Page 1

Spring 2012 l Volume 50

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

50th Edition

I wish to welcome our current and future subscribers of the 50th edition of the Bradco High Desert Report, the only economic overview of the High Desert region, covering the Northern

Inside This Issue Real Estate Market Recovery.................. 2 MDAQMD Board Reaffirms Support of AB 32 Suspension.......................... 6 Industrial Firms Absorb Space at High Rate in 2011.......................... 7 Turning the Green State Golden........... 9 Inland Empire Film Commission........ 10 Will a Big Quake Leave our Water Supplies “High and Dry”................. 12 Desert-Mountain Leaders Re-Engineering Their Workforce............................... 13 Employment Development................... 14 Snapshot of Commercial and Industial Real Estate Markets........... 15 Federal Port Taxes Need to be Reinvested in The Ports................... 16 Victor Valley Community College........17 Positioning CA and the High Desert for New Manufacturing Investment...... 19 High Desert Assessed Values................ 20 Macy’s is Coming to the Mall............... 22 No More Redevelopment, What Next?... 23 SanBag Update..................................... 25 Home Building Industry Indicators Point Upwards................................... 29 “Zombie” Drivers Endanger Other Motorists................................ 30 HD Single Family Market Stabiling.......31 Solar Mitigation.................................... 33 City Update Town of Apple Valley ...................... 34 Barstow............................................. 35 Hesperia............................................ 37 Victorville......................................... 39

portion of San Bernardino County and the Inland Empire. We more specifically address economic issues affecting the cities of Adelanto, Barstow, Hesperia, Victorville, and the Town of Apple Valley.

12 of these economic conferences, and while listening to the Inland Empire’s expert economist, Dr. John Husing at our April 11th function, I couldn’t help but think of some great statistical analysis that I want to share.

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

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

Who said that we would never make 50 newsletters? I have so many people to thank I don’t know where to start. Not only do I want to thank my bride, my partner and my motivation, Mrs. Deborah K. Brady, Executive Vice President of The Bradco Companies, Alliance Management Group and Barstow Real Estate, I want to thank our readers, our subscribers and those that have been the benefactors of information since our first publication in May of 1993. There are other publications that from time to time attempt to copy what we have been able to depict, but I believe that the competition is also good in the publication business. We have a very exciting publication and we are proud of the information that is in the 50th edition. I am recently reflecting on comments given at the High Desert Leaders Economic Summit, a function that The Bradco Companies has supported with many other sponsors, economist speakers etc. that started 14 years ago. We have recently completed

Exports out of the Los Angeles Long Beach port are at an all time high at 3.3 million containers for 2011. Congratulations. While the Inland Empire has over 1,145,000 existing jobs, and we are optimistic that the 12.4% unemployment that the Inland Empire’s is experiencing, in conjunction with California’s 11.3% (as of January 2012) will continue to decrease. One statistic to put things into proper prospective is the fact that within Southern California continued on page 28

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2

High Desert Report A quarterly economic overview

Real Estate Market Recovery? By Dr. Alfred J. Gobar Chairman, Alfred Gobar Associates

For those of you with an unhealthy interest in statistics, the statistical model has estimated the number of occupied units nationwide with an R2 coefficient of correlation of 0.9867. In economics, this type of correlation usually implies the analyst is cheating. As can be seen, the estimate of number of households nationwide based on statistics has been

for those who know how to profit from adversity) are still in the distant future. EXHIBIT A TOTAL NONAGRICULTURAL EMPLOYMENT INDEX - SOUTHERN CALIFORNIA JUNE 1990 - DEC 1995 vs. DEC 2006 - FEB 2012 6/90

12/90

6/91

12/91

6/92

12/92

6/93

12/93

6/94

12/94

6/95

12/95

6/96

12/96

6/97

12/97

1.02

1.02

1.00

1.00

0.98

0.98

0.96

0.96

` 0.94

0.94

0.92

0.92

0.90

1990's

Indexed (December 2006)

Occasionally people wonder why nonagricultural wage and salary employment, as illustrated in Exhibit A, figures in so many of the graphs we use. The reason for that is shown in the graph in Exhibit B. The little triangles are estimates of the number of occupied units in the United States based on a statistical model, the major input to which is nonagricultural wage and salary employment. The little squares in the graph are actual households as reported by the U.S. Bureau of the Census.

flat since 2005. It is not expected to turn Southern California (Ventura, Los sharply upward in the immediate future— Angeles, Orange, Riverside, San ALFRED GOBAR ASSOCIAT based on the trends in Exhibit A. The Bernardino, and San Diego Counties), number of occupied units probably will growth in nonagricultural wage and salary rise above the estimate as the data evolves. employment in the twelve months ended Real Market Anecdotal Estate information indicates that many Recovery? February 2012 totaled 62,600 jobs. This households are living in homes on which is well below the long-term average in the they are no longer making payments on six-county area during periods of normal As illustrated in Exhibit A, the recent recession was considerably deeper in the mortgage—i.e., economic recovery housing markets—approximately 150,000 termsphysical than theoccupancy one that affected Southern California after June 1990. is percentage often less than in new jobs a year. Actually, employment times of financial duress. growth isinanonagricultural andthan salary Sadly, the recovery from the most recent recession good deal morewage anemic employment over the most recent twelve was more the previous recovery, happy times for real estate properties (except With specificity withsuggesting regard to months was considerably less than the

Indexed (June 1990)

As illustrated in Exhibit A, the recent recession was considerably deeper in percentage terms than the one that affected Southern California after June 1990. Sadly, the recovery from the most recent recession is a good deal more anemic than was the previous recovery, suggesting happy times for real estate properties (except for those who know how to profit from adversity) are still in the distant future.

0.90

2000's 0.88 12/06

6/07

12/07

6/08

12/08

6/09

12/09

6/10

12/10

6/11

12/11

6/12

12/12

6/13

12/13

0.88 6/14

Source: California EDD (Employment Development Department) and Alfred Gobar Associates

Occasionally people wonder why nonagricultural wage and salary continued employment, as 3 on page illustrated in Exhibit A, figures in so many of the graphs we use. The reason for that

THE BisRADCO HIGH DESERT REPORT shown in the graph in Exhibit B. The little triangles are estimates of the number of Publisher: Mr. Joseph W. Brady, occupied units in the UnitedCCIM, StatesSIOR based on a statistical model, the major input to Editors: Dr. Ronald J. Barbieri, CPA, Ms. April Tyler, Mr. Lowell Draper, and Mr. Seth Neistadt which is nonagricultural wage and salary employment. The little squares in the graph Printed & Designed by One Stop Printers & Direct Mail Service areE-Mail actualVersion households as reported by the U.S. Bureau of the Census. 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 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 1 responsibility for inaccurate information. The Bradco High Desert Report is printed on recycled paper.

The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


3

High Desert Report A quarterly economic overview

Real Estate Market Recovery? Continued

comparable figure for the twelve-month period ended February 2011. Southern California’s economy (and therefore its real estate market) is not recovering rapidly. In fact, these statistics indicate the opposite. No. of Households (000s)

Actual Households (U.S. Bureau of the Census) Employment Derived Household Estimates = 0.6982(Jobs) + 15930, R squared = 0.9867 2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

1965

Year

market in which the Inland Empire is such the current trend is still down. The indices those of you with an unhealthy interest in statistics, the statistical model has anFor important segment. for this market have deteriorated fairly estimated the number of occupied unitsconsistently nationwide since with an R2 Quarter coefficient of Third 2006. The conventional output of the models, Housing price in the Inland Empire (as correlation of 0.9867. In economics, this type of correlation usually implies the which was used by such investors as PMI, well as Southern California overall) has analyst is cheating. can be etc., seen, the estimatebeen of number of households GE Capital, NationwideAsBuilders, historically high relationship to the from the 1970s to the 1990s consisted of ideal price structure. Because of declining nationwide based on statistics has been flat since 2005. It is not expected to turn a total of 17 pages for each market. In the demand derivative of the recession, even sharplyofupward in the immediate future—based on the trends in Exhibit A. The interest simplicity, many of the outputs with the decreasing prices in the Inland number of occupied units The probably will rise Empire, above the as thebetween data evolves. were combined into indices. simplified theestimate relationship price index of housing market conditions for the and income is still not comfortable. Anecdotal information indicates that many households are living in homes on which Inland Empire is shown in exhibit C. they are no longer making payments on the mortgage—i.e., recovery is A similar index for economic Los Angeles County, Although the statistical simulations of which continues to be the largest economic often less than physical occupancy in times of financial duress. current market conditions overall in the entity in Southern California, is as follows ALFRED GOBAR ASSOCIA Inland Empire are not quite as bad as they in exhibit D. With more specificity with regard to Southern California (Ventura, Los Angeles, were at the depth of the 1990’s recession, Orange, Riverside, San Bernardino, and San Diego Counties), growth in EXHIBIT C

nonagriculturalRIVERSIDE-SAN wage and salary employment in the twelve months ended February BERNARDINO-ONTARIO, CA MSA TOTAL RESIDENTIAL UNITS INDEX

2012 totaled 62,600 jobs. This is well below the long-term average in the six-County 1.05

area during periods of normal housing markets—approximately 150,000 new jobs a 1.00 year. Actually, employment growth in nonagricultural wage and salary employment

for the twelve-month period ended February 2011. Southern California’s economy 0.90 0.85 0.80

2 III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

0.75 III/91

Index

over 0.95 the most recent twelve months was considerably less than the comparable figure

III/90

The output of the most recent update with extensions to Third Quarter 2011 is a basis for illustrating housing market conditions in each of the Metropolitan Statistical Areas that make up the Southern California

115,000 110,000 105,000 100,000 95,000 90,000 85,000 80,000 75,000 70,000 65,000 60,000 55,000 50,000 45,000 1963

In 1969, analysts at Alfred Gobar Associates noticed the relationship between nonagricultural wage and salary employment and housing market trends. This led the number crunchers at the consulting company to develop a plethora of algorithms which incorporate generally available time series economic data published by the government and other sources into “models,” which simulate housing market conditions for each Metropolitan Statistical Area in the United States overall. The efficacy of these models with regard to the housing markets in each of these Metropolitan Areas was tested against the Census data for 1970, 1980, 1990, and 2000. Since Dr. Gobar’s retreat from consulting, less attention has been paid to the statistical simulation models, although kindly old Dr. Gobar did fund an analysis of the efficiency of the models in terms of estimating the number of occupied units by Metropolitan Statistical Area as of the date of the 2010 Census.

EXHIBIT B ACTUAL VS. ESTIMATED HOUSEHOLD FORMATION UNITED STATES - FEBRUARY 2012

1961

Categories of nonagricultural wage and salary employment experiencing continued decline include construction, certain portions of the financial sector, and local government, as well as the information sector as newspapers become technologically less efficient than they were prior to the Information Age. Somewhat surprisingly, manufacturing employment grew during the twelvemonth period contrary to the long-term trend over the last 15 years of a secular decline in manufacturing employment throughout the United States and with special regard to Southern California.

ALFRED GOBAR ASSOC

Although the statistical simulations of current market conditions overall in theonInland continued page 4 The Bradco High Desert Report Empire are not quite as bad as they were at the depth of the 1990’s recession, the 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com current trend is still down. The indices for this market have deteriorated fairly


ALFRED GOBAR ASSO

4

High Desert Report

EXHIBIT D A quarterly economic overview LOS ANGELES-LONG BEACH-GLENDALE, CA MD TOTAL RESIDENTIAL UNITS INDEX

Real Estate Market Recovery? Currently the index on an overall basis is lower than at any time shown. The index suggests that spillover demand from Los Angeles County is not soon likely to be a major element in housing demand in the High Desert.

Another of the Southern California economies that has suffered less than the Inland Empire is Orange County, see the graph in exhibit F. The index for Third Quarter 2011 was higher than in Third Quarter 2009 or 2010, indicating a very modest improvement in relative supply and demand conditions in housing in the Orange County Metropolitan Statistical Area.

Index

EXHIBIT D LOS ANGELES-LONG BEACH-GLENDALE, CA MD TOTAL RESIDENTIAL UNITS INDEX

0.95

1.05 0.90

III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

0.90

III/92

III/91

0.95 0.80 III/90

Index

1.00 0.85

Currently the index on an overall basis is lower than at any time shown. The index 0.85 suggests that spillover demand from Los Angeles County is not soon likely to be a III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

III/91

III/04

0.80

major element in housing demand in the High Desert. III/90

Between Third Quarter 2010 and Third Quarter 2011, Ventura County’s economy improved enough that incremental demand exceeded the incremental supply of new housing based on very feeble building permit activity in prior months in Ventura County in 2009 and 2010. The most recent index point is actually up a little bit from the two previous index points for the Ventura area.

1.00

The following index for Ventura County shows overall market conditions about similar Currently the index on an overall basis is lower than at any time shown. The index to what they were during the worst of the 1990s: suggests that spillover demand from Los Angeles County is not soon likely to be a EXHIBIT E

OXNARD-THOUSAND CA MSA major element in housing demand in the OAKS-VENTURA, High Desert. TOTAL RESIDENTIAL UNITS INDEX 1.01

The following index for Ventura County shows overall market conditions about similar 0.99

to what they were during the worst of the 1990s: 0.97

EXHIBIT E OXNARD-THOUSAND OAKS-VENTURA, CA MSA TOTAL RESIDENTIAL UNITS INDEX

0.95 Index

The exhibt E index for Ventura County shows overall market conditions about similar to what they were during the worst of the 1990s:

ALFRED GOBAR ASSO

Continued

1.05

0.93

1.01 0.91

ALFRED GOBAR ASSOC

0.99 0.89 0.97

0.87 in 2009 and 2010. The most recent index point is actually up a little bit from County III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

III/91

III/90

Index

enough that incrementalEXHIBIT demandF exceeded the incremental supply of new III/11

III/10

III/09

III/08

III/07

III/06

TOTAL RESIDENTIAL UNITS INDEX

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

SANTA ANA-ANAHEIM-IRVINE, CA MDin prior months in Ventura based on very feeble building permit activity

III/91

III/90

0.85 housing

1.05

Between Third Quarter 2010 and Third Quarter 2011, Ventura County’s economy 1.00

5 improved enough that incremental demand exceeded the incremental supply of new 0.95 housing based on very feeble building permit activity in prior months in Ventura 0.90 0.85

5 III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

0.80 III/91

This market appears to have been immune to the recession and, in fact, from 2006 to 2011 the index for the market increased

0.87 improved

III/90

This column has referred in the past to economics as the “dismal science.” In a vain hope to counter this probably accurate definition of my life’s work, we have included a comparable graph (Exhibit H) for a market that is currently in much better condition:

0.93

0.91 Another of the Southern California economies that has suffered less than the Inland 0.89 Between Third County, Quarter the 2010 andfor Third Quarter 2011, Ventura County’s economy Empire is Orange graph which is shown below:

Index

As shown, the low point of the index in recent years is well above the comparable indicator for the 1990’s recession.

0.85 the two previous index points for the Ventura area.

III/02

0.95

By far the strongest recovery of the housing market in Southern California is in San Diego County where the index has been improving for about three years, and incremental demand has exceeded incremental supply, see exhibit G

Bradco High Quarter Desert Report page 5 The The index for Third 2011 was higher than in Third Quartercontinued 2009 oron2010, 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com indicating a very modest improvement in relative supply and demand conditions in


5

High Desert Report

ALFRED GOBAR ASSOC

A quarterly economic overview

EXHIBIT G Real Estate Market Recovery? SAN DIEGO-CARLSBAD-SAN MARCOS, CA MSA

Continued

TOTAL RESIDENTIAL UNITS INDEX

ALFRED GOBAR ASSO

1.00 0.98

year by year, while the price index shows that housing prices in the market are less than they need to be in terms of the consumer support levels driven by the local economy.

0.96

Index

0.90

0.98 0.86 0.84 0.96

III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/92

III/91

0.90

III/93

0.80 0.92 III/90

Index

0.82 0.94

0.88 0.86

As shown, the low point of the index in recent years is well above the comparable 0.84

indicator for the 1990’s recession. 0.82 0.80 III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

III/91

III/90

This column has referred in the past to economics as the “dismal science.” In a vain hope to counter this probably accurate definition of my life’s work, we have included a for a market that is in currently muchisbetter Ascomparable shown, thegraph low point of the index recent inyears well condition: above the comparable EXHIBIT H TOTAL RESIDENTIAL UNITS INDEX

indicator for the 1990’s recession.

This1.10 column has referred in the past to economics as the “dismal science.” In a vain hope to counter this probably accurate definition of my life’s work, we have included a 1.05 Index

comparable graph for a market that is currently in much better condition: 1.00

EXHIBIT H TOTAL RESIDENTIAL UNITS INDEX

0.95 1.10 0.90 1.05

III/11

III/10

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

III/91

III/90

Index

III/09

ALFRED GOBAR ASSO

0.85

1.00

Another regional economy which reflects stronger-than-typical housing market 0.95 This market appears to been immune to the recession and, in fact, from 2006 to conditions is illustrated byhave the following graph: 2011 0.90

the index for the market increased year by year, while the price index shows EXHIBIT I III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/03

III/02

III/01

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

0.99

III/91

III/90

consumer support levels driven by the local economy.

