July 7-20, 2015

July 7-20, 2015

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Small business is big business. www.POLB.com

Compete Small business is big business. Small businesses employ more than 7.2 million Californians, keeping big businesses on their toes.

To get the most competitive bids, the Port of Long Beach utilizes small businesses for nearly 26% of its contracts. Small business is making a big difference.

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July 7-20, 2015

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SPECIAL REPORT – MID-YEAR ECONOMIC OUTLOOK

Job Creation Begets Positive Outlook Despite First Quarter Lag In GDP ■ By SAMANTHA MEHLINGER Senior Writer hile economists had to W adjust their expectations for U.S. gross domestic product

A retired police commander and former two-term city councilmember, Doug Drummond was appointed to the Long Beach Board of Harbor Commissioners by former Mayor Bob Foster in 2011. He has served as president of the five-member commission for the past year. (Photograph by the Business Journal’s Evan Patrick Kelly)

Harbor Commission President Drummond Reflects On The Port’s Achievements, Challenges And Competitive Edge ■ By SAMANTHA MEHLINGER Senior Writer oug Drummond’s career in D public service spans more than 45 years, during which time he spent 29 years with the Long Beach Police Department, eight years on the Long Beach City Council, one year on the Long Beach Transit Board of Directors, and most recently, four years on the Long Beach Board of Harbor Commissioners, where he currently serves as president. In all

that time, what he has found most rewarding is his role overseeing the Port of Long Beach as a harbor commissioner.

“It’s really exciting,” Drummond said of his role at the Port of Long Beach, for which he is one of five commissioners making policy decisions on the port and its future.

“It’s fun to be part of something where you are focused and you are building and making jobs.”

The other commissioners are: Rich Dines, vice president, a longshoreman at the ports of Long

Beach and Los Angeles; Lori Ann Farrell Harrison, director of finance for the City of Huntington Beach; Lou Anne Bynum, exe(Please Continue To Page 40)

(GDP) growth this year due to a contraction in the first quarter, the outlook for the remainder of the year is promising, as steady job creation is expected to generate positive ripple effects throughout the economy. Some uncertainties to this outlook remain – namely an expected increase in interest rates and cautious spending on the part of consumers, according to national and regional economists.

“The economy seems to be performing very well, notwithstanding the first quarter which was slightly negative in terms of GDP growth, but that was due to a few anomalies,” Steven Cochrane, managing

director with Moody’s Analytics who oversees U.S. regional forecasting, told the Business Journal.

United States GDP decreased at an annual rate of 0.2 percent in the first quarter, ac- Long Beach cording to a June Developmnet report from the U.S. Projects Bureau of Eco- Underway Or Planned nomic Analysis.

The anomalies See Page 31 that caused the GDP to falter were severe weather in the East and Midwest, and congestion at So Cal ports, Cochrane said. “These are one-time things that shouldn’t be read too much into the overall performance of the economy,” he emphasized. At the start of the year, Cochrane had expected U.S. GDP to increase by 3.5 percent this year, but has since adjusted his expectation to about 3 percent growth.

(Please Continue To Page 15)

Airport Tenants Say City Needs Strategic Plan For General Aviation Or Business May Decline Further ■ By SEAN BELK Staff Writer f Long Beach Airport doesn’t Iplandevelop a long-term strategic for general aviation, the industry may fall deeper into decline and some businesses may relocate or close all together, airport tenants said in a recent interview with the Business Journal.

Fixed-base operators (FBOs) that support general aviation – which includes corporate jets and

Jim Michaelian, president and CEO of the Grand Prix Association of Long Beach could not be happier. To find out way, see Page 12

all aviation other than commercial airlines and the military – said the airport takes a hands-off approach to marketing, lacks any strategic business plan and has turned to solely focusing on commercial airlines.

As a result, investors are having a hard time justifying whether they should dump more money into facilities at an airport that tenants say doesn’t value general aviation business as a resource even though the industry supports thousands of jobs and is a major asset to the local economy.

“The amount of business [at Long Beach Airport] has steadily declined over the years, and the pie is getting smaller,” said John Tary, general manager of Toyota AirFlite, a 14-acre facility and subsidiary of Toyota Motor Sales USA, Inc. that services jets for Toyota’s corporate executives from Japan as well as other corporate aircraft.

Tary said Toyota is now in a (Please Continue To Page 8)

John Bishop was recently appointed CEO of Long Beach Memorial Medical Center, Miller Children’s & Women’s Hospital Long Beach and Community Hospital Long Beach. (Photograph by the Business Journal’s Evan Patrick Kelly)

John Bishop Selected As The New CEO Of MemorialCare’s Three Long Beach Hospitals ■ By SAMANTHA MEHLINGER Senior Writer ohn Bishop, former chief J financial officer for MemorialCare Health System’s three Long Beach hospitals, was promoted to the position of chief executive officer and assumed duties on June 22. Bishop replaced Diana Hendel, who resigned earlier this year after six years as CEO of Long Beach Memorial Medical Center, Community Hospital Long Beach and Miller Children’s & Women’s Hospital Long Beach.

Bishop, a longtime Long

Beach resident, had served as CFO for MemorialCare’s Long Beach hospitals since 2009. Prior to that, he served as CFO for Saddleback Memorial Medical Center. He has also been the CFO of MemorialCare’s Seaside Health Plan since 2014.

“We selected an outstanding individual with a demonstrated track record of success within MemorialCare as the new leader for our Long Beach hospitals,” Barry Arbuckle, Ph.D., president and CEO of MemorialCare Painting The Town: POW! POW! Long Beach See Pages 36 & 37

Health System, said in a prepared statement.

“John is a strategic, engaged and innovative leader with extensive experience in executive management and finance,” Arbuckle continued. “That breadth of knowledge combined with John’s leadership in all aspects of health care delivery – from inpatient, outpatient and ambulatory settings to physician groups, health plans and communitybased care – makes him the perfect choice to lead our Long Beach hospitals and programs.”

Bishop told the Business Jour(Please Continue To Page 13)

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2 Long Beach Business Journal

Inside This Issue 4 6 8

July 7-20, 2015

15

Special Report: Mid-Year Economic Outlook

Inside City Hall

• What Are Private Public Partnerships And Why The Long Beach Courthouse Costs So Much More. Pt. II

By Former Councilmember Gerrie Schipske

Going Green

• Commercial Organic Waste Requirements

Newswatch

• Airport Tenants, continued From Page 1 • U.S. Customs Facility Study On July 7 Agenda • Midtown Property Owners Voting On Forming BID • Long Beach Water Use At Record Low • Long Beach Grand Prix Among The 10 Best Races • New Memorial CEO, continued From Page 1 • Port Of Long Beach Releases Narrative History Book • Budget Increase For Gerald Desmond Bridge Project • Port Of Long Beach Top Seaport In North America

34 36 38 39

• Corporate Aviation Major Boon For Local Economy • Financial Services: Roadblocks To Retirement • The Invisible Infrastructure: Utilities That You Count On • Getting At Oil Using New Technologies • The Projected Primary Care Physician Shortage • Ports Working Together To Ensure Future Growth • How Local Retailers Are Drawing Customers • Development Projects Underway Or Planned • Update On Douglas Park

Perspective POW! POW! Long Beach Art Matters

Presented By The Arts Council For Long Beach

The Nonprofit Page

Presented By The Long Beach Nonprofit Partnership

Free: Long Beach Business Journal Digital Edition, Monday Morning Coffee, NewsFlash Sign up at: www.lbbusinessjournal.com • Follow us on Twitter: @LBBizJourn

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4 Long Beach Business Journal

INSIDE CITY HALL

What Are Private Public Partnerships And Why The L.B. Courthouse Costs So Much More – Part II

■ By GERRIE SCHIPSKE Contributing Writer Defenders of “private-public partnerships” will tell you in a heartbeat that Long Beach should jump at the chance to encumber debt for 50 years in order to build a new City Hall and Library what will be the lynch-pin for a “Century City” type downtown.

After all, just look across the street at the new courthouse. It’s a “three P” or “PBI” performance-based infrastructure (to use the jargon). In fact, the courthouse is the only government building in the United States to be financed in this manner.

Public-Private-Partnerships (common in other countries) work with a private developer making the equity investment from usually international funds and pensions. The developer finances, designs, builds and main-

tains the facility and the government makes payments on a lease basis for 30 to 50 years. At the end of the lease, the building belongs to the government.

So what’s wrong with that? Nothing, if it costs the taxpayer less to do it as a PBI than it would if the project was funded by the city and built by a developer who did not own the building when it was completed. To date, we don’t know if that would be the case for a new city hall because that data has not been released to the public. Yet, without disclosing the cost, Long Beach has already lobbied the legislature to get a change in the law which would allow the city to pay for the civic center project over 50 years. The project is estimated to cost $358 million but if leased over 50 years it could soar to $630 million.

Before the courthouse project even got the green light, there was an analysis of the “Value for Money” (VFM)

July 7-20, 2015 of the project. VFM is a comparison of the risk-adjusted whole life-cycle cost of the project procured as a PBI compared with the risk-adjusted whole life-cycle cost of the project as if it was procured in the more traditional manner. The goal was to determine which would provide the best value to the state.

However, even with a VFM that indicated a PBI would provide the “best value to the state,” the project appears to be costing the state taxpayers a lot more than the analysis showed. The California Legislative Analyst Office notes in its review of the courthouse project: “that utilizing a different set of assumptions than those (in the original VFM) (such as excluding the assumed federal tax adjustment and leasing costs) would result in the cost of the Long Beach courthouse project being less – by as much as $160 million in net present value terms – in the long run under a traditional procurement approach than the chosen P3 approach.”

Given those facts and the fact that on other P3 projects, private companies will often seek to earn a profit of roughly 10 percent to 25 percent when loaning funds to a government, how can anyone justify this to the Long Beach taxpayer?

Before city hall officials move any further on committing taxpayers to paying for a new city hall and library – that could instead be retrofitted and repurposed – they need to produce a public VFM that discusses the full costs of this project and then, perhaps, put the issue on the ballot in 2016. Let the voters/taxpayers decide if they want to make private developer very wealthy.

Next column: Some Politicians Are So Transparent (Gerrie Schipske is a native of Long Beach, an attorney, registered nurse practitioner and full time instructor at CSULB Department of Health Care Administration.

She was elected to both the Long Beach Community College Board of Trustees and the Long Beach City Council.

She is the author of several books on Long Beach history and her blog, www.longbeachinside.blogspot.com.) ■

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6 Long Beach Business Journal

GOING GREEN

July 7-20, 2015

CalRecycle, City Of Long Beach And Businesses Prepare For New Commercial Organic Waste Recycling Requirements ■ By SAMANTHA MEHLINGER Senior Writer Beginning April 1, 2016, businesses, public entities and multi-family complexes with five units or more, generating eight or more cubic yards of organic waste, will be required by California law to recycle that waste. Signed into law in 2014, Assembly Bill (AB) 1826 includes a tiered implementation schedule, requiring entities generating lesser amounts of waste to begin organics recycling in 2017, 2019 and 2020, depending on their waste load.

California's Department of Resources Recycling and Recovery, known as CalRecycle, hopes the law will help it meet its goal of recycling 75 percent of all waste generated in the state by 2020. Removing organic waste from landfills through recycling cuts down on greenhouse gases, according to CalRecycle.

Under the mandate, organic waste from food, landscaping and pruning, nonhazardous wood and food-soiled paper must be recycled. To comply, businesses may partner with a waste service provider for collection and recycling, recycle the material onsite, self-haul the materials to other locations for recycling, or sell or donate any organic waste they generate. Typically, organic waste is recycled into compost for use in soil or is put through anaerobic digesters to generate energy.

“For local jurisdictions like the City of

The Long Beach Environmental Services Bureau is currently working with CalRecycle and local businesses to develop a program to comply with new commercial organic waste recycling mandates. Pictured from left are: Jim Kuhl, director of the Long Beach Environmental Services Bureau; Jennifer Wallin, supervisor, materials management and local assistance for the Southern Section of CalRecycle; and Cara Morgan, local assistance and market development branch chief for CalRecycle. (Photograph by the Business Journal’s Evan Patrick Kelly)

Long Beach, their requirement is to develop and have a program in place that will meet the needs of businesses to help them divert the materials,” Cara Morgan, local assistance and market development branch chief for CalRecycle, told the Business Journal in an interview that also included

Long Beach Environmental Services Bureau Director Jim Kuhl.

All California jurisdictions are required to have organic recycling options for businesses and multi-family complexes by January 1, 2016. According to Morgan, some jurisdictions may create their own ordi-

nances with enforcement procedures.

“Some jurisdictions are going to be ready to implement programs January 1, and others may need more time,” Morgan said, adding that the law allows for some leeway for those areas requiring more time.

CalRecycle’s role is to measure compli-

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July 7-20, 2015 ance with AB 1826 on a statewide scale, based on baseline figures from 2014, Morgan said. “Another role that CalRecycle plays is reaching out to statewide associations, so working with the California Chamber of Commerce and other business associations, manufacturer associations [and] retailers, to get out information to the businesses,” she continued. “Our other role is helping the local jurisdictions.”

The main role of jurisdictions, such as the City of Long Beach, will be to “educate businesses on how they can recycle in their community and then to monitor businesses to identify those that may not be recycling organics, and then to reach out to them in some way,” Morgan said.

The City of Long Beach hasn’t finished designing its organic waste recycling program to ensure compliance with AB 1826, Kuhl said. “The big part of it is trying to determine who falls under the first tier of the regulatory process,” he said, referring to generators of eight or more cubic yards of organic waste. CalRecycle is currently undertaking a statewide waste characterization data study to determine who those waste generators are, Morgan said.

Initial findings suggest the majority of businesses affected by the April 2016 implementation date are large supermarkets, food packing warehouses and large-scale food manufacturers, according to Morgan.

“Grocery stores are probably the largest generator, many of which already have their own programs to backhaul food waste to their facilities and compost it,” Kuhl said. “We may find in the first year that

GOING GREEN most of those are already in compliance.”

Other large producers of organic waste may include hospitals, universities, hotels and school districts, Kuhl said. Morgan suspected these would fall under the January 1, 2017 compliance date. Smaller generators of organic waste largely include restaurants.

“We are going to go through [the] business licensing [department] to determine who the largest employers are who fall into these categories,” Kuhl said. “And then we will start the outreach through there, possibly even going through the chamber of commerce.”

Part of the reason it may be difficult for some jurisdictions to fully comply with AB 1826 is there is a lack of organics recycling facilities. “What Southern California is missing are the facilities to compost or process this material,” Kuhl said. “There are very limited opportunities right now.”

Kuhl said he hoped the state government would encourage companies to invest in composting facilities or anaerobic digesters to alleviate this problem.

“We have allocated funding to implement a greenhouse gas reduction grant and loan program to provide funding for that infrastructure,” Morgan said. “That is a big part of the governor’s budget. It is money that comes from AB 32’s greenhouse gas reduction funds.”

Some companies have already developed their own organics recycling facilities. The Kroger Co., which owns and operates 300 Ralphs and Food 4 Less stores in Southern California with five Ralphs and three Food 4 Less locations in Long Beach, is one such company.

Long Beach Business Journal 7 Kroger invested in anaerobic digesting technology at its 49-acre Compton facility, where it hauls 150 tons of organic waste from Southern California locations every day, according to Kendra Doyel, vice president of media relations for Ralphs Group.

The Compton location includes corporate offices, distribution and warehousing centers and a creamery manufacturing plant.

Prior to building the anaerobic digester facility, which has been fully operational for about two years, the company hauled its organic waste by truck to Northern California. “We are reducing truck trips by more than 500,000 miles per year,” Doyel said.

At the facility, organic waste is put into a mulching device, which breaks the material down, Doyel said. After any nonorganic materials are filtered out, the organic waste is combined with effluent material generated by the site’s creamery and is placed in a “large bin of microbes,” which “then take the organic material through an anaerobic digestion process.”

Through this process, enough energy is generated and captured to power 20 percent of the entire 49-acre facility’s energy needs, Doyel said. “When you look at the energy needs that we are taking off the grid, that is about enough energy to power 8,000 homes per year,” she said.

The facility may be the first of its kind to be built in a densely populated urban area, Doyel said. “This model is one that I encourage other businesses to take a look at, and I am encouraging other cities to take a look at, because it really is a very powerful solution to the huge problem that is food waste in our state.” ■

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8 Long Beach Business Journal

Airport Tenants: Need For A Strategic Plan (Continued From Page 1)

“decision process” about what to do with its FBO facility, adding that the “current environment” has made it difficult for him to argue the viability of the FBO that has called the airport home since Toyota purchased the facility in 1989.

Last year, in a survey by Aviation International News that included 12,000 evaluations from 91 countries, Toyota AirFlite’s Long Beach facility was recognized as the best FBO for the Americas. Relocating its facilities out of Long Beach could easily result in a black eye for the city amongst the aviation community.

“Obviously, I can say we’ve been a pretty good tenant,” he said. “But, it’s one of those things that may come to an end given the current policies.”

Tary is not alone in his concerns about the future of general aviation at Long Beach Airport.

JFI Jets, an FBO company based in Long Beach, that has operations in New York and Nashville and that provides private jet charter services and aircraft management, is expanding its fleet in the Southeast instead of Long Beach, where the company is headquartered and employs about 50 people, according to Sohail Ashraf, chief financial officer for JFI Jets.

“We would love to be here,” he said. “We want to be here . . . But, at some point, if you were to ask me if I were to invest more money? I don’t see that. I have invested back in 2006 and 2005. [For] additional

July 7-20, 2015

NEWSWATCH money, I have to see some type of a return in order for me to expand.”

Several FBO managers said “too much capacity” at the airport – meaning too many tenants fighting over the same gallons of fuel – is what’s creating an “un-level playing field” for general aviation businesses.

Curt Castagna, chief operating officer of Aeroplex/Aerolease Group, which leases hangar space and provides support services for private airplanes, said that, while competition is good, “unhealthy” competition only keeps business stagnant.

He added that the airport should open up dialogue with airport tenants and FBOs to create a strategic business plan to ensure the value of the airport is “healthy.” Otherwise, general aviation business will continue to fall, creating less revenue for FBOs and the airport, Castagna said.

“The downside of allowing all that competition is that, if no one can survive, then everyone’s going to suffer,” he said. “And the value of the underlying land to what the city will charge you is going to go down.

It’s going to decline. As opposed to, if the businesses were doing better, the value of the land would be doing better.”

Castagna added that several general aviation businesses have either filed bankruptcy or left the airport in the last decade, noting that Cessna Aircraft Company in 2007 relocated its citation service center from Long Beach to Arizona, where it expanded.

