Interview with David Martin

  • San Francisco Examiner
  • June 29, 1992
  • Maureen McDaniel

Of The Martin Group, Developer of Hamilton Field and Marin City

Novato – From offices in San Francisco Emeryville, Pleasanton, and Milpitas, The Martin Group acquires, develops, owns, and/or manages a 4.5 million square feet portfolio presently valued at $70 million.

One major local project, being done in partnership with Marin City Community Development Corporation and the largest nonprofit builder in the U.S. Bridge Housing Corporation, is the redevelopment of Marin City, a new, mixed-use, village style community. Now The Martin Group has taken on the civilian redevelopment of Hamilton Field, a former Air Force base on the east side of Novato.

Founder and president of The Martin Group, David Martin, 37, moved to California from Alabama in 1979 with a BS in economics and finance from the University of North Alabama. He opened Union Bank’s Silicon Valley Regional Real Estate Center in San Jose, where he served as vice-president and manager. Later he joined CPS, a commercial real estate company that co-developed one of California’s largest business parks, before starting his own firm in 1984.

Mr. Martin is a member of the Urban Land Institute, several industry organizations, and the policy advisory board of UC Berkeley’s Center for Real Estate and Urban Economics. He was also a member of the Bay Vision 2020 committee. In that process he became an enthusiastic supporter of a more coordinated regional government process.

In this interview, Mr. Martin discusses the progress of plans for Hamilton Field, a community-based development approach that has worked well for him, and his views on regional government.

Business Journal: First, tell is about your community-based development approach.

David Martin: Most people in the development business have one particular product they build – either office buildings, apartment buildings, or shopping centers. They tend to search out locations in which they can build their product. That’s the “top-down” approach to land development.

What we practice as a firm is “bottom-up” community-based planning with shopping centers, office buildings, apartments, industrial facilities – we really do build a broad spectrum of products. This allows us to go into a community with a blank sheet of paper and have the community itself design the kinds of land use and development it wants.

We listen and then take what the community tells us and try to weave that into the economic realities of the marketplace. So the conclusion is an economically viable, successful project that resulted from the community’s input. That’s really what’s happening in Marin City and at Hamilton.

Business Journal: How did you get involved in those two projects?

David Martin: The Marin City CDC and Bridge [Housing Corporate] have been working in Marin City trying to put economic development and housing programs together since the late 1970s. When this project was beginning to take shape in 1989, we were invited in to be the private partner.

Our role was to work with Don Turner at Bridge Housing and with Al Fleming, the director of the local CDC, to develop a mixed-use model. The model that evolved was the result of many, many community meetings and a lot input as to what the local community wanted. We then had to translate that into economic reality by bringing in tenants and so forth.

As a result of our efforts in Marin City, Brady Bevis, a Marin County supervisor, came to us and asked if we would work with the people of Novato to see if planning for Hamilton could be put together in the same fashion. We started there in 1990.

Business Journal: Hamilton has been synonymous with divisiveness for the last 10 years. How did you go about developing a community consensus?

David Martin: Every community has places where people gather the Rotary club, or a flower club, a vet’s organization. Churches, whatever.

Brady arranged for us to meet a group of citizens who were active in the community. We showed up with blank sheets of paper and pens, and we listened. We then spent time with them with our maps, and they had a chance to sketch out for us how they envisioned Hamilton.

We spent a lot of time developing, circulating, and getting comments on an initial plan. After meeting with environmentalists and local homeowners groups and listening to their concerns about traffic and so on, we modified the plan. The we got comments from other groups.

Early this year the Novato City Council appointed an official citizens committee, which sat down with our team and spent months going through detailed aspects of the plan, including land use, environmental concerns, and so on. We recently concluded that process.

Business Journal: Were you able to use what was learned from the community’s rejection of the previous, Berg-Revoir plan?

