CalBizBlog

CALIFORNIA: A STRATEGY FOR PROSPERITY

Tim Johnson — Fri, 20 Jan 2012 01:40:00 GMT

Three years ago, I was asked by Wayne Schell, president and CEO of the California Association for Local
Economic Development, CALED to examine the multiple business and economic development strategies
that had been formulated in the state in the hopes of formulating a strategy of strategies for California

The following is the examination entitled, Prosperity California: Formulating a Stratgy of Strategies for
Economic Prosperity. The outcome unfortunately did not go far. But it provides a great look back at
what has happen early on during the Great Recession and one of the key problems with economic
development in California. It is too big to manage with the recent mindset.

We will let you be the judge. Enjoy!

PROSPERITY CALIFORNIA
FORMULATING A STRATEGY OF STRATEGIES
FOR ECONOMIC PROSPERITY

If economic history remembers anything about California, it should remember that the ‘Golden State’ experienced
one of its largest periods of expansion in its history from 2001 to 2006.

And strangely, even with this expansion there were a variety of business and economic maladies that caused
temporary statewide and regional economic downturns across the state during this period. Examples include
the collapse of the dot.com inudstry in 2001; the debacle associated with the deregulation of the electrical
transmission industry in 2002 and the downturn in the national economy in 2003, all of which could have caused
greater economic hardship including the derailing of the state’s economy but California’s economy persevered
and continued to grow.

But now it appears that unlike the recent previous singular economic oriented downturns that the state faced,
California is confronted with a multitude of economic conditions that could send it into a recession if not already
in one. These economic problems stem from the ‘Mortgage Meltdown’ followed by a ‘Credit Crunch,’ increasing
gas prices that have caused increasing pressures on prices, state budgetary problems and future issues such
as drought that could bring this global power figuratively to its economic knees. Combined, these economic
conditions have caused increasing unemployment and reduced incomes for residents along with less tax revenue
for state and local governments. And in terms of economic development, it is harder to see the potential for an
economic rebound that can focus California towards achieving its potential of growing innovative technologies
while in concert enhancing existing industries where California has had a global comparative economic
advantage . . . advantages in product, promotion, price and distribution that when enhanced with economic
development tools create the economic development outcomes of wealth, income, investment and jobs and
a business environment that keeps California on top of an economic pedestal envied by others.

Thus given the current economic condition, it is time for the profession of economic developers from across the
state to engage in a dialogue that reviews and examines recent strategies and initiatives and to identify components
from each of these that can be utilized to improve the economic growth of the state through a comprehensive
approach to achieve an economic agenda ‘Prosperity California.’

A STRATEGY FOR THE STATE, NOT A STATE STRATEGY

The demise of the state’s lead agency for the economy (Trade, Technology and Commerce Agency), gave way
to a host of organizations, like the California Economic Partnership along with other public and private entities
involved in business, community and economic development as well as workforce development, involved with
training and education along with redevelopment programs that embarked on a variety of initiatives and or
strategies. Examples of these include the infrastructure bonds program ($42.7 billion) for housing,
transportation, water quality and supply, flood protection and the many strategies enhancing these capital
improvements such as the California Transportation Plan and the Goods Movement Action Plan. In addition
other strategies and initiatives include efforts such as the California Broadband Initiative, the California Solar
Initiative and the California eHealth Initiative just to name a few as examples of ongoing efforts. There are
literally dozens of such efforts!

So, part of this undertaking is to identify the plethora of initiatives, plans and strategies. And, while all of these
efforts are and have been well meaning, there has been little or no connectivity amongst these efforts to enhance
the deployment and success of these actions increasing opportunities for wealth, income, investment and jobs.

But now, given that Californians are faced with these multiple economic problems it’s time for the economic
development profession in the state to take action . . .thus, the formulation of “Prosperity California”.

Prosperity California is an effort to create economic development actions. Its purpose is to articulate, pursue
and implement actions that will enhance California’s position in the global economy and ensure sustainable
economic prosperity throughout its diverse regions

Prosperity California keeps the focus on what must be done strategically to address core weaknesses and
maximize emerging opportunities so that California can retain and gain comparative economic advantages in
successfully competing in a global economy

Prosperity California will illustrate that the state, with its long history as a incubator for innovation and
entrepreneurialism has a deep base of assets, found in its people, places, institutions and portfolio of industries
that together can rise to the challenge and lead California nationally and globally specifically if there is a plan of
action

The intent of Prosperity California is not to reinvent the wheel but to incorporate these strategies along with
other yet identified actions

Therefore the purpose of this effort is to present a framework on how to capitalize on the work accomplished to
date by embracing the opportunity to formulate “A Strategy from these Strategies for California” yielding
“Prosperity California.”

To achieve this, the effort will involve a corps of nearly 1,000 economic development professionals. The corps
of economic developers from across the state will be joined by the progenitors of these initiatives and strategies.
The progenitors will present the goals/objectives that can best be achieved within a horizon of 1 to 3 years in the
effort to enhance their efforts. The corps of economic developers will review and examine these materials,
(numerous initiatives and strategies) in the effort to vette the ‘best of the best’ leading to recommendations and
actions that either are or could yield greater output (success) by utilizing the tools and professional services of
the economic development professionals, increasing the outcomes of economic development - wealth, income,
investment and jobs.

Beyond this review and examination, the “Corps” will identify other areas yet addressed by strategies/initiatives
such as, but not limited to emerging innovative technologies, specifically nano-technology, stem cell research,
autonomous (robotic) technology, fuel cell research and alternative fuels. In addition, the Corps will review
over-arching issues such as ‘New Economies’, ‘Sustainable Economies’ along with major studies recently
completed by the Kaufmann Foundation and Intuit Corporation on the future of entrepreneurs and what the
forecasted changes mean to California’s economic future.

Californians understand and appreciate change. This could be because of its agricultural history and having
to make change with every growing season. Or maybe its’ because of the ever changing innovative and
emerging technologies that are produced here that it has just become second nature to its residents. But what
ever it is, California continues to change and this is exactly the reason behind Prosperity California.

THE NEED TO SUCCEED – CALIFORNIA’S BIRTHRIGHT

While some take enjoyment in belittling the state, specifically its politics along with its regulatory and tax issues,
the opportunity to diminish this world power house only adds to the fervor of its stewards in both the public and
private sectors to make it better.

California is an icon unto itself. It represents inventors, entrepreneurs and free spirits. It represents the dedication
of generations that built more than a state, but a world renowned business culture that is constantly changing,
becoming more sophisticated through the embracement of new technologies, their applications and deployment
while growing a state economy larger than any other.

California is about leadership. It is a state that has been and continues to be ahead of others in public policy
development, such as with transportation, in the historic participation in the building of the Continental railroad
or more recently with issues of taxation, such as the infamous Proposition 13, the property tax limitation act,
or on the environment with the formulation of the most comprehensive environmental impact reporting process,
the California Environmental Quality Act or the most sophisticated natural resource distribution system for water
resources in the nation, with its aqueducts, canals and reservoirs that make up the California Project. And no one
can match its leadership in higher education with the formulation of the University of California, California State
University and its community college systems.

So, while the multiple combination of economic conditions has figuratively impacted California’s economy, those
items mentioned above and those below offer some glimmers of hope for its future.

