Ordinance 1997-07ORDINANCE NO. 97-7
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF GILROY PRE-ZONING FROM COUNTY AGRICULTURAL
TO M2 (GENERAL INDUSTRIAL) ON APPROXIMATELY
90 ACRES, Z 97-03, APN 841-17-069
WHEREAS, Tom S. Obata and Thomas J. Obata
("Applicants") have submitted Z 97-03 requesting an amendment to
the City of Gilroy's Zoning Map so that certain property is pre-
zoned from County Agricultural to M2 (General Industrial) on
approximately 90 acres; and
WHEREAS, the property affected by Z 97-03 is located
south of the terminus of Silacci Way, west of Miller Slough, such
land being indicated on a map attached hereto as Exhibit A and
incorporated herein by reference; and
WHEREAS, pursuant to the California Environmental
Quality Act ("CEQA"), the City Council on January 18, 1994
certified an EIR for this site for General Plan Amendment
application GPA 92-06 that included the Mitigation Monitoring
Program attached hereto as Exhibit B in conjunction with approving
the project; and
WHEREAS, the Planning Commission held a duly noticed
public hearing on Z 97-03 on June 24, 1997, and after that hearing
voted to recommend approval of Z 97-03; and
WHEREAS, the City Council held a duly noticed public
hearing on Z 97-03 on July 21, 1997, at which public hearing the
City Council considered the project and based upon substantial
evidence produced both in writing and orally, resolved that the
project should be approved with conditions; and
WHEREAS, the location and custodian of the documents or
other material which constitute the record of proceedings upon
which this ordinance is based is the office of the City Clerk.
\KBA\348030.01 - 1- ORDINANCE NO. 97- 7
72-073004706002
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GILROY
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION I
The project is consistent with the Gilroy General Plan
because it conforms to the land use designation for the property
on the General Plan Map and is consistent with the intent of the
text, goals and policies of the General Plan.
SECTION II
The City Council hereby finds that the EIR, Monitoring
Program and Statement of Overriding Considerations certified and
adopted
substantial
follows:
1.
January 18,
evidence
1994 for GPA 92-06 are supported by
and apply to this project, finding as
The EIR and Monitoring Program have been prepared
in accordance with CEQA and reflects the independent judgment of
the City; and
2. The City made a Statement of Overriding
Considerations with regard to identified significant adverse
impacts.
SECTION III
A. Z 97-03 should be and hereby is approved, subject to
the mitigation measures Monitoring Program contained within the
EIR adopted for GPA 92-06.
B. The Zoning Map of the City of Gilroy is hereby amended
to pre-zone approximately 90 acres located south of the terminus
of Silacci Way west of Miller Slough, from County Agricultural to
M2 (General Industrial), APN 841-17-069, such property as is
indicated in Exhibit A.
This ordinance shall take effect and be in full force
thirty days from and after its adoption and approval.
\KBA\348030.01 2
72-073004706002
ORDINANCE NO. 97-7
PASSED AND ADOPTED this 2nd day of September, 1997 by
the following vote:
AYES:
NOES:
ABSENT:
COUNCILMEMBERS: GILROY, MORALES, ROWLISON,
SPRINGER, VALDEZ, ROGERS
COUNCILMEMBERS: NONE
COUNCILMEMBERS: NONE
APPROVED:
~nnie Roge-rs', ~a~or Pro Tem
ATTEST:
Rhonda Pellin, City Clerk
\KBA\348030.01 3
72~73004706002
ORDINANCE NO. 97-7
~Vo Sc=le
. CARNADERO
THE SITE
GILFIOY
SEWE,R FARM
EXHIBIT A
OLD GILRC
LOCATION MAP FOR Z 97-03
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2.2
Market Demand
As pointed out in the EIR, market demand for industrial expansion has decreased in
recent years, resulting in an excess of current and near term expected demand for
industrial land. This situation has shifted slightly as requests for rezoning to
commercial uses are being processed by the city. As a result, the near term pdcing
and demand for industrial land has increased slightly.
The market value .for land is based on perCeived conditions of r~sale, ulti'rnete
highest and best use, and'market absorption rates. By its very nature, it is
speculative and since it depends on perceptions~ prices will vary over time and by.
client or investor. This value will shift as well; with changes in government
regulation, for'instance on standards of setbacks' or Floor Area Ratios.' Thus,
changes in sphere of influence boundaries and ultimately anne~(ation do influenc·
property resale rates, typically escalating them in terms of the perceived increase in
use potential.
