Economy Politics

No More Redevelopment…What’s Next?

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By Larry Kosmont, President & CEO of Kosmont Companies

Successor Agencies have assumed control and will be responsible for the winding down of the activities and assets of former Redevelopment Agencies under the supervision of Oversight Boards, which are currently being assembled. Following audits by Counties and the State of previous redevelopment transactions and ongoing Successor Agency obligations, properties of the former Redevelopment Agencies will begin to come onto the market. Cities are now handicapped with respect to future economic development without the capacity for tax increment financing. New and relatively untried tools such as infrastructure financing districts and community-based economic development authorities will be explored and implemented as a replacement for redevelopment, while existing tools, such as lease/lease-back financing and sales tax reimbursement agreements will concurrently be revisited. Several redevelopment legislation clean-up measures are underway to provide guidance and options to cities in California, but filling the void left by redevelopment will still be a formidable task.

Where We Are

Redevelopment is dead, and effective February 1, 2012 the dissolution process has begun. Though it is procedurally untried, the unwinding process is vaguely similar to certain aspects of private sector liquidation in that, by and large, the new decision makers (Oversight Boards) will act much like creditor committees, seeking to liquidate assets in order to share in the sale proceeds in addition to getting public agency-owned properties back on the tax rolls.Due to the unique and untested requirements and processes in AB1X 26, Successor Agencies (the cities that formerly had redevelopment properties) and private sector entities that took part in the program or may want to buy those properties are focused on several key questions going forward, regarding such issues as the next steps in redevelopment dissolution, the availability of properties going forward, the feasibility of redevelopment without tax-increment financing, replacement economic development tools, and potential redevelopment legislation clean-up.

What’s Next?

  • Successor Agencies have already made the decision to remain in control of the redevelopment dissolution program. Almost every city in the state elected to become a Successor Agency to its redevelopment agency, enabling them to finish ongoing projects and dispose of assets with the express review and approval of Oversight Boards.
  • Seven-member Oversight Boards will be formed over the next two months (deadline is May 1, 2012), to oversee the winding down of redevelopment assets and activities. For the most part, careful attention and emphasis is being put into the selection of board members, as these are the individuals who will decide what happens to former agency assets (though decisions can be appealed to the State Department of Finance and/or State Controller’s Office). Oversight Board members are appointed by county board of supervisors (two), the city mayor (one), the largest special district by property tax share within the jurisdiction of the former agency (one), county superintendent of education (one), Chancellor of the California Community Colleges (one), and one member representing employees of the former agency.
  • Successor Agencies have adopted their Enforceable Obligation Payment Schedules (“EOPS”) in January 2012. Audits and reviews of former agency transactions are now underway by the Department of Finance and the county auditor-controllers to scrutinize the EOPS and Recognized Obligation Payment Schedules (“ROPS”) and importantly, to set up the liquidation of former agency assets, including notes and properties.

Will Properties Become Available? If So, When?

Properties will become available. Timing is unclear. The Successor Agency EOPS must be ratified by the county auditor-controller, State Controller’s Office, and Department of Finance. The primary assets referenced on EOPS require ongoing payments (e.g. bond payments). Concurrently, real estate assets are being placed on lists by Successor Agencies to be disposed of “expeditiously and in a manner aimed at maximizing value” subject to the direction of the Oversight Boards as outlined in AB1X 26. Successor Agencies are currently evaluating preferred methods of disposition, initiating assessments of value, and formulating strategies to be recommended to Oversight Boards, once they are formed (by May 1, 2012).

Can Cities Accomplish Economic Development Without Tax Increment Financing (“TIF”)?

Terminating redevelopment essentially eliminated TIF in California. As a result cities have lost their primary leverageble revenue source for economic development projects. California is now one of only two states in the nation without some form of this valuable financing instrument. TIF enables public agencies cities to freeze property and other tax revenues, such that additional increment can become available to match or enhance private sector equity/debt investment. Without this tool, California cities are limited in ways to assist public-private projects and pay for infrastructure.

New & Untried Economic Development Tools

In the next year, there will be a prevalent debate about which tools should be authorized as a replacement for redevelopment. Most alternatives will involve the reintroduction of tax- increment at some level:

  • Infrastructure Financing Districts (“IFD”), which divert property tax revenues for public infrastructure improvement projects (highways, transit, water, sewer, parks, etc.). The current IFD statute requires approval by all effected taxing authorities and a vote by all constituent parties. As such, the process is too cumbersome and not workable.
  • Community-Based Economic Development Authorities – some charter cities have had such authorities in place, such as the City of Placentia (a Kosmont client), where the Industrial Commercial Development Authority was established in 1982. The City of Alhambra is a charter city that is leading the way by adopting an economic development ordinance that empowers the City to acquire or lease property, provide for site preparation work, accept financial assistance from public and private sources, provide financial assistance to projects, issue debt, and other essential economic development activities. Other charter and general law cities in California must decide whether to pursue similar actions. Ideally incorporated into any such model would be broadened surplus property disposition, ability of general law cities to create TIF-based reimbursement agreements, and capacity for cities to sell property below market to encourage private investment and job creation.

Existing Economic Development Tools Are Being Revisited (partial list):

  • Lease / Lease-Back Financing
    • With and without General Fund guarantees
    • Site specific tax revenue pledges for hotels and retail
    • Ground Leases
    • Sales Tax Reimbursement Agreements
    • Operating Covenants (e.g. for Retailers and Auto Dealers)

Clean-Up Legislation in Process (As of March 2012)

  • SB 654 (Steinberg) – Various Redevelopment Clean-Up
    • Currently at Assembly Desk
    • Would allow for L/M Income Housing Fund to transfer to Successor Housing Agency
    • Would allow certain City/Agency loans as Enforceable Obligations
  • AB 1585 (Perez) – Various Redevelopment Clean-up
    • Currently with Senate Rules Committee
    • Some overlap with SB 654 re: Housing Fund Balance and City/Agency loans
    • Additionally addresses employee project and termination and other admin costs
    • Requires Oversight Board to direct Successor Agency to prepare inventory of assets and fair market values and adopt asset disposal/transfer strategies
  • SB 986 (Dutton) – Bond Proceeds
    • With Senate Committee on Governance & Finance
    • Provides that all bond proceeds generated by former Agency are encumbered and not remittable to County Auditor-Controller
    • Requires that proceeds are used by the Successor Agency for the purposes for which the bonds were sold
    • Obligates Oversight Board cooperation with respect to establishment of enforceable obligations related to bond proceeds
  • SB 1220 (DeSaulnier, Steinberg, Assembly Member Atkins)– Housing Opportunity Trust Fund Act of 2012
    • With Senate Committee on Transportation & Housing
    • Imposes $75 on recordation of real estate documentation to support affordable housing development
  • SB 1151 (Steinberg) – Long Range Asset Management Plan
    • With Senate Committee on Governance & Finance (hearing scheduled for April 18, 2012)
    • Requires Successor Agency to prepare long range asset management plan outlining a strategy for ongoing economic development and housing functions
    • Plan would require Oversight Board & DOF approval
  • SB 1156 (Steinberg) – Community Development and Housing Joint Powers Authority
    • With Senate Committee on Transportation & Housing(hearing scheduled for April 10, 2012)
    • Authorizes Cities/Counties to form “Community Development and Housing Joint Powers Authorities” to assume from Successor Agencies the responsibility for managing the assets and property of the former redevelopment agency
    • Authorizes these entities to exercise specified powers included in the RDA law and to exercise certain other powers relating to financing its activities such as establish additional sales tax

Economic Development – A New Wave is Coming

As the burden of redevelopment dissolution and the roles and responsibilities of the various successor entities become clear, it is also becoming evident that there is significant room for differentiation in how cities cope and position themselves for future economic development efforts. Cities should be assertive in their pursuit of asset strategies, starting with full consideration of an upgraded and updated economic development strategy. Now, more than ever, local governments will need to be creative in their exploration and implementation of economic incentives and public financing tools for economic development projects. While redevelopment was the most widely used revenue-financing tool, it was in fact just one tool in the toolbox at the disposal of California cities.

More to come, so stay tuned!

Transportation

SANBAG/ San Bernardino Associated Governments High Desert Transportation Update

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By Jane Dreher, Public Officer

San Bernardino Associated Governments (SANBAG) is the Council of Governments and transportation agency for San Bernardino County. SANBAG is responsible for cooperative regional planning and furthering an efficient multi-modal transportation system countywide. SANBAG serves the 2.1 million residents of San Bernardino County.

As the County Transportation Commission, SANBAG supports freeway construction projects, regional and local road improvements, train and bus transportation, railroad crossings, call boxes, ridesharing, air quality and congestion management efforts, and long-term planning studies. SANBAG administers Measure I, the half-cent transportation sales tax originally approved by county voters in 1989 and reapproved in 2004 to extend from 2010-2040.