For example, a variety of economic dynamics such as private market investments in new industries such as
nano technologies, autonomous (robotic) technologies along with public-private investments and public policy
support for other innovative technologies ranging from green and clean industries to stem cell research are
providing new economic opportunities. For example, California’s taxpayer-funded stem-cell agency, the
California Institute for Regenerative Medicine recently awarded grants totaling nearly $271 million dollars to
build stem-cell laboratories statewide. Investment in research infrastructure to extend California’s state-of-t
he-art research capacity is a critical part of the agency’s scientific strategic plan to sustain and build California’s
global leadership in stem cell research and to accelerate the field as a whole. The awards will help build 800,000
square feet of facilities with researchers in the labs within two years. The money - coupled with additional money
from the recipients and their donors - will generate more than $1.1 billion dollars to build the facilities solidifying the
state as the world's leading research center into next-generation medicine.

In addition, California’s venture capital market has grown to the largest levels since the dot.com collapse.
Venture capital exceeded $30 billion in 2007 and remains near or just below the same levels in 2008.

Mergers and acquisition activity in the state set a benchmark in 2007 with the largest sum of ever spent -
$140 billion by either California based businesses buying foreign, national or other state businesses or
those from outside buying state based firms illustrating that the credit crunch has not stymied the brilliance
of the Golden State.

In addition, recently passed state ballot measures in support of new infrastructure projects will yield billions
in new investments which should help to further stimulate the economy and job growth during this downturn.

And the state adds on average 400,000 to 600,000 people per year. Hence the reason(s) why many state
experts believe that the current multiple economic combinations are short term (three to five years) but still
need to be addressed and through a variety of solutions.

Prosperity California will illustrate that the state with its long history as an incubator for innovation and
entrepreneurialism has a deep base of assets, found in its people, places, institutions and portfolio of
industries that together can rise to the challenge and lead California nationally and globally specifically if
there is a plan of action.

About the Author
Tim Johnson has 25 years of experience in working for or with local government in business, community
and economic development along with redevelopment and workforce training activities. Tim can be reached
at tjohnson@CaliforniaBusinessMinute.com

Prosperity California

Tim Johnson — Wed, 18 Jan 2012 07:43:00 GMT

The following information is a bibliography of significant economic development
and workforce related reports that have been completed during 2005-2008 pertinent
to California from either a statewide or regional perspective for the formulation a
of a strategy entitled Prosperity California. This bibliography was completed by
Tim Johnson for the California Association for Local Economic Development, CALED.

National Governors Association, 2007 State “New Economy’ Index: Benchmarking
Transformation in the states –California. The document provides excellent
insight to California’s strengths and weaknesses related to jobs, globalization
and the digital economy. California ranks extremely high against other states
in this report.

California’s EDGE: Keeping California Competitive, Creating Opportunity
This is a publication comprised of a coalition of non- partisan groups with
diverse and even divergent outlooks but united in the belief that:

• The states’ future economic growth rests in large measure on the skill
   base of its workers
• The state and its industrial leadership are now at serious risk of loosing
   the competitive advantage of a highly trained labor force
• The Governor and Legislature must lead a strategic effort to forge the state’s
   education and raining infrastructure, otherwise suffer-creating an uncertain
   future

See www.Californiaedgecampaign.org for 5 major goals. Unknown date of
Publication

New Voice of Business
This is a non-partisan organization to awaken, inspire, and mobilize the power
and creativity of business and business people. It does possess an economic
agenda but it is not focused specifically on California. The organization is
a supporter AB 2944. See www.newvoiceofbusiness.org

2007 Measuring Prosperity Index, Sacramento Region
A publication by the Sacramento Regional Research Institute. Good for background
information, but not an initiative or strategy.

Building Economically Competitive Communities
A document by the California Academy for Economic Development. The document is
focused on an organizational strategy for or in support of economic development,
specifically the California Association for Local Economic Development. No date
of publication.

Merced County, 1 Voice, Top Priority Project Summary,
Unknown publication date. This is published by Merced Council of Governments.
It is regional in nature but has concentrated on two statewide concerns:

•SB 975 related to Prevailing Wage configuration to other areas beyond,
LA Basin and Bay Area
•Change all tax measures to be passed by simple majority

League of California Cities, 2008: Adoption of Four (4) Goals
• Protect funding for vital Community Services
• Green and Sustainable Cities
• Expand Infrastructure Investments
• Enact Honest and Responsible Eminent Domain Reform

BAY BIO IMPACT 2008: Translating Science into Better Health,
A 12 Point Plan, Jan 2008

•Create a health information technology and life science investment capital
gains tax amnesty
•Invest $150 million over 10 years in UC-oriented life sciences incubator
•Convert California’s R&D tax credit into a tax rebate
•Create a 20 year carry forward provision on the treatment of corporate net
operating losses
•Create corporate tax incentive for major investments in California
•Increase state investments in Training Centers of Excellence
•Incentivize local communities to zone biotech regions in their master planning
•Expand allowable uses for State Infrastructure and ED Bank
•Establish a harmonization conference between CALEPA and USEPA
•Establish a science fellows program to serve the state government
•Establish a major economic incentive for bio-processing and bio-manufacturing
investments
•Establish a new California Science and Technology Trust

CALCHAMBER 2008 Business Issues
This is a publication that illustrates key business issues to be examined that
focus on items such as agriculture, climate change, education, energy,
environmental regulations, health care reform, housing, immigration,
international trade, labor and employment, legal reform, privacy, tourism,
transportation, water and worker’s compensation.

California Economic Development Partnership
Overview of Business Plan Revised 08/30/05 Draft. It is the mission of the
Partnership to bring together state resources in collaboration with regional
and local economic development organizations. The document was a draft plan.

Cluster Based Strategies for Growing State Economies
National Governor’s Association, 2008
The following identifies initiatives to grow and sustain clusters
• Establish a Solid Foundation
• Build Relationships
• Deepen Skills and Talents
• Align Innovation investments
• Accelerate Entrepreneurship
• Open Global Priorities

State Strategies to Promote Angel Investment for Economic Growth
National Governor’s Association, 02/14/08

•Promote seminars on private equity investment for current and potential
investors
•Assist entrepreneurs by connecting them with existing entrepreneurship
education and services
•Facilitate the formation of statewide angel group networks to organization
and empower local leadership and build investor knowledge
•Ensure that angel investors are well-represented on state economic
development advisory boards, along with entrepreneurs, universities and
other industry representatives
•Identify and collect metrics to monitor the impact

The California Economic Leadership Network
California Center for Regional Leadership, 09/17/07
Publication primarily focused on actions by the state, comparing the state to
other state’s and entities.

2007 Rural Economic and Health Vitality Policy Agenda
California Center for Regional Leadership, on behalf of the Governor
No discussion of a strategy or goals presented.

California Commission for Economic Development: Promoting Sustainable Growth
and Workforce Development for California’s Future 2007
A series of recommendations were presented. These include recommendations for
Sustainable Growth and Workforce Development:

Sustainable Growth

•Analyze and contrast business incentives offered by California and other states
to lure innovative companies. Assess whether and to what extent California
enterprises are at a competitive disadvantage
•Identify and work to eliminate unreasonable government barriers to developing
a carbon constrained economy
•Identify all natural advantage California possess to attract capital and to
develop new energy technologies. Promote policies to preserve and enhance such
advantages
•Examine the state’s corporate tax policies and its impact on California companies
large and small
•Encourage the development of a strategic plan to grow and sustain the
biotechnology sector in the state.

