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1997-02-05 ARRA PacketAGENDA Regular Meeting of the Governing Body of the Alameda Reuse and Redevelopment Authority * * * * * * * ** Alameda High School Cafeteria West Wing, Historic Alameda High School Corner of Central Avenue and Walnut Street Wednesday, February 5, 1997 5:30 p.m. Alameda, California IF YOU WISH TO ADDRESS THE AUTHORITY: 1) Please file a speaker's slip with the Secretary, and upon recognition by the Chair, approach the rostrum and state your name. Speakers are limited to three (3) minutes per item. 2) Lengthy testimony should be submitted in writing and only a summary of pertinent points presented verbally. 3) Applause, signs or demonstrations are prohibited during Authority meetings. 1. ROLL CALL 2. CONSENT CALENDAR 2 -A. Approval of minutes of the regular meeting of January 6, 1997. 2 -B. Report from the Executive Director recommending the adoption of a resolution by the Alameda Reuse and Redevelopment Authority authorizing the Executive Director to represent the ARRA and submit the application for the California Defense Adjustment Matching Grant. 3. ACTION ITEMS 3 -C. Report from the Executive Director recommending the ARRA approve the videotaping and televising of ARRA meetings. 4. ORAL REPORTS 4 -D. Final report on the Science Center Feasibility Study by Jim Gollub of Information Design Associates. 4 -F. Briefing on the Navy Cleanup Plan by Norma Bishop, Base Transition Coordinator. 4 -E. Oral Report from the BRAG updating the ARRA on current activities. 4 -F. Oral report from the Executive Director updating the ARRA on 1. Street Improvement Plan for Alameda Point - Summary of Work; 2. Utility Study, Alameda Naval Air Station - Summary of Work; 3. Developer's Panel Workshop - Executive Summary; 4. LAMBRA designation granted to NAS Alameda; ARRA Agenda - February 5, 1997 Page 2 5. Status of OEA budget request; 6. Status of Alameda Naval Air Museum; 7. Status of MARAD contract/occupancy of piers; 8. Reminder of Financing Workshop scheduled for March 15 at the Chipman Middle School Media Center; 9. Status of Cooperative Services Agreement negotiations; 10. Update on limited use airfield; and, 11. Response to base cleanup plan. 5. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) (Any person may address the Governing Body in regard to any matter over which the governing body has jurisdiction or of which it may take cognizance, that is not on the agenda.) 6. COMMUNICATIONS FROM GOVERNING BODY 7. ADJOURNMENT Notes: * Sign language interpreters will be available on request. Please contact Margaret Ensley, ARRA Secretary, at 864 -3400 at least 72 hours before the meeting to request an interpreter. * Accessible seating for persons with disabilities (including those using wheelchairs) is available. * Minutes of the meeting are available in enlarged print. * Audio Tapes of the meeting are available upon request. Next ARRA meeting scheduled for Wednesday, March 5, 1997. UNAPPROVED MINUTES OF THE REGULAR MEETING OF THE ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY Monday, January 6, 1997 The meeting convened at 5:45 p.m. with Chair Appezzato presiding. 2 -A ROLL CALL Present: Chair Ralph Appezzato, Mayor, City of Alameda; Vice -Chair Sandre Swanson, District Director, 9th Congressional District; Mark Friedman, alternate to Wilma Chan, Alameda County Board of Supervisors, District 3; Jay Leonhardy, alternate to Henry Chang, Jr., Councilmember, City of Oakland; Kathleen Ornelas, alternate to Ellen Corbett, Mayor, City of San Leandro; Tony Daysog, Councilmember, City of Alameda; Albert DeWitt, Councilmember, City of Alameda; Greg Alves, alternate to Karin Lucas, Councilmember, City of Alameda; Barbara Kerr, Councilmember, City of Alameda; Lee Perez, Ex- officio, Base Reuse Advisory Group; Ardella Dailey, alternate to Ex- officio Berresford Bingham, Alameda Unified School District. Absent: None. CONSENT CALENDAR 2 -A. Approval of Minutes for the regular meeting of November 6, 1996. 2 -B. Approval of Minutes for hem Minutes of December Alternate Friedman requested tha e regular meeting ber 4 be amended to reflect that it was requested by Supervisor Chan and concurred in by the ARRA that the draft Memorandum of Understanding for Pan Pacific University be brought to the ARRA for public discussion and approval. Executive Director Miller agreed that was the understanding and the Chair directed the ARRA secretary to so amend the December 4 meeting Minutes. Alternate Friedman moved to approve the consent calendar. Alternate Ornelas seconded the motion and it passed unanimously: 9. ACTION ITEMS 3 -C. Report from the Executive Director t recommending the Executive Director to enter into a er Large Lease with the Navy for a term of 15 years. Executive Director Miller explained that the Master Large Parcel Lease imposes no obligation on the City; the Navy will maintain the facilities until they are occupied (subleased). Assistant General Counsel McLaughlin stated that, as a long-term ree must be lease, Alameda City Counc lmefmbertsve vote of five Governing Body members, of whom Speakers: Stan Shane, an Alameda resident, spoke against items 3C, 3D, and 3E, stating that government is out of control and that ARRA has no business getting involved with housing. ®Printed on recycled paper Alternate Friedman moved to authorize the Executive Director to enter into a Master Large Parcel Lease with the Navy for a term of 15 years. Alternate Alves seconded the motion and it passed by unanimous voice vote: 9. Chair Appezzato stated that item 3 -E. Report from the Executive Director regarding Councilmember Daysog's request to review approval authority for the Executive Director to execute leases. (Daysog) was being pulled from the agenda and item 3 -D would be held until the public address system was working. He called item 4 -F. 4 -F. Report from the Assistant General Counsel on voting requirements for actions by the ARRA. (Appezzato, Daysog and Alves) Assistant General Counsel Heather McLaughlin stated that action by the ARRA governing body requires a majority of the members present to take action (assuming a quorum is present) with two exceptions: first, less than a quorum may vote to adjourn a meeting, and second, five ARRA members, of whom three must be Alameda City Councilmembers, must vote affirmatively on eight specific items outlined in the staff report, including the transfer of any real or personal property of the Authority. Member Daysog asked if this applies to long -term leases — anything more than seven years. Ms. McLaughlin answered yes. Alternate Alves asked if item 3 -D requires three City Council votes. Ms. McLaughlin answered no. Alternate Alves moved to accept the report. Member Daysog seconded and it passed unanimously: 9. 4 -G. Oral report from the BRAG updating the ARRA on current activities. BRAG Chair Lee Perez reported that the Base Reuse Advisory Group is currently reviewing issues such as the possibility of a limited use airfield, the commissary, retrocession, and how we can best protect and utilize housing. He also stated that the BRAG was looking at the Cooperative Services Agreement, adding that Fiscal Year 1999 (FY99) funding was a concern and that every possible dollar is needed. Chair Appezzato requested that Dave Ryan, present from the Navy's EFA West division, explain the Navy's budgeting process for the Cooperative Services Agreement (CSA), in particular for FY99. Mr. Ryan stated that the Navy first makes an analysis of the money required by the Navy to take care of the property that the Navy is responsible for. The ARRA and its subtenants will be responsible for the protection, maintenance, and improvements of leased property. The Navy expects that as time goes on, more property will be leased and more of the financial responsibility will go to the reusers. He stated that the budget for FY97 (5/97 -9/97) [the 5 months following base closure] is approximately $4.5 million. For FY98 (10/97- 9/98), the Navy is projecting $8.7 million, although he could not commit to that figure. Mr. Ryan stressed that he wanted to make it "loud and clear" that the Navy fully expects that the money is going down, and the best estimate they can put together for FY99 (10/98 -9/99) is approximately $4.8 million. The figure that is approved through the Navy chain of command, voted on by the Congress, and finally appropriated cannot be guaranteed, but the amount is definitely going down. Chair Appezzato asked if the funds for FY99 are negotiable. Mr. Ryan stated that the CSA is a one -year agreement with the option to continue. The CSA is a "reimbursable document;" that is, the money has to be commensurate with the amount of work to be done. Mr. Ryan continued that if there is not enough money then the City just does not do the work. @Printed on recycled paper 2 Speaker: Neil Patrick Sweeney, concerned citizen, asked that BRAG and ARRA meetings be televised so that the community is fully informed. 3 -D. Final report on the Housing Feasibility Study from Janet Smith - Heimer of Bay Area Economics and authorization for the ARRA Executive Director to take actions necessary to lease housing units in the Navy East Housing area. Executive Director Miller stated that for the final Housing Feasibility Study, ARRA asked Bay Area Economics (BAE) to (1) conduct a market study on the demand for residential housing in Alameda for rental, sale, new construction, and existing housing; and, (2) to recommend what to do with the existing housing at NAS Alameda. The findings from the BAE study were taken to the BRAG Housing Working Group and the entire BRAG for a determination as to what should be done immediately with the housing on the base. It had been expected that the East Housing would be conveyed to ARRA this year. However, due to slippage in the EIS work, the Record of Decision will not occur until well into 1998. As an interim measure (perhaps up to ten years for the apartment units), the BRAG and the ARRA staff recommend leasing the units because (1) the consensus is these units should not be boarded up, and (2) leasing could create a significant revenue stream. Executive Director Miller requested staff be authorized to move forward toward a leasing program. Chair Appezzato asked BRAG Chair Perez for comment, explaining that the Base Reuse Advisory Group is a volunteer citizens group that represents the 80,000 members of the community. Chair Appezzato thanked all the BRAG volunteers for giving their time to do a valuable job. Mr. Perez reported that the BRAG agrees overall on the leasing recommendation with the major caveat that decisions must be made with full knowledge of future ramifications. Mr. Perez then introduced Helen Sause, BRAG Co -Chair and Alice Garvin, Chair of the Housing Working Group. BRAG Vice -Chair Sause stated that the community and BRAG objective is for the base to become a seamless part of the fabric of the City. One concern is that there is a mixture of housing types with condos, rental units, and opportunities for home ownership. She explained that the townhouses and apartments were examined separately. It was decided that the townhouses should be leased if it is financially feasible to do so with an economic return to the City. No one wants empty, boarded up units that will attract nuisances and provide a danger to the community.. A resolution of the relocation liability issue is major concern that must be factored into the economics of the project. The BRAG felt the townhouses should ultimately be sold or leased for private housing. The financial return to the City of leasing the apartments needs further thorough investigation. Deconstruction should be studied in the coming months, with the possibility of selling the land to a developer for a new development. Ms. Sause summarized the overall concerns of the BRAG with the financial feasibility of the proposals, including any relocation liability, the project phasing, and that the City should not be burdened with the renovation costs —all of which need further evaluation. Alice Garvin, Chair of the BRAG Housing Working Group, explained that the housing units presently cannot be torn down or sold. In the meantime, an economically feasible plan that provides a revenue stream is needed. A Grubb & Ellis Study on the rental market in Alameda County states the average vacancy rate in Alameda County is 3.48 %. In reality, this is near zero, as there is always a 2 -3% vacancy factor due to normal tenant movement in the marketplace. A property management firm would use startup funds to renovate 10 -20 units with carpets, drapes, landscaping, etc. A model apartment and rental office would be set up and a good tight management plan would need to be formulated. It is projected that it would take two months to rent 10 -20 units. The income from ®Printed on recycled paper 3 those units would be used to fix up the next 10 -20 units. It is essential to have very strong management, tight leases, and quality tenants. This is a short-term solution. Speakers: Bill Smith, Virtual Agile Manufacturing, stated that ARRA should be looking at properties where people can both live and work. Eve Roberson, an interested citizen, spoke against leasing the housing, stating that it is short- sighted and a fatal blow to the 60% home ownership goal of the City Council. Alan K. Beales, Rental Housing Association, spoke against leasing the housing, stating that the housing is low quality, it would be a very expensive project, and would create terrific policing problems. Kurt T. Peterson, AIRR, asked questions regarding the difference between items 3 -C and 3 -D and suggested that the meetings be televised, as less than 1/10 of one percent of the community is involved in this discussion. Dave Ryan, EFA West (U.S. Navy), answered Mr. Peterson's questions on item 3 -C, the Large Parcel Master Lease, explaining that it will speed up the leasing process for commercial buildings on the base as well as some of the housing, if the ARRA decides to lease the housing. Amy Stone, Alameda Citizen, stated she was speaking neither for nor against the issue but voiced her concerns, asked questions, and suggested that students from U.C. Berkeley might be a good leasing population to consider. Ann E. Mitchum, an interested citizen, stated the real estate potential homes should be a vision for the public to shape and that homes should be placed Don Roberts, an interested citizen, stated that he was appalled that the ARRA has abrogated responsibility to the Executive Director to sign leases up to seven years, as that is too much power. He also stated that the meetings should be televised. Chair Appezzato opened up the issue for ARRA discussion. Lengthy debate, suggestions, and questioning by the ARRA followed. On behalf of the Alameda Unified School District, Ardella Dailey stated that the school district's short-term issue is immediacy. In the past three years, Woodstock School has lost 300 of its 600 students, with another 100 students from military families due to leave at base closure. She stressed that 180 -200 students is not a viable school and if it is boarded up for two to three years, it poses a question as to what will happen not only to Woodstock but to Miller School as well. The school district's concern is to maintain this area as a viable community. More discussion by the governing body followed. Alternate Friedman made a motion that this issue require the vote of at least three Alameda City Councilmembers. Member Kerr seconded the motion. Chair Appezzato suggested that the five recommendations outlined on pages 2 and 3 of the staff report be voted on separately with a sixth vote to send the issues to the Planning Board for review and a seventh vote requiring the affirmative vote of three Alameda City Councilmembers. Alternate Friedman suggested that in addition to leasing possibilities, staff also be directed to aggressively investigate lease /option and home ownership possibilities. Assistant General Counsel McLaughlin stated that there was a motion on the floor. Further discussion followed. Chair Appezzato called for a vote on the motion that requires at least three votes be from the Alameda City Councilmembers. The motion passed unanimously: 9. ®Printed on recycled paper 4 Original Recommendation 1: Consummate a master lease with the Navy for the East Housing that would allow ARRA to sublease the property to a management company. The ARRA would not be obligated to any expenses on the property unless it is subleased. This recommendation was approved previously by the action taken on item 3 -C. Original Recommendation 2: Initiate action with the City Planning Department to rezone the East Housing area to allow leasing to private tenants. This process will take 3-4 months to accomplish. Member Daysog asked to include a moderate income aspect to reflect 85% moderate income and 15% other. Member Kerr asked that the wording of recommendation #2 be very broad, so the Planning Board would have the option to review all possible uses for East Housing, including boarding up and demolition as well as lease /option, right -of- first - refusal, renting, etc. Member DeWitt asked if we were asking the Planning Board to redo everything that had been done by the BRAG and the ARRA. Assistant General Counsel McLaughlin stated that the ARRA was requesting that, as part of the rezoning process, the Planning Board consider the impacts that the rezoning will have on the rest of the City, which is part of their normal process. It is then up the Planning Board how much discussion and detail they wish to pursue. In response to Member DeWitt's question on how long this would take, Vice -Chair Swanson replied that if the process takes too long, interim decisions will have to be made by the ARRA but the request here is to engage the Planning Board in the process. Member Daysog advised Assistant General Counsel McLaughlin that he would contact her regarding how he wanted to have the question of 85% moderate income, 15% other reviewed by the Planning Board. Member Kerr made a motion to initiate action at the Planning Board level to consider the rezoning of the East Housing area and all of the possible uses thereof. The motion was seconded by Member Daysog and passed with the following voice vote: Ayes: 8. Noes: 1 - DeWitt. Original Recommendation 3: ARRA staff should continue to analyze the revenue potential of the East Housing leasing program. (Staff intends to apply for California Defense Matching Grant [DAM] money to obtain consultant assistance in the analysis.) Alternate Friedman moved to accept recommendation 3. The motion was seconded by Alternate Alves. Alternate Alves then made a friendly amendment to the motion to change the first sentence to read "ARRA staff should continue to analyze the revenue potential of the East Housing." Alternate Friedman accepted the amendment and it passed by unanimous voice vote: 9. Original Recommendation 4: If substantial revenue return can be projected, staff will issue a Request for Proposals (RFP) to select a property management firm to manage and market the property. We will also seek grant funds to obtain assistance in crafting an RFP and evaluating proposals. Alternate Friedman made a motion that if substantial revenue return can be projected, and it is deemed that the leasing option is preferable, staff will bring an RFP to the ARRA for approval to select a property management firm to manage and market the property. We will also seek grant funds to obtain assistance in crafting an RFP and evaluating proposals. The proposed contract resulting from the RFP will be brought to the ARRA governing body for approval. The motion was seconded by Vice -Chair Swanson and passed by unanimous voice vote: 9. ®Printed on recycled paper 5 Original Recommendation 5: Staff should simultaneously explore the prospects with the military for leasing some of the housing units through a "set- aside " program or some other mechanism. Vice -Chair Swanson made a motion to accept the original recommendation 5 as stated. The motion was seconded by Alternate Friedman and passed by unanimous voice vote: 9. New Recommendation 6: Alternate Friedman made a motion that staff be directed to fully investigate all aspects of potential home ownership, including lease /option. Member DeWitt seconded the motion. Member Daysog asked for an amendment to add " ... including lease /option and affordable rents to moderate income families." It was suggested that Member Daysog make a separate motion. The unamended motion passed by unanimous voice vote: 9. Member Daysog made a motion that staff be directed to investigate affordable rent options that allow moderate income families to save for home ownership. After discussion, he withdrew his motion. ORAL REPORTS 4 -11. Oral report from the Executive Director updating the ARRA. Executive Director Kay Miller reported that (1) the Cooperative Services Agreement for the Police and Fire services may be approved as early as January 7 at the City Council Meeting; (2) staff has not been officially approached by DeCA [the commissary] but the BRAG has advised that if contacted, we go forward with a normal short-term lease; (3) the logo chosen by the BRAG for Alameda Point is being passed around; (4) a workshop on the cashflow analysis for the Economic Development Conveyance is being scheduled for Saturday, March 15 from 8:30 a.m. -12:00 noon and a notice of its location will be forthcoming; (5) the EDA grant pre - application went off today and the answer will be received this Spring. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) Gratz Powers, an Alameda citizen and proponent of model airplane flying, discussed his group's wish have flying space at NAS Alameda and to have a national meet there. Chair Appezzato referred Mr. Powers to work with Mr. Fred Framsted from the Recreation and Park Department. Mr. Powers left copies of his correspondence for the Chair. Bill Smith, Virtual Agile Manufacturing, spoke on research, energy, and environmental cleanup matters and announced that it was Ann Mitchum' s. birthday. Ann Mitchum, concerned citizen, stated that ARRA should bulldoze, board up, or sell the housing units. She is not in favor of developers but the private sector seeking grants to buy homes. She suggested the ARRA become mortgagors with 7% interest loans with low or no down payment. COMMUNICATIONS FROM GOVERNING BODY Alternate Ornelas requested that when meetings need to be rescheduled, they are not rescheduled to a night when another critical meeting is scheduled. Mayor Corbett wanted to attend the meeting but she had to attend the San Leandro City Council meeting tonight. Executive Director Miller stated that, upon polling the governing body, this was the only night a quorum could be assembled. At 9:22 p.m., Chair Appezzato announced ADJOURNMENT TO CLOSED SESSION TO CONSIDER: CONFERENCE WITH REAL PROPERTY NEGOTIATOR - Property: building 530; negotiating parties: ARRA and Tower Aviation; under negotiation: price and terms of payment; Conference with Real Property Negotiator pursuant to subdivision (b) of Section 54956.8. Printed on recycled paper 6 The meeting was called back into general session at 9:37 p.m. It was announced that direction had been given to counsel. ADJOURNMENT The meeting was adjourned by Chair Appezzato at 9:38 p.m. Respectfully submitted, Margar Ensley ARRA Secretary @Printed on recycled paper 7 Interoffice Memorandum October 29, 1997 TO: Base Reuse Advisory Group Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Lee Perez, Chair SUBJ: BRAG recommendation that the use of East Housing be included in the master planning for the adjacent FISC property. Background. ', ' A number of BRAG members have been integrally inyolved „in the ad hoc committee for the developer selection at FISC. The BRAG has followed closely the proposals for the development of the FISC property. The BRAG has concluded that because of die adjacency of the FISC property to the East Housing area, the two pieces of property should be master planned jointly so that they are integrated and complementary. Di scussi on. The BRAG is aware that the FISC property disposition is being managed by the City of Alameda CIC and that the East Housing is currently under the ARRA's jurisdiction. However, BRAG feels that because of their proximity, it is very important that both these parcels be developed—or at the very least, planned—together. BRAG is aware that ARRA had previously decided to open East Housing to many developers for bid. On reflection and further analysis, BRAG believes that joint planning and/or development will be of advantage to the future of Alameda Point. Decisions made regarding the use and disposition of the property, the street and utility layout, placement of public amenities, etc. affect both parcels of property. While the BRAG is not recommending that the developer selected for FISC necessarily be the developer for the East Housing area, the BRAG strongly urges the integrated planning of the two contiguous parcels. Fiscal Tmpact. Likely none. , Recommendation. The BRAG urges that the ARRA consider its recommendation for integrated planning in any future decisions regarding the use and disposition of East Housing. Respectfully submitted, Lee Perez Chair KMILP/mee Alameda Reuse and Redevelopment Authority Interoffice Memorandum January 29, 1997 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller Executive Director 2 -B SUBJ: Report from the Executive Director recommending the adoption of a resolution by the Alameda Reuse and Redevelopment Authority authorizing the Executive Director to represent the ARRA and submit the application for the California Defense Adjustment Matching Grant. Background: At its December 4, 1996 meeting, the Alameda Reuse and Redevelopment Authority (ARRA) authorized the ARRA's Executive Director to apply for a grant from the Office of Economic Adjustment (OEA) for the 1997/98 Fiscal Year and a matching grant from the California Defense Adjustment Matching Grant Program through the California Trade and Commerce Agency. The ARRA has twice before applied for and been awarded California Defense Adjustment Matching Grants to assist the ARRA in complying with the 25 percent OEA local match requirement. The attached resolution authorizes the ARRA's Executive Director to represent the ARRA and apply for the state matching grant money. Discussion/Analysis: The ARRA is eligible to apply for a $126,000 California Defense Adjustment Matching Grant. There is a limited amount of state funding available and the ARRA will lose some points in the competition for having received previous grant awards; however, the ARRA can submit a very competitive application. OEA must approve the use of the proposed state grant funds in advance. The following is a list of consultant projects that ARRA has asked OEA to approve for a California Defense Adjustment Matching Grant: Airfield Management Study $40, 000 The ARRA is now considering a limited use airfield. If such a decision is made, the ARRA will need an airfield management strategy to define the relationship between the airfield operator and the tenants. The airfield consultant will develop a strategy for an airfield operator, identify all the necessary operating permits and licenses, assist with the preparation of a Request for Proposals and bid packages for an airfield operator, and have input into the Refuge Management Plan to ensure that an airfield operation could be included. Collaborative Cluster Development $60, 000 To foster the growth of the clusters recommended by the Alameda Science & Technology Center report, the ARRA would undertake the cluster development process recommended by the Science Center Feasiblity Study. This would involve outreach to more companies in each cluster and involving them in further collaborative development of the site. Certain clusters may be more ready to develop at the site after collaborative development due to continuing interaction. This Honorable Members of the January 29, 1997 Alameda Reuse and Redevelopment Authority Page 2 collaborative development process would be the least complex approach to fostering development of a science and technology center. This approach is designed to ensure that the Alameda Naval Air Station site is well positioned on a continuous basis with representatives of each cluster and better positioned for development when the Economic Development Conveyance and EIR/EIS are completed. If synergies develop at the site, the ARRA may focus on a more interventive approach, but still using market forces for development. Development of Strategy for NAS East Housing $26, 000 The funding would enable the ARRA to engage the services of a consultant to assist in the development of a strategy and additional financial feasibility analysis for the East Housing and assist in the preparation of a Request for Proposals (RFP) for a developer and/or property manager for the area. Fiscal Impact: To receive OEA funds, OEA requires the ARRA to provide a 25 percent local match; however, the 25 percent match is based on the total project cost. ' Utilizing OEA's match formula to receive $756,061 in OEA funding, the total project cost — including matching funds —is $1,008,081. Therefore, the ARRA' s actual local match requirement is $252,020. Effective this fiscal year, the California Defense Matching Grant allows the ARRA to apply for 50 percent of the local OEA match required up to $300,000. Therefore, the ARRA is eligible to apply for $126,000. Recommendation: It is recommended that the ARRA adopt the attached resolution authorizing the ARRA Executive Director to represent the ARRA and apply to the California Trade and Commerce Agency for a California Defense Adjustment Matching Grant. Respectfully submitted, AAci �J Kay Miller Executive Director Attachment: Resolution 020 ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY RESOLUTION NO. 020 AUTHORIZING THE ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA) EXECUTIVE DIRECTOR TO REPRESENT THE ARRA TO APPLY TO THE CALIFORNIA TRADE AND COMMERCE AGENCY FOR A CALIFORNIA DEFENSE ADJUSTMENT MATCHING GRANT WHEREAS, the California Defense Adjustment Matching Grant Program operated by the California Trade and Commerce Agency is designed to provide a portion of the matching grant funds required of communities seeking federal funding for defense- related economic adjustment strategies and programs; and WHEREAS, the Alameda Reuse and Redevelopment Authority is eligible to apply to the California Trade and Commerce Agency fora $126,000 California Defense Adjustment Matching Grant; and WHEREAS, the California Trade and Commerce Agency requires that the Alameda Reuse and Redevelopment Authority authorize an application to the California Defense Adjustment Matching Grant Program; and WHEREAS, the California Trade and Commerce Agency requires that the Alameda Reuse and Redevelopment Authority authorize its Executive Director to represent the Alameda Reuse and Redevelopment Authority concerning the California Defense Adjustment Matching Grant Program application and the. grant. NOW, THEREFORE, BE IT RESOLVED by the Alameda Reuse and Redevelopment Authority that the ARRA Executive Director is hereby authorized and empowered to apply, approve, sign, and execute in the name of the Alameda Reuse and Redevelopment Authority any documents necessary for its application to receive funding under the California Trade and Commerce Agency's California Defense Adjustment Matching Grant Program. * * * I, the undersigned, hereby certify that the foregoing Resolution was duly and regularly adopted and passed by the Alameda Reuse and Redevelopment Authority in its regular meeting, assembled on the 5th day of February, 1997 by the following vote, to wit: AYES: NOES: ABSENT: ABSTENTIONS: Margaret E. Ensley Secretary Alameda Reuse and Redevelopment Authority Date: February 6, 1997 7 Alameda Reuse and Redevelopment Authority Interoffice Memorandum January 29, 1997 TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Kay Miller Executive Director 3 -C SURE: Report from the Executive Director recommending the ARRA approve the videotaping and televising of ARRA meetings. Background: ARRA meetings were televised when they were held in the City Council Chambers at City Hall on Santa Clara Avenue. This allowed people who could not attend the meetings to remain informed. When City Hall moved to Historic Alameda High School, there was no accommodation for videotaping the meetings. In 1996, the Little Theater was outfitted to allow City Council meetings to be videotaped. In June 1996, the ARRA secretary was asked to inquire into the possibility of televising ARRA meetings. At that time the decision was made to delay televising until the ARRA meetings could be returned to City Hall where live production and high quality could be assured. Discussion: ARRA meetings have been scheduled for the remainder of the year in the cafeteria at Historic Alameda High School. The cafeteria setting has significant advantages for ARRA meetings: (1) we are less likely to be "bumped" by AUSD needs; and (2) it is easier for the governing body and the public to view presentations. The cafeteria does not have equipment capable of videotaping for live "real- time" broadcast. However, it is possible to videotape the ARRA meetings in the cafeteria on the first Wednesday of each month as scheduled. The videotape would then be broadcast on cable TV on a specific date and time to remain consistent each month (e.g., the first Thursday of each month at 7:OOPM). Fiscal Impact: It would cost $7 an hour for a technician to videotape the meetings plus the cost of the videotape. The total cost is estimated at no more than $35 per meeting. Adequate funds were included in the current OEA budget to allow for extra meetings or meeting costs, as necessary. The cost of videotaping all ARRA meetings could be covered within the budgeted amount. Recycled paper Honorable Members of the January 29, 1997 Alameda Reuse and Redevelopment Authority Page 2 Recommendation: Due to the continuing and increasing public interest in the ARRA's activities and the specific request from ARRA board members, it is recommended that the ARRA approve the videotaping of ARRA meetings to be telecast consistently at a specific date and time. Once the meetings return to City Hall, the shift can be made to live telecasting. Respectfully submitted, Kay Miller Executive Director /mee ®Recycled paper Correspondence Alameda Reuse and Redevelopment Authority Interoffice Memorandum TO: Honorable Members of the Alameda Reuse and Redevelopment Authority FROM: Margaret E. Ensley ARRA Secretary DATE: January 28, 1997 SUBJECT: Meeting Dates for 1997 Meeting dates for the remainder of 1997 follow; please mark your calendars accordingly. Day Date Wednesday February 5 Wednesday March 5 Wednesday April 2 Wednesday May 7 Wednesday June 4 Wednesday July 2 Wednesday - August 6 Wednesday September 3 Thursday October 9* Wednesday November 5 Wednesday December 3 *Rescheduled from normal ARRA meeting date of October 1, Rosh Hashanah. • • Printed on recycled paper REDEVELOPMENT AUTHORITY (ARRA) PREiARED BY: INFORMATION DESIGN ASSOCIATES (IDeA) • '1160 BatteryStreet1OFCR Direct) , San Francisco, CA 94111 • Prepared for: Alameda Reuse and Redevelopment Authority (ARRA) Prepared by: Information Design Associates (IDeA) 1160 Battery Street ( @FCB Direct) San Francisco, CA 94111 Tel: (415) 772 -8651 With assistance from: Economic & Planning Systems (EPS) Applied Development Economics (ADE) Longitude 122 West, Inc. December 31, 1996 This study was prepared under contract with the Alameda Reuse and Redevelopment Authority with financial support from the Office of Economic Adjustment, Department of Defense. The content reflects the views of the Alameda Reuse and Redevelopment Authority and does not necessarily reflect the views of the Office of Economic Adjustment. TABLE OF CONTENTS Part I: Overview of Phase I Results and Phase II Objectives 1 A. INTRODUCTION 1 B. PHASE ONE: CONCEPT DELINEATION 1 1. Technology Transfer Framework 1 2. Models of Science & Technology Centers 2 3. Identify Target Technology - Driven Industries 2 4. Delineate Science & Technology Concepts 3 C. PHASE TWO GOALS: DEFINE FEASIBLE SCIENCE & TECHNOLOGY CENTER CONCEPTS 3 Part II: Demand for CIuster Development at the Alameda Naval Air Station 7 A. INTRODUCTION 7 1. Purpose of Analysis 7 2. Organization of Part II 7 B. REGIONAL ECONOMIC GEOGRAPHY OF INDUSTRY CLUSTERS 8 1. Locational Factors: General Characteristics 8 2. F'conbn is Geography of Industry Clusters: Overview 3. Regional Distribution of Each Cluster " 15 a. Information Technology 15 b. Bioscience 20 c. Environmental Technology 25 d. Multimedia 27 C. REAL ESTATE DYNAMICS OF INDUSTRY CLUSTERS 31 1. Introduction 31 2. Space Utilization Characteristics and Requirements 32 a. Information Technology 32 b. Telecommunications 34 c. Biotechnology 35 d. Environmental Technology 36 e. Multimedia 37 3. Economic and Real Estate Dynamics 38 a. Firm Growth 39 b. Firm Size and Capitalization 40 c. Summary of Real Estate Requirements of Clusters 42 D. REAL ESTATE DEMAND PROSPECTS FOR ALAMEDA NAVAL AIR STATION 43 1. Regional Growth and Space Demand 44 a. Employment Growth 44 b. Building Space Demand by Clusters 44 2. Potential Capture by Alameda Naval Air Station 47 3. Cluster Industry Demand Versus Demand From All Sectors 50 Part III. Assessing Competitive Advantage: How the East Bay Compares 53 A. INTRODUCTION: BENCHMARK LOGIC 53 B. BENCHMARK 1: ACCESSIBILITY OF TECHNOLOGY 55 1. Technology Development 55 a. Biotechnology 55 b. Environmental Technology 56 c. Information Technology 57 d. Multimedia 58 e. Technology Development: Interregional Comparison of Clusters 58 2. Technology Deployment 58 3. Technology Discovery 59 C. BENCHMARK 2: ADAPTABILITY OF HUMAN RESOURCES 65 1. Skills Preparation 65 2. Skills Advancement 66 3. Workforce Costs 68 D. BENCHMARK 3: AVAILABILITY OF FINANCIAL CAPITAL 69 1. Initiation Capital 70 2. Expansion Capital 70 E. BENCHMARK 4: ADVANTAGES IN MOBILITY 72 I. Intraregional Mobility 72 2. Regional Access 73 3. Distribution 74 F. BENCHMARK 5: ADVANTAGES IN TELECOMMUNICATIONS 74 G. BENCHMARK 6: ACCEPTABILITY OF TAX AND REGULATION 76 1. Transaction Costs 76 2. Regulatory Complexity 76 3. Incentives 78 H. BENCHMARK 7: ACHIEVABILITY OF QUALITY OF LIFE 79 1. Housing 79 2. Health Care Costs 80 3. Recreation 80 4. ,safety i , ;: 81 1 5. Environmental Quality 81 I. CONCLUSION: ALAMEDA'S STRATEGIC ADVANTAGE 83 1. The East Bay's Overall Position 83 2. Regional Parity: Standing "Toe -to -Toe" - 83 3. The East Bay's Competitive Disadvantages 83 4. Alameda County Cluster Advantages 84 a. Biotechnology 84 b. Environmental Technology 84 c. Information Technology 85 d. Multimedia 85 Part IV: Analysis of Cluster Occupation Trends in Alameda County 86 A. OVERVIEW 86 B. ALAMEDA COUNTY OCCUPATIONAL STRUCTURE 86 C. OCCUPATIONS IN THE BIOTECHNOLOGY CLUSTER 88 1. Overview 88 2. Emerging Biotechnology Occupations in California 88 3. Diversity of Occupational Skills Required: Biotechnology 90 4. Skill Trends 91 5. Summary: Biotechnology Training Priorities 91 D. OCCUPATIONS IN THE MULTIMEDIA AND BROADCAST CLUSTER 92 1. Emerging Multimedia Occupations in California 92 2. Diversity of Occupational Skills Required: Multimedia and Broadcast 93 3. Skill Trends 94 4. Summary: Multimedia and Broadcast Training Priorities 95 E. OCCUPATIONS IN THE INFORMATION TECHNOLOGY & COMMUNICATIONS CLUSTER 96 1., Overview 96 2. Emerging Information Systems & Telecommunications Occupations in California 96 3. Diversity of Occupational Skills Required: Information Technology and Communications 98 4. Skill Trends 99 5. Summary: Information Technology and Communications Training Priorities 100 F. OCCUPATIONS IN THE ENVIRONMENTAL TECHNOLOGY CLUSTER 100 1. Overview 100 2. Emerging Environmental Technology Occupations in California 101 3. Diversity of Occupational Skills Required: Environmental Technology 103 4. Skill Trends 103 5. Summary: Environmental Technology Training Priorities 104 G. CONCLUSIONS: BUILDING ALAMEDA COUNTY'S OCCUPATIONAL CAPACITY 104 Part V: Science and Technology Competencies in the East Bay 106 A. INTRODUCTION 106 B. OVERVIEW OF PUBLIC RESEARCH INSTITUTIONS 107 1. Introduction 107 2. University of California: UC Berkeley and UC San Francisco 107 3. Lawrence Berkeley National Laboratory 108 4. Lawrence Livermore National Laboratory 108 5. Sandia National Laboratories 108 6. CSU Hayward 108 7. Summary of Research Resources 108 C. REPRESENTATIVE RESEARCH ACTIVITIES, COMMERCIAL INTERESTS, AND NEEDS 109 1. Introduction 109 2. Biotechnology 109 a. Summary of Biotechnology Activity 109 b. Research at Public:Insiitutions i 3• X . ; 110 c. Commercial Collaboration 111 d. Market Interests 112 e. Enabling Connections to the Marketplace 112 3. Environmental Technology 113 a. Summary of Environmental Technology Activity 113 b. Commercial Collaboration 115 c. Market Interests 115 d. Enabling Connections to the Marketplace 116 4. Advanced Materials and Manufacturing 117 a. Summary of Advanced Materials and Manufacturing Activities 117 b. Commercial Collaborations 120 c. Market Interests 120 d. Enabling Connections to Market 120 5. Microelectronics and Microfabrication 121 a. Summary of Microelectronics and Microfabrication Activity 121 b. Commercial Collaborations 124 c. Market Interests 124 d. Enabling Connections to the Marketplace 125 6. Information Technology for Knowledge -Based Industries 126 a. Summary of Information Technology Activities 126 b. Commercial Collaborations 128 c. Market Interests 129 d. Enabling Connections to the Marketplace 129 D. MARKET POTENTIAL AND COMMERCIALIZATION OPPORTUNITIES 130 E. TECHNOLOGY TRANSFER MECHANISMS: EXISTING BRIDGES TO MARKETS 131 1. Introduction 131 2. Transfer Mechanisms: Diverse Pathways 131 a. Applied Science: Enabling Technology 132 • b. Technology Development: Commercialization 132 c. Technology Deployment: Best Practices and Products 133 d. Intermediary Mechanisms 133 3. Building Bridges to Markets: Summary of Constraints 134 a. Career Policies 135 b. Technology Market Analysis and Competency Marketing 135 c. Intellectual Property Management 139 d. Security Provisions 141 e. Commercialization Infrastructure 141 4. Conclusion: Science and Technology Institution Interest in Alameda Naval Air Station 142 a. Contact Centerfrechnology Outreach Office 142 b. Technology Specific Application Centers 143 c. Collaboratory Hub 144 d. R &D Institute Intermediary (Virtual or Actual) 144 e. Incubators 145 f. High Speed/High Bandwidth Network NodefVirtual Presence 145 g. Technology Exchange Center 145 h. Waste Disposal Facility 145 5. Building a Base for Competencies: Realistic Prospects 145 Part VI. Feasibility of Science and Technology Center Concepts 147 A. ASSUMPTIONS GUIDING FEASIBILITY ANALYSIS 147 1. Assumption 1: Create Job Opportunities Through Technology- Driven Clusters 147 2. Assumption 2: A Science and Technology Center Organization is Needed 147 3. Assumption 3: The Science and Technology Center Should be A Physical Development 149 B. DEVELOPMENT OPTIONS: FEASIBILITY AND CONDITIONS 150 1. Concept 1. Natural Growth: A Virtual Science & Technology Center 151 a. Overview: A Minimal Approach -t 151 b. Expected Development: Baseline Job Growth '1 i ; 151 c. Concept Rationale: Accommodate Market Growth 151 d. Implementation Requirements: Watch Out for Competitors 152 2. Concept 2. Strategic Outreach: A Collaboratively Developed Science and Technology Center 152 a. Overview: An Aggressive Approach to Positioning 152 b. Expected Development: Technology Nodes Within A Community 153 c. Concept Rationale: Create a Critical Mass 153 d. Implementation Requirements: Marketing Partnership Capacity 154 3. Concept 3. Leveraged Assets: Specialized Science and Technology Center Investment 154 a. Overview: A Tactical Approach 154 b. Expected Development: Baseline Plus 155 c. Concept Rationale: Catalyze a Critical Mass 156 d. Implementation Requirements: Marketing Partnership Capacity 157 C. CONCLUSION: BUILDING MOMENTUM FOR THE ALAMEDA SCIENCE & TECHNOLOGY CENTER 158 LIST OF TABLES AND FIGURES Table II -1. Locational Characteristics & Requirements of Selected Industry Clusters 10 Map II -1. Regional Distribution of Industry Clusters 12 Table II -2. Cluster Presence in Selected Bay Area Counties in 1995 13 Table II -3. Cluster Concentrations in Alameda County compared to U.S. in 1993 16 Table 11 -4. Ranking of Information Technology Cluster Size 17 Table II -5. Largest Software and Hardware Companies in the Bay Area 19 Table 1I -6. Distribution of Industry Cluster Firms by City: 1995 21 Table 1I -7. Regional Distribution of Biotechnology Firms 22 Table II -8. Largest Biotech /Biopharmaceutical Companies in the Bay Area 24 Table I1 -9. Largest Multimedia Companies in the Bay Area 29 Table II -10. Number of Multimedia Companies by Region 30 Table II -11. Building Space Characteristics and Requirements 33 Table 1I -12. Historical Employment Growth in Alameda County by Cluster, 1991 -1995 41 Table II -13. Size Distribution of Establishments by Cluster in Alameda County and U.S. in 1993 45 Table 11 -14. Employment by Cluster in Alameda County and the Bay Area: 1990 -2015 46 Table I1 -15. Projected Demand for Space by Clusters in Alameda County: 1995 -2015 48 Table II -16. Projected Annual Average Space Demand from Clusters: 1995 -2015 49 Table II -17. Range of Potential Cluster Absorption at NAS Alameda: 1997 -2015 51 Table II -18. Potential Building Space Demand At NAS Alameda 52 Exhibit III -1. Economic Infrastructure Benchmarks and Indicators 54 Table III -1. Regional Comparison of the Biotechnology Cluster 56 Table III -2. Regional Comparison of the Environmental Technology Cluster 57 Table III -3. Regional Comparison of the Information Technology Cluster 57 Table III -4. Regional Comparison of the Multimedia Cluster 58 Table III -5. Size of Supplier Base 60 Table III -6. Federal Disbursements to Universities and Colleges for Science and Engineering, FY 1994 61 Table III -7. Total R &D Expenditures at Universities and Colleges, 1994 61 Table III -8. R &D Expenditures at Universities and Colleges by Field, 1994 62 Table III -9. Industry- Sponsored R &D Expenditures at Universities and Colleges, 1994 63 Table III -10. R &D Expenditures at University- Administered Federally Funded R &D Centers, by Science and Engineering Field, Fiscal year 1994 64 Table III -11. Educational Achievement and Quality of Educational Resources 66 Table III -12. Graduate Students in Science, Engineering, and Health Fields, 1994 67 Table III -13. Number of Doctorates Conferred, 1995 68 Table III -14. Salary and wages of Typical Occupations ' 69 Table III -15. Venture Capital Activity 71 Table III -16. Transportation Infrastructure 73 Table III -17. Telecommunications Infrastructure & Services 75 Table III -18. Comparison of Fiscal & Regulatory Environments 77 Table III -19. Comparison of Fiscal & Regulatory Environments 78 Table III -20. Quality of Life Indicators 82 Table IV -1. Occupational Employment Projections in Alameda County, 1992 -1998 87 Table IV -2. Alameda County Industry Cluster Historic and Forecast Growth Rates 88 Table IV -3. Typical Occupations in the Biotechnology Industry 89 Table IV -4. Selected Occupations in Alameda County in the Biotechnology Industry 90 Table IV -5. Range of Occupations in the Multimedia and Broadcast Cluster 92 Table IV -6. Selected Occupations in Alameda County in the Multimedia and Broadcast Industry. 94 Table IV -7. Selected Occupations in Alameda County in the Information Technology and Communications Industries 96 Table IV -8. Emerging Information Systems Occupations 97 Table IV -9. Range of Occupation Skills In The Information Technology And Communications Cluster98 Table IV -10. "Gap Analysis" Where are the Critical Skills Today? 99 Table IV -11. Selected Occupations in Alameda County in the Environmental Technology Industry 101 Table IV -12. Emerging Occupations in the Environmental Technology Industry in California 102 Table IV -13. Alameda County Occupations With Development Potential 105 Table V -1. Estimated Resources in Selected Technology Areas of Combined Institutions 109 Table V -2. Estimated Biotechnology Resources of Public Institutes in the East Bay and San Francisco110 Table V -3. Estimated Environmental Technology Resources of East Bay Institutions 113 Table V -4. Estimated Advanced Materials and Manufacturing Resources of East Bay Institutions 118 Table V -5. Estimated Microelectronics and Microfabrication Resources of Alameda Area Institutions 122 Table V -6. Estimated Information Technology Resources of East Bay Institutions 126 Table V -7. Summary of Market Opportunities for Selected Technologies 131 Figure V -1. The Technology Center and Specific Target Markets & Services 132 Table V -8. Mechanisms For Technology Transfer 134 Figure VI -1. Feasible Alameda Science and Technology Center Concepts 148 Figure VI -2. Feasible Alameda Science and Technology Center Concepts 149 Figure VI -3. Feasible Alameda Science and Technology Center Concepts 156 Part I: Overview of Phase I Results and Phase II Objectives A . INTRODUCTION This report evaluates the feasibility of a potential science and technology center at the Alameda Naval Air Station. The conclusions reached are based on two phases of work that were completed for this project. The findings of this report will set the stage for the findings of the third and final phase of this project, which is a business plan for a science and technology center component of the overall Alameda Naval Air Station development. This introduction briefly reviews the outcomes of Phase One of this project, and sets the stage for the findings and conclusions that will be presented in this, the Phase Two Report on Concept Feasibility. The objectives of the Alameda Science & Technology Center project are to define what a science and technology center is or could be, to determine whether there is demand for such a center at the Alameda Naval Air Station, and to define a planSor developing it, should one be feasible. This assignment is by no means simple; pespite past:proposals and discussions regarding what could take place at the Alafneda Naval Air Station, there was no formal definition of what a science and technology center actually constitutes. The key concern of the Alameda Reuse and Redevelopment Authority (ARRA) has been to determine whether a science and technology center could accelerate growth of technology- based industry and quality job opportunities at the Alameda Naval Air Station, and for Alameda County. Therefore, this project has faced the challenge of defining what a science and technology center is, what form it can take, and whether there is demand for one at the Alameda Naval Air Station site, as well as the challenge of specifying how its realization might be achieved. B . PHASE ONE: CONCEPT DELINEATION The first phase of this project was designed to develop a logic for guiding the overall analysis, and to complete the first of a three step demand - driven concept development process, concluding with delineation of candidate development concepts. The starting assumption was that a science and technology center is a geographic location where technology -driven companies can locate to gain a competitive advantage in their development and operations. This first phase of project analysis expanded on that assumption by answering fundamental questions such as "what is a science and technology center ?" and then putting the answer into action. As the results of this phase of work demonstrated, the answer to this question had two sides: an organizational side that focuses on how technology transfer takes place, and a physical side that focuses on where technology transfer takes place. These answers have been used to shape development at each stage of this project. The tasks and outcomes in Phase One are summarized below: J . Technology Transfer Framework What is technology transfer? This task provided a framework for understanding the organization of a producer- supplier environment in which different levels of technology transfer takes place. The framework described the different ways in which technology transfer takes place. The analysis used three levels to show the range of technology transfer relationships. The first level, discovery, focuses on applied science where enabling technologies are supplied by academic research institutions and laboratories to users in the commercial marketplace and government. The second level, development, 1 focuses on the translation of applied science into technological applications and commercial products. The third level, deployment, focuses on the transfer of best practices and current products to the users. This framework chapter concluded by describing examples of different ways that technology transfer intermediaries can influence transactions between producers and users at the three levels, and illustrated the types of technology transfer intermediary organizations that might comprise a possible science and technology center. Among these were intermediary organizations that linked university and laboratory research to commercial users, such as research networks, consortia, and organizations that focused on commercial development, such as R &D institutes and commercialization enterprises, including incubators. One important observation in this work is that technology user companies and technology producer institutions have a wide range of intermediaries to which they naturally avail themselves, and which are available when needed, if users are willing. 2. Models of Science & Technology Centers Where does technology transfer take place? Technology transfer happens in a marketplace of relationships, not necessarily in a building, campus, or town. However, physical sites 'can create the settings Where technology transfer relationships develop and take place. This task provided models describing the range of physical structures used to achieve science and technology center objectives. Models of technology transfer settings were provided at four levels: The smallest scale encompasses facilities such as technology transfer offices, commercialization centers and incubators, which take place in offices or buildings. The next larger scale is research institutes, corporate technology centers and laboratories, which may be located in one building or be as large as a campus. The third level is comprised of technology parks and new towns, which may be developments with a mix of technology - driven businesses and supporting research services, as well as commercial and retail services and quality of life amenities. The fourth level is technology regions (technopolises) that are literally metropolitan areas, such as the Silicon Valley, where the entire economy has a naturally reinforcing technological focus. This chapter evaluated each of these models and recommended that the Alameda Science & Technology Center focus on a technology park concept, consisting of technology- driven companies in industry theme areas (clusters). This technology park scale- development could accommodate technology institutions (building or campus size), if there are sponsors, but would not necessarily depend on any one institution. A key dimension that these models reinforce is the importance of the surrounding region as an existing technology center. Alameda is within a successful technology region; and to the degree that technology -based companies find the region's assets valuable, they will look for sites within the region that offer special advantages beyond what they can acquire already from the region. This means that the Alameda Naval Air Station can be a science and technology center, but so can competing sites in the region. 3. Identify Target Technology - Driven Industries This project has defined a science and technology center as a location where technology - based industry is concentrated and where technology transfer activities are an important intrinsic aspect of ongoing business activity. With or without any specialized intermediary, the Alameda Naval Air Station can be this type of science and technology center. However, the assumption that a science and technology center can help the Alameda Naval Air Station attract technology- driven industries and create quality jobs requires specifying what those industries are and what they need. Through a process of analyzing the industrial clusters in the Bay Area and East Bay that are technology- driven, six industry clusters were selected and combined into four major theme groups. These industries are: Biotechnology, Environmental Technology, Multimedia and Broadcast, and Information 2 Technology and Communications. Through examining economic data and company - specific perspectives, a profile on the status of these industries was created that shows that these industries are growing, and will continue to grow in the East Bay, and that companies in these industries would be good candidates as tenants in a science and technology center. The information on cluster development is expanded substantially in this Phase Two Report, Concept Feasibility. 4. Delineate Science & Technology Concepts Based on convening working groups with representatives of each of the four target technology - driven industries, four concepts were developed around which a science and technology center could possibly be created. These concepts represent configurations of businesses, suppliers and desired supporting services and amenities deemed by cluster companies a "locational competitive advantage ". The industry working groups for each cluster typically included 20 large, medium and small companies. The companies individually identified the requirements they believed would be important, were their company to locate and develop at the Alameda Naval Air Station. Then, collectively, the participants identified the specific attributes of a location for technology- drivenbusinesses that would provide them with a competitive advantage. These concepts were organiz€d into illustrative development concepts for each industry cluster. For example, the Biotechnology cluster concept, "Biomeda", proposed a technology -park comprising, at the core, a research center with collaborative R &D space, leasable wet laboratories, possible incubator space, and a research and patent library. Around this center there would be various biotechnology suppliers and vendors, and around this would be corporate biotechnology campus sites. The multimedia cluster concept, "Alamedia ", focused on a development that included multi -use structures for commercial and residential lofts, with larger corporate facilities for film production and post production, a "multimedia mall" that would be a showcase for demonstrating and testing a range of technologies, a possible media - technology university center, and, a village complex that offered the range of lifestyle features that workers in this industry thrive on. The importance of these concepts is that they employ user - driven interests in the composing of a community where these same that could businesses, uide futureothers, deve locate. At a ooffer1guidelines they r represent hat these users may concepts th guide from a development. These concepts were the starting point of the analysis of what might take shape at Alameda Naval Air Station. These ideas set the stage for Phase Two, the feasibility analysis of a Science & Technology Center. C . PHASE TWO GOALS: DEFINE FEASIBLE SCIENCE & TECHNOLOGY CENTER CONCEPTS This report presents the findings of Phase Two of the Alameda Science & Technology Center feasibility project. In this phase the key question is "which, if any, science and technology center concepts are feasible for development at the Alameda Naval Air Station ?" To answer that question, this overview (Part I) summarizes the steps that have been taken to bring the feasibility analysis to a close, and which comprise the components of this report. 3 Part II: Demand for Cluster Real Estate Development at Alameda Naval Air Station If the definition of a science and technology center is a location where technology - driven industries are concentrated, with or without specialized science and technology intermediaries, the bottom -line question that must be answered is, what level of demand is there for development at this site by the target cluster industries? To answer this question, this report (Phase Two) examines three aspects of industry cluster behavior. First, Part II examines the regional economic geography of the four industry clusters that have been selected as the targets for future growth in the science and technology center component of the Alameda Naval Air Station. This analysis shows where growth of these industries is taking place around the entire San Francisco Bay area and nationally, and discusses some of the local sources of advantage believed to support industry development. These factors are later examined in comparative detail in Part III, Assessing Competitive Advantage. Then, to better understand the prospects for attracting the target cluster industries to Alameda Naval Air Station, a profile of each cluster's real estate dynamics is provided. This analysis reviews building space preferences and spatial requirements for functions from headquarters to R &D and light manufacturing to distribution. Finally, based on analysis of regional growth ar*i space demand, the potential capture of real ?estate development at the Alameda Naval Air Station across the four clusters is provided. This final portion of the analysis provides the reality check needed to ascertain what a science and technology center comprise in land use annually over the build -out period of the Alameda Naval Air Station. These findings provide a baseline estimate that gives a positive but modest expectation for on -site technology -driven cluster growth. This baseline provides an important guide in the specification of the feasible science and technology center concepts. Part III: Assessing Competitive Advantage: How the East Bay Compares To better understand how Alameda County and the Alameda Naval Air Station is positioned to capture or exceed its share of technology- driven cluster growth in the East Bay, a comparative analysis of seven key economic infrastructure dimensions is provided. This comparative analysis benchmarks Alameda County against three competitor regions: Los Angeles, San Diego and Sacramento Counties. For each of these regions Alameda is compared in terms of its status on key economic infrastructure dimensions. These include: access to technology, adaptability of human resources, availability of financial capital, transportation, advanced communications, acceptable tax and regulation, and achievable quality of life. The results of this analysis tell a positive story about the East Bay's competitive strengths and confirm why the science and technology center concept makes sense as an element of the Alameda Naval Air Station. These findings also reaffirm the fact that the Alameda Naval Air Station will need to distinguish itself from its competitors in the East Bay who share the same position with respect to the region's positive economic infrastructure assets. Part IV: Analysis of Cluster Occupation Trends in Alameda County In order to grow the technology - driven industry clusters that will provide future jobs, Alameda County must be able to supply the range of occupations that growing technology - driven industry clusters require. How demand for occupations is addressed will play an important role in how well Alameda County attracts technology- driven industry to an Alameda Science & Technology Center. In this part, occupations emerging in California in the four industry clusters are compared to occupations in Alameda County. For each of the clusters, projected employment growth between 1992 and 1998 are summarized for 4 occupations in-Alameda County. The premise used here is that if occupational growth related to target clusters is forecast to keep up with their overall employment growth, the county should have little difficulty in meeting industry needs. If, however, the growth in occupations appears slower than general employment growth in target clusters, then many jobs will be filed by non - Alameda County workers. The results show that there are many occupations showing projected employment growth levels consistent with growing clusters. However, there are occupations identified in each cluster where employment growth appears slower than general employment growth. In order for Alameda County and the East Bay industries to adapt to the competitive challenges of growing target industry clusters, the region should be prepared to provide employment development support and address potential training needs for the identified occupations. Part V: Science and Technology Competencies in the East Bay The Alameda Science & Technology Center project has always had at its core the goal of linking and leveraging the East Bay's special research capabilities to better meet industry needs. To this point, the requirements identified for a science and technology center have focused on what each industry cluster believed would provide them with a competitive advantage if they located in the East Bay. In this part of the report the emphasis hokv shifts from the industrial user to the science and technology producers —the East Bay's public universities and national laboratories. To better understand the regional technology assets that might be more effectively linked to the East Bay industry marketplace, this project undertook the first ever cross - institutional review of competencies across five interdisciplinary fields believed to be important to the four target cluster groups. While this analysis is by no means comprehensive and is more of a sketch of the capabilities that reside in the region, the analysis does provide a preliminary picture of the scope of capabilities that can be used to assess the feasibility of a science and technology center. This work was completed with the cooperation and participation of the University of California administration, the UC Berkeley and San Francisco campuses, the Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, Sandia National Laboratory (California) and California State University, Hayward. Input was provided both through 35 interviews with faculty and laboratory personnel, as well as through two rounds of working groups with university and industry participants. The results show an impressive scale and diversity of world -class capabilities within important interdisciplinary fields. At the same time, this process also highlighted enduring challenges and frustrations facing faculty and laboratory staff as they individually struggle, on the one hand, to fulfill the primary mission responsibilities to which they and their institutions are committed and, on the other hand, explore how to be more entrepreneurial and responsive to the needs of industry. The needs identified in this analysis suggest how new technology transfer intermediaries (consistent with those outlined in Phase One) could help bridges get built to the commercial marketplace —if there were the means for sponsoring their development and operation. The analysis of industry cluster needs, and university and laboratory barriers to linking with the marketplace, points to an opportunity for science and technology organizations which could be at the Alameda Naval Air Station or could be "virtual ". Still, there are no clear champions, as yet. Part VI: Science and Technology Center Feasibility The last part of this report integrates the findings of this and the previous stage of analysis to reach a conclusion about which science and technology center concepts are feasible. The analysis provides three options to ARRA that are based on the degree to which partners for further implementation can be identified. 5 The first option described requires no intervention, beyond ensuring that the physical infrastructure of the Alameda Naval Air Station site is comparable to its competitors. Here, the good news is that the Alameda Naval Air Station is likely to capture a fair share of growth of the target technology- driven clusters in the coming years without developing any special science and technology center facilities at the site. However, this growth will be a component of a broader, mixed use, next generation community at the site. The second option recommends that ARRA undertake a systematic program of cluster- directed marketing to increase its share of future cluster growth. By using an integrated marketing approach, ARRA may be able to achieve a more concerted development pattern that could include attracting a significant anchor firm in a technology -driven cluster. The development concepts already developed could be the focus for this concerted marketing effort. Here, again, no specific science and technology center intermediary institution is essential, although the marketing process will focus on bringing on board specialized commercial and retail resources deemed important to clusters. This could result in a higher cluster - concentration at the site. Finally, the third option suggests that to tip the scales in favor of the Alameda Naval Air Station in technology -driven cluster development, an effort to develop specialized infrastructure for at least one target cluster might help accelerate cluster - attraction. In this option ARRA will require development partners from East Bay institutions, such as the universities and laboratories,'as4well as industries, cominitted to sponsoring or participating in a new development, such as a collaborative research facility. In conclusion, in answer to the question is a science and technology center feasible at the Alameda Naval Air Station, the answer is: yes. ARRA can expect natural growth of all four clusters as a part of the community's future development. Is this development contingent on creating a specialized science and technology center? No. Companies will harness the East Bay's regional science and technology assets as they already do. Could a science and technology center do more to accelerate growth, as originally hypothesized? Yes, if sponsors are available and the development creates the competitive advantages that differentiate Alameda Naval Air Station from other competing sites. The Phase Three Report will provide a plan for moving forward on these options. 