SANBAG considers the transportation needs of the entire county, with focused attention provided by specialized committees, one of which is the Mountain Desert Committee. Following is a summary of some of the projects being planned for the High Desert.

La Mesa/Nisqualli Road Interchange

After decades of development, officials from the City of Victorville, County of San Bernardino, SANBAG, and Caltrans kicked off the construction of the new Interstate 15 – La Mesa/Nisqualli Interchange with a bang in front of a crowd of nearly 200.

The Interstate 15 – La Mesa/Nisqualli Interchange will provide a new east/west cross-over point for local traffic, as well as a freeway access alternative to Bear Valley road to the south and Palmdale Road to the north. This significant addition to the Victorville transportation infrastructure will ultimately ease congestion, improve local circulation, and enhance overall safety in and around Interstate 15 in that area.

The contractor began work on February 13, 2012. Since then, significant progress has been made on the Oro Grande Wash; Mariposa Road has been realigned to allow for construction of the eastern bridge abutment; and utilities (both private and public) have been relocated to make room for the new interchange configuration. Information updates about the project are available on the SANBAG website (www.sanbag.ca.gov) and ongoing outreach to the community of Victorville will continue throughout the construction period. Individuals interested in getting email alerts about the project, which will include schedule changes, traffic handling, and detour plans can sign up from the project page on the web.

(Maps below) These two aerial perspectives show the complexity of the I-15/La Mesa-Nisqualli Interchange. Adjacent access roads on both sides of the freeway will be moved out away from the freeway ramps to disperse traffic and provide greater safety.

High Desert Corridor

The High Desert Corridor (HDC) is a proposed new 63-mile east-west freight and vehicle expressway. The 50 miles from Palmdale to Victorville is a proposed Public-Private Partnership (P3) that would also connect regional rail systems linking Los Angeles County to San Bernardino County and beyond. The corridor bypasses much of the L.A. basin, speeding and diverting freight traffic from the ports and stimulating export business expansion. The HDC will address traffic safety and support the growing need to move goods through Southern California. The HDC Joint Powers Authority (JPA) is a partnership among both counties, LA Metro, SANBAG, and all cities along the route.

The High Desert Corridor (HDC) project planning involves the California Department of Transportation (Caltrans) in coordination with the Los Angeles County Metropolitan Transportation Authority (Metro), the High Desert Corridor Joint Powers Authority, and other partner agencies, including the City of Victorville, the Town of Apple Valley, San Bernardino County, Caltrans District 8, and SANBAG. In 2010, Caltrans took over as lead agency from the City of Victorville.

The HDC east-west freeway/expressway is likely to be a toll facility and may also accommodate rail, between State Route 14 in Los Angeles County and State Route 18 in San Bernardino County. The High Desert Corridor was identified as the E-220 and designated as a High Priority Corridor on the National Highway System. The project is proposed as a means of improving mobility and access for people and goods in the rapidly growing Antelope, Apple, and Victor Valley areas of Los Angeles and San Bernardino Counties.

Click on this link for more High Desert Corridor information: http://www.metro.net/projects/high-desert-corridor/

High Desert Corridor Project Alternatives Map:

There are several alternative routes still being considered, as indicated below by the various shades.

I-15/I-215 Devore Junction Goods Movement Improvement Project

Environmental Document Approved

The Environmental Document for the Devore project was approved on February 29, 2012, thus allowing the project to move forward with discussions about acquisition of property. Design Alternative 3A was identified in the approved documents as the selected design which best meets the needs and purpose of the project and is supported by the community of Devore. The next steps on the project include: contacting affected tenants, as well as property owners; select a Design-Builder in Fall 2012; begin Design at the end of 2012; conduct a public meeting prior to construction; and commence construction activity in early 2013. This is a Design-Build project, whereby design and construction will be done simultaneously by the same contractor.

In July 2010, the California Transportation Commission (CTC) selected the I-15/I-215 Devore Junction Goods Movement Improvement Project as one of 10 road construction projects statewide that Caltrans can construct using the streamlined project delivery method design-build. This can save time and allows for adaptations throughout the construction process.

The I-15/I-215 Devore Junction is the worst grade-related trucking bottleneck on I-15 in San Bernardino County. Originally constructed in 1969, the junction currently handles an average of 160,000 vehicles a day, including about 21,000 heavy trucks.

This project will benefit freight traffic, recreational travelers, and High Desert commuters. It is anticipated that an improved Devore Junction will spur economic growth and improve the quality of life for all Southern California motorists traveling to the High Desert, Las Vegas, and beyond.

This project will improve traffic flow at the I-15/I-215 Devore Junction and includes reconnecting the historic Route 66 that currently dead-ends on both sides of the junction. The project’s total cost estimate of $324 million for the locally-preferred alternative includes 15 bridges, roadbed widening on two interstates, improvements to local arterials, environmental mitigation, and major drainage improvement.

Yucca Loma Bridge and the Yucca Loma Corridor

The Town of Apple Valley has hired a construction management firm and construction is expected to begin in late summer 2012 on the Yucca Loma Bridge project over the Mojave River. The Yucca Loma Bridge will connect Yucca Loma Road on the Apple Valley side with Yates Road on the Victorville side. The new roadway and bridge will carry vehicles, bicyclists, and pedestrians. It will also intersect the City of Victorville’s proposed Riverwalk bicycle/pedestrian project, providing an alternative means of transportation along the river towards Bear Valley Road and Victor Valley College.

Apple Valley is the lead agency on the bridge project but is also working with the City of Victorville and the County of San Bernardino to complete the Yucca Loma Corridor to connect the bridge with Hesperia Road and the planned I-15/La Mesa-Nisqualli Interchange. Starting at the corridor’s east end, the bridge will connect Yucca Loma Road to Yates Road, which will then connect to Hesperia Road via a new grade separation/bridge over the Burlington Northern Santa Fe railroad tracks, all of which will provide easy access to Interstate 15 using the new interchange at La Mesa/Nisqualli Road.

This project will create an alternate east/west corridor that will provide congestion relief for the I-15 Interchanges at Bear Valley Road and Palmdale Road, as well as State Route 18 at D Street in Victorville. In addition, the Yucca Loma Bridge will provide the Town of Apple Valley with another crossing over the Mojave River and connect the urban/commercial cores of Victorville and Apple Valley.

Ranchero Road Interchange

The proposed Ranchero Road Interchange at Interstate 15 is located in the City of Hesperia, approximately 1.78 miles north of the existing Oak Hills Road Overcrossing and approximately 1.42 miles from the existing US-395 Connection Overcrossing. The Ranchero Road Interchange will include the construction of ramps for full freeway access, and construction of a new overcrossing structure at the I-15 freeway to provide east/west connections. The project will also realign the frontage roads—Caliente Road and Mariposa Road—on either side of the freeway. Construction is scheduled to begin in fall 2012 with SANBAG as the lead agency.

US-395 widening

SANBAG is working with CALTRANS on the design for the widening project. The first phases of the project to be widened will be north of SR18. This project will widen US-395 from Interstate 15 through Desert Flower Road in Adelanto, from two to four lanes, with left-turn pockets and standard shoulders. This project will also widen or replace the structure over the California Aqueduct. The environmental document was completed in December 2009 and is in the design phase. The 12.5 miles of the project will be constructed in nine phases as funding is identified. Construction is anticipated to begin in 2013-2014.

Victor Valley Transit Authority

The Victor Valley Transit Authority (VVTA) is one of six transit agencies that SANBAG supports countywide and provides local bus service for the communities of Adelanto, Apple Valley, Hesperia, Victorville, and unincorporated areas of the Victor Valley The VVTA has completed construction of its new Victor Valley Transit Facility in Victorville. The new transit facility includes a 27,000 square feet administration and operations building, a 31,000 square feet bus maintenance building, a bus parking lot to accommodate 120 buses and paratransit vehicles, 230 parking spaces for employees, visitors and service vehicles, a 13,000 square feet bus wash structure and fueling station, and a photovoltaic panel covered bus shade structure. The facility was designed and constructed to achieve the highest feasible rating as established under the standards of the Leadership in Energy and Environmental Design (“LEED”).

VVTA had a dedication ceremony for the new transit facility on Friday, April 20, 2012 at 11:00 am, following the Mountain Desert Committee Meeting at this location. The public was invited.

Lenwood Grade Separation, Barstow

The City of Barstow initiated this project in response to proposed commercial and industrial development in the area. Currently, Lenwood Road has two lanes of traffic in each direction. Lenwood Road presently carries approximately 4,200 vehicles per day, many of which are trucks. Lenwood Road serves commercial, light industrial, and residential developments in the vicinity of the BNSF grade crossing.

Lenwood Road serves as a major access route from local residents and businesses to Interstate 15. Increasing vehicular traffic due to regional population growth and rising train traffic from the ports have increased the congestion, which is causing increased delays at the existing at-grade crossing. These delays affect the traveling public, potentially hinder access by emergency vehicles, and increase air pollution by vehicle emissions when vehicles are stopped and idling while waiting for the trains at crossings. The high train traffic volumes affect the mobility, accessibility, and reliability of emergency service providers requiring access between areas on either side of the tracks.