A major point that FBOs raised is the fact that the airport lacks a federal inspection service (FIS) facility for U.S. Customs and Border Protection, an issue that will be

discussed tonight, July 7, at the Long Beach City Council meeting.

While JetBlue Airways has been the main driver behind the city’s decision to consider adding international flights, FBOs have also been calling for a U.S. Customs facility, which airport officials have said would take three-plus years to establish.

FBO managers pointed out that not allowing international flights at Long Beach Airport actually creates more noise and safety hazards, since corporate jets coming from other countries currently have to stop at either Hawaii or LAX first to go through U.S. Customs and then fly to Long Beach, creating the need for additional flights.

Tary said, in many cases, because of safety risks, Toyota executives don’t even take the extra flight and instead drive to their location, leaving their FBO facility idle and providing tax revenue to Los Angeles rather than Long Beach.

“We just don’t want to add that risk to it, so we actually just leave the airplanes in L.A.,” he said. “So, our own company, our own base, our own facility, we can’t even use. Really, we’re not buying fuel here.

We’re not paying taxes here. We’re now shifting it to somewhere else.”

Castagna said Long Beach residents’ concerns that adding international flights and a U.S. Customs facility would compromise the airport’s noise ordinance are unwarranted, adding that currently general aviation at Long Beach is only at 50 percent capacity of what is allowed under the noise ordinance.

He noted that Van Nuys Airport, one of the world’s busiest general aviation air-

ports, opened a U.S. Customs facility for international flights this year.

Castagna said general aviation businesses should be allowed to maximize their opportunities for growth while staying within the confines of the noise ordinance.

“We need to evolve, but that doesn’t mean we need to be noisier,” he said. “That doesn’t mean we need to grow outside of the rules that we already agreed to. That’s the challenge.” ■

City Council To Consider Feasibility Study About Adding U.S. Customs At Airport ■ By SEAN BELK Staff Writer At tonight’s (July 7) meeting, city councilmembers will decide on whether to conduct a feasibility study on allowing international flights at the Long Beach Airport, and establishing a federal inspection service (FIS) facility for U.S. Customs and Border Protection. The agenda item is a request filed by Airport Director Bryant Francis The possibility of a feasibility study on a U.S. Customs facility comes nearly one year after JetBlue executives announced interest in requesting that the city consider adding international flights at the airport as part of the airline’s business model.

JetBlue, which is the airport’s primary air

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July 7-20, 2015 carrier, made its request formal in a letter to the city in February of this year. Francis previously indicated that establishing a U.S. Customs facility could be a process that takes three-plus years.

The city would be required to apply to the United States Department of Homeland Security, Customs and Border Protection for a “user fee” airport designation and seek approval to establish an FIS facility, according to a city staff report.

A move by the city council to perform a feasibility study on the issue was put on hold in March in order to wait until a 4th District councilmember was elected. That new councilmember, Daryl Supernaw, was sworn in more than two months ago.

Some Long Beach residents have opposed the proposal, stating that it would invite more flights. Others, however, say a U.S. Customs facility would bring major benefits, including more airport revenue and international tourism while also benefiting fixed-base operators.

The Business Journal has long supported a customs facility, or at a minimum exploring the feasibility of such a facility.

“Too many people are intentionally being misled to confuse improved services with more flights,” Business Journal Publisher George Economides said. “The airport ordinance is airtight and no one – including JetBlue – is looking to alter the ordinance in any way.

“If the city does not move forward with a study,” he continued, “I firmly believe the Feds will step in and say the city is not being reasonable. Then, local control is lost and no one is happy.” ■

NEWSWATCH

Task Force Formed To Examining Developing Queen Mary Area ■ By SEAN BELK Staff Writer Long Beach Mayor Robert Garcia is appointing 12 individuals to serve on a new task force expected to provide feedback on proposals for approximately 43.38 acres of developable land surrounding the Queen Mary.

The city council approved forming the Queen Mary Land Development Task Force at the request of Mayor Garcia and Vice Mayor Suja Lowenthal, who both have been in negotiations with the ship’s operator, Garrison Investments.

Garcia said the task force is being formed since the ship’s operator has recently been in “intense conversations” with the city and is ready to move forward with development. “It’s time to put together a community group to really advise development, service and management,” he said.

The advisory task force will include downtown residents as well as experts in tourism and hospitality, design and architecture and historic preservation. At the request of other councilmembers, Garcia agreed to also consider individuals throughout the city with a variety of talents, since the ship is considered a citywide resource.

The developable acres that surround the Queen Mary include the Queen Mary Events Park, parking lots and Sea Walk Village, as well as other vacant land. ■

Long Beach Business Journal 9

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July 7-20, 2015

Midtown Property Owners To Take Final Vote On Forming New Business Improvement District ■ By SEAN BELK Staff Writer Property owners along a stretch of East Anaheim Street between Raymond and Alamitos avenues that encompasses Cambodia Town have one last chance to voice their opinions about assessing themselves to form a new business improvement district (BID).

The assessments would allow for services beyond those provided by the city, including public safety, beautification, marketing and economic development programs, according to a city staff report.

The city, through a consultant, recently mailed ballots to property owners – approximately 52 of them, including the owner with the most properties, the city – regarding whether the city should establish the Midtown BID. The ballot mailing occurred after first petitioning those owners on whether they wished to move forward. Petitions were returned by 28, or nearly 55 percent of the owners, indicating they did. The city accounted for 13 of those 28 properties.

Property owners have until August 11 to return the ballots. If a majority of the returned ballots approve the formation of a BID, an advisory board will then be appointed. Ballot results will be released during a public hearing before the city council on August 11.

The proposed BID corridor, which crosses City Council Districts 4 and 6, would be adjacent to the East Anaheim Street Business Improvement District on the east and would include a diverse row of mostly small businesses, including supermarkets, restaurants and cafes in Central Long Beach.

As previously reported, property assessment fees for the Midtown BID are estimated to total $161,501 annually with an additional $5,952 from other revenues.

Assessment revenues would cover costs associated with a safe team program that would provide security services in the form of bicycle and walking patrols, a clean and

Long Beach Business Journal 11 beautiful program, sidewalk cleaning, graffiti removal, landscape maintenance, marketing and BID management.

According to the plan, properties owned by the City of Long Beach, including former redevelopment properties, represent the largest parcels in the district and 40 percent of the total assessment. In other words, the City of Long Beach will be paying $65,700 of the annual assessment.

City-owned properties include the Long Beach Transit facility, MacArthur Park and the Mark Twain Library.

If established, the new BID would go into effect on January 1, 2016. The city council will annually review and consider approving renewal of the levy, budgets and reports as submitted by the Midtown BID, according to city staff. Upon annual review, the city council may increase the levy up to 4 percent. ■

Long Beach Water Use At Record Low; Beats Governor’s Mandate ■ By SAMANTHA MEHLINGER Senior Writer Long Beach residents and businesses are helping the city to go above and beyond Gov. Jerry Brown’s water conservation mandate. The governor’s mandate required Long Beach to cut back on water use by 16 percent; in June, Long Beach exceeded that requirement by reducing water use an additional three percent, according to the Long Beach Water Department. The city’s June water use of 4,380 acre-feet of water was the lowest amount for the city since 1956.

“Long Beach is off to an incredible start to meet the state’s cutbacks,” Mayor Robert Garcia said in a statement from the water department. “I’m very proud of the effort by our residents, businesses, schools and very own water department. We continue to lead statewide.”

Harry Saltzgaver, president of the Long Beach Board of Water Commissioners, emphasized the importance of the city staying on track with its water conservation efforts. “We have to continue conserving and permanently change the way we use water,” he stated.

On July 18, the water department is launching a water conservation campaign called Mission H2O LB. Visit www.missionh2olb.com for more information. ■

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July 7-20, 2015

NEWSWATCH

Long Beach Grand Prix Race Is Among The Best Of The Best – But You Already Knew That ■ By GEORGE ECONOMIDES Publisher Readers of USA Today have confirmed what the Southern California racing community has known for decades: The Toyota Grand Prix of Long Beach is among the best motorsports events in the world. In fact, it’s among the Top 10, right alongside the Baja 1000 and the Indy 500.

A recent online poll by USA Today – the newspaper with the third largest paid circulation in the country after the Wall Street

Journal and New York Times – resulted in 12,000 responses and a list of the top 20 motorsports events. Those 20 events were then reviewed by a panel of what the newspaper called “motorsports gurus” to develop a Top 10 list.

Long Beach made it; Monaco did not!

“It is extremely gratifying to know that motorsports fans around the world see our event as one of the best in the world,” said Jim Michaelian, president and CEO of the Grand Prix Association of Long Beach, pictured at right. “Our thanks to them for

voting for us in the poll, and we look forward to once again delivering a world-class event for the 42nd time next April.”

Following is what the newspaper refers to as USA TODAY 10Best: 1. Baja 1000, which travels from one end of the California peninsula to the other.

2. Indianapolis 500 3. Isle of Man Tourist Trophy (motorcycle race) 4. Night Race at Bristol (Tennessee) 5. Chili Bowl Nationals (Tulsa) 6. Rally Finland 7. 12 Hours of Sebring (Florida)

Dr. Felton Williams Is Chair Elect Of Council Of Great City Schools

8. Singapore Grand Prix 9. Grand Prix of Long Beach 10. Pikes Peak International Hill Climb. ■ urban public school districts. The organization’s mission is “to promote the cause of urban schools and to advocate for inner-city students through legislation, research and media relations,” according to its website.

– Samantha Mehlinger

Dr. Felton Williams, president of the Long Beach Unified School District’s (LBUSD) Board of Education, was named chair-elect of the Council of Great City Schools’ Board of Directors earlier this month.

The council has a 134-member board with the superintendent and one boardmember from each of the council’s 67

Dr. Felton Williams visits with President Barack Obama following a meeting with the Council of Great City Schools at the White House in March.

(Photograph provided by LBUSD)

Police Foundation Receives $10,000 Donations From UPS And Fueling California ■ By SEAN BELK Staff Writer The Long Beach Police Foundation (LBPF) recently received two $10,000 donations, one from UPS and another from Fueling California, to support fundraising efforts for the Long Beach Police Department, according to announcements from the LBPF. “With the economic troubles facing our state and local governments, it is important that organizations like Fueling California, as well as private corporations, lend their support to help vital public services like public safety,” said Austin Lee, executive director of the nonprofit Fueling California.

Bruce Mac Rae, chairman of the LBPF Board of Directors, said in a statement that

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July 7-20, 2015 the foundations is committed to building a safer community through donations that enhance the Long Beach Police Department’s ability to perform at the highest level.

“These funds will contribute to making the community safer by assisting with the latest equipment, training and technology to stay on the leading edge of policing,” Mac Rae said. “LBFD is dedicated to supporting our men and women at the Long Beach Police Department. Contributions and funding also subsidize community outreach programs supported by the Long Beach Police Department.”

For more information about making a donation to the LBPF, visit www.lbpolicefoundation.org or call (562) 343-5111.

Port Of Los Angeles Co-publishes Book Chronicling Terminal Island’s Bygone Era ■ By SAMANTHA MEHLINGER Senior Writer On June 16, the Port of Los Angeles (POLA) and Angel City Press released a

Memorial’s John Bishop (Continued From Page 1)

nal that his top three priorities as CEO are focusing on the patient experience, which includes providing quality care and being seen as “the trusted provider of health care to our community,” strengthening and growing physician partnerships, and guiding the hospitals through the health care industry’s transformation towards a focus on population health.

“The transformation to population health is going to take a number of years . . . because the financial model and the reimbursement environment [are] not designed to support that,” Bishop said. “We are working with all of our payers – Medicare, MediCal, and all the HMOs and the PPOs, to try and change that model. But we also have to work with our physicians to make sure that they are in lockstep with us as we make that transition,” he explained. “I view that as a five-year goal to be completely converted to a population health mentality with all of the incumbent financial underpinnings.”

As for his long-term goal as CEO, Bishop said, “Long Beach is obviously the largest provider of health care services in our immediate community, but we’re looking to not just be the best provider of health care services in Long Beach, but as a system we are looking to continue to grow to be the best provider of health care services in Southern California.”

Part of that vision is continuing to grow what Bishop refers to as the hospitals’ “centers of excellence,” such as the MemorialCare’s Heart and Vascular Institute, the Todd Cancer Institute, and Orthopedic Institute. He also hopes to “raise the prominence” of Miller Children’s & Women’s Hospital, which he called MemorialCare’s “hidden jewel” in Long Beach.

“The consumer and our patients are our top priority,” Bishop said. “Maximizing the patient experience that our community members have is at the front of everything that we try to do.” ■

NEWSWATCH historical book, “Terminal Island: Lost Communities of Los Angeles Harbor,” about communities that used to exist on Terminal Island, which is now home to POLA and Port of Long Beach operations as well as a federal prison.

The book chronicles the lives of early occupants of the island who arrived in the mid-1800s, and subsequent communities of Japanese American immigrants who were forced to leave the island following the attack on Pearl Harbor in 1941.

The book was penned by Naomi Hirahara, an author and journalist, and Dr. Geraldine Knatz, former POLA executive director. It features hundreds of photographs and images. The book is available to purchase at several locations, including the Los Angeles Maritime Museum, San Pedro Bay Historical Society, Point Fermin Lighthouse, and the Japanese-American Museum. It is also avail-

able through the Los Angeles Public Library.

For more information, visit www.portoflosangeles.org. ■

Long Beach Launches Hotline For Reporting Unpermitted Construction ■ By SAMANTHA MEHLINGER Senior Writer The City of Long Beach has created a new hotline for the public to report suspected unpermitted construction. Open on Saturdays from 7 a.m. to 5 p.m., the hotline at 562/570-0000 accepts anonymous complaints, all of which “will be investigated

Long Beach Business Journal 13 and will be subject to a site visit by a code enforcement inspector,” according to a city statement. The hotline is intended to benefit Long beach neighborhoods and ensure the health and wellbeing of residents. After hours reports may be made to 562/5702633 or at www.lbcode.org.

If an inspector determines a reported construction site does not have proper permitting, an order to stop work will be issued to the responsible entity. Failure to comply with such an order results in citation fines and, in some cases, referral to the city prosecutor’s office.

“Long Beach is committed to promoting and maintaining a safe, quality living and working environment,” Mayor Robert Garcia said in a statement. “Providing fair, consistent and effective public services improves quality of life and enhances every part of our community.” ■

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14 Long Beach Business Journal

NEWSWATCH

July 7-20, 2015

Husband and wife George and Carmela Cunningham are the authors of the new book “Port Town,” a 500 page narrative history of the Port of Long Beach. (Photograph by the Business Journal’s Evan Patrick Kelly)

Port Of Long Beach Releases Narrative History Book ■ By SAMANTHA MEHLINGER Senior Writer For the first time, the history of the Port of Long Beach has been captured in detail in a 500-page narrative history book commissioned by the Long Beach Board of Harbor Commissioners. Authored by George and Carmela Cunningham, formerly the publishers of a maritime newsletter, the book not only examines

the history of the port since it was founded in 1911, but also delves into prior historical events that had an impact on its development.

“It wasn’t long after I joined the harbor commission in 2011 that I realized a detailed history of the port had never been written. I wanted to learn more,” Doug Drummond, president of the Long Beach Board of Harbor Commissioners, told the Business Journal. “After all, this port’s 100-

Port Requests Budget Increase For Gerald Desmond Bridge Project ■ By SAMANTHA MEHLINGER Senior Writer Port of Long Beach staff is requesting a $203.8 million increase for the Gerald Desmond Bridge Replacement Project budget at the Long Beach Board of Harbor Commission’s July 17 meeting, according to a staff report. The last budget increase was approved by the board in 2013, which took the $1.1 billion budget to a total of about $1.26 billion. If approved, the currently requested adjustment would increase the budget to $1.467 billion.

According to a staff report from Duane Kenagy, capital programs executive for the port, this latest budget increase is largely due to a directive from the port and Caltrans to “enhance the design of the [bridge] towers . . . to strengthen assurance of the tower performance in a seismic event.” This directive necessitated time extensions to complete an enhanced design and incorporate it into the project’s plans, the report explained. The board recently approved a 725-day time extension on the project.

Other issues identified by the report include increased administrative costs due to project time extensions, overhead and escalation costs incurred by the project’s designer/builder, “re-establishment or recommended program contingency and risk register levels,” “new requirements for protection of the structure from terrorist or catastrophic incidents,” and increased costs associated with demolishing the existing bridge.

The increased costs do not impact the fiscal year 2015 and 2016 budgets, according to Kenagy’s report.

The project to replace the Gerald Desmond Bridge with a new, taller structure was originally approved by the board of harbor

year-plus history is an amazing story of success. Long Beach is one of the top ports in the country and its story needed to be told.”

Drummond continued, “So, two years ago, I recommended that the harbor commission hire a top-notch writer to produce a first-rate, unvarnished history of the port.

My fellow commissioners agreed and, via a request for proposals, we found George and Carmela Cunningham. And now, we have ‘Port Town,’ a book that I heartily rec-

commissioners in 2010. The original cost estimate for the project was $950 million. When complete in 2018, the taller structure will allow for more vehicle traffic on its deck and will enable larger vessels to pass beneath it. ■

Trade Professionals Name Port Of Long Beach Best In North America ■ By SAMANTHA MEHLINGER Senior Writer The Port of Long Beach was recently recognized as the best seaport in North America at an awards ceremony at the Asian Freight, Logistics and Supply Chain Awards in Hong Kong. Asia Cargo News, an international trade publication, hosted the event.

This marks the 17th time the port has been recognized with the title of “Best North American Seaport” at the awards, which were previously sponsored by the publication Cargonews Asia.

The award is a reflection of the opinions of more than 15,000 importers, exporters and logistics and supply chain professionals, according to the Port of Long Beach. The port won the title of “Best Green Seaport” at last year’s event.

“We’re working harder than ever to provide the service to our customers that will keep them coming back to Long Beach,” Long Beach Board of Harbor Commissioners President Doug Drummond said in a statement. “It’s great to see the results of efforts, and I’d like to thank Asia Cargo News for this award.”

The Port of Long Beach handles more than $180 billion in international trade from 140 shipping lines on an annual basis. It is currently in the midst of a more than $4 billion capital improvement plan to create new and improved infrastructure capable of handling the world’s largest vessels. ■

ommend to everyone, especially the residents of Long Beach.”

As the book’s tagline explains, it tells the story of “how the people of Long Beach built, defended and profited from their harbor.” It was officially released on June 20 at an annual fundraiser for the Long Beach Public Library. In addition to text, the book includes historical maps and pictures of the port.