III/04

RESIDENTIAL INDEX that housing prices inTOTAL the market are lessUNITS than they need to be in terms of the 0.85 1.01

This market appears to have been immune to the recession and, in fact, from 2006 to 0.97 7

2011 the index for the market increased year by year, while the price index shows Index

0.95

that housing prices in the market are less than they need to be in terms of the 0.93

consumer support levels driven by the local economy. 0.91

III/11

III/10

III/09

III/08

III/07

III/06

III/05

III/04

III/03

III/02

III/01

7

III/00

III/99

III/98

III/97

III/96

III/95

III/94

III/93

III/92

III/91

0.89 III/90

An interesting anomaly related to the most recent analysis of these statistical data concerns the composition of employment growth. As noted in the early part of this column, nonagricultural wage and salary employment grew less between 2011 and 2012 than it did in the prior twelve months. Another source of employment data, however (based on the household survey), reflects a humungous increase in employment as reported by individual households. Typically, the difference in estimated employment between the household survey and the establishment survey relates to contract workers, small entrepreneurs, underground employment, etc. For long periods of time, the employment levels estimated on the basis of the employer surveys have been about ±87.0 percent of the employment levels estimated on the basis of the household survey. The most recent data available, however, suggests that reported change in nonagricultural wage and salary employment based on the employer survey was 58.0 percent of the level of employment change estimated on the basis of the household survey. Either an awful lot of people are working “off the books” or there is a glitz in the reporting

0.92

1.00 0.88

Another regional economy which reflects stronger-than-typical housing market conditions is illustrated by the exhibit I graph. Although there has been some decrease in overall market strength (i.e., demand exceeds supply), it still remains a very viable real estate market in comparison with much of the U.S. Perhaps Joseph W. Brady wants to sponsor a contest for readers of this column to identify these two mystery markets which are apparently doing well despite the abysmal conditions in much of the rest of the U.S. (at least the statistics are a whole lot better).

EXHIBIT G SAN DIEGO-CARLSBAD-SAN MARCOS, CA MSA TOTAL RESIDENTIAL UNITS INDEX

0.94

continued on page 6

Although there High has been decrease in overall market strength (i.e., demand The Bradco Desertsome Report 760.951.5111 • Fax: 760.951.5113exceeds • www.TheBradcoCompanies.com email:viable info@thebradcocompanies.com supply), it still remains a•very real estate market in comparison with much of the U.S. Perhaps Joe Brady wants to sponsor a contest for readers of this


6

High Desert Report A quarterly economic overview

MDAQMD Board Reaffirms Support Of AB 32 Suspension

Real Estate Market Recovery?

By Violette Roberts, Community Relations & Education Manager During its February 2012 meeting, the Governing Board of the Mojave Desert Air Quality Management District reaffirmed a resolution requesting a suspension or revision of AB 32 – the Global Warming Solutions Act of 2006 – which it originally adopted and forwarded to then-Governor Schwarzenegger in 2010. AB32 requires the California Air Resources Board to develop strict new regulations and market mechanisms to reduce California’s greenhouse gas emissions to 1990 levels by 2020, representing a 30% reduction statewide, with mandatory caps beginning in 2012 for significant emissions sources. The resolution – which was brought to the local regulatory air agency’s Board by MDAQMD Board Member and City of Victorville Councilman Mike Rothschild – was accompanied by a letter from District Governing Board Chair and San Bernardino County First District Supervisor Brad Mitzelfelt, which outlined the MDAQMD Board’s ongoing concerns with AB32’s continued implementation. “To date, there continues to be a failure to consider potential regulatory conflicts between AB 32 provisions and federal and state mandates in the AB 32 implementation process,” said Mitzelfelt. “In addition, an analysis of the potential impacts of multiple requirements on the local economy and ultimately, on the environment, have been minimal, at best.” Rothschild added that while the MDAQMD Governing

Continued

Board composition has changed since 2010, “the key factors which render AB 32 a threat to the High Desert’s economy have remained virtually unchanged.” These factors include an unemployment rate of just under 15%, a severe jobs/housing imbalance, substantial air pollutant and greenhouse gas emissions resulting from over 50% of all area residents commuting at least 40 miles to work each way, and transported pollutants from the Los Angeles basin. Moreover, according to Rothschild, AB 32 threatens to engender indirect environmental consequences - such as longer, more polluting commutes - as a result of businesses and jobs leaving the area.

or our interpretation of the numbers. We have been interpreting these numbers for roughly 40 years and have never seen this kind of relationship before. Since it is a one-time event, it could have been a typographical error, a simple transposition, or some other statistical screw-up. Not too much should be inferred from this unusual circumstance. Nonetheless, it is consistent with what we expected to happen with the onset of a highly-regulated society—an increase in informal employment as the market system worked to side-step a stifling bureaucracy. The late Jack Kyser and I discussed the implications of the Obama Administration’s ideology at a meeting a little over two years ago and hypothesized that the informal economy would grow faster than it has in the past in response to overregulation, mitigating to some extent the negative effects on growth of a highly-regulated economy.

In addition to sending the adopted resolution and letter to Governor Brown, the documents were also forwarded to CARB, state legislators, and to directors of California’s 34 other air districts.

If, in fact, the informal job growth was actually as great as the statistics seem to indicate, the overall condition of the market should be better than the graphs shown above suggest. Let’s hope so. Readers interested in reviewing Dr. Gobar’s observations about the statistical relationship of real estate market behavior to conventional economic time series data are referred to his book which is available from Alfred Gobar Associates.

Visit us online at www.mdaqmd.ca.gov or call us at (760) 245-1661

The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


7

High Desert Report A quarterly economic overview

Industrial Firms Continued To Absorb Space In The Inland Empire At A Very High Rate In 2011 By: Ronald J. Barbieri, Ph.D., CPA

One of the primary economic drivers of the Inland Empire and therefore the High Desert is the expansion of warehousing and distribution facilities as well as manufacturing operations in the Inland Empire. Such industrial operations provide Base Employment for the region which in turn generates Secondary Employment in other economic sectors of San Bernardino and Riverside Counties. Over 60,000 residents of the High Desert commute to the Los Angeles Basin for work. This represents approximately half the workforce of the High Desert. Hence, an increase in the demand for industrial space in the Inland Empire has a positive indirect effect on the High Desert. Also, the absorption of industrial space in the Inland Empire would further reduce the limited supply of industrial land in the Los Angeles Basin. A study by John Husing dated August 2008 determined there were only 4,860 acres of land in the Los Angeles Basin portion of the Inland Empire that could be developed for industrial use. This number could be significantly reduced over the next few years, thereby reducing number of sites that are rail served or can accommodate the development of large industrial buildings. It will not be long before the

very large industrial tenants or firms that require rail will have to locate in the High Desert or in the area along the I-10 Freeway in Banning, California; The migration of more industrial firms to the High Desert would create more Base Employment in the area, which in turn could generate additional Secondary Employment. This would lead to lower unemployment rates in the greater Victor Valley area. There is 499 million Square Feet (SF) of industrial space in the Inland Empire. This is equivalent to half the inventory of industrial space in the greater Chicago area. Costar defines 482 million SF as Warehousing/Industrial space. The remaining 17 million SF is in smaller Industrial Flex space. The High Desert currently accounts for slightly over 4% of the total inventory; but in the intermediate term and beyond it is expected to be the primary expansion area for industrial development in the region. Southern California is home to almost 2.0 Billion SF of industrial space. Much of the increased demand for industrial space in the Inland Empire is attributed to firms relocating out of Los Angeles County in search of industrial sites on which to build larger, more efficient facilities.

The vacancy rate for Warehousing/ Industrial space in the Inland Empire has increased from 5.2% at the end of 2004 to 12.2% by the end of 2009. The increase in vacancy was the result of overbuilding rather than a decline in industrial demand. The vacancy rate at the end of the Fourth Quarter 2011 declined to 7.5%. Very little inventory was added in 2010 and 2011; but there was a substantial absorption of large box industrial space during that two year period. If the vacancy rate declined to 5% the industrial market in the Inland Empire would be in equilibrium. That could occur by 2013 if the developers do not build an excessive amount of inventory that is not preleased. Developers are beginning to build spec large box industrial space in the Los Angeles Basin. There are a limited number of sites in the Los Angeles Basin that can accommodate large industrial boxes greater than 800,000 SF. Industrial tenants and users wanting larger facilities will have to locate either in the High Desert, Moreno Valley, or Banning California. The lack of larger industrial sites in the Los Angeles Basin could result in a substantial increase in the level of industrial development in the High Desert beginning as early as 2015. In calendar year 2007 the Net Absorption of industrial space peaked at almost 27 million SF. In 2008 industrial demand increase by 4.6 million SF; but in 2009 the Net Absorption was a negative 400,000 SF. Net Absorption in the Inland Empire was a positive 12.1 million SF in 2010 and 15.0 million SF in 2011. A portion of the increase in Net Absorption was caused by the acceleration of demand due to relatively low rents compared to prior years.

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High Desert Report A quarterly economic overview

Industrial Firms Continued To Absorb Space In The Inland Empire At A Very High Rate In 2011 Continued

The increase in industrial demand in the Inland Empire in the last two years is substantial, especially in light of the slow economic recovery in both the U.S. and California. In fact the Inland

agents in the Los Angeles Basin are now reporting Excess Demand (no vacancy) for buildings of 500,000 SF and larger. Most of the vacancy is in the medium and smaller size buildings often

Desert, though the timing is uncertain, and unfortunately very much a function of public policy that will be determined in Washington and in Sacramento, California. In spite of all the political and economic uncertainty the big box industrial market in the High Desert is likely to add one or more users each year for the next few years before the increase in demand accelerates in the second half of this decade. This will probably be the case because large industrial users will continue to relocate from Los Angeles County to the Inland Empire in order to build larger, more efficient facilities. As the availability of large industrial sites in the Inland Empire diminishes those seeking larger sites will have no choice but to locate in the area of Banning, California or in the High Desert. Only an economic depression would defer this from happening.

Empire only experienced one year of negative industrial absorption during the last recession.

occupied by small businesses that have not experienced much growth since the Great Recession.

From 2005 through 2008 an average of 26.1 million SF of Warehousing/ Industrial space was delivered annually in the Inland Empire. Deliveries declined to 7.0 million SF in 2009. Only 1.7 million SF was delivered in 2010; while 3.8 million SF was completed in 2011. The level of new construction has definitely increased in the last year. This limited level of construction coupled with the unanticipated increase in industrial absorption has resulted in the elimination of half of the Excess Vacancy in the market place.

Industrial agents are now suggesting there will be a new wave of construction for buildings larger than 500,000 Square Feet. When this is coupled with the fact there are only 4 sites in the Los Angeles Basis that can accommodate a building greater than 800,000 SF it is logical to conclude it will not be long before the High Desert will be able to Proud to be a part successfully of the compete for the larger High Desert Community warehousing and distribution tenants. A higher level of industrial MITSUBISHI CEMENT CORPORATION development 5808 STATE HIGHWAY 18 will occur LUCERNE VALLEY, CA 92356-9691 in the High (760) 248-7373 FAX: (760) 248-9002

The vacancy level was 22.1 million SF at the end of 2005. It peaked at 57.9 million SF by the end of 2009. As of the end of 2011 it had declined to 36.5 million SF. There is still an estimated 15 million SF of Excess Vacant space in the Inland Empire; but the industrial

All the inventory, absorption, and construction information contained in this article was obtained from reports The Bradco Companies generated from Costar. These numbers are deemed to be accurate by real estate industry standards; but they are not exact and subject to change.

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High Desert Report A quarterly economic overview

Turning the Green State Golden Again By: Assemblyman Tim Donnelly, 59th District

You have probably heard of cap and trade, but like most, you may have no idea what it actually is. Regardless, you are paying for it roughly every 3 days. Today, simply filling your gas tank so you can get to work and provide for your family feels like dropping a down payment on a brand new car. You are seeing and feeling the impacts of these misguided cap and trade policies instituted by out of touch lawmakers. Prices are going up. It is only the beginning, and your government CAN do something about it. The Governor can STOP it. I would argue that is in fact, the duty, of the Governor to undo this harm by suspending AB 32 and by scaling back on the California Air Resource Board’s (CARB) power. California politicians have long tried to create a Green Utopia under the auspices of “saving the planet.” So, in 2006, the Legislature passed AB 32 – California’s version of “Cap and Trade,” which constituted the most sweeping expanse of environmental regulations up until, or since, then. It essentially put the ability to pollute in the process of manufacturing up for sale to the highest bidder. This meant that only large corporations could afford to purchase this new hot commodity and continue to keep up with the costs to do business, while the local “mom and pop” shops couldn’t afford the “carbon credits” necessary to keep their operations going. Since its passage, our unemployment rate has skyrocketed and it will only continue to do so as long as it stands. This is both irresponsible and a gross abuse of power. No matter where you stand on the issue of global warming, the simple truth is that your government is dictating based on science that is nowhere near settled and is ruining our livelihoods and economy in the process. AB 32 has an impact on nearly every sector of our economy, including manufacturing, construction, housing,

and transportation. It even impacts school bus access. For instance, one new regulation requires tractors to idle for 4 straight hours to clear the soot trap after only running for 4 hours. It further mandates that an operator must man the tractor at the business owner’s expense. How is California improved by this new regulation? Additionally, we see cement companies dropping like flies. Within our air quality district, we dropped from 11 to 8 just last year.

That is why, this year, I am running AB 1721 to ensure businesses are given a warning for first violations, rather than fined for simply missing yet another rule coming from the California Air Resources Board (CARB). With support from business owners, we have a good chance of pushing forward this common-sense piece of legislation to lessen the blow to California’s job creators. Still, much more is required to reverse California’s business and job-destructive course.

I recently asked a friend I did business with years back to share his perspective on what the State can do to improve the business climate.

Good public policy hinges on two things: First, doing the right thing, and second, Doing the thing right. AB 32 does neither.

He told me with pain in his voice about how businesses, the backbone of our economy, are struggling to breathe in the suffocating, regulation-laden California environment. Worse yet, while the State emits rule after rule, it fails to notify the people whose taxes and production it relies on to continue operating. Instead, it imposes fines on business owners who may fail to keep up.

The right thing is certainly not to sink billions of taxpayer dollars into unfounded theories while simultaneously bleeding California businesses one restriction at a time. This is especially true when the policy does not even accomplish its stated goal!

“You’d think they’d be required to inform me at the very least, considering the enormous cost of not complying fines and penalties that often run into the tens of thousands of dollars,” he said. In California though, a truck driver--the person who delivers fresh food to our stores--can be fined $1000 for failing to have a certification slip in his truck at any given time, even if he is in fact certified and in compliance with all emission standards. What is the net effect of this kind of non-sense regulation? It is no surprise - trucking companies are moving out. They are now setting up shop and building the economy of bordering states. Our economy is dying the death of a thousand regulations just to continue feeding the bureaucratic beast that is California.

Ironically, the “green police” have done nothing to decrease air pollution. Increasing restrictions on businesses only serves to force them out of state, or even out of the country. Many businesses are choosing to open in or relocate to China. California then not only loses revenue and jobs, but actually increases pollution since other states and countries have far more lenient environmental laws. Even before AB 32, for every dollar that California and China spent on manufacturing, California produced ¼ the carbon emissions that China did. Now California has taken it too far. This means dirtier air for all of us as more production moves out of the state. (Air does not recognize international borders the last time I checked.) AB 32 is actually increasing air pollution! California’s irresponsible, go-it-alone approach to its environmental crusade continued on page 10

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High Desert Report A quarterly economic overview

Inland Empire Film Commission By Sheri Davis

Turning the Green State Golden Again Continued

The High Desert remains the number one desert location for the film industry in California. Why you ask? It is really a simple answer – terrific light, diversity of locations (from a mountain community to the vast sand dunes at Dumont), experienced crew and service providers, and ease of permitting with the Inland Empire Film Commission serving as the One Stop Permit Agency for the County of San Bernardino, the United States Forest Service, and the Bureau of Land Management.

Special Effects Permitting Update We are delighted to announce that the San Bernardino County Board of Supervisors approved an ordinance that will streamline the process of issuing film permits by eliminating the requirement to get an explosives permit in addition to a filming permit as long as they have a valid pyrotechnic and special effects license current with the State of California. This was a project the IEFC started in 1996 but it took the team of George Watson, Chief of Staff to Supervisor Neal Derry, San Bernardino County; Michael Delgado, Government Relations Officer, CAO’s office, San Bernardino County; Curtis Markloff, San Bernardino County Fire Department and Todd Cole, Sgt. San Bernardino County Sheriff to complete.

Filming Update Since October 2011 To Present Seven feature films selected locations from El Mirage Dry Lake to the Dumont Dunes. Two of the more notable feature films was “G.I. Joe: Retaliation” starring Channing Tatum, Dwayne Johnson and Bruce Willis; and “Seven Psychopaths” starring Woody Harrelson, Colin Farrell and Christopher Walken. Reality television has become the main

stay of television production for the High Desert region with shows such as “Stunt Busters,” “Pawn Stars,” and “The Biggest Loser” to name a few. When 17 commercials selected locations in the desert, the commercials highlighted a number of the dry lakes in the districts with El Mirage Dry lake being the most used of all of them. Watch for these commercials and enjoy our locations being introduced to the world. A few of the car commercials were BMW, Chevy Volt, Lexus, Kia, Mazda and Subaru. Some of the other commercials that were not car related were Absolut vodka, Graiman, and Trane AC units. Still photographers still consider the High Desert lighting and diversity to be perfect for their requirements. Fifty two still photography shoots with both National and International products such as Neiman Marcus, Glamour, Calvin Klein, American Eagle, Lefthansa Airlines, Rolling Stone Magazine, Nordstrom, Urban Outfitters and Mercedes Benz were shot in the High Desert region from Barstow to Baker. The town of Joshua Tree enjoyed an increase in production during this period also.

has become all but a state mandated religion. If you don’t buy it, you are silenced, as has been seen with numerous teachers and scientists facing job loss for countering the environmentalists’ policy conclusions. Never mind that the science behind global warming promotion is documented to be fraught with fraud. For every hard working Californian who loses his job, for each mom who gets a sick when she sees the rising food prices when shopping for her family, the results of this bill to the ordinary citizen are becoming impossible to ignore. California, once the Golden State, can turn this around, but it will require keeping the “green police” from locking up our vast potential. We must stand up for California and demand that this massive legislative error be reversed so our communities and our businesses do not continue to suffer for the sake of a green dream. 59th District Assemblyman Tim Donnelly can be reached at: DISTRICT OFFICE 15900 Smoketree Street, room 100 Hesperia, CA 92345 (760) 244-5277, (760) 244-5447 fax assemblymember.donnelly@assembly.ca.gov

Do you ever wonder about all of the music videos that are watched daily and where they are shot? Out of the 18 music videos that selected the High Desert here are just a few: Michael Saranga (Coyote Dry Lake), James Durbin (Coyote Dry Lake), Megdelena’s “Drown in Me” (Soggy Dry lake), Keith Urban (Silurian Dry Lake), Liz Primo’s continued on page 11

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High Desert Report A quarterly economic overview

Inland Empire Film Commission Continued

repeatedly stated that the sole reason for the very expensive and widely criticized takeover of the Johnson Valley area is to prepare Marines for land-based battles in Iraq and Afghanistan, General Amos has confirmed that this proposed expansion is no longer necessary or even critical to the future of the Marine Corps. “ Wind Me Up” (El Mirage Dry Lake), Marc Lavoine (El Mirage Dry Lake). Twenty one other productions selected varied locations in the High Desert such as the Town of Joshua Tree; and the City of Twentynine Palms had the documentary TV series “Who the Bleep did I marry?” shoot on various streets throughout the city. Each year a film crew comes out to record the actions at one of the biggest desert racing events in the Nation called “King of the Hammers.” This 5-day event always selects Johnson Valley and is filled with races, vehicle rock climbing, etc. that have an audience of over 25,000 people attending.

