Category Archives: Economy

Economy

Is the High Desert at a Tipping Point in its Evolution?

Published by:

By Steve Pontell
La Jolla Institute

The tipping point is the critical point in an evolving situation that leads to a new and irreversible development.

Is the High Desert at a tipping point in its evolution?If so which way will it tip?

Macro-economic forces are hard at work throughout Southern California buffeted by the winds of government action and inaction. Each part of the region will have a part to play in shaping the future of the region as a whole. The real question for the High Desert is within the range of alternative futures that defines reality – Where do you want to be?

 

To answer this question you must first start with honest self assessment. San Bernardino County undertook this first step in the publishing of the Community Indicators Report for 2010. The whole report is available here: (http://www.sbcounty.gov/iUploads/CAO/Feature/Content/ComIndicatorsReport10Rev.pdf) with a part of it excerpted in this newsletter.

The following comments are my opinions based on the information in the report.

1. As the beneficiaries of some of the most beautiful land in all of San Bernardino County and the high quality of life that goes with it, how we steward our remaining land is of increasing importance. For years we have had the attitude that we have lots of land – land is cheap. The truth is 81.5% of San Bernardino County is owned by the Federal Government – most of it in the High Desert. A very small percentage of the total land is developable. We need to pay critical attention to maximizing the use of the land, preserving a way of life, and creating a future for our children and grand children.

2. People are your most valuable resource. Your economy can be no better than the skills and abilities of your people. Six out of the bottom eight school districts in the county are in the High Desert – this is not acceptable. The net effect over the long haul is limited economic development and limited opportunities for these children.

3. 20 years after the close of George AFB and millions of dollars spent, the region must ask itself if that most important of assets has been managed to the best of its potential. It and your connectivity to the rest of Southern California are critical factors in your economic opportunities.

4. Federal lands and the relationship with the Federal Government should be strategic and intentional. From the military to the forest federal decisions significantly affect the High Desert’s future.

Southern California will recover; some parts will do better than others. What part the High Desert plays in the regional economy will be determined by the quality of the place you are and the abilities of the people you are. Both of these are aspects of your future that you can affect.

At the tipping point? Which way will you go?

Economy General

Is This Why the Study of Economics is Called the ‘Dismal Science’?

Published by:

By Dr. Alfred J. Gobar
Chairman, Alfred Gobar Associates

The graph in Exhibit A compares the relative pattern of employment change in Southern California during the recession that began in 1990 with the trend (expressed in terms of indices) of employment for the recession that began in 2006/2007. The graph provides some good news and some bad news. The good news is that there was a significant uptick in the trend of employment in May, June, and July of 2010. The bad news is that the employment dislocation is significantly more severe this time that it was in the 1990’s recession, which implies that employment recovery and, therefore, improved housing market conditions are still a considerable time into the future.

 Exhibit A

Our analyses over the last 40 or 50 years shows a strong correlation between household formation and nonagricultural wage and salary employment based on data collected by monthly surveys of employers in all parts of the U.S. Another form of employment data correlates less closely with household formation but continues to be of interest because of changes in the pattern of employment as between establishment employment and “other” employment. “Other” employment includes self-employed, commission sales, etc. Data for the second category of employment are generated by household surveys in which respondents are asked to identify the number of employed persons in the household and the number of household residents who are unemployed but who would like to have a job. The household survey is the source of information regarding the overall unemployment level.

A large proportion of High Desert residents represent spillover demand from employment centers in the more urban parts of Southern California. For this reason, overall economic trends in Southern California are especially important to the High Desert’s real estate sector.

In the most recent twelve-month period which ended July 2010, employment in Southern California (Ventura, Los Angeles, Orange, San Bernardino, Riverside, and San Diego Counties) based on the establishment survey declined by approximately 43,700 jobs. This is significantly better than the comparable figure a year earlier. Between July 2008 and July 2009, Southern California’s nonagricultural wage and salary establishment-based employment decreased by 616,600 jobs.

Overall, between July 2006 and July 2010, nonagricultural wage and salary employment reported in the establishment survey decreased by 762,800 jobs. The largest decrease in absolute numbers was in Los Angeles County followed by the two-county Inland Empire and Orange County, in that order. In terms of percentage decline from July 2006, the most significant reductions in local employment opportunities were in the Inland Empire—13.98 percent. The second largest percentage decrease in employment was in Orange County at a little over 10.0 percent. There was a similar percentage decline in Ventura County. San Diego County, which entered the recession earlier than the rest of Southern California, experienced a relatively modest decrease in local employment as defined by the establishment survey—a reduction of 6.53 percent.

