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HomeMy WebLinkAbout05/04/1988 Donald K. Ratty, Chair James H. Childs Kevin McDermott Staff: John Stinson AGENDA BUDGET AND FINANCE COMMITTEE Wednesday, May 4, 1988 12:00 Noon* City Manager's Conference Room ITEM #1 ATTORNEY SERVICES TO OTHER CITIES ITEM #2 MARKETING STUDY ITEM #3 REVIEW OF STREET LIGHTING *Meetings will be limited to one hour. . MEMORANDUM May 4, 1988 ~TO: Budget and Finance Committee ~i:.~-"-"-"-'7~ FROM: - Stanley C.-Grady,' Community Development Coordinator SUBJECT: A Business Market Study of Southe'ast.Bakersfield Background The consultant agreement with Atlant'is Scientific was approved by the City Council on March 25, 1987. On August 27, 1987, the first draft of the study was received by the City. On August.29, 1987, Jerry Moore of Atlantis Scientific responded to concerns expressed about the draft report. On January 19, 1988, Mr. Moore was informed of what changes he needed to make to the final report so that areeommend action could be made to accept the report. On February 19, 1988, we received an amended Final RePort to the Business Market Study. After review of the final draft, Mr. Moore was asked to make some changes which he missed. Atlantis Scientific has been paid $20,000 of the contract amount of $29,350. The work left on the contract is for the consultant to present his final findings inca public forum (i~e. the City Council) and to prepare a pro- motional booklet on the study area. The public meeting expenses would come from the $1,500 set aside for staff meetings and public forum. The promo- tional brochures would be funded from $1,500 budgeted for that purpose. Recommendation Staff recommends approval of the final report and payment of the balance of the contract. Budget & Finance Committee Page 2 May 4, 1988 Mr. Moore wants to make a short presentation to the City Council to ask which of .his recommendations they are willing to implement. With that information he will finish his promotional brochure for the study area and thus conclude his work. SCG/jlm M120 EXECUTIVE SUMMARY ATLANTIS was retained to conduct a BUSINESS MARKET STUDY FOR SOUTHEAST BAKERSFIELD which was described as the area east of Union Avenue and south of State Highway 178 with the focal point of the study located at the intersection of Union and California Avenues. The area encompassed by the study is identified-as the "Enterprise Zone", extending south from State. Highway 178 to Pacheco Road and east from Union Avenue to an irregular line roughly paralleling Mt. Vernon Avenue as shown on Figure 1, page 4, of the report. The report discusses the area in terms of three sections: Section I - State Highway 178 to California Avenue and Union Avenue to approximately Mt. Vet,non Avenue Section II - California Avenue to BrUndage Lane and Union · .",Avenue to just beyond Lakeview Avenue Section III - Brundage Lane and Highway 58 to Pacheco Road and · Union Avenue to Mt. Vernon Avenue ~, · These sections represent three· rat'her distinct areas that are · ,' ,~, clear.ly~ differentiated by demo~raPhi?c, and' economic factors as 'shown by comparision on the Area P~rofiles and Summary Tables in · ' '~the.report,. The report discusses' the findings, conclusions 'and recommendations in t. he context o{ these three sections and these · ~' different 'factors. It is sugges~¢'~ that the City of Bakersfield · also think of this area - its a~ssociated problems and solutions to those problems - in the conte~ of these three sections. This study was undertaken on the pr~mise that the City of Bakersfield .or any juriSdi ' ' , ct3on .for ~hat matter has limited public funds available to.it and almo,~t' unl~m3ted demands' against those funds. It'would be necessary;~herefore, for the City to structure priorities for the allocation, of. any portion of those funds in response to recommendations emanating from the study program. It was also presumed that any recommendations should reflect realistic economic factors so that a redevelopment program would have the greatest probability for success. The criteria used as a basis for recommendations in this report were the same criteria that Should be us'ed by the private sector any site selection process to determine the greatest~ probability' for the successful operation of retail establishments and service ~z~organizations. The study program indicated that the greatest P~i~v for econ~m..~c success and the mos~" product~ '~]~~jon- of public funds 'for re_-'_~6pmen wou- e wit in Se6~ion I. The ~ e ~6~-~ m-'~l~ e s definiti~ ~edevelopment within the area described as the Baker Street Corridor within Section I. Page 2 - Executive SUmmary '- Demographic and economic factors are analyzed in a comparative format for Kern County, the City of Bakersfiel.d and Metropolitan Bakersfield (pages 53-76). An "Area Profile" summarizes economic and demographic data for the study area (Table 24, pages 77-83). A separate analysis is provided for the area within one mile, three miles and five miles from the geographic center of study area and the surrounding environs (Table 25, pages 86-89). Finally, a "Retail Trade Summary Report", provides a comparative analysis of the three sections within the study area, showing the number and type of retail outlets, estimated expenditures within retail catagories and employment by retail trade (Tables 27-29, pages 92-94). This analysis compares activitY levels within four areas: one-half mile radius from Brundage Lane and Lakeview Avenue; one mile radius from California Avenue and Gage Street (Section I); one mile radius from East Planz Road and Cottonwood Road .