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Spring 2010 l Volume 46

The

RADCO Companies

High Desert Report A quarterly economic overview of the High Desert region affiliated with The Bradco Companies, a commercial real estate group

Mr. Lee Tucker, 12/14/1922 to 4/1/2010 Mr. William A. Porter, President (Retired) Porter Real Estate, 8/9/1924 to 4/6/2010 Mr. and Mrs. Joseph W. Brady, dedicate this edition of the Bradco High Desert Report to two individuals that truly brought leadership and change to the Victor Valley Economy.

I wish to welcome our current and future subscribers to the 46th edition of The Bradco High Desert Report, the only quarter economic overview of the High Desert region, covering the northern portion of San Bernardino County and the Inland Empire. We more specifically address economic issues, affecting the cities of Adelanto, the Town of Apple Valley, Barstow, Hesperia and Victorville.

Inside This Issue Are We There Yet?......................... 2 California-Nevada Interstate Maglev Project......................... 5 Desert Xpress................................. 11 It’s Water That Drives Our Economy......................... 12 Inland Empire Housing Market.... 13 The Real Job Creators of California........................... 16 Caltrans Past and Future High Desert Construction Projects.............. 17 MDAQMD Urges Governor To Reconsider AB 32.................. 18 Programs For Success.................... 19 Victor Valley Community College Construction News................ 22 SCLA Leads Way The Way In Job Creation...................... 23 Transportation Projects Planned For The High Desert.............. 27 City Update Adelanto................................ 30 Town of Apple Valley ........... 31 Hesperia................................. 32 Victorville.............................. 35

As always, we wish to thank all of our article sponsors and our newsletter sponsors for their continued commitment to the Bradco High Desert Report, in our attempt to find positive, factual and interesting information that relates to the High Desert economy. With the creation of the 45th edition (Fall 2009), we notified our current and future subscribers that the Bradco High Desert Report has become “green” and is now available online, at no charge to any and all parties, who have an inherent interest within the High Desert economy. This includes residential, industrial, office and retail investors, major land owners, banks, title companies, escrow companies, engineering firms, market research firms, local businesses and local citizens who wish to stay apprised of the many positive aspects that affect the High Desert region. As Publisher of The Bradco High Desert Report, I still believe “the glass is half full”, as evidence by our continued attempt to monitor the High Desert region to make information available to everyone that has an inherent interest within this region. If this is the first time that you’ve received this newsletter or have received it in the past via U.S. Mail, you may wish to visit The Bradco Companies website at www.thebradcocompanies.com/register. Complete the short input form to receive future editions of The Bradco High Desert Report, press releases regarding major projects, our quarterly vacancy/occupancy numbers for the cities of Adelanto, Apple Valley, Barstow, Hesperia and Victorville, which cover retail, office and industrial. During the last quarter, we have now made this newsletter available to over 7,300 Southern California based commercial, industrial, office and retail brokers, who are located in Ventura, Kern, Los Angeles, Riverside, San Bernardino, Orange, Imperial, and San Diego counties at no charge.

It’s been made available to over 600 commercial, industrial, and land brokers throughout the High Desert region, those located in the region or from out of the region and nearly 1,800 residential agents that are involved in the sale of single family and residential properties throughout the region. I also want to thank my good friend, mentor and 46th edition contributor, Dr. Alfred J. Gobar, Chairman of Alfred Gobar Associates for his continual commitment in analyzing the High Desert economy. The 46th edition is the largest edition ever created for The Bradco High Desert Report since our inception in May of 1993. I would like to personally thank Mr. Tom Stone of Desert Xpress for his letter and his link to their proposed project that would link the City of Victorville to the City of Las Vegas, Mr. Thomas Bordeaux, Senior Transportation Manager-American Magline Group (AMG) for responding to the 22 questions regarding their proposed California/Nevada Interstate Maglev project, our article contributors, including Mr. Michael Stevens, Mojave Water Agency Community Liaison Officer with his article, titled “It’s Water That Drives Our Economy”, Mr. Michael D. Reynolds, Director for The Concorde Group regarding the Inland Empire housing markets and what effect that they have on the High Desert region, 36th District Assemblyman, Mr. Steve Knight and his article, “The Real Job Creators of California”, Mr. Darin Cooke, Caljens District 8, Public Affairs Officer and his article titled, “CalTrans Past and Future High Desert Construction Projects.” These article suppliers are augmented by our longtime sponsor, Mr. Eldon Heaston, Executive Director for Mojave Desert Air Quality Management District (ADAQMD) and his article titled, “ADAQMD Urges Governor To Reconsider AB32”. AB32

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High Desert Report

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A quarterly economic overview

Are We There Yet?

By Dr. Alfred J. Gobar Chairman, Alfred Gobar Associates The answer to the question in the title is contingent to some degree on what we mean by “there.” There continues to be some ambiguity regarding the possibility of a double-dip recession, with pessimism increasing during the month of February when this material was prepared. Exhibit 1 compares the current recession with the one that occurred in Southern California between 1990 and 1993 in percentage terms. In many respects based on nonagricultural wage and salary employment, this recession has been a little less severe than the one we had about 20 years ago. In other respects,

however, it has been much worse. This recession has had a greater impact on housing construction that the one in the 1990s, suggesting than its impact on the High Desert’s economy will be relatively more severe also. The High Desert’s economy has for the 100 years in which the Gobar Family has been involved in this area been stimulated by exogenous inflows of capital to exploit our resource base. Stimuli evident previously include booms associated with agriculture (the element that brought our family to the High Desert),

mining (precious metals, cement, granite, etc.), film production, military bases, recreation, and real estate development. Some real estate development episodes were induced, taking the form of highvelocity land sales programs such as those at Apple Valley Ranchos and M. Penn Phillips’ development of Hesperia. Gradually, the High Desert’s economy is building a local economic base. This base, however, is still not large enough to support strong growth between episodes of economic stimulus. Our more recent booms have been predicated on real estate development responding to high land prices and shortages of affordable housing in the more urban parts of Southern California resulting in residential development booms on the High Desert when Southern California’s economy was expanding, rapidly-increasing home prices which excluded first-time homebuyers and other moderate-income families from housing opportunities close to major centers of employment. As the High Desert’s population and economy expands, it creates a market for ongoing economic activity in terms continued on page 3

THE BRADCO HIGH DESERT REPORT Publisher: Mr. Joseph W. Brady, CCIM, SIOR Editors: Ms. April Tyler, Mr. Lowell Draper, and Mr. Seth Neistadt Printed & Designed by One Stop Printers & Direct Mail Service E-Mail Version by Axiom Media Inc. P.O. Box 2710, CA 92393-2710 (760) 951-5111 BSN Ext. 100 l (760) 951-5113 FAX www.TheBradcoCompanies.com l e-mail to: info@TheBradcoCompanies.com Published Quarterly Free E-Mail subscription with online registration Printed Version $59.95 Domestic / $79.95 Foreign per year For a free subscription visit www.thebradcocompanies.com/register Postage paid in Victorville, CA l Send address changes to above. Entire contents copyrighted. All rights reserved. Material may not be reproduced in whole or part without permission from the publisher. Every effort is made to provide reliable information from reputable sources. The publisher assumes no responsibility for inaccurate information. The Bradco High Desert Report is printed on recycled paper.

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A quarterly economic overview

Are We There Yet? Continued

of retail commercial enterprises, a wide range of services (medical, etc.), some locally-serving industrial uses, and an increasing proportion of economic activity that exploits the local labor force to provide goods and services to markets located beyond the boundaries of the High Desert. Nonetheless, significant economic growth on the High Desert over the last 40 years has been related to periodic acceleration in new housing development in response to tight housing markets elsewhere in Southern California. When Southern California’s economy recedes as it did in 1990 and as it is currently doing, construction activity on the High Desert contracts. As illustrated in Exhibit 2, the contraction in building permit activity on the High Desert is more than proportionate to the contraction of this activity throughout Southern California. For example, in 2009, 389 new units were authorized by permit in the High Desert area. In 2005, the comparable figure was 8,295 units. Reduction in permit activity for housing construction in the High Desert between 2005 and 2009 was 95.3 percent. Overall, residential development activity in Southern California declined by 80.0 percent between 2005 and 2009, and by 87.0 percent in the two-County Inland Empire in which the High Desert is located. Employment has a significant impact on demand for housing. Extensive economic analysis has shown the long-term relationship between the number of U.S. households and the level of nonagricultural wage and salary employment over a 40to 50-year interval with an R2 coefficient

of 0.9864; i.e., nonagricultural wage and salary employment explains all but less than 1.5 percent of the number of households in the U.S. overall over a long time period. The same employmentto-household formation correlations are evident on the basis of similar comparisons for smaller areas. A study of 140 Metropolitan Statistical Areas throughout the United States over a 30- to 50-year period shows that nonagricultural wage and salary employment has a high correlation with household count, even allowing for differences in age profile, etc., as between various Metropolitan Statistical Areas and even allowing for the distortion associated with commute patterns, such as occupancy in the Inland Empire supported by jobs located in Orange County, etc. These relationships are described in detail in Real Estate Analysis in an Economic Matrix, Pages III-4 through III-9. A comparison between wage and salary employment change from 1990 to 1993, with similar figures related to the recession in which we currently find ourselves, shows the decrease in nonagricultural

wage and salary employment in the current recession over a three-year period was 7.07 percent while the comparable figure from the 1990 recession was a decline of 6.94 percent; i.e., quite similar. Significantly, however, the decrease in total employment in the most current recession over the appropriate interval was 8.05 percent, while 20 years ago the comparable decline was 6.40 percent. The sharp decline in employment in categories represented by self employment, off-books employment, etc., in this recession reflects the substantial impact on construction activity associated with the current recession and, therefore, the special impact on the High Desert’s economy from the recession in which we find ourselves. Return of a buoyant residential market on the High Desert is, therefore, expected to be contingent on growth in construction employment. The other category of job loss that has been particularly evident in the current recession is manufacturing employment. Declining manufacturing employment, however, is more of a secular trend than an immediate response continued on page 4

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A quarterly economic overview

Are We There Yet? Continued

to recession. One of the non-goods-producing categories of employment that has accounted for a significant proportion of job loss in this recession is retail sales. Retail sales employment has been undergoing a substantial structural change as high-volume retailers such as Best Buy, Costco, Home Depot, etc., account for a larger proportion of total sales. Since these types of retailers have high sales volume per employee, the total number of employees required to facilitate a given level of sales volume is less than would otherwise be the case. It could be argued, therefore, that recovery from the current recession as it affects the High Desert especially in light of the High Desert’s sensitivity to residential construction may be less vibrant than it was after the 1990 recession. As shown in Exhibit 2, however, construction activity on the High Desert measured in terms of single-family unit building permit activity hit bottom in 1997 and began a significant recovery about four years later in 2001, with steep acceleration thereafter. If it is assumed that the bottom of the current recession in single-family housing construction on the High Desert is likely to be 2009, we could begin to anticipate significant improvement in activity levels in single-family new home construction in about 2013. Allowing for the likelihood that the recovery from this recession is likely to be less vibrant than it was from the 1990 recession, significantly more exciting real estate opportunities may be further into the future than 2013. The trends in Exhibit 2 support an argument that significant recovery in development might lag to 2015. In either case, probably the most appropriate strategy for long-term High Desert investors is to acquire developable

residential properties, and if properties are not entitled, secure entitlement to facilitate their availability when demand circumstances recover. Access to utilities, highways, amenities, etc., is an important element in selecting raw residential land as a potential speculative investment. Certain elements of the High Desert’s economy, however, still seem to be showing significant activity. For example, industrial development in the City of Victorville in 2009 constituted virtually all industrial development that occurred in San Bernardino County during that interval. Victorville also shows a boom in industrial activity in 2004, representing approximately 16.0 percent of all industrial development activity in San Bernardino County. Another interesting element in the statistics for 2009 is the increase in average permit value per unit for the new units authorized for construction as compared with the comparable figure from earlier years, suggesting that the limited amount of new development currently underway probably consists of a substantial proportion of custombuilt homes, representing a specialized market that could create opportunities for development of high-amenity locations. Another interesting observation is that the economic structure of the Inland Empire currently is significantly different than it was during the 1990’s recession. A smaller proportion of employed High Desert residents commute to work at locations outside of the two-county Inland Empire, suggesting that overall average commute distance for homebuyers on the High Desert may well be decreasing. If indeed this is the case, the High Desert’s residential real estate market will respond more quickly to general economic recovery in Southern California than has

been the case previously. The High Desert’s economy continues to expand towards a critical mass element in which it supports many of the activities which previously required a larger market, causing High Desert residents to go outside the local community for purchases of critical goods and services. As the local economy gets larger, it supports a broader range of locallyserving industries, making the economic multiplier impact of new exogenous inputs of investment for new housing construction, employment, etc., more efficient in terms of generating broadbased local employment and population. In a previous Newsletter, it was noted that during times of economic distress, market values of real estate investments fall below their intrinsic value, providing an opportunity for “bottom fishers” to establish potential for significant profit realization in the future. This type of contrarian approach, however, requires a good deal of patience and probably even more courage. A characteristic of High Desert residents of my acquaintance has always been a high degree of courage and probably an enforced acceptance of patience. My father, who spent fifty years speculating in High Desert land, believed that my Ph.D. in economics was not as valid a source of real estate investment strategy as the Bible. His philosophy was based on “seven years of lean and seven years of fat” and the capacity to know which seven-year interval we were in at any given time. We are now in the lean interval.

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California-Nevada Interstate Maglev Project By Thomas Bordeaux Senior Transportation Manager - American Magline Group (AMG) 1. Briefly describe your project (one or two short paragraphs) in terms of the following: A. Purpose B. Travel Experience C. Features of the Transport Technology D. Public Benefit to Victorville and other High Desert Cities E. Financing Plan The California Nevada Interstate Maglev Project (CNIMP) will bring the fastest train service in the world and cover a distance of 269 miles connecting Las Vegas, the entertainment capital of the world, with Southern California, the largest and most diverse population center in the United States. The Maglev system is an advanced technology and will be constructed in this corridor for about $12.1 billion ($45M/ mi) which is within the same cost-per-mile range as European style high-speed rail. This estimate was prepared in 2000 and updated in 2005. It will again be updated as part of the environmental process to account for a number of cost reduction innovations that have been developed by the project team over the past five years and to account for the current construction market. The operating and maintenance costs of the Maglev system are significantly less than traditional railway service. There are no moving parts to wear or track to align. The train moves smoothly at high speeds supported by a magnetic field.