6 Part II: Demand for Cluster Development at the Alameda Naval Air Station A . INTRODUCTION 1 . Purpose of Analysis This part of the Alameda Science & Technology Center study is designed to provide a focused analysis of the potential of the Alameda. Naval Air Station to attract specific high - technology industry groups. The demand for space at Alameda Naval Air Station will be a function of regional economic growth, the building space requirements and the preferences of growing economic sectors, and the competitive attributes of the site. Part II provides a detailed analysis of the demand characteristics of four high - technology industry clusters that will potentially serve as a source of future tenants in the redevelopment of Alameda Naval Air Station. The selected clusters include: 1) Information Technology; 2) Bioscience; 3) Environmental Technology; and 4) Multimedia. The selection of industry clusters is based oh a variefy of factors; including their concentration within the Bay Area, their recent and projected growth rates, and their locational requirements. The analysis here focuses on the locational requirements and space utilization criteria of businesses in the targeted clusters to estimate the potential demand for space by these businesses at Alameda Naval Air Station. This information will be used to determine whether there is sufficient demand to warrant a Science & Technology Center and what form such a center might take. For example, it needs to be determined if a science and technology center should actually be a separate campus or district within the base, or whether such a center would be more a "virtual" configuration represented by a significant presence of the cluster industries, mixed with other businesses sectors, together with selected programmatic activities to attract targeted clusters and foster their growth. Regardless of what form a Science & Technology Center will take at Alameda Naval Air Station, it is important to recognize that it will be inextricably linked to the overall program to reuse the base. The real estate economics, in terms of the types and prices of space that can be developed, the overall character of the base environment, and the funding of infrastructure to support development, will be tied to a comprehensive reuse strategy and financing plan. Thus, detailed implementation recommendations for a Science & Technology Center will necessarily require a full consideration of development potential, revenue streams, and costs for the base as a whole. 2 . Organization of Part 11 Part II is organized into four sections. Section B describes the regional distribution of the cluster industries both nationally and locally and evaluates the historical, economic, institutional, and cultural factors that account for the geographical distribution of these clusters in the Bay Area region. The section is designed to ascertain whether or not the Bay Area as a whole, and Alameda, specifically, offers an environment conducive to continued growth in selected industry clusters. Section C of this report examines the real estate dynamics of the industry clusters, focusing on such issues as their building space requirements and preferences, their growth patterns, and their ability to finance real estate development. This section is designed to ascertain the type of buildings and infrastructure that the industry cluster firms are likely to find most 7 type of buildings and infrastructure that the industry cluster firms are likely to find most attractive. It is also designed to assess the economic factors that will hinder and /or promote their growth of the industry clusters at Alameda Naval Air Station. The final section, Section D, summarizes the findings of the previous chapters in terms of their implications for the development of Alameda Naval Air Station. It estimates the future demand for building space by the industry clusters based on their projected employment growth. It also evaluates the likely capture rate of this projected growth in the East Bay and at Alameda Naval Air Station. B . REGIONAL ECONOMIC GEOGRAPHY OF INDUSTRY CLUSTERS The existing regional distribution of the selected industry clusters is a reflection of their locational criteria and, thus, has important implications on where they are likely to locate in the future. This chapter describes the current distribution of the clusters nationally, within the Bay Area, and the East Bay specifically. It also evaluates the historical, economic, institutional,. and cultural factors that account for the existing locational patterns and the extent to which these factors may /guide the location of firths from the selected clusters in the future. Also examined is the spatial distribution of the business functions of firms within each cluster to determine how are distributed within the region. 1- Locational Factors: General Characteristics Like all industries, the firms within the selected industry clusters require a variety of business and infrastructure services and amenities to support both their day -to -day operations and long -term growth. However, due to the competitive nature and high - technology orientation of the selected cluster, they tend to be more concentrated than many other businesses. Prevalent locational attributes in areas that exhibit a high concentration of firms are summarized below: • Adaptable Human Resources: Supply of Qualified Labor. Because of their high - technology orientation, the industry clusters tend to need a large supply of qualified workers with strong technical skills. The labor pool should include workers with a variety of educational attainment levels, everything from community college graduates with two -year technical degrees to Ph. D. recipients from prominent universities. • Access to Technology: Proximity to R &D or Industry Activity. The industry clusters often need access to major research institutions and other organizations at the forefront of the field. This access allows firms to keep abreast of emerging research findings and the latest industry trends, establish consultancy arrangements with experts in various sub - fields, and develop or maintain demand and supply relationships with key buyers and suppliers. • Availability of Financial Capital. The industry clusters need a wide range of business and financial support services. For example, they require legal support, a well - developed investment and venture capital community, and day -to -day operational services such as employment agencies, real estate brokers, publishers, and parcel delivery services. They also often seek a work environment that is conveniently located to hotels, conference rooms, and retail or entertainment establishments. 8 • Achievable Qualify of Life. The industry clusters require regional quality of life amenities that are sufficient to attract top industry talent. These include a variety of cultural and recreational venues as well as attractive residential communities. Such factors have important implications on a particular firm's ability to recruit top quality employees who generally have multiple locational options from which to choose. • Advanced Physical Infrastructure. Industry clusters need immediate access to major transportation networks, including highways, airports, and mass transit. These transportation networks are essential due to the time sensitive and competitive nature of the industry and the need to continually transport both goods and people between demand and supply markets. Air cargo services are especially important because these firms often sell products and establish relationships with . clients /customers in other states and /or countries. Power, water and sewer services must be reliable and affordable for clusters. Finally, advanced telecommunications services must be on a par or better than competing regions for all technology - driven clusters. Although the attributes described above are important to all of the industry clusters, important variations exist between them...Moreover, there are other factors that may playan important role for some clusters and not forothers. Table II- 1(pag6 10) provides information on the unique locational requirements of each of the industry clusters. As shown, factors such as adaptability of human resources, proximity to related business or R &D institutions, and quality of life, can have different implications for each cluster. For example, multimedia firms tend to be less interested in establishing relationships with local universities than they are with other businesses in their field, while the opposite dynamic tends to characterize firms in the environmental technology cluster. Likewise, the type of labor force sought by information technology firms is different from that sought by biotechnology firms, although both tend to be highly trained. In general, the variations in the type of locational attributes desired by the clusters stem from the historical genesis, stage of development, technological focus, and corporate culture unique to each. The relatively mature nature of the information technology cluster, for example, has led to a focus, especially among computer hardware firms, on cultivating a corporate identity by locating in established areas. In contrast, multimedia firms seek an environment that supports a more creative and artistic element. The highly scientific underpinnings of the biotechnology industry, in turn, have produced a strong emphasis on locations that allow for fostering academic relationships. Finally, the diverse nature of the environmental technology cluster has produced a geographically dispersed industry with an emphasis on regional mobility. The locational factors relevant to each of the individual clusters are discussed in greater detail later in this chapter. However, it is important to note that the deciding locational criteria of any particular firm need not correspond to the factors listed above. For example, in many cases a firm's location will be based solely on where the founder(s) happen to live. Nevertheless, in general, the competitive factors essential to the long -run success of a cluster will not be subordinate to the preferences of the individual founders /CEOs. Overall, where these two factors coincide, the prospects for attracting cluster- related development are very good. Alameda County's position in these factors relative to competing regions is analyzed in Part III of this report. 9 co 0 15 0 1.4 2 a) m T. 0 r; .0 c 15 oh il; 0 0 0 C t 01- 000 0 03 at 0. 4 a) a) 0 X 0 0. c '13 E 0 0 0 g x a) 0.5 0 0.c S 5 a) -a c or@ (0 E a, (i) o) c 03= o 08 Eh as F.)14 .5 ID 0 - 0 S.; COL) C • C al ca § z, .... u, @ E m 1 " fill = v 0 LE 8 0 0 m 0 8 iff cr; a a yi E9. isi 0 00 00 00 co co co > c -8 .› 0 _ c 4 • - .a. >c c) 8 ,0 8 ..c. 0 as ,,, c ca _0 as a■ c E 0 E *to Ea) -.1 .- a) o @ .0 • - > 0 -ra ca > g 8 u) o a -5 1:7)2 •-• C 0 ... 0 O 0 0 .c ... c 0 0 0 a) c.) a -0 co 0 > 0 co ,.. = i) 5:, a a) . 'az if - a CD 8) s3 0 *C. min' 0 CD •I'l 5 E 0 m -r4 1.5 0) c - a> .E t cgs _c E . - .g. ,..115:1 4 co -a 0 arffl a_ a 0 (-3 a) 5 Er To" a) a .2 o 0. $ . 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Economic Geography of Industry Clusters: Overview The economic, institutional, and cultural requirements of the industry clusters are reflected by their high degree of locational selectivity or geographic concentration in particular regions and submarkets. The existence of distinct regional pockets or development nodes within the industry clusters corresponds to their dependence on specific location -based attributes. Indeed, the tendency among the firms of a particular cluster to rely on a common set of support networks and to seek proximity to related institutions or businesses has produced a self - reinforcing pattern of development. As institutions and businesses develop around an emerging cluster, the area often becomes even more attractive to firms within that cluster. The spatial distribution of the selected industry clusters in the Bay Area is summarized graphically in Map II -1 (page 12). This figure helps further illustrate the importance of the locational factors sought by the industry clusters. The key factors that account for the regional distribution illustrated in Map II -1 are summarized below: • The strong biotechnology centers in 1) South .San Francisco, 2) Palo Alto, and 3) the Berkeley, Emeryville, and AlameriaTareas; correspond to the proximity of UC San Francisco, Stanford, and UC Berkeley, respectively. • The large information technology cluster in Silicon Valley is related to the presence of Stanford University and the historical business agglomerations that have grown out of Stanford's influence. • The nucleus of multimedia firms in San Francisco is connected to the array of cultural amenities and business services offered by the city. The cluster's strength in Silicon Valley derives from its dependence on computer technology. • The environmental technology cluster's strength in the East Bay is in part a result of the academic and cultural support provided by UC Berkeley. In Table II-2 (pages 13 and 14), employment figures from the Economic Development Department (EDD) have been compiled to illustrate the geographical distribution of each cluster within the Bay Area. As shown, Santa Clara County dominates across all clusters. This is in part a function of the absolute size of Santa Clara's economy, which is the largest in the region, and the high- technology focus of the selected industry clusters. In terms of percentage of total employment, Santa Clara County has a particularly strong presence in computers and electronics, which represents about 12 percent of total county employment. In addition, telecommunications represents about 6 percent of total county employment. Alameda County ranks second in computers and electronics with about 2 percent of the county's total employment contained within this cluster. Alameda County ranks second, behind Santa Clara County, in the number of jobs in each of the selected industry clusters, with the exception of bioscience, where it is eclipsed by San Mateo County. Although Alaineda County is second in terms of total employment, it has the largest percentage of total employees in the environmental technology industry. Map 11-1 Regional Distribution of Industry Clusters Marin Walnut Creek Contra CQsta tr" r. trig" 7.4,.45"trt 0,114tti..... 77- - 41-114. Biotechnology p. Computer Hardware/Software 0 Environmental Technology . Education Multimedia Telecommunication F1:16055nasalmaokarea.svor 'I Lc) CJ) rn U) 0 v cv CU L cu t) >. U � a) U Cn a C co e- N � � d v Z C) O i ro > 1. C Q y c 0 E a0. Ew w � c O 0 S .Q N_ E II Z ; W v- C O N 2 E 0 o a w CU E O U To cL w c N E 0 O U E to 0 CO LOCONN CO CO O N CO CO 0) T tO CO CO h. T- N CD Lo O) LO CV M "4"d"4"d' O d' Co co O O) T N r r r N to co to o N co r. to <r CO co 0 0 0 0 0 cr CO CO N N d' CO r N cr; O O o o o O d co O O co cr CO r L O) tO h O T' Cr) cr d: h d N tO N t- Co o 0) N o CO CD O N M M co to N cO N CO O CO 0) tO CO d' N N T' CO O 0) co Lc) 0 Cy r 0) f =O 0 a O C U 0 0 U o U o w c33 U o 0 0 cc �U ;11 C3U ) L L2 at E c c c c cc o ctr 0 Cu < 0 W W &) Environment 'r Total for Five Counties Bioscience CO Q O i- CO 0 O CO 0) CO CO r` LO CD CT) CO 0) -c: tr d CD N M LO LO tO CD CO (O 64 64 64 EA} 64 64 dM N r U 0) 1.0 [ CO • CD o cr O h CD T h CD O N (0 0 0 0 0 co co CO N N N CO d: r CA c0 T Q Q Q r T T ct CO O O) M Vr CO r r CA to ` O T- M d C: Ln t d CVCDNN Co O O) N O CO CO CD N M M CO to co co r-- co to o d- o co v M 'sr 0) CO N t!) r Lc r N >. C C >, +�. 0 0 ? c U 0 0 0 0 it ai U cti m U Ea as U E ° L 2 as <UcWO)u) Total for Five Counties M r O LO O r• O r O) CD CD CO CO CO L() r LO CO M M Cr) '1 h- tfi LO LO CO r CO Eta 64 64 64 -. (3 CO CO 0) 0) d' ," r M N 1: O CD O CD CO 0 CD c0 M N- N LO LO N ti M N N T CO. r. 0 0 0 0 0 CA CO r O T ct CO M M r r O r 000NM " CO r LO h O co cr o) cr LO N d' N CD N r-: O 0) N o CO CO CO N LO CO CO LO N a)T-o�co `TD o o) c) v: N CD CD cri cco c o c o 0 S c U 0 0 () o 0 .N U 0 U o 0 0 2 76 U E Li 2 0 c c c c o cc co at <0u)U1CJ) Total for Five Counties H:15176aIsc1msrketlmediat 1995EMP.XLS Economic & Planning Systems, Inc. 12/2/96 NAS Alameda Market Study N1T CO 0 CO CO rs. cr CO N 111 0 CT) N CO CD CD co" co' tri LO CO CO N. CD 6969696969 60). r- 0 0 CV r- LO AO N • 0) 01 r•-• N C) CD 03 03- Z•i"-) `6"-' • Cg 0) 1-- CD LC) 'ct• r•-• CO N 1- ,t• co 0) a) 8 R. 0 CT) N CT) CO N CT) CO 1.0 O ONCOO CO 00 NOt----t■CT) 0 Cri st" co" cci cq Ch T•-• Telecommunications 0 1.0 1- Cy) CO tr) r CO CO CO 0 0 CO N CT) N • 46. c6 -.4:* 1.0 CD LO CD ; 69 (0 40 69 69 CJL0L0L() N •ct ,- 4,, LO CO CO 0 • CO CT) 0 re; • N CT) CO LO r- • r- "zt CO 0 t•-: M. 0) LC) N 0.c.i cc; CO g Lc2.) -,ztr a CD- N" CO 0 N 0 CO CD N LO CO CO In CO CO N •ct 1-- CO • •-• CO N LO CC) LO 0- CO- 't N CY; N c C >, 0 >, 0 0 C 0 C 00 0 • ai 0 0 O -.(6) C CI 6;0 0 • (`.3. as 0 0 al to 0 • LL E c o al CO < U) (f) Total for Five Counties Sources: Economic Development Department; Economic & Planning Systems, Inc. H:15176a!s clmarkatlmedla11995EMP.XLS Economic & Planning Systems, Inc. 1212/96 The employment data in Table II -2 suggest that the clusters are a relatively small component of the total economy. For example, total employment within the clusters represents less than five percent of employment within the five counties tabulated. It is important to note, however, that the data represents direct employment only and does not include the host of peripheral jobs and businesses that have developed around the industry clusters. These include business and professional services, law firms, shipping companies, and a wide variety of other ancillary companies. Although small, relative to total employment, the comparative position of the industry clusters in the Bay Area relative to other regions appears to be strong. For example, the "employment concentration factor" listed in Table 11-3 (page 16) shows how the relative size of employment in Bay Area cluster industries compares with their size in the nation as a whole. As indicated, these clusters appear to be better represented in each of the Bay Area counties than they are nation -wide. For example, the location quotient of 3.94 for information technology firms means that the concentration of employees in this cluster is almost four times greater than the national average. Within the Bay Area, all of the selected _clusters exhibit employment concentration factors significantly greater than the national average. 3. Regional Distribution of Each Cluster This section analyzes the geographic distribution of each industry cluster and the factors that account for it. It also explores the spatial distribution of the business functions within each cluster, including administrative, R &D, and manufacturing activities. a . Information Technology The information technology cluster has historically been relatively concentrated geographically, with nuclei centered around well - established research institutions on the East and West Coasts. However, as the industry has matured over the last 10 to 15 years, it has become increasingly geographically dispersed, a trend that is reflected both nationally and regionally. This geographic dispersion has occurred as firms seek to reduce operating costs related to land and labor. Table 11 -4 (page 17) ranks the top 20 information technology regions in the United States based on factors such as employment, number of films, and gross revenues. As shown, the primary markets are still centered around major East or West Coast metropolitan areas in California, Massachusetts, New York, and Maryland. In fact, when combined, California and the corridor that stretches from Boston, Massachusetts, to Washington, DC, accounts for about 45 percent of the information technology activity within the US.1 However, pockets a �o technology regions removed from these huge markets such areas DalastoFot Worth, Texas; Denver to Greeley, Colorado; and Seattle to Bremerton, Washington. It is important to note that the telecommunications component of the information technology cluster has always been relatively geographically'dispersed. This results in part from an industrial structure that has been dominated by large regional monopolies combined with the regulatory requirement of universal service. In addition, the technological underpinnings of telecommunications have been less dependent on university research. Nevertheless, the technologically dynamic areas of the telecommunications segment are today closely connected to the other areas of the information technology cluster. 1 Applied Development Economics, Inc., "Information Technology Market Profile and Development Strategy." Prepared for The University of California Fort Ord Project, August, 1996. 15 Industry Cluster Above national average concentration Above national average concentration c c o 0 — .4:4 El 0. •E' -6 4) izu 0 c) c c o o 0 0 a) a) 0) 0) 0 a) > > al C (0 (0 c c 0 o ..c.- ci ca c c a) a) > , > 0 41 E _a (0 «1- > >. (0 as 0 0 c E 0) 0) U) 65 CO cr C) lf) 0 "sr r- 0) C."! 04 t- r- 0 0 E3 Environmental Technology Information Technology (2) 0 E 2 c • ' a) _c c (0 • -c c >, 0 -o E u) a) 12 .6 c_ c — o -6 CD Et a-• E c eti >1 (1) 0 7:3 g .c E 0 0, c a) o o o o .5C2 al E ca) E o •17-: o c o o c 0 TD. E (0 _ as o (J) o 0 o -6 a) o -0 0 0- at c E 0 5 0 co -0 o as as a) a) -o E ai D ca ca c — al ° _c 0) c (0 0 etS E evi 0) 0) 0 c C 0) (.( E a) as 0_ c (1) 0 0 a ai E E 0 0 a) E (0 o_ a) a (.3 E 2 0 o H:15176a/sctmariret%media1001 SUMM.XLS 0 a. 0 0 14.1 Table 11 -4 Ranking of Information Technology Cluster Size NAS Alameda Market Study Location Rank (1) 1 San Francisco - Oakland -San Jose, CA 100.0 2 Washington- Baltimore, DC- MD -VA -WV 92.8 3 New York - Northern New Jersey -Long Island, NY- NJ -CT -PA 8 7.9 4 Boston - Worcester - Lawrence, MA- NH -ME -CT 65.4 5 Los Angeles- Riverside - Orange County., CA 59.0 f: .1 37.9' • 6 Dallas -Fort VVorti, TX 7 Chicago- Gary- Kenosha, IL -IN -WI 36.9 8 Philadelphia- Wilmington - Atlantic City, PA- NJ -DE -MD 31.4 9 Minneapolis, MN 28.4 10 Atlanta, GA 27.6 11 Detroit -Ann Arbor - Flint, MI 25.9 12 Denver - Boulder - Greeley, CO - 22.5 13 Houston - Galveston- Brazoria, TX 22.0 14 Raleigh, NC 19.0 15 San Diego, CA 14.5 16 Seattle- Tacoma - Bremerton, WA 12.2 17 Portland - Salem, OR -WA 12.0 18 St. Louis, MO 11.4 19 Columbus, OH 11.1 20 Huntsville, AL 10.4 (1) Ranking based on factors such as number of employees, product sales, number of firms, and R &D expenditures with the Bay Area serving as the benchmark. Source: Applied Development Economics; Economic & Planning Systems H:16055na sa Ida to 11.ANO.XL S Economic & Planning Systems, Inc. 12/2/96 i) Bay Area Distribution Within the Bay Area the information technology cluster remains concentrated in Silicon Valley. As shown in Table II -5 (page 19), the vast majority of large computer hardware and software firms in the Bay Area are located in Silicon Valley. This concentration results from the historical genesis of computer technology during World War II at Stanford University, resulting defense contracts, and the development of one of the world's preeminent electrical engineering programs. UC Berkeley and Stanford University continue to contribute to industry growth by providing highly trained employees and entrepreneurs. However, as the industry has matured, California State and Community colleges have played an increasingly important role in this respect. Specifically, they supply an essential cadre of technically competent employees capable of carrying out day -to -day engineering and technical tasks. In addition, as information technology firms have developed large R &D departments of their own, UC Berkeley and Stanford have become less responsible for providing key technological breakthroughs. 1 k Services and infrastructure requirements that account for the regional distribution of information technology firms are consistent with those discussed in the previous section. Specifically, information technology firms have been attracted to areas that offer the potential for inter - industry collaboration and quality of life attributes. Although Silicon Valley continues to dominate the region, various pockets of information technology firm development have emerged throughout the Bay Area. As shown in Table II -2, Alameda County has developed a sizable information technology sector, ranking second behind Santa Clara County in terms of employment and number of firms for both the computer and telecommunication segments. Part of this dispersion has corresponded to the relocation of various business functions. Specifically, as San Jose, Palo Alto, Menlo Park, and the other commercial real estate markets of Silicon Valley have become increasingly built -out and lease rates continue to rise, the expanding information technology firms have sought locations in neighboring areas. Information technology firms have also sought to locate their manufacturing activities in outlying areas where land is less expensive and housing more affordable. Areas such as Milpitas and Fremont have been the largest beneficiaries of this trend. However, the greater East Bay has also been affected as industrial markets such as Hayward, San Leandro, Richmond, and parts of Oakland have become home to information technology distribution and assembly activity. Table II -6 (page 21) shows how information technology firms are distributed within the inner East Bay submarket. All of the cities in this market have a significant number of information technology firms. However, the bulk of East Bay information technology finus are software rather than hardware - related. This is due in part to the importance of the Silicon Valley industry agglomerations to computer hardware firms, who tend to place a high value on the recognition, status, and inter - industry relationships found in this location. Major software - related firms in Alameda County include Ascend Communications in Alameda and Sybase in Emeryville. 18 Table 11-5 Largest Software and Hardware Companies in the Bay Area NAS Alameda Market Study Total Company (1) Location Employees Software or Hardware 1. Intel Corp. Santa Clara 40,000 Hardware 2. Samsung Semiconductor Inc. San Jose 20,000 Hardware 3. Phillips Semiconductor Sunnyvale 26,000 Hardware 4. National Semiconductor Corp. Santa Clara 22,300 Hardware 5. Advanced Micro Devices Inc. Sunnyvale 12,700 Hardware 6. LSI Logic Corp. Milipitas 4,000 Hardware 7. Cirrus Logic Inc. Fremont 3,250 Hardware 8. Hewlett- Packard Co., Components Group • San Jose 10,400 Hardware 9. VLSI Technology Inc. San Jose 3,000 ' Hardware 10. Integrated Device Technology Inc. Santa Clara 3,875 Hardware 11. Atmel Corp. San Jose 2,950 Hardware 12. Measurex Corp. Cupertino 2,360 Software 13. Oracle Corp. Redwood Shores 21,376 Software 14. Sybase Emeryville 5,970 Software 15. Adobe Systems Mountain View 2,300 Software 16 Informix Software Inc. Menlo Park 3,996 Software 17 Cadence Design Systems Inc. San Jose 2,702 Software 18 Intuit Inc. Palo Alto 2,700 Software 19 Symantec Corp Cupertino 2,200 Software 20 VeriFone Inc. Redwood City 2,500 Software (1) Companies ranked by market capitalization. (2) includes lull -time employees only. (3) Revenue figures for software companies are for fiscal year 1995, and revenue figures for hardware companies are for calendar year 1995. (4) Market Capitalization figures are for July 1, 1996. Sources: San Francisco Business Times/ San Jose Business Joumal, 1996 Bay Area Market Fact Guide, September, 1996; Economic & Planning Systems, Inc. Economic & Planning Systems, Inc. t2/2/96 H. :45176alscl markettmedla lALLCOS.XLS Although computer software firms also seek inter - industry relationships, their tendency to focus on distinct technology niches often allows for more locational flexibility. It is also noteworthy that the spatial separation of various business functions within the information technology cluster is less common among the software segment of the industry. For the most part, firms within the software segment maintain most of their business operations in one place. b . Bioscience In contrast to the information technology cluster, the bioscience industry remains geographically concentrated, with large clusters of firms existing in very close proximity to one another in certain areas of the US. This is because many of the factors responsible for the emergence of the cluster, such as university research activity, still have a strong influence on the locational decisions of individual firms. Nevertheless, the most recent trends in the industry cluster have led to increased regional mobility, especially among the industry giants. The size and distribution of the bioscien e cluster varies depeudtng on how the indluskry is defined. However, based on measures such as number of firms, total employees, or R &D spending, the Bay Area maintains the largest concentration of cluster activity in the US, and by most measures, the world. Table II -7 (page 22) provides information on the regional distribution of biotechnology firms in the US, a significanrcomponent of the bioscience cluster.2 As shown, the Bay Area leads the nation with about 16 percent of the firms in the industry. Other important areas include New England and the New York Tri-State Area. The geographical distribution of biotechnology firms, both locally and nationally, is a direct result of the industry's technological and R &D underpinnings. Specifically, the industry owes its genesis to, and continues to draw tremendous support from, universities and medical schools with large R &D budgets. Thus, the concentration of biotechnology firms along the Peninsula and in parts of Alameda County is closely connected to the strong bio- chemistry and medical departments of Stanford, UC San Francisco, and UC Berkeley, respectively. Genentech of South San Francisco, one of the first and largest biotechnology firms in the world, for example, was founded as a result of spin -off technology developed at UCSF. Although the industry has evolved and matured significantly over the last ten years, its dependence on R &D, and on a highly trained workforce capable of carrying it out, remains critical. Other factors that help explain the tendency among bioscience firms to concentrate around related firms and institutions include their unique building space requirements and dependence on a specialized financial sector familiar with the industry's products and processes. For example, smaller firms often need to lease R &D space and borrow laboratory equipment from the larger companies in the field, which generally requires proximity. In addition, many founders of biotechnology fu>us are university professors who continue to hold teaching posts at local universities, rely on university laboratory equipment, and regularly employ graduate students. 2 Bioscience is a term used to describe industries and institutions affiliated with both the biotechnology and biomedical fields. Biotechnology describes firms who employ techniques that use living matter to improve plants, animals and microorganisms for specific purposes. The term biomedical industry describes technology -based companies with products designed for the medical markets. 20 Table H -6 Distribution of Industry Cluster Firms by City: 1995 Alameda NAS Market Study Cluster/ City Number of Identified Companies (1) Multi -Media Alameda 6 6 Oakland 4 9 Emeryville 2 San Leandro 7 Berkeley /Albany 28 Subtotal Environmental Technology Alameda Oakland Emeryville San Leandro Berkeley /Albany Subtotal .A 10 30 20 25 30 115 Bioscience 25 Alameda , : 25 Oakland 25 Emeryville 20 San Leandro 20 Berkeley /Albany 120 Subtotal Information Technology 70 Alameda 0 Oakland 9 9 Emeryville 60 75 San Leandro 45 Berkeley /Albany 340 Subtotal (1) Firm counts reflect the estimated number of non - retail focused establishments based on the sources listed below. Source: CDPRO, Select Phone Database; American Business Lists;Economic and Planning Systems, Inc. H: t6055na sa tda to tCL USTDI S.XL S Economic & Planning Systems, Inc. 12/2/96 Table 11-7 Regional Distribution of Biotechnology Firms NAS Alameda Market Study Location 1992 1993 1994 1995 Total Biotech Firms Nationwide 1,218 1,272 1,311 1,308 Percent Distribution Tier I San Francisco Bay Area New England New York -Tri State Area Subtotal Tier 1 Tier 11 Mid - Mantic San Diego 15% 15% 15% 16% 10% 14% 13% 14% 11% 11% 12% 11% 36 %. 39% 40% 41% 9% 8% Los Angeles/Orange County 6% Subtotal Tier II 23% Tier 111 9% 9% 8% :1 1 8% 8% ' 7% 5% 5% 5% 22% 22% 21% Philadelphia area 4% 4% 4% 5% Seattle area 4% 4% 4% 4% Texas 4% 4% 4% 4% North Carolina 4% 4% 4% 4% Wisconsin 3% 3% 3% 3% Subtotal Tier III 18% 18% 19% 19% Tier IV Illinois 2% 2% 2% 2% Ohio 2% 2% 2% 2% Iowa 2% 2% 2% - . 2% Georgia 2% 2% 2% 2% Colorado 2% 2% 2% • 2% Michigan 2% 2% 2% 2% Minnesota 2% 2% 2% 2% • Florida 2% 2% 2% 2% Subtotal Tier IV 15% 14% 14% 14% Other regions 7% 6% 5% 4% Source: Ernst & Young LLP, Economic & Planning Systems Economic & Planning Systems, Inc. 121296 H:16055nasaidalalCLUSTDIS.XLS The biotechnology cluster's high R &D activity, whereby companies are required to survive long periods without significant product revenues, creates a heavy reliance on venture capital and other specialized financing institutions. This is reinforced by the industry's early stage of development with a large amount of small, young firms focused on a product field that is not well understood by the traditional financing community. As a result, a specialized venture capital community, one that is familiar with the products, processes and requirements of biotechnology firms, is a critical component of industry growth. Venture capital firms prefer to be within easy same -day visiting distance of the firms they finance, reinforcing the tendency of bioscience firms to cluster. The public policy and regulatory environment of a particular area is also an important consideration for biotechnology firms. Larger biotechnology firms desire local officials that understand their unique industry requirements and maintain zoning or other land use regulations compatible with their R &D and /or manufacturing activities. Frequently biotechnology firms seek to locate in areas, such as South San Francisco, in which government officials have previous experience with their building and site configurations and have an established permitting process._ Industry incentives, such as R &D tax credits, tax exemptions for machine or equipment purchases, and assistance with real estate costs, de also desirable but riot'required. i) Bioscience Business Functions Because of the relatively young nature of the cluster, bioscience typically integrate business functions in one facility. Office related activities generally take place in the same location as the R &D or manufacturing activities. Although larger companies often have separate facilities for these activities, they are located in the same area if not adjacent to one another. This phenomenon is common among young industries in which the original founders still control the day -to -day operations of the firm without the support of a large administrative hierarchy. The relatively small size of most firms also helps account for the lack of functional separation within the industry. It is important to note, however, that as the biotechnology industry has matured, the spatial segregation of various business activities has also increased, especially among the industry giants. Chiron, Genentech, and Amgen for example, all have subsidiary offices that are separate from the original operations. In many cases, a shortage of appropriately zoned land for expanding activities has forced bigger firms to look elsewhere. However, the trend is also consistent with the cluster's increased focus on manufacturing activities. These activities tend to take place in locations where labor and land costs are lower. Genentech's move to Vacaville, for example, was prompted by a combination of the lower land costs in the Vacaville area, and the proximity to UC Davis, which has strong reputation in bio- chemistry. ii) East Bay Bioscience Trends Within the Bay Area, the bioscience cluster is well represented in the East Bay. As shown above in Table II -2, Santa Clara County contains the most bioscience employees, with San Mateo and Alameda Counties nearly tied for a distant second. However, as shown in Table II -8 (page 24) which presents the location and number of employees of the top 30 the BaArea ea are located in the Eat Bay, from Fremont of the top Hercules, bioscience eflecting a substantial t Bay Ar representation of smaller firms in this area. 23 Table 11 -8 Largest Biotech/ Biopharmaceutical Companies in the Bay Area NAS Alameda Company Location Employees Total 1 Genetech Inc. 2 Chiron Corp. 3 Bio -Rad Laboratories 4 Alza Corp. 5 Bayer Corp. 6 Humphrey Instruments 7 Nellcor, Inc. 8 Target Therapeutics 9 Gilead Sciences,. Inc. •;0 SyStemix, Inc. 1.1 'Incyte Pharmaceutical's, Inc. 12 Orthopedic Systems, Inc. 13 SteriGenics, Inc. 14 Sequus Pharmaceuticals Inc. 15 Athena Neurosciences, Inc. 16 Cygnus, Inc. 17 XOMA Corp. 18 Baxter Healthcare, Novacor Division 19 Matrix Pharmaceutical, Inc. 20 Roche Molecular Systems 21 Semex -Icon Medical 22 Endosonics Corporation 23 Boehringer Mannheim Pharmaceuticals 24 Somatix Therapy Corp. 25 DNA Plant Technology 26 Cemax, Inc. 27 Medasonics, Inc. 28 Cholestech Corporation 29 Ciba Corning 30 Neurex Corp. 31 Thoratec Laboratories Corp. South San Francisco Emeryville Hercules /Richmond Palo Alto Berkeley San Leandro Pleasanton Fremont Foster City PaIQ Alto Palo;Alto- Union City Fremont Menlo Park South San Francisco Redwood City Berkeley Oakland Fremont Alameda Fremont Pleasanton Fremont Alameda Oakland Fremont Fremont Hayward Alameda Menlo Park Berkeley 2,403 1,883 1,500 1,000 930 500 450 375 249 240 225 200 200 190 170 166 165 160 150 150 150 137 110 110 100 100 95 70 70 62 59 Source: San Francisco Business Times; Bay Area Bioscience Center; Economic and Planning Systems Economic & Planning Systems, Inc. 12/2196 H: 15176a iscimarketbnedia1ALLGOS.XLS In the East Bay, the biotechnology industry has a strong presence in Emeryville, Berkeley, and Alameda, with the latter concentrated at the Marina Village Business Park. Although many of the biotechnology firms in the East Bay owe their existence to and continue to rely on the R &D activities of UC Berkeley, they have expanded into neighboring cities such as Alameda and Emeryville due to development constraints in the City of Berkeley. Currently, there are about 125 biotechnology firms and 5,360 employees in Alameda County overall, as shown in Table 11-2 (pages 13 and 14). Table II -6 (page 21) shows how the industry is distributed within the inner East Bay market area. As shown, all of the cities have a significant number of biotechnology firms, led by Emeryville. The largest employers include Chiron of Emeryville, Bayer Corporation, Xoma Corporation of Berkeley, Humphrey Instruments of San Leandro and Roche Molecular Systems of Alameda (see Table II -8, page 24). Both Chiron and Bayer are currently undertaking new development activities that will significantly increase the cluster's presence in the East Bay. c . Environmental Technology It is generally more difficult to track the geografhic distribution of envitonmental technology firms because of the highly diverse nature of the industry cluster. However, California is generally recognized as the largest environmental technology market in the United States. Within California, the Bay Area has become a prime location due to factors such as public policy support, accessibility to local and worldwide markets, appropriately trained labor force, and high quality of life. In addition, the environmental technology cluster maintains strong linkages with the information technology and bioscience clusters. Within the Bay Area, Santa Clara has the largest number of employees in the environmental technology cluster, followed closely by Alameda County. The Silicon Valley firms are attracted by the pro - business and highly innovative climate of the Silicon Valley, the concentration of firms with environmental rernediation issues, and industry promotion by organizations such as the Silicon Valley Environmental Partnership and the Environmental Business Incubator in San Jose. For example, the City of San Jose has designated two areas, the Monterey Corridor and Berryessa, as Green Industry Districts that are particularly well suited for Green Industry (with a particular emphasis on recycling, product manufacturing operations)3. The City of San Jose provides the "Green Industry Districts" with expedited City permit process and eligibility, as part of the San Jose Enterprise Zone, for sales and use tax hiring credits, net operating loss carryover, construction- related tax waivers and loans. San Francisco has a concentration of engineering and consulting firms with global markets such as Bechtel and Dames and Moore. Engineering and consulting firms with international markets choose to locate in San Francisco for the Pacific Rim connections, access to headquarters of other global firms, access to a highly skilled labor force, access to an international airport, and finally access to all the amenities and support services associated with a metropolitan area. i) East Bay Environmental Technology Trends Alameda County has the largest representation of environmental technology firms in the Bay Area when measured as a percentage of total County employment, as shown in Table II -3 (page 16). Again, public policy factors and regional accessibility appear to have enhanced the development of firms in this sector. For example, Emeryville has a number 3 Green Industry in San Jose by the San Jose Office of Economic Development. 25 of environmental remediation and consulting firms, as well as several start -up companies. These firms were attracted to Emeryville due to its proximity to the Bay Bridge and other transportation networks, and a pro - business environment. In the case of start-up companies in this sector, key assets include availability of inexpensive warehouse space and access to researchers and student labor at UC Berkeley. However, as the office and industrial market matures in Emeryville and approaches buildout, small start -up firms may find it more difficult to afford space in Emeryville and may choose alternate locations, such as Alameda: The City of Berkeley actively encourages firms developing and using reclamation and resource recovery technologies, and has specifically courted firms that use recycled materials in their manufacturing processes. The City has successfully used the State - sponsored Recycling Market Development Zone (RMDZ) which offers low interest loans to firms that are developing or using "materials substitution" in manufacturing to attract and promote "resource recovery" firms in Berkeley. However, a survey of Berkeley businesses conducted by the City indicated that many of the founders of local environmental firms were UC Berkeley graduates who simply wanted to stay in the city after graduation. '1 An attractive work environment and the cache created by the presence of the University and other research institutions are also key attributes cited by environmental firms in Berkeley. West Berkeley in particular has a concentration of recycling and other environmental firms that were attracted by the availability of vacant or under - utilized parcels zoned for light industrial and mixed uses, available infrastructure, proximity to major rail and freeway transportation networks, and the City's Recycling Market Development program. The East Bay as a whole has the largest number of resource recovery and recycling companies in the Bay Area .4 Finally, the I -680 corridor in northeastern Contra Costa County has a cluster of environmental consulting firms with business throughout northern California. This location suits environmental consulting films due the availability of attractive office space in high - technology business parks and its convenient location accessible to the state governmental regulatory offices in Sacramento and clients throughout the Bay Area and Northern California. The distribution of environmental technology cluster by business function follows a similar pattern to other industries. Specifically, the office headquarters tend to be located in San Francisco, San Jose, and Palo Alto due to the availability of Class A office space, proximity to other headquarters offices, and proximity to international airports affording easy access to clients. Space - extensive uses and industrial activities tend to be located wherever there is available and affordable manufacturing and warehouse space, and a supply of vacant parcels with light industrial zoning that allow mixed use development. The environmental technology fiiuis tend to have many of the same needs as the other industry clusters. New firms need low -cost space and access to affordable business services, such as assistance with business plan writing, securing capital, and legal assistance with technology licensing, tax, and regulatory issues. Existing environmental firms in the region tend to expand when they perceive the local political community as being supportive of their needs, such as offering tax holidays and stream -lined permitting for development proposals. Low -cost loans and inexpensive flexible space, with plenty of parking and storage spaces in an a attractive working environment are also important factors. 4 The List of 25 Largest Recycling Companies in the Ray Area, Business & the Environment, Week of April 12 -18, 1996. 26 Selected interviews with environmental companies in northern California suggest that the most important locational criteria are listed below in order of importance • Good transportation network (including multi -modal capacity) • Location within 30 minutes to one hour from an international airport • Access to highly skilled labor force • Quality of life /pleasant lifestyle /ability to attract "talent" • Competitive rents/land prices • Proximity to customers /clients • Proximity to University expertise and access to shared R &D equipment/space • Short commute distances for employees d . Multimedia6 i) Film/Television Industry ,Many regions are interested in developing a .strong film and television industry, be• cause it 'provides desirable employment opportunities td the rtgion'slabor force, as well as indirect economic benefits to the regional economy. As a result, there is significant competition between regions for this industry. While the Los Angeles industry cluster retains a stronghold over the business side of the industry and is expected to remain the dominant cluster location, several segments of the industry are locating elsewhere, especially production and special effects. Emerging locations, such as 1) the Bay Area, 2) New York, 3) Vancouver, British Columbia, 4) North Carolina, and 5) Orlando, Florida; have all benefited from this trend. Vancouver, British Columbia and North Carolina are particularly noteworthy because their emergence as regional centers occurred without the draw of existing large media, entertainment or tourist- related economies. The Bay Area's comparative advantages include a diverse economy with a significant technology and arts presence, and its leading position in the development and application of digital technology to film and television production. The area's skilled labor force, leading educational institutions, quality of life, cultural and recreational activities, and good public transportation, are also important. Prior to the recent series of local base closures, availability of production facilities in the Bay Area was very limited. Because their closure, production shoots have been concentrated at bases which offer the large open -plan spaces that are required, including Alameda Naval Air Station, Treasure Island, Mare Island, and Hunter's Point. There are also no particular areas that dominate the different segments of the film and television industry, though San Francisco is frequently a popular option, if suitable space is available. Production facilities, special effects studios and production offices are located in San Francisco, the South Bay, the North Bay and the East Bay. The personal preferences of company founders and executives tend to play a key role in location decisions. Key companies in the Bay Area include Colossal Pictures, Twitching Image, and C/NET in San Francisco; Lucas Film, ILM, and Golden Gate Productions in the North Bay; Fantasy 5 Environmental Industry Market Niche Study by Economic & Planning Systems, Inc. in collaboration with Information and Design Associates, DRI /McGraw Hill, and Economic Competitiveness Group, August 1996. 6 Because of its unique attributes, the film and television industry are described separately from other multimedia firms throughout this report. 27 Studios, Pixar, and Tippett Studio in the East Bay; and Pacific Data Images in the South Bay. The film and television industry require a variety of support services, including equipment rental, skilled labor for set design and production assistance, catering services and access to a variety of supplies and parts for set design. Access to editing suites, and viewing facilities are also important. However, the companies in this industry segment make locational decisions based on the attributes of the region as a whole (i.e., the Bay Area) and are less concerned with the specific nature of subareas /cities within the region. These factors partly explain the dispersion of companies in the industry throughout the Bay Area. ii) Other Multimedia. Like the environmental technology cluster, the geographic distribution of multimedia firms in the US is not well documented due to its recent emergence and cross - cutting nature. However, New York, Los Angeles and the Bay Area are widely considered the industry's focal points because of their strong information technology clusters and entertainment communities. Although both New York and Los Angeles have stronger entertainment industries, the Bay'Area's innovative computer software and hardware sectors make it the 4 cluster's technological leader. As shown in Table II -3 (page 16), multimedia employment in the Bay Area is about 2.5 times the national average (compared to about 1.5 and 3.05 for New York and Los Angeles respectively). Within the Bay Area, the multimedia industry has a significant presence in San Francisco, the South Bay, the East Bay and Marin County. As shown in Table II -9 (page 29), the largest multimedia companies are dispersed throughout the Bay Area and primarily include companies in the product development and technology segments of the industry. The largest company, Adobe Systems, Inc. of San Jose has over 900 employees and about $600 million in annual revenues. In terms of total employment, Santa Clara County is by far the region's leader with an estimated 15,000 employees, followed by San Mateo and Alameda respectively (Table II -2, pages 13 and 14). It is important to note, however, that estimates of the number of multimedia companies in the different Bay Area submarkets vary depending on the source of data. As mentioned above, this is due in part to the recent emergence and cross - cutting nature of the cluster. Table II -10 (page 30) provides information garnered from a variety of publications and news sources that track multimedia firms in the Bay Area. As shown, the City of San Francisco has the highest spatial concentration of multimedia companies in the Bay Area, followed closely by the South Bay. Despite the concentration of multi -media in these areas, the East Bay has a substantial share of the industry, accounting for about 19 percent of the total number of filuzs. Although Table II -10 only accounts for the highly visible or identifiable multimedia firms, and thus may underestimate the actual number, it does shed light on how the cluster is distributed throughout the Bay Area. As shown, the bulk of enabling technology firms are located in the Silicon Valley area while authoring, design, and product development multimedia firms are disproportionately located in San Francisco. The East Bay, meanwhile, has a relatively equal distribution of all types of multimedia firms. 28 Product Types 0 TS t.0 C 0 CY) C CO LO crl c C 0 0. 0 - 0. q N. a; vi 4 cei N: t-, co CJ 0 0 0 0 V) o co 01 0 c0 "- C a 0 cl 01 (.0 o :(53-. c c 64 c 64. 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Fs as ccs „, a) Es) a) f2 a) cri cn 13 o a) 0 0 7i , a) 0)0) 0) C:$ = ..Y u) c c as cf) "c" as .r...- o_ �2E tic .0 (1) :I- al at 0 0- la aS CCI (t) ....... c E a) ) .0 8 E cri a) c a("71 0) ICI D 0 Tzt .0 co 0 03 c c -0 0 0) a) .— a) ...0 7-1 0 E I5 a) *E (D00 E ccti E .7.3 *5 < c asio E c) a 0 E (0 " a) o 0 -c-.1 co a) LI! 74: 0 c cp a) 0) aS 73 a) , _c o .8 .....a- ..a... . 0 -5 -0 .0 - 1-) 6 E 0.) c c) c • a c c co — --Ce) CI) • 5 •,....S 7:3 V E c\.1 (4- (4 0 0.) a, Q., eL o - :T5 ro _ ) '3 ..o z cu a) E 5 mc , al 0 •••-• > a (1) 0. H F..). E E Cl- ti) s- cl (...) 0 0 cz 2 _02 a) 8 (f) = (i) ... 0 E 1:3 8 co cd if); _E - 1— as 0 0 cr) LU A number of factors account for the distribution of multimedia firms throughout the Bay Area. San Francisco has proved popular as a location due to its large creative community, including a large number of skilled workers, sense of place, business services, and availability of flexible space in the South of Market and surrounding areas. The development of a cluster in San Francisco, along with the networking opportunities it presents, has further increased the multimedia presence in the area. The South Bay has attracted the majority of multimedia technology companies due to its major cluster of high - technology companies, and the resulting networking opportunities and support services for technology companies. The East Bay has developed an industry presence due to its proximity to San Francisco and Silicon Valley, its highly skilled labor force, its urban neighborhoods, and its quality of life. Marin County offers space in high end business parks, as well as proximity to San Francisco along with natural beauty and exclusivity. The size and level of maturity of a particular firm also appears to have played a role in their regional distribution. Large companies requiring high end office space will tend to locate in Marin County or in high end office parks in the East and South Bay. San Francisco, espe'cially'South of Market, is a more frequent location for small and nledium sized multimedia companies demanding flexible space. Expanding companies in need of affordable high quality space tend toward Alameda and Contra Costa Counties. Several other location -based criteria important to the site selection decisions of films in the multimedia cluster are as follows: • Multimedia companies require high quality telecommunications infrastructure. Companies demand fast connections to the internet, with an ISDN connection at a minimum. Proximity to fiber optic lines enhances communications speed. • Access to specialized subcontractors, for animation, 3D modeling, and filming, is desirable for many companies, though these subcontractors need not be in the same city. Several support services are also useful, including computer consulting, scanning, color copying, and other graphic arts services. • Retail, entertainment, and eating/drinking establishments or other meeting places are also desirable because they promote an environment conducive to informal networking. C . REAL ESTATE DYNAMICS OF INDUSTRY CLUSTERS 1 . Introduction The real estate dynamics of the selected clusters have important implications for their potential as future Alameda Naval Air Station tenants. This Chapter explores the economic, technological, and institutional factors that affect the type and amount of building space demanded by the firms within each cluster. Also provided is insight into the size and type of buildings or vacant parcels, financing arrangements, and marketing strategies that are likely to be well received by the industry clusters. The first section of this chapter focuses on the space utilization characteristics and requirements of each cluster. For example, it examines the office, R &D, industrial, and warehouse space requirements of each cluster and for the various segments within each cluster. In addition, this section explores such factors as the need for specialized equipment or facilities. 31 The second section of this chapter focuses on the economic and financial factors that influence the real estate requirements of the industry clusters. For example, it explores the pace and predictability of industry growth cycles and their relationship to the type of buildings supplied by the real estate community. It also looks at the average firm size and capital backing within each cluster, and evaluates their implications on the type of real estate product typically demanded in the marketplace. 2. Space Utilization Characteristics and Requirements The requirements and preferences of the firms in the selected industry clusters can vary within each cluster depending on the business function, technological focus, or stage of development of a particular firm. For example, larger more developed firms within each cluster tend to require at least some space in all of the major real estate product types: office, R &D, industrial, and warehouse. Meanwhile, smaller or emerging firms often can fulfill their building requirements with just one facility that provides flexibility for office, R &D, and production activities. Table II-11 (page 33) summarizes the building space preferences and requirements of the! industry clusters. The table is further described below with respect to each industry cluster. However, several general themes are worth mentioning here. First, the various real estate product types listed in Table II -11 generally correspond to unique business functions. Specifically, office space is primarily utilized as either headquarters space and /or as a location for business, administrative and marketing activities. The R &D -flex space is primarily utilized for product development and small scale production activities while light industrial space is used for manufacturing and assembly. Finally, warehouse space is used for such activities as equipment or product storage and as a distribution location. The strictly office or manufacturing and light industrial facilities shown in Table II -11 are primarily used by the larger, more advanced firms within each cluster. The smaller emerging firms tend to focus most of their resources on R &D and product development activities rather than office related tasks or mass production. Consequently, their building space requirements tend toward the R &D /flex category. Exceptions to this trend exist primarily with environmental technology firms. It is also worth noting that the industry segments within the information technology and multimedia clusters are more important determinants of the type of space required than is the stage of firm development. For the information technology cluster, firms within the hardware, software, and telecommunications industry segments exhibit important differences with regard to building preferences. Within the multimedia segment, the film and television industry have vastly different real estate needs than other multimedia firms. The unique space characteristics are further described below separately for each cluster. a. Information Technology The building space requirements of most firms in the information technology cluster are relatively conventional. Given the size and maturity of the industry, films in the information technology cluster are well represented in warehouse, R &D, manufacturing, and office real estate product types. In most cases, information technology firms can occupy these buildings without major retrofitting or specialized improvements. However, modern physical infrastructure capable of providing reliable supplies of water, 32 0 co 0 (0 dustrl, x 0)� cc 0 Industry Sector Minimal use 8 c 0 E o 0. o 0) c 0) co , E o C" to o rl 2. •v.; co. 'c oti < cc Lo 0 1° se >01 cr of o >0 EL3 co Ets.. o E 2-. 0 <0 Information Technology Minimal use Minimal use Occasional use Minimal use El 0 r4 0 .0 0 a 0 Established /Advanced Stage 5 2 0 '0 • a) x .0 a) > 8 D5 cc „ 0)0 o =" 0 en- 49 g E co. E o cr 2 c .0 73 (1)1= Minimal Use 1'03 0 EL co 8 ef 6 6- 6 g P. E c CT 0 05 •Er . M 2 f , , --a E . 0 • 0) .. 0 5. 01o. co ul .. a) 0 0 VI "0 cj) ••-• _o E m — . • 11) •0 O. >. > CD .01= -0 c •-• 5 -8 E E IDO. 0 cx. > -- 8 0- 8 5 ce E ID= o o 2 c 00 U7 in al cn o co a) ID CC E aE 030 Lr-- c s -E• as 0c ID E a'E 0 ca. (D 9. 5. .8 5. .0) 0 0 00 c -0 2t c c o g cti 010 co CC E cC E E 0. 0 CD ID CD 4-1 0 CD C CD — OdE F)) . C 2c 'E > .E a) c }- co 2 0) 0 c 0. -C ca w 00 wa) 15) c E w Established /Advanced Stage Source: Economic & Planning Systems, Inc. power, and telecommunications connectivity is a prerequisite. In some cases, more advanced telecommunication infrastructure is also required. Although the real estate requirements of information technology firms are relatively standard, there are differences within the information technology hardware, software, and telecommunication segments with regard to the real estate prototypes sought. These differences are further described below. i) Information Technology Hardware The computer hardware industry segment consists of companies involved in the production and distribution of computers as well as the input, output, storage, and other peripheral devices that accompany them. These include keyboards, position devices, scanners, and terminal displays, as well as disk, tape and memory devices. The large quantity of electrical components that are included in the information technology cluster, such as printed circuit boards and semiconductors, can also be classified within the computer hardware segment. Many of these products require significant manufacturing and assembly. x The firms contained in this industry segment tend to have significant capital investment requirements and are in need of enough space to house a large number of employees and equipment. Specifically, they often require R &D, manufacturing and /or warehouse facilities with plenty of parking and infrastructure amenities. Large amounts of power and special water systems are also crucial to some types of manufacturers, such as semiconductor producers. Not only are they concerned with the cost of these resources, they also seek assurance that supplies will remain ample and reliable (e.g., protected from brown - outs). Some assembly operations also have significant need to manage environmentally hazardous substances, such as chemicals used in the photoengraving and in the cleaning processes of wafers and circuit boards. ii) Information Technology Software The information technology software industry encompasses a diverse group of companies focused primarily on developing, auditing, and managing computer programs, operating systems or other applications that add value to computer hardware. They offer such services as data processing, software design, custom programming, systems integration, and recovery or security. Their building space requirements tend to be relatively flexible with a focus on R &D spaces, although there is variation depending on the size and function of the firm. Most software developers can be accommodated with a relatively small amount of space per employee and generally have lower capital investment requirements than hardware producers. Indeed, many start -ups in this industry segment actually survive the early years of operation in the founder's home. As they mature, software companies generally seek flexible office or R &D type space. Although the more established firms seek Class A office space, Class B or office flex space predominates the segment. Probably the most stringent requirement among these fines is the need for modern and reliable electrical power and telecommunications infrastructure. Conference and demonstration rooms are also important as is room for expansion. b . Telecommunications The telecommunications segment includes companies involved in the provision of telecommunications services and equipment. Telecommunications services include the 34 provision of telephone, wireless communications, and cable television connections. Telecommunications equipment, on the other hand, includes both network equipment, such as switches and transmission systems, and terminal equipment which is privately owned and attached to telecommunications networks. Although the same company can provide both telecommunication equipment and services, the space requirements associated with these two activities vary considerably. i) Telecommunication Services The recent deregulation of the telecommunications industry will have important implications on the size and number of service providers. Instead of one firm providing a complete set of telecommunications services, a given market area is likely to comprise of a number of firms providing a variety of differentiated services (e.g., cellular, telephone, cable, etc.). However, the building space requirements of these firms are relatively modest because their transmission activity depends primarily on franchise rights and individual consumer accounts rather than a specific physical location. For example, a number of transmission companies can utilize a single telecommunications "switch" which can provide connectivity to a medium size city. In many cases, the bulk of telecommunication service employees will be "in- the - field" service or repair technicians who require minimal building space beyond basic warehouse space. Thus, their primary real estate requirements will be for office space to accommodate marketing, billing, and other administrative functions. However, the service operators and dispatchers as well as the actual corporate headquarters need not be located in the service area. ii) Telecommunication Equipment In contrast to telecommunications services, telecommunications equipment firms often require large manufacturing, R &D, and distribution facilities as well as Class A corporate offices. This wide variety results from the size, diversity, and technology orientation of the industry. The daily operations include everything from designing state -of- the -art communications equipment, such as compact wireless communication systems or voice -to- data devices, to assembling more conventional consumer products, such as fax machines and telephones. The marketing, financing, and administrative functions associated with these operations often occur in Class A offices, due to the corporate nature of the industry. For telecommunication equipment assembly, manufacturing facilities on large parcels of land are generally required. c . Biotechnology The space requirements of the biotechnology cluster firms tends to be relatively specialized. Costly improvements or retrofitting are often necessary before conventional real estate buildings are suitable. This is especially true for R &D space, which is the predominant building type occupied by firms in the cluster. Specifically, many biotechnology firms conduct a large portion of their activities in "wet labs ", which have extensive hydraulic, air handling, and plumbing systems not found in typical buildings. For example, the drainage pipes may be made of special, non - corrosive materials, as opposed to the standard iron, with disposal systems that are separate from the public sewer system. Other unique building and operating characteristics of biotechnology R &D facilities are described below7: 7 In most cases these improvements must be financed by the building users directly rather than incorporated into lease rates through TI's (tenant improvements). 35 • Biotechnology firms frequently handle highly sensitive materials that must be protected from contamination and stored in special environments. Thus, R &D buildings often need rooms where temperature, humidity, and air supply are carefully controlled and monitored. Cold -room storage facilities are common as are clean rooms with sophisticated air filtering and /or water purification systems. Adequate space for the orderly placement of materials so as to prevent mix -ups between different drug product containers, and in- process materials is also important. Finally, floors, walls, and ceilings often need to be constructed of smooth, hard surfaces to allow for easy cleaning and aseptic processes. • Because many biotechnology activities involve highly toxic substances, R &D buildings often need to be equipped with special hazardous waste disposal and treatment facilities. Many biotechnology processes must meet extensive Food and Drug Administration or Environmental Protection Agency standards and requirements. Consequently, many older or even rehabilitated buildings are often inadequate. • Biotechnology R &D facilities depend upon high quality water, electrical power and other utilities. For example, a reliable supply of un- interruptable electrical power is often needed td accommodate large incubators, refrigerators,'computers,` and other equipment. Often surge control and back -up generators are necessary. • Many biotechnology processes rely on expensive equipment such as high powered microscopes or gene sequences. Not only do these instruments require clean, secure, and usually enclosed environments, they are also very expensive. Although small biotechnology firms usually cannot afford to purchase these instruments, they are critical to their R &D activity and direct access to them is vital. Buildings that cannot accommodate these instruments are usually inadequate. In addition to R &D space, some bioscience firms also require office, warehouse, and manufacturing facilities. These uses are particularly prevalent among larger bioscience firms that have entered the manufacturing phase of the product cycle. The manufacturing activities tend to have similar requirements as those described above with regards to storage, handling, waste treatment, and contamination. However, the office requirements are relatively standard and can generally be accommodated by conventional buildings. For smaller firms, manufacturing activities are less prevalent and office related activities generally occur within the R &D environment. d . Environmental Technology The environmental industry cuts across a wide range of industry sectors and depends on a variety of scientific and technological fields. It is clearly the most diverse industry cluster evaluated in this report. Consequently, environmental technology firms have different building space requirements depending on which segment of the environmental industry they identify with. They range from outside storage and light industrial uses to Class A office space. These requirements will also vary depending on the level of maturity or stage of development of the firms within each segment. For example, emerging stage firms generally require less office space and more warehouse /R &D space and expanding firms generally require more traditional office space. A summary of the building space requirements of various environmental technology industry segments is provided below in terms of their stage of development. 