Viewed in terms of current use (i.e. agriculture), the value of such productive land
varies as a function of the soil type, availability of water, ready access to
transportation, and intended crop type. The range of price, when only agrfcultural
reuse is taken into account ranges from $3,500 (for Iow yield range lands in foothill
areas) to $25,000 (for specialty multi-yield row crops). The price escalates rapidly
when any type of intensified or speculative use potential such as conversion to
residential or commerCial use is taken into account.
Agricultural production capability of the land in question can be illustrated by single
annual row crops where the average yield may vary from 35-45 tons per acre.
Similarly, market pdces vary annually and can be very volatile, literally dependent on
world-wide shifts in demand. For purposes of this report, they are assumed to
average $50/ton gross retum to growers.
For PUrposes of this report, the sales rate for land valued at industrial-zoned pdces is
$30,000 per gross acre with finished space sales ranging from $3.50 to $5.00 per
foot (based on 20 to 40 percent net land coverage).
The project site is currently for sale. A sale at the asking price, which reflects the
· perceived industrial conversion value of the property, would clearly signal renewed
market interest in this land use category.
2.3 Absorption Rates
Once the market for industrial space begins to stabilize, this area should capture a
greater share of the industrial use market, which should begin to shift southward to a
greater degree from the existing San Jose area. For purposes of this report, the
capture rate represented by the Giiroy area is assumed to be 200,000 square feet
annually.
Utilizing the figures presented in the EIR, the first 100 acres could yield 2.1 million
square foot. of rentable industrial space. Under the assumption above, this
Obata. Property Plan for Services
represents app. uXimately five years of absorption. (.=,ven current market conditions,
the projec~ site could be in demand as early as 1998 or 1999.
Assuming that an excess of stock will always be on hand to allow for market choice,
the need for additional land would become apparent roughly half way.through the
development period for the'first. 100 acres, or in 2003. Therefore, the final increment
of land within the proposed project would be staged'for development in years four
and five of the build-out period.
2.3.1
Industrial Demand
The demand for industrial space was previously addressed in two different. sot~rces:
the EIR and in the Staff Analysis of the 1993 Giiroy Urban Service Area Extension
Request (LAFCo, December 4, 1993). Both sources 'point to an oversupply of
industrially zoned land, a phenomena which the City staff believes is largely
responsible for recent requests tc~ reclassify certain industrial properties to a
commercial designation. According to. the LAFCo staff report, '
The Rincon Plaza proposal contains 92 acres of industrially zoned
land...ln addition the Haun proposal contains another 11.45 acres of
· industrial land. The City developed approximately 75 acres of
industrial land from 1983 - 87, and another 50 acres from 1988 - 92, for
a ten year total of 125 acres. · ·
The report pointed out that there were 1,219 acres of industrially zoned land in the
urban service area, of which 700 in the current city limits are vacant and 130 acres
of which were vacant in the urban service area. Annual absorption, based on 60
percent coverage and 12 acres per year, as a result is approximately 313,000
square feet per year. Table 3 includes a review of commemial and industrial
acreage in the city and the urban service area.
The ultimate demand for the parcels will be influenced by competition from San
Jose, Morgan Hill, and to some limited extent, from Salinas.
To help illustrate absorption rates, we have Used the surrogate of population growth
which provides an indirect indicator of overall business expansion in the city. Tabie 4
presents population trends for the Cities of Giiroy and Morgan Hill, the Counties of
Santa Clara and San Benito, and a regional total showing strong growth potential in
the surrounding communities. Table 5 presents the population growth rates for
those same jurisdiction. .
The correlation between industrial and commercial growth and the balance of land
available in the urban service area in recent years as shown in Table 6.
10
Obata Property Plan for Services
In illustration of the apparent market demand, Table 7 presents the forecast
absorption rate in square feet per year for indL[stdal uses.
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TABLE 7
Potential Absorption Rate in Square Feet Per Year
Land Use Annual Abso~on Range *i Time to Aba_orb
Indu~[~;al 50,000-100,000 sq. ft.
~ ' 5.,10 years ..
Source: Michal Moore, Land Resources and Economic Strategies '.
Propen), P/an for Services 15
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I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached
Ordinance No. 97-7 is an original ordinance, duly adopted by the Council of the City of Gilroy at
a regular meeting of said Council held on the 2nd day of September, 1997, at which meeting a
quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
the City of Gilroy this 24th day of September, 1997.
City ~lerk of the City of Gilroy
(Seal)