South Los Angeles, California (Photo: Alfred Twu/Wikimedia)
More than three million Californians live in some 879 federally designated Opportunity Zones in disadvantaged communities throughout the state. California has more Opportunity Zones than any other state.
The federal Opportunity Zone incentive allows investors to defer federal taxation on capital gains by investing the proceeds through a qualified opportunity fund into a designated Opportunity Zone. To be eligible for the full benefit, investments must be long-term (at least 10 years) and meet a set of rules designed to ensure these investments create additional economic activity in Opportunity Zone communities.
To maximize the potential impact for Opportunity Zone residents, the state needs to pass legislation that will help communities become “Opportunity Zone Ready.”
“No such action has been taken yet in California,” CA Fwd CEO Jim Mayer wrote recently. “This is a serious missed opportunity to tap an unprecedented source of private capital in communities that need it most, and the state is running out of time to act.”
Governor Newsom has shown support for Opportunity Zones and ensuring California is a competitive environment for impact investments that can support community-building projects and local businesses. As the governor said at the Opportunity Zone Investor Summit at Stanford University last month, for the program to succeed it must spark investment while benefiting existing residents, rather than just investors. “We don’t just believe in growth,” Gov. Newsom said at Stanford. “We believe in inclusion. You can’t have one without the other.”
“Opportunity Zones provide an excellent opportunity to revitalize low-income areas in California,” said Lenny Mendonca, chief economic and business advisor to Governor Newsom. “In order to move the economic needle for millions of Californians who are struggling, attracting investment in areas where they live is sound policy that can help us meet our objective of making California’s economy more sustainable and inclusive.”
One example of a community that could benefit is the city of Lynwood, where roughly 70,000 people live in the working-class area of south east Los Angeles County.
“Economic development is a strategic priority for our city and many more like us,” said Jose Ometeotl, Lynwood city manager. “This investment vehicle can help us attract capital, improve our tax base and create jobs for our residents. I expect Governor Newsom and the Legislature will make sure California conforms to the federal requirements so communities like ours can compete for investment. ”
CA Fwd and Golden State Opportunity will release a new study next week showing that between $745 million and $1.2 billion in new economic activity in Opportunity Zones could be generated this year. In subsequent years, increased economic activity would range from more than $700 million to nearly $500 million.
“This study reaffirms what we already believed. Opportunity Zones will generate a significant return on investment and a much-needed boost to underinvested communities at a relatively minor overall expense to the state,” said Josh Fryday, president of Golden State Opportunity. “Opportunity Zones can be an important community-driven investment tool that complements other investments by the state and philanthropy in people, places and much-needed projects.”
These incentives would mean a potential revenue loss to the state of $65 million annually between 2019 and 2025, while local tax revenue is expected to cumulatively increase by $68 million over that same time period. Critics have said this incentive is an unnecessary expense, but according to the study, state support for Opportunity Zones will generate at least 10 times the economic impact in these areas, and state tax revenue would be largely recovered when deferred capital gains taxes are paid following the 2026 year.
“We are encouraged by the excitement in the investor community and encourage everybody to think about these investments as not simply about a tax benefit but about measurable long-term economic impact on the communities they are meant to serve,” Mendonca added.
The California Economic Summit in 2018 developed a framework that emphasized three steps that must be taken to maximize the social benefits of Opportunity Zones:
Make state resources available to communities that want to be “Opportunity Zone-ready”
Align state community, economic and workforce development funds to leverage social and environmental benefits of Opportunity Zones
Conform state capital gains tax treatment to the new federal law
Governor Newsom and legislative leaders will be sent the report on Monday and a series of meetings explaining the potential benefits are being scheduled.
“California is one of few states that have not yet enacted legislation conforming to the federal program,” said Mayer. “We believe that as legislators learn more about the program, they’ll make sure California isn’t left behind.”
“It’s like a California version of the New York versus New Jersey thing—but maybe worse,” Smith says. “You’re so close to one of the biggest metro areas in the country, but never quite there.”
Like many of his generation, Smith, 37, moved to bigger cities in search of opportunity. In his case, he sought work in urban planning and commercial development in Los Angeles and the Bay Area. But as he developed a passion for downtown revitalization, he began wondering, why not Bakersfield? He returned to his hometown in 2014 with a hunch that the city was ripe for redevelopment, and soon began work on what would become the 17th Place Townhomes.