According to Carmela, the historic detail covered in “Port Town” goes as far back as pre-statehood, at a time when the California landscape was defined by Native Americans and Spanish conquistadores. “A lot of things that happened before the port was here had impacts on it,” George said.

“One of the devices we used as we went along [was] at the beginning of every chapter we would tell what else [was] going on in the world,” George said. “So you have a picture of the world at this time and then you have a picture of Long Beach, because both things are important.”

The Cunninghams’ research included daily newspapers, books, transcripts of congressional hearings, federal studies and more. Perspectives of all parties involved in the port’s history – from squatters who lived on Terminal Island to longshore workers to corporate moguls – were all taken into account and included in “Port Town.”

“We tried to . . . look at it from a variety of lenses, if you will,” Carmela said.

“It’s an industry but it is also a community out there of people who work together, once in a while sue one another, go on strike,” George said of the Long Beach harbor. “This was a chance to do a real narrative of what happened, who the people were, who the real stewards were . . . and [tell] a story that people could read and be interested in. It’s kind of like an epic tale.”

“Port Town” is available on Kindle for $1.99, in print from Amazon for $11.89 and is free on Apple’s iBooks application. ■

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ECONOMIC OUTLOOK – MID-YEAR REPORT

Special Report (Continued From Page 1)

Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corporation, scaled back his original expectation of a 3 percent GDP growth rate to 2.5 percent for this year. “That puts us in the optimistic camp, because some more pessimistic views say we won’t even grow as fast as last year,” he said, referring to last year’s 2.4 percent GDP growth.

“The second half of the year looks good for a number of reasons,” Cochrane said.

“My guess is this year we will probably produce at least two-and-a-half million [jobs],” he said, adding that he expected the same for 2016.

As of June, the national unemployment rate was at 5.3 percent, according to the U.S. Bureau of Labor Statistics. “The L.A. County unemployment rate is typically higher than the nation’s and the state’s,” Kleinhenz said. In May, the county’s unemployment rate was 7.6 percent, while the nation’s was 5.5 percent. National, statewide and regional unemployment rates continue to decrease due to job gains, he pointed out.

Los Angeles County has been outpacing (Please Continue To Page 16)

Operations at Mercedes-Benz USA’s new 1.1 million-square-foot facility at Douglas Park, which houses three of the company’s business units for its Western Region, are now in full swing. The facility, which is home to Mercedes’ Western Region Offices, Vehicle Preparation Center (VPC) and Learning & Performance Center, was constructed within two buildings previously used for aircraft manufacturing

by The Boeing Company. The site employs about 200 people. The Western Region Offices serve 82 dealerships throughout Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Washington, Texas and Utah by assisting them with customer service, Mercedes policies and their inventories. In a previous interview, Rory Hepner, general manager of vehicle distribution and logistics for Mercedes-Benz USA, told the Business Journal that the Learning & Performance Center trains all Mercedes dealership employees throughout its Western Region, running classes about five to six days per week. The Vehicle Preparation Center is the principal operation at the Douglas Park site. Weekly shipments of 4,000 to 5,000 vehicles coming through the Port of Long Beach are washed, quality checked, tested and accessorized at the VPC, according to Hepner. (Photographs by the Business Journal’s Evan Patrick Kelly)

Long Beach Business Journal 15

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16 Long Beach Business Journal

ECONOMIC OUTLOOK – MID-YEAR REPORT

July 7-20, 2015

Special Report (Continued From Page 1)

the national rate of job creation, with a 2.4 percent year-over-year growth rate as of May in comparison with a 2.2 percent national rate, Kleinhenz said. The state as a whole created jobs at a 3 percent growth rate, bolstered by the strong technology industry in the San Francisco Bay and Silicon Valley areas, he noted.

Industries leading job gains in L.A. County include education, wholesale trade, transportation and warehousing, and health care, according to Kleinhenz. Health care job gains are significant in Long Beach, which has four hospitals and is home to Molina Healthcare, a national health care provider, Kleinhenz noted. Gains in transportation and warehousing and wholesale trade indicate a healthy logistics and goods movement sector, which is “so important to the Long Beach economy” due to the presence of the port, he pointed out.

Despite historic levels of congestion at the ports of Long Beach and Los Angeles at the start of the year due to supply chain issues and labor strife, the ports appear to be rebounding. “On a year-to-date basis through May, port activity for the twin ports is down 1.7 percent this year,” Kleinhenz said. “But to say at this point in the year that we are just 1.7 percent behind last year’s third best container count on record suggests that we are probably lined up to do at least as well as we did last year, which would be a pretty good outcome considering how bumpy the start was to the year.”

Some industries are still struggling in L.A. County. “If you see what’s happening at the national level, there have been some nice gains in both durable and nondurable goods manufacturing. But that is not the case here in Los Angeles County,” Kleinhenz said. Aerospace manufacturing jobs decreased by 1,800 positions in the first five months of the year, he said. Still, that sector has been fluctuating between about 38,000 to 40,000 jobs per year, and remains within that range. “It is still a very viable part of the local and county economy,” he said.

Job gains are likely to have a positive impact on the economy as a whole. “We have many jobs being created, which of course has a multiplier effect in terms of . . . stronger consumer spending,” Cochrane said. “Consumer spending should be lifted not only by the job growth . . . but also by the lower gasoline prices,” he added.

“We are seeing year-over-year increases in just about every measure of consumer or household spending,” Kleinhenz observed.

Even so, consumer spending hasn’t increased as much as some analysts had anticipated, he said. Cochrane agreed.

“Consumers have been slow to open up their pocketbooks,” Cochrane said, attributing the cautious behavior to not-so-distant memories of financial tribulations during the Great Recession. “It is hard to understand consumers these days. They are not behaving as one might expect at this point in a business cycle when you ought to be a little more comfortable in going out and buying the things you need.” Still, “all points are leaning towards stronger consumer spending this summer and in the fall months,” he added.

With more people in the workforce, housing demand has increased. “Home prices are rising and, in some cases, particularly California, rising pretty quickly,” Cochrane said.

Members of the corporate aviation community at Long Beach Airport convene on a recent afternoon for an interview with Business Journal writers. Pictured from left are: Sohail Ashraf, chief financial officer of JFI Jets; John Tary, general manager of Toyota AirFlite; Valerie Boes, manager of JFI JetCenter; Eric Hill, general manager of Signature Flight Support; Damon Danneker, director of operations for JFI Jets; and Curt Castagna, chief operating officer for Aeroplaex/Aerolease Group. (Photograph by the Business Journal’s Evan Patrick Kelly)

This increases household wealth and drives demand for new housing, which in turn translates into construction jobs. Housing construction also creates a demand for durable goods, which “should drive the manufacturing side of the economy over the next six months to a year as well,” he explained.

“The biggest uncertainty right now is how well the Federal Reserve can manage the normalization of interest rates they face in the coming year,” Cochrane said. The Fed has estimated it will begin increasing interest rates in September, he noted.

“There is a need to begin raising interest rates as the economy accelerates, particularly as we begin to reach what could be full employment next year – something close to 5 percent,” he said.

“The expectation is they will be able to do that with enough guidance that it doesn’t roil equity markets or the bond markets,” Cochrane said of the Fed raising interest rates. “But we know from history, back in 2013 when then- [Fed] Chairman Bernanke began talking about the possibility of raising interest rates, the bond market went a little crazy and market rates shot up quite sharply for about six months and brought a bit of a temporary halt to the housing rebound,” he recalled. “So the critical thing is that they manage this in such a way that the markets adjust in a reasonably smooth way.”

Sectors of the economy sensitive to interest rate changes are doing well, however, which reduces the risk for economic volatility if rates are raised, Cochrane pointed out. “Fortunately, interest rate-sensitive industry sectors in the economy such as housing are pretty sturdy right now in terms of a fair amount of pent-up demand for housing and, again, rising demand as job growth grows. So, even if there is some volatility in interest rates, it shouldn’t derail the housing turnaround too much.” ■

Corporate Aviation Is A Major Boon For Local Economy Say Airport Operators ■ By SEAN BELK Staff Writer rivate jets flying in and out of Long P Beach Airport support thousands of local jobs and bring major business to the area, according to industry representatives.

In an interview with the Business Journal, several managers of fixed-base operators (FBOs), which supply fuel, hangar space and other support services to businesses and celebrities, said that corporate aviation is a major asset for the local economy.

John Tary, general manager of Toyota AirFlite, one of the airport’s largest FBOs, said corporate aviation creates a “multiplier effect,” supporting jobs at the airport, such as in maintenance and training, and off the airport, such as in catering, rental cars and hotels.

“There is a huge multiplicative effect to what one airplane landing here in Long Beach means, not only to the core business of what that aircraft is doing but also to support services,” he said. “You’re bringing business to the local area, and that’s the reason they’re at this airport. There are also all the derivatives that occur because of that.”

General aviation, which is considered any aviation other than commercial airlines and

the military, supported some 255,000 direct jobs in the United States in 2013, according to a study by PricewaterhouseCoopers (PwC) that was released earlier this year.

California had 139,100 general aviationrelated jobs, the most of any state, according to the study. General aviation in California also contributes $16.2 billion to its gross domestic product (GDP) and generates $10.3 billion in labor income.

Long Beach Airport is considered one of the most diverse airports in the country because it offers a wide range of aviation activity, including blimps, helicopters, flight training and commercial airlines.

The 1,166-acre airport complex houses roughly 5 percent of all business establishments in the city and accounts for approximately 9 percent of all jobs in Long Beach, according to the latest study on the airport’s economic impact conducted by California State University, Long Beach three years ago.

As an “important and integral part of the city’s economy,” the airport is responsible for 18,000 direct local jobs, including airport and commercial airline staff, and 43,000 jobs in the region, according to the study. Those numbers are probably slightly lower today due to the Boeing Company’s downsizing in Long Beach.

Though general aviation activity has declined over the years, many jobs are centered on providing services to business owners, top executives and celebrities who fly in and out of the airport, industry leaders said.

Tenants that rent space from Aeroplex/Aerolease Group on Spring Street, for example, employ about 350 people, said Curt Castagna, the leasing company’s chief operating officer. He said the airport is “an engine in the community” as one of the largest employers in the city, comparable to the international trade industry and the Port of Long Beach.

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July 7-20, 2015 (Continued From Page 16)

“If you think about the depth of clients that are here, any town in mid-America would kill to have that presence for the jobs it creates,” Castagna said, adding that 80 percent of all Fortune 500 companies use corporate aviation services.

Signature Flight Support, an international FBO network, offers conference rooms, a pilot’s lounge, flight planning, a weather-briefing computer, an on-site deli, tie downs and hangar space at Long Beach Airport. The FBO currently employs about 35 people, said general manager Eric Hill, who also runs an operation out of Van Nuys Airport. He said Long Beach Airport’s 10,000-foot runway is ideal for such a diverse mix of aviation uses.

“If you look at the infrastructure, Long Beach is an amazing airport – right at the top,” Hill said. “There is everything from blimps to airlines to manufacturing . . . it’s all here.”

JFI Jets, which offers private jet charter services and aircraft management and sales, employs about 50 people, including mechanics and charter pilots, at its local facility, said Damon Danneker, the company’s director of operations. JFI Jets is based out of Long Beach and has offices in Farmingdale, New York, and Nashville.

“Take out the rich guys and [look at] it in terms of jobs,” Danneker said. “It’s feeding my family of five and every one of my other employees.”

Despite being considered by many as just a perk for the wealthy, businesses large and small use corporate aviation, which is often overlooked as a key economic driver that

Long Beach Business Journal 19 provides revenue to the city and generates thousands of local jobs, he said.

“I don’t think there’s an appreciation for the jobs that corporate aviation provides,” Danneker said. “On multiple different levels, there are white-collar jobs all the way down to blue-collar jobs. It has a path that can take you from right out of high school all the way to owning your own aircraft and owning your own company and flying all around the world . . . People look at it as fat cats being fat, but, in reality, there is a huge support within that provides income to the city in the form of taxes.”

One major operation at the airport is Gulfstream, a corporate jet manufacturer that currently employs 900 people in Long Beach with an aircraft service center, completions facility and sales and design center.

The company is expanding its local operation this year with the construction of a new 19,000-square-foot maintenance facility that will enable the Gulfstream to hire 50 more employees. The new facility is expected to be operational this summer.

“Corporate aviation is an important part of the local economy in Long Beach,” said Gulfstream spokesperson Heidi Fedak in an email sent to the Business Journal. She said the company’s Long Beach facility alone contributes more than $76 million to the local economy through its annual payroll and purchases with key suppliers in the region.

Though the airport is expected to see a decline in revenue this year after JetBlue reduced flights, corporate aviation businesses continue to make up a large portion of the airport’s revenue with a steady stream of income from ground leases, Castagna said. ■

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22 Long Beach Business Journal

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ECONOMIC OUTLOOK – MID-YEAR REPORT

Financial Services: Roadblocks To Retirement ■ By THYDA DUONG Contributing Writer t’s no secret that the road to retirement Ithosecan be a difficult one, particularly for whose journeys may be littered with road signs pointing them in many directions – with no clear destination in sight.

According to recent findings from the Wells Fargo/Gallup Investor and Retirement Optimism Index, a survey of 1,005 U.S. investors conducted May 22 through May 31, 2015, only 36 percent of all non-retired investors have a written plan for reaching their retirement and investment goals.

Part of the problem, experts say, lies in the sheer volume of information available in the marketplace that could steer individuals in the wrong direction.

“People feel overwhelmed by the need to plan for retirement because they’re confused,” said accredited financial fiduciary Karen Codman. “Wherever you go, everyone’s giving you advice . . . People aren’t sure what to do, so they don’t do anything.”

A key, experts say, is differentiating information from education.

“It can be pretty daunting for someone to take their hard-earned money and put it somewhere they don’t understand,” said Trent Bryson, CEO of Bryson Financial,

For instance, 96 percent of those surveyed by the Wells Fargo/Gallup Investor and Retirement Optimism Index noted that living comfortably in retirement is a part of their “American Dream.” Yet, roughly 92 percent of working households aren’t meeting the savings targets that they should be meeting based on their age and income for working until age 67, according to Elizabeth Jensen, wealth planning strategist at Wells Fargo Private Bank.

“Americans, generally across the board, just aren’t very good at saving,” Jensen told the Business Journal, noting that 38 million working age households don’t have any retirement account assets, which translates into a median retirement account balance of $3,000 for a working age American and only $12,000 for near-retirement households.

“There’s a bit of a disconnect in what we’re seeing people do and where they say they want to be,” Jensen added. “It doesn’t mean they’re going to necessarily be destitute; it just means they’re not going to be able to afford the lifestyle they’re envisioning.”

Part of the challenge of retirement planning, experts say, is establishing a realistic vision of what retirement might look like, including preparing for potentially longer life spans while taking into account the variability of supplemental incomes.

“One of the challenges is that many people don’t fully understand social security,” Codman said. “For most people, social security will provide between one-third and one-half of their living expenses, so it’s a very important part of your retirement planning, but it’s not all there is . . . You have to be diversified. You can’t just plan on one thing.”

“I hear people say, ‘Oh I’ll wait until I get a raise or a new job,’ but they would’ve been better off putting in less money and letting the money go to work for them over time.”

Trent Bryson, CEO Long Beach-based Bryson Financial

(Photograph by the Business Journal’s Evan Patrick Kelly)

who added that individuals should seek out guidance that’s educationally driven rather than product-driven.

“Education creates the confidence to invest,” he said. “Unfortunately, the only time people learn about what’s happening is when the economy’s crashing and they hear all the horror stories – not all the feel-good stories about somebody who started working at 21, took advantage of compound interest and dollar cost averaging, and was able to retire on time.”

For some, too much information and too little education may create critical gaps that could lead to even greater disparities in later life, experts caution.

This is especially important for business owners, Codman noted, noting that some may tend to overestimate the value of their business. “A lot of business owners tell me, ‘I don’t need a retirement plan because my business is my retirement plan,’” she said.

“What they’re going to find out, when push comes to shove, is that their business may not be worth what they think it is, especially if they don’t have a coherent exit strategy.”

Industry experts agree that planning appropriately for the future requires trade-offs in the present – which isn’t always easy. Financial and circumstantial challenges to saving for retirement run the gamut from heavy debt loads and unplanned expenses

to unexpected layoffs, job losses and stagnant income levels.

“Life is becoming a little more dynamic,” said J.C. Abusaid, president and chief operating officer of Halbert Hargrove. “We’re finding some clients are getting caught in the sandwich generation, so they’re not only having to care for their kids, but also their parents, and then on top of that they’re supposed to take care of themselves and save for retirement.”

Getting On Track While the challenges to saving can be difficult, industry experts generally agree that individuals should start saving as soon as possible – with a clear roadmap of where they’re going and how to get there.

“When you’re young, you’re either trying to pay off college debt or you’re trying to buy your first house,” Bryson said. “As you get a little bit older, you’re now paying for children and sports programs. And then when you get toward retirement you’re starting to have healthcare expenses.

“The sooner you start the savings habits in life, I think the much higher chance you have of retiring on time, more so than making more money even,” he added. “I hear people say, ‘Oh I’ll wait until I get a raise or a new job,’ but they would’ve been better off putting in less money and letting the money go to work for them over time.”

Similarly, Abusaid stressed taking advantage of time, while cautioning against relying on the potential for high short-term market returns to build adequate retirement assets. “The returns that the market can provide are not going to be the big doubledigit returns of the ’90s,” he noted. “The market’s not going to make up for what you didn’t save. You’re going to have to actually put the money away. You can’t expect the market to make up the difference.”

“If you start in a very methodical but slow, incremental process, that’s probably the best way,” Abusaid said. “Because once you start it, there’s momentum that starts building . . . and eventually you’ll be able to get to the right [savings] rate.”

Jensen recommended maxing out qualified plan contributions when possible (the current annual maximum 401K contribution limit for an employee is $18,000), but to balance building retirement savings with establishing a sufficient emergency fund of at least six to nine months of income.

“It may make sense to build both at the same time – contribute enough to get the employer match, for instance,” she said, “but it definitely does not make sense to fully fund your retirement plan when you have nothing set aside for emergencies and unexpected needs.”

Taking a comprehensive look at your financial situation, Codman added, is essential when developing a savings plan – and is especially important when seeking out a financial advisor.

“You want to find someone you can trust who’s knowledgeable, and who will take into account your entire situation and give you very personalized advice,” she said.

“You want someone who will take time with you to really delve into everything – your tax situation, your estate planning, for instance – and put together a plan that’s right for you.”

With a plan in place and a destination in mind, individuals also need one more thing when it comes to saving – patience.

“There’s no silver bullet,” Abusaid said.