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The efficiency of modern transportation can be judged by two indicators: the Connections Made and the Travel Time it takes to connect major places. The Maglev system will be the fastest, most efficient transportation mode for High Desert and Southern California residents to travel to and from Las Vegas. Maglev will provide the most convenient option for business, commuters and recreational travel within this corridor. Maglev will make travel to and from the High Desert to International Airports in Ontario, Anaheim, and Las Vegas simpler than ever. Maglev will connect High Desert residents with the heart of Southern California within minutes, compared to today’s difficult commute. Maglev will allow for a visit to Las Vegas for dinner and a show, and a quick trip home.

equipped with passenger amenities, and are extremely quiet in operation. Running the length on an elevated guideway, the Maglev service is fast, efficient and unlike any other operating train system in the world. The project financial plan is discussed under Question 2.

With the connections made by the Maglev service, Victorville will become a major distribution point for Southern California. It will also become a highly desirable and sustainable suburb with a shortened commute times for employees who work in Orange County and live in Victorville or other surrounding High Desert communities.

2. Who are your financial and development partners? Please list them. The California-Nevada Super Speed Train Commission (CNSSTC) is designing and building the California-Nevada Interstate Maglev Project (CNIMP) through a PublicPrivate Partnership with the American Magline Group (AMG), a partnership including MNC & Associates, Parsons Corporation, Hirschfeld Industries, General Atomics and Transrapid InternationalUSA, Inc. This public-private partnership is advancing the next generation Transrapid Maglev technology and elevated systems in the United States. The technology has been developed over thirty years and has been operating successfully in Shanghai for nearly six years at over 99.8% on-time reliability.

The Maglev technology has been developed over thirty years and has been operating successfully in Shanghai for six years at over 99.8% on-time reliability. The Maglev trains utilize the latest in control and construction technology, are

AMG is committed to delivery of this project through competent and conservative business principles and in the public interest. AMG has stayed the course over the past 10 years, through equity investment of expertise, services,

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A quarterly economic overview

California-Nevada Interstate Maglev Project Continued

and products. A number of past federal grants have supported the Maglev project development, including: technology review, detailed project description, complete environmental assessment, stakeholder briefings, transportation planning, concept engineering, and initiation of the Environmental Impact Statement (EIS). These efforts have been supported by bi-partisan support in California and Nevada through local governments, and by Congressional representatives from both states, in Washington D.C. The project financial plan identifies the use of federal grant and TIFIA loan programs, public and private equity contributors, and commercial bond funds. Recently a loan proposal was announced for $7 billion in financing from the Import Export Bank of China. Other equity and loan contributors are in negotiations with the public-private partnership, indicating that strong financing options are available; and each option will be considered carefully with the long-term public interest in mind, and applying the hard lessons learned from recent failures in private financing approaches for rail projects. 3. Where will your system have stations physically located? The Maglev project will have stations at the following locations: Las Vegas, Ivanpah (future airport), and Primm, in Nevada; and Barstow, Victorville, Ontario, and Anaheim, in California. The EIS work is identifying the preferred sites for the stations. The terminal station in California is planned for the Anaheim Regional Transportation Intermodal Center (ARTIC) in Anaheim. 4. What type of connections will your system create for Victorville and the other High Desert cities? The Maglev service will provide fast

access for residents of the High Desert to three International airports: Ontario, Orange County and Las Vegas. This will essentially connect Victorville with the rest of the world and will make Victorville a far more attractive business and residential community for sustainable growth and economic development. Connections between Victorville and Ontario will be in 16 minutes and far more efficient than any other transportation option. Add another 11 minutes and the Maglev service will arrive in the heart of Southern California at the ARTIC Station in Anaheim. Connections to the Las Vegas McCarran International Airport will be possible in slightly more than an hour (54 minutes from Victorville to the terminus station in Las Vegas, plus connecting time). With comfortable and state-of-art service to the ARTIC station in less than 30 minutes from the Victorville station, residents will be connected to other transportation services, including the California High Speed trains north to Los Angeles, Metrolink, bus rapid transit and other options. Furthermore, the ARTIC is within minutes of the sports venues, shopping, entertainment, and other business activities in this vibrant area. Connections to Las Vegas from the Victorville Station in less than an hour will serve tourist, business, and recreational travelers. The Victorville station will become a transportation distribution hub which will generate tremendous economic activity. 5. What are the current plans for facilities at the terminal stations? A. Retail B. Hotels C. Parking, etc. The ARTIC station in Anaheim will be a world-class multimodal facility and

activity center in the “Platinum Triangle” and is currently in design. The ARTIC project is a partnership between the City of Anaheim and the Orange County Transportation Authority (OCTA), and is a multi-year project, that will offer new and expanded transportation services and development. The project includes site work and preparation, transportation center and supporting facilities, guideway, trackwork and platforms, parking, public art, and will be an intermodal hub for Amtrak, Metrolink, local and international buses, shuttles, bikes, other fixed guideway, California High Speed Rail, and the California-Nevada Interstate Maglev. It will also provide opportunities for Public Private Partnerships development for commercial, retail, office, and residential uses with the cities Platinum Triangle Mixed Use Overlay Zone. More information on the ARTIC can be found at this link: http://www.articinfo.com/ The Terminal Station in Las Vegas will be designed to achieve the same integration with other transportation services and facilities, and urban development similar to that planned for the ARTIC Terminal Station. The preliminary design will determine all facilities to be included at the terminal stations in consultation with coordinating public and private stakeholders. In overview, the stations for the Maglev system will be the first point of contact for passengers, and must be efficiently laid out and managed to provide the best possible experience for the customers. The stations will be environmentally pleasing, with clear, easy-to-understand signage and an intuitive and uncomplicated passenger amenities for all phases of the ticketing and fare collection process. The stations’ designs will separate the access and egress paths to minimize conflicting walking paths. Requirements of the Americans with continued on page 7

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High Desert Report

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A quarterly economic overview

California-Nevada Interstate Maglev Project Continued

Disabilities Act (ADA) will be included in the station design. All public areas of the stations shall be handicapped accessible. 6. What is the socio-economic and market profile of potential users of your system? Because of the low cost of our ticket structuring and the opportunity for fare packages for returning commuters, our system will become a backbone of tourism, commuter and business travelers. There will not be a better transportation option and connection in this corridor. The City of Victorville and the nearby High Desert Communities will have a lifeline transportation system like nowhere else in the world.

8. How long will it take to transport passengers and for what price from Las Vegas to other parts of Southern California and what locations in Southern California would you propose? A travel time and fare comparison is provided in the table below. The Maglev services as planned will make connections in the fastest time possible through efficient Maglev system technology and

proven safe operations. Comparisons are made with the DesertXpress project, which is considered as an alternative in the environmental studies. 9. What is the expected annual ridership and how will passengers get on and off at Victorville or other High Desert cities? The projected ridership for the Las Vegas continued on page 8

The Maglev system can also handle small cargo, which will be carried on the line primarily at night. This will also create economic opportunities and a boost to the overall economy in the High Desert. 7. How long will it take to transport passengers from Victorville to Las Vegas and Las Vegas to Victorville and/ or Anaheim and at what cost? The travel time and cost are developed as part of the EIS and earlier work completed in 2000 for a comprehensive Environmental Assessment report. The EIS scope of work includes comparison of the Maglev project with the proposed DesertXpress project. The Maglev train will transport people from Las Vegas to Victorville in 54 minutes for a one-way fare of $36; and between Las Vegas and Anaheim via express service in 81 minutes and for a one-way fare of $55. These fares were assumed as percentages of the airline fares between Las Vegas and Orange County. The ridership and revenue analysis will be updated as part of the EIS process.

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A quarterly economic overview

California-Nevada Interstate Maglev Project Continued

to Anaheim service is projected for the year 2025, showing more than 42 million annual (one-way) trips on the Maglev service. Of this total, about 13.9 million annual (one-way) trips would occur in the Anaheim to Ontario segment; and about 14.3 million annual (one–way) trips would occur in the Las Vegas to Primm segment. The ridership estimates were prepared prior to the initiation of the planning for Ivanpah Airport and do not include potential riders using Maglev to access the planned airport. These ridership projections primarily include the diversion from other transportation modes: auto trips and intercity airline trips. The current work will include a more thorough examination of the number of “induced” new trips that would be generated by the availability of the service. For example, as noted above, people from Victorville and the High Desert, as well as Southern California, may make more frequent trips to Las Vegas for entertainment or business purpose, as a result of the fast connection provided with Maglev service. 10. How many people will go from other cities within Southern California to Victorville if your project is fully implemented? The overall ridership projections shown in the table illustrate the total segment number of riders or one-way trips, for projections on an annual and daily basis. These include connections by auto and other transit modes, from communities nearby each of the station cities. Victorville along the corridor and as a gateway station connecting into Southern California would be ideally situated for accommodating travelers in either direction. The Victorville station is projected to generate a significant ridership demand with the order of magnitude

similar to the level of ridership shown for both the Primm and Anaheim stations and connecting segments. 11. What is the implementation schedule for your project? The original timeline was to begin construction on the starter segment this year, 2010. A delay in release of the federal grant for the environmental and engineering work has delayed completion of the Environmental Impact Statement until the end of 2011. Some work may begin (at-risk) in advance of that date to prepare facilities for manufacture and assembly of the system components. Current timeline is: Release of SAFETEA-LU grant and completion of final phase of the EIS/Preliminary Design: 4th Quarter, 2011. Build starter segment, initiate operations, and begin other segments: 4th Quarter, 2014.

Full corridor complete & initiate operations: 2016/2018.

12. Are there any extensions planned or required for your project? None are required. The planned Maglev project is a complete system. (See, also response to #17.) However, it should be noted that several inter-mountain states have started discussions regarding high speed ground transportation connecting Nevada, Utah, Colorado, Idaho, New Mexico, and Arizona. Maglev may be considered a best solution for the Rocky Mountain region. 13. What is the status of the environmental studies for your project and have you completed the requirements under the California Environmental Quality Act (CEQA)? Over the past ten years, substantial work

relevant to the federal requirements of an EIS/EIR in both California and Nevada has already been completed and approved by the Federal Railroad Administration (FRA). This work, as listed below, is fasttracking the completion of the EIS/EIR for the full corridor: • • • • • •

Environmental Assessment, Las Vegas to Primm, 2000 Las Vegas-Primm Project Description, June 2000 Las Vegas-Barstow Project Description, August 2002 Anaheim-Ontario Project Description, August 2003 Ontario-Barstow Project Description, February 2004 Full Corridor Project Description (Las Vegas to Anaheim), September 2005

The EIS is underway for the first segment from Las Vegas to Primm. This will be followed by completion of the EIS/EIR for the segments within California. The CNIMP Team has already completed Phases 1 and 2 of the PEIS for the full 269mile corridor and specific deliverables to the FRA under prior PEIS contracts. Some of these deliverables include the Draft PEIS Scope of Work, the Purpose and Need Statement, the Draft Preliminary Alternatives Analysis for Las Vegas to Primm, detailed mapping and extensive public outreach and coordination with local stakeholders. The timeline for completion of the EIS is shown above in the response to Question #11. 14. How will your project impact the environment and what are the required mitigations? The project’s environmental impacts and benefits are being fully documented in the EIS/EIR. The construction and continued on page 9

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High Desert Report

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A quarterly economic overview

California-Nevada Interstate Maglev Project Continued

operations of the Maglev system along the planned alignment and through the desert environment will have some visual and land consumption impacts to the surrounding areas. The Maglev team will work to integrate the infrastructure along the guideway and at the stations in full cooperation with the various cities and governmental stakeholders. Examples from the operating Maglev system in Shanghai China, provides a good perspective of how well Maglev can be integrated into the urban and rural environments. The Maglev system by its design will yield significant environmental benefits due to the considerable reduction in traffic congestion and pollutant emissions (See Question #22 for more details). The EIS/ EIR work accomplished indicates that the impacts from a Maglev system will be substantially less than traditional railway systems or highway widening. The Maglev is electrically powered thus reducing emissions, is fully grade separated to avoid blocking wildlife corridors, and maintains a smaller footprint running along steeper grades thus allowing it to follow the I-15 corridor, without tunneling or impacting sensitive habitats, such as the Mojave National Preserve. A Maglev corridor typically requires less right-of-way clearance than conventional rail and less than one-fifth the width of an equivalent highway corridor. There are several significant advantages that come from the Maglev system using a no-contact technology. The most obvious benefit of having no grinding wheels on track is that the Maglev is much quieter than conventional rail at comparable speeds. There is almost no sound or vibration except that created by the train passing through the air. Given there is no friction and wear and tear

to its parts, the Maglev system requires less maintenance and has lower impacts and surrounding land. By comparison, traditional railways require maintenance on a frequent basis, which includes maintenance vehicles and frequent maintenance equipment access along the right-of-way. The Maglev system is the “green solution”, addressing the need for fast and efficient surface transportation systems and sound environmental management. Maglev offers frictionless technology, estimated to use 30 percent less energy than traditional railway systems traveling at the same speeds. The electrical system requirements for substations along the Maglev guideway can be met in part with alternative energy sources, including solar, wind, and other emerging “green” technologies. This will reduce draw from the electrical grid during peak demand periods and reduce operating costs. 15. Does your environmental study consider other city rail? A full Environmental Assessment was completed in 2000, including a detailed ridership forecast. The ridership models were calibrated to reflect current conditions and for all connecting and alternative modes (light rail, metro rail and other services) for the forecast years. The Federal Railroad Administration which funded these earlier studies, commissioned an independent expert consultancy to review and verify the legitimacy of the Maglev ridership forecasts. These ridership forecasts are being updated to reflect current transportation and economic conditions. The success of any intercity transportation link is to allow passengers to reach their destination with a minimum of transfers. The terminal station in Anaheim is a wonderful example of bringing passengers

close to their destination and providing direct connections to local transit (bus, AGV, taxi) and long distance opportunities (California High Speed Rail, Amtrak/ Metrolink commuter rail, John Wayne Airport). Similar connections to the Las Vegas’ Bonneville Transportation Center, under construction in Downtown Las Vegas, are also being explored 16. Are there any potential extensions covered in your environmental studies? The Maglev system planned for connecting Las Vegas and Anaheim is a complete system that would connect the largest most diverse population center in America with the entertainment capital of the world. No extensions are currently required or planned. Connections at the ARTIC and Las Vegas terminal stations with services provided by the California HSR system and other surface transportation modes are considered in the environmental and ridership studies; however, these are not part of the project cost or implementation. 17. What is the timeline for completion of any required extension? There are no required extensions for the California – Nevada Interstate Maglev project. The project is to be implemented in three phased segments: 1) Las Vegas to Primm; 2) Anaheim to Ontario; and 3) Primm to Ontario. The current timeline for delivery of the project is provided above in response to Question #11. 18. What is the observed support for your project in southern Nevada and in the Las Vegas area? During the development of this project over the last ten years, the Maglev team has participated in an extensive public outreach and local agency planning effort throughout Nevada and California and has always received overwhelming support continued on page 10