Since opening in 2016, the high-end three-story, 44-unit downtown development represents the first market-rate housing built in the city’s core in decades. It’s not every day the city gets new housing, complete with a dog park, fountains, and a fire pit. Now that the development is fully leased—not a small accomplishment for new housing asking the highest rent in town, at between $1,630 and $1,830 for a two-bedroom—its success has convinced Smith and his firm, Sage Equities Real Estate, to break ground later this year on a new 53-unit project downtown.
“What we’re doing is a real niche product,” he says. “But you can really start seeing people get excited about this neighborhood.”
A bet on Bakersfield and rebuilding downtown
Smith’s bet on Bakersfield represents a new era of development, however small, for this Central Valley city. A recent report from the National Association of Realtors (NAR) found Bakersfield to have one of the highest rates of millennial movers and homeowners, setting off a series of stories written with a tone of “wait, that Bakersfield?” as if it were a shock that somebody might find the city was both a good value and a good opportunity.
After all, compared to coastal California, where were the high-paying tech jobs and new homes? When California Gov. Gavin Newsom announced the state’s troubled high-speed rail project would focus on the Bakersfield to Merced section, connecting two Central Valley locations, many rail supporters felt Newsom was saying the train would never connect to LA or San Francisco.
The 17th Place Townhomes helped bring more attention to a newly christened neighborhood, Eastchester, that’s beginning to blossom, and includes restaurants, coffee shops, and new businesses. In this formerly industrial stretch of town, business owners are finding new uses for old buildings, including Cafe Smitten, another Smith project, and Dot x Ott, a just-opened seasonal kitchen that sources its produce from a farm 10 miles away.
Though tiny, the downtown turnaround is palpable, says Debbie Lewis, a wealth manager who moved back to Bakersfield a few years ago.
“The downtown that I grew up hearing about and knew as a young adult was a ghost town that people were hesitant to visit and a place that businesses had a hard time sustaining,” she says. “Now, it appears to be growing at a slow but steady pace and an inspiring amount of businesses have are continuing to decide to take that leap, get creative, and get in on the action. People are starting to see the positive impact of investing more care, money, and time in our downtown.”
While the city’s current growth spurt has been out, not up, as nearby farmland has been turned into housing developments, there are a lot of buildings with good bones downtown, according to Gunnar Hand, an urban designer with architecture and planning firm Skidmore, Owings & Merrill (SOM). Hand led a team that devised a new downtown plan for Bakersfield in 2016, in anticipation of the arrival of high-speed rail. They found the beginning stages of placemaking investments had already laid the groundwork for the nexus of new downtown development.
“This is, for lack of a better term, a third-tier city that’s only now coming around to urban revitalization,” says Hand. “Los Angeles is 20 to 30 years into revitalizing its downtown. Kansas City, [Missouri], my hometown, is 10 years in. Bakersfield is in, like, year one.”
Moving back and making a new start
When talking to Bakersfield residents who left town for college or careers and have now returned as older adults, affordability is a constant theme.
It helps in California to have housing that’s actually affordable. With a median home value of $241,000 as of last March, and median starter homes beginning at just $145,300 according to Zillow, it’s no surprise that the median age of a first-time buyer in Bakersfield is just 33. The city’s sprawling growth pattern has played a big role in creating cheap housing; as the city and metro region grew out, Bakersfield’s population ballooned from 70,000 in 1970 to more than 380,000 today.
According to NAR researcher Nadia Evangelou, these newly arrived millennials can afford to buy nearly 15 percent of homes currently listed for sale in Bakersfield, compared to only 4 percent in Los Angeles.
“Millennials still move to big metro areas such as Los Angeles and San Francisco,” she says. “But we see that they don’t stay in these areas, because of weak affordability conditions.”
But the real draw goes beyond affordability. Cheaper housing enables many of the Bakersfield boomerangs to buy rather than rent, have a better quality of life, and start businesses, all of which might be unaffordable in other California cities.
For Jessie Blackwell, a cofounder of Dot x Ott, the seasonal restaurant and market just a few blocks from the 17th Place Townhomes, now is the perfect time to open a new kind of business in town. The restaurant, which opened last month, is taking advantage of the region’s wealth of farms and fresh produce in a way that just wasn’t really done here just a decade ago
“There’s a food movement here,” she says. “You can see it in the revitalization of downtown, and the handful of farm-to-table restaurants that have come to town. In the last five years, you’ve just seen this boom in farmers markets and so many more local options.”
Melissa Delgado is a product manager for an agriculture company who returned to town in 2011 after studying in San Diego. She found that the city, with its low cost of living, was perfect for growing her career. With the $2,000 or more she would be spending per month on rent elsewhere, she’s been able to buy a house.
“When I first came back here, I hated it,” she says. “I wanted to go right back to the city. But I’ve been able to grow my career here, and the style of living is just so much better.”
