ECONOMIC DEVELOPMENT ELEMENT
1.0 Introduction
1.1 Overview
The past few years have seen a growing awareness by City leaders and officials throughout California that every City governmental action and policy concerning physical development has an effect on the local economy. As a result, cities which are concerned about developing a tax base with which to support vital services, stimulating quality local development activity, promoting the quality of life in the community generally, and providing employment opportunities for local residents are moving to adopt policies and effect changes which will lead to positive results in these areas.
Such awareness has given rise to public/private partnerships, where local government and private sector developers and property owners cooperate in achieving mutually satisfactory developments in the community. The starting point in any such cooperation is the planning process. By incorporating economic considerations into the General Plan, the City formally recognizes the importance of economic development and lays the groundwork for future cooperation between the City and the private sector in developing and maintaining an economically healthy community. Moreover, the Economic Development Element functions as a yardstick by which to evaluate the economic implications of land use, circulation, and housing decisions made by the City Council as actual development activities are proposed by the private sector.
1.2 Purpose
The Economic Development Element is provided as an optional element of the Solana Beach General Plan. Its purpose is to set forth general guidelines for the development and maintenance of a sound economic base in the community, recognizing that the achievement of a sound economic base is interdependent upon related policies and objectives identified in the various elements of the Solana Beach General Plan.
1.3 Legislative Authority
The preparation of an Economic Development Element to a General Plan is authorized by Section 65303 of the government code of the State of California. This section states: “The General Plan may include any other elements or address any other subjects which in the judgement of the legislative body relate to the physical development of the County or City.”
1.4 Relationship to Other Elements of the General Plan
Inclusion of an Economic Development Element in a general plan underscores the interplay between the Land Use Element, Circulation Element, and Housing Element, the policies and objectives of which are major considerations in the development of a sound economic base in the community. Further, the Economic Development Element identifies appropriate City roles to stimulate beneficial economic development.
1.5 Plan Period
The policies and objectives set forth in this Economic Development Element are based upon local and regional economic trends and determination of opportunities and constraints relevant to the City of Solana Beach identifiable as of 1988. Because of external influences and unforeseen events, the continuation of current trends, opportunities, and constraints cannot be assured. As a result, the policies and objectives identified in the Solana Beach Economic Development Element should be reviewed and modified as needed at least every ten years, and more frequently if significant problems with or obstacles to the achievement Element objectives are encountered.
1.6 Technical Appendix
To simplify the content and format of this Economic Development Element, presentation of detailed statistical information utilized in formulating the Element has been intentionally limited. Statistical data are presented herein only to the extent necessary to provide an overview of economic information upon the Element is based. Two reports have been prepared, containing detailed statistical information and comprehensive analyses upon which development of this Element is based:
■ Market Factors--Solana Beach General Plan; November 4, 1987.
■ Fiscal Impact Analysis--City of Solana Beach, November 4, 1987.
These reports are available for review at the City Hall. They are identified as Technical Appendix A and Technical Appendix B respectively, which by this reference are made a part of the Solana Beach General Plan documentation.
2.0 Existing Conditions/Issues Analysis
2.1 Economic Base
As a suburban community, Solana Beach’s economic base is keyed primarily to the economy of the Greater San Diego region. In particular, the City’s residential and industrial facilities are sustained primarily by the Greater San Diego economic base. Its local-serving commercial facilities are keyed to this regional economic base as well. However, significant portion of the City’s commercial base is supported by several local economic generators:
■ Del Mar Fairgrounds.
■ Beach tourism.
■ Floriculture in the City and nearby.
However, these are relatively minor in relation to the City’s total economic base. This analysis is keyed in large measure to the regional economy. However, special consideration has been given to commercial potentials arising from beach and fairgrounds proximity.
2.2 Land Use
The City of Solana Beach contains 2,211.5 acres. The General Plan specifies that at time of full development the City’s urbanized land use will be primarily residential and commercial, as indicated by the following tabulation:
|
|
# Acres |
% Of Total Acres |
|---|---|---|
|
Residential |
1,276.50 |
57.72 |
|
Commercial |
150.40 |
6.80 |
|
Office/Professional |
22.40 |
1.01 |
|
Light Industry |
13.10 |
0.59 |
|
Public/Inst. |
79.30 |
3.59 |
|
Sub-Total |
1,541.70 |
69.71 |
|
Open Space/Rec |
231.14 |
10.45 |
|
Vacant |
-- |
-- |
|
Roads |
337.39 |
15.26 |
|
Rights of Way (I-5/Railroad) |
88.50 |
4.00 |
|
Agriculture |
12.83 |
0.58 |
|
Total |
2,211.56 |
100.00 |
During the general plan evaluation process, 17 potential development sites were identified within the City. This list is by no means all inclusive, but provides a tangible indication of the small amount of land to be developed within the City‑‑about 2.2 per cent.
