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February 17-March 2, 2015
www.lbbusinessjournal.com
FOCUS ON THE AVIATION/AEROSPACE INDUSTRY
SPECIAL REPORT – REAL ESTATE
Long Beach Industrial And Multi-Family Properties Drive Real Estate Developments Residential, Office, Retail Sectors Experience Moderate Activity ■ By SAMANTHA MEHLINGER Senior Writer s the overall U.S. economy A continues to improve and Long Beach is inching closer to recovering the jobs it lost in the Great Recession, local residential and commercial real estate developers are generating new construction to meet increasing demand. The industrial and multifamily markets continue to stand out in terms of strong occupancy rates, sales activity and construction, with single-family residential, retail and office markets experiencing moderate activity by comparison.
Long Beach should gain back all the jobs it lost to the recession by the middle of the year Robert Kleinhenz, Chief Economist Los Angeles County Economic Development Corporation
“It seems as though we have one of the lowest vacancy rates of any place in the country,” Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corporation, said of the regional industrial market, which includes Los Angeles, Long Beach and the South Bay. Los Angeles County as a whole had a va-
cancy rate of about 3.4 percent and the South Bay had a vacancy rate of about 3.8 percent at the end of last year, Kleinhenz said. High demand and tight supply continue to push up sales prices and lease rates, according to Lee & Associates’ most recent market report. Douglas Park continues to be the darling of the local and regional industrial real estate markets, as evidenced by Virgin Galactic’s announcement last week that it is leasing a 150,000square-foot building there to manufacture satellite launch vehicles. In a press release, Virgin Galactic CEO George Whitesides indicated (Please Continue To Page 4)
Business Losses Mount As Port Congestion Continues Larry O’Toole, CEO of Rubbercraft and its corporate parent, Sanders Industries Holdings, Inc., says the spaciousness of its Douglas Park plant has improved the flow, efficiency and profitability of producing high-tech elastomeric parts used by the aviation/aerospace and a variety of other industries. (Photograph by the Business Journal’s Thomas McConville)
The Right Move – Relocating Headquarters To Long Beach Proves Successful For Rubbercraft ■ By DAVE WIELENGA Staff Writer lthough the gadget heads and polymer chefs in RubberA craft’s kitchen were putting more hustle and bustle into every batch of the elastomeric goodies so craved by high-tech clients in fields from aviation to the military to medicine, the company’s cash register wasn’t ringing with the usual zing. Clearly, (Please Continue To Page 22)
■ By SAMANTHA MEHLINGER Senior Writer hile congestion issues facing West Coast ports, in particular the ports of Los Angeles and Long Beach, were initially caused by changes in business practices throughout the supply chain, congestion has been exacerbated by the contentious and thus far fruitless contract negotiations with longshore workers at West Coast ports during the past few months. As of February 13, there were 19 ships at anchor outside the San Pedro Bay Ports waiting for docks to be cleared of cargo so they could complete deliveries and accept exports. But those docks are not being cleared in a timely fash-
W
ion. For months, fewer longshore workers than necessary to handle regular shipments have been deployed to local ports, creating backlogs of cargo on docks and a ripple effect of congestion throughout the supply chain. Last week, the Pacific Maritime Association (PMA), which represents employers of longshore workers unionized under the International Longshore and Warehouse Union (ILWU), announced it was suspending vessel operations (unloading and loading) from February 12 to 16, after having done the same the weekend prior. The economic impacts of the stymied international trade industry are already making themselves apparent, particularly in the West
A Big Plus For Long Beach As Virgin Galactic Inks Lease; Job Fair March 7 ■ By DAVE WIELENGA Staff Writer eritage and tradition are H abstract – and sometimes obscure – concepts, but the rich history of aviation in Long Beach translated into some of the
most practical and influential reasons that Virgin Galactic is coming here to design and manufacture its small satellite launch vehicle, LauncherOne. Will Pomerantz, vice president of special projects at Virgin Galactic, didn’t directly address those terms
Long Beach Business Journal 2599 E. 28th Street, Suite 212 Signal Hill, CA 90755-2139 562/988-1222 • www.lbbusinessjournal.com
or themes during his conversation with the Business Journal a couple of hours after last Thursday’s announcement that the company had leased a 150,000-square-foot facility in Douglas Park.
But when he was asked what Virgin Galactic was looking for and what it has found, this is how Pomerantz replied: “We needed a very large space (Please Continue To Page 21)
PRSRT STD U.S. POSTAGE
PAID Los Angeles, CA PERMIT NO. 447
Whit Latimer, left, and John Hancock are principals of Bancap Investment Group, a specialty property management and leasing compay. See story Page 12.
Coast agriculture industry, which depends upon timely shipments to ensure perishable goods are usable upon delivery. As Mark Vitner, senior economist for Wells Fargo, explained: “Once something spoils, it is spoiled . . . It is a loss.” (Please Continue To Page 13)
4TH DISTRICT
Not Just Another City Council Race; This One ‘Counts’ ■ By GEORGE ECONOMIDES Publisher’s Perspective n increase in the city’s A utility users tax? A mandated $15 an hour minimum wage for all hotels, motels and restaurants in Long Beach? City contracts awarded only to unionized groups? “Not possible,” you say. Think again. It’s not that far-fetched. The outcome of the April 14 special election for a new 4th District councilmember is expected to determine how, and if, the city council moves forward with those and other measures that will negatively impact the business community, property owners and the pocketbooks of nearly every household in the city. It’s no secret that several regional and statewide unions want to see the minimum wage go to $15 an hour for all hotel and restaurant workers. Locally, (Please Continue To Page 27)
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2 Long Beach Business Journal
Inside This Issue 4 13
22
February 17-March 2, 2015
26
Special Report: Real Estate
Residential, Office, Industrial, Retail Profile Business: Bancap Investment Group
Newswatch
Port Congestion, Continued From Pg 1 Mayor’s Technology And Information Initiatives Prioritizing The Tidelands Funded Projects Transit To Hold Public Hearing On Buses Economic Development Commission Members Helping Long Beach Businesses Grow: Northgate González Market Virgin Galatic, Continued From Pg 1
Focus On Aviation/Aerospace Industry
Rubbercraft, Continued From Pg 1 From Possible International Flights To Current International Student, Airport Shows Diversity
28 30 31
In The News
A Council Race That Will Shape The City’s Future Foundation Check Aids With Department Upgrade City Prosecutor Presents Annual IMPACT Awards Captain Vic’s Coffee & Ice Cream Opens Saving Face Fitness Opens At Bliss On Broadway O’Brien Named Executive Director Of CITT At CSULB
Perspective
Realty Views By Terry Ross Small Business Dollars & Sense By Ben Alvarado HealthWise By Shaun Setty, M.D. Third Sector Report By Jeffrey Wilcox Effective Leadership By Mick Ukleja
Art Matters
Presented By The Arts Council For Long Beach
The Nonprofit Page
Presented By The Long Beach Nonprofit Partnership
Free: Long Beach Business Journal Digital Edition, Monday Morning Coffee, NewsFlash Sign up at: www.lbbusinessjournal.com Follow us on Twitter: @LBBizJourn
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2015
5531 Bryant Drive East, Long Beach Estate Section of Park Estates $6,900,000 5 Bedrooms • 4.5 Baths 5,000-square-foot Home
Ken Trossen Owner/Broker 562/619-9889 kentrossen@equityre.com
Mike Trossen Owner/Broker/Attorney 562/233-5954 trossmk@aol.com
One-of-a-Kind Landmark Estate Home Designed by Famed Architect Paul Williams Located on 2.6 Acres. The Largest Residential Lot in Long Beach.
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Magnificent English Tudor Estate in Park Estates
This Elegant Custom English Tudor Home features the Finest of Materials, Craftsmanship and Quality. This is a Rare Opportunity to Own your own Premier Private Compound or Corporate Retreat, while Enjoying the Luxury of the Ultimate Resort Lifestyle in an Exclusive Coastal Living Location. Special Features include: Imported Honduras Mahogany Doors, Windows, Crown Moldings and Wainscoting, Crystal and Brass Chandeliers, Slate Roofing, Copper Gutters, Amazing Exterior English Brick Work, Formal Entry with Marble Flooring, Beveled and Leaded Glass, French Doors Throughout, Two Mahogany Staircases, Formal Living Room with Marble Fireplace, Formal Dining Room with Quarter Sawed Oak Flooring, Incredible English Library and Pub Bar with Wood Beams, Harringbone Oak Wood Flooring with an Oversized Marble Fireplace, Gourmet Chef's Kitchen with Top of the line Appliances, Center Island Granite, Butcher Block, and Tile Counters, Breakfast Area, Oversized Family Room, Guest Suite downstairs, All other Bedrooms and Master Suite Upstairs, Gym, Maids Quarters with Kitchen, Den, Game Room, Eight Garages, Parking for Nine Vehicles, with Guest House above, Swimming Pool with Rock Fountains and Spa, Lighted Tennis Court.
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February 17-March 2, 2015
4 Special Report – Real Estate
The Pike at Rainbow Harbor is undergoing extensive renovation and construction to be repositioned as an outlet center. At left, work is underway on a nearly 40,000-square-foot, two-story building for new retail establishments. Above, facade and interior work continues on the two-story facility to house H&M. (Photograph by the Business Journal’s Thomas McConville) (Continued From Page 1)
the company was expanding its presence in the Southwest to service its growing customer base. Before the announcement, Lee & Associates Principal Brandon Carrillo said the building was on the market for lease at $180 per square foot, which he said, if achieved, would be a new high for the local marketplace. With few industrial buildings available for sale, some companies are investing in new buildings at Douglas Park, which offers a large amount of developable land with nearby 405 Freeway access. Last week, Lee & Associates announced its Long Beach office had facilitated the sale of a 1.98-acre parcel at Douglas Park to Signal-Hill based 2H Construction. The company intends to build small industrial buildings there, according to Jeff Coburn, principal of Lee & Associates. Other developments include Universal Technical Institute’s approximately 140,000-squarefoot automotive trade school, Shimadzu Precision Instrument’s 58,796-squarefoot building at the corner of Lakewood Boulevard and Conant Street, and a planned 40,000-square-foot headquarters for Nautilus International Holding Corp. Demand for local industrial space is primarily driven by activity at the ports of Long Beach and Los Angeles. With the longshore workers who unload ships currently slowing down work as their union negotiates their contracts, ships are getting log jammed in the harbor, causing ripple effects throughout the supply chain. Local real estate agents expressed concern that, if the slowdown continues, the industrial market might take a hit. The Long Beach multi-family market continues to be strong among both existing properties and new construction. Local agents report that low interest rates are still driving strong demand from investors looking to purchase existing buildings, and low inventory is driving up sales prices. The largest recent sale of an apartment building was to Sares-Regis Group, which purchased Pine@Sixth, a four-story, 158-unit apartment commu-
nity with ground floor retail in Downtown Long Beach, in January. Kleinhenz noted that vacancy rates among Los Angeles County rental units are already low, and continue to decline as job counts improve and new households are formed. Growing demand for multi-family units has led to a recent surge in development in Downtown Long Beach, with nine multi-family projects either planned or under construction. Construction continues on the 223-unit high-rise The Current at 707 E. Ocean Blvd., the 222-unit Parc Broadway project at 245 W. Broadway, the 156-unit Edison Lofts at 100 Long Beach Blvd., the 69-unit Pine Square development at 250 Pacific Ave. and the 30-unit 6th Street Lofts at the corner of 6th Street and Elm Avenue. Plans for the adaptive reuse of the Ocean Center Building at 110 W. Ocean Blvd. and the Security Pacific National Bank Building at 110 Pine Ave. are awaiting approval by the City of Long Beach, as is a brand new 216-unit building adjacent to Ocean Center, being developed by Lennar Multifamily Communities. Job gains and better financial stability among prospective homebuyers ought to cause sales of single-family homes to increase this year, according to Kleinhenz. Long Beach should gain back all the jobs it lost to the recession by the middle of the year, he said, which may translate to more households being formed and subsequently a higher demand to purchase homes. Very low supply, coupled with stringent lending requirements and rising prices, somewhat stifled sales in the Long Beach single-family market last year. This year marks the first year that former owners who lost homes during the recession will have their damaged credit records cleared, which may cause a “wave of former homeowners” to buy homes again, he said. William Yu, an economist for UCLA’s Anderson Forecast produced by the Anderson School of Management, agrees with that assessment, saying steady demand coupled with a short supply of
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February 17-March 2, 2015 homes should cause sales prices to increase this year. Another ongoing real estate development in Long Beach is the conversion of The Pike at Rainbow Harbor by its property management firm, Ohio-based DDR Corp., into an outlet center. A new, twostory building measuring about 22,000 square feet is under construction on the property in front of the Hyatt The Pike Long Beach. Existing buildings are receiving facade improvements and retail spaces are being reconfigured to accommodate a new, yet-to-be-unveiled tenant list. A two-story H&M store is currently being built out in an existing building, and the existing Restoration Hardware Outlet is expanding to a second level. Apart from The Pike, existing retail properties at highly trafficked intersections or within popular shopping corridors such as Belmont Shore are in high demand among investors, local real estate professionals reported to the Business Journal. Kleinhenz said that retail in less-trafficked areas of Long Beach still have “lingering problems” because the economy has still not quite yet recovered from the Great Recession in terms of job gains and income growth. Although the office market “has been pretty soft over the past several years,” according to Yu, there is enough demand among certain industries to generate some new construction in Long Beach. Two medical office buildings, which measure 38,000 and 52,000 square feet, are nearing completion at Douglas Park by Urbana Development. The locally based company also recently announced plans to build
Long Beach Business Journal 5 three creative office buildings at Douglas Park measuring 24,500 square feet, 17,600 square feet and 15,500 square feet. Low interest rates are driving demand to buy small offices measuring 5,000 square feet or less, local commercial real estate firms told the Business Journal. Apart from that segment of the market, and construction driven by medical and creative office users, the market has been fairly sleepy, with vacancy rates hovering around 19 percent.