The primary project objective is to improve operation and safety by ensuring prompt emergency response time to businesses and residents while eliminating the hazards and inefficiencies of trains passing through the flow of vehicular traffic. Air quality will be improved through elimination of vehicles idling during gate downtimes.

It is anticipated that construction will begin in late 2012.

Economy Property

In the Home Building Industry, the Indicators May Finally Point Upwards

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By Carlos Rodriguez
CEO Building Industry Association Baldy View Chapter

The inland counties of San Bernardino and Riverside have always been the ultimate beneficiaries of job creation and housing demand that begins in the more densely populated coastal counties; San Diego, Orange and Los Angeles. So homebuilders in San Bernardino County (and most importantly the Victor Valley) have always taken a special interest in keeping a finger on Southern California’s economic pulse.

And the pulse seems to be growing stronger, according to an overall assessment of the recent Inland Empire 2012 Builder Panel and Economic Forecast presented by the Building Industry Association (BIA) Baldy View and the Riverside County chapters. Summing up the general tenor of the presentation, panel moderator MetroStudy Director Steve Johnson noted that the overall theme of the event was that homebuilders “have changed their processes, they’ve changed the way they do things, they’ve changed the products in search of success – and they are getting that success this year.”

The event featured Panelists KB Home Division President Steve Ruffner, Lennar Division President Greg McGuff, Pardee Home Director of Sales Peter Altuchow, and Standard Pacific Division President Marty Langpap assessing the building climate as the industry enters 2012.

Panelist McGuff observed that the overall tenor of the event was to exhibit “positive builder confidence out there and a lot of pride in how far the industry has come in meeting the buyers’ needs.” McGuff noted that themes absent from previous builder forecasts were beginning to emerge, including indications of positive job growth and builders’ heightened interest in purchasing land.

Another aspect of the recovery is that home builders are increasingly expanding their product lines to include niche markets such as multi – generational and move up buyers, said Donna Lawler of Orange Coast Title, Co. Projects such as Lennar’s Rosena Ranch have adjusted their product lines to provide homes for these types of buyers, and will represent the new face of construction in the Inland Empire.

While the overall permit figures in 2012 may paint a fairly dismal picture, the story they reveal is actually fairly heartening, added BIA Baldy View President Jonathan Weldy of Meridian Land Development.

According to figures from the Construction Industry Research Board (CIRB), in 2011, San Bernardino County homebuilders issued about 1,465 single- and multi – family permits. While a far cry from the nearly 17,000 permits issued at the height of the building boom in 2005, today’s figures show a far more diverse building landscape. Where only a fraction (less than nine percent) of the overall permits issue in 2005 were for multi – family housing, over the past few years, homebuilders have been building increasingly larger proportions of multi – family housing. This is especially important because when multi – family housing was unable to keep pace in the boom years, it forced many families into riskier mortgages on single family homes. With a graying population of ‘Baby Boomers’ and young people finding dismal prospects in today’s job market ‘boomeranging’ from colleges back into their parents’ homes, offering a greater diversity of housing opportunities for our labor pools will offer businesses a greater incentive to relocate or expand in the region and create even more new jobs.

Assessing the permit totals always tells a story. This year the story shows that the I-15 Corridor cities (Ontario, Rancho Cucamonga, Fontana, Hesperia, Victorville, Apple Valley and the unincorporated county sections surrounding those cites) accounted for nearly two – thirds of the total permits in the county – and nearly half of those from Victor Valley cities.

Residential construction in the Victor Valley and along the I-15 corridor cities leading to the region holds the key to San Bernardino County’s economic recovery, and the Building Industry Association (BIA) Baldy View Chapter maintains programs to ensure it happens.

The big issue confronting builders in the High Desert continues to be water and every August for the past six years the BIA Baldy View Chapter has presented the Annual San Bernardino County Water Conference. The conference focuses on the key water issues confronting home builders, such as conservation, conveyance, and emerging new technologies to maximize and conserve our most precious resources.

Keeping development impact fees (DIFs) at realistic levels to spur economic growth while maintaining the best possible cities in Southern California is another key factor in the chapter’s overall approach to rehabilitating our housing markets. Here in the Victor Valley, the Baldy View Chapter continues to monitor all development impact fees for cities, school and water districts to ensure the fee’s accuracy and proper implementation. The chapter has also coordinated closely with local, county, and state levels of governance to monitor general plan updates and development codes. We are also working with our colleagues at BIA of Southern California to advocate for the balanced implementation of SB 375.

Homebuilding remains the cornerstone of our region’s economy, and there are some positive economic signs that the construction industry and our economy are headed in the right direction. We remain optimistic that our industry will emerge from this unprecedented downturn and provide the engine for the economic recovery that our region desperately needs.

The Building Industry Association (BIA) Baldy View Chapter represents homebuilders and associates in the housing industry in all of San Bernardino County and the easternmost portion of Los Angeles County. Founded in 1938, the Baldy View Chapter is the most honored homebuilding chapter in the nation. It is a member of the California Building Association (CBIA), a statewide trade association representing nearly 6,000 businesses, including homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.

General Transportation

“Zombie” Drivers Endanger Other Motorists

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Law Enforcement to Target Distracted Drivers Texting or Using Hand-Held Cell Phones

By Fran Clader, CHP

SACRAMENTO, Calif. – Danger lurks behind the wheel when drivers redirects their attention from the road to some other distracting behavior, like talking on a cellular telephone or text messaging. During the month of April, law enforcement agencies throughout California will be especially focused on taking enforcement action on these inattentive, “zombie” drivers.

The California Highway Patrol (CHP) along with the California Office of Traffic Safety (OTS), Impact Teen Drivers, and law enforcement agencies statewide are preparing to launch the second annual National Distracted Driving Awareness Month campaign, “It’s Not Worth It!” During the campaign kickoff month in April 2011, more than 52,000 citations were issued by law enforcement statewide, four times the monthly average. A first time citation will cost a minimum of $159, with a second violation at least $279.

“Drivers need to ask themselves, ‘Is that phone call or text message worth my life or the lives of those around me?’” said CHP Commissioner Joe Farrow. “The answer is simple: it’s not worth it. Every distraction affects a driver’s reaction time, and things can change without notice.”

In recent years, hundreds of people have been killed in California, while thousands were injured, as the result of collisions that involved at least one driver who was distracted. This distraction can be any activity that diverts the driver’s attention away from the primary task of driving. According to a study conducted by Carnegie Mellon University, the act of talking on a cell phone can reduce more than 35 percent of the brain activity needed for driving. Essentially distractions change a seemingly good driver into a “zombie” behind the wheel.

To dramatize this “zombie-like behavior behind the wheel, zombies are being added to this year’s “It’s Not Worth It” campaign. The campaign will be supported by statewide grassroots outreach, social media activities, and television commercials that encourage people to focus on the road and not be a “zombie” driver.

Law enforcement sees firsthand the devastation caused by distracted driving and the needless pain associated with the senseless collisions that follow,” added Commissioner Farrow. “I am grateful that so many of the state’s law enforcement agencies are joining us in this important traffic safety endeavor again this year.”

More than 200 local law enforcement agencies and 103 CHP offices will be participating in the monthlong, life-saving effort. Similar to the previous year’s campaign, there will be both an enforcement and educational component. The overall goal is to reinforce to the motoring public the dangers of distracted driving and reduce the number of people impacted by this destructive behavior.

”Parents and other adults need to set a positive example,” said OTS Director Christopher J. Murphy. “Start by never calling or texting anyone, especially your kids, when there’s a possibility they might be driving. Then let that same action follow you when you are the driver.”

Among the more than 1,800 drivers over the age of 18 who participated in last year’s annual statewide traffic safety survey conducted by OTS, talking and texting on a cellular telephone were rated the two biggest safety problems on California’s roadways. In fact, talking on a cellular telephone (handheld or hands-free) was identified as the most serious distraction by 56 percent of the respondents.

Adults are not the only offenders when it comes to distracted driving. According to the National Highway Traffic Safety Administration, teen drivers are more likely than any other age group to be involved in a fatal crash where distraction was involved.

“Teens, even more than adults, are accustomed to using technology to have instant access to their friends. It’s not only technology – teens are frequently distracted by loud music, passengers, and other everyday tasks that, when done behind the wheel, become lethal,” said Dr. Kelly Browning, Executive Director of Impact Teen Drivers. “These everyday distractions, coupled with inexperience, often have deadly consequences.”

This year, National Distracted Driving Awareness Month coincides with California Teen Safe Driving Week, which is the first week of April. For nearly five years, Impact Teen Drivers, a non-profit organization, has been providing awareness and education to teenagers, their parents, and community members about all facets of responsible driving, with the goal of reducing the number of injuries and deaths suffered by teen drivers as a result of distracted driving and poor decision making.