36 • Emerging Stage (start-ups). Emerging environmental firms typically range in size from 5,000- 20,000 square feet. Start -up companies developing new technologies generally require a mix of office and R &D space. Some firms lease warehouse space and perform their own tenant improvements to create a combination of lab and office space. Recycling fines require more traditional manufacturing space with large outside storage . areas to hold unprocessed glass, metal and paper waste materials, manufacturing facilities with concrete floors, drains, truck docks and high bays. Firms in the environmental testing and equipment segment require a combination of office, R &D and light industrial space with wet labs. Generally, for R &D and light industrial functions space needs will be in the range of 700 to 1,500 square feet per employee. • Expanding Stage. Expanding stage environmental firms typically range in size from 15,000 to 70,000 square feet. Expanding start -up companies require more office and meeting space, including conference rooms. Often firms will split off the manufacturing component to areas where rents and /or labor are less expensive. Environmental engineering firms involved in remediation and environmental assessment need: 1) Class A office space with parking and 2) large high - ceiling storage facilities for heavy equipment • Global Stage. Environmental firms in the multi - national category often have campus -style office complexes with millions of square feet. Rents will vary by location but will generally be in the Class A office space range. e . Multimedia For the purpose of this analysis the multimedia industry cluster includes film and television films as well as multimedia companies. Because the space requirements of these two industry segments are different, they are evaluated separately below. i) Film & Television The film and television industry demands a variety of space types, which vary by stage of production, scale of production and type of production. For example, the industry requires corporate headquarters for its major studios and production offices for all productions, including feature films, television shows, commercials and corporate videos. Production facilities are also required for sound stages, sets, equipment storage for shoots, editing suites, and special effects studios for post production. Future growth of the industry is expected to result in a significant increase in demand for production facilities of all sizes, space suitable for companies producing specific television shows, space for special effects companies, and space for independent producers and corporate video makers. The following list summarizes the space requirements of the industry segments that constitute the bulk of development activity in the film and television segment: • Production /Shooting. Sound stages and sets, the primary needs of a production facility, are usually located in large open plan buildings with high ceilings. Space used for these purposes include warehouses /industrial type spaces. • Specific Show Television Production. Television production companies producing specific shows often combine office uses, stages and sets into one building. These companies have flexible space needs and location requirements. 37 • Special Effects Companies. Special effects companies have flexible space and location needs. Larger companies, such as ILM and Pixar, occupy both office and warehouse buildings on the same lot. Smaller companies often combine all functions into one building. While special effects companies have strong regional preferences, they do not need not be located at the heart of the main industry centers, as their production is distinct from the other production work. • Corporate Video Makers/ Independent Producers. Corporate video makers and independent producers combine office uses with editing suites and equipment storage, and are flexible in terms of space requirements. Corporate video makers prefer to be located close to their clients, usually in or close to urbanized areas, and independent producers prefer to be located close to other companies in their segment of the industry. Requirements for parking vary depending on the building use. Production offices require standard office parking, while production facilities require large parking lots for trucks carrying equipment and materials. Production facilities also require on -site office space and • support space. Support space is required for equipment and m'atdrials storage. Security issues include corporate secrecy at production offices and equipment and materials safety at shoot and storage locations. ii) Multimedia Small, medium, and some large multimedia companies prefer "flexible" space where they can create their own "non- corporate" environment. The most popular type of flexible space is large open -plan buildings with high ceilings, which include industrial loft buildings, warehouses and low -end office space. This demand for flexible space has created new demand for previously vacant and underutilized space. Many of these companies prefer to be located in industry centers, such as San Francisco's South of Market district, where they can network and develop relationships with others in industry. Examples of companies occupying flexible space include product developer Rocket Science located in a refurbished warehouse South of Market, a collection of multimedia companies, including Postlinear Entertainment and ThinkFish, located on one floor of a warehouse /industrial building on Potrero Hill, and software developer Grand Vitesse, which recently purchased an old machine building South of Market. Larger multimedia companies frequently choose high -end, traditional corporate style office buildings, with light manufacturing divisions located either in the same business park, or in lower rent business parks in surrounding areas. Security is also an issue for most of these companies, and location in a more isolated high end business park allows for tighter security. They are less dependent on the networking and other benefits that a location close to industry clusters provides. Examples include Mindscape, located in high -end office space in the Roland Plaza Office Park in Novato; Maxis, located on the Sixth floor of a high -end office building in Walnut Creek; and Spectrum Holobyte, located in a high -end office building in Marina Village Business Park in Alameda. 3. Economic and Real Estate Dynamics The firms in the selected cluster industries possess unique economic and financial attributes that affect their interaction with the real estate community. These attributes include firm size, level of firm capitalization, predictability of growth cycles, and preference for owned 38 versus leased facilities. This section evaluates the impact of these factors on the real estate requirements of the industry clusters. a . Firm Growth The growth patterns of the industry clusters have important implications in terms of their relationship with the real estate community. In many respects, there is an inherent tension between building space demand of new or expanding industries and the ability of the real estate community to provide supply. On the one hand, individual firms want space that can be supplied on demand and is tailor -made to their specific needs. On the other hand, developers need rtna e o rt specialized a prefer t o build ructues hatre mor gen standardized, and thus adaptable to a wide variety of users. The dynamic and at times contrary relationships between expanding firms and the real estate industry are especially pronounced among the selected clusters because many are on the frontiers of their respective technology. fields. As a result, their growth cycles can be very rapid and unpredictable. A new innovation, an important regulatory decision, or a major new account or codtract, can result in eithetrapid expansion or Major contraction of a particular firm. When fluctuations in activity occur, a firm often has an immediate need to secure new space and /or to leave old space. However, a typical real estate build -to -suit project can take up to 24 months from conceptualization to completion. Thus, in the short run the real estate community can only accommodate the needs of rapidly expanding firms with the standing stock or inventory of space. Table II -12 (page 41) provides information on the historical employment growth of the industry clusters within the Bay Area from 1991 through 1995. As shown, all of the industry clusters except the computer segments within the information technology cluster exhibited positive growth rates over the entire period. The motion picture/TV, bioscience, and telecommunications clusters experienced particularly robust expansion in the Bay Area. For all of the clusters, the year -to -year growth rates are highly erratic. It is also important to note that the performance of all of the clusters was undoubtedly affected by the economic recession that plagued most sectors in the California economy during this period. As a result, the data may underestimate the typical growth patterns within these sectors. Among the industry clusters, computer hardware firms have the most stable and predictable real estate needs and are less dependent on public policy or regulatory factors. The recent deregulation of the telecommunications industry is a notable exception, although the trend has led to a need for more smaller, leased facilities, especially for telecommunications service providers, due to an influx of new companies who need space for marketing, billing and other activities. The performance of the rest of the cluster between 1991 and 1995 mirrored the conditions of the economy as a whole. The real estate community is also accustomed to the space needs of the information technology firms because of the cluster's size. This, combined a make the cluster more conventional amenable to space real estate t supply in the previous section, m relationships. The environmental technology and bioscience clusters operate on the other end of the spectrum in teims of their growth cycles and corresponding relationships with the real estate community. Because both clusters are relatively dependent on an ever - shifting regulatory environment and exhibit highly erratic growth cycles, long -term investments in real estate designed specifically to their needs can be a risky endeavor. Often the firms within this cluster satisfy their building needs by subleasing space from other firms that are 39 either expanding or downsizing. Speculative development to serve these tenants is very rare. The relatively robust growth rate within the clusters has been beneficial to meeting the needs of smaller less well capitalized firms. Increased turn -over as companies graduate into larger facilities has created "backfill" space available to smaller firms. Additionally, firms often co -share facilities and instruments with other biotechnology firms or piggy -back on larger firms and adjacent research institutions, although special precautions are often necessary to preserve security. In some cases, state or local development agencies have offered tax incentives or helped finance communal biotechnology laboratories. Although the multimedia industry is also prone to erratic growth cycles, and is a relatively small sector with little influence on the overall market, its relatively flexible space requirements and affinity with the information technology industry have helped accommodate industry growth. This is demonstrated by the tendency within the industry to re -use or retrofit old buildings formerly occupied by tenants from other sectors. b . Firm Size and Capitalization The average size of the firms in each cluster have important implications for the type of space required and their ability to finance build -to -suit projects. Not only do larger firms require additional space, often in several locations, they are also more likely to own rather than lease. Smaller firms, on the other hand, tend to rely on leased space marketed through the real estate brokerage community because they can not afford to develop their own buildings. Table II -13 (page 45) provides information on the distribution of firms within each cluster by firm size. For all of the clusters, the majority of films are small to medium size establishments, a trend that is mirrored by the distribution of firm size within the US as a whole. The multimedia cluster has the highest proportion of small establishments with more than 75 percent of the firms having less than ten employees. Thus, the data suggest that the bulk of firms within the industry clusters are likely to demand relatively small amounts of leasable space. Smaller firms are likely to be relatively price sensitive and willing to occupy less conventional building space such as converted warehouse or industrial buildings. As shown in Table 11 -13, the bioscience and information technology industries have the largest percentage of firms with 50 employees or more at about 15 percent and 9 percent respectively. Nevertheless, all of the industry clusters have a higher proportion of films with more than 50 employees than firms in the US economy as a whole. Medium to large firms such as these are often looking to own rather than lease and seek larger buildings and bigger parcels of land that offer room to expand. They also tend to be more interested in such factors as privacy, safety, parking convenience, and cooperative City officials. They are less dependent on inter - industry or university relationships. All of these factors suggest that opportunities for significant build to suit projects for these users at Alameda Naval Air Station may exist. 40 m C C Q) a) O C C th H O Industry Cluster O 00) M O Environmental co o o m c r O • O • CO LO r CO CO 'a' CO N O) o I-0 T . Qo ( T CO a) N 16 O u °'o � o (nom TO e O ° N o to o (0 O co (h CO ° N O) N O N r co ° ti ° cD "zt O N O 0O. Q) o �y.N T CO t±) CO N 'd' N O) 10 O) o o CO to N r CO .a. CO Motion Picture/ G O N y a) d CO M CO N CD Q) M O (..O O ° N T co r O O T o N O N r) N O O ° ((') O r,.. .r... C7 T m o O o N T O N N T (() r O 0 N' N i c a) a) >, a) 0 ) N ) `m u) O al m a) rn m ro rn o T .D a o 0 a) rn a) m N 0) Q) c T rn o) 0 O 12 O a7 a) 0 t a) a) O) C a) TO C C Fa L N "' L .-• •l Q) w a) 0 O) m i L T 'U U C a) a) co 3 al L6 `,,, a) o) co Q C u 0 W T (II' a) C a) 0 .0 a) O c O O 0 (tl 0 CO a) .0 a, a) O •o N () a) WW U U u- E c � 0 E ° u) a) 2 " = p v) Uf N U a) 0 . a) ca o- C U O .2' •? E a cj is E _o E m a) O O. N 0 C C E °) a) a. 0 a) V) O) c Qom) a) rn N O N Q) .c : = O r (.) (I r2- U N O ui E 0 m C C C as 0 oZ) U E O C V W 0 a) O O N U E O O U W a c O 0 (a a) a) E as Q a) U 7 O H:15176alsclmarketlEMPGRTH.XLS ing Systems, Inc. 1212/96 Economic & Pla c . Summary of Real Estate Requirements of Clusters For each industry cluster, unique features regarding firm size and financing ability are described below as they relate to space needs and development dynamics. i) Information Technology • The companies involved in the production of computer hardware and peripherals tend to be relatively large, capital intensive, and vertically integrated firms, and can generally afford to build or purchase their own facilities. Nevertheless, it is not uncommon for hardware firms to lease a portion of their space. Often the core R &D or production activity occurs in built -to -suit space with peripheral back- office or newly expanded activities taking place in leased space. • The software segment is probably the most dynamic and diverse segment within the information technology cluster. It includes some of the largest firms in the cluster, such as Oraclye a1nd Microsoft, as well as, the greatest number:pf small companies. , . Overall, however, average firm size tends to be relatively small with a large number of 4 start -ups, as well as specialty /niche companies. • The telecommunications industry consists primarily of large, well - financed, vertically - integrated firms. They can afford to build their own facilities and generally do. The large Baby Bells, for example, typically own large administrative offices in central business districts while also maintaining back - office space in more remote locations. ii) Bioscience • In Alameda County and in the US as a whole, the bioscience industry is dominated by a large number of relatively small, research- intensive firms. Although there are bioscience industry giants, such as Bayer, Genentech, and Chiron, more than 85 percent of the firms have less than 50 employees, as shown in Table II -13 (page 45). Consequently, most biotechnology firms require relatively small amounts of space (e.g., between 2,000 to 15,000 square feet). iii) Environmental Technology • Because of its diversity, the size and financing ability of environmental technology firms share attributes with each of the other industry clusters. Like the biotechnology cluster, for example, the dependence of environmental technology firms on an uncertain and ever- changing regulatory environment makes leased space the most prevalent real estate arrangement. The small firm size and high turn-over rate that characterizes the cluster also limits the built -to -suit activity within the cluster. Generally, only the well - established environmental technology firms with highly specialized space requirements choose to, or can afford to, own the buildings and land associated with their operations. iv) Multimedia • The film and television industry consists of a diverse set of companies with varying firm sizes and production requirements. As a result, real estate dynamics vary considerably. Although the major studios in Los Angeles dominate the industry, a 1994 study by the Monitor group found that about 85 percent of the 1,000 California companies involved in film and television production employed less than ten people. 42 • Several of the major studios, such as Warner Brothers and Disney, own lots with production facilities, editing suites, and space for storage and outdoor sets. Some also own office spaces for their corporate headquarters. Most of this space is build -to -suit, and these companies frequently lease out their production facilities to other companies. • The vast majority of companies in the industry lease space, due to future uncertainties about their future growth. With the exception of some of the major studios, production facilities are always leased as they are only required for the duration of the project. Some developers have been successful in developing speculative production facilities for short- and long -term leases, such as North Shore Studios in Vancouver, British Columbia. • Most small and medium sized companies prefer to lease space as they aim to expand their operations. Some medium sized companies are choosing to buy South of Market, due to the relatively high cost of leasing there. For example, the software company Grand Vitesse is purchasing an old machine building South of Market, rather than leasing space within it. More established large companies are more likely to purchase buildings, though many prefer the more flelcibie and•lower =risk strategy of leasing. • Build -to -suits are rare in the multimedia industry with the exception of some large companies. Product development companies, including Mindscape and Lucas Arts, both had buildings constructed for their needs. Mindscape is leasing its building with an option to purchase, and Lucas Arts owns its building. D . REAL ESTATE DEMAND PROSPECTS FOR ALAMEDA NAVAL AIR STATION This chapter synthesizes the findings of the previous chapters and evaluates the extent to which newly forming, relocating or expanding firms from the selected industry clusters can serve as future tenants at the base. Forecasts of future employment growth in Alameda County are presented and translated into demand for building space by type. Based on the industry and real estate dynamics discussed in prior chapters, and an assessment of the competitive position of Alameda Naval Air Station, a forecast is made of future potential demand by type of space generated by the selected clusters. As discussed in the forecast of demand for office, R &D, and industrial uses generally, it is important to keep in mind that the realization of the market potentials identified in this chapter depend importantly on a number of factors, including the real estate economics of developing the base, overcoming environmental and regulatory hurdles, an effective marketing program and local government support for the reuse of the base. The demand generated by the selected industry clusters has the potential to be a significant component of the market support for the reuse of Alameda Naval Air Station. How that potential will be realized in the context of the overall base reuse, and what its implications are for a science and technology center, per se, will be addressed in subsequent analyses. 43 1 . Regional Growth and Space Demand The type and amount of real estate demand generated by the industry clusters will be determined by the growth rates of the various economic segments within them. This section uses employment projections for each of the industry clusters to estimate the future demand for building space generated by each within Alameda County. This information is used in the subsequent sections to evaluate the proportion of this projected demand that will potentially be captured by Alameda Naval Air Station. a . Employment Growth The Association of Bay Area Governments (ABAG) provides employment forecasts by sector for 'every city in the Bay Area through the year 2015. For the purposes of this study, ABAG generated county-wide employment forecasts for each of the industry clusters, and several economic segments within them, are based on the Standard Industrial Classification (SIC) codes that best represent the clusters. The ABAG forecasts for Alameda County and the nine Bay Area clusters are summarized in Table II -14 (page 46). According to the ABAG projections, the annual average employment grovvtl rate of the" industry clusters all together in Alameda County between 1995 and 2015 is projected to be 3.2 percent, with the bioscience, telecommunications, and multimedia clusters growing the fastest. These growth rates compare favorably with the 1.4 percent average growth rate projected for all sectors in Alameda County. Overall, the projected employment growth in the industry clusters is expected to total about 37,000 jobs, accounting for about 20 percent of total job growth in Alameda County. b . Building Space Demand by Clusters The preceding employment growth projections have been used to forecast building space demand by estimating the space requirements of employees in particular industry segments. EPS (Economic & Planning Systems, Inc.) has applied Economic Development Department's Occupational Guide, which provides information on the distribution of employment by managerial, professional /technical, sales, clerical, service, and other categories to each of the industry clusters. This information is used as a basis for estimating space utilization in order to model the building space implications of ABAG's employment forecast. The results are presented in Table II -15 (page 48) and summarized below. Table II -16 (page 49) summarizes these forecast on a average annual basis. • The total demand for building space from the selected industry clusters in Alameda County is projected to equal about 18.6 million square feet between 1995 and 2015, for an average of 930,000 square feet per year. This equates to about 1,250 acres of land by 2015. More than half of this total demand is for R &D space. • The bioscience and information technology (computers and telecommunications) clusters are projected to generate the largest proportion of demand with 6.3 million and 7.6 million square feet, respectively. Again, more than 50 percent of this demand is expected to be for R &D space. • Across all clusters and for all real estate product types, building space demand is projected to increase through 2005, then to decline somewhat during the 2005 to 2015 time period. 44 _ C) in v ((Y O U ((s N ((S Q Cr) N U 11 (n C (U E a (0 y W "8 O (0 2 O as -n a) () L E I N R3 Q 70- cu N ►— cn Z (n n. E wo 0 T N m E O O E w a) U c N 0 O 0 V CO st C*) O T O T T 0 0 0 0 O (h 14,856 100% Alameda County Environmental Technol co N O 0 o O CO O o r O M N N M 21,044 100% Alameda County (O CO 0 c U a) C CD N 84,834 100% CO 111 0 CD CO N N Alameda County ( ' In �Y' z,-?. e- a, O T T 0 0 O rn �Y Q) N Alameda County 62,164 100% N rn All Industries 0 CD CO C] O 0 (O "a N0 N N o O N N Alameda County rn CO N 0 c E 0) N T (r) O C C C m a 0j U 0 0 O 0 w (0 0) • 7 N 0 C 0 N L Q) rn -o cri C E to m a.. 8 "E c E 'h E O m 0) C O c U c m m c E .5 cu E 0 c c m a� E U t m "5 17; (4) (n EE 0 U O U 4 'a U C co 0 U Table 11 -14 7mpioyment by Cluster in Alameda County and the Bay Area: 1990 -2015 AS Alameda Market Study New Avg. Annual Cluster /Area Employment (2) . Jobs Growth 1990 1995 2000 2005 2010 2015 1995 -2015 1995 -2015 Computers and Electronics ALAMEDA COUNTY 12,986 11,933 14,329 17,031 18,848 20,328 8,396 2.7% BAY AREA TOTAL 123,127 113,897 125,911 135,703 143,795 149,915 36,018 1.4% Environmental Technology ALAMEDA COUNTY 4,317 4,319 4,801 • 5,410 5,727 6,254 1,935 1.9% BAY AREA TOTAL 14,892 14,971 16,519 18,554 20,152 21,994 7,023 1.9% Bioscience ALAMEDA COUNTY 7,626 7,615 10,600 13,133 17,253 19,662 12,047 4.9% . BAY AREA TOTAL • 35,132 35,101. 42,359 50,102 58,188 -• 63,655 28,554 : -- 3.0% Multimedia y $. j ALAMEDA COUNTY 9,268 8,775 10,681 12,554 14,078 15,459 6,684 2.9% BAY AREA TOTAL 64,801 63,743 71,799 78,089 84,583 89,773 26,031 1.7% . Movie and TV Production - ALAMEDA COUNTY 5,414 5,225 6,012 7,100 8,028 9,146 3,921 2.8% BAY AREA TOTAL 35,482 37,002 42,491 47,340 52,303 57,343 20,341 2.2% lecommunications ALAMEDA COUNTY 9,355 8,558 •10,202 12,635 14,184 15,814 7,257 3.1% BAY AREA TOTAL 93,084 87,110 96,483 103,764 110,275 117,726 30,616 1.5% Total Cluster Employment ALAMEDA COUNTY 45,244 42,896 52,320 62,705 72,181 80,077 37,181 3.2% BAY AREA TOTAL 338,662 325,085 365,499 400,602 433,628 462,375 137,291 1.8% Total Employment (all sectors) ALAMEDA COUNTY BAY AREA TOTAL 620,980 608,770 651,500 712,420 770,440 810,320 201,550 1.4% 3,073,000 3,028,290 3,298,800 3,585,640 3,826,520 4,021,780 993,490 1.4% (1) Total cluster employment has been discounted by 10 percent to account for the estimated employment overlap between various clusters. (2) These employment estimates vary somewhat from ttiose presented in Chapter 11, due to different . definitions and sources used by ABAG, the California Employment Development Department and the Alameda Economic Advisory Board. Source: Association of Bay Area Governments; Economic & Planning Systems. 2 . Potential Capture by Alameda Naval Air Station The East Bay and Alameda are well positioned to serve tenants from each of the four target market clusters to varying degrees. • Bioscience firms have already chosen Alameda as a preferred location, first at Marina Village and more recently at Harbor Bay Isle. The source of technology and talent driving associated private enterprise in this sector is primarily UC Berkeley, and Alameda is well located to benefit from proximity to UC in the absence of closer available sites. • Information Technology firms, driven by more robust talent and technology sources, also have demonstrated a willingness to come to Alameda, and competitive sites of similar quality are not abundant. • Film Production activities are already occurring at Alameda Naval Air Station, and the site clearly has the potential to contin ie attracting these firms.. The site is also well- ' ' positioned to capture a substantial share of other multi -media activity willing to locate outside San Francisco and Silicon Valley. Environmental Technology fiaiis, particularly those involved in office and R &D functions also have demonstrated a willingness to locate in theEast Bay. Alameda Naval Air Station can be expected to capture a share of those firms, as well as some of the more industrial type uses, especially on an interim basis as they seek to take advantage of available low cost land and buildings. The following methodology was used in order to assess the likely degree of cluster - related development on the Alameda Naval Air Station site: • Assess supply characteristics. Alameda Naval Air Station represents about 10 percent of all developable land supply in the market area. This figure is an approximation that could vary depending on specific characteristics (e.g., development densities) of development proposals on other sites. • Assess demand characteristics. Employment projections indicate that the City of Alameda's employment growth among selected high- technology industries is expected to be higher than other cities in the market area. Specifically, ABAG projects the City of Alameda will capture about 20 percent of the local market area employment growth through 2015. • Employment growth within all of the selected clusters in the Alameda Naval Air Station market area is projected to be 12,800 jobs. The space required to house these jobs is estimated to be about 7.1 million square feet, including 1.3 million square feet of office, 3.5 million square feet of R &D, and 2.3 million square feet of industrial space. This development will consume about 510 acres of land in the market area through 2015, and result in average annual space absorption of approximately 395,000 square feet. 47 Table I1 -15 Projected Demand for Space by Clusters in Alameda County: 1995 -2015 NAS Alameda Market Study Projected Demand 1995 -2000 2000 -2005 2005 -2010 2010 -2015 Entire Period Computers Office 186,400 210,200 141,300 115,100 653,000 R &D 695,600 784,400 527,500 429,700 2,437,200 Light Industrial 344,300 388,200 261,100 212,700 1,206,200 Warehouse Distribution 57,100 64,400 43,300 35,300 200,100 Subtotal 1,283,400 1,447,300 973,200 792,700 4,496,600 Total Land (acres) 90 100 70 50 310 Environmental Technology Office 44,700 56,500 29,400 48,900 179,600 R &D 96,100 121,500 63,200 105,100 385,900 Light Industrial 83,800 105,900 55,100 91,700 336,500 Warehouse Distribution 40,800- . 51,600 26,800 44,600 163,900 Subtotal 265,500- 335,500 174,600 290,300 1,065,900 Total Land (acres) 20 .20 10 20 70 Multimedia Office 185,700 182,500 148,500 134,500 651,200 R &D 476,000 467,800 380,600 344,900 1,669,300 Light Industrial 253,100 248,700 202,400 183,400 887,500 Warehouse Distribution 47,000 46,200 37,600 34,000 164,800 -Subtotal 961,800 945,100 769,000 696,800 3,372,700 Total Land (acres) 70 60 50 50 230 Movie/TV Office 70,700 97,800 83,400 100,500 352,400 R &D 153,900 212,700 181,400 218,600 766,600 Ught Industrial 0 0 • 0 0 0 Warehouse Distribution 250,300 346,100 295,200 355,600 1,247,100 Subtotal 474,900 656,500 560,000 674,600 2,366,100 Total Land (acres) 30 40 30 40 140 Telecommunications Office 293,300 434,000 276,300 290,800 1,294,300 R &D 276,900 409,900 260,900 274,600 1,222,300 Ught Industrial 86,100 127,400 81,100 85,300 379,800 Warehouse Distribution 43,700 64,600 41,100 43,300 192,700 Subtotal 699,900 1,035,800 659,500 694,000 3,089,200 Total Land (acres) 40 60 40 40 190 Bioscience Office 199,000 168,900 274,700 160,600 803,100 R &D 1,156,800 981,600 1,596,600 933,500 4,668,500 Light Industrial 199,000 168,900 274,700 160,600 803,100 Warehouse Distribution 0 0 0 0 0 Subtotal 1,554,800 1,319,300 2,145,900 1,254,700 6,274,800 Total Land (acres) 110 90 150 90 440 • Total Projected Space Demand (1) Office 881,800 1,034,900 858,300 765,400 3,540,300 R &D 2,569,800 2,680,100 2,709,300 2,075,700 10,034,900 Light Industrial 869,600 935,200 786,900 660,200 3,251,900 Warehouse Distribution 395,000 515,500 399,600 461,600 1,771,700 Total 4,716,200 5,165,600 4,754,000 3,962,900 18,598,800 Total Projected Land (1) 320 350 320 260 1,250 (1) The total demand for both land and space has been discounted by approximately ten percent to account for the overlap between sectors. Source: Economic & Planning Systems Economic .1 Planning Systems, Inc. 112/76 '1 i 14:16055nasViresenAABSORP.XLS Table 11 -16 Projected Annual Average Space Demand from Clusters: 1995 -2015 NAS Alameda Market Study Category 1995 2000 2005 2010 Annual Average Demand to to to to Over Entire Period 2000 2005 2010 2015 Expressed in square feet of building space Office 176,400 207,000 171,700 153,100 177,000 R &D 514,000 536,000 541,900 415,100 501,700 Industrial 173,900 187,000 157,400 132,000 162,600 Warehouse 79,000 103,100 79,900 92,300 88,600 Total Square Feet 943,200 1,033,100 • E150,800 792,600 929,900 Total Land 68 74 68 57 67 Sources: ABAG; EDD; Economic & Planning Systems, Inc. Economic & Planning Systems, Inc. 12/2/96 H:16055naslpresen tMABS0RP. XLS • Estimate Alameda Naval Air Station Market Capture Rates. These capture rates are specific to the selected industry clusters, and represent the proportion of cluster industry space demand that could be captured by Alameda Naval Air Station. Alameda Naval Air Station will be very competitive for R &D uses based on factors including the locational attributes of the site, the likely rent levels required to support redevelopment, historical development patterns elsewhere in Alameda, image, amenities, and presence of available space. Associated high - technology office and industrial firms will be favorably inclined to locate at Alameda Naval Air Station, compared to non -high technology office and industrial users. In their market assessment report to ARRA, EPS estimated that capture rates for general R &D, office, and industrial uses were 20 percent for R &D; 10 percent for office; and 5 percent for industrial development. Analyzing specific high - technology clusters in this report, it is expected that Alameda Naval Air Station will capture a consistent level of R &D development (20 percent), but will likely capture higher percentages of office (15 percent) and industrial (1Cx.pefcent) development affiliated with high- technplogy clusters. • Estimate Development Potential. Table II -17 (page 51) summarizes development at Alameda Naval Air Station between 1997 and 2015. Based on the capture rates described above, EPS estimates that Alameda Naval Air Station could experience demand for about 1.1 million square feet by the selected cluster industries between 1997 and 2015. This total represents average annual absorption of about 63,000 square feet annually over the period, and would consume about 81 acres in total, or 4.5 acres per year. It is important to remember that these figures do not include other users of office, R &D or industrial space, nor the ancillary commercial uses that would support this core tenant group. Based on this analysis, it does not appear that the development of a formal science and technology center at Alameda Naval Air Station would have a measurable effect on the magnitude of development on the site. The fact that the Bay Area has a number of strong educational and research institutions, including nearby UC Berkeley, is an important asset that reduces the need for this type of institution at Alameda Naval Air Station. However, as a part of a specific set of marketing actions, ARRA could help to create a distinct identity by facilitating interaction among institutions and private films as one of its organizational objectives. This potential activity will be discussed in more detail in subsequent analysis. 3 Cluster Industry Demand Versus Demand From All Sectors Table 11-18 (page 52) presents a comparison of demand at Alameda Naval Air Station from the selected industry clusters to the demand from all sectors estimated in the broader market analysis. Cluster demand, at 1.1 million square feet, is estimated to represent about 33 percent of the demand for office, R &D, and industrial space at Alameda Naval Air Station. This share varies by building type, with industry clusters representing an estimated 26 percent of office demand, 33 percent of R &D demand, and 39 percent of industrial demand. 50 Table 11 -17 Square Feet of Building Space "` R &D industrial (1) 0 CC 1. 0. o cl co ir). o co ci 10 CO ; CV 0 - ;I. 01 0 1— CO 10 CT) C \I- 05 •:17 1— 0 0) r CO h: ` ,.. '; •• 1 0 CO 0 0 CV "zt d* T CO • 01 Cr) T. 0 10 LO "rcil c4▪ 5 't Cluster Employment Growth'in Market Area (2) Cluster Space Demand in Market Area 0 Average Annual - lf) CC) "I" 0 CY) CO Cd. CV CO Nr ▪ CO op 0) co CO 0 CV OC 0 01 0 1.0 LO Amount Captured by NAS: Total (1997 -2015) Average Annual 2 .1 : ▪ *C" 2 E cis -a.. E a) >, 0 o Ti. 1;5 E 2 • • a • U) a)(15 a. 0. c° C „Es (ntip Tti c.) 0) • •-E .0 0.0) 0 TdCrIC0 • r-: (j) .- 0 0 ." _• ■., C u) 11: «s • 0 (1) = t0g 0. c„cu ce< E -C CO -0 as cL2 U) Ct5 • -0 0 0, 0 „ co " T.3 (25) (T) a) E E as >, — >. o ° o ci) a 0 -a .7 E 4ts, E CL) a) (1) Cr) (CS *0- C 1 CV Source: Economic & Planning Systems. H:16055na s l Ares entW BSORP.XL S Economic & Planning Systems, Inc. 1212195 Table 11-18 Potential Building Space Demand At NAS Alameda, All Sectors and Selected High Technology Clusters: 1997-2015 NAS Alameda Market Study Market Segment Square Feet of Building Space Acres Office R&D Industrial Total © .32 FAR Alt Sectors Total (1997-2015) 744,400 2,113,200 592,950 3,450,550 247.5 Average Annual 41,000 115,600 32,050 188,650 13.5 High Technology Clusters • :Total (1997-2015) 193,950 702,883 236,13 1,126,945 80.8 Average Annual 10,775 39,049 12,784 62,608 4.5 Clusters as a Percent Of Alt Sectors Total (1997-2015) 26% 33% 39% 33% 33% Source: Economic & Planning Systems Economic & Planning Systems, Inc. 12/2/96 H.16055nasipresentICLSTWLK.XLS Part III. Assessing Competitive Advantage: How the East Bay Compares A . INTRODUCTION: BENCHMARK LOGIC Do Alameda County and the Alameda Naval Air Station site have the sources of competitive advantage needed to sustain and accelerate growth of science and technology based industries? This chapter addresses this question by assessing Alameda County and the East Bay as a location for technology -based business development relative to three competing California regions: Los Angeles, San Diego, and Sacramento. The purpose of benchmarking is to determine how well Alameda and its environs supply factors that are important for sustaining and nurturing further cluster development vis -a -vis the other California regions. This process of comparison, or "benchmarking" involves selecting a set of measurable indicators to track how a variable changes over time (i.e., improves or declines) or varies in development between geographic areas. The benchmarking process us4d in this report focuses onia geographic comparsop, primarily at one point in time. Some time -based comparisons are also made, where feasible. Seven categories of indicators have been selected for comparison, which correspond to elements that constitute the regions' economic infrastructure. These include: access to technology; adaptability of human resources; availability of financial capital; adequacy of mobility; advantage in telecommunication; acceptability of tax and regulatory environment, and; achievability of quality of life (see Exhibit III -1, page 54). Indicators in each economic infrastructure category were selected based on the following criteria: • The indicator measures the region's ability to supply factors that are relevant to the growth of most, if not all, of the targeted clusters. • There is availability of quantitative statistics through secondary sources. • The indicator has comparability across regions —i.e., the same phenomenon is being measured in all regions. • There are measures that show different patterns of variability —i.e., indicators that measure different . phenomenon to avoid redundancy. • There is diversity of measures, including indicators that are both aggregate measures (total supply or mass) and standardized measures (expressed, for example, in terms of percentages or amounts per capita)... Each category of economic infrastructure elements contributes to the current competitiveness and future growth potential of the four targeted clusters. The findings are intended to show the special strengths of Alameda County and the Alameda Naval Air Station site for continued growth of science and technology -based industry. This benchmarking indicates whether there are short - comings that need to be remediated to achieve a competitive position relative to competing regions. In addition, these indicators may suggest whether there are special assets that could be further leveraged to strengthen the region's competitive advantage that could be located in the county and at the Alameda Naval Air Station site. 53 Exhibit III -1. Economic Infrastructure Benchmarks and Indicators 1 . Access to Technology: The technology infrastructure comprises three levels of inputs that support industry: • Development: Levels of technology product development. The concentration and growth of technology -based industry in target clusters. • Deployment: Levels of suppliers to cluster industries. The concentration of primary suppliers to industry clusters. • Discovery: Levels of science and technology research that enable and support industry. This is measured by total federally sponsored research, total research related to the target industry clusters (universities and laboratories), and industry sponsored research at public institutions. 2. Adaptability of Human Resources • Preparation: Levels of human resources prepared for workforce. High school graduation rates, college preparation, technological capacity. • Advancement: Level of specialized skilled generated for marketplace. Doctorates produced in each cluster - related field. • Costs: Relative employee costs. Comparative salary and wages in technology occupations. 3. Availability of Financial Capital • Initiation: Access to venture capital. Proximity of venture finance organizations. • Expansion: Volume of regional investment. Venture capital investment activity in region. 4. Adequacy of Mobility • Surface: Ability to move within and through the region. Roadway measures. • Air: Ability to move in an out of the region. Schedule airline flights per week. • Port: Capacity to ship goods. Volume of port shipments per year. 5. Advantages in Communications • Switching: Ability to acquire digital services. Range of ISDN, ATM services. • Bandwidth: Ability to send data rich information. DS -1, T -1, Videoconferencing. 6. Acceptability of Tax and Regulatory Environment • Transaction Costs: Number and range of fees. Business license fees, utility taxes, city budget per resident, special development fees, nonresidential zone change fees. • Regulatory Complexity: Status of permitting systems. Regulatory reforms in place, underway. • Incentives: Programs to encourage industry development. Special zones (enterprise, revitalization, trade zones). 7 . Achievability of Quality of Life Housing: Ability to purchase or rent housing. Supply of single family housing, median prices, housing vacancy rate. • Health Care: Cost of care in region. Health care cost relative to US average. • Recreation: Diversity of opportunities. Golf, movie theaters, live performances, art museums and galleries. Crime: Levels of threats to residents. Violent crimes, violent crimes per 10,000 residents, property crimes, property crimes per 10,000 residents. Environment: Relative safety of environment. Ozone pollution levels, US smog area ranking, achieve US air quality standards or not. 54 B . BENCHMARK l: ACCESSIBILITY OF TECHNOLOGY This project focuses on the feasibility of establishing a science and technology center at the Alameda Naval Air Station. For this reason, the analysis of the region's technology portfolio, relative to competitors, is very important. While this portion of the report provides a comparative analysis, Part V will focus in greater depth on the technological competencies of the region. The underlying assumption guiding this analysis is that economic regions with high concentrations of science and technology -driven companies grow through improvement of the inputs used by those industries. There are three important measures that are closely linked together. First, one of the best measures of whether a region has the capacity to support high - technology industries is whether or not those industries have been growing in the region (the development indicator). Second, almost as important, is the growth of suppliers who form and locate in the region to support companies over time —a key attribute of clustering (the deployment indicator). Third, is the measure of the concentration of overall technological research activity in_the region (the discovery.indicator). The concentration of overall research in fields related to clusters is a measure of the potential for technological development; ate asset highly-valued by companies, but not necessarily indicative of technology company growth. While observers may view technology cluster growth as a following or a "trailing" indicator (e.g., company growth happens after other factors create an attractive environment), the logic of cluster development indicates that the concentration of industry itself is a resource that attracts other companies. Thus, as the history of the Silicon Valley demonstrates, the more companies locate there, the more attractive the region becomes to other businesses. Cluster companies share not only a similar labor market and skill base, but, through this "competitive sharing" of workforce, transfer technology as well as basic competencies. The benchmarking of Alameda County focuses on the following three comparative measures of development, deployment, and discovery. 1. Technology Development Tables III -1 through III -4 show the extent of cluster activity in each of the four regions and how well they performed during the period 1991 to 1994. The units of analysis in these tables are the four primary counties: Alameda, Los Angeles, San Diego, and Sacramento. Because the overall economies of these counties vary in size, the column labeled "Employment Concentration" is particularly important. The concentration factors measure the number of jobs in the cluster as a share of all private- sector jobs, and compares this ratio at the regional and national levels. In other words, it is a standardized indicator which mathematically accounts for variations in the employment base. a. Biotechnology Alameda County had approximately 5,270 biotechnology jobs in 1994. In comparison, biotechnology jobs numbered 20,630 in Los Angeles County, 12, 670 jobs in San Diego County, and 2,050 in Sacramento County. Between 1991 and 1994, biotech employment in San Diego grew by approximately 1,910 jobs —the largest net increase among the four regions. Sacramento County added about 870 net new jobs and Alameda County added about 500 new jobs. 55 In 1994, Alameda County had a concentration factor of 1.95 —which means that it had almost twice as many biotechnology jobs as one would expect for an economy of its size. This level of concentration was second to San Diego, with a concentration factor of 2.64. Both Los Angeles and Sacramento had concentration factors lower than 1.00, indicating that biotech jobs account for a smaller share of the region's economy than the share of biotech jobs in the national economy. Also noteworthy, Alameda has the highest average earnings ($50,820) of all four regions. This comparison is significant because average earnings serves as a proxy for value added and productivity. The high average earnings in Alameda suggest that the value added component of the region's biotechnology cluster is relatively larger and, concomitantly, Alameda employees have achieved high levels of productivity. San Diego has the second highest average earnings at approximately $45,000. Overall, the statistics for the biotechnology cluster indicate that San Diego County is the primary competitor region. Table III -Y. `Regional Comparison of the Biotechnology Cluster A Net Percent Employ. Payroll per Biotechnology Employ. Employ. Change Change Concen- Employee Cluster 1991 1994 1991 -94 1991 -94 tration Alameda County 4,780 5,270 490 10.4% 1.95 $50,820 Los Angeles County 21,190 20,630 -560 -2.6% 0.84 $40,350 San Diego County 10,760 12,670 1,910 17.7% 2.64 $45,000 Sacramento County 1,180 2,050 870 74.0% 0.63 $31,380 Source: ES202 Series, MIG, Inc. 1991, 1994 b . Environmental Technology Alameda County had approximately 3,680 environmental technology jobs in 1994. There were approximately 12,960 environmental technology jobs in Los Angeles County, while San Diego County had approximately 3,400 jobs, and Sacramento County had approximately 990 jobs. Between 1991 and 1994, almost 200 net new environmental tech jobs were created in Alameda County, making it the largest net increase among the four regions. In comparison, San Diego experienced a net increase of 110 jobs and Sacramento's increase was approximately 50 jobs. The number of environmental tech jobs in Los Angeles declined over this period. Both San Diego (2.14) and Alameda (1.92) have high concentrations of environmental tech jobs. Average earnings, however, were highest in Los Angeles ($47,200), compared to $44,470 in Alameda. Unlike the biotechnology cluster, the performance indicators for the environmental technology cluster are not uniformly strong in any of the competitor regions. Los Angeles County is a major competitor because of its large size, despite cutbacks in employment. On the other hand, San Diego's environmental technology cluster is only slightly smaller than Alameda's and has grown in recent years. 56 Table III -2. Regional Comparison of the Environmental Technology Cluster Net Percent Employ. Payroll Environmental Employ. Employ. Change Change Concen- per Cluster 1991 1994 1991 -94 1991 -94 tration Employee Alameda County 3,480 3,680 200 5.6% 1.92 $44,470 Los Angeles County 14,200 12,960 -1,240 -8.7% 1.01 $47,210 San Diego County 3,280 3,400 110 3.4% 2.14 $45,920 Sacramento County 940 990 50 5.7% 0.86 $39,870 Source: ES202 Series, MIG, Inc. 1991, 1994 c . Information Technology Alameda had approximately 17,880 information technology jobs in 1994, an increase of almost 700 over its 1991 employment level. Of the four regions, Alameda also has the highest employment concentration factor (1.91). 1994 employment in Los Angeles was approximately 89,800, but the County's information technology cluster lost more than one in five jobs (21.5 %) between 1991 and 1994. - The information technology cluster in San Diego is also significant, numbering some 28,930 jobs in 1994 with a concentration factor of 1.77. But net employment growth between 1991 -94 was a relatively modest 0.7% or 200 jobs. Sacramento County, on the other hand, added the largest number of net new jobs - 1,480- thereby reaching an employment level of 7,700 in 1994. Alameda has more jobs in information technology than in any of the other three clusters. The performance indicators shown in Table III -3 below, point to the region's strong competitive position. Sacramento is an up- and - coming competitor region. Despite its rapid growth, however, average earnings in Sacramento County remain almost $5,250 lower than average earnings in Alameda. The earnings differential reflect a lower wage environment that could be attractive to some segments of the information technology cluster. However, it also suggests that these two regions may specialize in different types of activities with higher value -added functions (such as design and R &D) concentrated in Alameda and lower value -added functions (such as assembly) concentrated in Sacramento. Table II1 -3. Regional Comparison of the Information Technology Cluster Net Percent Employ. Payroll Information Tech Employ. Employ. Change Change Concen- per Cluster 1991 1994 1991 -94 1991 -94 tration Employee Alameda County 17,180 17,880 700 4.1% 1.91 $47,200 Los Angeles County 114,350 89,800 - 24,550 - 21.5% 1.19 $45,270 San Diego County 28,730 28,930 200 0.7% 1.77 $42,600 Sacramento County 6,220 7,700 1,480 23.8% 1.14 $41,970 Source: ES202 Series, MIG, Inc. 1991, 1994 57 d . Multimedia Alameda had approximately 9,750 multimedia jobs in 1994. In comparison, Los Angeles had 140,710 jobs. San Diego had 16,880 jobs and Sacramento approximately 5,040 jobs. In Alameda, employment increased by some 1,310 jobs, while in Los Angeles, more than 11,500 net new jobs were created. Of the four clusters, multimedia was the only one in which Los Angeles' employment grew during this period. This surge in employment, combined with a high concentration factor (1.79) and average earnings ($48,280) make Los Angeles the foremost competitor region in multimedia. Table III -4. Regional Comparison of the Multimedia Cluster Net Percent Employ. Payroll Multimedia Employ. Employ. Change Change Concen- per Cluster 1991 1994 • 1991 -94 1991 -94 tration Employee , 'i Alameda County 8,440 9,750 1,310 15.5% 1.45 $44,820 Los Angeles County 129,200 140,710 11,510 8.9% 1.79 $48,280 San Diego County 15,540 16,880 1,340 8.6% 1.41 $37,590 Sacramento County . 5,030 5,040 10 0.1% 0.99 $31,520 Source: ES202 Series, MIG, Inc. 1991, 1994 e . Technology Development: Interregional Comparison of Clusters The cluster statistics in Tables III -1 through III -4 indicate that Alameda County is highly developed in all four technology clusters. Employment grew in all four clusters despite the fact that the years examined -1991 to 1994 encompassed a severe recession. Concentration factors in Alameda are high across the board, and if one considers that the county adjoins Silicon Valley, the advantages of agglomeration economies are compounded. Average earnings in Alameda tend to be higher than in the other three regions. In part, they reflect regional differences in cost of living, but they also indicate comparatively higher levels of productivity. Thus, the concentration of the four target clusters in Alameda County are a good indicator of both the overall accessibility of technology development resources in the region. 2. Technology Deployment One of the ingredients that is frequently missed in analyzing the competitiveness of a region as a location for industry development is its capacity to support incoming firms with the most current products and best practices available. The supplier infrastructure is a crucial intermediate layer of any industry clusters, and even more important to technology- driven clusters. A region that does not have an adequate supplier base will need to grow one or it may remain an economic island, having to bring in inputs required, and possibly never acquiring the customer - focused types of innovations in products and services that characterize a cluster - driven economic region. While there are several ways to measure a region's capacity to support technology deployment, the size of the supplier base is the most direct. Other measures that can be used include counting the number and size of firms 58 within the ranks of a cluster category using company data bases, and the rate of formation of companies within the family of sectors that belong to a cluster. Indicator: Size of Supplier Base (Table III -5, page 60) Rationale: Having an adequate base of suppliers in the region increases the competitiveness of a business cluster in several ways: by reducing the costs of finding suitable suppliers, increasing the likelihood of finding suppliers who can provide specialized inputs or manufacture customized parts and components, and increasing the number of communication linkages which facilitates the diffusion of best practices within the cluster. Comparison: Alameda appears to have a healthy base of suppliers in all of the clusters, where "healthy" is defined as a balance between suppliers and final producers which is comparable to the region identified above as being the strongest competitor. Having the highest proportion of suppliers is not necessarily a desirable situation. For example, an estimated 87% of the biotechnology cluster in Sacramento is composed of suppliers, largely because employment in the industries which actually manufacture finished biomedical products is, quite small. ' 3. Technology Discovery In recent years regional economic strategy has stressed the importance of sources of research as a potential asset for accelerating technology -based cluster growth. There is no one indicator that best measures how well the regional institutions and their research activities help seed and attract technology -based industries. Historical analysis of regions, such as the Silicon Valley, suggest that regional institutional culture and the policies that formally and informally underlie them have more to do with capturing the economic benefits of technology than the actual levels of technological activity. None the less, the level of overall basic and applied research and development activity, as well as specialization in cluster - related fields, is perceived to be an important, positive factor in the attraction and location of high technology business by most companies. These levels of activity indicate a resource that can be tapped by regional companies, whether through recruiting graduates, through collaborative R &D initiatives, or licensing of technological discoveries. The key measures indicative of comparative differences used here are overall federal disbursements to universities and colleges for science and engineering, specific expenditures in cluster - related fields, and industrial research sponsored at regional institutions. 59 Table I1I -5. Size of Supplier Base Los Sacra - Alameda Angeles mento San Diego County County County County Biotechnology (a) 1991 Employment 1,700 9,330 1,080 4,590 1994 Employment 2,340 9,200 1,780 5,630 Suppliers % of Cluster Total 44.4 %* 44.6% 86.8% 44.4 %* Environmental Technology (b) 1991 Employment 430 2,080 270 800 1994 Employment 540 1,860 240 960 Suppliers % of Cluster Total 14.6 %* 14.4 %* 24.2% 28.2% Information Technology (c) 1991.. Employment 11,860 45,810 5,080 15,330 . 1994 Employment 11,730 38,73Q 5,950 s It6,760 Suppliers o of Cluster Total ` 65.6 %* 43.14 77.2 %* ' 57.9 % *' Multimedia (d) 1991 Employment _ 3,880 57,320 2,780 6,420 1994 Employment 4,640 49,840 2,940 7,270 Suppliers % of Cluster Total 47.6 %* 35.4 %* 58.3% 43.0% * Alameda compared to the strongest competitor regions, see discussion related to Tables la -ld. (a) Supplier SICs for Biotechnology: 3559, 3663, 3679, 3826, 8071, 8731 (b) Supplier SICs for Environmental Technology: 3821, 3826, 8731, 8734, 8999 (c) Supplier SICs for Information Technology: 3559, 3671, 3672, 3674, 3676, 3677, 3678, 3679, 3695, 3699, 5045, 5065, 7371, 7378, 7379, 7389, 8711, 8731, 8999 (d) Supplier SICs for Multimedia: 2752, 2759, 3861, 5043, 5065, 7334, 7336, 7371, 7379, 7389, 7819, 7822, 7829, 8711, 8999 Source: Employment data from the ES202 series compiled by MIG, Inc. Indicators 1 and 2: Federal Disbursements to Universities and Colleges for R & D and for Science and Engineering (Table I1I -6, and Table 111 -7, page 61) Rationale: The federal government is the largest single source of funds for basic research in the U.S. In turn, basic research performed at the nation's universities has spawned many of the platform technologies that have enabled and advanced the four clusters considered in this study. Comparison: Alameda, as part of the larger Bay Area, has access to tremendous assets for technology development. In FY 1994, Federal science and engineering disbursements to Bay Area institutions were approximately $704 million. The Los Angeles metro region's allocation was two- thirds as much of the Bay Area's total, San Diego received 35% as much, and Sacramento 15 %. Total R &D expenditures by Bay Area institutions were $345 million, slightly under R &D expenditures by Los Angeles institutions ($412 million). R &D expenditures by San Diego and Sacramento institutions were $200 million and $144 million respectively. 60 Table III -6. Federal Disbursements to Universities and Colleges for Science and Engineering, FY 1994 (Dollars in thousands) Total Research and development Facilities for R &D and instruction Fellowships, traineeships, training grants Other support Alameda Los Angeles 703,990 529,302 , 631,619 464,574 6,481 4,324 43,868 22,151 22,022 38,253 Sacramento San Diego 104,100 248,226 98,856 229,715 206 3,405 4,124 11,870 914 3,236 a Includes institutions receiving at least $1 million. Source: National Science Foundation, "Survey of Federal Support to Universities and Colleges" FY 1994 x Table 1II -7. Total R &D Expenditures at Universities and Colleges, 1994 (Dollars in thousands) Bay Area UC Berkeley UC San Francisco Total San Diego UC San Diego San Diego State University of SD Total Los Angeles UC Los Angeles Univ. of S. Cal. Cal Inst. of Tech. Claremont Grad. CSU Long Beach Total Sacramento UC Davis Total National Ranking 1987 1994 13 175,274 289,632 11 169,436 312,393 344,710 602,025 7 183,047 331,901 147 16,973 29,309 374 1/ 641 200,020 361,851 14 188,831 279,869 26 134,995 207,275 54 86,565 127,946 338 1,367 1,229 260 3,822 4,756 411,758' 616,319 23 143,798 230,147 143,798'' 230,147 % change 65.2% 84.4% 74.6% 81.3% 72.7% 80.9% 48.2% 53.5% 47.8% - 10.1% 24.4% 49.7% 60.0% 60.0% 1/ Not Reported Source: Academic Science and Engineering: R &D Expenditures Fiscal Year 1994, National Science Foundation, Table B -32 61 Indicator 3: R &D Expenditures at Universities and Colleges by Field, 1994 (Table 1II -8, below) Rationale: The relative difference in research funding at universities and colleges by field indicates the scale of activity and, indirectly, leadership of regional institutions, which is an important attraction factor for cluster - related industries. Comparison: Alameda County has access to the strongest concentration of life sciences research capabilities among the three comparison regions, if San Francisco is included ($435 million in FY 1994). The Los Angeles area is second ($321 million) and Sacramento area third ($200 million) and San Diego fourth ($172 million). In environmental sciences San Diego is the leader, if the Scripps Institute is included ($103 million) by a very wide margin. The Los Angeles area is second ($40.6 million), East Bay third ($4.5 million), and the Sacramento area fourth ($1.3 million). In engineering Alameda County ranks second, but has the highest single concentration of R &D at UC Berkeley ($61.6 million), with Los Angeles totaling $79.5 million). In math and computer sciences, Los Angeles has a strong, lead ($50 million) in concentration over San Diego ($14.3 million), the East Bay ($4.81mlllion) and Sacramento ($1.7 million). Table 1II -8. R &D Expenditures at Universities and Colleges by Field, 1994 (Dollars in thousands) Institution Environ- Math & mental Life Comp. Physical Sciences Sciences Engineering Sciences Sciences Total Bay Area UC Berkeley 4,466 122,182 61,654 4,836 59,996 253,134 UC San Francisco 0 312,393 0 0 0 312,393 Total 4,466 434,575 61,654 4,836 59,996 565,527 San Diego UC San Diego 102,266 156,724 15,806 13,542 35,450 323,788 San Diego State 533 15,421 2,356 775 1,436 20,521 Total 102,799 172,145 18,162 14,317 36,886 344,309 Los Angeles UC Los Angeles 14,130 178,014 29,544 8,291 24,069 254,048 Univ. of S. Cal. 11,591 117,145 26,861 35,013 7,014 197,624 Cal. Inst. of Tech. 14,850 25,670 23,093 6,625 54,539 124,777 Total 40,571 320,829 79,498 49,929 85,622 576,449 Sacramento UC Davis 1,331 199,638 14,709 1,730 8,361 225,769 Total 1,331 199,638 14,709 1,730 8,361 225,769 1/ Excluding Psychology, Social sciences, and Other sciences Source: Academic Science and Engineering: R &D Expenditures Fiscal Year 1994, National Science Foundation, Table B -39 62 Indicator 4: Industry Sponsored R &D at Universities and Colleges, 1994 (Table III -9, below) Rationale: The amount of industry sponsored R &D at universities and colleges is indicative of the degree of openness and interactivity between universities and business. While a significant amount of faculty consulting takes place during their free time, universities are working towards greater capacity to work collaboratively with industry. Comparison: While information on industry sponsored research is not detailed, data indicates that the East Bay and San Francisco together receive the highest levels of industry sponsored R &D among the comparison regions. Although on an institution to institution level, UC campuses are reasonably close in the revenues they receive, the Bay Area is more active, as reported data show. However, the levels of expenditure are very low relative to the total R &D levels from federal sources; and are very low relative to what industries expend on their own R &D.. Relative to other universities, those in the East Bay rank relatively low, 29th and 37th in levels of industry.: sponsored R &D. There is definitely an opportunity for enhancing interaction with business. Table III -9. Industry- Sponsored R &D Expenditures at Universities and Colleges, 1994 (Dollars in thousands) Institution Bay Area UC Berkeley UC San Francisco Total San Diego UC San Diego San Diego State Total Los Angeles UC Los Angeles Cal. Inst. of Tech. Total Sacramento UC Davis Total Ranking 1994 Expenditures 29 37 46 183 24 96 64 . Source: Academic Science and Engineering: R &D Expenditures Fiscal Year 1994, National Science Foundation, Table B -38 12,547 10,977 23,524 9,764 1,272 11,036 13,394 4,947 18,341 7,423 7,423 63 Indicator 5: R &D Expenditures at University - Administered Federally Funded R &D Centers (Table III -10, below) Rationale: In an era in which defense spending is declining and national laboratories are downsizing, the R &D capabilities of national laboratories represent a potential source of technological expertise, intellectual property and skill that may provide an advantage to a region that is able to harness them. Few national laboratory regions have high - technology industry bases. However, the existence of the technology assets of the laboratories could be construed to be a resource for industry, if not immediately, then perhaps over time. Comparison: The East Bay has the state's highest concentration of university administered national laboratory R &D expenditures (just under $1.2 billion FY 1994) at Lawrence Berkeley and Lawrence National Livermore Laboratories. If Sandia California is included, the East Bay's laboratory assets rise by almost another $200 million. Other laboratories in the South Bay Area, Ames Laboratory and Stanford Linear Accelerator, add to this regional base ($156 million FY 1994). The East Bay laboratories are strong in engineering, physical sciences, and math and computer sciences. In the Los Angeles area, the Jet Propulsion Laboratory (JPL) is the core of.the second largest center in the state (over $1.05 billion FY 1994). JPL'has lower expenditures in physical sciences but is the highest by far in environmental sciences, math and computer sciences. Table III -10. R &D Expenditures at University- Administered Federally Funded R &D Centers, by Science and Engineering Field, Fiscal year 1994 (Dollars in Thousands) Institution Life Sciences, Psychology, Environ- Math & and Engi- Physical mental Computer Social Total neering Sciences Sciences Sciences Sciences Bay Area Lawrence Livermore 904,800 300,064 467,721 21,859 98,762 16,394 National Laboratory Lawrence Berkeley 273,000 11,929 187,692 15,648 3,558 54,173 National Laboratory Total 1,177,800 311,993 655,413 37,507 102,320 70,567 South Bay Stanford Linear 124,421 0 124,421 0 0 0 Accelerator Center Ames Laboratory 31,993 6,117 21,410 0 4,466 0 Total 156,414 6,117 145,831 0 4,466 0 Los Angeles Jet Propulsion 1,049,345 431,798 73,569 107,219 436,759 0 Laboratory Total 1,049,345 431,798 73,569 107,219 436,759 0 64 C . BENCHMARK 2: ADAPTABILITY OF HUMAN RESOURCES The availability of human resources is important to industry development, but the adaptability of human resources to the needs of specific industries is a characteristic of regions with technology -driven industries. The adaptability of human resources refers to the capacity of a region's education and training infrastructure to prepare workers with basic skills, as well as to produce workers with the advanced capabilities that are needed specifically by regional industry clusters at different levels. The future supply of skilled workers is clearly a central concern of industry as they seek regions for location. This is where output volume and quality of graduates of education and training institutions are important measures of regional capacity. However, companies are also initially concerned with the existing concentration of skilled workers in the economy. As many companies have discovered, the higher the concentration of similar industries (e.g., competitors or related firms) the more likely a company can recruit workers with appropriate skills. While many companies clearly prefer to hire new employees directly out of university (particularly for R &D related jobs), companies still rely on the existence of a significant amount of lateral mobility. of workers in their labor market over time. While this lateral mobility has declingd in high .technology industries with the introduction of vesting of pensions and stock options over 'an extended time period, workers still move in and out of'tethnology companies within a region during their careers. This may be due to defense downsizing or economic cycles within an industry. As the East Bay is benchmarked to competing regions, the concentration of workforce skills is already noted as one important advantage (See Technology Development, page 55). However, the capacity of the region to continue to produce the range of skills needed by industries in the technology - driven clusters remains a key indicator of competitive advantage. 1. Skills Preparation In an era driven by technology, short product development cycles, zero defects production, and just -in -time delivery, a region must be able to prepare workers whose basic skills enable them to become an integral part of the workforce of their region. For this reason, simple measure of the performance of the regional education and training infrastructure are indicative of whether industries are well served or must introduce new training even to start workers in their jobs. Indicators offered here include high school graduation rates, college preparation, and technological capacity. Indicator 1: High School Graduation Rate (Table III -11, multiple indicators, page 66) Rationale: The starting point for developing a high - technology workforce is a strong K- 12 education system which teaches basic skills. The high school graduation rate indicates what proportion of the student population completes this basic formal training. Comparison: For school year 1994 -95, Alameda County had a graduation rate of 82.7 %. San Diego County lagged by 1 percentage point (81.7 %). Approximately three - quarters of the seniors in Sacramento County graduated, while Los Angeles County's graduation rate stood at 70.4 %. Indicator 2: College Preparation (Table III -11, multiple indicators) Rationale: Most of the jobs in the targeted clusters require some level of post- secondary education or training. Job candidates must demonstrate command of technical knowledge and the ability to engage in critical analysis and problem solving—skills that are developed in college -level courses which stress theoretical, as well as empirical, understanding. The 65 college preparation indicators measure the extent to which the region has readied its student population for more advanced studies. Comparison: A higher percentage of seniors took the SAT in Alameda County (44.0 %) than in any of the comparative regions. The second highest percentage was found in San Diego County (42.6 %). Sacramento County had the lowest percentage of senior SAT takers. But although a smaller proportion of seniors take the SAT in Sacramento, those that do tend to score relatively high. Sacramento had the highest average combined SAT score (912) compared to an average combined score of 903 in Alameda County and 905 in San Diego County. While Alameda and San Diego have lower average SAT scores, about 24% of the exam takers in each of these regions scored above the U.S. mean. In Sacramento and Los Angeles, only 19% and 16 %, respectively, scored above the U.S. mean. Indicator 3: Technological Capacity (Table III -11, multiple indicators) Rationale: Computer competence anq utilization of rapidly changing technologies has become a preregilisite for productive and bompetitive careers in m4any high - technology' industries. An indicator of the extent to which schools have access to state -of- the -art technology is the prevalence of Internet hook -ups. Comparison: Of the three regions for which data are available, the percentage of school districts connected to the Internet ranges from Alameda (78 %) to Sacramento (63 %). Table III -11. Educational Achievement and Quality of Educational Resources Alameda Los Angeles Sacramento San Diego High School Education High school graduation rate (a) 82.7% 70.4% 74.9% 81.7% College Preparation Percent of seniors who took SAT 44.0% 37.2% 32.1% 42.6% Average combined SAT score 903 849 912 905 Scores above U.S. mean 24.1% 16.3% 19.4% 24.2% Technological Capacity School districts w/ Internet (b) 14 (78 %) 57 (70 %) 10 (63 %) N/A Schools with Internet connection —250 —450 —125 N/A (a) This and the next three statistics are for school year 1994 -95 (b) The number of school districts in each county (and percent of total) with Internet connections, 1996 (prior to NetDay `96 which took place in October 1996) Source: California Department of Education, Research, Evaluation and Technical Division, "High School Performance Report, 1994 -95 "; Places Rated Almanac, 1993; Information received from the Departments of Education in each county. 