http://pleasantonweekly.com/print/story/print/2011/01/07/outlook-2011


Pleasanton Weekly

Cover Story - January 7, 2011

Outlook 2011

Business, government leaders voice 'cautious optimism'

by Jeb Bing

Pleasanton business and government leaders are cautiously optimistic about the economy in 2011, but they say it's still too early to believe the recession has ended.

Emily Wagner, in a report Tuesday night on first quarter results of the city's Fiscal 2010-11 budget for the months of July through September, said there was a slight up tick in sales tax receipts and that heavier shopper traffic in December could further buoy the second quarter. She said the city is on track for completing the current budget year on June 30 on target.

City Manager Nelson Fialho said he expects no change in the $83 million operating budget over the balance of the next six months and that it's likely the City Council will consider the same operating budget numbers July 1 when it weighs in on the next two-year budget -- for FY 2011-12 and FY 2012-13 -- that starts then.

Pleasanton is also eyeing continued growth in its business sector in the year ahead.

Clorox, which has been headquartered in Oakland for years, has purchased a building corporate campus on Johnson Drive that was once owned by Washington Mutual Bank. It is in the process of adding a 65,000-square foot, two story structure there to house a special projects workforce and soon will move 700 employees from Oakland to the new campus, with another 400 to be relocated there from the Clorox existing research center in Pleasanton, which will be sold.

Safeway Corporation also will start work within a few weeks on a new 58,000-square-foot Lifestyle supermarket on a 12-1/2-acre site it has acquired from South Bay Construction at the corner of Valley and Bernal avenues, adjacent to the I-680 northbound off-ramp and across from Koll Center and the Alameda County Fairgrounds.

The new Safeway store will anchor a retail center that will be built around it, which is expected to include restaurants, shops and possibly a bank. South Bay also owns the rest of a 39-acre site that is sandwiched between the freeway and Valley Avenue. South Bay has approval to construct up to seven four-story office buildings on the site, but with the office market still lagging, it could seek a change in the property's zoning to accommodate some residential units south of the new Safeway store.

Also on the development plate in Pleasanton is the 124-acre empty field at the southwest corner of El Charro Road and I-580, known as Staples Ranch. The property, now owned by Alameda County, is expected to gain the approval of the Local Agency Formation Commission of Alameda County (LAFCO) next Thursday to be annexed into Pleasanton. That's likely to be the last major land parcel that will be added to the city in the foreseeable future.

Once annexed, planning work by the county will get under way to allow for the construction of Stoneridge Creek, a multi-million-dollar residential continuing care community that the City Council has approved for a 45-acre site on Staples. It's expected that construction could start late this year on the 800-unit project with completion of the first phase of residential units in 2012.

Also part of the Staples Ranch annexation will be the planned construction of other commercial and recreational developments, including a new 37-acre auto mall to be built by the Hendrick Automotive Group. That project, which also has the approval of the City Council, probably won't get under way before 2012 or 2013.

"With all of this going on, I am eternally optimistic about the local economy," said Scott Raty, President and chief executive officer of the Pleasanton Chamber of Commerce.

"I am encouraged about seeing the development of the former Staples Ranch get under way; the ground breaking for a new Safeway shopping center at Bernal and I-680, and Clorox moving hundreds of employees to Pleasanton as they fill the WaMu campus," he added. "With these projects will come new jobs and a stronger tax base for the community."

James Paxson, who heads the Hacienda Business Park's Owners' Association, said company executives in the business park continue to be very cautious in their outlook for 2011. Once they see the national economy improving with a corresponding increase in employment, they'll be more comfortable about adding jobs here and expanding their operations.

With a current office vacancy rate averaging 22% in Hacienda, it continues to be a favorable market for leasing space.

"It's still a tenants' market," Paxson said, "with a lot of great leasing opportunities out there."

He called it a "flight to quality" opportunity with businesses that haven't been able to upgrade their facilities finding that it's cheaper to lease more space in business parks such as Hacienda, instead.

However, there have been a few signs of improvement. Exercise club 24-Hour Fitness just opened its new facility in the building once occupied by the Tri-Valley Herald. Kaiser Permanente has moved additional business units to Pleasanton with more employees coming this year, essentially filling up the two office buildings it acquired from Oracle Corp. Oracle, itself, has completed its expansion but continues to be a beacon for other companies, particularly those on the Peninsula, that are learning it's less expensive to expand operations here and more attractive for employees who can afford housing in the Tri-Valley.

Hacienda Business Park, where employment peaked at 22,500 in 2001, has seen a major drop off in recent years, although it's back to just over 17,000 in the workforce now, a gradual and steady gain, Paxson said.

Also favorable for the 2011 outlook are a number of entrepreneurial and small companies that recently moved to Hacienda and other parts of the city, including Zeltiq Aesthetics and Xradia. These and other biotech and medical-focused companies have received federal approvals on products Paxson expects to see gaining major ground in this growing technical field.

In the public sector, Gov. Jerry Brown, who was sworn in last Monday, has indicated that he will transfer responsibilities for services and programs funded by the state over to counties and cities in the year ahead. It's unclear how that will affect Alameda County and Tri-Valley cities, but at least Brown and the state legislature can't "borrow" from them as Sacramento has done in the past. Voters approved a measure last year that stops that borrowing, which has cost Pleasanton, alone, millions of dollars over recent years.

As Wagner reported Tuesday to the Pleasanton City Council, this year's budget is balanced. In fact, the city has not had to dip into its discretionary reserves of $21 million to pay operating costs despite the recession, relying instead on freezing management salaries and not filling staff positions when they're vacated. Still, pension reform is a top priority as the city moves forward on budget issues, with City Manager Fialho promising several public workshops to show the public where the city's revenue comes from and to solicit ideas for projects and services the public wants.

Besides budget considerations, the city government's top priorities for 2011 will focus on land use measures, mostly those resulting from an agreement with Urban Habitat, an affordable housing coalition, the state attorney general's office and the Alameda County Superior Court which ruled Pleasanton's 29,000-unit housing cap was illegal. Approved by voters in 1996, it has since been revoked.

To meet those obligations, the City Council established two task forces to deal with rezoning land for more affordable housing units in the Hacienda Business Park and to seek other suitable sites where land could be zoned for additional housing, beyond the once governing housing cap.

The 25-member Hacienda Task Force has met for the last 10 months and needs to wrap up its consideration of design guidelines for high density apartments on three sites in Hacienda by March 1.

The Housing Element Task Force is also holding public meetings on a regular basis, with its deadline in August.

A Climate Action Plan, which is also part of the attorney general's settlement agreement, is being shepherded by the Council-appointed Committee on Energy and the Environment. Its responsibility is to measure the impacts of growth in Pleasanton with an action plan that will protect the environment due to be presented to the state by year's end.

The council also has named Council members Cindy McGovern and Jerry Thorne to work with city staff in developing a growth management plan to meter growth in a state-approved manner. Although few residential building permits were issued last year, the growth management plan will help ensure that new construction is moderated should the development floodgates open again.

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