Age aside, California’s traffic safety partners are asking for the public’s help in making this April’s distracted driving awareness campaign successful.

“It is important to note that the success of this campaign is not measured by the number of citations the officers write, because we are hoping that by calling attention to this effort we will gain voluntary compliance,” added Commissioner Farrow. “The success of the campaign is measured by the number of lives saved.”

Don’t be “zombie” drivers; focus on the task of driving when you are behind the wheel. Remember, whatever the distraction, “It’s Not Worth It!”

Economy Property

The High Desert Single Family Market Appears To Be Stabling

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By Ronald J. Barbieri, Ph.D., CPA & Bob Thompson

For each month during 2004 and 2005, an average of 600 new homes were completed and sold; and an additional 500 to 600 previously owned homes were also purchased. The vacancy level for housing was low; and builders were not able to deliver homes fast enough. The median price for previously owned Single Family homes peaked in February 2006 at $322,000. In March 2012 the median home price in the High Desert for the Victor Valley Area was $110,000. Home prices have declined 65% from the peak. Over the last year the median home price increased by only $79 with home prices fluctuating between $106,000 and $112,700; consequently home prices today are statistically the same as they were a year ago. The table below published by Bob Thompson is the Market Condition Report for March 2012.

Home prices in the High Desert and elsewhere have probably been stable because Fannie Mae, Freddy Mac and the FHA along with some of the major financial institutions appear to be controlling the number of homes they release for sale in order to keep home prices from declining substantially from current levels. Some economists believe that an additional 15% to 20% decline in home prices across the United States would substantially weaken the financial strength of banks and cause undue hardship to many homeowners. If in fact these institutions have elected to carry the homes in their portfolios rather than dumping the units on the market, they are probably implementing a constructive policy given the current state of the economy.

During 2004 and 2005 the number of outstanding listings averaged 2,500, which represented four to five months of sales. As of February 2012 there were only 1,063 homes listed for sale in the Victor Valley area.An average of 477 homes was sold each month. Hence the number of listings on the Victor Valley MLS represents slightly more than a two month supply. Also, a review of the second page of the Market Condition Report would reveal that only 209 REO homes were listed for sale at the end of March, which is less than the 224 units sold in that month. For whatever reason, the financial institutions are not listing homes that they acquired through foreclosure, even though some real estate agents claim more homes could have been sold if more properties had been listed.

REO and Short Sales accounted for 67% of the transactions in February 2012.This is down from 74% a year earlier.This is a positive trend because it indicates properties that were foreclosed on represent a declining portion of the sales activity. Many of the buyers were investors who rather than owner occupants renovate the homes and either resell the units; or lease them to renters who are not able to purchase a home. The demand for Single Family homes has been artificially increased because of policies of the Federal Government.Interest rates are extremely low and down payments could be substantially below 20% of the purchase price. Individuals are purchasing homes in the High Desert with as little as 3% down. On the other hand, the underwriting criteria and documentation requirements are far more rigorous and extensive than normal; and the requirements for home appraisals tend to place a downward pressure on home prices. The effect of all this is to make home prices in the High Desert the most affordable in Southern California.

Many individuals want to know when the construction level for Single Family homes will begin to rebound. Some analysts believe the rebound could begin in earnest as early as 2014 while others believe it will be another seven years before new home construction reaches 3,000 units per year or 40% of the peak volume of the last real estate cycle.

The construction of Single Family homes will ramp up when the excess vacancy in the High Desert and the Inland Empire is absorbed due to an increase in household formations. There are 2,000,000 to 2,500,000 excess vacant housing units in the United States, which are defined as the number of vacant units in excess of normal vacancy levels for a market area. The normal vacancy level for Los Angeles County is approximately 3.5%, whereas the normal vacancy level for the High Desert is around 5%. There are an estimated 40,000 to 70,000 excess vacant housing units in the Inland Empire and between 5,000 and 7,000 excess vacant units in the High Desert.These are not very precise estimates, but they do provide a sense of the overbuilding that occurred during the last housing bubble.

The Inland Empire and the High Desert housing markets will be in equilibrium when these excess units are occupied, as a result of household formations.The number of households in the Inland Empire and the High Desert is expected to increase because of population growth, driven by the formation of jobs and an increase in the number of retired people.Many real estate analysts and economists estimate it will take another five years before the excess of vacant housing units are absorbed. There are an estimated 150,000 jobs in the Inland Empire previously lost in the Great Recession that still have to be replaced.

When the excess vacancy is absorbed home prices are expected to increase to the replacement costs for new homes. Home builders will only build new homes if they think they can sell the units for more than their costs to build and earn a normal profit for their effort. This could result in home prices in the High Desert increasing between $50,000 and $70,000 per unit from current levels.This would only occur if the U.S. and California economies continue to expand, creating jobs that could support population growth and substantial household formations in the High Desert. The good news is that the population of the High Desert appears to be almost stable over the last three years, and the U.S. Census Bureau estimates the population of California increased by 439,000 during the 15 months following the 2010 Census. This is discussed in another article on population in this Bradco High Desert Report.

Politics

Solar Mitigation

Published by:

By Brad Mitzelfelt, 1st District Supervisor, San Bernardino

Economic and environmental problems with the mega solar projects now being erected on federal land in our Southern California deserts have been the subject of several stories in local and regional media recently.

One major aspect of the issue has not been addressed in that coverage. Solar energy development on public lands not only affects species and their habitats; it has potentially profound impacts on local government, future economic growth, and other historic uses of the desert, including recreation, off-highway vehicle use, and mining, among others.

We fear that expansive solar developments, because of their impacts to species and the imposition of draconian mitigation requirements, could result in locking down the rest of the desert, creating an impenetrable de facto wilderness area, and eliminating a critical array of economic activities, while denying the right of our citizens to enjoy the public lands they own.

More than 80 percent of San Bernardino County is in federal ownership, and multiple uses on those lands – ranging from a variety of recreational activities to filming to mining – have long been critical to a sustainable and vibrant local economy.

As the elected county supervisor who represents 15,600 square miles of San Bernardino County, including the six-square-mile Ivanpah Solar Electric Generating Station just this side of Primm, Nev., it is clear to me that the strategies and costs of protecting species from this headlong rush toward renewable energy are unsustainable and unacceptable.

Projects that disturb or destroy habitat must make up for that loss by purchasing private land at ratios of 2-to-1, 3-to-1, even 5-to-1. In San Bernardino County, just three solar projects on federal land – BrightSource’s Ivanpah project, K Road Power’s Calico project on Interstate 40 east of Barstow, and a project proposed by First Solar immediately adjacent to Ivanpah – will require the acquisition of nearly 22,000 acres of private land or roughly 34 square miles. That’s an area larger than Glendale that must be purchased, provided the required mitigation ratio is “only” 2-to-1.

That land comes off the tax rolls, reducing revenue and further straining the ability of local government to provide essential services, and precludes any other uses that provide sustainable recreational and economic opportunities. (Note that Abengoa Solar’s 250-megawatt Mojave Solar Plant, now under construction northwest of Barstow, is on private, previously disturbed agricultural land and requires minimal mitigation.)

Under the current mitigation strategy, it would take only a few more of these mega-projects to take out the remaining available private land in the desert, and render future development, solar or otherwise, virtually impossible.

I advocated a policy that broadly supports the development of renewable energy, but rather than relying solely on the purchase of private land for mitigation, calls for developers to pay into a fund for aggressive and scientifically supportable strategies to enhance, preserve, and protect species and their habitats on existing federal land.

I also called for the protection of historic uses on public lands, including hiking, camping, rock hounding, off-highway vehicle use, grazing and mining. If a solar project eliminates one or more of those opportunities where they existed previously, then other public land should be made available for the affected uses. Those positions were ultimately adopted by not only San Bernardino County, but the National Association of Counties.

Solar development clearly is going to be part of the multiple-use mix on our public lands. Given the construction industry in the Inland Empire has been devastated with the loss of more than 76,000 construction jobs since the peak in 2006, the employment opportunities created by large solar projects are badly needed.

However, at the local government level, we are striving to help our state and federal colleagues understand that these projects must not restrict or eliminate other uses that have provided economic benefits for more than a century.

Brad Mitzelfelt is vice chairman of the San Bernardino County Board of Supervisors and represents the First District, which includes a large portion of the Mojave Desert.

City Updates

Town of Apple Valley City Update-2012

Published by:

By Orlando Acevedo, Economic Development Manager

That Can’t Be Good

In 2011, action by the California legislature and governor eliminated the state’s redevelopment program. In a clear taking of local funds to help balance the state’s enormous budget deficits, Assembly Bill 26 set into motion legislation that would eventually be decided upon by the state supreme court and would end one of the most effective job creation tools in California.

As a result, the Town of Apple Valley has established itself as the Successor Agency to the dissolved Apple Valley Redevelopment Agency (AVRDA) to carry out many of its obligated projects and contracts. Moreover, an Oversight Board, comprised of representatives of local taxing entities, was created to formally dissolve the Successor Agency of the former AVRDA of all its enforceable obligations, including debts, agreements, and disposition of assets.

