City of Glendale Report

•

FORMCM-37

CITY OF GLENDALE CALIFORNIA REPORT TO THE REDEVELOPMENT AGENCY

September S, 2009

AGENDA ITEM

Designation of a Creative Media and Design District within the San Fernando Road Corridor Redevelopment Project Area

1) Motion providing direction to staff AGENCY ACTION

Public Hearing [ 1

Approved for 4 . Ordinance [ ] Consent Calendar [

S, zudl calendar

ADMINISTRATIVE ACTION

Submitted

Action Item [X J Report Only [ J

Philip Lanzafame, Director of Development Services .......... .......... ~. ~jb4'-lpt~t-1A:7IIf-

~~~ ~ Ken Hitts, Economic Development Manager ................................. -'.;d'---f-\-t:>i----18tt--

Mina Pashayi, Administrative Assistant~lntern ................................ ..hd~11lli1,,1,!f,~:£O~!t::'

APProVJ:':nes E. Starbird, Executive Director .................... ............. ~IQ~ Reviewed

Scott Howard , City Attorney .......................................... .. ............. .

Alan Loomis. Principal Urban Designer ......... ...... .......... ...... ... -t4"'-'--'-'-----'-----

RECOMMENDA nON

Staff recommends that the Agency consider the concept of designating a creative media and design district within the San Fernando Road Corridor and provide direction to further explore the concept.

6 A

SUMMARY

Creation of Media and Design District Within the SFRC Project Arca September 8. 2009

Page. 2

During a previous meeting, the Agency requested that staff present the concept for establishing a media and design district within the San Fernando Road Corridor Redevelopment Project Area .

THE CONCEPT:

• Define and identify strategies for nurturing Glendale's creative community along with an action plan to encourage development of a creative media and design district or project within the San Fernando Road Corridor.

• Promote Glendale as a center for creative media and design on a regional level. • Strengthen Glendale's image as a City that supports and encourages creative industries.

This concept seems to be a natural progression of the original 1992 project area plan to encourage an economic transformation of an underutilized and overlooked industrial area by attracting entertainment, high technology, and new media industries to the Redevelopment Corridor; the development of DreamWorks Animation Studio, KABC 7 Television Studio and the Grand Central Creative Campus (GC3) are significant steps in this area. Staff is interested in exploring with the Agency this concept and how it might be implemented in Glendale.

What is Gained

• High paying jobs in creative industries (media, digital arts, technology, etc.): • Business that is complimentary to our existing commercial/industrial base: • Devetopment of lifestyle amenities - live/work space, lofts, galleries, coffee shops,

restaurants , bars/clubs etc. ; and • Greater attention to the arts in general.

What's Here Now

In addition to Disney, DreamWorks and KABC which act as entertainment anchors, the Corridor continues to be strong economically with its diverse mix of industries A preliminary review of the existing businesses in the San Fernando Road Corridor indicates that among sales and use tax producing businesses, there are approximately 267 (out of 731 or 36%) businesses that could be considered as creative industries under the following categories:

Architecture & Environmental Design - 4 Art Galleries/Studios - 9 Builders' Supplies - 27 Electronics/Computer - 6 Graphic Design/Printing/Publishing - 56 Home Furnishings & Improvements - 50 Jewelry Design/Manufacturing - 6 Light Industrial- 27 Media Services - 27 (Disney & DreamWorks represent 3 of the total but employ over 2,500) Music & Related Services - 4 PhotographyNideography - 9 Specialty Design & Services -15 Textiles & Garment Related - 27

KEY CONSIDERATIONS

Creation of Media and Design District Within the SFRC Project Area September 8, 2009

Page, 3

• Disney, KABC and DreamWorks act as existing media anchors; • 750 acres of land allowing for industrial mixed use development; • No clear identity exists for the Corridor, especially the southern portion; • 731 sales and use tax producing companies and small businesses operate within the Corridor; • 267 sales and use tax producing companies within the Corridor can be classified as creative

industries; • Sales tax contributions from the area totaled $4.8 m in fiscal year 07/08; • Corridor industrial vacancies remain low at 2% (7% when subleases are included); • Opportunity may exist for creating lifestyle amenities (live/work housing opportunities, artist lofts,

galleries, coffee shops and restaurants) catering to the creative employees and residents drawn to the district; and

• LA County's creative economy generated nearly $100 billion in revenues during 20D7.

INITIATIVES/ INCENTIVES

• Further refine and understand existing businesses and industry clusters ; • Contact commercial brokers to obtain feedback via focus group or one-on-one conversations; • Focus groups with businesses currently in the area; • Identify redevelopment efforts in other cities that foster the creative industries; • Further capitalize on Disney, KABC & DreamWorks as catalytic projects; • Where vacancies occur, encourage media and design uses to relocate to the Corridor; • Encourage ~Iifestyle amenitiesD such as live/work space, galleries, coffee shops, restaurants, etc.; • Branding and/or promotion of the corridor as a center for media & design; • Consider incentives to encourage growth in the creative industries; and • Increase marketing of city's fayade improvement grant program.