While the establishment-based survey data show an overall decrease between July 2006 and July 2010 of about 765,000 jobs, the comparable figure based on the household survey was a decrease of 588,400 jobs. Measured decrease in employment was more evident in percentage terms and in absolute numbers on the basis of the establishment survey of nonagricultural wage and salary employment than it was in terms of the household survey of the number of employed people. This suggests that many people employed in less formal types of economic activity as well as the self-employed and those people working “off the books” fared relatively better in this recession in percentage terms and in absolute numbers than did people employed in a more traditional type of business environment. In any case, these declines represent support for 400,000 to 500,000 households (housing consumers).

Acknowledging the ambiguity inherent in the household surveys, it is still interesting to note that during this four-year period ended July 2010, the number of people employed in venues other than the types of establishments surveyed by the Bureau of Labor Statistics actually increased by 174,400 jobs, while the number of people employed in more traditional employer/employee situations decreased by 762,800. Currently, the non-establishment (informal) types of employees represent a larger percentage of total employment than they have at any other time since we began this particular time series in January 1990. Obviously, many people who lose their jobs find other ways to generate income—as consultants, small time vendors, service providers, etc. The informal economy is growing concurrent with a decline in the formal economy. This creates a somewhat atypical economic environment. As noted above, correlations between employment and household formation are strongest for the definitions of employment based on formal establishment-type employment opportunities. Although the less formal types of employment are in many cases viable, securing home financing, etc., is probably more difficult for this type of employee than for the conventional employee of an established employer.

Historically, the housing sector has “led” the U.S. economy out of recession. This long-term historical relationship, however, may not be valid in the current situation. Because of the aggressive pro-homeownership, policies of the Bush Administration and strong proponents of homeownership such as Senator Dodd and Representative Barney Frank, in addition to the banking sector’s emphasis on low-income and minority homeownership, the homeownership ratio in the U.S. reached new highs just prior to the onset of the recession. Pent-up demand for homeownership that was a source of support for housing markets during previous recoveries may well be substantially smaller this time than has been typical of the economic cycles since World War II. This suggests that full-on recovery from the recession in terms of its impact on the High Desert’s real estate and housing market may be delayed somewhat more than would be expected on the basis of comparisons between this recession and the one that began in 1990.

As shown in Exhibit B, decrease in building permit activity during this recession has been substantially more dramatic than during the 1990 recession, especially in terms of its impact on the High Desert’s homebuilding sector. As shown in Exhibit B, building permit activity on the High Desert began to exhibit significant improvement in 2001 and 2002, roughly ten to twelve years after the onset of the 1990 recession, suggesting that if comparable relationships prevail this time around, strong recovery reflected in building permit activity may not be evident until after 2015. This is not a happy thought.

Exhibit B

On the other hand, throughout Southern California during the first seven months of 2010, more new units were authorized by permit than during the first seven months of 2009, suggesting that a total of perhaps 20,000 new units will be authorized overall in Southern California in 2010. Although this is an improvement over about 16,400 units authorized during 2009, it is well below the levels observed in 2004 and 2005 of over 100,000 units a year authorized throughout Southern California.

As shown in Exhibit C, residential building permits authorized on the High Desert for the first seven months of 2010 almost match the full-year figure for 2009, suggesting an overall total for the current year on the order of 500 units. Even though this represents a significant improvement from 2009, it is a far cry from the levels of residential building permit activity shown in Exhibit C for the Years 2004, 2005, and 2006. Exhibit D illustrates the relationship graphically.

Exhibit C

With the exception of significant industrial development activity authorized by permit in Victorville from 2007 through 2010, virtually no nonresidential activity is reflected in the nonresidential building permit data for the High Desert in recent years. As shown in Exhibit E, however, the very low levels of nonresidential development in the High Desert constitute a large proportion of the total nonresidential development activity authorized by permit countywide. Actual figures for nonresidential permit activity in the High Desert as compared with the county overall are shown in Exhibit F.

