Economic Development

I. Strategic Statement

West Berkeley is in a very real sense one of the economic engines of Berkeley, and has
historically played that role. It has the most private sector employment of any Berkeley
area, and thus roughly 1/4 of all jobs in the city. West Berkeley is home to thriving
manufacturing, retailing, business services, and other types of enterprises. These
businesses provide jobs for more types of occupation than anywhere else in Berkeley;
provide quality, often specialized goods and services for Berkeley, the Bay Area, and
often beyond; and supply much needed City tax revenue.

The West Berkeley Plan should help make it possible for all sectors to--in an
environmentally sound manner--continue to thrive. Some sectors will play their most
important role in the creation of good jobs, particularly for those with poor employment
prospects, others in supplying a wide and innovative range of goods and services,
perhaps still others in increasing the City's tax revenue The Plan recognizes that the
widespread view of (West) Berkeley as a "clean, environmental" area is an economic as
well as an environmental advantage.

The Plan has a special focus on retention of manufacturing because West Berkeley is
Berkeley's only manufacturing center, and because manufacturing provides many well
paid jobs to people without advanced education. By supporting manufacturing, a
sector which has had difficulties in the marketplace, but continues to have important
promise, the Plan supports its overall goal of maintaining a sectorally mixed economy.
In addition to stabilizing and renewing growth in manufacturing, the Plan anticipates
that the largest growth sectors will continue to be retail and (office-based) services. The
Land Use Element of the Plan contributes strongly to these goals by defining
appropriate locations for manufacturing, office, and retail growth.

The policy approach of the West Berkeley Plan is spelled out in more detail in the next
section of the Element--The Economic Development Rationale of the West Berkeley
Plan.

II. Economic Rationale of the Plan

A. The Rationale Overall

The fundamental economic goal of the West Berkeley Plan is to maintain a sectorally
mixed economy in West Berkeley--an economy which includes (along with others)
healthy manufacturing, retail, and service sectors. Maintaining such a mix in West
Berkeley is critical to maintaining it in the city as a whole, because of both the size and
the sectorial mix of the West Berkeley economy. West Berkeley houses some 1/4 of total
Berkeley jobs, and the great bulk of its manufacturing, wholesale trade, and
transportation/public utilities jobs. By seeking to keep manufacturing, services
(particularly advanced services) and retailing all healthy in West Berkeley, the city can
reap the benefits provided by each sector (which are discussed below). The city can also
avoid the dangers of dependence on too narrow an economic base, which is more
vulnerable to sudden collapse. This rationale provides the basis for making the
projections of West Berkeley's Economic Future below, since projections can only be
made in the context of assumptions about policies.

As noted in the Strategic Statement, jobs, goods and services, and tax revenues are the
three key City goals in economic policy. In general, different businesses and different
sectors are superior at generating one than the other. Economic development policies
are also of course framed by the City's environmental and physical policies. The City's
economic policy must seek to create and maintain jobs for its citizens, most importantly
for its citizens who would have the most difficulty obtaining jobs. The City should seek
to assure the availability of needed goods and services for its citizens, which also is
typically most difficult for the poorest citizens. City government should strive for
adequate tax revenue to provide City services.

The City's economic policy must also strike a balance between working within market,
environmental, and physical realities on the one hand, and guiding and regulating
economic actors to achieve City goals on the other. A policy not grounded in market
and other realities would be quixotic, while a policy which passively followed
dominant market forces would not necessarily achieve City economic or environmental
goals (and would not require a Plan). The City also generally seeks to retain existing
businesses, in all sectors. It is almost always more difficult to attract a new business
than retain an existing one, and there is almost always time (and thus tax revenue and
wages) lost until a site is reused by a new business. The greater the number of
employees or the capital investment on a site, (generally) the greater the lag.
Maintaining the economic mix requires active City intervention to support the retention
of manufacturing plants. In the absence of supportive land use policy, and other
support for manufacturing, West Berkeley would tend to "de-industrialize" over time,
with manufacturing facilities and jobs moving elsewhere. While support for advanced
services and retailing is also important, these sectors are generally supported, rather
than threatened, by market developments. Thus, the policy structure for these sectors
should be different. We now turn to the reasons for supporting manufacturing,
advanced services, and retailing in turn.

Manufacturing provides several benefits for the City and its residents. While some
manufacturing jobs--particularly in "biotech"--now require more advanced skills,
manufacturing still provides the best combination of jobs accessible to the less educated
with good wage levels. Manufacturing historically has hired people who have difficulty
being hired elsewhere, most notably Black and Latino men. Manufacturing also has
higher "multiplier" effects--that is generates other local economic activity because of the
inputs it uses--than other sectors. Thus, while the direct tax generation of non- biotech
manufacturing is often (although not always) lower than other sectors, the multiplier
effect leads to more economic activity and thus tax revenue. For biotech manufacturing
the rationale is somewhat different--stronger on tax revenue creation, but probably
weaker on hiring of the lesser skilled (although in the particular case of the Miles
Development Agreement, policy seeks to draw more residents in). Supporting
manufacturing in West Berkeley is typically a retention activity, on sites which in some
cases would be costly and difficult to reuse.

Perhaps the strongest benefit from advanced services (e.g. software preparation,
research laboratories, architecture & engineering) come from the high salaries paid to
the professional element of its workforce. These wages should generate daytime
spending in West Berkeley, and perhaps elsewhere in the city. The support element of
the service workforce (clericals, janitors, etc.) do not of course generate such high wages.
In direct tax revenue, advanced services occupy an intermediate place--higher than
many manufacturing activities, but lower than retail. Certain kinds of advanced services
(e.g. research laboratories) can lead to the creation of new companies with new products
or services ("spin-offs"), which might be produced in West Berkeley. To date, this
process has not been widely documented for West Berkeley. Market forces at this time
seem to strongly support the development of advanced services in (West) Berkeley,
particularly in small companies.

Retail trade's strongest suit from an economic policy standpoint is its tax generation,
well above any other sector. With the sales tax currently providing between 1/5 and
1/4 of the City's hard-pressed General Fund, this quality is quite important. Retailing
also provides needed goods, although much West Berkeley retailing is in specialized
goods, rather than daily necessities. "Neighborhood" oriented retail--food stores,
hardware stores, drug stores--which is relatively weak in (comparatively) low density,
low income West Berkeley, most directly satisfies these needs. This weakness is most
pronounced in the poorer, southern part of West Berkeley. On the other hand, West
Berkeley has shown clear strength as a regional retail center. "Interesting" retail as a city
amenity can also be an attraction for various types of business.

B. Defining the Economic Role of West Berkeley within Berkeley

Part of the economic rationale of the Plan is to define West Berkeley's role within
Berkeley. While West Berkeley is the leading economically active area in Berkeley, it is
far from the only one. Thus not all economic functions which are important in Berkeley
need be fulfilled in West Berkeley. Some can take place in Downtown Berkeley, in the
Telegraph commercial district, in North Shattuck, on the University of California
campus and elsewhere. The General Plan, which is being initiated in mid-1993, will
address the intended economic roles of various sections of the city.

This Element noted that West Berkeley and Downtown have been the two leading
economic centers in Berkeley. In fashioning an economic development rationale and
strategy for West Berkeley its economic role within Berkeley, as contrasted with
Downtown's role, must be considered. Ideally a strategy would be fashioned which
would treat the areas as complementary, not competitive.

Downtown and West Berkeley have some overlaps, but many differences, in their
economic roles in Berkeley. Downtown is the center of public employment in Berkeley,
with the University of course adjacent. Downtown is the civic and cultural center of the
city, having the most nighttime-oriented uses: movies, live theatre, and concert venues.
While restaurants are strong throughout Berkeley, Downtown--with its nearby student,
University staff, and office worker markets--has the greatest concentration. Downtown
retail has been weak recently, but some stores with "niche" markets have prospered.

West Berkeley's first distinction is as the city's manufacturing area. Laboratory uses
also locate in West Berkeley. As noted previously, West Berkeley has increasingly
become the city's main regional retail area--a trend which is particularly pronounced
around 7th & Ashby and 4th & Hearst. West Berkeley also has some office uses--such
as graphic artists--which need relatively low rents to function. West Berkeley--
especially San Pablo Ave.-- has numerous low rent service/retail uses, notably auto
repair.