CHALLENGES

• Length of Project Area - five miles long/75D-acre Corridor; • Potential for industrial development stagnation and manufacturing job displacement; • No clear identity exists for the southern portion of the Corridor; • Low 2% industrial vacancy rates (7% minus subleased space); • Potential competition for uses with Downtown Glendale; • Potential relocation of major sales tax producers; and • Accommodating existing uses (e.g. auto service, auto body) without them having to relocate out of

Glendale.

FISCAL IMPACT

There is no fiscal impact associated with this report. Should the Agency direct staff to pursue a creative media and design district for the San Fernando Corridor, there may be costs associated with that effort.

BACKGROUND

During a previous meeting, the Agency requested thai staff present the concept for establishing a creative media and design district within the San Fernando Road Corridor Redevelopment Project Area. The potential for creation of such a district cou ld be viewed as a natural progression of one of the objectives in forming the San Fernando Corridor project area in 1992: to encourage an economic transformation of an underutJlized and overlooked industrial area by attracting entertainment, high technology, and new media industries to the Redevelopment Corridor.

The Concept:

Creation of Media and Design District Within the SFRC Project Area September 8, 2009

Page, 4

• Define and identify strategies for nurturing Glendale's creative community along with an action plan to encourage development of a creative media and design district or project within the San Fernando Road Corridor.

• Promote Glendale as a center for creative media and design on a regional level • Strengthen Glendale's image as a City that supports and encourages creative

Industries

To compete in today's economy; a robust creative sector is desirable. The United States economy relies heavily on services, information, technology and intellectual property. Along with the increasing dominance of these enterprises comes the need for greater creativity and innovation in the workforce. This phenomenon breeds competition: for people, for ideas, for business and for quality of life.

Creative enterprises produce concrete economic benefits, including jobs, tax revenue and consumer spending. Many states have measured the economic effects of the creative sector, which nationwide amounts to billions of dollars through direct spending by cultural organizations and related spending by consumers. Creative enterprises are also key employers in some regions and produce blilions of dollars in local, state and federal taxes each year.

Creative enterprises deliver multiple benefits to communities. Cultural activities, buildings, artifacts and spaces are often the focal point of revitalization efforts and serve as primary meeting places for the community. Creative production, encompassing everything from environmental design and signage to architecture to public art, is frequently credited with generating a cohesive sense of place, beautifying communities and contributing to quality of life. Creative enterprises and arts participation yield measurable civic and social benefits, which contribute to economic vitality.

CREATIVE INDUSTRY IN THE LA REGION & SAN FERNANDO ROAD CORRIDOR

Los Angeles Regional Creative Economy

Nearly one million employees work directly or indirectly in the creative industries of Los Angeles and Orange counties. Los Angeles County based firms generated nearly $100 billion in revenues during 2007; Orange County accounted for at least $4.3 billion. The state of California received more than $3.8 billion in taxes tied to these industries.

In 2007, Otis College of Art and Design, together with the Los Angeles Economic Development Corporation, released the first ever comprehensive analysis of the economic impact of creative industries in Los Angeles County. In this study, the "creative" industries included the following activities and findings:

• Architecture (including interior and landscape design): Total economic impact. 34,300 Jobs and $14 billion;

• Art Galleries : Total economic impact: 2,500 jobs and $463.2 million;

• Communication Arts (including advertising, graphic design, and display): Total economIc impact: 58,000 jobs and $8.2 bi ll ion;

Creation of Media and Design District Within the SFRC Project Area September 8, 2009

Page,S

• Digital Media (including game design): Total economic impact: 33,200 jobs and $14.6 billion:

• Entertainment (including film, TV, and music) : Total economic impact: 422,300 jobs and $152 .7 billion;

• Fashion and Accessories: Total economic impact: 265,200 jobs and $72.3 billion ;

• Furniture and Home Furnishings: Total economic impact: 108,200 jobs and $25.4 billion;

• Product and Industrial Design : Total economic impact: 1.800 jobs and $299 million; and

• Toys: Total economic impact: 21 ,400 jobs and $9.9 billion .

Creative Businesses in the San Fernando Corridor

