There Goes the Neighborhood 

People who work in East Oakland's remaining industries worry that the housing boom will eventually crowd them out.

Larry Reid is on a mission to transform East Oakland. For decades, the city councilman's district was best known for drug dealing, bad schools, and homicides. So it was surprising when Reid sold his house in the tony Oakland hills and moved his family into the heart of an East Oakland flatland neighborhood.

Reid chose Durant Square, the first East Oakland market-rate housing development in years. When Durant Square was first proposed in the late 1990s, critics scoffed. Who in their right mind would buy a new home in one of the worst neighborhoods in Northern California? The answer was Reid and plenty of others. Most of Durant Square's 268 homes sold out before they were completed.

Like most new homeowners, Reid now wants the rest of his neighborhood to turn around, and he's convinced the success of Durant Square can be repeated elsewhere. Housing developers agree. The city is in the midst of the county's biggest home-building boom, and much of the interest is now centering on the eastern half of the city.

Yet Reid's vision has engendered a strong backlash. Some progressives and members of the black community are coming out against the new housing projects, saying they will gentrify East Oakland and leave low-income residents with no place to go. But the fiercest opposition is coming from a seemingly unlikely source -- the oldest sector of the Oakland's business community.

Sixty years ago, Oakland's blue-collar industrial and manufacturing base was the driving force behind the city's rapid growth. During and after World War II, tens of thousands of factory and shipbuilding jobs drew African-American families from around the country and they settled mainly in West and East Oakland. But much like other blue-collar American cities, Oakland's industrial base eventually withered. Today, much of what's left of East Oakland's industrial sector sits right next to some of the poorest and most dangerous neighborhoods.

It could be argued that the city's industrial and manufacturing era is nearing its end, just as it appears to be across most of the nation. At the same time, the overwhelming demand for housing has placed Oakland at a critical juncture. Reid believes the city should seize the opportunity and transform some of its industrial land into new housing developments, reasoning that the new homeowners will generate economic growth.

"People keep holding out hope that Oakland will return to the way it used to be, with the canneries and other industrial jobs coming back," he said in a recent interview. "It's not going to happen."

Reid is not alone; housing developers are banging on Oakland's door like never before. A Southern California company just paid $100 million for the old Oak Knoll Hospital property in the hills. And according to Margot Lederer Prado, the city's expert on industrial land use, in recent years housing developers have expressed interest in building at least 7,000 new homes on Oakland land earmarked for industrial or light industrial use. The Oakland market is so hot that many of the developers are not asking for public subsidies and they're willing, on their own, to clean up brownfields left by industrial and manufacturing businesses.

Many urban planners say it's foolish for cities like Oakland to cling to their industrial past. "Just because a section of the city was industrial for a hundred years, doesn't mean it should be industrial now or ten to fifteen years from now," said James Chappell, president of the San Francisco Planning and Urban Research Association. "They can't even keep industrial jobs in Asian cities, let alone this country."

American cities, on their own, can't fight US trade policies and world market forces that are driving manufacturing jobs to poor countries with cheap labor, Chappell argued. And just because a city zones land specifically for industrial use doesn't mean that those companies can survive there long-term. "There's this belief that if you keep land zoned as industrial, you will keep these jobs," he said. "But these are jobs in dying industries."

Polly Mendes bristles at the suggestion that her East Oakland furniture manufacturing company is dying. Creative Wood, which she co-owns with her husband, Joe, employs 175 people and has been on 77th Avenue just off San Leandro Street since 1989. The company makes and ships wooden furniture around the United States and overseas through the Port of Oakland. "We're thriving," the feisty business owner said, her voice rising. "I'm sorry, but I'm so pissed off about this. We're growing every year, and we're making money."

Mendes' anger, along with that of dozens of other industrial and manufacturing company owners, boiled over when home-building giant Pulte Homes unveiled plans to construct 366 homes on an industrial lot at the corner of 98th Avenue and San Leandro Street. The 27-acre project is to include 74 single-family homes, 108 detached condos, and 184 townhouses, with prices starting at $300,000.

The homes are to be built atop the old Fleischmann's Yeast factory, which was torn down in 2003. Even though the Pulte project is planned for one of the toughest sections of Oakland, the company believes its homes will sell quickly to families who can't afford San Francisco or Berkeley and are unwilling to move to the Central Valley and commute for up to four hours a day. "Oakland is an attractive place to live now," said Amir Massih, a Pulte executive. "It's close to San Francisco, but the market is not overheated like San Francisco."

To industrial business owners, Reid's vision and the Pulte project are a direct assault on their livelihoods and on the high-paying blue-collar jobs they provide. "The Pulte project is smack in the middle of a heavy truck corridor," Mendes said. "And they're going to put these pretty little homes on industrial land, and you know what's going to happen? The people who move in are going to start complaining about the trucks all the time. When we're busy, we sometimes operate 24 hours a day."

Despite conventional wisdom, Oakland's industrial sector is not hemorrhaging. While the number of industrial jobs has decreased slightly in the past few years, the number of industrial companies has increased slightly, Oakland's Prado said. "I get calls all the time from industrial businesses -- breweries, bakeries, chocolate makers -- who want to come to Oakland," she said.

According to the latest data available, there are at least 23,000 industrial jobs in Oakland. Add in the Port of Oakland and Oakland International Airport, and the total jumps to at least 47,000, Prado said. In fact, a large segment of Oakland's manufacturing and warehousing sector remains in Oakland precisely because of its proximity to the nation's fourth-largest container port.

Last month, Mendes and a group of other industrial business owners appealed the Oakland Planning Commission's approval of the Pulte Project, to be known as Arcadia Park. But the city council denied their appeal and approved the project anyway. The new homes should be ready for sale in 2007. Councilmembers agreed, however, that the city needs to hammer out a better policy for transitioning industrial land to housing.

In some ways the debate is ironic. For decades, Oakland was the homely girl who never got asked to the prom. The city watched enviously as high-tech businesses, housing developers, and young families clamored to be in San Francisco, Silicon Valley, or the East Bay suburbs. But now developers and homeowners are literally falling all over themselves to be in Oakland. Will the city dance each dance with its new suitors, or save a few for the boy who stood next to her all along?

Over the next few months, the city's political, business, and community leaders will grapple with that question. Mendes and a group of business owners want a section of East Oakland cordoned off permanently for industrial uses, similar to the policy in nearby San Leandro. They also want a stronger city prohibition against housing in industrial zones, because the current general plan ban is amended routinely by the council -- as it was for the Pulte project. Business owners also are demanding that the city spend money on sprucing up its industrial zone and attracting other industrial businesses, which the city does not do now.

On the other hand, Reid argues that a housing moratorium on industrial land will stymie efforts to finally revitalize East Oakland and force the city to miss out on the historic housing boom. As a result, he and housing developers say they will push for a more malleable policy that would allow housing on land at the edge of the current industrial zone, if certain triggers are met -- such as the inability of an industrial company to survive there.

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