Exhibit E

Exhibit F

Through July 2010, employment decline in Southern California continued to be dramatic in construction and manufacturing. Construction employment decreased by nearly 9.0 percent over the twelve months ended July 2010, while manufacturing employment decreased by 2.71 percent over the same interval. Major employment increases over this twelve months are evident in information, educational and health services, and leisure and hospitality. Government employment decreased significantly over the twelve-month interval throughout the Southern California area. The largest decreases in government employment were in local government education and in city government. Federal government jobs continued to grow throughout the Southern California region over the twelve months ended July 2010.

The best opportunities in the High Desert’s real estate sector currently appear likely to involve strategic acquisition of existing properties expected to exhibit dramatic improvement when recovery finally gets here. Anecdotes occasionally give us hope…”it could happen.” Several parcels in Victorville with which the author is familiar that were acquired in 1997 at a price of ±$0.65 per square foot sold in 2005 at prices of ±$4.50 per square foot—a nice return for a patient investor—or at least a lucky one.

Economy General

Are We There Yet?

Published by:

By Dr. Alfred J. Gobar
Chairman, Alfred Gobar Associates

The answer to the question in the title is contingent to some degree on what we mean by “there.” There continues to be some ambiguity regarding the possibility of a double-dip recession, with pessimism increasing during the month of February when this material was prepared. Exhibit 1 compares the current recession with the one that occurred in Southern California between 1990 and 1993 in percentage terms. In many respects based on nonagricultural wage and salary employment, this recession has been a little less severe than the one we had about 20 years ago. In other respects, however, it has been much worse. This recession has had a greater impact on housing construction that the one in the 1990s, suggesting than its impact on the High Desert’s economy will be relatively more severe also.
The High Desert’s economy has for the 100 years in which the Gobar Family has been involved in this area been stimulated by exogenous inflows of capital to exploit our resource base. Stimuli evident previously include booms associated with agriculture (the element that brought our family to the High Desert), mining (precious metals, cement, granite, etc.), film production, military bases, recreation, and real estate development. Some real estate development episodes were induced, taking the form of high-velocity land sales programs such as those at Apple Valley Ranchos and M. Penn Phillips’ development of Hesperia. Gradually, the High Desert’s economy is building a local economic base. This base, however, is still not large enough to support strong growth between episodes of economic stimulus.
Our more recent booms have been predicated on real estate development responding to high land prices and shortages of affordable housing in the more urban parts of Southern California resulting in residential development booms on the High Desert when Southern California’s economy was expanding, rapidly-increasing home prices which excluded first-time homebuyers and other moderate-income families from housing opportunities close to major centers of employment. As the High Desert’s population and economy expands, it creates a market for ongoing economic activity in terms

The answer to the question in the title is contingent to some degree on what we mean by “there.” There continues to be some ambiguity regarding the possibility of a double-dip recession, with pessimism increasing during the month of February when this material was prepared. Exhibit 1 compares the current recession with the one that occurred in Southern California between 1990 and 1993 in percentage terms. In many respects based on nonagricultural wage and salary employment, this recession has been a little less severe than the one we had about 20 years ago. In other respects, however, it has been much worse. This recession has had a greater impact on housing construction that the one in the 1990s, suggesting than its impact on the High Desert’s economy will be relatively more severe also.The High Desert’s economy has for the 100 years in which the Gobar Family has been involved in this area been stimulated by exogenous inflows of capital to exploit our resource base. Stimuli evident previously include booms associated with agriculture (the element that brought our family to the High Desert), mining (precious metals, cement, granite, etc.), film production, military bases, recreation, and real estate development. Some real estate development episodes were induced, taking the form of high-velocity land sales programs such as those at Apple Valley Ranchos and M. Penn Phillips’ development of Hesperia. Gradually, the High Desert’s economy is building a local economic base. This base, however, is still not large enough to support strong growth between episodes of economic stimulus.Our more recent booms have been predicated on real estate development responding to high land prices and shortages of affordable housing in the more urban parts of Southern California resulting in residential development booms on the High Desert when Southern California’s economy was expanding, rapidly-increasing home prices which excluded first-time homebuyers and other moderate-income families from housing opportunities close to major centers of employment.As the High Desert’s population and economy expands, it creates a market for ongoing economic activity in terms of retail commercial enterprises, a wide range of services (medical, etc.), some locally-serving industrial uses, and an increasing proportion of economic activity that exploits the local labor force to provide goods and services to markets located beyond the boundaries of the High Desert. Nonetheless, significant economic growth on the High Desert over the last 40 years has been related to periodic acceleration in new housing development in response to tight housing markets elsewhere in Southern California.

