Doug Dixon had little reason to be happy when he arrived at City Hall for the evening meeting.

The shipyard that he manages needs hundreds of thousands of dollars in stormwater management and other upgrades. To pay for them, he mortgaged an employee parking lot the shipyard owns nearby. Banks had valued that land at $2.1 million. But if the City Council rezones industrial areas as Mayor Greg Nickels wishes, Dixon says the lot would be worth half that.

The banks would pull their financing, he says. And the shipyard just east of the Ballard locks, with its 70 union employees and its $3 million in taxable inventory, would go belly up.

Dixon sat in the first row, closest to the glass doors of the Bertha Knight Landes room, a question at the ready for the five panelists: What are you boosters of industry going to do when we close? He asked his question. Then he stormed out.

The legislation “puts a 117-year-old shipyard out of business,” said Dixon, reached later by phone. The City Council “isn’t thinking this through. And it’s all in the name of punishing some guy named Henry Liebman.” Liebman is head of a real estate investment group that’s bought most of the private property in the south downtown industrial area, hoping it would one day play host to high-end shops, condos, and offices. He, Dixon, and a host of developers, landowners, and union officials convened for a public discussion of the future of Seattle’s industrial areas on Thurs., Sept. 20 at City Hall.

The focus of the meeting, and of Dixon’s ire, was Mayor Nickels’ proposal for rezoning land in or near the city’s designated “Manufacturing and Industial Centers” in SODO and from Ballard south through Interbay — two sites of the city’s largest and highest-paying source of jobs.

Nickels wants to stop the incursion of retail and office buildings in search of cheap land into the MICs — a trend that’s abetted, public officials agree, by vaguely worded land-use code. He also wants to dissuade the sort of speculation Liebman is riding, first by clarifying the non-industrial uses prohibited on industrial land, then by letting landowners make money out of thin air by selling their right to build in the air space above their roofs. To further discourage non-industrial development, Nickels’ legislation would limit construction in these zones to less than half the size of the lot they’re on.

At the meeting, the areas’ private landowners expressed their fear that these restrictions would be both ineffective and costly.

“Overly optimistic zoning will not bring heavy industry back to Seattle,” said Brook Stabbert from the audience, which included six members of the City Council. His brother Dan, partner in a waterfront office development near Fishermans’ Terminal, said that financing one’s operations often means mixing up the blue-collar industry with some office or retail space. “Bankers want to see the highest valuation” of the property, he says.

Panelist and SODO textile manufacturer Bill Oseran doubted the zoning changes could bring land prices back within range of what businesses consider affordable.

“Industry moves where land and labor is cheap,” he said. “Industrial land ends at $20 a square foot.” The price of land in SODO, he pointed out, has recently soared as high as $160 a square foot.

That kind of money hasn’t made every local business flee, said panelist and Macmillan-Piper vice president John Odlund. Odlund spoke glowingly of the Duwamish industrial area’s machine shops, suppliers, docks, and rails all sited in a 1.5 square mile section south of downtown. Macmillan-Piper’s drivers haul loads from port to railway without leaving the neighborhood; they unload and return to the dock on non-highway streets.

“Imagine how many trucks we’d need if we were based in the Kent Valley,” he said. “You think freeway congestion is bad now?” -John Odlund, Macmillia-Piper vice president.

Speakers sparred over the economic value of industrial activity in jobs and taxes, disagreeing, for example, over how many good paying jobs warehousing actually provided compared to the Home Depot just off First Avenue South.

Retail giants like Home Depot, Costco, and Fred Meyer intermixing with industry, said King County Labor Council executive secretary David Freiboth, “drives the question down the road about whether there should be a rezone.”

Councilmember Peter Steinbrueck will convene a discussion of the legislation in his land-use committee Oct. 5; he has scheduled another public hearing Oct. 22. The land-use committee may vote on the legislation as early as Nov. 28.