Both areas house professional services (e.g. architects) and business service functions,
including computer services, such as software development. Both areas also have a
complement of neighborhood-oriented retailers (such as food stores) and personal
services (such as beauty salons) though clearly the neighborhood populations served in
West Berkeley and Downtown are quite different.

How do these existing orientations translate into economic strategies? Answering this
requires ongoing analysis and testing in the two areas to see what uses are viable.
Initially, however, the city can seek to build on the existing strengths of the area. In the
Downtown, this could mean focusing particularly (although certainly not exclusively)
on its office worker, University staff, student, and nearby resident markets for retail.
Downtown can reinforce its role as a nighttime activity center, perhaps by encouraging
more stores to stay open later, and by encouraging theatre goers and moviegoers to
patronize Downtown restaurants and businesses. New housing and/or new office
development in and around the Downtown would both themselves provide tax revenue
and strengthen Downtown retail markets.

West Berkeley's uniqueness and thus economic strategies for it begin with the
manufacturing base. In retailing, West Berkeley's closeness to the Freeway will provide
for the foreseeable future--a thick stream of potential customers from throughout the
East Bay. Given this proximity, there are still opportunities to augment West Berkeley's
regional retail role (and thus increase the City's tax revenue), particularly in the 4th &
University area--although impacts from such regionally oriented development must be
carefully monitored and mitigated. The 4th & University area may ultimately benefit
from increased rail passenger traffic, although this volume is unlikely to approach the
Freeway's. San Pablo Ave. also could absorb more intense retail uses in some locations,
as has begun to occur. Yet there are unmet neighborhood retail needs, especially along
the southern part of San Pablo, which should be better served. There will presumably
continue to be strong interest in office development in West Berkeley. These offices
may house some firms which would have difficulty using Downtown offices, such as
those which require large areas on a single floor. Just as the West Berkeley Plan seeks to
assure that office development in West Berkeley does not interfere with retention of
manufacturing, so must economic planning assure that these offices complement, rather
than compete with Downtown office development.

III. Background

A. Introduction--West Berkeley as Economic Engine for Berkeley

West Berkeley is one of the key economic areas of Berkeley, and has been so since the
city was founded. Berkeley's history is unique in that the city was formed by a merger
of two communities--campus-based "Berkeley" and "Oceanview" or West Berkeley.
Even then, West Berkeley was beginning to develop as an industrial center, although
stronger growth would occur after the turn of the century. Today, West Berkeley has
some 1/4 of jobs in Berkeley, while UC and LBL have roughly another 1/4 (Downtown
has perhaps another 15% of jobs, the rest are scattered).

West Berkeley clearly has unique economic elements within Berkeley. It is the city's
only manufacturing center. It is where major "biotech" firms-- some laboratories, some
manufacturers--have located. It is Berkeley's leading regional retail area--with the
largest department store (Whole Earth Access), two large auto dealers (Weatherford
BMW and McNevin Cadillac), and major specialty retailers (e.g. REI, Nature Company,
Amsterdam Art). These elements can all fairly be thought of as key to Berkeley's
economic "base."

We have noted the economic functions of firms and areas (from a public policy
standpoint) as providing jobs, goods and services, and tax revenue. The firms which
fulfill one of these municipal needs may not fulfill others. After reviewing the overall
economic mix in West Berkeley, this background section will look at West Berkeley as
job provider, as goods and services provider, and as tax base.

B. The Economic Mix in West Berkeley

Before considering West Berkeley's roles as employer, goods and service provider, and
tax revenue generator, we must first note what economic activity is there. The
geography of these firms is discussed in the Land Use Element. More detail on the
subsectors of West Berkeley's broad sectors is provided in the Goods and Services
portion of this Background discussion.

Table 2-1 demonstrates both the mix and the evolution of the West Berkeley economy.
Manufacturing remains the largest sector, with 32% of employment, despite a sharp
decline in the 1980's. City data suggests that the sector stabilized at least somewhat at
the end of the 1980's. The related field of wholesale trade was more robust, adding jobs
to reach 1,488 (about 9% of the total) in 1991. Construction held about 8% of
employment, transportation and public utilities 3%.

Remaining jobs were in "white" and "pink" collar sectors. Retail trade nearly doubled
the number of stores, and close to tripled its number of workers to reach 16% of the
workforce. Similarly spectacular have been the increases in services, especially office-
based services. These office-based services--in West Berkeley primarily business
services, and engineering and management services--now constitute virtually 20% of
area employment.

To get a view of the leading businesses, the distribution of larger firms should be
considered. West Berkeley in 1991 reported 56 businesses with 50 or more employees,
over 40% of the total number citywide (131). Although they represented only some 7%
of the businesses reported, these 56 biggest West Berkeley firms had an estimated 59%
of West Berkeley employment. The largest number of 50 or more employee businesses--
17--are now found in services. However, it is in manufacturing where firms with 50 or
more employees (16 of them) make up the largest proportion of the workforce (an
estimated 66%).

C. West Berkeley as a Place of Employment

Because of the wide variety of sectors active in West Berkeley, there is an equally wide
range of occupations there. West Berkeley businesses provide good quality blue collar
jobs, highly skilled white collar jobs, and the low- wage jobs often referred to as "pink
collar." This section of the report will present an overview of the occupational
composition of the West Berkeley workforce, then review wages, unionization, and
"minority" hiring in manufacturing, services, and retail respectively.

1. Estimated Distribution of Employment by Occupation

There is no central source of data on jobs by occupation, unlike jobs by industry. The
City of Berkeley has collected information on specific companies, but this is not
adequate to develop estimates on West Berkeley as a whole. However, by applying
national data on the mix of occupations in a given industry to the number of jobs by
industry, an estimate of jobs by occupation can be derived. The following table
estimates jobs by occupation in private sector employment in West Berkeley as of 1990.
The city as a whole has a higher proportion of professional jobs, and a lower proportion
of production and related jobs.

2. Jobs in Manufacturing

Manufacturing, as discussed above, continues to be the largest sector in West Berkeley.
Wages and benefits in manufacturing are generally good, and many of the larger firms
are unionized. Most of the jobs in manufacturers are classified as "production and
related", generally not requiring formal education, although sometimes requiring
significant on the job learning. As of the end of 1989 (the last date for which local data
by detailed sector is available), the average annual pay for a manufacturing employee in
metropolitan Oakland was $32,945. On the high side, among sectors represented in
Berkeley were chemicals at $39,134 in average annual pay; scientific instruments at
$37,297 and primarily metals at $35,921. Towards the low end are printing at $24,307;
miscellaneous manufacturing at $21,882, and apparel at $15,194. Falling in the middle
were electrical machinery at $29,839 and fabricated metals at $33,221. Individual firms
of course vary.

The extent of unionization is significant, because unionized jobs generally pay better
and provide better benefits. In West Berkeley, most heavy manufacturing workers, and
some light manufacturers, are covered by union agreements. There are at least 20
manufacturers in West Berkeley, with a total of some 1,900 jobs, which are unionized.1
In some cases, almost all jobs at the site are under union contracts, in other cases less
than half. Miles, Pacific Steel Castings, and Peerless Lighting are among the unionized
firms. The Business Outreach Survey found 26 other firms, with some 1,350 employees.
The non-unionized firms tended to be in sectors such as food processing, machinery,
and scientific instruments; they also tended to be smaller.

Manufacturing has a generally weak record of Berkeley resident hiring. Sector-wide, as
of 1989, only some 20% of Berkeley manufacturing employees were Berkeley residents,
compared to just under 40% for Berkeley workplaces for a whole. Individual companies
vary widely--while several food processors reported 50% or more Berkeley resident
employment, other companies reported 10% or less resident employment. A number of
manufacturers are working with the First Source program and may improve this
record.1 There is clearly a Berkeley workforce needing manufacturing jobs-almost 1/3
of the unemployed registering at the Berkeley EDD office were in "blue collar"
occupations most likely to appear in manufacturing or wholesaling. The proportion of
Non-White workers in Berkeley manufacturing (Outreach companies) was 43%--higher
than any sector except retail.

3. Jobs in Advanced Services

We noted above that West Berkeley's services tend to have high technical content, like
Business Services, and Engineering and Management. These sectors tend towards high-
paying jobs which require higher education on the one hand, and clerical jobs on the
other. Business Services, which has a high proportion of clerical workers, had an end-
1989 annual average pay of $21,109, some 2/3 of the manufacturing average. But
Engineering and Management--where over 60% of the workforce is professional and
technical--had an average pay of fully $38,651, just behind chemicals.