2. Skills Advancement One of the crucial indicators of the capacity of a region to support and enhance the competitiveness of regional industries is its capacity to produce advanced skills. Certain regions are noted for their production of graduates with advanced skills, whether it is in 66 engineering, life sciences or business. World class companies within clusters fight for their share of the top graduates of regional institutions. While they cannot satisfy all their needs from the annual crop of graduates in the region where they may be located, the relationships between companies and the graduates of institutions of higher education constitute a strong bond that helps retain and grow business activity. For this reason, one simple indicator is the number of graduates from regional institutions, particularly in the fields pertinent to technology -driven cluster interests. The number of graduate students in science, engineering and health fields are shown in Table III -12 below. Table III -12. Graduate Students in Science, Engineering, and Health Fields, 1994 Total All Fields Science and Engineering Total Science Engineering Health Fields Alameda County San l?raincisco Sacramento Los Angeles San Diego .6,243 3,478 .3 3,642 19,880 4,948 5,688 2,367 3,499 16,816 4,021 4,115 ;.2,287 2,583 11,888 3,296 1,573 80 916 4,928 725 • 555 1;111 143 3,064 927 Indicator: Number of Doctorates Conferred (Table III -13, page 68) Rationale: The presence of sizable Ph.D. programs indicates the availability of skilled human resources that are important to technology -based clusters, such as research faculty (who often serve as industry consultants), library resources, and specialized testing facilities. The flow of newly graduated scientists into the workforce, of which Ph.D.s represent the segment with leading .edge knowledge of scientific principles and practices, is a crucial resource of technology - driven companies. In this respect, the size of doctoral programs may also serve as an indicator of Technology Discovery (see page 59). Comparison: The Bay Area exceeds the other regions in the number of Ph.D.s conferred in three technological areas: information technology, environmental technology, and biotechnology. Multimedia differs from the other three in that it does not draw as heavily from formal science and is counterbalanced by artistic and design inputs. 67 Table III -13. Number of Doctorates Conferred, 1995 Los Alameda Angeles San Diego Sacramento In Fields related to: (a) (b) (c) (d) Information Technology (1) 258 210 44 19 Multimedia (2) 43 43 15 3 Environmental Technology (3) 134 73 15 21 Biotechnology (4) 204 152 79 150 Fields included: (1) Information technology — Electrical Engineering, Mathematics, Computer Science (2) Multimedia— Computer Science (3) Environmental Technology —Civil Engineering, Chemical Engineering, Earth, Ocean & Atmospheric Sciences (4) Biotechnology— Biological Science, Agricultural Science Institutions included: (a) Alameda —Santa Clara University; Stanford University; University of California- Berkeley; University of California -San Francisco (b) Los Angeles— California Institute of Technology; Claremont Graduate School; University of California -Los Angeles; University of Southern California (c) San Diego — Research Institute of Scripps Clinic; San Diego State University; University of California -San Diego (d) University of California -Davis Source: National Science Foundation, Science Resources Survey (SRS), "Survey of Earned Doctorates" 3. Workforce Costs As companies grow and expand in a region the ability of the region to supply skills, along with the cost of living, also affects the region's capacity to naturally maintain competitive salaries and wages. For this reason, a comparison of salary and wages of typical technology- focused occupations provides an indicator of the competitive position of an economic region. Indicator: Salary and Wages of Typical Occupations (Table I1I -14, page 69) Rationale: In addition to the availability of skilled labor, the cost of labor is an important consideration in business location and expansion. Comparison: In the four occupational categories examined, labor costs in Alameda are slightly lower than Los Angeles, which tended to have the highest salaries. The only exception to this pattern was for Engineer V, the most advanced occupation category, for which salaries in Alameda were $87 higher per week than in Los Angeles. Disparities in salaries reflect cost -of- living differentials, but may also indicate supply constraints. 68 Table III -14. Salary and Wages of Typical Occupations (weekly salary in 1993 except as noted) Occupation Alameda Los Angeles San Diego Sacramento (a) (b) (c) (d) (e) Engineer III $905 $907 $823 N/A Engineer V $1,374 $1,287 $1,175 N/A Engineering Technician IV $608 $638 $570 N/A Maintenance Electronic Technician II (hourly) $15.62 $18.32 $14.97 $16.06 (a) Occupational Descriptions Engineer III: Independently evaluates, selects, and applies standard engineering techniques... Receives instructions on specific assignment objectives. Qualifications: equivalent of graduate level education. Engineer V: Applies intensive and 1iiversified knowledge of engineering principles and practices. Supervises, coordinates, and reviews the work of others. Qualifications: competence as a fully trained professional. Engineering Technician IV: Provide semiprofessional technical support in areas such as research, design, development, testing, or manufacturing process improvement. Receives technical advice from supervisor or engineer; work is reviewed for conformity with instructions. Qualifications: practical knowledge of science or engineering. Maintenance Electronics Technician II: Maintains, repairs, and installs various types of electronic equipment and related devices. Qualifications: ability to solve problems by interpreting manufacturers' manuals or similar documents. (b) Alameda data taken from the 1993 Area Wage Surveys for San Jose and San Francisco. (c) Los Angeles data taken from the 1993 Area Wage Survey for Anaheim /Santa Ana. (d) San Diego data taken from the 1992 Area Wage Survey and adjusted to 1993 dollars using the Consumer Price Index. (e) Sacramento data based on the San Jose Business Climate Study, September 1992, adjusted to 1993 dollars using the Consumer Price Index. Source: U.S. Bureau of Labor Statistics, Area Wage Surveys. D . BENCHMARK 3: AVAILABILITY OF FINANCIAL CAPITAL Many regions bemoan the absence of venture capital in their economies because they view the capital these institutions represent as an enabler of new enterprise formation and growth. However, regions often confuse the presence of providers of capital with its availability. Capital availability is more crucial than simply the presence of capital. Regions such as New York metropolitan area have long been centers of financing, yet, until recently they invested relatively little in New York area enterprises, choosing instead to place investments in technology centers, such as the Silicon Valley. Over time, regions that become centers of transactions ultimately attract location of specialized investment banking operations —which was what occurred in the Silicon Valley. Physical presence of investment banking activities, such as venture capital, therefore are indicative of the success with which a region has developed its entrepreneurial business activities —the region's ability to initiate new enterprise. For these reasons the presence of venture capital firms is a good indicator of the demonstrated capacity of a region to develop and sustain 69 entrepreneurial activity; the volume of venture capital activity is indicative of the growth and expansion of industry activity and the capacity of the region to support it. 1. Initiation Capital There are a variety of indicators that can signify a region's capacity to support the initiation stage of enterprise development. Among these measures, the localization of investment operations is one of the best demonstrations of the attractiveness of a region for business development. The simplest measure of this, other than the net growth in new enterprise formation (which is difficult to provide), is the concentration of venture capital business operations in a region. Indicator: Number of Venture Capital Firms by Geographic Preference (Table I11 -15, page 71) Rationale: Venture capital is not the only source of financial capital for business development, but it is perhaps the quintessential form of high -tech financing. The venture capital industry;isgeared, to high -risll enterprises, and reduces its exposure through active involvement in the management of client businesses. Because the financier- client relationship often requires frequent face -to -face contact, physical proximity is an advantage. Table III -15 shows the stated geographic preferences of venture capital firms. Assuming that all four California regions have access to the funds managed by firms who say that their preference is "West Coast" or "National," the regional advantage lies in the number of firms that prefer to invest "within two hours of their office." Comparison: Of the venture capital firms located in the San Francisco Bay Area, 15 (or about 9 %) limit their investment territory to an area within two hours of their offices. Of these firms, there are 14 firms with an industrial preference for information technology and /or multimedia, and 11 films with a preference for environmental tech and /or biotech. In the Los Angeles metro region, there are 9 venture capital firms (17 %) with a stated preference for investments within a two -hour travel radius of their office. All 9 would be willing to invest in information tech, 7 of them would also be willing to invest in biotech, and 6 are interested in multimedia and /or environmental technology. In San Diego, 2 of the 11 venture capital firms (18 %) claim a preference for investments within two hours of their offices. All are interested in information tech, multimedia, and biotech; one of them also has a preference for environmental tech. There are 2 venture capital firms in Sacramento, but neither has expressed a preference for being close to investments. 2. Expansion Capital The majority of new enterprise financing is provided by the individual entrepreneur (friends, family, fools). The true measures of the scale of initiation capital used by growing small businesses are hidden in use of savings, credit cards, second mortgages, personal lines of credit, and private equity investments. Once beyond the precarious stage of initiation, those companies with potential for substantial growth will often approach venture capital funds who can provide both capital and management assistance as new companies grow. Because of the due diligence with which ventures are funded, the growth of venture activity in a region is a good indicator of the capacity of that region to support the expansion of industry. 70 Table I1I -15. Venture Capital Activity San Francisco Bay Area No. of Companies with Industrial Preference All Industries Info Tech Multimedia Environ Biotech Geographic Preference Within 2 hrs of office 15 14 14 11 11 West Coast 52 43 38 33 39 Total No. of Venture Cap. Offices 162 137 123 111 121 Investment Amt -2nd Qtr 1996 Pct. of Total U.S. Investment $769,294,333 27.4% Los Angeles Metro Area No. of Companies with Industrial Preference All Industries Info Tech Multimedia Environ Biotech Geographic Preference Within 22 hrs of office 1 , 9: 9 6 6 7 West Coast 12 10 7 10 9 Total No. of Venture Cap. Offices 53 45 35 39 35 Investment Amt -2nd Qtr 1996 Pct. of Total U.S. Investment $135,266,500 4.8% San Diego Metro Area No. of Companies with Industrial Preference All Industries Info Tech Multimedia Environ Biotech Geographic Preference Within 2 hrs of office 2 West Coast 3 Total No. of Venture Cap. Offices 11 Investment Amt 2nd Qtr 1996 Pct. of Total U.S. Investment $44,730,000 1.6% 2 1 7 2 1 2 0 1 3 5 6 9 Sacramento Metro Area No. of Companies with Industrial Preference All Industries Info Tech Multimedia Environ Biotech Geographic Preference Within 2 hrs of office 0 0 0 0 0 West Coast 1 1 1 1 0 Total No. of Venture Cap. Offices 2 2 2 2 1 Investment Amt -2nd Qtr 1996 Pct. of Total U.S. Investment $106,000 0.0% Source: 1996 Pratt's Directory of Venture Capital Sources; Price Waterhouse LLP National Venture Capital Survey 71 Indicator: Total Venture Capital Activity (Table I11 -15, page 71) Rationale: The overall size of the venture capital community (number of firms and total investments) is indicative of start -up management expertise in the area and the dispersion of investment intelligence - whether through the informal grapevine or through formal publicity channels -which is picked up by other financial communities. Comparison: The San Francisco Bay Area has an estimated 162 venture capital offices, almost three times as many as its closest competitor, Los Angeles with 53. In the second quarter of 1996 alone, Bay Area firms invested more than $769 million which accounted for 27.4% of venture capital investments nationwide. Venture capital investments out of Los Angeles totaled $135.3 million, and $44.7 million out of San Diego. Venture capital activity in Sacramento was negligible. E. BENCHMARK 4: ADVANTAGES IN MOBILITY The attractiveness of a region for technology -based industry depends to a significant dggree on the actual and perceived ability of personnel to move across and in and out of the region. Many companies grow up in regions where mobility problems increase to a point at which the company moves or new growth is placed outside of the region. Mobility is a multidimensional challenge having to do with roads and public transportation, air service as well as shipping and distribution infrastructure. The position of the East Bay in - relationship to its three competitors is addressed in the indicators provided below. 1 . Intraregional Mobility One measure of the competitiveness of a region is the ability to move within the commutershed. Highway infrastructure development and congestion are sufficient indicators of this. Indicator: Regional Freeway Infrastructure and Congestion (Table II1 -16, multiple indicators, page 73) Rationale: An efficient network of roads and freeways is critical for transporting both people and goods. The number of freeway interchanges (per 100,000 residents) is a measure of access to the freeway system. Average daily cars per freeway lane measures the load on the freeway infrastructure, while average commute time measures congestion in terms of opportunity cost. Comparison: Sacramento offers the greatest access to freeways with 8.3 interchanges per 100,000 residents and also has the least congested freeways. The freeways in San Diego bear a higher load, but average commute times in San Diego (46 min.) are virtually the same as in Sacramento (47 min.). Los Angeles has a noticeably more congested freeway system. On a daily average, each lane -mile in LA carries some 23,200 cars, compared to 18,500 cars in the Bay Area. Average commute times, however, about equal in LA (57 min.) and the Bay Area (58 min.). 72 Table 1I1 -16. Transportation Infrastructure Los Sacra - Alameda Angeles mento San Diego Roadways Freeway interchanges (a) 6.2 5.5 8.3 7.4 Total mileage all roads (b) 9,166 25,188 3,623 5,836 Total mileage freeways (c) 338 597 100 223 Average daily freeway traffic (d) 119,523 184,723 96,370 121,744 Avg. daily cars per freeway lane 18,489 23,216 14,735 16,645 Avg. daily commute time — round trip (e) 58 min. 57 min. 47 min. 46 min. Air Travel Scheduled airline flights per 956 4,621. 193 1,337 week (f) Port Activity Volume of port shipments per year (g) 1,291,494 2,289,039 N/A 6,800 TEUs TEUs TEUs (a) Freeway interchanges for each 100,000 residents in 1995, a measure of freeway accessibility; this indicator refers to the major metropolitan area in each of the four counties, e.g., Oakland (b) Statistics are from 1991 and refer to the major metropolitan areas of San Diego and Sacramento; Alameda includes San Francisco, and Los Angeles includes Long Beach, Pomona, and Ontario (c) This and the next two freeway statistics are for 1991 and are for the same areas as in note b (d) Refers to the number of cars on all of the freeways in each metro region (e) 1990 Census journey -to -work data multiplied by 2.2 to represent a round trip whose return takes slightly longer than the first leg. (f) Includes all major airlines' departing flights in 1992, at all commercial airports in each county (g) This indicator is 1992 container cargo only, measured in Twenty -Feet Equivalent Units (TEUs) Sources: Kosmont Survey of Municipal Business Fees, Taxes and Economic Incentives, 1996; Gale City & Metro Rankings Reporter, 1994; Places Rated Almanac, 1993; Vickerman, Zachary, Miller, "Humboldt Bay Harbor, Recreation and Conservation District Public Terminal Implementation Plan" 2. Regional Access Aside from the time it takes to move within a region, there is the degree to which the region is well served by national and international air service. For high technology companies, in particular, air service is a crucial link to components of global business, whether researchers at institutions outside the region, financial and business management experts, operations personnel, or distribution of high - value, just -in -time products. For this indicator, the amount of air service is an important measure. 73 Indicator: Scheduled Airline Flights (Table III -16, page 73) Rationale: Airports are major transportation hubs of the global economy. The number of scheduled airline flights provides an indication of serviced destinations (convenient direct flights) and number of flights per route (flexible scheduling options). Comparison: At the individual county level, Los Angeles benefits from the largest number of scheduled airline flights per week (4,621), including traffic at Los Angeles International Airport, Long Beach - Daugherty Field, and Burbank Airport. In comparison, Alameda's Oakland International has a weekly schedule of 956 flights. Combining air traffic at San Francisco International (3,227) and San Jose International (884), the Bay Area as a whole is served by 5,067 flights per week. San Diego has 1,337 scheduled flights per week and Sacramento has fewer than 200. 3. Distribution Beyond air service, which-is accounting for a rising-share of total shipment in and out of regions, port infrastructure continues to be an important measure of access, particularly,ov goods that are exported and imported. Volume of port transactions is also a proxy measure for overall shipping and distribution capacity. The higher the volume of port transactions the higher the corresponding capacity of rail and truck shipping in the region. Indicator: Volume of Port Shipments (Table 1I1 -16) Rationale: The products manufactured by the targeted high- technology clusters are generally able to absorb higher transportation costs. Nevertheless, ocean -going transportation is an option that strengthens a region's overall industrial competitiveness. The volume of port shipments is not only an indicator of throughput, but also the magnitude of port operations and, indirectly, its efficiency through economies of scale. Comparison: The Ports of Los Angeles and Long Beach are clearly dominant on the West Coast. In 1992, container cargo traffic amounted to almost 2.3 million containers. The volume of shipments out of the Port of Oaldand was approximately 1.3 million containers or 56% of LA's shipments. Civilian port activity in San Diego is relatively insignificant with only 6,800 containers shipped in 1992. F . BENCHMARK 5: ADVANTAGES IN TELECOMMUNICATIONS In economic competitiveness strategy for the past decade, regions have recognized that having an advanced telecommunications infrastructure is an advantage for expanding and recruiting industry. As deregulation of the telecommunications industry continues, an increasing array of advanced local and international services are being offered to regional industry by the Regional Bell Telephone companies (RBOCs), cable companies (TCI), long - distance carriers (AT &T, Sprint, MCI), Internet Service Providers (ISPs), and satellite communications service companies. While the array of choices is growing rapidly, the current capabilities of a regional telecommunications infrastructure remain an important indicator of the competitiveness of a region. However, how long conventional measures will be valid for is unclear. Several measures (that were feasible to assemble) are provided below that cover switching and line capacity. 74 Indicator: Telecommunications Infrastructure and Services (Table III - 17, multiple indicators) Rationale: The rapid pace and global scale of business, coupled with the need to coordinate complex corporate operations, has put a premium on the capacity for speedy and reliable transmission and reception of voice, video, and data. Comparison: There is little differentiation in the types of advanced telecommunications services available in the major metropolitan regions of California. With deregulation of the telecommunications industry, competition is very keen among existing service providers who, in turn, are guarded about new entrants to the marketplace. Table III -17. Telecommunications Infrastructure & Services Alameda Los Angeles Sacramento San Diego Integrated Services . ,Digital Network (ISDN) :y ; Services Basic rate ISDN (a) Yes Yes Yes Yes Centrex (call routing Yes Yes Yes Yes system ISDN) Home ISDN Yes Yes Yes Yes Primary rate ISDN (b) Yes Yes. No Yes Switched 56/ 2 wire ISDN Yes Yes Yes Yes Switched 56/ 4 wire ISDN Yes Yes Yes Yes Asynchronous Transport Mode 1 2 1 1 (ATM) Switch (c) Other Telecomm Services DS -1 Yes Yes No Yes T -1 Yes Yes Yes Yes Videoconferencing Not yet Not yet Not yet Not yet (a) This list and the following refer only to Pacific Bell's services in California; a number of other telephone companies offer service to several outlying areas of the state. However, PacBell has ISDN capacity in approximately 97 percent of the state. Basic rate ISDN refers to the lowest -cost ISDN service offered by PacBell. ISDN is a high - quality, switched digital communications product that enables a single, copper -wire, telephone line to transmit voice, data, and packet data simultaneously at a relatively low cost. (b) Primary Rate ISDN refers to PacBell's high- speed, multi - purpose, switched- access, digital interface based on ISDN standards; it provides user with dialable access without needing dedicated lines and provides 24 channel assignments. (c) Asynchronous Transport Mode (ATM) switches are the newest generation of switches that transmit signals as a series of cells; they can be used to transmit signals that require high bandwidth, such as video, and are a good match for fiber -optic networks. (d) DS -1 refers to data transmission capacity of 1.544 megabits. A DS -1 provides dedicated, point -to -point private line service that operates as a full - duplex digital channel and allows for more efficient transmission of integrated voice, data, and video communications. T -1 also refers to data transmission capacity of 24 trunk lines. Source: Pacific Bell 75 G. BENCHMARK 6: ACCEPTABILITY OF TAX AND REGULATION Competitiveness analyses across the country have repeatedly shown that tax and regulatory problems are of very high visibility with industry. Of the two areas, regulatory complications are viewed as being the greatest disincentive when choosing a location. Regulatory processes, fraught with complexity and inconsistency, account for expensive delays and false starts in business transactions. Companies seek clear compliance requirements and certification. Taxes, on the other hand, are frequently complained about, particularly when taxes single out one type of industry (e.g., inventory taxes). However, when businesses perceive that they are receiving a fair return for the taxes they pay from the public infrastructure and services, they are less likely to be concerned. Companies worry about regions that show unstable fiscal conditions as these are associated with difficulties in maintaining infrastructure and with a decline in services. The following indicators of tax and regulatory conditions measure the relative differences in the business climate among the four competing regions. I. Transaction Costs The first indicator pFovided here focuses on the fiscal' environnieht and the costs associaated with doing business. As these measures are hard to acquire on a comparable basis the examples selected are offered. Indicator: Fiscal Environment (Table III -18 and III -19, multiple indicators, pages 77 and 78) Rationale: The fiscal environment includes both revenue collection and expenditures. One of the most direct ways in which local government affects businesses is through fees collected for business licenses. On the other side of the ledger are local government expenditures. The business community often contends that taxes and fees alone are not necessarily a problem, rather it's a question of how well these funds are spent. Per capita budget figures do not reveal the quality of city services, but comparative figures suggest differences in the efficiency of city government. Comparison: The Cities of Oakland, Los Angeles, and Sacramento base their business license fees on gross receipts. (San Diego's system is based on employment and, therefore, is not directly comparable.) The annual fee for a business earning $10 million in gross receipts ranges from $12,243 in Los Angeles to $4,026 in Sacramento. Oakland's fee of $12,000 would be just short of Los Angeles. Not surprisingly, both of the high -fee cities depend on business licenses for a significant share of revenues — Oakland (9.7 %) and Los Angeles (14.2 %) compared to Sacramento (2.6 %). Another source of revenues is the utility tax. In this case, Oakland sits about midway in a range that spans from Los Angeles which obtains 21.5% of its revenues from utility taxes and Sacramento (19.9 %) on the high side, to San Diego which receives no funds from this particular source. In terms of expenditures, there is a major split between San Diego and Sacramento with relatively low per capita expenditures ($338 and $382, respectively) and the high budget cities of Oakland ($654) and Los Angeles ($537). 2. Regulatory Complexity As increasing complexity of regulatory requirements at the county and city level leads to exasperation among potential incoming companies, as well as outmigration of those with high levels of dissatisfaction, the following simple measures of the complexity of the regulatory environment are offered. 76 Indicator: Regulatory Environment (Tables II1 -18 and III -19, multiple indicators) Rationale: Technology -based businesses that face abbreviated product cycles are frequently pressed to get new facilities up and running in short time frames. This means that streamlined regulatory processes are a major consideration in relocation and expansion decisions. Table III -18. Comparison of Fiscal & Regulatory Environments City of Oakland Alameda County Fiscal Issues Business license fees Typical rate Revenue from bus. license fees Revenue from utility taxes City budget per resident Special Development Fees Nonresidential Zone Change Fee Regulatory Reforms Special Zones $12,000 (annual fee for first $10 mil in gross receipts) 9.7% 11.5% $654 $1,543 Concurrent planning/building permitting process Oakland Enterprise Zone Port of Oakland FTZ No. 56 Oakland/Berkeley Recycling Market Development Zone Federal Enterprise Community City of Los Angeles Los Angeles County $12,243 (annual fee for first $10 mil in gross receipts *) 14.2% 21.5% $537 Traffic impact /trip fees Art in public places fee $10,325 Reforms initiated by Progress LA Case manager assigned Job creation tax credit available to multimedia LA Revitalization Zone (in 3 sections) State Enterprise Zones (4) FTZ No. 202 (Worldport LA; LAX) Recycling Market Dev. Zone Supplemental Empowerment (financed through LA Development Bank & waiver of business license fees) * In response to litigation, City proposes to tax manufacturers only on gross receipts of sales activity taking place in the City of Los Angeles, not gross receipts of company. Source: Kosmont Survey of Municipal Business Fees, Taxes and Economic Incentives, 1996 Comparison: All of the regions considered in this study are concerned about expediting permit approvals and have instituted various reforms, e.g., one -stop permitting to coordinate multiple agency requirements and assemble all information up- front, and assigning a case manager or ombudsman. The City of San Diego, in particular, has made considerable progress in permit streamlining and provides special assistance to targeted 77 industries in biomed/biotech and other high- technology fields.8 In Alameda County, the City of Fremont is at the forefront of regulatory reform. As reported in the San Francisco Business Times, Fremont's official permit and review process is considered "extremely professional." Or as a technology park developer stated, "They know what they want, and they give you a short list." 9 Table III -19. Comparison of Fiscal & Regulatory Environments Fiscal Issues Business license fees Typical rate Revenue from bus. license fees Revenue from utility taxes City budget per resident Special Development Fees Nonresidential Zone Change Fee Regulatory Reforms Special Zones City of San Diego San Diego County $637 (annual fee for first 100 employees) 3.6% $338 Development impact fees Housing trust fund fees $2,500 deposit Permit streamlining Ombudsman for high -tech companies State Enterprise Zones (4) Otay Mesa FTZ No. 153 Recycling Market Dev. Zone (2) Federal Enterprise Community City of Sacramento Sacramento County $4,026 (annual fee for first $10 mil in gross receipts) 2.6% 19.9% $382 Art in public places fee $5,680 plus environmental & public works fees One -stop permitting Case planner assigned State Enterprise Zones (3) Port of Sacramento FTZ No. 143 Recycling Market Dev. Zone * In response to litigation, City proposes to tax manufacturers only on gross receipts of sales activity taking place in the City of Los Angeles, not gross receipts of company. Source: Kosmont Survey of Municipal Business Fees, Taxes and Economic Incentives, 1996 3 . Incentives There is a long history of counties and cities providing financial incentives to attract new companies. Federal, state and local incentives packages can be used to reduce both the financial and regulatory burdens on incoming companies. However, incentives often end up being used against local jurisdictions as they find themselves bidding against each other to attract firms. More effective by far for inducing local development are improvements in 8 The City of San Diego's Ombuds Program: Biomedical and Biotechnology Support" an Economic Development fact sheet from the City of San Diego Economic Development Services, May 1994. 9 Blackwood, Franey, "Fremont says Silicon Valley has New Northern Outpost" in the San Francisco Business Times, week of June 23 -29, 1995. 78 all the other categories of economic infrastructure discussed here. The indicators provided below are illustrative of how the four competing regions are currently using incentives. Indicator: Economic Development Zones (Table III -18 and III -19, multiple indicators, pages 77 and 78) Rationale: Economic development zones are intended to provide special financial incentives to encourage development of particular industries and /or development in particular places. For some industries and companies, these incentives can have a positive impact on profitability and spur growth. Comparison: The types of economic development zones found in the four cities are similar. Each has one or more Foreign Trade Zones, Enterprise Zones, and Recycling Market Development Zones (RMDZ). The latter is potentially helpful in developing the environmental technology cluster. In Alameda County, the Oakland/Berkeley RMDZ is one of the most active in the state in terms of RMDZ loan applications. In the first two years of operation, RMDZ's efforts generated over $7 million in investment by recycling companies;10 £Los Angeles is actively; promoting multimedia by establishing a Media apd Technology District at Playa Vista, future headquarters site of DreamWorks SKG. Qualified businesses in the entertainment, media, and technology industries will be eligible for a job- creation tax credit, multimedia business license tax rate, reduced sewer facilities connection charges, and other incentives.11 Los Angeles is considering expansion of the media district classification to other parts of the city. H . BENCHMARK 7: ACHIEVABILITY OF QUALITY OF LIFE Quality of life is a measure of increasing importance to high technology companies. The elements of quality of life share in common dimensions such as choice, price, and quality. However, some technology- driven industries have more specific quality of life requirements that lead founders or managers to choose very specific locations. For example, the biotechnology industry is characterized by a work force that is more concerned with cultural amenities than is the infoiniation technology industry. The multimedia industry is more concerned with modern urban lifestyles than the other industries. As regions attempt to grow industry clusters, they need to better understand some of these specialized quality of life needs. The five indicators selected to represent comparative quality of life indicators are a useful beginning. However, as regions seek to understand specific clusters they will have to find the even more specific, sometimes idiosyncratic measures of what quality of life means for them. 1. Housing The most serious obstacle to recruiting new workers to a region is the cost of housing. One of the principle reasons net growth of Silicon Valley electronics manufacturing moved to regions such as the Sacramento area, Austin, and the Portland area was the greater affordability of housing. 10 Relis, Paul, "Recycling Market Development Zones are Turning Refuse into Jobs" in Western City, June 1994. 11 Resolution of the City Council of the City of Los Angeles regarding support of a media and technology district at Playa Vista, presented by Ruth Galanter, December 5, 1995. 79 Indicator: Housing (Table I11 -20, multiple indicators, page 82) Rationale: Home - buying is usually the largest single investment made by a household. Therefore, housing affordability is a significant issue in workers' decisions to relocate and firms' evaluation about whether they can hire the necessary workforce at a reasonable cost. Comparison: The median price of single - family housing units is higher in Alameda than in any of the other regions by a significant margin. That median price of $254,450 in 1995 was almost $74,550 more than Los Angeles which had the next highest median price ($179,900). The lowest median price was found in Sacramento ($120,160). Despite the high cost of housing —and, partly contributing to it— vacancy rates in Alameda are the lowest among the four regions which signals a tight housing market. 2. Health Care Costs Today, the regional costs of health care are viewed by companies as one of several concerns in selecting a location. Higher health care costs are often part of a generally Iligher regional cost of living. However, some regions, such as Minneapolis, Minnesota, are known for having worked collaboratively to reduce health costs (and through this process, reducing insurance costs). The cost of care is not always apparent to workers who are concerned with the quality of care and are covered by insurance programs. However, as costs become a greater concern of companies the choices available to employees can become constrained, forcing companies to examine whether cost controls are worth their impact of recruitment and retention of workers. The indicators provided below offer a simple comparative reference of the cost of health care. Indicator: Health Care Cost (Table I1I -20) Rationale: Health care costs, which are absorbed either by the individual household or by the employer, are one of many variables taken into consideration in locating and developing companies in a region. Comparison: The indicator for health care cost is calibrated to the national average and all four regions exceed this level. In Los Angeles, average costs in 1992 were 43% higher than the average for the U.S. as a whole. Among the California regions, Alameda equals Sacramento with the lowest health care . costs -18% above the national average. 3. Recreation Technology- driven industries have workforces that are both more diverse, better paid than the average, and therefore more active consumers. With more resources available to spend on their lifestyles workers in technology -based industries are also more concerned with the recreational and cultural amenities that surround them. For this reason, indicators suggesting the breadth and depth of the recreational environment are provided here. However, more detailed indicators can always be developed to provide specialized distinctions for a given region. Indicator: Recreation Amenities (Table 1I1 -20, multiple indicators) Rationale: In an age of fluid labor markets, and in industries where workers are paid well, the ability to attract a talented labor pool is significantly affected by a region's recreational amenities. 80 Comparison: Golf is a common sport among businesspeople. San Diego is particularly advantaged with golf courses. With 60 courses and 1,035 holes, its golfing facilities are not far short of those in the Los Angeles metro area, which has a far larger population. Alameda has more theater screens on a per capita basis than any of the other regions. With 186 movie screens in 1993, there was 1 screen for every 11,700 persons, compared to 1:13,200 in San Diego, 1:15,300 in Los Angeles, and 1:17,000 in Sacramento. Los Angeles has the largest offerings of live entertainment and art museum and galleries. Nevertheless, Alameda's calendar of 976 live performances in 1993 was fuller than the 914 live performances in San Diego, while the population base of Alameda (the Oakland metro area) is only 80% as large as the San Diego metro area. 4. Safety The importance of a safe and secure work and homelife are without parallel. Whether truth or image, the actual or perceived safety of the region in which technology -based companies develops can play a crucial role in growth. Indicator: Crime , and Safety (Table 1II -20, multiple indicators) .; Rationale: The safety of persons and property is a fourth component of quality of life. The two indicators shown —one for violent crime and the other for property crime —are expressed in both aggregate and ratio formats. The total level of criminal activity more accurately reflects people's perception about the prevalence of crime, for example, due to the frequency of reports in the mass media. The incidence of crime within the population is a better measure of one's chances of being victimized. Comparison: There is surprising uniformity in the level of property crimes across _ Alameda, Sacramento, and San Diego. However, the incidence of property crime in San Diego (253 per 10,000 residents) is significantly lower than Sacramento (469 per 10,000 residents). The statistic for Alameda is midway between the two (311 per 10,000 residents). The violent crime statistics show a similar pattern: San Diego is at the low end (25 per 10,000 residents), Sacramento is at the high end (41 per 10,000 residents), with Alameda in between (32 per 10,000 residents). Los Angeles averaged almost twice as many violent crimes (1,273) as the next highest region Alameda (672)— however, the incidence of crime was a low 14 per 10,000 residents. 5. Environmental Quality As consumers become better educated about the environmental risks and hazards that surround them they use this information to decide whether or not to remain where they are or move. Technology- driven companies are both concerned with the surrounding environment in which they may develop as well as with the possible constraints that doing business in regions that exceed environmental standards might pose on them in teiuus of business functions (from emissions controls to worker commutes). Several indicators of the environmental quality of the four competing regions are provided below which illustrate their relative advantages or disadvantages. 81 Table 1II -20. Quality of Life Indicators Alameda Los Angeles Sacramento San Diego Housing Supply of single family homes 306,774 1,781,271 308,732 584,133 Median price SFH (a) $254,450 $179,900 $120,160 $171,600 Housing vacancy rate (b) 4.88% 5.57% 5.81% 6.24% Health Care Health care cost relative to U.S. avg.(c) +18% +43% +18% +25% Recreation Golf courses (holes) (d) 39 (675) 82 (1,377) 30 (450) 60 (1,035) Movie theaters (screens) (e) 40 (186) 170 (589) 26 (85) 49 (200) Live performances (f) 976 2,987 399 914 Art museums & gaIleries 11 33 2 6 grime and Safety ? , ; I. Violent crimes (g) 672 1,273 550 632 Violent crimes per 10,000 residents 32 14 41 25 Property crimes 6,503 N/A 6,333 6,336 Prop. crimes per 10,000 residents 311 N/A — 469 253 Environmental Quality Ozone pollution levels (h) N/A .27 ppm .16 ppm .17 ppm U.S. smog area rank (i) (not in top 10) 1 8 7 Meets U.S. air quality standards? No No No No (a) 1995 median sales price of single - family homes in the metropolitan regions of San Francisco, Los Angeles, Sacramento, and San Diego (b) Housing Vacancy Rate refers to all types of housing, not just SFH, in 1996 (c) Compared to U.S. mean, 1992 cost of doctor /dentist visits, hospital stays, & over - the - counter drugs (d) Number of golf courses (and number of holes) in each county's major metropolitan center, 1993 (e) Statistic refer to the major metro centers in each county for 1993 (f) Number of touring artist bookings and performances of resident symphony orchestras, opera companies, professional theaters, and ballet companies, in each county's metro center, 1993 (g) Average annual rate of murder, rape, robbery and assault (violent crimes) in each metro area, 1988 to 1992; Property crimes statistic is the same period for burglary, larceny- theft, and auto theft. Ratios based on metropolitan populations in 1990. (h) Average 1990 levels of ozone air pollution, in parts per million, for major metro areas of each county (I) Rank of U.S. cities with the most severe smog problems in 1993, based on U.S. Environmental Protection Agency data; Next statistic refers to whether each metro area regularly meets U.S. ambient air quality standards for ozone, carbon monoxide, and particulates smaller than 10 micrometers, 1996 Sources: California Association of Realtors, October 1996; California Department of Finance; Places Rated Almanac, 1993: Gale City RE Metro Rankinps Reporter 1994 Indicator: Environmental Quality (Table 111 -20, multiple indicators) Rationale: Among California regions, air quality is the environmental resource that has elicited the most public concern, both in terms of impacts on personal health and possible constraints on further economic development. Comparison: All of the regions have been in violation of U.S. air quality standards; however, there are clear differences among them. Ozone pollution in Los Angeles is some .10 ppm higher than in San Diego and Sacramento. Comparable data were not readily 82 available for Alameda, but given the fact that its smog ranking is lower than Sacramento, we would expect air quality to be generally more favorable. I. CONCLUSION: ALAMEDA'S STRATEGIC ADVANTAGE 1 . The East Bay's Overall Position Alameda, and the East Bay in general, compare favorably to the other California regions in several areas. In each of the four industry clusters, the region has a critical mass of employment. This is a powerful locational inducement for companies that require a large reservoir of skilled workers, as well as for job seekers. The industry clusters in the Bay Area contain large numbers of both producers of finished goods and services, as well as suppliers of intermediate products. The depth of the supplier base and their nearby presence contributes to the ability of Bay Area companies to respond quickly and flexibly to changes in market opportunities. This is also borne out in industrial performance statistics which suggest that Bay Area clusters.have attained high levels of productivity and value added. q ., 3 i j: ) The East Bay is a stronghold of technological development and benefits from major infusions of federal dollars which support R &D at the region's universities. These institutions provide a robust supply of scientific and engineering graduates in fields that feed into each of the clusters. In addition to the academic institutions, high levels of private industry R &D are likely, proportional to the size of the clusters in the Bay Area. Technological development doesn't realize its value until it is commercialized. One of the chief means by which new technology enters the marketplace is through new business ventures. The Bay Area has an extremely vigorous venture capital community which not only provides start -up money but also the management advice that new businesses need. The East Bay has the advantage of being a desirable place for home and business, while also being well - connected to the rest of the world. The region offers a high quality of life, in terms of abundant leisure activities and an attractive natural environment. These are strong selling points for footloose industries, such as those that make up the targeted clusters. Air travel to domestic and international destinations is convenient from the East Bay which has access to three major airports. 2. Regional Parity: Standing "Toe -to -Toe" Other benchmarks indicate that the East Bay is in line with its competitor regions. Wage and salary levels in the East Bay are generally comparable in the occupational categories examined in this study. Given competitive business practices in telecommunications services, there is virtually no difference in availability of state -of- the -art services among the major metropolitan areas in California. Another area where all regions have made great strides is in the streamlining of regulatory processes to accommodate business needs for speed and predictability. 3. The East Bay's Competitive Disadvantages There are several areas in which Alameda compares unfavorably or lags behind other regions. Foremost is the K -12 education system and college preparation. While Alameda performs well in relation to the comparative regions, the California regions as a group perform 83 poorly in relation to national statistics. For example, only 24% of SAT takers performed better than the U.S. average, which means that 76% performed worse. The impact of this problem is masked because the region's universities draw talented young people from throughout the country. However, to have a fully competitive workforce at all levels requires strengthening the capabilities of the local student population. Another area of concern relates to quality of life. Housing prices are the highest among the four regions. At the same time, salaries are not significantly higher to offset the housing costs. One response to high housing prices has been the decision of many households to purchase homes in more remote suburbs, where land prices are cheaper. Long commutes, however, add to increasingly more congested highways. The East Bay is comparable to Los Angeles in the level of roadway congestion. This lowered mobility of commuters, product shipments, and supply deliveries resulting from congestion ultimately translates into higher costs in both time and money. While traffic jams are found in Sacramento and San Diego, these regions still have greater roadway capacity. Crime is unevenly distributed within regions, but the perception of crime tends to have an enduring negative effect on a region's :image. Average crime statistics Tor the East Bay (fociising • on Oakland) are not significantly worse than the other regions, but are high enough to be problematic. Fiscal conditions, as measured in Oakland, reveal a region with high taxes and high levels of per capita spending by local government relative to "emerging" high -tech regions, such as San Diego and Sacramento. 4. Alameda County Cluster Advantages a. Biotechnology The East Bay has one of the largest concentrations of biotechnology activity in the state and in the nation with an industry concentration twice the national average, but less concentrated or "specialized" than San Diego. San Diego has grown faster in this cluster, but Alameda County payroll per employee is higher. This is believed to be due to the fact that the East Bay currently has a higher preponderance of companies that are both performing R &D as well as producing and shipping product, while firms in the San Diego area are more specialized in the R &D phase. The East Bay and San Francisco area's combined life sciences R &D levels are almost half a billion dollars annually, providing a critical mass of capacity that can be accessed by regional industry. Very important is the East Bay's high number of Ph.D.s in the biological and agricultural sciences. There is an established tradition of technology transfer from the region's institutions, notably from the University of California campuses at Berkeley and San Francisco and Stanford University, to existing and new business enterprises. Moreover, the region has developed a strong base of professional services with expert knowledge about the requirements of biotechnology, including financiers, lawyers, accountants, and architects and builders. A similar, if smaller, community is growing in the San Diego region with key institutional roles played by the University of California at San Diego, Scripps Oceanographic Institute, Salk Institute, and BIOCOM San Diego. b . Environmental Technology Environmental technology is a diffuse cluster which covers a broad range of activities. In the Los Angeles region, the need to clean up severe environmental problems, particularly with regard to air quality and management of recycling needs, created markets for new environmental products and services. The "market pull" impetus has not been as strong in 84 the Bay Area. The Los Angeles region has a greater amount of environmentally related R &D ongoing at its universities and laboratories, although the San Diego region has the highest total amount of research in environmental science. However, applications of technologies coming out of the academic and National research labs, often combined with the electronics of Silicon Valley, have become the foundation for a number of environmental technology businesses. In Berkeley, recognition of the university- industry connection has led to the Green Valley initiative, a policy of proactive support for environment - related businesses that is complemented by incentives attached to the Oakland - Berkeley Recycling Market Development Zone. c . Information Technology Silicon Valley is a recognized hub of information technology. The East Bay has long been in the shadow of Silicon Valley, but with space limitations in the South Bay, the East Bay is poised to capture the growth among the next generation of information technology companies. The East Bay is also well situated for future growth of the information technology cluster because it connects the R &D locus in the Bay Area with the centers of assembly and manufacture in Sacramerttp nd other Central Valley}communities. The asset base on which this can build is the highl�r developed concentration of research activity at the university in the East Bay in which UC Berkeley stands out among the state's public universities in engineering R &D (double any of the other leading institutions). In addition, the region's highly developed national laboratory resources represent a source of intellectual property yet to be tapped, and, if eventually (as downsizing continues) a source of skilled labor that can be hamessed in the region. d . Multimedia There is a corridor of multimedia activity in the Bay Area that runs from Marin County through "Multimedia Gulch" in the South of Market area of San Francisco, through San Mateo and Santa Clara Counties. The East Bay lies outside this main corridor and the current level of multimedia activity is relatively low. There are efforts underway to tie the East Bay more closely into the multimedia development occurring elsewhere in the Bay Area. One plan is to establish a "Digital Diamond" of installed high -speed telecommunication lines with the East Bay anchor tentatively sited at the Rotunda Building, part of a technology district in downtown Oakland. While the multimedia industry in the Bay Area is benefiting from the synergies between media content production in the San Francisco area and the media software and hardware innovation in the Silicon Valley, the connection to the East Bay has yet to be fully developed. What is important in this regard is that industry groups from other regions, such as the film and multimedia industry in Los Angeles, are working hard to build their own bridges to the Silicon Valley to accelerate their already rapidly growing media cluster. Finding a connection between the East Bay and the emerging new media marketplace remains an important challenge for the entire Bay area. 85 Part IV: Analysis of Cluster Occupation Trends in Alameda County A . OVERVIEW In order to grow the technology- driven industry clusters that will provide future jobs, Alameda County must be able to supply the occupational diversity and capabilities they will require. For this reason, this analysis examines: • Overall occupational structure of Alameda County • The emerging occupations for each technology- driven cluster • The trends in occupational growth as defined by employment projections in each cluster • The_ implications of occupational structure trends for meeting technology- driven cluster needs. This analysis concludes with a summary of the occupational development issues that will play an important role in both how well Alameda County grows in the target technology - driven clusters, and by extension, how well an Alameda Science & Technology Center will be able to attract -technology driven industry. B . ALAMEDA COUNTY OCCUPATIONAL STRUCTURE Four technology - driven industry clusters have been selected as the focus for growth at an Alameda Science and Technology Center. The structure and forecast for these industries has been discussed in Phase One Report: Concept Delineation (Chapter IV) and in Part II of this Report. They include: • Biotechnology • Multimedia and Broadcast • Information Technology and Communications • Environmental Technology An important reason for selecting these four technology clusters, beyond their expected growth, is the quality of employment opportunities arising from their business activities and the diversity in occupation skills they use along the value chain from R &D to production to customer services. These technology- driven industries will need to draw their workforce from Alameda County's occupational mix. Using best available estimates (see Table IV -1, page 87) occupational employment in Alameda County is projected by California Employment Development Department (EDD) to increase by 8.1% between 1992 and 1998. A more current update (1994 to 2001) is being undertaken by EDD which will be available mid -1997. Table IV -1 shows the concentrations of employment and employment growth rates in Alameda County for general occupational categories. The table also illustrates the variety of occupations that support industries in the county. This mix of occupations also applies to the industry clusters discussed in this analysis. As shown in Table IV -1, workforce occupations present in Alameda County range from clerical and administrative support that cross many sectors and industries to technical occupations that provide specialized skill requirements to industry clusters such as 86 biochemists, molecular biologists, and laboratory technicians for the biotechnology cluster. Examples of support occupations in Alameda County include administrative services managers, customer service representatives, order clerks, stock clerks, stenographers, personnel specialists, production planning clerks, purchasing managers, and sales personnel. The analysis below focuses primarily on the technical occupations associated with the target industry clusters. Support occupations are included when they have been identified as critical to the growth of the industry, as is the case for service occupations for the telecommunications industry. Table IV -1. Occupational Employment Projections in Alameda County, 1992 - 199812 Occupation Category Employment Projected Percent 1992 1998 Change Managers and Administrative Occupations 40,290 44,310 10.0 Professional, Paraprofessional, Technical - 131,680 143,340 8.9 Sales and Related Occupations 1 > , 67,210 73,190 8.9 Clerical, Administrative Support 122,260 130,640 6.9 Service Occupations 77,710 84,390 8.6 Agricultural, Forestry, Fishing 4,590 5,080 10.7 Production, Construction, Operations, and 137,920 147,440 6.9 Material Handling Occupations not classified 640 1,010 57.8 Total All Occupations 582,300 629,400 8.1 The historic and forecast growth rates for the four technology- driven industry clusters in Alameda County are presented in Table IV-2 (page 88). All of these clusters are expected to grow over the next 19 years at a pace higher than their historic growth rates; some dramatically higher, some only slightly higher. Of the four technology- driven clusters, the biotechnology cluster has shown the highest historic, as well as projected, employment growth in Alameda County, growing at over 4% annually. The greatest growth change from historic rates is forecast for the environmental technology cluster, which grew only slightly between 1991 and 1995, and is forecast to grow 1.9% annually between 1995 and 2015. Whether the occupations that make up these growing clusters are showing corresponding employment growth in Alameda County is the subject of the next section. If occupational growth related to target clusters is forecast to keep up with their overall employment growth, the County should have little difficulty in meeting industry needs. If, however, the growth in occupations appears "out of synch" or slower than general employment growth in target clusters, then many jobs will be filled by non - Alameda County workers. The following section discusses the range of technical occupations in each of the four growing technology- driven industry clusters, the new occupations identified by the California Employment Development Department (EDD) as having increased importance for each cluster statewide, as well as the occupational breakdown for each cluster in Alameda County. This section also identifies the range of skills required by growing industries within select occupations in Alameda County. 12 California Employment Development Department, Projections of Employment 1992 -1993 By industry and Occupation, 1994. 87 Table IV -2. Alameda County Industry Cluster Historic and Forecast Growth Rates Industry Cluster Biotechnology Multimedia and Broadcast Information Technology and Communications Environmental Technology Average Annual Employment Growth, 1991 - 199513 4.4% 2.3% 1.9% 0.4% Annual Average Forecast Growth, 1995 - 241514 4.9% 2.9% 2.9% 1.9% C . OCCUPATIONS IN THE BIOTECHNOLOGY CLUSTER 1. Overview This rapidly growing technology- driven industry cluster employs a wide range of occupati&nsiincluding biochemists, Molecular biologists,land laboratory technicians, as. well as manufacturing engineers, quality control specialists, and technical writers. As many as 200,000 jobs are expected to be created in biotechnology companies over the next five years in California; most of these jobs will be in the San Francisco, San Diego, and Orange and Los Angeles Counties15. As this industry moves from R &D into manufacturing, additional occupations and skills will be required. The range of technical occupations in the biotechnology industry are grouped in five categories: research and development, clinical research, manufacturing and production, quality systems, and information systems. Table IV -3 (page 89) illustrates the typical occupations in the biotechnology industry, many of which are considered emerging by the EDD. 2. Emerging Biotechnology Occupations in California A strategic issue in the competitiveness of any region is the adaptability of its workforce. For this reason the growth of emerging occupations is a good indication of the responsiveness of the region to changing industry skill needs. The California EDD's Biotechnology Occupational Guide states that most growth in the biotechnology industry is expected in the areas of diagnostics and therapeutics. Because this industry is rapidly expanding and transforming, EDD considers a wide range of occupations as emerging, these are listed in Table IV -316. Additional emerging occupations are: • Biomedical Engineers • Biotechnologists • Toxicologists • Biomedical Equipment Technicians 13 California Employment Development Department, Labor Market Information Division, 1996. 14 Association of Bay Area Governments, 1996. 15 California Employment Development Department, Labor Market Information Division, Information Services Division; California Occupational Guide Number 2007, Biotechnology 16 EDD defines emerging occupations as either (1) an occupation that is totally new and created because of a technological innovation, (2) an existing occupation that has undergone a substantial degree of skill modification, or (3) an occupation that has arisen as an offshoot of an existing occupation. 88. Table IV -3. Typical Occupations in the • Animal Handlers • Animal Technicians • Aseptic Fill Assistants • Aseptic Fill Research Associates • Aseptic Fill Technicians • Assay Analysts • Biochemical Development Engineers • Cell Culture & Fermentation • Cell Culture & Fermentation Research Associates • Cell Culture Sc. Fermentation Technicians • Clinical Research Associates • Data Entry Clerks. • Documentation Clerks • Greenhouse Assistants • Instrumentation /Calibration Technicians _ • Laboratory Assistants • Laboratory Support Workers • Library Assistants • Manufacturing Engineers Biotechnology Industry 17 • Manufacturing Research Associates • Manufacturing Technicians • Microbiologists • Plant Breeders • Process Development Associates • Process Development Engineers • Production Planners • Purification Assistants • Purification Manufacturing Associates • Purification Technicians • Quality Assurance Auditors • Quality Control Analysts • Quality Control Engineers . • Quality Controljnspectors • Research Assoc'i'ates (R&D) • Safety • Scientific Programmer Analysts • Scientists • Statisticians • Technical Writers • Validation Technicians A key question for Alameda County is how well its current occupational mix matches the emerging occupations in the biotechnology industry. To answer this question, the Occupational Employment Survey (OES) codes from the emerging biotechnology occupations were matched to the corresponding OES codes for occupations present in Alameda County. These occupations are displayed in Table IV -4 (page 90). Seven of the seventeen occupations are projected to grow in Alameda County, and are some of the fastest growing occupations in the county. These occupations are areas where Alameda is most likely to be able to meet cluster workforce needs; although even with higher rates of forecast growth more skilled workers may be needed. Of the emerging occupations, three occupations are not classified in the EDD projections report, one shows negative growth and one shows no growth. Additional emerging occupations where OES codes were not available include: aceptic fill assistants, technicians, and research associates; assay analysts; cell culture and fermentation technicians, and research associates; manufacturing research associates; manufacturing technicians; purification assistants and technicians; and purification manufacturing associates. Many of these emerging occupations relate to the industry's movement into high - technology manufacturing. Comparing occupations in Alameda County to emerging occupations in the State, six occupations stand out as having lower than the county average t7 California Employment Development Department, See also California Occupational Guides from EDD web page http: / /www.calmid.cahwnet.gov /. Excludes jobs requiring Ph.D.s, jobs in company administration and sales. 89 employment growth rates, or are not classified, which may imply a potential mismatch in county capacity to meet anticipated future employment opportunities. These are: • Chemical Engineers • Biological Scientists • Veterinary Technicians • Veterinary Assistants • Chemical Equipment Tenders • Library Assistants Table IV -4. Selected Occupations in Alameda County in the Biotechnology Industry Alameda County Occupations Chemical Engineers Industrial Engineers Physical: Life Science Technicians Biological Scientists Chemists Animal Caretakers, except Farm Veterinary Technicians Veterinary Assistants Statisticians Technical Writers Chemical Equipment Tenders Biological, agricultural, food technicians Workers, precision Electrical Engineers Mechanical Engineers Library Assistants Systems analyst, electronic data processing Employment 1992 350 560 2,160 690 780 310 50 300 240 1,850 3,390 2,230 1,310 1,730 Projected 1998 350 640 2,350 690 920 340 60 410 260 2,180 3,820 2,420 1,270 2,060 " Percent Change 0.0 14.318 .8.8 .6.2 17.918 9.7 _19 20.018 36.718 8.3 17.818 12.7 8.5 -3.1 19.118 3. Diversity of Occupational Skills Required: Biotechnology The biotechnology industry requires workers to have a certain level of technical as well as basic skills. As this industry moves from R &D into high- technology manufacturing activities, occupations that require technology -based manufacturing skills appear to be emerging as well as skills in regulatory policies and processes. The range of skills include: • Computer applications and information processing • Critical thinking • Knowledge of good manufacturing practices • Knowledge of sterile techniques • Group dynamics and good communication skills • Measurement and critical interpretation of data • Problem solving and information analysis • Knowledge of federal, state, and local regulations and laws • Resource management 18 One of 50 occupations in Alameda County with the fastest employment growth. 19 Not classified in EDD's Projections of Employment 1992 -1998. 90 • Organization structure and systems • Computer communications skills • Research methods • Understanding of regulatory procedures • Scientific creativity and technical proficiency 4. Skill Trends An important factor in attracting companies in the biotechnology industry is the accessibility to and availability of appropriately matched skilled human resources. This need was highlighted at ARRA sponsored industry worksessions, where representatives from the biotechnology industry identified their top requirements for growing this cluster. Access to experienced, skilled, educated workers such as laboratory technicians and trained technical production workers were among their top priorities. More detail on one occupational example, Biological Scientists, that is representative of the biotechnology cluster needs for Alameda County, was selected from the 1995. Alameda .County Occupational Outlook, Oroduced by the California Cooperative Occupational Information System (CCOIS). A profile of this occupation from the CCOIS survey indicates trends for this specific occupation: • 40 new Biological Scientist positions are projected between 1992 and 1998. • Most employers expect employment in this occupation to grow over the next three years. • Most employers require work experience and about half substituted training for work experience. • Work experience as a Scientist averaged just over 3 years. • Work experience as a Research Associate averaged 3 years. • Most new hires had a Bachelor's degree • Skills required over the next three years include: — Advanced Cellular Biology — Molecular Biology — Protein Purification - Protein Structure Analysis — Magnetized Particles • Many employers found it difficult to find qualified and experienced applicants, and less difficult to find qualified inexperienced applicants. In response to the need for skilled biotechnology workers such as those described above, and to match workers with employers, the Bay Area Bioscience Center in Oakland, a non- profit organization supported by corporate membership, operates a Career Center and Job Bank, and offers a library of resources that provides information to assist individuals seeking positions in the bioscience and biotechnology industry. 