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Thursday, May 17, 2012
Regional Focus: May 2008
Bureaucrat Uprising
Sacramento County responds to private-sector criticism by taking action
Story by Deanna Broxton
An economic downturn fueled by the residential housing bust has led to a gloomy financial outlook for cities and counties across the state. While a $16 million budget shortfall and reductions in property and sales tax revenues might seem disheartening to some, it seems to have motivated Sacramento County officials who say they’re poised for change.
With an eye toward running the county more like a business and less like a bureaucracy, Rob Leonard — assistant to the county executive for economic development and intergovernmental affairs — prefers to remain optimistic about the county’s economic future.
“The bottom line is things are very diverse and robust right now. There’s so much gloom and doom that hits us every day,” Leonard says. “When I get up and look at the news on TV or read the newspaper in the morning, I have to shake that off and come to work because there are so many strong things going on right now within the region and within the unincorporated county.”
Leonard was hired seven months ago but has a long history with the county. His background as chief operating officer with the county’s airport system from 2001 to fall 2007, as well as 10 years as the executive director for base conversion for the county, may have prepared him well for his current position. But he’s been working with an economic development toolbox from the late ’90s — one that focused on a booming housing market and attracting business to create jobs.
Now, with the local spark in manufacturing activities and fierce competition between jurisdictions to attract new business, the county is making serious efforts to boost revenue, limit spending and maximize return on investment. By shifting its focus to offer attractive financial incentives to attract new business, its efforts seem to be working. Or at least it’s working for clean-tech company OptiSolar Inc. and growing businesses like Siemens Transportation Systems Inc., headquartered in south Sacramento.
Siemens, a German company that makes and ships light-rail vehicles worldwide, is planning a significant reconfiguration of its 120,000-square-foot manufacturing site. The move should allow Siemens to expand its capabilities in building commuter rail cars. Xanthi Pinkerton, Siemens’ corporate communications manager, says the move is prompted by the platform’s increasing popularity. It could take a year to finalize the project with Germany. Although the planned expansion has the potential to create more jobs, Pinkerton says it is more important for the company to sustain existing jobs. In 2006 Siemens expanded its line to include light-rail and car shell manufacturing at a cost of $5.6 million. Over 18 months, the expansion brought 120 more jobs to the area — raising the company’s total from 400 to 520 employees.
Though most rail car builders locate manufacturing plants in the Midwest or on the East Coast, Siemens’ Sacramento location hasn’t hindered its success, says Pinkerton. And the region’s talent base makes it a prime location for finding qualified engineers.
But attracting new business to the county can be tricky, Leonard says. In general, California isn’t viewed as a business-friendly or cost-effective location. But Leonard’s efforts to add a utility tax incentive to his department’s list of financial incentives have appeared to pay off.
Using a utility tax rebate to entice clean-tech companies like OptiSolar is new to the county. That, coupled with vacant space and a skilled work force, sweetened the deal for the company, which manufactures photovoltaic panels. OptiSolar has signed a 600,000-square-foot lease agreement at McClellan Park, a former military base. Over the 25-year term of the incentive agreement, the plant is estimated to add $26 million to county tax receipts and $539 million in annual output to the region’s economy, according to the Sacramento Area Commerce & Trade Organization.
This lease is a huge deal, says Susan Peters, a Sacramento County supervisor. “I’ve seen the number, and it’s larger than several car dealerships. That’s for sure.”
However, the utility tax rebate incentive is restricted to new and existing businesses that generate in excess of $75,000 in annual electrical utility tax revenues to the county. Eligible businesses are those that are making an investment locally by constructing or expanding facilities in the unincorporated areas of Sacramento, resulting in the creation of at least 50 full-time jobs with an average salary above $25,000.
But the rebate is just one card up Leonard’s sleeve. Another aspect of running the county like a business involves an image makeover. The county is focusing on customer service in all its business dealings, including streamlining permitting, which has faced sharp criticism by developers who say it is slow, unresponsive and one of the most difficult departments to work with regionally.
“Across the county, there is recognition that we need to be customer service oriented. We need to help our businesses grow, and in doing that, it helps the county’s revenue situation and helps us. When we get better revenues, we’re able to provide better services,” says Paul Hahn, county administrator of municipal services and former director of economic development. “We’re really trying to get across the image, both Rob and I, that we want to be a business-friendly place. We want to be streamlined, and we have regulatory responsibilities that we will never neglect.”