The San Fernando Road Corridor has a diverse mix of businesses. There are a tota l of 731 sales and use tax generating businesses in the Corridor and from that base, approximately 267 businesses could be ca tegorized as creative industries in Glendale. The following tab le identifies the industry sectors and the current mix within the Corridor:

Business Type Percent Businesses in Category Architecture & Environmental Design 1.50% 4

Art Galleries/Studios 3.37% 9 Builders' Supplies 10.11% 27 Electronic/Computer 2.25% 6 Graphic Design/Printing/Publishing 20.97% 56 Home Furnishina & Imorovements 18.73% 50 Jewelrv DesiQnlMfQ . 2.25% 6 LiQhtlndustrial 10.11% 27 Media Services 10.11% 27 Music & Related Services 1.50% 4 PhotoQraphyNideoQraphy 3.37% 9 Specialty Design & Services 5.62% 15

Textiles & Garment Related 10.11 % 27 Total 100% 267

Although the current mix of land uses does not reflect all of the activities outlined in the analysis, this analysis provides a benchmark to compare the current San Fernando Corridor economy with the creative economy of the broader Los Angeles region.

Existing Anchors as a Catalyst

Creation or Media and Design District Within the $FRC Project Area September 8, 2009

Page, 6

The Walt Disney Company purchased the Grand Central Business Centre and has subsequently built·out 250,000 square feet of space with plans to develop 6 million square feet over 25 years. Currently, Disney occupies 2.5 million square feet of space in Glendale. In addition , DreamWorks Animation Studio is adding 128,700 square feet to its current facility of 325,000 square feet. These catalytic projects provide a solid foundation to continue efforts in attracting creative industries to the corridor. Existing and prospective vendors, suppliers as well as media and technology firms often cluster together to network and recruit employees from a talented labor pool.

There are also pockets of re·tenanting where former light industrial uses have been replaced by home improvement services, creating a make·shift ~designer row~ of retailers such as flooring galleries, door and window showrooms, furniture boutiques, kitchen and bathroom showrooms, and other retailers providing unique interior finishes . This may have been a direct response to the growth of the housing market in the last decade. Their continued success should be tracked as this concentration of uses could potentially be creating a distinct cluster that may warrant further branding and promotion.

FINDINGS & CURRENT CONDITIONS

In order to evaluate the potential for a media and design district, the current environment, physical conditions, and business climate in the San Fernando Corridor should be considered. The following is a brief description of the San Fernando Road Corridor as it exists today, followed by potential opportunities and next steps in this effort .

Area Characteristics

The San Fernando Road Corridor includes approximately 750 acres of land and extends along the entire length of San Fernando Road. The project area includes areas west of San Fernando to the Golden State Freeway (1·5) in the northern half and east to the Southern Pacific Railroad right-of-way in the southern half. The Project Area spans up to one-half mile east along major streets such as Broadway and Colorado Street.

The Corridor has become the City's primary warehouse/distribution and manufacturing/industrial area, taking advantage of close proximity to major rail and other transportation lines. More recently the project area has evolved to include a significant mix of office, commercial and light industrial uses anchored by entertainment based companies such as Disney, DreamWorks, etc.

As the Corridor stretches several mi les between the borders of Burbank and Los Angeles, a number of distinctive nodes have developed. One such example is the prevalence of mid-size industrial uses concentrated south of the Pacific Avenue curve as compared to the more diverse commercial character of the area bordering Los Feliz Road.

According to the San Fernando Design & Implementation Plan presented in 1997, one of the initial assumptions for the project area was the need to develop a unified overall image due to the inconsistent character of the Corridor. However, that analysis concluded that there are different characteristics , uses, requirements and opportunities within the project area and that a single image would not be desirable or achievable. In fact, the variety and diversity of the area is one of its strengths.

Current Land Uses

Recognizable distinctions are evident within the corridor. This is exemplified by the prevalence of mid-sized industrial uses in lower San Fernando as well as the area north of the SR-134 in upper San Fernando.

Creation of Media and Design District Within the SFRC Project Area September 8, 2009

Page, 7

These enclaves exist where there was sufficient size, length and depth behind primary road parcels to allow for larger scale development. This contrasts with the smaller scale industrial users along the eastern edge of San Fernando Road where shallow lot depths and immediacy to residential neighborhoods do not permit sufficient lot size for large footprint development.