Low Inventory And Affordable Financing To Dictate Single-Family Sales ales activity in the local single-family real estate market continues to be constrained by low inventory, but, thanks to low interest rates and new, very low down payment mortgage programs, local real estate professionals are expecting the market to pick up this year. Last year, the number of sales of singlefamily homes in Long Beach decreased by about 11 percent from the prior year due to a low inventory of homes for sale, and rising prices and stringent lending requirements that edged out first-time homebuyers. The current inventory of homes for sale in Long Beach is enough to meet 2.1 months of demand, according to Jeff Anderson, principal of the Anderson Real Estate Group, which is part of Keller Williams Realty. The historic average is about six months of inventory, he noted. Although inventory remains low, Ander-
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February 17-March 2, 2015
6 Special Report – Real Estate
tion, together with interest rates for home loans still below 4 percent, ought to spark sales this year, Anderson predicted. He expected condo sales to tick up this year as well, as they are a more affordable option for first-time homebuyers at an average cost of around $300,000 locally. With demand still strong, sales prices of homes in Long Beach are likely to continue appreciating at a modest rate, Jones said. Currently, home prices are appreciating between 5 to 7 percent, a rate Jones expected to continue throughout the year. The average price of single-family homes for sale in Long Beach is just about $500,000, according to Anderson. With high demand and low inventory, “it is definitely a seller’s market right now,” Anderson said.
Long Beach Multi-Family Real Estate: It’s A Seller’s Market, But The Sellers Aren’t Selling Jeff Anderson, principal of Anderson Real Estate Group, which is associated with Keller Williams Realty, shows a property listed at 4512 E. 4th St. in Belmont Heights. His firm specializes in historic neighborhoods. (Photograph by the Business Journal’s Thomas McConville) (Continued From Page 5)
son said he is starting to see an improvement. At the start of the year, his company had about 20 listings on the market and now has about 30. “And that’s growing almost daily,” he said. Despite low inventory, the number of sales transactions seems to be picking up in comparison to last year, Anderson said. “Even though the number of homes on the market is low, things are selling so much
faster and demand is high. Days on market are down,” he noted. He estimated that homes for sale in Long Beach are currently sitting on the market for about 57 days on average, while last year the average was “in the high 60s and low 70s,” he said. Phil Jones, owner of Long Beachbased Coldwell Banker Coastal Alliance, has also witnessed an increase in sales so far this year. “We have seen an improvement in activity but we’re still not seeing
an improvement in the inventory . . . and that is constricting sales,” he observed. Because spring is typically a popular season to put homes up for sale, Jones is hoping to see more properties put on the market in coming months. This year is likely to be a good one for first-time homebuyers, Anderson stated. In December, Fannie Mae and Freddie Mac introduced conventional loans requiring only a 3 percent down payment. This op-
s has been the case for the past year or so, the number of multi-family properties for sale in Long Beach is not enough to meet the high demand from buyers hoping to take advantage of low interest rates, according to local real estate agents. With high demand and low supply, sales prices for local multi-family properties continue to increase. In addition to affordable financing, high occupancy rates and increasing rental rates among Long Beach multi-family properties are attracting buyers. But those same mar-
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February 17-March 2, 2015
8 Special Report – Real Estate
are going to continue increasing, Christopher said. As long as interest rates remain low, he explained, prices of multi-family properties could appreciate as much as 12 percent this year. Property owners are starting to wonder if this might be the peak of the market for the next few years, Christopher observed. “I am finding more sellers are realizing that prices are going to top out with the interest rates where they are,” he said. Once interest rates start rising, the demand to buy multifamily properties is likely to drop off, according to Christopher. “When rates do rise, the prices are going to pull back 10 to 15 percent,” he predicted. Speculation that sales prices might hit their peak in the near future may result in more property owners selling in the coming months, Bogoyevac said. “People are always trying to figure out where the height of the market is going to be and possibly sell at that time,” he said. Sheva Hosseinzadeh and Cameron Jacques, associates of Coldwell Banker Commercial BLAIR WESTMAC, recently leased the second floor at 207 E. Broadway in Downtown Long Beach to T-shirt company Fifth Sun. One of the firm’s contracts is with Warner Bros. (Photograph by the Business Journal’s Thomas McConville) (Continued From Page 6)
ket fundamentals are likely why property owners aren’t selling right now, Steve Bogoyevac, first vice president of investments for the Long Beach office of Marcus & Millichap, told the Business Journal. “Rents are good. Occupancy is good. The basic fundamentals are all good; so why would you sell?” he said. Bogoyevac estimated Long Beach rental units are about 97 percent occupied. With such high occupancy and increasingly improving jobs reports suggesting
there might be more demand from new renters coming up this year, property owners are feeling confident about raising rental rates, according to Eric Christopher, senior associate with INCO Commercial. “Most people are trying to get 10 to 15 percent [rent] increases this year,” he said. Some property owners are revamping their rental units when they have a vacancy and are able to get rent increases much higher than even 20 percent. A client of Bogoyevac who owns an apartment building in Signal Hill recently invested in some up-
grades when a tenant moved out of one of his two-bedroom units, which he had been renting for about $1,050 per month. After adding new carpet, laminate hardwood flooring, new paint, granite countertops, new kitchen cabinets and upgraded lighting fixtures, the client was able to raise the rent on the unit to $1,550 per month, Bogoyevac recounted. “If you’re decking them [rental units] out and making them nice, people are willing to pay for it,” he said. Increasing rental rates means the values of multi-family properties in Long Beach
Demand For Properties With High Visibility, Traffic Counts Drives Activity In Local Retail Real Estate Market n Long Beach’s retail real estate market, demand is high for visible properties along well-trafficked corridors, according to local real estate professionals. “There is a lot of money out there. A lot of people are hungry for deals and it is just a very competitive marketplace,” Adam Friedlander, senior associate at the Long Beach office of Marcus & Millichap, said of the local retail market. Brian Russell,
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February 17-March 2, 2015 vice president of Coldwell Banker Commercial BLAIR WESTMAC, said that his phone is ringing more than it did late last year. “Everyone I talk with is saying they are busy showing property and that there is a lot of activity,” he said. Low interest rates for loans on commercial properties are driving buyer demand, Friedlander said, adding that low inventory of well-placed properties are bolstering the market further. “There is not much inventory on the market, and the properties that are priced well and in good locations are getting significant activity,” he noted. To illustrate his point, Friedlander recounted how a recent listing – a multitenant retail center at 2610 Los Coyotes Diag. – received a flurry of offers within weeks of putting it on the market. “We listed that property for $3.7 million and ended up getting 14 offers,” he said. The property is now in escrow. Single-tenant retail properties with long-term corporate leases have proven to generate a lot of activity lately, Friedlander said, using McDonald’s, CVS Pharmacy and well-known banks as examples. He recently closed a deal on a Walgreens at 2627 Pacific Ave. with seven years remaining on a triple-net lease. “That property sold for $6.45 million at a 5.41 percent cap rate,” he said. Another high-demand property type among investors is grocery store-anchored shopping centers, Friedlander said. Russell pointed out that the shopping center formerly anchored by a Ralph’s off East San Antonio Drive and Long Beach Boulevard in Bixby Knolls recently sold to Red
Long Beach Business Journal 9 Mountain Retail Group, an Orange County-based investment firm. According to a recent newsletter from 8th District Councilmember Al Austin, the Trader Joe’s currently at the corner of Atlantic Avenue and Carson Street is relocating to that center. Other tenants are to include Crunch Fitness and Pet Food Express. Demand is causing sales prices to increase, Friedlander said. “We’re still continuing to see properties appreciate in value,” he observed, adding that landlords are “holding firm on their lease rates.” Areas in highest demand are what any Long Beach native would expect, Russell said, quoting Belmont Shore and Bixby Knolls as desirable areas for buyers. “Pine Avenue is still hit or miss. I don’t see a lot of traction there,” he pointed out. The biggest retail news of late is that The Pike at Rainbow Harbor is being repositioned as an outlet center by property management firm DDR, Inc. Seyed Jalil, an economic development officer for the City of Long Beach, said that if the tenant list he has heard floating around is accurate, The Pike will become a great asset for the city.
Vacancy Rates Remain Stubborn, Small Users Drive Sales In Long Beach Office Market ctivity in Long Beach’s office market remains somewhat static, as it has been for the past couple of years, according to local commercial real estate pro-
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February 17-March 2, 2015
10 Special Report – Real Estate Special Report – Real Estate
Workers are completing the interior of the new headquarters for Shimadzu Aircraft Equipment USA at Douglas Park. The company is relocating from Torrance to the 58,796-square-foot building. Grand opening ceremonies are planned for March 12. (Photograph by the Business Journal’s Thomas McConville) (Continued From Page 9)
fessionals. While some business owners have sought to buy smaller offices in the 3,000- to 5,000-square-foot range over the past year due to low interest rates, there hasn’t been enough activity to push vacancy rates lower. The vacancy rate for office space in Downtown Long Beach is at about 19 percent, and office space around the suburban market areas (which include the 405 and 710 Freeway corridors, Bixby Knolls, East Long Beach and the area
around the Long Beach Airport) is slightly higher at 19.3 percent, according to Cushman & Wakefield’s latest office report. “We’re not seeing rates increase, but we’re also not seeing rates decline,� Robert Garey, senior director at Cushman & Wakefield’s Long Beach office, told the Business Journal. Becky Blair, president and principal of Coldwell Banker Commercial BLAIR WESTMAC, agreed that there is “not much movement� in the local office market. Despite a stubborn vacancy rate, there
has been moderate activity in the office market lately, Garey said. Both he and Blair pointed out that low interest rates continue to drive demand to purchase office space among smaller owner-user type businesses. “With low interest rates, people want to lock in and take advantage,� Garey said. “On the office market there is just so little product for those small buildings that are out there that they tend to go relatively quickly if they are priced right,� he observed. Blair, whose company specializes in offices measuring about 5,000 square feet
and less, said Long Beach “is very active in sales now� but that she is starting to see a slowdown in sales transactions due to low inventory. “We absorbed a good amount of buildings and space for sale last year and that is somewhat slowing the market down on sales, and now we are seeing leasing starting to pick up,� she said. Due to strong demand, some properties are receiving multiple offers, she noted. Recently, Blair’s company facilitated the sale of an office that had been originally listed for lease. The 3,000-squarefoot office on the second floor of the historic Insurance Exchange Building at 207 E. Broadway on The Promenade in Downtown Long Beach, sold for $400 per square foot to a T-shirt company, she said. With the exception of the Belmont Shore area, offices in Long Beach usually sell for $150 to $200 per square foot, she explained. The buyer’s pursuit of the property and the sales price exemplifies why Blair feels Long Beach is becoming a strong investment market for businesses looking for smaller offices. Most activity in the local office market continues to be driven by health care firms, Garey said, noting that Long Beach is home to the corporate headquarters of health plans and providers such as Senior Care Action Network and Molina Healthcare. “That industry will continue to expand and take space in the marketplace,� he said. The health care sector is also driving office construction, with two buildings for local medical groups nearly complete at Douglas Park as well as one at 845 E. Willow St. According to Jeff Coburn, principal
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February 17-March 2, 2015
Long Beach Business Journal 11
Patrick O’Healy, owner of Signal Hill-based O’Healy Commercial Real Estate Services, says few vacancies exist within the local industrial market. (Photograph by the Business Journal’s Thomas McConville)
of Lee & Associates, the Douglas Park offices are nearly fully leased, and the lease for the building on Willow is out for signature by one medical tenant. While Blair said she expects the market to remain about the same through the end of the year, Garey said it is possible it might pick up sooner if there is more office-related job creation.
With Very Low Vacancy And High Demand, The Local Industrial Market Is At Its Strongest In Years n incredibly low 2.4 percent vacancy rate among industrial properties in Long Beach, combined with hardly any available inventory for sale
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and high demand from buyers, makes the local industrial real estate market one of the most competitive that local real estate professionals have seen in years – and some say, ever. “It’s the lowest vacancy I have seen in my 35 years in business,” Patrick O’Healy, owner of Signal Hill-based O’Healy Commercial Real Estate Services, told the Business Journal. “This is the tightest anyone has seen the market since 2007,” Brandon Carrillo, principal of the Long Beach branch of Lee & Associates, said. He noted that only Gardena’s industrial real estate corridor along the 110 Freeway has a lower vacancy rate than Long Beach. In a national 2014 fourth quarter report, Lee & (Please Continue To Page 12)
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12 BeachReport Business –Journal 12Long Special Real Estate (Continued From Page 11)
Associates listed Los Angeles and Long Beach among the top nine industrial markets in the nation. O’Healy puts the vacancy rate in Signal Hill at about 2.5 percent. In nearby Carson, Watson Land Company, which has large industrial property holdings in the area, currently has nearly no available floor space among its properties, according to Lance Ryan, senior vice president of marketing and leasing. A few of Watson’s buildings are coming up for lease in the next couple of months, but otherwise the company has no upcoming vacancies, he said.
February 17-March 2, 2015 With so many industrial property owners hanging on to their buildings, there aren’t many sales transactions taking place in Signal Hill, O’Healy noted. Carrillo said that, when properties come up for sale in Long Beach, sellers often receive multiple offers. “If you have good product priced right, it is going to move very quickly,” he said. With little existing inventory available to accommodate demand and very limited space to construct new industrial buildings – apart from land at Long Beach’s Douglas Park – developers are trying to find places for infill projects, Carrillo
said. Ryan called infill projects “the future of development for the area,” citing a recent project in which Watson Land demolished an older industrial building and replaced it with a new 220,000-squarefoot building. Strong demand and low supply continue to cause sales prices and lease rates to increase. Lee & Associates reported in January that the average sales price of industrial properties in the Long Beach and Los Angeles markets increased from $90 to $127 per square foot from the third to fourth quarter of 2014. Carrillo explained that a higher volume of sales of better
quality buildings was likely a factor in the steep increase. Average lease rates also increased, although only by one cent, to $0.65 per square foot, according to the Lee & Associates report. If congestion at the ports of Long Beach and Los Angeles is not worsened by a strike by the International Longshore and Warehouse Union or a lockout of longshore workers by their employers, Carrillo, O’Healy and Ryan expect demand to remain strong in the coming months. “The port remains the biggest issue facing our customers, for sure,” Ryan said. ■
Bancap: How Three Long Beach Natives Developed A Boutique Property Management Firm ■ By SAMANTHA MEHLINGER Senior Writer Spanning about 52 square miles, Long Beach has a breadth of commercial properties throughout its many unique neighborhoods and business corridors. Now in their 33rd year of business, the partners of Bancap Investment Group, a Long Beach-based property management firm, have carved out a niche role in the city’s commercial real estate market – one they as Long Beach natives are intimately familiar with. “We’re all Long Beach guys, born and raised,” Whit Latimer, CFO of Bancap, said in an interview at his office at Alamitos Bay Landing, a 47,000-square-foot property overlooking Alamitos Bay and the Pacific Ocean that the company owns and manages. Latimer joined the company in 1985. It had been formed three years earlier by his partners Stephen Conley and John Hancock, as well as Conley’s brother-in-law, whose share in the company Latimer eventually bought out. Each of Bancap’s principals has deep roots in the Long Beach community. Conley, Hancock and Latimer are all past presidents of the Long Beach Area Council of Boy Scouts of America. Latimer is also a past president of the Long Beach Rotary Club and currently sits on the board of the Long Beach Memorial Medical Center Foundation. Conley twice served as president of the Long Beach Board of Water Commissioners. Hancock is the former president of the Long Beach Board of Harbor Commissioners and is a past chair of Memorial Health System. Giving back to the community has always been a priority for himself and his colleagues, Latimer said.