Daniel Cater, an architect and designer who recently returned to town with his wife three years ago, has found great opportunity since moving home (Smith hired him to design the townhome project).
“You’re beginning to see a city of half a million support innovation and change,” he says. “For me, it’s exciting to watch a city that hasn’t really found itself, where the entrepreneurial spirit is alive. It’s fun to be in a place where you can get to know the people making an impact, and make an impact yourself.”
Placemaking and the Padre Hotel
Most of the Bakersfield residents interviewed for this story noted that a lot of the new energy downtown comes from people who have returned after moving away, not a flood of new arrivals from other parts of the state or country. There’s still a relatively tight-knit circle of businesses and entrepreneurs in town, often built on local networks. Smith’s dad, for instance, is city Councilmember Bob Smith. And compared to the urban renaissances touted in other cities, Bakersfield’s new developments are not linked to any kind of broad apartment-building boom or big economic expansion yet.
But the catalysts for such change seem to be in place: Two local groups, Kern Economic Development Corporation, a traditional local business group, and Be In Bakersfield, a grassroots nonprofit that promotes new local businesses, have started marketing the city as a place of opportunity.
With some additional investments in transit and placemaking, Bakersfield also has the potential to truly activate its downtown. According to SOM’s Hand, when the firm studied the city in 2016, it found that much of the infrastructure for downtown growth was already finished or in the works. As part of a larger community redevelopment project, Bakersfield developed Mill Creek, a River Walk-style public space and linear park lined with theaters and new businesses. It opened in 2010.
Many of SOM’s suggestions—to create new transit links, connect the city’s already impressive bike lane network, and tie together disparate parts of downtown—have already been done or are in development.
“Our main suggestion was to create infill that brings together Mill Creek with the downtown core,” he says. “That’s already happening now, without the rail station being built.”
In addition to larger urban plans setting the table for more dense development, the successful redevelopment of the Padre Hotel also served as a marker and milestone for downtown. A landmark from the ’20s that reopened in 2010, the ornate hotel at 18th and H streets, a four-star property in the Central Valley, showed many that the city’s stock of old buildings held promise.
“The 17th Place Townhomes and the Padre Hotel are landmark projects for a town this size,” says Hand. “They signal something to the market that didn’t exist before, and it’s starting to snowball. There are local developers taking note.”
Continuing challenges to building a better Bakersfield
Bakersfield has gained momentum, but it still has a ways to go. Like many Central Valley cities, such as Merced, it’s pushing to diversify economically and build new industries, as well as regain the attention of state government after being ignored for many years.
As part of a larger demographic trend statewide, however, these Central Valley cities have seen more attention from new arrivals. Interior metros like Riverside, Fresno, and Sacramento have seen net domestic migration rise from 2012, when this region collectively lost 4,000 people, to 2017, when 38,000 arrived. At the same time, coastal parts of California have grown at a much slower pace, two-thirds less in 2017 than in 2012.
To capitalize on its growing population, Bakersfield’s economy needs to expand beyond health care, agriculture, and oil, and the region needs to invest in creating a more educated workforce. According to the Brookings Institution, among those ages 25 to 34 in the Bakersfield area, 29 percent are in poverty and only 14 percent graduated from college. The city’s persistent problems with air pollution, some of the worst in the state and nation, give potential residents pause.
“We have historically relied on cyclical industries like oil and agriculture, but the truth is, that’s not the future of where the world is moving,” says Anna Smith, a columnist for the Bakersfield Californian, and Austin’s wife. “We need to diversify, and bringing new minds here who have lived in other places is key to the 21st century.”
Anna Smith, like others, has pinned some hope on Newsom’s commitment to the Central Valley, including high-speed rail and other economic plans. Proposals at the local level, like Measure N, an initiative to revive state-funded community development, and a forthcoming update to the city’s general plan, could help finish out some of the placemaking plans SOM and others have proposed to knit together Bakersfield’s downtown.
“Newsom has the opportunity to show us that he can make connections here,” says Smith.
Coming back to feel more connected
The small cadre of new businesses, and Bakersfield residents returning home, suggests a similar story—like those in places like Memphis, Tennessee, or Louisville, Kentucky—is starting to play out. Bakersfield hasn’t had a downtown boom, at least not yet, but the seeds have been planted.
As Debbie Lewis, the wealth manager, suggests, there’s a hunger among young adults to make a mark on their environment.
“They don’t just want to be one of the millions of people swallowed by social media and all the reminders that we’re broke and don’t have any money,” she says. “All that negativity is pushing people to connect with a place and make a difference, and I think that’s possible here in Bakersfield.”
