouraging transition as such flexibility can
be a critical tool in assisting desirable business expansion.
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APPENDIX I: TECHNOLOGY INFRASTRUCTURE
OVERVIEW
As part of the preparation of the City’s economic development strategy, ADE prepared an
initial assessment of the community’s information technology readiness, especially
broadband infrastructure, access, quality, and affordability. Broadband is high-speed Internet
access that is a critical 21st century infrastructure for economic development. It is also
critical for distance learning, e-Health and telemedicine, as well as public safety, emergency
services, and the delivery of high quality public services and information through egovernment and community outreach. Bridging the Digital Divide for un-served and
underserved communities is an important issue for Petaluma given its significant Latino
population and business community. The study effort included:
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Meeting with the City’s Technology and Telecommunications Advisory Committee
(TTAC) on January 13th 2010. The mission of the TTAC is to assess the City’s
technology readiness and make recommendations on how Petaluma can be a tech
friendly city, with a guided discussion on specific issues. The meeting also included a
presentation by a community member on what is needed for a more in-depth
assessment. The Committee expressed its interest to align its work with the City’s
Economic Development Strategy for the longer terms (see link for archived meetings
including the January 13th discussion.
http://petaluma.granicus.com/ViewPublisher.php?view_id=8)
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Interviews with key stakeholders in both the public and private sectors, including the
City’s Information Technology Manager; Petaluma Community Access; local and
regional educational, workforce and economic development partners and technology
providers which have telecommunications network infrastructure and/or are users of
information technologies; and businesses and community organizations on their
perceptions of access, quality, affordability, and adoption.
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Review of the City’s Technology goals and policies in the Petaluma General Plan 2025,
and other materials on city government technology capacity including a case study by
service provider AT&T
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Review of technology innovation reports for the County’s various industry clusters
prepared for the Sonoma County Economic Development Board, which include a
discussion of workforce issues.
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Consultation with the President and CEO of the California Emerging Technology Fund
which supports the acceleration of broadband deployment and use and major initiatives
around e-Health and telemedicine, “smart” housing, infrastructure and growth planning,
and digital literacy (www.cetfund.org).
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KEY FINDINGS AND RECOMMENDATIONS
This section addresses three components: broadband infrastructure and capacity issues; the
general status of the technology/telecommunications cluster (which has downsized
significantly in the past few years due to global economic trends, the recession, and industry
dynamics); and workforce skills. The findings and recommendations are cross-referenced
with the goals and policies of the Technology section of the City’s General Plan.
BROADBAND INFRASTRUCTURE, ACCESS, ADOPTION AND OTHER
TELECOMMUNICATIONS
Petaluma is well served with high speed Internet (broadband) access, (such as DSL and
cable). Petaluma Community Access is an important resource for the community.
Broadband is generally a residential and small business product. Residential coverage is
approaching 100 percent, some with multiple options for DSL and almost all covered by
cable TV broadband. Business areas which provide service for larger firms are highly
covered. Some providers consider the City to be “fiber rich;” it compares favorably with
other cities – i.e., ATT is deploying its next generation U-verse product in the City (based on
a fiber backbone). Wireless broadband is available in many areas of the City but not all.
There are some gaps. Cable TV is scarce in the downtown business area. There appears to
be gaps in wireless access on the east side. While the City did not qualify for ARRA funding,
since it does not meet the definition for un-served and underserved in a rural area, that does
not mean there aren’t gaps but they have been reported only anecdotally. Also, some
underserved communities such as some members of the Latino population generally need
outreach and capacity assistance to improve access and adoption. It is difficult to obtain
complete information from telecom providers and a more in-depth assessment is required to
identify specific gaps. This could include a community survey. Better messaging is needed
where there is service but residents and businesses are unaware of resources. Some Latino
businesses may need assistance with adoption of technology resources for business
operations.
The City should work with community partners to map public access point and wireless
hotspots at convenient sites to promote access.
There are resources in the City’s high schools that can help bridge the Digital Divide. For
example, high school students could fulfill their community service requirements or goals by
assisting seniors and Latinos through their churches and community organizations.
The Petaluma Ecumenical Properties senior housing projects are an asset; the community
rooms have computers and younger seniors are on-line. (Note: all their future properties will
be green buildings).
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The California Emerging Technology Fund reports it has no project activity in Sonoma
County; the City and its community partners should collaborate to determine if there is a
digital literacy issue that needs to be addressed, especially with the Latino community. The
City should be informed about the other resources of the Fund, including a new tool kit for
local governments on joint infrastructure planning.
As noted in the City’s General Plan, the City should “work with the technology industry and
local media provider(s) to expand the service levels and growth potential in the community
in an attempt to obtain 100 percent geographical access.”
