Kern Business Journal Dec. 2014-Jan. 2015 by Kern Business Journal

KERN Journal Business

Vol. 3, No. 6

Cover story

Seven Oaks renaissance in high gear

Tenant revamps rejuvenate downtown Page 23

December 2014 / January 2015

Real Estate Issue

ew development is bringing buzz to southwest Bakersfield as residential developer Woodbridge Pacific Group and Bolthouse Properties move forward with an ambitious plan for

Seven Oaks. Their alliance began in 2013 when Woodbridge Pacific Group (WPG) purchased 175 acres from Bolthouse for the Belcourt neighborhood. This uniquely walkable village will link new homes with retail, commercial and professional centers, including Seven Oaks Business Park and Mustang Square. Belcourt Village will add shopping, dining and entertainment choices that residents can experience without driving. “The Bolthouse commitment to quality drew us to Seven Oaks, and we are honored to work collaboratively with people who demonstrate that commitment in every endeavor,” said Carl Neuss, WPG cofounder. WPG has turned to prominent local home builders to participate in Belcourt’s development. WPG cofounder Todd Cunningham noted that the development is being shaped by focus group research with Bakersfield residents. “They talked, we listened and we’re moving forward with diverse new homes, a community park, public art and pedestrian connectivity to the destinations Bolthouse has incorporated in Seven Oaks,” Cunningham said. “It’s an exciting time in southwest Bakersfield, and we’re proud to be part of it. ” — Woodbridge Pacific Group

PHOTO BY GREG IGER

Seven Oaks Business Park is one of the biggest buzzes in local real estate development. Read more about its development on page 14.

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KERN BUSINESS JOURNAL

December 2014 / January 2015

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Journal KERN Business Showcasing Kern County business and industry December 2014 / January 2015 Vol. 3, No. 6 Kern Business Journal is a bimonthly publication of The Bakersfield Californian. Copies are available from The Bakersfield Californian, Kern Economic Development Corp. and Greater Bakersfield Chamber of Commerce. Publisher Ginger Moorhouse President/CEO Richard Beene Senior Vice President Revenue and Marketing John Wells Editor Olivia Garcia Assistant Managing Editor Rachel Cook Specialty Publications Coordinator Katelynn Camp Art Director Glenn Hammett Graphic Designer Allison Escobar To submit a story kbj@bakersfield.com To advertise Gunter Copeland, Interactive Sales Manager gcopeland@bakersfield.com 661-395-7385 To subscribe 661-392-5777

KERN BUSINESS JOURNAL

Editor’s Note

Commercial, residential development adapt, rise to the occasion

any residents will be spending their holiday dollars in local retail plazas, and the Outlets at Tejon is likely to be one of the main contenders for consumers’ business. I spent some time out there recently with my friend, Nancy, and my husband, Julio, on separate occasions. I marveled at the development, which is booming with retail stores and surrounded by nearby restaurants and gas stations. However, the general public knows little about the behind-thescenes work that the county did to help the developer complete their vision. A lot of steps must be taken and concerns addressed when building a new project in city or county. In this issue, Allan Krauter of the county’s administrative office provides us a glimpse into the planning process that made the Olivia Garcia outlets a reality. His narrative follows a theme of this issue, which focuses on commercial and residential real estate growth and changes. In this issue, you will see what methods are being used to improve the development plans that lead to economic growth in Kern County. Writer Diana Greenlee investigates how business owners setting up shop in downtown Bakersfield are renovating and rejuvenating the district. In another piece, we see how churches, schools and private businesses are saving money through solar energy. Meanwhile, Bolthouse Properties and developer Woodbridge Pacific Group are joining together in a partnership that redefines community

PHOTO BY HENRY A. BARRIOS

The opening of the Outlets at Tejon is a success story of how the county worked closely with businesses to complete a major project on time.

developments. And big developments are coming on the logistics front at properties owned by Roll Real Estate. In another note, David Milazzo writes about how technology is transforming how real estate agents are delivering home details to buyers. These are just a few examples of local trends moving commercial and residential real estate development in our county. Olivia Garcia is editor of the Kern Business Journal.

Business at-a-glance “We have always been a quiet force on the advertising scene. We continue to do consistent, solid work for our clients throughout the years, and we put our hearts into whatever project we are working on,” Tom Saba said in a news release. “We didn’t even know we were in the running. It blessed us to see that people voted us the best, and we are very grateful to this community and attribute our long-standing success to them.” — Kern Business Journal

PHOTO COURTESY OF SABA AGENCY

The staff members of Saba Agency are celebrating the firm’s anniversary.

Saba Agency celebrates silver anniversary Saba Agency, a Bakersfield marketing and communications firm, is celebrating 25 years in business. Founded by Tom Saba in 1989, the company now boasts a staff of

12, many of whom have worked for the business for 10-plus years. While the agency has won Addy awards and national awards, it was also voted the “Best Advertising Agency” in Bakersfield Life Magazine’s annual Best of Bakersfield in 2014.

PG&E rate plan helps businesses stay and grow jobs in California — 861 jobs saved or planned in first four months of utility incentive program As cities and counties throughout Central California continue to suffer serious unemployment, Pacific Gas and Electric Co. and its local teams are working to keep businesses and their jobs in the state. PG&E is offering significant reductions in electric rates to eligible California employers so they can keep, expand or launch new operations, rather than leave the state. In just over four months, the new rate has helped 10 California employers save or potentially add a total of 861 jobs, boosting the state and local economy. Attracting and retaining local employers and jobs has never been more important than here in Kern County. PG&E is encouraging any local businesses that are considering leaving the area to learn more about the new rate. There is still

time to be the first Kern County business to take advantage of the PG&E Economic Development Rate. The City of Stockton is the closest area with a business participating. For more information on the rate plan and other economic development services at PG&E, visit www. pge.com/economicdevelopment. — Denise Newton is a senior manager for PG&E’s Kern Division Leadership Team, one of PG&E’s 19 division leadership teams focused on providing customers safe, reliable and affordable energy with a strong focus on excellent service.

Denise Newton

KERN BUSINESS JOURNAL

December 2014 / January 2015

Chamber Roundups Dec. / Jan. Events

Greater Bakersfield Chamber of Commerce Dec. 1, 8, 15, 22, 29 – Strictly Business, 10 to 11 a.m. The Chamber’s live business broadcast is online at Bakersfield.com. Dec. 5, 12 – Governmental Review Council, 7:30 to 8:30 a.m., Greater Bakersfield Chamber of Commerce, 1725 Eye St. Dec. 9 – “Bakersfield: The Next 5 Years” event, 11:30 a.m. check-in and networking; noon to 1:30 p.m., program and lunch. $45 for members, $75 for nonmembers, Bakersfield Marriott at the Convention Center, 801 Truxtun Ave. Dec. 11 – Small Business Networking Breakfast, 7:30 a.m., check-in and networking; 8 to 9:30 a.m., program. $25 for members, $50 for nonmembers, Greater Bakersfield Chamber of Commerce, 1725 Eye St. Dec. 18 – Holiday Mixer, 5:30 to 7:30 p.m., Greater Bakersfield Chamber of Commerce, 1725 Eye St.

Kern County Hispanic Chamber of Commerce Activities for December and January: • Ribbon cutting ceremony set The KCHCC will host a grand opening and ribbon cutting ceremony for the new location of Arredondo Multi Services. Come join Christina Arredondo to celebrate the grand opening and ribbon cutting of her business. The ribbon cutting will be held at 6 p.m. Dec. 3 at Arredondo Multi Services, 429 Chester Ave. • Holiday reception The KCHCC invites the public to attend the Kern County Holiday Membership Appreciation Reception at 5:30 p.m. Dec. 9 at The Padre Hotel. Guests will be treated to holiday cheer, appetizers, refreshments, raffle, photographs, and more. There is no cost to attend. In the spirit of the holiday, the Hispanic Chamber will be accepting unwrapped toys and monetary donations, which will go to the Boys and Girls Club in Lamont and Kern County Cancer Fund. For more information or to RSVP, please contact 633-5495.

• Email marketing strategies for the holidays and beyond Learn how to build the relationships that are the key to your business during the holiday season. It’s that time of year, the hustle and bustle of the holiday season is upon us. There is no better time to reach out to your customers, bring new clients in, and boost repeat and referral business. Whether you have a retail shop, provide a specialized service or work businessto-business, or have a nonprofit in need of outreach, this workshop will provide simple, practical tips for closing out 2014 on a high note and jumping right into 2015. The event will be held at 9 a.m. Dec. 3 at the Kern Access Center, 1330 Truxtun Ave., Room 116. Participants will learn: • How to leverage social media to engage new and existing customers • Which promotions and special offers work for your business right now • Best ways to drive response from your emails and social posts • Easy strategies to keep your offers looking good on a cellphone or tablet • How to create and manage a campaign for the holidays and beyond

(it’s easier than you might think!) • Create a simple playbook to plan your marketing activities all season long • Most importantly, how to measure your results to get more out of your effort along the way. Please come ready to meet other small business owners and nonprofit professionals. We are all wearing many hats, and we can all share and learn from each other. This session is best suited for beginners in online marketing, but all skill levels are welcome. The subject matter is less about technology and more about how to grow your business or organization. Join us and rock your holidays this year! Agenda • 9 to 10 a.m. – Getting started with Constant Contact demonstration. • 10 a.m. to noon – Email marketing strategies for the holidays and beyond. • Noon to 1 p.m. – Advanced tips and tricks with Constant Contact (Sign up tools, growing your list, auto responders). To sign up or reserve your seat, contact KCHCC at 633-5495. — Jay Tamsi, KCHCC

Dec. 24 – 26 – Chamber closed for Christmas. Jan. 1 – Chamber closed for New Year’s Day. Jan. 5, 12, 19, 26 – Strictly Business, 10 to 11 a.m. The Chamber’s live business broadcast is online at Bakersfield. com. Jan. 9, 16, 23, 30 – Governmental Review Council, 7:30 to 8:30 a.m., Greater Bakersfield Chamber of Commerce, 1725 Eye St. Jan. 13 – Labor and Employment Law Update Forum, 7:30 a.m., check-in and networking; 8 to 10 a.m., program with complimentary light breakfast provided. Free to members, $40 for nonmembers, Greater Bakersfield Chamber of Commerce, 1725 Eye St. Jan. 22 – Annual installation dinner, 5:30 p.m., DoubleTree by Hilton, 3100 Camino Del Rio Ct. Jan. 28 – Social Media Therapy event, 11:30 a.m., check-in and networking; noon to 1 p.m. program and lunch. $30 for members, $60 for nonmembers, Greater Bakersfield Chamber of Commerce, 1725 Eye St. For more information, or to register for any of these events, please visit www.bakersfieldchamber.org or call 327-4421. — Melissa Rossiter, GBCC

Kern County Black Chamber of Commerce The mission of the Kern County Black Chamber of Commerce is to serve as an advocate for the creation, development, and general economic growth of its members and African American businesses in the Kern County area. Its vision is to create a prosperous and thriving African American business environment. Established in 2003, the KCBCC opened its office in October 2005, and the KCBCC

North of the River Chamber of Commerce The North of the River Chamber of Commerce is gearing up for a fruitful 2015. With new Executive Director Cathy Wolfe at the helm and a brand new website, the chamber that caters to business owners

Foundation was formed in 2006.

Activities for December and January: • Dec. 2 – Trip to Eagle Mountain Casino, 11:30 a.m. to 6:30 p.m. Meet at 2201 V St. in Bakersfield for bus pickup. Cost is $20. Call Kern County Black Chamber 326-1529 to reserve a seat. • Dec. 3 – Constant Contact Workshop

in the Oildale and Rosedale area is looking forward to expanding membership and increasing its scholarship fund. Founded in the early 1920s, the NOR Chamber of Commerce has been a resource for citizens and business owners alike. The organization is known for its monthly luncheons, mixers and quarterly fundraisers all aimed at helping local north of the river high school seniors move on college. Join the NOR Chamber of Commerce for their luncheon.

“Email Marketing Strategies for the Holidays and Beyond!” 9 a.m. to 1 p.m., 1330 Truxtun Ave. Call Kern County Black Chamber 326-1529 for more information. • Jan. 20 – Annual membership meeting, 5:30 to 7:30 p.m., location TBD. — Carol Holley, KCBCC

Traditionally the December luncheon is a celebration of the Christmas holiday, and the chamber is proud to announce a performance by singers from Beardsley High School. Dec. 11 – Monthly luncheon, 11:30 a.m. to 1 p.m., Hodel’s Country Dining, 5917 Knudsen Drive. $20 members, $25 nonmembers. — Miranda Whitworth, NOR

December 2014 / January 2015

KERN BUSINESS JOURNAL

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Wells Fargo places special focus on building long-term customer relationships. Our local commercial bankers take the time to listen and learn about your real estate business ventures, so we can offer you informed recommendations, relevant solutions, and rapid credit decisions. Whether new construction, expansion, or renovation, Wells Fargo offers specialized financial services for real estate development. In fact, Wells Fargo is proud to have provided financing for the construction of the Outlets at Tejon, Kern County’s newest, high-end outlet shopping destination. To find out more about how Wells Fargo can help finance your next real estate development project, contact: Bakersfield Commercial Banking Office Geraud Smith, Regional Vice President • 661-637-2610 • geraud.b.smith@wellsfargo.com Jeff Stone, Regional Sales Manager • 661-637-2632 • stonejb@wellsfargo.com Wells Fargo Commercial Banking

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December 2014 / January 2015

Commercial Real Estate

Kern County’s can-do attitude spurs Tejon projects By Allan Krauter

ern County supervisors know that development means jobs and economic growth. And since time is money for real estate projects, Kern County planners and building inspection officials want to help developers realize their vision as soon as the law allows. California’s exacting environmental rules make case-bycase processing of proposed projects a non-starter for timely development, according to Kern County Planning and Community Development Director Lorelei Oviatt. She said Kern County has instead moved to creating specific plans that spell out environmental impacts and mitigations for several projects within a proposed development area. “Investing at the beginning in a comprehensive detailed development makes the difference,” Oviatt said. “Doing the environmental approvals up front helps to streamline individual permitting so developers and investors know their projects will get built on time, once the environmental review is done.” The burgeoning development at Tejon Ranch illustrates how well the county’s approach is working. In 2003, the county did a project-level environmental impact report for 15 million square feet of industrial and commercial development on 1,109 acres of Tejon Ranch land at the foot of the Grapevine. After the plan for the Tejon Commerce Center cleared court challenges in 2007, the county made sure projects stayed on track. One-week turnaround on over-the-counter plan reviews allowed fast issuance of building permits. The Caterpillar facility at Tejon went from plan review to building completion in only eight months, an unprecedented amount of time for such a major project. The Outlets at Tejon prove the value of proactive permitting. County staff had to throw out the conventional playbook to make sure that a project totaling nine buildings, 350,000 square feet and more than 75 tenants would open on schedule. “Our goal is to complete plan reviews for commercial and industrial projects within three weeks,” said Greg Fenton, County Engineering, Survey and Permit Services Director. “In this case, that just wasn’t possible, but by being proactive and flexible, we helped the contractors climb a pretty steep mountain in a very short time.” As they do with all applicants, Fenton’s staff met with the project team well in advance of any permit submittals. When bids for the nine shell buildings that would house retail tenants came in much higher than anticipated, the applicant decided to value-engineer the buildings’ structural system to lower costs. As re-engineering went forward, county workers reviewed the rest of the submitted documents for code compliance with the help of structural consultants, who also suggested ways the applicant could save on construction costs. County inspectors met regularly with construction managers, signed off daily on work, had the lead inspector on site whenever necessary, and added inspectors and specialists as needed to keep construction on schedule. A master online spreadsheet allowed inspectors and contractors to document progress from remote locations. Before shell buildings were finished, tenant improvement construction began at several different locations in the nine buildings, so instead of waiting for an entire building to be completed and approved, county inspectors signed off on individual tenant spaces. When plans for the shell buildings changed even while tenant spaces were being built, county inspectors documented and coordinated the work of the tenant improvement contractors who were making changes to the

PHOTO BY HENRY A. BARRIOS

The Outlets at Tejon Ranch tower was designed with the Bakersfield clock tower in mind. County workers hustled to facilitate the opening of the outlets by Aug. 7.

shell contractors’ work. As the grand opening date approached and contractors raced to finish the outlets on time, county building, fire and public health personnel conducted immediate inspections and provided ideas and recommendations for compliance. Certificates of occupancy were issued to most of the tenants, but a few still had minor, non-safety related items to complete, so Fenton issued temporary certificates of occupancy to enable those tenants to participate in the grand opening. “Kern County was instrumental in enabling us to deliver the Outlets at Tejon on time,” said Hugh McMahon, Tejon Ranch Senior Vice President of Commercial and Industrial

Real Estate. “All county agencies engaged in the development were fully committed to the project’s successful opening and worked closely with us toward that end.” The successful launch of the outlets has Tejon Ranch officials already talking to Fenton’s staff about the next phase of the shopping destination, which will begin in 2015. It shouldn’t be surprising if many of the same contractors return for phase two, as several of them told Fenton that a project of this scale simply couldn’t have been built this fast anywhere else but Kern County. Allan Krauter is the senior administrative analyst for the Kern County Administrative Office.

