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Business district may replace Ravenswood industrial park

By Lily Bixler | 4 Apr 2010

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STANFORD, CA.–Lack of investor interest and economic adversity have kept East Palo Alto’s Ravenswood district in a 20-year redevelopment gridlock, but the city is moving ahead on a proposal that would rezone the area to spur job growth and make Ravenswood a new city hub.

“The city needs to be able to insure investors that Ravenswood is going to be a developed area and that they won’t be building next door to a chicken farm,” East Palo Alto redevelopment project coordinator Sean Charpentier said of the 350-acre redevelopment zone that is currently home to wrecking and storage yards, industrial companies, abandoned lots and a Super Fund chemical clean up site. “The completion of our infrastructure plan and the fact that people who own land out there are nearing retirement means the land could turn over soon. But, when will the land be available for redevelopment? Your guess is as good as mine.”

When the real estate market collapsed, even the five Ravenswood projects with entitlements to start building halted work to adjust to a new economy. Those developers still holding land are trying to sell it because with no financiers to build or buy, holding land only eats away profits, according to city redevelopment officials.

Part of the stand still is because investors and contractors are discouraged by Ravenswood’s inadequate sewage, water, roads, drainage and the decades old chemical mess laying at the foundation of any development effort.

Another part of the apprehension is the 25 million square feet of vacant property that already exists on the peninsula. Investors will likely turn to developed land before they even consider forking over money to build out East Palo Alto, according to the city’s Redevelopment Manager Marie McKenzie.

A square foot of industrial land in Ravenswood sells for around $15 to $20, which is substantially lower than the $30 to $45 per square-foot in neighboring communities like Redwood City, according to Martin Chiechi, a Grubb & Ellis real estate agent who has sold about eight properties in Ravenswood over the last few years. Expensive infrastructure is partly responsible for Ravenswood’s low prices, and part of it can be blamed on the poor economic conditions of the last two years. “It’s been a challenge to sell anything in Ravenswood,” Chiechi said. “But in the last 60 to 90 days, the markets has picked up. Just this morning I got two calls to buy in Ravenswood.” He noted that these calls were from people interested in existing facilities, not developers looking to start new projects.

Despite a dreary outlook for investor interest in developing Ravenswood, East Palo Alto doesn’t seem discouraged. Last November, the city began an 18-month preliminary planning process to rezone the district from industrial to mixed-use land and to determine transportation around Ravenswood. To this goal, on Feb. 18 the city will start a series of community engagement meetings for feedback about how Ravenswood should be developed. The city’s goal is to adopt a plan by the summer of 2011.

At the heart of the rezoned district the city proposes a light rail transit center from which an entirely new community will emerge. Redevelopment Manager Russell Averhart described an epicenter where East Palo Altans can hop off the commuter train to homes in the top stories of mixed use buildings and then walk around the block to have dinner at a neighborhood restaurant. As Averhart’s vision suggests, the new city hub would include 22 industrial condominiums (94,000 square-feet of building space), 45 housing units, seven live-work units and, in the city’s words, an “emerald necklace” of open space parks.

East Palo Alto says its biggest motivation for this project is improving city infrastructure and creating jobs. The city’s 21 percent unemployment rate as of November—the county’s highest—urges East Palo Alto to do everything it can to create and retain employment for local residents, according to the Economic Development Agency’s memorandum of city goals.

“Ravenswood offers the city an opportunity to leverage the development of a new Dumbarton Commuter Rail line to generate economic development,” city officials wrote in the Market Demand Analysis for the project. Ravenswood sits in an economic region that, with the addition of a rail line, could eventually support development.

As part of the planning process, the city’s economic redevelopment agency will do a study to address funding sources for the project. So far East Palo Alto has secured $645 million for the proposed project. Metropolitan Transportation Commission granted the city $360 million to plan a light rail system that would link East Palo Alto to the rest of the peninsula and connect the South and East Bays. East Palo Alto expects $180 million internally from the city, $100 million from various other grants and an undetermined federal grant to help with either the planning phase or base-line infrastructure improvements.

It took East Palo Alto over 20 years to complete University Avenue Circle development project and around 15 years to finish the Gateway 101 redevelopment area. These projects “take a very, very, very long time,” according to Charpentier, but the city remains positive as it continues to plan the process that could transform Ravenswood into a new business and residential district.

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