“There’s no magic to get it done. Saving for retirement is a process that requires constant attention. It requires discipline [and] for sure it requires perseverance and sacrifice. So . . . if anything contradicts that, meaning if it’s supposedly an easy formula [and] if it violates those rules, then people should be aware that whatever they’re basing their decisions on is probably off . . .

“You have to balance the short term with the long term,” he stressed. “There’s a tradeoff between having a nice lifestyle today versus having a secure future.” ■

The Invisible Infrastructure: Utilities That You Count On ■ By MICHAEL GOUGIS Contributing Writer magine, for a moment, what a 21st cenIlooktury Southern California home would like to a visitor from 200 years ago.

Water just shows up from metal fixtures; waste disappears down a hole and is gone forever. Light emanates from glowing objects in the ceiling, a box in a cabinet uses something called “radiation” to heat food, and neither of these creates any heat, smoke, or uses any visible flame.

We take this stuff for granted nowadays.

But it’s not just the technology that makes these devices and processes so impressive.

It is the reliability of the systems that deliver the energy and raw materials that makes the technology usable. No one is going to develop a microwave oven if there is no electricity, and no one is going to buy a microwave if you can't rely on being able to power it every time you want to use it.

Utilities make up an invisible skeleton that supports every facet of daily life for those of us fortunate enough to live in Southern California. We admire the artwork that adorns the walls of our homes and rarely, if ever, think of the beams within those walls that make it possible to hang that artwork. Similarly, we marvel at our newest smart phones but rarely think of the miracle allowing millions to power those devices, simultaneously, whenever we want, for remarkably little money and with increasingly minimal environmental impact. That is, we don't think of it until the battery warning light starts flashing . . .

“The system has delivered throughout our history. There have been no major interruptions. That’s been one of the characteristics of our type of utility infrastructure,” said B. Anatole Falagan, assistant general manager of the Long Beach Water Department, which recently celebrated more than a century of operations.

“It is that silent infrastructure that delivers service to the customers day in, day out, and they many times are unaware of the reliability of using it,” Falagan said.

“Whether that’s turning a switch on for your electricity, or turning the faucet on to get your water, or simply flushing the toilet or letting the water go down the drain to the sewer, what happens after that or before (Please Continue To Page 24)

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that is an incredible story of reliability, and many times the customer is unaware of it.”

How did the Long Beach area wind up with a utility network that works so well that we rarely think of it?

First, by securing the raw materials needed. The city’s water department, for example, has its own network of wells that tap into the groundwater supplies, as well as connections to water delivered from the Metropolitan Water District.

And the city’s water department has – and has fought hard to defend – the legal rights to those sources of water.

The reality is that the raw materials – natural gas, oil, electricity, even water – normally are plentiful. Even in times of drought, there are reservoirs that store water for non-rainy days. And with each passing day, more and more renewable resources – solar-to-electricity, wind-to-electricity – come on stream. And new storage technology – including banks of high-tech batteries and flywheels – is allowing even electricity to be stored.

Bob Weisenmiller, chair of the California Energy Commission, spoke with the Business Journal of the days of rolling brownouts and electricity shortages. “Back then, when you flicked a switch, you didn’t know if the lights would come on, and if you drove to an intersection you didn't know if the signals would be working,” he said in a phone interview. These situations are bad for everyone, Weisenmiller explained, but for a state that is home to Silicon Valley and high-tech electronically driven industries, a state of power unrelia-

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ECONOMIC OUTLOOK – MID-YEAR REPORT

Chris Garner, director of the Long Beach Gas & Oil Department, said that his staff is constantly maintaining the city’s pipeline system and plans to invest nearly $10 million this fiscal year on pipeline replacement. (Photograph by the Business Journal’s Evan Patrick Kelly)

bility poses extreme challenges to the economic infrastructure.

“Since then, we have beefed up the system,” Weisenmiller said. “We have increased the amount of solar and wind power more than two and a half times since 2012. We’ve taken extensive action to modernize gas-fired power plants. One of the steps has been to add new plants. We’ve had a number of plants re-powered. And [there is] an exciting opportunity to combine solar thermal and storage.”

But you still have to deliver the goods to the end user. That requires a stable delivery network. Redundancy in the delivery systems helps ensure that when something goes wrong, a backup system kicks in.

The best approach to generating stability is as old as the elements themselves: Vigilance.

Chris Garner, director, Long Beach Gas & Oil Department, said that the gas system’s reliability is such that the entire network has not been shut down since the department was established in 1924. The biggest outages he can recall have affected small groups of homes or, once, a couple of blocks, when contractors or other outside problems disrupted service for short periods of time.

“We do constant maintenance on the pipeline,” Garner stressed. “Just in 2015, we’re investing about $10 million in pipeline replacement. We’re replacing about 50 miles of main pipeline in the city in 2015. We’re monitored by the federal government. We have to submit an annual report to the federal government that describes in detail our pipeline system as far

as size, material of pipeline, pressure, any type of weaknesses we can perceive in our system, and how we’re going to address that. We do that on a regular basis.

“On top of that we’re required by regulation to physically go out and walk the pipeline system, every inch of it,” he added.

“We do 20 percent of the system every year, so we do the entire system once every five years. We have electronic sniffers that we walk over the pipeline and see if we can detect any odor coming out.”

It makes sense from a safety point of view and from an economic point of view, Garner said. And the end result is a gas delivery system so reliable that most customers never think about it.

“It’s so much more expensive if we have to go out,” he said. "If there is a damaged or leaking gas pipeline, it’s so much more expensive to mobilize the crews, to go out and dig up that street – it’s so much more expensive than if we just do regular maintenance on the pipeline.” ■

Getting At The Oil On The Run: Diatoms, Steam, Production And Environmental Protection ■ By MICHAEL GOUGIS Contributing Writer he easiest oil to get at exists at a very T specific geologic strata, where the combination of heat from the center of the earth below and pressure from the crust above makes the raw petroleum flow smoothly up the well pipe and – after a bit of manipulating – into the tank of your car.

But oil leaks out of those sedimentary layers and can get trapped in places where it isn’t as easy to get to. And we're talking about a lot of oil – by some estimates, a third of the world’s petroleum resources are trapped in impermeable rock.

One of the latest technologies to get at that oil is becoming more and more widespread in California. Cyclic Steam Injection – or “huff and puff ” as it is informally known in the industry – is nothing new, but, as oil producers seek more effective ways of getting at that “hidden” crude, it is attracting additional attention from those extracting oil from the Monterey Shale – the mother lode of oil in the state. And it offers companies one way of balancing environmental protections with the ability to extract crude from places that might otherwise go untapped.

“It’s a production technique, and it’s the latest whiz-bang thing that is pretty prominently used in California to extract this oil from the diatomaceous earth,” said Bob Poole, vice president of upstream campaigns for the Western States Petroleum Association, an advocacy organization for the petroleum exploration and processing industry in the West.

A brief geology lesson is necessary here.

Millions of years ago, one of the seas that (Please Continue To Page 26)

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“Unlike imported energy, local oil and gas production meets California’s stringent safety, labor and environmental standards, which are the most comprehensive of any oil-producing state.”

Frank E. Komin Executive Vice President, South Operations California Resources Corporation (Continued From Page 24)

covered California left a layer of sedimentary rock packed with the dead bodies of animals, fish and plants. The biggest formation is known as the Monterey Shale Formation, a 1,750-square-mile region, where the source rock contains the easierto-extract oil, Poole said.

“Most of the oil production in California comes out of marine layers. For oil to be made, you need two things: heat and pressure. It’s sort of like a pressure cooker,” Poole said. “The oil has to be far enough down in the earth so it has heat coming up from the center of the earth. And it has to be far enough underground so that the overgrade – all the rocks on top of it – create enough pressure so that those two things can allow for the transformation of this carbon matter, these plants and animals, into oil and natural gas.

“In California, regular production comes out of the Monterey Shale. But there is a layer that occurred later, closer to the present time, even though it’s still millions of years ago. There are these little microscopic creatures called diatoms. When they died, their bodies floated down and mixed with the sediment that was at the bottom of the sea. Basically, there are little hollow skeletons of them. You can only see them through a microscope. But in some places, this diatomaceous layer is a thousand feet thick.”

Through the normal process of rocks splitting and fracturing through movement (such as earthquakes) some of the oil in the source rock beneath the diatomaceous layer has leaked upward. This is problematic to get to. It is not as viscous as the oil deeper down, which is hotter and under more pressure, and the diatoms act like the cells in a Styrofoam cup – hollow but impenetrable.

Cyclic steam injection is a process by which superheated water is forced into this diatomaceous layer and allowed to sit. The heat transfers to the oil in the sediment, making the petroleum runnier (to use a technical term). And, as the steam condenses, the diatomaceous earth attracts the water. Pressure builds and forces the oil up out of the same well drilled to inject the steam into the ground. And the cycle is repeated until the ratio of oil to water coming back out of the ground no longer warrants recovery. The water is left in the soil to maintain the structural integrity of the sedimentary layer.

The technique is attracting attention because traditional hydraulic fracturing techniques simply aren't suited for California's geology. Hydraulic fracturing works best on a straight horizontal line. California's crust is bent, warped and woofed to the point that hydraulic fracturing’s use has been limited in scale. And, while one incident in a Kern County oilfield raised concerns that too much pressure could create sinkholes and geysers nearby, the practice of Cyclic Steam Injection does not require the shattering of rock underground as hydraulic fracturing does, nor does it utilize the chemicals used in hydraulic fracturing that have caused environmental concerns.

Environmentally conscious oil extraction of all types pays benefits, not just for the residents of California, but for the industry as well. Frank Komin, executive vice president, Southern Region, California Resources Corporation (CRC), pointed out that environmentally conscious producing in California has paid benefits to Long Beach residents for decades – the THUMS oil islands off the coast of Long Beach are celebrating 50 years of operation in 2015.

“CRC’s core strength is being a safe and efficient California producer of crude oil and natural gas. This is how we create value for our stockholders, increase California’s energy security and best contribute to our communities and our state,” Komin said.

“THUMS islands’ unique combination of production functionality, visual appeal and environmental and safety features has garnered the facility dozens of awards and recognition from local, state and national organizations. CRC is proud to operate in the Long Beach area and to contribute to the city’s success. We are committed to being a good neighbor and to protecting the environment in Long Beach, and we design and maintain our facilities with our neighbors, communities and the environment in mind.”

And Komin pointed out that the fact that the oil is being produced in California leads to specific, significant environmental benefits.

“Unlike imported energy, local oil and gas production meets California’s stringent safety, labor and environmental standards, which are the most comprehensive of any oil-producing state,” Komin said.

“The company invests in state-of-the-art

equipment and tools to find, develop, produce and deliver energy resources throughout the state. Technology plays an integral role in every phase of this process, from exploration to field development to operations management.” ■

Potential Solutions To The Projected Primary Care Physician Shortage ■ By SAMANTHA MEHLINGER Senior Writer tudies commissioned in the past few S years have consistently determined that, due to an increasing demand for health care, there will be a significant shortage of primary care physicians in the United States within the next five to 10 years.

A March 2015 study commissioned by the Association of American Medical Colleges (AAMC) anticipated a shortfall of 12,500 to 31,300 primary care physicians by 2025. A 2013 study by the U.S. Department of Health and Human Services (HHS) projected a nationwide shortage of 20,400 primary care physicians by 2020.

When specialty care physicians, such as surgical and medical specialists, are factored in to the picture, the shortage anticipated by AAMC’s study expands to 46,000 to 90,000 physicians by 2025.

Health care professionals posit that potential solutions include expanding primary care training opportunities for physicians, fostering a team-based care approach and implementing technological tools for patients to more readily access primary care.

Another solution – one backed by the AAMC and HHS – is to allow nurse practitioners and physician assistants to provide primary care within the scope of their licensure, education and training.

“Addressing the shortage will require a

July 7-20, 2015 multi-pronged approach, including innovation in delivery, greater use of technology, improved [and] efficient use of all health professionals on the care team, and an increase in federal support for residency training,” a summary of the key findings of AAMC’s study stated. “The study’s results confirm that no single solution will be sufficient on its own to resolve physician shortages.”

“One of the problems is there are not enough training spots in residency programs to actually produce enough primary care physicians,” Dr. Mark Schafer, CEO of MemorialCare Medical Group (part of MemorialCare Health System), told the Business Journal.

Molly Weedn, associate vice president of public affairs for the California Medical Association, agreed with Schafer’s assessment on residency training opportunities. “Increasing the number of residency slots in California is critical to ensuring the pipeline is full,” she wrote in an e-mail to the Business Journal. “Right now, because of the cap on funding for residency programs (tied to Medicare), doctors are graduating from medical school and are being forced to accept residency programs in other states, where they often set up practice. Keeping them in California is a step to ensuring we have more doctors here,” she explained.

“I would like to see the department of health and human services fund more training,” Schafer said. “The Affordable Care Act did put forward a few hundred million dollars in new money to expand primary care training, but I don’t think it’s adequate.”

The Affordable Care Act “has provided nearly $230 million to support the training of an additional 1,700 primary care medical residents, nurse practitioners and physician assistants,” according to HHS. Schafer may soon get his wish for more federal funding to train physicians. President Obama’s Fiscal Year (FY) 2016 budget includes $14.6 billion for the purpose of bolstering the health care workforce. About $4 billion of that amount is dedicated to the National Health Service Corps, which provides health care to Americans with limited access to care. “The proposed investment in the National Health Services Corps is projected to support a field strength of 15,000 providers in FYs 2015-2020 and serve the primary care needs of more than 16 million patients,” a March HHS report stated.

Additionally, a new Targeted Support for Graduate Medical Education program, for which President Obama budgeted $5.2 billion, “will support the training of 13,000 residents over 10 years,” according to HHS. Weedn called for more funding to support primary care physicians in rural areas to help address physician shortages.

Specifically, she suggested expanding the Steven M. Thompson Physician Corps Loan Repayment program, which “authorizes a plan for repaying up to $105,000 in educational loans in exchange for full-time service for a minimum of three years” in designated health professional shortage areas, according to California’s Health Professions Education Foundation.

MemorialCare Medical Group, a physician-based organization with more than 250 physicians at 29 locations from Long Beach to Dana Point, has implemented its own physician training program to ensure it is able to meet growing demand, according to Schafer. “We have a family medicine

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residency at Long Beach Memorial [Medical Center], and it has been great to be able to train those doctors in our system and then be able to offer them employment opportunities in either our medical group or IPA [independent practice association] once they finish,” he said.

“We also have a close affiliation with UC Irvine and their residency training program for internal medicine and pediatrics,” Schafer continued. “We train them at Miller Children’s [& Women’s Hospital Long Beach] and Long Beach Memorial, so we have that pool of doctors who are available to us when they finish.”

In addition to supporting and developing workforce-related solutions, MemorialCare Medical Group has implemented technologies to help meet increasing primary care demand. Through a telephone advice line, “we have 24/7 access to a registered nurse who can handle a lot of problems through protocols that have been approved by physicians,” Schafer said. This gives physicians more time to see patients, and is also convenient for patients themselves, he noted.

Both Schafer and Weedn emphasized the importance of implementing team-based approaches to provide better quality and access to primary care. In this model, the primary care physician acts as “the quarterback of care,” and works with advanced practice providers such as nurse practitioners or physician assistants to handle issues within their training,” Schafer explained.

This model, often referred to as a “medical home” for patients, frees up the physician to focus on care only he or she is qualified for, Schafer explained. “Then we have pharma-

Mark Schafer, CEO of MemorialCare Medical Group, believes that promoting team-based care models in which primary care physicians work with specialists, advanced care practitioners and other health care professionals, is one solution to a projected primary care physician shortage. Pictured at MemorialCare’s ambulatory care center at the Los Altos Market Center Dr. Daniel Kim, a family practice physician (left), and Dr. Linh Nguyen, a pediatrician, consult with a patient with the assistance of Marisol Ramirez, a nurse, second from right. (Photograph by the Business Journal’s Evan Patrick Kelly)

cists and social workers and sometimes even behaviorists as part of that team, [which] allows the doctors to be more efficient.”

On June 30, California Senate Bill (SB) 323, which would have allowed certified nurse practitioners to practice to the fullest extent of their education, training and certification without the supervision of a physician, failed to pass the California Assembly Business and Professions Committee. Schafer and MemorialCare had supported the bill, as had the California Association of Nurse Practitioners.

“It is important to have additional providers who have advanced training in our health care delivery system,” Schafer said. “There are 21 states outside of California that have already embraced nurse practitioners practicing at the full scope of

their training . . . It is critical to have them taking on that role with the primary care physician shortage.”

According to HHS’s 2013 study on the projected primary care physician shortage, “Under a scenario in which the rapidly growing nurse practitioner and physician assistant supply can effectively be integrated, the shortage of 20,400 physicians in 2020 could be reduced to 6,400 primary care physicians.”

The California Medical Association (CMA) opposed SB 323, contending its proposed lack of physician oversight of nurse practitioners would have jeopardized patients.

“We commend the assembly for rejecting SB 323, which would have significantly compromised patient safety,” CMA President Dr. Luther Cobb said in a statement. “SB 323 would have done nothing to address access to

care, and absent a bar on the corporate practice of medicine, adequate physician and medical board oversight, and the extensive training necessary, this legislation would have only put Californians at risk.”

Donna Emanuele, president of the California Association of Nurse Practitioners and a registered nurse working in both emergency and family medicine, argued the bill would have made a positive impact.

“When we look at California, we have millions of newly insured [patients] coming into the health care system in response to the Affordable Care Act,” Emanuele said. “Nurse practitioners are part of the solution to help increase the workforce ability here in the State of California so that we are in a much better position to meet their health care needs.” ■

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July 7-20, 2015

How The San Pedro Bay Ports Are Working Together To Ensure Future Growth ■ By SAMANTHA MEHLINGER Senior Writer ince unprecedented levels of harbor S and terminal congestion were resolved in the first quarter of 2015 and normal operations have resumed, the ports of Long Beach and Los Angeles have redoubled their efforts to work together and with trade stakeholders to resolve supply chain issues and ensure future business growth for the ports.

The way cargo flows into and out of ports has been altered in the past couple of years, largely due to decisions made by the world’s ocean carriers, such as to form alliances to ship their goods together. According to Michael Christensen, supply chain executive for the Port of Long Beach (POLB), “over 90 percent of ocean-going containerized cargo is moving in one of only four alliances.” This “massive market share” gives the alliances “tremendous control,” he noted.