Workforce Development

•Explore the relationship between workforce availability and business location
strategies with the state
•Identify successful strategies to promote productive partnerships between
businesses and the educational sectors to expand career and technical education
programs
•Explore whether options are available to provide additional state support to
expand successful workforce development models in key industries

Innovation, Investment, Collaboration: A Statewide Action Agenda for Economic
Vitality, California Center for Regional Leadership, February 2005

This report identified a variety of background items including consultant
recommended building blocks for economic development. However the significant
element of this report is Governor Schwarzenegger’s goals as they pertain to
economic vitality.

•Develop a fair and competitive tax structure that encourages growth and job
creation
•Solve the energy cost crisis
•End litigation lottery – reform BPC Section 17200 (tort reform)
•Fix runaway workers compensation costs
•Cut bureaucratic red tape and regulations

Shared Prosperity and the California Economy: Implications for California’s
Workforce Investment Systems
Center for Continuing Study of the California Economy
sponsored by the James Irvine Foundation

The report was formulated with the intent of helping the State’s Workforce Investment
Board along with the 50 local workforce investment organizations
across the state. The premise of the report was to express what the state
workforce investment system is and what are its components such as CalWorks,
Welfare to Work and programs funded un the New Workforce Investment Act.

The report illustrate that the state’s Employment Training Panel, ETP spent
$100 million in 2000. It is the only major public sector workforce program
that focuses on the training of workers who already have jobs and are not poor.
ETP is the only public sector program that focuses on developing career
ladders.

The report presented the significance of private sector workforce training
programs nationally. The report identified that businesses spent $60 billion
in 2000 across the nation. If California industry matched the national average,
businesses in the state would have spent $6 billion.

The report identified Four Big Picture Ideas to be considered in the new
workforce investment system.

The Four Big Picture Ideas:

• From Job Growth to Productivity Growth
• From employment to Move Up
• From Single Agency Programs to Partnerships
• From Conflict to Common Purpose , One Economy One Workforce

California Cities Economic Development Policies, Perspectives Assessments and
Implications for State Policy,
Public Policy Institute of California, 2008

This report illustrates that local governments are playing a very substantial
role in economic development. The report defines economic development policy
as a set of government actions that are self consciously not unintentionally,
directed at attracting, retaining or growing new businesses of any type.

It was identified 478 cities in the state are virtually all involved in economic
development. A corresponding survey illustrated the following:

1.Economic Development strategies have expanded over time
2.Local officials have a negative view of state government’s performance
regarding local economic development
3.There is unique value in a survey based approach to data collection
4.Perception of competition between communities is the driver of local
economic development

Significant findings from the report illustrated the following from the survey:
Barriers, constraints and problems that confront local economic development
programs:

•Shortage of Land for Industrial Development
•Lack of Affordable Housing
•Shortage of Land for Retail and Commercial Development
•Lack of Workforce Skills/Training
•Inadequate Transportation Infrastructure
•High Energy Costs
•Overt NYMBISM

What is important to local Economic Development programs:

•Working with Community Groups
•Assuring Consistency in Development Rules
•Contacting Businesses
•Emphasize improvement of Local Amenities
•Streamlining Review of all Applications for Permits
•Property/Site Referrals

The report does not provide any strategies nor defines any goals. Information
only

Survey of Biomedical Industry

Tim Johnson — Fri, 13 Jan 2012 06:32:44 GMT

Survey of Biomedical Industry: CEOs Finds Lack of Investment and Regulatory
Environment Threaten Future Growth and Innovation

Access to capital, a burdensome and uncertain regulatory environment and lack of
innovation and productivity in research and development are the biggest threats
to the biomedical industry's growth over the next five years, according to
biomedical company CEOs surveyed by CHI-California Healthcare Institute, BayBio
and PwC US. The CEO Survey found:

Nearly three quarters (74 percent) of biomedical industry CEOs surveyed said their
companies have had to delay a research or development project in the past year.
Lack of funding was the top reason for project delays cited by private company
CEOs, and accounted for more than one-third (40 percent) of delays by all public
and private companies in the survey.

Eight in 10 CEOs surveyed agreed or strongly agreed that the current FDA
regulatory approval process has slowed the growth of their organization.

Findings of the CEO Survey reflect issues being discussed throughout the
biomedical industry by executives gathering in California this week, and
provide an early glimpse into the 2012 California Biomedical Industry Report,
due in February. The report, published annually by CHI, BayBio and PwC, provides
a snapshot of the biomedical industry in California, the largest biomedical
cluster in the world and the source of the greatest number of products in
clinical development.

"As the center of biomedical innovation in the U.S., California's biomedical
industry is a national treasure," said Gail Maderis, president and CEO of
BayBio. "But the pace of R&D productivity and its global leadership position
hang on the availability of capital to fund future innovation and a regulatory
framework that is based on consistency and innovative technologies."

Biomedical Access to Capital

The CEO Survey found that biomedical companies in California have been
resourceful over the past year in seeking diverse funding sources, divided
almost evenly among government grants, angel investors, venture capital and
licensing agreements and partnerships.

"Biomedical companies have long relied on government grants and venture capital
to finance innovation, but funding sources are shifting and companies will need
to adapt to a new reality," said Tracy Lefteroff, national life sciences partner,
PwC US. "While venture capitalists and angel investors will continue to be an
important source of funding, it has become increasingly difficult for biomedical
companies to gain access to them. Alternative sources of funding are emerging,
which highlight shifting opportunities and dynamics in life sciences innovation."

The CEO Survey found:

Forty-four percent of biomedical CEOs surveyed said they will look to licensing
agreements and corporate partnerships as a source of finance in the next 12
months, double the number of CEOs who last year said their companies are using
this avenue for finance.

Corporate venture funding, the investment of corporate funds into external
endeavors, is expected to become a much more crucial source of funding to the
industry, with 30 percent of CEOs surveyed saying they will tap corporate venture
capital as a finance source in the next 12 months, versus only 10 percent who did
so in the past 12 months.

Though still only a small contributor to the finance equation, disease
foundations/non-governmental organizations are growing as a funding source for
11 percent of CEOs who plan to use these funds in the next 12 months, versus
only 4 percent who did last year.

Access to capital is seen by CEOs as the most influential state policy issue to
keep biomedical research, innovation and investment in California. Nearly three-
quarters (72 percent) of CEOs said that access to capital is extremely important,
followed by (in order of importance) tax incentives for innovation (60 percent),
corporate taxation (51 percent), workforce preparedness (47 percent) and
duplicative regulation among various state and federal agencies (37 percent).

Regulatory Environment will Determine R&D Productivity

According to CEOs surveyed, FDA and regulation are the key issues affecting
research and development. Eighty-one percent of CEOs also said that coverage
and reimbursement issues are extremely important to the industry's ability to
advance biomedical research, innovation and investment in California.

In addition, 80 percent of CEOs surveyed do not believe that U.S. FDA has the
best regulatory approval process in the world, and three-quarters believe that
within five years, another country could conceivably recreate the ecosystem that
has made the U.S. the leading biomedical region in the world.