When Bancap was formed, its primary focus was syndication – pooling assets from investors to fund real estate projects. In its early years, the company invested in projects in Sacramento, Colorado and Oregon, in addition to projects in Long Beach. A change in tax law in 1985 caused syndication to become less lucrative, and the company switched gears, Latimer recalled. “By the early 90s syndications had pretty much died and we evolved at that point into a third party asset management company,” he said. “Our sweet spot over time has become property management and leasing for third parties.” With the exception of managing a 70,000-square-foot commercial office and industrial building in Santa Fe Springs, Bancap operates exclusively in the Long Beach area. Early on, Bancap tapped into what is now one of the strongest aspects of the local office market – the health care industry – by purchasing the Columbia Medical Building and Hartley Medical Building on Long Beach Memorial Medical Center’s campus in the mid-80s. Although Bancap later sold these buildings to the hospital, the company still oversees them, as well as two other buildings on the hospital campus. There is only one building on Memorial’s campus that Bancap doesn’t manage, Latimer pointed out. “I would love to get the fifth building over by Memorial Medical Center to take care of,” he said. Bancap is perhaps best known for its work in revitalizing two commercial centers along Marina Drive, including Alamitos Bay Landing and Alamitos Bay Marina Center. In the early 1990s, the city released a request for proposals (RFP) to take over and remodel the Alamitos Bay Marina Center, then called Marina Bazaar, Latimer recalled. Ban-
cap bid on and was awarded the project. “We created an addition for the Seal Beach Yacht Club, remodeled the Schooner Or Later space, and have managed and leased it ever since,” he said. A couple of years later, the city released another RFP, this one for Alamitos Bay Landing, which at the time was struggling with only a 44 percent occupancy rate, Latimer said. As Long Beach locals, Latimer, Conley and Hancock saw potential in the property, with its sweeping views of the bay and the Pacific Ocean. “[Because of] the fact that we’re all local, we thought we could do something with the project,” Latimer said. Bancap was awarded a 55-year lease for the property and immediately acted to tear down an aging building anchoring the center. After constructing a new office and retail building there in 2003, which is currently occupied by Bancap and the restaurant Boathouse on the Bay, among other tenants, the center became 100 percent occupied. “We brought some life back to it,” Latimer reflected. All in all, Bancap now manages 10 properties, and its partners are perfectly happy to keep the business’s portfolio lean. “We always wanted to stay somewhat boutique-y and small so we could take great care of our clients,” he explained. Staying small has enabled them to develop tight-knit relationship with tenants, he said. Keeping Bancap as a smaller, boutique-style agency doesn’t mean Latimer and his partners are content to rest on their laurels. In the future, they plan to remodel the southern end of Alamitos Bay Landing, perhaps with a new building or event center, he said. “We’re toying with ideas right now,” he noted. ■
Pictured outside their headquarters office at Alamitos Bay Landing are Bancap principals Whit Latimer, left, who serves as chief financial officer, and John Hancock, president. Hancock and the firm’s other principal, Stephen Conley, founded Bancap in 1982. (Photograph by the Business Journal’s Thomas McConville)
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February 17-March 2, 2015
Port Congestion (Continued From Page 1)
“It is having a devastating impact. We estimate that agriculture exports off the Pacific Coast are 50 percent of what they normally are at this time,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told the Business Journal. The 28year old national organization advocates for the U.S. agricultural industry on business and legislative matters impacting them, with ocean shipping issues as a top priority. “We believe that we are $1.75 billion dollars below what we should be in exports just this month,” Friedmann estimated. “That only touches the impact,” he said, stressing that sales losses translate to suspended and even lost jobs throughout the supply chain. While contract negotiations between the ILWU and PMA may be short-term in the big scheme of things, the impacts those negotiations are causing are here to stay, according to Friedmann. “The impact is long term; in fact, it is permanent,” he said. Farmers have already contacted Friedmann’s organization to discuss business losses. Judging by losses caused by port shutdowns in 2002 – also spurred by ILWU and PMA negotiations – their customers may never return, he said. “In 2002 the West Coast ports were shut down. California almonds, which are the best almonds in the world, were unable to get out of California . . . so Japanese candy makers were unable to use California almonds,” Friedmann recalled. “They simply got almonds from Turkey, and Turkey was happy to supply them. Twelve years later many of those Japanese candy makers are still using the Turkish almonds.” An Oregon potato farmer who ships product through Southern California ports recently reported a similar experience to the Agriculture Transportation Coalition. “He is trying to sell next season’s crop and he is being told by customers, including long-time customers, that they are not going to be buying from [him],” Friedmann said. Even though the U.S. dollar is currently valued higher than other foreign currencies, the buyer said he still would have purchased U.S. potatoes despite the extra expense. “The reason they are not buying is because we proved ourselves undependable this year,” Friedmann explained. Incidents such as these are being repeated throughout the West Coast, he added. The retail industry has also been impacted by the congestion at West Coast ports. The ports of Long Beach and Los Angeles alone handle about 40 percent of the nation’s total imports. Retailers took a hit to their product supply, and therefore their sales, thanks to backlog at the ports during the holiday season. “Some folks were out of stock for things that they needed during the holiday season,” Vitner said. “Looking at the retail goods aspect of things, if you have something that you need seasonally and it is tied up at the ports or on a ship and you miss the season, then somebody is going to take a hit. It is probably only going to be accepted at a steep discount if at all,” Robert Kleinhenz, chief economist for the Los Angeles Economic Development Corporation, told the Business Journal. Even though the holidays have passed, retailers are still faced with issues. “If you talk to importers and distributors,
NEWSWATCH it is like their hands are up in the air,” Kleinhenz said. “They have got product that might be stuck on a ship or on a dock, and they are paying X amount per day for every day that it is sitting there. They cannot deliver to their end-customers, such as a retail store, and in some cases they have to pay the retailer because they are unable to fill the shelves,” he explained. “The National Retail Federation indicated that if in 2015 we have a five-day work stoppage it is about a $1.9 billion per day of lost gross domestic product (GDP). If it is a 20day work stoppage it is about a $2.5 billion per day loss of GDP,” Kleinhenz said, referring to the suspension of vessel operations at West Coast ports. Both he and Vitner pointed out that the national economy is measured in trillions of dollars, not billions. So a work stoppage wouldn’t “bring the economy to its knees,” as Vitner put it. Supply chain congestion has likely already caused slowdowns in job growth, according to Kleinhenz. “We have probably already seen either slower job gains or maybe in some cases no hiring, or even some layoffs, in the last couple of months that haven’t quite shown up in the numbers,” he said. Both economists indicated that current congestion might ultimately lead to permanent loss of business on the West Coast. “I think one of the costs of this slowdown is this is a problem that we have seen repeatedly at West Coast ports. It is not something that’s new. And because of that, I think more and more shippers are going to be looking at [other] places,” Vitner said, noting that the East Coast has considerably fewer issues
“It is having a devastating impact. . . . agriculture exports . . . are 50 percent of what they normally are at this time.” Peter Friedmann, Executive Director Agriculture Transportaion Coalition
associated with its equivalent of the ILWU. Work to expand the Panama Canal is nearing completion, which may tempt some shippers to go through the canal to East Coast ports, Kleinhenz and Vitner agreed. “Right now, there is a lot of throughput through the port that is actually headed east. We could lose some of that business,” Vitner said. “My general sense
Long Beach Business Journal 13 is that loss of market share is somewhat inevitable, but the volume of global trade is going to grow to the point that I think the West Coast ports are still going to be busy for the foreseeable future,” he added. Lee Peterson, spokesperson for the Port of Long Beach, acknowledged the loss of business. “As to impacts of the congestion, the concern is that we have already lost business to other ports. Ships have been diverted and we are concerned that we will not be able to get that business back once the congestion is cleared up,” he wrote in an e-mail. Meanwhile, the ILWU and PMA continue to negotiate with the assistance of a federal mediator. Both parties continue to release accusatory press releases several times per week. ■
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February 17-March 2, 2015
Mayor’s Technology And Innovation Initiatives Begin To Take Shape ■ By DAVE WIELENGA Staff Writer Long Beach Mayor Robert Garcia was not running late. When your path through life is taken in steps and leaps between uneven blocks of time – a half-hour here, a couple of hours there, each reserved-andpurposed chunk with its own energy and pace – running probably isn’t the safest way to catch a schedule that has broken away. Like the most successful of people with densely calendared days, the mayor responds to a time crunch with a surefooted economy of accelerated movement, a version of UCLA basketball coaching legend John Wooden’s famous exhortation to “be quick, but don’t hurry.” That’s how Garcia entered the meeting room adjacent to his office on the 14th floor of City Hall, where 30 minutes had been allotted for an interview with the Business Journal about the Long Beach Technology and Innovation Commission he had just created. Garcia was energetic and friendly but focused, extending a warm greeting, before turning away to wrap up a few pending issues, then finally taking a seat at the head of a long conference table. With a short gathering breath, he was ready for the first question – which didn’t come, because my tape recorder suddenly didn’t work. “Here ya go, Mr. Technology and Innovation,” I said to the mayor of the City of Long Beach, sliding the recorder across the
table toward him with a chuckle. “Let’s see what you can do.” After 10 calm seconds, Garcia placed the recorder in my hand. “It’s working,” he said, not at all smugly, and generously began to explain what had been the problem. After watching him prove the practical value of technology and innovation in an
“Any time things become more innovative through technology, the environment is more business-friendly, period.” Long Beach Mayor Robert Garcia
unrehearsed, real-world circumstance, what was there to say? “I am now a total believer in the technology and innovation commission,” I told him solemnly. Garcia rolled his eyes. “You’re right,” he said, although a sarcastic laugh made it clear he didn’t believe me. “That’s exactly what the commissioners are going to be doing the whole time.” As probably the first mayor of Long Beach to spend early childhood as the only family member who could program the household VCR, Garcia’s creation of the city’s first technology and innovation commission seems like the fulfillment of his destiny. Or the indulging of an obsession. He was talking about the importance of
technology to Long Beach government long before he would admit he planned to run for office. Technology was one of the principal themes of his years on the city council, and a promise to create the technology and innovation commission was a plank in Garcia’s campaign for mayor. But how does one do such a thing? Changing the name of the Long Beach Technology Services Department to the Long Beach Department of Technology and Innovation was mostly cosmetic, but it also installed Garcia’s priority into the official language of Long Beach City Hall. Proposing a Long Beach Technology and Innovation Commission, then getting city council approval for it, did the same thing. But the new city department didn’t have a director – still doesn’t, in fact, but an announcement is expected soon – and the new city commission didn’t have any commissioners. Hiring a director is City Manager Pat West’s responsibility, but populating the commission was up to Garcia. In a sense, the process served as an example of what he would like the commission to do – respond to a need with innovative ideas that translate into practical solutions. The first step was to gather a talent pool. Garcia put out the word through the usual publicity streams – e-mail, Facebook, Twitter and the plethora of social media tools, as well as mentioning his search for candidates during interviews with news media. He also did little personal outreach. “We had a lot of interest, and it came in a combination of ways,” he recounted. “Most of the candidates applied on their own. A few of them, I may have asked, ‘Would you please apply?’ A few of them – like Dr. Shaffer – I didn’t know.” Gwen Shaffer is an assistant journalism professor at California State University, Long Beach (CSULB) whose background includes more than a dozen years as an investigative political reporter in Philadelphia and significant academic research into the issues that include or exclude people from access to information. She received an appointment to the commission. So did Milton Arcos, a software architect and production developer for Integrated Rental Systems; David Ferrell, a boardmember of Long Beach Tech, a group of technology entrepreneurs with headquarters in the city; Cindy Hanks, deputy director for academic computing and multimedia and broadcast services at Long Beach City College; Robb Korinke, a consultant for California Forward; Juan Lopez, special assistant for the Los Angeles City Controller; and Andrew Schrock, a communications doctoral candidate at USC. “I put together this kind of all-star group of techies,” Garcia said proudly. But how did he decide? Did he model his technology and innovation commission on others across the country? Was he influenced by personal experiences or spiritual inspirations? Did he consider the personalities of people, who must not only work together but also advise the city council? Or did he look for expertise in technologies that might interlock? “That I did,” Garcia said, finally hearing
a question that resonated, referring to the interlocking technologies. “What I tried to do is find people who came from different experiences. “So there’s somebody from education, somebody who owns a hardware company, somebody into open data, somebody who does broadband. So I did kind of look at that. But ultimately I just tried to find the most creative people.” Shaffer is a relative newcomer to Long Beach, joining the journalism faculty at CSULB three years ago. She had no connection to Garcia, other than as a subscriber to his online newsletter, which is how she learned of the commission. “It didn’t occur to me that I needed a connection,” Shaffer said during a telephone interview. “When I lived in Philadelphia, I had been active in policy. I co-founded the Philadelphia Digital Justice Coalition. I was on a mayoral task force. When I moved here it was a part of my life that ceased to exist and I missed it.” Shaffer’s expertise seems to fold comfortably with Garcia’s interest in municipal broadband, which offers all residents free access to the Internet. “Broadband is especially important when you have communities of very low income, like we do,” Garcia said. “It’s difficult to do citywide without a lot of financial support. But, in some cases, localities have developed revenue streams. Businesses want to plug in.” Telecommunications companies tend to oppose municipal broadband pretty strongly. “But we don’t want just corporations to benefit from technology,” Shaffer said. “One of the motivations of municipal broadband is to create competition for those corporations. Municipal broadband makes getting it from Verizon and Charter more affordable. That’s why you get the pushback.” This is the kind of spirited discussion that Garcia hopes will eventually generate major technological and economic progress for Long Beach. “Any time things become more innovative through technology, the environment is more business-friendly, period,” he said. But that’s not where the technology and innovation commission will be starting. “I already have their first task, which is to review all the city’s smartphone apps,” Garcia said. “We have four or five now. They’re good, particularly the GO LONG BEACH app, which I kind of started. It’s really good – in fact, it’s opened and closed 30,000 cases now. “But it could be better. We need the commission to recommend how to improve those apps. As a regular user, I think having their input will be great.” It’s uncertain when input from the commission will be available. Although its members were approved by the city council in early January, no date has been set for the first meeting. “They’ve been in the process of ethics training, filling out Form 700 [a required disclosure of personal financial information], the stuff that every public official goes through,” Garcia explained. “That process usually takes a month. Assuming they’re close to wrapped up with that, I expect the first meeting in a few weeks.” ■
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Councilmembers To Make Decision On Prioritizing Tidelands Funded Projects ■ By DAVE WIELENGA Staff Writer With plans for $232 million in capital improvement projects but only $95 million available in a Tidelands Funds depleted by the low price of oil, the Long Beach City Council has until March 31 to decide which projects survive. The situation jeopardizes several significant pieces of Long Beach infrastructure, including the final phases of the Alamitos Bay Marina makeover, the refortification of Naples’ seawalls, the rehab of Rainbow Lagoon, the building of a new Belmont Plaza Pool, the Pine Avenue Public Dock and the Belmont Beach and Aquatics Center. Many smaller projects face uncertain futures, too. The city council began the task of picking and choosing among them on January 20 by voting to approve an evaluation process with nine criteria devised by city staff to prioritize the varied projects. Staff is currently applying the criteria to each project and will deliver a prioritized list to the city council before the end of the first quarter – the aforementioned March 31 deadline. If nothing else, councilmembers could simply go with that list. “I think the criteria for prioritization is very prudent,” said 3rd District Coun-