When the redevelopment program was dissolved by the state, it put an end to the AVRDA that helped create more than 5,600 jobs, infused $55 million into the local economy, revitalized blighted areas, facilitated needed infrastructure expansion, funded residential rehabilitation and much more.

So What’s the Solution?

The legislature seems to be acknowledging the drastic and unintended consequences of AB 26, and there have been recent bills introduced to alter AB 26 timelines and deadlines and potentially free up certain unencumbered funds for housing and other activities for which the revenues were intended.

Municipalities all over the state are getting a game plan together to find alternative ways to provide the services that were formerly the function of the redevelopment agencies. Apple Valley Town Manager Frank Robinson was appointed to the Economic Development Task Force for the League of California Cities. As a representative for the Desert Mountain Division, Mr. Robinson will help formulate strategies to accomplish this undertaking.

Pressing On

Attracting jobs to Apple Valley remains a high priority for Town staff and its residents. According to a recent community survey, when asked to prioritize among a series of projects and programs that could be funded by the Town of Apple Valley in the future, providing incentives to attract new employers and jobs to town was assigned the highest priority by 71 percent of the respondents.

As such, the Town is resolved to preserve key capital projects which add jobs and investment to the local community, despite the recent redevelopment dissolution. One project in particular that the Town is striving to preserve is the Yucca Loma Bridge.

The Yucca Loma Bridge

The excitement is building as the Town of Apple Valley makes further progress on the long-awaited Yucca Loma Bridge. The number one transportation priority of the Town since 2005, the Yucca Loma Bridge is a necessary and much anticipated project that will improve east/west travel across the High Desert. 34

Studies have shown that, in time, no amount of improvements to existing corridors will relieve the increasing traffic congestion on our already established east/west travel routes, so the success of this project is vital to our region.

With an estimated price tag of $31 million for the first phase, the project is moving forward into the right of way acquisition and construction and is anticipated to begin construction late this summer. A formal funding agreement with SANBAG for construction was scheduled to appear before the SANBAG Board of Directors at their April 4 meeting. We have high hopes that the Apple Valley portion of this project will be complete by January 2014.

Incoming Retail

The 240,000-square-foot Walmart Super Center, planned for construction on Dale Evans Parkway just north of Civic Center Park, is on a course for completion by this fall. Crews have successfully cleared and grubbed the 30-acre site and Walmart is in the process of evaluating construction bids. Award of the bids is anticipated to be sometime in April after which time the developer will schedule a groundbreaking. Walmart has a very aggressive construction schedule and anticipates completion of the store by late October.

For more economic development information visit www.GetASlice.org. For general Town information visit www.AppleValley.org

City Updates

Barstow City Update-2012

Published by:

By Oliver Chi, Assistant City Manager

During the past several years, the City of Barstow has certainly experienced its share of negative impacts from the downturn in the economy. Even today, the signs of economic distress can be seen throughout the community as Barstow still has an unemployment rate of 16.4%. Unequivocally, there is still much work that needs to be done.

When looking at the situation globally, however, the City of Barstow believes that there is much to be optimistic about. Signs of an economic turnaround can be found when looking at statistical data. In addition, several projects are underway that have the potential to make dramatic economic improvements in the community.

From a statistical perspective, one measure that illustrates how a community’s economic health is trending can be seen through tracking the area’s median income levels. In the 2000 census, the Barstow area had a median income level of $35,069. As of the 2010 census, the median income levels for the Barstow area had increased around 37% to $48,042. This data means that the quality of the jobs in the Barstow area is improving and points to a positive trend for the local economy.

In addition to the statistical data, the city has been working on several important economic development projects that have the potential to significantly improve the overall quality of life in Barstow.

Current significant projects that are underway in the community include the following:

Barstow Community Hospital Project

During the past several years, the city has been coordinating with Community Health Systems, Inc., on building a brand new state-of-the-art medical facility in town. In late 2012, those efforts will culminate with the opening of the new Barstow Community Hospital. The ultra-modern three-story, 82,500 square feet facility will feature 30 private rooms, a high-tech emergency room, a modern intensive care center, a technologically advanced diagnostic imaging department, and innovative laboratories & surgical rooms. All told, building the updated facility required around 3,283 cubic yards of concrete, over 65 tons of concrete reinforced rebar, 476 tons of structural steel, and over 120,000 square feet of fireproofing material. When the new hospital is complete, the overall project will have constituted an estimated investment of around $80 million in the Barstow community.

Lenwood Grade Separation

The city has been working diligently with the County of San Bernardino and SANBAG to coordinate the construction of the Lenwood Grade Separation project. A number of design enhancements have been coordinated during the past several months and the project team is currently working on finalizing the engineering work and right-of-way coordination for the new bridge. In total, the Lenwood Grade Separation will cost an estimated $31.5 million and is on schedule to begin construction in 2013.

Fort Irwin Projects

Fort Irwin and the United States Military have made a concerted effort to involve the local community in a variety of currently planned projects. While there are numerous improvements being coordinated by Fort Irwin, the two most significant initiatives include the construction of a $100 million water treatment plant and a $400 million hospital facility. These two projects, which will total an investment of over half a billion dollars in the greater Barstow area, are scheduled to break ground within the next year and are both scheduled for completion in 2015.

Redevelopment Dissolution Impacts Minimal for Barstow

On December 29, 2011, the California Supreme Court upheld the legislation that effectively dissolved redevelopment agencies throughout the state. However, in Barstow, the city had created contingency plans over a year ago in anticipation that redevelopment agencies could be eliminated. The strategy that the city developed was focused on developing enough capacity within the General Fund to absorb necessary RDA expenses. For example, several employee positions that were previously paid for with redevelopment monies were transitioned to General Fund roles as part of the FY 11/12 Budget. In addition, a new cost allocation formula that was instituted with the budget called for the RDA to pay for fewer General Fund expenses than in prior years. When the Supreme Court ruled that redevelopment agencies in California were to be dissolved, the City of Barstow was ready to address the situation. While the dissolution of the RDA does create a financial impact on the city, overall, the elimination of redevelopment will not require any reductions or modifications to the city’s current operations.

In addition to projects that are currently underway, there are several significant initiatives that are in the planning phase. An overview of those projects includes the following:

Wal-Mart Distribution Center

The city has continued to stay in close contact with representatives from Wal-Mart regarding the proposed construction of a cold-storage distribution center located adjacent to the city’s planned Industrial Park. In every conversation that the city has had with Wal-Mart, the message has remained consistent. Wal-Mart is still planning on constructing the distribution center in Barstow; however, the project is waiting for approval from the Wal-Mart Logistics Department. Given the recent number of Wal-Mart Supercenter conversions occurring in the high desert and throughout Southern California, in addition to the announcement that Wal-Mart will be testing a small-store format called Wal-Mart Express, it is likely that the distribution center in Barstow will be approved for construction in the near future.

Wal-Mart Supercenter Expansion

During the past several months, Wal-Mart representatives have made contact with the city regarding expanding the current Wal-Mart store on Montara Road into a Supercenter format. In fact, Wal-Mart has developed and submitted for city evaluation two separate site plans for review and consideration. The proposed project would include additional retail outlet options in addition to a new Wal-Mart Supercenter. While the city has streamlined its permitting process to allow for quicker approvals, it is anticipated that the Wal-Mart expansion project is around a year away from being finalized. There are a number of environmental issues that need to be coordinated and Wal-Mart is still in the process of determining the type of project they would like to have constructed.

Barstow Casino & Resort Project

The Barstow Casino & Resort Project, which is being pursued as a partnership project between the Los Coyotes Band of Cahuilla & Cupeňo Indians and Bar West Gaming, is still a viable initiative that is in the review process. In order for the initiative to move forward, both the Federal Government and the State of California will have to agree to allow the project to be constructed. Currently, the Federal Government’s Department of the Interior is evaluating the proposed Barstow Casino & Resort project, and a public hearing on the environmental impact statement was held last July. If the Department of the Interior approves the project as meeting federal guidelines, the next step in the process would be negotiating a contract with the Office of California Governor Jerry Brown. That contract would also have to be approved by the California State Legislature. In an effort to give the Barstow Casino & Resort Project the best chance of gaining State approvals, the city is in the process of determining how to hire a State lobbying firm. If all the approvals are obtained, the overall casino project could be constructed in 2013 or 2014.

Barstow Industrial Park

Another significant initiative that the city is coordinating is the revival of the Barstow Industrial Park project. In total, the Barstow Industrial Park spans over 1,174 acres and is located around 3 miles northwest of Interstate 15 and around 5 miles west of the Interstate 15 / Interstate 40 interchange. Recently, a new developer purchased the industrial park property, which had been in a state of foreclosure. Since then, the city has been in contact with the new property owner regarding future plans for the location. Discussions are currently underway regarding infrastructure concerns, utility coordination / installation issues, and the potential of obtaining rail-spur access for the site. The city will be working with the developer during this next year to coordinate and implement the solutions needed to ensure that the Barstow Industrial Park becomes the high desert’s premier logistics, manufacturing, and distribution hub.