When Southern California’s economy recedes as it did in 1990 and as it is currently doing, construction activity on the High Desert contracts. As illustrated in Exhibit 2, the contraction in building permit activity on the High Desert is more than proportionate to the contraction of this activity throughout Southern California.

For example, in 2009, 389 new units were authorized by permit in the High Desert area. In 2005, the comparable figure was 8,295 units. Reduction in permit activity for housing construction in the High Desert between 2005 and 2009 was 95.3 percent.

Overall, residential development activity in Southern California declined by 80.0 percent between 2005 and 2009, and by 87.0 percent in the two-County Inland Empire in which the High Desert is located.

Employment has a significant impact on demand for housing. Extensive economic analysis has shown the long-term relationship between the number of U.S. households and the level of nonagricultural wage and salary employment over a 40- to 50-year interval with an R2 coefficient of 0.9864; i.e., nonagricultural wage and salary employment explains all but less than 1.5 percent of the number of households in the U.S. overall over a long time period. The same employment-to-household formation correlations are evident on the basis of similar comparisons for smaller areas. A study of 140 Metropolitan Statistical Areas throughout the United States over a 30- to 50-year period shows that nonagricultural wage and salary employment has a high correlation with household count, even allowing for differences in age profile, etc., as between various Metropolitan Statistical Areas and even allowing for the distortion associated with commute patterns, such as occupancy in the Inland Empire supported by jobs located in Orange County, etc. These relationships are described in detail in Real Estate Analysis in an Economic Matrix, Pages III-4 through III-9.

A comparison between wage and salary employment change from 1990 to 1993, with similar figures related to the recession in which we currently find ourselves, shows the decrease in nonagricultural wage and salary employment in the current recession over a three-year period was 7.07 percent while the comparable figure from the 1990 recession was a decline of 6.94 percent; i.e., quite similar. Significantly, however, the decrease in total employment in the most current recession over the appropriate interval was 8.05 percent, while 20 years ago the comparable decline was 6.40 percent. The sharp decline in employment in categories represented by self employment, off-books employment, etc., in this recession reflects the substantial impact on construction activity associated with the current recession and, therefore, the special impact on the High Desert’s economy from the recession in which we find ourselves.

Return of a buoyant residential market on the High Desert is, therefore, expected to be contingent on growth in construction employment. The other category of job loss that has been particularly evident in the current recession is manufacturing employment. Declining manufacturing employment, however, is more of a secular trend than an immediate response to recession.

One of the non-goods-producing categories of employment that has accounted for a significant proportion of job loss in this recession is retail sales. Retail sales employment has been undergoing a substantial structural change as high-volume retailers such as Best Buy, Costco, Home Depot, etc., account for a larger proportion of total sales. Since these types of retailers have high sales volume per employee, the total number of employees required to facilitate a given level of sales volume is less than would otherwise be the case. It could be argued, therefore, that recovery from the current recession as it affects the High Desert especially in light of the High Desert’s sensitivity to residential construction may be less vibrant than it was after the 1990 recession. As shown in Exhibit 2, however, construction activity on the High Desert measured in terms of single-family unit building permit activity hit bottom in 1997 and began a significant recovery about four years later in 2001, with steep acceleration thereafter.

If it is assumed that the bottom of the current recession in single-family housing construction on the High Desert is likely to be 2009, we could begin to anticipate significant improvement in activity levels in single-family new home construction in about 2013. Allowing for the likelihood that the recovery from this recession is likely to be less vibrant than it was from the 1990 recession, significantly more exciting real estate opportunities may be further into the future than 2013. The trends in Exhibit 2 support an argument that significant recovery in development might lag to 2015. In either case, probably the most appropriate strategy for long-term High Desert investors is to acquire developable residential properties, and if properties are not entitled, secure entitlement to facilitate their availability when demand circumstances recover. Access to utilities, highways, amenities, etc., is an important element in selecting raw residential land as a potential speculative investment.