Michael Penrose, interim director of Sacramento County Department of Transportation is overseeing the streamlining project and says the county wants to shed its “can’t do” attitude for a “can do” attitude.
“We don’t want to be the ones where someone says it will be easier for us to get through the process and get our project approved in some other city rather than the county. We want to be competitive in that arena, and we want to make the development opportunities attractive. We have to figure out a better way to do this for all of us,” Penrose says.
That’s one of the reasons that led to Rancho Cordova’s incorporation in 2003. It was previously part of the county’s unincorporated area. Curt Haven, the city’s economic development director, says Rancho Cordova wanted to create its own destiny and not wait for the county, which he refers to as a slow-moving bureaucracy that is difficult to communicate with — a fact he hopes will change as it learns to work with cities in its jurisdiction.
So to expedite that process, Penrose says a series of teams and committees have been organized to help guide the county. The Development Oversight Committee was established a year and a half ago and includes engineers, lawyers and developers. As they outline the challenges they encounter when interacting with the county in the development pipeline, they are pointing out areas that need improvement. Since last year, a customer survey has been used to track customer satisfaction, the results of which could be accessible online in the future.
With a new permit-tracking system in May 2007 and an established timeline for processing applications in place, Penrose says the county is meeting its goals on the residential side 90 percent of the time, but things are still slow on the commercial side in part because of limited staffing.
As the county’s municipal services staff updates the county’s general plan, which guides its growth and development, it will include an economic development component for the first time.
Penrose, who headed the economic development department when it was a startup in the mid-’90s, watched it grow to a staff of 30 to 40 employees and oversaw the rebirth of Mather and McClellan Air Force bases. He says he’s proud of the department’s past accomplishments, including the tremendous business growth in the Highway 50 corridor before most of it became part of Rancho Cordova.
“Economic development is a big part of what we do, and it’s not just the department that does it but a team effort. We’re poised for growth, and I think we’re taking that economic development perspective across the departments,” says Hahn. “We’re ready to take that next step, and Rob’s the right guy to do it — to continue the efforts we started. He’s been able to come in with some new and fresh ideas and, I hope, take it to the next level.”
Redeveloping retail
by Deanna Broxton
Sacramento County’s efforts to bring retail centers to unincorporated areas, like south Sacramento, couldn’t come at a better time — the economic downturn has caused property and sales tax revenue to decline throughout the county.
Rob Leonard, assistant to the county executive for economic development and intergovernmental affairs, says the department’s focus on retail is not only an attempt at revitalization, but is also another element of the county’s economic development strategy to work on infill projects and existing commercial corridors.
“One could say that it looks like sales tax is down and certain large-scale retail is stalling out in different parts of the region. Yet within the county, we’ve got a major retail center in an area that is really hungry for it,” Leonard says. “I think it’s going to be great for folks who live in south Sacramento. We’re not just waving our arms around, talking about what may be. This is all very real.”Notwithstanding a less than encouraging economic forecast, Florin Towne Centre, located on the old Florin Mall site, has the potential to breathe new life into south Sacramento. Developer Jim Kessler, president of Stonehenge Property Group, says the Centre is the best use of an area that is relatively stable and not dependent on housing starts. To date, Kessler has invested $80 million in the project and says the project works for an area that serves close to 190,000 residents.
“In terms of merchandise, you really don’t have very much, and it’s way below the norm for the population. What we’re doing is a project that is specifically focused on providing basic goods, services, general merchandise and groceries at affordable prices,” Kessler says.
Utilizing an open-air concept similar to that of Sacramento’s Town & Country Village, shoppers will be able to park within the interior of the retail center and walk along pedestrian-friendly, tree-lined streets. Mervyn’s, which opened in February, is one of the tenant anchors. Old Navy and FAMSA, an electronics and home appliance retailer, are also scheduled to open this year.
The county is also looking at the redevelopment of the drive-in theater at Highway 50 and Bradshaw Road into a 400,000-square-foot retail shopping center called the Bradshaw Landing Retail Center, which would be the largest for Bay Area developer SyWest Development.
