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Future Prosperity
New reports show Pleasanton poised for greater business, job growth as economy improves

by Jeb Bing

A collaborative effort by a broad range of stakeholders that shows a challenging, yet optimistic economic future for Pleasanton will be considered Tuesday night at a special public workshop of the City Council and its Economic Vitality Committee.

The reports by Bay Area Economics, the Tri-Valley Business Council, and the U.S. Labor Department show that Pleasanton and the Tri-Valley are evolving as a mix of prosperous industry specializations driven by a surge of homegrown entrepreneurships. This trend involves a combination of local forces, including a business-savvy and highly educated population, innovative entrepreneurs and a city, civic, education and business leadership bent on improving economic vitality and the quality of life.

Along with the successes seen since recent economic downturns, the challenge facing Pleasanton, according to these reports, is to sustain the gains and work to retain businesses now here while also recruiting new companies to the area.

"Talented people can leave or stop coming," said Tom O'Malley, President of the Tri-Valley Business Council. "Quality of life can decline, businesses can decide to locate elsewhere."

"So going forward, the region will have to ensure that the necessary talent, entrepreneurial business support and quality of life are in place to sustain the region's innovation-based economy and to remain competitive with other regions that are working hard to do the same," he added.

The new level of responsibility that will be required to sustain the recent economic gains will require a partnership among city and business leaders and community stakeholders who will be called on to:

* Analyze current economic trends and key industries;

* Identify opportunities for future economic development and job creation;

* Formulate economic development goals and strategies; and,

* Create an action plan to serve as a blueprint for implementation activities.

Pamela Ott, the city's Economic Development Manager, said Pleasanton has fared relatively well in recent years, despite some weaknesses in several sectors influenced by general economic trends.

Wedgits, a home-based startup company on Serpentine Lane which invented and developed a popular toy using geometrically symmetrical blocks, is moving to Roseville. The company said it was unable to find reasonably-priced land where it could expand and that its growing number of employees could not afford housing here.

In addition, the recent merger of SBC and AT&T into a new organization to be called AT&T is expected to downsize its CarrAmerica space in the Hacienda Business Park as it moves most or all of its operations to San Ramon and Texas.

At the same time, Pleasanton has seen considerable business growth despite a rocky start to 2005. That's when Oracle Corporation finalized its $10.3-billion hostile takeover bid for PeopleSoft, then the city's largest employer with 3,500 workers. Oracle officials said the quick work of Mayor Jennifer Hosterman, City Manager Nelson Fialho and Ott to arrange meetings with them and to talk about the advantages of doing business in Pleasanton helped to persuade them to keep many of the former PeopleSoft operations that they would use in Pleasanton

Fears of massive layoffs dissipated as Oracle chose to keep all but a few hundred at its Pleasanton operation, where it has since established a visible foothold in the community that includes contributions to schools, placement of a large monument sign for Oracle along I-580 for all commuters to see and active participation in the Pleasanton Chamber of Commerce. Because of a rebounding office market, Oracle was able to rapidly sell three former PeopleSoft buildings that it no longer needed: one on Stoneridge Drive to Thoratec, which wanted to expand, and the other two to Kaiser Permanente, which will move its Information Technology operations here from Oakland. That will bring to Pleasanton more than 1,000 jobs, at least twice the number lost in the Oracle takeover of PeopleSoft.

Just as important, according to the Bay Area Economics report to be reviewed Tuesday and the Tri-Valley Business Council's "Preserving Prosperity Project" published earlier are the growing number of small businesses started in the Valley.

According to O'Malley, the region has gone from a business creation rate below the national average in the early 1990s to one well above the national average in 2003, the last year these statistics were available, although O'Malley believes the trend is continuing.

"In recent years, the Tri-Valley has become a wellspring for thousands of small, homegrown companies that are transforming the region's economic landscape and accounting for a greater share of regional prosperity," he said.

"The number of business establishments per resident has boomed--from about 3 per 1,000 residents in 1990 to more than 10 by 2002," O'Malley added. "In all, more than 18,000 companies have been created in the Tri-Valley since 1990."

In addition, homegrown firms are the most important source of job growth in the local economy. O'Malley reported that since 1990, new firms have added on average about 41 percent more jobs each year to the local economy than have existing firms, and about 420 percent more jobs than firms relocating or expanding into the region.

"The role of very small firms (five or fewer employees) in local prosperity has grown substantially," O'Malley said. "By 2003, these firms were 80 percent of total firms, compared to 75 percent in 1990. By 2003, they were generating 35 percent of the local economic revenues, well above their 26 percent contribution in 1990.