Virtually no service firms in West Berkeley are unionized--most tend to be extremely
small. One notable exception in health services to both rules is the very large Kaiser
Permanente facility, which is being expanded and rebuilt.

There is not reliable data on what proportion of West Berkeley service employees live in
Berkeley. Citywide data from the 1980 Census (parallel 1990 data is not yet available)
indicated that 36% of business and repair services employees live in Berkeley, slightly
under the workforce wide average. For professional services (including engineering
and management), the figure was 44%. However, this figure is perhaps inflated by the
high proportion of University staff who live in Berkeley. Data is not adequate to assess
the racial composition of the West Berkeley advanced services workforce specifically
but it appears that the professional element of it is disproportionately White. For
example, as of 1980 in Alameda County as a whole, engineers, managers, and architects
were 74% non-Hispanic White.

4. Jobs in Retail

Retail trade has been expanding in West Berkeley. Unfortunately, retail trade jobs
generally pay poorly and provide poor benefits. The Department of Labor, for example,
characterizes retail jobs as having a high growth rate, but very low wages, high
unemployment rate, very high "separation rate" (turnover of employees) and a very
high percentage of part time workers. The retail-wide end of '89 average annual pay
was $16,239. Best paid were salespeople at auto dealers--$26,981, and at building
materials stores-- $20,549. Below average pay was found at restaurants--$9,772; and in
miscellaneous retail at $15,663. With the exception of a few large restaurants like
Spenger's, West Berkeley retailers are generally not unionized (in retailing,
supermarkets and conventional department stores are most unionized).

The proportion of residents in retail employment--37% is typical for the Berkeley
employed labor force as a whole. Only 4% of the Berkeley unemployed were in sales,
the most characteristically retail field, but there may be candidates in other occupational
groupings. Retail employment was heavily minority--46%. A high proportion of young
people also work in retail jobs.

5. Self-employment in Live-Work

One small but growing employment type in West Berkeley occurs in live-work spaces,
which now house a wide occupational range, beyond their original artist-craftspeople
tenants. The work done in these spaces, generally by self-employed people, cuts across
the spectrum from manufacturing to advanced services (although retailing is unusual,
and generally not permitted).

D. Goods and Services from West Berkeley

West Berkeley provides a broad range of goods and services to customers, both at retail
and as producer products for wholesalers, manufacturers, and other businesses.

1. The Bazaar--West Berkeley Retail --The Broadest Selection

West Berkeley has the broadest range of retail stores of any area within Berkeley. The
Standard Industrial Classification (SIC) recognizes 63 types of retailers, 48 of which (or
76%) exist in West Berkeley, more than in any other Berkeley shopping district. Usually
these retail types are represented in West Berkeley by more than a lone outpost. The SIC
groups its specific retail types into 8 major retail groups--Building Materials & Garden
Supplies, General Merchandise (department and discount stores) Food, Autos and Auto
Parts, Apparel, Furniture, Restaurants and Bars, and Miscellaneous Retail. As of 1991,
West Berkeley had a significant proportion of Berkeley's sales in all these categories,
except apparel, where it represents only 5% of Berkeley sales dollars. West Berkeley
dominates building materials (81% of citywide sales) and general merchandise (74% of
citywide sales). It has roughly half of autos (46% of citywide). West Berkeley sales
range from some 1/3 to 1/5 of citywide in furniture, restaurants, and miscellaneous
retail (food is discussed in the next section). West Berkeley also dominates auto repair
(69% of citywide gross receipts), which is considered a service, but functions alongside
retail. West Berkeley has 63% of the city's sales in sporting/outdoor goods.

The area also has a broad range of retail on other dimensions as well. West Berkeley
stores are among the cheapest and the most expensive in Berkeley in areas such as home
furnishings and apparel. There are also a wide range of ethnically identified stores and
restaurants, with a prominent group of Indian stores cohabiting with Arab/Middle
Eastern, Japanese, Mexican, and African- American enterprises. These businesses often
attract a more regional clientele than would otherwise come to (for example) a food
store.

An emerging element of West Berkeley retailing is stores which wholly or partially
focus their appeal to customers around the environment. There are stores which offer a
range of goods which have been checked for their environmental appropriateness,
while others seek to provide environmentally sound goods in a given sector. Analysts
suggest that this type of retailing is likely to have growing appeal in the future.

2. The Workshop-- Producer Goods from West Berkeley Manufacturers

West Berkeley manufacturers are also in a sense "shopped" at, though typically by other
businesses, rather than retail consumers. Berkeley's manufacturers are too diverse to
occupy a particular niche in the business market. However, Berkeley clearly represents
a city in which specialized, sometimes technically sophisticated, often custom ordered
products, rather than mass produced ones, are made. It is also part of the large
Alameda County manufacturing "complex" whose overall employment levels were
generally stable through the 1980's and early 90's (Alameda County is California's 5th
largest manufacturing county).

Most West Berkeley manufacturers do not make consumer products directly for the
public. There are of course important exceptions to this rule, (especially in the food
processing sector)-- outdoor equipment from North Face, sake from Takara Sake, and
energy bars from Powerfood are among them. Other West Berkeley products are used
by contractors in construction, such as concrete from Berkeley Ready Mix and lighting
fixtures from Peerless Lighting. But most typical are A&B's die castings for
manufacturers, Flint Inks for printers, PQ's salts for soap makers.

Berkeley manufacturers' markets are typically regional and national. Slightly under half
of Berkeley manufacturers interviewed in the Business Outreach Survey said their
primary markets were found within Northern California. In a few cases (PQ, Asphalt
Products Oil Corp.) the manufacturers are branches established to serve the Northern
California market. No companies saw Berkeley itself as their primary market, and there
were distressingly few links between Berkeley based manufacturers (some firms saw
opportunities to expand Berkeley sales). Silicon Valley was an important market for
some, as was the industrial East Bay in general.

Roughly 1/3 of manufacturers served the national market. A number of these firms
said that they did secondarily serve international markets, but only 3 firms (of 48
surveyed) saw their primary market as international. Firms with an international
presence tended to be in "higher tech" sectors such as chemicals, machinery, and
instruments. One reason for the relative lack of international activity by Berkeley
manufacturers may be their comparatively small size vis-a-vis multinational firms.

Businesses of course buy wholesale products from wholesalers as well as directly from
manufacturers. West Berkeley has approximately 100 wholesalers, who sell goods in 37
different categories. They are overwhelmingly small-- with the departure of
Bookpeople, no wholesaler has more than 50 employees (three book wholesalers do
remain). Direct data for comparing Berkeley wholesale trade with other communities is
not available, but it does not appear that Berkeley has a strong specialization within this
sector.

3. The Back Office -- West Berkeley as a Provider of Services

As noted above, West Berkeley has increasingly added an office-based services
component in recent years. West Berkeley now has slightly over 1/4 of Berkeley's
private sector employment in office-based fields--such as business services, architecture
and engineering, and legal services.

West Berkeley has not develop a clear specialization in services, unlike other sectors.
On a regional level, Berkeley does not have a strong share of office-based services, with
the partial exception of gaining 14% of Alameda County receipts in computer services.
This suggests, but does not prove, that much of the market for Berkeley service firms is
within Berkeley (an alternative explanation is that Berkeley, for whatever reasons--
perhaps the Berkeley residence of firm proprietors--has a certain share of region-serving
firms).

Within Berkeley, West Berkeley's strongest performance is engineering and
management services, where it gains almost half of citywide gross receipts. This
category includes, among other things, architectural services, engineering services, and
freestanding laboratories. West Berkeley has about 1/4 of citywide receipts in business
services, which includes such fields as computer services (among them software),
graphics services, and advertising. West Berkeley's share of those subfields does not
exceed roughly 25%.

E. The Revenue Functions of West Berkeley -- West Berkeley as Tax Generator

From a city government perspective, one of West Berkeley's key contributions is to City
revenues. City government finances have become increasingly constrained due to
Proposition 13 and state and federal cuts in aid to cities. Thus California cities have
been forced to increasingly "fiscalize" their policies. This section explores the revenue
contribution of various forms of economic activity in West Berkeley.