Johnson Valley Update For those who weren’t aware that Johnson Valley had been slated for use by the Marine Corp. out of Twentynine Palms which would have meant a loss of the use of most of Johnson Valley to both the Production Industry but also the recreational users as well. An article published on December 11, 2011 by writer Robert Burns of the Associated Press quotes Marine Corp. Commandant General James F. Amos stating that the future of the Marine Corps lies in a “smaller, versatile seabased fighting force based primarily around the Pacific, including bases in Okinawa and Australia....but not in Iraq or Afghanistan.”

California Tax Incentive Update

 Estimated total aggregate direct spending by Program projects - $2.9 Billion  Estimated total below-the-line wages paid / to be paid by Program projects - $1 Billion  An estimated 32,000 crew and 8,900 cast members have been / will be hired by the approved projects

The California Film Commission has The CFC will be accepting applications been tasked with overseeing a five-year, for its next round of tax credits on June $500 million dollar program (recently 1, 2012. Please visit its website for extended by one year), which provides more information - www.film.ca.gov/ tax credits to eligible film and TV incentives. productions that meet specific criteria. The program, which launched in July As anticipated, Assemblymember Felipe 2009, targets those productions most Fuentes introduced a bill (AB 2026) likely to leave the state due to incentives seeking to extend the Film & Television offered by other states and countries. Tax Credit for five years through 2019The program has succeeded in attracting 2020. Please join the effort to extend the target groups of basic cable TV the tax incentive program for California series, mid-sized feature films and TV by contacting your state representatives movies. This has enabled California and encourage them to vote for bill AB to be competitive and keep many at- 2026. risk projects in the state. To date, approximately $400 million in tax credits has been allocated � Publications � Direct Mail Marketing (reserved), resulting � Brochures � Presentation Folders in: � Newsletters

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High Desert Report A quarterly economic overview

Will a Big Quake Leave Our Water Supplies “High and Dry?” By Art Bishop, President, Mojave Water Agency Board of Directors

[The following excerpts are from a February 22, 2012 article by Aaron Task of The Daily Ticker] “…The Strait of Hormuz is a waterway that connects the Persian Gulf to the Arabian Sea. It is the only passage to the open ocean for some of the biggest oil producers in the Middle East… …Because so much of the world’s oil travels through the Strait, any disruption to the shipping channel would have a major impact on global crude oil prices, which ultimately determine the price we pay for gas at the pump. Some analysts estimate the price of oil could go up by 50% within days if there’s a disruption of supply, which would mean much higher prices for us filling our tanks at the gas station — and anything else that requires the use of oil. Crude oil and gas prices have risen sharply since September in large part because of the threat of a disruption in the Strait of Hormuz…” Once again, America is at the mercy of overseas oil producers and because of the instability in the Persian Gulf, we are paying much higher prices for gasoline—and the gasoline equivalent of “the Big One” (closing the Strait of Hormuz) hasn’t hit. Californians face a similar crisis as the Strait of Hormuz, but our “Strait” is the Sacramento-San Joaquin Delta, and our “oil” is our water supply. We’ve been told for years when it comes to earthquakes, the “Big One” could happen at any moment and that a significant portion of the state’s water supply could be wiped out for a year or longer. So we buy earthquake kits, flashlights, bottled water, extra canned food for our homes—we take action to prepare. Billions of dollars have been spent retrofitting bridges, highways, hospitals, schools and prisons. But to date, no effective measures have been taken to secure our water supply in the event of an earthquake.

Because of prudent management by the board of directors, including establishment of a water banking program, Mojave Water Agency’s service area would likely not be adversely affected like other areas in the state in the event of a catastrophic earthquake. But the region’s supplies won’t last indefinitely. It’s time to retrofit our state’s water delivery system. The main concern is about a 6.7 earthquake striking Northern California and its effect on the Sacramento-San Joaquin River Delta, a network of rivers, streams, marshes and grasslands—the largest estuary on the West Coast and home to unique communities and farming interests, and it currently doubles as the state’s primary water conveyance system, sending freshwater to 25 million Californians throughout Northern, Central and Southern California. But that water is ushered through by 100-year old levees that are weak, poorly engineered and could collapse in the event of an earthquake. If that happens, water from the San Francisco Bay would rush into the Delta, turning freshwater into saltwater. The economic toll of this seismic event could amount to $40 billion from losses in water supplies, farm production, wages and jobs, and downed utilities. To avoid a catastrophe as described above, public water agencies have been working with state and federal agencies, environmental organizations, and other stakeholders on a comprehensive plan to protect California’s water supply, protect local communities, and restore the Delta’s ailing ecosystem. The plan, known as the Bay Delta Conservation Plan (BDCP), couples a new water delivery system with habitat restoration to achieve long-term water supply reliability and a healthy Delta ecosystem. New infrastructure -- either a tunnel or

canal -- would carry a carefully managed portion of water underneath or around the Delta, rather than through the fragile ecosystem and away from the weak levees. By doing this, we would restore reliability to our water supply, protect it from floods and earthquakes, improve water quality, all while restoring and protecting the Delta ecosystem. The BDCP is likely to be one of the largest public works projects in California history and public water agencies have already agreed to provide the funding for construction. With five years of research and planning, and more than 300 public meetings already complete, the state is now close to finalizing the BDCP and beginning the environmental review process. A survey released last month by California public opinion research firm Probolsky Research (http://www. probolskyresearch.com/new-pollcalifornia-voters-support-water-bondbut-display-little-knowledge-of-thebay-delta/) indicates that:  78 percent of Californians did not know what the Delta is  86 percent of Southern Californians did not know about the Delta  70 percent of respondents outside of Southern California did not know about the Delta It’s time for residents throughout the state to get informed and understand the risks to our water supply system and the solutions presented by the BDCP. The Southern California Water Committee, including support from Mojave Water Agency, has launched a public education program, “Delta Disrupted,” to provide more information on this critical issue.To learn more, to request materials or to download a sample letter of support for the Bay Delta Conservation Plan, check out www.socalwater.org/deltadisrupted.

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13

High Desert Report A quarterly economic overview

How Desert-Mountain Leaders Are Re-Engineering Their Workforce STEAM 2020-A Local Initiative for Economic Success By Dale Marsden, Ed.D. Superintendent Victor Elementary School District

Imagine a Desert-Mountain region where every student graduates from high school concurrently with their community college degree or a vocational, technical or trade school equivalent certificate in a STEAM (Science, Technology, Engineering, Arts, or Math) related career field. Well that is exactly what is happening in this region! From Victorville to Hesperia, Apple Valley to Adelanto, and Baker to Big Bear, leaders from five key sectors - Public, Private, Higher Education, K-12, and Service and Faith-Based Organizations - are entering into a collective effort, which will align regional resources to ensure a systemic approach that ultimately reengineers its workforce. What does this look like on the ground and in the trenches? It all started with a kick-off event last summer when a score of community and educational leaders came together to draw a line in the sand and make a commitment to this goal: By 2020, every child and adult in the Desert-Mountain region will be prepared for the 21st Century workforce by achieving their high school diploma concurrently with their community college degree, or vocational, trade or technical school equivalent certificate, in a STEAM (Science, Technology, Engineering, Arts or Math) related field. Every person who attended the event pledged their commitment, including Mayor Ryan McEachron, Community College President Dr. Christopher O’Hearn, Chamber of Commerce CEO Michele Spears, and several other key community and educational leaders. From this meeting, and with the assistance of Inland Empire Economist, Dr. John Husing, and leading Commercial Real Estate Broker, Joseph W. Brady, CCIM, SIOR, President of the The Bradco Companies and Trustee for the Victor

Valley Community College, the stage was set in November for a Solutions Summit. Nearly 300 key sector leaders joined together during the Summit to hear presentations from: Craig Garrick, CEO of Aviation Assurance, explaining how his business is prepared to grow from 250 employees to over 2,500; Dr. Gary Thomas, County Superintendent of Schools, on just how desperate things are in our current educational system and a high school diploma is no longer enough; Joseph W. Brady, highlighting the potential for the region and what every leader must do to take advantage of the opportunities in their own backyard. The keynote speaker for the event, Dr. John Husing, left the audience with an unquestionable understanding that the key to the region’s success is a reengineering of its educational system to ensure a prepared workforce. Key leaders then divided into groups to establish strategies or “Solutions” to achieve the STEAM 2020 Goal, and to better align regional resources to this end.

objectives, metrics and action plans to achieve STEAM 2020. In January, a smaller representative group hammered out the details to include three key strategic goals for the initiative: Career Readiness, Communication, and Funding. Action steps outlined plans for a K-16 student tracking systems to electronically monitor the success of each child; there was a call for comprehensive “soft skills” training, including financial life planning; a plan to survey employers to assess gaps in the school curriculum; a plan to establish a communication center for STEAM goal engagement and development; and a plan to target regional resources and develop key sponsorships and funding for programmatic goals.

Some of the solutions developed during this inaugural Summit included the development of a Speakers Bureau of leaders from the community, Increasing parent knowledge about educational opportunities in the region, Creating Virtual Field Trips to local businesses, Increased Internships, and Increased Access to Certificate programs at Victor Valley College. This was a passionate group who all wanted to participate in following up on next steps to ensure implementation of these key strategies to achieve the goal.

In addition to these meetings, education and business leaders participated in several workplace tours of local manufacturing and research and development firms. During the tour of Scott Turbon Mixer in Adelanto, students from Sultana High School in Hesperia filmed the entire tour to begin a series of virtual field trips so more students can experience the real world of work in their own community. Craig Garrick, CEO of Aviation Assurance, asked us to be sure when kids come to tour local businesses, we bring their parents with them! Once leaders finished the first half of the day at Scott Turbon, they headed over to Exquadrum, a small but very powerful Research and Development firm in Adelanto and listened to Vice President & Chief Operating Office Eric Schmidt explain about the skills needed for developing the latest technologies for the Warrior. This is rocket science!

Since the November meeting, much has taken place. Later in December, a workgroup of about 60 key leaders came together to draft strategic

Now with action plans established, next steps include having a community cabinet in each city or town comprised of key sector leaders who will meet regularly

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High Desert Report A quarterly economic overview

Employment Development Department By John Williams

How Desert-Mountain Leaders... Continued

2011 unemployment rates are shown in the following chart. The rates shown are National, State of California, San Bernardino County, and the High Desert Region. It appears that 2011 was a year of fairly high unemployment for most of the nation as well as California. The High Desert cities had even slightly higher unemployment rates for most of the year than either the nation or the state.

to monitor progress. Additionally, representatives from each participating city and town will attend regional meetings where all resources will be presented and aligned to fit the tailored needs of each area within the region. As this work continues, the Desert-Mountain region is already looking ahead to build capacity for long-term strategic success. Several national models for community engagement have been studied and the region, under the leadership of the San Bernardino County Superintendent of Schools Alliance for Education, plans to align itself to the nationally recognized STRIVE Together Model out of Ohio. Its slogan is “Cradle to Career” - what an amazing testimony of one community’s efforts to ensure success for all. For additional information, you may contact Dr. Dale Marsden, regional lead for the STEAM 2020 initiative, at dmarsden@ vesd.net. Dr. Dale Marsden is superintendent of the Victor Elementary School District, one of the county’s highest performing districts, and member of the executive board for the San Bernardino County Superintendent of Schools Alliance for Education. Dale and his family have lived in the High Desert since 1990.

The last four months of 2011 did show a slight downward slope in unemployment rates, which we hope will continue throughout 2012. The data shows that it is trending in a more favorable direction for the economic growth of California, San Bernardino County, and the High Desert Communities. Contributed by the staff of the EDD Workforce Services office in Victorville. Please contact (760) 241-1682 for further information. The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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High Desert Report A quarterly economic overview

Snapshot of The Commercial and Industrial Real Estate Markets in The High Desert By: Ronald J. Barbieri, Ph.D. and CPA

Office Market As of the end of 2011, the High Desert had almost 5.5 million SF of office space. The net absorption for 2011 was negative 8,900 SF compared to the 135,000 SF absorbed in 2010. The vacancy level at the end of last year was 347,000 SF or 6.4% of the total inventory. The increase in the vacancy rate was mostly due to the delivery of 62,000 SF of office space in the second half of last year. Most of the increase in office space demand over the last two years was from the expansion by local government and the medical profession. There was 25,000 SF of office in Apple Valley under construction as of the end of 2011. The new construction is targeted for medical users. While the office space is only slightly oversupplied, there has not been any additional demand for space in the High Desert. This has

resulted in a slight decline in rental rates over the last year.

Retail Market There was 15.6 million SF of retail space in the High Desert of which 1,352,000 SF was vacant at the end of 2011. This represents a vacancy rate of 8.7%. The High Desert experienced a negative net absorption of 67,000 SF in 2011, compared to a positive 262,000 SF in 2010. Only 6,900 SF was delivered in the second half of that year. Macy’s has announced that they would be moving into a vacant 70,000 SF former department store in the Victor Valley Mall and adding an additional 30,000 SF to the structure. However, this will not be reflected in the absorption figures until early 2013. Three super Wal-Marts in Victorville, Hesperia and Apple Valley are under construction and are expected

to be completed this year.

Industrial Market There was 20.4 million SF of industrial space in the High Desert at the end of 2011. The vacancy rate was 6.1% or 1,241,000 SF. The net absorption in 2011 was 978,000 SF, which was approximately the same the prior year. There is 49,600 SF under construction. Most of the absorption was in the large boxes. Substantial warehousing and distribution as well as manufacturing companies counted for the increase in demand. The cities of Adelanto and Barstow accounted for the negative absorption in 2011. The City of Victorville absorbed over 1,000,000 in both 2010 and 2011. Most of this increased demand occurred at SCLA.

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High Desert Report A quarterly economic overview

Federal Port Taxes Need To Be Reinvested In The Ports By Senator Jean Fuller

California’s system of ports and goods movement might not be something many of us think about everyday. But recently, I felt it was important to lend my name to an effort for the maintenance of California’s ports. Most of us take for granted that the majority of goods we buy have likely traveled on a ship and passed through one of California’s 11 ports. In addition to these imports, my Senate district is the third largest in the state for exported goods through the San Pedro Bay Ports. The locally grown and manufactured goods are shipped through these ports to reach the international markets, which accounts for roughly 25% of California’s gross economy. The economic impact of California’s ports cannot be overstated. California’s three largest ports; Los Angeles, Long Beach, and Oakland have the cumulative impact of employing approximately 500,000 statewide workers and bring in roughly $7 billion in state and local tax revenues, while facilitating 40% of the nation’s total maritime trade with a value of roughly $375 billion. Agriculture goods from the Central Valley make up a large part of the total goods that are exported, and only by maintaining these trade gateways can we assure steady increases in the ability of agricultural goods to be shipped in a reliable, timely, and cost-effective manner to overseas markets. But just as our ports are reaching this peak success and contributing so importantly to our economy, several challenges lie ahead.

The expansion of the Panama Canal, expected to be complete in 2014, will mean that no longer will large cargo ships from Asia have to stop in California’s ports in order to get goods in and out of this country. The Canal expansion opens the door for port business to be drawn away from California’s ports to other regions of the nation who are aggressively looking to increase their cargo-handling and pump up their local economies. When combined with the myriad of often burdensome state and local regulations – a topic ripe for a future discussion the Panama Canal expansion has the potential to make California’s ports less competitive with Gulf Coast and East Coast Ports.

these funds, our ports are further disadvantaged. While generally taken for granted by those of us in this region, California’s ports have a huge impact on our everyday lives. The feds need to allow our ports to remain as competitive as possible by reinvesting these important tax dollars for their intended purposes. State Senator Fuller represents the 18th Senate District, which includes Bakersfield, Visalia, Tulare, Ridgecrest, Tehachapi, Mojave, Taft, Kern River Valley, the Frazier Mountain communities, and other portions of Inyo and San Bernardino Counties.

As a result of these challenges, I felt it was important to coauthor SJR 15, a resolution that calls on the Federal Government to return to California the federal port taxes that are collected from port users and shippers - and ultimately consumers. Unfortunately, the federal government has not fully utilized the funds available in the Harbor Maintenance Trust Fund for needed maintenance dredging, and, instead, it has allowed a large surplus to build up in the trust fund in order to mask the federal deficit or fund other programs unrelated to ports. Without

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High Desert Report A quarterly economic overview

Victor Valley Community College

By Bill Gruelich, Public Information Officer, Presidents/ Office The big news for the college was the dedication of the new Victor Valley Regional Public Safety Training Center. The 41,500 square foot building is now on line and serving students and the community. The multi-purpose facility functions as a training center for four distinct programs, including Fire Technology, Administration of Justice, Emergency Medical Services and Corrections. The future looks good for community partnerships that will potentially benefit the services in which these students will eventually transfer. The $31.5 million structure and prop yard also includes a CERT City that will be used to train community volunteers in disaster preparedness scenarios. The real advantage of this facility will be its ability to provide cross training/ cooperative real-life training that involves everyday emergencies. This unique factor permits VVC students to take the giant leap from physical training to actual service duty. The building features an indoor combat shooting range, a gun cleaning room, training simulators, and defensive tactics/physical training areas for Administration of Justice Programs.