Certain elements of the High Desert’s economy, however, still seem to be showing significant activity. For example, industrial development in the City of Victorville in 2009 constituted virtually all industrial development that occurred in San Bernardino County during that interval. Victorville also shows a boom in industrial activity in 2004, representing approximately 16.0 percent of all industrial development activity in San Bernardino County. Another interesting element in the statistics for 2009 is the increase in average permit value per unit for the new units authorized for construction as compared with the comparable figure from earlier years, suggesting that the limited amount of new development currently underway probably consists of a substantial proportion of custom-built homes, representing a specialized market that could create opportunities for development of high-amenity locations.

Another interesting observation is that the economic structure of the Inland Empire currently is significantly different than it was during the 1990’s recession. A smaller proportion of employed High Desert residents commute to work at locations outside of the two-county Inland Empire, suggesting that overall average commute distance for homebuyers on the High Desert may well be decreasing. If indeed this is the case, the High Desert’s residential real estate market will respond more quickly to general economic recovery in Southern California than has been the case previously.

The High Desert’s economy continues to expand towards a critical mass element in which it supports many of the activities which previously required a larger market, causing High Desert residents to go outside the local community for purchases of critical goods and services. As the local economy gets larger, it supports a broader range of locally-serving industries, making the economic multiplier impact of new exogenous inputs of investment for new housing construction, employment, etc., more efficient in terms of generating broad-based local employment and population.

In a previous Newsletter, it was noted that during times of economic distress, market values of real estate investments fall below their intrinsic value, providing an opportunity for “bottom fishers” to establish potential for significant profit realization in the future. This type of contrarian approach, however, requires a good deal of patience and probably even more courage.

A characteristic of High Desert residents of my acquaintance has always been a high degree of courage and probably an enforced acceptance of patience.

My father, who spent fifty years speculating in High Desert land, believed that my Ph.D. in economics was not as valid a source of real estate investment strategy as the Bible. His philosophy was based on “seven years of lean and seven years of fat” and the capacity to know which seven-year interval we were in at any given time. We are now in the lean interval.

Economy

Southern California Logistics Airport Leads The Way In Job Creation

Published by:

By Brad Mitzelfelt
San Bernardino County Supervisor 1st District

After struggling along with the rest of the region with job losses and home foreclosures, the High Desert is beginning to see signs of economic life. In fact, the High Desert is one of the few areas around Southern California where recession-weary residents can actually look forward to a short-term increase in local employment.

Southern California Logistics Airport is leading the way on the job creation front, boosted by the development of a new Dr Pepper Snapple Group facility and a Plastipak Packaging Inc. plant. As winter turns to spring, High Desert residents can expect to see both facilities begin to reach their full economic potential.

Growth at the airport, which local residents have watched evolve since the closure of the old George Air Force Base, will create more than 1,000 jobs in the area. The additional jobs are especially welcome since the airport already was doing its part to fuel the High Desert economy by attracting companies like Newell Rubbermaid, General Electric, Pratt & Whitney, and FedEx.

The region’s overall economy is, of course, not out of the woods yet. Despite efforts at the local, state, and federal levels to rejuvenate our collective economic engine, the economy remains far from what we have enjoyed in the High Desert in past years. Many local residents who have been laid off in the past year are struggling to find new employment, while others are commuting further for their jobs. Some residents, including some who are unemployed and others who were victims of predatory lending practices, are struggling to maintain ownership of their homes.

Given that backdrop of sobering economic realities, it is no wonder that experts agree that getting back to the boom years will take more time than we would like. While the prospect of new jobs in the near term is encouraging, the area still has a ways to go to fight its way out of the current economic downturn. To further that fight, San Bernardino County remains committed to assisting local businesses in any way we can.

But it is equally important, if not more so, to take note when encouraging economic signs begin to show themselves. For example, many local analysts tell us that job losses are beginning to slow.

The fact that we are losing jobs slower than before would hardly have been a welcome sight a couple of years ago, when the High Desert was the envy of Southern California for its rapid job growth, explosion in taxable sales, and booming neighborhoods. But we know from past recessions – and subsequent economic recoveries – that a slowing of job losses often is a sign that an area is getting poised for a rebound.

The most important thing about the job growth that is occurring at Southern California Logistics Airport is that it re-affirms some of the things about the High Desert that made this area attractive in the first place to investors and business developers. In short, companies are coming here for the same reasons that drew them during stronger economic times. As a result, the High Desert is expected to add more than 300,000 residents by 2025, which will boost wages, taxable sales, and local employment.

