June 25, 2013, California Progress Report

 In recent weeks a broad array of progressives has rallied opposition to Plan Bay Area, a state-mandated proposal to reduce the region’s carbon emissions and still accommodate massive increases in jobs and population by encouraging dense infill development close to transit, i.e Smart Growth. Drafted by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC), Plan Bay Area claims to “be taking equity into account.” However, the plan’s own assessment concedes that its implementation “could result in residential or business disruption or displacement of substantial numbers of existing population and housing,” and that those who cannot pay the “higher prices resulting from increased demand” for new housing and commercial space will be forced out.

So far, progressive critics have focused on residential displacement. But inflated land values also threaten low-rent business, including small and medium-sized industrial firms and the well-paying middle-income jobs they provide. Those who care about equity and, for that matter, about the environment, should be concerned about the vulnerability of the region’s industrial enterprise and employment.

For years we’ve been told that the Bay Area has gone post-industrial, that its stagnant “old” economy, anchored by low-tech manufacturing and brute strength, was long ago banished by an innovative “new” economy driven by high technology and brainpower—and, most important, that this change is inevitable.

That the region’s industrial sector has shrunk and its economy undergone a transformation is undeniable. But to frame this makeover in terms of low-tech vs. high, stagnation vs. innovation, brawn vs. brains, and bad vs. good is a mistake. For one thing, the line between the “old” and “new” economies often zigzags and blurs. For another, there’s still a significant amount of industry in the Bay Area. According to MTC/ABAG, in 2010 manufacturing and wholesale enterprise accounted for 460,200 jobs or 14% of the region’s employment.

Contrary to “new” economy hype, industrial decline isn’t inevitable, and the health of the industrial sector is critical to both broad regional prosperity and environmental amelioration. But for industry to thrive, public officials have to support its essential role in the region’s well-being.

Instead, Plan Bay Area puts industry at risk. Not overtly, to be sure. The document’s most substantial statement about industrial issues appears under the heading “New vitality of industrial lands,” a phrase that might lead you to think that the plan heralds an industrial renaissance.

That cheering impression is undercut by the paragraph-long statement that follows. First it says that “[m]anufacturing and wholesale distribution have experienced declining employment in many of the region’s key industrial areas.” Then it asserts that the Bay Area’s industrial lands owe their “new vitality” to the incursion of “a different and very diverse mix of businesses whose “building and space needs” make “traditional industrial lands attractive.” Those needs remain unspecified, as do the “jobs, “essential support” and “vital services” that these businesses offer “to other sectors of the economy” and “nearby residents.” But the plan’s concluding defense of rezoning industrial lands singles out the jobs factor: “It is in the region’s best interest to ensure that new businesses have access to industrial lands, so that the jobs they create remain in the Bay Area.”

That conclusion is strikingly at odds with the findings and recommendations of three MTC reports, the 2003-4 Regional Goods Movement Study, the 2006-8 Regional Goods Movement/Land Use Project and the Goods Movement Initiatives 2009 Update. These reports examine industrial land use and employment, traffic congestion, greenhouse gas emissions and economic diversity and equity in relation to the movement of goods in the region by trucking, rail, marine and air facilities and services.

All three reports emphasize that, in the words of the 2006-8 study, goods movement businesses “are typically lower-density uses that cannot pay to compete with higher-density, more intensive residential and commercial uses.” For that reason, they need industrially zoned land. Like Plan Bay Area, the goods movement reports foresee growing demand for such land. But whereas the plan simply applauds that growth as a sign of economic revitalization, the MTC studies see it as a mixed blessing.

The good news: the increased interest in the Bay Area’s industrial lands partly reflects the robust state of the region’s goods movement sector. The 2003-4 report found that manufacturing, freight and wholesale trade account for nearly 40% of regional output, and that Bay Area busineses spend over $6.6 billion on transportation services. The 2006-8 report identified 5,400 goods movement establishments located along East Bay I-80-880 from Richmond to Fremont and North Peninsula U.S. 101 from the San Mateo County line to Millbrae/Burlingame and supporting 177,200 jobs. That report also forecast a 59% growth in central area goods movement industries employment between 2006 and 2035. The realization of that growth, however, depends on the ability of those industries to locate on industrially zoned land in the central Bay Area.