Indoor Combat Shooting Range The size of the combat shooting range is 90’ by 42’ and covered completely in a bullet proof material which by design, will partially absorb stray rounds, eliminate ricochet projectiles, and facilitate expended rounds down range to the collection pit. This material is on the side walls, doors, and ceiling of the range facility to ensure safety for shooters. The collection pit spans the width of the range and holds over 40 tons of rubber fragments along with coating of fire retardant material covering a hardened steel backing. The range was designed as a combat range and therefore, has no target retrieval mechanism or shooting booths. This open floor designed combat shooting range

offers more flexibility in developing real-life shooting experiences for law enforcement officers as mobile props can be placed anywhere on the open floor area of the range and moved as necessary. The range has a state-of-the art air filtration system, which virtually removes all expended lead and ancillary particles from the air through a whole air flow system which begins at the rear of the range and flows to the front ventilation system. This system is designed to remove any air particles forward of the shooter and filter out the ventilation system, reducing exposure to the shooter.

Gun Cleaning Room The range is also equipped with an adjacent gun cleaning room, which also has a similar vacuum ventilation system, stainless steel work benches and gun repair and cleaning equipment. It also has a range master office, which houses all weapons and associated range equipment including: “state of the art” noise reduction communication ear phones, accompanying radio and push to talk microphone. The range master office also serves as the distribution center for all equipment to be used on the range and it houses several technological devices, i.e., “Milo ShootDon’t Shoot” simulator and the “Super Trap” targeting system.

Training Simulators Milo is a 3 “D” projection scenario program when projected on a screen in the range, students decide which course of action to take “shoot or don’t shoot” based on the circumstances demonstrated. These scenarios may be altered by the instructor with a hand-held control device while adjacent the student. This flexibility in programming serves to challenge the student’s analytical and problem solving skills while offering a “real life like” exigent circumstance

decision making experience. Scenarios may be run by the instructor in laser format with range weapons or in live fire with the student’s weapon. The Super Trap targeting system consists of ten hardened steel (adjustable) electronically controlled target holders mounted vertically on the ceiling adjacent the target trap. These holders are designed to deflect oncoming projectiles into the range trap and they also hold the targets in place. The range master has the option of pre-loading a program to turn all or selected targets in a pre-designed manner to show “good guy” vs. “bad guy” images by the touch of a remote controlled button. The targets have the option of turning 180 or 360 degrees to show either image. Students then must decide to “shoot or don’t shoot” based on their observations and analysis of the target. The Super Trap target holders are designed to re-set themselves in the event of a malfunction caused by an unbalanced target or when the holder is struck by a projectile. This technology allows the range master to continue with the shoot and he/she is not forced to delay the shoot to repair or re-set the target device. Super Trap will also be installing a “Running Man” horizontal target system, which will run the width of the range in the range trap area. This system will allow students another shooting (target acquisition) dimensional challenge as the target moves in the manner a person would while running from a crime scene. The range trap area also contains sensors to evaluate the amount of lead building up in each area (lanes). The sensor sends an electronic message to the range master regarding the condition of the accumulated lead and recommends that lane or lanes be shut down and evacuated. Additionally, the combat range has two large doors, which open to the exterior of the facility and are used for the ingress

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High Desert Report A quarterly economic overview

Victor Valley Community College Continued

of police vehicles for shooting props and other large movable props. These doors weigh approximately 1200 pounds apiece; however, they can be manipulated quite easily by anyone. The range office safety windows and exterior windows (hall way) are made of level #7 glass, which will withstand several rounds of high caliber weapon strikes, yet they are clear for the purposes of auditing any firearms training in the range. The range ceiling has several layers of lighting, which may be dimmed by the instructor to simulate various lighting conditions found outside. It also has two emergency lights on the ceiling near the rear of the range that may be used to simulate a law enforcement traffic stop or emergency situation. The range also has an intercom system to communicate with observers not wearing head gear who may be in the range area. The range ingress is limited to one door near the range master office and notwithstanding the aforementioned exterior doors and one emergency exit, the only egress is through the same door near the range office. This ingress-egress system was developed to ensure the safety of all students and equipment.

capabilities in both the range and the Defensive Tactics/Physical Training areas.

Defensive Tactics/Physical Training Area

 Recognized as a Gold LEED facility by the U.S. Green Building Council’s Leadership in Energy & Environmental Design (LEED)

The Defensive Tactics/Physical Training area is approximately 1200 square-foot class room with 14 ‘ceilings. The room contains a ceilingmounted projector for the use of the “Milo System” offering presentations in use of force decision making scenarios projected on a wall. This training area also contains permanent combat mats with fifty storage “cubbies” for student clothing and equipment. This area is also equipped with audio and visual surveillance equipment recorded in the center’s computer hard drive for safety and historical purposes. Adjacent the training area are two instructor offices, which have windows for auditing

The complex also includes office space, classrooms, conference rooms, four apparatus bays, a fire tower, burn rooms, a prop yard with a tanker rail car, an overturned tanker truck, a low angle rope rescue prop, a collapsed building, and a confined space/trench prop.

Fact Sheet Victor Valley College Regional Public Safety Training Center (VVCRPSTC) Cost: $31.5 million; financing from Measure JJ bond funds Location: 19190 Navajo Road, Apple Valley, CA 92307 Project awarded: August 11, 2009 Construction start: August 12, 2010 Project completed: October 2011 Architect: Carrier-Johnson Architects Contractor: Highland Partnership Opening: February 2012 Facility Size: Nine-acre campus including a four-acre prop yard for training; 41,500 square feet of building complexes, classrooms, etc.

Building Features

 Facility features a 230kW solar photovoltaic (PV) system, consisting of rooftop panels and solar covered carports providing up to 80 percent of the building’s total electricity demand.  4692 SF apparatus bay  (4) bay doors east/west (drive thru)  (2) 567 SF storage rooms  Solar Panels located in parking lot and on roof of Building A and C  Prop yard  5 Story Fire tower 4+ burn rooms Propane and Class A

 Drafting Pit with Cone water flow calibration  Standpipe trainer  Fire training Connex trailer  Roof ventilation prop  Rail Tanker Prop  Collapsed Building prop  Confined Space/trench prop  Underground tunnel prop various size pipe  Low Angle rescue prop  Rubble pile  CERT (Citizens Emergency Response Team) City  House with Bedroom/living room facing West  Café with outdoor patio seating NW corner  Office N  Bank N  Warehouse N  Convenience store NE corner  Jail East  2 cells  Processing desk  15 classrooms, including 12 smart classrooms, providing seating for 368 students  Two student lounges  Computer lab  Video production lab  Outdoor courtyard  “N” level wireless network

Purpose The VVCRPSTC offers a state-of-theart facility that facilitates a dynamic, multi-agency learning environment for disaster training by incorporating the following disciplines: Fire Science, EMT, Paramedics, Administration of Justice, SWAT and Corrections. Future plans for the VVCRPSTC include the development of cooperative and contract ventures to expand educational and training opportunities for local and regional public safety entities, corporate safety personnel, community organizations, and governmental agencies.

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High Desert Report A quarterly economic overview

Positioning California And The High Desert For New Manufacturing Investment by Jack M. Stewart, President, California Manufacturers & Technology Association

California manufacturing pays the highest average wages among all sectors at $71,000, offers the best opportunities for upward mobility for working families, and creates an abundance of local economic growth and activity. In 2001, manufacturing accounted for 11.8 percent of the Riverside-San Bernardino metropolitan statistical area’s (MSA) workforce. Ten years later, that percentage has dropped to 7.6 percent. Unfortunately it’s likely more of a state issue than a regional issue. California lost 34 percent of its manufacturing base over the last decade. The San Bernardino and Riverside MSA, which contains the “high desert region”, was not far behind at 28 percent. Accounting for 620,000 and 33,000 lost manufacturing jobs respectively, California and the High Desert region have much to fight for in any national manufacturing resurgence or the “re-shoring” of industrial jobs. Bringing new high wage jobs to California will not come easy. We must scrap, wrangle, crusade, lobby, and contend for vital manufacturing growth. We must lay out the welcome mat with policies that allow production facilities to compete domestically and make secure long-term investments in capital and workers. State policy has a tremendous impact on manufacturing job growth. States with a positive business climate (competitive operating costs, a trained workforce, and a predictable regulatory climate) outpace states with negative business indicators. California’s 34 percent manufacturing job loss compares with Texas at 21 percent, Indiana at 29 percent and Louisiana at 19 percent. Specifically, there are some bottom-

line issues that must be resolved. California imposes industrial electricity rates that are 50 percent higher than the national average and 95 percent higher than our competitors in western states. California is also one of only three states that taxes the purchase of manufacturing equipment, and, in 2011, the state had the fourth highest workers’ compensation premiums.

led by industrial expansion. During the 1950s, 60s, and 70s, California led the nation in industrial growth, becoming the top manufacturing state in 1977. With that growth came a flood of new tax revenues allowing California to invest in infrastructure, education, and new social programs. California became dependent on the largess of a robust industrial economy.

Business climate issues have a direct impact on new investment. From 1977 to 2000, California received 5.6 percent of the nation’s new and expanded industrial facilities. Since 2001, California’s share of those facilities has plummeted to 1.9 percent. Industrial investors plan on a 10 to 15 year time horizon when making large investments in land, buildings, and equipment. States with long-term budget deficits, excessive infrastructure needs, and aggressive regulatory agendas seldom make the short list of corporate planners.

During the ensuing 40 years, California found pride in implementing “first in the nation” environmental regulations. Clean air, land, and water are laudable goals, but the associated regulatory costs have had an impact. Four decades of accelerating environmental activism have taken a toll on our ability to attract new investment and jobs.

It’s true that California continues to be the innovation state – we receive a large share of venture capital. But in the past decade, we have lost our ability to both innovate and manufacture new products here. From 2005 to 2009, California received 48 percent of U.S. venture capital investment, but only 1.3 percent of U.S. industrial investment. The current model is to innovate in California, manufacture in a more costcompetitive state or country, and market back to California consumers. Under this scenario, California gets the jobs advantage of small, start-up research and development firms, but loses the enormous jobs benefit when those new products move to the production stage.

We’re told by financial analysts that American corporations have $3 to $5 trillion available for investment when the current recession ends and that more and more U.S. manufacturers are reshoring their overseas operations. The question is: will California, as well as the industrial-dependent high desert region, attract a fair share of manufacturing investment, or will investors look elsewhere for a more favorable business climate? We must prove California is serious about rebuilding a manufacturing economy by acknowledging where we must make improvements, not resting on an assumption that this is simply a national problem with a national solution. It’s California’s problem to fix.

California’s modern government grew up of an era of rapid economic growth

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High Desert Report A quarterly economic overview

High Desert Assessed Values By Dan Harp, Assistant Assessor-Recorder The County Assessor is responsible for the assessment of all taxable property within their respective counties, except for State Board of Equalization assessed property which includes utility-owned property and railroad property. The Assessor’s role involves three main objectives: (1) discovering and taking inventory of all taxable property within the county; (2) determining the taxability of each item of property; and (3) valuing and assessing each item of property in accordance with property tax law. Proposition 13, which was overwhelmingly approved by California voters in June 1978, is the basis for property tax assessment today in California and all of its 58 counties. Prior to the passage of Proposition 13, property taxes could increase dramatically from year to year based on assessed value of the property. Proposition 13 limits the tax rate to 1 percent plus additional rates necessary to fund local voter-approved bonded indebtedness. It limits the property tax increases to a maximum of 2% per year on properties that did not undergo a change in ownership nor had completion of new construction. Proposition 13 placed explicit limitations on the power of government to impose additional property taxes and it requires real property to be assessed at its current market value upon a change in ownership and new construction is to be reappraised at its current market value as of its date of completion. Proposition 13 has been amended numerous times since 1978 resulting in several change in ownership and new construction exclusions from reassessment. Some of the more common exclusions are: • Reappraisal exclusion for parent/ child transfers - property transferred between parent and children may be excluded from reappraisal. A timely filed claim form is required along with other statutory requirements and limitations.

• Reappraisal exclusion for property owners age 55 and older – property owners age 55 or older may transfer their Prop 13 value from their original principal residence to a replacement residence if the replacement residence is of equal or lesser current market value compared to the original property and is located in the same county. A timely filed claim form is required along with other statutory requirements and limitations. • Property acquired or constructed to replace property destroyed in a disaster – owners of property that is substantially damaged or destroyed by a Governordeclared disaster may transfer the Prop 13 value of the damaged property to a comparable replacement property within the same county. A timely filed claim is required along with other statutory requirement and limitations. • Exclusions from market value assessment as a result of new construction include the following: addition of an active solar energy system, additions of fire sprinkler systems, seismic retrofitting and earthquake hazard mitigation features applied to existing buildings, and modifications to make an existing residence or structure more accessible to a severely and permanently disabled person. When Proposition 13 was originally enacted in 1978, it did not provide the Assessor the ability to reduce assessments resulting from a decline in market value if the property was owned by the same taxpayer. California real estate was appreciating at record levels in the late 1970s so the drafters of Proposition 13 did not have the foresight or envision a need to allow Assessors the ability to reduce assessments resulting from economic conditions, depreciation, damage, obsolescence,

or other factors causing a decline in value. Proposition 8 was approved by the voters in November 1978 to remedy this oversight in Proposition 13. Proposition 8 allows the Assessor to make reductions to assessed values when property has been damaged or its value has been reduced by other factors such as economic conditions. The Assessor can recognize declines in value if the market value of the property on lien date (January 1st) falls below its Proposition 13 value or stated otherwise, the correct value to be enrolled in any year is the lower of a property’s Proposition 13 value or its current market value. For example, if the current market value of one’s home on January 1st is $125,000 and its corresponding Proposition 13 value is $174,556, the assessed value for that particular assessment year should be reduced to the current market value of $125,000. It is important to note that a property owner may lose a substantial amount of equity in the property because of a declining real estate market but that does not necessarily mean the assessed value is incorrect. For example, the current market value of one’s home on January 1, 2007 is $360,000 and its current market value on January 1, 2012 is $150,000. The owners purchased the property in 1998 and their January 1, 2012 Proposition 13 value is $110,556. Even though the property owner has lost $210,000 in equity, its assessed value is still correct because the Proposition 13 value of $110,556 is less than the January 1, 2012 current market value of $150,000. During the mid- 2000s, San Bernardino County experienced unprecedented appreciation in real estate prices in all areas of the county, which resulted in double-digit increases to the assessment roll for years 2004 through 2007. The 5 High Desert cities and adjoining unincorporated areas showed

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High Desert Report A quarterly economic overview

falls below its Proposition 13 value or stated otherwise, the correct value to be enrolled in any year is  the lower of a property’s Proposition 13 value or its current market value.  For example, if the current  market value of one’s home on January 1st is $125,000 and its corresponding Proposition 13 value is  $174,556, the assessed value for that particular assessment year should be reduced to the current  market value of $125,000.   It is important to note that a property owner may lose a substantial amount  of equity in the property because of a declining real estate market but that does not necessarily mean  the assessed value is incorrect.  For example, the current market value of one’s home on January 1,  2007 is $360,000 and its current market value on January 1, 2012 is $150,000. The owners purchased  the property in 1998 and their January 1, 2012 Proposition 13 value is $110,556.  Even though the  property owner has lost $210,000 in equity, its assessed value is still correct because the Proposition 13  value of $110,556 is less than the January 1, 2012 current market value of $150,000.    During the mid‐ 2000s, San Bernardino County experienced unprecedented appreciation in real estate  prices in all areas of the County which resulted in double‐digit increases to the assessment roll for years  2004 through 2007.  The 5 High Desert cities and adjoining unincorporated areas showed a particularly  robust increase in their assessed values for years 2004 through 2007 then stabilizing in 2008.  The peak  of the real estate market in San Bernardino County occurred in 2007, stabilized in 2008 and then began  its steep decline.  During the late 2000s, the 5 High Desert cities and adjoining unincorporated areas  were especially hard hit with decline of real estate values and substantial decreases to the assessment  roll.     

High Desert Assessed Values Continued

a particularly robust increase in their assessed values for years 2004 through 2007 then stabilizing in 2008. The peak of the real estate market in San Bernardino County occurred in 2007, stabilized in 2008 and then began its steep decline. During the late 2000s,

assessment roll for 2008 through 2011 is $27.3 billion.

revenue collected on the basic 1% tax rate is used to support local schools, cities, special districts, the county, and redevelopment agencies (dissolved as of 2-1-2012). As one can imagine, when assessed values are increasing property tax revenue supporting schools, cities, county, etc. are increasing. Conversely, when assessed values are decreasing property tax revenue to schools and local government is reduced, which is the current situation in San Bernardino County and the State of California.