Of these 17 sites, 11 are situated on or very near Highway 101 and Cedros Avenue. For the most part, these sites reflect opportunities for higher intensification of older existing uses. These sites can be a major asset to the City, particularly with respect to attracting specialized high-dollar commercial development, including hotel development.
2.3 Residential Community
The General Plan will allow the following residential uses at full development:
|
|
# Acres |
# Units |
% Of Total Units |
|---|---|---|---|
|
Estate (0-2 DU/Ac) |
280.5 |
280 |
4.28* |
|
Low Density (3 DU/Ac) |
253.2 |
760 |
11.63 |
|
Low/Medium Density (4 DU/Ac) |
375.5 |
1,502 |
22.98 |
|
Medium Density (5-7 DU/Ac) |
147.0 |
882 |
13.49 |
|
Med-High Density (8-12 DU/Ac) |
80.5 |
805 |
12.32 |
|
High Density (13-20 DU/Ac) |
139.8 |
2,307 |
35.30 |
|
Total |
1,276.5 |
6,536 |
100.00 |
* Midpoint of density range used for calculating residential units.
The prospective 6,536 residential units at full buildout reflect a 4.7% increase over current levels, which are estimated at 6,245 units. Essentially, Solana Beach will remain primarily a detached single-family community, with over half of its units of this type. Basically, the residential community is largely built out at this point in time. The only significant new development of residential units will be of a multiple-unit type, primarily in several vacant parcels and to a lesser extent in replacement parcels.
2.4 City Population
As noted earlier, at full build out the general plan will accommodate an estimated 6,536 residential units per year. Residential in turn will accommodate an estimated population of 16,897, computed as follows:
|
|
# Units |
Population Per Unit |
Population |
|---|---|---|---|
|
Single-Family |
3,424 |
2.89 |
9,895 |
|
Multiple-Family |
3,112 |
2.25 |
7,002 |
|
Mobile Homes |
-- |
2.00 |
-- |
|
Total |
6,536 |
|
16,897 |
The above projections are predicated upon current per unit population densities, as identified in the market report. They assume that all additional residential growth will be of a multiple-family type, and that all existing mobile-home uses will be replaced.
2.5 Market Areas
The market analysis utilized in preparing the Economic Development Element identified economic growth potentials in four principal areas, ranging from a localized 2.5-mile ring to the County region as a whole. Projected population growth levels for these four defined market areas are as follows:
|
|
1987 |
2002 |
% Increase |
|---|---|---|---|
|
2.5-Mile Ring |
28,000 |
35,000 |
25.0 |
|
5.0-Mile Ring |
84,000 |
143,000 |
70.2 |
|
10.0-Mile Ring |
225,000 |
390,000 |
73.3 |
|
San Diego County |
2,188,000 |
2,747,000 |
25.5 |
As indicated, the immediate local market area has projected growth approximately equal to that of the region as a whole. However, the surrounding 5.0-mile and 10.0-mile rings have projected growth substantially in excess of that of the region. These two market areas are of significant importance to many of the City’s commercial establishments.
2.6 Commercial and Industrial Community
Full buildout of the general plan will provide for approximately 2.5 million square feet of commercial building space in the City, as follows:
|
|
# Acres |
# SF |
|---|---|---|
|
General Commercial |
114.76 |
1,262,360 |
|
Light Commercial |
1.90 |
20,900 |
|
Special Commercial |
33.70 |
505,500 |
|
Office/Professional |
22.40 |
448,000 |
|
Light Industrial |
13.10 |
248,900 |
|
Total |
185.86 |
2,485,660 |
This amount of space will represent approximately 3.25 times the existing building space, estimated at 764,000 square feet.