It must be acknowledged at this point that direct tax revenues are not the only economic
contribution to the City that businesses make. Two other forms of contribution--which
ultimately lead to City tax revenue--are the impacts of employee spending and the
"multiplier" effects of business spending for other businesses in the community.
Unfortunately, available information is inadequate to quantitatively estimate these
impacts. West Berkeley employees undoubtedly spend money on lunches and other
goods. However, given the relative dispersal of West Berkeley employees--compared to
a compact employment district such as Downtown Berkeley--it is difficult to accurately
estimate how much they spend. Parallel problems arise with multiplier effects of
business a buying from business b, which in turn buys goods or services from business
c, etc. Given Berkeley's small size, and the lack of linkages (at least in goods purchases)
between West Berkeley manufacturers, Berkeley may not be receiving the full benefit of
presumed multipliers.

The comparison of these impacts between sectors yields mixed results. Advanced
Services firms tend to have the employees with the highest overall wages/salaries,
thought to contribute heavily to retail and restaurant spending. However, in
manufacturing, wages are highest for the broadest spectrum of workers. Retailers
generally pay the lowest wages, but often seek to stimulate spending by providing
employee discounts. Regarding multipliers, construction and manufacturing generally
have the greatest multiplier effect, but there is the difficulty of capturing these in
Berkeley.

1. West Berkeley's Contribution to Various Taxes

Returning to taxes, there are six key taxes which support the City of Berkeley's General
Fund (the funds over which the City has the most control). These are, in order of funds
generated:

It should be noted that the property tax is divided among a number of taxing agencies
(e.g. Berkeley Unified School District, Alameda County, etc.). Concerning sales tax, the
City gets 95¢ from each dollar of taxable sales (which generates total sales tax for all
agencies of over 8¢). The discussion in this report concerns only the tax revenue
received by the City of Berkeley.

The percentage of revenues generated in the West Berkeley Plan area varies greatly for
each of these taxes. The City does not keep official statistics on taxes generated by area,
these figures represent estimates with available data. Table 2-6 outlines the basic
information. It appears that West Berkeley generates approximately 10% of citywide
property tax revenue.1 This relatively low percentage is in part explained by the
relatively low turnover (compared to homes) of West Berkeley commercial properties,
thus keeping the assessments down under the Proposition 13 system.

West Berkeley's largest contribution comes in sales tax, where it represents some 40% of
citywide revenue. West Berkeley has some 33% of citywide retail sales dollars,
according to the City's business licenses. But some 20% of Berkeley's taxable sales come
in business to business transactions. These include sales of electronic equipment,
chemicals, software, metal products, and other items. Based on an analysis of detailed
taxable sales data from the Board of Equalization, it appears that West Berkeley
accounts for some 67% of these sales in Berkeley. Thus, sales from sectors such as
construction, manufacturing, wholesaling, and health services make up 1/3 of the over
$4 million in sales tax generated. We estimate that West Berkeley generates 20% of
utility users tax revenues, based on citywide estimates of how much of the utility users
tax residents and businesses respectively pay. However, West Berkeley has many of
the City's energy-intensive businesses--such as certain manufacturers. If data becomes
available on energy use by business type, it may be possible to re-analyze this question.

The other taxes provide a less important contribution from West Berkeley. The slow
rate of West Berkeley property transfers--depressing that revenue-- has been noted
above. Berkeley's major hotels, including the Marriott, are outside the West Berkeley
Plan area, limiting that revenue.

The most recent data on assessed value come from the Redevelopment Expansion
Feasibility Study, which indicated that West Berkeley's total assessed property value
was $304.5 million. At that time, 1986-87, the Citywide total was $2,966 million.
Regarding later change, West Berkeley has had faster economic growth than the city as
a whole (tending to increase its share of property tax) but properties there turn over
more slowly than in the city as a whole (slowing reassessments and tending to decrease
West Berkeley's share.

2. Relative tax importance of Various Sectors

The information above demonstrates the overall importance of the West Berkeley Plan
area in City tax collections. But a more "micro", site specific, view is also important.
Without looking at all West Berkeley companies, this can most easily be constructed on
a sectoral basis.

Table 7 (see PDF version of The West Berkeley Plan) shows the estimated City revenue
(including special taxes and assessments) derived from a square foot of new construction
for various sectors. It should be emphasized that the table is based on prototype revenues,
drawn from prototype property values, retail sales, and utility usage of actual cases where
available, and general data where not. Other situations in the same sector may vary. The
table represents new development- -the far greater amount of existing development will
usually generate substantially less. This is primarily because the property taxes on
existing buildings are based on assessed value as of 1978 or the most recent sale,
whichever was later. Thus property taxes for a given type of property within West
Berkeley (and throughout California) vary wildly.

Not surprisingly, given the key role of the sales tax in West Berkeley, retail is the most
lucrative sector for the City. A successful West Berkeley retailer could generate $3.42 in
City tax revenue per square foot per year. Fully $2.38 is from the sales tax. It should be
noted that this revenue assumes a quite successful retailer, with (taxable) sales of $250
per square foot. If sales per square foot are lower, sales tax revenue to the City is
reduced. This level of sales per square foot (or an even higher one) is not uncommon in
the interior West Berkeley commercial areas.

Laboratory "R&D" and heavy manufacturing provide similar revenues, but through
different taxes. The manufacturers' heavy use of energy is reflected in the 23¢ per
square foot of utility users tax, a tax where the R&D impact is modest. Conversely, the
R&D user contributes 19¢ per square foot in business license tax on its landlord on the
rents it pays, while the heavy manufacturer contributes none, since it owns its' site.
These tenures are typical in Berkeley for these sectors. While we did not develop a
prototype for conventional office use, it should be broadly similar to laboratory R&D.

Light manufacturing is a weaker revenue producer. Its facility requirements are less
demanding than heavy manufacturing or R&D, therefore lowering the cost of and thus
the property tax derived from its buildings. Light manufacturing also tends to use less
energy. This prototype case was an owner occupant firm, but there are tenant light
manufacturers whose rents generate property owner business license tax revenue. It
should be cautioned, however, that varying light manufacturers have very different
levels of investment in plant and equipment, and thus varying tax levels.

F. Advantages and Disadvantages of Doing Business in West Berkeley

In assessing how West Berkeley is likely to evolve and grow as a business center, its
advantages and disadvantages as a business locale must be analyzed. Some of the
issues can be viewed in strictly financial terms--what is the cost of doing business in
West Berkeley, while others are more qualitative--e.g. perceptions about the
community's attitudes. This analysis was developed both by staff and by the Economic
Development Subcommittee of the West Berkeley Plan Committee.

1. A Creative "Town" in the Heart of the Bay Area--Advantages of West Berkeley

West Berkeley's advantages center on its character as a dynamic, innovative center in
the heart of the Bay Area. The Business Outreach Survey asked firms (mostly
manufacturers) what they thought the advantages and disadvantages of doing business
in West Berkeley are. Advantages they cited included the centrality of West Berkeley to
the Bay Area and the strong availability of skilled labor here. Indeed, Miles Inc., in
explaining why it wishes to concentrate its biotech operations in Berkeley cited the large
number of biotech companies and personnel located in Berkeley and the Bay Area.

Access to the University is an important part of the attraction. Berkeley's cosmopolitan
population was seen as a plus by some. In this same vein, the innovative, sophisticated
image of Berkeley made Berkeley a "good address" for scientific instrument makers,
specialty food processors, publishers, and outdoor wear firms. A view of Berkeley as a
"clean, environmental city" with enlightened business leaders helped attract like-
minded firms. For smaller firms of many types, Berkeley is a good place to "incubate"--
start up a grow in "a fertile entrepreneurial environment." The amenities of the city,
such as restaurants, are also an advantage in getting and keeping firms in West
Berkeley. Berkeley's amenities and its tolerant atmosphere make Berkeley a place many
employees enjoy working.

Office users also enjoy the accessibility, amenities, and to them "funky" image of West
Berkeley. The mix of uses is part of the cultural appeal. Office users find rents lower
and parking easier than in Downtown Berkeley and some other office locales.