"Sound public policy and managerial and operational improvements at FDA, along
with responsible congressional oversight, will encourage biomedical innovation
and, ultimately, job growth here in California," said David L. Gollaher, Ph.D.,
president and CEO of the California Healthcare Institute. "Working collaboratively
with other stakeholders, Congress, FDA and the biomedical industry can maintain
the high standards of safety and effectiveness that address patients' need, while
improving our ability to attract investment and grow in 2012 and beyond."

BayBio is Northern California's life science association, supporting the regional
bioscience community through advocacy, enterprise support, and the enhancement of
research collaboration. Its members include organizations engaged in, or
supportive of, research, development and commercialization of life science
technologies. Online at www.baybio.org

San Jose /Silicon Valley Chamber Celebrates 125!

Tim Johnson — Fri, 23 Dec 2011 06:25:00 GMT

The San Jose Silicon Valley Chamber's 125th anniversary, "The chamber was
founded in 1886 and is now among the oldest and largest chambers in California,"
said Matthew Manhood, President & CEO.

Matt identified the following as one of the key historic accomplishments of the
Chamber:

Eighty years ago, members of the region’s business community—led by the chamber
of commerce —helped create Moffett Field for the Santa Clara Valley. The chamber
raised $476,000 to buy a thousand acres of land in 1931 for the U.S. Navy to
establish a dirigible base. That former naval air station, as we all know, became
a key airbase during World War II and the Cold War and is now owned and operated
by the NASA Ames Research Center which is one of th significant assets of the
Silicon Valley.

CONGRATS!

California Cities: Most Expensive for Business?

Tim Johnson — Thu, 01 Dec 2011 20:56:20 GMT

Recenlty the Claremont schools in concert with the Rose Institute and Kosmont Consulting
released their annul "Most Expensive Cities to Do Business" rankings.

Five California cities figured into the Top 20 Most Expensive locations. They include
Beverly Hills, Culver City, Los Angeles, San Francisco and Santa Monica.

Of interest, Birmingham, Alabama was also listed. Strange given the fact that
the county that Birmingham is in just filed for bankruptcy protection. One would think
they would have sufficient funds. Broke and expensive! It is amazing how many
times this community comes to the forefront on business cliamte rankings.

Additionally, the rankings identified that the least expensive places to do business are
in Texas. However, the methodology fails to express that if you locate to Texas
you will need to negotiate your tax rate over a horizon or you will find your company
in a dilemma of being taxed significantly by local jurisdictions. Something that the report
fails to discuss.

See the article at the following link: www.CaliforniaBusinessMinute go to main menu
(orange colored bar) place cursor over Minutes4thQtr11, wait for drop down menu then go
to 12-01-11 "Most Expensive," then click on to view.

We will let you be the judge.

Tjohnson@californiabusinessminute.com

Colorado Recruiting on the Cheap in California

Tim Johnson — Thu, 01 Dec 2011 20:33:04 GMT

Colorado Gov. John Hickenlooper and Denver Mayor Michael Hancock will lead an
economic development trip to California Thursday and Friday to help grow and retain
Colorado businesses.

But this team of solons appears to be doing it on the cheap. Normally Colorado
makes its sojourn to California during February. Airplanes above the skies of
LA pull banners saying, Colorado Loves California. In concert with this, every
CEO visited gets a box of Rocky Mountain chocolates. Apparently, not this year
as budget constraints take their toll on their efforts

The goals of the trip include strengthening existing business relationships,
increasing company commitments to Colorado and encouraging business executives
to look at Colorado when there are opportunities for growth and expansion,
according to the governor's and mayor's offices.

The Colorado delegation will meet with venture capitalists and business, academic
and community members to discuss job creation, innovation and economic development.

"There are companies in California that have a strong presence in Colorado and we
want to grow those relationships," Hickenlooper said. He claims that both states
have similar growth industry clusters, including aerospace, bioscience, energy
and high-tech.

To those who receive a visit from Colorado remember this, they build snowmen in
Colorado. In California, we build sand castles. Rocky Mountain High or California Dreamin?

Tjohnson@californiabusinessminute.com

Oregon to Lure Companies from California

Tim Johnson — Tue, 22 Nov 2011 18:42:58 GMT

Encouraged by a recent set of surveys, the State of Oregon will look to recruit
California food processing companies that might be interested in relocating or
expanding.

Earlier this year, the Oregon Economic Development Association, consisting of
city, county and regional economic development organizations, surveyed its
members on what kind of companies and industries they are most interested in
recruiting. Apparently as identified by an article written by a state official
in the Yamhill Valley NewsRegister, agriculture and food processing got more
votes than any other sector to recruit.

Another and different survey conducted by a California firm found that about 40
percent of the businesses were planning on moving or expanding their operations
outside the state.

The results of the survey have prompted both the Oregon Business Development
Department and Dept. of Agriculture to develop a plan to seek out food processors
through upcoming trade shows - particularly in California.

Representatives of several local communities are expected to join specialists
from the Oregon Department of Agriculture and Oregon Business Development
Department early next year at some large California food shows.

A state official quoted in the article identified, “There seems to be quite a bit
of willingness on the part of companies to look elsewhere, because California may
not be meeting their needs. We think there is fertile ground to bring a company
from California to Oregon."

Recommendation: This should be a call to action for all economic developers in
California as it pertains to business retention as Oregon successfully pulled
Amy’s Kitchen from California to relocate in Medford, Oregon even with Governor
Arnold Schwarzenegger’s retention efforts.

South Dakota to Recruit in California

Tim Johnson — Tue, 22 Nov 2011 18:38:13 GMT

South Dakota Governor Dennis Daugaard openly identifies that his administration
is actively looking to lure companies out of California. Apparently in an
upcoming trip in December to attend the Western Governor’s Conference in Palm
Springs, he will also take the time to go to speak with nearly 60 business
executives in San Diego county to discuss South Dakota’s tax advantages, such
as the lack of corporate and personal income taxes. According to a news
article in the San Diego county-based North County Times, he will specifically
talk with the motor vehicle brake systems manufacturer, PureForge (a start-up
company) in relocating. Recall that Idaho was successful years ago in relocating
Buck Knives from San Diego County.

Recommendation: Ensure a great business retention program and no more Western
Governor’s Conferences in California. And to all those considering relocatiing, don’t
forget the harsh Dakota winters.

The British Are Coming

Tim Johnson — Thu, 17 Nov 2011 07:02:00 GMT

One by land or two by water a British trade delegation organized by the
advertising trade group IPA and supported by the United Kingdom’s Trade
and Investment organization is coming to California to visit with social
media and creative tech companies.

The delegation, which left today, will visit America’s largest search, social
networking and creative tech companies including Twitter and Zynga, and
leading Hollywood studios Walt Disney, Warner Bros and Twentieth Century
Fox.

The purpose of the mission is to present the UK as a creative partner for
West Coast tech and entertainment companies as well as a marketing hub for
international expansion.

Meanwhile a group of tech entrepreneurs have been in Tech City in London at
this year’s Entrepreneur Festival to learn about the British government’s
efforts to encourage development and growth in the city's tech startup
community.

Tim Johnson
tjohnson@Californiabusinessminute.com

Creating an Australian California or Just California Dreaming?

Tim Johnson — Thu, 17 Nov 2011 07:01:00 GMT

Australians have been discussing the likelihood of the potential for
Western Australia to become a power house of an economy to what California
is to the U.S. In a recent article in the Sydney Morning Herald, the
Chancellor of the University of Western Australia, Michael Chaney identified
that Western Australia is in the same time zone with countries that make up
60 percent of the world’s population.