Or, as Anna Smith suggests, affordability isn’t the entire answer, it’s just the beginning. Without the pressure to pay for increasingly high rents, having more time to focus on passion projects and community engagement makes a real difference.
“If you want to say it’s just about affordable housing, that’s not all there is the Bakersfield,” she says. “Young professionals can come here, start a business, and find lower barriers to entry. Most importantly, they can feel connected to the community and make a real impact.”
Published On April 11, 2019 – 2:13 PM Written By David Castellon
California once again led the nation in agricultural sales in 2017, with six Valley counties — along with one along the state’s Central Coast — topping ag sales across the nation.
This according to the U.S. Department of Agriculture’s 2017 Census of Agriculture, which gathers information annually on U.S. farms and ranches and the people who operate them.
Agricultural sales in California exceeded $45 billion in 2017 — about 12 percent of total U.S. ag sales — far outpacing the No. 2 state, Iowa, which had sales totaling about $29 billion, followed by Texas, Nebraska, Kansas, Minnesota, North Carolina, Wisconsin and Indiana.
But while the USDA lists the same top ag counties as the California Department of Agriculture, they don’t list them in the same order.
Most notably, the federal agency lists Fresno County as the top ag county in the nation for 2017.
CDFA placed Fresno County as third in sales that year, behind Kern and Tulare counties, respectively.
CDFA officials couldn’t be immediately reached to determine if the USDA census used different criteria in determining total ag sales.
The other four top ag counties were, in order, Monterey, Stanislaus, Merced and San Joaquin, all of which also are among the top seven ag counties on the USDA’s list.
The top commodities produced on farms nationally were cattle and calves, followed by corn, poultry and eggs, soybeans and milk. California lead the nation in milk production, a total of 18 percent.
Other California highlights from the farm census:
– The state’s top commodities were fruits and nuts, with $17.5 billion in combined sales; vegetables, with $8.2 billion; milk, with $6.5 billion; cattle and calves, with $3.1 billion; and horticulture, with $2.9 billion.
– Total farm production expenses for California totaled $37.8 billion.
– The average age of the California farmer was 59.2 years old, compared to the national average of 57.5 years old.
– Military veterans accounted for 10 percent of California farmers, compared to about 11 percent, nationally.
– At 14,552 farms, California was the top state using renewable energy-producing systems in agriculture. Solar was the most common renewable energy-producing system on farms and ranches in the state.
• They’ll be at a new T-Mobile customer call center in Kingsburg
• Company says it will offer a new level of customer service
T-Mobile U.S. and Sprint have picked Kingsburg in Fresno County as the location for their previously announced Central Valley “Customer Experience Center.” The new call center will have more than 1,000 employees. The companies say the new workers will earn wages on
average over 50 percent higher than the average wages in Fresno County, which will also make the the call center one of the highest-paying employers in the area.
The Kingsburg call center is to have what T-Mobile terms its “Team of Experts” service model, which provides customers direct personal access to a dedicated team of specialists when they call or message for assistance. The specialists are to work with local retail and engineering eams to address a wide variety of topics and tackle complex challenges for customers primarily based in California.
The combined company will have 7,500 more customer care workers in 2024 than the two stand-alone companies would have employed, they say. It all depends, however, on the closing of their merger to become what the companies want to call the “New TMobile.”
Editor’s note: This story was corrected April 4. Due to an editing error, an earlier version of this story incorrectly named Novogradac & Co. LLP.
Governors helped the U.S. Treasury Department choose nearly 9,000 economically distressed “opportunity zones” where people can get a tax break for investing in certain businesses and properties. But the 2017 federal tax law that created the zones doesn’t allow governors or state lawmakers to steer investors’ money into certain projects.
They’re trying to influence the market anyway.
This year 17 state legislatures have considered opportunity zone bills, including proposals for additional tax breaks to lure investors or encourage certain projects, such as affordable housing or solar energy development, according to Novogradac & Co. LLP, an accounting and consulting firm that is keeping track.
The federal government is expected to announce a second round of proposed opportunity zone regulations any day now, which would give many investors confidence to start striking deals.
“Through the added incentives, states can encourage the type of development they want to see in opportunity zones,” said Michael Novogradac, managing partner of Novogradac & Company.
Novogradac cautioned, however, that ultimately cities and counties may have more power over what gets built in a zone than states do. Last year, for example, the City Council in Boulder, Colorado, halted some development in its zone, citing the need for more planning.
“I do think they can bend the curve to be sure,” Novogradac said of states. “But at the end of the day it really depends on local government and local policies.”