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A quarterly economic overview

California-Nevada Interstate Maglev Project Continued

from all types of stakeholders, including the public-at-large or the future riders, leaders along the corridor, local public agencies, labor unions, environmental groups, local businesses, and Universities. In two widely distributed recent Nevada media polls the Maglev system was a runaway favorite where as many as 9 out of 10 polled stated a preference for it over the DesertXpress. The Maglev project received more than 81% support from the public of Southern Nevada while DesertXpress received only 7% support of the votes. CNSSTC and AMG have jointly signed a Letter of Commitment with the Nevada Building Trades Council that reflects the strong feelings of support by Nevada’s union members for the jobs and economic benefits to come from implementation of the Maglev project. 19. What is the observed support for your project in Southern California and any and all of the High Desert cities? Californians are wildly enthusiastic about the 310 mile per hour train and what it means to their commute. It opens up possibilities of travel to Las Vegas but just as important, it has high importance as a commuter train which allows them to live in less expensive areas such as Ontario and Victorville, even Las Vegas. No other project offers such advantage for commuting to other Southern California cities or making Victorville and Ontario distribution centers. 20. What are near and long term economic benefits of your project to the City of Victorville and other cities within the High Desert Region? The Maglev would make Victorville a distribution point for southern California. It will be easier to work in southern California and live in Victorville than in cities that are

part of the crushing urban traffic. Jobs will be brought to Victorville with the advent of distribution. There is the potential for small package distribution with Maglev trains, in the off-peak hours, that could contribute to Victorville as a center for warehousing and shipping. With Maglev all of the land in the Victorville area could become a valued suburb supporting new jobs in its own right. 21. What are the short and long term economic benefits of your project to the City of Las Vegas? Nevada and California are currently in one of the worst economic situations in the nation with overall unemployment in double digits. About 50 percent of those in the construction industry are out of work and there are no major building projects on the horizon. Construction of the Maglev project has the potential to create more than 90,000 jobs, a new industry in the United States, and will pump hundreds of millions of dollars into the local economy in this corridor. The Maglev project offers a long term rebirth of Las Vegas, linking places and people efficiently using the fastest transportation possible, faster than car, more convenient than the airline, faster than private aviation. During the 81 minutes visitors can walk on a train, sit, enjoy a drink or a meal, not hassle traffic, and arrive in one of the world’s most unique cities ever envisioned. Linking the largest and most diverse population center in the United States with the entertainment capital of the world with fast service will provide enormous economic stimulus to Southern Nevada, Southern California, and all the cities along this corridor. 22. How will your project effect the congestion on Interstate 15, south of Victorville connecting to any other cities and/or airports in Southern

California? The CNIMP Team has performed detailed analysis of the benefits resulting in the construction of the Maglev system versus a no-build option. One of the primary benefits would be the value of highway delays saved and the reduction in fatalities on I-15 from diversion of highway trips to the Maglev; however, there would also be a significant net environmental benefit due to the reduction in pollutant emissions. The full Maglev system from Las Vegas to Anaheim is expected to have total additive benefits estimated to amount to more than $27 billion for an evaluation period of 41 years. This includes more than $8.5 billion saved due to decreased delays on I-15 and more than $1.1 billion due to decreased fatalities on I-15. Victorville is approximately 90 miles away from Anaheim and the heart of Southern California. Congestion and pollutants from vehicular emissions along this segment of Interstate 15 is the worst part of the freeway. Because the Maglev system will have two additional and very key stations west of Victorville and deeper into the heart of Southern California, the benefits coming from reduction of I-15 congestion and surrounding freeways along this segment alone will be quite significant. In addition to reduced congestion and fatalities, implementation of the Maglev system would result in a decrease in emissions of pollutants, such as total organic gas (TOG), carbon monoxide (CO), nitrogen oxides (NOX), and CO2. This is especially beneficial for ozone (O3) and CO levels, for which all or parts of the South Coast Air Basin (SCAB) is designated as non-attainment and is under federal mandate to reduce these emissions. continued on page 15

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A quarterly economic overview

Desert Xpress By Thomas Stone President Thank you for your invitation to participate in your survey regarding high speed ground transportation. While we appreciate your continued interest, we respectfully decline to participate in the survey because we believe this simply would reinforce the misperception that DesertXpress somehow is involved in a competition with the maglev proposal. This is not the case, because the DesertXpress project is going forward as discussed below. • DesertXpress is moving rapidly to implementation of the 200-mile long, fully extendable, first phase of a high speed rail system from Las Vegas to Victorville, as a viable private initiative that requires no tax-backed funding grants, with all costs having been covered by DesertXpress Enterprises. • The environmental clearance process and the required federal approvals made possible by that clearance, and project kickoff, are scheduled to be complete this year. • This will make DesertXpress the nation’s first true, dedicated, passenger-only high speed rail line, helping to demonstrate what many other countries also have concluded: modern, fast, reliable, safe, comfortable, and convenient high speed rail is the wave of the future in ground transportation. • Local, regional, state, and federal governmental officials already have formally expressed their support for a rapid second phase extension to Palmdale, where DesertXpress can interface directly with the voter approved California High Speed Rail system, recently awarded the largest single federal high speed rail stimulus grant ($2.4 billion), which will connect DesertXpress with the en-

tire state network. • If the proposed 40-mile maglev project’s first phase from Las Vegas to Primm at the California state line ever were to be environmentally cleared and funded (and it was recently denied high speed rail stimulus grant funding), they then would be free to try to pursue the estimated tens of billions in taxpayer funds that they would need to environmentally clear and construct it all the way into Southern California. All aspects of the DesertXpress project have been and continue to be discussed openly in the public arena. We would encourage you to review the facts of this matter more thoroughly. As an example, please refer to the Draft Environmental Impact statement that is posted on the Federal Railroad Administration’s website at http://www.fra.dot.gov/us/content/1703, and the expert study comparing the maglev proposal and DesertXpress that was commissioned by the Southern California Logistics Airport Authority at http://www.desertxpress.com/media/dxBSLReport.pdf, copy attached. You may also be interested in comments made by USDOT Transportation Secretary Ray Lahood, Senator Reid and Caltrans Executive Director Will Kempton at a July 2 event in Las Vegas at: http://www.youtube.com/ watch?v=DMXX3PnJv1I; and more recently comments by Secretary LaHood and Senator Reid after award of the HSR stimulus funding.at: http://www.youtube. com/watch?v=gRlN6fo7OGA. Finally, we also would be pleased to meet with you at a convenient time to assist you in your fact-finding. Thank you for your continued interest.

Publisher’s Message Continued will have a very serious effect on businesses and the citizens in California and cost implement and could challenge the High Desert’s local economy. We also welcome Mr. Gary Thomas, San Bernardino County Superintendent of Schools, and a gentleman, whose leadership follows the former Superintendent, Dr. Herb Fischer in implementing those programs that will ensure a competitive, educational process and will help our county economy with students that achieve the necessary educational requirements to maintain our competitiveness. Again, many thanks to Gary for what you’re doing and your entire staff. Victor Valley Community College continues to grow with the article by Mr. Bill Greulich and Mr. Al McQuilkin, titled “Victor Valley Community College News”. We always appreciate the time and energy that our First District Supervisor, Mr. Brad Mitzelfelt, San Bernardino County Supervisor of the First District gives in his article, titled “Southern California Logistics Airport Leads the Way in Job Creation” and amendment by the San Bernardino Associated Governments (SANBAG) in the article prepared by Ms. Jane Dreher, titled “Transportation Projects Planned for the High Desert”. Lastly, we’re pleased to have updates by Mr. Mike Borja, Management Analyst for the City of Barstow, Mrs. Kathy Martin with the Town of Apple Valley, Mrs. Lisa K. LaMere, Economic Development Analyst for the City of Hesperia and lastly, Mrs. Yvonne Hester, City of Victorville Economic Development Department. We wish each and every one of you reading this the very best and will be preparing the 47th edition over the next 4 months. Please direct any comments and/or suggestions to Mr. Joseph W. Brady, CCIM, SIOR, Publisher of The Bradco High Desert Report at jbrady@thebradcocompanies. com. Don’t forget to sign up for your free copy of the newsletter, economic forecast, or news about other community issues that we believe are paramount by visiting www. thebradcocompanies.com/register.

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A quarterly economic overview

It’s Water That Drives Our Economy By Michael Stevens Mojave Water Agency Community Liason Officer

Whether you’ve been part of the High Desert for five, 10, 20-years more—or even less time—think back to how much commercial and residential construction our communities have experienced. Although current economic conditions have slowed the growth, it hasn’t stalled and projections that development projects will increase and home building will rebound. Read elsewhere in this publication about the different development projects and tracts that have come or are coming to the Victor Valley and Barstow areas and you’ll likely agree development hasn’t stalled. Later in this article is a description of capital projects by Mojave Water Agency (MWA) that are supporting our local economy.

projects share in common is that they create a higher demand for our local resources: natural gas, electricity—and the one resource we absolutely cannot survive without—water.

But whether the development project is a Ross, Lowes, a Super Target, or tract of 200 homes, the various development projects all share two things in common. One, they all will result in either temporary or permanent jobs. Some would argue that it’s jobs and the spending they create that drive our economy. Yes, secondarily. But primarily, without an adequate water supply to support the various commercial, retail, industrial and institutional projects—there will be no jobs. The second thing that development

Mojave Water Agency, the only water wholesaler serving the Victor Valley and Barstow region, took a major step late last year to balance water demands with a reliable supply. The Agency closed sale on the ability to purchase up to 14,000 acre-feet of additional water a year, an 18.47 percent increase over its contracted amount for up to 75,800 acrefeet (An acre-foot is the volume of water necessary to cover one acre to a depth of one foot. It equals approximately 326,000 gallons, enough water to supply two households for one year).

The two are inextricably linked, water and jobs. Without water, development, and the jobs that it brings, comes to a screeching halt. So how do we ensure that water supplies are sufficient to accommodate the growth? First it’s important to note that water agencies, including the Mojave Water Agency, have no land use authority. Whether development projects are approved or not rests with the Planning Commissions and the City/Town Councils and the County of San Bernardino.

In an environment where water supplies in California are limited because of drought and reduced deliveries through the Sacramento-San Joaquin Delta, this move has better positioned MWA to meet future water demands. The agreement between the Mojave Water Agency and a water-rights owner in the San Joaquin valley gives MWA a right to buy and deliver muchneeded water to its customers on a longterm basis. The purchase is one very important action needed for the Agency to preserve, obtain, and reliably deliver water to local water purveyors within the Mojave Water Agency service area, and for delivery to their residential and business customers. The agreement also results from years of planning, preparing, and positioning for such opportunities to provide sufficient water resources to the High Desert beyond the year 2020. MWA is meeting its obligation to reliably deliver safe, clean, affordable water through a diversified portfolio of strategies that are included in the agency’s Regional Water Management Plan. The continued on page 25

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A quarterly economic overview

Inland Empire Housing Market By Michael D. Reynolds Director - The Concord Group

Introduction

Quarterly High- and Low-Lights

The Inland Empire (“IE”) has felt the brunt of Southern California’s housing and economic slowdown. Since peak, home prices in the IE are down a staggering 55%, new construction is at a virtual standstill and unemployment rates have nearly tripled. However, there is a glimmer of hope for the region. Housing affordability in the IE has never been greater. In 4Q09, an allocation of only 20% of income to housing is required to afford a median priced home. Sales volume has trended up seven consecutive quarters, despite a lack of job creation.