He identified that Australia must align its thinking with the increasingly
prominent Indian and China Ocean regionsand seek to optimize its relevance
and influence within "the zone's" political landscape.

"It is possible that what we are witnessing is the creation of an Australian
"California", with the centre of economic gravity in this country shifting
westwards," he said.

As the Chancellor identified California is the 8th largest economy in the world.
Australia is not even in the Top Ten let alone Western Australia. Apparently,
there is nothing better than California Dreamin.

Tim Johnson
tjohnson@californiabusinessminute.com

INDIANAPOLIS: A MISCUE IN BUSINESS ATTRACTION OF A CALIFORNIA BUSINESS

Tim Johnson — Thu, 10 Nov 2011 20:14:46 GMT

Recently, we reported at our daily newsletter the pending departure of a
California business, LiteBox.

It announced it was going to move to Indianapolis and create 1100 jobs in
a $20 million 125,000 sq.ft. facility

However, apparently after news reporters and community stakeholders had done
some background checks, the company was not all that it seemed. It has been
identified by news sources that the founder of LiteBox has hundreds of
thousands in federal and state of California tax liens.

It appears that this was staged in a quick manner for the governor of Indiana
and mayor of Indianapolis without appropriate vetting of the company.

Meanwhile, the company has been offered a variety of state and local incentives
and tax credits over a ten year period. Some reports from the Indy Star to the
Fort Wayne Journal Gazette illustrate from $10 to $40 million.

Amid these and other concerns that have been brought to light since the news
conference to tout the Litebox proposal, the governor and mayor have tried to
allay any fears that the public is at risk. City and state economic development
officials have expressed confidence that LiteBox will deliver, based in part
on financial information they've seen that has not been made public. However,
according to an article in the IndyStar, the governor acknowledged “that this
thing has longer odds than many of the other things we do," which to some should
raise a concern.

Apparently Indiana and Indianapolis are no strangers to projects announced that
never materialize. That’s not to say that the LiteBox development may or may not
happen. However, it appears more of a “case of premature business attraction,”
based upon an effort to expedite this announcement and elevate the mayor in his
efforts to create jobs pending his re-election campaign. This is truly an
unfortunate calamity impacting the economic development profession.

Of interest, not one economic development professional in California questioned
the move.

Tim Johnson
tjohnson@californiabusinessminute.com

Citi Bank California Pulse 3rdQtr Survey

Tim Johnson — Thu, 10 Nov 2011 17:35:19 GMT

During the holidays, a majority of Californians will spend the same as or less
than last year. Though many Californians do not expect significant economic
improvement in 2012, the majority are prepared for continued challenges and
adjusting their spending and saving habits, according to the latest Citi
California Pulse(R). Additionally, Citibank's latest quarterly survey found
that the majority of Californians (63 percent) continue to rate the state as
an excellent or good place to live.

Respondents say they feel financially sound, with most saying their current
situation allows them to meet their obligations or save money. More than half
say they feel empowered to improve their current situation, though not as much
as they would like.

"Our survey continues to show that despite uncertainty over future economic
conditions, Californians are prepared for the eventual recovery," said
Rebecca Macieira-Kaufmann, President of Citibank California. "We remain
encouraged to see the resiliency that so many Californians are demonstrating
by taking action to adjust to these challenging times."

Citi California Pulse(R) Optimism Index
At the same time, the survey clearly shows that the current environment remains
challenging. Sixty-nine percent say they see no signs of economic recovery in
California, up from 65 percent in June. Additionally, when looking ahead 12
months, fewer Californians believe conditions will improve for job opportunities,
their own financial situation or the overall California economy. For example,
87 percent rate current job opportunities as fair or poor; looking ahead 12
months, less than half (46 percent) expect job opportunities to improve, down
from 56 percent in June and 58 percent a year ago.

The Citi California Pulse Index of optimism fell to -7 in the third quarter of
2011. At 0, the index would be on the exact middle point of all possible scores,
which range from +100 to -100. The Index of optimism in San Diego came in at +2,
compared to +1 in San Francisco and -6 in Los Angeles. The total for all other
counties was -14.

Spending and Saving Behavior
The survey revealed a new outlook on spending and saving among Californians,
with 58 percent saying the way they spend and save has "forever changed" as a
result of the recession. According to the survey:
-- 72 percent are eating out at restaurants less;
-- 71 percent have cut down on credit card purchases;
-- 67 percent are using coupons;
-- 66 percent have cut back on premium products such as gourmet coffee and food;
-- 53 percent are shopping at stores that sell bulk items.

Some are taking additional measures. According to the survey, 40 percent of
Californians say they have changed living arrangements to save money, a number
that rises to 56 percent among those aged 18 to 34.

Holiday Spending
Looking at the upcoming holiday season, most Californians say they expect to
spend the same as (50 percent) or less than (38 percent) last year. Only 12
percent expect to spend more money. Thirty-eight percent say they will buy only
items on sale, while 39 percent plan to look for deals but may buy non-sale
items; 10 percent say price doesn't matter. When asked how they would make their
holiday purchases, 65 percent will pay cash or use a debit card, 32 percent will
use a credit card. Seventy-one percent plan to shop in a store or mall; 20
percent will shop online. When asked if holiday spending would represent a
"strain" for their family, Californians were split, with 46 percent saying
it would not be a strain and 46 percent saying that it would be.

Californians were split on the subject of "good debt" v. "bad debt," with 49
percent saying there is good debt and 47 percent saying there is no such thing.
Respondents cited a primary home mortgage and student and home improvement loans
as examples of good debt, but a second-home mortgage and loans for travel and
entertainment as bad debt.

Among the survey's other key findings:
-- 88 percent say the economy in California is fair or poor;
-- 59 percent say California is on the wrong track; while 26 percent say it
is headed in the right direction;
-- 45 percent say California residents are worse off than residents of other
states; 24 percent say they are better off and 24 percent about the same.

California, International Trade and Informed Protectionism

Tim Johnson — Thu, 27 Oct 2011 21:41:08 GMT

International Trade is a significant component of California’s economy. The
state’s economy is often measured against countries across the globe. California’s
GDP is over $1.9 trillion making it the ninth largest economy in the world just
on the heels of Italy and Brazil.

This week at the premiere international trade conference in the state “Gateway
California,” professionals from the sector and from across the state gathered
to discuss key issues related to export and imports, their opportunities and
challenges and the regulatory environment which they work. Of significance,
the conference came on the heels of three recently signed trade agreements with
Columbia, Korea and Panama and how these will impact the nation and California.

In a separate response, the semiconductor business often considered synonymous
with California provided the following related to the agreements: “Semiconductors
are America’s top exporting industry and with three quarters of semiconductors
being designed and manufactured here and 82 percent of our sales outside the U.S.,
access to growing markets is critical for the success of our industry,” said
Brian Toohey, president, Semiconductor Industry Association. “We are hopeful that
the passage of these FTAs will mark the beginning of a renewed focus on
strengthening U.S trade policy and we applaud both the Congress and the
Administration for their work to create more American jobs and economic growth
through these agreements.”

However, within the context to the agreements, there were guarded but optimistic
statements.

