Fresno Chamber of Commerce Business News. Valley Business. Valley Stories.

FRESNO, Calif. – An area that was once known as a no man’s land for the industrial sector in southwest Fresno has now transformed into a vital economic engine and contributor to the City’s tax base. Yet, an ongoing dispute over parcels on Elm Avenue has property owners advocating to regain their industrial zoning, which they say was taken away and rezoned without their knowledge.

In 2015, a 21-person Steering Committee made up of residents, business owners, developers, and other stakeholders, appointed by former City Councilmember Oliver Baines began engaging the community to come up with a specific plan for southwest Fresno. The committee conducted group meetings and workshops to see what residents in the area wanted in their neighborhood. By coming up with a vision and highlighting their issues, the group came up with a land use concept that would eventually guide the development of the Plan area.

But what may be unknown to some is that when someone controls or changes the land use policy, they are in essence deciding what happens to existing developments and how the area is allowed to grow or not.

Baines, who represented District 3 from 2011 to 2019, says he witnessed firsthand the disparity in housing, retail, and commercial developments between his district and other areas of the City. He believed that to attract investment to the area, a specific plan was crucial. The existing industrial land use acted as a barrier, making it harder and more resource-intensive to bring these improvements to southwest Fresno.

“I realized that I had to take this planning all the way to the ground because how it was, it was completely inconsistent with the wishes of the community and anyone else,” Baines said.

Adopted in 2017, the Southwest Fresno Specific Plan (SWFSP) was unanimously approved by the Fresno City Council. Included in those changes were 92 acres on Elm Avenue that was changed from light industrial to neighborhood mixed-use, leaving zero acres of industrial land use.

According to Nick Audino, Senior Vice President at Newmark Pearson Commercial, and a long-time industrial leasing agent, neighborhood mixed-use is the lightest type of use within the mixed-use bundle and as a result, puts existing industrial businesses in a legal nonconforming status. This means businesses in the Plan area are grandfathered into this new Plan but cannot alter or expand operations. If and when that tenant decides to end the lease, the grandfathered component will sunset over time.

“We found out in 2018 when finishing up construction on a 40,000 sq ft. building out there, when a tenant, DHL, who is still there today wanted to get its business license. This includes a zoning verification and the City of Fresno said they were not zoned for the warehouse,” said Audino.

Caught by surprise, he and several Elm Avenue property owners say they had no idea the zoning had changed or had been considered in the decision-making process.

“We were never consulted; we were never personally engaged about any meetings in the two-year planning process otherwise we would have definitely shown up to protect our interest. We are good neighbors, these are good companies that provide good jobs,” said Kevin Ramos, Chief Investment Officer at Buzz Oates, a commercial real estate investment management company that owns multiple industrial sites in the Central Valley.

The City was issuing building permits for new buildings, yet a rezoning was happening in the background, explained Audino. “I had signs up and down that street at the time, I was working with city staff on deals in the area, talking to economic development people and talking to the planning department and nobody said a word to me that this was going on. And to this day I don’t understand why.”

Based on the SWFSP final document, flyers and postcards were mailed to all property owners and residents in the Plan area, inviting them to the public fourteen Steering Committee meetings, about ten group meetings, and four community workshops that took place.

According to Baines, the City is legally obligated to carry out all the proper communication. He says he is hesitant to believe that the businesses on Elm Avenue were unaware of what was taking place for two years.

“If you are operating in a community, in a business and you are so disconnected with what is going on around you and don’t know that a significant planning process has been happening for two years, you can’t make that the fault of the City,” said Baines.  “At some point, you have to be part of the community in which you are making money on.”

Due to the clear breakdown in communication, the Fresno Chamber has submitted a Public Records Request to the City of Fresno-District 3, to help identify who precisely received the mailers and was notified. In response, the City has requested an extension of time (until April 5th) to address this request. As of now, we have yet to receive a response.

Additionally, the Chamber reached out to former and current members of Fresno’s administration who were involved in the drafting of the Plan and what it’s become today. Unfortunately, we have yet to receive a response from Jennifer Clark, Planning Director, and Councilmember Miguel Arias, representative of District 3. Wilma Tucker, former City Manager declined to comment at this time.