There are several factors that contribute to assessment roll growth and decline. Assessment roll growth is a result of 3 primary components: (1) change of ownership reappraisals in an appreciating real estate market; (2) abundant new construction, both residential and commercial; (3) assessed value added by the 2% The compilation of the 2012 assessment California Consumer roll will not be completed until June Price (CCPI) index 2012 and will be certified by the factor. Assessment Assessor July 1, 2012. It is projected the roll decline is the San Bernardino County assessment roll result of 4 primary will decrease by 1% from 2011 and the conversely the High Desert experienced the highest rate of decrease in values when the rea components; (1) High Desert portion of San Bernardino     Source: Assessor’s Office (RBA)  bubble burst.  The effect the collapse of the real estate market had on the San Bernardino C change of ownership County is projected to experience a   The decline in the real market created an assessment situation County‐wide in which thousands of  assessment roll is staggering.  Approximately 186,000 parcels have been reduced under Pro reappraisals in a similar 1% decrease. properties were over assessed because the current market value was now less than their Proposition 13  the 5 High Desert cities and adjoining reductions and the total assessed value removed from the assessment roll for 2008 through thus the Assessor was faced with Proposition 8 reductions on a mass scale.   As with the case where the  declining real estate market; (2) dearth conversely the High Desert experienced the highest rate of decrease in values when the real estate  unincorporated areas were especially High Desert experienced the highest rate of increased real estate values during the real estate boom,  $27.3 billion.    bubble burst.  The effect the collapse of the real estate market had on the San Bernardino County  of new construction; (3) assess value hard hit with decline of real estate   assessment roll is staggering.  Approximately 186,000 parcels have been reduced under Proposition 8  added/deducted by the CCPI factor - for reductions and the total assessed value removed from the assessment roll for 2008 through 2011 is  values and substantial decreases to the San Bernardino County Proposition 8 Statistics   $27.3 billion.    2010 and 2011 assessment roll.   the CCPI was Assessment  Parcels reduced under  Average reduction per  San Bernardino County Proposition 8 Statistics   Prop 8  $ amount of reduction  parcel  The decline in the real market created minus 0.237%Assessment  Year  Parcels reduced under  Average reduction per                                Year  Prop 8  $ amount of reduction  parcel  $71,976   2008  84,370  6,072,614,851  an assessment situation county-wide and 0.753%                                                             $71,976   6,072,614,851  in which thousands of properties were r e s p e c t f u l l y ; 2008  2009  84,370                                191,189  15,454,298,159  $80,833   2009  191,189  15,454,298,159  $80,833                                 over assessed because the current (4) Proposition                               2010  5,234,406,705  $28,216   2010  185,515  185,515  5,234,406,705  $28,216                                 market value was now less than their 8 reductions. 2011                                186,131  614,834,012  $3,303   2011  186,131  614,834,012  $3,303         Source: Assessor’s Office (RBA)  Proposition 13 thus the Assessor was property tax        Source: Assessor’s Office (RBA)  faced with Proposition 8 reductions on    2008 ‐ 2011 Secured Assessment Roll Values ‐ High Desert  a mass scale. As with the case where      2008  2009  % chg  2010  % chg  2011  % chg  % chg  the High Desert experienced the highest from '08  from '09  from '10  from '08  Assessed Value  Assessed Value  City  Assessed Value   Assessed Value 2008 ‐ 2011 Secured Assessment Roll Values ‐ High Desert  to '09  to '10  to '11  to '11  rate of increased real estate values 2,109,874,024  1,534,125,342  ‐27.3%  1,399,855,057  ‐0.6%  ‐33.7%    Adelanto  2008  2009  1,408,451,006 % chg ‐8.2%  2010  % chg  201 Apple Valley  5,470,399,576  4,672,077,824  ‐14.6%  4,311,546,745  ‐7.7%  4,308,694,066  ‐0.1%  ‐21.2%  during the real estate boom, conversely from '08  from '09  City  Assessed Value   Assessed Barstow  1,173,296,756  1,156,788,657  Assessed Value  ‐1.4%  1,105,960,622  ‐4.4%  Assessed Value  1,095,815,547  ‐0.9%  ‐6.6%  the High Desert experienced the highest Hesperia  5,702,257,731  4,586,155,399  ‐19.6%  4,134,613,850 to '09  ‐9.8%  4,135,938,237  0.0%  to '10  ‐27.5%  Victorville  8,222,005,880  6,518,890,591  1,534,125,342  ‐20.7%  5,959,465,005  ‐8.6%  5,944,321,590  ‐0.3%  ‐8.2%  ‐27.7%  Adelanto  2,109,874,024  ‐27.3%  1,408,451,006  1,399,85 rate of decrease in values when the    Unincorporated  Apple Valley  5,470,399,576  4,672,077,824  ‐14.6%  4,311,546,745  ‐7.7%  4,308,69 Daggett  21,791,351  21,886,291  0.4%  23,512,357  7.4%  23,064,005  ‐1.9%  5.8%  real estate bubble burst. The effect the Barstow  1,173,296,756  1,156,788,657  1,095,81 Helendale  740,660,421  590,639,388  ‐20.3%  515,906,266  ‐1.4%  ‐12.7%  1,105,960,622  504,531,633  ‐2.2%  ‐4.4%  ‐31.9%  Hinkley  76,504,794  75,356,203  ‐1.5%  72,536,327 ‐19.6%  ‐3.7%  73,245,828  1.0%  ‐9.8%  ‐4.3%  collapse of the real estate market had on Hesperia  5,702,257,731  4,586,155,399  4,134,613,850  4,135,93 Lucerne Valley  559,765,805  513,919,025  ‐8.2%  460,397,113  ‐10.4%  429,155,695  ‐6.8%  ‐23.3%  Victorville  8,222,005,880  6,518,890,591  5,959,465,005  5,944,32 the San Bernardino County assessment Newberry Springs  140,801,732  140,359,737  ‐0.3%  135,006,466 ‐20.7%  ‐3.8%  133,292,389  ‐1.3%  ‐8.6%  ‐5.3%  Phelan  1,248,884,434  1,048,116,678  ‐16.1%  917,920,702  ‐12.4%  905,303,469  ‐1.4%  ‐27.5%  Unincorporated     roll is staggering. Approximately Pinon Hills  549,289,907  474,631,060  ‐13.6%  416,434,834  ‐12.3%  409,038,593  ‐1.8%  ‐25.5%  Daggett  21,791,351  21,886,291  0.4%  23,512,357  7.4%  23,064 Wrightwood  520,247,437  471,278,218  ‐9.4%  438,345,797  ‐7.0%  441,633,956  0.8%  ‐15.1%  186,000 parcels have been reduced Helendale  740,660,421  590,639,388  515,906,266  504,531 Yermo  71,982,365  69,750,595  ‐3.1%  63,136,656 ‐20.3%  ‐9.5%  63,253,869  0.2% ‐12.7%  ‐12.1%  under Proposition 8 reductions and the Total High Desert  26,607,762,213  21,873,975,008  ‐17.8%  19,963,233,746  19,867,143,934  ‐25.3%  Hinkley  76,504,794  75,356,203  ‐1.5% ‐8.7%  72,536,327  ‐0.5%  ‐3.7%  73,245 Total SB County  171,796,562,119  160,051,284,105  ‐6.8%  152,572,761,983  ‐4.7%  151,686,712,103  ‐0.6%  ‐11.7%  total assessed value removed from the Lucerne Valley  559,765,805  513,919,025  ‐8.2%  460,397,113  ‐10.4%  429,155   Source: Assessor’s Office (RBA) 

760.951.5111 • Fax: 760.951.5113

Newberry Springs  140,801,732  140,359,737  ‐0.3%  135,006,466  ‐3.8%    There are several factors that contribute to assessment roll growth and decline.  Assessment roll growth  Phelan  1,248,884,434  1,048,116,678  ‐16.1%  917,920,702  ‐12.4%  is a result of 3 primary components: (1) change of ownership reappraisals in an appreciating real estate  Pinon Hills  549,289,907  ‐13.6%  416,434,834  ‐12.3%  The Bradco High Desert Report 474,631,060  market; (2) abundant new construction, both residential and commercial; (3) assessed value added by  520,247,437  • email: 471,278,218  ‐9.4%  438,345,797  ‐7.0%  •Wrightwood  www.TheBradcoCompanies.com info@thebradcocompanies.com the 2% California Consumer Price (CCPI) index factor.  Assessment roll decline is the result of 4 primary  ‐3.1%  63,136,656  Yermo  71,982,365  69,750,595  components; (1) change of ownership reappraisals in a declining real estate market; (2) dearth of new  ‐9.5%  Total High Desert  26,607,762,213  21,873,975,008  ‐17.8%  19,963,233,746  ‐8.7% 

133,292 905,303 409,038 441,633 63,253 19,867,1


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High Desert Report A quarterly economic overview

Macy’s Is Coming To The Mall Of Victor Valley Located in one of the fastest growing areas in California, The Mall of Victor Valley is the dominant regional mall in Southern California’s High Desert region. A strong anchor and in-line retailer mix attracts customers who would otherwise have to drive at least 30 miles (through the Cajon Pass, a significant geographic barrier) to find similar, quality shopping. It is also the only regional mall within the 220 miles that separates San Bernardino from Las Vegas. With numerous manufacturing and distribution facilities drawn by the area’s low land costs and superb accessibility, the High Desert region has enjoyed a boom in industrial development. In order for The Mall of Victor Valley to maintain its appeal to the growing population and ever changing environment, a new refined look was needed. In 2007, The Mall of Victor Valley went through an exciting transformation in which a full interior remodel was launched to better serve this Southern California community. The 10-month renovation project delivered a fresh look with new flooring and tile, a paint palette complementing the majestic High Desert region, and updated aesthetics such as lighting and new modern ceiling treatments. The mall will continue to expand its desirable offerings in 2012 and 2013 with the addition of Macy’s, a new expanded JC Penney and plans for many more new to market national retailers.

many of the store’s popular celebrity lines.The iconic department store remains one of America’s top retailers, with a focus on innovation in localizing its merchandise and connecting with customers. “We are looking forward to serving High Desert customers with the localized assortments, distinctive fashion, obvious value, and exciting shopping experience for which Macy’s is known,” said Ron Klein, Chief Stores Officer, Macy’s. “We are making plans for getting to know this community and the customers served by this well positioned shopping center.” The Mall of Victor Valley officially announced the expansion and relocation of jcpenneyon February 6, 2012. As one of nations’ best retailers, jcpenneyis reimagining every aspect of its business in order to reclaim its birthright and become America’s favorite store. The company is currently transforming the way it does business and remaking the customer experience across its 1,100 department stores and on jcp.com. The effort is spearheaded by Straightforward Fair and

Square Pricing, month-long promotions that are in sync with the rhythm of their customers lives, exceptionally curated merchandise, artful presentation, and unmatched customer service. The expanded store at The Mall of Victor Valley is set to open in October 2012, expanding into a 92,672 square f00t, single story, full-line department store, approximately twice the size of the current jcpenney. A loyal consumer base, coupled with the center’s position as the dominant retail hub in the High Desert, places The Mall of Victor Valley in a unique position to leverage this development into additional remerchandising success. The improvements to the merchant mix, curb appeal enhancements, and addition of strong anchors promise to create a real estate and community asset that will continue to grow with the market for years to come. For more information and future updates about the project please visit us at TheMallofVictorValley.com.

On November 10, 2011 The Mall of Victor Valley officially announced Macy’s to take the place of 72,000 square-foot former Gottschalks department store building. With a planned opening in spring of 2013 the new 103,008 square foot, single story, full-line department store will feature The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


23

High Desert Report A quarterly economic overview

No More Redevelopment...What’s Next?

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

Where We Are Redevelopment is dead, and effective February 1, 2012 the dissolution process has begun. Though it is procedurally untried, the unwinding process is vaguely similar to certain aspects of private sector liquidation in that, by and large, the new decision makers (Oversight Boards) will act much like creditor committees, seeking to liquidate assets in order to share in the sale proceeds in addition to getting public agency-owned properties back on the tax rolls.Due to the unique and untested requirements and processes in AB1X 26, Successor Agencies (the cities that formerly had redevelopment properties) and private sector entities that took part in the program or may want to buy those properties are focused

on several key questions going forward, regarding such issues as the next steps in redevelopment dissolution, the availability of properties going forward, the feasibility of redevelopment without tax-increment financing, replacement economic development tools, and potential redevelopment legislation clean-up.

What’s Next?  Successor Agencies have already made the decision to remain in control of the redevelopment dissolution program. Almost every city in the state elected to become a Successor Agency to its redevelopment agency, enabling them to finish ongoing projects and dispose of assets with the express review and approval of Oversight Boards.

Colleges (one), and one member representing employees of the former agency.  Successor Agencies have adopted their Enforceable Obligation Payment Schedules (“EOPS”) in January 2012. Audits and reviews of former agency transactions are now underway by the Department of Finance and the county auditor-controllers to scrutinize the EOPS and Recognized Obligation Payment Schedules (“ROPS”) and importantly, to set up the liquidation of former agency assets, including notes and properties.

Will Properties Become Available? If So, When?

Properties will become available. Timing  Seven-member Oversight Boards is unclear. The Successor Agency EOPS will be formed over the next two months must be ratified by the county auditor(deadline is May 1, 2012), to oversee the controller, State Controller’s Office, and winding down of redevelopment assets Department of Finance. The primary and activities. For the most part, careful assets referenced on EOPS require attention and emphasis is being put into continued on page 24 the selection of board members, as these are the individuals who will decide what happens to former agency assets (though decisions can be appealed to the State Department of Finance and/or State Controller’s Office). Oversight Board members are appointed by county board of supervisors (two), the city mayor Mojave Water Agency is (one), the largest special district by property tax share within the jurisdiction of the former agency (one), county superintendent of education (one), Chancellor of the California Community www.mojavewater.org

MWA

Making Water Available

The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


24

High Desert Report A quarterly economic overview

No More Redevelopment...What’s Next? Continued

ongoing payments (e.g. bond payments). Concurrently, real estate assets are being placed on lists by Successor Agencies to be disposed of “expeditiously and in a manner aimed at maximizing value” subject to the direction of the Oversight Boards as outlined in AB1X 26. Successor Agencies are currently evaluating preferred methods of disposition, initiating assessments of value, and formulating strategies to be recommended to Oversight Boards, once they are formed (by May 1, 2012).

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

New & Untried Economic Development Tools In the next year, there will be a prevalent debate about which tools should be authorized as a replacement for redevelopment. Most alternatives will involve the reintroduction of taxincrement at some level:  Infrastructure Financing Districts (“IFD”), which divert property tax revenues for public infrastructure improvement projects (highways, transit, water, sewer, parks, etc.). The current IFD statute requires approval by all effected taxing authorities and a vote by all constituent parties. As such,

the process is too cumbersome and not workable.  Community-Based Economic Development Authorities – some charter cities have had such authorities in place, such as the City of Placentia (a Kosmont client), where the Industrial Commercial Development Authority was established in 1982. The City of Alhambra is a charter city that is leading the way by adopting an economic development ordinance that empowers the City to acquire or lease property, provide for site preparation work, accept financial assistance from public and private sources, provide financial assistance to projects, issue debt, and other essential economic development activities. Other charter and general law cities in California must decide whether to pursue similar actions. Ideally incorporated into any such model would be broadened surplus property disposition, ability of general law cities to create TIF-based reimbursement agreements, and capacity for cities to sell property below market to encourage private investment and job creation. Existing Economic Development Tools Are Being Revisited (partial list):  Lease / Lease-Back Financing  With and without General Fund guarantees  Site specific tax revenue pledges for hotels and retail  Ground Leases  Sales Tax Reimbursement Agreements  Operating Covenants (e.g. for Retailers and Auto Dealers) Clean-Up Legislation in Process (As of March 2012)  SB 654 (Steinberg) – Various Redevelopment Clean-Up  Currently at Assembly Desk  Would allow for L/M Income Housing Fund to transfer to Successor Housing Agency

 Would allow certain City/Agency loans as Enforceable Obligations  AB 1585 (Perez) – Various Redevelopment Clean-up  Currently with Senate Rules Committee  Some overlap with SB 654 re: Housing Fund Balance and City/ Agency loans  Additionally addresses employee project and termination and other admin costs  Requires Oversight Board to direct Successor Agency to prepare inventory of assets and fair market values and adopt asset disposal/ transfer strategies  SB 986 (Dutton) – Bond Proceeds  With Senate Committee on Governance & Finance  Provides that all bond proceeds generated by former Agency are encumbered and not remittable to County Auditor-Controller  Requires that proceeds are used by the Successor Agency for the purposes for which the bonds were sold  Obligates Oversight Board cooperation with respect to establishment of enforceable obligations related to bond proceeds  SB 1220 (DeSaulnier, Steinberg, Assembly Member Atkins)– Housing Opportunity Trust Fund Act of 2012  With Senate Committee on Transportation & Housing  Imposes $75 on recordation of real estate documentation to support affordable housing development  SB 1151 (Steinberg) – Long Range Asset Management Plan  With Senate Committee on Governance & Finance (hearing scheduled for April 18, 2012)  Requires Successor Agency to prepare long range asset management plan outlining a strategy for ongoing economic development and housing functions

continued on page 25 The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


170 W. 3rd Street, 2nd Floor „ San Bernardino, CA 92410-1715 „ r, Public Information Officer „ (909) 884-8276   

A quarterly economic overview

No More Redevelopment... What’s Next?

SANBAG/San Bernardino Associated Governments High Desert Transportation Update

Continued

By Jane Dreher, Public Information Officer

ormation:     

Jane Dreher, Public Information Officer        909‐884‐8276 or jdreher@sanbag.ca.gov    Ellen Pollema, High Desert Projects       909‐884‐8276 or epollema@sanbag.ca.gov 

San Bernardino Associated Governments (SANBAG) is the Council of sociated Governments  Governments and transportation agency Update   for San Bernardino County. SANBAG AG) is the Council of Governments and transportation agency for San  is responsible for cooperative regional ooperative regional planning and furthering an efficient multi‐modal  planning and furthering an efficient multives the 2.1 million residents of San Bernardino County.    modal transportation system countywide. BAG supports freeway construction projects, regional and local road  SANBAG serves the 2.1 million residents lroad crossings, call boxes, ridesharing, air quality and congestion  udies. SANBAG administers Measure I, the half‐cent transportation  of San Bernardino County.

n 1989 and reapproved in 2004 to extend from 2010‐2040.  