Inland Empire The Good • Annualized sales volume up for the seventh straight quarter, increasing 63% from 1Q08, but only than 1% vs. 3Q09. • Median home price up for second consecutive quarter, rising 9% since 2Q09. • Unprecedented affordability – 20% income to housing payment ratio. • Level of distress activity is falling – cumulative number of notices of default, auction notices and foreclosures in 4Q09 lower than 3Q09 (46,500 vs. 55,900). The Bad • Jobs – unemployment continues to creep up. Annualized unemployment rose 90 basis points in 4Q09 vs. 3Q09. However, pace of unemployment is slowing, down from a 150 basis point increase between 1Q09 and 4Q08. • Building activity continues to fall. Annual pace of building permits issuances fell to 5,953, down 34%

However, not all submarkets behave the same. Exurb markets such as the Victor Valley and Central Riverside were hit the hardest, enduring the steepest decline in prices and building activity. However, in recent months, these same exurbs have generated significant price growth. Please find below The Concord Group’s (“TCG”) housing update for the IE’s seven major submarkets (see Figure A below).

from 4Q08, but nearly level with 3Q09 (5,950). • New home closings continue to fall as well, down 2% in 4Q09 vs. 3Q09 (annualized). Victor Valley Spotlight • Annualized sales volume up for the seventh straight quarter, up 131% from 1Q08and 2% from 3Q09. • Median home price up for second consecutive quarter, rising 8% since 2Q09. • Most affordable submarket in the IE – 15% income to housing payment ratio. Victor Valley Spotlight (continued) • Annualized unemployment of 16.4% in 4Q09 – second highest amongst the seven IE submarkets. • Only 333 building permits issued in 2009. Trends to Look Out For • Foreclosures – level of distress seemed to reach a peak in early to mid 2009 – potential for further declines in early 2010. • Increased sales volume and recent price increases have been partially buoyed by the federal tax credit. Will demand for housing slow once the tax credit is phased out? May lead to higher than average annualized volume in 1Q10, but a significant drop in 2Q10. • Supply constraints? With little new construction activity over the last several years, select IE submarkets have seen significant builder interest in finished lots, leading to a rapid rise in lot prices. Are recent lot price increases a result of market fundamentals or irrational builder behavior? continued on page 14

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A quarterly economic overview

Inland Empire Housing Market Continued

Painful Descent Housing construction (measured by building permit activity) in the twocounty Inland Empire region is down 89% from peak 2005 levels. While all

IE markets have been hard-hit, some have suffered more than others. TCG analyzed three “pain” variables for the seven major IE submarkets. “Pain” was quantified relative to percent change from peak activity in home price, building permits, and unemployment. The Inland Empire’s three priciest housing markets, with a median home price that is 25% higher than the IE average, have generally suffered the least – Southwest San Bernardino, South Riverside, and Northwest Riverside. These same three submarkets have endured an average 50% loss in home price, while outperforming the Inland Empire relative to unemployment.

in permit activity. However, despite the large decline in fundamentals, these three exurb markets have been the recipient of strong sales activity during the past year.

Turning a Corner? The same submarkets that endured the greatest drop in home price are now benefiting from unprecedented affordability, which is driving significant gains in sales volume. Total annualized sales volume in the Victor Valley, I-10 Corridor, and Central Riverside exurb submarkets is up 183% since 1Q08, compared to an IE average increase of 120%. Increasing demand exhibited by strong sales figures is also leading to higher home prices. The median home price in the IE is up 8.9% since

2Q09, while the three exurb submarkets have garnered an average 8.0% price increase. The new home market remains depressed. During 2009, only 7,400 new homes closed in the Inland Empire, continuing a downward trend that started in 1Q07. Only two submarkets exhibited an increase in new home closings – Southwest San Bernardino, with an annualized increase of 10% compared to 2Q09, and Central Riverside, with a 1% increase over 3Q09. Overall, the pace of sales decline in the IE is slowing significantly. Annualized new home sales fell only 2% in 4Q09 vs. 3Q09 – the smallest decrease in the past three years – and only the second quarter without a double-digit drop. The expiration of the federal tax, and the associated rush to buy before it ends, will likely yield the first increase to annualized volume in over three years in 1Q10. Victor Valley Spotlight The Victor Valley submarket overheated to an annualized building pace of 7,675 permits by 2Q06 – multiples above its historic10-year average. By 4Q09, the annual building pace has fallen to a level of only 330 permits – an astounding 96% drop. However, while construction remains mired in an

At the opposite end of the spectrum, three Inland Empire housing markets have suffered more than others – I-10 Corridor, Victor Valley, and Central Riverside. Since peak, these three submarkets have endured a three-fold increase in unemployment, home price drop of 60% or more, and a 94% drop continued on page 15 The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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A quarterly economic overview

Inland Empire Housing Market Continued

California-Nevada Interstate Maglev Project Continued

unprecedented slump, the resale market has rebounded nicely, with annualized sales volume nearly doubling between 2Q08 and 4Q09. Renewed interest in homebuying is driving up demand for homes, leading to the recent price gains in the Victor Valley. Since 2Q09, the median home price is up 8% - a welcome change from the 68% price drop that was endured between 4Q06 and 2Q09. Moving forward, foreclosures remain a significant obstacle to housing growth. In 4Q09, there was one foreclosure activity for every 20 households – much higher than the IE average of 28. Until new jobs are created and the foreclosure inventory is addressed, the best hope is for flat to moderated growth in sales volumes.

About The Concord Group The Concord Group is a leading real estate strategy firm with offices in Newport Beach, San Francisco and Boston. TCG’s professional consulting staff completes hundreds of assignments annually in the U.S., Europe, Asia, and Latin America. Our services include market and consumer analyses, transaction due diligence, and asset valuation. Recent private equity assignments have included multiple analyses of distressed assets of commercial banks and new acquisitions for next-cycle development. We also continue to assist developer, builder, and financial clients on value maximization of owned-assets. We cover all property types (commercial, residential, and land), in all metro areas and work under tight due diligence deadlines.

Significant benefits will be derived for the highly congested segment, between Anaheim and Ontario, which covers the last 35 of the 90 miles between Victorville and Anaheim. Benefits attributable to the Maglev system versus the No-Build along this segment are estimated to amount to nearly $6.8 billion in savings from reduced delay and accidents, over the project study evaluation period, 2010 and 2050. Furthermore, the Maglev system will reduce between 28,000 and 42,000 daily person trips from area freeways over the period respectively. These diversions would also result in the following benefits: • Reduction in Vehicle Miles Traveled (VMT) is projected to be approximately 744 thousand daily and 267 million annually. • Reduction in Vehicle Hours Traveled (VHT) is projected to be approximately 55,000 daily and 20 million annually. • The impact of these diversions was monetized and results showed that the value of delays saved varied from $205 million in 2010 to $247 million in 2050. • Fatality savings would range between about $3 million per year in 2010 to about $5 million in 2050. Sources 2000 California-Nevada interstate Maglev Project, Project Description, submitted to the FRA; 2003 California-Nevada interstate Maglev Project, Anaheim to Ontario Study, submitted to the FRA.

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A quarterly economic overview

The Real Job Creators of California By Steve Knight Assemblyman, 36th District

Over the last year, since being elected an Assemblyman, I’ve strived to meet my commitment to regularly reach-out to constituents – to be accessible to citizens throughout the High Desert. Through one-on-one meetings, community events, town halls and many other activities, the people I meet and the stories I hear of perseverance through the adversity in our economic downturn are uplifting and at the same time disheartening. By far, the loudest message I hear from citizens and business owners alike is that the state’s economy and jobs are priority one. I’m confident that California’s resilient business men and women are ready and willing to create the jobs we desperately need to boost our state’s economy. They just want one thing from the rest of us to get the ball rolling: for California government to get out of the way and let employers do what only they can do – be competitive, make a profit, expand and hire people. Regrettably, California has a longstanding practice of smothering businesses with excessive rules and regulations and unreasonable taxes and fees. Our government has created this hostile business environment that discourages employers, large and small, from moving to or investing in our state because the risk of failure is significantly higher than other states. Businesspeople know what it takes to succeed; their livelihood depends on it. Unlike many bureaucrats and some legislators, who believe that government knows best, never makes mistakes, and can create a thriving economy and more jobs by throwing around stacks of taxpayer dollars. At one of my town halls, an audience

member summed it up well when he said: “The bureaucracy is expanding to serve the expanding needs of the expanding bureaucracy.” The killing of California’s businesses and jobs didn’t start with the current recession. The process has been going on in our state for decades, one little law, rule, tax, fee, and regulation at a time. Taken individually, they may have seemed harmless at the time, but the cumulative effect leaves California with a dwindling pool of employers, few incentives to attract new businesses, and unemployment rates running over 20 percent in some parts of the state. While nobody in the Legislature wants to take responsibility for killing jobs in California, citizens can see for themselves who voted for and against the jobkiller bills. The pro-business California Chamber of Commerce maintains the voting records of all state legislators on bills identified as “Job Killers” and “Job Builders.” Go to www.calchamber.com to separate the political promises from the hard reality. Jobs come from prosperity invested in private companies which produce goods and services to be sold around the world to finance further business growth and new jobs; That age-old process of commerce works without any help from the government. But the dependable private enterprise engines of economic prosperity can be shut down by unwise and unrealistic government policies.

investment of time and money. Risk is a fact of life for business even in the best of times. But risk in a recession is logically far more difficult to take. If we truly want to rebuild our economy and help the private sector provide wealth-producing jobs for our families, friends, and neighbors, then we must insist that our elected representatives work on unleashing the spirit of free enterprise that made California green and golden. And we must all work to reduce spending by eliminating unnecessary and duplicative programs, services, and regulations, and by making the remaining programs efficient and cost-effective. Cutting government spending opens the door to put more money back into the pockets of taxpayers, thereby giving Californians a real chance to stimulate the economy and create new jobs on their own. My confidence lies in the privatesector to create jobs that will better our State, not the lie that the State creates jobs. Assemblyman Steve Knight, (R-Antelope Valley), represents the 36th Assembly District in the California Legislature, which includes many communities throughout the Antelope and Victor Valleys.

Many businesses today are not hiring because owners and managers have no confidence in the job-killing, antibusiness economic policies and practices at all levels of government. Bluntly, there is no incentive for a company to put its money at risk without a reasonable expectation of financial growth from the

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A quarterly economic overview

Caltrans Past and Future High Desert Construction Projects By Darin Cooke Caltrans District 8

Caltrans recently completed construction on Interstate 15 just south of the California/Nevada state line. This project included the addition of a northbound truck descending lane along with bridge rehabilitation at Yates Well Road and Bailey Road. The project also included reconstructing the southbound truck lane with Portland Cement Concrete (PCC) and rehabilitation of both the north and southbound travel ways with an AC overlay. The completion of the project assures a longer lasting product and a smoother commute for motorists. The added truck climbing lane will provide a separate lane for slow moving vehicles. The northbound lane will improve the traffic flow and safety of the roadway. Caltrans has future projects on State Route 58 and US 395. These projects are still in the environmental phases and are estimated to start construction in 2013 and beyond. State Route 58 project proposes to widen the roadway to accommodate four lanes of expressway in the County of San Bernardino, near the Kern County line to 7.5 miles East of US 395. The project consists of 12.9 miles of new pavement and widening of the median. The purpose of the project is to accommodate the increased volumes of oversized vehicles. This will improve traffic safety, reduce traffic congestion, and reduce the accident rate. The operational efficiency will be improved by separating slowmoving vehicles and extending the life of the pavement.

US 395 from Interstate 15 to two miles north of State Route 58 and will upgrade US 395 from a conventional highway to a Freeway/Expressway facility. The first phase will realign and widen the US 395 to a six lane expressway from Interstate 15 to State Route 18. The second phase will widen US 395 to a four lane freeway from State Route 18 to Purple Sage Road in Adelanto and a four lane expressway from Purple Sage Road to Farmington Road just north of State Route 58. The purpose of the project is to relieve congestion and provide a safe and efficient transportation facility. Caltrans has an ongoing project in the Ontario/Rancho Cucamonga area on Interstate 15 which might have a significant effect on the High Desert corridor travel. Caltrans has begun its 55-hour weekend closures on the OntFix w/Rapid Weekends project. This will consist of full freeway closures at the I-15/I-10 interchange most weekends until the end of the summer. Typically, closures will begin on Friday evenings at 10:00 p.m. and will continue through the weekend re-opening Monday morning at 5:00 a.m. Please use alternate routes to avoid delays.

the most significant chokepoint on I-15 in San Bernardino County, with traffic queues extending south for more than three miles to Sierra Avenue during the late afternoon/evening rush hour. Friday evening delays are much longer, due to recreational drivers bound for Las Vegas and Laughlin. Interstate 15 is a major regional goods movement gateway. SANBAG is working with Caltrans to prepare a Project Study Report to deliver plans sooner for this heavily-traveled interchange. SANBAG completed the Project Study Report in early 2009 and expects the Project Report/Environmental Document to be complete and approved by 2011. Final design, development of project plans, specifications and estimates, and right of way acquisition are expected to start in 2011. Pending the availability of funds, construction could begin by late 2013 and last about three years. This schedule is tentative and subject to change. For more information on this project please contact SANBAG at (909) 884-8276 Caltrans would like to thank the motoring public for its patience as we work to make our roads safer for future generations. For more information on Caltrans projects visit our website at www.caltrans8.info.

The I-15/I-215 Devore Interchange reconstruction project will play a major role in the High Desert due to the volumes of traffic in this area. The interchange is

US 395 is still in the beginning phases and not expected to complete environmental until 2015. This project will be constructed in two phases. They will be split into a northern and southern phase. The project will cover 44 miles of the The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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A quarterly economic overview

MDAQMD Urges Governor To Reconsider AB 32 By Eldon Heaston Executive Director, MDAQMD