December 2014 / January 2015

KERN BUSINESS JOURNAL

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December 2014 / January 2015

Rental market remains ‘slow and steady’ By John Cox

he upshot of Bakersfield’s rental market these days is “slow and steady,” which is good for both investors and renters. Compared with neighboring communities, Bakersfield rental properties are affordable to buy into, there’s high demand, and rents are reachable for the average person. The only problem for renters is it can sometimes be hard to find a place. But that may be changing in the next year or so as more apartments are built. Rent prices haven’t jumped here as much as they have recently in Los Angeles and Fresno counties, even though industry data show their markets aren’t as tight as Bakersfield’s. Property manager Darren Powers said more people are moving to Bakersfield, it’s relatively inexpensive to invest in multifamily housing locally, and landlords understand renters here can’t pay steep price hikes. “The rank and file can’t afford higher rents, and we’re sensitive to that,” said the owner of Atco Property Management Inc. on H Street.

Novato-based RealFacts reported Bakersfield’s thirdquarter apartment vacancy rate, 2.3 percent, was the lowest in at least two years. It compared favorably with Fresno County’s 4.2 percent in the third quarter, and LA County’s 5.4 percent. At the same time, RealFacts said, Bakersfield’s average apartment rents have increased only 1.7 percent in the last year to reach $949 per month. That increase was significantly less than Fresno County’s (up 4.9 percent at $855) and LA County’s (6.1 percent, $1,939). These and other conditions have made Bakersfield the sixth-best rental market in the West for investors, just after LA and before Fresno, according to a second-quarter ranking by Seattle-based All Property Management. The company noted Bakersfield’s solid performance in terms of vacancies, increasing property values and job growth. But the city’s strongest suit, All Property CEO Jacob Colker said by email, was its capitalization rate, defined as a property’s net operating income divided by its cost. The city’s second-quarter capitalization rate of 9.34 percent was the highest among all other cities in the company’s top 13 in the West.

Marc A. Thurston, senior vice president at Newmark Grubb ASU & Associates, said he has been “pleasantly surprised” at the strength of the local rental market despite the recent addition of 340 apartment units. But, he added that an additional 742 apartment units are scheduled to open over about the next year. “The fourth quarter and first quarter 2015 will be interesting to watch as we will see how deep the demand for rentals is,” he wrote in an email. Bakersfield real estate appraiser Gary Crabtree, who was recently hired by city government to study the local apartment market, said one reason the rental market remains tight is that investors who bought single-family homes as rental properties have begun to sell to owner-occupants. Still, he predicted a shift toward even more local rental activity. Interest rates are poised to rise, he noted, and families’ disposable incomes are declining. Both would make it harder for people to buy homes of their own, he said. This article was originally published on Nov. 2 in The Bakersfield Californian.

Solar energy changing Kern County’s landscape By Katie Van Dyke

he benefits of solar are changing Kern County everywhere you turn. Friends and colleagues are talking about lower energy bills, businesses are cutting utility costs and becoming more competitive, and local churches and schools are saving money while providing shaded parking with solar carports. Even some of our fallowed farmlands left barren by the drought are getting a new lease on life as solar farms. Have these innovative approaches become the next mainstream source of affordable power? Several local organizations think so. “The Central Valley, and Kern County in particular, is better suited for solar energy production than almost any other location in the entire nation,” said David Morton of A-C Electric Company. “Our high utility rates and abundance of sunshine makes solar an ideal solution for companies looking to lower their operating expenses. Solar also helps to reduce our carbon footprint and helps improve the air quality in the Central Valley, which is important to all of us.” Newby Rubber, Inc. of Bakersfield finished a 446-kilowatt system in 2012. The company completed the installation over three separate phases and has seen significant savings. “Solar was the best facility upgrade that we could have done,” said Kelly Newby, president of the company. “As a family-owned company since 1958, we wanted to make sure

PHOTO COURTESY OF A-C SOLAR

Valley Baptist Church’s carports tap into solar energy.

future generations had a strong foundation in uncertain economic times. Solar helped us plan for the future and take control of our rising utility expenses.” Many businesses and government organizations are choosing to install solar systems because they are reliable, low maintenance and have a relatively non-invasive construction process. “I never lost a day of production during construction,” Newby attested. But existing facilities aren’t the only ones that are adopting solar. Many developers are integrating solar into new construction. West Day Village apartments is installing solar in all of its luxury apartment homes. “It is important to us that our residents have the opportunity to take advantage of

environmentally responsible housing. We also wanted to make this housing more affordable by passing along the energy savings,” said Michael Hair Jr., developer of West Day Village. The benefits of going solar are appealing for many, but most are unsure of the process and where to begin. A thorough analysis of the energy usage patterns and utility rate structure options is the first step in determining if solar is right for you. A good solar contractor should also be able to provide a breadth of financing options and the ability to help you navigate which of those solutions is best for your organization. In many cases, organizations can get a system installed with zero money down and reap the benefits of immediate savings due to a dramatic reduction

in their utility costs. But the most important factor in going solar is choosing a quality product and a contractor who will be able to service and support your facility over the life of the system. Most solar panels are guaranteed for 25 years and the best contractors offer a production guarantee. But remember that panels are only really guaranteed for the longevity of the companies that are backing these warranties and production guarantees. “We requested proposals from a number of experienced, reputable companies. A-C Electric Company stood out as the one best equipped to meet our needs, time schedule, and who understood and appreciated our overall vision and mission,” said Stephen Dinger, president of Bakersfield Christian High School. The 500-kilowatt solar carport project at BCHS is still being constructed, but the school is eagerly anticipating the tremendous savings the system will produce. “We believe that conserving the resources God has given us is one more way we honor him. The dollars saved by using solar will directly benefit our ability to provide a quality program. Money spent on energy can now be redirected to the classroom and to financial aid,” Dinger said. The beauty of solar is that it allows organizations to hedge against rising utility costs, often with little or no money out of pocket, and reinvest the savings into their organization and the community. Katie Van Dyke is the sales and marketing coordinator at A-C Solar.

December 2014 / January 2015

KERN BUSINESS JOURNAL

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December 2014 / January 2015

Local, national businesses lead the green way in Bakersfield in pursuit of LEED certification By Sasha Windes

ore and more businesses are choosing to operate with sustainability in mind, meaning more and more sustainability-related terminology is making its way into the vernacular. Terms like “green,” “high-efficiency” and “zero waste” are tossed around in news, magazines and everyday conversation. While some of the terminology is self-explanatory, some remains only vaguely familiar. Take the often seen, but slightly mysterious phrase, “LEED certified.” This is proudly stamped on the outside of buildings, so it’s clearly an accomplishment. But what exactly is an LEED-certified building? The acronym itself stands for Leadership in Energy and Environmental Design. Much like the Kern Green’s Green Business Certification Program for local buildings (more information available at KernGreen.org), LEED is a largerscaled, nationally recognized certification offered by the U.S. Green Building Council to buildings designed with sustainability in mind. The first step for any company interested in having an LEED-certified building is to choose one of the five rating systems designed to address various project types. These rating systems include “Building Operations and Maintenance,” which applies to existing buildings, “Homes,” which applies to residential buildings, and “Building Design and Construction,” which applies to buildings undergoing major renovations or new construction. Once the correct rating system is

PHOTO BY LYDIA GONZALES

The southwest Kohl’s department store in Bakersfield is LEEDcertified.

chosen and the company is registered, the U.S. Green Building Council then provides several resources to help detail the process and requirements, and provides support to the applicant. Each company must meet prerequisites within several different credit categories in order to earn points for each category. The U.S. Green Building Council is comprised of a team of expert professionals who are constantly working to ensure that the prerequisites are in-line with the highest and most upto-date building and performance standards. Categories cover

everything including the materials used, proximity to diverse transportation options, water efficiency, energy usage, indoor air quality and innovation. The number of points required for certification varies per rating system. The points earned in the credit categories will then determine what level of certification a company has achieved. Certification levels include certified, silver, gold and platinum. Once the company has completed its work, it must submit an application detailing its efforts to the U.S. Green Building Council, who will determine the certification level. Companies looking for a little local inspiration can check out one of our local LEED-certified buildings. East Bakersfield Dental Center, Pacific Gas and Electric Company’s Bakersfield Service Center, Kern Schools Federal Credit Union’s administrative office, Kohl’s in the southwest and The Shops at River Walk Building J, have all obtained the certified level. Local silver-level LEED buildings include the Kohl’s northwest location, The Shops at Riverwalk Building A and Clinica Sierra Vista Dental Center in Arvin. Frito Lay Kern, the PCL Industrial Services’ building and the Rabobank off Coffee Road have all earned the gold certification level. As you can see, these companies run the gamut from major national corporations to local businesses, from dental clinics to retail stores, demonstrating that LEED certification is achievable for businesses of all sizes. Sasha Windes is the founder of Kern Green, a Bakersfield nonprofit committed to protecting the environment through education and awareness.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Happy Holidays

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Community banks help strengthen Kern’s economy By Bruce Jay

ommercial loan demand across all sectors of Kern County’s market has been increasing over the past two years as the local economy strengthens. Residential inventory stemming from foreclosures and short sales has dissipated, creating demand for new housing and construction loans. New commercial real estate projects also are coming on-line. Bolthouse Properties and Castle & Cooke are leading the commercial revival Bruce Jay in southwest Bakersfield, while several major companies are building large distribution facilities in the northwest. In the wake of the 2008 economic downturn, some believed banks had withdrawn from the commercial lending market. In reality, banks had substantially more funds available for lending during the recession when compared to historic levels. Yet, economic conditions resulted in fewer loans being made. The recession was deep and long lasting, causing most businesses to experience lower sales and slower growth. Business expansion plans were also placed on hold. This resulted in a decline in

PHOTO COURTESY OF BOLTHOUSE PROPERTIES, LLC.

Houchin Community Blood Bank’s new facility.

the number of quality loan applications. Improving economic conditions have come with an increase in the number and quality of applications. Banks still have substantial liquidity, which is creating strong competition for loans. With interest rates at historic low levels and strong competition among banks, businesses can borrow money at very attractive rates and terms. Community banks, such as Bakersfieldbased Valley Republic Bank, are strong competitors in this growing loan market. A public company owned by about 300 local investors, Valley Republic Bank has a board

of directors, management team and staff that include many people who were born and raised in Kern County. Local ties give community banks the knowledge, understanding and appreciation of Kern County’s economic conditions and the needs of its businesses. This knowledge, coupled with local decision-making, allows for quicker loan decisions and agility in business operations. No other business is more deeply ingrained in the economic fabric of Kern County. Deposits acquired from local businesses and households are deployed back into

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the community through loans. In contrast, funds deposited at a regional or national bank may be used to make loans anywhere in the bank’s “service area.” And local loans have a multiplier impact on the economy. Proceeds are used in construction projects that create jobs and material acquisition. Once a project is completed, a facility is used for manufacturing, warehousing, offices, etc., which continues job growth, purchasing and other business activities. Each dollar invested in a loan produces $2.50 to $4 of local economic benefit. A community bank’s local board of directors, management and staff also personally contribute to the community with involvement in local causes. For example, in 2012, one of Valley Republic Bank’s directors and I were asked to join the capital campaign committee for Houchin Blood Bank as they approached the construction of their new facility in southwest Bakersfield. We assisted with fundraising and made both personal and corporate pledges to this valuable Kern County facility. This is one of many examples of Valley Republic Bank’s commitment to this community that extends beyond banking services. Community banking is about service and commitment to community. Bruce Jay is the president and CEO of Bakersfield-based Valley Republic Bank.

December 2014 / January 2015

KERN BUSINESS JOURNAL

New Advances for People with Disabilities: Helping adults, children reach their potential By David Shawn Kennemer

nspired by her sister, Rosemary, the late Eunice Kennedy Shriver became one of the nation’s most influential advocates for people with intellectual and developmental disabilities. From her advocacy grew the International Special Olympics Games, with the idea that if you give people with intellectual and developmental disabilities the same opportuDavid Shawn nities and experiences Kennemer as everyone else, they can accomplish far more than anyone ever thought possible. It is with this same idea that New Advances for People with Disabilities (NAPD) has embarked on an ambitious program to build a new Center for Creative Achievement on Brittan Street in Bakersfield. The 17,000-square-foot facility will be located near NAPD’s Adult Enrichment Center on North Sillect Avenue. With groundbreaking scheduled for next

spring, the new facility will replace a much smaller and older center located in downtown Bakersfield. The new facility, which will open in 2016, will better accommodate more than 180 adult clients enrolled in a wide range of programs, and allow the expansion of creative and performing arts activities. The state-ofthe-art, green building will include an outside recreation area and an indoor health and wellness center. The Center for Creative Achievement is NAPD’s integrated program that provides a creative learning environment for adults with intellectual and developmental disabilities. Activities and classes include drama, art, computer literacy, cooking, health and wellness. A nonprofit in Kern County for more than three decades, NAPD has more than 14 programs to meet the daily needs of more than 500 children and adults with intellectual and developmental disabilities. Programs range from adult day programs and children’s after-school programs, to financial literacy and supported living services. The new $3.2 million Center for Creative

RENDERING COURTESY OF PAUL DHANENS

New Advances for People with Disabilities is planning a new 17,000-square-foot facility.

Achievement is being designed by Bakersfield architect Paul Dhanens and constructed by S.C. Anderson, Inc., a Bakersfield general contractor. NAPD already owns the land for the center and has set aside funds to improve existing facilities and build new ones. Grants and community support assist NAPD in providing extensive services to Kern County children and adults with intellectual and developmental disabilities. A legacy campaign has been launched to raise $600,000 for NAPD’s building fund. The legacy campaign provides naming and sponsorship opportunities for individuals and companies interested in helping construct the new Center for Creative Achievement. Among the rooms available for naming are the fine and performing arts center, music

center, health and wellness center, computer lab, culinary skills center, learning center, theater and multi-purpose room, and senior activity center. The theater and multi-purpose room in the new center will have a raised and lighted stage, and the entire facility will emphasize wellness, fitness and athletics. Future plans call for the inclusion of a greenhouse and the involvement of the agricultural community in NAPD’s programs. The programs, advocacy and skill building that NAPD offers empower clients to live more productive, rewarding and independent lives. David Shawn Kennemer is the associate executive director of NAPD. For information, visit www.napd-bak.org.

WE’VE MOVED

Sprague Real Estate Group is pleased to announce the opening of our new office located at 7702 Meany Avenue Suite 105 Bakersfield, CA 93308 Sprague Real Estate Group is a local, family-owned and operated commercial real estate brokerage with decades of experience in sales, leasing, and management. We are grateful to work with local investors and community leaders, and welcome you to stop by anytime.

Have a Merry Christmas and we wish you success in 2015!