As the County Transportation Commission, SANBAG supports freeway construction projects, regional and local road improvements, train and      bus transportation, railroad crossings, e City of Victorville, County of San Bernardino, SANBAG, and Caltrans  e 15 ‐ La Mesa/Nisqualli Interchange with a bang in front of a crowd  call boxes, ridesharing, air quality and congestion management efforts, and ge will provide a new east/west cross‐over point for local traffic, as  long-term planning studies. SANBAG ey road to the south and Palmdale Road to the north.  This significant  ructure will ultimately ease congestion, improve local circulation and  administers Measure I, the half-cent  15 in that area.  transportation sales tax originally 2.  Since then, significant progress has been made on the Oro Grande  approved by county voters in 1989 and ow for construction of the eastern bridge abutment; and, utilities  reapproved in 2004 to extend from 2010o make room for the new interchange configuration.  Information  SANBAG website (www.sanbag.ca.gov) and ongoing outreach to the  2040. ut the construction period.  Individuals interested in getting email 

the entire county, with focused attention provided by specialized  rt Committee.  Following is a summary of some of the projects being 

SANBAG considers the transportation 1 | P afocused ge  needs of the entire county, with attention provided by specialized committees, one of which is the Mountain Desert Committee. Following is a summary of some of the projects being planned for the High Desert.

dule changes, traffic handling, and detour plans, can sign up from the 

La Mesa/Nisqualli Road Interchange

25

High Desert Report

Interchange with a bang in front of a crowd of nearly 200. The Interstate 15 - La Mesa/Nisqualli Interchange will provide a new east/west cross-over point for local traffic, as well as a freeway access alternative to Bear Valley road to the south and Palmdale Road to the north. This significant addition to the Victorville transportation infrastructure will ultimately ease congestion, improve local circulation, and enhance overall safety in and around Interstate 15 in that area. The contractor began work on February 13, 2012. Since then, significant progress has been made on the Oro Grande Wash; Mariposa Road has been realigned to allow for construction of the eastern bridge abutment; and utilities (both private and public) have been relocated to make room for the new interchange configuration. Information updates about the project are available on the SANBAG website (www.sanbag.ca.gov) and ongoing outreach to the community of Victorville will continue throughout the construction period. Individuals interested in getting email alerts about the project, which will include schedule changes, traffic handling, and detour plans can sign up from the project page on the web.

After decades of development, officials from the City of Victorville, County project page on the web.  (Maps below) These two aerial of(Maps below)These two aerial perspectives show the complexity of the I‐15/La Mesa‐Nisqualli Interchange.  Adjacent  San Bernardino, SANBAG, and perspectives show the complexity of access roads on both sides of the freeway will be moved out away from the freeway ramps to disperse traffic and  Caltrans kicked off the construction of provide greater safety.   continued on page 26 the new Interstate 15 - La Mesa/Nisqualli  

Plan would require Oversight Board & DOF approval  SB 1156 (Steinberg) – Community Development and Housing Joint Powers Authority  With Senate Committee on Transportation & Housing(hearing scheduled for April 10, 2012)  Authorizes Cities/Counties to form “Community Development and Housing Joint Powers Authorities” to assume from Successor Agencies the responsibility for managing the assets and property of the former redevelopment agency  Authorizes these entities to exercise specified powers included in the RDA law and to exercise certain other powers relating to financing its activities such as establish additional sales tax Economic Development – A New Wave is Coming As the burden of redevelopment dissolution and the roles and responsibilities of the various successor entities become clear, it is also becoming evident that there is significant room for differentiation in how cities cope and position themselves for future economic development efforts. Cities should be assertive in their pursuit of asset strategies, starting with full consideration of an upgraded and updated economic development strategy. Now, more than ever, local governments will need to be creative in their exploration and implementation of economic incentives and public financing tools for economic development projects. While redevelopment was the most widely used revenue-financing tool, it was in fact just one tool in the toolbox at the disposal of California cities. More to come, so stay tuned!

 

The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com

High Desert Corridor              

The High Desert Corridor (HDC) is a proposed new 63‐mile east‐west freight and vehicle expressway. The 50 miles 


26

High Desert Report A quarterly economic overview

SANBAG/San Bernardino Associated Governments High Desert Transportation Update Continued

Alternative 3A was identified in the approved documents as the selected design which best meets the needs and purpose of the project and is supported by the community of Devore. The next High Desert Corridor Click on this link for more High Desert steps on the project include: contacting Corridor information: http://www.metro. affected tenants, as well as property The High Desert Corridor (HDC) is owners; select a Design-Builder in net/projects/high-desert-corridor/ a proposed new 63-mile east-west Fall 2012; begin Design at the end of freight and vehicle expressway. The 50 High Desert Corridor Project 2012; conduct a public meeting prior to High Desert Corridor Project Alternatives Map:  miles from Palmdale to Victorville is a Alternatives Map: construction; and commence construction There are several alternative routes still being considered, as indicated below by the various colors.  High Desert Corridor Project Alternatives Map:  proposed Public-Private Partnership (P3) activity in early that would also connect regional railThere are several alternative routes still being considered, as indicated below by the various c 2013. This systems linking Los Angeles County to is a DesignSan Bernardino County and beyond. The Build project, corridor bypasses much of the L.A. basin, w h e r e b y speeding and diverting freight traffic from design and the ports and stimulating export business c o n s t r u c t i on   expansion. The HDC will address traffic   will be done safety and support the growing need to   There are several alternative routes still simultaneously by the same contractor. move goods through Southern California. I‐15/I‐215 Devore Junction Goods Movement Improvement Project     being considered, as indicated below by In July 2010, the California  The HDC Joint Powers Authority (JPA)   the various shades. Transportation Commission (CTC)   is a partnership among both counties, LA selected the I-15/I-215 Devore Junction Environmental  Document Approved  Metro, SANBAG, and all cities along the  I-15/I-215 Devore Junction Goods Goods Movement Improvement Project Movement Improvement Project route. I‐15/I‐215 Devore Junction Goods Movement Improvement Project     The Environmental Document for the Devore project was approved o as one of 10 road construction projects February 29, 2012, thus allowing the project to move forward with  The High Desert Corridor (HDC)     statewide that Caltrans can construct discussions about acquisition of property. Design Alternative 3A was  project planning involves the California using the streamlined project delivery DEVORE      identified in the approved documents as the selected design which b Department of Transportation (Caltrans) Environmental  Document Approved  method design-build. This can save time Junction   meets the needs and purpose of the project and is supported by the  in coordination with the Los Angeles and allows for adaptations throughout community of Devore.  The next steps on the project include:  contac County Metropolitan Transportation The Environmental Document for the Devore pr the construction process. affected tenants, as well as property owners; select a Design‐Builder  Authority (Metro), the High Desert February 29, 2012, thus allowing the project to m Fall 2012; begin Design at the end of 2012; conduct a public meeting  The I-15/I-215 Devore Junction is the Corridor Joint Powers Authority, and prior to construction; and commence construction activity in early 20 discussions about acquisition of property. Desig worst grade-related trucking bottleneck other partner agencies, including the City This is a Design‐Build project, whereby design and construction will be done simultaneously by the same contract DEVORE      identified in the approved documents as the sel on I-15 in San Bernardino County. of Victorville, the Town of Apple Valley, Junction   Originally constructed in 1969, meets the needs and purpose of the project and In  July  2010,  the  California  Transportation  Commission  (CTC)  selected  the  I‐15/I‐215  Devore  the Junction  Go San Bernardino County, Caltrans District junction currently handles an average of Movement Improvement Project as one of 10 road construction projects statewide that Caltrans can construct u community of Devore.  The next steps on the pr 8, and SANBAG. In 2010, Caltrans the streamlined project delivery method design‐build. This can save time and allows for adaptations throughout 160,000 vehicles a day, including about took over as lead agency from the City affected tenants, as well as property owners; se construction process.   21,000 heavy trucks. of Victorville. Fall 2012; begin Design at the end of 2012; cond This project will benefit freight traffic, The HDC east-west freeway/expressway The I‐15/I‐215 Devore Junction is the worst grade‐related trucking bottleneck on I‐15 in San Bernardino County.   prior to construction; and commence constructi Originally constructed in 1969, the junction currently handles an average of 160,000 vehicles a day, including abou recreational travelers, and High Desert is likely to be a toll facility and mayThis is a Design‐Build project, whereby design and construction will be done simultaneously b 21,000 heavy trucks.  commuters. It is anticipated that an also accommodate rail, between State Environmental Document Approved improved Devore Junction will spur Route 14 in Los Angeles County andIn  July  This project will benefit freight traffic, recreational travelers, and High Desert commuters.  It is anticipated that an 2010,  the  California  Transportation  Commission  (CTC)  selected  the  I‐15/I‐215  economic growth and improve the The Environmental Document for improved Devore Junction will spur economic growth and improve the quality of life for all Southern California  State Route 18 in San BernardinoMovement Improvement Project as one of 10 road construction projects statewide that Cal the Devore project was approved on quality of life for all Southern California County. The High Desert Corridor was motorists traveling to the High Desert, Las Vegas, and beyond.  the streamlined project delivery method design‐build. This can save time and allows for ad February 29, 2012, thus allowing the motorists traveling to the High Desert, identified as the E-220 and designated This project will improve traffic flow at the I‐15/I‐215 Devore Junction and includes reconnecting the historic Rout project to move forward with discussions Las Vegas, and beyond. construction process.   as a High Priority Corridor on the 66 that currently dead‐ends on both sides of the junction.  The project’s total cost estimate of $324 million for the about acquisition of property. Design This project will improve traffic flow National Highway System. The project locally‐preferred alternative includes 15 bridges, roadbed widening on two Interstates, improvements to local  The I‐15/I‐215 Devore Junction is the worst grade‐related trucking bottleneck on I‐15 in San B continued on page 27 arterials, environmental mitigation, and major drainage improvement.          The Bradco High Desert Report Originally constructed in 1969, the junction currently handles an average of 160,000 vehicles 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com   21,000 heavy trucks.  the I-15/La Mesa-Nisqualli Interchange. Adjacent access roads on both sides of the freeway will be moved out away from the freeway ramps to disperse traffic and provide greater safety.

is proposed as a means of improving mobility and access for people and goods in the rapidly growing Antelope, Apple, and Victor Valley areas of Los Angeles and San Bernardino Counties.


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High Desert Report A quarterly economic overview

SANBAG/San Bernardino Associated Governments High Desert Transportation Update Continued

bridge project but is also working with Road Overcrossing and approximately the City of Victorville and the County of 1.42 miles from the existing US-395 San Bernardino to complete the Yucca Connection Overcrossing. The Ranchero Loma Corridor to connect the bridge Road Interchange will include the with Hesperia Road and the planned I-15/ construction of ramps for full freeway La Mesa-Nisqualli Interchange. Starting access, and construction of a new at the corridor’s east end, the bridge will overcrossing structure at the I-15 freeway connect Yucca Loma Road to Yates to provide east/west connections. The Road, which will then connect to Hesperia project will also realign the frontage Road via a new grade separation/bridge roads—Caliente Road and Mariposa over the Burlington Northern Santa Fe Road—on either side of the freeway. Yucca Loma Bridge and the Yucca railroad tracks, all of which will provide Construction is scheduled to begin in fall Loma Corridor Yucca Loma Bridge and the Yucca Loma Corridor          easy Ranchero Road Interchange            access to Interstate 15 using the new 2012 with SANBAG as the lead agency. interchange at La Mesa/Nisqualli Road. The proposed Ranchero Road Interchange at     The Town of Apple Valley has hired a construction management firm and Interstate 15 is located in the City of Hesperia,  The Town of Apple Valley has hired a construction management firm and construction is expected to begin in late  This approximately 1.78 miles north of the existing Oak  project will create an alternate east/ construction is expected to begin in late summer 2012 on the Yucca Loma Bridge project over the Mojave River.  The Yucca Loma Bridge will connect Yucca  west corridor that will provide congestion Hills Road Overcrossing and approximately 1.42 miles  summer 2012 on the Yucca Loma Bridge Loma Road on the Apple Valley side with Yates Road on the Victorville side.  The new roadway and bridge will carry  from the existing US‐395 Connection Overcrossing.   relief for the I-15 Interchanges at Bear project over the Mojave River. The vehicles, bicyclists and pedestrians.  It will also intersect the City of Victorville’s proposed Riverwalk  The Ranchero Road Interchange will include the  Valley Road and Palmdale Road, as well bicycle/pedestrian project, providing an alternative means of transportation along the river towards Bear Valley Road  construction of ramps for full freeway access, and  Yucca Loma Bridge will connect Yucca as State Route 18 at D Street in Victorville. construction of a new overcrossing structure at the I‐ and Victor Valley College.      Loma Road on the Apple Valley side 15 freeway to provide east/west connections. The  In addition, the Yucca Loma Bridge will   with Yates Road on the Victorville side. project will also realign the frontage roads—Caliente  Apple Valley is the lead agency on the bridge project but is also working with the City of Victorville and the County of  provide the Town of Apple Valley with The new roadway and bridge will carry Road and Mariposa Road—on either side of the  San Bernardino to complete the Yucca Loma Corridor to connect the bridge with Hesperia Road and the planned I‐ another crossing over the Mojave River freeway.   Construction is scheduled to begin in fall  vehicles, bicyclists, and pedestrians. It 15/La Mesa‐Nisqualli Interchange.  Starting at  the  corridor’s east end, the bridge will  connect Yucca Loma Road to  and connect the urban/commercial cores US-395 widening 2012 with SANBAG as the lead agency.     will also intersect the City of Victorville’s Yates  Road,  which  will  then  connect  to  Hesperia  Road  via   a  new  grade  separation/bridge  over  the  Burlington  of Victorville and Apple Valley. proposed Riverwalk bicycle/pedestrian SANBAG is working with CALTRANS Northern Santa Fe railroad tracks, all of which will provide easy access to Interstate 15 using the new interchange at  US‐395 widening   project, providing an alternative means Ranchero Road Interchange on the design for the widening project. La Mesa/Nisqualli Road.  SANBAG is working with CALTRANS on the design for the widening project.    The first phases of the project to be  of transportation along the river towards widened will be north of SR18.  This project will widen US‐395 from Interstate 15 through Desert Flower Road in  The proposed Ranchero Road The first phases of the project to be This project will create an alternate east/west corridor that will provide congestion relief for the I‐15  Adelanto, from two to four lanes, with left‐turn pockets and standard shoulders.  This project will also widen or  Bear Valley Road and Victor Valley Interchange at Interstate 15 is located widened will be north of SR18. This replace the structure over the California Aqueduct.    The environmental document was completed in December 2009  Interchanges at Bear Valley Road and Palmdale Road, as well as State Route 18 at D Street in Victorville.  In  College. in the City of Hesperia, approximately project will widen US-395 from Interstate and is in the design phase. The 12.5 miles of the project will be constructed in nine phases as funding is identified.    addition, the Yucca Loma Bridge will provide the Town of Apple Valley with another crossing over the  Construction is anticipated to begin in 2013‐2014.    Apple Valley is the lead agency on the 1.78 miles north of the existing Oak Hills 15 through Desert Flower Road in Mojave River and connect the urban/commercial cores of Victorville and Apple Valley.     Adelanto, from two to four lanes, with Victor Valley Transit Authority                    left-turn pockets and standard shoulders. The Victor Valley Transit Authority (VVTA) is one of six transit agencies that SANBAG supports countywide and  This project will also widen or replace the provides local bus service for the communities of Adelanto, Apple Valley, Hesperia, Victorville, and unincorporated  structure over the California Aqueduct. areas of the Victor Valley.    The environmental document was   The VVTA has completed construction of its new Victor Valley Transit Facility in Victorville. The new transit facility  completed in December 2009 and is in includes a 27,000 square feet administration and operations building, a 31,000 square feet bus maintenance building,  the design phase. The 12.5 miles of the a bus parking lot to accommodate 120 buses and paratransit vehicles, 230 parking spaces for employees, visitors and  project will be constructed in nine phases service vehicles, a 13,000 square feet bus wash structure and fueling station, and a photovoltaic panel covered bus  shade structure.  The facility was designed and constructed to achieve the highest feasible rating as established under  as funding is identified. Construction is the standards of the Leadership in Energy and Environmental Design (“LEED”).”  anticipated to begin in 2013-2014. at the I-15/I-215 Devore Junction and includes reconnecting the historic Route 66 that currently dead-ends on both sides of the junction. The project’s total cost estimate of $324 million for the locallypreferred alternative includes 15 bridges, roadbed widening on two interstates, improvements to local arterials, environmental mitigation, and major drainage improvement.

