As a potential fight brews over the future of land use in south central Fresno, one economic study shows that while the area only makes up 7.5% of Fresno acreage, it generates 35% of the city’s economic output.

Business advocacy group INVEST Fresno released its 2022 Economic Impact Study on Monday, July 31.

The study found that the $102.7 million in tax revenues from the 5,000 acres south of California Avenue along Highway 99 make up 20.7% of the city’s tax revenue, based on the 2023 Fresno budget. The Amazon distribution warehouse is expected to net the city $24 million in fiscal 2023 alone, according to the report.

Ben Granholm, president of INVEST Fresno, said the study reaffirmed the group’s beliefs about how much the area contributes to city services. At the same time, the South Central Fresno Specific Plan — which would dictate land use decisions and design standards — has been in the works for years. By fall, the public will have a say in what businesses are allowed to operate there.

“When we see a 7.5% land area in the city creating over $100 million in revenue, going to the general fund and helping to build up the public safety and the parks and so many critical services, it’s just really incredible to see that such a small piece of the city has such a large impact on the entire city as a whole,” Granholm said.

But there are no guarantees that the area’s economic bonanza will continue. One of the plans being considered at City Hall would significantly reduce manufacturing there.

Report: South Central Fresno Generates 35% of Fresno’s Economic Output

The 443 businesses in the area directly employ 22,070 people in Fresno and pay out $1.2 billion in wages every year, according to the report.

Economic activity in the area indirectly creates another 25,743 jobs.

People working in the area make slightly more than the average in the rest of the city, making $68,007 a year compared to $67,590 across the entire city.

Business-personal services is the biggest employer by category. Those service-oriented jobs such as janitors, dry-cleaning, and home repair businesses pay $95,377 a year compared to the city’s average of $77,822 in the same category.

Surprisingly though, the manufacturing side does not keep up with the city’s average, only paying $52,989 compared to $58,802 for the category.

The Amazon Fulfillment Center located in the area is classified under retail. The average $46,918 yearly income for a retail job in the area is 4% higher than in the rest of the city.

The study also looks at indirect impacts on the area — meaning those companies supplying the businesses in the area and other companies fueled by employees going to lunch and other resulting jobs.

Study author John Dunham of John Dunham & Associates, said where some studies will include far-reaching effects to increase dollar figures, he limited indirect impacts to those closely related to businesses in the area.

Between businesses in and those businesses supplying and fueled by south central Fresno, $13 billion of Fresno’s total $37 billion in economic activity comes from the area.

South Fresno Generates 21% of Fresno’s Tax Revenue: $24 Million Expected from Amazon Alone

From sales tax to property tax (minus Fresno County’s share) to licenses and permits, the area generates $102.7 million in taxes, accounting for 20.7% of the percent of budget.

The $57.8 million in sales tax comes largely from the Amazon and Ulta fulfillment centers, the report stated. Those sales taxes directly contribute to the Measure P parks fund for the city of Fresno.

California law says sales tax is collected based on wherever the goods originated. So online shoppers are paying 8.35% to the city of Fresno for every purchase that comes from a Fresno warehouse.

Based on comments from Henry Fierro, the city of Fresno’s budget manager, the study’s author expected the Amazon fulfillment center to generate $24 million for fiscal 2023.

A map proposed by community groups would rezone the Amazon building.

South Central Fresno Hotly Contested Between Multiple Interests

Fresno officials are putting the final touches on the years-long South Central Fresno Specific Plan before they circulate the document to the public in the fall.

Parks, homes, and open space in the area make up less than 10% of land, according to the city. Heavy industrial land makes up 72% of existing land use.

Community groups want to see more retail brought to the area to serve nearby communities. They also want to reduce emissions from truck traffic. California’s emissions map, CalEnviroScreen calls the area one of the most heavily impacted by pollution.

Mike Betts, president of Betts Company, said that the difference between semi-trucks today and those from 10 to 15 years ago is “night and day.”

“We’re moving to electric, we’re moving to hydrogen, we’re moving to zero-emission at a very rapid rate,” Betts said.

Three different land use maps for the 5,000 acres of land determine what would be allowed in the contested area.

One from community groups would reduce the amount of industrial land to below 32% from the 85% it is now. Much of the land would be changed to “general commercial.” Calls made to Fresno Building Healthy Communities and Leadership Council for Justice and Accountability were not returned.

The map from business groups would preserve industrial land, but repurpose 9% to lighter usage.

Fresno planners have their own map published as a compromise between the competing factions.

Having three options means councilmembers have a full scope of possibilities rather than just a narrow view, according to Fresno City Councilman Miguel Arias, whose district includes south central Fresno.

Business Advocates' MapFresno Planners' MapCommunity Groups' Map

What Changes Would New Zoning Maps Bring to South Fresno?

Community and business groups have pitched their flags in the form of two different zoning maps.