KERN BUSINESS JOURNAL

December 2014 / January 2015

Tradition of excellence continues as Seven Oaks area grows By Laura Wiener

olthouse Properties, LLC and its business partners are driving the thoughtfully master-planned Seven Oaks region in southwest Bakersfield into a rapidly growing commercial and residential hub. “We’re very pleased and encouraged by the continued strong momentum taking place in the Seven Oaks/Buena Vista corridor,” said Bruce Davis, vice president of development at Bolthouse Properties, LLC. “The quality of the businesses and retail tenants being attracted to the area will ensure that a tradition of excellence remains here for generations to come.” Designed to be linked to the unique Seven Oaks trail system and accessible to the new Belcourt Seven Oaks residential village, Seven Oaks Business Park has grown to be home to some of the region’s most significant commercial projects. Houchin Community Blood Bank’s administrative headquarters opened there in 2013. In 2014, the 60,000-squarefoot administrative headquarters of Kern

“We’re humbled as we watch the Seven Oaks/Buena Vista corridor develop from concept to reality” — Bruce Davis, vice president of development at Bolthouse Properties, LLC. Schools Federal Credit Union and the western regional headquarters for Seneca Resources began operations in the business park. Currently under construction and opening in 2015 are Hoffmann Hospice of the Valley, DaVita Dialysis, The Village at Seven Oaks Assisted Living and Memory Care and the Alzheimer’s Disease Association of Kern County. The momentum continues with the construction of a 27,000-square-foot commercial office building in the park that will be available for new tenants beginning early next year. This commercial growth has attracted many popular local, regional and national stores and restaurants to the corridor. At Buena Vista Road and Ming Avenue, Bolthouse Properties has developed Grand Island Village, a retail center with gorgeous Tuscan architecture consistent with the Seven Oaks tradition. Within the Village, you’ll find the Dewar’s family’s first Express Drive-Thru

PHOTO BY FELIX ADAMO

The western regional headquarters for Seneca Resources opened in Seven Oaks Business Park in 2014.

location, locally owned Wiki’s Wine Dive & Grill, Sports Clips and Sully’s, an unexpected gas station experience. The Sullivan family’s gas station comes complete with a grocery area, including one of the city’s finest wine and specialty beer selections. The area’s premier community bank, Valley Republic Bank, and others are also located at Grand Island. Phase two of Grand Island Village will be completed in early 2015 and will welcome Sol y Luna Mexican Cuisine, Opulent Salon Di Bellezza, and Bakersfield’s first “Diamond-level,” 30,000-square-foot In-Shape club. “A limited number of spaces, ranging from 1,260 square feet to 5,479 square feet, remain available for tenants in the center’s new shops building,” Davis said. Further south at White Lane and Buena Vista Road, Mustang Square will soon be home to a new Broken Yolk restaurant and the medical offices of Dr. Steven Chen opening in 2015. Additional retail space at Mustang Square is slated for construction in early 2015. Complementing the corridor’s expanding commercial and retail activity is the new community Belcourt Seven Oaks, featur-

PHOTO BY GREG IGER

Seven Oaks Business Park is one of the biggest buzzes in local real estate development.

ing 793 elegant single-family residences by Woodbridge Pacific Group and local builders, and Park Square at Seven Oaks, a luxury gated community developed by Fuller Apartment Homes.

“We’re humbled as we watch the Seven Oaks/Buena Vista corridor develop from concept to reality,” Davis said. Laura Wiener is the owner of Spectrum Communications in Bakersfield.

December 2014 / January 2015

KERN BUSINESS JOURNAL

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For docs looking to buy, pickings are tight in hot areas

KERN BUSINESS JOURNAL

December 2014 / January 2015

Taking the temperature of commercial real estate By Wayne L. Kress

By Diana Greenlee

f you’re a doctor hoping to buy office space near Cal State Bakersfield, you’re out of luck. Alex Balfour, associate director for Cushman & Wakefield Pacific Commercial Realty Advisor, said there’s a demand for physician-owned condos and offices, but not much available, especially in the sought-after section of town referred to as the “University Corridor,” located between Coffee and Buena Vista roads, and Stockdale Highway and Ming Avenue. The corridor sits smack dab in the middle of upscale homes and newer businesses, making it appealing for doctors wishing to draw from the area for patients. But for most docs looking to purchase, it’s not happening. “If you were a doctor trying to buy on Stockdale Highway across the street from Mercy Southwest (Hospital) or on River Walk, there is zero-point-zero percent to purchase,” he said. “To lease, there is some space; maybe 5 to 6 percent (available).” Balfour, 32, said northwest Bakersfield was a “new frontier” for medical facilities pre-recession, and there are still a few places for doctors, but not much. He said the Crown Pointe development at Brimhall and Coffee roads is selling to physicians, but the pickings are slim. The center at Brimhall Road and Calloway Drive is “leased up or sold” and the center at Noriega Road and Calloway Drive is “leased and sold – 98 percent.” It’s a good time to be a landlord right now,” Balfour said. Olivieri Commercial Group Principal Anthony Olivieri agreed. He said there’s been a market shift for doctors, causing them to migrate from downtown, first along the Truxtun Extension, into facilities on Bahamas, Empire and Commerce drives. Now those areas are saturated. “As they filled in, it pushed medical further west,” he said. The Westside Parkway has made the area near the freeway attractive for physicians who make the trek to the downtown hospitals, according to Olivieri, 49. He said it’s a quick commute from his office at Calloway and Brimhall to central Bakersfield. “I can get downtown in seven minutes,” he said. “It used to take at least 15.” Olivieri said the perimeter including Gosford Road, Ming Avenue and Buena Vista and Brimhall roads gets a lot of interest, but there’s a “high barrier to entry.” “We have people asking us frequently to build projects,” he said. “But we can’t find projects in that area.” He said Bolthouse Business Park at Buena Vista Road and Bolthouse Drive offers smaller parcels that doctors can build out. It may be the only option to get close to CSUB. “In and around Cal State won’t see a major influx of doctor-owned properties,” Olivieri said. Balfour said Bolthouse also has a potential business condo project coming up at Allen Road and Ming Avenue, but it’s two to five years away. “The demand is there,” he said. Roll Real Estate Development is actively developing 80 acres in south Bakersfield between Harris Road and Panama Lane. The CrossRoads Business Park is slated for light industrial, office and medical facilities. As a show of confidence, Roll is constructing spec buildings, which should be complete in 18 to 24 months. “They are turning dirt right now,” he said.

akersfield’s vibrant economy continues to outperform most other California cities. Kern County is among the global leaders in all forms of energy production — fossil fuels, solar and wind — while our agricultural sector rose to number two in the country in 2013. This thriving background produces our commercial real estate activity. Industrial Since the beginning of 2011, industrial occupiers have bought or leased 6.6 million square feet of building space, and vacancy declined from 11.2 percent to 4.8 percent today. The market is now 38 million square feet in size, and two significant situations exist: the lack of available standing product, leading to a high number of build-to-suits, and the dominance by Roll Real Estate Development on the supply side. Roll’s Paramount Logistics Park (1,700 acres at 7th Standard and Zachary roads) has seen the most new construction, including a 1.75 million-square-foot Ross Dress For Less distribution center, a 1 millionsquare-foot American Tire distribution center, a 350,000-square-foot spec building and a 210,000-squarefoot FedEx distribution space. These projects underscore the increased recognition of Bakersfield’s importance to the logistics industry. For the non-logistics industries, the airport area has been the most active, with about 75 percent of the market activity occurring there. Roll’s North Meadows Business Park (145 acres at Highway 65 and Imperial Road) is the location of an 84,000-square-foot build-to-suitfor-lease for CHEP USA and where Roll will spec-build three buildings in 2015, one 85,000-square-foot building and two 45,000-square-foot buildings. C&C Properties is now developing a 138-acre business park, to be called Landings Commerce Center, immediately north of the William M. Thomas Passenger Terminal, and another local developer just acquired 94 acres immediately east of the terminal to build a mixeduse development. Elsewhere, JS Ag Specialties just acquired a 24-acre site at Highway 99 and Lerdo Highway on which it will build an 80,000-square-foot distribution facility. Roll also broke ground this fall on CrossRoads Business Park, an

SOURCE: CUSHMAN & WAKEFIELD / PACIFIC COMMERCIAL REALTY ADVISORS

80-acre business park in southwest Bakersfield immediately south of Sam’s Club that will include 685,000 square feet of planned mixed-use building space, about 500,000 square feet of it to be light industrial. Roll also intends to spec-build in this park in 2015. Office The office market hasn’t produced any significant transactions in 2014, but there has been solid activity and vacancy has fallen to 7 percent, which compares favorably to the national average of 14.8 percent. The market is now 11 million square feet in size, but it is sure to grow, as there are also several single-tenant requirements of 50 to 150,000 square feet in the face of no existing availabilities larger than 10,000 square feet. It appears as though another round of development is about to occur, and several projects are planned that are looking for a lead tenant to kick-off construction. Planned projects are Stockdale Centre, a 270,000-square-foot complex at Stockdale Highway and Coffee Road; University Center, a 275,000-square-foot complex at Camino Media and Seven Oaks Boulevard; River Run Business Park, a 56,000-square-foot building at Stockdale Highway and River Run Boulevard; Seven Oaks Business Park, a 400,000-square-foot mixed-use project at Buena Vista and Bolthouse drives; and CrossRoads Business Park, a 685,000-square-foot mixed-use project at Harris Road and Young Street, including 136,000 square feet of office space. Retail Kern County’s retail sales have grown at an average rate of 10 percent per year since 2009, putting us in the top 20 percent of all retail

markets in California and earning us a five-star rating from the California Retail Survey. We also rebounded to pre-recession performance faster than most areas in the country. The retail base is now 12.5 million square feet and vacancy is down to 10.1 percent. The biggest news is the opening of The Outlets at Tejon in August and the coming of Nordstrom Rack, BevMo! and Sprouts, along with expansions by Hobby Lobby, Ross Dress for Less, T.J. Maxx, Panera Bread and WinCo Foods. Brighthouse Networks also moved from an office building to a retail setting next door to Hobby Lobby. The long-vacant site on California Avenue that formerly housed Three-Way Chevrolet began development this year, and will soon welcome The Habit and Corner Bakery as tenants. Employment in Kern County surpassed pre-recession levels in 2014 and looks to continue growing in 2015. This demand, along with falling vacancy and increasing rents, is enabling a new cycle of development, including two Wal-Mart Neighborhood Markets, one at Olive and Calloway drives, and the other at Brimhall and Allen roads. The start of a long-awaited interchange at Highway 99 and Hosking Road will now allow the huge Bakersfield Gateway power center just south of CarMax to move forward, although there have been no formal announcements as to when. Overall, our commercial real estate market has outperformed other valley cities, and we are poised for the next development cycle across disciplines. Wayne L. Kress, SIOR, is a director and principal in Cushman & Wakefield | Pacific Commercial Realty Advisors, Inc. in Bakersfield.

December 2014 / January 2015

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KERN BUSINESS JOURNAL

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Bakersfield office market remains tight, but where is new demand? By Martin J. Starr

he Bakersfield office market has maintained a vacancy rate under 10 percent for the last 11 quarters. That is nearly three straight years of what is considered a stabilized market while the economy has experienced only moderate growth. The third quarter of 2014 brought an increase of 10 basis points to the vacancy rate, which now sits at 9.11 percent for all submarkets and all classes of buildings within the Bakersfield office submarket. While activity remained marginal, more space was leased in the third quarter compared to the entire first half of 2014; the net absorption topped out just under 65,000 square feet for the quarter. The University Centre submarket vacancy is almost nonexistent with less than 12,000 square feet of vacant office space available in a submarket of 1.75 million

square feet. The suburban submarkets in the southwest and northwest remain under 10 percent vacant, continuing the threeyear trend of stability. Only the central submarket has shown increasing vacancy as activity and interest remains slow. But where is the new demand for growth in the office sector? The boomand-bust cycle in the first decade of the 2000s was primarily fueled by the financial services demand related to the explosion of the residential real estate industry bubble. Bakersfield’s office market is driven mostly by two dominant sectors: government and energy. While the rest of the nation’s office markets were experiencing ballooning vacancy rates that in some cases reached as high as 30 percent during the peak, Bakersfield’s oil and energy focus kept our peak vacancy just under 12 percent. However, good news may be on the way. The U.S. Bureau of Labor Statistics

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reported that the labor market has expanded at a moderate pace in October, posting its ninth consecutive monthly gain above 200,000 new jobs. According to Newmark Grubb Knight Frank’s economic research department, the demand for new office space signaled by new construction of office buildings and the positive net absorption of space is outpacing the demand realized in 2013 by more than double the amount of space. Locally, we have been slow to realize the growth, but when it becomes a reality, developers will be ready to meet the need for more office buildings. There are new developments planned in the University Centre submarket, located south of the Kern River and primarily west of Gosford Road, that can accommodate more than 800,000 square feet of office space. That figure does not include the Bakersfield Commons development at Coffee and Brimhall roads, and barely scratches the surface of what can be developed within the

Seven Oaks Business Park. The 265-acre business park development has been kickstarted with sales of nearly 30 acres of land that will represent more than 220,000 square feet of development in just the last 18 months. Seven Oaks Business Park is the only major development in the University Centre submarket that is actively selling land to users, and a new speculative 27,000-square-foot Class “A” office building on Bolthouse Drive has just been announced that will be completed in the second half of 2015. The scope of the Seven Oaks Business Park development is similar in size to the total acreage of the California Avenue office corridor that was constructed in the 1980s. When, not if, the demand comes, Bakersfield will experience exciting new architecture and construction that will provide innovative and efficient workspace for years to come. Martin J. Starr is a principal at Newmark Grubb ASU & Associates.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Chain Cohn Stiles law firm purchases historic building in downtown Bakersfield By Jorge Barrientos

ince 1870, the southwest corner of 18th Street and Chester Avenue in downtown Bakersfield has been home to vital businesses. It was the site of the first Kern Valley Bank until it closed in 1911, and would remain home to several other banks in the century that followed, including National Bank, Crocker-Anglo Bank, and most recently, Wells Fargo and Washington Mutual. Goodwill Industries took over the 30,000-square-foot building in the 2000s until it moved out three years ago. The building has been empty since â&#x20AC;&#x201C; until now. Chain Cohn Stiles, the longtime Bakersfield-based personal injury law firm, will soon call the two-story building at 1731 Chester Avenue home after purchasing it in October. Chain Cohn Stiles plans to occupy the ground floor and lease out the upper level, and possibly basement space, after it completes improvements to the building. The purchase includes a parking lot to the west on Eye Street. The firm also expects to install parking at an east-west alleyway south of the building for clients, many of whom have been disabled by some kind of injury. Historically speaking, the purchase couldnâ&#x20AC;&#x2122;t have come at a better time; the law firm is commemorating 80 years in Bakersfield this year. Through that time, they have served clients in offices in downtown Bakersfield, a central location thatâ&#x20AC;&#x2122;s also near Kern Countyâ&#x20AC;&#x2122;s courtrooms. For the past

PHOTO COURTESY OF CHAIN COHN STILES

Signs posted on the building at the southwest corner of Chester Avenue and 18th Street state, â&#x20AC;&#x153;Future home of Chain Cohn Stilesâ&#x20AC;? following the law firmâ&#x20AC;&#x2122;s purchase in October.

several decades, Chain Cohn Stiles has occupied space in the nearby Bank of America building. Along with other nearby developments, The Bakersfield Californian recently called the law firmâ&#x20AC;&#x2122;s purchase of the building â&#x20AC;&#x153;a hopeful sign for the continuing evolution of Bakersfieldâ&#x20AC;&#x2122;s commercial and historical core.â&#x20AC;? The partners at

Chain Cohn Stiles agree. â&#x20AC;&#x153;We like to think that, in some small part, weâ&#x20AC;&#x2122;re going to contribute to the ongoing revitalization of downtown Bakersfield,â&#x20AC;? said Matt Clark, partner at Chain Cohn Stiles. Jorge Barrientos is the marketing director for Chain Cohn Stiles.

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Roll Real Estate sees great growth, potential in metro Bakersfield By John Balestra

riving through the greater Bakersfield area, it’s easy to see that there is a surge in development. Across the board, construction is underway on large industrial facilities, retail amenities and housing developments. Because of the strengthened economy, business owners and real estate developers have recognized the opportunity for growth and development in the region. Additionally, the 2014 Kern County Economic Summit cited that commercial vacancy rates are low and there is a lack of supply across the board. In the past year, there have been more than 3.5 million square John Balestra feet of industrial facility construction starts at Paramount Logistics Park and North Meadows Business Park, most of which are nearing completion. On the south side of Bakersfield, development has begun at the 80-acre CrossRoads Business Park that will grow to be a mix of office, retail, medical, commercial and light industrial spaces. Shake, rattle and Roll Most recently at Paramount Logistics Park, Scannell Properties purchased 22 acres to develop a 210,000-square-foot sorting hub for FedEx Ground. Ground broke in July 2014 and the facility is scheduled to be completed during the first quarter of 2015. Typically, a project of this size and capacity has a development timeline of 22 months; however, Scannell will be able to complete the project in less than eight months total as a result of in-place, by-right land-use entitlements at Paramount Logistics Park and through expedited building permit processing in Shafter. With the FedEx Ground sorting hub, Ross Dress for Less’ 1.7-million-square-foot facility and American Tire Distributor’s 1 millionsquare-foot facility all nearing completion, the park is proving to be an ideal distribution location in the West. Across town, CrossRoads Business Park is in the final stages of prepping for groundup development. The park will offer parcels ranging from 1.5 to 16 acres available for build-to-suit, lease or sale. It has direct access to Highway 99, Interstate 5, Gosford Road and District Boulevard, and offers future tenants prime visibility and superb access to a diverse base of consumers. The southwestern area is also a growing residential community with numerous new and existing communities. CHEP USA, a division of the Australian-

PHOTO COURTESY OF ROLL REAL ESTATE

Shown in this site plan, CrossRoads Business Park in southwest Bakersfield is entering the final stages of prep for ground-up development.

based aerospace, automotive, containment and logistics solutions company CHEP, recently signed a lease for an 86,000-squarefoot build-to-suit facility at North Meadows Business Park. Additionally, Roll Real Estate Development is preparing to break ground on three speculative industrial facilities ranging from 41,000 to 54,000 square feet, and has additional buildings of up to 142,000 square feet planned. On the map As the southern Central Valley and greater Bakersfield region continue to flourish, Kern County increases its visibility as a comparable distribution location among many national and global companies. With operational costs at 85 percent of the national average and an abundant labor force expected to increase its entry-level workforce population by 22 percent in the next 10 years, Kern County’s Bakersfield metro is firmly stamping its place on the map as a valid logistics solution to the distribution of goods to and from the ports of California and throughout the western U.S.

