Spring 2007 Issue - Seattle Report
Seattle
Posted: Spring, 2007
Tales of Three Cities
Seattle planners are taking a new look at industrial zoning. Part of that review will examine experiences in other cities. Seattle writer Dan Catchpole recently conducted his own research, taking a look at the different experiences of Chicago, Portland, and San Francisco.
Chicago: The Model
General Iron Industries is a scrap metal and recycling plant located just a few blocks west of Chicago’s upscale Lincoln Park neighborhood. Small mountains of junk metal and crushed cars, patiently waiting to be recycled, resold and recast, dominate the facility. It is a loud, bare-knuckle industrial site and the bright red engines of the Chicago Terminal Railroad run through the property and the neighborhood, hauling heaping metal loads for General Iron and other industrial companies. Businesses like A. Finkl & Sons, one of Chicago’s last steel companies.
Howard Labkon (a part owner of General Iron) loves the noise and the setting. His greatgrandfather, Nathan Rosenmutter founded General Iron in 1910, and he doesn’t see any reason to move. “I have a nephew. He’s two years old now,” Labkon said. “He’s gonna be running the company someday.”
Developers covet the land occupied by General Industries and the other industrial businesses in the neighborhood. Located between the North River and Lincoln Park, the land is worth two or three times as much to a residential developer than to industry, but the zoning is all but ironclad. General Iron sits in the Clybourn Corridor Planned Manufacturing District (PMD).
Created in 1988, the Clybourn Corridor PMD was a desperate attempt to stop the flight of manufacturing companies from Chicago. Today, 13 manufacturing districts exist in Chicago, with another one potentially on the way. They come with some of the strictest industrial zoning protections in the country. Single parcels within the district can’t be rezoned. The districts account for about 7 percent of all land in Chicago, or 10,000 acres.
PMDs were a radical new approach when they were first implemented. Without the the new zoning protections, Labkon doubts General Iron could have stayed. “We suffered some difficult times in the ’80s,” Labkon said. “Due to the assurances of the Clybourn Corridor PMD, we were able to go to the bank, and put all our money into investment. … Without PMDs there’d be no Finkls, no General Iron.”
Finkl & Sons is located next door to General Iron. It is a world-leader in its field, producing high-grade steel for specialized industrial uses. Finkl was founded more than a hundred years ago and, like General Iron, it has only existed at its present location. When the manufacturing districts were first being established, Finkl was cited as an example of the type of company that Chicago wanted to keep.
“Finkl was the poster child for PMDs back in ’88,” said Mike Holzer, Economic Director for the Local Economic and Employment Development Council, which helped spearhead the drive for PMDs.
Today, Finkl illustrates both the strengths and the limitations of Chicago’s manufacturing districts. After the PMD was created, Finkl’s sales grew from $40 million to $260 million and its 350 employees outgrew its 22-acre site. The company found and bought a bigger location in Chicago but in December Finkl was bought by Schmolz + Bickenback, one German company with headquarters in Düsseldorf which has announced the company will be relocated either to a new site in Chicago or Montreal or Quebec.
Companies are lining up to occupy Finkl’s space, according to Holzer, but critics, such as Crain’s Chicago Business, are asking what kind of companies will they be? The publication supports developers who argue the industrial land should be put to more lucrative residential and commercial uses. In the industrial buffer areas adjacent to the PMD, light industrial uses are giving way to retail businesses such as Crate & Barrel, Whole Foods, Bed, Bath & Beyond, Circuit City, and Old Navy.
Yet the PMD remains healthy. Jobs dropped in the 1990s but the district experienced manufacturing job growth between 2000 and 2004, according to a study by the University of Wisconsin-Milwaukee. “It should be a cause for a certain amount of optimism,” said Joel Rast, the UW-Milwaukee economist who conducted the study. Rast warns that gentrification in the buffer zone shows the land use fight is far from over. “The buffer zones are big question marks for the PMDs,” Rast added. “More thought needs to be given as to what is an appropriate use for the buffer zones.”