(Section III); and~one and one-half mile radius, emanating from East Brundage Lane and Lakeview Avenue encompassing Section II and portions of Sections I and III. A "windshield survey" was conducted which identified the physical characteristics of the area..A photographic essay was prepared, showing typical Street scenes which characterize each of the three sections within the study area. Additional ~data is provided for~ the study area and the three sections-on traffic circulation,, public transportation and a "Statistical Summary" of reported crime.~ This part of the report (pages 6-53) is well illustrated. The comparative economic analysis and the survey of the physical characteristics lead to several inevitable conclusions. First, the economic factors show a relative deterioration of living standards as you progress toward the center of the study area. There is older housing, lower rents or mortgage payments, lower property values, significantly less. education, fewer autos, less growth, higher crime rates, less traffic, lower household income., etc. - all the factors that would lead a prudent retailer or service' organization to the conclusion that there might be a limited market. By comparison, as you progress further away from the center of the study area, the marketing opportunities become more attractive. This conclusion is equally obvious in a comparative analysis between Section I and Sections II and III. Second, the physical Characteristics of the area' quickly distinquish Section I from Section II and Section II from Section III. Each is a small enclave separated by the intervening transportation corridors. The only thing they have in common, is Union Avenue and it also' changes character as it runs north to south from secti'on to section. .) ~page 3- Executive Summary union Avenue is the "spine" of the "Enterprise Zone". The Avenue is a well.travelled north/south corridor. The volume of traffic along Union Avenue in Sections I, II and III diminishes toward the southern end of the "Enterprise Zone" (see Figure 37, page 45). The traffic volume on Union Avenue, however, is two to five times the traffic volume of other major thoroughfares in the study area. Union Avenue is in a period of transition from highway commercial and there is considerable evidence of encroaching economic ~blight, including deteriorated and vacant structures interspersed with several successful businesses. The Avenue runs through both .City and County jurisdictions and there is some contention over the provision for .public services. Portions of the Avenue are plagued by. "ladies of the night" plying their trade from street corners. Commercial activity is less concentrated toward the' south and there are several large parcels of land open for development. Union Avenue is an excellent location for many types _Ofand c_o. mmer c i B r unda,geal'Lane. - de v"e_l o~me_~ _=_p_a r t~~~lf o r n i a Aven u ~ Section III of the study area is predominantly underdeveloped simply because it is in the southeastern portion of the City and County, away', from current development trends. Its mai.n, features are. the Airpark,. which was purchased by the City of Bakersfield .for some unfathomable reason, and its proximity to the Kern County Fair Grounds at. Union Avenue and Casa Loma Drive. There is undeveloped land available for light industry within the "Enterprise Zone" and numerous sites for commercial development along Union Avenue. The commercial prospects may have been recently enhanced for certain type .of businesses along the southern portion of Union Avenue as a result of the nearby concentration of auto dealerships. The undeveloped lands within Section III and around the Airpark are being promoted by the "South East Enterprise Zone" (S.E.E.Z). This quasi public/private, organization has only been in existence for a short period, but there is little infrastructure to support the optimism for eminent industrial development. The Tenneco "Gateway" industrial development area to the northeast, adjacent to Brundage Lane, and the vacant light industrial land along Union .Avenue (see Figure 15, page 20)may have greater potential. There is a current effort to jUstify a redevelopment area encompassing Section III and reaching up to Section I along a sinuous path~ to obtain the required balance in population. This somewhat strains credibility Section III presents relatively little pro_spect for the development oF-retail outle'ts' due to the limited ~ec.~o~_omic base, the lack of population concentrations aj~d the proximity of e e pj~--~. Page 4 - Executive Summary Section II is a'hybrid area -~a mixture of indl~trial developmm_~t encroachinq on a low income residential area. The residential area appears 'to be relatively, stable. Brundage Lane, which parallels Highway 58, defines its southern border. This thoroughfare, by virtue of its proximity to the freeway with direct~ access to Interstate 5, i.s an excellent .prospect for ware~c_~_~_uho ~o~hec businesses Tnvolved ~'n~ra~s~c~j~ .aod ~. There i~--t'h~--~' e~ e Brundage Lane for this type of development (see Figures 11-13, pages 16-18). California Avenue forms the northern border of Section II. There is also adequate land available along this Avenue for commercial development (see Figures 8-10, pages 13-15). Because California Avenue is a thoroughfare between two predominently residential areas~ c._ommercial development includin.g retail and service ..