By Greg Kane
CREJ Staff Writer
The city of Redding has more than 90,000 residents living in the shadow of nearby Mount Shasta and Shasta Lake. It is bifurcated by a major freeway running from San Diego to Vancouver and features an airport and rail access.
Yet when developers and employers look at opportunities to build plants, factories or offices in Northern California, their eyesight generally doesn't reach beyond Sacramento, its neighbor more than 150 miles to the south, said Patrick Keener, economic development liaison for Redding.
"People think North State is Sacramento," Keener said. "Well, Sacramento is not North State."
Keener is part of a delegation of city and regional economic development officials and real estate executives who traveled across Oregon and California in November in hope of opening the eyes of financiers, businesses and brokers to Redding's potential as an industrial center. The focus is a 700-acre business park endeavor that the city will have invested more than $50 million into by the time it is ready for construction next year, officials said.
Supporters believe the Stillwater Business Park will reinvigorate a manufacturing base that has been largely nonexistent in Redding since the timber and mining industries left the area in the 1980s. The 16-parcel site features cheaper land than can be obtained in Sacramento and the San Francisco Bay Area, and is served by one of the state's most cost-effective utilities, said John Troughton, a senior director with
Cushman & Wakefield in Oakland who is leading Stillwater's brokerage efforts.
But the large project also faces what some see as an uphill battle in a climate where communities both in and outside of California are competing for a shrinking number of business opportunities.
Jon DeCesare, president of supply chain solutions firm
WCL Consulting in Long Beach, said a number of smaller cities up and down the state have constructed similar industrial parks along freeways in the hope of attracting jobs - to decidedly mixed results.
"This is the farthest north I've heard [of] it happening, but I've heard it up and down the state," DeCesare said.
The recession also has brought real estate values in more densely populated areas to the south closer to what can be offered in Redding, broadening the regional selection for prospective businesses, experts said. But Stillwater's proponents say the project's geographical cost advantages coupled with less expensive housing and the availability of large swaths of land for development are enough incentive to have industries knocking down their doors.
"There's a demand here that needs to be met," Troughton said. "Redding is now in the game for corporate site selection. We weren't even in the game before."
Luring Developers
The wheels for the Stillwater project were set in motion more than a decade ago when the Redding City Council decided to lead the drive to redevelop a stretch of forest and wetlands northeast of the city's municipal airport to lure commercial developers - and jobs. Traditionally, a developer-partner will handle the costs of water, sewer, parks, roads and other infrastructure - as well as the lengthy and costly environmental-review process - but the city chose to shoulder the burden itself because local developers didn't have the resources to fund such a project, Keener said.
"We are a small community," Keener said. "And we don't have a lot of major developers with the wherewithal for bonding opportunities."
By the time the park is ready for new development next year, the city will have invested between $50 million and $55 million, largely through long-term bonds to be repaid in 20 to 30 years, Keener said. But it also will have 16 lots ranging from three to 92 acres on which industries can build heavy and general industrial and office projects within a few months of applying for a building permit.
A study completed as part of the project's development plan suggested such uses as plastics and precision metal manufacturers for medical devices and similar products, as well as food processing and advanced manufacturing as good fits for the region's labor supply, utilities and logistics. Troughton said the city always planned to target high-employment light industrial uses, choosing a site closer to Interstate 5 and the airport than one that sat along the city's rail access.
"It's a clearly defined choice the city made not to make heavy industrial a priority," Troughton said. "We're not looking for low-employers that make a bulk commodity type of product that you'd usually ship on rail."
Six of the 16 sites are zoned for general industrial uses, while the remainder is zoned for heavy industrial. The prices range from $3.50 per square foot for six of the smaller parcels to $1.80 a square foot for the largest site, a 91.85-acre heavy industrial parcel being marketed for $7.2 million.
In a typical real estate market, such prices would offer a tremendous advantage over other industrial hubs in the East Bay and Silicon Valley, officials said. But Keener acknowledges that growing vacancies and distressed assets in such areas have narrowed the gap somewhat as owners fight to retain and attract tenants.
"There are a lot of opportunities in the bigger cities now than there were seven or eight years ago because businesses have failed," Keener said. "It just depends on how much of a loss some of the people in the bigger cities can take versus where we are today. We believe our pricing in the business park is very, very competitive, and we can still be more competitive in our pricing."
National Competition
But it's not just other cities in California Redding must compete against.
Gino DiCaro, vice president of communications with the California Manufacturers and Technology Association, said communities up and down the state also must compete with such nearby states as Nevada, Colorado and New Mexico which continue to lure industries with tax breaks and inexpensive land.
In the past decade, the state has lost 531,000 industrial jobs - 31 percent of its base in California, DiCaro said. The cost of doing business in California is 23 percent higher than other states because of real estate prices, corporate tax and wage burdens and high electricity costs, he said.
But Keener believes Redding holds advantages that other California cities cannot offer, allowing the community to compete with other states. The Redding Electric Utility, owned and operated by the city, buys power from nearby Shasta Dam and its own gas-fired power generators, keeping costs as much as 30 to 40 percent lower than Pacific Gas & Electric and other investor-owned utilities, he said. The city utility saves residents $40 million a year in electricity costs.
"That's not chump change," Keener said.
Land prices in Redding also remain at least 30 percent below other business parks in California, Keener said. And the community does not have the strong union presence that other cities might have, potentially lowering payroll expenses for employers.
DiCaro said the claims of lowering energy costs in particular would go a long way toward helping to attract industry to the area. Energy is one of the largest portions of a manufacturer's operating budget, he said.
"Manufacturers need to be competitive to the penny," DiCaro said. "Any ability to reduce their costs in California is a necessity to operate."
A group of city and real estate officials recently made stops in such cities as Portland, Sacramento and San Diego in the hope of creating interest among both brokers and private equity managers in directing clients to the Stillwater project. The goal, Troughton said, is to make those closest to the industries they hope to attract aware of the advantages of setting up shop in Redding before the sites are even available.
"We're getting people to become aware," Troughton said. "This opportunity just wasn't there before. We've got to go out and make everybody who can't be aware of it aware that there now is an opportunity to go into Redding."
- E-mail Greg_Kane@dailyjournal.com
Greg Kanen
Daily Journal Staff Writer