5. Summary: Biotechnology Training Priorities Accessible and available workers with skills in the biosciences, are key to the growth and competitiveness of the biotechnology industry. Occupations range from scientists, engineers, and laboratory technicians, to managers, experts in manufacturing, and regulatory specialists. Representatives of this industry have indicated that it is hard to find qualified applicants for biotechnology positions in the Bay Area. In addition, while employment in several occupations in Alameda County are projected to grow, development 91 efforts to meet East Bay employment opportunities for this industry may be needed for the following occupations: 1. Chemical Engineers 2. Biological Scientists 3. Veterinary Technicians 4. Veterinary Assistants 5. Chemical Equipment Tenders 6. Library Assistants D . OCCUPATIONS IN THE MULTIMEDIA AND BROADCAST CLUSTER The Bay Area is home to some of the most advanced and innovative multimedia companies. This cluster includes content producers, multimedia developers and technology providers. This growing and expanding industry employs a wide variety of occupations that require skills in the production of films, TV programs and videos including artists, writers, .animators, computer programmers, and advertising managers. Because of market A.irit;ertainties, and the projbct related nature of the work, the workforce that supports this industry is more flexible than for other industries, with a pool of freelancers and contractors, as well as full time employees. The range of technical occupations in the multimedia industry are illustrated in Table IV -5 below. Table IV -5. Range of Occupations in the Multimedia and Broadcast Cluster20 • Interface Designers • Executive Producer • Producer • Scriptwriter • Editor/Moderator • Videographer • Lawyer • Content Expert • Performer /Actor • Financial Consultant • Visual Designer • Lighting, Props, Sets • Agent • 2D Animator • 3D Animator • Technical Lead • Recruiter • Programmer • Marketing Roles • Test Manager • Creative Director • Art Director • Voice Artist/Vocalist Tester • Sales Roles • Interface Designer • Effects Specialist • Customer Support • Game Designer • Sound Engineer/Editor • Composer /Musician/ Sound 1 . Emerging Multimedia Occupations in California As this industry expands new occupations and new skill sets will be needed. The California Employment Development Department has identified in its Multimedia Occupational Guide the following emerging professional occupations in the multimedia industry in California: Animators • Art directors • Graphic designers 20 California Employment Development Department, Labor Market Information Division, Occupational Guides, from EDD web page: http / /www.calmid.cahwnet.gov/ 92 • Interface designers • Programmers • Sound producers • Video producers • Writers Corresponding OES codes were not available for these emerging occupations, and for this reason, occupations in Alameda County that fall into the multimedia industry were estimated. These are shown in Table IV -6 (page 94). In Alameda County, occupations such as artists, designers, and computer programmers are projected to grow more than the average occupation in the county. However, other corresponding occupations are projected to grow below the county average such as writers and editors, and there is no growth projected in producer occupations between 1992 and 1998. Table IV -6 shows an illustrative example of occupations that make up the multimedia and broadcast industry in Alameda County. Of the 25 estimated emerging occupations, two showed no projected growth, and two showed a decline in growth. The eight occupations with lower than average employment growth are: • Radio and TV announcers • Electric and electronic engineering • Broadcast technicians technicians • Computer operators • Motion picture projectionists • Producers, directors, actors • Public relations specialists • Writers and editors These trends indicate that as the multimedia industry grows in the East Bay, a significant percent of new opportunities may be filled by workers from outside the county. Alternatively, training may need to enhance occupational development in multimedia for county residents. 2. Diversity of Occupational Skills Required: Multimedia and Broadcast The multimedia and broadcast industry requires specific job skills as well as flexibility of workers to move from project to project. Job skills that are common to all multimedia jobs include: • Ability to work as a member of a team. • Ability to clearly communicate ideas. • Ability to quickly and accurately understand the goals and objectives of the project. • Ability to be organized. • Ability to use the computer tools required to complete the project. • Willingness and ability to frequently seek employment on new projects. • Willingness and ability to join projects without much advanced notice. • Willingness and ability to continually update skills by learning new tools and techniques. • Passion for the work, a good sense of humor, and patience. • Be an expert in one or a few areas, but have a general understanding of as many areas as possible. 93 Additional technical skills include: • Digital video production • Digital Assembly • Animation • C ++ object oriented programming • Communication and storytelling skills Table IV -6. Selected Occupations in Alameda County in the Multimedia and Broadcast Industry. Employment Projected Percent Change Alameda County Occupations 1992 1998 Radio and TV Announcers 90 90 0.0 Artists and Related workers 590 660 11.9 Broadcast Technicians 140 140 0.0 Camera Operators 100 110 10.0 Computer Engineers 1,210 1,760 45.521 ;Computer Operators 1,210 1,270'7 i 5.0 : Computer Programmers 3,170 3,890 22.721 Computer Scientists 180 230 27.821 Designers, Excluding Interior, and Floral 710 790 11.3 Electric and Electronic Engineers 3,390 3,820 12.7 Electric and Electronic Engineering 3,300 3,270 -0.9 Technicians Electrical Equipment Assemblers 770 870 13.0 Motion Picture Projectionists 100 90 -10.0 Music Directors, Singers and Composers 90 100 11.1 Instrumental Musicians 220 240 9.1 Peripheral EDP Equipment Operators 60 70 16.721 Photographers 200 230 15.021 Producers, Directors, and Actors 90 90 0.0 Public Relations Specialists 390 410 5.1 Reporters and Correspondents 210 210 0.0 Technical Writers 300 410 36.721 Typesetting, Composing mach ops 120 130 8.3 Systems Analysts 1,730 2,060 19.121 Sales Agents, Advertising 540 620 14.821 Writers and Editors 840 890 6.0 3. Skill Trends The need for skilled workers in this industry surfaced at the ARRA- sponsored industry worksessions, where representatives from the multimedia and broadcast industry identified their top requirements for growing this cluster. The need for an accessible, large, talented and diverse pool of media - skilled workers was deemed essential and explains why existing locations with high concentrations of multimedia and broadcast business activity continue to grow in San Francisco and Marin Counties. More detail on one occupational example illustrative of needs in the multimedia and broadcast industry was selected from the 1995 Alameda County Occupational Outlook, 21 One of 50 . occupations in Alameda County with the fastest employment growth. 94 produced by the California Cooperative Occupational Information System (CCOIS): The occupation Marketing, Advertising, and Public Relations Manager was profiled. A profile of this occupation from the CCOIS survey indicates trends for this specific occupation: • 500 new Marketing, Advertising, and Public Relations Managers positions are projected between 1992 and 1998. • Most employers expect employment in this occupation to grow over the next three years. • Most employers require work experience and some substituted training for work experience. • Work experience for a Sales or Marketing Manager position averaged 1.5 to 2.5 years. • Many new hires had an AA degree, fewer had a Bachelor's degree • Skills over the next three years include — Communication skills — Patience Computer skills - Supervisory skills + — Ability to apply Marketing techniques s ' - Effective writing skills - Interpersonal skills - Ability to work as part of a team - Ability to maintain good business relationships - Ability to maintain good customer relations — Ability to manage multiple priorities • Many employers found it difficult to find qualified and experienced applicants, and less difficult to find qualified inexperienced applicants. A statewide effort to respond to the skills shortages in the multimedia industry has resulted in SkillsNet, a new collaborative network that will address skills shortages in the entertainment and multimedia industries in California. SkillsNet is a joint venture between the Alliance of Motion Pictures and Television Producers and the Bay Area Multimedia Partnership (BAMP). The Bay Area has two universities, San Francisco State University and CSU Hayward, that offer degree programs in multimedia and specialized coursework and training. San Francisco State University has one of the nation's largest continuing education programs focusing on multimedia skills. Representatives from the regional educational institutions have indicated that the demand for graduates specialized and skilled in multimedia is greater than the capacity for the schools to produce graduates. 4. Summary: Multimedia and Broadcast Training Priorities Access to a skilled and diverse labor pool is a priority for growing the multimedia and broadcast industry. Representatives from this industry have indicated that it is difficult to find qualified applicants for positions in the multimedia industry even though there are two regional institutions offering formal training and coursework in multimedia programs. Although employment in several occupations in the multimedia broadcast cluster in Alameda County are projected to grow, development efforts to meet East Bay employment opportunities may be needed for the following occupations: 1. Radio and TV announcers 5. Electric and Electronic 2. Broadcast technicians engineering technicians 3. Computer operators 6. Motion picture projectionists 4. Producers, directors, actors 7. Public Relations Specialists 8. Writers and Editors 95 E. OCCUPATIONS IN THE INFORMATION TECHNOLOGY & COMMUNICATIONS CLUSTER 1. Overview The rapidly evolving information technology and communications industry cluster employs a wide range of occupations that produce, supply, and distribute the following basic products: computers, peripherals, software, telecommunications equipment and services, and specialized components. This industry employs such high - technology occupations as electrical and computer engineers, computer programmers and scientists, systems analysts, computer operators, data processing equipment repairers, assemblers and fabricators, and telecommunications specialists. Table IV -7 below, lists the range of technical occupations in the information technology and communications industry. Table IV -7. Selected Occupations in Alameda County in the Information Technology and Communications Industries. Ala�ine'da County Occupations Employment Projettei Pe'rcent 1992 1998 Change Civil Engineers 2,090 2,420 15.822 Civil Engineering Technicians 630 700 11.1 Computer Engineers 1,210 1,760 45.522 Computer Operators 1,210 1,270 5.0 Computer Programmers 3,170 3,890 22.722 Computer Scientists 180 230 27.822 Communications Equipment Operators 60 60 0.0 Data Processing Equipment Repairers 720 940 30.622 Electric and Electronic engineers 3,390 3,820 12.7 Electric and Electronic engineering technicians 3,300 . 3,270 -0.9 Electrical Equipment Assemblers 770 870 13.0 Electrical Equipment Assemblers 770 870 13.0 Mechanical Engineers 2,230 2,420 8.5 Mechanical Engineering Technicians 670 640 -4.5 Peripheral EDP equipment operators 60 70 16.722 Technical writers 300 410 36.722 Systems analysts 1,730 2,060 19.122 Sales agents, advertising 540 620 14.822 Writers and Editors 840 890 6.0 2. Emerging Information Systems & Telecommunications Occupations in California A strategic issue in the competitiveness of any region is the adaptability of its workforce. For this reason the growth of emerging occupations is a good indication of the responsiveness of the region to changing industry skill needs. The California Employment Development Department has identified the following long list of emerging professional occupations in the information systems and telecommunications industry in California. These are shown in Table IV -8 on page 97. 22 One of 50 occupations in Alameda County with the fastest employment growth. 96 Corresponding OES codes were not available for these emerging occupations, consequently, the corresponding Alameda County occupations in the information systems and telecommunications industry were estimated. These are shown in Table IV -7 (page 96). Of the 19 occupations listed, five show lower than average employment growth, and three of these are projected to either decline or remain at the same employment levels. These five occupations are: • Computer operators • Communications equipment operators • Electric and electronic engineering technicians • Mechanical engineering technicians • Writers and editors Table IV -8. Emerging Information Computer Aided Design (CAD) Technicians • Computer Aided Manufacturing (CAM) Technicians • Closed Caption Reporters • Computer Security Specialists • Information and Image Managers • Librarians, Special • Library Scientists • Local Area Network (LAN) • Network LAN/WAN Managers • Network Analysts • Network Consultants • Network Control Technicians • Network Sales Representatives • Network- related Software Engineers/Designers • Network Training and Support Specialists • Programmers, Engineering & Scientific • Software Engineers • Systems Integrators • Robotics and Automated Systems • Artificial Intelligence Specialists • Computer Programmers • Computer System Analysts • Numerical Control (NC) Machine Operators • NC Machinists • Robot Machine Operators Systems Occupations Emerging; Professional Occupations in the Telecommunications Industry in California • Electrical/Electronics Engineers - Satellite Industry • Equipment Installation Analysts • Information Systems Analysts • Laser Engineers • Sales Reps, Telecommunications • Software Engineers/Designers • Telecommunications Consultants • Telecommunications Lawyers • Telecommunications Managers • Telecommunications Specialists 97 3 Diversity of Occupational Skills Required: Information Technology and Communications The wide range of skills required for the information technology and communications industries is listed in Table IV -9 below. They range from problem solving and analytical skills to diagnostic, planning, designing and computer programming skills. As this industry evolves, skills in such areas as strategic planning, customer service, and intellectual property management are becoming more important. Table IV -9. Range of Occupation And Communications Information Technology • Read and understand engineering drawings • Access and convert computer programs into diagrams and drawings • Visualize three - dimensional; blects from two - dimensional drawings • Diagnose system errors • Create and implement plans • Develop, design and customize information system programs • Plan and design information delivery methods • Use computer technology to solve a variety of complex problems • Solve problems in new or creative ways Skills In The Information Technology Cluster Telecommunications • Computer programming • Software design • Basic telephony • Laser technology • Fiber optics • Cellular technology • Data compression skills • SaIes ability with knowledge of telecommunications terminology • Business knowledge • Interpersonal communication skills The North Valley Private Industrial Council (NOVA PIC), located in Sunnyvale, conducted a survey to investigate the labor market for the telecommunications industry23 and identified five critical occupations in the Bay Area over the next two years: Telecommunications sales, customer service, installation technicians, application engineers, and telecommunications engineers. Four of the five critical occupations for this technology - driven industry emphasize the quality of customer interface in sales, support, installation and design. The NOVA PIC, as part of their labor market studies for the software and telecommunications industries, identified critical skills gaps in the Bay Area. These are displayed in Table IV -10 (page 99). These gaps in skills suggest specific areas to focus training programs and employment development efforts. 23 NOVA Private Industry Council, Telecommunications Industry: Bay Area Labor Market Analysis 1996. 98 Table IV -10. "Gap Analysis" Where are the Critical Skills Today? Responses by Employers Software Skill Type24 Demand Supply Engineering/Scientific core 4.2 4.2 Platform 4.4 3.7 Developer's environment 3.4 3.0 Business/Industry 3.2 2.7 Application domain 3.4 3.2 Personal /interpersonal 4.0 2.7 Telecommunications Skill Type25 Engineering/Scientific core Platform .. l Productivity tobls3 Company Environment Business/Industry Scale 1 -5: 1 =very low, to 5 =very high 4.4 4.6 4.1 4.0 3.1 4.0 2.8 3.1 3.0 3.2' " 2.6 2.7 Excess (Shortage) (.5) (1.3) 4. Skill Trends An important factor in growing this industry is the accessibility to and availability of skilled human resources. This was brought out at recent industry worksessions sponsored by ARRA focusing on the information technology and communications industry: An important requirement is sharing personnel and training facilities. Another human resource issue was access to trained personnel within a reasonable commuting distance. Also discussed at this worksession, to respond to the need for access to a skilled workforce, was a high -tech vocational training center. More detail on one occupational example, Computer Engineers, that is illustrative of the typical needs of the information technology and communications cluster for Alameda County was selected from the 1995 Alameda County Occupational Outlook, produced by the CCOIS. A profile of this occupation from CCOIS survey indicates trends for this specific occupation: • 550 new Computer Engineering positions are projected between 1992 and 1998. • Most employers expect employment in this occupation to grow over the next three years. • All employers require work experience and most substituted training for work experience. • Work experience for a Computer Engineer position averaged 1.5 to 2.5 years. • All new hires had at least a Bachelor's degree • Skills over the next three years include 24 NOVA Private Industry Council, Life in the Fast Lane ... New Perspectives on the Bay Area Software Labor Market, 1995. 25 NOVA Private Industry Council, Telecommunications Industry: Bay Area Labor Market Analysis, 1996. 99 — Ability to write detailed technical instructions - Computer science skills — Basic math skills — Ability to read and follow instructions — Windows 95 — Ability to analyze data and solve problems — Ability to interact with others • Most employers found it difficult to find qualified and experienced applicants, and less difficult to find qualified inexperienced applicants. 5. Summary: Information Technology and Communications Training Priorities Workforce availability is a key factor in the growth and competitiveness of the information technology and communications cluster. Occupations range from high -tech computer engineers and programmers to an emerging need for skills in customer service and sales. Representatives from this industry have indicated that it is difficult to find qualified applicants for positions in the inforr ation:technology and communications industry. Although employment in several occupations in the information technology and communications cluster in Alameda County are projected to grow, development efforts to meet East Bay employment opportunities may be needed for the following occupations as well as the customer service and sales occupations: 1. Computer operators 2. Communications equipment operators 3. Electric and electronic engineering technicians 4. Mechanical engineering technicians 5. Writers and editors In addition, the NOVA PIC has identified the following critical skills shortages in the Bay Area which may further focus development efforts. • Engineering/Scientific core • Platform • Developer's environment • Business/Industry • Application domain • Personal/Interpersonal • Productivity tools • Company Environment F . OCCUPATIONS IN THE ENVIRONMENTAL TECHNOLOGY CLUSTER 1. Overview The occupations in this diverse and growing industry are centered around the environmental focus of their work, and generally fall into three categories: environmental services, equipment, and resources. Technical occupations vary widely within this 100 industry and range from natural scientists, engineers and researchers to lawyers and consultants. Occupations in Alameda County that fall into the environmental technology industry cluster are listed in Table IV -11 below. Related jobs include air pollution analysts, environmental scientists, soils analysts, water quality analysts, marine biologists, chemical, civil, and mechanical engineers. Table IV -ll. Selected Occupations in Alameda County in the Environmental Technology Industry Employment Projected Percent Alameda County Occupations 1992 1998 Change Chemical Engineers 350 350 0.0 Nuclear Engineers 160 150 -6.3 Civil Engineers 2,090 2,420 15.826 Civil Engineering Technicians 630 700 11.1 Industrial Engineers 560 640 14.326 Safety Engineers 160 190 18.826 Mechanical Engineers 2,230 2,420 8.5 ,� Surveying and Mapping Scientists 220 1230 4.5 Surveying and Mapping Technicians 260 280 7.7 Biological Scientists 650 690 6.2 Physical Scientists 480 550 14.626 Chemists 780 920 17.926 Life Scientists 140 150 7.1 Chemical Technicians 460 490 6.5 Urban and Regional Planners 290 300 3.4 Lawyers 2,130 2,350 10.3 Instrument Repairers, Precision 230 180 -21.7 2. Emerging Environmental Technology Occupations in California A strategic issue in the competitiveness of any region is the adaptability of its workforce to changing market needs. For this reason, the growth of emerging occupations is a good indication of the responsiveness of the region to changing industry skill needs. California EDD has identified the environmental management industry as one of the fastest growing because of increased public concern about pollution, and legislation mandating corrective and preventive measures. EDD has identified several emerging occupations in the environmental technology industry in California. These are listed in Table IV -12 (page 102). 26 One of 50 occupations in Alameda County with the fastest employment growth. 101 Table IV -12. Emerging Occupations in the Environmental Technology Industry in California27 • Environmental Analysts • Environmental Engineers • Environmental Lawyers • Environmental Microbiologists • Recycling Coordinators • Solar Energy System Installers • Urban Foresters • Water Pollution Control Inspectors • Asbestos Abatement Occupations Asbestos Abatement Contractors Asbestos Materials Building Inspectors Asbestos Project Designers Asbestos Removal Workers Asbestos Worker Supervisors or Asbestos Removal Mechanics Asbestos Consultants Site Surveillance Technicians • Environmental Protection Agencies Compliance Jobs Environmental Protection Specialists " Superfund" Contract Project Coordinators ✓ State And Native American Program Managers 1 RCRA Compliance And Enforcement Officers d " Superfund" Site Assessment Managers 1 " Superfund" Cost Recovery Specialists • Environmental Protection Engineers And Scientists ✓ "Superfund" Remedial Project Managers 1 "Superfund" On -Scene Coordinators ✓ RCRA Remedial Project Officers ✓ RCRA Permit Writers • Toxicologists 1 Hydrogeologists Compliance Officers In State And Local. Government And The Private Sector V Environmental Hazardous Material Specialists 1 Hazardous Waste Disposal Specialists ' t ✓ Environmental Hazardous Waste Management Specialists 1 Environmental Engineers Hazardous Material Transportation Workers HAZMAT Truck Drivers Truck Driver Helpers Equipment Operators Truck Dispatchers Leaded Paint Abatement Occupations Leaded Paint Abatement Inspectors And Assessors Leaded Paint Abatement Project Designers Leaded Paint Abatement Workers Leaded Paint Abatement Project Monitors Leaded Paint Abatement Supervisors Leaded Paint Abatement Consultants How well the growth in occupations in Alameda County match the emerging occupations can only be estimated. As shown in the comprehensive list of emerging occupations, some require skills in specific areas such as asbestos abatement, hazardous materials, and leaded paint abatement. Because corresponding OES codes were not available for these emerging occupations, Alameda County occupations that are employed in the environmental technology cluster have been estimated. These are shown in Table IV-11. In Alameda County occupations such as safety engineers, physical scientists, and civil engineers are 27 California Employment Development Department, Labor Market Information Division 102 projected to grow more than the average occupation in the county. Of the 17 listed, occupational employment for five were projected to grow less than the average for the county. They are: • Chemical engineers • Nuclear engineers • Surveying and mapping scientists • Urban and regional planners • Instrument repairers, precision 3. Diversity of Occupational Skills Required: Environmental Technology The environmental technology industry requires workers to have technical, and research skills as well as knowledge of federal, state and local laws and regulations. A sampling of k the range of skills include; :.:. - 'I i • Gather, interpret and report information • Find logical solutions to environmental problems • Make decisions based on information that can be measured /verified • Write and present technical /scientific information • Use high -level mathematics • Understand and apply Environmental Protection Agency (EPA) laws and regulations • Design pollution control /cleanup systems • Work on and adjust to many kinds of projects • Use logic and scientific methods • Understand and follow instructions written as chemical formulas, numbers or diagrams • Pay close attention to spoken /written details • Ability to work and coordinate with many kinds of people • Plan and coordinate work schedules, schedule and oversee the work of others • Collect and catalog information • Basic electrical wiring • Understand and use blueprints, drawings, or other detailed instructions • Take exact measurements • Understand and use basic arithmetic • Perform effectively under stress or in emergencies/hazardous conditions • Apply HAZMAT worker safety codes • Use technical knowledge to do investigations and inspections • Establish facts and draw conclusions based on information gathered • Make decisions based on laws, regulations and personal knowledge • Use applied high -tech methods • Understand and apply abatement laws and regulations 4. Skill Trends The need for skilled workers in the environmental technology industry was emphasized at ARRA- sponsored worksessions, where representatives from the industry identified the top requirements for growing this cluster. The need for a workforce trained in specific 103 environmental fields was identified as an important requirement. Interest in hiring former workers from the down - sizing national laboratories with adaptable skills was noted. To illustrate how the growth of key occupations related to the environmental technology cluster is taking shape in Alameda, more detail on one occupational example in the environmental technology industry was selected from the 1995 Alameda County Occupational Outlook, (produced by the CCOIS): The occupation Industrial Engineers was profiled. This profile indicates trends for this specific occupation: • 80 new Industrial Engineering positions are projected between 1992 and 1998. • About half of the employers surveyed expect employment in this occupation to remain stable over the next three years, and less than half expected employment in this occupation to grow.. • All employers require work experience and most substituted training for work experience. • Work experience for an Industrial Engineer position averaged 1 to 3 years. • Most new hires surveyed had a Bachelor's degree • Skills over the next three years include — Design drafting skills ' — Computer skills • Most employers found it difficult to find qualified and experienced applicants, and not difficult to find qualified inexperienced applicants. 5. Summary: Environmental Technology Training Priorities Accessible and available skilled workers are key to the growth and competitiveness of the environmental technology industry. Occupations range from biologists, scientists and engineers, to lawyers, urban and regional planners, and regulatory specialists. Representatives from this industry have indicated that it is difficult to find qualified applicants for positions in the environmental technology industry. Although employment in many occupations in Alameda County are projected to grow, of the 17 occupations used to describe the environmental technology industry, the following have projected growth rates between 1992 and 1998 at lower than average: 1. Chemical engineers 2. Nuclear engineers 3. Surveying and mapping scientists 4. Urban regional planners 5. Instrument repairers, precision G . CONCLUSIONS: BUILDING ALAMEDA COUNTY'S OCCUPATIONAL CAPACITY Adaptability of a region's workforce is an important factor in economic competitiveness. Alameda County must be able to supply the occupational diversity that growing technology- driven industry clusters require. This chapter identified the emerging occupations within industry clusters in California, and the corresponding range of occupations in Alameda County. The emerging occupations mentioned in this section are good indicators of the responsiveness of a region to changing industry skill needs. The good news is that Alameda County has many occupations within industry clusters where employment is projected to grow. However, employment in some occupations within growing clusters show below average growth in Alameda County. In order for Alameda 104 County and the East Bay industries to adapt to the competitive challenges of growing target industry clusters, the region should be prepared to provide employment development support and address potential training needs in the occupations listed in Table IV -13 below. In addition to the occupations listed in Table IV -13, many of the clusters have new occupations such as in the environmental technology and biotechnology industry clusters. In the information technology and communications cluster, skills in customer service and sales have been identified as critical occupations for growing this cluster. Exploring and investigating the training requirements for the skills associated with the new occupations emerging in the East Bay may be necessary to develop the occupational diversity in Alameda County. Table IV -13. Alameda County Occupations With Development Potential Biotechnology, CIuster Information Technology and Communications Cluster t: • Computer operators • Communications equipment operators • Electric and electronic engineering technicians • Mechanical engineering technicians • Writers and editors • Chemical Engineers • Biological Scientists • Veterinary Technicians • Veterinary Assistants • Chemical Equipment Tenders _ • Library Assistants Multimedia and Broadcast Cluster • Radio and TV announcers • Broadcast technicians • Computer operators • Electric and electronic engineering technicians • Producers, directors, and actors • Public relations specialists • Motion picture projectionists • Writers and editors Environmental Technology Cluster • Chemical engineers • Nuclear engineers • Surveying and mapping scientists • Urban regional planners • Instrument repairers, precision 105 Part V: Science and Technology Competencies in the East Bay A . INTRODUCTION The purpose of the Alameda Science & Technology Center project is to determine if some form of a science and technology center at the Alameda Naval Air Station is desirable and feasible. Part Two of this report, Demand for Cluster Development at the Alameda Naval Air Station (and the first part of this report, Concept Delineation), documents that growth of the four target technology - based clusters is taking place in Alameda County and that growth can reasonably be expected to continue in the county and at the Naval Air Station over the coming years. These earlier portions of this report point out that the growth of technology -based clusters is driven by both trends in global markets (demand) as well as responsiveness of the county and Naval Air Station site to the needs of these industries (supply). Part Three of this report, Assessing Competitive Advantage, showed that Alameda County compares favorably to competing regions on many indicators, and is, in particular, a stronghold of technological development from basic research to product development.. Moreover, this technological base is supported by a good business environment and high quality of life although the East Bay does compare less favorably in K-.12 education and college preparation, housing prices and 'perception of higher criine'rates Cleary, however, technological advantage is one of the most important assets the region has for use in achieving development of its future economy. The question is, what are these special technological assets and how can they be harnessed to accelerate growth of the technology- driven clusters? The objective of this part of the Alameda Science & Technology Center concept feasibility report is to document the sources of competency in the public institutions of the East Bay and the potential for better harnessing their potential for the economy. This analysis provides the first ever cross - institutional examination of these competencies. Within the limits of this inquiry, attempts to portray the scale of R &D and research personnel concentrated here. It also attempts to identify the themes and issues around which potential new initiatives to harness these competencies could be built. The San Francisco Bay Area, and particularly the East Bay, offers world class scientific and technological expertise through public institutions that can be brought to the industries of Alameda County to accelerate cluster growth. Although the primary mission of the Universities is to serve academic science, and the primary mission of the local U.S. Department of Energy National Laboratories is to serve government programs, these institutions all have extensive capabilities that can and do serve the marketplace. This section provides an overview of competencies of six public institutions: The University of California at Berkeley (UCB), the University of California at San Francisco (UCSF), Lawrence Berkeley National Laboratory (LBNL), Lawrence Livermore National Laboratory (LLNL), Sandia National Laboratory - California (SNL), and California State University Hayward (CSUH). While these institutions do serve the marketplace today, there may be better ways to build bridges to commercial users and to foster entrepreneurship. This part of the Alameda Science & Technology Center report provides a partial overview of the science and technology multidisciplinary competencies that these institutions have to offer. Five multidisciplinary technology areas were selected for review due to their applicability to the target technology -based industry clusters that are the focus of the concept feasibility process. These multidisciplinary areas are: biotechnology, environmental technology, advanced materials and manufacturing, microelectronics and microfabrication, and information technology. These areas of competency were examined in their broadest definition, rather than as narrow specialty fields. 106 For each of these science and technology theme areas, information was gathered in a systematic process, beginning with the assembling of profiles of university and laboratory research and staff activity from institutional offices and the World Wide Web, followed by identification of senior researchers in each field from across these institutions who are knowledgeable about their institutions research activities. 35 interviews with these scientists followed. Organizational units, rather than individual researchers, were profiled to build this cross - institutional perspective. This analysis is, at best, only illustrative of the depth and breadth of science and technology competencies across these institutions. For this reason, the observations and conclusions provided here should be viewed as indicative and by no means comprehensive. The summary of research findings from this work is presented in two stages, using the competency fields as the organizing theme. First, a brief overview of each public organization is presented, along with a summary of the overall resources in each theme area in terms of estimates of annual research budgets, research staffing and facilities available to outside users. These estimates represent the first cross - institutional summary of East Bay /San Francisco area science and technology competencies produced to date; however, they should not be viewed as comprehensive. Following this summary, the competencies across institutions are described.- escribed . within each field. For each field this encompassed ab estimate of the total research budgets in 1994 dollars, research staff levels in each field, and special facilities that focus on that field of research. After this summary, an overview of potential areas of commercial markets interest among researchers in the field is provided in each field. This is followed by observations on the constraints and requirements believed to be essential to opening up future researcher- industry collaboration. The conclusion of this analysis summarizes barriers to building bridges to the marketplace. This includes roles for a Science and Technology Center at Alameda Naval Air Station that might enhance connections between the institutions and the growing industry marketplace that Alameda County and the Alameda Naval Air Station seek to cultivate. B . OVERVIEW OF PUBLIC RESEARCH INSTITUTIONS 1 . Introduction Five East Bay and San Francisco area public institutions with leading research programs are examined here to determine the overall concentration of science and technology research in five different fields. 2. University of California: UC Berkeley and UC San Francisco The University of California (UC) is a nine campus state - supported system of education serving undergraduates, graduate programs, extension programs and significant world class research programs. The campus at Berkeley is the largest, offering degree programs to an average of 31,000 students annually. UC Berkeley has 4,884 graduate students, of which 2,857 are in the sciences and 1,573 are in engineering (National Science Foundation, Survey of Graduate Students, 1994.) Located within 10 miles of Alameda, the University of California at Berkeley (UCB) consistently ranks within the top five universities in the country in all areas of engineering and science. UCB had 29 inventions reported in 1995 and 231 active US patents. The San Francisco campus of the University of California (UCSF) is home to 2000 graduate students and postdoctoral fellows and 15,000 staff members, including faculty. With an emphasis on medical programs, UCSF is the premier biotechnology research center in Northern California. UCSF has 11 research institutes, 1500 laboratories and more than 2,000 ongoing research projects. 107 3. Lawrence Berkeley National Laboratory The Ernest Orlando Lawrence Berkeley National Laboratory (LBNL) is located atop the Berkeley hills just north of Oakland. The laboratory includes 3300 scientists and staff, and is a center of research in accelerator physics, energy and the environment, and health issues. Many facilities at LBNL are open for outside use, including the Advanced Light Source, and National Energy Research Super computer. Each year nearly 1800 guest scientists and 50,000 visitors visit Berkeley Laboratory. LBNL has a historically close, symbiotic relationship with UC Berkeley. 4. Lawrence Livermore National Laboratory The Lawrence Livermore National Laboratory has served as one of the nation's top research centers for national security since the 1950's. As a result of its expertise in physics, engineering, and computer sciences, LLNL has generated a number of innovations that have found their way into the marketplace. Home of 8000 scientific and technical personnel, LLNL has been successful in patenting and licensing a number of Laboratory inventions, and sponsors a large industrial partnership and commercialization program, including an extensive array of Cooperative Research and Development Agreements (CRADAs) with industry, and a gjrowing amount of w6rk for others (estimated to be $107 million for 1996). } I Both LLNL and LBNL are operated for the U.S. Department of Energy by the University of California. 5. Sandia National Laboratories Sandia National Laboratories are multi - purpose DOE laboratories. Two major sites are in Albuquerque, New Mexico (4000 personnel), and Livermore, California (1000 personnel). Sandia Laboratories are operated by the Lockheed Martin Company. The California site is the home of several large user facilities, including the Combustion Research Facility, and the Integrated Manufacturing Test Laboratory. Sandia has signed a large number of Cooperative Research and Development Agreements (CRADAs) with industry. 6. CSU Hayward California State University at Hayward offers a wide range of expertise in entrepreneurial business and technology, transfer training. It also offers a graduate program in Multimedia and Electronics Arts. 7. Summary of Research Resources The summary Table V -1 (page 109) shows the wealth of resources, in people and research programs, that are available in the target fields. The East Bay and San Francisco Bay area are centers for over $100 million in biotechnology research, almost $200 million in environmental research, $50 million in microelectronics research, $120 million in advanced materials and precision manufacturing research, and $170 million in infoimation technologies. These fields total almost $1 billion in annual multi- disciplinary science and technology research activity in the four fields, employing an estimated 3000 researchers whose work focuses in these areas. 108 Table V -1. Estimated Resources in Selected Technology Areas of Combined Institutions C. REPRESENTATIVE RESEARCH ACTIVITIES, COMMERCIAL INTERESTS, AND NEEDS 1 . Introduction The following sections of this report describe the research activities ongoing within the East Bay and San Francisco area for each of the five fields of science and technology. For each field the discussion reviews the primary activities of major public research institutions, the areas of commercial work in which the institutions are involved, illustrations of their market interests, and concerns and needs to better link researchers to the commercial marketplace. 2. Biotechnology a. Summary of Biotechnology Activity Biotechnology research is a field of significant growth in the East Bay and San Francisco. In the broadest terms, biotechnology is an interdisciplinary field comprising basic science in biology, biochemistry, chemical engineering, computer science and focusing on applications in human health (diagnosis and treatment, a S5.7 billion US market in 1995), plant and animals (protection, treatment and improvement, a $660 million market in 1995), chemicals (nutritional supplements, flavors, cosmetics, specialty chemicals, a $330 million market in 1995), energy (alternative fuels), and environment (an emerging market for contaminate monitoring and remediation). The biotechnology resources of the local campuses of the University of California (UC) and the national laboratories are summarized in Table V -2 (page 110). 109 Annual Research Budget, millions of $ Research Staff Examples of Special Programs and Facilities Biotechnology 107 650 Molecular Design Institute, Human Genome Center Environmental technology 191 1260 Combustion Research Facility, Center for Accelerator Mass Spectrometry Advanced Materials and Precision Manufacturing 390 545 Integrated Manufacturing Test Laboratory, Advanced Light Source Microelectronics 5 190 Extreme UV Lithography, Center for Microelectronics and Optoelectronics Information technologies _ r: 167 - 885 National Energy. Research Scientific Computing Center, Electronic Arts Center. Estimated total: 860 3,530 C. REPRESENTATIVE RESEARCH ACTIVITIES, COMMERCIAL INTERESTS, AND NEEDS 1 . Introduction The following sections of this report describe the research activities ongoing within the East Bay and San Francisco area for each of the five fields of science and technology. For each field the discussion reviews the primary activities of major public research institutions, the areas of commercial work in which the institutions are involved, illustrations of their market interests, and concerns and needs to better link researchers to the commercial marketplace. 2. Biotechnology a. Summary of Biotechnology Activity Biotechnology research is a field of significant growth in the East Bay and San Francisco. In the broadest terms, biotechnology is an interdisciplinary field comprising basic science in biology, biochemistry, chemical engineering, computer science and focusing on applications in human health (diagnosis and treatment, a S5.7 billion US market in 1995), plant and animals (protection, treatment and improvement, a $660 million market in 1995), chemicals (nutritional supplements, flavors, cosmetics, specialty chemicals, a $330 million market in 1995), energy (alternative fuels), and environment (an emerging market for contaminate monitoring and remediation). The biotechnology resources of the local campuses of the University of California (UC) and the national laboratories are summarized in Table V -2 (page 110). 109 Table V -2. Estimated Biotechnology Resources of Public Institutes in the East Bay and San Francisco Biotechnology Annual Research Budget, millions of $ Research Staff Examples of pecial Programs and Facilities UCB 6 60 Cancer Research Laboratory UCSF 30 80 Molecular Design Institute Center for Environmental Biotechnology Center for Health Care Technologies LBNL 47 350 LLNL 24 60 Estimated Total 107 550 b . Research at Public Institutions UCSF and UCB The programs of'the University of California campuses at San Francisco and Berkeley are leaders in the biotechnology field from basic science research to applied science to develop enabling technologies for human health and agriculture. Biotechnology at UCSF is spread out across several programs, including Biosciences, Pharmaceutical Chemistry, Biophysics, Bioengineering and Biomedical Sciences. At least one third of all researchers at UCSF are engaged in activism related to biotechnology. About 20% of all industry sponsored research is focused on biotechnology. One of the key research programs at UCSF is the Molecular Design Institute (MDI). The goal of the Molecular Design Institute is to promote and coordinate research in the broad area of molecular design with particular emphasis on drug design (e.g. re- engineering of macro molecules). The MDI focuses on the development of new methods to aid in the discovery of novel phaiuiaceutical agents. UCSF also operates a Biotechnology training program for the National Institutes of Health. UCSF is also the home of the Hooper Foundation, the Cancer Research Institute, the Hormone Research Laboratory, the Metabolic Research Unit, and the Reproductive Endocrinology Center. UCSF is expanding its work in biomedical informatics, which can link laboratories with initiatives, such as the Human Genome Project. At UCB, biotechnology programs include the Cancer Research Laboratory, the Laboratory of Chemical Biodynamics, the Virus Laboratory, the Center for Plant Developmental Biology, the Superfund Research Program, the Berkeley branch of the Agricultural Experiment Station, the Bioremediation Education, Science and Technology Centers (BEST), the Health Effects of Toxic Substances program, and the Linn Center for DNA Damage and Repair. Across the UC system, all campuses participate in the new STAR (Strategic Targets for Alliance in Research) project. The Biotechnology STAR project is a matching grant program that links UC scientists and California businesses in biotechnology research. The program enhances the development and transfer of research discoveries to support the creation and maturation of entrepreneurial biotechnology companies. The program is relatively new and is a demand - responsive approach to incenting collaborative research. In other words, those companies who know who and what they want to work on can receive matching funds for their R&D. 110 LBNL Lawrence Berkeley National Laboratory carries out biological research in three divisions: life sciences, structural biology, and through the Berkeley Lab, the Human Genome Center. Bioscience and biotechnology competency focus on structural biology; genome research; bioinstrumentation; molecular cytogenetics; medical imaging; the biology of human diseases; and biomolecular design. A new initiative at LBNL started in 1996 is the Center for Environmental Biology (see Environmental Technology) which focuses on interdisciplinary solutions to environmenal problems. The LBNL is active in developing new tools for biotechnology applications such as the confocal microscope, and new techniques for identifying senescent cells, and it has an extensive list of biotechnology techniques available for transfer to industry. LLNL Lawrence Livermore National Laboratory's Directorate of Biology and Biotechnology Research includes the Human Genome Center, programs in Human Risk Assessment, DNA Repair and Chromatin Structure, Technology Development, and the Institute for Genetics and Genomics. In addition, the Center for Health Care Technologies was established in 1994. The Center is dedicated to providing cost - effective medical techtiolbgies in partnership Witlf industry and the ' health care community. Some current research interests include computational modeling (of effects of strokes), laser characterization (of blood clots), miniaturization of interventional clinical tools, and tissue welding. LLNL holds a patent for chromosome painting, and along with LBNL, specializes in the use of fluorescent in situ hybridization (FISH) for the identification of genetic material. Sandia Sandia National Laboratories is pursuing biotechnology in several special areas: one is optical measurements of biological processes using bio /optical sensors; another is the application of advanced technology to agriculture. In the latter initiative, which was initiated by the Department of Energy with the encouragement of Sandia, some possibilities being investigated include advanced food preservation, the use of biofuels, the development of cellular microprobes, laser radiation to treat agricultural products, the study of enzyme mechanisms in photosynthesis, molecular farming using genetic engineering, plant and animal genome mapping, rapid -scan immunoassay development, and pest and pathogen detection and management. Human Genome Research in the UC System: Both LBNL and LLNL participate in the Human Genome Research program. Each specializes in a different way. The LBNL Human Genome Center excels in genomic DNA sequencing, genetic and physical mapping, and DNA isolation and analysis. LBNL personnel have said that, to speed the sequencing of genes, it would be valuable to build an automated environment — a sort of sequencing factory — in a nearby location. The Human Genome Center at LLNL has focused its efforts on human chromosome 19, where it has generated a map spanning 92% of the chromosome. Over 450 Kb of high accuracy sequence has been completed, including three DNA repair genes. c . Commercial Collaboration The biotechnology programs at UC and the Laboratories have experience working with industry, although faculty and researchers express a desire for more opportunities. More commercially 111 focused R &D is likely as the relatively new programs that are now in place begin to mature. Examples of current commercial projects between UC or Labs and the marketplace include: • Collaboration with Oceana Systems of Alameda (UCSF) • Research relationships with a number of pharmaceutical companies, the Petroleum Research Forum, and CYTECH (LBNL) • Established links to several health care services (LLNL) d . Market Interests Areas of commercial market interests beyond current biotechnology projects identified through this project analysis include applied research on: • Bio- information, biostatistics • Automation of health care, including: database design, knowledge management and health services dataresearch • In situ oreniediation ' I. bi • Human genome byproducts • Medical instrument development • Disease susceptibility studies (plant and animal) • Designer drugs for the human therapeutic markets e . Enabling Connections to the Marketplace Individual biotechnology researchers contacted for this project have described the barriers to collaboration and commercialization that they have encountered, and have consistently expressed their needs for mechanisms to better facilitate their working with business. Several difficulties were identified, many of which are common to researchers in other fields. Among these are: • Matching Capabilities with Market Clients: Researchers report difficulty in finding and matching the right people in their organizations with outside companies, despite improvements in technology transfer services. • Acquiring Funding to Explore Commercial Markets: Acquiring funding to enable researchers to pro - actively move beyond current mission focused research and reach out into the marketplace. • Meeting Market Cost Expectations for Research Costs: Managing the costs of research services to the marketplace. Costs for industry - supported research at the National Labs is sometimes viewed (by researchers) as too high; at times to the point where industry would not pay for the research they would otherwise like to support. • Low Entrepreneurial Motivation Among Researchers: University and laboratory research can often lack an entrepreneurial nature: rather it focuses on straight - forward goals. • Lack of Institutional Encouragement: Researchers perceive institutional or attitudinal problems regarding their work for commercial clients; as with academia or mission focused laboratories, business relationships have a fundamentally lower priority of importance. 112 3. Environmental Technology a . Summary of Environmental Technology Activity Environmental technologies are an interdisciplinary field of research that bridges the widest range of science and technology competencies of the five areas examined in this report. Environmental technology encompasses capabilities from across the life and environmental sciences, physical sciences, all aspects of mechanical, electrical and civil engineering. The commercial markets for environmental technology are enormous, subsumed within a national market of $135 billion annually in expenditures for all aspects of major public works and associated services. Technological markets include a wide range of services focusing on testing and analysis, engineering and management, as well as large markets for water, air and waste control and management equipment, as well as instruments and controls for all aspects of water, air, waste and energy management and recovery. Moreover, while federal expenditures in this market have slowed, industry expenditures on prevention and treatment of environmental problems has increased. Industry is now generally estimated to spend approximately 10% of total revenues on environmentally-related design and engineering matters. In addition, the :East Bay is a center for rdsehrch and innovation in environmental technology, with strong interests that include pollutant control, clean -up technologies, geologic hazard studies, renewable and alternative energy technologies. The East Bay's strengths in biotechnology, engineering and computer science enable the region to bring to bear a strong and synergistic portfolio of capabilities on a wide variety of environmental challenges. The environmental technology resources of the University of California at Berkeley and the Laboratories are indicated in Table V -3 below. Table V -3. Estimated Environmental Technology Resources of East Bay Institutions Environmental Technology Annual Research Budget, millions of $ Research Staff Examples of Special Programs and Facilities UCB 8 60 Berkeley Environmental Restoration Center, Energy and Resources Group LBNL 40 300 Bioremediation Education, Science and Technology Center LLNL 95 650 Center for Accelerator Mass Spectrometry Sandia 48 250 Combustion Research Facility Estimated Total 191 1,260 UCB The programs of the University of California at Berkeley are primarily found in the Engineering School, primarily in the Departments of Mechanical Engineering and Civil Engineering, along with faculty in the School of Public Health, there are also close links to programs in the biological sciences. Several special programs include industrial ecology or "green manufacturing" in which the environmental impact of manufacturing processes, especially the use of solvents, is minimized through carefully controlled procedures and recycling. The Berkeley Environmental Restoration Center sponsors research on fast clean -up of wastes using thermal approaches (e.g., steam injection), rather than more expensive, slow or damaging processes. Also, combustion research focuses on pollutant control. The BEST program ( Bioremediation, Education, Science and 113 Technology) which is in the Biochemistry Department, is actively involved in applying biotechnology to environmental clean -up at very large industrial scales. UCB works with LBNL on applying these and other techniques to problems, such as toxic metals and monitoring of waste water. Sensors Available: One spin -off from environmental programs at the national laboratories in the East Bay has been the development of many specialized sensors. These devices can measure the presence of specific chemicals, specifies, ongoing control processes, or provide iinages of clean -up activities. Other sensors include fiber optic devices for oil well examination and oxygen sensors for sea and space exploration. LBNL Lawrence Berkeley National Laboratory carries out environmental research in a number of areas, including participating in UC's Bioremediation Education, Science and Technology Centers; operation of the Center for Environmental Biotechnology; and the Environmental Research, Program of the Energy and Environment Dlviion. The last of these is a multi- disciplinary ''- program with the goal of understanding and mitigating anthropogenic effects on the environment. Program researchers investigate and develop efficient and environmentally benign combustion, methods of pollution abatement and destruction of toxic materials, and novel methods of detection and analysis of criteria and non - criteria pollutants. Indoor air pollution is one focus of study. - Another focus of the group is the examination of atmospheric processes and a variety of other - ecological systems, including terrestrial ecosystems, modern wetlands, freshwater and marine environments, and ancient ecosystems. A major new initiative established in 1996 was the establishment of the Center for Environmental Biology, which brings together the multiple disciplines of pollution prevention, bioremediation, waste site characterization and monitoring, hazardous waste treatment, human exposure and comparative risk assessment, and ecological risk assessment and restoration. Interviews with personnel indicate interest in pursuing the goals of this center in conjunction with the potential growth of industry at the Alameda Naval Air Station. Conversations with LBNL's environmental team and the Navy on collaborative environmental projects are already underway. LLNL Lawrence Livermore National Laboratory operates the Environmental Programs Directorate whose research mission is to mitigate environmental hazards and to repair environmental damage. Current projects number over 100 in areas of research including: atmospheric:radiative transfer, chemistry, dynamics, and climate processes; physics of the atmospheric boundary layer and cloud processes; seismic processes; geochemistry and geophysics; dosimetry and risk analysis of radioactive and toxic substances; isotopic and ion beam sciences; modeling of subsurface flow and transport; subsurface imaging and characterization; in situ environmental remediation using natural and engineered processes; design, analysis, and testing of advanced waste - treatment technologies. In addition, LLNL operates the Center for Accelerator Mass Spectroscopy, which provides isotopic sample analysis to outside users or customers. This capability is applied to dosimetry of carcinogens and mutagens, to studies of the hydrological record of Northern California watersheds, and to biogeochemical processes in the carbon cycle. 114 Sandia Sandia solves technological problems related to environmental cleanup and protection, the efficient use of energy, and transportation. Research is focused on environmentally responsible weapons dismantlement and other base cleanup for Department of Defense sites, imaging soil contaminants, remotely sensing atmospheric components for global climate change, recycling explosives and propellants, and cleaning up hazardous waste using supercritical water oxidation. Sandia operates the Combustion Research Facility (CRF), a major DOE user facility. The CRF's mission is to conduct a broad range of basic and applied research and development in combustion science and technology. Interaction with automobile and furnace manufacturers leads to the design of more efficient and cleaner engines and furnaces. Energy and the Environment: Much of the environmental expertise of the East Bay's National - Laboratories is a result caf decades of DOE - sponsored research on energy systems. These result in red'ucgd emissions from engines, reduced energy, wage and thus reduced,pQllution in-conversion systems, and less heating waste for buildings. Much of the modeling capability was developed originally for prediction of nuclear processes, and is now being applied to all facets of the environment, from deep in the Earth to the land surface, and from groundwater to the upper reaches of the atmosphere. b . Commercial Collaboration The environmental programs at UCB and the Laboratories have established relationships with industry. Most substantially, these relationships have been developed at LBNL, where non- defense links.between research and the marketplace have long been important. Examples of current collaboration between East Bay environmental researchers at public institutions and the commercial marketplace include: • Microbial refinery waste cleanup: UCB/Exxon • Agricultural waste cleanup: Central Valley Water District • Site cleanup demonstration: Southern California Edison, Chevron • Site clean-up at the Alameda Naval Air Station (UCB/LBNL have $20 million DoD grant) • Clean water systems: East Bay Municipal Utility District • Green manufacturing technologies: FORD, GM • CRADAs for explosive and radioactive clean -up labs are seeking opportunities to expand • Spin -offs: Thermatrix (commercial product cleanup for paint fumes) • Collaboration with sensor companies: Beckman Instruments (among others) • Containment technology: used by Architecture and Engineering firms • Fuel additive: lubricant c . Market Interests Among the interests that university and laboratory researchers have identified beyond their ongoing collaborations are potential collaborations in: 115 • Use of isotopes and special sensors to monitor clean -up • Bioremediation of toxic metal wastes and waste water treatment • Steam injection for thermal cleanup • Sale of well - logging instruments • City and utility treatment facilities • Sensors for pollutant species detection • CAD tools • Atmospheric monitoring and remote sensing • Telemetry for remote sensing and unmanned aircraft • Digital imagery, for in situ and remote sensing applications d . Enabling Connections to the Marketplace Individual researclieTs in the field of environental research have described the barriers to collaboration and commercialization that they have experienced, and have expressed their perception of the need for improvement in mechanisms for working with commercial markets. Again, many of these concerns, while arising from interviews with environmental researchers at - universities and laboratories, are consistent across other fields. Examples of concerns include: • Lack of Entrepreneurial Motivation: Many of those interviewed have expressed the view that most scientists in environmental sciences are not personally interested in commercialization of technology and while believers in the potentials of their discoveries, are not necessarily interested in leading commercialization efforts. • Absence of Incentive to Develop with Commercial Performance in Mind: Researchers commented that their peers do not set out to develop technologies which are cost - effective or user - friendly, and that they are not motivated to do so. • Lack of Continuity to Enable Commercial Development: Product development in the laboratories is difficult to pursue or complete because after the typical government supported research phase there is often no support for further work, such as commercial prototype development. The term "Valley of Death" was used by a number of researchers who have tried to mature their innovations to a degree suitable for commercialization. Note that traditional early stage resources for commercial development, such as the Federal Government's Small Business Innovation Research Program (SBIR) were not disparaged, but were viewed as unfamiliar territory. • Concern with High Overhead Disincentives: Environmental. researchers remarked on their high overhead costs, especially at the National Laboratories, which make it difficult to secure industry interest and financial support. Research institutions may lack information or management policies on competitive pricing of services. • Missing Marketing Capabilities: There is little marketing skill among researchers or their administrative staff which might help in attracting industry interest in certain developments, potential products and processes. This is understandable, since these institutions have academic and national service missions. However, researchers expressed the belief that for many environmental innovations some form of market development is needed; just letting the world know about new methods would be helpful, but systematic promotion of capabilities may require a more developed commercial marketing system (whether from within or external to the research institutions). 116 • Concern with Intellectual Property Policy: A perceived obstacle to industry collaboration cited by researchers is the University of California's Intellectual Property Guidelines. Accurately or not, researchers have described these policies unfavorably using many terms, including "onerous." While specific concerns vary from researcher to researcher, there are historic issues underlying management of intellectual property that are of fundamental concern ranging from the overall complexity of intellectual property processes to the uncertainty of processes involving negotiation of terms with commercial clients. At a minimum, researchers do not feel they have an easy to understand or use system (and share this concern with researchers in institutions nationally): • Dissatisfaction with Technology Transfer Marketing Capacity: Independently from their concerns with intellectual property, researchers expressed the view that their technology transfer offices are not effective in bringing users together with solutions. Researchers appear to have expectations for a scale of technology transfer activity that may be based on a higher degree of staffing and expertise than is typically available. (See "Missing Marketing Capabilities" above). • Lab Resistance to Market Timing Needs: Researchers report -.an apparent mismatch between laboratory cultureeand the timing of commercial opportunities. =;Lang range research projects typically move slowly and systematically, as contrasted to rapidly and opportunistically, which characterizes successful market- relevant research and development. Long range research could also have this "market- oriented" character without distorting its long -range and systematic quality; it is a matter of institutional culture and management _ flexibility and encouragement. • Industry Resistance to Innovation: Researchers, particularly in the remediation and green manufacturing areas, have said that industry is highly bureaucratic and slow in responding to researcher innovations. They claim that mature industries don't want to change, that establishing new standards (for solvent recycling, for example) is extremely painful, that the environmental industry is risk averse. The compound difficulty of finding industries willing to begin to adopt innovations is a disincentive to commercialization efforts. • Inconsistency of Government Policies Towards Commercial Markets: Finally, researchers interviewed commented that the DOE policy toward technology transfer, industry collaboration, and commercialization, whether pro or con, has not been consistent. Despite the words in laboratory brochures, individual researchers do not sense strong commitment or support for these activities. Although this may be due in part to individual personalities, it also results from federal budget support levels and unresolved policy and administrative issues. 4. Advanced Materials and Manufacturing a. Summary of Advanced Materials and Manufacturing Activities Advanced materials are responsible for many of the innovations in today's modern world. Advanced materials is an interdisciplinary field that draws extensively on competencies in the physical sciences and from all facets of engineering. Today's field of advanced materials applications focuses on research and engineering across a wide range of physical substances and methods of processing. These include: metallurgy, with its emphasis on the physics and engineering challenges of light weight, strong metals, powdered metals, shape memory alloys; polymers, including unique substances, such as aerogels and research on engineering properties for adhesives, sealants and coatings, thermoplastics, thermosets, resin matrix composites and various fiber composites that bring together different materials into new configurations; ceramics, such as high- temperature materials and structural ceramics for engines, specialty glasses for electronics, and optics, electronic ceramics, and ceramic coatings; electronic materials, from new semiconductor or superconductor materials and methods of coating etching surfaces and, fields such as membrane separation for macro, micro and ultra filtration, reverse osmosis, gas 117 separation, permeation, electro and hemodialysis. Manufacturing advances at the university and laboratories are focused on testing and on finding smarter, more efficient ways to produce products, as well as the precision fabrication of parts. The advanced materials and manufacturing resources of UCB and the Laboratories are indicated in Table V -4 below. Table V -4. Estimated Advanced Materials and Manufacturing Resources of East Bay Institutions Advanced Materials and Manufacturing Annual Research Budget, millions of $ Research Staff Examples of Special Programs and Facilities Combinational synthesis of materials, Engineering Systems Research Center UCB 10 45 LBNL 300 100 Advanced Light Source, National Center for Electron Microscopy LLNL 60 300 Materials Research Center Integrated Manufacturing Test Laboratory Standia ? 