~_~o.r.~_~.nizati n~ ~~e~ _ ~ o~c~ate than li h~ ~' Development of retail.outl~' wi.ll take place as a natural consequence of building the Department of Human Services offices at the northeastern corner of California and Union Avenues. The City of Bakersfield has made a concerted effort to establish retail outlets and service organizations along Lakeview Avenue to the~ extent of purchasing and developing properties and subsidizing various enterprises. 'This does not appear to be~ the most appropriate or productive use of public funds. There is no viable "market" for retail establishments within a low income residential/industrial area - a high crime area that has minimal cross-town traffic. The City would be better advised to subsidize commercial redevelopment and retail outlets' along the western border of Section II on Union Avenue. This thoroughfare has almost twenty times the cross-town traffic and is in need of new .development during its transitional stage from highway commercial. It is also in close enough proximity to conveniently serve the residents within Section II. Section I has some 'historical sign.ificance to the City of Bakersfield. It also has the remnants of a viable retail shopping area along what is termed the "Baker Street Corridor". Baker Street is bounded by commercial development and light industry to the west with residential properties to the n,orth, east and south. It is bisected by a railroad marshalling yard and long trains frequently interrupt the north/south flow of traffic. The northern portion of Baker Street - the area above the railroad ~racks and some of the adjoining streets - contain' prosperous businesses. There is enough of a nucleus to justify a program to rebuild the'area. The streets below the railroad tracks contain Page 5- Executive Summary vacant property along with deteriorated structures and several small "going businesses". The area is also a haven for transients and vagrants. A concentration of welfare organizations encourage the aggregation which is detrimental to the development of a viable retail shopping area. The Baker Street Corridor is in a period of transition and its survival as a retail service area is marginal. The merchants and property owners have evidenced some willingness to cooperate in an effort to rebuild the area. Recommendations have been made to improve the area with landscaping, street treatments, and other measures that would provide a sense of "identity" or "place" and create an atmosphere that would attract other ret-ail outlets. This would seem to be an appropriate allocation of public funds with a reasonable probability of success, if the merchants and property owners agree to participate. Any retail shopping and service area that would be created along Union or California Avenues and within the Baker Street Corridor would be competing with the highly successful Southwest Shopping Mall and the new East Hills Mall as well as the existing downtown service area. Metropolitan Bakersfield with a population under 300,000 cannot support a proliferation of shopping areas. Interviews Were conducted within the City ·of Bakersfield· and throughout the study area to determine what community leaders and residents thought was needed to improve· economic conditions within the "Enterprise Zone". ATLANTIS conducted a series of interviews with merchants and with wholesalers, distributors and manufacturers who were resident with the study area. In addition. consumer questionnaires were filled-out by shoppers with the cooperation of local merchants. These interviews identified a number ·of improvements that were needed within the study area. AIS Market Research also conducted well over 200 interviews by intercepting shoppers and through telephone surveys to determine what type of retail outlets or service organizations were needed within'the area. The results of these interview programs are detailed in the report which also includes copies of the questionnaires that guided the interviews. Some general conclusions were formed during the study program. The first is that the area has been adequately studied and there is sufficient information available to make intelligent decisions wi th re_ga__r_U_d~_t_o e_..~conomic rede~v~el~en_ t. Second,. ~here i-~'--li~ evi2ence of coop~eration between the several pub)lc and pri~va--~'t-e .there has been a-l~lteo e?tort to promu~--Ci-Fe--q-.~'h'tives for de_ve]opmen_t, w_i thin the "E_nterprl' se~=-~o--~-~~-~--f-l-nal ly, t-~f~-'C'~i~y areas. ~ ...... ........... The ability to "rate" retail/service establishments by "capacity to serve the present market within the study area" is subject~ to conjecture because there are a number of variables which would influence that analysis, including: · Size of the establishment in terms of physical dimensions, available inventory and financial capability. · Location of the establishment in. terms of proximity to certain types of customers or population concentrations. Delivery policies Would also enter into consideration of extended service areas. · Mix and breadth and diversity of the product lines or services offered. · Level of service or the quality of products offered. · Pricing and credit policies. · Access to the establishment in terms of public transportations, pedestrian or vehicular traffic and parking. The best indication of "capacity" can be found in responses to the field survey. The ATLANTIS Consumer Questionnaire ( Exhibit 2, Pg. 122) asked: "What goods or services are not available to you in this shopping area?", and in the AIS Shopper Intercept Questionnaire {Exhibit 5 Pg. 152} they asked: "What types of goods or services would you like in this shopping area that are not- available now?" (Question #8). In the expanded AIS Southeast Bakersfield Shopping Habits Study (Exhibit 6 Pg.