                      Peggy Rupp and Leslie Levy August of
                             Boomerang Freight Solutions

“Free trade is a goal and whatever we can do to create a middle class around the
world is good for the US in helping others to acquire USA and California products,”
cited Michael Faust, president and CEO of the Northern California World Trade
Center and coordinator of the conference.

“Reducing trade barriers however small is good,” said Leslie Levy August of
Boomerang Freight Solutions. She identified that as it pertains to FTA’s we need
to be an engaged country and state on “informed protectionism.” “As a nation,
we should want all markets to be open, however we need to protect US companies
particularly as it pertains to the loss of intellectual capital,“ said August.

Moving forward, specifically as it relates to California, Faust identified that
to ensure the state continues its international growth; the focus of California
should be on “make it, create it and innovate it in response to keeping California
globally competitive.

ECONOMIC DIRECTION SIMPLIFIED

Tim Johnson — Thu, 06 Oct 2011 18:14:10 GMT

This week (Oct. 4) Fed Chairman, Ben Bernanke spoke before the Joint Economic Committee
of Congress. He discussed the economic outlook and directions.

“It is clear that overall; the recovery from the crisis has been much less robust than
we had hoped.” Recent government economic data shows that the recession as having
been even deeper and the recovery weaker than previously estimated stated Bernanke.

The Fed chair identified several short term factors impacting the nation’s economy.

• Political unrest in the Middle East & Africa
• Strong growth in emerging markets economies contributing to significant
   increase in the price of oil and other commodities
• The earthquake in Japan and its impact on a major global supplier
• Consumer behavior and cautious spending decisions as many families continue
   to struggle with high debt burdens or reduced access to credit
• The most significant factor depressing consumer confidence has been the poor
   job market
• State and local government continuing shedding of jobs

All of these points according to Bernanke will continue the likelihood of more
sluggish job growth.

Additionally he identified that the housing sector has been a significant driver of
recovery from most recession since World War II. However he identified that with
the overlapping of distressed and foreclosed properties, tight credit conditions for
builders and potential homebuyers and the large numbers of “underwater mortgages”
have left the rate of new home construction at only about one-third of its average
level in recent decades. Additionally, he identified that financial stresses persist. Credit
remains tight for many households, small businesses and residential and commercial
builders, in part because of weaker balance sheets and income prospects have increased
the perceived credit risk of many potential borrowers.

Bernanke illustrated for Congress, that they face a complex situation of fiscal policy
in seeing tax and spending policies for now and the future. He suggests the following
four objectives:

1. Achieve long-run sustainability. His concern is that the federal budget is
not on a sustainable path at present

2. Avoid fiscal actions that could impede the ongoing economic recovery

3. Fiscal policy should aim to provide long term growth and economic opportunity

4. There is an evident need to improve the process for making long term budget
decisions.

It sounds as though California should adopt these objectives as well. Your comments
and perspectives are always appreciated. Let us know what you think.

Tim Johnson
tjohnson@CaliforniaBusinessMinute.com

Citibank Survey

Tim Johnson — Thu, 08 Sep 2011 17:54:00 GMT

According to the latest Citibank small business survey, the majority of California
small business owners believe they are poised to grow or are already in growth mode.
Forty two percent say they are “holding their own, but poised to grow when the climate
is right” and 33 percent indicated they are already growing. Despite feeling as though
they are primed to grow should the opportunity present itself, the vast majority (88
percent) of small business owners remain concerned about the economy, including the
possibility of a double-dip recession. The results also show an increasing trend in
small businesses feeling more prepared to withstand longer-term challenges.

“We are excited about the results of this survey, which show that California small
businesses are optimistic about the future and taking action today to grow as the
economy improves,” said Rebecca Macieira-Kaufmann, President of Citibank California.
“Small businesses are the engine of California’s economy, and their improving outlook
is a great sign for the state.”

Economic Key Findings:
• 91 percent said they feel they are either very (61 percent) or somewhat (30 percent)
   responsible for the nation’s economic recovery
• 88 percent are concerned about the possibility of a double-dip recession
• 77 percent are prepared if the economy were to experience another downturn
• 71 percent plan to keep the same number of employees next year, 24 percent are
   projecting employment increases and 5 percent plan to reduce the number of
   employees
• 32 percent plan to hire temporary or part-time workers instead of full-time
   employees

As California small business owners look back over the past few years, they share that
the biggest challenges of owning/running their business have been:

• Taxes, insurance and/or benefit costs (67 percent)

• Declines in sales/poor economic conditions (67 percent)

• Personal stress/being accountable for everything/everyone (63 percent).

The American Dream
Despite the challenging environment, the majority of California small business owners
(58 percent) say they are living the American Dream. 83 percent said owning a small
business helps them fulfill the American Dream. For small business owners, living
the American Dream also means being able to afford the lifestyle they want (76 percent)
and being able to save and plan for the future (79 percent) 78 percent cited “being
their own boss” as the key benefit to being a small business owner

Looking Ahead: The Rest of 2011 and 2012 Outlook
As small business owners in California look to the future months and 2012, 45 percent
say it will be “steady as she goes – continuing much as we are now” for the holiday
season.

In an effort to improve or grow their business in 2012, small business owners plan to:
Increase their marketing efforts (69 percent)
Get better pricing from suppliers, vendors or landlords (62 percent)
Introduce new products and services (56 percent)
Work longer hours (47 percent)

Looking forward to 2012, topping the list of most important issues for their business:
Consumer confidence (66 percent)
Maintaining or increasing sales (70 percent)
Taxes and/or government regulation (61 percent)

As small business owners plan for 2012, they are likely to increase:
Use of their website to drive business (66 percent)
Marketing using social networking sites (47 percent)
Use of email marketing (46 percent)

“The results of this current Citibank Small Business Survey are consistent with what
we’re seeing and hearing from our clients, in that they are being thoughtful and
prudent in their planning,” said Raj Seshadri, Head of Small Business Banking at
Citibank. “The underlying message here appears to be that small business owners
are preparing themselves for a more sustainable growth path, and are not expecting
any type of quick fix or change.”

CALIFORNIA JOBS FIRST

Tim Johnson — Thu, 01 Sep 2011 17:44:00 GMT

California Gov. Jerry Brown is calling for over $1 billion a year in tax relief
for businesses that create jobs in the state. It would be one part of a three-part
jobs creation program.

“Boosting job growth in California is a top priority, and this proposal is a critical
step in making sure the state does everything it can to support local job creation,”
says Governor Brown.

“This legislation would expand a currently existing job credit to make it more effective
while adding new tax incentives for growth in the manufacturing sector,” says Brown.

The first part of his “California Jobs First” plan reforms and expands an underutilized
tax credit for small businesses worth hundreds of millions of dollars, the governor’s
office says. To date, much of this funding has been left on the table because too many
small businesses were excluded from the credit. The governor’s plan expands eligibility
to small businesses with up to 50 employees (up from 20) and the credit for each new
hire will jump from $3,000 to $4,000. These changes will encourage small businesses
to hire immediately, as the credit will expire at the end of 2013, the governor’s office predicts.

The second part of the plan would provide over $1 billion in tax relief to businesses
that purchase new manufacturing equipment. The plan exempts start-ups in their first
three years from the state portion of sales tax (3.9375 percent) — and provides an
exemption of 3 percent for all other firms — on manufacturing equipment purchases.