cilmember Suzie Price, one of five councilmembers facing this unexpected crunch during the first year of their first term. “It’s a great place to start the analysis.” Of the nine characteristics considered, the criteria assigns the highest value to projects that impact public safety. From there, descending importance is placed on projects based on the number of California residents they impact, their urgency, condition of the current facility or the high need for the improvement, their contribution to the quality of life, their generation of revenue, their attraction of funding, the lack of alternative funding sources for them, and how little they cost. “I think they [the criteria] are appropriate, given the challenge,” said Vice Mayor Suja Lowenthal, the 2nd District representative, who is the longest-serving member on the current city council. “They reflect many of the considerations used in the first place to develop projects, so I don’t anticipate the need to deviate.” All the projects are located in the 2nd and 3rd City Council Districts because the southern boundaries of those districts run along the Long Beach waterfront from downtown to Alamitos Beach – the Tidelands area, which is measured from the mean high tide line to three miles offshore. The representatives and residents of
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February 17-March 2, 2015 Long Beach’s other seven council districts are legally equal stakeholders due to the underlying principle of the Tidelands Fund, which is a trust fund that Long Beach controls by permission of the State of California on the condition that all projects funded must benefit all state residents. “I think it’s really important for us to have basic understanding among all of our council colleagues of the projects that are going to make it to the top of the list, and why,” Price allowed. “But having said that, I have just taken all the 3rd District’s unfunded projects and started to prioritize just those – just within my own district – in order to determine which ones should be prioritized higher based on the criteria we just adopted.” The Naples seawalls and the Alamitos Bay Marina have already jumped out at Price as projects she believes deserve the highest priority. “No doubt about it, projects like the Naples seawalls are going to be at the top of that list,” she said. “It would be my hope that, no matter what other major Tidelands projects we have going on, we continue to do that work. “People who have not walked the marina may not understand the need for it to be repaired. There are literally nails sticking out of the docks. It’s not a very safe environment for people to walk and have boat activities. There needs to be some dramatic, significant work.” Price said the marina’s eligibility for some bond funding or loans is being evaluated and that she hopes to have that information before staff returns with its priority list. Price was reminded that there had been discussion about Naples residents contributing to the repair of the seawalls. “That is a discussion that took place before I came to the council,” she said. “That has not been something we discussed or that needs to be discussed. Naples is a citywide asset. It’s not something that only benefits the residents of Naples. Right now we have a situation with some serious seismic considerations.” Lowenthal, likewise, is using the time before city staff returns with its priority list to do some personal research. “I have developed a list of priority projects in District 2,” she said. “It includes pedestrian/bike safety enhancements at the intersection near the Villa Riviera [near Ocean Boulevard and Alamitos Avenue], completion of the beach area directly below the Bixby Park bluff, expansion of the concessions building in Alamitos Beach and a pedestrian bridge linking the Terrace Theater with our convention center.” The councilmembers have been communicating with one another and have found that they share some perspectives. “Vice Mayor Lowenthal and I have met and we have discussed, very generally, our various projects and shared with one another why we think those are priorities – just so we can understand one another’s districts better,” Price said. “I want to understand where she’s coming from on her projects as well as I want her to understand where I’m coming from on my projects.” Lowenthal acknowledged that “Councilmember Price and I are on the same page about projects and criteria.” The Tidelands Fund predicament was triggered by last summer’s sudden drop in the price of oil, but the commodity’s sustained decline in value is what has pushed
NEWSWATCH the situation toward a crisis. The Tidelands Fund is filled by the City of Long Beach’s oil sales and drained by the projects the fund finances – projects that are budgeted on the basis of the assumed price of the oil. Long Beach has been calculating its budget for Tidelands capital projects on an assumed oil price of $100 per barrel and its Tidelands operating budget at a rate of $70 per barrel. That was great in June 2014, when oil was selling at $107 per barrel, but the steady descent of the price to a six-year low of less than $50 per barrel has made February 2015 . . . um, not so great. The situation caught many people off guard, but Lowenthal said her experience on the council has helped her gain perspective. “Initially, I worried about the projects that we’d been planning, in some cases, for years,” she said. “However, considering our budget struggles over the last 10 years,
I realized that delays to capital projects weren’t the end of the world and could be managed in phases.” ■
Transit To Hold Public Hearing February 23 About New Buses ■ By SAMANTHA MEHLINGER Senior Writer Long Beach Transit is holding a public hearing at noon February 23 at city hall to discuss the transit company’s plan to replace its fleet of buses over the next five years. According to LBT, the buses have “exceeded their useful life of 12 years,” and “new buses are needed to meet current and future air quality regulations.”
Long Beach Business Journal 17 LBT has already released requests for proposals for a fleet of battery-powered, electric, zero-emission buses, a contract on which competitors Build Your Dreams (BYD), based in China, and Proterra, based in North Carolina, are expected to bid. BYD lost the contract last year when the U.S. Federal Transit Administration discovered the company did not meet its disadvantaged business enterprise requirement at the time the contract was awarded. LBT is also seeking a fleet of compressed natural gas-run buses. Legislation requiring transit agencies to hold public hearings for any bus added to a fleet if the bus’s axle weighs more than 20,500 pounds prompted the hearing. Public comments are to be accepted following the hearing, and online at http://www.lbtransit.com/services/PublicHearing.aspx. ■
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Mayor Robert Garcia Recommends Members For The New Economic Development Commission ■ By DAVE WIELENGA Saff Writer If Mayor Robert Garcia’s 11 nominees for the Long Beach Economic Development Commission are approved at tonight’s (February 17) meeting of the city council – and there is plenty of precedent to suggest they will be – the city’s 26 commissions will be stocked with a total of 253 commissioners. Since taking office last summer, Garcia has recommended 75 people to serve on a variety of city commissions. All 75 have been approved by the city council, and all the approvals have been unanimous. If form holds, this batch will improve the mayor’s winning streak to 86-0, with only six scattered openings remaining. What comes next? Garcia told the Long Beach Business Journal earlier this month that he’s planning a big get-together – an all-commission assembly, he called it, emphasizing that such an event would be unprecedented. “We are going to kick things off by gathering together all the commissioners from all the commissions,” said Garcia, who indicated the meeting will be held before the end of February, but that a decision about the site had not been finalized. “The city has never done a commission assembly before. When we have everyone together, we’re going to say, hey, this is a restart, we’re going to work together and get involved in engagement.” For the economic development commission, this truly is a restart. Garcia has resuscitated the commission after several years of inactivity and, in a prepared statement from his office, called that “a great step forward for economic development in Long Beach.” According to the City of Long Beach website, the economic development commission “advises the Mayor and City Council on matters relating to local businesses and economic issues such as growth patterns and programs to better serve the community.” In time, the mayor said. “Their first task is going to be fixing
our permitting and licensing system, which will be fun,” Garcia told the Business Journal. He elaborated on those plans in a prepared statement from his office. “The commission [will undertake] an independent review of the permitting, licensing and planning process that businesses go through when opening or expanding, and it will be presented to the city council for review,” Garcia said, “While I am proud of recent improvements to our permitting and licensing process, I know we can do better. An independent review by this all-star team of business and community leaders will ensure that we make the process of opening a new business seamless and quick.” When that is completed, Garcia said, the economic development commission “will also work towards presenting ideas and recommendations to spur economic growth in Long Beach.” Garcia described the revival of the commission as another component of his plan to reposition Long Beach for long-term economic sustainability. “We need a 21st century approach to economic development that drives innovation and supports business growth in trade, healthcare, technology, manufacturing and the creative sector,” he said. “The economy is changing rapidly and we have to be in the best position to attract quality, middle-class jobs. That’s why I’ve made reviving this commission a priority, and also why I revived the city’s economic development department, and worked to bring on a Bloomberg Innovation Team to assist with economic development efforts.” The nominees to the Long Beach Economic Development Commission are: • Kristi Allen, vice president of hotel operations at Long Beach-based Ensemble Hotel Partners, and director and chairelect of the Long Beach Area Chamber of Commerce. • Becky Blair, longtime commercial real estate broker in Long Beach and former member of the Long Beach Planning Commission. (Please Continue To Page 21)
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Helping Long Beach Businesses Grow
Northgate González Market
The majority of the 170 employees for the new Northgate González Markets location at 4700 Cherry Ave. in North Long Beach were hired from the local community with assistance from the Pacific Gateway Workforce Investment Network The Network is administered by the City of Long Beach. Pictured are employees Christian Casillas (left) and Juan Trujillo (right) with Adrian Martinez, store director. (Photograph by the Business Journal’s Thomas McConville)
■ By SAMANTHA MEHLINGER, Senior Writer When Northgate González Markets, a family-owned grocery store chain specializing in Hispanic products, sought to open a store in North Long Beach, high on the company’s list of priorities was hiring the majority of its workforce from the local community. With the assistance of the Pacific Gateway Workforce Investment Network, the company met its goal, hiring 86 percent of its 170-person workforce from zip codes in the immediate area for the store, which is located at 4700 Cherry Ave. More than 70 percent of the Northgate González Markets’ workforce at the recently opened North Long Beach store was hired with the assistance of the Pacific Gateway Workforce Investment Network, according to Alan Bagley, vice president of human resources for Northgate. About 120 to 130 of the store’s employees work full-time and receive benefits, he noted. When Northgate began considering opening a store in North Long Beach, representatives from Northgate and a hired supermarket industry consulting firm, Emerging Markets, met with the mayor’s office. “They pointed us to Pacific Gateway, which is a fantastic workforce organization – very professional,” Daniel Tellalian, principal of Emerging Markets, recalled. “Pacific Gateway kindly offered to help find the right labor force and worked with us to understand our hiring needs and to make sure that we could find some skilled local residents,” he said. Pacific Gateway organized a well-publicized hiring fair for the grocery store months before it opened in the fall of last year, attracting a pool of 700 applicants for on-site interviews. “They gave us a large and diverse set of applicants . . . and from there we got a really good workforce,” Tellalian said. “North Long Beach is a wonderfully diverse community, and we made real efforts in terms of [considering] ethnic background and language to make sure we had something that represents that community,” he said of the hiring process. Follow-up interviews were hosted at Pacific Gateway’s headquarters in Bixby Knolls while the grocery store was under construction. In addition to providing a location for interviews, Pacific Gateway worked with applicants through the hiring process, helping them to prepare necessary documents. “They had very qualified staff to support us in all of the applicant prescreening and processing,” Bagley said. Northgate hired for an array of positions, including clerks, cashiers, bakers, butchers, truck drivers, maintenance staff and more. Through a federal On The Job training program facilitated by Pacific Gateway, Northgate was reimbursed for about $30,000 in wages while employees learned skills in their first few weeks, Bagley said. The savings allowed Northgate to hire more employees than they had originally planned. “They [Pacific Gateway] showed a mastery of the On The Job program, which is not uncomplicated,” Tellalian said. As a supermarket industry consultant, Tellalian has worked with many local hiring agencies similar to Pacific Gateway, as has Northgate. “We found Pacific Gateway to be one of the most professional, with a really strong staff,” he said. “They were accessible, they were professional, and they made the business a priority.” ■
Presented monthly by the Long Beach Business Journal and the Pacific Gateway Workforce Investment Network
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February 17-March 2, 2015
Economic Development Commission Reformed (Continued From Page 19)
• Blair Cohn, executive director of the Bixby Knolls Business Improvement Association, chair of the Council of Business Associations (COBA) and Cycling Competition Manager for this summer’s Special Olympics World Games. • Frank Colonna, former two-term city councilmember from the 3rd District and longtime real estate broker. Randal Hernandez, Union Bank’s managing director of government relations and former chief of staff to former Long Beach mayor Beverly O’Neill. • Ralph Holguin, CEO of RMD Group, Inc., a North Long Beach-based high-tech company. • Walter Larkins, president of CDR Benefits, LLC, a life and health insurance company, and founder of Endosurgical Development Corp. and CDR Financial Services, LLC. • Michelle Molina, managing partner of Millworks, an investment and property management company in Downtown Long Beach. • Robert Olvera, Jr., president of International Longshore and Warehouse Union (ILWU) Local 13. • Cyrus Parker-Jeanette, dean of the College of Fine Arts at California State University, Long Beach. • Paul Romero, the Long Beach Convention & Visitors Bureau’s senior national sales director. ■
NEWSWATCH
Virgin Galactic Moving In To Douglas Park (Continued From Page 1)
where we could manufacture rockets and manufacture a lot of them. But more important was the people – the very talented and experienced people we already have on our team, but just as importantly the people we want to add to our team. “We have a lot of job openings. The fact that the Long Beach area has such a wonderful stable of talent already, people who are quite experienced in aerospace and in other related fields, was very attractive to us.” The stable of talent Pomerantz cited is the present-day manifestation of the history of aviation in Long Beach. It’s a tradition that originated more than a century ago with takeoffs and landings on the beach, found a home at Long Beach Airport in 1924, branched into Douglas Aircraft’s ’s wide-scale aircraft production, which delivered 31,000 planes during World War II and by the 1950s accounted for 90 percent of global aviation, merged with McDonnell in 1967 then in the 1990s with Boeing to create the massive C-17 Globemaster. It has persevered during the painstaking shutdown of C-17 production, and is about find new expression creating the LauncherOne for Virgin Galactic. The employment possibilities are immediate. “Right now we’re looking for several dozen people, and we’ll keep growing from there,” said Pomerantz. “I think it will be in the 100-plus range by the end of this year. That’s the goal.” Day One for the Virgin Galactic plant is
March 1, when approximately 50 existing employees arrive. Pomerantz encouraged potential new employees to attend the job fair Virgin Galactic is hosting at the facility on Saturday, March 7. The time has not been set. In a broader context, Virgin Galactic’s new Long Beach address gives its most visible owner, Sir Richard Branson, a presence in the larger aviation tradition of Southern California, only 20 miles from SpaceX, the Hawthorne-based company that Elon Musk has built into a world leader in the manufacture and launch of small satellites. The presence of big characters and small satellites – and tickets for commercial rocket flights to the moon – are pumping new energy into to old aerospace. “It’s a really awesome time to be working in this industry” Pomerantz said. “Because of the wonderful things that NASA and traditional aerospace companies have already accomplished, the way is paved for so much that’s new. “Whether it’s my boss, Richard Branson, starting up Virgin Galactic or the dozens and dozens of small satellite manufacturers, it seems not a week goes by without hearing a really exciting announcement of a new mission type or a new company or a new investment or a new rock star CEO or entrepreneur.” That said, the lease Virgin Galactic signed in Long Beach would seem to indicate the company saw the value of some old-fashioned stability, too.