The Mojave Desert Air Quality Management District has always strived to lead by example and takes great pride in its role as a leader among local regulatory agencies. In 2003, the MDAQMD was the first public agency in the High Desert to install its own solar electric generating system to meet almost half of the energy needs of its Victorville headquarters. In 2006, the MDAQMD became the first air district in the state to join the Climate Action Reserve and voluntarily certify its own carbon emission reductions. On February 3, 2010, the MDAQMD became the first air district in the state to write a letter to Governor Schwarzenegger and legislators, urging them to reconsider moving forward with regulations under AB32 until a careful review of the implementation impacts on California’s existing regulatory scheme and its struggling economy could be undertaken. Although our governing board’s position on AB 32 has not exactly made us the darling of the state or other air districts, we have been encouraged by the overwhelming support we have received from local municipalities, businesses, and everyday citizens of the High Desert. These entities understand that the MDAQMD’s position is not based on the science of global warming – it’s based on the High Desert’s economic future and the possibility that our region may not survive the mounting regulatory gridlock which threatens to cripple our struggling economy and hinder our agency’s ability to adequately protect local air quality and the health of our residents. While the MDAQMD believes the goals of many of the legislative and regulative enactments behind AB32 are laudable

and necessary, we are also finding that in an area of unique economic and regulatory challenges – such as the High Desert – there are serious conflicts among existing and potential proposed regulatory programs. To begin with, there is the unique issue of transported pollution which overwhelmingly impacts air quality readings measured within the MDAQMD’s jurisdiction. CARB studies have demonstrated that were it not for windblown pollution originating outside of the MDAQMD’s boundaries – primarily in the Los Angeles basin – our area would rarely, if ever, exceed state and federal ozone standards. Unfortunately, the Federal Clean Air Act does not consider the source of pollution, just where the exceedances of the standards happen to be measured. As a result, businesses in the MDAQMD are already subject to costly and stringent New Source Review requirements, which require them to obtain nonexistent pollution offsets before they are allowed to locate or expand within our jurisdiction. This requirement – which is precipitated by out-of area smog over which the MDAQMD has no control – has historically forced many an industry to look elsewhere to site its business – often out of state – primarily because we have very few existing industries in the High Desert to provide such offsets through emission reductions. Having businesses and the jobs circumvent your region is never a good thing, particularly in an area such as the High Desert, where the average unemployment rate currently looms at 16.6%. The MDAQMD believes that any additional mandates which impose even more stringent requirements and higher fees on local industry will put us

at a further competitive disadvantage with neighboring states, which are not regulating greenhouse gasses as stringently, if at all. For this reason, we also believe that the state should delay full implementation of AB32 and consider allowing GHG regulation to occur at the federal level, when the time is right, which insures uniformity between states as opposed to economic disparity and unfair competition. Basically, we support waiting until the playing field is leveled so that both the environment and the economy will benefit. In this vein, the MDAQMD also strongly supports NSR reform and a reopening of the Federal Clean Air Act to correct the plethora of existing problems with both permitting and PSD requirements. The severe jobs/housing imbalance which exists within the MDAQMD represents a major economic and air quality challenge, in that this imbalance – and the inordinate commuter miles it requires – is also the major source of air emissions and GHGs within the MDAQMD. Surveys show that nearly 50% of High Desert residents commute at least 40 miles each way to work, with many more traveling over 100 miles one way daily. It is estimated that over 200,000 cars travel in and out of the MDAQMD’s jurisdiction each and every work day, often in heavy traffic. Thus, the MDAQMD cannot support any law which has the effect of discouraging business from establishing locally, forcing local residents to commute unnecessarily and consequently increasing air emissions in both our district and elsewhere. It is the MDAQMD’s belief that truly “green cities” will not be possible until we can site jobs in those cities. continued on page 26

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A quarterly economic overview

Programs For Success

By Gary Thomas San Bernardino County Superintendent The challenges facing public education today are unprecedented for generations of students and their families. With state employment stagnated in double digits and effects of the housing crisis still crippling financial outlooks, the economic future and budget situation for California remains uncertain. Underlying those concerns for public education, there still remains troubling access and achievement gaps, and far too many of our students drop out of school before graduation. Under these conditions, the resolve to make sure that students are successful in school and carry with them the tools that will allow them to be successful in college and their careers must be stronger now more than ever. Every one of us is feeling the impact of the current economic climate and statewide budget cuts; however, we cannot let that distract us from our mission of educating students. Every one of the 420,000 students in San Bernardino County deserves to have the best opportunity to succeed in school and every one of us has a moral responsibility to do all we can to see that they do. Improving Student Performance Remarkably,despiteourcurrentchallenges, this year’s Accountability Progress Report shows that for the first time since state testing began, schools in San Bernardino County exceeded state averages with 61 percent of all schools meeting all of their Academic Performance Index (API) growth targets. High schools in the county made the biggest improvement, increasing 16 points. Also for the first time, county schools bettered statewide averages for those that showed overall API growth with 80 percent of schools increasing their API scores. That compares with 76 percent of schools statewide showing growth. A record 40 additional schools reached the state standard of 800 this year, including 12 in the High Desert. We also

doubled the number of 900 schools in the county to 20, including three in the Victor Elementary School District and a fourth in Snowline Joint Unified. The county’s API growth of 17 points was the second largest in 11 years the state has done testing. These are truly remarkable results, and I am pleased to see the growth taking place, particularly with our high schools. These results are due to the hard work of teachers, principals, district administrators, board members, support staff, and parents to help students achieve academically. As we celebrate these accomplishments, we recognize that in our ever-changing diverse student population, there is an achievement gap that remains between subgroups of students that still requires a determined course of action. Model Programs to Address the Access and Achievement Gap One program that successfully addresses the access and achievement gap is AVID, Advancement Via Individual Determination. It’s hard not to be impressed with the work that AVID is doing in preparing our students for college. While AVID serves all students in secondary schools, its first focus is on the least-served students in the academic middle. I was so proud this past year when I attended the AVID Senior Recognition Ceremony to find out that 88 percent of more than 2,500 AVID seniors representing 77 high schools were recognized for having a letter of acceptance to a four-year college or university. That compares with only 47 percent statewide who enrolled in a California public college or university, according to the California Post-Secondary Education Commission. When looking at the percentage of AVID seniors meeting A-G course requirements in comparison to state and county totals, it is clear-AVID closes the achievement gap.

than 34,000 students in about 200 middle schools and high schools in San Bernardino and Riverside counties will be enrolled in AVID classes. In the High Desert, seven high schools from Barstow to Sultana accounted for nearly 200 high school seniors who graduated last year, with Granite Hills High School being one of the top producers of AVID graduates countywide with 53 seniors. As the county superintendent, I will continue to fight for funding for this outstanding program, which is desperately needed in our region as we prepare students for a highly competitive global economy. High School Dropouts and Low CollegeGoing Rates As was shared, we have made great strides on academic performance indicators. When we received the most recently reported dropout data for 2008, we also showed improvement in terms of a decrease in the number of dropouts for Grades 9-12 in comparison to data released the prior year. Yet our county’s adjusted four-year derived dropout rate of 22.5 percent is above the statewide rate of 18.9 percent. Conversely, our county graduation rate is on the low side, 74.3 percent for 2007-08. Again, we trail state grad averages, which are 80.2 percent. While our county dropout rate improved 3.8 percent from 2007, our schools and districts face the challenge of keeping more of their students engaged in the classroom and following a path that will lead to graduation. This is not an area of concern for our county alone. Forty years ago, our country was a leader in high school graduation rates. Today, it ranks 18th out of 24 industrialized nations. As recently as 1995, America was tied for first in college graduation rates; by 2006, this ranking had dropped to 14th.

This year, it’s anticipated that more continued on page 20

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A quarterly economic overview

Programs For Success Continued

Call to Action for Dropouts/Grad Rates Last summer, I issued a “Call to Action” in response to our county’s high dropout and low graduation rates and called together key members of my staff to look at research and proven practices to attack this head on. These two issues-that go hand-and-hand-are the most pressing educational concerns for our region. They have severe ramifications that extend well beyond public education. According to a recently released report, “The Economic Achievement Gap in America’s Schools” by McKinsey and Co., if America had closed the international achievement gap between 1983 and 1998 and had raised its performance to the level of such nations as Finland and South Korea, the gross domestic product of the United States in 2008 would have been between $1.3 trillion and $2.3 trillion higher. That’s sufficient enough to close the federal deficit. That’s why, every one has a stake in reversing the dropout rate. It’s necessary to fuel our local economy. We need a more highly skilled and educated workforce to meet the demands of employers and sustain the economic viability of our region. In November, we issued the “Call to Action” to educators in the field and our broad base of community partners-business leaders, as well as those in labor, government, education, community, and faith-based groups, and most importantly parents and students. We held the first meeting of a stakeholder’s group that is focused on developing strategies and resources to help lower countywide dropout rates and increase graduation rates. We need our community’s expertise, insights, and experiences to tackle these challenges. Barstow Unified has begun its own “Call to Action,” as Superintendent Susan

Levine has organized the community to become involved in coordinating its own resources to tackle high dropout rates and low graduation rates in its own district. At County Schools, we know how powerful collaboration can be with the growth of programs like AVID, Regional Occupational Programs, Smaller Learning Communities, the P-16 Councils, and the Alliance for Education. These programs have been very successful in engaging our students in learning and preparing them for post-secondary education. We are building on these successes and the key recommendations from more than 40 research studies to tackle troubling graduation and dropout rates. Our growing population provides an ample landscape to mine fertile minds. Even with the tough economic circumstances of the last several years, our county is still home to more than 420,000 students, which could be a tremendous economic engine of growth if we can bring about stronger graduation and college-going rates. We must implement more and more ways to ensure that more of our young people get the kind of education that will increase their chance of success. Soon, our office will be launching a new Web site aimed at this issue. The Every One Counts Web site pulls together key research and resources on dropouts, and will serve as a toolbox for educators, parents, community members, and students as we work to keep youth on track for high school graduation and postsecondary options. Alliance for Education The Alliance for Education is based on the new three R’s-Rigor, Relevance and Relationships-and it continues to make significant headway throughout the county, changing lives for thousands of

students who: • Experience rigor in their academics and career technical preparation at Science, Technology, Engineering, & Math (or STEM) academies that prepares them for both college and careers. • Find relevance through classroom demonstrations and field studies in Algebra with business, labor, fire, and safety partners. • Form relationships at literacy and homework centers with faith-based and community partners. Thanks to a $550,000 contribution to the Alliance from the San Manuel Band of Mission Indians, more of our students will benefit from STEM programs. This allowed the Alliance to increase STEM programs to 10 districts and 19 schools sites with more than 840 students participating. The High Desert has been at the forefront in recognizing the need for STEM programs with Barstow, Silverado and Victor Valley high schools offering STEM programs. During the past year, other funds have been secured from: Arrowhead Credit Union, Lewis Group of Companies, the James Irvine/ Community Foundation, SchoolsFirst Federal Credit Union, the San Bernardino County Workforce Investment Board, Chaffey and San Bernardino Community College Districts, and federal funding for the STEM initiative. These programs total more than $1.4 million. Regional Occupational Programs The County Schools’ ROP program received a six-year accreditation – the highest available – in February from the Western Association of Schools and Colleges. With 11 districts in the High Desert as part of the program, the ROP has been recognized statewide as a model program. ROP districts in the High Desert

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High Desert Report

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A quarterly economic overview

Programs For Success Continued

are Apple Valley, Baker Valley, Barstow, Hesperia, Lucerne Valley, Morongo, Needles, Silver Valley, Snowline, Trona, and Victor Valley. Offering some 125 classes from automotive repair to video production, more than 21,000 students countywide are enrolled in County Schools’ ROP programs. ROP instructors are specialists from business and industry chosen for their expertise and experience in their particular subject field. Each instructor is credentialed by the California Teaching Commission. Employers support the ROP in a variety of ways. Through their participation on advisory committees, business leaders assist in verifying local labor market demand, determining curriculum content, providing expert consultants, and recommending qualified instructors. In addition, employers provide facilities, equipment, and promote student job placement. School Safety Because high school dropouts are more likely to commit crimes than their peers with a high school diploma, addressing the reasons our young people drop out of school also helps to eradicate truancy, juvenile crime, and unsafe school environments. The Gangs & Drugs regional task forces have been meeting for a year now and have developed specific short and long term goals. As a result, there is a new juvenile court in the West End, which held its first hearing last month. In the High Desert, strong partnerships have been developed with the Sheriff’s Department, to support the rural areas that do not have their own police departments. The Let’s End Truancy (LET) Program has received state and national recognition. As a result of LET and countywide School Accountability Review Board (SARB) trainings, reporting of truancies has improved and all but three small districts have SARB. Last year, five school districts

in the county – including Victor Valley and Hesperia in the High Desert – were named SARB model statewide programs. That distinction was given to only eight districts statewide. Our services in programs such as Coordinated Health, Foster Youth and Homeless Education have increased 10-fold. Working with our interagency partners in law enforcement, juvenile justice and social service, we’re targeting student and family needs to grow healthy schools and communities. With a grant from the Center for Disease Control, our office is pleased to be one of only three counties in the state to be awarded funds to implement a Coordinated School Health Model program with pilot districts and social service agencies to bring services to the schoolhouse door for students and families. If we can help by taking the social issues off the table for students, they can better focus on their schoolwork. State Budget Outlook There will be no relief from the poor economic conditions that have plagued much of the nation and especially California in recent years. That was evident following Gov. Schwarzenegger’s budget proposal for the 2010-11 fiscal year. For public education, the outlook remains bleak. Public schools are proposed to take a $1.7-billion hit, the majority of which is proposed to come from revenue limit funding. This equates to roughly a $200 per student reduction for the next fiscal year. This is on top of a current year per pupil reduction, equaling about $900 per student. These budget cuts threaten efforts to sustain improvement and reform, and erode the conditions that support teaching and learning. The current budget proposal also relies on nearly $7 billion of aid from federal government-assistance that already is proving to be unrealistic.

After suffering some $17 billion in cuts during the past two years, this may be the most difficult budget year yet for K-12 education. Already, we’re seeing districts proposing cuts they feel they will have to make to balance their future budgets. Our commitment at County Schools is ongoing support to our districts during these uncertain financial times. The 420,000 students in the county face the prospects of having more crowded classrooms, reduced programs in the arts and athletics, and fewer services offered. Several research studies conducted in this state on school finance point to the need for a new approach, a stable approach-to funding California’s public schools. It’s time. We are jeopardizing the future of California’s workforce and economy. Making Every One Count What educators contribute daily to the life of a child matters deeply. What each of us does to support them and our students matters greatly. Every one counts in the life of a child: • Every educator; • Every business partner; • Every labor leader; • Every community member; • Every clergyman; • Every parent, brother and sister; every family member. Dr. Martin Luther King, Jr. said, “Our lives begin to end the day we become silent about things that matter.” As an educator, these words have profound meaning to me, especially in these challenging times for public education. I am a firm believer in the opportunities we can provide through public education, and I will continue to be a voice that is heard in support of all students in our county and making sure they have every opportunity to achieve academically.