The Port of Los Angeles’s Michael DiBernardo, deputy executive director of marketing and customer relations, left, and Chris Chase, business development manager, have been working with the Port of Long Beach and international trade stakeholders to resolve supply chain issues and ensure future business growth at the ports. (Photograph by the Business Journal’s Evan Patrick Kelly)

Now that multiple shipping companies are stowing their cargo together on the same vessels, that cargo isn’t being loaded in an organized manner as ships travel from port to port. And, while the mega ships of just a few years past were able to carry 12,000 to 15,000 twenty-foot equivalent (TEU) container units of cargo, today’s largest vessels carry between 18,000 and 21,000 TEUs. “Terminals are simply too small and unable to absorb the massive flood of unsorted containers that come off [these ships],” Christensen explained.

These and other changes in the way shipping lines conduct their business have caused a ripple effect throughout the supply chain.

“The terminal operators struggled over this issue, coming up with solutions that have at

times caused massive problems to the drayage truck drivers,” Christensen said, explaining how, when one party in the supply chain came up with a solution to improve its own efficiencies, it often resulted in problems for the next leg of the supply chain.

“We see this stark evidence that everybody is postured in positions to affect their own efficiencies, but not affect the overall supply chain,” Christensen said.

These issues, coupled with slowdowns caused by contract negotiations for longshore workers, led to historic levels of congestion at local ports last year. Beneficial cargo owners (BCOs) – the major retailers and wholesalers of the world, such as Walmart, Target and other big companies represented by the National Retail Federation

– began asking for the ports of Long Beach and Los Angeles, which operate as landlords for their tenants (terminal operators), to play a larger role in resolving the issues.

“When a firm like Abercrombie & Fitch makes a big public statement [like it did] back in February or March that said, ‘We are no longer taking any of our goods into the Southern California gateway,’ a lot of marine terminal operators and even the ILWU [International Longshore & Warehouse Union], sit up and take notice and say, ‘Whoa, we just lost a bunch of business,’” Christensen noted.

The ports requested that the Federal Maritime Commission expand an existing agreement allowing the ports to work together to resolve supply chain issues.

Shortly after that request was granted, the two ports’ head executives, Jon Slangerup of Long Beach and Gene Seroka of Los Angeles, met and decided the best move was to gather affected parties in one room.

The resulting meeting on April 23 drew what Port of Los Angeles’s (POLA) Michael DiBernardo, deputy executive director of marketing and customer relations, called a “Noah’s Ark” of stakeholders. “We brought in more than 100 cargo owners, trucking firms, longshore labor, marine terminals and other people within the supply chain, to listen to them and find out what issues they have and where they think improvements should be made in the supply chain,” he explained.

The meeting was the first time these groups were brought together in one place to find solutions to benefit them not just individually, but as a whole. The presence of beneficial cargo owners in the discussion helped spur dialogue. “What made them [supply chain stakeholders] willing to communicate was largely the involvement of the BCOs, because everybody . . . understands that they make the routing decisions,” Christensen explained.

Following that meeting, leadership from the ports met together and identified seven areas of focus – gleaned from the April 23 meeting – upon which to form working groups of port representatives and supply chain executives representing labor, truckers, railroads, shipping lines, BCOs, terminal operators and other involved parties.

A focus group dedicated to identifying issues to address before 2015’s peak shipping season (which officially begins at the end of July) was the first to meet. The group’s purpose is to identify “what it is that we can correct immediately to help the supply chain,” DiBernardo said.

After meeting in May, the group identi-

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ance indicator and data solution team,” DiBernardo said. In discussions with goods movement industry professionals, one of the major issues identified was a lack of data available to track a container’s movement throughout the supply chain, he explained.

Other focus groups planned include: a container terminal optimization group, focusing on improving the movement of cargo from ships into terminals; an off-dock solutions group, examining how to move cargo more efficiently out of terminals; an intermodal rail Michael Christensen was hired on as the Port of Long Beach’s sup- group, aiming to “improving ply chain executive lead in February of this year. In this newly creefficiencies of getting cargo ated position, Christensen “is responsible for working moved to inland locations;” collaboratively with industry stakeholders to find new ways to increase communication and cooperation among the links of the sup- and a group targeting drayage ply chain to enhance cargo flow,” according to the port. issues such as truck driver turn (Photograph by the Business Journal’s Evan Patrick Kelly) times. fied 30 items to address, which have since “The goal here is to keep our terminals been whittled down in subsequent meetings fluid and get the cargo out to the customers to five key issues, including: marine termi- as quickly as possible with minimal delays nal gate operation efficiency, appointment to anybody who touches the container,” systems used by truckers to pick up cargo DiBernardo said of the port’s joint meetfrom terminals, skilled labor and training, ings with labor, trade and goods movement availability of chassis (truck trailers to professionals. move containers), and the status of ware“Supply chain experts will almost always housing, according to Christensen. The tell you that the enemy to a good supply group meets every week to 10 days, chain is variability,” Christensen said. “The DiBernardo said. end point of this whole effort are two isAdditional issues identified by the peak sues: reliability and velocity.” season 2015 focus group may be passed on Achieving these two end goals is importo the other six focus groups. The next tant to the future of the ports. “We are not, group likely to convene is the “key perform- never have been and probably never will be

the absolute low cost provider of services,” Christensen said. “Our labor is not cheap.

Our property and development is not cheap. But what we are is we are the premiere gateway in terms of velocity.”

When the ports’ reliability and efficient velocity of goods movement suffer, discretionary cargo – cargo destined for areas not in the immediate vicinity of the ports – may be routed elsewhere, Christensen explained. “It’s not going to come to our gateway if we don’t make the reliability sufficient to satisfy the BCOs.” “They want that reliability back,” Chris Chase, business development manager for POLA, said of the BCOs who have become vocal and who extended help through the ports’ working groups.

“We have seen traffic bleed off to the East Coast ports, and there is a significant possibility of more diversions through the Suez Canal,” Christensen said. Canadian ports have also become a source of competition for their efficacy in modifying their policies to accommodate demand, he noted. “Mexico is investing $5 billion in their ports . . . we have to be watching them closely,” he added.

Despite the competition, the ports of Long Beach and Los Angeles remain ideally positioned for cargo traffic from Asia, DiBernardo pointed out. “We have the facilities to accommodate larger ships,” he said. “Here at the ports of L.A. and Long Beach, we have been investing in the future. We have been doing that by dredging our main channel, doing upgrades to our current facilities by deepening the water up against the wharf to allow for bigger ships, [and] working with the terminal operators

Long Beach Business Journal 29 on terminal development,” he explained.

“What we are doing is positioning ourselves for the future,” DiBernardo said.

“We have decided that the supply chain needs adult supervision and that it has to be us,” Christensen said. “Because there is nobody else out there who is unbiased enough to do that. And we have so much at stake.” ■

Local Retailers Look To Social Media, Events And Creating Sense Of Place To Draw In Customers ■ By SEAN BELK Staff Writer ince taking over Blue Windows, a S small retail shop on 2nd Street in Belmont Shore that sells clothing, jewelry and other “lifestyle” items, nearly 11 years ago, Heather Duncan has attracted a loyal following through social media.

Her Instagram page, for instance, now has more than 3,200 followers. Regularly (Please Continue To Page 30)

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Heather Duncan is the owner of Blue Windows, a “lifestyle store” that sells clothing, jewelry and accessories at 5276 E. 2nd St. in Belmont Shore.

Susanne Lee, right, is the owner of Trance on Atlantic, a women’s clothing boutique at 3846 Atlantic Ave. in Bixby Knolls. Pictured with her is store employee Tina Bone.

Dana Robertson is the owner of Restauration, a restaurant that serves American cuisine at 2708 E. 4th St. She is hosting a “Bluegrass Boil” for the restaurant’s one-year anniversary on July 22.

(Photographs by the Business Journal’s Evan Patrick Kelly) Danny Harris is general manager of Cirivello’s Restaurant Lounge Sports Bar at 4115 N. Viking Way in Parkview Village in Northeast Long Beachc

Chris Geer owns Urban Americana, an antique and vintage furniture store located at 1345 Coronado Ave. off of East Anaheim Street.

Rand Foster is the owner of Fingerprints, a record store at 420 E. 4th St. in the East Village Arts District.

ECONOMIC OUTLOOK – MID-YEAR REPORT

posting artsy images of items in the store isn’t a waste of time, she said. In fact, it has become a way for Duncan to directly interact with customers while showcasing new products and trends.

“A lot of people have specifically told me, ‘Oh, I followed you on Instagram and I wanted to come down and see it,’” said Duncan, who bought the store in 2004 after working part time there after earning a music degree.

Several small business retailers interviewed by the Business Journal describe social media as their main marketing tool for drawing customers through the doors, in addition to hosting special events and creating a sense of place in the community.

In the last few years, social media sites, whether it’s Instagram, Facebook, Twitter or Pinterest, have become Duncan’s key marketing apparatus. In addition, she just recently launched a new website for her store that now allows customers to buy merchandise online.

“I feel like I started a little late in the game, but that’s how I have reached my customers mostly,” said Duncan, who serves as vice president of promotions and marketing for the Belmont Shore Business Association. The new website allows customers to keep up with her blog, learn about events and sign up to get regular emails about the store.

Susanne Lee, owner of Trance on Atlantic, a women’s clothing boutique on Atlantic Avenue in Bixby Knolls, said she also utilizes social media sites, including Facebook and Instagram, to promote items in the store, in addition to using her own website.

Although Lee, who opened her store nearly two years ago after leaving a similar business in Manhattan Beach, doesn’t sell items directly online, customers may call in to make a purchase after seeing merchandise on the website, she said.

“We do have a website we use to update photos,” Lee said. “A customer will go on it and see certain pieces and say, ‘Oh, I like that. Can you ship it to me?’

And we absolutely do. We pretty much ship everywhere.”

Lee said another way to keep sales humming is through branding and having a close connection with customers.

While mainstream clothing stores, such as Nordstrom Rack and Forever 21, are geared more toward the younger crowd, Trance mostly caters to women, particularly moms, age 30 and older, she said.

“I’m a mom myself and the girlfriend that helps me out is a mom, and we still want to look good, but we don’t want to look like we’re wearing our kids’ clothes,” Lee said. “We still want to be in fashion, and there’s a need for fashionable wear.”

Understanding the demographic allows her to have a personal connection with customers and also comes in handy when selecting merchandise to sell, she said.

“We stay in close contact with a lot of our customers and in fact a lot of them have become our friends,” Lee said. “That’s how we know what they want.”

Supporting local venders is also important, she said, adding that 80 percent of her merchandise is local and more than 95 percent is American made.

Lee said her store also stays heavily involved in the community, hosting a regular

July 7-20, 2015 in-store mixologist during the monthly First Fridays event organized by the Bixby Knolls Business Improvement Association.

“We do events every month,” she said.

“You have to get people excited about things that you’re doing . . . That’s how we meet new people.”

Dana Robertson, owner of Restauration restaurant, which opened a year ago as one of the newest additions to 4th Street’s Retro Row, said social media is currently her “biggest aspect” of marketing.

“We’re prevalent on Instagram, and we’re also on Facebook, and try to keep our website up to date,” she said, adding that having an online presence and being included on websites such as Yelp have helped people find the restaurant.

Besides some local print advertising, collaborating with people in the community is also important to connect with customers, Robertson said. For instance, her restaurant, which serves American cuisine with a modern flare, hosted a “farm brunch” that benefited Farm Lot 59, a local farm in Signal Hill.

Robertson opened the restaurant, which gets its name from combining the words restore, restaurant and relaxation, with her husband, Rob, at a location that used to be home to 212 Patio Bistro. For the restaurant’s one-year anniversary on July 22, Robertson is planning a “Bluegrass Boil” that will include live bluegrass music and will benefit The Long Beach Depot for Creative Reuse to “bring attention to the importance of reducing waste by creative reuse.”

Cirivello’s Restaurant Lounge Sports Bar has also gravitated to social media to draw in customers, said General Manager Danny Harris. The establishment officially reopened its doors last year at 4115 N. Viking Way in Parkview Village in Northeast Long Beach after briefly closing and once reopening as The Station.

“We’re doing a lot of social media,” Harris said. “We try to do that as much as we can.”

The restaurant and sports bar, which underwent renovations including upgraded banquet rooms and a new 24-foot by 16foot high definition TV for watching sporting events, already has a loyal customer base in the community after being in business for 32 years, Harris noted.

“We recently took it over again, and we’re just running with it,” he said. “I got a hold on the community. I know what they like and what they don’t like. We made changes back to where it was, and it’s been real busy.”

In coming months, Cirivello’s is planning to host community events – possibly a beer garden or a movie night in the parking lot – to draw customers as well, Harris said.

Building an online presence is also important to Chris Geer, owner of Urban Americana, a vintage and antique furniture shop in the Zafaria District on Coronado Avenue between East Anaheim Street and 14th Street.

Geer said he has spent a lot of time on social media promoting his business. In addition, he has listed several items for sale on eBay.com and etsy.com to not only sell the items but to also drive traffic, particularly from other states, to his store’s website, which has thousands of items for sale.

Though summer months are expected to be slower than winter months for his business, Geer said, since opening last year, his

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July 7-20, 2015 store has experienced “significant growth.”

Though he said his store could be considered essentially an antique mall, Geer added that he wanted to gear it more toward a younger crowd of customers in an effort to get young people interested in antiques or mixing antiques with standard vintage items.

What has helped business, he said, has been collaborating with other shops, particularly those on 4th Street’s Retro Row, to turn Long Beach into a “destination” for vintage.

“They send people here and I do the same,” Geer said. “We all sort of in our stores carry this guide to vintage in Long Beach . . . If we’re going to get business from L.A. and Orange County, those people are more likely to make the drive if Long Beach is a destination for vintage stuff.”

Working with nearby businesses also helps drive sales, he said, adding that the Working Class Kitchen, located across Coronado Avenue, hosts monthly events in his drought tolerant nursery, where they’ve hosted beer gardens.

“Their customers can come over and dine at my nursery,” Geer said. “Inevitably, they’re probably going to come in and shop afterwards. So it’s great.”

Creating a “sense of place” is something that Rand Foster, owner of Fingerprints Music, a record store at 4th Street and Linden Avenue in the East Village Arts District in Downtown Long Beach, has always strived for, he said.

Moving the store from 2nd Street, where it opened in the early 1990s, to its current location five years ago has helped transform the section of downtown that once had nothing but a restaurant and an art supply store, which moved across the street, Foster said.

What really helped convert the space, he said, was Berlin Coffeehouse, which opened inside the record store’s building, and adding a “parklet” that turned what had once been a metered parking lot into an outside patio area.

“It really truly feels like some place you would come down to hang out, have a coffee, shop and meet friends,” Foster said.

“There are a lot more things to do here then just that sort of hit-and-run shopping where you drive up and go.”

The record store’s location has also provided more space to host live in-store music events, featuring musical artists such as Weezer, Lou Reed and Brian Wilson of the Beach Boys, Foster said.

In addition to having regular musical events that draw customers through the doors, Fingerprints also relies on social media and an active e-mail list that has 15,000 subscribers, he said.

It’s important for retailers to provide customers with something other than what they came in the store for, to create an overall pleasant shopping experience, Foster added.

“We have benches and places to sit, and we try to have things that are interesting for people who maybe weren’t there to buy a record,” he said. “It goes back to when I was a kid and had to go shopping with my mom, and they had a chair outside the dressing room. The days of that passing for acceptable entertainment for the third party are gone. We’ve always strived to make sure that, if you aren’t here to shop, it’s at least a fun place to be.” ■

Long Beach Business Journal 31

Development Projects Underway Or Planned In Long Beach ■ By SEAN BELK Staff Writer evelopers are moving forward with D major residential and commercial real estate projects throughout the City of Long Beach this year that are slated to significantly transform the city landscape.

Some development projects are already under construction, including a new retail outlet mall at The Pike and new high-rise apartment buildings downtown. Other projects, meanwhile, are moving through the planning process, including a new singlefamily residential community planned in North Long Beach and a new retail center that has long been proposed at 2nd Street and Pacific Coast Highway.

In addition, the Long Beach Unified School District (LBUSD), using Measure K funding, is moving forward with construction of a new high school near Signal Hill along with significant upgrades to Jordan High School and two elementary schools.

The following is a list of development projects (in alphabetical order) that are underway or planned in Long Beach: • Belmont Pool – The City of Long Beach is moving forward with a $103 million project to build a new Belmont Beach & Aquatics Center pool facility. City officials said it may take up to two years before construction begins as the city has yet to release an environmental impact report (EIR) or receive California Coastal Commission approvals.

• Browning High School – A new thematic high school on a 10.3-acre site surrounded by Hill Street, Obispo Avenue and Redondo Avenue near Signal Hill is under construction. The campus, expected to serve 800 students in 9th through 12th grades, with courses in tourism, recreation, hospitality and people movement, is expected to open in fall 2016.

• Civic Center – Plenary-Edgemoor Civic Partners has been selected to take on the publicprivate partnership project that includes building a new city hall, headquarters office for the Port of Long Beach and a main library, along with apartment units, a hotel, retail and a redesigned Lincoln Park. After the design phase and community outreach is complete, the city expects to break ground in early 2016, with construction of city buildings to be completed in 2019.

• Douglas Park – Refer to separate story on next page.

• East Division Substation – A project to build a new East Division Police Substation at the former Schroeder Hall facility that was used for the U.S. Army Reserve at 3800 E. Willow St. is expected to be completed by the end of the year.

• Edison Lofts – An adaptive reuse project by Ratkovich Properties that involves converting an old city hall building at 100 Long Beach Blvd. into 156 multi-family residential units is currently under construction. The city’s Long Beach Development Services (LBDS) department expects construction to be completed by September.

• 442 W. Ocean Blvd. – Long Beach-based developer Ensemble Investments is planning a 95unit, eight-story apartment building. The Long Beach Planning Commission approved the project on May 21 with no appeals for local and coastal (Please Continue To Page 32)

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32 Long Beach Business Journal (Continued From Page 31)

development permits. The city is currently awaiting plan check submittals, according to LBDS. • 495 The Promenade North – The Residences at City Place – The project includes a four-story mixed-use building with 20 residential units and 5,220 square feet of ground floor commercial space. According to LBDS, the project is currently in the plan check process for grading and site improvements.

• 4100 E. Ocean Blvd. – Olympix Fitness Center – An adaptive reuse project to turn a building that once housed Yankee Doodles and a salon into a fitness center in Belmont Shore is moving forward after the planning commission approved the project and denied appeals on June 4. According to property owner Kurt Schneiter of Maverick Investments, construction, which should begin in the next 45 days, is expected to take eight to 10 months to complete.

• 431 E. 6th Street – Sixth Street Lofts – Construction is underway on a 30-unit multifamily residential complex at the corner of 6th Street and Elm Avenue by Long Beach-based Urban Pacific Multi-Housing, LLC. According to LBDS, the city expects construction to be completed this fall.