20 +' ' 100 Estimated total 390 545 UCB Beyond UC Berkeley's leading work in materials science, UC Berkeley has one of the nation's leading programs in precision manufacturing within its Engineering Systems Research Center in the Department of Mechanical Engineering. The Department itself trains in bioengineering, controls and robotics, design, manufacturing and materials, dynamic and dynamic systems, thermosciences, fluid mechanics and solid mechanics. The Engineering Systems Research Center is active in research on precision manufacturing in semiconductors, optics and lenses and works with the aerospace industry and collaborates with the national laboratories on a variety of projects. Among the themes worked on are advanced measurement technologies, process development, such as chemomechanical polishing, and software processes for precision manufacturing. LBNL The Lawrence Berkeley Laboratory program works closely with some of the programs of the University of California at Berkeley. For example, the two organizations work together in the area of combinatorial synthesis, in which special properties of high -tech material samples are tested in a large array of variations. In this exciting new approach, researchers use masks to deposit thousands of distinct metal -oxide molecules onto an area the size of a checkerboard square. As many as 10,000 compounds can be tested in a single day. In other areas of material science, LBNL researchers study: • production of new synthetic fuels through the use of organo - metallic catalysts. • development of materials for high - performance rechargeable batteries and fuel cells. • development of catalysts for advanced thermochemical energy reactions. • use of novel materials, such as aerogels and superconductors, for energy conversion and transmission. LBNL also operates the National Center for Electron Microscopy, a DOE User Facility providing advanced instrumentation for electron - optical characterization of materials. The Advanced Light 118 Source (ALS) is also a User Facility which can be used to provide chemical analysis of material samples. The ALS is the most sophisticated facility in the US for making the surface measurements; such features are important because they often control the entire character of a solid. LLNL Lawrence Livermore National Laboratory has an active and highly sophisticated manufacturing and materials program. Their fabrication facilities include capabilities for super high precision cutting and machining, forming, grinding, welding, brazing, coating and joining. Among its many capabilities, LLNL has unique expertise in the production of large optics. Specialized capabilities in fabrication support services range from CAD /CAM design to metallographic analysis and custom machine tool development. In the Materials Science and Technology Division, capabilities focus on metallurgy, ceramics, electrochemical processing, metals processing and corrosion, coatings, material characterization, surface science, and solid state chemistry. The Lab also has engineering expertise in physical properties measurements, strain gage experimentation and analysis, calibration services and predictive maintenance are also provided. Sandia • The focus of Sandia's work in manufacturing in the East Bay is the Integrated Manufacturing Test Laboratory (IMTL) at Livermore, much of Sandia's advanced materials capabilities are located at its facility in New Mexico. This multi - million dollar, 90,000 square foot center is both a user facility and a world -class research laboratory. Sandia scientists and engineers conduct research and development in microelectronics, materials synthesis and processing, materials 'characterization, process sensors and simulation, engineering theory and design, prototype fabrication, demonstration techniques, and information technologies related to manufacturing/process control. The IMTL is an agile manufacturing test bed for low -cost prototypes and development. Applications include welding technologies, semiconductor fabrication, sensors, high- performance metals, ultrahard ceramic coatings, and computational modeling and analysis. One goal of the IMTL is to apply a systems approach to production systems and practices. The need for a systems approach is driven by the complexity of today's manufacturing operations. The increasingly distributed nature of production has led Sandia to explore not only processing technologies, but new information networks, collaboration/coordination tools, and business practices. Given the opportunity to harness all aspects of its "product realization cycle" concept in systems engineering for manufacturing, Sandia could assist US industry in developing products for in -house programs as well as the general marketplace. Special Materials: Aerogels: Aerogels are highly porous solid materials that are composed of a web of ultra -fine silica strands (approximately 0.2 %) containing air (99.8 %). Aerogels are transparent and very low density materials with many uses, as identified by LBNL researchers. These include high efficiency window and lighting materials, radiation detectors, and cosmic dust collectors. Photo - luminescent silica aerogels are used as oxygen sensors. High performance capacitors also use aerogels because of their high internal surface area. Superconductors: Superconductors are a special, type of material with no electrical resistance at very low temperature. They can be used in thin -film electronics devices or high power applications, such as magnets or trans - mission lines. LBNL and LLNL, as well as UCB, have expertise in the design and application of super - conducting materials and systems, using both niobium -based and the newer, ceramic materials. 119 b . Commercial Collaborations The advanced materials and manufacturing programs at UCB and the Laboratories have established relationships with industry. They are particularly developed at LLNL and Sandia where weapons programs have pushed these fields to the cutting edge. In recent years these defense . technologies and existing links with industry have become even more important for potential efforts to expand universities and laboratories into commercial sectors. At LBNL, "User Facilities" play an important role in enabling industrial relationships. Current links with industry include membership in or sponsorship of a variety of consortia, trade association initiatives, as well as individual collaborations with companies. Examples include initiatives with: • American Iron & Steel Institute: Metals R &D • National Metals Institute: sheet metal property enhancement • National Machine Tool Partnership: machine tool R &D • BTI: Battery Technology Initiative. • • z USA $.attery: Consortium • NCMS; National Center for Manufacturing Sciences, Detroit • Aeroject: CRADA to develop aerogels • DuPont: Partnership for hospital products • Quantum Optics: Captive business relationship • Therrna Lux: Spin -off commercialization agreement • Superconductivity, Inc.: Business using LBNL Cabling Machine • Trinity Flywheels: Spin -off from LLNL • Polystor: Spin -off from LLNL • Tinsely Labs: Precision manufacturing process software • Burr Formation Consortium c . Market Interests Interviews with scientists and researchers identified the following areas of interest in commercial applications of advanced materials: • Commercialization of . aerogels for conservation products, electronic products, and sensors • Joint development and fabrication of superconductors • Transportation sector, especially clean vehicle technology • Green manufacturing • Materials manufacturability, information -based manufacturing, • Batteries and fuel cells, energy storage products d . Enabling Connections to Market Individual researchers in advanced materials described the barriers to collaboration and commercialization that they have experienced, and have expressed their views of how to improve the environment for working better with business. Many of these observations are common to other fields of research. They include issues such as: 120 • Industry Risk Aversion: A number of researchers view business (especially established industries) as risk averse, with a "fear" of new technologies or change in standards or approaches. This view reflects the understandable difference in motivation and perspective between research and business; one driven by innovation the other by business performance. New material innovations (like environmental technologies) can add new value and solve problems, but can also be incompatible with a company's position in a competitive marketplace driven by standardization. • • Lack of Entrepreneurial Outlook: Consistent with the observations of researchers in other fields, material scientists observed the lack of entrepreneurial spirit among many of their peers, particularly within the University where there is less perceived reward for such activities. • Burden of Intellectual Property Procedures: As with other researchers, successfully negotiating intellectual property rights has also been reported as an obstacle at the University. • Administrative Efficiency: Comments from researchers indicator that national laboratory policy, bureaucracy, and time delays were obstacles to ease of work for others. • Declining Availability of CRADA Funding: The increasing inability to secure funding for the internal (laboratory) porticm of CRADAs, which had grown in-previous ;years, has hindered certain types of collaborative projects with industry. In fact, this last issue is so problematic that the researchers report that CRADA, as a technology transfer mechanism may not be used much longer. • Need for Marketing Assistance: Researchers report that they know of laboratory innovations that have failed in the marketplace because of inadequate marketing assistance and market development. In the case of aerogels, which should have a bright technological future, not only has industry resistance and insufficient market development been an issue, but interim funding for development has also been inadequate. 5. Microelectronics and Microfabrication a . Summary of Microelectronics and Microfabrication Activity Microelectronics and microfabrication are interdisciplinary fields of research and application that focus on the design and manufacture of devices for information storage and processing. The competencies involved in this field encompass the physical sciences (particularly physics and materials science), mathematics, computer science (for the architecture and operation of systems) as well as electrical, chemical and mechanical engineering. Microelectronics is most often associated with the design and production of memory and microprocessor devices and their integration into end -uses, from instruments for measurement and control to computers and telecommunications and an increasing array of consumer products, such-as household appliances (refrigerators, washing machines, security systems). Microfabricationi is the field of activity that pertains to the manufacture of microelectronic devices, from the circuit design using computer aided design and engineering (CAD /CAE) to techniques for lithography that transfer the images of microelectronic circuits to materials, to the production and etching of semiconductor materials that ultimately become the microelectronic devices. This includes the emerging field of microfabrication that focuses on the creation of micro- miniature devices, such as embedded sensors and miniature control valves. The San Francisco Bay area and the East Bay are among the leading centers of excellence in the field of microelectronics and microfabrication. A summary estimate of the Levels of research and personnel engaged in these fields at UCB and the National Laboratories is provided in Table V -5 on page 122. 121 Table V -S. Estimated Microelectronics and Microfabrication Resources of Alameda Area Institutions Microelectronics • Annual Research Budget, millions of $ Research Staff Examples of Special Programs and Facilities ElectricafEngineering and Computer Sciences Dept. UCB - 10 60 LBNL 10 20 Ion beam LLNL 16 60 Center for Microelectronics and Optoelectronics, Micro Technology Center Sandia 15 50 Extreme UV Lithography Estimated total 51 190 UCB The programs rams in microelectronics .at the 1Jniversi ' o California at Berkeley are foi'ind izi'the P g tY Y Electrical Engineering and Computer Sciences Department. Areas of special activity include: silicon integrated circuits for RF communications, bioelectronics, semiconductor manufacturing and process technology, solid state materials and devices, communications and signal processing, and power electronics, as well as micromachining. A special effort is underway at UCB in the design of high speed digital circuits for signal processors, as well as hybrid superconducting - semiconducting circuits. High speed digital circuits are reported by researchers to be opportunities for rapid growth in the cellular telecommunications field. UCB currently operates a high frequency (10 GHz) testing device for large multi -chip modules (MCM) up to 1 -1/4 inch. Discussions with researchers have indicated that an even higher._ frequency (12.5 GHz) tester is scheduled to be installed in the next year. Collaborative research arrangements with industry are currently being sought. UC has led the development of superconducting quantum interference devices (SQUIDS) for medical imaging. UCSF is now testing their application in heart surveys. Other microelectronic and micro- sensor devices have been developed for medical and bio- telemetry applications. Sensors based on surface acoustic wave (SAW) chemical resistors are also being developed for miniaturized chemical /pollutant detection. LBNL LBNL is using its unique physics tools in innovative ways to promote improvements in microelectronic fabrication. One application LBNL has developed is an elegant new approach to making masks for the semiconductor industry using computer - generated holograms to project the desired image onto a wafer. Because the hologram is the sole optic component, replacing conventional mask and projection optics, fabrication of microcircuits is relatively free from contamination, resolution is high and good depth of focus can be achieved. In another example, researchers at LBNL have developed a selective ion beam source that produces a beam of boron, arsenic or phosphorous ions from plasma that is free from unwanted hydrogen ions. This ion source is particularly applicable to the positive doping of silicon in the manufacture of semiconductors. 122 Extreme UV Lithography: One important development underway at the East Bay Laboratories has been the successful demonstration of extreme UV lithography to pattern integrated circuits to 0.1 micron — more than 3 times smaller than devices on current chips: The first device fabricated was a field effect transistor. The tool assembled at Sandia is capable of overlaying features, a precise and demanding function which is necessary to create a working device. Collaborators in the development were LLNL and UC Berkeley. Lithography has been targeted as a key technology for sem iconductors as they continue to be made, smaller, faster and more powerful. A consortium of semiconductor companies is sponsoring a $100 million continuing effort, which involves SNL, LLNL, LBNL, and UCB. LLNL As -with its counterpart laboratories, LLNL has specialized capabilities in microelectronics and microfabrication. LLNL operates the Center for Microelectroni s and Optoelectronics (CMO). Many of the technologies emerged in part from high -speed detection, transmission and transient recording requirements of the nuclear test program; these capabilities are now being applied to global security, economic and enviro- mental vitality, and bioscience. Areas of competency in microelectronics at LLNL include: - 1 Semiconductor processing and diagnostic facilities • Interconnect design, processing and reliability • Etch and deposition tools • Lithography • Electronic and optoelectronic packaging • Photonics, including fiber optics • Flat panel display technology Another special product of LLNL's Microelectronics efforts is a technology known as microchannel cooling. Microchannel heat sinks represent the most compact and efficient method of transferring heat from a power source to a fluid. By minimizing the size of a slow - moving fluid boundary layer and increasing the area of contact between heatsink fins and a fluid, the microchannel heatsink removes heat 50 times more efficiently than conventional methods. This approach can be used to cool supercomputers, laser diode arrays, high -flux optics and solid -state radars. LLNL's Micro Technology Center specializes in microtechnologies fora wide range of applications frequently referred to as "nanotechnologies." Among the devices which have been designed and built are microanalytical instruments, micromechanical sensors and actuators, semiconductor diode lasers and optical amplifiers, photocathodes, light and radiation detectors, and electronic and photonic devices often used for taking data at high -speed from transient events. The research focus includes: • microstructures • microinstrumentation • III -V semiconductors and photonics • high - voltage switches • solid state radiation and light detectors • integrated optoelectronics • semiconductor device modeling 123 • bio- instrumentation • polymerase- chain - reaction chambers • microelectro mechanical systems (MEMS) Sandia The Sandia Laboratories in the East.Bay have special capabilities in microelectronics, ranging from circuit design to flat panel display engineering. However, most of Sandia's micro electronics capabilities are at their New Mexico facility. In 1996, Sandia National Laboratories demonstrated the ability to perform extreme UV lithography (see box on page 123). This capability will complement the efforts of Sandia's Microelectronics Office, which opened in San Jose in 1995. The mission of this technology transfer office is to perform the following functions: • Identify appropriate microelectronics technologies for commercialization or other applications. • Reduce time delays for translating technological breakthroughs into industrial products. • Expedite development and approval of technology transfer agreements. • Provide a communication focal point for working with Sandia. Develop mutually beneficial agreements tailored to individual needs and resqurces. Sandia also operates the Microelectronics Development Laboratory (MDL) in Albuquerque. This expertise is available to parties in Northern California as well. b . Commercial Collaborations The microelectronics programs at UCB and the Laboratories already have well established relationships with industry, through consortia such as SEMATECH which focuses on semiconductor manufacturing (supported by major integrated circuit device companies) and the Extreme UV Lithography program (with ten major companies participating). Recent University developments, especially in high speed digital electronics, have some sponsorship from industry, but researchers are seeking more. In the field of microstructures and microfabrication, much of the development has been done with scarce research funds and more linkages are sought with businesses to bring these technology applications out of the laboratory into the marketplace. Examples of current links with industry in. the microelectronics field reported by university and laboratory researchers include: • Quantum Corporation: Mini sensors. • TRW: Research partner on microelectronics. • Conductus: Thin film superconducting devices • CRADAs on display technology: Silicon Video, Redwood Microsystems • Extreme UV Lithography consortium • SEMATECH: Microelectronics Fabrication • Berkeley Microelectronics Affiliates c . Market Interests Among the areas for additional collaborative university and laboratory R &D with industry identified by researchers interviewed are the following: • Bio- telemetry/Bio- diagnostics • High speed digital for cellular telecommunication • Superconducting Quantum Interference Devices (SQUIDS) 124 • Lithography • Microstructures / microfabrication d . Enabling Connections to the Marketplace Individual researchers in the field of microelectronics and microfabrication have identified their views of the barriers to collaboration and commercialization, and have suggested requirements for more effective collaboration with commercial users. Microelectronics researchers in universities and laboratories share many of the same concerns as those in other interdisciplinary fields. Among the concerns reported in interviews are the following: • Lack of Market Knowledge and Market Channels: A common theme echoed by researchers when they reflected on their challenges in connecting to markets is that academia has an "ivory tower" attitude and that University researchers have little knowledge of the markets and potential new products and technologies that their research could advantageously be connected with. In general, marketing assistance is needed, especially for microstructures, microfabrication, microchannel cooling, all of which arelspecialty skills1 These may seem at first to appeal to niche markets, i)ut in fact, these technologies should have widespread use once they are established in the marketplace. The difficulty is building and implementing a mechanism to help move these (and other) innovations to commercial applications with industry. • Need for Early Stage Funding: Most of the developments that have potential for commercial application suffer from inadequate funding, especially prototype funding. Many good ideas do not have the possibility of moving off the lab bench and there is no systematic way to assess their value or organize commercial development at the early stage. • Inadequate Interchange with US Professionals: Researchers in digital electronics are . concerned that exchange programs better serve non -US professionals, and that Americans do not have support or motivation to participate in interchange. For this reason technology transfer, in many cases, inadvertently serves non -US markets, resulting in missed domestic opportunities. • Procedural Barriers to Collaboration: Those interviewed, particularly those from LLNL, noted that technology transfer offices "paper things to death" and that it is difficult to bring collaborators into a weapons lab due to security concerns. • Mission Confusion: Researchers in laboratories are confused about whether or not they should pursue commercial collaboration, and are generally not entrepreneurially motivated. Several who were interviewed perceive that their national security mission fundamentally discourages staff from systematically considering activities directed - toward commercial and civilian markets. Other comments include that DOE regulations concerning commercial work are (or appear) too restrictive and at the same time they are ineffective relative to their purpose. • Decline of CRADAs: After a period of enthusiasm about CRADAs, their use is being reconsidered and their value to national laboratories is being evaluated. This in contrast to what is called "work for others" where contracts from industry are accepted (at full cost) when they are consistent with and complementary to the mission interests of laboratory program managers. These and other policy concerns appear to drive many researchers away from any attempt to initiate commercial activities. 125 6. Information Technology for Knowledge -Based Industries a. Summary of Information Technology Activities Information technology is a broad interdisciplinary field that encompasses mathematics, computer science and software development as well as communications, and is closely associated with microelectronics. Information technology is the software -side of the computer and involves all aspects of computation, from the architecture of computer chips and computer systems and networks to the machine languages that manage their basic actions to the higher level languages in which their operating systems and applications are written to provide calculations, word processing, spread- sheets, Internet communications, and graphic displays, all in increasingly user - friendly graphical user interfaces. The methods for capturing, organizing, analyzing, compressing and decompressing, transmitting and presenting information is what information technology is all about. The act of information gathering, interpretation, and presentation lies behind much of the research in the East Bay laboratories and fuels many of today's fastest growing industries. Estimates of the computer and multi -media resources of the national.laboratories, UCB and California State University, Hayward are summarized in Table V -6 below. Table V -6. Estimated Information Technology Resources of East Bay Institutions Information Technology Annual Research Budget, millions of $ Research Staff Examples of Special Programs and Facilities UCB 32 35 Multi -media program, Bay area collaboration LBNL 50 180 National Energy Research Scientific Computer Center LLNL 60 500 Scientific Visualization, National Storage Program Sandia 25 115 Synthetic Environment Project CSUH 5 Multimedia Center Estimated total 167 835 The information technology activities of the University of California, California State University, and the national laboratories are broadly distributed within those institutions. The reason for this is that research and development in information technologies is carried out to support many of the mission or academic programs at the same time that they are distinct areas of programmatic activity. As a result, much of the innovation in information technology within East Bay public research institutions is developed and used in -house before it makes its way to commercial markets. UCB UCB's Computer Science Department is ranked among the best in the world. Faculty and students pursue a wide variety of leading edge projects in multi- media, networking, CAD, and database management. Examples of ongoing collaborative projects include BARWAN: the Bay Area Research Wireless Access Network, PATH IVHS (Independent Vehicle Highway Systems), computer vision and real -time decision - making for automated vehicles, and the Electronic Library Project. In addition, UCB's Haas School of Business works with computer - oriented scholars to help establish new information- technology businesses. 126 LBNL Computing Sciences at LBNL offer user services through a number of Centers, including: Information and Computing Sciences, which provides advanced software engineering; information management; network development; scientific imaging and visualization tools; computation tools for the Human Genome Project; biostatistics; and distributed control of applications. The National Energy Research Scientific Computing (NERSC) Center, which provides unsurpassed high -end computing services to the energy research user community; access to state - of -the -art computers, including the Cray C90 and Cray J90/T3E, scaleable, high - performance computing systems; collaboration and support for external users and computational scientists for mathematical modeling, algorithmic design, software implementation, and system architecture, as well as science -of -scale projects; access to high performance (terabyte) storage systems; large -scale parallel applications; collaboration with industry and other institutions. Energy Sciences Network ( Esnet), a nationwide computer data - communications network supporting multiple - program, open scientific research, supports multiple protocols such as DOD Internet, DECnet Phase IV, Open Systems Interconnection, and ConnectionLess Network Protocol. Esnet connects more than 30 sites at up to 45 Mbps. DOE contribution to National Research and Education Network (NREN) provides access for data exchange with DARPA, DOD, NASA, NSF, plus international connections. The Center for Computational Science and Engineering (CCSE), works on high - resolution numerical methods for partial differential equations; adaptive methodologies; computational fluid dynamics; algorithms for parallel architectures, and scientific visualizations. LLNL Lawrence Livermore National Laboratory operates infoiniation technologies out of a division called Livermore Computing. It runs, among other things, the Scientific Visualization Laboratory, for both internal and outside users. This laboratory works in conjunction with visualization images and movie clips, research documents, available software, the Lawrence Livermore Television Network, and other visualization pages. Computational advances first achieved at LLNL have led commercial developments for decades. Livermore Computing developed the first time - sharing system, large archival storage systems, and distributed architectures. Current objectives include tera -scale computing, which features tera -flop processing, tera -byte networking, and peta -byte archives accessible through the global network. Sandia In addition to performing research for Department of Energy program, Sandia National Laboratories offers commercial users the services of its Synthetic Environment Laboratory. This effort is to develop an open, multi - purpose software interface between general classes of scientific infonnation and a highly interactive, multi - dimensional visualization system (including the incorporation of immersive systems often referred to as virtual reality systems). Through the Computational and Information Sciences Division, Sandia works collaboratively with Pacific Bell, Hewlett Packard, Silicon Graphics, Sun, DEC, SRI, Stanford University and others to develop protocols and data transmission systems for advanced information infrastructure, as well as the development of advanced computing networks and facilities, computational methods, mathematical techniques for information security, and computer -based techniques for intelligent machines. 127 CSUH CSUH offers a special Multi -Media graduate program. This new interdisciplinary program is focused on the creative and technical aspects of computer technology, which enable users of this medium to create, control, deliver and present information in a variety of forms. The program brings together aspiring science, art, business and educational professionals in a working partnership. The course work provides essential knowledge in four areas: 1) the fundamentals of digital media and the internet, 2) content and interface design for interactive systems, 3) management of multimedia business, and 4) the effects of electronic communications on meaning and values. Telecommunications Technologies: LLNL has developed considerable expertise in satellite technologies through its involvement in defense projects. Recently, the Clementine moon probe, designed at LLNL, demonstrated significant miniaturization of satellite components. Cellular communications will be impacted by the development of high speed digital signal processing, sgch as that being deve,lofied at UCB in the Electrical Engineering and pomputer Sciences Department. Multi -chip Modules up to 12.5 GHz and 1 -1/4 inch are being tested. Global Positioning System (GPS) technology and Geographic Information System (GIS) developments are also important to the telecommunications industry; both are being used and improved at Sandia National Lab and LBNL. b . Commercial Collaborations The information and computer sciences programs at UCB and the national laboratories, as well as the multi -media program at CSUH, have established relationships with industry. While many of these have come through trade and professional associations, there are a limited number of commercial collaborations. In the field of information technology, technology transfer has most often occurred through movement of people from institutions into companies, rather than through the dissemination of information by itself. While true of most fields, in information technology, this is particularly the case. Much of the innovation that has made its way to commercial markets had initially been developed for mission programs or grant projects use and is only recently becoming available to the general marketplace through formal and information technology transfer. Examples that illustrate current collaborative relationships with industry include: • Berkeley Computer Sciences Affiliates • Berkeley Telecommunications Affiliates • Berkeley Sensor and Actuator Center • Berkeley Initiative on Soft Computing (BISC). • CAD /CAM Consortium • Bay Area Research Wireless Access Network (BARWAN) • Sun Microsystems: Network protocol research • IBM: A $95 million high -speed computer installation • Silicon Graphics: Data visualization collaboration • Kaiser Permanente: Distributed computing system 128 c . Market Interests The extensiveness of information technology capabilities in the East Bay offers the potential for many collaborations with industry on the leading edge of information applications businesses. Examples of market interests reported by those interviewed for this report include: • Multi -media technology • CAD software • Database management • Computer Architecture • Electronic Commerce • Education software • Networking security • Modeling and simulation . • Telemetry, wireless - comrnuniqation • Virtual reality • Internet/Intranet development • Distributed Computing • CORBA (Object- oriented programming) d . Enabling Connections to the Marketplace Individual researchers in information technology have described the barriers to collaboration with industry and commercialization of innovation and confirm many of the concerns already outlined. Fortunately, in information technology the history and knowledge of how commercial markets work is better established than for many other fields. Researchers from UCB and other Bay area institutions are known for having helped develop many enabling information technologies, from early graphic user interfaces and Internet developments to the RISC chip architecture and networking . Despite the easier rapport that academics and laboratory staff may have with the information technology marketplace, many basic obstacles endure. Among these are: • InteIlectual Property Policies: The complexity and time required to negotiate intellectual property rights is a constant concern of researchers in information technologies (particularly since they have more interaction with industry than researchers in many other fields). • Managing Classified Research: Some researchers at the national laboratories face difficulties in building bridges to commercial markets when many areas, such as advanced computing, have not been fully declassified. While the intention to create access exists, there remain continuing needs to provide security. • Mismatch with CRADAs: Researchers in information technologies find CRADAs a less suitable mechanism for collaborative work designed to support commercialization. • Managing Work Teams: Integrating work/product teams in scattered locations across different facilities is cumbersome. • Need for Start -Up Space: Researchers in this and other fields who are based in universities and particularly laboratories believe there is a significant need for facilities to accommodate early -stage start -up companies, whether this is informal, low -cost rental space or more formal business incubators. 129 D . MARKET POTENTIAL AND COMMERCIALIZATION OPPORTUNITIES Many of the technologies developed and implemented at the Universities in the East Bay and San Francisco as well as at the East Bay's national laboratories, have significant potential for producing enabling technologies and actual products for the commercial marketplace. A number of innovations may be translated almost directly into product sales; others can become part of processes or products within various industrial sectors. Table V -7 (page 131) below presents the five technology themes that have been the subject of this study and the industry markets in which the researchers interviewed believe their competencies have application. The nine industry markets presented here encompass an expanded version of the four technology -driven clusters that are the subject of this report and several related or new markets for potential end -uses. These markets are briefly outlined below. • BiotechnoIogy: East Bay and San Francisco area biotechnology competencies have clear application in the human diagnostic and therapeutic markets, as well as in plant, animal and chemical related subsegments. The industry that produces the final goods is well established in the region and is growing. •; 4 • Environmental Clean -Up: Environmental markets were split into two by researchers commenting on applications. Clean -up was the first market. Although federal expenditures on clean up have declined, the need for cost - effective clean up has become even more important to. industries, particularly those with enduring liabilities. This business will grow as costs come down and regulatory enforcement stabilizes. • Environmental Protection and Prevention: This second of the two markets for environmental technology is growing as companies spend more to prevent problems (and avoid clean -up costs). Today, industry spends approximately 10% of revenues on environmental matters and will integrate prevention engineering more and more into basic business goals. • Energy Production and Efficiency: Distinct from environmental technology end users, energy markets represent a broad target for a cross - section of environmental, materials, microelectronic and information technology applications, whether in the design of techniques for power generation, transmission, management or recovery. • Transportation: Analogous to energy production, the transportation industry represents a major end -user of a wide range of competencies that the East Bay has, whether materials for vehicles, motors and energy storage or computers and information systems for independent vehicle highway systems. Initiatives, such as CALSTART, are illustrative of this hybridization of technologies. • Multimedia: As an end - market for microelectronics and information technology, researchers see the potential for a wide range of applications, particularly in entertainment. • Knowledge -Based Industries: To distinguish from entertainment, researchers suggested that knowledge -based industry be used to define markets for end -users that focus on data acquisition, analysis, presentation and transmission, for which East Bay research institutions are well positioned to serve. • Telecommunications: High -speed and high - bandwidth communications systems are an end -user market for information technology and microelectronics competencies in the East Bay can continue to play an important role, from signal generation to switching to network systems. • Space Systems: Space -based services for consumer uses are rapidly growing, particularly in the Western states. Among these services that East Bay technological competencies can serve are: global positioning systems for navigation and control, remote sensing and management of commercial agriculture, natural resources, risk detection and emergency services, global mobile personal telephones, direct high resolution TV, high -speed satellite transmission of interactive video, insurance, banking, health data, and education. 130 Table V -7. Summary of Market Opportunities for Selected Technologies arket Applications Technology Biotechnology/ Medicine/ Agriculture/ Industrial Environmental Remediation Environmental Protection/ Industrial Ecology Energy Production & Efficiency Transportation Multimedia Knowledge -Based Industries Telecommunications Biotechnology . Environmental Technology . Advanced Materials & Manufacturing . Microelectronics and Microstructures . . tnforrnation Technology . . E. TECHNOLOGY TRANSFER-MECHANISMS: EXISTING BRIDGES TO MARKETS;. t 1 . Introduction The analysis of research competencies of East Bay public research institutions has demonstrated the depth of capability in interdisciplinary fields, such as biotechnology, environmental technology, advanced materials and manufacturing, microelectronics and microfabrication, and . information technology. In the course of profiling activities, researchers indicated some of their interests in working with the commercial marketplace. Moreover, researchers commented on their concerns about the difficulties they experience in making linkages with the commercial marketplace. Their concerns suggest that current mechanisms, while serving many needs, could benefit from enhancement. This part of the Alameda Science & Technology concept feasibility report concludes by summarizing the current technology transfer mechanisms in place, analyzing the barriers reported as constraining university and laboratory interest and capacity to transfer technology to markets, and options for their resolution, ending with an appraisal of interests among representatives of the East Bay science and technology producers (universities and laboratories) in potential Alameda Science & Technology Center developments. 2. Transfer Mechanisms: Diverse Pathways This project's first report, Alameda Science & Technology Center: Concept Delineation, provided a framework for examining the supply and demand processes of technology transfer (Chapter II Technology Transfer: Building Bridges to the Marketplace). That framework chapter defined different mechanisms that exist for achieving technology transfer, showing how different intermediaries fill the gaps between producers and users and distinguishing between applied science (generation of "enabling" technologies), technology development (commercialization of technologies) and technology deployment (putting best practices and most recent products into use). As Figure V -1 on page 132 illustrates, there are different paths through which technology may move from a producer through an intermediary to the end user. The pathways used will depend on whether the movement is demand -pull, in which industry is seeking a specific technological output, or, supply -push, in which universities or laboratories are seeking specific users or markets for their technological competency. 131 Figure V -1. The Technology Center and Specific Target Markets & Services I over Cost T" i Proxtmrtyto Bu Pmximity to Suppliers Marketing Physical Facilities The interviews with the East Bay and San Francisco research community identified a range of mechanisms being used to bring technology developments out of the University and Laboratories and to make them available to industry. The continuum of reported mechanisms vary according to the level or stage of the technological resource and the policies and administrative style of producer institutions. See Table V -8 on page 134. a . Applied Science: Enabling Technology To diffuse scientific information and applied science discoveries to users, universities and national laboratories in the East Bay actively use conferences and publications (including on -line information), educational programs, and technical personnel exchanges. These are recognized and accepted ways for scientific information to move from institutions to a broad array of users, and are the ways that the majority of information reaches the marketplace today. b . Technology Development: Commercialization To actually produce user - specific developments that become inputs to technology development, universities and laboratories in the East Bay have actively used an array of mechanisms and policies. These range along a continuum from the least financially and legally complex (and with the least involvement of an intermediary) to the more formal and market based. At the most simple organizational level East Bay research institutions (primarily national laboratories) offer user facilities and material transfer to companies. More complex technology development relations encompass cooperative research and development agreements (CRADAs), and participation in national consortia programs sponsored by industry and government (under contract). Ultimately, where there is a match to mission interests or faculty priorities, East Bay national laboratories perform contract research ( "funds -in technology assistance ") as well as commercial work for others (priced at full cost), which may involve memoranda of understanding or non - disclosure 132 agreements on technologies. Universities perform little contract research and emphasize affiliate or consortia research projects and single sponsor research grants. In conjunction with or independently from any contracts, East Bay public research institutions may market and negotiate the licensing of specific technologies that they have patented. Separately from the commercial -user focused mechanisms (e.g., demand- pull), researchers within East Bay public research institutions are working with their technology transfer offices, private technology commercialization services (e.g., Technekron) and on their own to form their own new start-ups. Although start-ups by faculty and staff are not specified as a major technology transfer activity, they represent one of the more important channels available to universities and laboratories with highly development competencies on the leading edge (e.g., where existing companies are not ready to "buy in "). These are sometimes supported by SBIR (Small Business Innovation Research) grants and technical assistance programs for faculty or laboratory entrepreneurs. Other US regions and laboratory communities with less richness of market -pull for use of research, have (and need) more developed mechanisms for fostering and supporting start -ups by scientists, such as institutionally - affiliated seed capital venture funds and business incubators. Finally, technology development takes place naturally through independent consulting (UC allows 37 days. a year for consulting; the laboratories 5 weeks of leave) as well as the movement of skilled professiaoals from research institutions to companies. c . Technology Deployment: Best Practices and Products Universities and laboratory research programs in the East Bay principally focus their technology activities on the generation of discoveries (e.g., enabling technologies) and less on the diffusion of existing commercially established technologies and practices to the marketplace. It is through undergraduate, graduate and continuing education that universities play a role in Technology deployment. This function is, in many respects distinctly different from the universities role in science. In the case of the national laboratories, technology deployment is explicitly called for by specialized laboratory centers and through their participation in national programs, such as those sponsored by the National Institute of Standards and Technology (NIST). d. Intermediary Mechanisms To facilitate relationships with the commercial marketplace, each campus and laboratory has its own offices for research and technology transfer activities: • UCB: The University of California at Berkeley makes opportunities for R &D on licensing available to industry through its office of research and its office of Technology Licensing, located on campus. The office helps introduce UCB capabilities to industries who might be interested in licensing or using research services. Private organizations, such as Technekron, offer technology commercialization services to faculty interested in forming new start -ups. Venture capital firms maintain contacts with UCB departments and the Technology Licensing Office to track opportunities for future development. • UCSF: The University of California, San Francisco has until recently used the services of the University of California's Office of Technology Transfer, which is located in Oakland. These are UC's central services for all campuses on technology transfer services, supporting individual campus offices. However, efforts to initiate an office at UCSF are now underway. • LBNL: The Lawrence Berkeley Laboratory encourages use of its facilities, and licenses technology through its Technology Transfer and CFO /Sponsored Projects Office. 133 • LLNL: At Lawrence Livermore National Laboratory, the Industrial Partnerships and Commercialization Office is the responsible agent for commercial work. • Sandia: At Sandia National Laboratory, negotiations are managed by the Technology Partnerships and Commercialization Office. Sandia also offers staff entrepreneurs the opportunity to commercialize internally - developed products through the Technology Venture Corporation, which was created by Lockheed Martin Corporation for that purpose. Table V -8. Mechanisms For Technology Transfer Applied Science UC LBNL Educational programs 4) U 1� 4) 3 Technology Development QA U Commercial work for others Technology Deployment Continuing education LLNL Sandia CSUH 3. Building Bridges to Markets: Summary of Constraints While industry relationships and the transfer of technology are encouraged by all the public research institutions reviewed in this study, many individuals interviewed expressed strong opinions about the difficulty they have encountered in actually achieving technology transfer goals and developing commercial relationships. Researchers in the public university system and national laboratories express uncertainty concerning the formal positions of their institutions with regards to the transfer of technology to the marketplace. All researchers contacted recognize that technology transfer is not the primary mission of their institution; but they are often unclear as to its relative priority within their responsibilities. Clearly, most researchers see technology transfer as an opportunity that follows fulfillment of a primary mission, such as research and training or achievement of a national program objective. The University of California has a formal organization and policies for managing commercial research relationships and intellectual property under the provost for research and at each campus. All U.S. Department of Energy sponsored national laboratory organizations have established technology transfer activities; although their programs have been in flux. Their technology transfer offices manage intellectual property and commercial research agreements as well as produce 134 detailed descriptions of technology transfer projects. Yet, for individual researchers, the answer to the question: "Should researchers pursue commercialization ?" remains ambiguous. The reason for examining the institutional definition of technology transfer policy at the University of California and national laboratories is to help set parameters around the science and technology center concepts that might be feasible at the Alameda Naval Air Station. Based on interviews carried out, there are areas of conflict or disincentives for faculty or researchers to perform certain types of technology transfer activity that might define important limits on what a science and technology center could be (or might need to be). The most fundamental barriers described by those interviewed mentioned in this report and options for addressing these needs are examined below. The barriers tend to fall into five general categories: a . Career Policies Challenge: Few Incentives to Work with Commercial Clients University of California faculty researchers fnay be mbti'vated to work with commercial clients by their need for new sources of revenue to fund research in their discipline and create opportunities for graduate students. There are few formal incentives and rewards to encourage faculty to actively seek commercially- related research and development activities, particularly if they have the potential for displacing traditional academic research. Pretenure faculty may find themselves at risk for undertaking commercial work that does not enable publication of results. Faculty may miss promotion opportunities that are based on peer reviewed research publication if they focus on commercial work that constrains publication. Faculty are able to undertake non - academic contract work during their 37 free -days a year, and national laboratory staff can take five weeks of leave annually, whether for another company or for themselves. These activities are considered outside the sphere of work undertaken while on the payroll of the public university or laboratory, which must remain within each institution's mission parameters for research and /or education. Most faculty and staff are not dissatisfied with this system —it is what they were hired for; it does not, however, encourage faculty work directly for companies or a culture concerned with commercialization issues. Options: Introduce Flexible Policies and Rewards Universities and laboratories with a higher rate of commercial and entrepreneurial activity tend to have internal policies that are more flexible with respect to use of faculty and staff time and institutional culture and that formally or informally recognize the value of work with industry in promotion decisions. Ideally, career rewards would be incorporated into faculty promotion schemes for measurable technology transfer activities, such as generating intellectual property (patents that are awarded), introducing completed licensing agreements (which produce revenues), developing appropriate commercial contractual relations with industry (e.g., affiliates, consortia, securing contracts that do not restrict publication of results). Leave policies that explicitly focus on technology transfer and commercialization assignments would also be defined. Policies such as these might raise concerns in academic senates that have more conventional views regarding academic freedom and the mission of faculty and staff. b . Technology Market Analysis and Competency Marketing Challenge: Understanding Technology Demand and. Marketing Supply Independent of the relative absence of career incentives for such activity there are two fundamental constraints limiting faculty and laboratory linkages to commercial markets. The first of these 135 issues has to do with barriers to understanding and responding to market demand —or, how market needs and opportunities are communicated to researchers from the market place or from researchers to the market place. The second issue pertains to constraints on technology supply —or, limits on how university and laboratory personnel can serve commercial market needs. Technology Demand: While services for technology transfer at university campuses and national laboratories have improved, there are university and laboratory staff who still feel that their institutions, from their own programmatic level on up to university administration, are not sufficiently well organized or adequately resourced to effectively either identify market demand for their research competencies or to optimally promote their capabilities to appropriate segments of the commercial marketplace. This means that research groups are not always able to know where their capabilities could be positioned to exert a strategic impact as enabling technology (or even straight technical services). Universities and their senior faculty do track their leadership in science. They do this by measuring their share of total national science spending in their discipline; through tracking the frequency of publication in peer reviewed science journals and even through science citation analysis, which measures the frequency with which a faculty or staff member's publications are cited in the' peer reviewed literature and thereby is a foundation for development in hn'iexisting or emerging field. These techniques do not apply as well in understanding the trends in science and technology needs of industry. Here, leading faculty may have close ties to one or more industries and use this to guide choices in proposed research projects in which industry may sponsor as an affiliate. Leading faculty may also participate in national dialogues on "critical technology" issues. These forums which use a consensus process to define areas where breakthroughs in "enabling technology" are needed to maintain competitiveness of US industry, which in turn may result in national research and research partnerships. Faculty and laboratory staff are also likely to participate in developing "technology road maps" that define the major technical challenges and hurdles facing an industry such as semiconductor device or flat panel displays design and manufacturing. These road map exercises are typically shaped by panels of industry and technology experts within a given industry field and result in both industry consortia as well as national investment in R &D partnership activities. In fact, faculty and laboratory staff are likely to be involved in a variety of industry consortia, such as SEMA'1'bCH (which focuses on semiconductor manufacturing) or similar industry and government sponsored research programs, such as the Semiconductor Research Corporation (SRC),or the National Center for Manufacturing Sciences (NCMS). Faculty are increasingly participating in dual -use research programs, such as those sponsored by the US Department of Commerce Advanced Technology Program (ATP) or the Technology Reinvestment Program (TRP) when invited in by corporate partners. Short of direct technology market research, participating in these programs may be the closest resource that faculty and laboratory personnel have to an early warning signal concerning emerging research market opportunities. These forums, in conjunction with traditional research publication, appearance at conferences and entry of graduates into employment in their discipline, represent the major opportunities that researchers have to learn about markets and position their research organizations. None of these ways of interacting with the market place are systematic or early enough to enable research programs to assume a leading role that will bring researchers the associated industry recognition and support. Concomitantly, university and laboratory staff rarely have the resources and marketing infrastructure to undertake company -by- company needs analysis or market outreach in any familiar industry, let alone emerging industries that could become important sponsors of research. 136 These constraints on articulating market demand are understandable, given that neither universities nor national laboratories were chartered to analyze industry specific market demands or to market themselves to industries. Yet, the impressions given by faculty and laboratory staff is that more systematic outreach to the marketplace to define their science and technology requirements is essential to raise badly needed funds for areas of innovative R &D and because, as noted, the elapsed time between scientific discovery and market application is being compressed. At a minimum, researchers are recognizing that the rules of the game that defined how they once worked are changing, for good or ill. For this reason, better "infrastructure" for linking the two ends of the technology spectrum are increasingly necessary for both innovation and, to a certain degree, continued survival of research programs. Clearly, there are major needs for enhancing the capacity of the university system and possibly the national laboratories to both learn more about market driven applied science and technology needs and to position research institutions, their programs and staff with specific users and user groups in industry. This challenge may, in certain respects be more true of public institutions, such as UC, than for private universities that have had fewer actual or perceived conflicts of interest with responding to market needs. Technology Supply: Researchers often do not have the mechanisms they need to respond to research opportunities in the commercial iarket place. The historic absence of internal incentives to formally incorporate commercial research into the structure of approved research incehtive systems appears to induce most faculty who are interested in working with industry to focus efforts on traditional applied science and precompetitive research whose results are publishable or on projects where there are memoranda of understanding or nondisclosure agreements that limit restrictions on how long commercially supported research musf be withheld from publication. Faculty may find that the intrinsic constraints on the depth to which the can relate more directly to commercial interests leads them to choose relationships with industry that impose the least restrictions (hence less commercially focused R &D). Therefore, business - sponsored affiliate research programs and consortia with abroad research agenda are favored over commercial projects that are highly specific or highly proprietary. University faculty are, naturally more interested in research that meets the parameters within which they must work. What frustrates many researchers is the absence of a middle ground that might serve both research and commercial interests, but does not fall within the parameters of traditional academic or mission program R &D. Private sector sponsored research at the University of California has been growing year by year across the many programs and centers at each campus. Current programs, such as the UC STAR program and its predecessors, have attempted to energize greater private sector interest in university research by business. The program provides matching grants for commercially sponsored research between faculty and corporate clients and includes protections of rights for publication and protection of intellectual property. While an important initiative to incent industry to work more with UC faculty, this program is currently modest in scope (approximately $2.5 million in 1996). The use of mechanisms for enabling research for industry beyond traditional grants, industry affiliate programs and participation in consortia is highly limited. Conventional contract research by universities is still virtually non - existent, as it does not fall within the parameters guiding academic research (or research sponsored in part by a public institution). Given the interests of faculty and of industry, there may need 'to be a mechanism that provides a more neutral ground for offering conventional commercial R &D services than is currently available within the University of California system. The national laboratories have defined more effective business tools for working with industry that are bringing them more into the range of commercial service providers. While Cooperative Research and Development Agreements (CRADAs) had been increasing in number over the past few years, their use is now declining in favor of direct "work for others" (e.g., commercial clients) at full costs. However, this is limited to projects that are demand related to a mission program 137 theme (e.g., undertaking the project will enhance benefits to that laboratory program) and is a service not otherwise available from the private sector (often difficult to ascertain). National laboratories are also eager to offer user services and facilities that help underwrite the cost of maintaining core national laboratory capabilities. They have also been active in applying core competencies to address industry technology needs in industries from automotives to microelectronics. The challenge facing national laboratories has less to do with the mode of contracting (which is in place) than it does with the ability of laboratories to more effectively market their services to potential users, without violating the mission charters. At a certain point the laboratories will need to determine the extent to which their work for commercial markets is consonant or in conflict with their still changing mission and structure. Options: Create Intermediary Institutions for Commercial Research and Start -Up Incubation The analysis of the demand -side and supply -side challenges facing the University of California and East Bay's national laboratories suggest a menu of options for the future. There are two options proposed for consideration, the. first focuses on increasing market analysis, outreach and brokering; tie second on creating arl.entirely new institution for commercial R &D. I 5 •. . Marketing Services: At a minimum, there may need to be expanded capabilities within the UC system, at each campus, to help UC's research programs and centers analyze industry technology markets and promote their capabilities. These services need to build on and exceed the capabilities offered by industrial liaison programs that are currently in place in some schools and departments. Those liaison programs (where they are in place) currently try within resources available to track _trends and position their research programs and centers with potential industry partners. None the less, the scale of opportunity and need is believed by many faculty and laboratory staff to exceed current capacity. Whether they are located at the UC system, campus, department or program level, there is apparently a need for enhanced services that provide staff skills and expertise dedicated to analyzing industry technology trends (through primary and secondary data sources) and communicating them to UC (and laboratory) programs. Equally if not more important, these services should also encompass an expanded capability for identifying and positioning UC and laboratory program competencies with industry clients (single firms or consortia) with the objective of organizing and brokering new research initiatives. These could range from signing up companies for conventional industrial affiliate programs to orchestrating innovative new collaborative research efforts. Independent Research Institute: One of the major barriers to expanding the linkages of the University of California to the commercial marketplace is the absence of an intermediary institution that can carry out traditional contract research, including commercialization. Administrators within the UC system have long recognized that other universities, Stanford in particular, had effectively used a separate (typically non - profit) research institute as a neutral environment to enable faculty and other researchers to perform traditional commercial R &D. The Stanford Research Institute, now SRI International, was formed in 1946 explicitly to perform contract research for the private sector. At its peak, SRI employed 3000 research and support staff and carried out over $300 million in research annually in over 2000 projects. The Stanford Research Institute started out as a small group of faculty and graduate students working in a Quonset hut at a former naval hospital in Menlo Park.. Over time, the number of faculty and graduate students working on contractual assignments grew. More and more graduates stayed on at the Institute, initially only on "soft" money (project by project) and eventually as full time staff. Eventually, the Institute gained a complement of former faculty, graduates and post- graduates and recruited research professionals. By the late 1960s Stanford University spun -off the Stanford Research Institute as a separate nonprofit entity, which paid a substantial sum back to Stanford University over the decades. Today SRI comprises both a for- profit and non - profit entity that continue to perform research and development for international markets. 138 Many faculty and administrators have expressed the belief that the UC system has long needed a commercially- focused research institute as a separate organization. This organization would be a setting within which UC affiliated researchers could take on direct contract research assignments, work on collaborative projects with industry. Faculty could undertake these assignments on their 37 days of free time a year, on leave of absence, or in new career positions. Most importantly, researchers could work directly with industry under the terms and conditions that proprietary research often require. This type of institution could also play an important role in helping faculty commercialize research and form their start -ups by providing -both a host environment and needed technical services. Creating an independent research institution may require the following developmental steps: 1. Identification of Sponsors: An independent research institution typically requires sponsors or stakeholders who believe in the merits of establishing a new entity (no matter how small initially). 2. Planning and Development: In order to establish such an institution, a planning and development process is required to ascertain the scientific need or market demand that it would respond to This type of planning process is typically supported by grants from sponsors or stakeholder institutions such as federal and state agencies and foundations. 