The county, through a program approved by the Board of Supervisors, is trying to assist with the High Desert’s economic revival by helping businesses gain access to low-interest bond funds. Businesses and public agencies that want to expand or renovate their facilities can participate in a $115 million financing program that is part of the new Recovery Zone program that spans across San Bernardino County. The effort includes $46 million in economic development bonds and $69 million in private facility bonds.

The High Desert’s burst of job creation is especially important given that, in these economic times, companies can choose to make deals virtually anywhere in the Inland Empire. Local experts estimate that there are more than 58 million square feet of available space in San Bernardino and Riverside counties, making it truly a buyer’s – or renter’s – market.

So, given the glut of available space and decreasing costs in areas that are usually cost-prohibitive, why is the High Desert attracting companies like the ones that are taking root at Southern California Logistics Airport? The simple answer, which should give pause to anyone who is tempted to write off the High Desert, is that everything that was attractive about this area during the boom years is still attractive now, perhaps even more so, given the size of the economic wave that crashed onto Southern California and the rest of the nation last year.

The High Desert, more so than any area of the Southern California and even among its neighbors in the Inland Empire, offers business people an unbeatable combination of affordable land costs, an available supply of eager workers, and a network of county agencies, cities and towns that are eager to work with businesses that might be struggling through prohibitive amounts of red tape at other, less business-friendly, areas. Those things, taken collectively, give the High Desert an advantage when job developers are looking for ways to manage costs.

Paid Advertisement
That combination already is showing results. The 850,000-square-foot Dr. Pepper Snapple facility, spread across 53 acres, is expected to produce 40 million cases of beverages each year. About 200 people will work at the facility, which is the company’s headquarters for production and distribution in the Western United States. Plastipak, a Michigan-based firm, chose the airport grounds for its 231,185-square-foot facility, which will manufacture plastic packaging containers for some of the largest companies in the world.
The arrival of these two businesses, and the accompanying jobs, is a harbinger of good things to come and a validation of the High Desert’s business strategy, which calls for growing the local economy through the development of core industries like logistics, renewable energy, and aviation. Such a strategy holds great promise for future economic growth and job creation, and already is showing results on the aviation front.

For example, at the Southern California Logistics Airport School of Aviation Technology, which also is housed at the airport, more than 50 High Desert residents are completing 82 weeks of training to become aircraft mechanics. These students, who are scheduled to graduate at the end of the 2010, represent the potential for the airport as a job developer. The school already has scheduled another class to begin this spring after more than 150 people expressed interest in 30 openings.

Graduating students, many of whom want to stay local, will be certified by the Federal Aviation Administration to maintain, repair, and overhaul airplanes. They are learning skills that can be put to use at any airport in the world, meaning these 50+ students will have a skill set that is marketable worldwide. Yet, most report to their instructors that they want to make their post-school homes in the High Desert because of the opportunity they see for growth here. More than a dozen of the students already are working part-time at the airport, beginning their careers at the former Air Force.

Business development is an important part of the High Desert’s future, but infrastructure remains a key issue. Without the roads, streets, and freeways needed to move goods to market and commuters to jobs, the area will not reach its potential. The development of this transportation network also is a key to providing local construction jobs in the High Desert.

Recent decisions by San Bernardino Associated Governments (SANBAG) are bringing $15 million in funding to the La Mesa/Nisqualli interchange on Interstate 15 in Victorville and the Yucca Loma bridge in Apple Valley. Each project received $7.5 million in funding, which helps with providing another east-west route for the Victor Valley that is needed to ease traffic congestion and spur economic development.

The county also is moving forward with plans to pave stretches of Wilson Ranch Road and Duncan Road in the Phelan area, which will help with local mobility and provide better access for emergency services. The improvements include grading and paving two dirt roads and installing traffic signs and striping.

The Duncan Road portion of the project is between Johnson Road and Wilson Ranch Road, a distance of approximately two miles. The Wilson Ranch Road portion is from Duncan Road south to Goss Road, a distance of one mile. Contracts for the $2.8 million worth of work are scheduled to be awarded in late April, with construction to start shortly thereafter. Completion is expected in late July.