VVTA will be having a dedication ceremony for the new transit  Victor Valley Transit Authority facility on Friday, April 20, 2012 at 11:00 am, following the  The Victor Valley Transit Authority Mountain Desert Committee Meeting at this location.  The public  is invited.   (VVTA) is one of six transit agencies   that SANBAG supports countywide   

and provides local bus service The Yucca Loma Corridor begins at the I‐15/ LaMesa‐Nisqualli Interchange in Victorville and extends east to the Yucca  The Yucca Loma Corridor begins at the I-15/ LaMesa-Nisqualli Interchange in Victorville   communities of Adelanto, Apple Loma Bridge in Apple Valley, creating a new much‐needed east‐west corridor for the Victor Valley.  and extends east to the Yucca Loma Bridge in Apple Valley, creating a new much-needed    

 

east-west corridor for the Victor Valley.

for the Valley, Hesperia, Victorville, and unincorporated areas of the Victor Valley. 5 | P a g e  

The Bradco High Desert Report continued on page 28 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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Ranchero Road Interchange           

High Desert Report

The proposed Ranchero Road Interchange at  Interstate 15 is located in the City of Hesperia,  A quarterly economic overview approximately 1.78 miles north of the existing Oak  Publishers Message SANBAG/San Bernardino Associated Governments Hills Road Overcrossing and approximately 1.42 miles  Continued High Desert Transportation Update from the existing US‐395 Connection Overcrossing.   Continued The Ranchero Road Interchange will include the  existing at-grade crossing. These delays (Los Angeles County, Orange County, The VVTA has completed construction construction of ramps for full freeway access, and  of its new Victor Valley Transit affect the traveling public, potentially Riverside County and San Bernardino construction of a new overcrossing structure at the I‐ County) Inland Empire, we have nearly Facility in Victorville. The new transit hinder access by emergency vehicles, 15 freeway to provide east/west connections. The  facility includes a 27,000 square and increase air pollution by vehicle 1.94 billion square feet of industrial project will also realign the frontage roads—Caliente  feet administration and operations emissions when vehicles are stopped space. While the Inland Empire, with nearly 440,000,000 square feet of Road and Mariposa Road—on either side of the  building, a 31,000 square feet bus and idling while waiting for the trains at space represents 4% of all total space maintenance building, a bus freeway.   Construction is scheduled to begin in fall  parking crossings. The high train traffic volumes nationally, 20% of the absorption lot to accommodate 120 buses and affect the mobility, accessibility, nationally in 2011 occurred in the Inland 2012 with SANBAG as the lead agency.     paratransit vehicles, 230 parking spaces and reliability of emergency service Empire. We are latterly the epic center   for employees, visitors and service providers requiring access between for industrial activity (please see Ronald US‐395 widening   J. Barbieri, Ph.D., CPA’s commentary vehicles, a 13,000 square feet bus wash areas on either side of the tracks. on industrial activity). structure and fueling station,SANBAG is working with CALTRANS on the design for the widening project.    The first phases of the p and a The primary project objective is to photovoltaic panel covered bus shade widened will be north of SR18.  This project will widen US‐395 from Interstate 15 through Desert Flow improve operation and safety by Lastly, but something that we need to structure. The facility was designed ensuring prompt emergency response deal with and will eventually go away Adelanto, from two to four lanes, with left‐turn pockets and standard shoulders.  This project will als and constructed to achieve the highest time to businesses and residents are the 370,960 mortgages out of nearly replace the structure over the California Aqueduct.    The environmental document was completed in feasible rating as established under the while eliminating the hazards and 849,136 mortgages within the Inland standards of the Leadership inand is in the design phase. The 12.5 miles of the project will be constructed in nine phases as funding Energy inefficiencies of trains passing through Empire, representing 43.7% of the Construction is anticipated to begin in 2013‐2014.    and Environmental Design (“LEED”). the flow of vehicular traffic. Air quality mortgages that are currently “under   VVTA had a dedication ceremony for will be improved through elimination of water” in the way of equity and value. the new transit facility on Friday, April vehicles idling during gate downtimes. Victor Valley Transit Authority                    We have noticed a considerable increase 20, 2012 at 11:00 am, following the It is anticipated that construction will in leasing and sales activity in the High The Victor Valley Transit Authority (VVTA) is one of six transit agencies that SANBAG supports county Mountain Desert Committee Meeting at Desert region. We hope you enjoy our begin in late 2012. provides local bus service for the communities of Adelanto, Apple Valley, Hesperia, Victorville, and u 50th edition. We are extremely humbled this location. The public was invited. areas of the Victor Valley.    and proud that we have completed Lenwood Grade Separation, Barstow this monumental publication. I would   be remiss if I did not thank my idol The City of Barstow initiated this project The VVTA has completed construction of its new Victor Valley Transit Facility in Victorville. The new t and a gentlemen that I call my second in response to proposed commercial includes a 27,000 square feet administration and operations building, a 31,000 square feet bus main father “Dr. Alfred Gobar”, Chairman and industrial development in the area. Emeritus of Alfred Gobar Associates a bus parking lot to accommodate 120 buses and paratransit vehicles, 230 parking spaces for employ Currently, Lenwood Road has two lanes Anaheim. I originally went to Dr. Gobar of traffic in each direction. Lenwood service vehicles, a 13,000 square feet bus wash structure and fueling station, and a photovoltaic pan seeking advice in late 1992. During the Road presently carries approximately shade structure.  The facility was designed and constructed to achieve the highest feasible rating as es discussion I asked him if he had ever 4,200 vehicles per day, many of which produced a newsletter and he informed the standards of the Leadership in Energy and Environmental Design (“LEED”).”  are trucks. Lenwood Road   me that he had been co-editor of many. serves commercial, light Dr. Al, I can’t thank you enough and I VVTA will be having a dedication ceremony for th industrial, and residential am humbled to call you one of my close facility on Friday, April 20, 2012 at 11:00 am, follo friends. Thank you. developments in the vicinity of the BNSF grade crossing. Mountain Desert Committee Meeting at this loca Lastly, and most importantly, if you is invited.   Lenwood Road serves as a wish to continue to receive a copy major access route from local   of the Bradco High Desert Report, residents and businesses to    any statistical reports, op-ed articles that we post to our website for free, Interstate 15. Increasing please register at our website at www. vehicular traffic due to   thebradcocompanies.com/register. regional population growth   and rising train traffic from the ports have increased the congestion, which is causing increased delays at the   The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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High Desert Report A quarterly economic overview

In the Home Building Industry, the Indicators May Finally Point Upwards By Carlos Rodriguez CEO Building Industry Association Baldy View Chapter

The inland counties of San Bernardino and Riverside have always been the ultimate beneficiaries of job creation and housing demand that begins in the more densely populated coastal counties; San Diego, Orange and Los Angeles. So homebuilders in San Bernardino County (and most importantly the Victor Valley) have always taken a special interest in keeping a finger on Southern California’s economic pulse. And the pulse seems to be growing stronger, according to an overall assessment of the recent Inland Empire 2012 Builder Panel and Economic Forecast presented by the Building Industry Association (BIA) Baldy View and the Riverside County chapters. Summing up the general tenor of the presentation, panel moderator MetroStudy Director Steve Johnson noted that the overall theme of the event was that homebuilders “have changed their processes, they’ve changed the way they do things, they’ve changed the products in search of success – and they are getting that success this year.”

their product lines to include niche markets such as multi - generational and move up buyers, said Donna Lawler of Orange Coast Title, Co. Projects such as Lennar’s Rosena Ranch have adjusted their product lines to provide homes for these types of buyers, and will represent the new face of construction in the Inland Empire. While the overall permit figures in 2012 may paint a fairly dismal picture, the story they reveal is actually fairly heartening, added BIA Baldy View President Jonathan Weldy of Meridian Land Development.

that the I-15 Corridor cities (Ontario, Rancho Cucamonga, Fontana, Hesperia, Victorville, Apple Valley and the unincorporated county sections surrounding those cites) accounted for nearly two – thirds of the total permits in the county – and nearly half of those from Victor Valley cities. Residential construction in the Victor Valley and along the I-15 corridor cities leading to the region holds the key to San Bernardino County’s economic recovery, and the Building Industry Association (BIA) Baldy View Chapter maintains programs to ensure it happens. The big issue confronting builders in the High Desert continues to be water and every August for the past six years the BIA Baldy View Chapter has presented the Annual San Bernardino County Water Conference. The conference focuses on the key water issues confronting home builders, such as conservation, conveyance, and emerging new technologies to maximize and conserve our most precious resources.

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

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

Another aspect of the recovery is that home builders are increasingly expanding

Assessing the permit totals always tells a story. This year the story shows

Homebuilding remains the cornerstone of our region’s economy, and there are

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

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

continued on page 30

The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com


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High Desert Report A quarterly economic overview

“Zombie” Drivers Endanger Other Motorists Law Enforcement to Target Distracted Drivers Texting or Using Hand-Held Cell Phones

By Fran Clader, CHP SACRAMENTO, Calif. – Danger lurks behind the wheel when drivers redirects their attention from the road to some other distracting behavior, like talking on a cellular telephone or text messaging. During the month of April, law enforcement agencies throughout California will be especially focused on taking enforcement action on these inattentive, “zombie” drivers. The California Highway Patrol (CHP) along with the California Office of Traffic Safety (OTS), Impact Teen Drivers, and law enforcement agencies statewide are preparing to launch the second annual National Distracted Driving Awareness Month campaign, “It’s Not Worth It!” During the campaign kickoff month in April 2011, more than 52,000 citations were issued by law enforcement statewide, four times the monthly average. A first time citation will cost a minimum of $159, with a second violation at least $279. “Drivers need to ask themselves, ‘Is that phone call or text message worth my life or the lives of those around me?’” said CHP Commissioner Joe Farrow. “The answer is simple: it’s not worth it. Every distraction affects a driver’s reaction time, and things can change without notice.” In recent years, hundreds of people have been killed in California, while thousands were injured, as the result of collisions that involved at least one driver who was distracted. This distraction can be any activity that diverts the driver’s attention away from the primary task of driving. According to a study conducted by Carnegie Mellon University, the act of talking on a cell phone can reduce more than 35 percent of the brain activity needed for driving. Essentially distractions change a seemingly good driver into a “zombie” behind the wheel. To dramatize this “zombie-like behavior

In the Home Building Industry... Continued

behind the wheel, zombies are being added to this year’s “It’s Not Worth It” campaign. The campaign will be supported by statewide grassroots outreach, social media activities, and television commercials that encourage people to focus on the road and not be a “zombie” driver. Law enforcement sees firsthand the devastation caused by distracted driving and the needless pain associated with the senseless collisions that follow,” added Commissioner Farrow. “I am grateful that so many of the state’s law enforcement agencies are joining us in this important traffic safety endeavor again this year.” More than 200 local law enforcement agencies and 103 CHP offices will be participating in the monthlong, lifesaving effort. Similar to the previous year’s campaign, there will be both an enforcement and educational component. The overall goal is to reinforce to the motoring public the dangers of distracted driving and reduce the number of people impacted by this destructive behavior.

some positive economic signs that the construction industry and our economy are headed in the right direction. We remain optimistic that our industry will emerge from this unprecedented downturn and provide the engine for the economic recovery that our region desperately needs. The Building Industry Association (BIA) Baldy View Chapter represents homebuilders and associates in the housing industry in all of San Bernardino County and the easternmost portion of Los Angeles County. Founded in 1938, the Baldy View Chapter is the most honored homebuilding chapter in the nation. It is a member of the California Building Association (CBIA), a statewide trade association representing nearly 6,000 businesses, including homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.

”Parents and other adults need to set a positive example,” said OTS Director Christopher J. Murphy. “Start by never calling or texting anyone, especially your kids, when there’s a possibility they might be driving. Then let that same action follow you when you are the driver.” Among the more than 1,800 drivers over the age of 18 who participated in last year’s annual statewide traffic safety survey conducted by OTS, talking and texting on a cellular telephone were rated the two biggest safety problems on California’s roadways. In fact, talking on a cellular telephone (handheld or hands-free) was identified as the most serious distraction by 56 percent of the respondents. Adults are not the only offenders when it comes to distracted driving. According continued on page 31

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High Desert Report A quarterly economic overview

The High Desert Single Family Market Appears To Be Stabiling.

“Zombie” Drivers Continued

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

For each month during 2004 and 2005, an average of 600 new homes were completed and sold; and an additional 500 to 600 previously owned homes were also purchased. The vacancy level for housing was low; and builders were not able to deliver homes fast enough. The median price for previously owned Single Family homes peaked in February 2006 at $322,000. In March 2012 the median home price in the High Desert for the Victor Valley Area was $110,000. Home prices have declined 65% from the peak. Over the last year the median home price increased by only $79 with home prices fluctuating between $106,000 and $112,700; consequently home prices today are statistically the same as they were a year ago. The table below published by Bob Thompson is the Market Condition Report for March 2012. Home prices in the High Desert and elsewhere have probably been stable because Fannie Mae, Freddy Mac and the FHA along with some of the major financial institutions appear to be controlling the number of homes they release for sale in order to keep home prices from declining substantially from current levels. Some economists believe that an additional 15% to 20% decline in home prices across the United States would substantially weaken the financial strength of banks and cause undue hardship to many homeowners. If in fact these institutions have elected to carry the homes in their portfolios rather than dumping the units on the market, they are probably implementing a constructive policy given the current state of the economy. During 2004 and 2005 the number of outstanding listings averaged 2,500, which represented four to five months of sales. As of February 2012 there were only 1,063 homes listed for sale in the Victor Valley area.An average of 477

homes was sold each month. Hence the number of listings on the Victor Valley MLS represents slightly more than a two month supply. Also, a review of the second page of the Market Condition Report would reveal that only 209 REO homes were listed for sale at the end of March, which is less than the 224 units sold in that month. For whatever reason, the financial institutions are not listing homes that they acquired through foreclosure, even though some real estate agents claim more homes could have been sold if more properties had been listed. REO and Short Sales accounted for 67% of the transactions in February 2012.This is down from 74% a year earlier.This is a positive trend because it indicates properties that were foreclosed on represent a declining portion of the sales activity. Many of the buyers were investors who rather than owner occupants renovate the homes and either resell the units; or lease them to renters who are not able to purchase a home. The demand for Single Family homes has been artificially increased because of policies of the Federal Government. Interest rates are extremely low and down payments could be substantially below 20% of the purchase price. Individuals are purchasing homes in the High Desert with as little as 3% down. On the other hand, the underwriting criteria and documentation requirements are far more rigorous and extensive than normal; and the requirements for home appraisals tend to place a downward pressure on home prices. The effect of all this is to make home prices in the High Desert the most affordable in Southern California. Many individuals want to know when the construction level for Single Family homes will begin to rebound. Some analysts believe the rebound could begin in earnest as early as 2014 while others

to the National Highway Traffic Safety Administration, teen drivers are more likely than any other age group to be involved in a fatal crash where distraction was involved. “Teens, even more than adults, are accustomed to using technology to have instant access to their friends. It’s not only technology – teens are frequently distracted by loud music, passengers, and other everyday tasks that, when done behind the wheel, become lethal,” said Dr. Kelly Browning, Executive Director of Impact Teen Drivers. “These everyday distractions, coupled with inexperience, often have deadly consequences.” This year, National Distracted Driving Awareness Month coincides with California Teen Safe Driving Week, which is the first week of April. For nearly five years, Impact Teen Drivers, a non-profit organization, has been providing awareness and education to teenagers, their parents, and community members about all facets of responsible driving, with the goal of reducing the number of injuries and deaths suffered by teen drivers as a result of distracted driving and poor decision making. Age aside, California’s traffic safety partners are asking for the public’s help in making this April’s distracted driving awareness campaign successful. “It is important to note that the success of this campaign is not measured by the number of citations the officers write, because we are hoping that by calling attention to this effort we will gain voluntary compliance,” added Commissioner Farrow. “The success of the campaign is measured by the number of lives saved.” Don’t be “zombie” drivers; focus on the task of driving when you are behind the wheel. Remember, whatever the distraction, “It’s Not Worth It!”

continued on page 32

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High Desert Report A quarterly economic overview

The High Desert Single Family Market Appears To Be Stabiling. Continued

believe it will be another seven years before new home construction reaches 3,000 units per year or 40% of the peak volume of the last real estate cycle.

very precise estimates, but they do provide a sense of the overbuilding that occurred during the last housing bubble.

The Inland Empire and the High Desert The construction of Single Family homes housing markets will be in equilibrium will ramp up when the excess vacancy in when these excess units are occupied, the High Desert and the Inland Empire is as a result of household formations. absorbed due to an increase in household The number of households in the Inland formations. There are 2,000,000 to Empire and the High Desert is expected 2,500,000 excess vacant housing units to increase because of population growth, in the United States, which are defined driven by the formation of jobs and an as the number of vacant units in excess increase in the number of retired people. of normal vacancy levels for a market Many real estate analysts and economists area. The normal vacancy level for Los estimate it will take another five years Angeles County is approximately 3.5%, before the excess of vacant housing units whereas the normal vacancy level for the are absorbed. There are an estimated High Desert is around 5%. There are an 150,000 jobs in the Inland Empire estimated 40,000 to 70,000 excess vacant previously lost in the Great Recession far more rigorous and extensive than normal; and the requirements for home appraisals tend to place a  housing units in the Inland Empire and that still have to be replaced. downward pressure on home prices. The effect of all this is to make home prices in the High Desert the  between 5,000 and 7,000 excess vacant When the excess vacancy is absorbed most affordable in Southern California.  units in the High Desert.These are not home prices are expected to increase to

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

Information is believed accurate but not guaranteed. Resale market only. Report intended to be generally descriptive, not definitive. The Bradco High Desert Report 760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: info@thebradcocompanies.com  


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High Desert Report A quarterly economic overview

Solar Mitigation

By Brad Mitzelfelt, 1st District Supervisor, San Bernardino Economic and environmental problems with the mega solar projects now being erected on federal land in our Southern California deserts have been the subject of several stories in local and regional media recently. One major aspect of the issue has not been addressed in that coverage. Solar energy development on public lands not only affects species and their habitats; it has potentially profound impacts on local government, future economic growth, and other historic uses of the desert, including recreation, off-highway vehicle use, and mining, among others. We fear that expansive solar developments, because of their impacts to species and the imposition of draconian mitigation requirements, could result in locking down the rest of the desert, creating an impenetrable de facto wilderness area, and eliminating a critical array of economic activities, while denying the right of our citizens to enjoy the public lands they own. More than 80 percent of San Bernardino County is in federal ownership, and multiple uses on those lands – ranging from a variety of recreational activities to filming to mining – have long been critical to a sustainable and vibrant local economy. As the elected county supervisor who represents 15,600 square miles of San Bernardino County, including the sixsquare-mile Ivanpah Solar Electric Generating Station just this side of Primm, Nev., it is clear to me that the strategies and costs of protecting species from this headlong rush toward renewable energy are unsustainable and unacceptable.