Trump Tax Break Aims to Turn Distressed Areas Into ‘Opportunity Zones’
Much of the early investment in opportunity zones is flowing into real estate. Sales of undeveloped land, previously developed but vacant land, and properties ripe for demolition and redevelopment surged in zones last year, according to a December report from Real Capital Analytics, a company that tracks real estate markets.
New York City, Los Angeles and Phoenix may be the hottest markets for opportunity zone funds, the report said.
Some state lawmakers want to tip the scales in favor of projects their constituents need but may be riskier or less lucrative than a new hotel or apartment building in a big city.
California Gov. Gavin Newsom, a Democrat, has proposed a state tax break like the federal one, though it would apply only to green technology and affordable housing projects.
Maryland Gov. Larry Hogan, a Republican, wants to lure businesses into zones with additional tax breaks for creating jobs, expanded workforce training assistance, and more funding for affordable housing development and small-business loans, among other incentives.
Washington state Rep. Mike Chapman also is interested in offering state tax credits to opportunity zone investors who can create jobs in economically depressed rural areas.
“We don’t have a lack of construction work in this state, so it’s not like we need to build more buildings,” the Democrat said. “We need jobs in rural counties that are living wage jobs where people can consistently receive a paycheck.”
A ‘Windfall to Investors’
To get the federal tax break, people must invest earnings from selling stocks, bonds or property in a fund that, in turn, invests in businesses or property in an opportunity zone. Investors who put money into such a fund can defer paying taxes on their gains right away and earn a 15 percent tax cut on the gains after holding their shares for seven years.
Investors who hold their shares for 10 years don’t have to pay capital gains taxes on money they make from those shares.
Most states have adopted a similar tax break. Nine states have not aligned with the federal tax break because they don’t tax incomes. Lawmakers in eight states have either declined to offer the same incentive or haven’t acted yet, according to Novogradac. But it’s not clear that creating a state version of the federal opportunity zone tax break will make much of a difference to investors.
Federal tax law typically influences people’s choices more than state tax law, the California Legislative Analyst’s Office, a nonpartisan adviser to the legislature, said of Newsom’s plan in a recent report. “Any state tax benefit provided would be a ‘windfall’ to investors because they likely would have made the investment even without the state benefit,” the report said.
Some progressive advocacy groups say the state tax breaks are a waste of money.
“It’s going to be going to the investor class, which is not a piece of our society that we need to help,” said Jody Wiser, executive director of Tax Fairness Oregon, a nonprofit pushing to eliminate Oregon’s version of the opportunity zone tax break.
“Most of the money will be spent where money was going to be spent anyway,” she said.
She pointed to zones in downtown Portland that already are filling up with office buildings and trendy restaurants.
Piling on Tax Breaks
Lawmakers are looking for other ways to use the state tax code to spur investment, particularly in businesses.
Encouraging investors to put money into businesses under current opportunity zone rules could be a challenge. State economic development officials have called for clarifying some of the criteria, such as the requirement that eligible businesses must derive half their income within a zone.
That requirement could disqualify “most e-commerce companies, manufacturers, and other businesses with the potential to create significant numbers of new jobs and wealth for their communities,” officials from Rhode Island, Utah and Louisiana wrote in a recent op-ed in The Hill.
West Virginia Del. Joshua Higginbotham, a Republican, has proposed giving investors in zone businesses a 10-year reprieve from state income and business taxes.
“What we wanted to do in West Virginia,” he said, “is make sure that our 55 opportunity zones are the most competitive of any opportunity zones in the country.”
Last week West Virginia Republican Gov. Jim Justice vetoed Higginbotham’s proposal, but the legislator said he plans to push his bill again during an upcoming special session without the amendments Justice opposed.
Washington’s Chapman wants his state to offer $60 million in business tax credits to investors in opportunity zone funds focused on rural, economically depressed counties.
Funds would need permission from the state Department of Commerce to pass on the credits, and if they were to misuse the taxpayer dollars, they’d have to pay the state back.
The Senate has amended the bill to conduct a study on rural economic development programs, including tax credits, before the state makes any investments.
In Maryland, Hogan has proposed both new tax credits and expanding existing economic development programs — such as one that pays for the demolition of derelict buildings — to advance projects in opportunity zones.
“We’re really tying together everything that we were already doing and trying to use it to bolster the opportunity zone investment,” said Sara Luell, director of communications for the Maryland Department of Housing and Community Development.
The additional state assistance would be available to any business or real estate project in a zone, she said, even those not receiving money from an opportunity zone fund.