Long Beach Business Journal 21 Pomerantz said he is not familiar with the terms of Virgin Galactic’s lease at Douglas Park. “But we certainly expect to be there for a long time,” he said, “and we expect to be very busy there, too.” ■
Current Job Openings At Virgin Galactic Long Beach Facility Virgin Galactic, which is in the process of preparing its new headquarters at Douglas Park for a movein, has already listed numerous jobs opening for its Long Beach location. Go to http://www.virgingalactic.com and click on “Careers” for more information about each position or to apply. Here is a list of job openings as of Friday, February 13: • Senior Launch Mechanical Technician-Advanced Programs • Mechanical Engineer-Advanced Programs • Project Scheduler-(Contract) • Lead Systems Analyst-Advanced Programs • Ground Communications Engineer-Advanced Programs • Avionics Technician- Cleanroom • Ground Safety Officer-Advanced Programs • Avionics Integration Engineer • Senior Systems Analyst-Advanced Programs • FPGA Design Engineer • Lead Composite Technician • Flight Software Engineer • Senior Structures Design Engineer-Advanced Programs • Senior Test Engineer- Advanced Programs • Supply Chain Manager (ERP Project Management) • Machine Shop Supervisor, Advanced Programs • Manufacturing Engineer-Propulsion • Manufacturing Engineer, Machining • Propulsion Stage Systems Lead-Advanced Programs
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February 17-March 2, 2015
FOCUS ON AVIATION/AEROSPACE INDUSTRY
Atop, Rubbercraft’s manufacturing and assembly floor provides ample unobstructed space to ensure a good flow for the production of work, and ot accommodate very large parts and equipment. At left, Martha Lopez’ detail work on Rubbercraft’s launch vehicle parts shows that hand crafting has an important role in high tech. At right, Juan Gonzalez works an extrusion machine, which pushes material through a die that tranforms it into a part. (Photographs by the Business Journal’s Thomas McConville)
Rubbercraft (Continued From Page 1)
there was a problem with Rubbercraft’s recipe for success – so clearly in fact that it didn’t take a degree in engineering to figure out what needed to be tweaked. The base ingredient was a simple change of address. That’s how Rubbercraft happened to come to Long Beach in 2011. But maybe it wasn’t all that simple: the company had to pull up some deep stakes at its longtime Gardena home. Transporting an unwieldy assortment of very heavy, but delicately high tech and correspondingly high-priced equipment was no picnic, either. It took most of the year, but the 140,000 pristine square feet of built-tosuit wonderfulness in the heart of newborn Douglas Park seemed to be worth it.
“A gift from the heavens,” sighed Larry O’Toole, CEO of Rubbercraft and its parent company, Sanders Industries Holding, Inc., slumping in a padded swivel chair in the well-appointed conference room they share. But O’Toole wasn’t talking about the comfort of that second-floor conference room, where he had dropped in between clients to visit a tour group. The heavenly gift he referenced was ease of doing his real work, which is mostly done downstairs in Rubbercraft’s real world. On the first floor are the small, glasswalled offices just off the factory floor where engineers and clients can meet in mid-production, the face-to-face cubicle spaces that allow easy communication among collaborating employees, the spacious, clean and orderly production line, and perhaps even the 16 microwave ovens in the
Rubbercraft Backgrounder Rubbercraft describes itself as “a high-technology company that designs, develops and manufactures precisionengineered custom elastomeric and rubber parts, components and systems,” which means … exactly what? And for exactly whom? Let’s start with who uses Rubbercraft’s products. Rubbercraft makes parts for customers whose products and services span the spectrum of modern life – aircraft, medicine, communications devices, security devices, military equipment and power generators. Rubbercraft’s client list is so diverse that, although The Boeing Company is at the top, it accounts for less than 10 percent of Rubbercraft’s total business. Now, the original question: what is an elastomeric part? Basically, “elastomeric” means “rubbery.” The original elastomer is rubber (aka polyisoprene), but others include polybutadiene, polyisobutylene, and polyurethanes. Their common defining and valuable characteristic is what might be called “bounceback” – they can be stretched to many
workers’ lunchroom, where nobody has to spend a break waiting instead of eating. These are the elements, all of them focused on the bottom line, that have made a difference for Rubbercraft in Long Beach. “The old facility was just a hodgepodge of rooms and buildings that obstructed the logical flow of production,” O’Toole said. “Coming here has allowed a logical layout, so the parts we’re making aren’t being moved 60 times before they go to the shipping room.” As its name suggests, Rubbercraft makes rubbery things. Thousands of them. Some really are made of rubber, but most are elastomerics – a variety of substances mixed in thousands of ways, each concocted for the precise flexibility needed for its desired function. The improved manufacturing efficiency
times their original length but return to their original shape without being permanently deformed. When Rubbercraft makes a part, it first determines the specific amount of bounceback the part requires. This depends on the conditions of its use. Will it line the windows of a commercial airliner or space vehicle, or hold the lenses of night-vision goggles? Will it keep salt water out of an oceangoing ship or insulate computer components against the heat of high-speed processors? Will it shield against the broadcast of sensitive information or enhance the connections that enable more efficient high-speed rail? Will it lighten aircraft with its use in the interior panels of Boeing’s C-17 military transport, control the burn of Space-X rocket engines or line the fuselage of the Boeing 787? Rubbercraft currently employs approximately 200 people, but with orders and revenues climbing CEO Larry O’Toole said “hiring is going to be the key” to an increasingly profitable future. “We have to hire at least 10 engineers in the next 12 to 15 months,” O’Toole said, and he confirmed that the engineering department at California State University, Long
Rubbercraft is achieving in Long Beach is translating into lower costs. “The profitability of the business has improved,” O’Toole acknowledged. “The better flow, the LEED [Leadership in Energy and Environmental Design] Manufacturing would mean we make more money working in this facility, even if nothing else had grown.” But it seems that everything else is expanding, beginning with some of the most gigantic parts Rubbercraft already produces. As they become even more enormous, the equipment to build them gets bigger and bigger, too. “That’s the other thing this building affords us – the ability to bring in whatever size equipment we may need,” O’Toole explained. “Some of the equipment we are using now is 60 feet and 70 feet long, and we are being challenged to go even longer. The guy from Boeing I just met with was talking about the wings of the 777X, which are 90 feet each. “Some of our competitors who might like to do that work, who might have the wherewithal to do it, they don’t have the space to do it. But if we needed to go to 100 feet, we have the space. The Boeings, the Airbuses, they see some of the presses we are operating and say, “There’s not another company on the planet doing that.” (Please Continue To Next Page)
Beach is producing the kind of candidates Rubbercraft is seeking. “We’re going to need a lot of direct labor, too.” O’Toole was referring to Rubbercraft’s reliance on hourly employees with talents that can be adapted to factory jobs ranging from operating some of the amazing array of machines to the precise hand-cutting and brushing of parts. Rubbercraft is a subsidiary of Sanders Industries Holdings, Inc., and both organizations are headquartered in the same Douglas Park facility. Sanders has three other subsidiaries: Sanders Composites in San Diego, Fabritech in Pennsylvania, and Creavey and Northern Engineering Sheffield in the United Kingdom. Sanders is in the process of merging them into one company, but O’Toole emphasized that Rubbercraft would keep its name. Sanders, on the other hand, will not. It is rebranding itself with a new logo and a new name, the choice of which is causing much agonizing, according to a company spokesperson. When asked what he would choose as Sanders’ new name, O’Toole replied immediately, and jokingly: “Polymers-R-Us?”
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February 17-March 2, 2015 Rubbercraft’s unused floor space isn’t only attractive to the biggest clients. “If you think about what’s been happening in specialty commercial aerospace – they are building more planes and also designing new ones – they are looking for a company that can keep up with their rate of production,” O’Toole said. “When they come into our facility and walk around, they go, ‘Wow, you really DID build for the future; I like this because you can grow with my program.’ “Right now they might only be making one or two planes a month, but what they’re thinking is, ‘How do I get up to 50 or 60 a month?’ And we can tell them, ‘Rubbercraft has the space.’” The bottom line is that the wisdom of Rubbercraft’s move to Long Beach has become evident on the bottom line. “Revenue growth is up considerably,” O’Toole said – and before we could ask, he added, “and when I say ‘considerably,’ I mean by 20-plus percent.” For a company with an international client list, that’s a lot of revenue to attribute to a 12-mile move – or it would be, if that were where O’Toole was placing all the credit. He’s not. “Some of it has to do with finally getting out and telling our message to more people,” he admitted. “Historically, Rubbercraft was a well-kept secret – I don’t mean a secret from the greater community, I mean to some of the top 50 entities making airplanes or building tanks or building ships. They didn’t know who we were.” All the upgrades that have come with Rubbercraft’s move to Long Beach wouldn’t be getting the company anywhere if
Long Beach Business Journal 23 Rubbercraft hadn’t told the world about themselves. Since O’Toole moved from the board of Sanders Holdings to CEO – it will be three years in April – Rubbercraft has come out of the shadows, beefing up its sales and marketing efforts, spotlighting its engineers and emphasizing the company’s customer service. “Back then everyone knew our business growth was starting to stagnate, but the company leaders weren’t really sure what was causing the stagnation,” O’Toole recounted. “Boiled down, the problem was not our product, not our capability. It boiled down to presence. “There were people out there who were looking for our type of product, but they would not have thought of us. They will now. We’ve got every territory filled, both here and in Europe. It may not sound like it could be that simple, but in some cases, it was.” Going forward, O’Toole said he intends to keep Rubbercraft’s focus on commercial aerospace and defense, which currently accounts for 70 percent of its business. “Of that 70 percent, the breakdown between commercial and defense is relatively 50-50,” he reported. “The other 30 percent is made up of all kinds of things – things we do for Disneyland.” Getting back to that bottom line – and beyond – O’Toole is not shy. “In the next 36 months we need to double our revenue,” he asserted. “We doubled it in the last 36 months, so we’ll double it again.” And after a slight pause, O’Toole again beat our question with his answer. “If not,” he said, “somebody else will be sitting here.” ■
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FOCUS ON AVIATION/AEROSPACE INDUSTRY
February 17-March 2, 2015
From Possible International Flights To Current International Students, Long Beach Airport Is A Study Of Business Diversity ■ By DAVE WIELENGA Staff Writer The conversation about internationalizing the Long Beach Airport begins this afternoon (February 17) at city hall. But don’t expect it to end anytime soon. The special meeting of the Long Beach City Council that Mayor Robert Garcia has called for 4 p.m. is the first detectable official public response to Jet Blue’s repeatedly expressed desire to fly between Long Beach and international destinations in Latin America and the Caribbean. Implicit in that wish is Jet Blue’s request that Long Beach officials seek a Port of Entry designation and U.S. Customs facility that would enable international flights. The airline is hoping its 14 years as Long Beach Airport’s principal commercial tenant will bolster its case. There’s been no difficulty detecting the response of citizen groups from neighborhoods around the airport, who are wary of any changes involving commercial airlines at the airport and who are expected show up in council chambers to air their anxiety. Don’t be surprised if the conversation gets loud. It would actually be weirdly appropriate, since the special session that begins the conversation about a possible Long Beach International Airport will be devoted to the Long Beach noise ordinance. Perhaps that doesn’t sound like a very
Curt Castagna, CEO of the Aeroplex Aerolease Group, says the diversity of interests at the Long Beach Airport provide a balance of uses that actually protect the neighborhoods’ quality of life – and the noise ordinance. (Photograph by the Business Journal’s Thomas McConville)
special session. Every conversation about the Long Beach Airport over the last quarter century seems to have included at least a mention of the noise ordinance. Nothing wrong with that, of course. The noise ordinance is one of the most renowned features of the Long Beach Airport. As a set of policies, it is unique among all commercial airports of any substantial size. As a public issue, it is testimony and tribute to the effectiveness of intelligent, vigilant citizen ac-
tivism, as well as the tripwire to a political landmine. Enforcement of the Long Beach noise ordinance is a wondrous mixture of scientific precision and sensitivity to the human body clock. Decibel levels are measured 24/7 with 18 noise monitoring devices strategically positioned within and around airport property. The results are compared to codified decibel limits calculated according to formulas that consider such conditions as time of day or
night, proximity to the airport and whether an aircraft is taking off or landing. Violations are punished by a succession of escalating warnings and fines of up to $300, and the right is reserved to criminally prosecute those who violate the ordinance with impunity. The Long Beach noise ordinance is a miracle baby, surviving the Federal Aircraft Noise Capacity Act that would render it illegal, through the grace of the special exemption it received in 1990. The Long Beach noise ordinance may be the last of its species; no other airport noise-related ordinance has been enacted in the United States since 1991. But Business Journal Publisher George Economides has warned repeatedly that if elected officials tamper with the ordinance or, in the eyes of the U.S. Federal Aviation Administration (FAA), deal with the airline industry unfairly, they risk losing the city’s grandfather status, thus control. “The FAA is not keen on cities restricting commercial flights, and what may be deemed ‘unfair’ to city officials may not be the same to the FAA,” Economides said. Curt Castagna, CEO of Aeroplex/Aerolease, has worked at the Long Beach Airport since the mid-1980s and acknowledges that the noise ordinance is an amazing thing. But he wonders whether the intensity of the reverence it inspires is robbing some people of a bigger picture, one that considers the role, the value and the potential of the noise ordinance in the larger context of the airport or the city as a whole. “If you go to ask a resident of Long Beach about the airport, 99 percent are going to say, ‘We love the new terminal and we love Jet Blue and we love the noise ordinance,’” Castagna said. “But the truth is that commercial passenger airlines only represent about five percent of the airport’s operations. What’s truly unique about Long Beach – its diversity – really goes to the heart of what’s valuable about the airport to both the city and its residents.” Castagna provided some off-the-top-ofhis-head examples of airport enterprises not related to commercial passenger flights. “We’ve got manufacturing at the Gulfstream jet facility, private aviation at the flight schools, and helicopters and blimps,” he said. “Do people realize that in AirFlite we have Toyota’s flight department at our airport? That we are lucky enough to have one of the 150 worldwide locations of Signature Flight Support here? Flight Safety, which does [aviation] training, is a Warren Buffet company. The Long Beach Fire Department adds a public safety component. Then, of course, there is commercial service.” Castagna kept going. “There is a host of non-aviation income streams that support the airport budget – the Kilroy business center, the industry of Douglas Park. And we’ll see what happens in the next decade with the redevelopment of Boeing’s C-17 site; there’s an opportunity to replace what we have lost with in(Please Continue To Next Page)
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February 17-March 2, 2015 dustrial uses, maybe a tech park – a complement not only to the airport but to the balance of the community.” Castagna continued, “There is a depth of business interests at the Long Beach Airport that many airports would kill to have,” he began. “But, at the same time, those businesses provide the balance of uses that really protect the quality of life in the neighborhoods. “We’re not going to be LAX. We’re not going to be Orange County. We’re going to be a diversified airport, hopefully with some non-aviation development opportunities that will continue to provide more jobs to the city and balance the airport out.” A key to that, said Castagna, is the Long Beach noise ordinance. “We would all love to preserve our noise ordinance because it’s not only important for the neighborhoods’ quality of life, but it is a known operational entity with which we can continue to manage our businesses – so we know what the regulations are.”