3. Initial Start -up: Initiating a new research institution can be facilitated by seed grants from sponsors but does not need to depend on those resources. Research institutions can begin incrementally by competing for grants and contracts, adding staff and facilities as growth occurs. Once established, a research institution should depend less contracts to sustain itself. Such an institution could be established as a self - sustaining entity in order to avoid conflicts of interest with the state legislature and the administration and academic senates of the UC campuses. With careful development the charter of this organization could be established in a manner that would be positive both scientifically and financially for the University and for the economy of the state of California. A new research institute is not proposed for the Alameda NAS at this time, due to complexity and requirements for development. However, this concept could become an attractive option for the site over time, after more immediately feasible science and technology center actions (see Part VI) have been implemented. c . Intellectual Property Management Challenge: Entrepreneurial Bottlenecks The ownership of university employees time is an important factor in shaping the motivation of faculty researchers to undertake technology transfer, beyond traditional publishing and meeting with peers. Faculty motivation to generate intellectual property (and likewise for laboratory staff) is influenced by the degree to which they see themselves as employees (of the State of California) pursuing research or as entrepreneurs pursuing innovation for commercial purposes. Although most faculty as well as national laboratory staff are content to view themselves as teachers or scientists this employee - entrepreneur distinction has increasingly surfaced as an issue as researchers have become aware of the potential financial value of the fruits of their research —their intellectual property. There are a set of issues that range from the actual treatment of intellectual property submissions, the disposition of ownership under various conditions, and the marketing of intellectual property. The university (or laboratory), as employer, is the primary owner of research findings produced by its employees. The University of California and Department of Energy each have policies that 139 guide how they can distribute ownership of scientific discoveries by their employees. In every case the university or laboratory must first decide whether they believe a discovery merits the necessary attention required to actually create a legal asset (a patent), and with whom it will share patent rights with (the researcher or researchers). The sharing of ownership or the disposition of rights has become more complicated as universities have recognized that any item of intellectual property may have the future potential to generate licensing royalties for the university. This may result in the university (or lab) being increasingly reserved in awarding rights over intellectual property at the outset or in cases of collaboration with external partners or funders. This process of consideration can create frustration among inventors or the companies with whom they hoped to craft business relations. The potential for future revenue also makes the university (and, to some extent, the laboratories) more cautious as to how it structures those new commercial research relationships that it permits its researchers to enter into. Agreements may take time to resolve, frustrating researchers and commercial clients who may (as interviews suggest) lose patience with the university system or national laboratories. As the volume of intellectual property submitted to the university or laboratories for disclosure and patent review increases, these institutions (but particularly the university) face rising costs and the inevitably frustrating need to screen submissions for their anticipated value without having had the opportunity to perform a full evaluation: When a faculty or research staff member believes an item of intellectual property deserves attention and the university does not, this creates the potential for disappointment. Moreover, university faculty (as well as laboratory staff) may find themselves frustrated with the absence of more sophisticated market expertise within their institutions that can help them prioritize activities that might have commercial value or link them to potential commercial partners for development of their ideas. How the rights to intellectual property that have been generated at the university are promoted and licensed to potential commercial users is a further complication to technology transfer simply because there are severe limits in university resources for this purpose. This is one area where researcher concern about university's capacity to successfully undertake marketing of intellectual property surfaces. However well management of intellectual property is carried out, the university system, however, emphasizes the value of intellectual property as an important adjunct to the two traditional mechanisms of technology transfer, peer reviewed publication and training of graduates. Intellectual property is valued more than commercial work because it is a natural, though unpredictable, result of academic research, and is therefore an appropriate result of the university's primary mission of research and training. In contrast, direct commercial research and development that is not supporting an academic goal (e.g., publishable) or, in the case of national laboratories, not supporting a mission goal is fundamentally not a priority and a potentially a conflict. Options: Time -Based Value and Market Partnering Approach Expanding capacity to review and process intellectual property on a timely basis to meet both the needs of the researcher or commercial partner, as well as increase the portfolio of the parent university or laboratory is important in a world where knowledge has short "half- life ". To address the problem of taking action on a technology before it's value diminishes, the concept of time based value, many universities have utilized outside services to review and manage intellectual property patent processes and compensated them through their participation in the royalty stream that could flow from increased volume of patents that are successfully licensed. Internal improvements to the policies used to manage and award ownership on a timely basis are important, particularly policies that enable businesses to receive patent rights in exchange for equity or other forms of compensation based on future value. Overall, increasing capacity, speed and simplicity of intellectual property management will boost moral and confidence of researchers with interests in potential applications of their work. 140 d . Security Provisions Challenge: Confusing Restrictions While the national laboratories are opening up to more collaborative work with industry, there remain a number of areas where key research information has not yet been declassified. Moreover, the security status of information is often not clear until inquiries are made. The process of ascertaining the status of classified information, and of declassifying where possible, is not carried out by individual researchers, who may not participate directly in negotiations concerning the classified information. There have been a variety of instances where collaborative commercial research and development activities with laboratories have been constrained or halted by security matters. Option: Strategic Roadmaps for Declassification As major industries develop their own technology roadmaps, national laboratories could become involved early on in their review and use these roadmaps as guides to declassifying (where - appropriate) sets of formally classified information that might be transferrgd to civilian users. e . Commercialization Infrastructure Challenge: Inadequate System to Screen and Support Start -Ups University faculty and staff are educators first and researchers second. Entrepreneurs are scattered across institutions depending on the personality of the researcher and the culture of the parent organization. Commercializing innovations is not the primary purpose of the University of California nor of the national laboratories. Expertise for planning and implementing a new enterprise are not part of the mission of either universities or laboratories, although the technology transfer offices offer limited services. University or national laboratory personnel are not expected or rewarded for being entrepreneurs as public employees. Yet, increasingly university and laboratory personnel are expressing the need for market analysis, business organization and planning capacity, and, most often, financing for early stage development. SBIRs are one of the only sources of early stage financing, other than hard to find seed capital from private or public investors. Public institutions are not chartered to help start-up private businesses and therefore leave this challenge to non - university organizations for the most part. This is troubling in that there is both growing interest in enterprise formation by faculty and laboratory personnel and a deficiency in mechanisms to help these creative and entrepreneurial people make the transition to the commercial marketplace (and keep their day jobs while they do it). Options: Grow Commercialization, Incubation and Financing Organizations The problem of technology transfer is very different when the interests of faculty or staff extend beyond work for commercial interests to the desire to form new enterprises or spin -off research activities into commercial ventures. While many universities have adjacent incubators or nearby small- business counseling programs, these tend to be occupied by entrepreneurs from outside the university eager to exploit research and facilities, rather than faculty ready to explore life as entrepreneurs. The scale of the culture gap between faculty or laboratory staff research and their capacity and skill to act as an entrepreneur is significant; yet, many major innovations have arisen from both entrepreneurial faculty, as well as the licensing of intellectual property. For this reason, some means of bridging the gap between the world of scientific research and commercial enterprise appears to be desired by university and laboratory staff, irrespective of the internal career incentives or disincentives to engage in commercially - oriented activities. 141 Ideally, the University of California and the national laboratories would have on -site commercialization and incubation facilities, as do some other public institutions (e.g., the University of Maryland, Rensalear Polytechnic, among others). To a limited degree, faculty at the University of California and laboratory personnel already work on an ad hoc basis with regional business development services, from venture capital funds to private development companies, such as the Teknekron Corporation. However, to support a potential increase in entrepreneurial and technology commercialization activity from the UC system and laboratories, new or expanded services accessible to faculty and laboratory personnel at or nearby the campuses and lab sites or where personnel reside, could be helpful. Whether actual (on -site) or virtual (a network of services from providers), these services can and perhaps should be private. While the provision of actual or virtual business incubation services is important, the need for financing for the "seed" stage of enterprises, (stages 1 and 2 of development) particularly development of prototypes and testing of new devices and systems, remains an extremely important focus for improved commercialization and enterprise development services for faculty or laboratory staff. This need for seed capital is true despite the scale of the Bay Area's venture finance community. While the State of California has a matching-grant program for SBIR grantees lo leverage regional funi availability, and Lockheed has a Technology Vpnture Corporation f r lab generated enterprises (only available to Sandia staff), there are by no means sufficient source of early -stage financing available for the potential entrepreneur. New pools of capital for higher risk new enterprise remain a priority need of many researchers, and essential to achieving technology transfer and commercialization ambitions. Some university systems have established campus - affiliated venture capital funds, associated with private investment companies that leverage public funds (e.g., Michigan university system, Connecticut). Other universities and regions have focused on a process of assembling, screening and presenting new ventures in target fields, such as biotechnology or information technology, to invited panels of the investment banking community. Such initiatives have been sponsored in the publicly funded Regional Technology Alliances in California, economic development agencies and development corporations in New York and Connecticut, and public - private partnerships in Texas. 4. Conclusion: Science and Technology Institution Interest in Alameda Naval Air Station Given the depth and breadth of science and technology competencies among universities and national laboratories in the East Bay and their technology transfer needs and constraints, are there reasons for specialized development at or linkages with the Alameda Naval Air Station? When the potential for Linking the science and technology competencies of East Bay public research institutions to developments at the Alameda Naval Air Station was explored across the five technology areas the following needs, interests and conditions were identified: a. Contact Center /Technology Outreach Office University and national laboratory representatives do not want activities at the Alameda Naval Air Station to compete with on- campus programs. However, they recognize that as industry cluster development takes place on the Naval Air Station site there may be opportunities to broker R &D relationships that should not be overlooked. For this reason, without any surety concerning who would fund such a resource, several different groups (particularly the laboratories) suggested that a contact center or technology outreach office be established. Through this office, research connections to on -site industry could be developed. To facilitate these outreach linkages, university and laboratory representatives proposed that administrative procedures be developed to enable standardized, seamless agreements for collaborative research with laboratory personnel, whether the projects took place at the Alameda Naval Air Station site (e.g., in company labs) or at campus or national laboratory facilities. 142 b . Technology Specific Application Centers Representatives of universities and national laboratories proposed a number of concepts for technology R &D centers that could be established at the Alameda Naval Air Station, given appropriate sponsorship (of which there is none at the present time). These technology centers would be extensions of existing program activities focusing on technology transfer, rather than efforts that would compete with those ongoing at universities and laboratories. The proposals call for establishing R &D activities that use space not available on campuses or laboratory sites and can benefit from the geographic location and its proximity to regional industry clusters. Examples of technology centers suggested include: • An Automated Facility for Genome Sequencing: A "factory" for large scale sequencing that would enable large scale amounts of rapid sequencing for regional biotechnology firms. This facility, which could be privately financed, would use the latest technologies for the sequencing process. Source: Biotechnology Competency Group. • Environmental Technology pemanstration and Field Test Center. Researchers from the national laboratories and universities expressed the view that a site and facility was needed to enable testing of new clean up and monitoring technologies from their facilities. They further stated that they perceive an opportunity to bring their remediation and monitoring technologies to the Alameda Naval Air Station for demonstration during cleanup of the site. Source: Environmental Technology Competency Group. • Green Engineering and Manufacturing Center: A collaborative venture could be established linking researchers from university and laboratories to assist companies in applying "green manufacturing" practices. The site could also serve as a testbed for experimenting on automated disassembly and recycling of electronics and computer products. The center could provide an opportunity for students to both learn about and contribute to developments in environmentally - sensitive productions by working with industry. Firms moving into Alameda Naval Air Station site could be encouraged to use "green manufacturing" practices, including the use of recycled materials, especially solvents. Alameda Naval Air Station could become an ISO 14000 site. Source: Environmental Technology Competency Group. • Institute for Regulatory Research: The public research institutions in the East Bay have worldclass computational capacity, particularly in simulation. For this reason, representatives of universities and laboratories recommended that a center or institute for bringing together industry, and scientists (particularly modelers), from UC and national laboratories to objectively study the effectiveness of environmental regulations, their continuum of impacts and the value of alternative processes would be an positive step. The objective of this research organization would be to develop neutral capacity to support regulatory policy making and to train regulatory policy makers to more effectively develop regulations. This center was proposed as an on -site effort to bring it close to ongoing R &D in environmental technology. Source: Environmental Technology Competency Group. • Center for High -Speed Digital Electronics for Cellular Communications: The new technology of high -speed digital electronics for cellular communications, invented at UCB, might be a theme for R &D and commercialization activities co- located near other telecommunications companies and vendors. This institution could be a consortia sponsored by the telecommunications and device manufacturing industry with university and laboratory partners. Source: Information Technology Competency Group. 143 • Virtual Work Center: Researchers proposed that a center for demonstrating new communications tools for remote work, such as video conferencing and virtual reality systems, could be established with an adjacent conference center. The virtual work center could be established by a consortium of major employers and telecommunications suppliers and RBOCs with linkages to university and laboratory staff and communications infrastructure as required. Source: Information Technology Competency Group. • Object- Oriented Automated Factory Center: To develop and test new university and laboratory generated software (new object- oriented code) for flexible manufacturing, a research and test center built around an automated machine shop was proposed. This center, possibly sponsored by national agencies in partnership with industry groups (e.g., a consortia) would enable different manufacturing industries and suppliers to learn about flexible object - oriented software, such as CORBA. Source: Microelectronics and Microfabrication Competency Group. • Center for New Media Demonstration: Both the multimedia industry, university and n'ational`laboratory representatives believe that a center to demonstrate and test new media would be useful to bring together innovative research in the East Bay. This hypothetical center could comprise major installations of new multimedia systems, such as SGI Visionarium, IMAX theater, and Videowall, with facilities for computational support (linked to universities and laboratories) and space for smaller, short -term uses by new media vendors. Such a facility would need sponsorship of a consortia of media companies and funding for evaluation and testing activities. Source: Information Technology Competency Group. c . Collaboratory Hub Independent of any specific research center theme, a number of university and laboratory representatives indicated that they faced laboratory space shortages at their present location and might be candidate tenants for leasing laboratories in an appropriate mixed- tenant facility at a site such as the Alameda Naval Air Center. Representatives proposed that a multi - tenant building could be designed to accommodate: university and national laboratory non -core R &D projects in spaces from 5,000 square foot up; spaces for collaborative R &D with industry (rented by corporations for specific projects); temporary labs of specific firms, and; possibly an incubator. The building, developed by a private investor /developer, would need to accommodate a substantial amount of wet labs to serve the biotechnology researchers and should be equipped with advanced telecommunications infrastructure to enable interaction with parent companies and East Bay university and laboratory facilities. d . R &D Institute Intermediary (Virtual or Actual) Representatives of universities and national laboratories repeatedly noted that conducting technology transfer activities with commercial users was difficult under traditional university or national laboratory research policies, intellectual property, and personnel policies. For this reason, those interviewed and in working groups repeatedly mentioned the need for a neutral research organization to accommodate researchers desiring to carry out commercial R &D. The UC system does not have any R &D intermediary organization designed to serve commercial markets at present, beyond its current research management policies and chartered research institutes and departmental or college research centers. The same is true for national laboratories. While no specific model was proposed, an independent or specially chartered organization for housing strictly commercial R &D projects was suggested. This organization was proposed along the lines of an independent research institute, analogous to SRI International, but possibly only an administrative infrastructure, rather than an entire campus of R &D facilities. Developing an R &D 144 intermediary institution, actual (e.g., a building or complex) or virtual (e.g., a research production network), would require sponsorship from founders and potential partners and participants. Equally important, an institution of this kind would need to be viewed as a positive addition to the East Bay research infrastructure that could not compete or interfere with the missions of the University of California or the national laboratories. e . Incubators Researchers from laboratories and universities believe that providing incubators at the Alameda Naval Air Station site could help support and encourage new start-ups or spin -offs from their institutions. While many researchers would prefer institutions to be close to where they work, the site's potential proximity to clusters of technology -driven industry could enhance the prospects for new start -up success in finding strategic partners or buyers. Participants recognize that there are already incubation activities in place (the CALSTART Hatchery) and planned (ACET) for the site and believe additional incubation activities could be constructive. f. High Speed /High Bandwidth- Network Node /Virtual Presence Irrespective of whether on -site R &D centers are established, university and national laboratory ' representatives believe that establishing a small facility as a node for highspeed/high bandwidth service to laboratories and campus would be a useful infrastructure for enabling potential projects with companies at the Alameda Naval Air Station. g . Technology Exchange Center University and national laboratory personnel believe that there are inadequate places for physically gathering with other scientists and business professionals to learn and exchange. A number of participants have proposed that a hotel and conference facility be established for events with leading scientists and engineers. A privately financed hotel and conference center that was easy to access from UC Berkeley or the national laboratories would contribute to the Alameda Naval Air Station site becoming a recognized center for technology exchange activities. h. Waste Disposal Facility Representatives from the biotechnology and environmental competency fields pointed out that having a shared facility for the disposal of wastes arising from research would be a valuable asset for both institutional and corporate researchers. This type of facility would not require university or laboratory involvement, but would contribute to attracting both academic and business R &D activities in the biosciences and environmental fields. 5. Building a Base for Competencies: Realistic Prospects The Alameda Naval Air Station is fortunately positioned in the East Bay so that companies that locate at the site will be able to access world class science and technology competencies without any specialized R &D facility development necessarily taking place at the Alameda Naval Air Station itself. There is substantial interest on the part of both the University of California and the national laboratories in the Naval Air Station as a site where the clustering of technology- driven industry might provide new sources of funding for on- campus R &D, or where faculty could possibly undertake collaborative research in the sponsoring client's own laboratories. In fact, the laboratories and campuses are eager to have an outreach presence at the site, over time, as well as special telecommunications and computer infrastructure to enable industry at the site to link with each campus or laboratory with whom they might exchange information or consult. In other words, the Alameda Naval Air Station can be connected to the science and technology wealth of the East Bay through improved networking and connectivity. A science and technology center at 145 Naval Air Station could easily comprise a grouping of technology - driven companies with their own strong R &D connections to the East Bay's technology competencies. But there is the potential for more than remote connections between on -site firms and East Bay Institutions. It is true that as yet, there are no groups of UC or national laboratory researchers with public or private sponsors who wish to establish a research center or technology transfer activity at the Alameda Naval Air Station site. There are, however, groups of researchers who believe that with assistance they might build a consortia for research and demonstration activities that would appropriately take place at the Naval Air Station location or establishes laboratory facilities for non- core and collaborative research. These interested groups are in fields such as biotechnology and environmental technology demonstration. Are these potential research centers necessary for the achievement of a science and technology center at Naval Air Station? No, but if any one were to be established they would help accelerate visibility and potential for growth at the site. What then appears to be most realistic in terms of potential near -term linkages of the East Bay's technology competencies to the Alameda Naval Air Station site? Based on the working group processes and analysis carried out, the following options appear most feasible over the near -term {1 ;3 years), medium -term 0-5 years), and logger -term (5 -10 years); assuming no: major catalytic anchor investment at the site: • Near -Term: Virtual Linkages and Outreach. UC and national laboratory establish communication linkages to the site and potential on -site offices for outreach to promote and organize R &D or technology transfer activities with off -site capabilities in key competency fields. In addition, use of designated open space and reuse facilities for an environmental test bed facility. • Medium -Term: Multiuser Collaboratory. Development of a private or jointly -owned multi- tenant research building. This structure could offer lease space to universities, national laboratories, and companies, as well as lease a "collaboratory space" for joint - projects, and an incubator with its shared services. The facility could house other university or laboratory tenants, such as industry outreach offices or new intermediary organization created to foster university - laboratory- industry linkages. This facility is most likely to appeal to a specific set of institutional competencies and industry cluster markets (Biotechnology and Environmental Technology). • Longer -Term: New Intermediary Institutions. Development of new intermediary institutions to provide commercial R &D. Bringing the technology competencies of the East Bay to work most effectively in enhancing the growth of technology -driven clusters at the Alameda Naval Air Station can be accomplished by focusing on the realistic and feasible near -term opportunities. To bring about a more intensive medium -or longer -term development objective, such as a new research facility or institute, may require organization of a collaborative development process with strong participation from stakeholders from the universities, laboratories and industry. What mix of these opportunities might succeed relative to the potential of technology -based cluster development growth at a potential Alameda Science & Technology Center, is the focus of the next and final part of this report. 146 Part VI. Feasibility of Science and Technology Center Concepts A science and technology center is feasible for the Alameda Naval Air Station. Based on the analysis carried out for this project, a science and technology center is first and foremost a geographic location with a concentration of companies in technology -driven clusters that produce high quality jobs. It is also defined as a location with competitive advantages that include specialized technology transfer institutions. The Alameda Naval Air Station can certainly develop a science and technology center under the first criteria of this definition, and may possibly meet the second, under specific conditions. This final part of Phase Two of the Alameda Science & Technology Center project presents the conclusions regarding the feasibility of such a center and the conditions under which feasibility may be realized. Three concepts are proposed as feasible, and for each concept this concluding section provides an overview, the development expectations, the concept rationale and a summary of implementation requirements. A. ASSUMPTIONS GUIDING FEASIBILITY ANALYSIS In concluding this feasibility analysis, three key assumptions guiding this project are reviewed to set the stage for the recommendations. (See Phase One report on Concept Delineation) 1 . Assumption 1: Create Job Opportunities Through Technology- Driven Clusters A principal assumption of this science and technology center feasibility project has been that higher growth of quality jobs in Alameda and Alameda County can arise from technology -driven industry development, in comparison to non - technologically -driven industry. For that reason, this project set out to deteiuiine what types of technology -based industry development could take place at the Alameda Naval Air Station that had good prospects for accelerating the formation of high quality jobs for the site and Alameda County. The economic analysis carried out for this project has determined that there are four technology- based clusters that can and will create new jobs at the Alameda Naval Air Station and in the East Bay: biotechnology, environmental technology, multimedia, and information technology. Each has grown in the East Bay and is forecast to grow in the future. These technology -based clusters are a small part of the overall economy, but they create quality jobs and have high economic multipliers. Any one of the technology- driven clusters can be the basis for or part of a science and technology center. 2. Assumption 2: A Science and Technology Center Organization is Needed A second assumption that this project has examined is that a technology intermediary organization of some type at the Alameda Naval Air Station site could accelerate the attraction and formation of technology - driven industry and formation of quality jobs. The project set out to answer the question: Is the growth of technology- driven industry dependent on the addition of a new science and technology organization, not already in place, that is associated with the Alameda Naval Air Station? The framework provided in Phase One helped answer this question by defining the continuum of technology transfer processes and intermediaries that take place naturally between users and producers as well as special bridge building mechanisms that can enhance linkages between the research infrastructure and industry users. A number of alternative science and technology center 147 organizations or intermediaries were explored as candidates for the Alameda Naval Air Station. See Figure VI -1 below. The conclusion reached by both the industry working groups and by representatives of university and national laboratories is that companies in technology- driven clusters in the East Bay are currently able to access research competencies from the surrounding world -class universities and laboratories reasonably well. In fact, companies constitute their own technology - transfer organizations for the most part, working with those resources they require as needed. This implies • that special intermediary organizations at the Alameda Naval Air Station site are not requisite to growth of technology -driven jobs. However, findings suggest that new intermediaries could improve the quality and depth of interaction in many of the target technology -driven clusters. The key issue is defining sponsors for new intermediary organizations at the site. Figure VI -1. Feasible Alameda Science and Technology Center Concepts Concept One: Natural Growth:. No intervention needed beyond base site improvements Companies use existing regional science and technology assets 4.5 acres estimated annual growth from technology - driven clusters (100 jobs per year) Cluster companies diffused within broader multi -use development of Alameda NAS Alameda Naval Air Station Community 148 3. Assumption 3: The Science and Technology Center Should be A Physical Development A third assumption of this project has been that a technology center should have a physical presence at a specific geographic location, such as the Alameda Naval Air Station. Clearly, there are many elements that can comprise a science and technology center and all or some of these components may be located in one place. This then raised the question of what the physical composition of a possible science and technology center at the Alameda Naval Air Station can or should be. The analysis of technology center models in the first report (Report One: Concept Delineation) made clear that there are a range of physical technology center development options that could be pursued at Alameda, all dependent on market demand and sponsorship. The options for consideration ranged from small centers, such as a technology transfer office or commercialization or incubator services, to larger building or campus complexes for research institutes or corporate R &D centers, to technology parks and new towns that comprise planned industry developments with supporting commercial, retail and quality of life amenities, to technology regions, such as the Silicon Valley. See Figure VI-2. below. t: > • Figure VI -2. Feasible Alameda Science and Technology Center Concepts Concept Two: Strategic Outreach Intervention limited to collaborative development process to shape user - oriented center plans for site Targets a higher share of development across all four clusters through intensive outreach to companies 5 plus acres estimated annual growth plus prospect for a major anchor development (135+ jobs per year) Alameda Naval Air Station Community 149 The findings of the technology competency analysis, industry working groups and discussions with university and laboratory personnel leads to the following conclusions. First, the Alameda Science & Technology Center should be physically defined by its key components which, in this case, would be the anticipated agglomeration of technology -driven companies. This concentration of companies in technology- driven clusters does not have to be placed within a narrowly defined physical site, such as an industrial district or even a cluster- specific technology park, but can be mixed within a broader multiuse community of development: This physical configuration is also consistent with the first assumption that a science and technology center is a means for growth of quality jobs. Second, the more intense the scale of development, the more the Alameda Naval Air Station site may need to accommodate cluster - specific requirements, such as those pertinent to the entertainment industry (e.g., sound stages), environmental technology (e.g., test beds for environmental processes) or telecommunications industry (e.g., high speed/high bandwidth capabilities), or biotechnology (e:g., leasable laboratories or facilities for collaboration). Third, in addition to its core configuration of technology -driven cluster companies the science and technology center can also include technology intermediaries who help arrange research and technology transfer relationships between technology users (e.g., companies) and providers (e.g., universities and laboratories), as well-as commercial and retail support infrastructure that can help anchor the site and make it more attractive to incoming technology -based businesses. However, these resources do not necessarily have to be on -site. As mentioned earlier, the East Bay is already - capable of supplying many important technology resources to companies. Therefore, the development of added -value resources to enhance the business environment at the Alameda Naval Air Station site whether in the form of specific technology transfer, commercialization, research or incubator organizations while desirable, is not requisite. Moreover, the development of these on- site value- adding resources will depend on the interest and commitment of private or public sponsors and participants. The Alameda Science & Technology Center, therefore, does not need to be a specific building, such as a technology transfer or commercialization facility, or a narrowly cluster- focused development, such as an industrial district. Instead, the Alameda Science & Technology Center can be a more diffuse physical community of companies and their supporting economic infrastructure nested within a broader development. The key lesson, learned from observing other technological regions such as the Silicon Valley, is to ensure that the physical site and its surroundings provide companies with an advantage in the inputs they require to compete and sustain themselves. Therefore, the Alameda Science & Technology Center is not proposed as focusing on a single technology transfer organization, but on creating a supportive business environment for the job generating potential of each of the technology- driven clusters that may locate at the site. B . DEVELOPMENT OPTIONS: FEASIBILITY AND CONDITIONS Given the assumptions that have guided this analysis the project team has ascertained that a science and technology center based on technology - driven clusters is feasible. There are three forms of science and technology center that are proposed as being feasible. These concepts are: • Natural Growth: A "virtual" science and technology center that takes shape within the broader development at the Alameda Naval Air Station as it secures its fair share of natural technology- driven cluster growth. 150 • Strategic Outreach: A collaboratively developed science and technology center that exceeds expected natural growth by aggressive outreach to each target cluster in which companies continue to participate in shaping center development. • Leveraged Assets: A single technology- driven cluster focused concept that builds user commitment to establish a self - sustaining research facility that serves as the centerpiece for development and enhancement of additional industry - university -lab linkages. The three options for feasible science and technology center developments proposed here each require increasing intervention and commitment by ARRA and concerned stakeholders. Each concept builds on the fundamental logic that technology- driven cluster development is the goal, that creating increased company concentration increases technological innovation and market visibility, and that creating special advantages can improve the capacity of the site to distinguish itself from other competing locations in the East Bay. 1 . Concept I. Natural Growth: A Virtual Science & Technology Center a . Overview: A Minimal Approach Under the current growth assumptions the Alameda Naval Air Station has the potential to develop an estimated 240 acres over the next 18 years (See Part II) of which an estimated 80.5 acres (1,126,945 sq. ft.) are expected to be . occupied by tenants from the four technology- driven clusters. Of this total an estimated 193,950 sq. ft. is expected to take the form of office development; 702,883 sq.ft. is expected to be used for R &D space and; 230,113 sq.ft. for light . industrial and warehousing. See Figure VI -1, page 148. b . Expected Development: Baseline Job Growth This technology- driven cluster growth will bring with it slightly over 100 jobs annually over the course of development, or 1800 jobs over an 18 year period. In this development option approximately 4.5 acres of Alameda Naval Air Station real estate will be developed annually by industries within the four technology- driven clusters. These acres will most likely be dispersed within the broader land use planned for the Alameda Naval Air Station site. As a dispersed concentration of companies this growth will create a "virtual" science and technology center in that there will be no specialized geographic center or services developed to uniquely serve these industries. Companies that locate at the Alameda Naval Air Station will choose the location over other regions because of the generic advantages of Alameda County and the San Francisco Bay area. In this development option companies will choose the Alameda Naval Air Station over other competing sites in the county because of the special locational and aesthetic attributes of the site. The type of development that could be expected to constitute this virtual science and technology center would likely be expansions of small companies needing 2,000 to 20,000 sq. ft. of space to growing companies who need office space in the 20,000 to 70,000 sq.ft. range. Thus, in a typical year several small office tenants could be expected, filling upwards of 10,000 sq. ft., and two to four R &D tenants occupying an estimated total of about 40,000 square feet. c . Concept Rationale: Accommodate Market Growth To some observers gaining 100 jobs a year from technology- driven clusters, without intervention, does not constitute having a "true" science and technology center. However, the analysis completed supports the logic of this concept. The logic is that companies will locate at the Alameda Naval Air Station to take advantage of the technology advantages that already exist in the East Bay. In other words, the East Bay has its own basic technology infrastructure that already is serving companies. Many regions have not and could not achieve the level of annual technology- driven 151 industry growth expected at the Alameda Naval Air Station even with intensive development in intermediary facilities, such as R &D institutes or technology training centers, because they lack the broader set of resources available in the East Bay. In sum, the "virtual" science and technology center is feasible because: • It Is Natural: This concept's feasibility relies on natural market growth of the technology - driven clusters in the East Bay and the prospects for Alameda Naval Air Station capturing its fair share of total development. • Requires No Special Intermediaries: Because the technology- driven cluster growth at the site will draw from the East Bay's outstanding technological and human resources, it will not require any specialized technology transfer intermediary. • Does Not Have A Specific Site: and because is nested within the broader development of the Alameda Naval Air Station and connected naturally to the surrounding resources of the East Bay. d . Implementation Requirements: Watch Out for Competitors In this virtual science and technology center development concept, ARRX. does not need to develop or implement any specialized interventions to support growth, other than ensure that the basic improvements to the site called for by general development are made in a timely way. No special land use planning is required to accommodate any one technology - driven cluster. No new science and technology organizations are requisite to achieve the baseline growth estimated to occur. - There is one important external contingency that needs to be kept in mind by ARRA regarding the prospects for this concept remaining feasible, separate from overall changes in each clusters' market growth. This contingency is the degree of action by competing sites in the region to build their own competitive advantage. Sites may themselves develop advantages at their locations that enable them to increase their visibility relative to industries in technology -driven clusters. They may do this by securing the location of an anchor tenant, such as a university, research institute or global company, through other investment in business amenities, or through improvements in the business environment, such as business permit streamlining. For this reason, ARRA should not take the feasibility of growth for granted and should prepare to track competing sites within and across the East Bay to determine how they may be positioning themselves to increase their capture of technology- cluster growth. Not only will Alameda Naval Air Station face competition for share of Bay Area Technology- driven Clusters; the site will also face competition from regions nation- wide. 2. Concept 2. Strategic Outreach: A Collaboratively Developed Science and Technology Center a . Overview: An Aggressive Approach to Positioning This second feasible science and technology center concept builds on the first concept with the goal of creating a significant difference in the total share of regional technology - driven cluster growth that could take place at the Alameda Naval Air Station. See Figure VI -2 on page 156. Whereas the baseline capture rate of total cluster - driven development at the Alameda Naval Air Station is expected to be an estimated 15% of regional development for office, 20% for R &D space, and 10% for light manufacturing and warehousing, this more aggressive approach would seek to increase that share of total capture by a minimum of 5% in office space, 5% in R &D and 5% in light manufacturing. Moreover, a primary goal of this development concept will be to break through the baseline expectations through succeeding in recruiting at least one major anchor industrial tenant (e.g., illustrated by Chiron developing its corporate campus in Emeryville). The 152 presence of the anchor tenant would enhance the future market prospects for the site by elevating Alameda Naval Air Station's visibility. b . Expected Development: Technology Nodes Within A Community This aggressive cluster outreach approach might on average add an possible 35 direct jobs a year to the site and over 630 over the period of development through improved outreach to industry and promotion of collaborative development at the Alameda Naval Air Station site. Success in acquiring one or more major tenants could add several thousand jobs to the site over a brief period of time — the breakthrough. Generally, this science and technology center concept may not change the annual land absorption rate significantly, with an annual average of possibly 5 acres being developed. However, this enhanced growth does not include the potential impact of a major tenant locating at the site. In this event from five to 100 acres could be absorbed by one major tenant over a relatively short period of time. The approach of this science and technology center concept is to strategically position the Alameda Naval Air Station as a preferred site for expansion of industries with each of the target technology- driven ylusters. By; reaching out to each of the target clusters more proactively,,iand on a more intensive scale than would take place under traditional real estate development conditions, the site could require more cluster- specific planning. Under this strategic positioning approach, the physical configuration of the science and technology center could shift from the "virtual ", with no distinct location within the Alameda Naval Air Station site for cluster companies, to an approach that is more focused on the distinct needs of specific clusters. Here, strategic positioning of the site would use, concepts arising from the industry cluster working groups (see Report 1: Concept Delineation) and land use expertise to help communicate the advantages of the Alameda Naval Air Station site. These development concepts would serve as organizational themes for discussions and planning for companies in technology - driven clusters. The goal would not be the creation of industrial districts (e.g., a biotechnology or a multimedia zone), since the total acreage expected to be used may be modest, but specification of user - driven planning priorities that engage companies in the development process and thereby help attract more companies to this particular site. This concept is feasible in that it emphasizes a more aggressive approach to the positioning of the science and technology center development, but does not require any major permanent intervention. Achieving the goals of this development concept focuses on more technology- cluster specific outreach during the early stages of site development. This would be carried out with active industry participation and promotion of the site concepts to increase visibility and attractiveness of the site to technology -driven clusters. c . Concept Rationale: Create a Critical Mass The difference between the natural growth concept and the intensive outreach concept proposed here is that the strategic positioning concept requires taking an affirmative approach to the cultivation and development of the potential of the Alameda Science & Technology Center as a distinct rather than virtual element of the Alameda Naval Air Station. The goal of this strategic positioning approach would be to achieve a breakthrough in attraction of companies in specific technology -based clusters so that the site achieves the visibility of a major geographic center of science and technology enterprise. There are three key points that undergird the feasibility of this concept: • Increases Share of Regional Growth: This concept is feasible because it will build on acquiring a greater share of the forecast technology -based growth for the region. • Requires Limited Intervention: This concept will succeed by adding incremental growth to the basic expected development, but does not require specific new infrastructure. The 153 concept would require support for cluster- focused outreach for the initial phases of Alameda Naval Air Station development. • Uses Collaborative Development: The outreach approach proposed would combine continued work with and outreach to companies expressing interest in the Alameda Naval Air Station site and enhanced planning to highlight the potential for technology -based cluster development. d . Implementation Requirements: Marketing Partnership Capacity Implementing the Strategic Positioning concept will require support for an intensive period of continuous outreach to companies in each technology -driven cluster. The experience of the Alameda Science & Technology Center feasibility project has brought together large numbers of companies in each technology -driven cluster. This represents a resource for enhancing the future development of the science and technology center. To the extent that ARRA can undertake or find support for undertaking ongoing collaborative work with technology -based cluster companies, this will strengthen the position of the Alameda Naval Air Station as a candidate for acquiring an above - average share of future growth of these companies in the East Bay. A fundamental opportunity in this process is to identify technology- driven cluster #companies (and their real estate developers}::. who have participated in this project and feel that the concepts they helped conceive are worth • continuing to explore. Technology cluster concepts, such as "Alamedia" which conceived a mixed . use development that would serve entertainment and multimedia companies, or "Biomeda" which posited a biotechnology - oriented development can continue to be refined and expanded by - corporate users and their representatives. Through this "relationship building approach" ARRA and its consultants can maintain a closer connection to potential end tenants than they could ordinarily. While no one cluster development concept would be expected to serve as a formal plan for the site, they serve as a rallying point for expressing corporate site interests and for communicating Alameda Naval Air Station's direction to the marketplace. 3. Concept 3. Leveraged Assets: Specialized Science and Technology Center Investment a . Overview: A Tactical Approach The third of the feasible Alameda Science & Technology Center concepts focuses on achieving higher growth in one technology - driven cluster by better focusing the region's science and technology assets on the Alameda Naval Air Station site. See Figure VI -3 on page 156. This concept would involve selecting one cluster as a primary focus for whom development or acquisition of a distinctive science and technology anchor facility would be undertaken. The presence of this facility would raise the image of the Alameda Naval Air Station site among competing sites, help attract leading companies in target technology -driven cluster, and add its own value to the site over time through possible spin -offs and incubated firms. The focus on building a science and technology facility for one cluster is a tactical approach to building development momentum at the Alameda Naval Air Station. Once successful for a given cluster, the concept could be employed again in other technology - driven cluster markets. In this way, the site could become a more differentiated location for technology -driven development, increasing its share of cluster growth one after the other. The cluster suggested as the initial focus in this concept of "asset leveraging" is biotechnology. The mechanism for leveraging regional science and technology assets is a leasable research laboratory facility. However, other cluster- focused initiatives may certainly be possible and worthwhile, if there are sufficient catalysts and sponsors to pursue their implementation. 154 b . Expected Development: Baseline Plus The leveraged asset concept for the Alameda Science & Technology Center site will build on the two previous concepts through adding a new source of specialized advantage at the site. Whereas the first concept simply accommodates market growth and the second concept aggressively reaches out to companies in each of the four clusters, this third concept will focus on one cluster by causing a specialized facility to be built that will serve firms of different sizes in the selected cluster and create an enhanced market interface with the university and laboratory systems at the Alameda Naval Air Station site. While all four of the technology- driven clusters are strong and have good expected growth in the East Bay, Biotechnology is the strongest. While not the largest employer with 4,000 jobs in 1993 (compared to information technology with 21,606 jobs), Biotechnology has the highest payroll per capita ($50,820), has the best distribution of companies by size (e.g., 61% <9, 23% 10 -49, 11% 50 -249, 4.4% 250 +), the highest concentration (almost 2x the national average), and the second fastest growth over the past three years (10.4 %) next to multimedia and broadcast (15.5 %) and the highest annual growth forecast (4.9 %) for the period 1995 -2015, based on the ABAG forecast commissioned for this project. Moreover, of the four target technology -driven clusters, it:is biotechnology that has the highest ongoing historic linkage to the university and'labortory system of the East Bay and San Francisco Bay area. For these reasons biotechnology is suggested as the choice for the focus for a science and technology facility. Growing technology- driven clusters, such as environmental technology, could easily be included in this development, whereas clusters, such as multimedia and information technology are less dependent or interested in research - oriented linkages to the East Bay's science and technology assets. In this concept the growth expected under the "baseline natural growth" concept and "strategic outreach" concept could be reinforced and improved upon by virtue of accelerated growth in one target cluster market (e.g., biotechnology), although there is no means of knowing by how much. This value -added concept of a science and technology center could help, for example, in achieving the marketing breakthrough needed to attract a major corporate anchor and more medium -size companies that would have located elsewhere. However, there is no guarantee of the specific impact that this version of the Alameda Science & Technology Center might deliver on the local economy. Given that the biotechnology cluster is expected to grow by 4.9% annually for the next 15 or more years, by developing specialized capabilities that are in demand by the growing biotechnology industry and its potential research partners, the Alameda Naval Air Station should stand to gain a higher share of total biotechnology development in the East Bay than other sites. Alameda Naval Air Station should be able to capture from 15% to 20% of the approximately 1,500 new jobs that will be added in biotechnology related industries in the East Bay in the next five years, if the site is ready and positioned effectively. Moreover, this growth does not include the potential of capturing relocations within the region that are actively underway right now and could choose Alameda. 155 Figure VI -3. Feasible Alameda Science and Technology Center Concepts Concept Three: Leveraged Assets Builds on Concepts One and Two (baseline 4.5 acres annually 100 -135 jobs); potential for major anchor Focuses on priority technology- driven cluster- - Biotechnology is recommended due to concentration, growth, wages Emphasizes building a "critical mass" of development -in one cluster by creating self- sustaining shared research facility as an anchor Research facility would depend on sponsors and tenants with long -term leases for laboratory space (e.g., universities, national labs and companies) Critit:alviass of Cluster Companies Core Science & Technology Facility Cluster Anchor Companies Alameda Naval Air Station Community c . Concept Rationale: Catalyze a Critical Mass The underlying logic of this third concept is that ARRA could better attract companies to the Alameda Naval Air Station site if it focused on a select cluster, such as biotechnology, and if the site had a distinctive facility on site that supported this industry in a visible way. Given that there are few public resources for planning and sustaining an new research institute or technology transfer organizations, no proposals have been put forward that are not user - driven and market supported. To this end, a concept for a research laboratory facility has arisen from collaborative worksessions with universities, national laboratories and companies that has the following features: • Technology User Driven: The concept is a pragmatic and feasible approach that responds to needs of technology users (new and expanding companies in specific clusters). • Technology Producer Responsive: The concept responds to needs of East Bay technology producers (universities and laboratories) who need laboratory space, and want to be near businesses. 156 • Self - Sustaining: The concept is designed to be market - driven and not dependent on any external financial support other than its tenants (who are responsible for their own financial requirements). • Builds New Bridges Between Users and Producers: The concept creates leverages regional technology assets by providing a variety of spaces designed to accommodate collaborative R &D, technology transfer and enterprise development services of various kinds without being responsible for their financial operations. The proposed "leveraged asset" concept is to seek development of a private multi -user research building that will serve as a core complex around which cluster development can take place and where linkages to regional research institutions can be enhanced at the Alameda Naval Air Station. This facility is proposed as providing the following array of space: • Leasable laboratory space for university and national laboratories who need additional room for non -core activities (typically 5,000 to 10,000 sq. ft. per laboratory). • Leasable laboratory and office space for early stage and expanding companies who are not ready to purchase a building or temporary use by larger firms (typically fi'pm;2,500 sq. ft. to 20,000 sq. ft. per client). • Collaboratory space for joint use by universities, national laboratory and companies (average of 5,000 to 10,000 sq. ft. for one collaboratory or cluster of laboratories). • Laboratory and office space for start -up companies (combined spaces between 2,500 and 5,000 sq. ft) . Though not necessarily a formal incubator these spaces could be linked to a network of existing business support services. • Office space for existing technology transfer, university outreach and technology commercialization services that desire locations close to growing concentrations of technology - driven clusters. These spaces would be approximately 2,500 sq. ft each. This concept above has been identified by both the biotechnology industry (both small and expanding firms) and by university faculty and some national laboratory staff as the centerpiece of a potential biotechnology cluster concept that also includes nearby hotel and conferencing amenities, accessible housing, high frequency transportation to UC and other destinations, and high speed/high bandwidth communication. Yet, of all these elements, this research facility is believed by prospective users as the most central and most difficult to bring about. d . Implementation Requirements: Marketing Partnership Capacity This "leveraged assets" science and technology center concept is feasible because it focuses on a pragmatic, market- driven, self - sustaining development concept: a core research complex. The successful development of this core research facility will depend on ARRA and an appropriate development partner achieving commitments by potential tenants from the target technology -driven cluster: the biotechnology industry, as well as from the universities and laboratories. If serious tenants with interest in long -term leases are identified, there will be less difficulty in securing the commitment of a real estate developer to invest in, develop, and manage the core research complex. Therefore, the first step in implementing this concept is developing a core group of committed sponsors and users of this research complex. The likely sponsors and key tenants include private biotechnology and bioscience firms and Bay Area universities, such as UC Berkeley and UC San Francisco as well as programs of UC affiliated national laboratories, such as Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory and even Sandia. If a core building is developed that is large enough to accommodate the laboratory requirements of the key public and private institutions, 157 additional space could also be made available either directly to growing new firms through an incubator portion of the facility. Similarly, to the extent that space could be made available to existing technology transfer programs, to or indirectly programs and other technolo pace is available, office technology-services. p g � clinical assistance As this concept becomes a reality, its development will confirm and the technology - driven cluster development activities that have been describedoabovebroader C . CONCLUSION: BUILDING MOMENTUM FOR THE ALAMEDA CENTER DA SCIENCE & Each of the three science and technology center concepts presented here is feasible. build and depend on the other. For example, the third concept focusing on leveraging science and technoIo le• They each second concept which focuses gonastrategicoutreach to industry hatiwill build Ce d without the g cluster (e.g., biotechnology) as well as the other three ke clusters. suconct for the target nlenp for ARRA's consideration. key Zhese three concepts are a Should AR '� RA wish to minimize its efforts conceming development of the science and technology it need do little more than ensure that the building blocks for natural, base -line future are in place. In this manner, the site will be likely a natural share logy technology - driven cluster growth. ely to gain _ are of future re site If ARRA believes that increasing its share of future growth technology -driven clu essential mission, then the second concept, with its emphasis on direct outreach to clust companies and individual development concepts to build engagement with site sters is an becomes essential. For this course pp er outreach and development.' may need support for a continuing program cluster Finally, to make a significant breakthrough in the visibility and development of the site cluster, such as biotechnology, of collaborative development with both cluster companies and East Bay sith in a priority ARRA will need to organize a concerted process institutions, such as UC and the national laboratories. This collaborative development on securing commitments to establishing amarket- driven self-sustaining public research that will be a core component of a leading edge science and technology pment process will if sustaining research facility Air Station. This process, if successful, could lead to further efforts to create new facilities that could help the Al gy center at the Alameda Naval faiven industry could p Alameda Naval Air Station achieve breakthrough levels of technology- driven g wth, as the base makes its transition to the civilian marketplace. The Phase Three Report for ARRA will provide a business plan for managing the implementation three feasible concepts. p anon of these 158 Alameda Reuse and Redevelopment Authority Inter- department Memorandum February 11, 1997 TO: Honorable Mayor and Councilmembers FROM: Kay Miller, Executive Director SUBJ: Status Report from the Executive Director, Alameda Reuse and Redevelopment Authority, on ARRA Activities and Lee Perez and Helen Sause on BRAG Activities. Background At your February 4, 1997 meeting, under Item 5B (Oral Report on Planning Process as it Relates to the City, ARRA, and NAS), the Mayor requested a similar report on ARRA and BRAG activities. Discussion The requested report will be presented as an oral report to include current ARRA lease activities and projected revenues and the state and federal grants we have received, as well as a discussion of our activities on major reuse issues. The Mayor also requested that the Base Reuse Advisory Group (BRAG) Chair and Vice -Chair report on the activities and accomplishments of the BRAG. That report will be done orally as well. Budget Consideration None. Recommendation This report is informational only, as requested. Respectfully submitted, A14*(1.0..../ Kay Miller ARRA Executive Director KM:mee Attachment: Presentation materials FORWARDED {'Recycled paper City of Alameda Inter-department Memorandum January 9, 1996 To: Honorable Chair and Members of the Community Improvement Commission From: Robert Wood, Vice-Chair Economic Development Commission Re: Background Approval of the Request for Proposals to be issued to The Lincoln Property Company, The Martin Group and Catellus Development Corporation for the Redevelopment of the Fleet Industrial Supply Center . The Community Improvement Commission. (CIC) has initiated a developer selection process for Fleet Industrial Supply Center (FISC). On November 4, the CIC selected three development teams to participate in the Request for Proposals (RFP) process. Discussion/Analysis The proposed RFP (on file with the City Clerk's office) is a request for detailed information about the development teams and allows the teams to present their plans for the development of the FISC property. The RFP directs the development teams to prepare a narrative description of the overall design concept for FISC, a planning and development schedule, preliminary drawings, financing plan, proposed transaction structure, preliminary marketing concept, etc. Responses are due by April 4, 1997. Similar to the RFQ process, staff and a new Ad Hoc FISC Working Group would review the responses and provide a recommendation to the Economic Development Commission, who, in turn, would recommend the preferred FISC development team to the CIC. Fiscal Impact Cost for the RFP process is included in the CIC's adopted budget. Recommendation The Economic Development Commission recommends that the CIC approve the Request for Proposals to be issued to The Lincoln Property Company, The RECEiV€D JAN 1 7 1997 APRA Re: Resolutions #1 (CIC) 1-21-97 Honorable Chair and Members Page 2 of the Community Improvement Commission January 9, 1997 Martin Group and Catellus Development Corporation for the redevelopment of the Fleet Industrial Supply Center. Respectfully submitted, Robert Wood, Vice-Chair Economic Development Commission RW/JD:dc cc: Alameda Reuse and Redevelopment Authority Base Reuse Advisory Group Alameda Chamber of Commerce West Alameda Business Association FORORD ( (llail/a4-1, STREET IMPROVEMENT PLAN ALAMEDA POINT SUMMARY OF WORK_ January 1997 Alameda Reuse and Redevelopment Authority NAS Alameda, Building 90 Alameda, California 94501-5012 510 864-3400 FAX 510 521-3764 I. Introduction A. Background The following report is a summary of the progress of the Street Improvement. Plan as of January 1997. The Alameda Reuse and Redevelopment Authority has undertaken a Street Improvement Plan project (in fiscal year 1997) to provide more detailed street improvement plans and costs for the redevelopment and reuse of the Alameda Naval Air Station (Alameda Point). The data from this study provides critical input into the ARRA's overall cash flow model (pro forma analysis), business plan, and Economic Development Conveyance application to the Navy. The ARRA hired Rajappan & Meyer Consulting Engineers to undertake this task. The Street Improvement Plan is funded through a grant from the Economic Development Administration (EDA). The project team includes the consultant team, ARRA staff, and the staff from the City of Alameda Public Works Department and the Planning Department. The street plan is being developed to be fully integrated into the City of Alameda street system, the City planning process, and the City of Almaeda Capital Improvement Program (CEP). Ultimately, the street system, along with other major infrastructure components (storm drainage, street lighting, and sewer system), will become the property and responsibility of the City of Alameda. B. Scope of Work The scope of work for the street improvement plan includes: 1. Inventory and conditions analysis of existing streets; 2. Roadway classification system with detailed street sections and a bicycle pathway system; 3. Feasibility studies for: a. major street alignments, connections and intersections for Tinker, Mitchell - Mosely, Atlantic Avenue and Main Street, and b. analysis of a new bridge /tunnel connection to I -80; 4. Construction costs and a pavement management plan for the first five years; 5. Capital improvement plan and phasing for long -term street improvements; 6. Capital improvement plan and financing strategy; 7. ,GIS mapping for each roadway segment; 8. Transit improvement study (bus, ferry, water taxi, light -rail, etc.); 9. Parking lot analysis; 10. Traffic analysis for the 15 -year and 30 -year roadway system; and 11. Estuary crossing study update. The street improvement plan is being coordinated with the ARRA's utility improvement study, the detailed development plan studies, the cash flow analysis, and economic market studies. As part of the street classification system, the consultant team has conducted and refined the traffic demand Alameda Reuse and Redevelopment Authority NAS ALAMEDA STREET IMPROVEMENT PLAN 5_Year Road Maintenance Plari 2.2 Summary of Costs The following table presents the cost for each street segment, as well as the overall cost of implementing the entire 5 year street improvement plan for the Naval Air Base. These improvements should be implemented under 1 construction contract to benefit from economics of scale. Figure 3 on the following page gives a visual representation of all recommended improvements for these streets. STREET COST First St. between Ave. A and Ave. F $29,000 Second St. between Main St. and Ave. F $42,000 Third St. between Main St. and Ave. F $16,000 Fifth St. between Ave, A and Ave. N $62,000 Ninth St. between Ave. C and Ave. L $194,000 Ave. A between First St. and Fifth St $6,000 Ave. 0 between First St. and Main St. $38,000 Ave. F between First St. and Twelfth St. $70,000 Atlantic Ave. between Fifth St. and Webster St. $260,000 Ave. K between Eighth St. and Eleventh St. $59,000 Ave. L between Fifth St. and Eleventh St. $35,000 Ave. M between Fifth St. and Twelfth St. $165,000 Ave. N between Fifth St. and Twelfth St. — • $6,000 Main St. between Second St. and Pacific Ave. ._ .. $129,000 Central Ave. between Pacific Ave. and Webster St $32,000 •incoln/Pacific Aves. between Main St. and Webster St. $272,000 Singleton/Mosley Avenues $27,000 Barbers Point Road $0 TOTAL $1,440,000 DRAFT - November 11, 1996 Page32 APP FN DICES S 01 -24 -199? 