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  Commercial Versus Residential?
November 1, 2005

The following story in today’s West County Times discusses what appears to be a trend of converting property intended for commercial use to residential use and cites what some construe as adverse impacts on jobs, taxes and city services.


The story focuses on the Pulte Home’s project, The Anchorage at Marina Bay, and particularly on the fact that the City Council reversed a Planning Commission denial.


Several people have also asked me to explain my rationale for voting with the City Council majority to ultimately approve the project despite opposition by the Marina Bay Neighborhood Council, which I usually support.


Here are my reasons:

  • Contrary to various assertions, the residential use is allowable by the current zoning and general plan designation. Although the title of the zoning designations are “R&D/Business” and “Commercial/Office,” residential and/or live/work are within a range of allowable uses, in this case with a conditional use permit. There was no zoning change or general plan change required.

  • The project approved by the City Council was not the same one approved by the Planning Commission. Thanks to additional successful negotiations by City Council members, substantial additional mitigations were secured from the developer, including a $3.5 million contribution to a grade separation and/or bypass to mitigate long trains and a commitment to forego a Marina Bay Parkway entrance if it interferes with a future grade separation.

  • The argument about commercial uses generating sales taxes for the City is not necessarily valid. Most of the existing non-residential uses in the Marina Bay area generate few sales taxes because they are either offices or do not involve point of sale retail. It is a myth that commercial uses produce sales taxes. Only retail uses do, and retail uses follow “rooftops” (residential development). There is little demand for commercial space in Richmond right now, and the vacancy rate for commercial space has actually climbed recently. If the land were limited to commercial use, it would likely not be developed at all and produce no significantly increased tax revenue.

  • The argument that commercial uses produce more property tax income for the City is not valid. Land and improvements used for residential use have much higher value than commercial uses and therefore produce more property tax revenue. Homes also turn over more frequently than commercial properties, so the rise in assessed value will produce higher property tax revenue in the future.

  • There is no scientific data to support the argument that proximity to an existing railroad will endanger the health of future residents or that potential buyers will find the project unacceptable. Large residential projects are being constructed adjacent to rail corridors all over the Bay Area. A good example is Jack London Square. See photos below of apartments and condominiums adjacent to the Amtrak station at Jack London Square. Richmond is on the verge of creating a railroad Quiet Zone at Marina Bay, and Pulte is contributing $250,000 to the effort, which will benefit all residents, not just those at The Anchorage.

  • A conflict between residential and commercial or industrial users does not have to become an issue. Most of these are resolvable if everyone plays by the rules. Most conflicts happen because some party is trying to take an advantage to which they have no inherent or legal right. As old fashioned heavy smokestack industries disappear, the traditional dividing line between land uses is also disappearing. “Mixed use,’ is the new planning mantra. Through design and technology, uses that once were in conflict can not only live together – they can thrive. Achieving a jobs-housing balance is the new goal so that commutes will be reduced and energy saved. Quality of life will improve in the process, not decline.

  • I will concede that commercial development is more likely in the short term to bring jobs than residential development, but it is not that simple. Jobs will be created only if there is commercial development, which is generally not happening right now in Richmond. Many companies bring their work force with them or hire largely outside Richmond. For example, Richmond’s largest employer only has about ten percent or less Richmond residents on the payroll. And while residences do not directly result in large numbers of jobs, people who relocate to Richmond often start businesses here or bring existing businesses to Richmond – and those businesses bring jobs. Residential growth creates retail demand, which in turn, creates jobs.

 Housing projects appear in zones for business use
Posted on Tue, Nov. 01, 2005


During its last meeting, the Richmond City Council reversed a planning commission decision so that Pulte Homes can build 208 residential units on property zoned for commercial use.

The council's decision signaled a land-use trend in which residential development is encroaching into areas that have traditionally been set aside for manufacturing, retail and offices.

Planning officials say such development is good for the city's economy, and is in keeping with national trends. Opponents argue the city will lose business tax revenue and long-term jobs, and that conflicts between businesses and homeowners will make it increasingly difficult for businesses to operate.

Three recent projects illustrate the trend. The Pulte Homes project, Anchorage at Marina Bay, was just approved on property adjacent to a Southern Pacific Railroad line, a railroad switching yard, and the DiCon Fiber Optics research and development facility.

Further inland, the Summer Lane Homes project, which will consist of 164 residential units, is under construction on the site of a former strip mall. In the May Valley tract, 43 residential units have recently been completed by Braddock and Logan on the site of a former shopping mall at Valley View and May roads.

Of the three projects, the Pulte Homes development has been the most controversial. In August, the planning commission denied the project for what seemed like solid reasons. The commission's decision was based on several issues, including poor quality of life because of train noise and health risks from train diesel fumes. But the overriding reason was the property is primarily zoned for commercial use, said commission Chairwoman Virginia Finlay.

"It would be fair to say I was very disappointed when the council reversed our decision," she said. "It appeared to be a straightforward land-use decision, but unfortunately the council has chosen to make piecemeal decisions rather than conforming to the general plan."

Finlay said building residential property on commercially zoned land threatens the city's tax base. She said Richmond will get a cut of the property taxes for these developments, but the new communities will end up costing more than commercial development because the city will lose sales tax revenue in addition to having to provide police, fire and maintenance services for the new communities.

"We can't afford to erode the tax base, which is what we're doing when we put residential in for commercial, industrial and light industrial," Finlay said.

Building residential developments so close to commercial properties also creates a conflict over noise, traffic and health risks, said Jim Cannon, a board member of the Contra Costa Council of Industries.

"Every time we have an intrusion, there's conflict between the residents and the industry, and we want to avoid it before it gets started," Cannon said. "We know this is going to happen because it happens every time."

But Richmond's interim planning director, Richard Mitchell, said residential development in industrial and commercial areas is a nationwide trend.

"In the old days, a plant would be built, and everybody would rush to live near it for employment," he said. "Now industries are more nimble and are likely to follow residential development, and especially so if there are a lot of amenities for employees. And Richmond has a lot of amenities."

Mitchell said attractive features in Richmond include 32 miles of waterfront, close proximity to San Francisco, easy access to public transportation, and residential property still affordable by Bay Area standards.

"What we're doing here is not radical," he said. "There are similar projects in Oakland's Jack London Square, Emeryville and San Jose. We are following trends that have already occurred in other areas."

Mitchell said the Summer Lanes and Valley View projects, which are being built on former retail sites, are also part of a national trend.

"Many cities are building residential developments either on or near these large, sprawling, 1970s-era shopping malls," he said. "Many of them are failing financially, and the new residential developments create more of a market for the businesses."

The city has begun the process to update its general plan, and Mitchell said the revised plan will likely result in more zoning areas that include a variety of uses.

Contact John Geluardi at 510-262-2787 or jgeluardi@cctimes.com

Residential development on commercially zoned land:

Anchorage at Marina Bay:

Pulte Homes just received approval to build 208 residential units at 1689 Regatta Blvd. in Marina Bay.

Summer Lane Homes: D.R. Horton is constructing 164 residential units on the site of a former strip mall at Hilltop mall.

43 residential units on the site of a former strip mall at Valley View and May roads. Valley View Homes: Braddock and Logan has recently completed