The bad news: “central area industrial land supply is declining.” The Goods Movement/Land Use Project explained that decline in a passage the likes of which is rarely found in an official planning document and certainly not in Plan Bay Area:

The decline of central area industrial land is not an issue of the structural decline of production, distribution, and transportation industries, but the result of the demand for land by other, higher-density land uses and the pressures of a speculative real estate market and by land use policies that allow or encourage changes in land use.

In another gutsy move, the study identified the speculation-inducing policies with Smart Growth, which “encourag[es] a more compact development pattern…in central areas, often along or near the major goods movement corridors,” and that disregards goods movement and indeed industrial business in general.

Unable to compete with the high-density, high-rent residential and commercial uses that zoning changes are allowing into formerly industrial districts, goods movement businesses are migrating to the edges of the Bay Area and beyond, with dismaying results:

• greater truck travel and congestion on already congested roads

• worse air pollution

• higher transportation costs translating into higher cost of goods

• the permanent loss of industrial land supply (conversion from low to high rent land use is a one-way street)

• fewer well-paying blue/green collar jobs in proximity to the urban workforce residing in the central Bay Area

• less economic diversity

Calling the situation “urgent,” the 2003-4 Regional Goods Movement Study put forth a host of remedies, including better regional planning that incorporate the following “guiding principles”:

• preserve central location options for goods movement businesses while applying best practices off-site impact mitigation

• accommodate the region’s growing needs for warehouse and regional distribution facilities in some suburban locations by integrating current land uses without creating major auto/truck/rail conflicts

*  ensure a diversity of job opportunities through land use policies and transportation investments that preserve “good-paying jobs at the lower end of the skill range”

Reiterated by the two subsequent MTC reports, these guidelines do not appear in any form in the draft Plan Bay Area. And while the regional agencies have initiated some improvements in the transportation infrastructure that supports goods movement, they have continued to pursue the Smart Growth land use policies that exacerbate industrial displacement.

But things may be about to change. In their June 7 response to public comments response to public comments on the draft plan, ABAG and MTC staff flagged “Goods Movement and Industrial Lands” as one of the issues that merit “additional work by ABAG and MTC.” To my knowledge, the subject had elicited only two comments, a plaintive appeal from the owner of a Hayward trucking firm and a long critique a long critique from myself. But at the June 12 meeting of the ABAG and MTC Administrative Committees, ABAG Commissioner and Alameda County Supervisor Scott Haggerty said that he’d met with ABAG Director Ezra Rapport and told him that the plan’s treatment of goods movement needed major improvement.

The June 7 memo promised that ABAG/MTC staff would “evaluate the needs related to the development, storage and movement of goods through our region and identify essential industrial areas to support the region’s economic vitality” so as to “permit these issues to be considered more fully in the 2017 update of Plan Bay Area.”

That wasn’t good enough for Haggerty, who asked for immediate action. At ABAG’s Executive Board meeting on June 14, he got what he wanted.

In a last-minute addendum to the original agenda, ABAG staff recommended that their agency:

• Work with MTC to hire a full-time freight planner at MTC to focus on freight, sea and airport planning, coordination and grant funding

• Support MTC in implementing the latest Federal transportation bill, MAP-21, which addresses the performance of the national freight network; and “actively participate…in the California Freight Mobility Plan, a new Caltrans-led freight initiative.”

• Ensure that the areas prioritized for development “support adjacent viable industrial land and avoid negative impacts on goods movement businesses.”

• Support local zoning that “guide[s] new residential development to other locations and that limit[s] stand-alone office and retail development.”

Haggerty praised these recommendations and then offered an amendment to incorporate their immediate funding and implementation into Plan Bay Area. Thus amended, the staff proposals were unanimously approved by the ABAG Executive Board.

Let’s hope they pass muster on July 12, when the MTC and ABAG Administrative Committees will meet to review and approve the final plan, and then again on July 18 when the plan is set for final approval by the ABAG Executive Board and the Metropolitan Transportation Commission.

Even if these changes make it into the final plan, their implementation is no sure thing. That’s especially true for the industrial retention measures, which run smack up against Smart Growth’s disregard of the industrial economy; the region’s red-hot speculative real estate market; and local officials’ urge to convert industrial land to high-rent uses in hopes of more revenue and bigger campaign contributions.

These are formidable obstacles. Overcoming them will require a long and concerted effort. Progressive activists should lead the way.