Monday, February 04, 2008

Fairfield's Diverse Industries, Location May Combat Economic Downturn

Fairfield's Diverse Industries, Location May Combat Economic Downturn
East Bay Business Times - by Jessica Saunders

A city of 105,000 people equidistant from San Francisco and Sacramento, Fairfield has been able to leverage its key location paired with inexpensive land to become an attractive destination for companies ranging from Anheuser-Busch Cos. Inc. to auto auctioneer Copart Inc.

The Solano County seat is also close to Napa Valley wine country and home to the county's largest employer, 6,000-acre Travis Air Force Base, which employs more than 14,000 people and contributes more than $1 billion to the economy each year.

With 36.7 square miles of land, Fairfield provides ample opportunities for both business expansion and homeownership - it has averaged 750 new housing units annually from 1979 through 2006.

Building off these assets, the city grew an average of 3 percent annually in population between 1990 and 2005. Now the question is whether all those positives will outweigh the negatives of a slowing economy, falling home prices and rising unemployment.

Already, there are signs of trouble. Fairfield has gone from being a darling of home builders, with nearly 1,000 building permits issued in 2004, to not issuing a single permit in the last three months of 2007, which was unprecedented. For the year, the city gave out about 200 permits. Due to funding issues, including revenue impacts from the housing slump, the City Council is preparing to make an estimated $7 million in cuts from its $81 million budget by July 1.

The Solano County housing market has been one of the hardest hit in the state, with home sales down 42 percent in December from the same period a year earlier and foreclosure activity rising by 129 percent, according to DataQuick Information Systems. In December, there were 67 new and resale houses and condos sold in Fairfield, with a median sale price of $415,000, down from $495,000 a year ago.

In the fourth quarter in Fairfield, there were 103 single-family houses and condos sold, compared with 240 home sales in the fourth quarter of 2006, a 57 percent decline, according to multiple-listing service data compiled by Prudential California Realty.

Unemployment is also rising. There were 3,200 unemployed people in the city in December, a non-seasonally adjusted jobless rate of 6.4 percent, which was above the countywide rate of 5.8 percent, according to the labor market information division of the state Employment Development Department. The city's jobless rate was up from 5.9 percent in November and 4.9 percent in December 2006, when 2,400 people were out of work.

Those statistics might be daunting, but it should be remembered that Fairfield managed to weather the dot-com bust better than other Bay Area cities due to its diverse mix of industries.

The city might be best known for high-profile food manufacturers such as Jelly Belly Candy Co. and the Anheuser-Busch plant looming along Interstate 80, but it is also home to corporate headquarters for the auto auction company Copart, Westamerica Bancorporation and the stationery retailer Papyrus. Other companies - such as Ball Metal Container Group, which makes beer and soda cans, and Pride Industries Inc., an outsourcing company that hires disabled people - have also located in Fairfield

The fact that Fairfield manages to welcome many different industries is another source of civic pride.

"One of the ways to deal with a (budget) shortfall is you try to grow out of it," said City Manager Sean Quinn. "We have been very successful with economic development in the past, and we can build on that."

Diversity remains the plan going forward. The city's five-year economic development strategy, adopted in 2005, calls for recruitment of manufacturers, back-office operations such as call centers, and industries including biomedical, computer and office equipment, communication infrastructure, and industrial equipment and supply. The city will also continue to pursue tax-generating retailers, Quinn said.

"Our overall target is job generators," said Eve Somjen, director of community development for the city of Fairfield.

The foundation of business recruitment is the city's land supply. It has an industrial base of 10.4 million square feet, averaging 385,000 square feet of development a year over the past two decades, said Curt Johnston, assistant community development director. That compares to 4.5 million square feet in Vacaville and 3 million square feet in Benicia, both Solano County neighbors.

Fairfield also has about 3 million square feet of office land, which should be a 20-year supply based on average annual development of 100,000 square feet a year, Johnston said.

Two million square feet of that land base is within the bounds of the 132-acre Green Valley Corporate Park, under development by Quadrangle Development Corp. at the intersection of Interstates 80 and 680 and Highway 12. Another 1 million square feet is within the 72-acre Fairfield Corporate Commons, which is located at I-80 and Suisun Valley Road and serves as home to State Farm Insurance and the Solano County Economic Development Corp.

At Green Valley, insurer GeoVera Holdings Inc. expanded to 27,000 square feet, and Sutter Health leased 15,000 square feet in a new two-story office building, 4830 Business Center Drive, said Glen Dowling, executive director at Cushman & Wakefield in San Francisco. The 57,000-square-foot building is the second of four planned by developer Harvey Shein, with the third breaking ground this summer.

Construction was completed in December on two hotels at Green Valley, an 85-room Homewood Suites and an 83-room Staybridge Suites. NorthBay Healthcare plans to finish its 72,000-square-foot, two-story medical office building this spring, Dowling said.

NorthBay will eventually be joined by a Kaiser Permanente facility on 9.34 acres Kaiser owns. Sutter's newly leased space will be a Northern California regional conference center for doctors, Dowling said. Green Valley's strategic location at I-80, I-680 and Highway 12 is a major attraction for medical users.

Another chunk of Green Valley is owned by Copart, whose 100,000-square-foot headquarters facing I-80 sits on 6.5 acres. Although Copart started out as a tenant, the company's owner liked Fairfield so much he bought the land and has plans to build another 100,000 square feet of offices, Dowling said.

The main target in marketing Green Valley has been employers in San Francisco, Contra Costa and Marin counties who want to move closer to where their workers live. Anyone parked along I-80 in Fairfield at 8 a.m. on a weekday can watch a "sea of cars" heading west, Dowling said.

"We are talking with a company right now that is looking at moving part of their employment base out of the city," he said. The search area? Solano and Contra Costa counties, and outside the Bay Area. | 925-598-1427

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