· 175) they asked: "Now I'd like you to think about the kinds of stores, shoPs and services that aren't available in the shopping area near where where you live and tell me what one type of store, shop or service you would want most to locate'in a s~opping area near where you live?" (Qu~on #7A) and, further: "What other types of stores, shops or services would you like to locate in the shopping area where you live?" (Question #7B). The correlation between the ATLANTIS and the AIS field surveys was excellent so; regardless of whether the AIS.Shopper Intercept was concentrated within one specific area, the Shopping Habits Study and the ATLANTIS Consumer Questionnaire were representative of the entire study area. However, no single question or survey can do more than indicate the existing capacity - or lack of capacity - to serve the present market. The "demand curve" used in economic studies is elastic, dependent upon several factors and a number of variables which were previously identified. "Existing capacity", or the presence of establishments representing a capability to merchandise products or deliver services is indicated by the number of businesses licensed by the category within the study area (Summary Business Licenses, Table 26, Pg. 90). However, our field survey found the City records to be grossly inaccurate, listing establishments which were obviously no longer in existence (at least, not at that location) and failing to list establishments which could be visably identified. The City also includes within its Business Licenses such things as video games, Juke Boxes, pool tables, etc. on the premises of retail/service establishments. These categories were not pertinent to our study, and were deleted from the listing on Table 26, Pg. 90. It was impossible for our field survey to correct the current listing of Business Licenses because we were not privileged to enter the premises of each and. every establishment to .verifY that they were operating under a City Business License. It was necessary for us to work from other source materials that basically provided a compilation of retail/service establishments within statistical areas that did not overlay the irregular boundaries of .the study area. In other words, some listings overlapped within the study area causing duplication where others extended beyond the boundaries of the study area and would include more' outlets than were actually located within the study area. Various sources compiled retail/service establishments under different categories. An accurate, numerical compilation becomes very difficult under the circumstances. The problem is further compounded by the fact that both City and County jurisdictions intrude on the study area. Some outlets could be operating under City or.County Business Licenses. The report presents a listing of business est-ablishments compiled from several sources in a comparative format {Pgs. 92-94): We felt this comparative format to be particularly useful because it clearly illustrated where the preponderence of retail/service outlets were located and what markets they were serving. The concentrations were graphically shown on Figure 43, Pg. 9 It must be remembered that the "capacity to serve the present market" (eg. the population with the confines of the artificial boundaries of study area} is not predicated on being physically located within the study area. Outlets on the fringe of the study area draw customers from without the study area and establish, ments outside of the study area (or, just outside of the study area) "serve" and, perhaps, competitively preempt the capacity of the present mar'ket. Again, the final arbiter of how the communitY within the study area is being served by outlets within the study area is best indicated by the results of the field survey and questionnaires. We have, however, recompiled the listing of establishments within the study area under the categories in the Definition of.Characteristics listed on Pg. 95. We have ranked these outlets by a "relative capacity to serve the present market" based upon responses to the field survey. These relative values are indicated by percentage figures. Two percentage figures are given in a range to indicate the variance in capacity between the northern portion of the study area and the southern portion of the study area. Again, the characteristics and differences between northern and southern portions of the study area are so pronounced that it would be a misrepresentation to use one set of statistics to represent the entire study area. Categories Outlets Percentage Range* North South 'Food Store Sales 30 60 - 20 Eating and Drinking Place Sales 87 70 - 30 'Drug and Proprietary Store Sales 2 40 - 10 Gasoline Service Station Sales 59 90 -. 50 Automotive Deal er Sales General Merchandise Group Store Sales 4 30 - 10 Apparel and Accessory Store Sales 11 20 - 5 Automotive Dealer Sales 19 80 - 10 Building Materials, Hardware, Garden 23 90 - 10 Supply and Mobile Home Dealer Sales Other 56 (Unknown) TOTAL OUTLETS 291 *Indication of percent capacity served north and south of Brundage Lane.