The third part is the application of the Mandatory Single Sales Factor (SSF) to all
businesses in California. This change levels the playing field by eliminating what
Mr. Brown calls “an outrageous and perverse tax incentive that encourages multi-state
businesses to create jobs outside of the state.” This places California-based
businesses at a competitive disadvantage and is a disincentive for out-of-state
businesses to locate jobs here.

The revenues produced by closing this loophole will fund the expansion of the small
business tax credits for new hires and the sales tax exemption for manufacturing
equipment, the governor says.

CALIFORNIA: Ranked, Rated & Graded - First Half 2011

Tim Johnson — Thu, 25 Aug 2011 07:55:34 GMT

California’s business environment has taken a hit in the first half of 2011,
based upon third party rankings that the California Business Minute follows
online and through its annual publication - California: Ranked, Rated and
Graded. The state, its regions, counties and cities have figuratively taken
it on the chin compared to 2010 business rankings for the same time frame.

For example, California while having the largest state Gross Domestic Product
in the nation at $1.9 trillion, only grew at 1.8 percent and was ranked 34th
out of the 50 states in 2010 (latest number available). California was again
named as the “Worst State in the Nation for Business” by Chief Executive Officers.
California was ranked as having one the “Worst Tax Systems in the Nation.”
No California City was ranked in the “Top Ten Best Cities for Small Business,”
they were for the most part ranked on the bottom of the list. Meanwhile, six
California cities were ranked in the “Top Ten Cities in the Nation Where the
Economies Are Getting Worse.” Lastly, four California cities were ranked in
the “Top Ten Most Toxic Cities in America.”

However, the Golden State did receive some high scores for access to capital,
entrepreneurship, innovation and technology. Additionally, San Jose and San
Francisco were named in the top ten for the “Easiest Cities to Find Jobs.

Meanwhile, California’s rankings for quality of life received two poor rankings,
otherwise it remained similar to 2010 rankings. For example, the Golden State
continued to have one of the least obese populations in the nation. San Jose
was identified as one of the top places in the nation for both men’s and women’s
health. Rowland Heights was rated as one of the top “Places to Raise your Kids.”
Additionally, neither California nor its cities were ranked the “Most Angry in
the Nation.” Also, California was not ranked as one of the “Most Depressed States.”
But, unfortunately this year, California owned the list of the “Most Miserable
Cities in the Nation” and Vallejo was ranked as one of the “Fastest Dying Cities
in the Nation”

Nevertheless, the Golden State remains one of the wealthiest states and several
counties along with cities are ranked among the “Top Ten Wealthiest in the Nation.”

There are some contradictions and similarities. Two California cities were ranked
with high crime rates in one ranking but did not appear in another. Additionally,
California and its cities apparently rank well in two surveys for “Walkable
Cities.”

The annual publication, California: Ranked, Rated and Graded 2011 includes nearly
100 third party rankings. It is scheduled for publication in April 2012. In the
meantime, the following identifies some of the key highlights of the rankings
released during the first half of 2011. Recommendation: Don’t take them too
seriously.

Find the rakings at the Hompeage at www.CaliforniaBusinessMinute.com

OH MY, WHAT A WEEK IT WAS

Tim Johnson — Mon, 15 Aug 2011 19:18:26 GMT

We have been trying at the California Business Minute to publish a six month review,
but given the events of the past week, it is apparent and even more important to do
a week in review given the business and economic activity of the week August 7 – 13.

The week began with news on Monday, that the credit rating agency Standard and Poor’s
would downgrade the US creditworthiness from AAA rate to AA+. This action, coupled
with investors concerns of European bank solvency, fears created by rumors of a
possible new recession in the U.S. and an announcement by the Federal Reserve that it
would keep interest rates low for two more years because of slowing growth upset the
stomachs of Wall Street investors. All of this news and rumor would be joined by a
variety of reports, from the widening of the nation’s trade balance to a lack of
consumer confidence. However on the flip side, there was a positive retail sales
report, better employment news and strong earnings from a technology bellwether – Apple.

Additionally, the California Supreme Court announced that they would hear the case against
state legislative action that is trying to dismantle the 400 redevelopment agencies in the effort
to use their resources to help balance the state budget. All of these made for a rollercoaster ride
of a business week in the nation and the Golden State.

Solons vs. Standard and Poor’s
News and rumor may have help rock the stock market and consumer confidence during the
week. Many believe it was the partisan action of Congress in addressing the debt
limit ceiling and corresponding debt reduction that triggered many of the events during
the week.

For example, as Congress indolently completed its work before the deadline on August 2,
to raise the debt limit ceiling and to find solutions for debt reduction, the credit
rating agency, Standard and Poor’s would downgrade the US creditworthiness from AAA
rate to AA+. That brought a quick White House invitation requesting the credit rater
to explain their action and to identify their mis-interpretation of the numbers, some
$2 trillion to be exact. But the rating was downgraded anyway.

Investors worried and the Dow dropped 634 points on Monday, August 8, its sixth-worst
point drop in history as investors responded to Standard & Poor's withdrawal of the
country's AAA credit rating. It was the first downgrade of U.S. government debt in
history. The Dow would rise 429 points on Tuesday, August 9, one of the top 20 largest
increases in history for the Dow. However it would plunge 519 points on Wednesday,
August 10, one of the worst points drops in history for the Dow. It surged 423 points
on Thursday, August 11, following a better-than-expected drop in applications for
first time unemployment claims. Again, 423 points is one of the top 20 largest
increases in history for the Dow. It would end Friday, August 12 with a 125 point gain.
Friday capped a week when the blue-chip index had four 400-point swings in a row for
the first time in its 115-year history.

Meanwhile, the University of Michigan’s Consumer Confidence Index dropped. Consumers
were pessimistic about their own finances and the economy. The measure of consumer
sentiment fell to a 30-year low. This drop may have been more of an editorial with
the displeasure of Congress and its vote on the debt limit ceiling and budget
reduction action by those surveyed, than a true gauge of their confidence. Again,
another acid-indigestion inducing event.

The Good News for California and the Nation
There was good news. Amidst the rollercoaster ride on Wall Street, Cupertino-based
Apple was playing tag with Exxon as the world’s most valuable business. On Tuesday,
Apple’s valuation whizzed by Exxon in wild day of trading. However, by the end of
the day, Apple’s market cap was $346.74 billion and Exxon’s was $352.9.

Meanwhile, on Thursday, the Labor Dept released its weekly first time unemployment
claim numbers for the week ending August 6. The numbers came in under 400,000
illustrating fewer demands for unemployment benefits and continued good news for the
labor market. Wall Street was quick to acknowledge the news as the Dow surged 423
points.

Meanwhile, continuing to add to the good news, Thursday, the US Dept of Commerce
released trade balance activity. Nationally, the trade balance widened. However,
for California, it continued its growth as exports grew above $77 billion and
imports over $165 billion for the year through June.

The State Supreme Court announced on Thursday that it plans to hear a case
challenging state legislation that would divert $1.7 billion from the 400
redevelopment agencies across the state. The case was brought before the
Court by the League of Cities, the California Redevelopment Association and
two redevelopment agencies, Additionally, the Court identified that agencies
could continue to operate through their decision, however, they are barred
from starting any new projects, issuing bonds or purchasing or transferring
any property. Officials from the Court have asked both parties to prepare as
they will begin to hear the case shortly with a timeline for a decision by
middle of January. This was good news for local government and the redevelopment
community. The state’s key economic development tool may still have life left.