Hogan recently toured a real estate project that will turn 40 acres of parking lots near a light-rail station into a hotel, office space for health care company Kaiser Permanente, apartments, a parking garage, and shops and restaurants.
An opportunity zone fund will help finance the apartment buildings, said Scott Nordheimer, a partner at Urban Atlantic, the company behind the project. But the project also relies on a long list of other incentives, he said, including state income tax credits and Prince George’s County’s multimillion-dollar investment in streets, utilities and other infrastructure on the site.
Without county help, the development would still be a parking lot.
“You could not privately finance the infrastructure,” Nordheimer said.
When Raj Kahlon was a young boy he had dreams of one day becoming a farmer, even though his father was a businessman. Little did he know, his humble beginnings would lead to that dream becoming a reality. In a relatively short amount of time, Kahlon has become a prominent local pistachio and almond farmer, building the Kahlon family business. Kahlon is now giving back to the community with a $5-million donation to support the agricultural programs at Merced College and the future 20,000-square foot Agriculture and Industrial Technology Complex.
“I believe that Merced College is the foundation of the Merced community,” Kahlon said. “They’ve had strong ties to local agriculture since the school opened and continue to educate the area’s future agriculturists and leaders.
Raj Kahlon is making a $5-million donation to support the agricultural programs at Merced College and the future 20,000-square foot Agriculture and Industrial Technology Complex. It’s the largest gift in the college’s history.
/Courtesy Merced College
The partnership agreement, approved by the Merced College Board of Trustees on Tuesday evening, between Kahlon and the Merced College Foundation will include developing approximately 100-acres of pistachios, which will generate additional funds for the college as well as provide an agricultural land lab for students to learn production and harvesting practices.
“This is the largest gift in Merced College history and the beginning of big things to come,” Merced College Superintendent/President Chris Vitelli said. “I’m proud of the work done by the Merced College Foundation to help make this happen and grateful to Raj Kahlon for his investment in our students and agricultural programs.
“Throughout this process, Raj has expressed his desire to give back to the community who has given him so much. I couldn’t be more appreciative of his incredible generosity and the long-term impact of this donation.”
Kahlon will be honored as the President’s Medallion recipient at the seventh annual State of the College luncheon, which is set to be held on May 8. Vitelli will also recommend to the Merced College Board of Trustees that the College’s new Agriculture and Industrial Technology Building is named after Kahlon.
Jill Cunningham, executive director of the Merced College Foundation, said this gift is near and dear to the school administration’s heart. Vitelli studied agriculture and was very active in the FFA, while Cunningham has deep roots in the Le Grand farming community.
“I’m a third generation Merced College family and I’m thrilled that this donation will propel the next generations to come.”
For more information about the upcoming State of the College luncheon visit www.mccd.edu/foundation or call 209-384-6470.
Blue Devil Notebook is compiled by Merced College staff. It will run occasionally and contain news, information and events happening at the college.
Raj Kahlon is making a $5-million donation to support the agricultural programs at Merced College and the future 20,000-square foot Agriculture and Industrial Technology Complex. It’s the largest gift in the college’s history./Courtesy Merced College
Photo 1 and 2: CCVEDC awaits introduction in the CA Assembly. Left to Right, Bobby Kahn, Mike Ammann, Lee Ann Eager, Lance Lippincott, Wil Oliver, Richard Chapman Photo 3: CCVEDC Board meets with CMTA
March 25, 2019– Representatives from EDC’s throughout the Valley met with more than 20 legislators and top government officials to bring the voice of Central Valley businesses to the Capital. On the list of top priorities for the valley were Workforce Development, Infrastructure Development, Regulatory and Tax Reforms, Opportunity Zone and Tax Incentives. Central Valley priorities were presented in comparison to a list of top site selection factors for business.
“Each year, the CCVEDC Board meets with legislators to discuss mutually beneficial priorities for economic prosperity. This year we were very optimistic after speaking with Valley representatives, the Governor’s Office of Economic Development, and the new Lieutenant Governor. It was a very busy and constructive two days in Sacramento,” according to Lee Ann Eager, Co-Chair of the California Central Valley Economic Development Corporation, comprised of the eight EDC’s from San Joaquin to Ke
In addition to valley legislators, the group met with the Assembly Committee on Jobs, Economic Development and the Economy; the Governor’s Office of Business and Economic Development (GoBiz), and California Manufacturing & Technology Association officials.
As manufacturing is a large and still growing economic part of the Central Valley, the role of investing in Workforce Career Technical Education (CTE) has never been more important. CCVEDC supported the State in continuing to invest and, if possible, increasing investment in Career Technical Training. Specifically, advanced manufacturing, value-added agriculture, logistics, and technology development.