Construction is nearing completion at American Tire Distributors’ one-million-square-foot distribution facility only eight months after breaking ground.

That’s how we roll Roll Real Estate Development is a division of Roll Global, a $3-billion privatelyowned consumer goods company and the largest owner of agricultural land in California. The company has experienced steady growth in development over the past

six months, and has hired two executives to supplement the increased activity. John Guinn, the former city manager for the City of Shafter, recently joined Roll Real Estate as vice president of forward planning, and Brian Dollar joined the Roll Real Estate executive

PHOTO COURTESY OF ROLL REAL ESTATE

team as director of development this past July. The company continues to set a standard for quality and efficient development, while making an impact on the markets in the West. John Balestra is president of Roll Real Estate Development.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Commercial space offerings a ‘landlord-driven market’ By Diana Greenlee

hen Jim Reed started his pizza business with a franchise six years ago, he never realized the undertaking would be so expensive. After struggling for three years, he dropped the franchise, renamed the business Cubbies Chicago Style Pizza, and renegotiated his lease with his local landlords. They lowered the rent on the 2,500-square-foot building at Hageman Road and Calloway Drive from $6,500 to $4,500 per month. Reed’s restaurant has built a following, and is doing well now, but he knows there may be bumpy roads ahead. He’s cautiously optimistic about Cubbies’ future. “The only thing (the landlords) really take care of is four walls, a ceiling, a roof and a floor,” said Reed, 49. Nathan Perez, Cushman & Wakefield Pacific Commercial Realty Advisors sales associate, said all points are negotiable when it comes to retail leasing, but leniency and flexibility like Reed experienced isn’t common in this market. “Landlords used to offer 10 or 20 cents a square foot (discount),” said Perez, 27. “Now it’s more like 5 cents per square foot.” The agent said he’s seen a couple of retail property deals allowing landlords to collect a percentage of gross sales in addition to rent and “triple net,” which means tenants must shoulder the burden of property tax and insurance along with common area maintenance, including grounds’ upkeep, on top of their own business taxes, liability and fire insurance. “It’s rare, but there’s a little bit more of it,” he said. “It was more common 25, 30 years ago.” Marty Starr, a principal at Newmark Grubb ASU & Associates, said landlords offering properties expect to make

PHOTO BY CASEY CHRISTIE

Jim Reed, owner of Cubbies Chicago Style Pizza, takes a phone order at lunchtime.

improvements by painting, laying carpet or installing shelves. But as the economy has improved, commercial space in attractive areas and good condition is harder to come by, and tenants don’t have the leverage they once did. Larger improvements, such as a heating, ventilating, air conditioning or an electrical overhaul, may end up being on the tenant’s bill. Starr, 41, said expensive upgrades can be amortized over the life of a lease and offer landlords, many of whom are in a position to be choosy, more confidence in their lessee. “(Owners) like to make sure the tenant has some skin in the game,” he said. Olivieri Commercial Group Principal Anthony Olivieri echoed Starr. He said industrial, office and retail vacancies

Top 10 Reasons Why Businesses Join the Greater Bakersfield Chamber of Commerce

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Fact: 88% of our members say that the Chamber provides value that is equal to, greater than or more than twice their dues investment.

AND you can have it all with your membership in the... Contact Joy Davis, Director of Membership at (661) 327-4421 or jdavis@bakersfieldchamber.org for more information on Chamber membership.

have reached pre-recession levels and, “in some cases, we’ve surpassed them.” Olivieri, 49, said lessees requiring minimal work on a space before taking possession of a property might ask landlords for a “tenant improvement allowance,” which is the same concept as free rent; it comes down to a compromise in rent or improvements. Today, landlords are passing on more of the costs to tenants. Even office properties, once immune to triple net, are seeing a shift in the trend. “This is definitely a landlord-driven market,” Olivieri said. “Landlords are in a strong position to negotiate and not make as many concessions.”

KERN BUSINESS JOURNAL

December 2014 / January 2015

Master-planned communities link commercial, residential developments By Shannon Medina

t is hard to turn down a main street on the west side of Bakersfield without seeing signs for new homes or businesses coming to the area. With the much anticipated opening of many new retailers at The Shops at River Walk and Gosford Village in the first quarter of 2015, and with a new residential neighborhood opening in the third quarter of 2015, Castle & Cooke is keeping their contractors busy. It can be hard to Shannon Medina tell which attracts the other, the homes or the retailers. Really, it is a combination of both. Pat Henneberry, Vice President of Homebuilding for Castle & Cooke, asserts that the resurgence of the housing market in Bakersfield has led to the surge of new businesses looking to open shops in the area. In any case, Castle & Cooke has always sought to synchronously develop residential and commercial properties, allowing space for

both audiences. “Since Castle & Cooke’s inception in Bakersfield over 25 years ago, we have focused on building amenity-based developments that add value to our residential projects,” Henneberry said. “The value is in the ability to strategically plan for a balance between residential and commercial properties that have planning symmetry, versus one-off projects that just tack onto one another.” “It truly is a diversified approach to what goes into a plan where our residents can shop, dine and get services near their homes,” added Darlene Mohlke, Vice President of Sales and Marketing. “For instance, The Shops at River Walk sits perfectly between our master-planned residential communities of Brighton and Seven Oaks. We try to attract upscale tenants and create new offerings to our residents, while at the same time, incorporating the local favorites whether that be national brands or local shops,” This boom in retail development has been the perfect time for Castle & Cooke to expand their residential community of Seven Oaks.

PHOTO COURTESY OF CASTLE & COOKE

A new home in Village Green.

“Our commitment to beautiful, lifestyleenhancing communities will be continued at our newest community of Highgate at Seven Oaks, currently under development, which will deliver what really matters most in life: a sense of belonging,” Mohlke said. Located on the southwest corner of Ming Avenue and Allen Road, Highgate at Seven Oaks will span approximately 442 acres and will include several distinctive neighborhoods to attract move-up buyers, executives and active adults. Highgate at Seven Oaks will be a private, gated community with lush landscapes, greenbelts, roundabouts and pedestrian friendly, tree-lined streets. At the center of the community will be the Highgate

Clubhouse and Sports Facility where people can enjoy social and cultural activities, a children’s spray park, resort-style pool and large public park. Another addition to the community that will make Highgate highly sought after is a new elementary school, which will be part of the prestigious Panama-Buena Vista School District. The school is tentatively scheduled to open in 2017. With land development linking commercial, retail and residential neighborhoods, Castle & Cooke continues its legacy of master-planned communities in Bakersfield. Shannon Medina is a sales and marketing assistant for Castle & Cooke.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Retail tenants renewing and improving downtown area shops By Diana Greenlee

hen boutique owner Kay Wyatt moved into her new business digs on 19th Street last spring, she said, “This will do, until I make my million dollars.” Wyatt, a former special education program specialist turned fashionista, transferred her business, Bleu Lavender Women’s Fashion Boutique, from another downtown location to her new spot for better exposure, but the place needed work. Wyatt had to remove old paint and move an entire wall to increase the number of dressing rooms. Downtown Bakersfield is a flurry of renovation like Wyatt’s, with revamps changing the landscape and the vibe. De Coeur Bake Shop Owner Mai Giffard, a 28-year-old graduate from Art Institute of Orange, is bringing in a touch of Paris to the area with her authentic French bakery. The shop features fresh croissants, macaroons and specialty cakes with lifelike flowers, feathers and forms painted by hand and sculpted from fondant. “Through pastry arts, I have found my love of the arts,” Giffard said. Giffard, a native of Orange County, moved her business from a commercial kitchen in Buttonwillow to her G Street location near the downtown post office in July. She had a range of projects to complete before she moved in, including improvements to the kitchen and plumbing. She replaced a pink and black tile floor with a wood-look laminate that is functional and attractive, and she muted the previous blend of candy-colored bright walls with more neutral Parisian beige, black and gold tones. She traded mini blinds for pull-down shades, adding to the ambience. Budget-minded Giffard was able to forgo pricey art for her interior by framing photos of her impressive pastries. “Those are my actual work,” she said, gesturing to a collage of photos. West of the bakery, Susan and Jim Ruppel converted “I love being downa former pharmacy on 17th town. There’s always Street to a his-and-hers busisomething going on.” ness space. Jim, 68, operates Ruppel Marketing, provid— Kay Wyatt, owner of ing geothermal equipment Bleu Lavender Women’s and software, and Susan, 59, Fashion Boutique creates jewelry and operates a retail space, Wire + Pearl. They also afford an interim gallery for local artists in their halls. Jim rented an office for 20 years while Susan worked from home, but they’ve made this new office a homeaway-from home for both, complete with kitchen, built-in bookcases and a garage. “All we need is a cot in here and we could live here,” Susan said, motioning to the oversized bathroom. The couple purchased the property in late 2013; it took six months to gut and rebuild into six offices. Jim said the space comes in handy when clients come for training, and Susan is pleased to have a retail store to present her wares. Meanwhile, at Bleu Lavender in the heart of downtown, Wyatt said the downtown area offers advantages for small businesses, including events such as First Friday and Third Thursday. “I love being downtown,” Wyatt said. “There’s always something going on.”

PHOTO BY FELIX ADAMO

Mai Giffard, owner of De Coeur Bake Shop, revamped her bakery’s space near the downtown Bakersfield post office.

PHOTO BY FELIX ADAMO

Boutique owner Kat Wyatt brightened up a retail rental space on 19th Street for her women’s clothing shop.

KERN BUSINESS JOURNAL

December 2014 / January 2015

Retail Real Estate Retail continues to grow with new shops planned for new year throughout Bakersfield By John Cox

alf a dozen retailers and restaurants are finalizing plans to occupy the former ThreeWay Chevrolet Co. property on California Avenue, a local commercial real estate broker said in early November in a wide-ranging update on local shopping center development activity. Broker Scott A. Underhill said one tenant recently signed a lease to occupy space at the former dealership on the northwest corner of California and Easton Drive. Two more leases are out for signatures and another three are pending, he said. Although he wasn’t authorized to disclose potential tenant names, Underhill, a partner at Newmark Grubb ASU & Associates in Bakersfield, characterized some of them as “retail services” and others as “very nice

boutique eateries that are not currently open in Bakersfield.” The tenants would be spread among four buildings totaling 26,700 square feet in the proposed shopping center. Underhill said only two retail spaces remain available in the three buildings planned to have frontage along California Avenue. He shared architectural renderings of tileroof buildings produced by the Long Beachbased firm Perkowitz + Ruth Architects. “It’s going to be beautiful, Santa Barbarastyle architecture,” he said. Across town, at the WinCo shopping center under development along Panama Lane at Ashe Road, five new tenants are making preparations to move in, Underhill said. The 90,000-square-foot WinCo opened earlier this year. A 7,000-square-foot building at the

center will include an AT&T store, a Dickey’s Barbecue Pit and a Supercuts, he said. The building has one available space measuring 1,600 square feet, he added. Other buildings at the shopping center will house a Les Schwab Tires center – Bakersfield’s third – a McDonald’s and a Taco Bell, Underhill said. “It’s going to be a great center, “ he said. Site plans for the WinCo shopping center show several spaces ranging in size from 825 to 1,375 square feet remain to be leased out. A Wal-Mart Neighborhood Market will anchor another shopping center being developed at the southwest corner of Calloway and Olive drives, Underhill said. ASU & Associates previously reported that the center, which has been in the planning stages for 10 years, will feature a fitness center measuring 25,000 square feet, an

11,000-square-foot gasoline and convenience store, two chain restaurants, a local optometrist and a locally owned sandwich shop. The shopping center developments are the latest sign Bakersfield’s retail real estate market has begun to recover from the recession. Despite vacancies at prominent properties, including former department stores at East Hills Mall, there are many new developments underway, and stores are opening at spaces that sat empty during the downturn. Castle & Cooke recently announced Nordstrom Rack, Sprouts Farmers Market, shoe seller DSW, TJ Maxx and BevMo! have signed leases for space at Shops at River Walk along Stockdale Highway near Old River Road. All are slated to open in early 2015. This article was originally published on Nov. 6 in The Bakersfield Californian.

December 2014 / January 2015

KERN BUSINESS JOURNAL

KEEP BUILDING.

KERN BUSINESS JOURNAL

December 2014 / January 2015

Neighborhood shopping center development fueling commercial real estate boom By Scott A. Underhill

he unprecedented growth in neighborhood shopping center development here in Kern County is significantly impacting the local economy. Currently, there are five major retail projects under construction with two more planned for early 2015. The projects are creating numerous construction-related jobs and will spur job growth and retail tax sales in the very near future. This rapid expansion of the retail segment of commercial real estate propScott A. Underhill erties has never been seen in these parts of the San Joaquin Valley. By conservative estimates, more than 1 million square feet of shopping center space will be open to the public by the end of 2015. One of the most anticipated developments is now under construction at the corner of California Avenue and Highway 99, the site of the former Three-Way Chevrolet dealership. California Easton, LLC, a local real estate development company purchased the property in 2009. Scheduled to open in spring of 2015, the beautiful Santa Barbarastyle center will feature several new and exciting eatery concepts to Kern County as well as service-related tenants in a just over 100,000-square-foot development. Phase one will feature three buildings fronting California Avenue ranging in size from 5,000 square feet to 8,100 square feet. All in all, the developer well understands the site is a gateway to the city and is thus constructing a development equal to the quality of the site. Wal-Mart Neighborhood Market has selected the corner of Calloway and Olive drives for construction of their second Bakersfield unit. The 20-acre development is now under construction with DCM Asset Management, LLC, another Bakersfield development company, anticipating a June completion date. Other activity within the project includes Les Schwab Tires, an optometrist, high-end gas station/convenience store, bank, eateries and service retail uses. Bolthouse Properties is nearing completion on one of Bakersfield’s most beautiful neighborhood centers at Ming Avenue and Buena Vista Road. In-Shape and Sol y Luna Restaurant, along with several other retail service uses, will make up the last phase of the development, which already features CVS Drugs, Sully’s Chevron, Valley Republic Bank, Dewar’s, Bakersfield Eye Care, Wiki’s Wine Dive and Grill, and others. Silver Creek Plaza is a noteworthy

PHOTO BY CASEY CHRISTIE

Wiki’s Wine Dive & Grill is one of the businesses in Grand Island Village, a development of Bolthouse Properties.

center at the southwest corner of Panama Lane and Ashe Road. Silver Creek features one of Bakersfield’s largest grocery stores, a 90,000-square-foot WinCo Foods, which opened in the third quarter of 2014. Now under construction within the project is Bakersfield’s third Les Schwab Tire center with McDonald’s and Taco Bell breaking ground in January. A fourth building is now underway which will feature AT&T, Dickey’s BBQ, Supercuts and an Asian cuisine restaurant. Cahan Panama, LLC is the developer. Castle & Cooke is nearing completion on their next phase of the River Walk retail complex. Nordstrom Rack, Sprouts Farmers Market and BevMo! are well under construction with a late winter/early spring completion date anticipated. To wrap-up, from a national retailer’s perspective, Bakersfield and the greater Kern County area is a fine place to do business and invest corporate capital with residents being the greatest benefactors. Scott A. Underhill, SCLS, CRX, is a principal at Newmark Grubb ASU & Associates.

PHOTO BY FELIX ADAMO

Heather Dewar Cook and her brother Mike Dewar inside the Dewar’s express location in Grand Island Village.

December 2014 / January 2015

KERN BUSINESS JOURNAL

A WHOLE NEW WAY OF LIVING IS COMING TO SEVEN OAKS.

SNEAK

PEEK

KERN BUSINESS JOURNAL

December 2014 / January 2015

Your New Seven Oaks Wish List. Realized. Meandering walkways shaded with lush tree canopies. An abundance of outdoor and indoor places to play, gather and celebrate. A warm, friendly, small town community that reflects a deep respect for the rich heritage of Bakersfield, yet is defined by a fresh new architectural character all its own.

