Scannell Properties to face Fresno City Council vote for multi-million-dollar project

by Ishshah Padilla | Sunday, February 18, 2024

FRESNO, Calif. – Since 2020, Scannell Properties has been working toward approval to build a multi-million-dollar speculative industrial development project, the first of its kind in our market, which stands out for its distinctive approach—it does not have any predetermined tenants.

To make these projects pencil out, developers rely on meticulous market research, data analysis, long-term growth and retraction patterns in the real estate market to strategically choose an optimal location. The concept of a “spec building” is not new, but it has been a growing trend due to the demand for industrial spaces across the country.

The proposed four-building project, totaling 901,438 square feet, would be built in the city-sponsored Roeding Business Park on North Marks and West Neilson avenues. A strategic location near Highways 99 and 180.

These types of projects are always a calculated risk, but after nearly four years, a full Environmental Impact Report (EIR), and now a three-time delay by the Fresno City Council, Scannell Properties remains committed to Fresno, according to Alex Tavlian, the Public Affairs Consultant for Scannell Properties.

“Scannell is maintaining a proactive stance to ensure project approval, and this commitment will persist through completion,” notes Tavlian. “The company understands the importance of community care, especially in Fresno, where expectations for accountability are high. Scannell is fully committed to meeting those expectations.”

The timeline below helps paint a better picture of the procedural steps taken

Large, complex projects, like this one often begin with a full EIR, one that Scannell Properties decided to undertake—a strategy to better withstand possible legal challenges from both labor unions and advocacy groups.

On September 9, 2022, a Notice of Preparation (NOP) was made available to the public that an EIR would be prepared for this proposed project by LSA, an Environmental Consulting Firm.

On February 24, 2023, a Draft EIR was made available for public review.

On April 4, 2023, the City issued a Recirculated EIR. In compliance with CEQA regulations, there is a mandatory 45-day public comment period once an EIR is circulated.

On May 19, 2023, the public comment period closed.

All comments collected during that period were incorporated into a Response to Comment (RTC) document, diligently prepared and published by LSA in September 2023. A total of eight response letters were received, encompassing minor corrections and additional clarifications. Following the review it was concluded that no further Recirculation was necessary.

At this point, the RTC document and the Draft EIR constituted a Final EIR.

On October 4, 2023, a Fresno City Planning Commission meeting took place in which LSA presented its Final EIR. Cara Cunningham, the LSA Consultant, took the time to respond and rebut claims made during the public comment period. The Planning Commission ultimately granted approval (6-0) to the project, advancing it to the City Council for a final vote.

Since that approval, the project has faced numerous delays

On December 14, 2023, the item was initially placed on the City Council Agenda but was subsequently removed by Councilmember Arias, resulting in its postponement until January 11, 2024.

On January 11, 2024, despite its placement on the City Council Agenda, the item was again withdrawn, this time by Councilmembers Arias, Esparza, Maxwell, and Perea, leading to its rescheduling for February 1, 2024.

On February 1, 2024, the item appeared once more on the City Council Agenda but was once again removed, resulting in its postponement until February 22, 2024.

According to a letter submitted by Wanger, Jones, and Helsley to City officials on January 31st, “the City Attorney is recommending that the City Council table the item and defer action on the appeal until the City completes the production of documents in response to several Public Records Act (PRA) requests served on the City by the opponents of the project.”

The most recent PRA request found in the agenda item’s supporting documents was dated January 8, 2024, from Adams, Broadwell, Joseph & Cardozo, a San Francisco law firm representing opponents to the project, the Fresno Residents for Responsible Development— a coalition made up of several labor unions.

The Challenges

Attempting to build an industrial space in Fresno has become increasingly difficult, as previously explained in the Unraveling Fresno’s industrial development: From warm welcome to present challenges.”

According to Tavlian, potential opposition from Councilmembers Arias and Chavez could be arising from the developer’s inability to agree to a Project Labor Agreement (PLA).

Although the City of Fresno does have an existing PLA requirement for public projects exceeding $1 million, there is no existing law that mandates private projects to abide by this requirement.

According to Scannell, they are not opposed to a PLA if it makes sense financially. The company has signed PLAs in the past in other markets, but due to Fresno’s project being a spec development, a PLA simply does not line up.