Berkeley has both comparative advantages as against other cities in the region, and
advantages it shares with them. Berkeley's unusual combination of a "smaller city"
flavor with a dynamic urban economy appeals to many. Berkeley is safer from crime
than Richmond or Oakland, two cities which businesses often compare Berkeley
against. Berkeley's relatively modest size (10th in population among Bay Area cities)
makes its City government more accessible than in larger cities like San Francisco. The
Business Outreach Survey and follow ups to it by the Community Development
Department have opened lines of communication with business. The West Berkeley
Plan itself (and perhaps now the Miles Development Agreement) stand as positive
examples of how business, the City, and various community groups can come together
to make decisions that provide planning frameworks. Berkeley shares a well-
developed infrastructure with the Bay Area (as against more rural areas where roads,
water lines, etc. must be built for each plant, at significant cost).

2. The Price of Entry--Disadvantages of West Berkeley

The disadvantages of West Berkeley as a business locale center on the real and
perceived costs of doing business--in time, money, and real or perceived community
hostility. In the Business Outreach Survey, the lead negative was "anti-business"
attitude on the part of the City and/or citizens, even though most surveyed firms had
no complaints about specific City services or processes (these comments were not a
reference to taxes, as only 3% of companies singled those out as an issue). Instead,
many businesses--manufacturers in particular--felt that the community did not
recognize their value. An equally important negative was transportation and
congestion--an ominous note (but one shared with much of the region) given the strong
possibility of worsening conditions on I-80.

Economic factors did appear in the survey--11% of companies surveyed cited land cost
and availability as the biggest disadvantage of doing business here. Average listed
Berkeley industrial rents range from 8-27¢ (all rents converted to industrial gross)
higher than in other East Bay cities, depending on the size of the space and the city (see
Table 7). In general, rent differentials were greater for smaller spaces, than larger ones,
although this was not always the case. These differentials reflect both higher pre-tax
lease costs and higher taxes and assessments of some 3.5¢ per square foot. Similarly,
the maximum $2 per square foot in initial mitigations a manufacturer might be charged
could cost as little as 2¢ per month under typical financing terms. Nonetheless, taxes,
impact mitigations, and other fees can serve as an irritant to business. A separate, but
related, problem is the difficulty that both manufacturing and advanced services firms
have finding large sized spaces. Another problem for many firms was difficulty of
obtaining qualified entry level workers, although not all had difficulties in this area.

The Economic Development Subcommittee suggested some additional problems.
Besides cost factors, they noted the difficult Use Permit process, which can be time-
consuming and sets no priorities between permit applications. The perception that
Berkeley is a difficult political environment with difficult approval processes, peopled
by hostile activists, Commissions, and perhaps City staff and officials, was noted. They
also noted the perception that Berkeley sets more stringent environmental regulations
and enforces them more strictly than other communities, even though all are most often
enforcing state law. It was noted that for some firms the mixed-use nature of West
Berkeley is a very mixed blessing, bringing incompatible uses to their doorstep, as well
as residents who might oppose their expansions. Berkeley also shares in the regional
lack of affordable housing, despite the City's substantial efforts to deal with the
problem.

III. The Economic Future of West Berkeley

The West Berkeley Plan is a 15 year Plan for the economic, physical, and social
development of West Berkeley. Projecting the likely economic future-- and shaping it to
the extent that an active local government can--is a difficult, but necessary, task. All
projections should be understood as analyses of likely future development based on
information available today, and thus inevitably limited.

Regional Context

The West Berkeley Plan proceeds in the context of the Association of Bay Area
Governments' projections for the 9 County Bay Area--the only such set of detailed local
area projections. The Bay Area can be seen as the economic context for (West) Berkeley
development, although the region is of course influenced by state, national, and
international factors. ABAG projects continued growth in the Bay Area until the year
2005, although at a slower pace than occurred in the 1980's. ABAG's Projections 92 also
projects that 3 broad sectors of the West Berkeley economy--manufacturing, services,
and retail trade--will also grow. Regionally, manufacturing employment is projected
grow 18% between 1990 and 2005, services 37%, and retail trade 23%. ABAG predicts
that most manufacturing growth will be in sectors it labels "high technology"--
electronics, computers, office equipment, and scientific instruments (with modest
growth in remaining sectors). In services, it cites business services, along with legal
services and architecture and engineering, as special growth areas.

ABAG projects more sectorally balanced growth patterns within Alameda County.
They project a 30% growth in manufacturing employment in the County between 1990
and 2005, a 33% growth in services, and a 23% growth in retail trade. "High technology"
manufacturing is projected to grow from 29,000 to 52,000 employees in the County over
the period, while other manufacturing grows very modestly from 55,000 to 58,000. In
services, a business services cluster identified by ABAG, including business services as
identified by the Standard Industrial Classification, legal services, and architectural &
engineering services (or SIC codes 73,81, and 89) will garner 59% of growth.

Local Conditions

These projections, if accurate, set the framework for considering economic development
in West Berkeley, but of course cannot precisely predict it. Development in West
Berkeley is constrained by the available supply of land and buildings. Moreover, even
with some 15,000 jobs, West Berkeley is a small enough area so that the performance of
individual companies can make a substantial difference in the area's direction. This is
particularly true in manufacturing, but there are some large retailers and office-based
service companies as well. The development of specific geographic areas is important,
particularly such retail concentrations as 7th & Ashby, University & San Pablo, and 4th
& University. Nonetheless, some general projections can be made.

Future economic development in West Berkeley should be assessed both in terms of
building development and economic activity by sector. Economic activity by sector is
ultimately the more important and driving force, but building development gives the
area its physical form and sets (or removes) constraints on economic activity.

In building development, the West Berkeley Plan projects an increase of some 1,535,000
square feet of occupied space from 1992 to 2005. Major sites for development or reuse
include UC's Harrison tract, Utility Body, and the Colgate site. It also projects retail
additions throughout the commercial zone, primarily through conversion from other
uses, and to a lesser extent from new construction. Linking these buildings to use types,
the Concept projects that this space will be distributed as follows: a net addition of
400,000 square feet in manufacturing (with wholesaling); 680,000 square feet in office
and laboratory uses, and 325,000 square feet of retail uses. It should be stressed that the
manufacturing figure is a Net figure, the product of new construction, reuse of vacant
space, and also of losses of space due to conversion to other uses.

Economic Prospects by Sector

Manufacturing is likely to be in a stable to slow growth mode, when net gains and
losses of employees are totalled. West Berkeley's role as a manufacturing center is set
largely by the firms that are here, since manufacturers do not move easily, but West
Berkeley manufacturing is also characterized by technical and product innovation.
National scale manufacturers have largely left the city, leaving less footloose locally
based firms. Few recent Berkeley plant closures have been due to business failures, a
trend which will hopefully continue. However, some firms unable to find (affordable)
expansion space--ideally space adjacent to existing sites--are likely to continue leaving.
The projected growth in manufacturing assumes that the City places a priority on
retaining existing manufacturers and facilitating their expansion, as the West Berkeley
Plan calls for. These expansions, rather than attraction of new companies into the city,
will almost certainly be the main source of new manufacturing jobs (one potential
source of relocated manufacturing jobs is printers and other manufacturers leaving San
Francisco).

The most dramatic example of expansion should occur at Miles/Cutter, where the City
and the company have agreed to a 30 year development plan for the 25 acre site.
Peerless Lighting and Andros Analyzers are other examples of large manufacturers
who plan to add jobs in Berkeley. Most manufacturers polled in the Business Outreach
Survey stated that they planned to add jobs. Certainly, company by company factors
concerning markets for the company's products, site conditions (including expansion
possibilities) and costs, management plans for the company, and others will affect these
expansion plans over the long run.

Biotechnology could be a growth area for Berkeley manufacturing, if local companies
can successful develop and prove the safety of their products. Miles and Xoma are
large existing "biotech" firms, perhaps their presence, the presence of the University,
and the presence of similar firms in the East Bay "Biotech Corridor" will attract new
producers. Among sectors highlighted by ABAG, Berkeley has a strong presence in
scientific instruments, with firms also in electronics and industrial machinery. Thus, in
Berkeley, as in the region, "high tech" manufacturing will continue to grow as a
proportion of total manufacturing, but "traditional" manufacturing will remain as well.

