Agenda Item Wording:
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Receive Report - Receive Industrial Land Inventory Analysis report and presentation.
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Deadline for Action: 2/3/2025
Submitting Department: Community Development
Contact Name and Phone Number:
Paul Bernal, Planning and Community Preservation Director, (559) 713-4025, paul.bernal@visalia.city <mailto:paul.bernal@visalia.city>
Devon Jones, Economic Development Manager, (559) 713-4190, devon.jones@visalia.city <mailto:devon.jones@visalia.city>
Department Recommendation:
Staff recommends the City Council receive the Industrial Land Inventory Analysis report and presentation and take public comments on the item. Based on information and recommendations noted in the Industrial Land Inventory Analysis, staff will provide the City Council with a work session item at the Council’s next scheduled meeting to further discuss potential direction on proceeding with the recommendations.
Background Discussion:
A key component of the General Plan’s economic development strategy is industrial development and corresponding job growth. The General Plan’s Economic Development Land Use Objective #1 (LU-O-1) is, “Maintain Visalia’s role as the regional commercial and industrial center for Tulare, Kings and southern Fresno counties.” Industrial sector job development is critical as these are "basic” or “primary” jobs. In economic development terms, basic jobs are those that make products or services that are consumed outside of the community, thereby generating “new” wealth for local workers and local service or retail sectors. Because Visalia’s jobs mainly come from the services, industrial, and retail sectors, prioritizing industrial job development best leverages the City’s economic development efforts to realize a growing, diversified local economy. As the City strives to be a “development partner” through its various General Plan elements, this also means the City needs to strive to provide an adequate supply of available sites for industrial job development.
At this time, industrial development and land acquisition activity has accelerated quite rapidly and while there is still considerable vacant land to be developed for industrial uses, much of the planned development is specific to warehousing and distribution and may not be suitable for heavy manufacturing or food processing. Also, the available land for purchase by end users is diminishing. Currently, there is approximately 1,164 acres of vacant designated industrial land. However, most of this acreage is outside the City limits and will require annexation prior to development.
With the expansion of larger speculative industrial spaces in the Visalia Industrial Park primarily for warehousing, distribution, and e-commerce, interest in industrial investment in Visalia appears to be at an all-time high. While this means there are now several active speculative industrial developers and new companies invested in Visalia who will deliver new facilities for several years to come, staff concluded, based on the amount of industrial development interest in our community and initial concerns with the speed in which this land was being developed, that it was in the City’s best interest to conduct an analysis to see where the next phase of available industrial sites should be located. This resulted in staff issuing an RFP to hire a consultant to help with preparing an Industrial Land Inventory Analysis (ILIA) under CP0536. The consultant, 4Creeks, was selected as the vendor to help in preparing the ILIA.
The ILIA provides a comprehensive assessment of the industrial land supply and opportunities within the city. It aims to inform policymakers, planners, and stakeholders about the current and future potential of industrial land, aligning with the city’s General Plan and evaluates several parcel’s availability, suitability, and readiness. Here are the main points of the report:
- The current market conditions for industrial land in Visalia reflect a tight and competitive environment, with a vacancy rate of only 1.6%. A healthier vacancy rate is closer to 5 - 6%. This demonstrates a shortage of “readily” available industrial space.
- Strategic opportunities include Visalia’s strategic geographic location and unparalleled logistical benefits in the middle of the state along State Route 99 and near Interstate 5. This location, coupled with the presence of several logistics providers such as UPS, Fed Ex, and GSL, provides companies the ability to get goods to consumers across CA overnight. Additionally, Visalia’s pro-business environment and streamlined processes coupled with competitive costs make the City a very attractive location for industrial investment. As such, the City has several industrial development partners that build speculative industrial space.
- Various growth scenarios project significant additional space requirements by 2033, with potential needs ranging from 600,000 to 6.4 million square feet depending on economic conditions:
Ø Low Job Growth Scenario: Based on projected job growth for industrial sectors in Visalia, this scenario assumes a modest annual increase in industrial sector jobs at a rate of 0.6%. Under this scenario, Visalia would require between 600,000 and 1.6 million square feet of additional industrial space by 2033. For Tulare County as a whole, the demand is projected to be around 1.5 million to 4.1 million square feet (note that Visalia represents about 42% of the Tulare/Kings County region’s industrial space - Colliers, Central CA Semi-Annual Research & Forecast Report, 2024 Q1 & Q2). This scenario reflects a more conservative outlook, accounting for potential economic uncertainties and slower job growth.
Ø Historical Growth Scenario: This scenario projects future demand based on past trends in industrial square footage growth. If the trend from the last decade continues, Visalia is expected to need approximately 3.9 million square feet of additional industrial space by 2033. This scenario assumes that the city will maintain its current growth trajectory, driven by its strategic advantages and robust industrial base.
Ø High Job Growth Scenario: Based on projections from the California Employment Development Department (EDD), this scenario predicts an average annual job growth rate of 4.0% for the transportation and warehousing sectors. In this scenario, Visalia could see a demand for up to 6.4 million square feet of industrial space by 2033. This scenario assumes robust industrial development and significant expansion of the logistics and warehousing sectors, driven by strong economic conditions and high demand.