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Victor Valley Community College Construction News By Bill Greulich and Al McQuilkin

Victor Valley Community College’s drive to bring its bond-funded construction projects online in an expedient manner will result in high paying jobs for our community and facilities to create new training programs in a time when these items are essential to the economic welfare of our High Desert region. The projects, outlined below, will enhance essential programs, new technology, dramatic energy savings, and service to a burgeoning student population. Eastside Public Safety Training Center: Project Awarded: August 11, 2009 Design-Build Team Highland Partnership/ Carrier-Johnson Architects Contract Amount: $ 25,000,000 Total Project Budget: $ 29,946,466 Project Completion: Construction Completion – December 2011 Current Project Status: Schematic design (SD) was completed as scheduled on September 24, 2009. Design Development (DD) was completed on November 11, 2009. Highland Partnership has submitted the first package to DSA, and anticipates submitting the remaining packages to DSA in March 2010. The District’s environmental consultant, Dudek, has been working on the technical studies needed to support the environmental document being prepared for the project. Over the past few months, Dudek has prepared the biological assessment, conducted a cultural resources review of previously-prepared documents, prepared a Phase I Environmental Site Assessment and started the air quality impact analysis. Linscott, Law & Greenspan (LLG) has been preparing the traffic study for the project. All technical studies are set to be completed by the end of December. The Mitigated Negative Declaration (MND), which is the environmental document needed to fulfill the District’s obligation under the California Environmental Quality Act (CEQA), will be released for public comment on march 5, 2010. The project is scheduled for completion in December 2011.

Main Campus Solar Project: Description: 1 megawatt Solar Photovoltaic (PV) System Project Awarded: December 8, 2009 Company: SolFocus, Inc. Contract Amount: $4,662,840 Project Completion: April 2010 Throughout the planning for bond and non-bond projects on the campus, energy conservation and renewable energy projects have been identified as very high priorities. Following many weeks of discussion and research by district staff and program manager, the board, on November 10, 2009, approved moving forward with a Request for Proposal (RFP) for a 1MW solar generating facility. On November 13, 2009, a Request for Best & Final Proposal (BAFP) was issued to those firms that had previously submitted proposals, and on November 24, 2009, the District received five (5) responsive proposals. A selection committee conducted interviews of all five proposers and completed a “best value” evaluation. The best value scoring, which included technical and price criteria, resulted in SolFocus, Inc. being the number one ranked proposer. SolFocus’ proposal provides the District with the latest advanced technology, dualaxis, concentrator PV, coupled with the best price/performance ratio and the lowest installed cost. The guaranteed output from SolFocus’ system will achieve well over $20 million in savings over 25 years. The system will generate almost $4 million in incentives from the California Solar Initiative and an additional $2 million in avoided cost, tariff and renewable energy credit savings in the first 5 years. The District plans on funding a portion of the solar facility from Measure JJ funds. Approximately $1.5 million of the total project cost of $4,662,840 will come from non-bond funds, with the remainder coming from Measure JJ funds.

The project is scheduled for completion by mid April, 2010 Westside Workforce Development Center (Phase I): Project Delivery Method: Design-Build (Same process as Eastside Center) Revised Project Budget: $ 32,847,642 Revised Timeline: Program Development, Scoping Document Development, Site Design (Grading, Infrastructure, Hydrology, Off-Site Improvements) – June 2010 Completion of Draft EIR – June 2010 Release RFP for Phase I Building – June, 2010 Complete Final EIR – December 2010 Complete Phase I Site Improvements – December 2012 Current Project Status: The Westside Workforce Development Center is progressing. Several discussions with the City of Hesperia have helped define and clarify the CEQA process, which is currently underway. Several planning meetings have taken place to develop a site hydrology and drainage plan. Dudek has been working with the District, gkkworks, and project engineers to develop the Project Description for the Westside Center. Dudek will be conducting its biological field work on the Westside site in December. Results of the biological field work can be used by the engineers and the District to consider environmental constraints of the site in site planning. The CEQA process for the Westside Center will commence once the project description has been developed in sufficient detail. An environmental impact report (EIR) will be prepared for the project. The timeline for program development and scoping document preparation has been modified to coordinate with the expected completion of the draft EIR in June 2010.

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A quarterly economic overview

Southern California Logistics Airport Leads The Way In Job Creation By Brad Mitzelfelt San Bernardino County Supervisor 1st District

After struggling along with the rest of the region with job losses and home foreclosures, the High Desert is beginning to see signs of economic life. In fact, the High Desert is one of the few areas around Southern California where recession-weary residents can actually look forward to a short-term increase in local employment. Southern California Logistics Airport is leading the way on the job creation front, boosted by the development of a new Dr Pepper Snapple Group facility and a Plastipak Packaging Inc. plant. As winter turns to spring, High Desert residents can expect to see both facilities begin to reach their full economic potential. Growth at the airport, which local residents have watched evolve since the closure of the old George Air Force Base, will create more than 1,000 jobs in the area. The additional jobs are especially welcome since the airport already was doing its part to fuel the High Desert economy by attracting companies like Newell Rubbermaid, General Electric, Pratt & Whitney, and FedEx. The region’s overall economy is, of course, not out of the woods yet. Despite efforts at the local, state, and federal levels to rejuvenate our collective economic engine, the economy remains far from what we have enjoyed in the High Desert in past years. Many local residents who have been laid off in the past year are struggling to find new employment, while others are commuting further for their jobs. Some residents, including some who are unemployed and others who were victims of predatory lending practices, are struggling to maintain ownership of their homes. Given

that

backdrop

of

sobering

economic realities, it is no wonder that experts agree that getting back to the boom years will take more time than we would like. While the prospect of new jobs in the near term is encouraging, the area still has a ways to go to fight its way out of the current economic downturn. To further that fight, San Bernardino County remains committed to assisting local businesses in any way we can. But it is equally important, if not more so, to take note when encouraging economic signs begin to show themselves. For example, many local analysts tell us that job losses are beginning to slow. The fact that we are losing jobs slower than before would hardly have been a welcome sight a couple of years ago, when the High Desert was the envy of Southern California for its rapid job growth, explosion in taxable sales, and booming neighborhoods. But we know from past recessions – and subsequent economic recoveries – that a slowing of job losses often is a sign that an area is getting poised for a rebound. The most important thing about the job growth that is occurring at Southern California Logistics Airport is that it reaffirms some of the things about the High Desert that made this area attractive in the first place to investors and business developers. In short, companies are coming here for the same reasons that drew them during stronger economic times. As a result, the High Desert is expected to add more than 300,000 residents by 2025, which will boost wages, taxable sales, and local employment. The county, through a program approved by the Board of Supervisors, is trying to assist with the High Desert’s economic revival by helping businesses gain access

to low-interest bond funds. Businesses and public agencies that want to expand or renovate their facilities can participate in a $115 million financing program that is part of the new Recovery Zone program that spans across San Bernardino County. The effort includes $46 million in economic development bonds and $69 million in private facility bonds. The High Desert’s burst of job creation is especially important given that, in these economic times, companies can choose to make deals virtually anywhere in the Inland Empire. Local experts estimate that there are more than 58 million square feet of available space in San Bernardino and Riverside counties, making it truly a buyer’s – or renter’s – market. So, given the glut of available space and decreasing costs in areas that are usually cost-prohibitive, why is the High Desert attracting companies like the ones that are taking root at Southern California Logistics Airport? The simple answer, which should give pause to anyone who is tempted to write off the High Desert, is that everything that was attractive about this area during the boom years is still attractive now, perhaps even more so, given the size of the economic wave that crashed onto Southern California and the rest of the nation last year. The High Desert, more so than any area of the Southern California and even among its neighbors in the Inland Empire, offers business people an unbeatable combination of affordable land costs, an available supply of eager workers, and a network of county agencies, cities and towns that are eager to work with businesses that might be struggling through prohibitive amounts of red tape at other, less business-friendly, areas. Those things, taken collectively, give the High Desert an advantage when continued on page 24

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High Desert Report

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A quarterly economic overview

Southern California Logistics Airport Leads The Way In Job Creation Continued

job developers are looking for ways to manage costs. That combination already is showing results. The 850,000-square-foot Dr. Pepper Snapple facility, spread across 53 acres, is expected to produce 40 million cases of beverages each year. About 200 people will work at the facility, which is the company’s headquarters for production and distribution in the Western United States. Plastipak, a Michigan-based firm, chose the airport grounds for its 231,185-square-foot facility, which will manufacture plastic packaging containers for some of the largest companies in the world. The arrival of these two businesses, and the accompanying jobs, is a harbinger of good things to come and a validation of the High Desert’s business strategy, which calls for growing the local economy through the development of core industries like logistics, renewable energy, and aviation. Such a strategy holds great promise for future economic growth and job creation, and already is showing results on the aviation front. For example, at the Southern California Logistics Airport School of Aviation Technology, which also is housed at the airport, more than 50 High Desert residents are completing 82 weeks of training to become aircraft mechanics. These students, who are scheduled to graduate at the end of the 2010, represent the potential for the airport as a job developer. The school already has scheduled another class to begin this spring after more than 150 people expressed interest in 30 openings. Graduating students, many of whom want to stay local, will be certified by the Federal Aviation Administration to maintain, repair, and overhaul airplanes.

They are learning skills that can be put to use at any airport in the world, meaning these 50+ students will have a skill set that is marketable worldwide. Yet, most report to their instructors that they want to make their post-school homes in the High Desert because of the opportunity they see for growth here. More than a dozen of the students already are working part-time at the airport, beginning their careers at the former Air Force. Business development is an important part of the High Desert’s future, but infrastructure remains a key issue. Without the roads, streets, and freeways needed to move goods to market and commuters to jobs, the area will not reach its potential. The development of this transportation network also is a key to providing local construction jobs in the High Desert. Recent decisions by San Bernardino Associated Governments (SANBAG) are bringing $15 million in funding to the La Mesa/Nisqualli interchange on Interstate 15 in Victorville and the Yucca Loma bridge in Apple Valley. Each project received $7.5 million in funding, which helps with providing another eastwest route for the Victor Valley that is needed to ease traffic congestion and spur economic development. The county also is moving forward with plans to pave stretches of Wilson Ranch Road and Duncan Road in the Phelan area, which will help with local mobility and provide better access for emergency services. The improvements include grading and paving two dirt roads and installing traffic signs and striping. The Duncan Road portion of the project is between Johnson Road and Wilson Ranch Road, a distance of approximately

two miles. The Wilson Ranch Road portion is from Duncan Road south to Goss Road, a distance of one mile. Contracts for the $2.8 million worth of work are scheduled to be awarded in late April, with construction to start shortly thereafter. Completion is expected in late July. Economic vitality also goes hand in hand with healthy communities and a high quality of life. That means complementing our affordable housing stock with parks and recreation opportunities for young families. The county recently approved a $300,000 contract with the Phelan Piñon Hills Community Services District to expand the Piñon Hills Park with more playgrounds, basketball courts, and drainage improvements - and to also begin designing a new 80-acre community park in Phelan. The first phase of the new park includes a 20-acre planned equestrian center, including a covered arena, horse stalls and corrals, children’s playgrounds, and parking. In conclusion the High Desert has much to be proud of. Its core strengths -- affordable commercial and industrial land, reasonably-priced housing and an available and eager workforce -- will help the region return to prominence as a job developer and as a premier economic engine in Southern California. County government is dedicated to working with private businesses to ensure economic prosperity returns to the High Desert and all of San Bernardino County. It will take time, but we can all be comforted by the fact that many of the assets that got us this far remain in demand and still hold the promise of an even brighter economic future.

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A quarterly economic overview

It’s Water That Drives Our Economy Continued

RWMP is a comprehensive plan that incorporates the Agency’s groundwater, urban water and integrated regional water management plans. Water-supply planning depends heavily on population projections. The High Desert’s 2005 estimated population of about 360,000 residents is projected to grow to about 646,000 residents by the year 2030, which will no doubt lead to economic growth. However, sufficient water is needed to support economic growth and maintain it, and it is the role of the Mojave Water Agency to supply customer needs for commerce and industry. In a March 21, 2009 Press-Enterprise special report about balancing water and growth, economist Dr. John Husing told reporters that the Inland Empire — including the High Desert — relies on construction of housing, industry, and shopping centers to maintain a prosperous economy. To construct job-producing industrial and commercial buildings, and to maintain the commerce they create, cities must prove sufficient sources of water exist for each development in order to meet state laws. MWA’s acquisition of the additional water rights directly supports the Agency’s mission to provide sufficient water for a healthy local economy for years to come. The cohesive project and financial planning that MWA began early last decade is being effectively implemented to provide for its customers’ current and long-term future water needs. In addition to the planning by Mojave Water Agency to ensure adequate water

supplies, the California Legislature passed two bills in 2002 that serve as protectors so that development doesn’t outstrip local water supplies. Senate Bill 610 requires that the land use authority reviewing a proposed development project through the CEQA process must contact the appropriate water provider to request a Water Supply Assessment (WSA) if a commercial or industrial development project meets the threshold of a 500,000 retail square footage, a 250,000 commercial square footage, or a 650,000 industrial square footage. A similar bill, Senate Bill 221, applies to the Subdivision Map Act, conditioning a tentative map on the applicant verifying that the public water supplier has “sufficient water supply” available to serve the project. Mojave Water Agency, along with its numerous stakeholders who depend on the Agency to carry out its mission, understands the connection between water and a viable economy. Working with water agencies, cities and towns, the county and a host of other stakeholders, MWA is living up to the acronym it is known for: M.W.A.—Making Water Available!

whopping $3.4 million savings! Because of the slowdown in construction across the board (residential, commercial, industrial) many contractors have either gone out of business or dramatically reduced staff. MWA’s construction projects will infuse jobs and spending in the local economy. Projects currently underway include… • Regional Recharge and Recovery Project—known as R-Cubed or R3, is part of a comprehensive solution developed by the Mojave Water Agency and the region’s stakeholders to ensure a sustainable water supply for our region. Estimated cost for Phase 1, inclusive of engineering, construction management services, land acquisition, and the value of continued on page 26

Capital Projects Advancing MWA’s Strategic Objectives Mojave Water Agency is realizing the benefits of its long term planning to reach its strategic objectives with three key capital projects set to begin construction within the next six months. And the projects are set to begin during a very opportunistic time that’s not only cost effective for taxpayers but will result in a positive economic impact for the region. For example, original estimates to complete the new Agency Headquarters facility was $9 million, but the final bid came in at $5.6 million—a

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It’s Water That Drives Our Economy Continued

facilities to be deeded over to MWA from Victorville for project use, is $69.4 million. Work will soon begin with installation of two wells and ending with an 11-mile pipeline delivering water throughout the region. Phase one of four major construction phases is expected to take 18 months and the project will have an economic impact by: --numerous construction related jobs being filled to complete the project; --the project requiring the purchase of local materials such as asphalt, slurry-mix, concrete, aggregate, fill-sand, and possible equipment rentals; --construction crews will likely patronize local eateries, gas stations, and possibly lodging facilities • Oro Grande Wash Recharge Project—located along the west of Bear Valley Road and south of the Mall of Victor Valley, the 10acre project will take 8,000 acrefeet annually of imported State Water Project and recharge the Alto Subarea. Although not expected to take as long as R-Cubed to construct, the $12 million project will have similar benefits such jobs potentially filled by local subcontractors and patronizing of local establishments. • New Agency Headquarters—the new 22,000 square foot single story office building (and a 5,500 square foot warehouse building) will consolidate MWA staff and services from three locations into one thereby improving efficiency and reducing costs. Construction will begin by the end of March and the contract scheduled for completion is 12 months, with the expected economic benefits the

same as described above. A blogger on the Daily Press’ Reader Comments board summed up it best when on February 27th he/she wrote: …“Isn’t this the time to be building a new building? My understanding is that construction costs are down 40 - 60 percent, isn’t this the best time to be building it?... I am glad they are building a building…lower cost to the taxpayers is a big bonus.” For more information about Mojave Water Agency, visit the website: www. mojavewater.org or to participate in a community dialogue you can also go to the discussion portion of MWA’s Facebook page at http://www.facebook. com/mojavewater. Or to speak to someone at MWA contact 1-800-2544242.