December 2014 / January 2015

KERN BUSINESS JOURNAL

The Belcourt vision was inspired by all the wonderful input we received from you, the residents of Bakersfield. It is our hope as we approach our Fall 2015 Debut that you’ll be as excited as we are about becoming a part of this exceptional new Seven Oaks community.

How will Belcourt live? Maybe a morning workout at the Center Club fitness center is what you’re in the mood for today. Or perhaps it’s a brisk walk along a shaded pathway with your pooch before heading to work or meeting friends for coffee. There’s an outdoor jazz concert coming up this weekend at the community amphitheater, and you’ve still got time to try that new recipe your neighbor shared with you for the picnic dinner you’re planning. And perhaps later in the afternoon a leisurely respite at the pool is just what you need to recharge. At beautiful, friendly, thoughtfully designed Belcourt, there are so many ways to spend your time. Each day presents a canvas upon which you can create a whole new way to live your life. And enjoy it like never before.

Irresistibly different.

KERN BUSINESS JOURNAL

December 2014 / January 2015

;SSHFVMHKI 4EGMÁG +VSYT A commitment to bringing a special brand of style, quality and character to the premier locations in which we build has been a WPG hallmark for over 20 years. We’re dedicated to the details, both seen and unseen. And invested in providing the kind of communities that honor an area’s history and traditions in an authentic way, while creating extraordinary places that offer people what they need to live life to the fullest today.

UPCOMING &IPGSYVX 1MPIWXSRI )ZIRXW Winter 2015

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Spring 2015

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Fall 2015

Belcourt Information Gallery Debuts 8LMW MW XLI TPEGI XS KIX EPP XLI PEXIWX MRJSVQEXMSR SR &IPGSYVX MXW RIMKLFSVLSSHW ERH EQE^MRK MRHSSV ERH SYXHSSV EQIRMXMIW

Fall 2015

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To register for regular Belcourt Updates, please go to

www.BelcourtSevenOaks.com

All imagery is representational and does not depict specific buildings, views or future amenity details. Lifestyle photography does not reflect any ethnic or racial preference.

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December 2014 / January 2015

KERN BUSINESS JOURNAL

Wal-Mart’s Oildale opening brings hope of additional investment By John Cox

n often-overlooked stretch of North Chester Avenue stole the spotlight Oct. 1, as Oildale celebrated the opening of a Wal-Mart Neighborhood Market that some hope will spark additional investment nearby. Hundreds of area residents and other spectators gathered to watch North High School’s marching band play and its cheerleaders cheer, before checking out the store’s fresh foods, pharmacy and general merchandise. At 41,000 square feet and 96 employees, the 24-hour store at 311 N. Chester Ave. represents significant new development in an area that tends to draw less interest from national retailers than parts of Bakersfield with stronger demographics and more new home construction. Wal-Mart said its goal in entering the Oildale market was to meet customer demand

for affordably priced fresh food located close to home. From the company’s perspective, if the store attracts other businesses, aside from the Jack in the Box opening across the parking lot, so much the better. “Other businesses see the benefit of being located near a Wal-Mart, “ company spokeswoman Delia Garcia said. There’s certainly room for it, said WalMart’s pharmacy area manager, Tony Paton. He noted two vacant lots nearby, including a large one opposite Chester from the new store. He said the company’s selection of a site next to available land was no coincidence. “We want to make some space available for other businesses to join us, “ he said. Customers filling their shopping carts on opening day were hopeful of such development, but focused more on the store itself. “I think it’s great, “ said Oildale resident Barbara Tate, 77. “We have to go all the way to Rosedale, east Bakersfield and the southwest” to shop for everyday goods, she said.

Another neighbor, Josie Poush, a mother of four, agreed the new store was convenient and would save her “lots of gas.” She also expects it will freshen the area’s reputation and give people “a brand-new, fresh impression” of Oildale. That’s already partly true in the case of Lena Ramirez, also a mother of four living in Oildale. She and her husband have been considering a move out of the area but are now re-evaluating. “It’s kind of making us want to stay in Oildale, “ she said. “Little things like this, I think - it’s going to bring Oildale up.” But is the grand opening the start of an Oildale economic boom? Commercial real estate broker Scott Underhill doesn’t think so. “I wouldn’t see any kind of paradigm shift, because the demographics just aren’t there” to support substantial new development, he said. While Wal-Mart uses a sophisticated computer model to identify areas for new construction, other retailers tend to look for recent homebuilding, which the nearby

area of Oildale generally lacks. There have been other investments, however. Dollar General built a small grocery store two years ago by North Chester on Roberts Lane. Also, Omni Family Health is building a $4.65 million, 15,600-square-foot health center at 210 N. Chester that will provide family medical care. “I think that there is development going on in the Oildale area. I also feel that that community is in need of assistance provided by everyone, “ Omni Chief Operations Officer Diego Martinez said. “Anything that is done to help the community is a ... win-win.” Mike Maggard, the Kern County supervisor representing the area, said the new WalMart does two things: it brings a new energy and standard of operation, and it injects capital to an area in need of it. John Cox is a business reporter for The Bakersfield Californian and can be reached at jcox@bakersfield.com.

KERN BUSINESS JOURNAL

December 2014 / January 2015

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December 2014 / January 2015

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December 2014 / January 2015

Residential Real Estate

Live, work, play enclave coming to Seven Oaks By Rebecca Hardin

oots in the Central Valley and an aim to create places where “families can live, love and grow,” as Woodbridge Pacific Group cofounder Carl Neuss termed it, brought a new developer to Seven Oaks in 2013. That year, Woodbridge Pacific Group (WPG) purchased 175 acres from Bolthouse Properties. As Belcourt’s master developers, Neuss and partner Todd Cunningham are creating a live, work, play enclave unlike any other in Bakersfield. Neuss and Cunningham are working in tandem with Bolthouse, which continues to develop high-quality retail, employment and commercial destinations in Seven Oaks. “We share their commitment to value,” Cunningham said. “The Bolthouse vision for the new Seven Oaks complements Belcourt’s village plan, and all of us are eager to see a place where the car plays a secondary role to pedestrians, bicycles and strollers.” Belcourt is planned to include approximately 793 homes in distinctive neighborhoods of single-family lots tailored to families and active adults. It will also include the luxury apartment homes of Park Square by Fuller Apartment Homes. An 8-acre public park is planned to house a tot lot, tennis courts, turf amphitheater and a soccerfield-sized commons. A private community center for homeowners is also planned, featuring a swimming pool, splash park, spa, barbecue areas and additional amenities. A site reserved for a house of worship within Belcourt will be the home of Trinity Anglican, which plans to include a day care center. The Seven Oaks trail system will link Belcourt’s neighborhoods and amenities and will eventually connect with the Kern River Parkway. Landscaping will feature canopy trees, seating areas and public art. Meandering pathways will connect homes and amenities to a central paseo, which in turn will link pedestrians to Seven Oaks Business Park, Belcourt Village and other Seven Oaks destinations. Grand Island Village, acclaimed schools, and River Walk’s recreation and retail are also nearby. Belcourt’s progressive concepts reflect the preferences of Bakersfield residents who took part in surveys, focus groups and personal meetings WPG conducted before creating the plan. “The City (of Bakersfield), Bolthouse and WPG are all in favor of the best outcome, and that outcome is being directly shaped by feedback from local citizens,” Neuss said. WPG is a privately-held development company that brings architecturally distinc-

PHOTO COURTESY OF WOODBRIDGE PACIFIC GROUP

Belcourt’s lake-framed arrival will showcase birds in flight, which was designed by sculptor Douwe Blumberg and is one of several public art pieces planned for the new village.

PHOTO COURTESY OF WOODBRIDGE PACIFIC GROUP

A bell tower with clock and chimes will highlight visual cues that promote the distinctive sense of place that Belcourt will provide its residents.

tive homes to premier locations, and the Belcourt property clearly fit the definition. “We pursue lifestyle settings, so we were immediately interested in Seven Oaks, but it was the Bolthouse people and their reputation for quality and integrity that made the decision for us,” Cunningham said. WPG invited local companies as its guest builders. WPG anticipated it would announce the builders before the end of 2014. “These builders know and appreciate

Bakersfield, and share our desire to create something special,” Cunningham said. For Neuss and Cunningham, Belcourt is a homecoming. Neuss has family in the Central Valley and Cunningham was raised in Bakersfield. “Bakersfield is a place where business can still be done with a handshake,” Neuss said. “The belief that your word is your bond is a very comfortable standard for Todd and me, and for WPG’s younger generation.”

That generation includes Belcourt Senior Project Manager Jeff Eittreim, who is married to Cunningham’s daughter, Lauren. Neuss’ son Alex is assistant project manager, and his daughter, Carla, has brought her theater and arts background to the mix and is working with the Arts Council of Kern to ensure that public art will play a distinctive role in the community. “If you have not spent time in Bakersfield, you cannot appreciate how wonderful it is,” Eittreim said. “We are living here with our twin sons, working to bring Belcourt to reality and feeling very much at home; it’s tremendously exciting and rewarding.” Alex Neuss shares Eittreim’s view. “Bakersfield offers the feeling of a traditional small town, which is amazing in a place as large and diverse as this city really is,” Neuss said. “The friendliness and feeling of connection with people is wonderful.” WPG and local guest builders will build the first new-home neighborhoods at Belcourt. First construction is planned for spring 2015. A late summer 2015 opening is anticipated for the first model homes and for the Belcourt Information Gallery. For the latest on Belcourt, visit www.woodbridgepacific.com and find Belcourt under “Neighborhoods.” Rebecca Hardin is the owner of Open Line Public Relations.

December 2014 / January 2015

KERN BUSINESS JOURNAL

A return to normal: Bakersfield’s single-family market in review By Gary Crabtree

to show steady growth, with an anticipated 1,450 building permits to be pulled, approxiakersfield’s 2014 single-family mately 8 percent more than 2013. New conmarket has returned to what can struction sales volume, however, is 33 percent be termed “a normal market,” below 2013 year to date. Price points, on the something we have not seen other hand, have increased about 16 percent in 11 years after the run up to the bubble year over year, to the low $290,000s. peak in 2006, and then straight to the botAs prices increase, the market becomes tom in 2009. less attractive to investors. Their market After experiencing a strong recovery in share has declined from 36.6 percent to 28 2013, the 2014 market will prove to be one of percent in the past year. Cash buyers have stable supply and demand, causalso exited the market, with ing the median home price to their market share declinincrease approximately $15,000, As prices increase, ing from 29 percent to 18 or 7.5 percent, compared to a 30 in the past year. the market becomes percent percent increase in 2013. The The New Year may prove less attractive to in- to be a year of profit taking median home price is still 29 percent below the 2006 peak, vestors. Their market by the investors, as market but more homeowners are able rents have failed to keep share has declined to experience a positive equity pace with price increases. A position, which has caused the from 36.6 percent recent single-family market distressed sales to decrease to 28 percent in the rental study indicates the dramatically. Over the past year, median rental price is $0.86 past year. the number of short sales has per square foot, with the declined from a 10.3 percent to median rent for a threea 4 percent market share, and bedroom home at $1,400 the foreclosure sales have declined from 8.1 per month. percent to a 5.8 percent market share. The Looking toward 2015, I expect to see a economic recovery has also resulted in the slower increase in the median price as invenreduction of foreclosures, as unemployment tory is expected to grow, the interest rates are rates have declined from 7.3 percent to 6.2 expected to increase, and the median family percent, and 3,700 jobs were added to the income continues to shrink (the cost of living Bakersfield market. is increasing 1.7 percent per year and the Currently, there are a total of 1,274 active median family income is declining by 1.3 listings on the market, which comprises only percent per year). 1 percent of the total single-family homes in Gary Crabtree, SRA, is the owner of Bakersfield. Demand has remained very stable Affiliated Appraisers of Bakersfield. He over the past year, with sales volume expected publishes “The Crabtree Report,” a monthly to equal the 2013 volume of 5,850 units. report of Bakersfield Single Family Market The new construction market continues Trends.

What buyers want

ocation and functional floor plans are high on homebuyers’ lists, according to a local real estate

agent. George Gary Belter, co-owner and broker of Coldwell Banker, said the Bakersfield residential real estate market is marked by relative stability and slowly increasing values.

Buyers are most interested in purchasing homes in Bakersfield’s northwest and southwest neighborhoods, looking for new schools, newer floor plans and energy-efficient homes. However, rising interest rates and lack of affordability in the face of building fees will remain challenging to the residential real estate market in the coming year, Belter said. Stay tuned. — Kern Business Journal

CHARTS COURTESY OF AFFILIATED APPRAISERS

KERN BUSINESS JOURNAL

December 2014 / January 2015

County parks department wraps up projects, looks to grant for tree planting By Bob Lerude

hile the current economic climate in the county is difficult, the Kern County Parks and Recreation Department has made improvements to county parks over the past year and new improvements are expected to be completed this new year. In July, a new playground for 5- to 12-year-old children was completed at Rosamond Park in Rosamond through a low-income housing grant. Another new playground for 5- to 12-year-old children was completed Oct. 4 in Lamont Park in Lamont through a KaBoom playground grant. A new dog park will be complete by the end of the calendar year at LeRoy Jackson Park in Ridgecrest through an Eagle Scout project. In addition, a new park is currently being developed in Ridgecrest that will be called Petroglyph Park, and will be dedicated to observing and honoring Native American culture and its art. Examples of the work and art created by those living in the area more than 13,000 years ago will be displayed. A Petroglyph and Heritage Festival was held Nov. 15 and 16 at the park. A walking path with lighting and benches is being installed at Pioneer Park in Bakersfield. Additionally, a spray park that recycles the water for irrigation will be added this coming year at Pioneer Park through a low-income housing grant. A walking path with lighting and exercise equipment will be added at Lamont Park, also through a low-income housing grant. A new park was developed this past year in Lost Hills on airport property that included an all-weather track, artificial turf soccer field, new recreation building and restrooms. All the improvements were accomplished through an agreement with Paramount Farms, who financially supported the entire

PHOTO COURTESY OF THE KERN COUNTY PARKS AND RECREATION DEPARTMENT

The Lamont Park was recently completed by the Kern County Parks and Recreation Development.

project. A new restroom will be installed this coming spring at Mt. Mesa Park in the Kern River Valley through Community Development Block Grant funds. This restroom will support the use of the park by the local baseball and soccer leagues. This coming year, the department is expecting to secure a

couple of grants from Cal Fire to plant more than 1,300 trees throughout the county’s park system, and increase the tree canopy throughout Kern County. These trees would be planted over the next three years. Bob Lerude is the director of the Kern County Parks and Recreation Department.

City of Bakersfield Recreation and Parks: Plenty of projects planned for 2015 By Dianne Hoover

he Recreation and Parks Department, City of Bakersfield has several projects in the planning stages, with construction to begin in 2015. There are currently 59 city parks, a 32-mile bike path, a large amphitheatre, two community centers, three disc golf courses, four outdoor pools, one water park, an in-line hockey rink and numerous outdoor tennis and basketball courts throughout the city. In addition to maintaining parks, this department is also responsible for maintaining the streetscapes that total more than 160 miles of trees, shrubs and other plant life. The city’s two major sports parks, State Farm Sports Village and Mesa Marin Sports

Complex, are both ready to expand in the coming years. State Farm Sports Village currently consists of 12 soccer fields and four youth football fields along with a concession stand and restrooms. The master plan for the 200-acre facility includes 16 soccer fields, four youth football fields, a stadium field, 10 softball/baseball fields, a community center and several miles of walking trails throughout the complex. With planning currently underway for an entrance off Taft Highway, a children’s play area, landscaped picnic areas and a stadium field, construction for these features should begin sometime in the spring or summer of 2015. The stadium field will be designed to hold final tournament-level Continued on page 37

PHOTO COURTESY OF RECREATION AND PARKS DEPARTMENT OF THE CITY OF BAKERSFIELD

The Mesa Marin Sports Complex is ready to expand in coming years.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Continued from page 36 games for soccer and football. Mesa Marin Sports Complex has four lighted softball fields that are constantly in use for nightly adult leagues and weekend tournaments. The tournaments range from girlsâ&#x20AC;&#x2122; softball to competitive adult teams from within driving distance. Recently, the City of Bakersfield was able to acquire the triangle of land between Highway 178 and Highway 184 for an expanded regional park totaling 80 acres. Planning is underway for the next phase, which may include two more lighted softball fields, a childrenâ&#x20AC;&#x2122;s play area, a dog park, a skate park, more restrooms and expanded parking. The funding and input from the surrounding communities will determine the final features in phase two, which should begin construction later in 2015. The master development plan calls for all of the above features plus a spray park, added picnic areas, two more softball fields and five playing fields, which could be a combination of soccer and youth football fields. In addition to more parking, it will also include an added entrance off Highway 184 and a maintenance yard. Both of these sports complexes are in areas of increasing growth and will serve the greater Bakersfield community. With the expansion also comes the opportunity for more tournaments that draws visitors to the community on a regular basis, which will increase spending at local hotels, restaurants and shops. The need for youth sports fields is tremendous throughout Bakersfield, and the city is working diligently to increase the number of playing fields. In addition to the sports complexes, the Recreation and Parks Department continues to enhance existing facilities by rebuilding old playgrounds. The next rehabilitation projects will include Silver Creek and Yokuts parks. Plus, funding was recently approved to install a new wood gym floor at the Dr. Martin Luther King Community Center. Lastly, the water slides at McMurtrey Aquatic Center will have a new look in the fall. For further information on parks and programs, please visit www.bakersfieldparks.us or like us on Facebook. Our mission is to enhance the quality of life through parks, programs and partnerships. If any business is interested in partnering with us on special events or even naming rights, contact Director Dianne Hoover at 661-326-FUNN (3866). Dianne Hoover is the director of the Recreation and Parks Department of the City of Bakersfield.