The broad services sector is likely to continue growing significantly. One of Berkeley's
economic roles as a city--with a strong contribution from West Berkeley firms--is as a
reservoir of brainpower and artistic talent for the East Bay, the Bay Area, and to some
extent an even larger area. Business services as defined by the Standard Industrial
Classification are strong in West Berkeley, particularly in graphic arts and software
writing. In terms of overall growth (or decline), the specific fates of individual firms are
least important in this sector, since it is composed of many (mostly) small firms. West
Berkeley and other parts of Berkeley have numerous small software companies, to some
extent as a result of the presence of the University and of a major software research
institute. In the past, some of these firms have left Berkeley if they got large, but the
potential for office developments at such sites as the University's Harrison Tract may
make it easier for them to remain in the future. Architectural and engineering services--
also part of ABAG's services growth cluster--are also strong in West Berkeley and likely
to remain so. Berkeley is also a likely site for the expansion of research laboratories,
particularly in association with--or as a precursor to--biotech manufacturing. Other
services, most notably auto repair, are not likely to grow and may even shrink as
competition for commercial sites increases.

Retail trade should also expand in West Berkeley over the Plan period. While Berkeley
is narrowing the gap, it remains "understored" in sales dollars per capita (in some retail
sectors) compared to other Alameda County or Bay Area cities. Paradigmatic West
Berkeley retailers seek to project images of creativity, technical sophistication,
supportive service, and environmental concern. The key assumption allowing West
Berkeley to grow as a retail area is reasonable traffic flow on I-80.

West Berkeley's current strength as a regional retail area is marked by the entrance of
Orchard Supply Hardware, the expansions of Whole Earth Access and the planned
addition of a second car dealership at Weatherford BMW. The 4th & University area
also has potential for added regional retail (much of it in smaller shops), particularly if a
train station and parking structure are added. If San Pablo Ave. retail nodes (e.g. San
Pablo & University, San Pablo & Dwight) can be strengthened, as the Plan hopes, both
neighborhood and regional serving retail can be developed at these locations. The
many ethnically identified retailers along University and San Pablo Aves. should prove
to be a source of strength, as the population of the East Bay continues to grow more
diverse. There is less basis to predict an expansion of purely neighborhood serving
retail, although the City can attempt to foster it. On San Pablo Ave., Walgreen's has
opened two drug stores, a classification generally considered to be neighborhood-
serving, although the stores are on a scale which suggests a somewhat broader clientele.

V. Goals and Policies

Goal 1:

Take all reasonable actions to maintain and promote manufacturing and other
industrial sectors in Berkeley.

Rationale:

One of the central thrusts of the Preferred Land Use Concept was to provide a land use
framework which would allow manufacturing to remain and expand. Manufacturing
is the one economic sector which is unique to West Berkeley. Manufacturing also
provides often well-paid blue collar jobs accessible to moderately skilled people. Some
manufacturers also produce products with important technical content, thus also
providing technical jobs. The Plan is also premised on the concept that manufacturing
can be maintained and expanded without sacrificing environmental quality.

Policies:

A. Implement the land use concept in the Preferred Land Use Concept, which allows for
the retention and expansion of manufacturing, in conjunction with other Plan goals;

B. Implement the measures in the Preferred Land Use Concept which will streamline
the permit process for manufacturers (consistent with other Plan goals such as the
maintenance of environmental standards) and explore additional methods for
streamlining the process;

C. To the greatest extent possible, focus business assistance efforts, including efforts to
retain and attract new companies, on manufacturers which will provide jobs and/or
other benefits for Berkeley.

D. Continually assess the impact of policies in other areas--such as taxes, impact
mitigations, transportation planning, environmental quality, and others to assess how
these policies affect the goal of retaining and attracting manufacturing, and how the
goals which these policies are intended to achieve can best be harmonized with the
manufacturing retention goal.

Goal 2:

Support the growth of regionally oriented retail trade in West Berkeley in locations
which are consistent with other goals and standards, particularly the traffic goals of the
Transportation Element.

Rationale:

West Berkeley has been increasingly successful as a regional retail center. This success
has provided tax revenue to the City, provided innovative goods and services (which
are not generally available at locally oriented retailers) to Berkeley and surrounding
communities, and in some cases created stimulating urban environments. In a time of
fiscal stringency for the City, gaining new tax revenue is critical. There are a number of
locations--the Ashby corridor, around 4th & University, and along San Pablo Ave.,
where retail expansion can occur without damaging industrial activity. Clustering of
regional retail uses can help them succeed, help make retail areas more pleasant and
attractive, and allow for centralized parking facilities shared among retailers. However,
in developing these areas, the City and businesses should assure that they do not cause
undue traffic congestion at nearby major intersections. Such congestion is both
undesirable in itself and tends to make the retail areas less successful.

Policy:

A. Assist appropriate types of retailers to locate in West Berkeley retail areas, and to
meet planning standards for those areas.

Goal 3:

Improve the level of neighborhood serving retail in West Berkeley

Rationale:

As discussed above, many West Berkeley residents feel the area is deficient in
neighborhood serving retail, such as food stores. There are many factors--e.g.
competing commercial areas, the need for service commercial uses such as auto repair,
low population density--which have led to the character of commercial strips such as
San Pablo Ave. Yet San Pablo Ave. may have the ability to attract local customers from
both West Berkeley and neighboring areas. Doing so would not only provide needed
services, but also improve the urban environment. Improving the level of
neighborhood serving retail might make it possible for area residents to walk or bike
instead of drive on some shopping trips. Therefore, the City should explore and take
feasible action to improve the situation.

Policies:

A. Explore how neighborhood serving retail uses might be brought to San Pablo
Avenue specifically.

B. Explore the potential of other locations within West Berkeley to support
neighborhood serving retail.

C. Implement the provisions of the Preferred Land Use Concept which allow small scale
food stores in residential zones.

Goal 4:

Continue to support the growth of advanced technology manufacturing (such as
biotechnology) and advanced technology services (such as research laboratories) in
appropriate locations, under appropriate environmental safeguards.

Rationale:

As is discussed earlier in this Element (see p 74), Berkeley's concentration of both
scientifically trained personnel and scientific research institutions is a "comparative
advantage" (vs. other cities) for this community. The recently signed Development
Agreement between the City and Miles Labs indicates both City and corporate interest
in this type of expansion. The body of trained people here makes it possible for
Berkeley firms to set up the most technologically sophisticated manufacturing and
research processes possible. Research conducted in these operations may (or may not)
have spinoff benefits in other fields. While research activities generally provide jobs
solely for the highly trained, jobs requiring less advanced training are also likely to be
created if products move into the production process. The heavy capital investments
required for advanced technology manufacturing, and to a lesser extent for advanced
technology services, also translate into increased property tax revenues for the City.
While advanced technology firms cannot and will not completely supplant
"mainstream" manufacturers or service providers, they are likely to form an important
part of West Berkeley's economic base and thus should be supported.

Policies:

A. Provide assistance to advanced technology firms to help them establish or expand
businesses in appropriate locations.

B. Periodically review the City's regulation of biotechnology to assure that it both meets
City regulatory objectives and does not unnecessarily interfere with the creation and
expansion of biotechnology firms here (see Environmental Quality Element for
implementation measures)

C. Develop links between training agencies and Berkeley biotech firms, so that Berkeley
residents can become qualified for biotech jobs.

Goal 5:

Continue to create employment opportunities, especially for Berkeley and West
Berkeley residents.

Rationale:

Finding employment opportunities, especially in good jobs, is one the major goals of the
City's overall economic development policy. It is particularly important to find these
opportunities for economically disadvantaged Berkeley and West Berkeley residents. In
1990, the Census showed that West Berkeley residents were less likely to work in
Berkeley than other Berkeley residents. Doing so both serves needy citizens and reduces
the strain on the stressed regional transportation network. Getting residents employed,
has secondary beneficial effects, such as reducing social service costs and increasing
retail spending in Berkeley. Creating employment opportunities requires not only
assuring that there are jobs in Berkeley, but also that needy residents have the skills and
mechanisms to access these jobs. Therefore, the City implements such programs as First
Source, which requires that businesses which get Use Permits review Berkeley resident
candidates first for their job openings (however, the program does not require that the
businesses hire the Berkeley candidates, and does not expect businesses to hire
unqualified employees).

Policies:

A. Pursue all avenues which will result in the training of Berkeley residents, particularly
economically disadvantaged Berkeley residents, for the widest possible range of
occupations that exist in West Berkeley. To do so, pursue strengthened links between
major employers and educational institutions, and major employers and training
agencies. In the context of citywide efforts, improve the abilities of Berkeley training
agencies and schools to prepare future workers.