Even though general commercial seems broad, the aim is geared toward retail, said Ethan Smith, senior vice president and industrial broker for Newmark Pearson Commercial. Smith is also the board chairman for INVEST Fresno.

For employers, that means new complications for what is allowed. Some wholesale uses would be allowed, but warehouses may not be allowed.

And retailers want to see homes nearby or at least significant traffic before they move into an area. Zoning an area for general commercial may not be enough to lure grocery or big-box stores.

“Retail goes where rooftops are,” said Smith. “You’re not going to force retail into an industrial area simply because you’d rather have retail than industrial or office. That just doesn’t work that way.”

Some food processor operations at places such as JD Foods or Certified Meat Products may be considered out-of-compliance.

The term “heavy industrial” carries a negative connotation nowadays, says Smith.

Even under the city’s proposed map, heavy industrial land would be reduced by more than 800 acres.

Fertilizer companies that keep a large piece of the Fresno economy moving fall under that category.

Manufacturers such as Betts Company would be reclassified as “light industrial,” putting them out of compliance, said Smith.

“I don’t think anybody that would go down and visit Betts Springs would come to the conclusion that ‘we don’t want any of this,’ this is heavy industrial,” Smith said.

Some other businesses that would have a rezone under one or more maps include:

• Amazon FAT1
• JD Foods
• Penny-Newman Grain Co.
• Certified Meat Products
• Fresno Pipe & Supply
• Donaghy Sales
• Hormel Foods
• Wawona Frozen Foods
• Electronic Recyclers International

Industrial Broker: Change in Zoning Jeopardizes Economic Activity

The city experienced a similar issue on 90 acres along Elm Avenue when existing businesses were rezoned to mixed use. City staff said the businesses there would be “grandfathered” in, meaning they could operate so long as there was an operating business there. But Smith said that presumes nothing is going to change at those businesses.

Property owners at Fresno City Council meetings said they were unable to secure loans to buy low-emission fleet vehicles or expand their businesses because they were out of compliance with land use.

Now business advocates with INVEST Fresno fear the same will happen with south central.

“All of the things that have happened with the Elm Avenue buildings, that would be replicated across millions of square feet of existing real estate,” Smith said. “So that real estate will almost assuredly lose a significant amount of value overnight.”

City Shouldn’t Be ‘Tinkering’ With Fully Built-out Area: Attorney

Most of the land in south central has been fully built out. In fact, some businesses have been there for decades.

Attorney John Kinsey with Wanger Jones Helsley, represents Donaghy Sales, whose land could be rezoned under proposed maps. He said it’s the stance of most property owners that the city “shouldn’t be tinkering with land that is fully built out.”

While one function of the company may be compliant, others may not.

“There’s comfort in knowing you’re in compliance with your existing zoning,” Kinsey said.

Manufacturing Turning to Visalia

In the past few years, manufacturers have looked to Visalia’s booming north-end of town to locate businesses. Shipping giant UPS opened a 450,000-square-foot warehouse in 2020.

Visalia’s economic development manager Devon Jones in a previous interview attributed the growth of the $1.1 billion industry in the city to a “business-friendly” attitude from the city.

The booming industrial park has been expanding adjacent to some of Visalia’s more affluent neighborhoods, counter to narratives that suggest manufacturing only goes to poorer areas.

Businesses consider zoning uncertainties when choosing locations, said Smith.

“When business and property owners make decisions about where they will locate and invest resources, both capital and human, they tend to prefer locations and communities that provide a predictable and timely approval process,” Smith said.

To address a shortage of developable land for manufacturing, Fresno County officials want to open more land for manufacturing with a proposed 3,000-acre business-industrial campus in southeast Fresno. The public comment period for the environmental impact report regarding the industrial campus and the county’s updated general plan closed in June.

Who Is Invest Fresno?

INVEST Fresno is a nonprofit business advocacy group made up of representatives across multiple industries.

The group began in January, funded by developers Leland Parnagian, John Brelsford, and Mike Pickett, according to Granholm. As the group grows and proves its model works, Granholm wants to bring on more funders.

Parnagian is president of Fowler Packing and owns G4 Enterprises, the company behind many of the Amazon warehouses in Fresno and Visalia, among other developments. Brelsford is president of Diversified Development Group, one of the major industrial developers in Fresno. Pickett is president of Don Pickett & Associates, a construction and development group in Fresno.

The group’s advisory committee includes engineers, architects, the Fresno Chamber of Commerce, and representatives from the Fresno County Farm Bureau and the California Fresh Fruit Association.

Granholm said he wants to bridge the gap between business and the community and get businesses involved in discussions that affect them.

“Our main focus right now is really engaging with the community, you know, building this coalition of folks, both businesses and residents and community organizations in the area that support this notion of a sustainable economy,” Granholm said.