A major potential for new commercial development is hotel/motel usage. Much of this usage would likely be located in parcels currently designated for commercial usage, located primarily along Highway 101. The market analysis indicates the capability for development for up to four to six new high-quality hotel complexes, in the range of 600 to 800 units.
Light industrial usage is and will continue to be a relatively minor land use factor in the City. At full build out, the General Plan allows for 13.1 acres of such usage, which is projected to accommodate approximately 249,000 square feet of building space.
2.7 Commercial/Industrial Employment Base
Based upon Southern California averages, the City’s commercial/industrial building space allowed by the General Plan at full buildout will accommodate an estimated 7,600 employees.
2.8 Fiscal Impacts
A fiscal model has been created to evaluate the fiscal impacts of future residential and commercial development upon the City’s finances. This model demonstrates that the City can be comfortable in knowing that long-term implementation of the General Plan will result in positive fiscal impacts. To illustrate, future residential development will “pay its way” under existing service levels. This is indicated by fiscal model estimates of five prototypical residential types at anticipated housing value levels, which estimate the following estimated annual surplus generated by one acre of residential development:
|
|
|
# Units |
Net Annual Cash Flow |
One-Time Devel Control Fees |
|---|---|---|---|---|
|
$ 75,000 |
Apartment |
30 |
$ 87 |
$11,250 |
|
150,000 |
Condominium |
18 |
1,661 |
13,500 |
|
225,000 |
Condominium |
18 |
4,331 |
20,250 |
|
250,000 |
Single-Family |
5 |
882 |
6,250 |
|
350,000 |
Single-Family |
3 |
1,084 |
5,250 |
The model also indicates that the City’s principal opportunity for creation of substantial additional surplus revenues lies in commercial development. This is illustrated by the following estimates of annual surplus (to the City of Solana Beach) generated by one acre each of eight types of prototypical commercial development:
|
|
# SF |
Net Annual Cash Flow |
One-Time Devel Control Fees |
|---|---|---|---|
|
Retail $100/SF Taxable Sales 150/SF Taxable Sales 200/SF Taxable Sales |
11,000 11,000 11,000 |
$12,010 18,514 25,018 |
$6,600 7,700 8,800 |
|
Restaurant 250/SF Taxable Sales 300/SF Taxable Sales |
7,000 7,000 |
19,729 24,080 |
5,600 7,000 |
|
Hotel (50 Rooms) |
22,500 |
84,344 |
17,500 |
|
3-Floor Garden Office |
20,000 |
772 |
16,000 |
|
Light Industry |
18,000 |
4,522 |
5,400 |
The above projection results point with favor to the City’s future financial health. None of the prototypical developments indicate a negative cash flow--including residential--and commercial development has a highly favorable cash flow. Prospective new commercial development can add significantly to the City’s fiscal resources, estimated at approximately $2.6 million annually as follows:
|
|
# Acres |
Annual Surplus Per Acre |
Annual Surplus |
|---|---|---|---|
|
Hotel |
10 |
$84,000 |
$ 840,000 |
|
Other Commercial |
90 |
20,500 |
1,800,000 |
|
Total |
100 |
|
2,640,000 |
From a planning standpoint a principal point to be drawn from fiscal analysis is that fiscal considerations should not be a major negative factor in judging the desirability of any particular type of development. This means that the City and its residents have the choice to select the types of developments they want, based upon a variety of non-fiscal factors as well as financial considerations. In particular, this fiscal situation means that the City should be able to dictate that all new development in the City meet the highest quality standards. The City should not be forced to accept less than the highest quality development because of fiscal considerations.
On the other hand, the above projections indicate that one form of commercial development has a particularly high level of cash flow return to the City. This is hotel development, which yields a projected favorable annual cash flow (in 1988 constant dollars) of about $85,000 per acre – more than triple the levels returned by retail and restaurant uses. Thus, selective hotel development which can meet other community criteria can be a major benefit to the City’s future finances.
The above tabulations also indicate that one-time development control fees should be in the range of $5,250 to $20,250 per acre. The fiscal model assumes that such fees are offset by direct development control costs.
2.9 City Roles in Economic Development
The realization of General Plan objectives will not be automatic. Rather, the City will need to take a pro-active stance, working as a partner with the private sector in implementing these objectives. Realization of General Plan objectives will require future City participation. Key areas of City partnership participation should include the following:
■ Maintenance of commercial development opportunities, through strong ongoing restriction of commercially designated sites for high quality future commercial use only.