Kickstarting Industrial Development in Southwest Fresno

Buzz Oates played a pioneering role in the early industrial development of southwest Fresno.

In the late 1990s, the company was approached by Fresno’s Development Agency and the Economic Development Corporation (EDC) which promoted the location as ideal due to the proximity to Highways 41 and 99.

According to Ramos, Buzz Oates liked the infrastructure, liked the area, was zoned properly, and had its utilities already in place. This is what ultimately convinced the company to invest in an area that other developers had stayed away from at the time.

The decision to rezone multi-million-dollar industrial buildings is a concept unheard of in the industrial sector. Neither the leasing agent nor Buzz Oates’ Chief Investment Officer have ever seen or heard of this happening anywhere else. Changing an area that has been zoned for industrial use via the General Plan for decades–to having the City approve the rezone to neighborhood mix-use was a mind-blowing concept. This left many wondering how feasible it is to have residential, commercial, and office use in an area surrounded by existing warehouses that still have decades more to give economically.

“Eventually the legal non-conforming will sunset and you will not be able to use the property at all except for a use that would be allowed in a neighborhood mix-use zone. Which are going to be none, because these are warehouse buildings, not houses or commercial buildings,” said the leasing agent.

Incorrect zoning affects the value of the property and the ability to operate and lease a building long-term.

A lender will most likely not approve a loan on a property that sits in a nonconforming status, it is too high of a risk as leasing it may be difficult or impossible in a competitive market with all the existing limitations and regulations an operator must follow.

Plus, an added curve ball—a Conditional-Use Permit would also be required for any new tenant coming into a legal nonconforming building, according to Ramos, which would add extra time and resources to an already lengthy process.

“Businesses don’t want to go somewhere where they are not wanted,” Audino said. “What company wants to deal with that—Elm will lose every single time.”

Baines disagreed with the committee’s choice to rezone Elm Avenue during the drafting of the Plan. After explaining to the group the adverse effects this would have on businesses, the compromise reached was the grandfathered rights, serving as a middle ground between himself and the committee.

Controversial Partial Rezone

Following the approval of the Southwest Fresno Specific Plan (2017), impacted property owners submitted an application to the City of Fresno to revert their zoning.

However, in 2022, when this matter was finally brought to the City Council agenda, the application was not directly voted on; instead, it was amended.

Miguel Arias, present representative for District 3 proposed a compromise to partially return a portion of that land to industrial zoning.

Mid Valley Disposal and Stravinski successfully regained their original zoning, but the compromise excluded the other half of the property owners involved in that application.

The unanimous vote did not receive support from either side of the political divide. Community members wanted industrial completely gone and the other half of the parcel that was left out, Buzz Oates and Span Development were left confused with the outcome.

“It seems like the local owners got rezoned and the out-of-town owners didn’t,” said Ramos.

Later, Arias faced allegations of a possible conflict of interest with one of the property owners affected by the rezoning. The reasons behind the decision-making process for selecting which parcels to rezone are still in question, as is whether the City Council had the authority to divide the application in this way.

“How do you cherry-pick these couple of parcels and rezone them and leave the rest of them untouched? It makes no sense, there is no land use justification, it was wrong and what they should have done is the overlay district for all of them and it would have solved the problem,” said Baines-one of several that suggested an overlay district that would stack on top of the existing zoning, a method that would help facilitate operations.

In the end, according to Baines, the overlay was not possible after Councilmember Arias decided to split the rezoning application.

Former Councilmember Baines believed there was an oversight in the process made by the City. The overlay district language should have been included in the original document of the Southwest Specific Plan. This oversight meant that businesses did not have the entitlement needed to continue operations smoothly, leading to the issues experienced today.

“They (property owners) have a legitimate argument; they absolutely do and it could have been fixed,” said Baines.

Rezoning Attempt- Take 2

Over the past eighteen months, the remaining property owners who are still in a legal nonconforming status have been actively pursuing another rezoning application, continuing the dispute that’s lasted over six years since the initial rezoning.