KERN BUSINESS JOURNAL

December 2014 / January 2015

Ag values rise higher as supply tightens By Michael Ming

he days when you could find an acre of farmland on the Kern County market for $5,000 are so far in the rearview mirror they’re nearly invisible. Higher-priced crops are edging out their traditional competitors and raising land prices. The spread of highvalue permanent plantings, such as almonds, pistachios, vineyard Michael Ming and citrus, have ousted the old cropping patterns and fields of high-value vegetable crops, such as carrots, leafy greens, peppers and others crops similar to those grown along the Central Coast, are now occupying open land. These crops have replaced the old stalwarts of cotton, milo, wheat and others, which are now practically extinct because of their lack of crop value. This isn’t Jurassic Park; they aren’t coming back in the near or extended future. The value of the underlying asset – land – prices these commodity crops right out of the market. You may see some traditional crops on small acreage, but they’re grown on lands with limited capabilities or other specific conditions favorable to that farming interest. Most of the land in Kern County is designated as “prime farmland” or “farmland of statewide importance,” allowing farmers to plant high-value crops and produce abundant harvests that exceed most other areas in California. Our only rival is vegetable production on the Central Coast, which exceeds Kern County’s vegetable output. Increasingly high crop values have strengthened the farmland market since 2005. Kern River water users, such as the Rosedale-Rio Bravo Water Storage District, Kern Delta Water District and Buena Vista Water Storage District, have seen the highest long-term open farmland appreciation rates. These districts maintain water rights off the Kern River and operate active, wellpositioned water banking programs that provide groundwater recharge and/or surface delivery to their farming members. They will garner the most interest in the foreseeable future due to increased water reliability and their substantial landholdings with prime and statewide importance. From 2005 through the end of 2014, land values in these districts had an annualized appreciation range of 15 to 17 percent.

Projecting to the end of 2014, the lower land value range will be $20,000 per acre, with the higher land value range at $26,000 per acre. Open farmland in 2014 has seen appreciation rates of 25 to 30 percent, and current escrows indicate new values are rising above the highest values. Almond orchards garner a significant share of interest within Kern County due to their exceptional production, water areas that can deliver 4.0-acre-feet per acre every year, and capable soils. From 2005 through the end of 2014, almond orchard values had an annualized appreciation of 8 to 9 percent. Projecting to the end of 2014, the lower land value range will be $23,000 per acre, with the higher land value range at $32,000 per acre. In 2014, almonds have seen appreciation rates of 5 to 14 percent, and current escrows indicate new values in excess of the highest values. Almond orchard capitalization rates range between 7 and 8.5 percent. Almond orchard values will continue to rise as long as almond prices are stable or higher, and the water situation is stable. Any decrease in almond prices and/or increased risk associated with water could destabilize and hurt values going forward. Market sensitivities have drastically transformed over the last 10 years. In 2005, sensitivities were soils, water district and water, in order of importance when considering the value of agricultural land. Starting in 2012, sensitivities shifted to water, water district and soils. Water is, and will continue to be, the driving factor behind all agricultural sales. Knowledgeable buyers will prudently select properties that have flexibility in ground and district water. Soils will be the third concern. Stable to higher crop prices, extraordinary demand and water concerns coupled with limited supply will lead to higher ag values as 2015 begins. So, is it the time to buy or be cautious? The agricultural real estate market has been strong for five years. Crop prices have been equally strong over the same period. The risk factors in the market are water, interest rates, crop prices, and value of the dollar related to world trade. The one thing we know for sure is that change is unavoidable. Michael Ming is an appraiser and owner of Alliance Appraisal, LLC, which specializes in agricultural valuations throughout California. He is also the broker and owner of Alliance Ag Services, LLC, which provides brokerage and consulting services to all agricultural areas in California.

GRAPHICS COURTESY OF ALLIANCE APPRAISAL

December 2014 / January 2015

KERN BUSINESS JOURNAL

Money Management

Credit Report: Is it killing your business? By Paul Anderson

s a business owner, credit is often a necessary part of opening and running a business. Access to credit can determine whether you are able to start your own business, or must continue grinding away at a job you may not like. Understanding how to read and manage your credit report is critical. Accessing your credit report When you apply for a loan, you’re not automatically approved. Instead, lenders go through the process of checking your credit. If you look like a good risk, meaning you’re likely to repay and do so on time, you get approved and you get a good rate. Not such a great risk? Either a higher rate or a denial is in your future. You should get in the habit of checking your report. The easiest, and free, way is to go to annuPaul Anderson alcreditreport.com. Federal law allows you to get one report per year gratis from each major credit bureau: Experian, Equifax and TransUnion. Order from one bureau every four months and you’ll have a good handle on where you stand at all times.

Personal information Each report will look slightly different depending on which bureau the report is from. The first section contains personal information. This is your name, date of birth, Social Security number and home address. Accounts review The next section contains information about your accounts in good standing. It includes both open credit and closed accounts. Look for the date when each was opened, the current balance, the credit limit and the payment history. Make sure this information is accurate, noting that your most recent payment may not be on your report yet. The critical sections Move on to the credit actions section. This shows your delinquent accounts, which are those where you missed a payment by more than 30 days. Hopefully, this section is empty. If not, ensure it is accurate. Information from public records related to money you owe is listed next. This can include bankruptcies, tax liens, monetary judgments filed against you, and back child support or alimony, if your state allows this information to be included. Hard and soft inquiries The final section of your credit report is reserved for

inquiries. Here you will see all the organizations that have run checks of your report. Hard inquiries are those authorized by you, such as when you applied for a loan. Soft inquiries are without your authorization, such as if a bank wants to check your file to send you a preapproved credit card. Be proactive Your report should include information about how to report mistakes in your file. Since mistakes can cost you loans you should have qualified for, follow the instructions right away. If there is an account you do not recognize, an address that is not yours, or other incorrect information, you may be a victim of identity theft. Act quickly to correct this and keep a record of all of your correspondence for future reference. There are many things that are out of your control as a business owner. Don’t let inaccuracies on your credit report be one of them. By being proactive, you can increase your ability to access necessary credit so you can start and grow the business of your dreams. Paul Anderson is an investment advisor and partner at Moneywise Wealth Management. He is a host of the Moneywise Guys radio program on KERN 1180 weekdays 10 a.m. to noon.

KERN BUSINESS JOURNAL

December 2014 / January 2015

Finding investment opportunities in local residential real estate By Jose M. Granados

here is both good news and bad news from Bakersfield’s residential real estate market. Good news first. Bakersfield’s housing market has been on a positive upward trend for the past three years in spite of foreclosures, tight mortgage markets, inventory fluctuations and other market conditions affecting real estate. More good news, home prices are up, which is great news if you are looking to sell your home. Bakersfield’s median home price reached more than $200,000 in the first quarter of 2014, up 60 percent from a low of $128,000 in fall 2010. However, over the past 12 months the median home price in the Bakersfield area grew more slowly, at an annual rate of 5 to 6 percent. This is significantly low compared to the growth in 2012 and 2013. Nevertheless, the current growth rate may lead to a more stable real estate market and therefore is definitively good news. Heading into fall 2014, the median home price in Bakersfield hit $210,000, bad news for first-time homebuyers. The lack of affordable homes makes matters even worse. Half of all homes currently on the market are priced at $250,000 or higher, which is outside the desired price range for most buyers. Furthermore, construction of affordable homes (priced near the median) is slim at best. The majority of Kern County adults (67 percent) planning to buy a home have annual household income of $75,000 or less. This is important given that nearly half of current homes on the market are priced at $250,000 or higher. The bulk of homebuyers are priced out and left to compete for the few homes in their price range. Conditions are even worse for buyers in cities like Delano, McFarland, Shafter, Lamont and other Kern County cities. As of March 2014, more than 1,600 Delano adults reported plans to buy a home, with one-third considering new construction. However, homes for sale in Delano have been difficult to find. The same is true for other areas in Kern County. In spite of the demand, only 188 homes have been purchased in Delano in the past 12 months. Comparing the good and the bad, the good news really does win out. Despite current challenges, owning a home still ranks high among most Kern County residents’ goals. As of March 2014, more than 16,000

Kern County adults reported they were planning to buy a home in the next 12 months. One-third of them already own a home, but they were ready to upgrade or find a home more suitable for their needs. New buyers made up the remaining 66 percent of those looking to buy a home. Seventy-five percent of those planning to buy a home were considering existing construction, perhaps due to affordability. But one out of four buyers was seeking new construction. There is also good news for homebuilders. One out of four homebuyers has a household income of $100,000 or more, making homes priced at $300,000-plus within reach. These affluent homebuyers are highly likely to be considering new construction. These home statistics, together with other positive market indicators, should attract homebuilders and developers back to the home construction business. And this seems to be the case; Bakersfield is on track to issue nearly 1,500 permits for single-family dwellings in 2014, up 15 percent from 2013. Jose M. Granados works for The Bakersfield Californian in the Market Research Department. This market analysis is based upon data from Scarborough Research, Multiple Listing Service and the City of Bakersfield.

December 2014 / January 2015

KERN BUSINESS JOURNAL

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Business Profile: Kern Real Estate Foundation

Donors can turn real estate into long-term gifts

effrey R. Pickering is President and CEO of Kern Community Foundation. He is also President of the Kern Real Estate Foundation, and is Treasurer of the League of California Community Foundations. He recently responded to the Kern Business Journal’s questions about the Kern Real Estate Foundation. Jeffrey R. Pickering What is the history of the Kern Real Estate Foundation? Kern Real Estate Foundation (KREF) was established in 2012 as a subsidiary of Kern Community Foundation. The organization’s purpose is to facilitate the sale of donated real estate in order to pass the net proceeds of the sale on to a donor’s fund, which then makes grants to benefit the charitable causes they care about. Since its establishment, KREF has processed two gifts of real estate with appraised values of more than $3 million dollars in Bakersfield. The proceeds from the sales are now used by the families to benefit the charitable causes they care about. How does the foundation benefit the community of Kern County? Donors who give real estate unlock the potential of an illiquid asset to support their favorite charitable causes. As a public charity, KREF provides donors of real estate with the maximum tax benefit provided by law. Gifts of real estate reduce or eliminate long-term capital gains taxes, limit or eliminate future estate taxes and, in some cases, can be used to generate life income. Charities are often reluctant to accept land and real estate because there are many legal complexities and risks involved. KREF is exclusively dedicated to simplifying and facilitating charitable gifts of real estate so that our local charities can still benefit from these types of gifts. While real estate comprises between 40 to 50 percent of the total U.S. net worth, only 2 percent of the gifts given to charities are made in the form of real estate. Most local charities are desperate for unrestricted capital, but reluctant to accept land and real estate for the aforementioned reasons. KREF exists to fill this need.

PHOTO BY HENRY A. BARRIOS

Kern Real Estate Foundation can turn gifts of real estate into charitable funds that will benefit local nonprofits for many years.

timing of the gift and the type of giving vehicle that will help meet their philanthropic and financial goals. Next, the donor must submit a Real Property Inquiry Form along with an independent qualified appraisal of the property. KREF will conduct a site inspection, order a preliminary title search, and may require an environmental review and broker analysis. KREF will then determine whether it can accept the property. If approved by our Board of Directors, we will prepare a gift agreement that the donor will use to transfer the title of the property to KREF. We will then actively market the property, carefully manage it during the sale process and seek the highest possible price. Once the property is sold, the donor can begin enjoying the many rewards of their charitable gift by supporting the charitable causes they care about.

What are some examples of gifts to the foundation and how have they impacted the community? In 2012, Marvin and Nadene Steinert made a charitable gift of real estate. The property was an income-producing commercial building located in northeast Bakersfield with two tenants and an appraised value of more than $1.2 million. The property was sold, and net proceeds of more than $1 million were deposited into the Marvin Steinert Family Charitable Fund. Grants are now being made to the charitable organizations that are important to the Steinert family. Recent grantees include the CSUB Foundation, Bakersfield Music Theatre, The Mission at Kern County, Youth for Christ, The Salvation Army and Teen Challenge. In 2013, Bryan and Marie Batey made a charitable gift of real estate. The property was 14 acres of undeveloped land in northwest Bakersfield. The property was sold, and net proceeds were deposited into the Bateys’ charitable fund at Kern Community Foundation. The Bateys plan to use these proceeds to support the charitable causes they care about.

What kinds of commercial and residential properties can be donated? Examples of real estate that donors may want to consider giving include: • Commercial building • House or condominium • Farmland or undeveloped land • Apartment building • Vacation home

What is the process of donating to the foundation? The first step is to discuss the specifics of the potential gift with us. We can help the donor and their advisors evaluate the

How is KREF looking to grow in coming years? Donors and the advice they receive from their financial advisors are likely to play a significant role in their decision

Long term, what are the benefits to donating real estate? Gifts of real estate reduce or eliminate long-term capital gains taxes, limit or eliminate future estate taxes and, in some cases, can be used to generate life income. Gifts of real estate are also a convenient way to create a charitable legacy. Through an estate gift of real estate, a donor can create an endowment fund that will annually provide a grant to the charities or causes they care about in perpetuity.

PHOTO COURTESY OF KERN REAL ESTATE FOUNDATION

In 2012, Marvin and Nadene Steinert made a charitable gift of real estate.

on whether to gift real estate to benefit charitable organizations. We will continue to assist donors to facilitate these gifts, so that local nonprofits can receive support from the sale proceeds.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Business Profile: Cornerstone Communities

Cornerstone Communities brings expertise, quality to Bakersfield new home market K E R N R E A L E S TAT E F

A s u b s i d i ar y o f

“Donors who give real estate ‘unlock’ the potential of an illiquid asset to support their favorite charitable causes.” -Jeffrey R. Pickering President

PHOTO COURTESY OF CORNERSTONE COMMUNITIES

With experience building in more than 60 communities in California and Nevada, Cornerstone Communities aims to provide energy-efficient, comfortable housing for Bakersfield residents.

his past February, prominent homebuilder and developer Cornerstone Communities entered the Bakersfield new home market. Cornerstone Communities took over existing McMillin projects including the Saybrook and Sanibel developments at Bridgeton in northwest Bakersfield and has recently started development in Tuscany Village, Cornerstone Communities’ newest community, also located in the popular northwest. Sanibel at Bridgeton is a collection of 200 homes nestled in the heart of desirable northwest Bakersfield. This ideal location offers easy access to the popular Northwest Promenade shopping area, the freeway and the great schools in the award-winning Norris School District. Offering five luxuriously appointed new home plans, Sanibel features residences ranging from 2,028 to 2,700 square feet. Homes showcase rich exteriors influenced by Craftsman, Tudor and ranchstyle architecture. Sanibel home sites start at 10,000 square feet and homes offer up to five bedrooms and up to three baths. All homes include a three-car garage, cozy fireplace and a solar energy system with a 20-year, pre-paid lease. Luxurious kitchens feature granite-slab countertops and Whirlpool appliances. Tuscany Village is an enclave of 212 single-family residences in northwest Bakersfield. Tuscany Village will house a collection of new home designs ranging from 1800 to 3000 square feet, offering three to six bedrooms and up to four baths. Home sites average 8,800 square feet. A lifestyle within the village includes schools in the award-winning

Rosedale School District, shopping at the nearby Northwest Promenade and convenient access to nearby freeways. Gourmet kitchens feature granite-slab countertops, Whirlpool appliances and generous custom-crafted wood cabinetry. All Tuscany Village homes include a three-car garage and spacious rear yard. Tuscany Village will open in early 2015. For additional information please join our interest list at cornerstonecommunities.com. Cornerstone Communities, a San Diegobased building company, has developed, mapped, and constructed more than 15,000 homes in over 60 developments throughout California and Nevada. Cornerstone will offer Bakersfield residents a variety of home options including first-time homebuyer communities and semi-custom homes. Cornerstone Communities incorporates environmental considerations and resource efficiency into every step of the homebuilding process. Green building starts with land planning and lot development, and continues through the home design, construction, and energy efficiency of each and every home. Cornerstone is committed to providing homebuyers with efficient, comfortable, environmentally-sound homes at the best value. Most recently, Cornerstone Communities was honored by the San Diego building industries’ annual ICON award as “Builder of the Year.” This distinctive award recognizes Cornerstones’ enduring commitment to excellence. Cornerstone is proud to be a part of the Bakersfield market and is projecting to develop several new home communities while establishing a long-term commitment to the area.