• 433 North Pine Avenue – Construction is underway on an adaptive reuse project to convert a building that once housed the Newberry department store into a 28-unit residential complex with ground floor retail.

• 4210-4280 Long Beach Blvd. – Santa Anabased Red Mountain Retail Group (RMRG) has submitted plans for retail development at Long Beach Boulevard and San Antonio Drive on a site formerly occupied by a Ralph’s grocery store. Trader Joe’s is relocating to the site from its current Bixby Knolls location. In addition, Pet Food Express and Crunch Fitness have signed leases. RMRG is seeking tenants for four spaces and expects construction to begin in August with tenants opening in early 2016.

• Golden Shore Master Plan – The planning commission approved a development agreement for residential condominiums, office, retail, hotel and parking space on a 5.87-acre site on the south side of Ocean Boulevard at Golden Shore on June 4. The city council is expected to consider the proposal at its meeting today, July 7. The proposed project was originally brought forward in 2007 prior to the Great Recession.

• Jordan High School – The second phase of a $143.8 million renovation to David Starr Jordan High School located at 6500 Atlantic Ave. continues this year. Construction, which includes building new classrooms, new athletic fields and an outdoor swimming pool, is expected to be fully completed in 2021.

• Newcomb Academy – The $46 million project includes a complete renovation to Newcomb K-8 Academy’s 50-year-old campus at 3351 Val Verde Ave. in East Long Beach. LBUSD expects the project to be completed in August.

• North Neighborhood Library – Construction of a new North Neighborhood Library in North Long Beach that replaces the Art Deco-

July 7-20, 2015

ECONOMIC OUTLOOK – MID-YEAR REPORT style Atlantic Theater, which was demolished in January 2014, is scheduled to be completed this year. The new library will be a state-of-theart, 24,655-square-foot, single-story facility at 5870 Atlantic Ave. • 150 W. Ocean Blvd. – Oceanaire – Lennar Multi-family Communities is planning to build a 216-unit apartment complex adjacent to the Ocean Center building at 110 W. Ocean Blvd. The planning commission approved the seven-story project on May 21. The city is currently awaiting plan check submittals, according to LBDS. • 1570-1598 Long Beach Blvd. – The project includes building a 36-unit condominium complex with 10,000 square feet of ground floor retail space near the Poly Academy of Achievers and Leaders high school at the southeast corner of Long Beach Boulevard and 16th Street. The planning commission approved the project on June 18. The city is currently awaiting plan check submittals, according to LBDS. • 110 Pine Ave. – The 13-story Security Pacific National Bank Building, under new ownership, will retain its current use as office space. The building will be converted into creative offices instead of a multi-family residential complex as previously proposed. The city, however, has yet to receive a new application, according to LBDS. • 110 W. Ocean Blvd. – The adaptive reuse project proposed by property owner Santa Monica-based Levy & Associates includes converting the Ocean Center office building at the southwest corner of Pine Avenue and Ocean Boulevard into a residential complex with ground floor retail. According to LBDS, the project is currently in the plan check process.

• 124 Linden Ave. – Off Broadway – The project includes three stories of apartment lofts above 2,688 square feet of retail and a parking structure. The complex will feature mezzanine interiors and provide resident access to a rooftop common area. The project is entitled under the Downtown Plan; however, no date has been set for construction documents, according to LBDS. • Parc Broadway – The project includes building a 222-unit apartment complex at 245 W. Broadway, the site of a former state office building. According to LBDS, the site is still in the land clearance phase. The project requires the relocation of an eight-foot-diameter storm drain underneath the property.

• Riverwalk – A residential development project on a 10.56-acre parcel at 4747 Daisy Ave., which was formerly the site of the Will J. Reid Boy Scout Camp, proposes subdividing the property into a gated residential community containing 131 single-family homes. The comment period for a draft EIR on the project by Orange County-based developer Integral Communities ended June 18. Responses to comments are currently in progress, according to LBDS. • Roosevelt Elementary School – A $49.6 million project involves completely rebuilding the campus, which is one of the largest and oldest elementary schools in LBUSD at 1574 Linden Ave. LBUSD expects the project to be

completed this fall.

• 2nd + PCH – The planning process is underway for a new retail center to replace the aging SeaPort Marina Hotel at the corner of 2nd Street and Pacific Coast Highway overlooking Alamitos Bay. The proposed Shoppes at 2nd+PCH would include 216,000 square feet of retail and 29,000 square feet of restaurant space. The comment period for a draft EIR on the project is expected to start late summer or early fall, according to LBDS. • Shoreline Gateway – The two-phased project

by Anderson Pacific, LLC at Ocean Boulevard and Alamitos Avenue includes a 17-story building, The Current, now under construction that includes 223 luxury apartments. An adjacent second building, a 35-story condominium tower, will break ground after the first phase is completed.

According to LBDS, the west tower is under construction and estimated to open in early 2016.

• The Ocean View Tower – The 102,356square-foot building at 200 W. Ocean Blvd., formerly occupied by Verizon, is being converted into creative office space by Milan Capital Managment. The building has been gutted, but a timeline to move forward hasn’t been announced.

• The Pike Outlets – A project by property management firm Developers Diversified Realty Corp. (DDR) includes completely renovating the facade and redesigning walkways. After H&M recently opened, other new tenants to open in fall are Nike and Forever 21. DDR expects the redevelopment work to be completed this fall as well, with tenant fit-outs continuing through 2016.

• The Queen Mary – The city has been meeting with Garrison Investments, the ship’s operator and adjacent land leaseholder, to develop a timeline and process for creating a new master development. A new task force is expected to kick off the community outreach process while providing feedback. The 43.38 acres that surround the ship include the Queen Mary Events Park, parking lots and the Sea Walk Village, as well as other vacant land.

• 3399 E. Willow St. – Hooman Toyota of Long Beach is relocating from its current location at the Traffic Circle to Redondo Avenue and Willow Street where a new, state-of-theart dealership is under construction. According to LBDS, the project is about 20 percent complete. The site previously housed a Cadillac dealership.

• 2533 Lakewood Blvd. – A new single-story 10,877-square-foot retail building for two tenants is under construction just south of Lakewood Boulevard and Willow Street behind a Shell gas station. According to Alex Kang of Satoh Brothers International, a Dunn-Edwards Paints shop has signed to take one of two spaces. Kang expects the entire project to be completed in early August.

• 250-270 Pacific Ave. – Pine Square/Pacific Court – The project involves converting the former AMC Pine Square movie theater space into 69 apartment units with 112,079

square feet of new residential space in two levels. The existing 142 residential units will remain as well as existing retail spaces on Pine Avenue, 3rd Street and Broadway. The project is currently under construction.

• 228 E. Broadway – American Hotel – The adaptive reuse project includes creating a mixed-use structure and completely restoring the existing façade and shell of the historic building, with 7,000 square feet of new creative office space on the second and third floors and approximately 3,670 square feet of retail space on the ground floor. LBDS expects construction to be completed in fall.

• 207 Seaside Way – The project by Long Beach-based developer Ensemble Investments involves building a 113-unit residential multifamily complex behind The Breakers. The planning commission approved the project on May 21. The city is currently awaiting plan check submittals, according to LBDS. ■

New Retail Center And More Corporate Headquarters Coming To Douglas Park ■ By SEAN BELK Staff Writer A new 26-acre retail center with a hotel and three new corporate headquarters are scheduled to break ground this year as the latest additions to Long Beach’s Douglas Park, considered one of the last prime pieces of commercial real estate in L.A. County.

Irvine-based developer Sares Regis Group (SRG) bought 194 acres of the massive Douglas Park property, which had long been used for aircraft manufacturing, from Boeing Realty Corp. in 2012. The Boeing Company had been downsizing operations for years, while relocating its commercial activity to other states.

In the last three years, major tenants have taken up space at the burgeoning new business district located off Lakewood Boulevard just north of the Long Beach Airport.

“The activity has been great,” said Larry Lukanish, senior vice president of SRG’s commercial development, in a phone interview with the Business Journal. He confirmed that approximately 60 acres of land already entitled with the city

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July 7-20, 2015 for retail, office, industrial or hotel use remain to be developed.

SRG has already developed and sold a collection of headquarters/distribution buildings called Pacific Pointe at Douglas Park, totaling 677,000 square feet. All seven buildings were either leased or sold within one year, SRG states.

One of those buildings was taken up by Virgin Galactic, which is owned by billionaire Richard Branson. In March, the company opened a 150,000-square-foot facility at Pacific Pointe to manufacture its LauncherOne satellite launch vehicle.

Across Lakewood Boulevard, Mercedes Benz USA moved into a 1.1-millionsquare-foot space converted from two aircraft hangars that were once home to the Douglas Aircraft Company, later becoming the Boeing 717 aircraft manufacturing site until it closed in 2006.

The hangars now house Mercedes Benz’s West Coast regional facility, employing about 200 people at its vehicle preparation center and training offices. The automaker signed a 15-year lease with SRG for the 52acre facility in a deal worth more than $100 million, according to SRG. Next month, work is scheduled to be completed on a new 137,000-square-foot campus for automotive trade school Universal Technical Institute (UTI), with classes set to open in August, Lukanish said. UTI is leasing the building from SRG for administration and classroom space for about 800 students and more than 80 faculty and staff.

In addition, Long Beach-based Urbana Development recently completed two medical office buildings totaling 90,000 square feet on five acres. SRG also sold two acres of property to Signal Hill-based 2H Construction, which is planning to build industrial facilities on speculation totaling 40,000 square feet.

Another new occupant to the park is Shimadzu, a precision aircraft instruments manufacturer, which relocated from Torrance to a 53,000-square-foot building that was completed late last year.

Also, Nautilus International Holding Co., parent company of Metro Ports, is relocating its headquarters from Wilmington to a new 40,000-square-foot building at Douglas Park. Lukanish said the new headquarters should be completed by the end of the year.

The next major phase of development at the park involves the construction of three new corporate headquarters at a new complex called Pacific Pointe East, which will be located on Lot D, just south of the Mer-

Long Beach Business Journal 33 cedes Benz facility. The property currently serves as a 25-acre parking lot off Lakewood Boulevard.

SRG plans to break ground on the headquarters-style distribution facilities in September, Lukanish said. Totaling about 470,000 square feet, the buildings are being constructed for lease and are expected to range in size from approximately 110,000 square feet to about 230,000 square feet, according to SRG’s publication to investors and partners.

“Demand for facilities continues to grow along with the economy,” Lukanish said in the publication. “South Bay already was a tight market when we bought the land. With dwindling options for large buildings, companies and developers see our commercial lots in Long Beach as the last chance for prime land in Los Angeles County.”

Lukanish told the Business Journal that the new Pacific Pointe East buildings would be sold on a speculative basis as industrial property, which is in high demand right now since there is no standing inventory of new buildings.

“Pacific Pointe East will be a speculative, industrial-kind of corporate headquarters facilities for us,” Lukanish said. “We think there’s a lot of demand in that area for buildings . . . It’s a very constrained inventory of product. There is very little standing inventory, and the inventory for brand new, Class A buildings, as much as we’ve built, is zero.

Every new building gets leased or sold.”

As for the office real estate market, users are primarily calling for build-tosuits and are buying property for their own accounts, he said, adding that few developers are breaking ground on speculative office buildings because there are more vacancies on the market.

Another new major development includes a 26-acre retail center to be called The Village at Douglas Park, with restaurants, shops and at least one hotel at the corner of Carson Street and Lakewood Boulevard. In March, SRG announced that Newport Beach-based developer Burnham USA Equities, Inc., signed off on the purchase of the acreage to develop the new retail center.

Lukanish said Burnham USA, which is a partner of the South Coast Collection (SoCo) in Costa Mesa known for its hip collection of restaurants, boutiques and home-décor stores, is currently working on plans for the retail center, and seeking tenants. He said the developer is expected to break ground on the retail center by the end of the year. ■

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34 Long Beach Business Journal

July 7-20, 2015

PERSPECTIVE

HealthWise

Small Business Dollars & Sense

joint replacement now Available Through robotic Surgery

Finding The right Credit Solution For Your Business

By ramy elias, M.d. and Andrew j. Wassef, M.d.

M

illions of successful total knee and hip joint replacements have been completed using standard techniques without the use of advanced robotic assistance. However, new technological advancements have now allowed orthopedic surgeons to bring robotic technology into the operating room.

Robotic-assisted surgery isn’t a new concept; the da Vinci® Si™ Surgical System has been available for cardiothoracic and gynecologic surgeons for a decade. But robotic-assisted surgery just recently became an option for orthopedic surgeons and their patients.

MAKOplasty® is the first robotic-assisted surgery of its kind in orthopedics. It assures that the procedure is done with exact precision and takes away the factor of human error.

Orthopedic surgeons can formulate a plan preoperatively using CT scan-based images and perform the surgery with pin-point precision. The plan ensures that the robot is precalibrated to the millimeter, which leads to better placement of implants and components.

During the surgery, live feedback allows the surgeon to make the critical decisions necessary to have the best possible outcome.

Total Hip Replacement – Total hip replacement surgery is one of the most successful surgeries in history, allowing people to stay active and relieve their arthritic-associated pain. The use of robotics in orthopedic surgery has significantly decreased two of the most common complications after total hip replacement: dislocation and leg length discrepancy.

Dislocation following total hip replacement can be preventable. MAKOplasty® gives surgeons real-time feedback on the leg lengths and overall symmetry compared to the other leg. In addition, surgeons can measure exactly how much cartilage and bone to remove in order to place the correctly sized prosthesis without losing any unnecessary bone.

Partial Knee Replacement – Historically, partial knee replacements weren’t recommended by many orthopedic surgeons – instead, it was suggested that the patient wait until the pain becomes completely unbearable. MAKOplasty® technology is single-handedly shifting the culture of this thinking.

Rather than waiting until the entire knee is completely arthritic, the trained MAKOplasty® orthopedic surgeons are using this new robotic technique to help people sooner, by doing partial replacements, rather than waiting for a total replacement in a few years.

MAKOplasty® uses the RIO® Robotic Arm Interactive Orthopedic System to perform partial knee resurfacing. This provides surgeons precision to resurface only the diseased portion of the knee, retaining as much of the natural knee as possible – including healthy bone and ligaments. A partial knee replacement can allow the patient to get excellent pain relief while having a speedy recovery. It also is an excellent surgery for the very active and athletic person who has suffered an injury to one area of the knee.

Studies have shown that a surgeon is three times more accurate with the use of the robotic system when compared to conventional techniques. The utilization of robotics in surgery will continue to increase as the development and knowledge of these systems proliferate. As surgeons strive to perfect the art of total joint replacements, the use of MAKOplasty® can only increase their ability to obtain excellent results while decreasing complications.

(Ramy Elias, M.D., and Andrew J. Wassef, M.D., are with the MemorialCare Joint Replacement Center at Long Beach Memorial Medical Center.)

Effective Leadership Why Your Culture Must Be Part of Business Strategy

W

hat is the purpose of your organization? What do you want to be known for – both inside and outside your company? You might not have a Department Of Culture Development, yet the development of culture should be a clear and compelling goal that saturates your

By MiCk entire organization, whether you are a UklejA profit or nonprofit entity.

Culture needs to be tied to the organization’s purpose in a way that creates alignment with your game plan. There needs to be cultural evangelists within your organization that helps people stay connected to the vision. If this is not intentional you run the risk of having a culture that will either slow down or contradict where you want to go.

Organizational culture could be likened to a personal reputation. As we exist together we develop a reputation –

O

ne-third of business owners say they use their own funds or personal credit for their business. Yet as a business seeks to grow, obtaining business credit is essential and can help finance purchases, build a credit history, supplement cash flow and preserve savings.

How do you choose the right credit solution for your business? Not all financing options are created equal. The type of business credit you need depends on your business goals and how much funding you need.

By Ben Need a way to pay for everyday business expenses? When a busiAlvArAdo ness owner is looking for a convenient way to pay for everyday business expenses, business credit cards can be a good solution because business owners can separate business from personal expenses and immediately pay for day-to-day business expenses. Businesses also can obtain multiple cards for employee use. There are many cards on the market, so it’s a good idea for business owners to research their options, and evaluate card features – from fees to spending controls to rewards – to find the one that best fits their needs.

Need to make large seasonal purchases or cover payroll? Nearly every small business will face a time when it needs more cash than it has on hand. A business line of credit can provide fast, easy access to cash, which can bridge gaps and help supplement cash flow.

Unsecured and secured credit options are available. For unsecured credit solutions, the most common type of credit, a business owner typically borrows based on personal and business credit history and cash flow. Secured credit solutions are another option that can help newer businesses establish business credit and assist businesses that may need to rebuild their credit. With a secured credit solution, the cardholder or borrower uses a deposit account or assets as collateral to secure the credit.

Want to expand your business or make a large equipment or vehicle purchase? For a specific business need, business term or equipment loans should be considered.

Loans give businesses immediate access to funds and are ideal for business owners who want a flexible way to get a lump sum at a fixed or variable interest rate for a fixed period of time. There are many types of loans, including unsecured loans, secured equipment loans, real estate loans and vehicle loans, and rates and terms vary.

When evaluating lending options, you should also consider an SBA loan. Through government-guaranteed SBA loans, financial institutions are able to extend financing to a segment of creditworthy small business owners who may not be able to obtain a conventional loan or loan terms that meet their business needs. Business owners who are looking to buy real estate, acquire a new business or purchase equipment may find that an SBA loan offers more flexible terms than a conventional loan. SBA products include the SBA Express line of credit, and SBA 7(a) and SBA 504 loans.

Every business has unique needs and goals. As business owners consider their credit options, they should consult with a banker to determine the best solution to meet the specific needs of their business.

(Ben Alvarado, a 23-year veteran of Wells Fargo, is the president of the bank’s Southern California Region, which stretches from Long Beach to Orange, Imperial and San Diego counties.)

something unspoken but strongly present. A poor reputation can be at best, unpleasant, and at worst, poison to those who are exposed. Culture, can either repel or propel employees, customers, partners, and prospective hires.

Your culture goes far deeper than just keeping employees happy. It’s connected to your strategy. And it’s there whether you are aware of it or not. So make sure it’s the one you want.

How is this done? It happens by establishing communication at every level of your organization – both up and down and across all departments; i.e. throughout the entire system. It’s real time feedback describing current reality, not some far off aspiration. This is how you learn what your culture is. You can’t be intentional without this information.

You can’t get to where you want to go if you don’t know where you are.

Culture is made up of the thoughts, beliefs, attitudes, and actions that happen by default unless you are intentional about changing it.