Councilman Arias, a frequent opponent of economic development projects, appealed the Planning Commission’s decision. Following the approval, in a letter addressed to Jennifer Clark, the Director of the Planning and Development Department, he expressed, “I have been requested to appeal the proposed project by District 3 residents,” citing concerns about unmitigated environmental impacts in the overburdened, disadvantaged West Fresno community.

Also, the Golden State Environmental Justice Alliance submitted a letter of appeal (one of several) to City staff stating it “believes the EIR (Environmental Impact Report) and RTC (Responses to Comment) are flawed and a revised EIR must be prepared for the proposed project and circulated for public review.” The letter goes on to say that the EIR fails to comply with the California Environmental Quality Act (CEQA) for adequate informational documents and meaningful disclosure.

Nevertheless, these letters appear to be a repetition of arguments that the LSA consultant had already addressed and countered during the Commission meeting. A transcript of those concerns and LSA’s reply can be found here.

“I understand their objections, they have their concerns, and I am not going to say they are not valid. They have their perspective, and we have a different one.” Tavlian says Scannell Properties is confident in its EIR as everything in it was carefully and rightfully reviewed.

Project Significance

Letters of support from organizations, companies, and nonprofits all echoed a unified theme: “the timing is perfect.”

At a time when available commercial real estate is at its all-time low, this project could help alleviate some of the demands in the region.

For the last several years, Fresno has remained with less than 3% of available commercial real estate inventory, according to the Fresno County Economic Development Corporation (EDC). Some contributing factors are the growth of e-commerce, onshoring trends, the rise of the EV market, and changes in distribution strategies, as explained by Urbanland.

Toward the second half of 2023, Fresno experienced less than 2% in industrial vacancy rates, according to Colliers’ 2023 Semi-Annual Report.

This becomes a big challenge when attempting to find an appropriate site for a potential company looking to reside in Fresno.

“This project sends a great message, and it also opens the door to labor partners. This is the first mass investment project, in this form and fashion. Everything is new and it’s setting the stage for additional future projects as people realize Fresno is open for industrial businesses,” said Scannell’s Public Affairs Consultant.

Those backing this project believe that Scannell Properties is committed to environmentally sustainable practices. While the area is zoned for heavy industrial use, Tavlian points out that 99% of the market demands lean towards light industrial. The company is confident in its ability to attract tenants, especially considering its history of working with Fortune 100 tenants and operators like DHL, FedEx, Chrysler, Pepsi, Nestle, and General Mills are among that list.

“Scannell Properties brings in Class A, high-quality tenants that are good operators and good neighbors. Our expectation is that this will continue with this project,” Tavlian said.

The development company is well known in North America and Europe for its industrial, multifamily, and office builds. In Fort Worth, Texas you’ll find one of its latest spec constructions, a multi-building project that took less than one year to complete. In Visalia, Scannell Properties was able to build MilliporeSigma—a hazardous storage facility in just 18 months.

Economic Impact

This City Council vote carries significant weight, as it has the potential to shape Fresno’s trajectory in economic growth and send a pivotal signal to prospective business opportunities.

“The City of Fresno is evolving from being the ‘stepchild’ of the state to the forefront of economic growth. Businesses who have never done business in Fresno are recognizing this, Scannell being one of them,” said Tavlian.

According to him, there’s currently an industrial boom happening in four major markets in the San Joaquin Valley – Kern, Tulare, Madera, and Fresno counties. Among these, Fresno is particularly appealing due to its strategic location, available workforce, and the added benefit of the Fresno Yosemite Airport aiding in transportation processes.

In an area that is properly zoned to accommodate this sizable project, there is the potential to generate over $100 million in direct construction investment and create more than 1,000 jobs during the building phase. Following construction, the addition of more than 1,000 jobs is anticipated. Based on projections made by the developing company, this industrial space is positioned to contribute several billion in economic activity and municipal tax revenue for the City of Fresno.

“The future of Fresno is defined by an evolving economy,” Tavlian said. “And if we want to continue to evolve our economy to the next generation, we really have to embrace the next wave, and industrial is the start of that.”

Upcoming Vote

With steadfast optimism, Scannell Properties eagerly anticipates its Fresno City Council consideration, urging them to refrain from imposing any additional delays beyond the deadline of February 22nd.

If the project receives approval, the next steps include working with the Planning Commission on the remaining procedural requirements, starting construction, and securing suitable tenants.