01 :30PM FROM RAJAPPAN & MEYER Consult TO 15105213 ?64 P.03 NAS ALAMEDA STREET IMPROVEMENT PLAN 30 Year Capital improvement Program SUMMARY OF COSTS Design and Construction • Upgrading Minor Arterial to Major Arterial SECTION NO. STREET NAME CROSS STREET 1 CROSS STREET 2 COST 1 First Ave. Ave. A Atlantic Ave. $1,340,000 $1,610,000 2 Second Ave. Mitchell Mosley Ave. Atlantic Ave. 3 Third Ave. Mitchell Mosley Ave. Atlantic Ave. $1,560,000 4 Fifth Ave. Mitchell Mosley Ave. ,Atlantic Ave. • $2,010,000 $1,800,000 $810,000 $2,260,000 $5,670,000 $4,1602000 $610,000 $3,510,000 $10,210,000 $3,420,000 $7,260,000 $1,640,000 $3,140,000 $6,800,000 $2,490,000 $1,890,000 , $2,800,000, $4,310,000 $1,,690,000, 31,47;000 $1,360,000 51,990,000 $930 000 $920,000 5 Fifth Ave. Atlantic Ave. Ave. N 6 Ninth Ave. Tinker Ave. Atlantic Ave. 7 Ninth Ave. Atlantic Ave. Ave. N 8' Main St Base Limit ,Atlantic Ave. 9 Main St Atlantic Ave. Ave. M 10 'Main St. Ave. M Harbor 11 Fifth St. Mitchell Mosley Ave. Atlantic Ave. 12 Mitchell Mosley Ave. First Ave. Second Ave. 13• Mitchell Mosley Ave. Second Ave. Base Limit 14` Mitchell Mosley Ave. Main St _ , Mariner Square Dr. 15 . Ave.-A First Ave. Fifth Ave. 16 Tinker Ave. Ave. . Main St. 17 . Tinker Ave. ,First Main St Constitution Way 18 Ave. F First Ave. Main St. • 19 Atlantic Ave_ First Ave. Fifth Ave. 20 Atlantic Ave. Fifth Ave. Main St. 21 Atlantic Ave. Main St. Constitution Way 22 Ave. K • Filth Ave. Main St. - 23 Ave. M Fifth Ave. Main St • 24 Ave. N Fifth Ave. Main St. 25 Taxiway Echo Mitchell Mosley Ave. Atlantic Ave. 26 Ninth Ave. Mitchell Mosley Ave. Mitchell Mosley Ave. Tinker Ave. Tinker Ave. 27 Ave. 28 ,Mosley Singleton Ave. Tinker Ave. Fifth Ave. Taxiway Echo Mitchell Mosley Ave. First Ave. $2,780,000 29 $430,000 $450,000 30 Atlantic Ave. Taxiway Echo First Ave. • Upgrading Minor Arterial to Major Arterial 01-24-1997 01:29PM FROM RAJAPPAN & MEYER Consult TO 15105213764 P.02 • NAS ALAMEDA STREET IMPROVEMENT PLAN 15 Year Capital Improvement Program SUMMARY OF COSTS Design and Construction SECTION NO. STREET NAME CROSS STREET 1 CROSS STREET 2 COST 1 First Ave. Ave. A Atlantic Ave. $1 340,000 2 Second Ave. Mitchell Mosley Ave. Atlantic Ave. ' $1,610,000 3 Third Ave. Mitchell Mosley Ave. Atlantic Ave. $1,560,000 4 Fifth Ave. Mitchell Mosley Ave. Atlantic Ave. $2 010 000 5 Fifth Ave. Atlantic Ave. Ave. N $1,800,000 $810,000 6 Ninth Ave. Tinker Ave. Atlantic Ave. 7 Ninth Ave. • Atlantic Ave. Ave. N $2,250,000 8 Main St. Base Limit Atlantic Ave. $5,110/000, $4,160,000 $610,000 9 Main St. Atlantic Ave. Ave. M 10 Main $t. Ave. M Harbor 11 Fifth St. Mitchell Mosley Ave. Atfantic Ave. $3,510 000 12 Mitchell Mosley Ave. First Ave. Second Ave. $10,210,000 $1,890,000 13 Mitchell Mosley Ave. Second Ave. Base Limit . 14 Mitchell Mosley Ave. Main St. Mariner Square Dr. $4,160,000 $1 ,640000 15 Ave. A First Ave. Fifth Ave. 16 Tinker Ave. First Ave. Main St. $3,140,000 $6,800,000 17 Tinker Ave. Main St. Constitution Way 18 Ave. F First Ave. Main St. 52,490,000 51,890,000 $2,800,000 19 Atlantic Ave. First Ave. Fifth Ave. 20 Atlantic Ave. Fifth Ave. Main St. 21 . Atlantic Ave. Main St. Constitution W $4 310 000 22- Ave. K Fifth Ave. Main St. 51,690,000 $1,470,000 23 Ave. M Fifth Ave. Main St. 24 Ave. N Fifth Ave. Main St. $1 ,360 000 TOTAL S68,700,000 Summary of Work January 24, 1997 Street Improvement Plan Page 3 improvement grants, among others. The City of Alameda and the ARRA have already begun improvements to the street infrastructure system. The very first project now underway is the Main Street improvement project from Atlantic Avenue to the estuary. This project also includes major park improvements within the old railroad right -of -way being purchased by the City of Alameda. This project is financed through a number of federal (EDA) and state grants, and local City participation. C. Next Steps Upon completion of the Street Master Plan, the ARRA staff and City of Alameda Engineering Department will present the proposed plan to the City Planning Commission, other City boards, and eventually to the City Council for approval. The street plan and financing strategy will ultimately be integrated into the City of Alameda's Street Plan and Capital Improvement Plan (CIP) for implementation. Alameda Reuse and Redevelopment Authority Summary of Work January 24, 1997 Street Improvement Plan Page 2 analysis to determine the impacts of traffic at intersections and traffic through the Webster Street tubes. These traffic studies are being integrated with the Navy's EIS/EIR. II. Summary of Work A. Work Products The Engineering consultants have completed preliminary drafts on a number of the work tasks. The financing strategy is being prepared by Economic and Planning Systems (EPS) as part of the overall cash flow analysis and business plan development. Copies of the draft technical memorandurns from the consultant are available for review at the ARRA office, including: 1. Proposed functional classification system 2. Typical street cross - sections of functional classifications 3. Proposed bikeways system plan 4. A copy of the draft street system is attached to this report. 5. Five -year road maintenance plan 6. Street improvement plan costs 7. Street connection feasibility studies. B. Cost Estimates Based upon the above street engineering studies, the consultant team have completed preliminary costs estimates for the proposed street improvements. The estimated costs for the proposed street improvements include: 1. Five -year road maintenance costs 2. Long -tern capital improvement costs 1st 15 -year improvement costs 2nd 15 -year improvement costs Total 30 -year improvement costs $ 1,440,000 $68,700,000 $11,260,000 $81,400,000 The preliminary costs for street improvements will be integrated into the cash flow analysis being prepared by the ARRA.'s economic consultants, Economic and Planning System, Inc (EPS). Based upon this economic analysis, street improvements will be phased over the full buildout development period (30 years). • The economic analysis may require adjustments to the phasing of street improvements to reflect projected cash flow and revenues to the City of Alameda. The economic analysis will also provide a strategy for financing these and other infrastructure improvements. The financing strategy could include development bonds, private development participation, infrastructure development fees or special assessment fees, and transportation UTILITY STUDY ALAMEDA NAVAL AIR STATION SUMMARY OF WORK Prepared for: ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY Naval Air Station, Building 90 Alameda, California 94501-5012 Prepared by: MOFFATT & NICHOL ENGINEERS In Association With: HARRIS & ASSOCIATES VERSAR INC. YEI ENGINEERS ALAMEDA BUREAU OF ELECTRICITY PACIFIC GAS & ELECTRIC CO. January 1997 WIN JOB NO. 375Et INTRODUCTION A. BACKGROUND In April 1997, the Alameda Naval Air Station will officially be closed for Navy use and opened for public use. The Alameda Reuse and Redevelopment Authority (ARRA) contracted with Moffatt & Nichol Engineers to prepare a Utility System Study of the Naval Air Station. The study was part of the plan for the utility system as identified in the recently adopted "Community Reuse Plan ". The Reuse Plan provides a mechanism for the orderly transition from military to civilian use. B. SUMMARY OF WORK The study involves the assistance of various offices, such as the Navy and the Utility Steering Committee which are composed of representatives from EBMUD, Alameda Bureau of Electricity, Pacific Gas & Electric, City Of Alameda and ARRA. The utilities considered in the study only include the following: Storm Drainage System Sanitary Sewer System Potable Water and Fire Protection Sprinkler System Electric Power System Gas System The study was divided into four phases and they are summarized as follows: Phase 1 Preliminary Investigation Phase 1 work was primarily aimed at producing a work plan for the remaining phase of the study through the evaluation of utility information gathered from the Navy. The tasks involved are : update of utility system maps, define service area, define system variances, defining demand criteria, defining system problems, and formulation of work plan for phases 2, 3 and 4. One of the major tasks in this phase is the preparation of utility base maps for each of the following system: Storm Drainage System Sanitary Sewer. System Potable Water and Fire protection Sprinkler System These maps were prepared in AUTOCAD ( RELEASE 12) at 1 " =40 ft. scale. The resulting set of drawings were the compilation of drawings and information obtained. The drawings show the pipe sizes, materials, manhole rim and invert elevations and any other pertinent available information. Each system consisted of 50 drawings. A set of each was submitted to ARRA, EBMUD, and the City of Alameda. Electronic file ( diskettes) were also submitted. The Electric Power System and Gas System maps are prepared at 1" =100 ft. scale to correspond to Bureau of Electricity and PG &E standard mapping scales. The drawings and electronic file were furnished to ARRA, EBMUD and City of Alameda. The phase 1 report was completed and submitted on June 1996. Phase 2 Field Studies The phase 2 study presents the results of the work effort for the utility systems with regard to their condition. The overall objectives of this phase are to provide a condition assessment of the existing utility system and identify system improvements to meet the needs for the interim and long range reuse of NAS Alameda and the FISC area. The existing systems were analyzed and evaluated based on available information gathered from the Navy and in the limited field studies. The study was divided into two subphases and they are summarized as follows: Subphase 2A Initial Assessment The Initial assessment Phase describes the condition and evaluation of the existing system based on the available information. The need for field work at specific location was identified after the available information was reviewed. The task undertaken for subphase 2A are: 1. Condition Assessment 2. Existing Capacity Evaluation 3. Demand Analysis 4. Presentation of summary of findings The utility lines to buildings within the interim service area was assessed as to its condition if they can remain and be maintained during the interim period. The capacity were determined by computer simulation on some utility system, the flow demands were calculated based on the criteria established by the City of Alameda and utility owners. The result of the evaluation of the existing utility system based on the existing condition, findings, and analysis are summarized and a report was submitted on December 1996. Subphase 2B Field Studies The field studies involved field survey, and inspection of selected components of the system . The tasks included in this field studies are: Field Verification Inspect Condition Summary of field findings The result of these tasks provided the study with data to identify the probable problems in the system that were not identified before and data to supplement and bridge the information gap. Some of this field verification includes TV inspection, smoke testing, field surveys, leak detection survey, hydrant flow tests and corrosion investigation. For the electric system, the Bureau of electricity conducted their own survey by visual inspection and evaluation of the existing electrical equipment while PG &E initiated pot holing to determine the location and condition of the gas piping. The defects discovered in utility systems during the field studies were included in the report submitted to ARRA . These defects will need to be corrected to meet the needs in the interim and long range reuse plan. Phase 3 Master Plan This phase includes the improvement plans to the utility systems as a result of the findings in Phases 1 and 2 of the study. The objective was to provide the plan in relation to the interim reuse (1997 -2001) and long range reuse (after 2001). The first draft report was submitted in October 1996 and a second draft submitted in November 1996. The final report is scheduled to be submitted after EBMUD has reviewed the section in the report dealing with the Potable Water and Fire Protection Sprinkler System. Storm Drainage System Ten projects for the interim and three projects for the long range reuse were recommended and the estimated cost. are $ 13.5 million dollars for interim reuse and $21.1 million dollars for long range. Sanitary Sewer System Eight projects for the interim reuse and three projects for the long range reuse were recommended. The estimated cost for the interim projects totaled $6.4 million dollars, and $10.3 million dollars for the long range reuse. Potable Water and Fire Protection Sprinkler System Five projects for the interim reuse with a total estimated cost of $11.5 million dollars were recommended. Two alternative scenarios for improvements are considered for the long range reuse. The estimated cost for the alternatives are $4.6 million dollars and $5.4 million dollars. Electrical Power System Twelve projects identified for the interim reuse with an estimated cost of $10.6 million dollars and twelve projects for the long range reuse with an estimated cost of $10. 8 million dollars were recommended. Gas system There were four projects with an estimated cost of $ 3.1 million dollars were recommended for the interim and long range reuse. Environmental Assessment There are a total of 23 installation restoration sites identified that may require remedial activities. The estimated cost for environmental work relative to the utilities are $4.3 million dollars for the interim and $2.2 million dollars for the long range reuse. The summary of projected capital improvement programs for interim and long range reuse are presented in TABLE ES -1. Phase 4 Operating Plan The operating plan is the fourth and final phase of the study. This phase of the study is in the draft stage and awaiting some data regarding 0 & M for water system. At present the Gas system has no projection for cost regarding 0 & M. This report will include the 0 & M cost, emergency and cyclic cost projected for each system. A draft Phase 4 report is tentatively set for submittal by the end of January 1997. uJ w w z z _C3 0 z w z z 0 O u. P 0 t_< • g t0 LU _1 IX > }— CO Z < z w c < • LLI ILI > • 0 IX Y. c_) 0 >- 0 cr w LU 0 0 ...I < {— 0 !-- • 0 1 LONG RANGE REUSE !SUBTOTAL N 0 V i c .•. 0 c.„ imii im .,: 1 N r). 0 2 . - A ci 8 . to .-.. 6 ":r. - ai 1 8 0 2 . ,.... A 6 0 — 6 hs 17.4 (.1 o . u.) 0. o (.4 o . us - ci al (..) ci 1 g 6 (..) o . a) )r) 6 a) co 6 to - ca n .:7? a., ENVIRONMENTAL' 2002 1 2003 1 2004 1 2005 REMEDIATION 0.53 1 1.65 1 5.46 1 0.90 1 1.07 1 (,) q .- 2. .. ,„ 2 2 6 a) 0 6 A 6 0 —. 0 ,... 0 ei IF IF u, to ci A 6 5 Ell El cl NA 0.79 0.12 1 0.16 I 2.22 1 INTERIM REUSE SUBTOTAL to .- 6.45 (.4 - ta c4 .- .cr r-• . 'g 6 2 c4 2 ..6 8 ci r•4 — (') (.4 c4 0 — . 8 0 0 N I c.„ N N 1 2 to c! ..- ..- S. — — N N 0 t■ .... . 6 N: - (.4 S N 8 0 t•■• ENVIRONMENTAL REMEDIATION 08. 111 Z.< 0.24 1 4.28 1 I= !STORM DRAINAGE SYSTEM (SANITARY SEWER SYSTEM POTABLE WATER 8 FIRE PROTECTION SPRINKLER SYSTEM 'ELECTRIC POWER SYSTEM I IGAS SYSTEM 1 'ESTIMATED TOTAL EXPENDITURE 1 w 5 a UJ 0 CC 0 a. 1- < z 0 z 2. ALL COSTS ARE IN 1996 MILLIONS OF DOLLARS AND INFLATION COST IS NOT INCLUDED. ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY Naval Air Station Alameda DEVELOPERS PANEL SUMMARY November 22, 1996 Prepared By: Bay Area Economics Dena Belzer, Principal 2550 Ninth Street, #202 Berkeley CA 94710 510/549 7310 ACKNOWLEDGMENTS This effort would not have been possible without the coordination, time, and energy of numerous organizations and people. A few of these parties are singled out for special thanks. Thanks to the voluntary efforts of panelists, whose knowledge of the local area and expertise in the field, made today's effort possible: Susan Chamberlin, Cynthia Kroll, Jeff Loustau, Eddie Orton, Ken Riding, Tom Sargent, Eddie Orton, and John Stewart. Thanks to Kay Miller, Paul Tuttle, Jo Chavez - Backster, Andy Pendoley, and all other members of the Alameda Reuse and Redevelopment Authority staff who, among other things, put together an extremely extensive and helpful briefing book and coordinated all logistic details. Special mention of appreciation to Bill Dodge, TCI Cable, for videotaping the Public Presentation and making the videotape available for public viewing. Most important, thanks to the City of Alameda staff, community residents and business people for attending the session and providing input. * * * 2 FORWARD BACKGROUND Today's discussion occurs at a pivotal point in the reuse planning process for the Naval Air Station (NAS) Alameda: the Community Reuse Plan is complete, a number of more detailed planning studies have been initiated, and preparations to begin the Economic Development Conveyance application have commenced. This transition phase from planning to implementation, presents the ideal time to insert reality into the process. Panelists were invited to provide candid feedback about overall development strategies as presented in the Community Reuse Plan. Panelists were also asked to provide input on local market conditions that could be integrated into the Housing Development Strategies Report as well as the market studies being completed in conjunction with the Economic Development Conveyance (EDC) application, currently underway by the Alameda Reuse and Redevelopment Authority (ARRA)for submission to the Navy. PANEL FORMAT The panel process was modeled on a format developed by the Urban Land Institute (ULI), a non - profit organization dedicated to doing research and education on topics related to land use and development. ULI panels typically involve a one -week time frame and utilize development experts from all over the country. The ARRA panel utilizes a local approach: guest panelists are already familiar with market conditions and development constraints in the Bay Area and are able to advise without a full week of study. Each of the seven panelists received an extensive briefing book one week before the session. The book included in -depth background material about NAS including a description of the major development constraints and a copy of the relevant portions of the Community Reuse Plan. Panelists were also -given a set of questions to address in their deliberations (see "Questions" at the end of this summary). Before the panel convened before the public, they met for a day of briefing by ARRA staff and key consultants, and were able to discuss the key issues and questions and prepare their remarks. All seven panelists are volunteers devoting their time and energy to help the community with the base conversion process. 3 THE PANEL'S ASSIGNMENT The task and charge of the panel is to give feedback on development strategies presented to date, and help guide discussion on housing strategy and the EDC application. Panelists were specifically asked to address topics including: Overall Development Strategy, Housing Strategy, Financing Strategy, and Organizational Strategy. THE PANELISTS All the panelists are familiar with local market conditions and are experts in their respective fields. Today's panelists include: Susan Chamberlin. Development Director for Dinwiddie Construction, which currently manages construction of Elihu Harris State Building in downtown Oakland. Ms. Chamberlin has worked with the City of Oakland, and is a lecturer at Haas School of Business at UC Berkeley. Cynthia Kroll. Regional economist for Real Estate and Urban Economics at UC Berkeley. Conducts ongoing research of real estate conditions in California for various product types and extensively tracks industrial trends that drive demand. Eddie Orton. Principal for Orton Property Corporation and President of Orton Development Inc. Specializes in adaptive reuse of existing older industrial buildings and new industrial office product. Ken Riding. President of the Riding Group which specializes in new infill housing construction all over the Bay Area Tom Sargent. Partner at Equity Community Builders which specializes in public - private partnerships and is currently developing space at the Presidio in San Francisco. Mr. Sargent also specializes in housing, live work and office infill development. John Stewart. President of the John Stewart Co., and Jeff Loustau, Vice President of Development for the John Stewart Co., focus on housing development for all levels of the affordability spectrum as well as ongoing property management. Another specialty is the renovation of historic buildings. THIS REPORT This report summarizes points presented by panelists. It is organized by issue discussed, rather than each individual panelist's response. All recommendations assume consensus among panelists who toured NAS Alameda and met with ARRA staff and consultants for a day- and -a -half in preparation for the public presentation/forum. Issues summarized in this report include Summary of Findings, Development Process, Housing, Infrastructure and 4 Transportation, and the Marina. This report concludes with a synthesis of the questions and answer session from community members. For more information about the Reuse process and reports completed to date, please contact the ARRA at (510)864 3400. A videotape of the Developers' Panel Public Presentation and discussion is available for loan at the City of Alameda Library and the ARRA library. 5 SUMMARY OF FINDINGS AND RECOMMENDATIONS The following represents a summary of key points made during the panel. It is organized by topic. DEVELOPMENT PROCESS • Developers need to know community values, the level of infrastructure in place, the degree of environmental clean up to be conducted, and all the players involved. Certainty is a key element for attracting development. • Preliminary development measures include identifying all stakeholders, specifying their interests, and creating a community value set. • The jointly developed value set should act as a guide upon which development decisions are based. • The panel recommends the Single Entity approach for development at NAS Alameda. The Single Entity approach assumes public sector management with individual private sector and non - profit developers developing individual parcels. The public sector organization, such as the ARRA, would oversee many developers in different areas of development. • The panel does not recommend the creation of a new non - profit entity to manage development. • • Measure A enforces the importance placed on maintaining the character of the island. It is an important value statement but should be reconsidered. An exception to Measure A should be granted for housing development in the Marina. Phasing is needed to take advantage of market opportunities. Phasing plans need high levels of flexibility due to frequent fluctuations in market conditions that create demands for different products at different times and in different amounts. • The interim leasing currently underway is a good intermediate use and the process should be continued. • Real benefit can be achieved by keeping the Navy involved in the disposition process. The managing agency should share revenue in exchange for assistance with infrastructure financing. 6 HOUSING • The panel recommends a housing strategy that rents existing units in the interim which will eventually be removed to build new units. Interim rentals will provide the most immediate gains by accumulating revenue that can be used for later development. The driving force for this interim strategy of renting now and redeveloping later is that too many housing projects are currently in the pipeline. The glaring disadvantage with this option is the displacement of renters in the long term. Some of the impacts of displacement, however, can be mitigated by sound planning and management strategy. • Long -term housing needs to dictate higher density housing to support transit and retail. • Integrate mixed income housing to avoid isolation of affordable housing. • Currently selling housing projects need to be monitored to determine the time for sale of NAS Alameda housing units. INFRASTRUCTURE AND TRANSPORTATION • Infrastructure and transportation especially need to be coordinated by the managing public agency on the campus setting. • Loading up on infrastructure debt is not recommended. Infrastructure can be built incrementally. Do not assume costs in early years or place heavy assessments on property that can drive developers away. • • • The panel recommends conducting a thorough transportation study, including cost benefit analysis, as necessary for analyzing options to make the area most easily accessible to neighboring communities. A transportation network is needed to better link the city with the rest of the region. From a marketing viewpoint, the concept of Alameda as an island with many entry points is highly desirable. Greater emphasis needs to be placed on alternative modes of transportation (ferry, bus, etc.) as a marketing feature for future development at NAS Alameda. 7 MARINA • The Marina has great potential for housing, recreation and employment activities. • The Marina is a vehicle for high -end housing and a recreation source. History and high density should be used as a competitive advantage. OTHER • • The core area of the Base should not undergo a major upgrade. Rather, it should be maintained and rehabilitated for reuse by high volume space businesses such as warehousing and movie and storage companies. The existing hanger buildings in the core should be especially examined for reuse potential. Neither ownership of the airstrip nor ownership of open lands should be fragmented. Occupation rights instead of ownership rights should be granted to tenants, so that in the event there are no endangered species on the site in the future, the land could be easily assembled. THE DEVELOPMENT PROCESS This section describes various aspects and recommendations for the development process. Preliminary Steps In the process of converting NAS Alameda to peace time uses through redevelopment while capitalizing on its many assets, preliminary measures need to be taken before significant development decisions can be made. Specifically: • Identify Parties. All beneficial parties in the conversion process need to be specified (such as government agencies, housing advocates, for - profit and non - profit developers). • Discuss Interests. The legitimate expectations and interests of each party need to be outlined. • Apply Values. All parties need to join together to formulate community goals and objectives for development by establishing a set of values to guide development decisions. 8 The Value Set The Value Set should clearly outline the communities' development intentions and desires. The value Set is to be used as the basis for making decisions and resolving doubt between parties. The Value Set will also aid the City in creating a deal structure with the Navy. Values stated for the conversion process could include: • need to fulfill public purpose • a sense of fairness to people in the greater economic region • simplicity for a better process • economic progress The Value Set is also important from a developer's perspective because it gives developers certainty in the development process; certainty is a key element for attracting development. Development Approach To guide the development process at NAS, there are two major ways to approach development. These two options can be characterized as a Master Developer approach and a Single Entity approach. Both approaches are defined below. Master Developer. The Master Developer approach assumes the development of the entire base as one project, with one developer acting as manager for the whole site. Single Entity. The Single Entity approach assumes public sector management with individual private sector and non - profit developers developing individual parcels. The public sector organization, such as the Alameda Reuse and Redevelopment Authority, would oversee many developers in different areas of development. The Master Developer Approach The Master Developer approach best fits a plan that is highly specialized and has little flexibility during process implementation. This approach is generally utilized in large scale planning efforts that create costly infrastructure networks up -front with costs passed on to users via assessment districts. (Infrastructure is discussed in further depth in the Infrastructure section of this summary.) The Master Developer approach is rejected for the purposes of development at NAS Alameda for the following reasons: 9 • It would most likely be impossible to find one developer capable of handling the wide range of product types desired (housing, retail, recreation, industrial, commercial, office, R &D flex, industrial and new product) as well as deal with the inevitable market fluctuations. • The risks incurred to one developer would be too large. • Assessment districts and bond cost issues are difficult for one developer to handle. One master developer lacks public purpose. • The community would lack control and flexibility, making it difficult to maintain a sense of identity. In order to take advantage of the opportunity to create a better community and better region, the panel rejects the Master Developer approach and recommends the Single Entity approach for development at NAS Alameda. The Single Entity Approach The reuse process is a long term project and strategic overview of land use plan implementation best accomplished by many different parties with public sector oversight. The public sector agency could be modeled after organizations such as the Pennsylvania Avenue Development Corporation or the Presidio Trust. The public sector agency should have the following characteristics: • The agency should deal only with NAS Alameda. • Staff should have strong knowledge of redevelopment law. • Staff must be highly skilled in negotiation processes and should be able to negotiate between public agencies, the Navy and developers. • Staff must be highly skilled project managers; they should be people who want to see the project work and who will sponsor it throughout the process. • One or two people in the organization should have the power and capacity to make executive decisions in a business -like manner based on the community value set. 10 Functions of the public sector agency or Single Entity organization could include: • Planning arm. • Transportation arm (internal and external to the base). • Coordination with other public agencies. • Coordination with the City of Alameda and the Navy before and after disposition concerning environmental and infrastructure issues. • • • • Ability to conduct and facilitate sales, leases, holding property in the interim and long term, master leasing, interim leasing. Ability to retain revenue on site for redevelopment projects (except for service agreements with the City). Capacity to make loan guarantees, credit enhancements, bond releases and all other financial tools necessary for the various projects that it oversees (albeit tricky under redevelopment law). Lobby various State agencies to encourage their involvement in the conversion process on the basis of the NAS Alameda serving as a valuable resource to not only the City and County of Alameda, but to the State of California as well. Managing Entity The Panel was confident in its recommendation that fulfilling the public purpose could be done without creating a separate non- profit housing entity and by leaving this to the Alameda Reuse and Redevelopment Authority, or whatever overall entity may be in place at the time. An extra entity might steer away developers due to the extra layers that would be included in the development approval processes. One concern is that they may need additional financial tools at their disposal. Planning for Development - Phasing The phasing of development is a major issue in the conversion process and directly concerns potential private sector development. The general mantra within the private sector calls for phasing of development that is: • market driven • provides many opportunities • able to respond flexibly to changing situations and market conditions. Specifically regarding the Base Reuse process to date: • The interim leasing currently underway is a good intermediate use and the • • process should be continued. Real benefit can be achieved by keeping the Navy involved in the disposition process. The managing agency should share revenue in exchange for assistance with infrastructure financing. Some major site and design plans that may impact housing on the site include the Linear park by the Belt Line railroad track and the main entry area of Atlantic Avenue. An entryway that draws people in so that they are aware of arriving is extremely important. Maintaining NAS Alameda Historical Value NAS Alameda's extensive history and culture played an important role in thousands of people's lives which should be remembered in the reuse effort. The Panel recommends the maintenance of the core area of the Base for historic rehabilitation and future reuse for high volume businesses. This ties in with both recreational and economic development. Phasing from the east to the west end of the Base would allow many of the buildings on the west side ( the buildings with the most stature), to remain for a long period of time. Hanger buildings would be in demand by users who need large volumes of space, such as moving and storage businesses or incubator space, as can be seen by some of the existing interim users. HOUSING Background The Alameda community has a strong history of expressing its desires regarding the direction of the City's housing. The mandate of high quality housing that preserves the community character of Alameda was voted into law in 1973 with the passage of Measure A. Measure A prohibits the building of residential structures having more than two units. The intention of the measure was to reduce the number of new apartment dwellings on a site that formerly contained Victorian era homes. As a result, new residential units are typically single family detached homes and low density variations of duplex, small lot and zero lot line units. Another law was passed in 1991 that further limited densities of residential development projects to one dwelling unit per 2,000 square feet of gross site area. 12 Directly at issue in the conversion process are 900 units of moderate priced housing being turned over to the Alameda Reuse and Redevelopment Authority. A Housing Strategies Report was conducted to deter nine various options for the units. The Strategies Report informed the Panel's recommendations for housing strategies which are different from the recommendations presented in the report. Each housing strategy option, including its advantages and disadvantages, is briefly described below. Option 1: Sell All 900 Units Now. The sale of all 900 units would bring in up -front revenue which could be applied to future development. However, if the units were sold today, they would most likely be sold at the bottom of the market due to current market conditions. There also may be some major liability concerns for the City since some units are old and not seismically retrofitted. Option 2: Remove All Units and Construct New Units Now. The removal of existing units and construction of new units might be good in the long term. However, there are too many housing projects currently in the pipeline which would likely lead to extremely low absorption of newly constructed units. Units already in the pipeline include approximately 400 units at the nearby FISC site, as well as units under construction in nearby Alameda communities. Further, the Bridgeport Apartments are under consideration for rehabilitation. Another negative aspect to new unit construction would be the loss of revenue that current units can achieve. Finally, it is politically problematic to eliminate housing and wait for the market to pick up in a region that is losing its affordable housing base. Option 3: Rent Now, Redevelop Later. The option of renting now and redeveloping later has many advantages. As in Option 1, leasing the current units may be an excellent source of income for the City; solid revenue will be created for the long term development that the City desires. Another advantage is that this option works well with the city's low income and transitional housing plans. Further, under Measure A requirements new units developed would be of higher cost and greater mix of housing than would be likely achievable by selling current units. The glaring disadvantage with this option is the displacement of renters in the long term. However, some of the impacts of displacement can be mitigated by sound planning and strategizing. (For example, property managers need to clearly state the time period of rentals, rental conditions, and emphasize the short term nature of the contract to new renters). Recommendation: The Panel recommends a housing strategy of renting existing units in the interim and eventually removing and building new units. The driving force for pursuing this strategy is that too many new, for sale units are currently in the pipeline and the market will be too deep by the time new units could be constructed at NAS Alameda. Strategies for Big Whites and East Housing Units that can be rented now should be contracted out to a for - profit management company. A responsible for - profit management company, or the City acting as a non - profit, will be best 13 equipped to handle the inevitable renter displacement. Currently selling housing projects in the City need to be monitored to determine the time for sale of NAS housing units. The Big Whites and East housing need to be dealt with separately because they come on line at different times. Titles to the property will not become available for at least one to three years depending on whether units are sold or leased. Big Whites. The site of Big Whites housing is not considered to have long term appeal; it is recommended that existing units be moved elsewhere in the short term with possible rental revenue in the extreme interim (the interest expressed by a campus university to rent some Big Whites is a good interim use). The land upon which this section is situated is more valuable than the units; waiting for the outcomes of housing developments underway in other parts of Alameda may be the best course for deciding upon the best use for this site. New unit construction would provide greater value to the Big Whites site, as they are located on one third acre lots or more. Even under Measure A, development could triple or quadruple the number of houses on the same space, increasing the value of the land tremendously. East Housing. The East housing is likely to be sustainable for approximately ten years of rental use, though $8,000 - $10,000 of renovation is needed per unit. This area would be solid mixed income housing which is consistent with the homeless and low income housing plans currently in place. Most importantly, lower income households would be dispersed, not isolated. The economic advantages of renovating East Housing as rental units for a 10 year period (with nominal up -front costs), is the potential of generating cash flow from the rental units to finance development that the City envisions for Measure A activities. This option also creates a healthy partnership of non - profit and for - profit developers because of the mixed income focus of development. The location of the East housing is the gateway area to the Base, and the long term plan of creating quality housing units will be best suited for an attractive entry point to the area. INFRASTRUCTURE AND TRANSPORTATION Infrastructure Due to the campus setting of the Base, the level of ease and feasibility of parcellizing the property for development by multiple developers is directly dependent upon the coordination of infrastructure and transportation by the managing public agency. Examples of infrastructure systems needing joint oversight include the steam heating system that runs throughout the grounds, the electrical system, and the phone line system. Environmental issues should be jointly addressed when dealing with infrastructure. All systems should be viewed as a package for financing purposes since it is likely to be more expensive to finance pieces individually. 14 Transportation The market studies conducted to date for the Base Reuse process, have not adequately focused on transportation. Transportation is a crucial component for conversion since development at the base should be viewed from a regional perspective where access is a key to success. The lack of a transportation study will create marketing problems. Therefore the Panel recommends conducting a thorough transportation study, including cost benefit analysis of alternative transportation systems, and to analyze options for making the area most easily accessible. Potential transportation options that a study could explore include: • water taxi to the Oakland Estuary (a short walk or bike ride from downtown Oakland); • pedestrian tube; • ferry traffic analysis; • light rail/electric bus connection with the City of Oakland. The transportation study should also include an analysis of impacts on the freeway grid for various development scenarios as well as an exploration of potential federal funding sources such as ISTEA and Metropolitan Transportation Commission. 15 MARINA Development Potential The Marina has excellent potential for housing, employment, and recreational activities and is considered to be the prime location on the base. Housing The Marina area provides excellent opportunities for quality housing. The panel recommends denser, mixed use and mixed income housing, with a significant number of the units reserved for higher income rental units. This is considered to be the highest and best use of the land. The recommendation envisions a "Portofino" design which can be characterized as cascading units of apartments or condominiums that are set back and staggered, three to four stories high, terraced, and overlooking the water. The recommendation and vision outlined above conflict with the stipulations of Measure A. The Panel recommends that a variance from Measure A be obtained for the Marina area so that the City of Alameda can capitalize on the potential economic and aesthetic benefits that the area has the potential to bestow upon the City. Measure A is problematic for the Marina because only a few units would receive a San Francisco Bay view. Another unintended consequence of Measure A is that its stipulations require dedication of land to cars, further reducing the land available for housing and thus the value of the units as well. Retail Retail development would follow housing development. Recreation There are several recreational opportunities for the Marina. One idea is a maritime museum that uses existing vessels currently at the NAS port and possibly adds more vessels. This could give the City a sizable portion of the market niche that museums in the San Francisco Fisherman's Wharf area have capitalized on. Such attractions_ are likely to bring tourism from around the Bay Area in the form of day - trips, particularly with the obvious feasibility of trans -Bay ferry service due to the Marina's location in the Bay Area. Another recreation opportunity is the use of the park lands and estuary on the north end of the Base for a recreational area including a "links style" golf course. A full foot path around the area connecting the Marina and possibly farther south into the City is another good way to capitalize on spectacular views of San Francisco and the Bay Area as well as celebrate the unique island culture of Alameda. 16 QUESTIONS AND ANSWERS The following represents a synthesis of questions and answers that were raised at the end of the developer panel session. Was there a democratic role for the public during the Presidio Trust negotiations in San Francisco, and was it successful? How can NAS incorporate the community into the development process and is it necessary? Dedicate an entity to the project which continues to accommodate public concerns. Should there be additional layers of administrative and public review process associated with the Base aside from City government? Additional advisory roles and public participation in the process are not needed; there is already an extensive system in place and no decision will ever satisfy all people. The experience at Bishop Ranch with the Toyota plant is a prime example: - how much can the public decide? What is the feasibility of extending Alameda to the freeway using a bridge as the extension and using federal and state funding? What are other transportation options? De- emphasize cars and roads dedicated to the land, examine car ratios and provide quality of life economic incentives to not own cars. The freeway is an option that can be explored. The view of Alameda as a highly accessible island is very appealing. Housing density is key to supporting a transit system that reduces the number of cars. Can the BRAG and Alameda Reuse and Redevelopment Authority staff act as the agency overseeing redevelopment in the same format in which it currently operates for future redevelopment? The single entity needs _consistency, credibility, and predictability in the process. The Alameda Reuse and Redevelopment Authority may need more financial tools but should not be replaced. The entity should be present all the time and act similarly to a redevelopment agency. Alameda Reuse and Redevelopment Authority is a great vehicle. A dedicated staff is critical, as is an executive of the committee that can make business decisions. Comment: A concern was expressed that carrier and other ships would block views at the Marina - this would not be the case. 17 Wouldn't it be better to remove East side housing now? Personal experiences have taught us that displacing renters is a big deal both legally and emotionally. The developer panel underemphasized this point in the presentation. There are too many projects in the pipeline now to warrant construction of new units. Revenue that existing units can generate is needed in the short term period. The issue of relocation will occur now or later, it is a difficult issue and the city needs to decide when the trauma will occur. Steps can be taken to mitigate the impact. Looking at Alameda from a regional perspective, average incomes in Alameda are lower than the region 's. Average incomes could be raised by offering housing that attracts higher incomes as opposed to affordable housing and low income housing. What good does it do for the City of Alameda to raise revenue for Alameda Reuse and Redevelopment Authority by renting out the East housing thereby ruining the market for existing rental housing which will also lose out on maintenance. Why is affordable housing on the west end advocated? Leasing rights will be more quickly obtainable than sale titles by up to three years. Housing projects in the pipeline are not for -sale. Upscale renter and owner housing is envisioned for the Marina area, assuming a variance on Measure A can be achieved. Further, the future holds for -sale high end units on the East side. Additional affordable housing is not being advocated here. Item four on the overall development strategy implies long -term development leasing of properties to public trust areas. This item presumes an opportunity to transfer land from other areas. Phasing is the challenge of the project. When can urban retail districts be developed? Retail development follows residential development. C: \WPDOCS\ARRASTAF.RP1 DEVPNL.SUM 18 ADDENDUM I. Introduction The purpose of the NAS Alameda Developers panel is to bring the finest local expertise in the development and real estate fields to advise the community on key questions facing the reuse and redevelopment of NAS Alameda. The expert panel spends several intensive working sessions, take a tour of the site, meet and be briefed by ARRA staff and consultants on the ARRA's reuse efforts, and prepare findings and recommendations. A written report will be prepared on their results. The developers panel will meet to address key development questions, evaluate planing options, policies and market studies, and provide advice on real estate development issues with implications for phasing and financing of ARRA's future reuse efforts. NAS ALAMEDA DEVELOPERS' ADVISORY PANEL November 21 -22, 1996 LIST OF PANELISTS Susan C. Chamberlin Development Director Dinwiddie Construction Company (also) Lecturer Hass School of Business University of California at Berkeley Daniel R. Gray Vice - President Gray and Reynolds Property Cynthia A. Kroll Regional Economist Fisher Center for Real Estate and Urban Economics University of California at Berkeley J.R. (Eddie) Orton Principal Orbit Property Corporation Emeryville, CA (also) President Orton Development Incorporated Emeryville, CA Kenneth L. Riding President The Riding Group San Jose, CA Tom Sargent Partner Equity Community Builders John Stewart The John Stewart Company NAS Alameda Developers' Advisory Panel November 21 -22, 1996 DEVELOPERS' BIOGRAPHIES Susan C. Chamberlin Ms. Chamberlin is a Development Director for Dinwiddie Construction Company in Oakland, California, as well as a lecturer at the Haas School of Business at UC Berkeley. She is currently responsible for development project management for the Elihu M. Harris State Office Building, and she has served as Acting Manager of the Redevelopment Division in the City of Oakland's Office of Economic Development and Employment in 1993. Daniel R. Gray Mr. Gray is a Vice - President of Gray and Reynolds Property. Cynthia A. Kroll Dr. Kroll is the Regional Economist for the Fisher Center for Real Estate and Urban Economics, a research center on the UC Berkeley Campus. She holds masters and doctoral degrees from UC Berkeley's Department of City and Regional Planning. She is well known for her research on California economic trends and their implications for real estate development opportunities and land development issues. Her recent research on California's economy includes studies of the impacts of foreign trade on the state's economic activity, the role of tourism in California's economy, and the slow recovery of the Bay Area housing market. J.R. (Eddie) Orton Mr. Orton is a Principal for Orbit Property Corporation as well as President of Orton Development Inc., in Emeryville, California. These real estate development and property management companies have extensive experience in mixed -use industrial rehabilitation developments in Northern and Southern California and North Carolina. These companies have in -house management, construction, and development divisions. Orton Development has developed over 400,000 sq. ft. Of class A suburban office buildings. Kenneth L. Riding Mr. Riding is the President of The Riding Group in San Jose, California. He has been an integral part of Bay Area development for more than twenty years. He has served in top executive posts requiring full financial responsibility for Ponderosa Homes, Inverness Development Corporation, and A -M Homes. In addition, he served as Executive Vice President and Chief Operating Officer of A -M Homes where he supervised multiple regional divisions. Over his development career, Riding has delivered over 4,000 homes, and has been instrumental in initiating and planning innovative projects for in -fill locations. Tom Sargent Mr. Sargent is a Partner at Equity Community Builders, and he is currently managing the $12 million conversion of the historic Letterman Hospital at the Presidio, San Francisco into the privately financed Thoreau Center for Sustainability. He is a city planner and developer specializing in urban infill projects and the conversion of underutilized real estate assets into innovative, community- oriented, development projects. Over the past 14 years he has been involved throughout the United States in the development of complex projects with a creative mix of uses and financing sources. He has been an innovator in the establishment of new types of urban retail districts, small business incubators, alternative housing, and mixed use projects. John Stewart Mr. Stewart is the President of the John Stewart Company. NAS ALAMEDA DEVELOPERS' ADVISORY PANEL November 21 -22, 1996 BRIEFING EXPERTS ARRA Staff Kay Miller, Executive Director Paul Tuttle, Reuse Planner Edward Levine, Facilities Manager United States Navy Steve Eddy, Environmental Manager, NAS Alameda Consultant Groups Bay Area Economics (BAE) Dena Belzer Economic and Planning Systems (EPS) Jim Musbach EDAW Jonathan Stem Moffat & Nichol Engineers Juanito Jamas NAS ALAMEDA DEVELOPERS' ADVISORY PANEL QUESTIONS Overall Development Strategy 1. How would you phase subarea development in the Community Reuse Plan starting with the areas having the greatest near term market potential ? 2. What priority should be given to leasing existing buildings versus moving aggressively on demolishing existing buildings to create open development sites ? 3. How would you prioritize infrastructure improvements ? 4. What are the implications for long term development of the Tidelands Trust areas which only allow for long termleasing rather than fee simple title transfers for properties within public trust areas. 5. Are the consultants' market study findings consistent with your experience with the Bay Area market real estate conditions ? Housing Strategy 6. Is it realistic to plan for building new in -fill housing interspersed with existing housing units that could be retained ? 7. Approximately how many units should be included in the first increment of a new housing development; and what product types do you recommend building ? 8. Assuming that at least for the immediate short-term, the ARRA retains ownership of some of the existing housing units, and that there will be a mix of market rate and affordable units; which of the following options presents the best approach to managing these units ? • creating a new non -profit entity under the auspices of the City, • contract with an existing non -profit housing management company, or • contract with an existing for - profit housing management company. Financing Strategy 9. Of the public financing mechanisms available to the ARRA to fund infrastructure improvements, which ones would work best given the market, costs, and risks involved ? 10. What steps can the ARRA take to help encourage private equity investment in the Base? 11. Are there appropriate short -term versus long -term financing strategies ? Organizational Strategy 12. What should be the ARRA's long term role and organizational structure to better facilitate the base reuse and redevelopment ? CORRESPOMMNCE . 1 › .. . 0 U) ..- IJI g3. E w 0 0 N 0 LC) CI " " 0 V* 0 0 •r- 0 0 v-- 0 0. A.-- It) CO tO 0 Area (Sq. Ft.) 66,000 34,250 13,150' 17,000 1 84,2501 67,000) 22,000 22,000 67,000 55,450) 00 00 00 00 '1 Building Number OZ • Portions of 24 & 25 co N-- t-- cr) Adjacent to Bldg. 360 at FISC Portions of 24 & 25 < c, 0 .1- 0.1 V' ('4 < co 0 • 167 & finger piers CO 0) 0, NI• <-- Long or Short Term Occu•anc long term long term long term long term long term long term short term short term short term E 'a 0 . short term long term long term long term Tenant CALSTART (Electric Vehicle Consortium) Carstar (Vehicle Painting) Giannotti (Ship Parts & Repair) Records Storage (City of Alameda) 'Soccer Field 'Storage yard (Bureau of Electricity) Great Benefit Productions (Film Co.) Industrial Light and Magic (Film Co.) 'Disney Studios (Film Co.) I Rysher Entertainment (Film Co.) 'Microsoft (Software Co.) (Nelson's Marine (Boat Repair) 'Polyethylene Products (Plastics Recycling) 'Navigator Systems (Furniture Mfgr.) *Employment estimates based on company's projection or industry standard c- r c- r r Interim Use Permits Approved X X .1, . >' o E w ...4 co tu 175 183 o 0 , 1 200 55 25 100 50 75 O 0 s- to — 401 loot. to 0.4 o co N t-. 0 s— 0 CO Area (Sq. Ft.) 0 0 0 <6 co 1 55,000 0 5,770 82,250 0 0 0 l's.- (DC to 0 0 0 r-: .. r 82,000 0 0 0 (5 V-. r 55,0001 0 0 0 vi V-• 110,000 12,100 0 0 01.0 oi Nr 0 0 c5 ',* 30,9001 0 0 Os-000 cci (0 0 0 tri 0 0 cei 0 0 0 0 cri 42,0001 65,5001 Building Numbe r 12 (1/2 of bldg.) 750 Mini- storage units near Bldg. 530 — CV co 530 CV (NI CO v— 0 ad ( \ I 0) Csi Piers 1, 2, 3; 168 0) 01 CO CO CO .... t■ CD 0 st CO (0 — 0) (0 1-- CO sl" CD CO 231 sr "ct CV Nt 3721 372 (1) CD CO s- C'4 1 N Tenant Quality Assured Products (Valve Mfgr.) ACET (Envir. Tech. Incubator) Military Storage Systems Richard Miller (Photography) Tower Aviation (Avionics) STS (Plating Company) Bay Ship & Yacht (Ship Repair) MARAD Alpha Document Storage IAviation Advisory Group (Airplane Hangar) Dynamic Business Dev. (Boat Production) Puglia (Ship Repair) Delphi (Exhibit Displays) Chatz (Coffee Roaster) Envirtech (Powder Coating) Haviside & Heastings (Ship Repair) Integrated Technology Group (Computer Rebuild) Zebra Motors, Inc. (electric vehicles) Delaco Builders (Cabinetry) Kurt Rankin Studio (Art Studio) Quadrantek (Electric Motor Works) Cable Moore, Inc. (Cable Rigging) Admiral Marine (Marine Hardware) Korbin (Electric Vehicles) *Employment estimates based on company's projection or industry standard s— CNI CI NI 10 r•s. CO 0) 0 I— 'F.' <— CNI r CO r 'Cr s— 10 r CO s— r-- s— (0 s— 0) r 0 N 1— (‚4 I CV C■1 CO (\ I szt Cs1 Alameda, Reuse and Redevelopment Authority Naval Air Station Alameda Postal Directory, Building 90 Alameda, CA 94501 -5012 Governing Body Ralph Appezzato Chair Mayor, City of Alameda Sandre R. Swanson Vice -Chair District Director for Ronald V. Dellums 9th Congressional District Wilma Chan Supervisor, District 3 Alameda County Board of Supervisors Henry Chang, Jr. Oakland Councilmember serving for Elihu Harris Mayor, City of Oakland Ellen M. Corbett Mayor City of San Leandro Tony Daysog Councilmember City of Alameda Albert H. DeWitt Councilmember City of Alameda Barbara Kerr Councilmember City of Alameda Karin Lucas Councilmember City of Alameda Kay Miller Executive Director ®Recycled paper January 24, 1997 Barbara Baack Marilyn York Alameda Naval Air Museum 16148 Via Sonora San Lorenzo, CA 94580 (510) 864 -3400 Fax: (510) 521 -3764 Ron Reuther Western Aerospace Museum P.O. Box 14264 Airport Station Oakland, CA 94614 Dear Barbara, Marilyn, and Ron: Thank you for meeting with ARRA staff this week to discuss your joint application to move forward to lease Building 77 and Hangar 41. You have made significant progress in addressing the leasing issues described in the attached letter from ARRA Facilities Manager Ed Levine. We would encourage you to continue to work with City staff and your engineers and architects to identify the actual requirements and costs associated with building alterations associated with code compliance. You should also initiate steps with the City Planning Department to obtain a Use Permit, which is a sublease requirement. At the meeting we agreed that by April 1 you will submit a complete lease application package and business plan that fully addresses the costs associated with the upgrades and leasing of the two buildings and your revenue sources for covering those costs. ARRA staff and the appropriate BRAG committees will review that plan and recommend action to the ARRA governing body. As we also agreed at the meeting, since the Navy will close Building 77 in order to clean it and conduct its "one -time compliance," the ARRA will request the historic artifacts as part of its personal property screening. If the museum presents a viable plan, the artifacts will then be made available for museum use. Finally, we agreed to meet at least twice (February and March) to insure your business plan is on track and that you have access to any information you need that the ARRA or its consultants have generated on building upgrade costs, utilities, etc. Norma Bishop, Base Transition Coordinator, has offered to serve as our point -of- contact to assist you in finding the information you need from us in understanding the costs associated with the lease. Barbara Baack, Marilyn York, and Ron Reuther January 27, 1997 Page 2 We look forward to working with you and reviewing your business plan in April. Very truly yours, Kay Miller cc: ARRA BRAG Rob Wonder, Interim City Manager Norma Bishop, Base Transition Coordinator Alameda Reuse and Redevelopment Authority Naval Air Station Alameda Postal Directory, Building 90 Alameda, CA 94501 -5012 ioverning Body talph Appezzato ;hair dayor, City of Alameda iandre R. Swanson /ice-Chair )istrict Director for 2onald V. Dellums )th Congressional District Wilma Chan "Supervisor, District 3 Alameda County Board Df Supervisors Henry Chang, Jr. Oakland Councilmember serving for Elihu Harris Mayor, City of Oakland Ellen M. Corbett Mayor City of San Leandro Tony Daysog Councilmember. City of Alameda Albert H. DeWitt Councilmember City of Alameda Barbara Kerr Councilmember City of Alameda Karin Lucas Councilmember City of Alameda Kay Miller Executive Director ®Recycled paper January 23, 1997 CAPT R.G. Hocker, Jr. Commanding Officer Engineering Field Activity, West Naval Facilities Engineering Command 900 Commodore Drive San Bruno, CA 94066 -5006 Attn: Teresa Bernhard (510) 864-3400 Fax: (510) 521 -3764 Dear Captain Hocker: I received a copy of the BRAC Cleanup Plan for which you requested written comments by January 29. I am requesting an extension until March 15, 1997. Staff has just completed a preliminary review and will brief the Base Reuse Advisory Group (BRAG) on February 19. There was no opportunity to place the Plan on the agenda before that date. The ARRA Governing Body will be briefed on March 4. I am disappointed that Appendices A and B, Environmental Programs Master Schedules and Fiscal Year Funding Requirements and Costs, respectively, were not included in the BCP so that we might make substantive comments in those areas. I am sure you realize it is essential that reuse priorities and cleanup be closely coordinated within the paramount objective of protecting human health and the environment. If you can provide Appendices A and B before the BRAG and ARRA presentations, it would be most helpful. Please advise as to your ability to accommodate ARRA's comments within the extension requested. Sincerely, Kay Miller Executive Director cc: ARRA BRAG COMMANDER THIRD FLEET Dear Ms. Miller, 7 January 1997 Thank you for your letter concerning Alameda's desire to continue to support Navy ship visits to the San Francisco Bay area. We plan to continue to schedule ship visits to the Bay area during THIRD fleet quarterly operations and scheduling conferences. Although I can not commit to a certain number of visits per year, Alameda's location between fleet concentration areas of San Diego and the Pacific Northwest offers several operational advantages. Prior to scheduling an Aircraft Carrier or other deep draft ship we will need to watch closely the silting problems in the channel and pier side. We appreciate your continuing interest in the Navy and look forward to working with you to keep the Bay area as a quality of life and operationally attractive port for our Sailors and ships. Sincerely, H. A. BROWNt- Vice Admiral, U.S. Navy Ms. Kay Miller Ekecutive Director Alameda Refuse and Redevelopment Authority NAS Alameda Postal Directory, Bldg 90 Alameda, CA 94501-5012 RECEIVED JAN 1 4 1997 ARRA CITY OF ALAMEDA JAN 29 '97 06:03PM WESTDIV 09B DEPARTMENT OF THE NAVY ENGINEERING FIELD ACTIVITY, WEST NAVAL. FACILITIES ENGINEERING COMMAND 900 COMMODORE DRIVE SAN BRUNO. CALIFORNIA 9406646006 Ms. Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority Naval Air Station Alameda Postal Directory, Building 90 Alameda, CA 94501 -5012 Subj: NAVAL AIR STATION ALAMEDA BRAC CLEANUP PLAN (BCP) P.1 /1 IN REPLY REFER TO 2$ JAN 1997 Dear Ms. Miller: Thank you for your letter of January 23, 1997, requesting an extension to the BCP comment period. As was discussed with you on January 7, 1997 and January 22, 1997 by EFA WEST staff members, all BCP comments received are welcome. Unfortunately, as Steve Edde explained to you by telephone today, we cannot extend the comment period. This deadline is based on le DoD budget process, and all BCP's are required to be at our headquarters by March 1, 1997 - At that point the BCP's will be used to allocate the FY 1998 budget. If the Alameda BCP is no:, included or delayed, there is a high risk to FY 1998 funding. However, as the BCP is a "living document," comments received after January 29, 1997 will be used to prioritize environmental actions. As previously explained, Appendix A (schedules) will be included in the final version of the 1997 BCP. To assist in your review, copies of the current schedule were provided during the • above mentioned meetings. This schedule is continually refined in order to accommodate both cleanup and reuse programs and priorities. The Fiscal Year Funding Requirements and Costs (Appendix 13) will be supplied by our headquarters after the 1997 BCP revision is completed. The fiscal year funding requirement for the following year is in part developed from the program outlined ir. the BCP. We agree that it is essential to coordinate reuse priorities and cleanup. The Navy's paramount priority at closing bases is to support the reuse and conversion while protecting human health and the environment. We hope that this allays any concerns about comments received after January 29, 1997. My staff looks forward to meeting with you in the future on these issues. Since ely, " ER R. P. BO HOLZ -. COMMANDER. CEC, 'IS ACTING COMMANDING Alameda Reuse and Redevelopment Authority /LE CoPy Naval Air Station Alameda (510) 864 -3400 Postal Directory, Building 90 'Fax: (510) 521 -3764 Alameda, CA 94501 -5012 Governing Body Ralph Appezzato Chair Mayor, City of Alameda Sandre R. Swanson Vice -Chair District Director for Ronald V. Dellums 9th Congressional District Anthony J. "Lil" Arnerich Councilmember City of Alameda Wilma Chan Supervisor, District 3 Alameda County Board of Supervisors enry Chang, Jr. Oakland Councilmember serving for Elihu Harris Mayor, City of Oakland Ellen M. Corbett Mayor City of San Leandro Albert H. DeWitt Councilmember City of Alameda Karin Lucas Councilmember City of Alameda Kay Miller Executive Director ORecycled paper October 21, 1996 Ms. Barbara Baack, President Ms. Marilyn York Alameda Naval Air Museum 16148 Via Sonora San Lorenzo CA 94580 Dear Mesdames Baack and York: CAPT Dodge's October 9, 1996, letter to Barbara indicates that the Alameda Nava Air Museum must sign an interim lease with the ARRA by February 1, 1997 i order to continue its occupancy in Building 77. Given this relatively short tiro frame, it is important that we start negotiations on your lease as soon as possible. As previously discussed, there will be no rent charged for this facility. However there are a number of other costs for which the Air Museum will be responsible These will include some or all of the following: 1. 2. 3. 4. 5. 6. 7. 8. I t is 1 n e • Utility service. Building and grounds maintenance and janitorial service. Common services costs, including police and fire protection, street maintenance, etc. Insurance. Building upgrade costs for code compliance. Infrastructure improvement costs. City fees, including building permit, use permit and improvement tax. Possessory interest tax. important that these costs be quantified as soon as possible so that you can assess the feasibility of the Museum's operation. I look forward to discussing this further w - ou when we meet with Kay Miller on Thursday morning. Sin Edward Levine Facilities Manager EL /j cb c: CAPT Dodge Kay Miller, Executive Director C: \W PDOCS \EL \MUSEUM. LSE Pan - Pacific University ❖ Working Committee for the Development of Pan - Pacific University ❖ at College of Alameda, 555 Atlantic Ave., #G-237, Alameda, CA 94501 ph. 510 - 523 -2220 ■ fax 510- 523 -1906 January 21, 1997 Ms. Kay Miller, Executive Director Alameda Reuse and Redevelopment Authority Naval Air Station Alameda Postal Directory, Building #90 Alameda, CA 94501 -5012 Dear Ms. Miller: I am writing at the request of Dr. Peter Sun, after our joint presentation before the BRAG Task Force on January 17, 1997 and just following Dr. Sun's departure for Korea, which had been scheduled for some time. Dr. Sun wanted me to thank you very much for your letter of December 20, asking him to provide additional information on accreditation and recruitment plans for PPU as well as funding sources of the supporters. I believe that you will be hearing separately from the Task Force, including their recommendation that we postpone the Pan- Pacific University presentation to the ARRA until the March meeting, when Dr. Sun will be back in the country and able to attend. At the January 17th meeting, I addressed the first two points (accreditation and recruitment), and Dr. Sun updated the participants regarding recent developments in Korea which have interfered with his ability to provide the detailed financial information that you have requested within the desired timeframe, namely,: 1) The general labor strike in Korea, which has reached international attention, has created upheaval at Cewon, which employs about 40,000 people. Having other, more urgent priorities at this time, Cewon has asked us to delay their commitment. 2) The Korean Medical Mission Fellowship faxed Dr. Sun papers relating to the official minutes of their Board meeting, budget and future meeting schedule. It is clearly indicated that the Fellowship has budgeted 800,000,000 Won, slightly more than $1,000,000 US, as a line item. As these papers are in Korean, Dr. Sun will need to provide you with an English translation. REC JAN 2 4 1997 ARRA CITY OF ALAMEDA 3) (New Item) The Young Shin Group has pledged $1,500,000; they will send Dr. Sun a Letter of Intention with their proof of financial capabililty at the end of this month. The monies will be available in 1997. I very much apologize for the inconvenience that may be caused by a postponement of the presentation of Pan - Pacific University before the ARRA and the extension of the request that we provide you with detailed financial information about our funders. Please accept my sincere apologies for the delay. Respectfully yours, 6 .fit-. Andrea Safir for Dr. Peter Sun