“Workforce and Economic Development in the Central Valley have worked together hand in hand for more than 30 years, leveraging each other to the benefit of business and residents. The legislators from the Central Valley understand and support the continued investment in this collaborative effort and the positive economic effect produced by this partnership,” stated Lace Lippincott, CCVEDC and CCWC Board Member.
The Central Valley is experiencing significant economic growth and activity. Yet, infrastructure development has been left behind and is needed to attract and grow jobs in this critical transportation corridor. The Central Valley is a prime location for advanced manufacturing, distribution, energy development, water technology among other sectors which support California’s identity as an innovation leader.
“It is important for our state legislators to be aware of the unique issues of the San Joaquin Valley. Water issues effect more than just farming operations, it effects all the other ancillary industries that thrive because of agriculture.” noted Bobby Kahn, CCVEDC Board Member and Treasurer.
Of California’s four million businesses, 3.1 million are sole proprietorships and 87% of companies have 20 or fewer employees. A complex regulatory process creates a significant burden on small businesses, causing many to consider leaving or expanding outside of the state.
“A vibrant entrepreneurial ecosystem in the Valley and the State is vital to the economy. Indeed, a region’s startup activity is a key factor in overall economic growth. It is critical to for these companies to be provided with relief from onerous regulations that hinder future investment and job creation,” according to Richard Chapman, CCVEDC Board member.
According to business, tax credits and other incentives can go a long way toward boosting capital — especially when the project involves job creation or a major capital investment. The new Opportunity Zones program is attractive, but hard to access and understand. Incentives allow manufacturers a chance to recover costs expended for workforce, research and expanding/staying in California.
“We encourage the legislature to conform state tax law to federal tax law treatment of Capital Gains under the Opportunity Zones incentive which will bring new investment and jobs into center city areas in need of redevelopment. Thirty-four other states have adopted state tax conformity provisions, but California has not. The Central Valley is home to over 150 Opportunity Zone census tracts that represent some of the most disadvantaged communities in nation,” stated Mike Ammann, CCVEDC board member representing San Joaquin Partnership.
CCVEDC is a not-for-profit Corporation whose mission is to attract and retain jobs and investment in the Central San Joaquin Valley counties of San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings, Tulare and Kern. They are supported by the 8-counties in the Central Valley, Central California Workforce Collaborative, PG&E and Central Calif/Central Mother Lode Regional Consortium (CRC) Partnership.
For years, there has been a nationwide shortage of workers in vocational and technical careers, largely caused by society adopting a more college-going culture.
According to Adecco, an estimated 31 million career tech jobs will be left vacant by the year 2020 due to Baby Boomer retirements.
“This is a once-in-a-lifetime opportunity for the city of Fresno and the Central Valley. If this is the thing of stuff to come, I am incredibly proud of this start.” — Bob Nelson, superintendent of Fresno Unified
Fresno Unified, the fourth-largest school district in California, is working to change the narrative of career tech and the looming worker shortage.
The district showcased its efforts last Thursday with an open house displaying $12 million worth of improvements to CTE facilities at Duncan Polytechnical High School.
New Heavy Trucks Facility
Perhaps the biggest upgrade is a new, 10,000-square foot heavy trucks facility large enough to fit eight semi-trucks.
“It’s the first of its kind in the nation,” said Vanessa Ramirez, Fresno Unified’s public information officer. “The facility provides the most modern equipment for preparing students for jobs in the Valley’s growing transport industry.”
Ramirez said students in the school’s heavy truck maintenance and repair program will utilize the facility. To ensure it met the needs of employers, Fresno Unified worked closely with industry partners on designs, she said.
This Has Been Needed For a Long Time
Hugo Rodriguez, the service manager at Fresno Truck Center, hopes the new facility is the first of many local high schools will construct for students.
“It is 20 years (late), but it is a great start,” Rodriguez said. “I am anxious to see what kind of kids we can get out of the program.”
Rodriguez said he’s also concerned about how many students he can get to fill vacant positions.
“The trades died out of the high schools years ago, and we’ve struggled for years finding technicians to come in and fill the voids,” Rodriguez said. “This facility is definitely needed.”
The district also expanded Duncan’s existing facilities in manufacturing and construction technology, automotive, welding and fabrication.
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Students Give Thumbs-Up
To fund the work, the district utilized $7 million from Measure Q — a $280 million bond measure passed in 2010 — along with $5.2 million from a California Career Technical Education Facilities Program grant.