Two reports were released on Friday that would have an impact on the market. The
first was the University of Michigan Consumer Confidence Index. Analysts and
economists had forecasted a reduction in the Index, but not such a significant one.
The Index fell from 63.7 to 54.9. But, apparently Wall Street didn’t give the Index
much credence. It instead focused its attention on the increase in retail sales that
jumped 5 percent according to a Department of Commerce report. If only Wall Street
had paid attention to the National Retail Federation that released data illustrating
that the nation’s retailers hired 26,000 in the month of July, claiming they are
doing their part to help the economy, maybe some of the gut wrenching events would
have been diminished.

Oh my, what a week it was.

Tim Johnson
California Business Minute

GOT IDEAS? Solving the Glut of Foreclosed Homes in California

Tim Johnson — Thu, 11 Aug 2011 20:58:24 GMT

Currently they are nearly 200,000 repossessed homes in nation that are owned by
Fannie Mae, Freddie Mac. This represents about half of the total unsold repossessed
homes in the nation.

In July, there was over an estimated 56,000 homes in foreclosure or one in every
239 homes in California according to the real estate information firm, RealtyTrac.

This large amount of homes causes two issues: First, there is a glut of repossessed
homes putting downward pressure on home values in the market putting a damper on
economic growth. Second, there is a demand for rental housing that could be
resolved by putting these homes into rentals.

The Obama administration announced plans for the government to take these properties
off the residential housing market and instead sell them off in bulk to private
investors, who would be required to convert them into rental units. The ultimate
goal would be to stabilize the housing market and bring down rents at the same time.

Meanwhile the Federal Housing Finance Authority in concert with the Treasury and HUD
have begun a Request for Information, (RFI) process seeking input on how to address
this issue. See the following link; http://www.fhfa.gov/Default.aspx?Page=360b

The Federal Housing Finance Agency is pursuing the quest because of expectations
that housing prices will continue to fall if delinquent properties end in foreclosure,
rather than being converted to some type of income-producing arrangement

The government agencies are hoping a wide variety of market participants — such as
financial institutions, hedge funds, buyout shops and even municipalities, nonprofits
and community groups — will provide ideas and scenarios in which they would be
interested in buying packages of foreclosed homes owned by the U.S. government’s
Fannie and Freddie in “significant transactions.”

The regulators then plan to issue specific requests for business proposals from
potential investors interested in buying pools of foreclosed properties. One goal,
the Treasury Department indicated, is to help stabilize neighborhoods struggling
with foreclosed properties. The agencies hope to develop several programs that
address specific issues in particular geographic areas particularly hit hard by
foreclosures, such as California.

Tim Johnson
www.CaliforniaBusinessMinute.com

CITI CALIFORNIA PULSE, 2nd Qtr. Survey 2011

Tim Johnson — Thu, 28 Jul 2011 23:16:08 GMT

In a sign of California's resiliency, a majority of the state's residents (74 percent)
say the recent recession has not hampered their ability to achieve their life goals,
according to the latest Citi California Pulse(R). Moreover, 81 percent say they consider
themselves somewhat or very successful, showing that despite the downturn and slow
recovery, Californians remain optimistic about the state and their own prospects.
Citibank's latest quarterly survey also found that only 15 percent of respondents
believe they are currently upper-class or well-off, with 66 percent describing their
circumstances as working-class or middle-class; 18 percent say they are poor. Yet
60 percent believe it somewhat or very likely that they will achieve upper-class or
well-off status in the next five to 10 years. Californians also continue to see
brightening prospects in the near-term: Looking forward 12 months, 65 percent of
respondents believe their personal financial situation will improve, 57 percent
believe economic conditions in California will get better, and 56 percent believe
job opportunities will increase. Additionally, 65 percent currently rate California
as a good or great place to live.
"California is often viewed as the land of opportunity, and we are thrilled to see
that so many residents believe the state's best days are still ahead," said Rebecca
Macieira-Kaufmann, President of Citibank California. "Though the current recovery
appears slow, Californians continue to look to the future with pluck and optimism,
which is a great sign for the state."
Optimism Index
At the same time, the survey shows that the current environment remains challenging.
Sixty-five percent say they see no signs of economic recovery in California, and
majorities rate current economic conditions, opportunities for jobs and consumer
spending as fair or poor. Overall, the Citi California Pulse Index of optimism fell
to -2 in the second quarter of 2011, down from 0 in the first quarter. At 0, the
index would be on the exact middle point of all possible scores, which could range
from +100 to -100. The Index of optimism in San Diego came in at +5, compared to +3
in San Francisco, +2 in Los Angeles, and -5 in both Sacramento and Fresno.
Among the survey's key findings:
-- 90 percent say the economy in California is fair or poor;
-- 84 percent say they fared better or about the same through the recession compared
to other people, only 13 percent say they fared worse;
-- 70 percent say in the current conditions they are "just keeping even";
-- 58 percent say California is on the wrong track, while 28 percent say it is headed
in the right direction;
-- 27 percent say the recession has delayed their retirement plans.
Measuring Success
When measuring success against others, respondents see themselves as on par with most.
Eighty-one percent say they are more or about as successful as the people they grew up
with, 75 percent say they are more or about as successful as their parents, and 73
percent say they are more or about as successful as their siblings. Looking ahead to
the next generation, 55 percent say they believe their children will be more successful
than they are, compared to only 7 percent who say they expect them to be less successful.
Regionally, 84 percent of Los Angeles residents describe themselves as successful,
compared to 82 percent in San Diego, 79 percent in Sacramento, 78 percent in Fresno
and 77 percent in San Francisco.
Retirement and Summer Travel Plans
Many Californians harbor concerns over their retirement preparations, with 62 percent
saying they are worried they will not have enough money for retirement. When asked
about saving for retirement, 56 percent say they are somewhat or very uncomfortable
with their current savings; 39 percent say they are comfortable. Sixty-three percent
say they are actively reducing spending to shore up their retirement accounts.
Looking at summer travel, nearly 60 percent of Californians will not take a vacation.
Among those who do plan a summer vacation, 75 percent are taking less than or the same
amount of time off as last year; only 13 percent are taking more. Additionally, 83
percent plan to drive a car for their trip, 65 percent will spend less than $2,000,
32 percent will travel to another state, and 12 percent will visit another country.
Regional Differences
The regional differences identified by Citibank changed in the latest survey, with
the split coming between coastal residents and inland residents, not Southern
California and Northern California, as Los Angeles and San Diego residents appear to
be getting more optimistic.
-- Seventy-four percent in San Diego, 68 percent in San Francisco and 65 percent in
Los Angeles rate the state as an excellent or good place to live, while 59 percent in
Sacramento and 51 percent in Fresno feel the same way.
-- Sixty-one percent in Los Angeles, 56 percent in San Francisco and 53 percent in San
Diego believe job opportunities will be better in 12 months, compared to 48 percent in
Sacramento and 47 percent in Fresno.
-- Fifteen percent in San Diego, 13 percent in San Francisco and 12 percent in Los
Angeles say current economic conditions are excellent or good, compared to 8 percent
in Fresno and 5 percent in Sacramento.