Fertile Ground, Does I-80 have the soil for economic development?

Fertile Ground
Does I-80 have the soil for economic development?
by Bill Romanelli | November 2008

In economic development circles, they’re starting to call it “San Framento.”

The moniker applies to the swath of land between San Francisco and Sacramento that planners predict will one day be a single unbroken stretch of housing, retail and industrial development bound together by Interstate 80.

No one knows when the final golden nail will connect the two regions, but few people doubt it will happen in the agriculturally rich Solano County. Bounded on the east by Dixon and parts of Davis, and on the west by Suisun and Vallejo, Solano enjoyed such a boom in the 1980s and ’90s that it was named one of the fastest-growing counties in the Bay Area.

That said, the demise of the Nut Tree and the Milk Farm, two iconic stopping places for almost everyone who has driven in Northern California, were a heartbreaking loss to locals. The fact that the properties went idle and undeveloped for years, however, was downright disturbing.

They weren’t the only seemingly untouchable properties either. Although the Nut Tree is now being reborn, several patches of highly desirable dirt, right next to I-80 and the 58 million cars it funnels between east and west every year, are quietly waiting for the right development idea. Almost all of it is former agricultural land, and land-use experts today say that soil is still fertile — a rich opportunity to produce a new kind of economic crop that bears the fruit of jobs, tax revenues and increased economic development.

There are challenges, however. Nothing else would explain why these properties weren’t gobbled up instantly, and the economic downturn is only one of them. There are also environmental issues, infrastructure gaps and even Solano’s own identity crisis to contend with.

“We’re right between two major economic engines: the San Francisco Bay Area and California’s political power center,” says Sandy Person, vice president of the Solano County Economic Development Corp. “That creates debate over whether we’re part of the Bay Area or the Central Valley.”

That debate, according to Jim Shepherd with Cornish & Carey Commercial in Walnut Creek, often takes place between landlords and tenants.

“Landlords think of it as the Bay Area and want Bay Area rents, but tenants prefer to think of it as the Central Valley and prefer Central Valley rents,” he says. “Someday it’s all going to blend together, but developers are going to need to see the market start to turn around first, and I don’t know if anyone can predict when that’s going to happen.”

Thus, the properties sit, but just like a $20 bill on the floor of a bus, whoever decides to grab it first will likely reap the rewards. Starting in Dixon and working west, the following is just a sampling of the hot spots currently available.

Dixon

Anyone who has traveled Solano’s I-80 corridor knows the Milk Farm sign, but few realize that beneath it are 30 acres of prime commercial land. It’s got an approved final environmental impact report and is surrounded by huge developments like a 184,000-square-foot Wal-Mart Supercenter and a pending development by Home Depot. The sellers are advertising that, “All offers will be considered,” and yet the property has been on the market for more than a decade.

“One of its biggest obstacles is there’s no city infrastructure on the site,” says Mark Heckey, economic development director with the city of Dixon. “Facilities are only a half-mile away from the property, but you need to go under the freeway to connect, which means you need someone willing to invest $10 million to $12 million to get utilities hooked up.”

Heckey says a significant portion of the 30 acres must also remain orchard or open space, but it’s still a phenomenal piece of roadside property with tremendous logistical advantages; it’s close to three freeways (I-80, I-5 and State Highway 113), the Sacramento International Airport and rail service.

There’s also a 260-acre site on the west side of Pederick Road between I-80 and Vaughn Road, which was originally intended to be a new Dixon Downs racetrack. Voters rejected the idea in April 2007, however, and the property has been for sale ever since.

The challenge? The site has no utility hookups and needs an investment of about $40 million before it can be fully developed. Heckey says the site, which is now being farmed for tomatoes and onions, could be very good space for office, distribution or warehouse centers, as well as research and development.

“It’s very close to UC Davis, giving it lots of potential for biotech and alternative energy companies that need space they can’t find in Davis,” he says.

Vacaville

“Vacaville has been a field of dreams,” Shepherd says. “They built it, and people came.”

Indeed the retail development along the east side of I-80 has done well, but across the freeway, the Nut Tree property has, until recently, simply languished.

In 2005, Snell & Co. and Westrust Ventures LLC began building the new Nut Tree Theme Park, the first 30 acres of which are complete and attracting visitors, along with a vineyard, bocce ball grove and small amusement park. The remaining 40 acres, while carefully planned, have yet to attract development.

Plans call for an additional 10 acres of retail, 12 acres of residential units, 12 acres of office space and six acres for a hotel and conference center.

“We’re still looking for partners on those parcels,” says Snell & Co.’s Brad LaRue.

“There’s job growth in the region, thanks to [Genentech Inc.] and [Kaiser Permanente], so there’s good demand for housing. At the same time, the nearby amenities are part of a plan that rides the trend toward walkable communities, where people can work, shop and dine without getting into their cars.”

The remaining retail land is adjacent to the freeway, which offers two off-ramps and opportunity for visibility and customer traffic. As for the hotel, the city has committed to building a first-class facility.

“With all the development happening in Vaca Valley Industrial Park attracting new employers and jobs, other nearby office developments and the Nut Tree Airport, a hotel and conference center just makes tremendous sense for the area,” LaRue says. “Factor in the amenities of a retail center and theme park, and you’ve got a hotel that can serve both the business and vacation traveler.”

The Nut Tree is the most notable development opportunity; it’s not by any means the only one. There are several smaller business and office parks with land available, but among the most talked about are the more than 100 acres still available in the triangle, an area bordered by I-80, I-505 and the Vaca Valley Parkway. It’s already home to Genentech, Kaiser and soon the State Compensation Insurance Fund with its expected work force of 1,200 to 2,000 employees.

At buildout, employment figures for the triangle are estimated at 5,000, making it a promising prospect for retail and restaurant development, but there are challenges for attracting people driving down the freeway.

“This is an area that includes a great freeway frontage retail site right along I-80,” Shepherd says. “The only problem is it’s not easily accessible; so it’s ideal for a real destination retailer, like a Bass Pro Shops or something like that, which draws visitors from hundreds of miles.”

Fairfield-Suisun

Perhaps the most recognizable opportunity is the 44-acre former truck stop on the west side of the freeway, across from Scandia.

It’s been vacant for half a decade; the site’s major obstacle is its proximity to nearby wetlands and the Suisun Marsh. It adds a very complex layer of issues to any development idea. Even so, there’s no overlooking the promise the site offers.

“It’s right at the 680 and 80 interchange, where you’ve got some 240,000 cars driving by daily,” Shepherd says. “It’s amazing freeway frontage, it’s got its own off-ramp, and it can serve the markets in Fairfield, Vallejo and Benicia all at once.”

Out West

As you go further west, there is no shortage of signs advertising proposed retail sites, but Shepherd says while they may be good plots of land, few are likely to attract developer interest. This isn’t a market where anyone wants to build something and have it sit empty.

Last month, an online real estate database maintained by the Solano Economic Development Corp. returned 61 hits for undeveloped land for sale, mostly commercial and along the I-80 corridor.

“You want freeway frontage property to get traffic,” he says, “and there’s just not that much left.

“When you look at Solano County as a whole it remains a strong market. You have top national players there, and once the economy stabilizes, people will realize it’s actually an underserved market.”