MDAQMD Urges Governor To Reconsider AB 32 Continued

In our letter to the Governor, the MDAQMD expressed concerns regarding the layers of conflicting land use mandates, CEQA and other regulatory air quality requirements and policy goals which may potentially come into direct conflict with current state laws and regulations, as well as proposed regulatory measures developed to implement AB32. These mandates include a proposed tightening of the National Ambient Air Quality Standards for Ozone and the USEPA’s recent “Endangerment Finding,” which states that “greenhouse gases threaten the public health and welfare of the American people.” Even closer to home, recent proposals to amend California’s Desert Protection Act pose a threat to the area’s economic and air quality future by severely restricting

construction of clean and essential energy generation facilities in the place where they make the most sense: the Mojave Desert, which ranks second only to the Sahara Desert in solar radiation. Clearly, this type of gridlock does not seem to make sense for the environment or the economy. Over the past 30-plus year, California has made great strides in its efforts to reduce air pollution. Despite the impacts of transported smog, the High Desert’s air quality continues to improve, thanks in large part to emission reduction progress made in the South Coast Air Basin. Even as these improvements continue, conflicting and onerous regulatory requirements threaten to cripple economic growth. In light of the current economic and regulatory situation, the MDAQMD believes that there will be a time and place for AB32 implementation, but we do not believe that now – during the worst economic climate since the Great Depression – is that time. We are troubled that if we do not proceed with caution at this delicate juncture and fail to clearly set forth our priorities and carefully examine potential conflicts between regulatory programs at both the state and federal Levels, we may make some apparent gains in one area while jeopardizing progress in another. What we are suggesting is not without precedent. The governor’s office and the legislature has waived CEQA and other requirements in order to site football stadiums, finding that there is something very dysfunctional about the California regulatory requirements for projects. We would hope that this region’s air quality and its economy are due the same deference.

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Transportation Projects Planned For The High Desert By Jane Dreher Public Information Officer SANBAG

High Desert Corridor – Phase One This project includes the construction of a new interchange near Falchion Road in the City of Victorville along with a new four-lane expressway. This project is a new 21 mile highway, realigning State Route 18 (SR -18) from the east side of Apple Valley to the existing US Highway-395 south of Air Expressway. It is currently in the Project Approval and Environmental Document phase, which is expected to be completed in mid-2012, with construction anticipated for 2015.

San Bernardino Associated Governments, known as SANBAG, is the council of governments and transportation planning agency for San Bernardino County. SANBAG is responsible for cooperative regional planning and furthering an efficient multi-modal transportation system countywide. SANBAG serves the 2.1 million residents of San Bernardino County. As the County Transportation Commission, SANBAG supports freeway construction projects, regional and local road improvements, train and bus transportation, railroad crossings, call boxes, ridesharing, air quality and congestion management efforts, and long-term planning studies. SANBAG administers Measure I, the half-cent transportation sales tax originally approved by county voters in 1989 and reapproved to extend from 2010-2040. SANBAG looks at the transportation needs of the entire county and breaks into specialized committees, such as the Mountain Desert Region Committee. This includes board members from the high desert region who have interest and knowledge about projects in their area. There are many transportation planning efforts in progress that will benefit the residents of the High Desert. Following is a summary of some of the long-term projects being planned now and for the future. I-15/I-215 Interchange in Devore SANBAG, in cooperation with California Department of Transportation (Caltrans) proposes to reconfigure the Interstate 15/ Interstate 215 (I-15/I-215) Interchange near Devore, (unincorporated area), County of San Bernardino, CA. These sections of highway are access controlled Interstate Freeways adopted by the

California Transportation Commission (CTC) in 1959 & 1963. The purpose of the proposed project is to eliminate congestion, reduce accidents, restore route continuity for I-15, construct truck By-Pass lanes, and improve non-standard weaving between interchanges. Several alternatives are still being evaluated and range from $369 million to $468 million for the total project cost. Construction is estimated to begin in 2013 and be completed in 4 to 5 years. If the project is chosen by the California Transportation Commission to be to one of five “Design-Build” projects in the State, the project development/ construction duration could be shortened by 2-3 years. SR138 Widening Project State Route 138 is located in the Cajon Pass and connects to I-14 in Palmdale. This project will widen State Route 138 to four lanes with a four-foot median buffer from SR-18 in Los Angeles County to Interstate 15 in San Bernardino County. This project will also construct turn pockets at selected local intersections, upgrade shoulders to current standards, extend drainage as necessary, and construct two wildlifecrossing structures. The beginning of construction is scheduled for 2012. Caltrans is the lead agency.

High Desert Corridor SANBAG has identified the High Desert Corridor (HDC), a public private partnership, to be a high priority project. San Bernardino and Los Angeles Counties have created a Joint Powers Authority (JPA) to accelerate development of the HDC, and provide decision making coordination for cities and transportation agencies. The HDC provides a vital missing link in the National Highway System between California’s two major North/South Interstates, the I-5 and I-15. The HDC/I-15 Interchange is part of the first phase of this project. In Section 1305 of SAFETEA-LU (a Federal funding source titled “Safe Accountable Flexible Efficient Transportation Equity Act – A Legacy for Users”), the HDC/ E-220 was officially designated as a High Priority Corridor on the National Highway continued on page 28

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Transportation Projects Planned For The High Desert Continued

System from I-5 in Los Angeles to Las Vegas, via Palmdale and Victorville. The HDC project will be a 50-mile, sixlane expressway that could accommodate High Speed Rail, and will connect the fast growing population centers in the Antelope and Victor Valleys. LaMesa/Nisqualli Road Interchange This new interchange will provide an alternative to Bear Valley Road, which is currently the primary exit to the Victor Valley Regional Mall and a major street that serves the cities of Hesperia, Victorville, and the Town of Apple Valley. The LaMesa/Nisqualli Interchange is an important part of a regional corridor that will extend from Interstate 15 to the Town of Apple Valley. Construction is scheduled to start in late 2010. The City of Victorville is the lead agency. Yucca Loma Bridge The proposed Yucca Loma Bridge will connect Yucca Loma Road on the Apple Valley side of the Mojave River with Yates Road on the Victorville side. The new roadway and bridge would carry vehicles, bicyclists, and pedestrians. The environmental document is in the final approval stages. Construction is estimated to begin in Summer 2010 and should be completed in early 2012. The cost of the bridge is estimated at $50 million. The Town of Apple Valley is the lead agency on this project.

Nisqualli to Yucca Loma Corridor This project will create an alternate east/ west corridor that will provide congestion relief for the I-15 Interchanges at Bear Valley Road and Palmdale Road, as well as State Route 18 at D Street in Victorville. In addition, the Yucca Loma Bridge will provide the Town of Apple Valley with another crossing of the Mojave River and connect the urban/commercial cores of Victorville and Apple Valley. Starting at the corridor’s east end, the Bridge will connect Yucca Loma Road to Yates Road, which will then connect to Hesperia Road via a new grade separation/bridge over the Burlington Northern Santa Fe railroad tracks. Drivers will then have easy access to Interstate 15 using the new interchange at LaMesa/Nisqualli Road on the west end of the corridor. Ranchero Road Interchange The proposed Ranchero Road Interchange at Interstate 15 is located in the City of Hesperia, approximately 1.78 miles north of the existing Oak Hills Road Overcrossing and approximately 1.42 miles from the existing US395 Connection Overcrossing. The Ranchero Road Interchange will include the construction of ramps to serve four entrance and exit moves, construction of a new overcrossing structure at the I-15 freeway to provide east/west connections, and realign the frontage roads—Caliente Road and Mariposa Road—on either side

of the freeway. The cost is anticipated at $80 million. Construction is scheduled to begin in July 2011. The City of Hesperia is the lead agency. US-395 widening This project will widen US-395 to four lanes, construct a left-turn section and standard shoulders. This project will widen or replace the structure over the California Aqueduct. The environmental document phase was completed in December 2009 and the project has entered the final design phase. The 12.5 miles of the project is being designed for construction phasing. Victor Valley Transit Authority The Victor Valley Transit Authority (VVTA) provides local bus service for the communities of Adelanto, Apple Valley, Hesperia, Victorville, and several unincorporated areas in San Bernardino County. VVTA currently operates its fleet from a facility located in Hesperia and is preparing to construct a new Victor Valley Transit Facility to house administrative, maintenance, and operations functions, along with the larger fleet. SANBAG is working with VVTA to obtain funding for this project. VVTA is one of five transit agencies that SANBAG supports countywide. Lenwood Road Grade Separation The Lenwood Road grade separation at the BNSF Cajon Line (with shared use by the Union Pacific) is the northernmost of the Alameda Corridor East grade separation projects in San Bernardino County. Lenwood Road provides a northwesterly connection between Interstate 15 (I-15) and State Route 58 (SR-58), both of which are among California’s key goods movement corridors. Because of Barstow’s strategic location at the intersection of these two facilities, the area adjacent to Lenwood continued on page 29

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Transportation Projects Planned For The High Desert Continued

Road is increasingly being developed as a warehousing and distribution center in close proximity to Barstow’s extensive rail yards. Lenwood Road is also the primary point of access to the Barstow Industrial Park, which is projected to create as many as 10,000 jobs when completely built out. Currently, truck traffic travels eight miles out of the way to avoid the Lenwood Road at-grade crossing because of the unreliability of access. The cost of this project is estimated at $25 million; it is in the Project Approval and Environmental Design stage. Kramer Junction in Mojave Desert State Route 58 (SR-58) is a major east-west transportation corridor in north central San Bernardino County with a high percentage of truck traffic transporting goods in and out of the state. The project scope will include widening and realigning a 13-mile segment of SR58 centered on Kramer Junction, where SR-58 intersects with US-395, in San Bernardino County. This section of SR58 is currently a non-standard 2-lane highway between a 4-lane freeway to the west and a 4-lane expressway to the east, and the project would close this gap. This

2-lane segment includes an at-grade signalized intersection at SR-58/US395 (Kramer Junction), an at-grade crossing of the Burlington Northern Santa Fe (BNSF) railroad west of that intersection, and numerous uncontrolled at-grade driveway and street access points. There is also an at-grade railroad crossing on US-395 north of the SR-58/ US-395 intersection that slows traffic and contributes to accidents when traffic backs up during train crossings. By expanding SR-58, it would be closer to becoming a continuous expressway between the Kern/San Bernardino county lines and Interstate 15. Caltrans is leading this project, which will cost $119 million. Needles Highway Needles Highway is primarily a two-lane rural highway that is the only road that runs north and south between the City of Needles, Laughlin, Nevada, and Bullhead City, AZ. It is also the linkage between Interstate 40 and the Fort Mojave Indian Reservation. The project area covers 19.5 miles between Interstate 40 and the California/Nevada state line. Due to safety concerns and the inadequacy of

the current highway, SANBAG and the County of San Bernardino are proposing to realign and widen the highway through this region. Most of the area surrounding the roadway does not meet current San Bernardino County design standards for horizontal and vertical curves; such non-standard design features normally lead to an increase in accident rates. In many locations, normally dry streambeds cross the roadway at grade and can make the roadway impassible during storm events and flash floods. Using traffic counts from 2007, the two-lane roadway carries approximately 6,000 vehicles per day, including commercial trucks. The County of San Bernardino is the lead agency on this project. Numerous other High Desert transportation projects are in the planning and/or environmental study phase. For the latest information on current projects, go to: www.sanbag.ca.gov.

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Adelanto City Update

By Mike Borja, Management Analyst City of Adelanto business to open in the center and is still one of the top-performing stores of the Southern California based grocery chain. The shopping center

On The Verge of Tremendous Growth On the verge of tremendous growth is the City of Adelanto. Located in the western portion of the High Desert, Adelanto is comfortably removed from the urban sprawl of Los Angeles, yet close enough to take advantage of urban amenities and resources. Adelanto offers the perfect blend of small town charm and big city convenience. It provides an excellent standard of living, while retaining the hard working, civic-minded mentality in which the area was built. With a growing population of over 28 thousand residents and a city that encompasses approximately 52 square miles, Adelanto looks to capitalize in all areas of development. Since breaking ground in 2005, Stater Bros., in the Adelanto Marketplace, has seen significant growth. The supermarket chain was the first

encompasses approximately ninety thousand square feet of retail space. With phase two completed, there is an additional nineteen thousand square feet of commercial space available. The center offers the community its first “eco-friendly” bank from Bank of America, its first in the country. The Adelanto Towne Center, a 280 thousand square foot retail project on thirty-five acres, will feature Target as its main anchor and is considered to be the store’s future prototype. It’s part of Highway 395’s prospect as a major retail corridor in the region. The City of Adelanto partnered with the Lewis Retail Group to bring this development to the community. One of the biggest logistics projects coming to the region is the Adelanto

Gateway Logistics Center, a 400-acre industrial project positioned across from the Southern California Logistics Airport. It will serve as a distribution center for the Los Angeles basin as well as for Arizona, Nevada, and Utah. All of the buildings will be for sale or lease, with AMB Property set to manage the leased properties. With more than eighty companies selecting Adelanto as their place of business, Adelanto has constructed over eight thousand homes for the increased workforce of almost five thousand new jobs in its five industrial parks. Known as the “City of Unlimited Possibilities,” Adelanto’s philosophy looks to be well underway.