Airport Flight Schools Train Growing Number Of International Students Amid the discussion over the pros and cons of making Long Beach an international airport, there’s this observation: in some ways, it already is. International students comprise a growing percentage of the people in the classrooms and cockpits of flying schools at the Long Beach Airport. At the Long Beach Flying Club and Flight Academy, owner Candy Robinson said the upswing is contributing significantly to the success of her business. “We have at least 50 students from dif-
FOCUS ON AVIATION/AEROSPACE INDUSTRY
Long Beach Business Journal 25
“Fuel prices are less here than in other countries, especially for aviation gasoline. Taxation is lower, the user fees cost less. There are generally fewer regulations and less bureaucracy. Sure, everybody bitches about the FAA and the government, and things are slowly but inexorably getting worse, but there is still a long, long way to go to be anywhere near as bad as the rest of the world.” There’s a huge map of the world on the wall at the Long Beach Flying Club and Flight Academy that Robinson often consults to get a general sense of the reach of her business at any given moment. “Our operations manager puts pushpins where our students are from,” she said. “Right now we Long Beach Flying Club instructor Tomas Martinez (left) and students Shehan DeSilva (center) of Sri Lanka and have a contingency of Italians – Henry Lee from South Korea might suggest that Long Beach already is an international airport. (Photograph by our fifth or sixth generation of the Business Journal’s Thomas McConville) Italians, who keep spreading the news by word of mouth. We have Seosamh Sommers, owner of Angel City ferent countries who are learning to fly a student from Sri Lanka, several from here,” she said. “It’s kind of a miracle. I’ve Flyers, agrees with Robinson not because Thailand, and we still have a good Korean been here for 35 years, and much of the he teaches many international students, but contingency.” time it’s been hand-to-mouth. But business because he used to be one. International students and flight “I came to the United States to become a has really improved during the last few schools suffered after the attacks of Sepyears and the biggest difference has been pilot in 1996,” said Sommers, 42, who tember 11, 2001, but Robinson said that’s in our international students.” grew up in Ireland. “I saved my money over not an issue, anymore. Robinson said aspiring pilots from other a number of years to do it.” “Flight schools got a bad name, but the countries want learn to fly in the United Why did he do it? problem was in the government system, not States because there are vastly more air“No. 1, the U.S. has a culture of aviaours,” she said. “But after 9/11 they autoports, schools and teachers. tion,” Sommers said. “Aviation history is mated the system, making it more secure “And it’s cheaper,” she said. “Even with mostly in America. There is a critical and more efficient. Along the way, they the expenses of housing and food and other mass that allows things efficiently, with also made it much easier. I think that’s one living expenses, they pay less here than the more expertise.” ■ of the reasons business is up, too.” He wasn’t done. cost of instruction alone in their countries.”
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February 17-March 2, 2015
PERSPECTIVES IN THE NEWS
Host Committee Provides Update On Fisher House Plans For Long Beach VA Site A progress report on plans to construct a two-story, nearly 16,000-square-foot Fisher House on the grounds of the Long Beach Veterans Administration Hospital were discussed during a reception at Virginia Country Club earlier this month. According to former Congressman Steve Kuykendall, president and CEO of the nonprofit Fisher House Southern California, Inc., the facility will be a place where families of veterans can stay while visiting their recovering loved ones. Groundbreaking is expected to occur in the summer, with the facility opening by year end. Fundraising is ongoing as the organization needs about another million dollars to reach its $6 million goal. Anyone wishing more information, or who would like to make a donation, may reach Kuykendall at: StevenKuykendall@aol.com. Pictured at the reception are members of the host committee, from left: George Murchison; Valerie and Greg Owen; Kuykendall; Leo Vander Lans; John DiCarlo; and John Dameron. Not pictured is committe member Bob Waestman. The reception was sponsored by Keesal Young & Logan, the Port of Long Beach, Windes, Dameron Alloy Foundaries, Cal Worthington Ford and Ability Tri-Modal. (Photograph by the Business Journal’s Thomas McConville)
Community Hospital Long Beach Foundation Check Aids With Emergency Department Upgrade Campaign A check-presentation ceremony was held earlier this month to kick off the second of four phases in the upgrading of the Community Hospital Long Beach Emergency Department, which serves 25,000 adult and 4,800 pediatric patients a year. Members of the Community Hospital Long Beach Foundation presented a check for $150,000, which, according to Foundation Board Chair Alan Anderson, allows the hospital to begin work immediately on upgrades to the nurses’ and physicians’ workstations to improve work flow and provide efficient professional care. Additionally, Foundation Executive Director Matthew Faulkner said that the Bixby Endowment Fund announced a $500,000 challenge grant “to stimulate a minimum of $500,000 in matching gifts toward a total of $1.25 million for a campaign to upgrade patient treatment, technology and service capacity” of the emergency department. Pictured from left are: Faulkner; Greg Bush, M.D., medical director of the emergency department; Jean Bixby Smith of the Bixby Endowment Fund; Krikor Jansezian, Ph.D., hospital administrator; and Anderson. Community Hospital is part of the MemorialCare Health System. The health system’s employees’ giving campaign, “I Give,” provided funding for the first phase of the emergency department refurbishment, which included renovation of the lobby. (Community Hospital Foundation photograph)
Long Beach City Prosecutor Haubert Presents Annual IMPACT Awards A ceremony marking the presentation of Long Beach City Prosecutor Doug P. Haubert’s 4th Annual IMPACT awards was held earlier this month at Gladstone’s at Rainbow Harbor. According to Halbert, the awards recognize “individuals and groups who, working with city prosecutors, made a positive, significant impact on the city.” The awardees, pictured from left, are: Bill Hodgeman, L.A. District Attorney’s Office (accepting for awardee, District Attorney Jackie Lacey; Erin Simon, Long Beach Unified School District; Mark Fort, Long Beach Fire Department (LBFD); Fire Chief Mike DuRee; Joel Davis, LBFD; Chris Barton, LBFD; Haubert; David Honey, LBFD; Beth Aboites, UrbanFin/7th Street Church; Tracy Colunga, Long Beach violence prevention coordinator; Keith Farrell, LBFD; Gonzalo Medina, marine safety chief; Robert Belcher, Long Beach Police Department (LBPD); Rich Funk, LBPD; and Calvin Lane, Los Angeles Sheriff’s Department. Not pictured are awardeds Jason Marks of the California Department of Corrections and Daid Ternullo, detective with the LBPD. (Photograph provided by the Long Beach City Prosecutor’s Office.)
Captain Vic’s Coffee & Ice Cream Opens
Saving Face Fitness Opens At Bliss On Broadway
A new business on the border of the cities of Lakewood and Long Beach aims to satisfy both sweet tooth and caffeine cravings with a selection of ice creams and coffees. Captain Vic’s Coffee & Ice Cream opened its doors at 2700 E. Carson St. on December 15. The nautical-themed establishment serves organic, locally roasted coffee and Dreyer’s Ice Cream, plus fruit smoothies, cheesecake, ice cream bars and more. According to married owners Gloria and Captain Vic Laragione, a boat captain and veteran of the U.S. Navy, one of the most popular menu items is the Affogato, a shot of espresso poured over ice cream. The shop offers free Wi-Fi access to customers, and is open Monday through Thursday from 6 a.m. to 9 p.m., Friday from 6 a.m. to 10 p.m., Saturday from 8 a.m. to 10 p.m. and on Sunday from 8 a.m. to 9:30 p.m. Call 562/3039915 for more information. (Photograph by the Business Journal’s Thomas McConville)
Saving Face Fitness, an anti-aging workout regime for your face, is being launched exclusively at Bliss on Broadway, 4032 E. Broadway, beginning February 20. The first 100 guests will receive treatment giveaways, gift bags and $25 gift certificates. Saving Face Fitness was invented by Kelly Sullivan and Bliss on Broadway owner Camlynn Tran. “It is a natural, noninvasive, affordable facelift primarily using micro-current technology and research-based treatments,” Sullivan said of the treatment. The Belmont Heights salon and spa is open Tuesday through Sunday from 10 a.m. to 7 p.m. Pictured, from left, are Bliss on Broadway owners Jacqui and Camlynn Tran, and Sullivan. Call 562/4394333 for more information. (Photograph by the Business Journal’s Thomas McConville)
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February 17-March 2, 2015
4th District Council Race (Continued From Page 1)
some city unions want to see the utility users tax raised from the current 5 percent to 7 or 8 percent, or back to the 10 percent it was until voters took matters into their own hands in November 2000. Each percentage point equates to roughly $7.5 million in new taxes – each year – on Long Beach residents and businesses. While the tax increase can be enacted only by a vote of the people, an increase in the minimum wage would merely take a vote of five of the nine councilmembers. Unions are chomping at the bit to get councilmembers to raise the minimum wage, and will spend whatever it takes to win a ballot measure to increase the utility users tax. And they are closer to achieving that objective than most people realize. In fact, they may be just one vote shy. The city council currently consists of four members who are well connected with unions, and who have received significant contributions from them: Lena Gonzalez in the 1st District; Roberto Uranga in the 7th District; Al Austin in the 8th District; and Rex Richardson in the 9th District. Those four – three of whom were elected last year – will do just about anything to support the union cause. Enter Herlinda Chico, a candidate for the 4th District who has significant union ties and who has already gathered endorsements from the Long Beach police officers union, the Los Angeles Country Federation of Labor AFL/CIO, Councilmembers Richardson, Austin and Gonzalez, and State Sen. Ricardo Lara – another staunch union supporter. If Chico wins, the unions have their fifth vote to pretty much pass whatever they want. Mayor Robert Garcia, however, could use his veto power to thwart their plans. It would require six councilmembers to override his veto. In a recent interview with the Business Journal about reduced city revenue due to a drop in oil prices, the red flag went up when Chico said, “I don’t like austerity programs – saving your way out of an economic crisis – but this is where you have to get into the books and take a look. I don’t want to speculate, but it doesn’t look good. . . . What is the best way to deal with this? We’re going have to look at options like bringing back the utility users tax. Or maybe a half-cent sales tax.” That is the typical union response
PUBLISHER’S PERSPECTIVE when times are tough in the public sector: let’s increase taxes instead of streamlining operations and reducing expenses, or generating new revenue through economic development. Getting voters to approve a tax increase is not easy, but unions know all the right buttons to push. They will ask for a small increase in the utility users tax and tie it to public safety and to “saving” children, seniors and feel-good community programs. Nowhere will the real aim be mentioned: salary increases. Fifteen years ago, a small group of residents and business people led a fight to reduce the city’s utility users tax from 10 percent to 5 percent. The tax had been increased by the city council in the 1990s (voter approval was not required at that time) from 5 to 7 percent, and again to 10 percent, with the understanding that the increases would be “temporary.” But the city council did not keep its word and return to the 5 percent rate. When the citizen-led measure to cut the tax finally made it to the ballot, it won easily, garnering 70 percent of the vote, despite claims by the mayor, city manager, union leaders and others that city services would be cut drastically. In the end, that vote forced the city to streamline its operations, get its house in order by being creative and becoming more efficient in how it conducted the business of the people. Few services were negatively impacted; yet over the past 15 years, the residents and businesses of Long Beach have saved more than $400 million. One of the key reasons the tax reduction won in that 2000 election was that a study of all 88 cities in L.A. County and the 50 most populous cities in the state showed that the average utility users tax on electricity, gas, telephone and water bills was 3.3 percent – or one-third of what Long Beach was charging. Today is no different. At 5 percent, the Long Beach utility users tax remains 50 percent higher than the county or state averages. The residents of the 4th District – and residents citywide – need to pay close attention to this election and to how much union money is spent in direct contributions and independent expenditures. Get to know the candidates – Daryl Supernaw, Richard Lindemann and Chico. Put them on the spot and challenge them to give you straight answers about how they would address a possible shortfall in revenue. It will be intersting to see how many 4th District residents con-
Tom O’Brien Named Executive Director Of Center For International Trade And Transportation At CSULB Thomas O’Brien, Ph.D., was recently named the executive director of the Center for International Trade and Transportation (CITT) at California State University, Long Beach (CSULB). O’Brien had served as the interim executive director since his predecessor, Marianne Venieris, retired about a year ago. In his role, he oversees CITT’s educational programs in global logistics, supply chain management and marine terminal operations. He also oversees four research centers affiliated with CITT including: the U.S. Department of Transportation-designated METRANs Transportation Center; the National Center for Sustainable Transportation; METROFREIGHT, a Volvo Research and Education Center of Excellence in Urban Freight; and Southwest TransWorks, a workforce center for the Federal Highway Administration. “CSULB and CITT should be proud of the role we have played in forging a new path forward in logistics education, research and outreach,” O’Brien told the Business Journal. “The global logistics specialist program in particular has provided a skilled workforce for the trade and transportation industry for more than 15 years. I’m proud to be part of it and I’m also proud to have worked under the founder of the program, Marianne Venieris.” (Photograph by the Business Journal’s Thomas McConville)
tribute to the campaign of each candidate. We’re not opposed to unions. Most of them do a good job in representing their members’ needs. What we are opposed to are the heavyhanded tactics employed by some unions and how they control elected officials.