While the overall economic situation is still challenging, the current projects in the Barstow area that are either underway or in the planning process illustrate that…

…Barstow is strategically situated midway between Los Angeles and Las Vegas.

…Barstow is a major transportation corridor that serves more than 60 million travelers and 19 million vehicles each year.

…Barstow is where the Interstates 15 & 40 and Highways 58 & 247 all converge.

…Barstow is home to the Barstow Outlets and Tanger Outlets, which provide shopping options that are usually only found in metropolitan areas.

…Barstow is where an eclectic mix of railroad, military, high technology, and mining employers have located.

…Barstow is home to a vibrant and caring community

.…Barstow is at the crossroads of opportunity… where the best is yet to come.

Any individual who would like to learn more about all that Barstow has to offer is encouraged to visit the city’s website at www.barstowca.org or to contact Oliver Chi, Assistant City Manager, via email at ochi@barstowca.org or by telephone at (760) 577-4510.

City Updates

Hesperia City Update-2012

Published by:

By Lisa K. LaMere, Economic Development Management Analyst

Ranchero Road Underpass Project

The Ranchero Road Underpass broke ground on August 31, 2011, and is approximately 20% complete at the time of this writing, with the bridge the focus of construction. It is expected that the bridge should be completed in summer 2013.

The project is progressing slightly ahead of schedule and this alternate east-west route through the southern portion of the city should be accessible to residents by early fall of 2013. These improvements, stretching from Danbury Avenue on the east side to Seventh Avenue on the west, will greatly improve traffic options for travelers of the entire High Desert.

On the Right Track

The G Avenue Industrial Rail Lead Track was completed in March, with a ribbon cutting ceremony held on April 19, 2012. Consisting of nearly one mile of new railroad lead track and a parallel runaround track, it will be served by Burlington Northern Santa Fe Railway and allow adjacent properties rail access.

Business attraction efforts are a priority for the project, which will stimulate development and indirectly influence the attraction and expansion of other businesses into the 1,300-acre ‘I’ Avenue Industrial area. In addition, a future Team Transload facility would foster entrepreneurship by making rail accessible to businesses throughout the region that will now be able to ship and receive goods with the use of a Team Transload facility.

Now Open for Business

Victor Valley Transit Authority recently received the certificate of occupancy for its new facility. Located on E Avenue and Smoketree, the complex consists of a 28,820 square foot administrative building and more than 43,000 square feet for maintenance, fuel, and washes facilities.

Sleep Number opened the doors of its 2,400 square foot bed and bedding store in High Desert Gateway.

Also located in the High Desert Gateway, the new 20,005 square foot JoAnn Fabric and Crafts store, near Marshall’s, opened on March 9, 2012. Jo-Ann executives, dignitaries, City representatives and 150 Jo-Ann fans were on hand for the ribbon cutting ceremony held on March 22 to kick off the grand opening celebration.

A new 7,147 square foot AutoZone on Main and Maple opened in April.

The Pepper Olive Café, offering breakfast, lunch, and dinner, leased 1,737 square feet of restaurant space closest to Eleventh Avenue in the Hesperia Marketplace on Main Street.

What’s in store for the future …

The City of Hesperia has received plans for construction or tenant improvements for the following businesses:

The long-awaited 194,183 square foot Walmart Supercenter is taking shape, evidenced by the completed construction of exterior walls. With the completion of parking lot lighting and asphalt being laid down in April to the 43.84-acre site, an opening in September is expected.

In addition to the Supercenter, a second major 180,000+ square foot anchor is available, as are 65,000 square feet of retail and restaurant space on 7.6 acres of this site along Escondido and fronting Main Street.

Following the purchase of the Midtown Square Albertsons building in 2011, Stater Bros. is readying the former Albertsons for a proposed spring opening as a Blue Ribbon Stater Bros. Supermarket. Currently undergoing major renovations to the new 20,000 square feet grocery store, including replacing the deli, bakery, and prep rooms, the new Stater Bros. location replaces the smaller Stater Bros. market along Main Street and E Avenue.

Beef ‘O’Brady’s, a Tampa-based franchise, has sited its first California location in Hesperia with a 6,009 square foot concept seating approximately 250 patrons. In early April, the family sports restaurant and pub began its transformation of the former Bob’s Big Boy located at Main Street and Cataba. Featuring 19 big-screen TVs and a diverse lunch and dinner menu, Beef ‘O’ Brady’s anticipates a summer opening.

Tenant renovation is currently underway on a 2,250 square foot microbrewery, complete with tasting room, in an establishment located on Poplar Street near Three Flags Avenue, west of I-15. Renovations should be completed in April.

Hesperia will soon be home to additional medical offices. In the early planning stages is a 2-story, 14,360 square foot medical building to be sited on Main Street, east of Cottonwood. Main Street Medical has been issued permits for a 9,360 square foot, 3-story medical office building. Their future site is located west of Eleventh Avenue on the north side of Main Street.

Lewis Retail Centers has been issued permits for a 10,467 square foot retail space in the High Desert Gateway center, anchored by Super Target. The as-yet undisclosed tenant will be located between Marshall’s and Jo- Ann Fabric and Crafts.

Desert Discount Tires will soon complete Phase I of its 4,973 square foot 2-phase expansion plan, which includes shop areas, 5 bays and office space.

Ground Breaking Project

A first for Hesperia, a 37,000-square-foot movie theater from developer Cinema West broke ground on February 23. The Hesperia Cinema 12 will soon join more than 188,000 square feet of development in Hesperia’s Civic Plaza. Creating 40 new jobs, the new theater features start-of-the-art digital technology and stadium seating for 1,700 movie-goers.

Residents have long desired entertainment venues in Hesperia, and with popcorn in hand, they will have their choice of 12 movie screening options, including two IMAX-sized screens. The Hesperia Cinema 12 also features both game and party rooms. Uniquely, it will be the first cinema in the High Desert to serve food and alcoholic and non-alcoholic beverages to seated movie fans in a new theater-going concept known as a “meal and a movie” in two screening rooms limited to patrons aged 21-and-over.

Look for a grand opening in time for the Christmas movie season this year.

To find out more about operating in one of the most innovative enterprise zones in the country, or to request information about Hesperia’s retail or industrial opportunity sites, contact Steven Lantsberger at (760) 947-1906, by e-mail at econdev@cityofhesperia.us ; or visit www.cityofhesperia.us/econdev .

City Updates

City of Victorville – Spring 2012

Published by:

By Keith Metzler, Assistant City Manager

As the geographic and commercial center of the High Desert, Victorville’s resurgence is leading the way for continued growth in the region. Nowhere is that more apparent than with the construction of the Nisqualli/La Mesa/Interstate – 15 interchange.

City officials have partnered with SANBAG and CalTrans to bring the interchange project to life, with construction already underway and a completion date set for early fall 2013. The interchange will alleviate traffic congestion by providing a new east/west route through the Victor Valley. The interchange was recently named the 2011 Public CEO Public Works Project of the Year by PublicCEO.com.

The most active area of development within the city is at Southern California Logistics Airport (SCLA). Recently industrial companies, such as United Furniture Industries and M&M/Mars have brought in over 130 jobs to the region in the last six months. Aviation operations at SCLA continue to be in demand, with several companies extending lease agreements for hangar and office space at the airport.

Southern California Aviation, a tenant at SCLA since 1998, has extended its current lease agreement for four more years with an additional five year option beyond that. The lease covers Southern California Aviation’s building space, consolidation area and ramp usage on its 240-acre site. Boeing, a tenant at SCLA since 2005, has extended several of its leases at SCLA through December 2012, including its hangar and office space as well as a storage facility.

Victor Valley College has also extended its aviation technology training program at SCLA, with 25 more students beginning classes in the summer of 2012. The students will receive hands-on training at SCLA, including 2,000 hours of documented class and lab instruction. Many of the current students within the program are hired for entry level positions with SCLA companies while still in school. Upon graduation of the two year program and FAA certification, a licensed Airframe & Powerplant technician typically makes $25 an hour.

In addition to the dynamic activity at Southern California Logistics Airport, Victorville has seen an influx of commercial and retail development. A local Hyundai car dealership is expanding its space to add a new Mazda dealership, with over 8,500 square feet of new show room and office space currently under construction. The new dealership will be located on the corner of Palmdale and Anacapa Roads.

The Mall of Victor Valley is also expanding, with construction taking place on two of its anchor locations. Macy’s has announced it will open a 103,000 square-foot anchor at the former site of Gottschalks by mid-2013. JCPenney’s has also announced plans to move from its current location to the expanded anchor slot of almost 100,000 square feet that is currently under construction. JC Penney’s new location will double its current size and is set to be complete by the end of 2012.