To provide reassurance to the neighborhood and address concerns from the opposition, Buzz Oates chose to include its own conditions in the new application. Property owners stated that they would not permit certain uses that had been allowed by previous tenants, and no additional building would be constructed.

Fortunately, because of the shortage of available industrial spaces across the country, there has not been a lot of business movement.

According to Audino, nearly all the industrial spaces on Elm Avenue have remained occupied which has allowed property owners to remain patient throughout this time. However, he and Ramos predict that spaces will soon become available as the industrial market cools and current tenants look to expand, change operations, or want to own their buildings.

“Sooner or later if we are not able to get the zoning back, the project will go vacant, in my opinion, sooner rather than later,” Audino said.  “If we are unable to lease a space that becomes permanently vacant the criminal element of homelessness will create havoc for the remaining tenants in the project.”

These multi-million-dollar buildings, still classified as legal nonconforming, not only pose leasing challenges but also restrict the implementation of necessary infrastructure upgrades or a tenant needing to electrify an entire fleet, which demands updates to the power system. All costly items that a property owner would have a hard time permitting and financing.

Clearing the “Air”

Residents and advocacy groups who want industrial uses completely gone from this area say the partial rezoning walked back from the Southwest Specific Plan.

Ramos emphasizes that misinformation has significantly contributed to the negative perception surrounding the industrial sector. While historically associated with polluting factories and rendering plants, he highlights the substantial progress made by the industrial sector since then. “People think these are bad uses, bad for the environment, and bad for the neighborhood but I disagree. These uses are necessary and part of every town, it’s the supply chain that flows through these buildings.”

California, already known for having the strictest regulations on air quality, has taken an ambitious step. This plan mandates that half of all heavy vehicles, including trucks, must be all-electric by 2035.

The California Air Resources Board maintains stringent regulations on emissions within the industry. Between 2000 and 2020, the agency reported a notable decrease in statewide greenhouse gas (GHG) emissions, with the transportation sector showing the largest decline.

New engines, fuels, and filters “are not what they were back then,” says Ramos, who says truck trips are often a major area of concern for advocacy groups.

Similarly, Baines notes that manufacturing processes have become significantly cleaner compared to 15-20 years ago. As these businesses are given the chance to upgrade, it will be difficult to argue that they are detrimental to the community.

Roughly 7% of Fresno’s entire industrial market is located in Southwest Fresno, representing approximately $150 million in property value. These parcels also contribute significantly to the City’s tax base as the largest property taxpayers within this specific plan.

To help paint a better picture of the value industrial businesses bring, INVEST Fresno, a nonprofit public advocacy organization, released a study on industrial businesses belonging to the Southcentral Specific Plan. This Plan area covers 5,629 acres and accounts for more than $102 million in tax revenue, and over $13 billion in economic activity while providing over 47,000 jobs citywide.

In terms of financial impact, industrial uses often prove highly lucrative for cities. They generate significant tax revenue while requiring relatively fewer city services compared to residential or commercial properties, which typically demand more municipal services to operate.

“We want to be a good member of the community, and we think we are a good member,” said Buzz Oates, Chief Investment Officer. “It hurts sometimes when people make accusations that maybe we are not, or our tenants are not and that’s not right or fair.”

Feeling hopeful and optimistic, property owners are continuing the process of this second rezoning application through the Planning Commission and presumably to the City Council for a final vote later this year.

Continuing the Conversation

Due to the outcomes of the Southwest Specific Plan and the uncertainties stemming from the City’s communication process with property owners, Audino noted that businesses are now more vigilant and prepared to voice their concerns about specific land uses where they currently operate.

Businesses covered by the Southeast Specific Plan serve as another example of property owners finding themselves in a legal nonconforming status. However, these property owners managed to contest the rezoning successfully and were then transferred to the Southcentral Specific Plan, which is set for a vote later this year.

Additionally, a few businesses in the Tower-Specific Plan are apprehensive about the potential change in zoning to mixed-use and are closely monitoring the drafting of the Plan.

“It is one thing to do it on Elm Avenue and call it a mistake, but it is another thing to keep doing it all over town,” said Audino.