Establish a charitable fund with a gift of real estate to benefit the charitable organizations or causes you care about, now and forever. To learn more about donating real estate, contact our Donor Services team at 661.616.2617 or donorservices@kernfoundation.org.

BOARD OF D IRECTORS Gregory D. Bynum Anthony R. Olivieri Duane A. Keathley, Chair Diane L. White, Treasurer Anthony L. Leggio Michael C. Young, Secretary Jeffrey R. Pickering, President

realest a t e. k ern f o u n d a t i o n . o rg

KERN BUSINESS JOURNAL

December 2014 / January 2015

Small Business Development Center

Moms tap into small business offering 5K races with the click of a mouse By Kelly Bearden

n your mark, get set, go! And often with the firing of a gun, a race begins. But with Flex It Pink, the race begins with the click of a mouse. Anna Snyder and Elisha Villanueva, friends-turned-entrepreneurs, created Flex It Pink, an online business, to help them achieve their personal and financial goals. The two young Southern California mothers desired to get in shape and lose weight after the births of their children, and they turned Kelly Bearden to the Small Business Development Center at CSUB to provide the business tools they need to succeed. Snyder lives in Tehachapi and Villanueva lives in San Diego. In 2013, the women, with support from their significant others, Joe and Brian, created a way for people nationwide to participate in

5K races without physically being at a single starting line. Participants go to the website www. flexitpink.com to register for a virtual race. The fee is $25 for early registration, $28 for regular registration or $35 for late registration. Participants are sent a “race packet” that includes a finisher’s medal, race bib and tank top or shirt. Once registered, participants are given a time frame to complete the 5K race in any manner and in any location they desire. “We have seen our 5Ks completed on cruise ships, at Disneyland, hiking mountains and everything in between,” Snyder said. “The possibilities are endless.” After participants complete a race, they take a screen shot of their miles and provide pictures of themselves wearing the finisher’s medal. The photos are posted on Instagram or Facebook, using the hashtag of the event. For example, Flex It Pink has a race scheduled from Dec. 26 through Jan. 3 called Winter RUNderland Light the Streets Pink. Finishers’ photos will be posted with #PinkRunderland. For every participant in

the 5K race, Flex It Pink will donate funds to distribute 10 meals to people facing hunger in America through the Feeding America network of food banks. The virtual 5K runs help participants get into shape and help raise funds for worthy causes. Flex It Pink stages about a half dozen 5K virtual runs every year. Earlier races benefited Wounded Warriors and the American Heart Association, and an event last December benefited the victims of a hurricane in the Philippines. The events fit the needs of individuals as well as large groups. Snyder and Villanueva are using social media, including Facebook, to help promote the races. Villanueva writes a blog and posts updates every Friday. Links to the blog, upcoming races, products and other related information can be found on the Flex It Pink website, flexitpink.com. The organization’s primary target market is women ages 18 to 70 who want to lead a healthy lifestyle and the men who support them. To move their fitness company forward, Snyder and Villanueva recognized that they needed expert advice. At the Small Business Development Center (SBDC) at CSUB, the women are being teamed with consultants who have years of experience in fields such as business management and marketing. These consultants are helping the women develop a business plan, marketing strategy and business systems. The SBDC at CSUB is one of five service centers overseen by the University of Califor-

PHOTO COURTESY OF SUSIE ARANDA PHOTOGRAPHY

Anna Snyder and Elisha Villanueva created Flex It Pink, a way to participate in a 5K in any place.

nia, Merced SBDC Regional Network, which is a partnership between the university and the U.S. Small Business Administration. The SBDC at CSUB assists entrepreneurs and small business owners in Kern, Mono and Inyo counties by providing free one-onone consulting, small business training and research. For more information, go to www. csub.edu/sbdc. Kelly Bearden is the director of the Small Business Development Center at California State University Bakersfield.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Wellness

Worksite Health 101

By Sean Kenny

orksite wellness programs continue to gain popularity as a way to boost performance, moral and help contain health care costs. But what components should employers consider when starting?

To make a program successful and increase engagement, consider the use of incentives, a workplace policy on access, transparent communication and a variety of interventions. Other best practices include allowing spouse/dependent participation and a combination of delivery methods such as mail, on-site and web-based to boost coverage.

What does an effective program need? Support. The first thing a program needs is support from the top down. If leadership is not engaged, the program is doomed to fail. If the program is not integrated into the workflow or culture of the company, meaning that events are held at inconvenient times or employees have limited access, it will not work. After all, engagement is the name of the game in wellness programs. If people don’t use it, it will not generate results. Get executive buyin and build a workplace policy supporting the program. This second piece may be a surprise, but a wellness program actually needs a name. Research shows that when a program is named, it sends a message to employees that the program is serious and here to stay. Form a committee and choose a name or, better yet, open it up to the employees and hold a naming contest. Once support, policy and a name are secured, the focus can shift to putting components together. Key components include biometric health screenings, health risk assessments reporting metrics, and interventions such as classes, flu clinics and employee challenges. A 2011 study by ShapeUp and The Parthenon Group found that while employers differ on which program components are essential, “biometric screenings and HRAs are frequently cited as cornerstones” of wellness programs. At the other end of the spectrum, that same study found health coaching to be the least effective component, with low participation rates. In fact, low engagement rates in wellness programs are a common pain point across the board, regardless of components offered.

Measure it to manage it Surprisingly, an industry study found that only about one-third of companies actually measure their wellness program’s effectiveness. Like any process, analyzing outcomes is the only way to determine what is working and where challenges remain. First, decide on what to measure: participation, medical claims, absenteeism, etc. It is easy to think of health costs as the key metric, but there is also the investment in human capital that wellness programs can impact. These include things such as increased productivity, less turnover, the attraction of top talent, etc. Another benefit of measurement is that it can guide the direction of the program. For example, we use reports compiled from screenings and HRAs to identify and stratify the risks of the population. This data is only used in aggregate format and does not identify individuals. An example would state, “73 percent of the group has elevated cholesterol.” This information can then trigger a variety of interventions such as cooking classes, heart health presentations, etc. Follow-up measures then demonstrate the effectiveness of those interventions. Putting together a wellness program can be challenging at first, but a worthwhile endeavor. For additional information, a great free resource is the Wellness Council of America, www.welcoa.org. Sean Kenny is the health and wellness manager for Advanced Care Wellness, a service of Managed Care Systems, LLC. For more than 16 years, Kenny has designed successful wellness solutions for organizations in the fields of oil, ag, healthcare, law enforcement and government.

KERN BUSINESS JOURNAL

December 2014 / January 2015

Business retention, expansion activities position county for economic success By Richard Chapman

ern Economic Development Corporation’s (KEDC) mission is to stimulate a diversified and strong economic climate in Kern County through recruitment of new business opportunities and assistance in the retention and expansion of existing businesses. Increasingly, business retention and expansion activities are considered by many to be the most critical of all economic development activities. Indeed, local businesses create approximately 80 percent of the new jobs and capital investment within a community. In addition, according to the Oklahoma Department of Commerce, it costs 100 times more to recruit new businesses than to retain existing businesses. Currently, KEDC staff members visit an average of 100 county businesses per year, and since 2010, KEDC has created/retained thousands of jobs for county residents. The two key goals for KEDC’s Business Retention and Expansion program are to remove local obstacles that prevent existing firms from remaining in operation in the community, and to help businesses become more competitive. KEDC provides targeted business development assistance in the areas of strategic planning and marketing, production, regulations, workforce development and financing. Thankfully, the number of companies picking up stakes and moving to another town is much less common today. According to a 2013 report by Good Jobs First, in the late 1990s and early 2000s there was one firm relocating for every 500 firms in the U.S. Today, there is only about one relocation for every 1,300 firms. Recent studies also show that relocations account for only about 1 percent of overall employment change. Housing costs an important driver of economic growth While the cost of doing business is an important factor in business relocation/expansion decisions, the cost of living also plays a role. For example, workers are moving out of California because of the high cost of living. “California’s most inexpensive markets are on par with the most expensive metro areas in places like Texas, while California’s most expensive markets are quickly approaching median prices of $1 million,” wrote Jordan Levine in a Beacon Economics’ study. These high costs are pressuring a growing numbers of workers, especially middle-

SOURCE: CONWAY DATA INC.’S NEW PLANT DATABASE

income workers, to leave California for places where they may be better able to buy a house, Levine wrote. However, Kern County is one of the most affordable markets in the state (with a median home price of $210,000), and, according to Moody’s Analytics, the cost of living in Kern County is 93 percent of the U.S. average. KEDC promotes the fact that Kern County is a cost-effective alternative for families and businesses. Intrastate relocations more common than interstate moves According to John Walls, president of Walls and Associates, a Denver-based database research firm that tracks the movements of companies nationwide, “The vast majority of California firms that move out, move to somewhere else in California.” Indeed, a Public Policy Institute of California (PPIC) study found that intrastate moves were more common than interstate moves and, among intrastate moves, shortdistance moves were more common than long-distance moves. Furthermore, the most common cross-county moves were between adjacent counties, from a more urbanized county to a less-urbanized county. KEDC has been aggressive in marketing Kern County as a geographic part of Southern California. As a result, we are now solidly on the radar screen for many Los

Market

Median

Differential

Kern County

$215,750

Los Angeles Metro

$414,300

192%

Orange County

$696,190

327%

Inland Empire

$275,820

128%

Sacramento

$276,960

128%

San Diego

$519,420

241%

State

$460,940

214%

SF Bay Area

$730,240

338%

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS, SEPTEMBER 2014

Angeles basin companies seeking to maintain a presence in the state, but also to operate in a business-friendly climate where the cost of doing business is 93 percent of the U.S. average, according to Moody’s Analytics.

Living and working in Kern County is a great economical choice. Richard Chapman is the president and CEO of the Kern Economic Development Corporation.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Human Resources

‘Protecting’ women in the workplace By Robin Paggi

ollywood legend Mae West once said, “Every man I meet wants to protect me. I can’t figure out from what.” An employer recently learned that seemingly trying to “protect” women in the workplace can be unlawful and costly. The employer, New Prime, Inc. (Prime), is one of Robin Paggi the nation’s largest trucking companies. According to an Equal Employment Opportunity Commission press release dated Aug. 18, 2014, the company adopted a policy that inexperienced female truck driver applicants had to be trained by female company drivers in order to be hired. The company put the policy into place after the EEOC sued Prime for sexual harassment of three female driver trainees by male drivers. The company’s rationale for the policy is easy to understand – if you don’t allow men to train women, you’re less likely to be sued for sexual harassment. Problem was, out of its hundreds of trainers, only a handful were women. Therefore, female applicants were put on a “female waiting list” and had to wait for as long as a year before being trained. There was no waiting list for male applicants. The EEOC thought the policy discriminated against women and sued the company. The U.S. District Court for the Western District of Missouri heard the case and rejected Prime’s argument that the policy was put into place to protect women. The court noted that the company had numerous means of protection in place before the policy was created, including a zero-tolerance policy on harassment, a complaint procedure for trainees and drivers, a panic button on its satellite communications equipment and an 800 hotline number to call for help. It didn’t help Prime’s defense when the company’s general counsel testified that he was responsible for encouraging and creating the same-sex training policy, but did not “do much legal research” on it. Finally, the court referenced a similar case in which the Supreme Court determined that a company’s policy that prohibited women from occupying certain jobs so they would not be exposed to lead was sexually discriminatory. Saying that, “the women who apply for positions at Prime should be allowed to make their own decisions regarding their potential employment within the trucking industry,”

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the court found the company guilty of sex discrimination, according to court documents posted online. The case will proceed to determine damages. “While Prime would like to claim that it was protecting women, its policy denied employment opportunities to them. Women are entirely capable of understanding and assessing the risks of truck driving. But one of those risks should not be sexual harassment. Employers should prevent sexual harassment through training and strict enforcement of effective anti-harassment policies, not by segregating male and female employees,” said Andrea G. Baran, regional attorney of the EEOC’s St. Louis District. Employers should not try to “protect” women by denying them certain jobs or refusing to allow them to engage in certain job tasks. Ensuring equal opportunity in employment is the protection that they need. Robin Paggi is the training coordinator for worklogicHR in Bakersfield.

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Tech Talking

Real estate technology gives buyers a realistic peek inside properties By David A. Milazzo

hen thinking about the real estate industry, gizmos and gadgets aren’t usually the first things that come to mind. The last piece of tech I remember hearing about were electronic key boxes that sped up home entry access for agents. So it may be surprising to learn about two of David A. Milazzo the newest technological wonders aiding real estate professionals in the battle to advertise properties most efficiently. iBeacon A new breed of technology rippling through many industries is a proximity system developed by Apple called iBeacon. iBeacon employs tiny transmitters to notify nearby devices of their presence and offer up all sorts of useful information. In the case of real estate properties, iBeacon can advertise and transmit an immediately downloadable property info sheet to anyone within a 1,500foot radius of a transmitter. Leveraging the 800 million iPhones and iPads in the wild, iBeacon technology promises to speed access to information for folks wandering around front yards everywhere. Using a small, battery-powered “beacon” attached to a yard sign, sellers can direct potential buyers to learn everything about their property. Realty Beacon (realtybeacon. com) is one vendor that has the whole setup ready to roll. At $29 per beacon, it’s not terribly costly and allows an agent to skip the constant refilling of brochure boxes and ensure an ever-present stream of digital flyers at a listing. Matterport An even larger development impacting the real estate market is a startup called Matterport. It provides a hardware/software/service combo that promises to digitally capture the interior of a property as a 3-D, explorable realm. Before you pass this off as just a fancy 360-degree spin in the middle of a living

room, go take a peek at realestate.matterport. com. This technology surpasses all photo and video fly-throughs I’ve ever seen. Matterport creates a fully immersive, 3-D environment ready to impact buyers with a space they can actually “wander” around inside. It should be mentioned that this is bleeding-edge tech and is far from cheap. You start with their custom $4,500 camera plus a subscription service ($49 to $149 per month) to process and host each of your listings. The good news is it requires zero technical skills to capture the 3-D images. Matterport provides a custom iPad app that walks you through the process of placing the camera in the exact location for each of the required shots. They claim a typical property takes under an hour to capture. The raw data is sent up to the Matterport Cloud where the 2-D and 3-D images are stitched together to create a complete, dimensionally accurate model of the space. Once complete, the 3-D showcase is hosted on the web for anyone with a modern web browser to enjoy. Matterport promises future software upgrades as well. Coming soon are annotations, measuring tools and personalized enhancements allowing a potential buyer to virtually re-furnish, refresh or renovate a property, all within the live 3-D space. Lastly, Matterport asserts this technology has impact outside the real estate market. They provide use cases stretching from hospitality to construction management. One interesting use envisions an insurance adjuster capturing detailed loss data. Team members could then “walk” a damaged property without necessitating a site visit, which is a potentially useful feature if natural disasters make it difficult to travel to a particular locale. In the end, it’s clear no industry is outside the scope of technology’s impact. Real estate professionals finally have realistic methods to give up-to-the-minute property info and amazing virtual tours of their listings, all while never having to leave their own house. David A. Milazzo is the founder and principal of Bakersfield-based Macroscopic, an Apple enterprise technology consultancy focused on bringing Mac and iOS technologies to businesses, schools, agencies, and independent professionals. Contact him at milazzo@macroscopic.net.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Cyber risks loom for small, large retailers By John Pryor

hat a difference computers have made in our business operations. Communication is instantaneous, customer orders are immediate, and internal accounting has never been easier or faster. These and other benefits of automation John Pryor have led to our (almost) total dependence on digital systems and processes. Therein lies the problem, of course. What will we do if: • We are without power and our computer screens are dark and stay dark overnight? • Our system crashes and all data are corrupted or otherwise lost and totally inaccessible? • Overnight, the data in our systems fall into the wrong hands? These first two risks have been with us from the outset and solutions abound. They range from an uninterruptible power supply for a single computer, to a backup hydrogen fuel cell “stack” that keeps overall operations running with uninterrupted power. Backup systems are available from a multitude of sources and at various levels of protection to ensure that data can be recovered. The ultimate goal for retailers is to continue doing business, regardless of the cause of the power outage. Whether it’s a utility company issue, an earthquake, or an electromagnetic pulse caused by terrorists that shuts down the entire power grid, a business continuity plan is critical and doable. We continue to be vulnerable to the third risk, that data could fall into the wrong hands, and are at an even greater risk than major retailers.