Long Beach Business Journal 27 Business owners in particular need to be aware of the consequences of the April 14 election. Make no mistake about it, it could be a game-changer for this city, and deter new businesses from locating here and current businesses from expanding. ■
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28 Long Beach Business Journal
February 17-March 2, 2015
PERSPECTIVES
HealthWise
Small Business Dollars & Sense
knowing Congenital Heart disease Signs Can Save A Child’s life
Happily ever After: Why Credit Should Be At The Center of Your Communication
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ongenital heart defects are America’s most common birth defect. Each year approximately 40,000 babies are born in the United States with a congenital heart defect, and twice as many children die from congenital heart defects than from all forms of childhood cancers combined. It is critical for parents to be aware of what congenital heart defects are and know the signs to identify them in their child. Congenital heart disease is a defect or malformation of blood vessels By SHAUn SeTTY, M.d. or the heart structure that occurs before birth. Depending on the defect, symptoms can appear right away, or oddly enough, may not manifest until adulthood. The defects can range from a “hole” between two heart chambers, abnormal heart valve development, abnormal connections between veins/arteries and the heart, to the extreme of missing heart chambers, and anything in between. Many congenital heart defects require surgery by pediatric congenital heart surgeons to correct it and avoid problems in the future. There are many different signs that can indicate congenital heart disease, but they present differently depending on what type of defect your child has. Some of the most common signs and symptoms are: 1. Heart murmurs Heart murmurs are commonly heard during annual checkups with your pediatrician. If your pediatrician hears a heart murmur and is concerned, an ultrasound of your child’s heart may be ordered to see if there is an underlying heart defect. 2. Constant heavy breathing If your baby is constantly breathing hard, especially when feeding, that is a warning sign. A baby may seem perfectly normal when their body isn’t stressed, but once they start feeding, the stress can make them stop feeding, start to breathe hard or get really sweaty. 3. Slower stunted growth If your baby is feeding regularly, but they are not showing any signs of gaining weight or growing appropriately, then a heart defect could be involved. 4. Blue skin or lips In children, if their skin starts to turn blue it’s a sign of a condition called Cyanosis. This occurs because the ability to have a normal oxygen level is compromised by the heart defect and their skin, nails or lips can turn blue, especially when crying. 5. Extreme fatigue If your child gets tired very quickly or easily, or their hearts race during physical activity, this could be a sign that their heart can’t maintain the ability to meet their body’s needs. 6. Swelling in the legs, abdomen or areas around the eyes If your child suffers from consistent swelling in these areas, this could be a sign that their heart isn’t pumping efficiently. If your child’s heart is too weak it prevents their blood from flowing properly which can lead to fluid buildup or leakage. When a congenital heart defect goes untreated it can, over time, cause high pressures in the lung and heart, and weakening of the pump function of the heart which can ultimately lead to death. Being aware of the potential warning signs of a congenital heart defect can save your child’s life. (Shaun Setty, M.D., is the medical director for the Pediatric & Adult Congenital Cardiac Surgery, Pediatric Heart Center, at Miller Children’s & Women’s Hospital Long Beach.)
Effective Leadership if You Want An inspirational Workplace, Start With Trust
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n a study of 32,000 employees in large and midsize organizations across a wide range of industries globally, trust was at the top of the list for employee engagement. Of the highly engaged employees: • 65 percent felt that developing future leaders was important for managers. By MiCk UklejA • 72 percent felt that managers needed to have a sincere interest in their employee’s well-being. • 79 percent felt that trust and confidence in their senior leaders were essential for connection and interdependency. During change and transition, the need for trust takes on exponential proportions. Employees have been doing more with less – and in some cases, for less – for over half a decade. That reality doesn’t seem likely to change anytime soon. Organizations that survived the past economic crisis were companies with a strong foundation of trust.
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ost couples will say that the key to a healthy relationship is being honest with one another and maintaining an open communication, especially when it comes to finances. Yet, one-third of adults have difficulty discussing money with their spouse or partner according to a recent Wells Fargo study. For many couples, talking about credit and their financial history isn’t often top of mind. However, if you are thinking about joining your By Ben financial life with a significant other, then you should start an open AlvArAdo discussion and learn how your partner’s credit score might affect you and vice versa. While couples are not required to apply for credit jointly and may apply with people other than a spouse, having good credit is still an important first step towards developing a sound financial future. Good credit can help when applying for a mortgage or car loan, and in some cases, a job. For example, a common misconception about credit is that when you get married, your partner’s credit score may lower yours. While this is not true, it is important to note that what it might affect is your ability to access credit if you are seeking joint credit. Another example, couples looking to buy a home together will find that most lenders look at the credit history of both applicants and consider the average of your two credit scores when approving a loan. This is also true if you are looking to purchase a car together. If you or your partner has a low credit score, not only can it affect the loan amount and the interest rate, but it can also prevent you from obtaining the loan. Maintaining good credit is important as you prepare for different life events – including when you’re considering combining finances with your significant other. Here are five important tips to keep in mind when thinking about credit and your relationship: 1. Discuss your financial situation, including your credit score: be honest about your credit history. When discussing how to finance an item such as a car or a mortgage, always discuss how you will repay the loan with your partner. 2. Plan a realistic budget together: calculate your income, expenses, and savings for future plans as well as retirement plans. 3. Set financial ground rules: track how much you’re spending as a couple and set parameters to help you save and plan for emergencies. 4. Share your financial goals: create a realistic financial plan together to help you reach your goals. 5. Maintain an open and ongoing dialogue: your credit score can change rapidly, and even missing a single payment can influence it. Be sure to inform your partner of any changes with your credit, as it might also affect them. Talking about money and your credit score can feel awkward but when starting a life together, it’s important to have awareness and understanding of each other’s financial situation. (Ben Alvarado, a 23-year veteran of Wells Fargo, is the president of the bank’s Southern California Region, which stretches from Long Beach to Orange, Imperial and San Diego counties.)
Trust only works in two directions. You have to give it in order to get it. One of the keys to trust is transparency. When others see it, trust is being built. When we take responsibility for our actions, we are constructing trust. When we communicate openly – both the good and the bad – trust grows. When we show we care about others as much as organizational results, trust is being created. The outcome of these behaviors help people take pride in what they do and the quality of their work. According to the Towers Watson study, trust was a key factor in employee retention. It wasn’t the only factor, but it was at the TOP of the list. One of the specific reasons people leave a company is because trust has been eroded. It should also come as no surprise that organizational cultures of high trust strongly outperformed their competition. Profitable organizations are built by successful teams. Successful teams are highly engaged teams. Highly engaged teams are found only in cultures where trust is high. Trust is the bridge between the organization’s need for outcomes and the individual’s need for connection. It is universal, and it is reciprocal in nature. And the good news is that trust is a natural human need. We really do want to trust each other! There is no connection unless we connect on common ground. Even in hierarchical organizations the connection takes place on common ground. The greatest generals have
always connected emotionally and tangibly with the front line troops. That has always led to greater engagement. So how can leaders connect? They do more than proclaim it. They make it a part of their team’s agenda. The best way to get buy in is to get input. They make it a part of their team’s conversation. They ask questions on an individual level, then they bring the team together to discuss the results. Try these on for starters: • What does trust look like to you? • Why is trust important to you? • How would increased trust help meet our strategic objectives? • What are three things our team could do to build on our mutual trust? Get together and discuss the results. This in itself promotes trust. When trust is low, relationships are weaker. When relationships are weaker, results suffer. When we trust, we connect. When we connect we inspire. And it’s in this atmosphere of inspiration that our best work gets done. (Mick Ukleja keynotes across the country on topics related to leadership. He is president of LeadershipTraq and author of several books, including co-author of Managing the Millennials. His clients have included Fortune 500 corporations and non-profit organizations. Check his weekly blog at www.leadershiptraq.com.)
Februa
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February 17-March 2, 2015
PERSPECTIVES PERSPECTIVES
Realty Views down Payment A Problem for Many
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ven with new vigor in the economy in 2015, and most estimates showing a growing optimism among consumers, the harsh reality for the housing industry is that the majority of the people who want to buy a home simply can’t come up with the funds for the down payment. According to a survey conducted by the First By TerrY Tuesday real estate website, fewer than one out of roSS four homebuyers are able to make the traditional 20 percent down payment that lenders like to see when writing a mortgage. Although there are programs for as little as three percent down that have recently returned since the clampdown on lending after the real estate bubble – and FHA has continued to offer programs with as little as 3.5 percent down – these programs carry extra costs and insurance that drive up the price for mortgages, not to mention tighter guidelines that go with a lower down payment. Despite the relative strengthening of the economy, home sales volume numbers remain stagnant even with mortgage rates that keep hovering around historical lows. And here is a good illustration why: at the current 5.5 percent savings rate, a buyer with an annual gross income of $68,222 (the household median for California in 2013, according to the U. S. Census) will need to save for just under two years to acquire a 3 percent down payment on a $200,000 property. It would take the same buyer over 12 years to save for a 20 percent down payment at the same rate. Although there is inflation, it’s a wash because wages run with inflation, as do home prices over the term of each real estate pricing cycle. Part of the reason the personal savings rate is so low is that wage growth for most employees hasn’t kept pace with inflation, employment and Gross Domestic Product growth. You can’t save when too much of your check is going to basic living expenses. Most observers don’t feel it is wise to push homebuyers – especially first-timers – into the financial responsibility of a home before they are fiscally ready. And when you figure that many of these buyers need to use the low-down programs just to get in, the less down payment they invest, the more likely they are to default
on the mortgage when things go bad. Lenders know buyers are less likely to default if they allocate no more than 31 percent of their monthly gross income to their monthly mortgage payment. Accordingly, mortgage lenders refuse to lend more money than the buyer can repay at that 31 percent gross income ratio, amortized over 30 years. One way to bridge this down payment gap is through programs to subsidize down payments through tax-exempt savings accounts or even matching programs for low- to middle-income earners. Smart Growth America of Washington – a coalition of builders and real estate professionals – is lobbying Congress to institute tax-exempt down payment savings accounts for first-time homebuyers. Housing subsidies, including the mortgage interest tax deduction (MID), account for nearly $450 billion a year in federal spending. Tax-free accounts for college and retirement savings already exist; why not for down payment savings as well? The coalition takes its inspiration from a home loan savings program that has been in effect in Montana since the late 1990s. First-time homebuyers are allowed to deduct up to $3,000 a year from their state income tax returns in order to save for their down payment. The Federal Home Loan Bank of New York matches funds for down payment savers. First-time homebuyers in New York and New Jersey who earn no more than 80 percent of median income earn $4 in matching funds for every dollar saved, up to a total of $7,500. While neither program has dramatically affected the savings rate in either state, proponents of the plan argue it is the best way to sustainably and fairly promote homeownership. This approach rewards saving instead of – the classic American approach – rewarding spending. Despite the simple genius of the idea, it’s unlikely to get off the ground – the American economy is just too dependent on spending in this day and age. Also, with an American middle class that is struggling, finding that extra money to save is a stretch at best. Real incomes for 99 percent of Americans fell dramatically during the Great Recession. Perhaps not as well known is that incomes have yet to recover for the majority of Americans. In fact, real income continues to fall. The combination of rising interest rates and falling incomes has sent buyer purchasing power into a tailspin. Speculator-driven home price inflation of late has only added insult to injury to the buying power of the average consumer. It could take much more than savings programs to enable borrowers to come up with enough for the traditional 20 percent down payment. (Terry Ross, the broker-owner of TR Properties, will answer any questions about today’s real estate market. E-mail questions to Realty Views at terryross1@cs.com or call 949/457-4922.)
Third Sector Report What is This funny little Thing Called, ‘ex officio?’
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mong the many things that a board of directors for a nonprofit organization should be concerned about, matters relating to titles aren’t going to tip the scales. ExBy jeffreY WilCox cept, of course, for those persons whose titles somehow became a matter worth discussing. Titles, nevertheless, establish a culture. A debate about “chief executive officer” versus “executive director,” for example, is an inevitable discussion in every nonprofit board room. In this day and age, any board that cares about succession planning and attracting top candidates to provide professional leadership to hold the top salaried position in the corporation, albeit nonprofit, is destined to discuss this matter. Similarly, the idea of titling a nonprofit boardmember’s role as one of “governor,”
“trustee,” or “director” is not simply a matter of semantics as some would like to believe. Whatever words are selected to designate roles or describe the power structure of an organization, each title generally carries a practical definition. But for some titles, there are legal definitions and, for those designations, practicality becomes an irrelevant matter. The best example is the title of “ex officio.” Ex officio is one of those historically significant titles, while expressed in Latin and, yet, part of the English language, literally means, “by right of office.” The term can be found in the constitutions of countries like Italy and the UK, or in charters like the City of New York and Hong Kong. In practice, ex officio says that because someone holds a special kind of position, he or she can a have a special kind of relationship or privilege with a recognized body. For nonprofit organizations, ex officio has been a great catch-all, if not a parking lot for capturing the who’s who for an assigned parking space on the letterhead. Slapping this term behind the name of an individual who occupies or once had a par-
ticular position, like the Italian Senate does for all former presidents of the Italian Republic, offers genuine recognition and reinforces credibility. The usual modem operandi is for “ex officio directors” to have right of participation or recognition, but not a right to vote. It took a few hundred years, but the policy-makers in Sacramento made a decision to complete a job that apparently the early Romans left unfinished to their satisfaction. On January 1, 2015, a change was made in the California Nonprofit Corporations Code that sets the story straight about ex officio directors and nonprofit corporations. Their conclusion: “Ex officio director” is as much an oxymoron as the expression “icy hot.” The new law, according to the California Association of Nonprofits (CAN) and more specifically, Gene Takagi, managing attorney of the NEO Law Group in San Francisco, states “a person who does not have the authority to vote as a member of the governing body of the corporation, is not a director.” What that effectively means is that any person who is identified as an “ex-officio director” is first and foremost a director of the corporation and, therefore, has all the rights of directorship including voting rights. Any limitations to those rights must be clearly and specifically stated in the by-
Long Beach Business Journal 29
Vol. XXVIII No. 3 February 17-March 2, 2015
EDITOR & PUBLISHER George Economides SALES & MARKETING EXECUTIVE Heather Dann GRAPHIC DESIGNER Chris R. Weber OFFICE ASSISTANT Larry Duncan EDITORIAL DEPARTMENT SENIOR WRITER Samantha Mehlinger STAFF WRITER Dave Wielenga PHOTOJOURNALIST Thomas McConville COPY EDITOR Pat Flynn The Long Beach Business Journal is a publication of South Coast Publishing, Inc., incorporated in the State of California in July 1985. It is published every other Tuesday (except between Christmas and mid-January) – 25 copies annually. The Business Journal premiered March 1987 as the Long Beach Airport Business Journal. Reproduction in whole or in part without written permission is strictly prohibited unless otherwise stated. Opinions expressed by perspective writers and guest columnists are their views and not necessarily those of the Business Journal. Press releases should be sent to the address shown below.