David Martin: Yes, the previous plan crystallized a lot of the opposition to the development, so at least people already knew whey they didn’t want. That was valuable, because it allowed at least an initial plan to develop, with which we could go to prospective tenants and financing sources.

We found that environmental concerns were significant factors in the rejection of the previous proposal, which was for a much more ambitious development. The new proposal is less than half the size of the previous proposal. Partly as a result of that, almost all the environmental concerns have generally been met.

The other big objection revolved around funding. The last project had proposed to use public funds. Our project is totally privately funded. Obviously, one of the key ingredients is the inclusion of Autodesk. In the current economic environment it would be very difficult to finance a speculative business facility, so we went out in search of an anchor tenant – and found one.

Business Journal: Why Autodesk?

David Martin: Autodesk was actively looking for a location to consolidate its facilities, which presently stretch from Sausalito to Petaluma. Hamilton seemed to be the right location for the,. Being in northern Main, it offered a good, central location for many of its employees. The bulk of its employees live to the south so the Novato location creates a reverse commute situation on the highway.

We were also able to offer Autodesk a large enough site for it to build the campus it envisioned. This made the difference for the financial success of this project and also, I believe for the political success.

Business Journal: At what point is the project now?

David Martin: The citizens committee report is coming soon, and the environmental impact report is about be circulated. We’re hoping to have all of our public hearings this summer and all of our public approvals wrapped up by early fall.

Business Journal: Do you foresee any legal challenges?

David Martin: I’ve learned not to predict anything that might happen in Marin County. However, this plan meets desires for environmental preservation, additional open space, and parks and recreation, and we’re trying to increase the stock of entry level housing ownership opportunities.

What we’re really trying to do is take a military base that has been for the most part deserted, providing no economic benefit for the city of Novato, and make it useful. And this is truly infill, on previously utilized property.

We’re also trying to create an opportunity for one of the largest employers in the county – Autodesk – to remain in the county, with economic benefits for Novato, which could certainly use them.

It seems to me it would be hard to find something here to be against.

Business Journal: What kind of uses are now in the design?

David Martin: The new Hamilton project includes 1.2 million square feet f commercial space, roughly 940,000 sf of which will be dedicated to Autodesk. The rest will consist of miscellaneous commercial uses including a community retail center of approximately 150,000 sf.

The residential component includes about 1,400 units, a combination or rental, for sale attached, and for-sale detached housing. The housing component includes units that are affordable to entry level home buyers and families.

The notion was to create a residential community that was reminiscent of the 1920s and 1930s, which reflects a lot of the historical heritage at Hamilton. We took the cars of the street and out porches in front. There are sidewalks and street trees.

A very extensive park system runs throughout the project, and there is significant amount of open space that includes wetlands and wildlife habitat.

Business Journal: What is the general financial outline of the project?

David Martin: We are acquiring the site from the government for $310 million, and we will spend about another $30 million on public improvements. In addition, there are $20 million of other costs associated with the acquisition. We have the financing in place that would allow up to do all that.

As part of the deal, we would sell a portion of the site to Autodesk, which would build its own corporate headquarters.

Then housing lots would be sold off to residents to have their own homes built. Unlike a lot of housing tracts, where one builder comes in and builds all the houses, we’re proposing to sell off the sites to different builders or to owners who would select their own builders, to give a real neighborhood look. There is a variety of lot sizes on the flatland area, and a few lots on the hillsides that are much larger. It’s our intent to price the residential lots so they are affordable to entry level homebuyers in the $225,000 to $350,000 range.

Business Journal: Where does your financing come from?

David Martin: Most of our predevelopment activities are privately funded. Once we et the entitlements, we can to the banks that might provide us with construction loans, and then through insurance companies for long-term financing. Our largest long-term lender is Teachers Insurance and Annuity Association, the largest pension fund in the U.S. With assets of roughly $100 billion, it is the principal retirement source for college professors.

Business Journal: Why have you taken this community-based approach to development?