B. Improve the access of (West) Berkeley residents to jobs which exist in West Berkeley
through mechanisms such as an actively implemented First Source Program.

C. Improve the placement and retention rate of First Source Program participants by
improving training through intensified links between the First Source Program and the
planning and outreach process for employment and training agencies.

Goal 6:

Promote opportunities for business ownership by the economically disadvantaged--
non-Whites, women, and other economically disadvantaged people.

Rationale:

While paid employment will remain the primary source of income for most households,
business ownership can be a means for economic advancement for some non-White
people, women, and other economically disadvantaged people. The diverse West
Berkeley economy, with its many niches and many small businesses, provides
opportunities for business ownership without capital requirements that are prohibitive
to non-traditional business owners. As of 1991, 20% of West Berkeley businesses report
themselves as minority owned, although these businesses gain only 8% of total gross
receipts. The City should be alert for opportunities to assist African-American, Latino-
American, Asian-American and women entrepreneurs. The "high technology" sectors
present in West Berkeley have tended to have a low percentage of entrepreneurs from
these groups. To the extent that San Pablo Ave. becomes a focus of economic
development activity, it could be a good locale (among others) for expansion of
"minority" owned businesses.

Policy:

A. Use City economic development programs, such as the Revolving Loan Fund,
business outreach, and ownership transfer assistance as vehicles to promote business
ownership by non-Whites and women.

Goal 7:

Protect small businesses, particularly arts and crafts businesses, so they can continue to
flourish in West Berkeley.

Rationale:

Small businesses, especially arts and crafts businesses, are key in creating the unique
character of West Berkeley. The City has developed Arts and Crafts zoning to protect
these businesses. However, the zoning has not always worked as intended. It is vital
to assure that arts and crafts enterprises are genuinely protected from displacement.

Policy:

A. Use available mechanisms, including zoning, property purchase assistance, and
direct City assistance to artists, to assure that artists and craftspeople remain a vital part
of the West Berkeley community.

Goal 8:

Encourage linkages between West Berkeley businesses, and between public institutions
and Berkeley businesses.

Rationale:

West Berkeley businesses--especially (but not only) manufacturers--purchase millions of
dollars of goods and services annually as inputs into their goods and services. To the
extent that these purchases can be made locally, their economic impact can be greatly
increased. Many necessary inputs are not available within Berkeley (and sometimes
even Alameda County) but there has been no concerted effort to assure that businesses
are maximizing their opportunity for local purchases. There is a particular opportunity
for those firms which are undertaking major construction projects. Beyond purchasing,
there may be possibilities to increase cooperative information sharing efforts, training,
or problem solving.

A similar logic obtains for public agencies, such as the City of Berkeley or the
University. Public agencies are major goods and services purchasers, although typically
of final products, not intermediate inputs. Public agencies can also seek to use the
funds they have on deposit to encourage to lenders to engage in socially constructive
(or "community development") lending.

Policies:

A. Explore mechanisms which can facilitate increased linkages between West Berkeley
businesses.

B. Explore the possibility for City funds to be used in "linked deposit" programs.

C. Use the Recycling Markets Development Zone (RMDZ) as a way of encouraging
manufacturers to use local inputs. (see Environmental Quality Element

IV. Issues and Strategies

This section forms a transition between the Background and Goals and Policies on the
one hand, and the specific implementation measures on the other. The Background
section seeks to paint a picture of existing conditions in the West Berkeley economy,
while the Goals and Policies section points out desired goals and directions for City
policy. This section outlines some key issues--largely those highlighted by the
Economic Development Subcommittee of the West Berkeley Plan Committee--and
discusses in general how the City should respond to them, how to move towards the
goals. The strategic discussions in this section suggest approaches to problems,
although specific implementation steps have not necessarily been developed,
particularly if areas of program activity are required. It is expected that the strategic
concepts discussed here--and the specific measures used to implement them--will
evolve over time.

A. Strategies for Business Retention

Business retention is one of the central elements of the West Berkeley Plan. The
Preferred Land Use Concept was conceived in significant part to provide a more stable
planning environment for manufacturers and other businesses. Manufacturers in
certain areas of West Berkeley are protected by the Plan from invasive and destabilizing
uses, in others the nature of the mix of uses is clarified. In all areas, permitted and
prohibited activities are more clearly defined, and the process for expanding a
permitted use is generally eased--changes which will benefit manufacturers and other
businesses. Streamlining the permit process has been repeatedly cited as a key goal of
business people.

These changes are necessary, but not sufficient, to retain manufacturers- -particularly
expanding ones. These expanding companies often face the need to find space at
affordable rents/prices, which can be difficult in West Berkeley. The Community
Development Department currently works intensively with manufacturers and other
businesses to help them find appropriate space. In some cases these efforts have been
successful, in others they have not.

The Economic Development Subcommittee suggested that business retention efforts
focus on sectors such as scientific instruments, printing, machinery, biotechnology, and
possibly other light manufacturing sectors. While the City generally seeks to retain
most businesses, these sectors are particularly promising for Berkeley and do deserve
special attention. The mechanisms to do provide this attention will need to be defined.
Perhaps (with adequate staffing) a special program of regularly contacting these
businesses to make sure they were functioning well in Berkeley would be possible. The
West Berkeley Manufacturers' Forum planned in the Miles Development Agreement
will provide another avenue to implement these ideas.

In addition to these concrete, bottom line factors, there are less objective factors--such as
how the "business climate" seems--as well. It is unclear how important these factors are
in business retention--companies relocating out of Berkeley cited cost and space
availability as their key reasons for leaving. These factors are discussed in the
Opportunities and Constraints subsection of the Background section of this Element.

One relatively low cost way to improve perceptions about doing business in Berkeley to
recognize and reward those Berkeley firms which make a particularly positive
contribution to the city. For example, Berkeley manufacturers have been leaders in
seeking out environmentally sensitive ways to manufacture products. Those who
innovate in this field or in the making of environmentally sound products should be
recognized and rewarded. Some such firms have been noted in the South and West
Berkeley Revitalization Exchange, but there are many other possible publicity
mechanisms. A Made in Berkeley labeling program for such products has also been
proposed (as has similar labeling for the Bay Area as a whole).

Another important strategy for retaining manufacturers is addressed in the following
discussion.

B. Strategies for Retaining Local Ownership of Manufacturers

One important strategy area for business retention is retaining local ownership. Both
academic studies and Berkeley experience demonstrate that owners based outside
Berkeley (or the Bay Area) are much more likely to move or close a plant than locally
based ones. Non-local owners may "consolidate" Berkeley plants into plants elsewhere.
Durkee Foods, Colgate-Palmolive, Heinz, Canada Dry, Lectra Lighting, and Upright
Scaffolding are all examples of outside corporations which closed Berkeley plants. This
is not to suggest that all local owners are community-minded, or that all outside owners
(even foreign ones) are not, but rather that in general local owners are more committed
to remaining in Berkeley.

In order to maintain local ownership of West Berkeley businesses, there must be
intervention at the time when a company is likely to pass out of local hands. Two times
when this likely to occur are 1) retirement of owner(s); and 2) major expansion. When
the local owner(s) retire, (s)he may not have a family member who is interested in
assuming control of the business. At that point, (s)he may sell the business to an
outsider or simply close it down, even if it is still profitable. Major expansions generate
the need for increased capital for the firm. One way that firms generate that capital is
by selling the firm to non-local owners.

There are many roles for the City, or a City-supported intermediary such as an
Economic Development Corporation, to play in facilitating local ownership. These
could include finding financing for a local buyer, guaranteeing loans for a local buyer,
providing information on employee ownership options such as ESOPs (Employee Stock
Ownership Plans) and finding technical assistance for that buyer. The City or Economic
Development Corporation would have to develop mechanisms to learn of impending
owner retirements or company sell-offs, though some such situations are already
known. In cases where the firm's workers were interested, they could be the local
buyer. It seems prudent for this effort to focus initially on smaller firms, to help build
up a credible record for later efforts to intervene with larger firms.