Projects that disturb or destroy habitat must make up for that loss by purchasing private land at ratios of 2-to-1, 3-to-1, even 5-to-1. In San Bernardino County, just three solar projects on federal land – BrightSource’s Ivanpah project, K Road Power’s Calico project on Interstate 40 east of Barstow, and a project proposed by First Solar immediately adjacent to Ivanpah – will require the acquisition of nearly 22,000 acres of private land or roughly 34 square miles. That’s an area larger than Glendale that must be purchased, provided the required mitigation ratio is “only” 2-to-1. That land comes off the tax rolls, reducing revenue and further straining the ability of local government to provide essential services, and precludes any other uses that provide sustainable recreational and economic opportunities. (Note that Abengoa Solar’s 250-megawatt Mojave Solar Plant, now under construction northwest of Barstow, is on private, previously disturbed agricultural land and requires minimal mitigation.) Under the current mitigation strategy, it would take only a few more of these mega-projects to take out the remaining available private land in the desert, and render future development, solar or otherwise, virtually impossible.

I also called for the protection of historic uses on public lands, including hiking, camping, rock hounding, off-highway vehicle use, grazing and mining. If a solar project eliminates one or more of those opportunities where they existed previously, then other public land should be made available for the affected uses. Those positions were ultimately adopted by not only San Bernardino County, but the National Association of Counties. Solar development clearly is going to be part of the multiple-use mix on our public lands. Given the construction industry in the Inland Empire has been devastated with the loss of more than 76,000 construction jobs since the peak in 2006, the employment opportunities created by large solar projects are badly needed. However, at the local government level, we are striving to help our state and federal colleagues understand that these projects must not restrict or eliminate other uses that have provided economic benefits for more than a century. Brad Mitzelfelt is vice chairman of the San Bernardino County Board of Supervisors and represents the First District, which includes a large portion of the Mojave Desert.

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

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High Desert Report A quarterly economic overview

Town of Apple Valley City Update

By Orlando Acevedo, Economic Development Manager That Can’t Be Good In 2011, action by the California legislature and governor eliminated the state’s redevelopment program. In a clear taking of local funds to help balance the state’s enormous budget deficits, Assembly Bill 26 set into motion legislation that would eventually be decided upon by the state supreme court and would end one of the most effective job creation tools in California. As a result, the Town of Apple Valley has established itself as the Successor Agency to the dissolved Apple Valley Redevelopment Agency (AVRDA) to carry out many of its obligated projects and contracts. Moreover, an Oversight Board, comprised of representatives of local taxing entities, was created to formally dissolve the Successor Agency of the former AVRDA of all its enforceable obligations, including debts, agreements, and disposition of assets. When the redevelopment program was dissolved by the state, it put an end to the AVRDA that helped create more than 5,600 jobs, infused $55 million into the local economy, revitalized blighted areas, facilitated needed infrastructure expansion, funded residential rehabilitation and much more. So What’s the Solution? The legislature seems to be acknowledging the drastic and unintended consequences of AB 26, and there have been recent bills introduced to alter AB 26 timelines and deadlines and potentially free up certain unencumbered funds for housing and other activities for which the revenues were intended.

Municipalities all over the state are getting a game plan together to find alternative ways to provide the services that were formerly the function of the redevelopment agencies. Apple Valley Town Manager Frank Robinson was appointed to the Economic Development Task Force for the League of California Cities. As a representative for the Desert Mountain Division, Mr. Robinson will help formulate strategies to accomplish this undertaking. Pressing On Attracting jobs to Apple Valley remains a high priority for Town staff and its residents. According to a recent community survey, when asked to prioritize among a series of projects and programs that could be funded by the Town of Apple Valley in the future, providing incentives to attract new employers and jobs to town was assigned the highest priority by 71 percent of the respondents. As such, the Town is resolved to preserve key capital projects which add jobs and investment to the local community, despite the recent redevelopment dissolution. One project in particular that the Town is striving to preserve is the Yucca Loma Bridge. The Yucca Loma Bridge The excitement is building as the Town of Apple Valley makes further progress on the long-awaited Yucca Loma Bridge. The number one transportation priority of the Town since 2005, the Yucca Loma Bridge is a necessary and much anticipated project that will improve east/ west travel across the High Desert.

Studies have shown that, in time, no amount of improvements to existing corridors will relieve the increasing traffic congestion on our already established east/west travel routes, so the success of this project is vital to our region. With an estimated price tag of $31 million for the first phase, the project is moving forward into the right of way acquisition and construction and is anticipated to begin construction late this summer. A formal funding agreement with SANBAG for construction was scheduled to appear before the SANBAG Board of Directors at their April 4 meeting. We have high hopes that the Apple Valley portion of this project will be complete by January 2014. Incoming Retail The 240,000-square-foot Walmart Super Center, planned for construction on Dale Evans Parkway just north of Civic Center Park, is on a course for completion by this fall. Crews have successfully cleared and grubbed the 30-acre site and Walmart is in the process of evaluating construction bids. Award of the bids is anticipated to be sometime in April after which time the developer will schedule a groundbreaking. Walmart has a very aggressive construction schedule and anticipates completion of the store by late October. For more economic development information visit www.GetASlice. org. For general Town information visit www.AppleValley.org

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High Desert Report A quarterly economic overview

Barstow City Update

By Oliver Chi, Assistant City Manager During the past several years, the City of Barstow has certainly experienced its share of negative impacts from the downturn in the economy. Even today, the signs of economic distress can be seen throughout the community as Barstow still has an unemployment rate of 16.4%. Unequivocally, there is still much work that needs to be done. When looking at the situation globally, however, the City of Barstow believes that there is much to be optimistic about. Signs of an economic turnaround can be found when looking at statistical data. In addition, several projects are underway that have the potential to make dramatic economic improvements in the community. From a statistical perspective, one measure that illustrates how a community’s economic health is trending can be seen through tracking the area’s median income levels. In the 2000 census, the Barstow area had a median income level of $35,069. As of the 2010 census, the median income levels for the Barstow area had increased around 37% to $48,042. This data means that the quality of the jobs in the Barstow area is improving and points to a positive trend for the local economy. In addition to the statistical data, the city has been working on several important economic development projects that have the potential to significantly improve the overall quality of life in Barstow. Current significant projects that are underway in the community include the following:

Barstow Community Hospital Project During the past several years, the city has been coordinating with Community Health Systems, Inc., on building a brand new state-of-the-art medical facility in town. In late 2012, those efforts will culminate with the opening of the

new Barstow Community Hospital. The ultra-modern three-story, 82,500 square feet facility will feature 30 private rooms, a high-tech emergency room, a modern intensive care center, a technologically advanced diagnostic imaging department, and innovative laboratories & surgical rooms. All told, building the updated facility required around 3,283 cubic yards of concrete, over 65 tons of concrete reinforced rebar, 476 tons of structural steel, and over 120,000 square feet of fireproofing material. When the new hospital is complete, the overall project will have constituted an estimated investment of around $80 million in the Barstow community.

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

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

scheduled for completion in 2015.

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

Wal-Mart Distribution Center The city has continued to stay in close contact with representatives from Wal-Mart regarding the proposed construction of a cold-storage distribution center located adjacent to the city’s planned Industrial Park. In every conversation that the city has had with Wal-Mart, the message has continued on page 36

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High Desert Report A quarterly economic overview

Barstow City Update Continued

remained consistent. Wal-Mart is still planning on constructing the distribution center in Barstow; however, the project is waiting for approval from the WalMart Logistics Department. Given the recent number of Wal-Mart Supercenter conversions occurring in the high desert and throughout Southern California, in addition to the announcement that WalMart will be testing a small-store format called Wal-Mart Express, it is likely that the distribution center in Barstow will be approved for construction in the near future.

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

Barstow Casino & Resort Project The Barstow Casino & Resort Project, which is being pursued as a partnership project between the Los Coyotes Band of Cahuilla & Cupeňo Indians and Bar West Gaming, is still a viable initiative that is in the review process. In order for the initiative to move forward, both the Federal Government and the State of California will have to agree to allow the project to be constructed.

Currently, the Federal Government’s Department of the Interior is evaluating the proposed Barstow Casino & Resort project, and a public hearing on the environmental impact statement was held last July. If the Department of the Interior approves the project as meeting federal guidelines, the next step in the process would be negotiating a contract with the Office of California Governor Jerry Brown. That contract would also have to be approved by the California State Legislature. In an effort to give the Barstow Casino & Resort Project the best chance of gaining State approvals, the city is in the process of determining how to hire a State lobbying firm. If all the approvals are obtained, the overall casino project could be constructed in 2013 or 2014.

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

in the Barstow area that are either underway or in the planning process illustrate that... …Barstow is strategically situated midway between Los Angeles and Las Vegas. …Barstow is a major transportation corridor that serves more than 60 million travelers and 19 million vehicles each year. …Barstow is where the Interstates 15 & 40 and Highways 58 & 247 all converge. …Barstow is home to the Barstow Outlets and Tanger Outlets, which provide shopping options that are usually only found in metropolitan areas. …Barstow is where an eclectic mix of railroad, military, high technology, and mining employers have located. …Barstow is home to a vibrant and caring community .…Barstow is at the crossroads of opportunity… where the best is yet to come. Any individual who would like to learn more about all that Barstow has to offer is encouraged to visit the city’s website at www.barstowca.org or to contact Oliver Chi, Assistant City Manager, via email at ochi@barstowca.org or by telephone at (760) 577-4510.

While the overall economic situation is still challenging, the current projects

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High Desert Report A quarterly economic overview

Hesperia City Update

By Lisa K. LaMere, Economic Development Management Analyst Ranchero Road Underpass Project The Ranchero Road Underpass broke ground on August 31, 2011, and is approximately 20% complete at the time of this writing, with the bridge the focus of construction. It is expected that the bridge should be completed in summer 2013. The project is progressing slightly ahead of schedule and this alternate east-west route through the southern portion of the city should be accessible to residents by early fall of 2013. These improvements, stretching from Danbury Avenue on the east side to Seventh Avenue on the west, will greatly improve traffic options for travelers of the entire High Desert. On the Right Track The G Avenue Industrial Rail Lead Track was completed in March, with a ribbon cutting ceremony held on April 19, 2012. Consisting of nearly one mile of new railroad lead track and a parallel runaround track, it will be served by Burlington Northern Santa Fe Railway and allow adjacent properties rail access. Business attraction efforts are a priority for the project, which will stimulate development and indirectly influence the attraction and expansion of other businesses into the 1,300-acre ‘I’ Avenue Industrial area. In addition, a future Team Transload facility would foster entrepreneurship by making rail accessible to businesses throughout the region that will now be able to ship and receive goods with the use of a Team Transload facility. Now Open for Business Victor

Valley

Transit

Authority

recently received the certificate of occupancy for its new facility. Located on E Avenue and Smoketree, the complex consists of a 28,820 square foot administrative building and more than 43,000 square feet for maintenance, fuel, and washes facilities. Sleep Number opened the doors of its 2,400 square foot bed and bedding store in High Desert Gateway. Also located in the High Desert Gateway, the new 20,005 square foot JoAnn Fabric and Crafts store, near Marshall’s, opened on March 9, 2012. Jo-Ann executives, dignitaries, City representatives and 150 Jo-Ann fans were on hand for the ribbon cutting ceremony held on March 22 to kick off the grand opening celebration.

Are your property taxes too high? Did you know that you have a right to appeal your property taxes? If you are a property owner in the County of San Bernardino you may be able to appeal the current assessed value of your property. The regular filing period for the County of San Bernardino is July 2nd through November 30th. For more information, you can contact your local County Board of Equalization via the Clerk of the Board’s office at www.sbcounty.gov/assessmentappeals or call (909) 387-4413.

A new 7,147 square foot AutoZone on Main and Maple opened in April. The Pepper Olive Café, offering breakfast, lunch, and dinner, leased 1,737 square feet of restaurant space closest to Eleventh Avenue in the Hesperia Marketplace on Main Street. What’s in store for the future … The City of Hesperia has received plans for construction or tenant improvements for the following businesses: The long-awaited 194,183 square foot Walmart Supercenter is taking shape, evidenced by the completed construction of exterior walls. With the completion of parking lot lighting and asphalt being laid down in April to the 43.84-acre site, an opening in September is expected. In addition to the Supercenter, a second continued on page 38

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High Desert Report A quarterly economic overview

Hesperia City Update Continued

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

been issued permits for a 9,360 square foot, 3-story medical office building. Their future site is located west of Eleventh Avenue on the north side of Main Street.

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

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

Beef ‘O’Brady’s, a Tampa-based franchise, has sited its first California location in Hesperia with a 6,009 square foot concept seating approximately 250 patrons. In early April, the family sports restaurant and pub began its transformation of the former Bob’s Big Boy located at Main Street and Cataba. Featuring 19 big-screen TVs and a diverse lunch and dinner menu, Beef ‘O’ Brady’s anticipates a summer opening. Tenant renovation is currently underway on a 2,250 square foot microbrewery, complete with tasting room, in an establishment located on Poplar Street near Three Flags Avenue, west of I-15. Renovations should be completed in April. Hesperia will soon be home to additional medical offices. In the early planning stages is a 2-story, 14,360 square foot medical building to be sited on Main Street, east of Cottonwood. Main Street Medical has

Desert Discount Tires will soon complete Phase I of its 4,973 square foot 2-phase expansion plan, which includes shop areas, 5 bays and office space. Ground Breaking Project A first for Hesperia, a 37,000-squarefoot movie theater from developer Cinema West broke ground on February 23. The Hesperia Cinema 12 will soon join more than 188,000 square feet of development in Hesperia’s Civic Plaza. Creating 40 new jobs, the new theater features start-of-the-art digital technology and stadium seating for

1,700 movie-goers. Residents have long desired entertainment venues in Hesperia, and with popcorn in hand, they will have their choice of 12 movie screening options, including two IMAX-sized screens. The Hesperia Cinema 12 also features both game and party rooms. Uniquely, it will be the first cinema in the High Desert to serve food and alcoholic and non-alcoholic beverages to seated movie fans in a new theatergoing concept known as a “meal and a movie” in two screening rooms limited to patrons aged 21-and-over. Look for a grand opening in time for the Christmas movie season this year. To find out more about operating in one of the most innovative enterprise zones in the country, or to request information about Hesperia’s retail or industrial opportunity sites, contact Steven Lantsberger at (760) 947-1906, by e-mail at econdev@cityofhesperia. us; or visit www.cityofhesperia.us/ econdev.

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39

High Desert Report A quarterly economic overview

City of Victorville – Spring 2012 By Keith Metzler, Assistant City Manager

As the geographic and commercial center of the High Desert, Victorville’s resurgence is leading the way for continued growth in the region. Nowhere is that more apparent than with the construction of the Nisqualli/La Mesa/ Interstate – 15 interchange. City officials have partnered with SANBAG and CalTrans to bring the interchange project to life, with construction already underway and a completion date set for early fall 2013. The interchange will alleviate traffic congestion by providing a new east/ west route through the Victor Valley. The interchange was recently named the 2011 Public CEO Public Works Project of the Year by PublicCEO.com. The most active area of development within the city is at Southern California Logistics Airport (SCLA). Recently industrial companies, such as United Furniture Industries and M&M/Mars have brought in over 130 jobs to the region in the last six months. Aviation operations at SCLA continue to be in demand, with several companies extending lease agreements for hangar and office space at the airport. Southern California Aviation, a tenant at SCLA since 1998, has extended its current lease agreement for four more years with an additional five year option beyond that. The lease covers Southern California Aviation’s building space, consolidation area and ramp usage on its 240-acre site. Boeing, a tenant at SCLA since 2005, has extended several of its leases at SCLA through December 2012, including its hangar and office space as well as a storage facility. Victor Valley College has also extended its aviation technology training program at SCLA, with 25 more students beginning classes in the summer of 2012. The students will receive hands-on training at SCLA, including 2,000 hours of documented class and lab instruction. Many of the current students within the program are hired for entry level positions with SCLA companies while still in school. Upon graduation of the

two year program and FAA certification, a licensed Airframe & Powerplant technician typically makes $25 an hour. In addition to the dynamic activity at Southern California Logistics Airport, Victorville has seen an influx of commercial and retail development. A local Hyundai car dealership is expanding its space to add a new Mazda dealership, with over 8,500 square feet of new show room and office space currently under construction. The new dealership will be located on the corner of Palmdale and Anacapa Roads. The Mall of Victor Valley is also expanding, with construction taking place on two of its anchor locations. Macy’s has announced it will open a 103,000 square-foot anchor at the former site of Gottschalks by mid-2013. JCPenney’s has also announced plans to move from its current location to the expanded anchor slot of almost 100,000 square feet that is currently under construction. JC Penney’s new location will double its current size and is set to be complete by the end of 2012. A new 193,000 square-foot Walmart is currently under construction at Dunia Plaza, sitting on the southwest corner of Interstate -15 and Bear Valley Road. The Walmart will be located next to the existing Lowe’s and Kohl’s anchors and will open in mid-2012. Another Walmart at the corner of Highway 395 and Palmdale Road is currently in the planning stages.

development of Southern California Logistics Airport. Because of these projects, the City now enjoys increased sales tax revenue that helps provide our current level of Police and Fire services. Without the redevelopment agency, there would have been little the City could have done to directly influence the type of development we see today. Now that redevelopment has been eliminated, the City of Victorville’s ability to encourage new industries has been substantially weakened and the City will not have the ability to be as responsive to the community’s demand for jobs in an economy that is desperate for employment. To adjust, Victorville will have to become creative if it wants to develop a more balanced local economy. New industries, such as manufacturing food and beverage products, aviation flight testing and maintenance services for commercial aircraft currently taking place at SCLA is a good step in the right direction. However, the current and future City Council must be prepared to make hard decisions about creating special industry attraction programs, including low cost financing, re-tooling its use of federal and state grant programs, developing revolving loan programs, fee deferral, sales tax sharing programs and continued use and expansion of its Municipal Utility services to compete for businesses in a global economy.

Elimination of Redevelopment On February 1, 2012, redevelopment as we have known it was eliminated by the Governor and the State Legislature. Many residents of Victorville may not be aware of the impact this will have on our local community. The Victorville Redevelopment Agency was directly responsible for much of the development in the city the past decade, including the AutoPark at Valley Center, the Roy Rogers interchange and accompanying development, Bear Valley Road/Hesperia Road Corridor, and the

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