The good news is that when this is clear you now have criteria for hiring the right people who fit the culture you want. They might be highly talented, but if they don’t fit the culture, more damage than good will be done.

Culture is also one of the great levers that help your organization accomplish its objectives. With the right culture your mission, vision, and core values will be enhanced. It’s powerful like the current in a river. It moves things. It’s a driving force.

Culture also informs and guides the progression path of people in your organization. How are they viewed? Is there a growth path that is also aligned with the company’s values? Does your workforce see your organization valuing both people and results? Is the organization interested in the individual’s well-being and personal mastery.

Culture also helps the organization and the individuals in it accomplish their dreams. There should be alignment in the aspirations of the company and the employees. It is powerful in keeping everyone aligned with the vision.

It breeds effective communication up and down the chain of command. It ensures the best care for your greatest asset – your people.

And here’s the payoff. Culture connects the individual to the strategic plan. Each person feels like a strong contributor impacting the big picture.

The results: • Alignment – everyone going in the same direction • Attunement – an emotional connection as you tap into people’s passions.

• Action – alignment informs what people think, and attunement provides motivation and energy to act.

Is your culture a part of your business strategy?

(Mick Ukleja keynotes on topics related to leadership and personal productivity. He’s president of LeadershipTraq, and author of several books. Check his weekly blog at www.leadershiptraq.com.)

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July 7-20, 2015

PERSPECTIVE

Realty Views Commercial loan restrictions Could dampen Market

F

inancing on any level is much harder in today’s world considering the economic changes of the last decade, but new guidelines for commercial construction lending is poised to both dampen the market for new development while also sending this segment away from traditional banking sources and into the

By TerrY roSS arms of other types of lenders.

The new regulations, released by regulators on March 31, are also forcing many projects to either be abandoned altogether or to find investors to bridge the gap and forego financing in the traditional sense. New lending requirements that went into effect this year called Basel III created a new category of acquisition, development and construction loans that regulators call High Volatility Commercial Real Estate. Such loans face a 150 percent capital requirement that is making construction loans more expensive and forcing developers to go to nonbank lenders, according to lending officials.

“It doesn’t make sense," said Thomas Bisacquino, the president and chief executive officer of the National Association of Industrial and Office Properties, which lobbies on behalf of the commercial real estate development industry. “You are moving the better loans out of the banking system.”

Regulators added the higher capital charge because of their experiences during the financial crisis. A Federal Deposit Insurance Corp. study found that many banks that failed during that period held large concentrations of acquisition, development and construction loans. A common problem was that, by the time construction of new properties was completed, there was low demand for them.

The new capital rules are designed to force borrowers to have more skin in the game. They must meet a 15 percent equity requirement to avoid the High Volatility designation. The leverage on the loan also cannot exceed 80 percent of the estimated completed value of the project.

But lenders said these rules don’t recognize certain realities in the real estate market. For example, the requirements do not

recognize the appreciated value of the land in determining how much equity the developer has to bring to the table.

For builders who have held land for a number of years, they will not get credit for appreciation in determining their equity in the project, which is going to be a deal breaker in many cases.

Many developers buy and hold raw land for future projects.

“They hold a piece of dirt for 3, 5 or 20 years,” Bisacquino said.

“This new regulation says they have to use the original basis of the land. It is insane.”

Regulators are also now requiring that construction loans be held for their full term, another deterrent to using traditional banking sources for these types of loans. Under the new Basel III requirements, a “high volatility” construction loan can’t be converted to permanent financing until it is held for the full term of the loan. For instance, in the case of a four-year loan where construction is completed in two years and the project is considered “cash flowing,” regulatory guidelines dictate that the loan must still be held for the full four-year period, something lenders say is unnecessary.

Another new requirement prevents the developer from taking any equity or funds internally generated by the project until construction is complete and converted to permanent financing, thereby eliminating any use of the cash flow generated to pay taxes or other expenses. This also increases the capital requirement for developers going into a project.

The regulators used to consider all construction loans in the 100 percent risk-based capital category. The higher 150 percent risk weighting “will put a damper on [high volatility] lending,” said Hugh Carney, vice president for capital policy at the American Bankers Association.

The higher capital requirement will be reflected in the price of loans, and put banks at a competitive disadvantage to nonbank lenders, Carney added.

“If borrowers are able to get better pricing elsewhere, these loans may not be done by the banking system,” he said.

In their effort to take the risk out of construction lending, regulators have done the opposite, some industry representatives warn. The rules effectively encourage banks to focus on B-grade projects so they can charge a higher interest rate and increase their return on capital.

The end result will make development more difficult and expense, and will require more investor participation into projects to bridge this lending gap.

(Terry Ross, the broker-owner of TR Properties, will answer any questions about today’s real estate market. E-mail questions to Realty Views at terryross1@cs.com or call 949/457-4922.)

Trade And Transportation Beyond Traffic

I

t’s not uncommon for trade-related professionals, who may disagree on any number of issues, to find common ground on one key thing: the U.S. suffers by not having a naBy ToM o’Brien tional freight strategy.

Truckers, rail companies, port labor – that is to say anyone working along the supply chain – recognizes that the ability to compete as a leading trade nation depends upon consistent policies, the development of clearly defined priorities, and constant attention to the state of the infrastructure on which the goods move. The latter also depends upon a regular funding stream.

While shared consensus on the problems at hand - if not the solutions - is only half the battle, it’s certainly a start. And it’s in part the purpose behind Beyond Traffic, which is the title of both a report and an initiative launched by the U.S. Department of Transportation earlier this spring. Beyond Traffic advertises itself as “an invitation to the

American public—including the users, developers, owners, and operators of the transportation network and the policy officials who shape it – to have a frank conversation about the shape, size, and condition of that system and how it will meet the needs and goals of our nation for decades to come.”

The report is a draft survey of major forces impacting transportation. It attempts to separate fact from fiction when it comes to our understanding of the state of the transportation system in this country. The initiative on the other hand is actually an Internet-driven dialogue focusing on the potential solutions needed to address those forces. It engages all of us as problem-solvers, seeking input on additional trends impacting the movement of people and goods as well as policy options.

It also asks for answers to questions that include not only how we move things but how we can move things better, how do we adapt and how do we align decisions and dollars.

The input received on the draft report will be used in the preparation of a final document to be released later this year.

Beyond Traffic does a good job painting a picture of the external forces influencing the demand for different kinds of trans-

portation services. These include the growth of megaregions, which are expected to become home to three-quarters of the US population by 2045. The report also analyzes changing needs resulting from generational and demographic trends including an aging population.

Secretary of Transportation Anthony Foxx has been on the stump talking about Beyond Traffic. He’s frank about the shortcomings and dysfunction of our current model for planning, funding and implementing our transportation network. For one thing, it’s hard to be strategic when the system lives or dies with unreliable and inconsistent short term funding fixes and continuing resolutions. We’ve had 32 of them in the past six years. And by not being strategic, we can only react to hot spots, not anticipate the changes coming ahead.

For freight, those changes are likely to be significant. Beyond Traffic predicts a 45% increase in volumes by 2045 and points to other dramatic shifts in the economy that will change the nature of how and why people use transportation. These shifts include an increase in “last mile” home deliveries due to increasing online and m (or mobile) commerce, increased congestion around major airports resulting from airline mergers and the consolidation of hubs, and congestion at other major trade gateways like ports and border cross-

Long Beach Business Journal 35

Vol. XXVIII No. 13 July 7-21, 2015

EDITOR & PUBLISHER George Economides SALES & MARKETING EXECUTIVE Heather Dann STAFF ASSISTANT Larry Duncan EDITORIAL DEPARTMENT SENIOR WRITER Samantha Mehlinger STAFF WRITER Sean Belk CONTRIBUTING WRITER Thyda Duong, Michael Gougis, Gerrie Schipske PHOTOJOURNALIST Evan Patrick Kelly COPY EDITOR Pat Flynn The Long Beach Business Journal is a publication of South Coast Publishing, Inc., incorporated in the State of California in July 1985. It is published every other Tuesday (except between Christmas and mid-January) – 25 copies annually. The Business Journal premiered March 1987 as the Long Beach Airport Business Journal. Reproduction in whole or in part without written permission is strictly prohibited unless otherwise stated. Opinions expressed by perspective writers and guest columnists are their views and not necessarily those of the Business Journal. Press releases should be sent to the address shown below.

Office South Coast Publishing, Inc. 2599 E. 28th Street, Suite 212 Signal Hill, CA 90755 Ph: 562/988-1222 • Fx: 562/988-1239 www:LBBusinessJournal.com Advertising and Editorial Deadlines Wednesday prior to publication date. Note: Press releases should be faxed or mailed. No follow up calls, please. For a copy of the 2015 advertising and editorial calendar, please fax request to 562/988-1239. Include your name, company and address and a copy will be sent to you. Distribution: Minimum 22,000.

Regular Office Hours Monday-Friday 8:30 a.m.-5:30 p.m.

Business Journal Subscriptions Standard Bulk Rate: $28.00 1st Class: $70.00 (25 issues–1 year)

ings thanks in part to increasing vessel size but also the development of megaregions which creates the demand for the goods in the first place. Even the hopes of one of the country’s economic bright sports – domestic energy production – could remain unfulfilled without careful attention to that sector’s infrastructure.

The report recognizes the limitations of the federal government in responding to all of these challenges. And given the fact that the USDOT is in fact-finding mode at this stage of the initiative, the Beyond Traffic report doesn’t pretend to offer a path forward.

The final report, which will respond to both expert opinion and general comments, may yet provide something closer to a blueprint.

And as we know, with plans the devil is in the details. But it seems like a worthwhile exercise (and appropriate) for USDOT to serve as a convener of disparate stakeholders and facilitate the development of new ideas in the hopes of creating guiding principles that demonstrate the country’s commitment to a world-leading transportation system.

Access to the report can be found at http://www.transportation.gov/BeyondTraffic (Dr. Thomas O’Brien is the executive director of the Center for International Trade and Transportation at CSULB and an associate director for the METRANS Transportation Center, a partnership of USC and CSULB.)

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36 Long Beach Business Journal

POW! POW!WOW! WOW!LONG LONGBEACH BEACH

July 7-20, 2015

Before

POW! WOW! Painting The Town ■ By SAMANTHA MEHLINGER Senior Writer

From June 22 to 27, artists transformed highly visible buildings throughout Long Beach with permanent outdoor murals as part of POW! WOW! Long Beach, a weeklong event

focused on engaging the community “in the process and creation of art,” according to event organizers.

POW! WOW! originated in Hawaii and “has grown into a global network of artists and organizes gallery shows, lecture series, schools for art and music, creative community spaces, concerts,

and live art installations across the globe,” according to the POW! WOW! Long Beach website. The principal POW! WOW! event takes place during Valentine’s Day weekend in Honolulu and attracts hundreds of artists.

Founded by Jasper Wong and co-directed by Kamea Hadar, “the festival is

expanding to cities and countries such as Long Beach, Taiwan, Israel, Singapore, Jamaica, Washington D.C., Guam, New Zealand, Germany and many more,” according to event organizers.

Several murals were painted on walls of Long Beach buildings by international, national and local artists,

At left: PUSH, a California artist, paints a mural from a cherry picker on the side of the Expo Arts Center building in Bixby Knolls as part of the weeklong event, POW! WOW! Long Beach. Pictured in the foreground from left are: Imprint Venture Lab’s John Hall, a POW! WOW! Long Beach director; POW! WOW! Co-lead Director Kamea Hadar; 8th District Councilmember Al Austin; Bixby Knolls Business Improvement Association Director Blair Cohn; and POW! WOW! Founder and Lead Director Jasper Wong. At right: The opening reception for the Long Beach Museum of Art’s “Vitality And Verve: Transforming The Urban Landscape” exhibition, held as part of POW! WOW! Long Beach, drew more than 3,000 people. The exhibit, available for viewing through September 28, features murals from visiting urban artists painted directly on museum walls.

1_LBBJ_July7_2015_PortAnniversary 7/4/15 5:52 PM Page 37

July 7-20, 2015

POW! WOW! LONG BEACH

Long Beach Business Journal 37

After (Photographs by the Business Journal’s Evan Patrick Kelly)

including France’s Fafi, Germany’s Low Bros, Austria’s Nychos and Aaron Horkey of Minnesota. California artists included Aaron De La Cruz, Benjie Escobar, Bumblebee, Cryptik, Hueman, James Jean, Jeff McMillan, Jeff Soto, Madsteez, PUSH and Tristan Eaton.

Mostly concentrated in Downtown Long Beach, finished mural locations include The Varden hotel, the Long Beach Convention & Entertainment Center, the former City Hall East building (currently being transformed into the Edison Lofts), the Expo Arts Center in Bixby Knolls and others.

In addition to transforming the Long Beach landscape with art, POW! WOW! Long Beach also brought several events to the city, including music concerts, a film screening and lectures.

On June 26, the Long Beach Museum of Art (LBMA), a co-sponsor of POW! WOW!, debuted its exhibition, “Vitality and Verve: Transforming the Urban Landscape,” featuring works of visiting artists painted on the museum’s Hartman Pavilion walls. “Vitality and Verve aims to illuminate the sensory value and powerful practice of these artists as they transform the urban landscape around them,” a POW! WOW! statement explained. The event featured live music, dancing and refreshments, and attracted more than 3,000 people – the biggest opening reception in the museum’s history. The exhibit remains through Septebmer 28. ■

At right: The design for this mural on the side of the historic The Varden Hotel (pictured above, before and after, as well) hearkens to the hotel’s 80year history, depicting figures and images with a vintage feel. Pictured from left are: The Varden Hotel owner Larry Black; 1st District Councilmember Lena Gonzalez; and artist Tristan Eaton.

Below: Long Beach artist Jeff McMillan’s finished mural livens up a once blank wall between the Long Beach Convention & Entertainment Center and the Hyatt Regency Long Beach. The mural was created as part of POW! WOW! Long Beach. Pictured, form left, are: McMillan; POW! WOW! Co-lead Director Kamea Hadar; POW! WOW! Founder and Lead Director Jasper Wong; Vice Mayor Suja Lowenthal; and Long Beach Convention & Entertainment Center General Manager Charlie Beirne.

1_LBBJ_July7_2015_PortAnniversary 7/4/15 5:52 PM Page 38

ART MATTERS

Brought To You By The Arts Council For Long Beach • www.artslb.org

ART MATTERS to Long Beach: Arts Council Launches New Website and Fundraiser for Artist Microgrants

T

he Arts Council for Long Beach launched a new, redesigned website on July 1st, as well as an Indiegogo campaign to raise money for artist microgrants!

The Arts Council is a private 501(c)3 nonprofit that helps fund, market and advocate for the arts in Long Beach.

Fund Artist Microgrants & Get Rewarded

The Indiegogo crowdfunding effort raises money for the Arts Council’s popular monthly microgrant program. All money raised will go directly to artists and arts organizations – 100%!

The more money raised, the more art Long Beach communities receive.

Every level of donation brings a fantastic reward from a local sponsor: Fingerprints, University Art Museum, Long Beach Art Theatre, Lyon Art Supply, Primal Alchemy, Yellow 108, Long Beach Playhouse, Fox Coffee House, The Garage Theatre, Belmont Music Studio or MADE in Long Beach!

Arts Council microgrants have supported 29 projects so far this year around the city – from music to dance, visual arts to cultural festivals, and beyond – programs that make Long Beach a vibrant and exciting place to live.

Donors support a great cause, get a tax break through a tax-deductible donation and receive awesome gifts! What’s not to love? Donate today, and spread the word! Visit artslb.org/news.

Long Beach Business Journal 38 July 7-20, 2015

Long Beach Dragon Boat Festival Combines Chinese Culture and Community

Visit the New Artslb.org The Arts Council’s newly designed website (at the same great web address – artslb.org), seeks to serve as an excellent resource for both the general public and artists. Designed by Downtown Long Beach-based visualade, the site is fully responsive and functions beautifully on desktop, notebook, tablet and mobile devices of all types!

For the Public:

• Looking to hire a local artist to display or sell art in your office or business – or want to buy art for your home? Check out the Artist Registry (artslb.org/artists) and the Art in Available Spaces tips (artslb.org/services/art-inavailable-spaces)!

• Looking for a fun event? Browse the new Calendar of Events (artslb.org/calendar)!

• Want to check out the arts venues around town, sortable by genre? The Arts Map (artslb.org/arts-map) is the place to go.

For Artists:

• The Artist Registry gives every Long Beach artist a free web page to display, describe and promote your work! Link to it to your website and social media, or use it as your main website. (artslb.org/artists) • Apply for our annual grants or monthly microgrants (artslb.org/services/grants) • Learn about upcoming local, regional and national Artist Calls (artslb.org/services/artistcalls) • Get links to professional development and advocacy groups (artslb.org/services/resources) • Promote your venue on the Map (artslb.org/arts-map) • Promote your events on the Calendar (artslb.org/calendar) Check out the new artslb.org today and donate to the microgrant fundraiser to support Long Beach arts! ■

Gallery Corner Sound and Vision is a 40-year retrospective of multimedia artist, Teressa Longo, at the Cultural Alliance of Long Beach (727 Pine Ave). Longo graduated from the film department at Massachusetts College of Art and has worked in Long Beach for more than 14 years.

This exhibit will be an interactive experience with custom-made soundscapes to accompany images that have been shot over four decades. “I know what impact and impressions can be generated and experienced by the manipulation and conjunction of film with sound,” Longo said. Opening reception: July 11, 6–9 p.m. Closing reception: July 26, 12–5 p.m. Free workshop: July 8, 12–4 p.m. (all materials included and registration required). Art created during the workshop will be exhibited at the closing reception.

For more information and for workshop registration, call CALB at (562) 436-3421.

■ By SARAH BENNETT Arts Council for Long Beach Contributor

F

or more than 2,000 years, on the fifth day of the fifth moon, residents of southern China have taken to the rivers with decorated 22person boats, beating drums and rowing their way through competitions in honor of the rebel poet Qu Yuan, who drowned himself in the year 278.

Steeped in rich ceremonial, ritualistic and religious traditions, the socalled Dragon Boat Race is emerging as one of the world’s fastest-growing water sports.

For nearly 20 years, Long Beach has been home to one of the oldest and most well known Dragon Boat competitions – the weekend-long Long Beach Dragon Boat Festival at Marine Stadium, being held this year July 18–19.

“It’s a very special sport in that it’s combined with a cultural thing,” founder Howard Chen said of Dragon Boat racing. “I don’t think any other sport is as culturally steeped. All the people, even the Americans who do this sport, know where it comes from. It’s a chance for others to learn about Chinese culture.”