A new 193,000 square-foot Walmart is currently under construction at Dunia Plaza, sitting on the southwest corner of Interstate -15 and Bear Valley Road. The Walmart will be located next to the existing Lowe’s and Kohl’s anchors and will open in mid-2012. Another Walmart at the corner of Highway 395 and Palmdale Road is currently in the planning stages.

Elimination of Redevelopment

On February 1, 2012, redevelopment as we have known it was eliminated by the Governor and the State Legislature. Many residents of Victorville may not be aware of the impact this will have on our local community.

The Victorville Redevelopment Agency was directly responsible for much of the development in the city the past decade, including the AutoPark at Valley Center, the Roy Rogers interchange and accompanying development, Bear Valley Road/Hesperia Road Corridor, and the development of Southern California Logistics Airport. Because of these projects, the City now enjoys increased sales tax revenue that helps provide our current level of Police and Fire services. Without the redevelopment agency, there would have been little the City could have done to directly influence the type of development we see today.

Now that redevelopment has been eliminated, the City of Victorville’s ability to encourage new industries has been substantially weakened and the City will not have the ability to be as responsive to the community’s demand for jobs in an economy that is desperate for employment. To adjust, Victorville will have to become creative if it wants to develop a more balanced local economy.

New industries, such as manufacturing food and beverage products, aviation flight testing and maintenance services for commercial aircraft currently taking place at SCLA is a good step in the right direction. However, the current and future City Council must be prepared to make hard decisions about creating special industry attraction programs, including low cost financing, re-tooling its use of federal and state grant programs, developing revolving loan programs, fee deferral, sales tax sharing programs and continued use and expansion of its Municipal Utility services to compete for businesses in a global economy.

General

Publisher’s Message-50th Edition

Published by:

By Joseph W. Brady, CCIM, SIOR

I wish to welcome our current and future subscribers of the 50th edition of the Bradco High Desert Report, the only economic overview of the High Desert region, covering the Northern portion of San Bernardino County and the Inland Empire. We more specifically address economic issues affecting the cities of Adelanto, Barstow, Hesperia, Victorville, and the Town of Apple Valley.

As always, we wish to thank our committed article suppliers (over 135) and our newsletter sponsors for their continued commitment to our endeavor, and our attempt to find positive, factual, and interesting information as it relates to the High Desert economy.

Who said that we would never make 50 newsletters? I have so many people to thank I don’t know where to start. Not only do I want to thank my bride, my partner and my motivation, Mrs. Deborah K. Brady, Executive Vice President of The Bradco Companies, Alliance Management Group and Barstow Real Estate, I want to thank our readers, our subscribers and those that have been the benefactors of information since our first publication in May of 1993. There are other publications that from time to time attempt to copy what we have been able to depict, but I believe that the competition is also good in the publication business.

We have a very exciting publication and we are proud of the information that is in the 50th edition. I am recently reflecting on comments given at the High Desert Leaders Economic Summit, a function that The Bradco Companies has supported with many other sponsors, economist speakers etc. that started 14 years ago. We have recently completed 12 of these economic conferences, and while listening to the Inland Empire’s expert economist, Dr. John Husing at our April 11th function, I couldn’t help but think of some great statistical analysis that I want to share.

While the national economy lost nearly 8,770,000 jobs through this last down turn, the nation has created nearly 3,522,000 or 40.7% since then. While unemployment has decreased 8.2%, we are hopeful that this number will continue to drop. For the State of California, unfortunately we are at the same job levels that we were in 1999, in essence wiping out all jobs that were created from 1999 through 2008. Since Dr. Husing has been following the Inland Empire market, from 1964 through 2008 we never had any net job loss. It was not until the period of 2008 through 2011, that we had a net loss of 146,400 jobs, or 11.4% of the number of jobs that we have in the Inland Empire. In 2011, the Inland Empire did create 3,700 jobs. That is positive news. The bleeding has finally stopped.

Exports out of the Los Angeles Long Beach port are at an all time high at 3.3 million containers for 2011. Congratulations. While the Inland Empire has over 1,145,000 existing jobs, and we are optimistic that the 12.4% unemployment that the Inland Empire’s is experiencing, in conjunction with California’s 11.3% (as of January 2012) will continue to decrease. One statistic to put things into proper prospective is the fact that within Southern California (Los Angeles County, Orange County, Riverside County and San Bernardino County) Inland Empire, we have nearly 1.94 billion square feet of industrial space. While the Inland Empire, with nearly 440,000,000 square feet of space represents 4% of all total space nationally, 20% of the absorption nationally in 2011 occurred in the Inland Empire. We are latterly the epic center for industrial activity (please see Ronald J. Barbieri, Ph.D., CPA’s commentary on industrial activity).

Lastly, but something that we need to deal with and will eventually go away are the 370,960 mortgages out of nearly 849,136 mortgages within the Inland Empire, representing 43.7% of the mortgages that are currently “under water” in the way of equity and value.

We have noticed a considerable increase in leasing and sales activity in the High Desert region. We hope you enjoy our 50th edition. We are extremely humbled and proud that we have completed this monumental publication. I would be remiss if I did not thank my idol and a gentlemen that I call my second father “Dr. Alfred Gobar”, Chairman Emeritus of Alfred Gobar Associates Anaheim. I originally went to Dr. Gobar seeking advice in late 1992. During the discussion I asked him if he had ever produced a newsletter and he informed me that he had been co-editor of many. Dr. Al, I can’t thank you enough and I am humbled to call you one of my close friends. Thank you.

Lastly, and most importantly, if you wish to continue to receive a copy of the Bradco High Desert Report, any statistical reports, op-ed articles that we post to our website for free, please register at our website at www.thebradcocompanies.com/register.

Economy General

The High Desert’s Population Decline Appears To Be Substantially Overstated

Published by:

By Ronald J. Barbieri, Ph.D., CPA
February 9, 2012

Population estimates by Nielsen/Claritas indicate the Population of the High Desert declined from a high of 443,516 as of January 1, 2009 to 421,712 as of January 1, 2011. If the estimates are correct it would represent a population decrease of 21,804 or 4.9% over the two year period, which is significant.  The estimated loss in population in 2009 was 12,721 compared to 9,083 in 2010.  The rate of decline has diminished somewhat in the second year; but it is still large enough to raise concerns that the population may have continued shrinking in 2011, because of the lack of job formation in the Inland Empire.  When the population estimates by Nielsen/Claritas at the beginning of 2009 are compared to the 2010 U.S. Census counts for the High Desert the decline in population is only 2,139 over the 15-month period ending April 1, 2010. As of that date the Population of the High Desert was 441,377.

In December 2011 the U.S. Census Bureau released its population estimates for July 1, 2010 and July 1, 2011.  During the first 3-month period after the 2010 Census the population of California increased by 84,242; and for year ending July 1, 2011 it increased by 353,714.  This represents 15.4% of the population increase of the United States.  Births over deaths accounted for approximately 88% of California’s growth in population; so there was a net in migration of population during the 15 months following the 2010 Census. This was an encouraging sign that California is still able to attract more individuals than the number that migrate out of the state.

The Bradco Companies analyzes a substantial amount of demographic information to support our real estate brokerage and consulting activities, a portion of which was incorporated in the following Table that depicts the population estimates by Neilsen/Claritas for the first day of 2009, 2010, 2011 and 2016; and the annual changes in population during 2009 and 2010 and for the five year period that encompasses 2011 through 2015. This data is in the Orange section of the Table. The green section of the Table reflects the population counts for the 2010 Census and how they differ from the Nielsen/Claritas estimates for 2009, 2010 and 2011. This information is provided by zip code and grouped into the five cities and their areas of influence. The cities and zip codes are identified in the brown section of the table. The table also provides population information for the High Desert, San Bernardino and Riverside Counties and the State of California.

The counts from the 2010 Census are the best estimate of the each submarket’s population as of April 1, 2010. Demographic estimating companies such as Nielsen/Claritas and ESRI are still using 2000 Census counts to derive their January 1, 2011 and 2012 population estimates. The 2010 detailed Census data was released around the summer of last year.  It is now being used to recalibrate the models that will estimate the population for January 1, 2012.

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A comparison of the actual 2010 census counts to the Nielsen/Claritas estimates for January 1, 2009 revealed that that population of Adelanto increased by 1,098 over the 15-month period while the Town of Apple Valley’s two zip codes lost 4,622 inhabitants. The Barstow zip code suffered a decline of 1,563. The population of Northeast Barstow was down by 1,304; and the population of Fort Irwin decreased by 1,923.  In the 2010 Census the City of Hesperia and Oak Hills had a population of 110,595.  This was 7,887 more than the 1/1/2009 estimate by Nielsen/Claritas.  The Greater Hesperia area including Pinion Hills and Wrightwood experienced a population growth of 9,217 over the same 15-month period.  The three zip codes that include the City of Victorville saw a population decrease of 4,267.  The Greater Victorville area that also includes Helendale/Silver Lakes, Phelan/Baldy Mesa and Oro Grande realized a population decrease of 2,764.