Our key challenges include maintaining an adequate labor supply which includes labor skills and housing supply. Other challenges are state and federal regulatory factors that present hurdles for industrial growth and ensuring adequate infrastructure such as power, water, and sewer.
Based on the information provided in the ILIA, the following are recommendations noted in the report:
1. Designate additional industrial land - To support projected industrial growth, it is recommended that an additional 405 acres within the Reserve area be designated for industrial development. This will address the anticipated shortfall and ensure that Visalia can accommodate future industrial development needs. The Reserve area is particularly suitable for this designation due to its proximity to SR99 and the Caldwell interchange, enhancing transportation connectivity and making it an ideal location for industrial use. Furthermore, the site’s proximity to the airport provides a unique opportunity to leverage this asset for specialized manufacturing or uses that benefit from air freight services.
2. Expand utilities - Extend water, sewer, and stormwater lines to the Reserve area to support the newly designated industrial land. This expansion is critical to ensuring that the area has the necessary infrastructure to support industrial activities and attract new businesses. The proposed extensions along Shirk Road and Caldwell Avenue will connect this area to City services, facilitating industrial development.
a. Expand Shirk Road - Fully build out Shirk Road to its ultimate Right-of-Way from Caldwell Avenue to SR 198. This expansion will support and accelerate industrial development in the reclassified Reserve area by improving transportation connectivity. Enhancing Shirk Road will make the area more accessible and attractive to industrial developers, stimulating economic growth and creating job opportunities.
b. Develop more renewable energy - Establish a solar facility west of SR 99 near the wastewater treatment plant to increase power generation capacity and support additional industrial development. This renewable energy initiative reduces the City’s reliance on non-renewable energy sources and will provide clean energy to meet the industrial area’s growing energy demands.
c. Develop more housing - Designate additional land for residential use to accommodate the projected increase in the workforce needed for industrial growth. Ensuring an adequate supply of housing is essential to maintaining a stable labor force and preventing labor shortages from hindering industrial development. Suitable areas for residential development include portions of the Reserve area that do not overlap with airport safety zones and other areas within the City’s Sphere of Influence (SOI). This will support the creation of approximately 3,000 new jobs and ensure the housing supply keeps pace with industrial growth.
d. Permit medical uses in the Business Research Park zone - The ILIA also assessed BRP zoning and found that expanding the allowable uses within the zone to include a broader range of medical offices, healthcare-related research facilities, pharmaceutical and biomedical labs, or support services for medical offices could support the growing healthcare sector, enhance economic development, provide greater access to healthcare services for the community, while encouraging development in the zone.
Given these recommendations, and in particular Recommendation No. 1 as noted above, staff recommends a discussion and thorough overview of the Reserve area occur at the City Council’s next scheduled meeting to discuss the possibility of directing staff to begin the process of establishing land use designations for the Reserve area. Please note the Reserve area is in the southwest quadrant of the community and is bounded by the Visalia Airport and Walnut Avenue to the north, Caldwell Avenue to the south, Roeben Street to the east and Highway 99 to the west. A map of the Reserve area is attached to this report for reference.
Staff would further note that there is extensive interest from property owners who own property in the Reserve area who are seeking to develop their property with urban uses. There have been two development considerations submitted through the County of Tulare’s land review process due to this area not having designated land uses under Visalia’s General Plan. These actions have led staff to issue letters informing the County of the City’s intent to seek Council direction on proceeding with establishing land use designations within the Reserve area. In addition, these letters also noted the City’s objection to any County supported development proposal due to the City’s desire to oversee development of this area under the City’s jurisdictional purview and development standards, including servicing this area with adequate infrastructure (i.e., sewer, water, regional storm management, etc.).
Consideration by the City Council on establishing land use designations within the Reserve area is identified per Land Use Policy LU-P-33. A copy of this General Plan policy is included as an attachment to this report. Based on this policy language, staff acknowledges a deeper discussion and understanding of proceeding with potential land use designations warrant’s a separate work session discussion given the complexities that may occur if directed to proceed with this endeavor, including identifying the appropriate environmental review process.
Fiscal Impact:
The ILIA is CIP #0536 and had a budget of $60,000.
Prior Council Action: N/A
Other: N/A
Alternatives: Per Council direction.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to receive the Industrial Land Inventory Analysis report and direct staff to provide an overview of the Reserve area at the next City Council meeting.
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Environmental Assessment Status:
Exempt from California Environmental Quality Act, Public Resources Code Sections 21000 et seq. (“CEQA”) and 14 Cal. Code Re. Sections 15000 et seq. (“CEQA Guidelines”).
CEQA Review: This item is exempt from the California Environmental Quality Act, Public Resources Code Sections 21000 et seq. (“CEQA”) and 14 Cal. Code Re. Sections 15000 et seq. (“CEQA Guidelines”). The analysis conducted is not for any particular project or action that would result in a potentially significant physical impact on the environment.
Attachments:
1. ILIA report
2. Map of the Reserve Area
3. Land Use Policy LU-P-33