Portland: Industrial Sanctuary
In Portland last summer, industrial organizations and residents of one neighborhood were at loggerheads over the future of a 35-acre site along the Willamette River. Overlooking the river and city harbor, the site was an ideal addition to the upland neighborhood, Linnton Village. Residents had a clear vision of the acreage blossoming with inviting shops, beautiful housing, and a sprawling park along the river’s edge. Their vision dated to 2001 when the former occupants, Linnton Plywood, moved out.
But the property also looks across the Willamette River to shipping operations that operate 24/7. The site is wedged between massive petroleum holding tanks, while the waterfront is crossed by the Olympic Pipeline that originates in Washington State and delivers 65 percent of the petroleum products used in Oregon. The site also sits inside a designated Industrial Sanctuary. Rezones are permitted in sanctuaries, but only with special permits that must be approved by the Portland City Council.
When debate hit the council, the rezone failed for a variety of reasons, chief among them safety. In a memo sent to the city council prior to the vote, the Bureau of Planning stated, “Major residential development of the site would expose residents to significant and complex risk factors… avoiding or significantly limiting residential development where conflicts with industrial uses are inevitable is sound public policy.”
Portland adopted its Industrial Sanctuary policy in 1980 and maintains around 14,000 acres of land zoned for industrial uses. The possibility of rezones by permit provides constant potential for land-use changes, but an inventory conducted in 2004 showed that nonindustrial users account for only 5 percent of the industrially zoned land, said Steve Kountz, Economic Development Planner in the city’s Bureau of Planning.
“The policy encourages industrial growth in the city, reinforces a century of freight-hub infrastructure investments, and supports social diversity by wider access to middle-income jobs,” said Kountz.
Topography creates an important buffer between most of the city’s industrial land and nearby neighborhoods, according to Kountz, because industry is situated on the river plateau, with residents on the bluffs and wooded slopes above.
“Portland is nearing build out in the industrial areas, and there are not many places to go,” said Kountz. The city’s expected to use up its surplus land in the next 20 years.
As in Seattle, infrastructure improvements are a concern. Portland is a major distribution hub with a deep-water port, the Columbia River, railroads and highways, but the system is struggling more and more intensively to keep up with demand. Right now the interstate system is prone to congestion, especially at the bridges spanning the Columbia.
“It’s vital for us to fix that bottleneck,” said Kountz. But “rail capacity is probably the more significant competitive concern for local industry.”
San Francisco: New Economy, Lack of Planning
San Francisco is known more for its exorbitant property values than its manufacturing base. Most of the manufacturing and industry moved inland after World War II, and shipping went across the bay to Oakland when containers were introduced. In many ways San Francisco represents what many fear Seattle could become, a city of rich and poor.
The city has no comprehensive plan, and has never had any zoning protection for manufacturing and industry. A broad coalition of residents, community activists, businesses, and city officials is fighting to introduce some sort of zoning protection for the Eastern Neighborhoods, the last redoubt of manufacturing and industry in the city.
Over the last 15 years, San Francisco pursued the New Economy at the expense of its traditional industry. The dot.com bust hit the city hard. Today, the city is courting biotech businesses. “Initially the action was inaction,” said Nick Pagoulatas, coordinator for the Mission Anti-Displacement Coalition (MAC). “There was nothing done by the city to protect existing business, and at the same time there was action to allow certain businesses to circumvent restrictions.”
The city is in the process of creating Production, Distribution, and Repair (PDR) Districts to protect what businesses remain. Last year all new housing construction in the Eastern Neighborhoods was halted after an appeal was filed by one of the groups fighting for zoning. A 2002 report by the city’s Planning Department cautioned about effects of pursuing a homogenized economy:
“During peaks of economic cycles that center on one particular activity – the demand for office space generated by the dot-com boom, for example – the balance between land uses is altered and certain activities are temporarily favored. Though such cycles may be short-lived, they can have a permanent effect on other sectors of the economy not favored in the particular cycle.” 
Zoning laws are subject to politics, of course. San Francisco’s Board of Supervisors came to the aid of community groups. The city’s mayor is pro market-rate housing, and has pushed for the Eastern Neighborhoods to be used to entice biotech companies. The Planning Department came around “reluctantly,” according to Pagoulatas. Since the ban, it has backed PDRs. “What it took for us is having a crisis on our hands,” said Pagoulatas, “where everyone was afraid they might be evicted at any moment.”