Consider these examples: a hacker breaks into the system and steals personal customer data; an employee’s laptop containing customer data is stolen; or an employee unintentionally includes customer data in a mass email or on the business website. Each of these risks, and many others similar in nature, are considered cyber crime and a personal data breach. Guess who’s liable? Retailers, of course. Therefore, the question is: how can these risks be reduced, avoided, or transferred to others? Earlier this year, the CSUB Small Business Development Center co-sponsored a workshop on cyber crime with CSUB’s School of Business. Experts from industry, law enforcement and the university helped local business owners more clearly understand and address this newly emerging and growing risk. Among other things, a summary of “10 Tips to Protect Your Business” (where cyber crime is concerned) was distributed. A copy of this is available by email request to Johnpryorqrm@gmail.com. Beyond all reasonable efforts to minimize the risk of data falling into the wrong hands, most organizations still need to talk with their insurance company. Ask your insurance broker for a proposal. Brokers may also help manage this risk by suggesting non-insurance risk management solutions and tools. IT counsel can help, too. Don’t forget to ask your broker about a business continuity plan. The ultimate goal is to keep your business on going (and your revenue uninterrupted), despite external forces that want to shut it down. By preparing in advance, you will be rewarded with not only financial stability, but also one of the overall strategic goals of risk management, and that is a quiet night’s sleep! John Pryor is a risk management consultant who can be contacted through the CSUB Small Business Development Center at www.csub.edu/sbdc.

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December 2014 / January 2015

Marketing

Traditional, digital marketing combine for success By Maureen Buscher-Dang

he buzz about digital marketing versus more traditional marketing tactics can leave small business owners scratching their heads. Combining tools from both approaches provides a stronger edge in a competitive marketplace. Traditional marketing can include television, radio, newspaper, billboards, direct mail, phone books and promotional items. Digital marketing can include websites, blogs, email, Facebook, Instagram, YouTube, LinkedIn and Twitter. Weaving a consistent message is the Maureen critical element in all forms of digital Buscher-Dang and traditional marketing communications. Here are some tips to effectively utilize traditional and digital marketing strategies: Start with the basics. Define your target market and their needs. Who is your client? General categories include age, gender, ethnicity and income level. Think about the best ways to reach them. Create and refine the message you want to send and carry through all communications. Do some research. Look around for examples and ideas. Become more aware of your surroundings. What do you like? What don’t you like? I recently went through Cruz Thru Car Wash and took notice of everything from the car

trash bags, uniforms and politeness of staff, to the website (cruzthrucarwash.com) and Facebook contests. While I won’t be opening a car wash anytime soon, I was impressed with the consistency of their message and how they engage customers. Plus, I came away with some nifty new marketing ideas. Define and set your goals. Create a plan. Develop a budget. Plan a time frame. Review and evaluate results. Begin with a good story. There are many sources for finding a compelling story. Make sure it is something to which your target market can relate. Client testimonials are at the top of the list. If you’re involved with nonprofits, specific events or the arts, all are good sources that can be written about, shot with a camera, uploaded or posted. Total Woman Fitness and Training Centers in Bakersfield (twfitness. com) provides a good example of a consistent message integrated throughout digital and traditional mediums, and one of the essential components in their marketing is the gym’s compelling member stories: a 70-year-old grandmother who lifts weights; a mother

and her two daughters who work out together; a young bride trying to get into shape before her wedding. Engage your target market. When you get down to it, marketing is appealing to people at an emotional level. Find something where people can become engaged by talking, viewing, posting or commenting. One example of grabbing an audience emotionally is the National Football League’s “Together We Make Football” campaign at togetherweemakefootball.com. Earlier this year, anyone “touched by the game of football” was invited to enter a contest on Facebook and to share their story of why they love the game. Submitted stories were posted on their website and Facebook for viewing and commenting. Television commercials running during the football season promote the contest. Visitors can vote for their favorite story. The winner wins a trip to Super Bowl XLIX in Arizona. People are engaged. Ultimately, the key to any successful marketing is to maintain consistency and continuity of message throughout all forms of communication, both digital and traditional. Maureen Buscher-Dang is a Bakersfield public relations and marketing consultant.

Brush up on real estate resources at library By Katherine Ross

BSCO’s Business Source Complete and the Legal Information Reference Center are two current and reliable resources for researching real estate. Both of these online databases are available to library cardholders at all branches of the Kern County Library system. To access the databases for free, visit the library home page, kerncountylibrary.org, and click the “Research and Reference” link, which will take you to the alphabetical list of available databases. EBSCO databases typically offer a basic search box, a truly helpful “Help” link at top right, a “Publications” link at the top of the page for looking up a specific periodical title, and other database-specific options. An initial search may be further narrowed down with convenient options for date, format and subject.

EBSCO Business Source Complete provides full-text articles from over 3,400 periodicals, many of them journals. Through the PDF format, they may be viewed exactly as they appeared in print, including charts and illustrations. Many of the periodicals go back a couple of decades; the Quarterly Journal of Economics goes back to 1886. As an example of EBSCO’s huge amount of information, a simple search on “real estate industry” yields more than 26,000 results, even after refining the search to only show full-text results. Narrowing the search down to 2012-2014 and selecting “Industry Profiles” will reduce the results to about 170. Searching trade publications, academic journals, company, geography or industry may also limit results. Each article may be printed, emailed or saved to a flash drive. The Legal Information Reference Center, farther down the list of available databases, includes the category “Prop-

erty & Real Estate” on its first page. The “Property & Real Estate” link leads to the subcategories “Buying a House,” “Foreclosure,” “Homeowners,” “Landlords & Property Management,” “Renters & Tenants’ Rights,” and “Selling a House.” These, in turn, lead to dozens of articles or chapters taken from high quality and easy-to-understand legal books. The information can be printed or emailed through links at the right side of the page. Moving the mouse to the bottom of the page reveals the link for downloading to flash drive. The Legal Information Reference

Center includes a search box option for additional searches; you can search for a specific form, such as a rental agreement. There is a “Help” link at the top right for guidance on even more search options. This is only a small sample of the many online resources available through the Kern County Library, accessible at any of our 25 locations or from your home computer with a library card. For more information, call us at 661-868-0770. We’re here to help. Katherine Ross is a reference librarian for the Kern County Library System.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Retail

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KERN BUSINESS JOURNAL

December 2014 / January 2015

Owning vs. leasing: Creativity is key for large local nonprofit By Louis Medina

nonprofit needs real estate to run its programs, but the question looms, “How can a nonprofit possibly afford buildings or land?” Community Action Partnership of Kern (CAPK) has managed to meet its real estate needs in creative ways like agency-owned modular buildings sitting on leased property, an Olive Garden restaurant purchased and turned into a central kitchen to prepare meals for Head Start children, and a food bank warehouse built with funds pieced together from various sources. CAPK, which boasts a staff of more than 700 employees across a dozen povertyfighting programs throughout Kern, manages 84 facilities: 14 that it owns outright and 70 that it leases. Of those 70 leases, 27 are land leases that house CAPK-owned modular buildings. “Being creative, seeing what’s on the market and making it work to fulfill our needs is important, especially for a nonprofit having to deal with a tight budget,” said CAPK’s Executive Director Jeremy Tobias. Nonprofits need to weigh the pros and cons when deciding whether to buy or lease, Tobias said, adding that sometimes immediate needs and time constraints can drive the process, making leasing the quickest, most desirable option. The Pros to Buying “Buying is a way to build an asset that has value down the road,” Tobias said. “There’s a security aspect to it. You can control your own destiny. And once a building is paid up, that frees up money for other uses.” CAPK Finance Director Christine Anami said there are also some property tax breaks and assessment waivers for real-estateowning nonprofits, such as exemption from California’s Proposition 13 Tax, which equals 1 percent of a property’s assessed value. These waivers are obtained by filing a welfare exemption with the county annually for each site the agency owns, Anami said. The county extends these tax breaks because CAPK properties are used for charitable purposes. The Cons “The downside to purchasing is that you take a risk, as you do with any real estate transaction,” Tobias said. “A property can decrease in value and is harder to walk away from when you lose funding or have to downsize.” Emilio Wagner, CAPK’s Director of

PHOTO COURTESY OF LOUIS MEDINA, CAPK

Community Action Partnership of Kern Food Bank Manager Ken White (center) stands in front of the Food Bank donor wall with Jennifer Campoy and Mitchell Millwee from Farm Credit West during a check presentation.

Operations, oversees the agency’s facilities. He highlighted that increased maintenance responsibilities go hand-in-hand with owning properties. By contrast, he said that when leasing, “the landlord takes care of maintaining major equipment like air conditioning, depending on the type of lease.” Modulars Owning modular buildings that sit on school property in various school districts throughout Kern works well for a number of CAPK’s 44 Head Start centers. “We’re a pre-kindergarten type of system and it’s nice to be tied to a local school,” Tobias said. “We can go to them and say, ‘Can we fence off a little corner of your yard?’ It’s a small footprint and non intrusive to the school.” Wagner said that purchasing a modular building also costs less than building from scratch, but sometimes expensive site improvements such as grading and foundation work, landscaping, fencing, or water and sewer piping might need to be done on the property before a modular building can be moved there.

PHOTO COURTESY OF LOUIS MEDINA, CAPK

CAPK’s East California Avenue Head Start Preschool occupies a leased facility.

Creativity Sometimes, CAPK looks for a belowmarket-value opportunity, like a restaurant getting ready to close, and buys and converts a property to the agency’s needs. This happened when CAPK bought and renovated the Olive Garden in the East Hills Mall to turn it into their Head Start central kitchen.

Testifying to the importance of grants and donations in helping nonprofits realize these projects, the CAPK Food Bank warehouse has an entire donor wall acknowledging the many gifts that went into building it. Louis Medina works as an administrative analyst for Community Action Partnership of Kern.

December 2014 / January 2015

KERN BUSINESS JOURNAL

Air District’s historic rule reduces emissions, encourages green development By Janelle Schneider

nacted for the first time anywhere in 2005, the San Joaquin Valley Air Pollution Control District’s Indirect Source Review regulation (ISR) has reduced 13.8 tons per day of emissions, improving the air quality and public health in the valley. This would be a notable achievement in itself apart from the fact that ISR was a unique rule that had never before been adopted by any air basin in the US. Additionally, this groundbreaking rule encourages smart valley development that is often less focused on the automobile and more focused on quality of life and public health. “The air district takes pride in developing innovative air quality strategies that benefit all of us: businesses, communities and residents,” said Seyed Sadredin, the district’s executive director and air pollution control officer. “The complexity and uniqueness of the air basin demands it.” The San Joaquin Valley faces natural challenges to achieving clean air, including a bowl shape, stagnant atmosphere, hot summers and cold winters. Virtually every activity in the air basin contributes to the emissions that become pollution. Over the years, awareness has grown that emissions can also be emitted from indirect sources, that is, other than from some

type of industrial or mobile source. New development contributes to air pollution by increasing the population in its vicinity and consequently, the number of cars and vehicle miles traveled. Developments also result in other emission-producing activities such as landscape maintenance, fuel use and the use of consumer products. ISR provides a framework for quantifying resulting emissions from both construction and the life of the project. Projects that exceed the applicability threshold for emissions, currently two tons of nitrogen oxides, or PM10 per year, can build in emission-reducing measures to offset fees, such as green space and pedestrian-friendly features that reduce the need for driving, installing electric-vehicle charging stations to encourage the use of emission-free vehicles, and building in mixed-use areas, such as residential and retail. While the district works with developers to plan these mitigation measures into the project before construction, there are times when additional reductions are needed to offset the new emissions being created. These remaining unmitigated emissions are calculated and a fee assessed, which is funneled back into the valley in the form of emission-reduction projects. One hundred percent of all off-site mitigation fees are used by the district to fund emission reduction projects through its grants department, reducing emissions in the air

basin on behalf of the project. “We’ve had great success with this rule,” Sadredin said. Other air basins, such as Imperial County, subsequently adopted their own indirect source regulations. In addition to reducing the project’s impact on air quality through ISR, a developer can further reduce the project’s effect on air quality through a voluntary emission reduction agreement with the district to address the mitigation requirements under the California Environmental Quality Act. Resulting funds, which may fully offset emission impacts, are used for more emission-reduction projects. Since 2005, the district has forged more than 20 such agreements. As the housing development sector in the valley continues to recover from the 2007 to 2010 recession, the number of ISR applications received by the district has increased. Applications were up 75 percent during 2013-14, when 200 applications were received, over 2009-10 (the season in which the district received the fewest applications). “The district’s rulemaking continues to demonstrate the flexibility and forward-thinking that are required to meet our air-quality challenges. ISR is an excellent example of that,” Sadredin said. Janelle Schneider is an outreach representative for the Valley Air District.

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December 2014 / January 2015

Dollars and Sense

Understanding rental real estate, tax laws By Joel A. Bock

ince the enactment of the Tax Reform Act of 1986, the Internal Revenue Code has treated income and losses from a passive activity differently than income and losses from a non-passive activity. Losses from a passive activity (i.e., an activity in which the taxpayer does not materially participate) are generally only allowed to offset income from a passive activity. Unless a specific set of Joel A. Bock conditions is satisfied, which I will discuss below, income or loss from a rental real estate activity is passive. So, what is the practical impact of this law on a taxpayer involved in rental real estate on a limited basis? Let’s assume that an owner of a single rental property has positive cash flow from the property in which he/she actively participates, but has a tax loss (possibly due to depreciation). If the taxpayer has modi-

fied adjusted gross income (MAGI) of less than $100,000, there is a provision that allows the taxpayer to deduct a rental loss of up to $25,000. As the taxpayer’s MAGI increases, the amount of the loss which is allowed to be deducted is reduced by $0.50 for every $1.00 increase in MAGI (fully phased out when MAGI reaches $150,000). For a taxpayer with an MAGI over $150,000, unless the taxpayer has another source of passive income, the rental real estate losses will be suspended and will carry forward to future years. Let’s now assume that the taxpayer has several rental properties, and the taxpayer spends the majority of his/her time participating in the day-to-day management and operations of the properties. The previously referenced exception to the treatment in which losses from a rental real estate activity are treated as passive is referred to as a materially participating real estate professional. To qualify as a materially participating real estate professional, the taxpayer must meet the following tests: • More than 50 percent of the taxpayer’s personal services must be performed in real property trades or businesses (includ-

ing development, construction, acquisition, rental, management or operation, leasing and brokerage); • More than 750 hours of personal services must be performed during the tax year in real property trades or businesses; and • The taxpayer must materially participate in each rental activity (an election may be made which will allow all of the taxpayer’s rental real estate activities to be grouped and treated as one activity). Personal services performed by a taxpayer as an employee in a real property trade or business will qualify for steps one and two above as long as the taxpayer is a 5 percent owner of the business. Time spent performing investment activities such as reviewing financial statements or reports on operations, monitoring the finances or operations, or preparing analysis or summary of finances or operations only qualifies as material participation if the taxpayer participates in the day-to-day management or operations of the rental activity. So, how could a taxpayer’s real property trade or business activities be proven to the IRS if challenged? From a documentation

perspective, most real estate professionals don’t punch a time clock as they begin work every day. The IRS allows a taxpayer’s participation to be established by any reasonable means including identification of services performed over a period of time and the approximate number of hours spent performing those services, like appointment books, calendars or narrative summaries. In addition to the preferential treatment afforded to rental real estate losses, another benefit available to materially participating real estate professionals is related to net rental real estate income or gain from the sale of a rental property. Typically, net rental real estate income or gain from the sale of a rental property are subject to the net investment income tax; however, these types of income are not subject to this tax for materially participating real estate professionals. Please consult your tax advisor to determine how these tax laws impact your specific situation. Joel A. Bock, CPA, MST is a partner in Daniells Phillips Vaughan & Bock, a Bakersfield accounting firm.

December 2014 / January 2015

KERN BUSINESS JOURNAL

December 2014 / January 2015