The sport itself now stretches beyond its Chinese roots and is practiced by a diversity of people in more than 60 countries. The appeal, said Chen, is multi-layered. Firstly, it’s a ‘green’ sport in that runs exclusively on human power and does not require a field or stadium. It’s a team sport and social activity that, in many divisions, is co-ed. It can also be relatively cheap and easy to start your Dragon Boat career, with the only equipment required being a paddle.

As a spectator, the barriers to entry are even less: with no rules to memorize and the boats moving forward in a straight line, jump in at any part of a race or tournament and know exactly who is winning and who is losing.

“I call it a community sport,” said Chen. “Anybody can join. And technique-wise, you can spend an hour practicing and then join.”

Chen started working on Dragon Boat tournaments in 1995, when the San Gabriel Valley orthodontist and a friend gathered donations, rented a few of the massive boats from Vancouver and hosted a small race at Puddingstone Lake in San Dimas.

Donations from the Lions Club in Taiwan and other sources allowed the tournament to obtain its own boats the following year. Chen formed a nonprofit around the Dragon Boat Festival and moved the tournament to Marine Stadium, where it’s been held ever since.

Today, Long Beach’s Dragon Boat Festival owns 50 boats (some of which can be seen parked on Mother’s Beach year-round) and hosts a tournament that draws 110 teams, as close as San Diego and as far away as China.

The races are accompanied by a cultural festival that includes traditional Chinese art demonstrations, acrobatics, dance, hip-hop, music and martial arts.

“The festival is very special for Southern California, which has the most diverse number of ethnic groups,” said Chen. “We’re not just emphasizing Chinese culture anymore. It’s about combining everybody together. This is the only sport I can think of that promotes everybody. It’s all of our community uniting together.” ■

1_LBBJ_July7_2015_PortAnniversary 7/4/15 5:52 PM Page 39

THE NONPROFIT PAGE

Long Beach Business Journal 39 July 7-20, 2015

Curated By The Long Beach Nonprofit Partnership

Leading By Example According to Brazilian novelist Paul Coelho “the world is changed by your example not by your opinion.” Any observant individual would take note of the fact that our world is becoming Matthew Faulkner, increasingly turExecutive Director, bulent and that ciCommunity Hospital vility seems more Long Beach the exception than Foundation the norm. Never was there a more important time in our lives for examples of good leadership.

We frequently express our opinions and sometimes do so with indignation, disdain or anger. Conversely when we are attempting to set an example we are mostly on our best behavior, demonstrating patience, courage, clarity, dignity, excellent listening skills and a myriad of other traits that are worth following. It is really quite easy to fire off a strong opinion on a subject or an individual, we all do it on a daily basis, but it is really quite challenging to consistently set a tone of cooperation, acceptance, humility and grace.

Personally I have always felt the harder work is to be a leader with these characteristics and maintain the strength of your convictions and faith in achieving your objectives even when the odds are stacked against you.

FDR once said that the loneliest feeling in the world was to believe that you are leading only to turn around and find no one is following! It’s not easy work being a strong and effective leader because invariably it is not always going to go your way and you will make mistakes. However a belief

in long term success is a must - an ability to be flexible and allow other trusted advisors and confidants to inform your decision making is a must.

No leader is an island and you can’t lead alone. We all need a strong support group around us and in the nonprofit world this becomes particularly important because we rely very much upon our volunteer leaders and staff to play an increasingly important role in moving the organization forward.

Your job, as a leader, is to direct, inspire, motivate and ensure results but these results only come about if we have done a good job of communicating with others what the intended goals are and how they can help the organization achieve them.

Leadership by example is about doing things right but more importantly about doing the right thing. As a leader you’ll need to see a little farther ahead than the crowd and this is often where the term “being steadfast” may come into play because those you are leading may not see that vision and/or your persistent belief in a positive outcome. Given all of the challenges you may face leading an organization it is important to remember that while you are being a civil, cooperative and thoughtful leader sometimes you will need to be very clear and direct and you must stick to your principles. FDR told a reluctant nation on the brink of war that “there would be losses before there would be victories.” This was an example of being truthful that allowed the nation to steel itself against setbacks that occurred. Sometimes leaders want to play to the audience and gain acceptance. However it is imperative that the truth be told. The truth, no matter how difficult to take, is always enough!

Capacity Corner: Upcoming Calendar of Events From the Nonprofit Partnership Essentials of Human Resources Certificate Thursdays, July 16, 2:00-5:00pm (6 Sessions) Rapidly changing workplace initiatives, legal landscapes and workplace culture are an integral part of the human resources function. The program provides the knowledge and practical skills for human resources administration and management. This certificate program will focus on real-life situations that are found in organization’s today.

Successful Project Management Wednesday, July 29 to August 20, 2015, 9:00 am-Noon If you're new to project management or looking for a refresher on effective project management, come learn the basics of managing projects small to large.

Leading by example also requires some personal development and it is important to grow and develop yourself before you do so with others.

Leading others is also a skill that needs to be continually honed. Empowering others to greatness comes about through encouragement, recognition and acceptance. Be slow to punish but swift to reward and if you get others to believe that they can make a difference then indeed they will.

Don’t wait to become perfect before you take the reins, remembering that you are a work in progress also. No matter where you are in your personal development you can always do great things and these will help raise you up and a rising tide does lift all boats.

It is not often spoken about in a sense of leadership but I think that love has a strong place in a good leader for it is in this mindset that you will truly inspire and encourage others and bring out the best in them. You better develop a good sense of humor also because laughter is truly the best medicine and often disarms particularly volatile situations.

In our 24/7 – 365 world, there is a constant plethora of information coming at us on a daily basis: email, voicemail, news, etc. These electronic missives always seem to need our immediate attention and represent distractions that can immobilize our efforts to lead effectively. The solution? Take a break, get some fresh air, walk, or take meeting instead of trying to maintain an attention span that sometimes feels akin to that of a gnat.

Many recent studies have demonstrated the necessity of recharging ourselves and taking time out from the electronic cacophony that buzzes in our eardrums all day long. Taking time is really part of our very human DNA. You only have to be a casual observer of history to understand that so many great leaders knew when to take a break, step back, smell the roses and clear the air. Another admirable trait of good leaders is that they possess a short term memory when it comes to slights and criticisms. This is a helpful attribute because you can’t afford to burn bridges you’ll need to rebuild one day and your focus should be on the idea that if you don’t mind who gets the credit the job will get done.

As a leader, you are mostly a conduit for others and you won’t always know who’s really watching and paying attention and may not even have a strong sense of how you are influencing others. So take a deep breath,

proceed with love and strength of your convictions, communicate openly and honestly and empower others to greatness. When you have done these things you have truly changed your organization and the world for the better.

Nonprofit News Welcome to . . .

• David Leonard, Executive Director, New Hope Grief Support Community • Erin Wilson, Development Director, Precious Lamb Preschool • April Economides, Director of Marketing & Communications, Arts Council for Long Beach • Megan Hanks, Director of Development, Arts and Services for the Disabled

Congratulations to . . .

• Long Beach City College Foundation for raising $1.5 million in scholarships awarded by LBCC on May 29th.

• Operation Jump Start’s class of 2015 graduates, they will become 1st generation college students this fall.

• Century Villages at Cabrillo on launching their 2015 Villages at Cabrillo Social Impact Report: centuryhousing.org.

• Women in Transition for successfully graduating six formerly homeless women through their Women’s Leadership Development Training.

• Leadership Long Beach, which adds 78 alumni to its growing network in its three programs: LLBI, EQS and YLLB. • Children’s Dental Clinic for being honored among the top 10 nonprofits in LA as a ”Champion of the Game” by Molina Healthcare.

• Comprehensive Child Development for reaching their fundraising goal at Art of All Ages.

• Urban Community Outreach for expanding its “Rainy Day Program” to become a year-round temporary shelter for women and families.

Farewell to . . .

• Susan K. Beeney, as she stepped down from her founding role as Executive Director of New Hope Grief Support Community to welcome David.

And . . .

• Food Finders has moved to new and larger offices at 3744 N. Industry Avenue, Suite 401, Lakewood, CA 90712.

Delivering Exceptional Customer Service from the Inside Out Wednesday, August 19, 2015, 9:00am-4:00pm Successful organizations recognize that excellent customer service is the result of paying close attention to interconnected interactions. Excellent service doesn’t come just from a friendly response or a helpful website. It results from really understanding customer expectations and putting structures in place that will exceed those expectations at every step of their experience.

Ultimately, your success is tied to the quality of the customer’s experience with you.

From our Partners Ask the Expert: Finding Funding for Technology Projects July 23, 2015, 11:00am WEBINAR In this interactive webinar, they will examine how to make a data-informed case for technology investment and explore funding sources, cost estimates, and needed resources. For more info, visit: nten.org.

Save the Date: Stronger Together Nonprofit Conference August 24, 2015 — Los Angeles, CA Join three strong partners working together on the second annual nonprofit conference for California with leading edge content and exceptional presenters in leadership, strategy, advocacy, and risk management. For more info, visit: calnonprofits.org.

The area’s regional capacity builder, serving local organizations to strengthen and grow through leadership, education and collaboration. Offering: Professional Development & Training Networking & Collaboration Custom Training & Consulting Services Information Resources To learn more, visit us at www.lbnp.org.

4900 East Conant St., Building O-2, Suite 225, Long Beach, CA 90808 562.888-6530

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40 Long Beach Business Journal

July 7-20, 2015

“We have 100 miles of rail in the Port of Long Beach.

We need 200 [miles], because we would like to move more by train.

It is less polluting and, given the right kind of infrastructure, it can give us real smooth throughput.”

Doug Drummond (Continued From Page 1)

cutve vice president of college advancement and economic development for Long Beach City College; and Tracy J. Egoscue, an environmental attorney and former district attorney general for the State of California.

Since Drummond was appointed to the board in 2011 by former Mayor Bob Foster, his top priorities have been fiscal responsibility and building a stronger relationship with the city. “We had become an organization that didn’t worry much about projects being over budget,” Drummond said of the state of the port when he joined the board four years ago. “We needed to look at the bottom line more closely.”

Although the port operates under the city’s harbor department, the relationship between the department and city hasn’t always been ideal. “There were times when our relationship with the city suffered,” he said. One of the causes of friction was a debate between the port and the city over how much of the port’s revenues should be transferred into the city’s Tidelands Fund for capital improvement projects.

That matter was resolved just as Drummond came on the board through ballot Measure D, which set the amount of port and oil revenues that could be put into the Tidelands Fund at 5 percent of gross revenue. Previously it had been 10 percent of net revenue, which often became a moving number. “The issue no longer exists. It’s all very smooth now,” he said of the port’s relationship with the city.

When asked which harbor commission decision made in the past four years has had the most impact on the port’s future, Drummond replied without any hesitation, “Hiring Jon Slangerup.” Slangerup began as the port’s new chief executive last August.

“Jon Slangerup is incredibly competent,” Drummond said. “He has been adding staff in critical positions. He is really focused on speeding up cargo through Long Beach.”

Also significant is that Slangerup has placed due emphasis on the importance of good customer relations. “He is customer focused . . . In the past, we were kind of puzzled over who our customers were,” Drummond said, explaining that, in prior years, terminal operators and shipping lines had been regarded as the port’s main cus-

“Over the next 20 years, I think we will easily double the volume of cargo coming through the ports of Long Beach and Los Angeles. We’re going to have to be very creative to deal with that growth over time.” tomers. These entities, however, are truly the port’s partners in the supply chain and port operations.

The port’s customers are really the beneficial cargo owners – major retailers and wholesalers who own the goods moving through ports, Drummond explained. “The true customers are the Targets and the Walmarts that source materials overseas, and then they make the decision from the origin all the way through to the destination [about where that cargo goes],” Drummond said. “We haven’t been very efficient and we haven’t treated our true customers with sufficient respect. Slangerup is doing that.”

With Slangerup in charge, the overspending issues Drummond had once been concerned with are no longer a glaring issue. Since Slangerup began, the port has now implemented a budget complete with goals and objectives, Drummond noted. He has also helped tighten up spending for capital improvement projects such as the Middle Harbor Redevelopment Program and the Gerald Desmond Bridge Replacement Project.

“I believe the port’s biggest challenges are the bottlenecks,” Drummond said. One of these bottlenecks is the 710 Freeway. Several lanes feed onto the 710 from the downtown area and the port, he noted. “Those eight lanes feed to three lanes just north of Pacific Coast Highway. It doesn’t work,” he said.

Drummond said the port has been working with the Gateway Cities Council of Governments and other entities involved in a proposed I-710 Corridor Project to ensure that it resolves bottleneck issues.

The port’s efforts to expand its on-dock and near-dock rail infrastructure may also help alleviate some supply chain congestion, Drummond noted. “We are spending a lot of money right now, some of it coming from federal assistance . . . to improve our railroad access within the port,” he said.

“We have 100 miles of rail in the Port of Long Beach. We need 200 [miles], because we would like to move more by train,” he continued. “It is less polluting and, given the right kind of infrastructure, it can give us real smooth throughput.”

In the future, the port may also invest in short-haul rail to the Inland Empire, which has a growing warehousing industry. “That’s in the planning stage now,” Drummond said.

Remaining competitive in an evolving

international trade landscape is also on Drummond’s list of priorities moving forward. “Our biggest challenge with competition is to be able to bring goods here in the most economical fashion from the origin to the destination,” he said.

A widened Panama Canal is slated to open in August, leading some to speculate that some cargo usually destined for Southern California ports may instead pass through the Panama Canal. “Now, with the Panama Canal almost finished . . . there is a lot of thought or belief that [the ports of] Savannah and Charleston and some of the eastern ports will compete with us,” Drummond acknowledged. “I truly believe that is mistaken.”

It costs more to ship to these ports from Pacific Ocean routes simply because the distance is farther, which necessitates more fuel, Drummond noted. Additionally, the canal hasn’t been widened enough. While it will be able to handle ships large enough to carry 13,500 twenty-foot equivalent units (TEUs, which are standard-sized containers) of cargo, the San Pedro Bay Ports already regularly receive shipments from larger ships carrying 18,000 to 19,000 TEUs, Drummond said. These mega-ships are the way of the future – 21,000-TEU ships are currently on order right now, he noted.

Still, some cargo may be diverted from the Port of Long Beach through the Panama Canal. “In my opinion, we will get as much [cargo] as we lose, because there will be some cargo coming up [westward] from Brazil that will pass through the canal and come to the West Coast,” Drummond said.

Of more concern to Drummond are ports on Canada’s West Coast, specifically the ports of Vancouver and Prince Rupert, which are a shorter distance from Japan than the San Pedro Bay Ports. While the U.S. federal government charges a harbor maintenance tax on arriving cargo, the Canadian ports don’t have such a tax, Drummond noted. Combined, these factors mean Vancouver and Prince Rupert have an economic advantage over the Port of Long Beach, he pointed out.

“They also have deep water, big cranes [and] new facilities,” plus good railroad access to the Chicago area, Drummond continued. “So there is a lot of American cargo going through Prince Rupert and Vancou-

ver,” he said. However, these ports falter in the winter when Canada is hit with frigid weather – an issue Southern California ports do not have.

To stay ahead of competition, it is important that the Port of Long Beach develops its infrastructure to prepare for larger vessels, according to Drummond. “The big change over the next 15 to 20 years is going to be to create bigger terminals, like Middle Harbor,” he said. “That means we are going to have to either do more landfill and build out, or we will need to combine existing terminals.” Slangerup has spearheaded a land use study, currently underway, to determine the best direction to take in this arena, Drummond said.

“Over the next 20 years, I think we will easily double the volume of cargo coming through the ports of Long Beach and Los Angeles,” Drummond said. “We’re going to have to be very creative to deal with that growth over time . . . Along with that, we have to establish a reputation for reliability,” he said. “Actions speak louder than words. We have to prove that we’re reliable.

And I believe we’ll do it.”

The Port of Long Beach continues to improve upon its environmental efficiencies and develop stronger ties to the community, Drummond pointed out. “Our clean air and clean water programs continue to improve the environment every year,” he said. In the future, Drummond looks forward to achieving Jon Slangerup’s goal of running the Port of Long Beach as a zero-emissions operation with clean energy.

“We are also doing very well with public relations. The new book, ‘Port Town,’ is an epic that is going to show the progress of Long Beach over the past 100 years,” Drummond noted, who has authored two books set in Long Beach. (Refer to separate story about “Port Town” in this edition of the Business Journal.)

“In the course of my time, I can remember when we had a giant Douglas Aircraft [Company] that employed 50,000 [people], we had shipyards that together employed 50,000, and we had a huge Navy,” Drummond said. “All of that is gone. But we have a superb port,” he said, explaining why he is so invested in the port’s future. “That’s what we have left, and we have to protect it. We have to improve it.

Because the port is the future of Long Beach. We are ‘Port Town.’” ■

Take a Trip Back in Time In conjunction with Port Town, the exhibit uses one-of-a-kind artifacts, photos and video to bring to life the remarkable transformation of a marshy mud flat into one of the greenest, most prosperous and most modern ports in the world.

Additional limited edition copies of Port Town will be available for purchase at the exhibit, with proceeds benefiting the Historical Society.

Hours Tues./Wed./Fri. 1-5 p.m.

Thurs. 1-7 p.m.

Sat. 11 a.m.-5 p.m.

Sun and Mon. Closed Special evening events planned with Bixby Knolls First Fridays: Aug. 7, Sept. 4, Oct. 2, Nov. 6 Learn more about Port Town at porttown.polb.com

“Richly detailed, well researched, and thorough.”

— D.J. Waldie, author of Where We Are Now: Notes from Los Angeles and Holy Land: A Suburban Memoir Port Town — how the Port of Long Beach rose from a marshy mud flat to become an economic powerhouse, one of the greenest and most modern ports in the world.

This epic tale is filled with the true stories of the larger-than-life soldiers of fortune, land-grabbers, lovers, dreamers, and builders who were inspired and bewitched by the Port of Long Beach’s mighty promise.

Now available at Amazon.com and Apple iBooks. porttown.polb.com

Take a Trip Back in Time In conjunction with Port Town, the exhibit uses one-of-a-kind artifacts, photos and video to bring to life the remarkable transformation of a marshy mud flat into one of the greenest, most prosperous and most modern ports in the world.

Additional limited edition copies of Port Town will be available for purchase at the exhibit, with proceeds benefiting the Historical Society.

Hours Tues./Wed./Fri. 1-5 p.m.

Thurs. 1-7 p.m.

Sat. 11 a.m.-5 p.m.

Sun and Mon. Closed Special evening events planned with Bixby Knolls First Fridays: Aug. 7, Sept. 4, Oct. 2, Nov. 6 Learn more about Port Town at porttown.polb.com