Clustering of similar land uses has occurred in various areas of the corridor. One such cluster of note is the area along San Fernando Road between Chevy Chase and Los Feliz Road which has evolved into a home improvement district with furniture stores and interior remodeling service retailers . Another example of clustering is the Grand Central Business Center, portions of which have evolved from an industrial/manufacturing and warehouse/distribution district for larger users to a business park with a high percentage of entertainment production, industry support functions and back·office space, while maintaining older uses.

The land uses within the Corridor are highly diverse representing virtually all uses permitted by zoning. As allowed by current zoning, mixed use developments with residential components have been evaluated and entitled.

Zoning

In August 2004, the City adopted new zoning designations and regulations for the San Fernando Road Corridor Project Area. The new regulations maintained key industrial zones to ensure the continued well· being of the industrial employment base. However, in appropriate locations, it allowed for the mixing of different uses. These could be mixed·use developments with industrial/commercial or commercial/residential combinations, depending on the location.

Zoning in the corridor currently allows most, if not all , of the uses associated with creative and media industries. This is evident by the number of these types of businesses that are already operating in the Corridor. To the extent the land·use demands in the corridor shift away from a more classical industrial or manufacturing uses to creative industries, the zoning regulations maximize flexibility in a number of zones to permit this change to occur naturally. The 2004 zoning changes now allow for the introduction of live/work uses and other services in the corridor that typically are associated with creative uses or professional services.

Parking

In a number of locations within the corridor, parking is at a premium, particularly in areas where small scale industrial businesses predominate. The parking requirements for industrial uses are 2 spaces per 1,000 SF; warehousing and wholesaling is 1 space per 1,000 SF. The parking requirements for general office or research and development space are 2.7 spaces per 1,000 SF. This causes an issue where uses go from a less intense use to more intense (warehouse to office) creating the need for more parking which is already at a premium.

If the corridor were to transition to more creative or media uses, available parking supply could be a critical issue. A number of properties were built to house industrial or warehousing uses. They have limited parking and could not accommodate increased demand on site without addressing and exploring parking alternatives.

Economic Stabilitv

Currently, the San Fernando Road Corridor is economically viable with a diverse mix of industries, business services and retail. Although difficult to identify all businesses, according to HdL Companies data, 731 sales tax producing companies and small businesses operate in the Corridor. This represents the highest concentration of businesses in the City of Glendale by geographic area. Additionally, in 151

Creation of Media and Design District Within the SfRC Project Area September 8, 2009

Page, 8

quarter 2009 the sales tax contributions from the area totaled approximately $964,782. This is significant when compared with the Glendale Galleria One ($808,619) and Brand Boulevard of Cars ($766,094). The annual sales tax contribution from the San Fernando Road Corridor was $4.8 million in 2008.

Industrial Vacancies

With the exception of small areas of Montrose and Sparr Heights, the majority of industrial zoned land in Glendale is located within the San Fernando Road Corridor. Out of 8.2 million square feet of industrial space, only 134,000 square feet was vacant as of June, 2009. This represents a 2.0% vacancy rate (7% including subleased space) citywide which is reflective of the general strength of LA County's industrial market. When retail, office and commercial properties within the lower section of the Corridor are included in the analysis, the vacancy rates rise to 20%.

Future redevelopment policy discussion regarding the corridor should consider the potential loss of valuable industrial properties that currently provide employment opportunities and sales tax generation. The economic health of the San Fernando Road Corridor is a significant consideration when evaluating the concept of creative, media or design districts in the corridor.

There seem to be numerous examples of such concentration of uses, helping revitalize former industrial districts. However, these areas often suffered form obsolete building stock and significant economic distress. Although there currently does not seem to be strong economic indicators that the existing industrial and manufacturing uses are suffering or that the current building stock has become underutitized, the natural future evolution of such industrial and manufacturing uses may warrant replacement by creative and media related uses.

KEY CONSIDERATIONS

Opportunities

1) Disney's Grand Central Creative Campus, KABC and DreamWorks are existing media anchors.