■ Encouragement of an optimum amount of hotel facilities within the City, with particular emphasis in the upgrading of Highway 101 sites, consistent with development controls.
■ Encouragement of deeper-lot commercial development--with its attendant better site planning opportunities--on the City’s principal commercial arterials, with particular emphasis on Highway 101 and Cedros Avenue.
■ Assistance in related site assembly, including utilization of redevelopment procedures allowable under California law.
■ Provision of financial assistance to obtain public facilities and private improvement, through utilization of such implementation means as: (1) California Redevelopment procedures, (2) special assessment district procedures, and (3) allocation of gas taxes and other available City funding.
■ Assistance to the Solana Beach business community in planning and promoting a most viable commercial sector.
Section 3.0 of this Economic Development Element sets forth goals, objectives, and policies which establish the general course for City action to implement its General Plan.
3.0 Goals, Objectives, and Policies
GOAL 3.1
TO PROVIDE FOR THE LONG-TERM ECONOMIC HEALTH OF SOLANA BEACH THROUGH DEVELOPMENT OF AN EXPANDED COMMERCIAL BASE
Objective 1.0
Encourage greater visitor-serving (including regional-serving) commercial facilities, particularly hotel, restaurant, and retail facilities.
Policy 1.a The City shall provide for the development of visitor-serving commercial uses during the next 20 years within appropriate areas of the City.
Objective 2.0
Encourage greater retail, office, and other commercial facilities to serve local resident needs.
Policy 2.a The City shall provide for the development of local-serving commercial uses during the next 20 years within appropriate areas of the City.
Objective 3.0
Support organizational efforts to maintain and/or increase commercial volume and quality.
Policy 3.a The City shall encourage the strengthening of existing and prospective marketing organizations within Solana Beach through financial and administrative assistance.
Policy 3.b The City shall support private marketing efforts aimed at increasing commercial volume by providing relevant land use and demographic information to marketing organizations.
GOAL 3.2
TO PROMOTE THE CITY’S ECONOMIC HEALTH BY UPGRADING ITS COMMERCIAL BASE.
Objective 1.0
Adopt a regulatory program aimed at securing only highest-quality new development.
Policy 1.a The City shall establish land use controls to ensure high-quality--yet practical--levels of new development, encompassing such items as site planning, setbacks, screening, and noise control.
Objective 2.0
Ensure adequate access to accommodate existing and future levels of commercial visitors and employees, through the Circulation Element of the Solana Beach General Plan.
Policy 2.a The City shall ensure the provision of adequate parking facilities to serve new commercial development.
Policy 2.b The City shall implement circulation improvements as necessary pursuant to the Circulation Element of the General Plan, to improve automobile access to the City’s principal commercial areas.
Policy 2.c The City shall implement the provisions of the Circulation Element to improve--where possible--the pedestrian-oriented environment within the City’s key visitor-serving and other commercial areas.
Objective 3.0
Identify the potential for establishing measures to revitalize the area along the Highway 101 corridor and Cedros Avenue, including the possible formation of a redevelopment area.
Policy 1.a The City shall complete a feasibility study which evaluates the effectiveness of potential revitalization measures for the area along Highway 101 and along Cedros Avenue.
GOAL 3.3
TO ASSURE CONTINUED DELIVERY OF ADEQUATE PUBLIC SERVICES AND FACILITIES TO CITY RESIDENTS AND ORGANIZATIONS, WITHIN THE LIMITS POSED BY FISCAL RESOURCES.
Objective 1.0
Establish procedures and mechanisms to encourage and give priority to commercial uses providing greatest financial resources to the City.
Policy 1.a The City shall give greatest priority and emphasis in terms of economic development to hotel, restaurant, retail, and office uses, in that order.
Policy 1.b The City shall give least emphasis in terms of economic development to residential and industrial development.
Objective 2.0
Establish procedures for the continued assessment of fiscal impacts of development.
Policy 2.a The City shall utilize its fiscal model through the establishment of appropriate procedures for its use to evaluate the fiscal impacts of proposed developments and annexation.
Policy 2.b The City shall establish a development monitoring program to track development activities as they relate to the need for expanded public services and facilities.
Policy 2.c The City shall continue a developer fee structure for providing development services.