CITY TECHNOLOGY ISSUES
The City’s General Plan has a thorough consideration of Technology goals and policies,
many of which have been accomplished or for which the City is making progress. The City
has made a significant investment in its own technology infrastructure, has a five year
strategic plan, and an innovative Information Technology Manager. It will be important to
continue investments and upgrades to reflect changing technologies and community and
economic development needs, and to address public safety and emergency services capacity.
The City’s web site is one of several “portals” to Petaluma – the PVP and PACC being the
others. More integration and cooperation is needed between these “portals.” The City’s
website could benefit from a great deal more information geared to economic development
resources. Currently, the process is not clear for setting up a business. The City as contracted
with CGI Communications to produce “Community Videos” designed to enhance economic
benefits which will be a valuable marketing resource. The Technology and
Telecommunications Advisory Committee is considering recommendations to the City
Council to review major website developments of marketing value.
The City should assess how it can streamline the building permit and planning process
through technology. Past improvement efforts experienced technology software glitches but
improvements should continue to be pursued, including areas such as digital plan reviews
and permit payments.
The City should assess the user friendliness of access by the community to on-line city
government services. The City could use technology to better accommodate electronic
payments such as for turning basin berthing fees. There is no real notification stream on City
services and resources. Better “PR” is needed. Possible resources include using the City’s
sewer and water bills to advertise on-line services, the City website, PCA, and social media.
The Advisory Committee is looking to see how the City can provide more web-based
services and create new efficiencies, provide more data to citizens in a more user-friendly
way, and identify ways to obtain citizen input.
As noted in the General Plan, the City should provide computer access points, training and
print capability to low income and access-limited residents at service sites, City Hall, libraries,
the senior center and other appropriate public sites.
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There needs to be better timed traffic signals at major intersections, to improve the flow of
traffic and reduce greenhouse gas emissions. It is difficult to manage the timing as Caltrans
owns two of the intersections in question.
TECH SECTOR
The tech sector is sustaining itself, although the telecom sector can be volatile and Telecom
Valley is not really an appropriate identification for the City. It won’t come back in the way it
was before, but it’s better to diversify the City’s economic base. There is still an asset base of
workers and knowledge. The City should leverage these pieces by reaching out to the smaller
firms in the areas of clean tech and advanced information technologies and applications that
are emerging out of the telecom/tech cluster. Also, the City could leverage the technology
capacity into other clusters, as technology users, and by focusing on assisting start-ups and
small growing firms.
Petaluma can be a technology innovation center, building off its technology base and
institutional partnerships. For example, Santa Rosa Junior College is using a new technology
from a Petaluma start-up (Utelogy) with input from JC Media Services leaders, which will
simplify classroom media. The technology was rolled out at the Petaluma campus. The City
should be promoting these examples of innovation. Other technology firms such as Calix,
the communications equipment supplier specializing in access solutions for broadband
service delivery, should also be highlighted in the City’s marketing efforts.
This technology capacity is an asset for an expanded city green footprint, especially as it can
help with telecommuting and other on-line access to information and services and reduce
travel trips. The City’s electronic infrastructure can be an incentive and opportunity to
support telecommuters who could work in the Silicon Valley and other parts of the Bay
Area. The City’s Information Technology Division provides a good summary of the City’s
IT role in environmental responsibility.
The Advisory Committee would like to focus on areas where the City’s businesses have been
innovative, and to claim a stake on emerging green and clean technologies, including
alternative energies. With Sonoma County being a pioneer in AB 811 and the City focused
on sustainability, there is an opportunity for Petaluma in these new technology sectors. One
area of consideration might be a possible role in smart grids, which connect energy
efficiencies with information technologies. Smart housing is another potential application.
The City should be proactive with linkages to the Innovation Council and the Sonoma
Mountain Business Cluster Incubator, to promote Petaluma as a location when technology
start-ups spin off, and for entrepreneurship support. This would be a good role for a
designated Economic Development Manager.
WORKFORCE SKILLS ISSUES
Santa Rosa Junior College and Sonoma State University are significant assets in development
of technology-based workforce skills. Though several innovative programs are being offered
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through these institutions, there are still gaps in the area of technology-related skills. A study
by the Sonoma County Economic Development Board found that 29 percent of firms
surveyed for the 2008-2009 Technology, Innovation and Creativity Report had difficulty
finding employees to fill positions in IT/Computer Programming. Since, sixty percent of the
top ten fastest-growing occupations are tech-related, there is concern that the local education
system is not preparing students to qualify for high paying jobs in the Information and
Communications Technology industry and other technology-based industries. Business feels
there needs to be a better emphasis on technology-related skills development in both high
school and in college. The study identified technology-related courses that businesses would
like to see offered within the region. In light of the fast-growing Latino population in the
region, there should be efforts focused on skills-building for Latino youth.