Site SeleCtiOn ASSiStAnCe

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Town of Apple Valley City Update By Kathie Martin Marketing and Public Affairs Officer

The Yucca Loma Bridge The number one transportation priority of the Town of Apple Valley since 2005, the Yucca Loma Bridge has progressed from a 40-year long discussion, to a shovelready project breaking ground in 2010. Included in the circulation elements of Apple Valley, Victorville, and the County of San Bernardino, and a component of adopted regional transportation plans and models, the Yucca Loma Bridge is a necessary and much anticipated project that will improve east/west travel across the High Desert. Why is it needed? Regional east/west routes such as Bear Valley Road and Highway 18 are operating at or above capacity, and traffic numbers will continue to increase as buildout progresses across the Victor Valley. The time will come when no amount of improvements to existing corridors will relieve the increasing traffic congestion. Construction of a new east/west corridor is needed. The Yucca Loma Bridge/ Yates Road/ Green Tree Boulevard / La Mesa/ Nisqualli Interchange corridor is essential for the future vitality of the High Desert region, to ensure congestion does not negatively affect the entire Victor Valley. The I-215 Freeway in San Bernardino currently carries approximately 85,000 vehicles a day, and is under construction for critically needed capacity-enhancing improvements; in comparison, traffic volume on Bear Valley Road, particularly in Victorville west of the Mojave River, is 60,000 to 70,000 vehicles a day. Only the re-distribution of existing traffic along a new east/west corridor will reduce congestion and prepare us for future growth on a region-wide basis.

How will the bridge impact existing traffic patterns? The Yucca Loma Bridge/ Yates Road/ Green Tree Boulevard Corridor Project will not generate new vehicle trips, but new development certainly will. The project is needed to help relieve today’s traffic on Bear Valley Road, as well as the Palmdale Interchange, and to prepare for the future traffic that will come as development occurs. Traffic studies predict traffic volumes and then determine the improvements needed to mitigate that anticipated volume. Special traffic studies can evaluate shifts in traffic patterns as a result of a particular improvement, and can show the “before and after.” The Town of Apple Valley commissioned one such study to show the trip distribution impact of the Yucca Loma Bridge/ Yates Road/ Green Tree Boulevard Project, and the La Mesa/ Nisqualli Interchange, on the existing Bear Valley Road/I-15 interchange. The simulation shows that Bear Valley Road becomes a manageable and nearly free-flowing major roadway as a result of the implementation of this project. It can be predicted that the Palmdale interchange would show a similar improvement as well with the Corridor in place. Traffic patterns will shift to use the La Mesa/ Nisqualli Interchange and avoid the historic congestion areas. Trip distribution in the Victor Valley Region will re-adjust, finding alternative routes that can provide the best balance of time required, distance traveled and congestion avoided.

What about in the interim, with the corridor completed through Ridgecrest? To maintain the improved level of service into the future, the additional mitigations identified in the Project Traffic Study, and in the Town’s, City’s, and County’s General Plan Circulation Elements, will need to be installed. The order of completion should be driven by where and when development actually occurs. Each agency has the authority to determine this order of priority for its own jurisdiction. In the short term, it is important to remember that phase one of the project, which includes the bridge, Yates Road past Mojave Narrows Park, and a connection to Ridgecrest Road, will not increase traffic traveling east and west across the valley, it will only redistribute it. It is anticipated that the bridge would open with 6000 to 8000 cars per day, cars which otherwise would have approached Ridgecrest from the east or west on Bear Valley Road. What is the status of the project? The Preliminary Design and the DRAFT Environmental Documents (ED) for the Yucca Loma Bridge/ Yates Road/ Green Tree Boulevard project have been completed. Public Circulation of the ED ended on March 11, 2010, with final ED approval and project approval by May, and final design and right-ofway acquisition to follow shortly after. Apple Valley has the funding for the first phase of the project to begin in late fall of 2010. For more information visit www.AppleValley.org and click on Project Updates.

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Hesperia City Update By Lisa K. LaMere Economic Development Analyst

Hesperia Receives Second State Designation

Batting 1000 in 2009, the City of Hesperia’s Economic Development team wrote its second competitive, award-winning state application of the year. December 24, 2009 brought notification of final approval for the Hesperia Recycling Market Development Zone (RMDZ). An RMDZ is a specially designated geographical area formed to promote the growth of the recycling industry, administered by the California Integrated Waste Management Board (CIWMB) and implemented locally. The Hesperia RMDZ combines state benefits, such as low-interest loans, with innovative incentives offered by the City of Hesperia.

“This initiative will demonstrate that Hesperia is becoming a ‘green’ community, by reducing our carbon footprint and the amount of waste going into our regional landfill,” said Mayor Thurston “Smitty” Smith. “Hesperia’s RMDZ is especially important as it will serve approximately one-third of the waste sent to the Victorville Sanitary Landfill.”

Within these specially-designated zones, the state offers below-market rate loans and no-cost marketing of products manufactured in an RMDZ. In addition, technical assistance for preliminary research and development of the new market is available in the form of specialized studies to determine project feasibility, identification of feedstock (raw material), and prospective markets for the project. “The City of Hesperia has become extremely competitive in its goal of attracting and expanding businesses and creating jobs. In addition to our newly designated Enterprise Zone, the award of an RMDZ is expected to further stimulate industrial growth and reduce waste currently going to landfills,” said Steve Lantsberger, Deputy Economic Development Director. “The RMDZ will provide significant economic development benefits for the residents and community of Hesperia and the Victor Valley.”

are based on a per capita Calculated Disposal Rate, for which Hesperia’s performance has been exemplary. For more information about the Hesperia RMDZ, please contact the Zone Administrator, Steven J. Lantsberger at 760/947-1906. WAL-MART CONSTRUCTION TO MOVE FORWARD Wal-Mart and the plaintiffs in a lawsuit challenging the construction of the Wal-Mart Supercenter on Main Street at Escondido in Hesperia reached a settlement that resulted in the dismissal of the case in February 2010. The decision means construction of the proposed 190,000 square-foot retail facility can move forward on the 46-acre Marketplace on Main, located along the continued on page 22

Businesses wishing to participate in the State’s RMDZ Loan Program must meet specific eligibility criteria. Aside from being a business located in the RMDZ, eligible projects must show diversion of nonhazardous solid waste from California landfills. The loan program is administered by CIWMB and funded through ‘tipping fees,’ the charges paid at landfills statewide for the collection of waste and rubbish. In recent months, California lawmakers have looked into increasing the current waste diversion rates of 50% (which was required by 2000) to 75%. For many years now, Hesperia has consistently exceeded the mandate. Currently the reporting factors

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Hesperia City Update Continued

west side of the California Aqueduct. According to the retail center’s developer, Elliot Megdal of Megdal and Associates, Wal-Mart officials are reviewing plans and meeting with City of Hesperia staff to determine when construction on the distribution center can begin. “We are glad the matter has been resolved and we appreciate both the city and the community’s continued support,” Megdal said. Megdal has 65,000 square-feet of retail and restaurant space planned on 7.6 acres of this site. For more information, contact Megdal & Associates at 310/2770456. RANCHERO ROAD CORRIDOR PROJECT Over the last several years, the City has successfully managed to secure $40.2 million in combined city, state and federal funds for the Ranchero Road Corridor Project - Phase II Interchange segment of the Project. Because the Ranchero Road Corridor Project is the City’s highest priority transportation project, the City will continue to advocate for funds in multiple funding cycles from all available sources until the project becomes fully funded. As with Phase I, the City is confident that full funding will be achieved for Phase II, which continues to move forward with milestones continually being met Project Construction Phasing The Ranchero Road Corridor Project consists of three phases, each of which is an integral component of the overall

success and completion of the entire project as a whole. Each phase of the project is described below as follows: Phase I Undercrossing - installation of an undercrossing at the Burlington Northern Santa Fe (BNSF) Railroad to connect Ranchero Road where it ends on both sides of the railroad tracks in order to provide direct access for Phase II. The cost of this phase, which is now fully funded, is $32.7 million. Construction is scheduled to begin by the end of 2010. Phase II Interchange – involves the construction of a freeway Interchange at Ranchero Road and Interstate 15. This phase includes a seven-lane bridge over the freeway, on ramps, off ramps and other ancillary improvements. The cost of this phase is $60 million, of which $40.2 million has been secured. Construction is scheduled to begin in 2011. Phase III Road Widening – a joint project with San Bernardino County to widen a five-mile stretch of Ranchero Road from two to four lanes between Interstate 15 and the Phase I Undercrossing. The cost of this phase is $15M, and is currently in the design/engineering phase.

Status of Project Each of the three phases of the Ranchero Road Corridor Project, while separate and distinct projects in and of themselves, is interconnected and crucial to the success of the entire project. Construction progress is being made concurrently in each phase, with each being in various stages of completion. Due to the federal funds being utilized, each phase of the construction process is administered by Caltrans. Because the City is committed to delivering this project as quickly as possible, the design phase of the Phase II Interchange Project has begun “at risk,” meaning that the City worked with Caltrans to complete two preliminary steps in the project development phase continued on page 22

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Hesperia City Update Continued

concurrently, rather than sequentially, in order to save approximately twelve months of time on the project.

the necessary requirements in order to meet the ultimate completion date of December 2012.

The chart below illustrates the construction progress and milestones reached, to date, in each phase of the Ranchero Road Corridor Project:

Cities like Hesperia require the local transportation connectivity that the Interstate system provides in order to enhance the community’s ability to grow and function. The Ranchero Road Corridor Project will not only benefit the residents of Hesperia but residents and travelers from all over the State and the entire region. Collectively, all three phases of the Ranchero Road Corridor Project will provide significant mobility, access, and safety improvements to an underserved, growing area of San Bernardino County.

Caltrans recognizes the significance and urgency of the Phase II Interchange Project and, consequently, has been instrumental in expediting the various sequences of the project development phase, resulting in sixty percent completion of the design. With the support and cooperation of Caltrans, and oversight from the City’s Development Services Department, this project is being expedited and advanced to satisfy

Project would enhance transportationefficient land use patterns by improving the interconnectedness of transportation to nearly every aspect of residents’ activity within the community. Transforming the geography of Hesperia in this manner would provide greater accessibility with less travel time and less miles traveled, thus benefiting both the environment and the economy.

Additionally, the Phase II - Interchange

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Victorville City Update

By Tracy Foster, Management Technician City of Victorville Economic Development

Global Opportunities At The Heart of Victorville’s Future “Global Access” has long been Victorville’s mantra. The city has worked extensively to promote growth locally and throughout the Victor Valley by targeting international organizations. With the creation of Regional Center of Victorville Development, Inc. and the combination of a U.S. Customs Port of Entry and Foreign Trade Zone #243 at Southern California Logistics Airport, Victorville is poised to become the epicenter for international opportunities in the Victor Valley and Southern California. Regional Center of Victorville Development The United States Congress in 1992 enacted legislation to create a Pilot Immigration Program to be administered by the U.S. Citizenship and Immigration Services (USCIS). One such Pilot Immigration Program is the EB-5, permitting foreign citizens to receive permanent U.S. residency in exchange for making a minimum investment of $500,000 in a new commercial enterprise that will create at least ten direct or indirect full-time jobs in an area designated as a Regional Center. On June 19, 2009 the USCIS, as the EB-5 administrator, awarded a regional center designation to Victorville, as the Victorville

Regional Center (VRC). The Regional Center of Victorville Development, Inc. (RCVD, Inc.) is a California non-profit corporation created for the purpose of promoting social welfare by providing advisory administrative and analytical services associated with and making recommendations regarding potential investments in the VRC. As part of the designation, the USCIS identified four qualified investment projects at the city’s largest industrial park, Southern California Logistics Airport. Southern California Logistics Airport (SCLA) is an 8,500-acre fully dedicated logistics and industrial park that features world-class tenants, such as Dr Pepper Snapple, Boeing, Pratt Whitney, General Electric, and Newell Rubbermaid. SCLA provides an ideal logistics hub combining air cargo, rail and ground transportation with immediate access to the Western United States via Interstate -15 and Highway 395. The projects identified by RCVD, Inc. and approved by USCIS include the SCLA wastewater treatment facility, SCLA hybrid power generation, intermodal rail development, and SCLA infrastructure improvements.

The program’s goal is to raise up to $100 million for investment into the identified projects. The program will initially contain fifty (50) investors, each investing a minimum of $500,000 with an additional $50,000 transaction fee. Once invested in the program, qualified investors will receive an EB-5 Green Card and may obtain U.S. citizenship after 5 years. For more information on the program, visit www.RCVDInc.com. U.S. Customs Port of Entry and Foreign Trade Zone Southern California Logistics Airport (SCLA) is home to a 24 hour U.S. Customs Port of Entry and Foreign Trade Zone #243. The U.S. Customs office provides tenants with the opportunity to import or export goods through SCLA without the usual fees and taxes associated with customs laws in the United States. Goods are moved directly from the Port of Los Angeles/Long Beach or flown into SCLA and cleared through the U.S Customs office and routed to their final destination. Goods can also be sent to SCLA’s bonded warehouse, where it can be distributed on an as-needed basis. The bonded warehouse operates in conjunction with the U.S. Customs office and SCLA’s Foreign Trade Zone #243. The bonded warehouse allows companies to manufacture, assemble, store, and manipulate eligible merchandise before fees are assessed, providing additional savings through the program. Victorville’s U.S. Customs Port of Entry has cleared all types of merchandise and goods through its office, including cars, perishables, electronics, home décor, power tools, textiles, handbags, toys, and ATVs. The largest user at the Victorville office is Black and Decker, serving their Southern California market with inventory stored at their Rialto warehouse under Foreign Trade Zone #243.

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