As a group, the Business Council's report shows firms with 100 or more employees have lost jobs since the early 1990s while smaller firms have gained jobs.

Report: "No surprise."

The report's findings came as no surprise to James Paxson, general manager of the Hacienda Owners Association of Hacienda Business Park.

"We're seeing a lot of activity in the park right now with smaller and entrepreneurial businesses moving in, taking advantage of the vacancies and still-low rents," he said. "Building owners are 'condominimizing' their empty offices by shaping them to accommodate these startup businesses. It's a healthy situation."

Paxson said the office occupancy rate today in Hacienda Business Park is about 91 percent, better than in surrounding Bay Area business parks.

Speaking to a group of small business owners last week, Karen Czarnecki, the federal government's deputy assistant secretary of labor for intergovernmental affairs, said Pleasanton and the Tri-Valley "are in the forefront of job creation in one of the most advanced sectors in the U.S."

"When you look at consumer confidence, it's at the highest level in just about three years, and that's something to be proud of," she added.

Czarnecki, who is also director of the administration's 21st Century Workforce, said President Bush is making funds available to train an additional 80,000 math and science teachers to help increase the number of graduates in these fields.

"It's a 10-year plan with $136 billion earmarked over those years to strengthen education and invest in the future of research and development in this country," she said. "We need these professionals if we are to encourage entrepreneurship and innovation. We've enjoyed a very good standard of living for quite some time. But a lot of other countries, including some third world countries, are catching up to us."

Responding to criticisms from local contractors that they can't find skilled workers, Czarnecki also said that the 21st Century Workforce is investing heavily in career training to teach those skills. Part of the challenge is to work with high school districts to bring back vocational courses that can be taught by non-degreed but highly-experienced skilled workers to teach students who don't go to college to fill the many vacancies in the construction trades.

"We need to increase the education and training opportunities so that we can compete in the world economy," she said.

Learning more

The BAE's "Economic Development Strategic Plan" to be discussed Tuesday night is intended to guide policymakers, city staff and the public on ways to strengthen business retention, expansion and attraction programs, according to Pamela Ott.

In addition, the economic development strategies detailed in the more than 50 pages of analysis, charts, data and reports, also suggest ways the city government can use public resources to maintain and improve the local economy, which is facing special challenges as the city nears residential build-out Although property and sales taxes are expected to continue growing for years to come, some fees collected through new home construction, such as those charged for new water and sewer hookups, and developer fees paid to the school district, could shrink as housing developments slowly grind to a halt. The BAE report will help highlight the fiscal/economic impact for the city as it makes land use and future development decisions as part of its new General Plan update considerations.

The BAE report shows that Pleasanton's demographic trends indicate a stable, affluent residential community characterized by high household incomes, low unemployment, strong educational attainment and a concentration in middle age ranges, although with a large population of Baby Boomers, who will start turning 60 this year.

The report also finds that Pleasanton is a "job rich" community, with more than 1.6 jobs for every working resident. While about one-third of the city's working residents stay in Pleasanton to work, including a number of home-based businesses, the more than 56,000 jobs in Pleasanton are also filled by numerous commuters coming here from other cities.

As good as that sounds, the large number of out-of-town commuters also cause traffic congestion, which annoys local residents and the commuters, themselves. High-priced housing here also means that many of the jobs that pay nominal salaries are held by workers who realize they can't afford to live here and would exchange their positions for comparable jobs closer to their homes in Tracy or beyond, where many of them live.

Jobs for all

Even so, BAE found that Pleasanton's economy has a broad distribution of jobs among high wage professionals, including those engaged in scientific, technical, administrative and information related positions. These sectors have seen strong growth since 2002, creating more than 3,300 new jobs, the study shows.

"Pleasanton's high quality of life, educated and seasoned workforce and existing economic base offer a major competitive advantage to foster the expansion of existing firms and attract new firms," the BAE report states.

It warns, however, that to support a healthy, sustainable economy, the city must find the means of providing housing that is "accessible to young workers, attractive to families and one that provides opportunities for people to age in place.

"Pleasanton's ability to provide housing to support its economic development is constrained by a voter-approved cap on the development of housing units with the city," the report states. "No more than 29,000 units are allowed and its Growth Management Program limits the number of residential building permits that can be issued teach year at 350."

It recommends organizing a Business/Workforce Housing Task Force to find ways of adding affordable housing that workers can afford.

The City Council and Economic Vitality Committee workshop will meet starting at 6:30 p.m. in the City Council chambers, 200 Old Bernal Ave. Open to the public, the meeting also will be televised for later broadcast on Community Television Channel 29.