The City and its businesses need to improve collaboration and participation with the
Sonoma County Workforce Investment Board to ensure that Petaluma is included in
initiatives and connected to resources. The City also needs to strengthen relationships with
the Innovation Council which will improve regional linkages with the business community.
These opportunities can best be realized through a designated Economic Development
Manager for the City.
Economic development, education and workforce development partners should focus on
career technical education, school to career partnerships, and partnerships with the unions.
There are opportunities in the “green” economy, renewable energies, energy efficiencies and
green building that require some technology-based skills and are potential opportunities for
apprenticeships as well as other skills building. Again, ensuring the alignment of workforce
skills with employer needs in the key local and regional clusters would be advanced by a
designative Economic Development Manager.
SUMMARY
Overall, Petaluma has many assets in terms of:
ƒ
Existing technology/broadband infrastructure throughout most of the city;
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Intellectual capital of the workforce;
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Core technology business base that is transitioning into good emerging sectors –
both in development and use of information technologies; and
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Innovative City Information Technology Division and the Technology and
Telecommunications Advisory Committee.
Key areas on which to focus the City’s economic development technology-related actions
include:
1. Improve the City’s website as a more user-friendly portal, especially for marketing
economic development assets and providing access to effective e-government
services. Upgrade on-line permitting and planning processes.
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2. Conduct a more thorough technology assessment as recommended to map baseline
conditions and develop an infrastructure deployment and resource strategy. There is
anecdotal evidence that there are infrastructure gaps which need to be better mapped
and understood, and aspects of unserved or underserved communities that need to
be reached. Anecdotal evidence suggests that there are gaps in wireless service and
high-speed internet. Also, while the infrastructure may have only a few gaps
currently, with usage and technologies accelerating rapidly, continual investment in
infrastructure is necessary, especially for mobile services, to be prepared for future
economic growth. Further, based on information from the FCC, there are 18,209
residential broadband subscribers in Petaluma with download speed of 768 kpbs and
upload speed greater than 200 kbps. This represents approximately 68 percent of
Petaluma households. An example of a possible approach was presented to the
Technology and Telecommunications Advisory Committee.
3. Assess emerging technologies and their uses which will require new levels of
broadband capacity throughout the City. The California Emerging Technology Fund
recommends this approach even as the baseline of broadband infrastructure is
currently good. The movement to mobile media and applications such as video
technologies which require very large levels of bandwidth (not only for social uses
but for critically important applications like public safety, emergency services and
telemedicine) will strain existing capacity for most cities. The City needs to
incorporate these emerging needs into its infrastructure planning and work with local
telecom providers to ensure that they are making the appropriate investments in the
City’s wireline and wireless infrastructure. Such a mapping project could cost from
$5,000 to $20,000, depending on the availability of existing data.
4. Promote the City as a “tech savvy community” and deliver on the promise, building
on its legacy as Telecom Valley. This is particularly important for the City’s image to
support the competitiveness of existing firms and to attract and support
entrepreneurs and new businesses in emerging technology-related fields, especially
green businesses, which need high levels of telecommunications capacity.
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APPENDIX J: PERSONS INTERVIEWED
1.
2.
3.
4.
5.
6.
7.
8.
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10.
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29.
30.
31.
32.
33.
Abraham Solar
Albert Straus/Deborah Parrish
Alison Marks
Anthony Mills
Ben Stone
Bruce Blinn
Charles Robbins
Chip Rees/Tyler Young
Chris Castellucci
Chris McCarthy
Christian Lind
Dan Sunia
David Glass
David Keller
David Martinelli
David Rabbitt
Diane Zimmerman
Dick Herman
Donna Hinshaw
Edward Lombardi
Elece Hemphill
Gary Imm
Jeff Mayne
Jeff Piccinni
Jessica Zenk
Jim Happ
Jaimey Walking Bear
John Bertucci
John Burns
John Crowley
John Fitzgerald
John Nemeth
John Records
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35.
36.
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40.
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51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
Justin Hayashi
Larry Peter
Lillian Hames
Linda Postenrieder
Lisa Maldonado
Lorraine DuVernay
Marcus Benedetti
Marie McCusker
Marsha Trent
Marty Bennett
Mary Stompe
Mike Harris
Mike Healy
Mike Powers
Onita Pelligrini
Pamela Torliatt
Pat Conklin
Pierre Miremont
Rich Ronsheimer
Rick Mossi
Rob Brockman
Ryan Williams
Sue Conley/Peggy Smith
Teresa Barrett
Tiffany Renee
Tim Williamsen
Tom Baker
Tony Magee
Vangie Pullins
Vicky Kumpfer
Vin Smith
Willie McDevitt
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APPENDIX K: SAMPLE BUSINESS SURVEY
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APPENDIX L: SAMPLE PROJECT SCORING SYSTEM
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