David Martin: I come from a different generation than do many of my peers. Some of the older generations in my profession believe that private property rights have a higher moral standard than the community’s involvement. I have grown up in an era when community sensitivity is really the building block to successful property development.

It is a different way of looking at the world. The real value of property is the entitlements. A piece of land is really only worth what you can build on it, and until you have the entitlement to do that building, it doesn’t have a whole lot of value. Once the entitlements are in place, the financing also becomes much easier. In a lot of situations, developers will buy land before they have any significant political entitlements; then their back are against the wall. We will not buy Hamilton until our entitlements are complete.

Business Journal: What makes you so successful where others fail?

David Martin: One of the greatest problems of most people in the real estate development business is that they don’t listen very well. No one can parachute into a community with all the right answers. If they try, that project usually falls apart or produces something community doesn’t like. Or, the opposition becomes crystallized.

Our success is due in large part to our ability to listen to what the community has to say. We tend to be second or third or fourth people through the door on a project, which is certainly the case with Hamilton, and when we come in, we come in with a blank sheet of paper and our ears open. We really try to accommodate the local community.

There’s no real way that I or anybody on my development team is ever going to know the community as well as the people who live there. So the critical past of our data base is having the local residents show us what the needs are. Then can go about satisfying those needs.

If for some reason we lose the support of the community, we’re out of there. Our whole reason for being involved with Hamilton in the first place is to be accommodating, to take the vision that the local community has for Hamilton and allow that to become a reality. If the vision for Hamilton becomes no vision at all, then we’ve got a lot of other opportunities, and we’ll go somewhere else.

Business Journal: You have been deeply involved with Bay Vision 2020.

David Martin: Yes, I spent about a year and a half of my life on Bay Vision 2020, and I believe its conclusions.

The thing that most people don’t appreciate about it is the divergence of interests that we had on that commission from Napa Valley farmers to business people, people from the Coastal Commission, educators, and environmental organizations. And we had incredible consensus among this diverse group.

Business Journal: How do you answer the critics of the regional government it espouses?

David Martin: The two biggest criticisms of Bay Vision 2020 are from people who believe that regional government will force development into their county, or the flip side – some criticism has come from some people in Solano County who believe that regional government will restrict wanted development from occurring in their county.

The real answer, from my perspective, is that today we already have regional government in the bay area. It’s just in the form of eight special purpose districts – the Regional Water Quality Control Board, Metropolitan Transportation Commission, ABAG, and so on – which is the biggest problem in our region.

All of these agencies have blinders on, pursuing their issues without talking to anyone else. The best example is the Air Quality Control Board and the MTC. How can you plan transit facilities without being sensitive to air quality?

Or take the Regional Water Quality Control Board and the Department of Health Services, which are both responsible for contamination issues. In essence, what they are doing is encouraging suburban sprawl, because you can go out and buy and develop farmland in east Contra Costa County that has no contamination issues much easier than you can buy and develop urban infill locations.

The initial goal of Bay Vision 2020 is to take all these agencies and put them together. Let’s cut administrative overhead and do joint planning.

Business Journal: Then you’re in support of state Senator Becky Morgan’s regional government bill, which basically grew out of the Bay Vision 2020 process. But isn’t that asking people to choose between two evils?

David Martin: Yes, very much so. But if our current system isn’t working, then we’ve go to do something to remedy it. I believe there ought to be an urban limit line and a greenbelt. At the same time we ought to set up plans that will allow growth inside that limit line so we can accommodate job growth and population growth.

If people would take a look at the bill, that would take away some of their fears, and more people would see that this is something we can all benefit from.

It’s always easier to stay with the status quo, which seems to be what people say the “silent majority” wants. One of the best quotes in this process was used by Angelo Siricusa president of the Bay Area Council. Someone asked him, isn’t the evil we know better than the evil we don’t know? And his response was to quote the great philosopher Mae West: “When choosing between two evils, I always take the one I haven’t tried yet.”