Economic vitality also goes hand in hand with healthy communities and a high quality of life. That means complementing our affordable housing stock with parks and recreation opportunities for young families.

The county recently approved a $300,000 contract with the Phelan Piñon Hills Community Services District to expand the Piñon Hills Park with more playgrounds, basketball courts, and drainage improvements – and to also begin designing a new 80-acre community park in Phelan. The first phase of the new park includes a 20-acre planned equestrian center, including a covered arena, horse stalls and corrals, children’s playgrounds, and parking.

In conclusion the High Desert has much to be proud of. Its core strengths — affordable commercial and industrial land, reasonably-priced housing and an available and eager workforce — will help the region return to prominence as a job developer and as a premier economic engine in Southern California. County government is dedicated to working with private businesses to ensure economic prosperity returns to the High Desert and all of San Bernardino County. It will take time, but we can all be comforted by the fact that many of the assets that got us this far remain in demand and still hold the promise of an even brighter economic future.

Economy

The Real Job Creators of California

Published by:

By Steve Knight
Assemblyman, 36th District

Over the last year, since being elected an Assemblyman, I’ve strived to meet my commitment to regularly reach-out to constituents – to be accessible to citizens throughout the High Desert. Through one-on-one meetings, community events, town halls and many other activities, the people I meet and the stories I hear of perseverance through the adversity in our economic downturn are uplifting and at the same time disheartening. By far, the loudest message I hear from citizens and business owners alike is that the state’s economy and jobs are priority one.
I’m confident that California’s resilient business men and women are ready and willing to create the jobs we desperately need to boost our state’s economy. They just want one thing from the rest of us to get the ball rolling: for California government to get out of the way and let employers do what only they can do – be competitive, make a profit, expand and hire people.
Regrettably, California has a longstanding practice of smothering businesses with excessive rules and regulations and unreasonable taxes and fees. Our government has created this hostile business environment that discourages employers, large and small, from moving to or investing in our state because the risk of failure is significantly higher than other states.
Businesspeople know what it takes to succeed; their livelihood depends on it. Unlike many bureaucrats and some legislators, who believe that government knows best, never makes mistakes, and can create a thriving economy and more jobs by throwing around stacks of taxpayer dollars.
At one of my town halls, an audience member summed it up well when he said: “The bureaucracy is expanding to serve the expanding needs of the expanding bureaucracy.” The killing of California’s businesses and jobs didn’t start with the current recession. The process has been going on in our state for decades, one little law, rule, tax, fee, and regulation at a time. Taken individually, they may have seemed harmless at the time, but the cumulative effect leaves California with a dwindling pool of employers, few incentives to attract new businesses, and unemployment rates running over 20 percent in some parts of the state.
While nobody in the Legislature wants to take responsibility for killing jobs in California, citizens can see for themselves who voted for and against the job-killer bills. The pro-business California Chamber of Commerce maintains the voting records of all state legislators on bills identified as “Job Killers” and “Job Builders.” Go to www.calchamber.com to separate the political promises from the hard reality.
Jobs come from prosperity invested in private companies which produce goods and services to be sold around the world to finance further business growth and new jobs; That age-old process of commerce works without any help from the government. But the dependable private enterprise engines of economic prosperity can be shut down by unwise and unrealistic government policies.
Many businesses today are not hiring because owners and managers have no confidence in the job-killing, anti-business economic policies and practices at all levels of government. Bluntly, there is no incentive for a company to put its money at risk without a reasonable expectation of financial growth from the investment of time and money. Risk is a fact of life for business even in the best of times. But risk in a recession is logically far more difficult to take.
If we truly want to rebuild our economy and help the private sector provide wealth-producing jobs for our families, friends, and neighbors, then we must insist that our elected representatives work on unleashing the spirit of free enterprise that made California green and golden. And we must all work to reduce spending by eliminating unnecessary and duplicative programs, services, and regulations, and by making the remaining programs efficient and cost-effective.
Cutting government spending opens the door to put more money back into the pockets of taxpayers, thereby giving Californians a real chance to stimulate the economy and create new jobs on their own. My confidence lies in the private-sector to create jobs that will better our State, not the lie that the State creates jobs.
Assemblyman Steve Knight, (R-Antelope Valley), represents the 36th Assembly District in the California Legislature, which includes many communities throughout the Antelope and Victor Valleys.