“In addition to better serving the Duncan students we already have, we absolutely expect attendance will grow from here for all of our Duncan pathways.” — Amy Idsvoog, Fresno Unified’s interim chief information officer
With the new improvements, Josiah Montijo said he’s not worried about whether he’ll be adequately prepared for a career in programming.
“(The improvements) will prepare you for your career or for any job you are trying to go into,” said Montijo, a senior in the school’s manufacturing pathway. “I don’t think I would be as prepared if I didn’t come to Duncan.”
Nathaniel Martinez said the new and updated facilities will definitely help him expand his knowledge in Duncan’s construction pathway.
“Previously, we were working in little portable classrooms and using the construction site that we already had to do anything that we needed,” said Martinez, a junior. “This new building is going to help us expand out more and attract new students.”
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Return On Investment
There are 1,048 students at Duncan. Amy Idsvoog, Fresno Unified’s interim chief information officer, said the district is hoping the new improvements will help increase enrollment to 1,400 students in the next three to four years.
Seeing the new equipment and taking in the aroma of gas and oil reminded Trustee Veva Islas of the days she spent with her father, who was an agricultural mechanic.
“(My father) would have been so excited to have been a student here,” said Islas, who represents the area in which Duncan is located. “I am excited for those that are going to have the opportunity to come to this program, and just really have a fantastic experience.”
“I think the improvements are incredible. I think we should duplicate it in other areas.” — Brooke Ashjian, former Fresno Unified trustee
With all the new upgrades, Esli Cardenas said she is confident she will develop the skills necessary to land her dream job at Vanir Construction Management.
“It will definitely help me in the future, and hopefully I can start my own private business and build companies and more buildings like what we have here,” said Cardenas, a senior in Duncan’s construction pathway.
Superintendent Bob Nelson said the new facilities at Duncan is about opening doors.
“This is a once-in-a-lifetime opportunity for the city of Fresno and the Central Valley,” Nelson said. “If this is the thing of stuff to come, I am incredibly proud of this start.”
More CTE in the Pipeline
Former Fresno Unified trustee Brooke Ashjian was instrumental in boosting career technical education during his four years on the board. Seeing his vision come to life at Duncan, he said, is satisfying.
“I think the improvements are incredible,” Ashjian said. “I think we should duplicate them in other areas.”
That’s just what Fresno Unified plans to do, Idsvoog said.
The district, she said, has been approved for state grant funding, requiring a local funding match for CTE facilities at Fresno, Hoover, and McLane high schools.
Idsvoog said the district has also applied for funding for CTE facilities at Edison and Sunnyside high schools.
Such projects, Idsvoog said, are pending future board approval. She said the local match would likely come from Measure X construction bonds.
Foster Farms on Thursday announced a multimillion-dollar capital investment project to support an expansion and upgrade of the company’s poultry processing facility in Livingston.
The company that supports 2,032 jobs in Merced County will expand the facility’s product lines and add jobs, according to a news release. The announcement comes as the company is possibly in discussions to be sold to meat industry giant Tyson Foods, CNBC reported Tuesday.
Foster Farms spokesperson Ira Brill would not say exactly how much the company planned to spend on the expansion, noting the firm is privately held.
“Foster Farms is expanding its Livingston operation to allow for future growth and diversification of our customer mix on the West Coast,” CEO Laura Flanagan said in the news release.
The expansion project is underway, the company said in the release, with completion scheduled for September. State and local leaders worked with the company to offer a $6.5 million economic incentive package.
“This is a perfect example of government working with local business to help keep jobs in the Valley and grow our economic base,” Merced County Board of Supervisors Chairman Lloyd Pareira said in the release.
Foster Farms employs about 12,000 people at poultry plants in Livingston, Fresno, Turlock, Porterville, the Pacific Northwest and the South. Max and Verda Foster started the operation in 1939 and it remains under family ownership.
“The city of Livingston prides itself for having such a dynamic and community-oriented company and we are pleased to see Foster Farms continue to grow and prosper here,” Livingston Mayor Gurpal Samra said in the release.
Neither Tyson nor Foster Farms has confirmed the discussions of a possible sale, referring to the report as a rumor. The cable business network based its report on unnamed sources, who put the price at roughly $2 billion. The two sides disagree on the exact amount, and the deal could fall through, CNBC said.
Foster Farms is one of the largest employers in the Northern San Joaquin Valley. Its hundreds of products include whole chickens and turkeys, fresh poultry parts, ground meat, deli slices, marinated products, frozen patties and corn dogs.
The company has annual revenue of $2.4 billion, according to Forbes.