Despite the overall downturn in the economy, there are significant opportunities to aUract media, internet and technology firms to the San Fernando Corridor. With the expansion of DreamWorks and Disney's GC3 and the proximity to the entertainment industry in Burbank, the San Fernando Road Corridor presents an opportunity to attract additional media inftuenced investment.

Disney for example plans to bulld-out low·rise technology space in a collegiate environment to house media, consumer product and gaming companies. This opportunity is consistent with recent Los Angeles Business Journal analysis data indicating that Los Angeles has surpassed Silicon Valley in total number of tech·related jobs. Glendale'S current anchors, proximity to the entertainment industry, accessibility, public safety and low business cost business environment provide a good foundation for future attraction efforts.

2) Branding & marketing the Corridor locally & regionally.

Although there is currently a concentration of creative uses, no clear identity exists especially for the southern portion of the Corridor which includes Glendale's Transit Center along with the aforementioned industries that currently operate from the area. Branding efforts could take the form of stakeholder meetings, visioning, logo creation & customization, signage and/or marketing collateral . Despite the presence of the existing media anchors, the area seems to have no distinguishing identity for residents or visitors. An opportunity may exist to strengthen certain pockets with specific uses and brand the Corridor to attract additional creative businesses and ancillary services that cater to these industries.

Creation of Media and Design District Within the SFRC Project ArcH September 8, 2009

Page, 9

3) Where vacancies occur, encourage continued growth of creative industries.

The potential for strengthening certain pockets of the Corridor with specific uses from creative industry clusters and the opportunity for becoming a ~designer row" seems to be consistent with this goal. Furniture and home improvement products, architecture & interior design, communication arts, and product & industrial design firms are represented throughout the Corridor. Communication with property owners, commercial brokers, businesses and stakeholders is key toward fulfilling this initiative.

4) Encourage "1ifestyle~ venues and amenities that appeal to creative workers.

Consider opportunities for creating live/work housing, artist lofts, galleries, coffee shops, restaurants, clubs and entertainment and media serving businesses that provide the type of uses that creative employees and residents want.

The employee base from the entertainment industry is estimated to be approximately 4,000 strong and continually growing. However, many of them only work and do not live or play in Glendale. There seems to be a natural development opportunity for "life-style amenities" that provide services to the creative industries. Such redevelopment may take the form of creating live/work housing, artist lofts, galleries, coffee shops, restaurants, clubs and entertainment.

Challenges

1. Length of Project Area - five mile long/750 acre Corridor creates organizational and planning challenges;

2. Potential for industrial development stagnation and manufacturing job displacement could take place absence communication;

3. No clear identity exists for the entire Corridor which inhibits promotional and marketing efforts; 4. Low 2% industrial vacancy rates (7% including subleased space) present challenges in attracting

desirable tenants to the Corridor; 5. Potential competition for uses with Downtown Glendale such as galleries, restaurants and clubs; 6. Potential exists for relocation of major sales tax producers if little attention is paid to their needs and

interests; and 7. Accommodating existing uses (e.g. auto service, auto body) without them having to relocate out of

Glendale.

NEXT STEPS TO CONSIDER

1. Further refine the concept and understand existing businesses and industry clusters; 2. Present and discuss concept with commercial brokers & businesses in an effort to obtain feedback; 3. Explore redevelopment efforts in other cities that foster the creative industries; 4. Further capitalize on Disney, KABC & DreamWorks as catalytic projects; 5. Branding andlor promotion of the corridor as a center for media & design; 6. Encourage "lifestyle amenities" such as live/work space, lofts, galleries, coffee shops, restaurants,

bars/clubs etc. that cater to creative industries; 7. Increase marketing of city's fac;ade improvement grant program. 8. Consider incentives to encourage growth in the creative industries; and 9. Where vacancies occur, encourage media and entertainment uses to relocate to the Corridor

through incentives such as the Agency's Fac;ade Improvement Program.

MOTION

Moved by Agency Member _________ ________ , seconded

_______________ , that , with respect t o by Agency Member

the designat ion of a creat ive media and des i gn district within the

San Fernando Road Corridor Redevelopment Project Area, staff is

d i rec t ed by the Agency as follows :

Vote as follows :

Aye s :

Noes :

Absent :

Abstain:

APPROVED A TO FORM

.1 : \FI L~S\DOCrI LES\F/lC'rFi NIJ\lIgcm.:y St" f f lli Ten; 0" re crcdll v" medi a "nd d<'si gn di st rict .doc

A 1