The aforementioned population changes assume that the population estimates for the first day of 2009 were accurate.  There are indications some may have been overstated. The Census count for San Bernardino County was 32,280 less than Nielsen/Claritas estimated for 1/1/2009 and the count for California was 305,772 less than what had been estimated for that day. It is highly unlikely the population of California declined by such an amount in during the 15-month period. The more likely scenario in both cases is that the population as of 1/1/2009 had been overestimated. The models may have given too much weight to the completion of residential units in 2006 through 2008. During that period many homes received their Certificate of Occupancy; but they were not sold or occupied in the typical time frame. Because of such an overstatement it is possible the population of the High Desert actually increased during the 15-month period before the 2010 Census.

Conversely the population of the High Desert and some of its submarkets may have been underestimated for the beginning of 2010 and 2011. The models consider factors that act as proxies for vacant residential units, which have increased because many households have doubled up in order to reduce expenses. The models may be overestimating the loss of population caused by the increase in vacant housing units. Children may move back with their parents adding to the vacancy level; but not reducing the population. The consolidation of households because of the recession has likely resulted in lower population estimates than would normally be the case.

The number of children attending school has decreased, probably caused by the outmigration of construction workers from the High Desert. The decrease in the number of students has been significant; and would suggest a population decline.  On the other hand there is anecdotal evidence that retired people are moving to the High Desert, accelerated by the low cost of housing. It may be that the loss of population caused by the outmigration of families with children has been offset by the in migration of retired people.

It is unlikely there was any significant decrease in the population of the High Desert since the beginning of 2009. It may even be increasing.  The fact that there have been significant increases in taxable sales over the six quarters and home prices have not dropped substantially in the last 18 months, tend to collaborate a stable if not slightly expanding population scenario in the High Desert. Nevertheless some cities such as Barstow, Victorville and the Town of Apple Valley may have experienced population declines while the City of Hesperia and outlying areas like Oak Hills, Pinon Hills, Helendale/Silver Lakes, Phalen/Baldy Mesa benefited from a growth in population.

According to the 2000 Census the population of the High Desert was 305,909. In the 2010 Census the population reached 441,337, which represents an increase of 135,468 or 44.3% over the decade. Nielsen/Claritas estimates that the population of the High Desert will grow by 55,000 during the five year period ending in December 31, 2015. While this would represent a growth rate of 13.1%; or 59% of the rate for the last decade, it is nevertheless significantly positive and substantially higher than the 5% growth rate expected for the U.S. over the half decade.

General

Publisher’s Message-November 2011

Published by:

By Joseph W. Brady, CCIM, SIOR

I wish to welcome our current and future subscribers of the 49th edition of the Bradco High Desert Report, the only economic overview of the High Desert region, covering the northern portion of San Bernardino County and the Inland Empire. We more specifically address economic issues affecting the cities of Adelanto, Barstow, Hesperia, Victorville, and the Town of Apple Valley.

As always, we wish to thank our committed article suppliers (over 135) and our newsletter sponsors for their continued commitment to our endeavor, and our attempt to find positive, factual and interesting information as it relates to the High Desert economy.

As I’ve said over the past eight (8) editions, I strongly believe that our global economy, our nation, our state, the Inland Empire, and the High Desert region are currently challenged with a very serious financial crisis, a crisis that we’ve never seen before. As publisher of the Bradco High Desert Report, I still believe the “glass is half full”, as evidenced by our continuing attempt to monitor the High Desert region and make information available to those that have an inherent interest in the High Desert region.

When we published the 45th edition, we made the Bradco High Desert Report available electronically and now nearly 2,000± people receive that and any updates we have relative to commercial, industrial, office activity, increase and decrease in absorption and/or vacancy or any other information that we deem appropriate to notify those that care about the High Desert economy.

If you are not receiving information from our office in an electronic fashion, with up-to-date economic information, you may sign up for free at www.thebradcocompanies.com/register.

Having published 49 editions of the Bradco High Desert Report, we are nearing our 50th edition, which we anticipate to be completed by February 15th, 2012. Most importantly, I’m pleased to make some monumental announcements, as it relates to the Bradco High Desert Report, and The Bradco Companies.

On September 12th, 2011, Ronald J. Barbieri, Ph.D., CPA and Mr. Nicholas DiCosola, formerly employed as founding shareholders of Lee & Associates-Inland Empire North, became founding partners with The Bradco Companies.

On September 21st, 2011, Dr. Barbieri, Mr. DiCosola, and I met our new partners with an organization known as TCN Worldwide at their annual conference in Chicago.

We were proud to become a part of The Bradco Companies/TCN Worldwide. TCN Worldwide, a consortium of independent commercial real estate firms, provides completed, integrated real estate solutions locally and internationally. With approximately $21.6 billion in annual transactions, and over 80,000,000 square feet of space under management, the organization ranks as one of the largest service providers in the industry, and based on the commercial property executive rankings for 2011, this makes The Bradco Companies/TCN Worldwide the largest company of its size within the High Desert region. Formed in 1989, TCN Worldwide is comprised of over 800 commercial real estate professionals, serving more than 200 primary and secondary markets worldwide.

I wish to welcome Ron Barbieri, Ph.D., CPA as Co-Editor of our publication. Ron Barbieri has joined our longtime Editor, Mr. Lowell Draper, a former Professor at Victor Valley Community College and a retired teacher who makes the final adjustments to our publication before they are printed. Dr. Barbieri spent a tremendous amount of time preparing his first article, “The Demand for Industrial Space in the High Desert and Inland Empire has Increased Substantially Over the Last Two Years.” Besides information obtained from our five (5) incorporated cities, we also have information this quarter from Mr. Bob Thompson (Las Vegas) who monitors the High Desert housing market and is an expert in doing so, our friend, Mr. Bill Greulich, Public Relations Director for Victor Valley Community College District, Mr. Brian Parno of Stirling Development LLC and Stirling Airports International, the joint venture developer of the former George Air Force Base, now called Southern California Logistics Airport.

I would be remise if I did not welcome our friends and client, Mr. Larry George, President, Mr. Douglas A. Hanby, Chief Financial Officer of United Furniture Industries, Inc, as well as Robert T. Cottam, III, Vice President of Piedmont Risk Management/United Furniture Industries, Inc of Mississippi and North Carolina, who have recently leased through The Bradco Companies the largest square footage lease transaction ever completed by a broker in the region, a 505,192 square foot LEED Certified Gold Industrial space at Southern California Logistics Airport, that will eventually over the next 36-months create 400 jobs.

I’m honored to have had the privilege to work with such a fine company, and I want to thank Mayor Ryan McEachron and his very capable staff of the City of Victorville, Mr. Keith Metzler, Economic Development Director for the City of Victorville and also the Executive Director for Southern California Logistics Airport, First District Supervisor Mr. Brad Mitzelfelt, Mrs. Sandy Harmsen and Mr. Nick Demartz from the San Bernardino County Workforce Investment Board, and Mr. Robert Lovingood, President of ICR Staffing Services, Inc/DegreedJobs.com, for all the work that they did to help secure this client.

We wish to re-welcome Assemblyman Steve Knight, Mr. Ty Schuiling, the Interim Executive Director for the San Bernardino Association of Governments (SANBAG), the Victor Valley Transit Authority, who is about ready to move into its new facility in Hesperia, Ms. Sheri Davis of the Inland Empire Economic Partnership/Film Commission, Superintendent Dale Marsden of the Victor Valley Elementary School District, the High Desert’s Chair of the San Bernardino County “Alliance for Education” and a very well-known and respected educator, Mr. Tom Shields representing the Barstow Casino Resort, our newest assemblyman responsible for the Town of Apple Valley/Hesperia 59th District Assemblyman Tim Donnelly, Mr. Jonathan Weldy, President of the BIA Baldy View Chapter, Ms. Vici Nagel, PresidentCEO of the High Desert Resource Network, Mr. Darin Cooke and our friends at Caltrans-District 8 and the Victor Valley Community Services Council.

I can’t thank Dr. Alfred Gobar enough for 49 continual articles and to help us advance to our 50th edition, while being challenged with health issues. I recently had dinner with Dr. Gobar and I can assure you that he has not lost his sense of humor, is as enjoyable to have dinner with as anyone I’ve ever met and we convey to him on a continual basis how much our subscribers and readership enjoy reading his articles, his editorials, and his facts. Dr. Gobar, keep up the great job, thanks for your friendship and guidance. We look forward to preparing our 50th edition with you.

Lastly, and most importantly, if you wish to continue to receive a copy of the Bradco High Desert Report, any statistical reports, op-ed articles that we post to our website for free, please register at our website at www.thebradcocompanies.com/register. We help that you have a enjoyable holiday and winter season, and we look forward to producing our 50th edition be February 15th, 2012.