Office South Coast Publishing, Inc. 2599 E. 28th Street, Suite 212 Signal Hill, CA 90755 Ph: 562/988-1222 • Fx: 562/988-1239 www:LBBusinessJournal.com Advertising and Editorial Deadlines Wednesday prior to publication date. Note: Press releases should be faxed or mailed. No follow up calls, please. For a copy of the 2015 advertising and editorial calendar, please fax request to 562/988-1239. Include your name, company and address and a copy will be sent to you. Distribution: Minimum 22,000.
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laws which constitutes a clear corporate definition of ex officio. This doesn’t seem like a big deal. Unless, of course, one or more ex-officio directors decides to play hard ball over a disagreeable decision and the fine print about what constitutes ex-officio can’t be found. This matter should be of particular interest to those nonprofit organizations who have chosen to designate their CEO or executive director as an ex-officio director of the board. It would be smart for every board to review with their legal counsel the level of clarity that is detailed in their bylaws regarding “ex officio” status and the rights, privileges and responsibilities associated with the designation. There are also those who think it would be smarter to just get rid of the term altogether in all corporate documents. Many examples of excellent wording, particularly as it pertains to the executive director, have already been developed to make this a fairly painless matter. Whatever a board decides to do, the fact is “this funny little thing called ‘exofficio’,” isn’t a funny little thing anymore in the State of California. (Jeffrey R. Wilcox, CFRE, is president and CEO of The Third Sector Company, Inc. Join in on the conversation about this article at the Long Beach Business Journal website www.lbbusinessjournal.com)
1_LBBJ_Feb17_2015_PortAnniversary 2/14/15 4:36 PM Page 30
ART MATTERS
Long Beach Business Journal 30 February 17-March 2, 2015
Brought To You By The Arts Council For Long Beach
Why the Arts Matter . . . At The Long Beach Airport . . .
A ship mosaic by Grace Clements at one of the main airport terminal entries represents Long Beach’s shipping industry. The terminal was also built in a Streamline Moderne design to resemble a cruise ship.
welcomes guests to a refreshing new way to fly. Inside the concourse, Long Beach firm Studio One Eleven designed an award-winning shops and restaurants area that mixes timeless style of LGB with modern twists. These are the ■ By BRYANT L. FRANCIS, C.M. works that people may not think of as art in the traditional Director, Long Beach Airport sense, but they are vital to the tone and character of Long Beach Airport. Our airport staff often witnesses travelers n the air travel industry, which so heavily relies on custhat come through the gates with smiles on their faces. tomer satisfaction, attractive art and design are not Many turn to friends and family to remark on the beauty luxuries; they are absolute necessities. That’s why that greets them; some even audibly gasp. Long Beach Airport (LGB) has been intrinsically linked with We are also proud of the way that art ties Long Beach local artists for more than 70 years, and continues to make Airport to the history of the community. Once our airline the aesthetic experience of our visitors, whether travelers, customers have deplaned, passed through the outdoor meeters & greeters, or employees, a top priority today. atrium, and retrieved their bags, they’re greeted by a large, To those with a trained six-panel mosaic hanging or curious eye, Long on the south wall of the Beach Airport abounds main terminal. This piece, with fascinating art entitled “Bay of Smokes,” pieces of all mediums, was created for the aireach meant to reflect the port by Long Beach native easygoing yet inspired and Wilson High graduate energy of the city itself. Patrick Mohr in 1986. It Whether it’s vintage depicts six periods in posters of Rosie the RivLong Beach history, beeter that have become ginning with authentic beloved symbols of native Chumash picworkplace equality, the tographs, and ending arresting lines of the fawith the flight of an elemous poem “High Flight” gant Douglas DC-3 airembossed outside the craft that was once main terminal, or the A zodiac compass mosaic by Grace Clements is part of the “air voyage” produced right across collection. (Photographs by the Business Journal’s Thomas McConville) intricate mosaics with the street. 2.6 million tiles decorating both the first and second floor For many travelers, “Bay of Smokes” is one of the last vithat immortalize the hopes and potential of early-1940s sions they’ll have as they leave Long Beach Airport, and Long Beach, the airport displays beautiful and often pro- there could not be a more fitting final send-off. Art is esfound works of art in every direction. sential to the atmosphere of Long Beach Airport, and the While the general traveler may not visit Long Beach atmosphere is an integral component of what keeps travAirport to admire the art, their overall experience is just elers coming back. We’re proud to share the heritage of as important, and is just as influenced by their surround- this great city with them, each and every day. ings. The famous ease and accessibility of flying with (Bryant L. Francis, C.M., began his tenure as the director Long Beach Airport is in large part aided by the stunning of Long Beach Airport in January after nearly 20 years in Streamline Moderne style of the main terminal, as well the aviation industry. He is a certified member of the Ameras our newer facilities. ican Association of Airport Executives and chairs its DiverOnce past the security screening checkpoint, the open- sity Committee. He is also a member of the Airports Council air atrium lined with palm trees and enormous windows International – North America Board of Directors.) ■
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An oil well mosaic created by Grace Clements signifies Long Beach’s urban development at the time the airport terminal opened.
Art in Real Estate ■ By SARAH BENNETT Arts Council for Long Beach Contributor
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eal estate agents know it's all about the staging. Sure you could sell an empty house, but properly furnishing and decorating a for-sale home can mean the difference between a few days on the market to a few months. In Long Beach, where many friends and neighbors are artists, it only makes sense that some agents are now going local when it comes time to choose paintings and sculptures that will comprise a staged property. Coldwell Banker agent Kathleen Spurlock, for example, turned to the Arts Council for Long Beach's Artist Registry to help her find the perfect art for an upscale Belmont Heights home she was selling. With room to add profiles, exhibitions and sample work, hundreds of Long Beach artists across all mediums have entered themselves into the Arts Council's comprehensive database. You can drill the list down by name or style, then scroll through large thumbnails to find someone who fits the aesthetic and sensibilities you are looking for. It was through this process that Spurlock discovered Mariko Tabar, a landscape and nature painter who had recently moved to Long Beach from Santa Barbara. Through a third party art broker, Tabar was offered the opportunity to select 10 works, which were to be displayed in various rooms of Spurlock's staged house, along with work from several other area artists. “To me it was a very beautiful setting. It looked like it was somewhat lived,” Tabar says. “I'd never done this before, showing in a house. I always showed in galleries so it was very interesting and it was also nice to have that kind of exposure for my art because there are a lot of people coming for an open house.” All of the artists were invited to attend the two-day open house as well, which allowed them to answer questions about their work and keep potential buyers engaged while they browsed. “At the same time, I told all my friends this is what's happening, so they came and see house too,” Tabar says. “The exposure worked both ways.” ■
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Gallery Corner Traveling through the Long Beach Airport may feel even more uniquely Long Beach these days due to Sound Cloud, an innovative online database of user uploaded music. The Long Beach Airport partnered with Sound Cloud to highlight the exceptional musical talent that exists here in Long Beach. Ryan ZumMallen, Public Affairs Specialist at the Long Beach Airport, says the goal of the project is to share Long Beach music “with people who are visiting the city and… give exposure to local acts trying to build a following.” The original idea, which builds on Long Beach Airport’s constant efforts to enhance travelers’ experience, was to introduce unique music in the airport. When the Long Beach Airport connected with the local music scene, it realized this opportunity could offer LB artists a new platform and provide a unique listening experience. The first installment, The Takeoff Vol. I, was released on Feb. 3rd and features local artists like: Avi Buffalo, The Moderates, The Get Down Boys, Hedgehog Swing, Wild Pack of Canaries, and Bearcoon. To hear the Long Beach Airport ‘s Sound Cloud, download the LGB Airport mobile app and follow the social media accounts that feature the newest volumes.
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THE NONPROFIT PAGE
Long Beach Business Journal 31 February 17-March 2, 2015
Curated By The Long Beach Nonprofit Partnership
The Next Generation of Giving is Now lifestyle, are the next generation in the mail. The study also found that younger donors were more of community “do-gooders.” According to a 2012 Millennial likely to make a donation had Impact Report, 75% of millenni- they volunteered or invested time als gave to charity in 2011. Of with a nonprofit. This generation truly wants to be the young adults who donated money to charities, over half do- seen as leaders and want to make nated $100 or less, and only 16% their impact known. The question gave $500 or more to one organ- becomes, how do we channel and foster this philanthropic ization. While their inenergy? Encourage dividual contributions In 2011, 75% them to volunteer? were not seen as a tremendous impact on of millennials Check. Rally around a cause and write letters? nonprofits, their potential as a group cannot gave to charity Sure. Tell them to dump ice on their heads and be ignored. If a few of these like-minded individuals ral- share with friends? Done. But what lied together, that individual giv- will really make the biggest impact ing, combined with their passion is, let’s face it, cash. One of the around a cause, will add up to newest trends to reach this end is quite an impactful sum. The a concept called Giving Circles. The idea of Giving Circles is study also showed, not surprising, that most donations (70%), nothing new. For decades, were made online, while only 7% friends and families have sat of donations were made through around dinner tables and passed mobile websites or text message. the proverbial hat to collect The remaining donations arrived money for charity. But what impact could our selfie generating tribe of 20 & 30 something’s really make? They are not yet esBeyond philanthropy, the Millennial Generation will be shaping the future tablished in their careers long of our nation and institutions for years to come. Like members of the “Greatenough to give the large est Generation” who fought in World War II, Millennials are part of the Civic amounts required to support a generational archetype identified in the research of William Strauss and Neil nonprofit. However, collectively Howe. Members of civic generations focus on resolving societal challenges they are a powerhouse of inforand building institutions. Despite coming of age during periods of intense mation-sharing passionato’s with stress and turmoil, civic generations invariably exhibit a uniquely high dean incredible amount of drive to gree of optimism about where they and the nation are ultimately headed. make the world a better place. For more on Millennials and their impact, read Millennial Momentum: Community Foundations, which How a New Generation Is Remaking America and Millennial Makeover: have been around for more than MySpace, YouTube & the Future of American Politics by Morley Winograd 100 years, assist with programs and Michael D. Hais. such as Giving Circles. The money raised is invested, which earns income to grow that giving over a period of time, and is available to the public to make From the Nonprofit Partnership tax-deductible contributions. A Giving Circle leaves a legacy on HR Workshop: Conducting a Workplace Investigation the community forever. February 19, 2-5 pm This generation truly wants to Top 10 Financial Tax Considerations be seen as leaders and wants to for Exempt Organizations in 2015 and Beyond make their impact known. We hope that they continue to inFebruary 24, 8-9:30 am vest, and do so in our great city. Best practices for effectively managing tax, legal & accounting infrastructure. Let’s make sure that Long Beach One-Person Development Office is ready for them.
We give to charity for many reasons. Some of us want to make a difference. Some want to leave a legacy. Some want to Marcelle Epley see our hard President and CEO earned dollars Long Beach go to charity Community instead of the Foundation g ove r n m e n t , and some give for all of the aforementioned reasons. Whatever the motivation, it’s important to know that giving is becoming increasingly popular with the millennial generation. This group, born 1980-2000, are ahead of previous generations when it comes to being globally aware and philanthropic minded at their age. This group, known for their hyper on-demand digital
Millennials: The Civic Generation
Capacity Corner: Upcoming Calendar of Events
How to Start a Giving Circle It really is as simple as 1, 2, 3 Step 1: Connect Identify what cause or movement you want to support; find likeminded friends, family and/or colleagues and recruit them to join you. Step 2: Set Your Rules Set some ground rules for how your giving circle operates. Think about things like how do you collect money together, how often you meet, how, where, and when do you give. Step 3: Grow Your Circle Recruit more people to get involved; keep your members engaged. There is no one “right” way to do it. Have fun and feel the rewards of giving. There are plenty of ways to learn more about giving circles including your local Community Foundation right here in Long Beach. www.longbeachcf.org..
Nonprofit News Leadership Transitions Welcome to . . . Jaimie Zavala Executive Director Olive Crest Dora Jacildo Executive Director South Asian Helpline and Referral Agency Marcelle Epley President & CEO Long Beach Community Foundation Jaci Anderson Program Manager CARE 18 at Kingdom Causes Linda Alexander Executive Director Long Beach Nonprofit Partnership Thank you to . . . Sara Pol-Lim for her years of service as Executive Director at the United Cambodian Community
February 26, 9 am-4 pm Prioritize efforts and identify the most effective fundraising techniques for the oneperson shop.
Essentials of Fund Development 3-Day Certificate Program March 19, April 2, April 9 Create a fund development plan by participating in interactive discussions and hands-on activities. Visit: lbnp.org.
From our Partners Women's Leadership Summit: Working our Power February 24, 9 am to 2 pm Featuring a powerful panel of women from the corporate, foundation and academic worlds. Visit: cnmsocal.org.
Service Grants for Nonprofits LA metro area nonprofits may apply for a Taproot Foundation Service Grant in the areas of Marketing, Leadership Development, Information Technology & Strategy Management. Application deadline is MARCH 3. Visit: taprootfoundation.org.
The area’s regional capacity builder, serving local organizations to strengthen and grow through leadership, education and collaboration. Offering: Professional Development & Training Networking & Collaboration Custom Training & Consulting Services Information Resources To learn more, visit us at www.lbnp.org. 4900 East Conant St., Building O-2, Suite 225, Long Beach, CA 90808 562.290.0018
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