C. Strategies for Improving the Level of Neighborhood-Serving Retail

Some West Berkeley residents feel the area is short of neighborhood serving retail.
Food stores are the key issue. In a 1989 survey of Berkeley households, 57% of West
Berkeleyans responded that there were too few food stores near their house. More West
Berkeleyans felt they were lacking for food stores than any other neighborhood's
residents--in South Berkeley 38% felt there were not enough. West Berkeley residents
missed food stores more acutely than any other category, though 48% also desired more
specialty stores and 39% more drug stores. (Most West Berkeleyans--54%--felt they had
too many liquor stores.)

Unfortunately, it may be rather difficult to increase food stores in West Berkeley. West
Berkeley already has 27 of Berkeley's remarkable total of 157 food stores, or 17%. West
Berkeley's food stores racked up some $12.5 million in sales in 1990, almost 10% of the
Citywide sales of $128 million, despite the absence of a major supermarket in West
Berkeley. The portion of Berkeley's population which could be expected to rely on West
Berkeley food stores is also 10%, suggesting that the area is capturing a fair share of
sales (This adds Census Tract 4233--the San Pablo Park area--to West Berkeley proper,
because San Pablo Ave. is the closest major shopping street for them). Berkeley has only
some 9 supermarkets--depending on exactly what stores are considered supermarkets--
again suggesting that West Berkeley's population may be too small (and too low
income) to attract one.

However, most of West Berkeley's food stores are in the area from Addison St. north,
suggesting that the southern residential areas are relatively underserved. In addition, a
West Berkeley supermarket might be feasible if it could capture some of the traffic from
outside West Berkeley which use West Berkeley arterials. In addition, it has been
suggested that the Redevelopment Agency explore the idea of establishing an outdoor
"mercado" or farmers/arts and crafts market at the Delaware St. Historic District
(Delaware St. between 5th and 6th). Such a mercado might be able to draw on the
regional traffic 4th St. draws while providing locally useful services (and re-establishing
the retail importance of Oceanview's historic main street).

VII. Implementation Measures

Priority Implementation Activities

The first group of activities are activities which have been selected for both their
particular importance in implementing the goals of the Element and for the likelihood
that they can be at least partially implemented in the short run.

1. Targeted industrial retention and attraction program--Develop and implement a
targeted West Berkeley industrial retention and attraction program, including
preparation of appropriate and timely informational and promotional materials.

Goals and Policies Implemented: Goal 1, Policy 1C; Goal 4, Policy 4A
Responsibility: Community Development Services, Community Development
Department
Funding: Costs not yet analyzed, but general Berkeley promotional brochure published,
West Berkeley promotional brochure planned.


2. Large Site Reuse Project--Make reuse of large sites such as Colgate and Utility Body
priorities for business assistance, explore how planning tools such as the Large Site
Development Process could facilitate development on these sites, and explore
mechanisms for financing toxic remediation and improvements on the site, including
(but not limited to) expansion of the Redevelopment Area and creation of assessment
districts.

Goals and Policies Implemented: Goal 1, Policy 1C; Goal 4, Policy 4A; Goal 5, Policy 5A
Responsibility: Community Development Services, with City Planning Dept.
Funding: No non-staff costs yet identified.


3. Major Employer Training Project--Implement the Biotech Academy provisions of the
Miles Development Agreement, and seek to develop similar comprehensive education
and training arrangements with other large employers, particularly those in the
biotech/laboratory field.

Goals and Policies Implemented: Goal 4, Policy 4C; Goal 5, Policies 5A and 5B
Responsibility: Community Development Services
Funding: Miles Development Agreement.
General Implementation Activities:

A. Ordinances, Regulation and Policy Development

1. Rezoning--Rezone the West Berkeley Plan Area to reflect the land use districts,
permitted and prohibited uses, and development standards of the West Berkeley Plan.

Goals and Policies Implemented: Land Use Element Goals and policies, also Economic
Development Element Goal 1, Policies 1A & 1B; Goal 2; Goal 3, Policy 3B; Goal 4, Policy 4A
Responsibility: City Planning Department
Funding: Regular staff and operations funding


2. Arts and Crafts--Review the functioning of the arts and crafts Ordinance, and develop
recommendations about how it can best be implemented.

Goals and Policies Implemented: Goal 7, Policy 7A
Responsibility: City Planning Department, in consultation with affected parties.
Funding: Regular staff funding


3. Mitigations--Develop and adopt as Ordinances housing, child care, and possibly
other mitigations which reflect both the City's goal of recovering the impacts of
development, and the City's goal of maintaining manufacturing and creating jobs
generally.

Goals and Policies Implemented: Housing/Social Services goals
Responsibility: Community Development Services, Community Development
Department, with City Planning Department


4. Coordination with County--Increase City coordination with and participation in
Alameda County industrial retention, defense conversion, job training, and other
economic development programs and policy development.

Goals and Policies Implemented: Goal 1, Policy 1C; Goal 2; Goal 5, Policy 5A
Responsibility: Community Development Services, Community Development
Department, with Berkeley representative on Alameda County Economic Development
Advisory Commission
Funding: Regular staff and operating funds


B. Programs

1. Building Buyout Program--Implement the West Berkeley small business buyout
program, established as a mitigation for the Durkee project.

Goals and Policies Implemented: Goal 1, Policy 1C; Goal 5
Responsibility: Community Development Services, Community Development
Department
Funding: Program Self-funded


2. Buyouts of Retiring Owners--Develop and implement a financing and technical
assistance program to facilitate worker or community buyouts of retiring owners of
manufacturers.

Goals and Policies Implemented: Goal 1, Policy 1C
Responsibility: Community Development Services, Community Development
Department
Funding: Costs not yet analyzed. Industrial Development Bonds possible source for
project financing.


3. Employment/Training System-- Institute a coordinated program to improve
Berkeley's system for employment training, and to improve Berkeley resident workers'
access to Berkeley jobs (see also Priority Activity #3)

Goals and Policies Implemented: Goal 5, Policy 5A & 5B
Responsibility: City Manager's Office, possibly to be delegated
Funding: Costs not yet analyzed.

4. Recognition--Develop mechanisms to recognize and publicize manufacturers and
other businesses with outstanding records in environmental quality, local hiring, or
other contributions to the Berkeley community.

Goals and Policies Implemented: Goal 1, Policy 1C
Responsibility: Community Development Services, Community Development
Department
Funding: Regular staff and operating funds


5. Business Assistance--Continue to provide assistance to manufacturers, retailers, and
other businesses seeking to locate or expand in appropriate West Berkeley locations.

Goals and Policies Implemented: Goals 1,2,3,4; Policies 1C, 2A, 3A, 4A
Responsibility: Community Development Department
Funding: General Fund


C. Projects

1. Business Directory--Develop a directory of West Berkeley businesses, both for retail
customers and to assist West Berkeley businesses in buying goods from each other.

Goals and Policies Implemented: Goal 1; Goal 2; Goal 3: Goal 8, Policy 8A
Responsibility: Not yet determined, directories frequently published by community
organizations
Funding: Costs not yet analyzed.


D. Studies

1. San Pablo Ave. Economic Development Study-- Analyze the social, economic, and
physical conditions and potentials on San Pablo Ave., in order to formulate and
implement an Improvement Strategy for San Pablo Avenue. The strategy should
emphasize attracting and retaining desired businesses and improving the physical
character and appearance of the street.

Goals and Policies Implemented: Goal 3, Policy 3A; Goal 6
Responsibility: Not yet determined
Funding: Costs not yet analyzed.


2. Redevelopment Feasibility--Study whether renewal and expansion of the
Redevelopment Area would be a feasible and appropriate method to finance West
Berkeley Plan proposals. The study would develop an appropriate proposed area.

Goals and Policies Implemented: Goals from Housing, Transportation, Environmental
Quality Elements, also Goal 1, Policy 1C; Goal 3, Policy 3A; Goal 4, Policy 4A; Goal 6,
Policy 6A; Goal 7, Policy 7A.
Responsibility: Redevelopment Agency
Funding: Costs not yet analyzed.

3. Economic Development Organization--Explore the feasibility and usefulness of
creating some form of West Berkeley economic development entity, such as an
Economic Development Corporation, perhaps analogous to Coliseum Corporation in
Oakland.

Goals and Policies Implemented: Potentially all, depending on entity's focus.
Responsibility: Community Development Services with City Planning Dept.
Funding: No sources identified, but Miles Development Agreement provides for Miles' in-kind support to West Berkeley economic development forum.