Newport-Beach Conexant Systems Inc. said it is considering expanding in other Orange County cities and might move its headquarters elsewhere in the wake of last week’s passage of the slow-growth Measure S in the city. IIf we cannot expand in Newport Beach, we’ll look at other places,” said Lisa Briggs, a Conexant spokeswoman. “There are a lot of alternatives where we could put our headquarters. There are different scenarios that could play out.” And Conexant may not have to look far. Irvine mayor-elect Larry Agran, not known as a friend of developers, said he thinks it’s possible that Conexant could expand into his city. Conexant had been planning to expand its Newport Beach headquarters by adding 566,000 square feet of space and 2,500 employees. But Measure S, which Newport Beach voters approved by a 63%-to-37% margin last week, mandates a city wide vote on whether Conexant could expand in the city. Conexant,or any other company for that matter,is unlikely to accept the expense, delay and uncertainty of putting an expansion before voters. Many executives believe that Newport Beach’s passage of Measure S, also known as the Greenlight Inititave, will be a red light for future development in the city. “It will have a negative impact on investments in Newport Beach,” said Tim Strader Sr., owner of an Irvine-based development firm, Starpointe Ventures.
The measure was a reaction to growing traffic in the city. Executives said that while they understand residents’ frustration over congestion, the measure’s biggest problem is that any significant development will be put to a city vote.
The initiative will mean frequent special elections,or that projects must wait for the regular elections held every two years. “It’s hard for someone in a real estate program to wait two years,” Strader said. Newport Beach’s most prominent developer, The Irvine Company, strongly opposed Measure S while supporting a rival Measure T, which failed 35% to 65%.
Even before the election, the Irvine Co. announced it wouldn’t build any more high rises in Newport Beach. Afterward, the company reaffirmed that position and said it won’t build any more in the city except for the square footage the city already has approved. The company said that Measure S has created a confusing business climate in Newport Beach. “It is now crucial for (Measure S) proponents, working with the City Council, to promptly clarify for all the residents and businesses in Newport Beach the confusing ambiguities of the measure, and to clearly explain exactly how it will be implemented,” said Gary Hunt, executive vice president of the Irvine Co. Conexant, one of the city’s largest employers with 3,000 current OC employees, has a variety of options, including leaving Newport Beach entirely, but that would appear to be a remote possibility.
“We’ve been here for 30 years. It’s not something that we want,” spokeswoman Briggs said. Rather, some of Conexant’s options include expanding its offices to Irvine. The company already has about 80 employees working in an Irvine office a few blocks from its 438,127-square-foot headquarters complex near the corner of MacArthur Boulevard and Jamboree Road. Briggs noted that Conexant generates $2.5 million in sales and property taxes for the city of Newport Beach, the city’s second-largest tax-revenue source behind Fashion Island. Whether Irvine benefits from its neighbor’s passage of the Greenlight Initiative could depend on Agran, who was mayor in the 1980s and is well known for his liberal politics. When Agran was Irvine mayor in the late 1980s, he was instrumental in formulating the city’s general plan.
Besides winning the mayor’s race unopposed, Agran also gained two allies on the City Council, meaning his bloc controls the city government. Agran said that if Conexant wanted to expand into Irvine, he would have to study the effect of any plan on traffic. But, he said, “I believe if we adhere to our general plan and the various growth-control measures that are already available, that we can accommodate the traffic impacts and retain the residential character of community life.”
He added that he doesn’t foresee a measure similar to the Greenlight Initiative in Irvine. Strader’s Starpointe Ventures is planning the $55 million, 250,000-square-foot Campus Centre business park in Irvine at the coveted corner of Jamboree Road and Campus Drive, a stone’s throw from Conexant and about a mile from the Newport Beach business district near John Wayne Airport. Strader said the Greenlight Initiative could very well cause businesses to move the few blocks from Newport Beach to sites like Campus Centre in Irvine. “Anything is possible,” he chuckled. “The city of Irvine does not have a similar initiative, so that will be very positive for people.”
Conexant’s problem is perhaps the most dramatic local outcome of last week’s election. Anti-growth measures failed in Brea, 49% to 51%, and San Clemente, 47% to 53%. The San Clemente initiative sought to stop the city from issuing all building permits until the completion of a $40 million road to ease congestion in the area. “We’re just thankful it didn’t pass, because we’d be spending money on attorneys,” said Ken Nishikawa, a VP at Laing Forster, which is developing more than 1,000 homes in San Clemente. “From our way of thinking, we had our development agreements that protect you from this sort of thing.” n
