Visalia approves membership, leaving Tulare as the only city to opt out of the Tulare County Economic Development Corporation for 2019-2020
By Reggie Ellis @Reggie_SGN
VISALIA – Economy is an abstract concept. It’s the aggregate feeling of corporate CEOs, consumers, dealers and contractors about how the other is feeling. That’s not to say we can’t measure when it’s good or bad, but those outcomes are often the results of guesswork on whether the next two, five or 10 years will be good or bad. It’s why college majors can list economics as either a science or an art.
Even more perplexing is economic development, attempting to generate more economic activity than what would happen naturally. Do companies locate in an area because of distance to markets, proximity to suppliers, tax incentives, low overhead and labor costs; or, do they locate somewhere because they were sold on all those things? And when more than one entity is working to attract new businesses, who gets the credit? Is it the one who started the conversation, the one who sealed or the deal, or the people that got them from window shopping to standing in line at checkout?
These are the questions the Tulare County Economic Development Corporation (TC EDC) attempts to answer every day. And for the first time in two years, it seems as though most cities in Tulare County think TC EDC is the answer to at least some of those questions.
Last month, the Visalia City Council unanimously approved retaining TC EDC’s services. The vote means nearly every city and the county will contribute membership fees to the TC EDC this year. The two exceptions are Tulare, which opted out in 2017, and Dinuba, which was granted a one-year waiver. Saldana said the City of Dinuba is planning to pay its portion using proceeds from the sale of city-owned industrial property once it is sold. 2017 will go down as a defining year for TC EDC, when Tulare and Exeter both left TC EDC, and Visalia narrowly voted to keep it. The next year, Lindsay, Farmersville and Woodlake city councils all debated on whether or not they needed it.
What is the TC EDC?
The primary focus of the TC EDC is to generate leads, convert them to clients and assist them in locating opportunities in Tulare County. Lead generation consists of marketing and promoting Tulare County through real estate databases, public relations, trade shows, etc. EDC has also assisted over 120 clients/prospects over the last four years by preparing project proposals, responding to project requests for information and providing follow-up information, organizing site tours and other needs. The ultimate goal is to facilitate new businesses locating in the county.
“The work we do into gathering and taking data and then turning it into knowledge,” said Paul Saldana, executive director of the TC EDC. “It’s connecting the dots.”
Saldana said the EDC website, and more specifically its real estate database, is the primary point of contact with companies and advisors looking for new locations or locations for expansion. The City of Visalia has 149 sites (as of April 15) within the database, 53% of the total sites in the County. TC EDC also provides direct marketing for Visalia through one or more of its email or mass communication platforms, such as a database of over 800 realtors representing retailers.
As part of its agreement with Visalia, Saldana shared a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis with the council. The report listed highly available industrial property and labor, low business risk and low labor costs as strengths, while underutilized rail and airport, low vacancy rate, and the lack of skilled labor as weaknesses. Opportunities included access to the Bay Area and Southern California markets, growth in logistics, and automation advancements while threats were listed as restrictive regulations, high energy costs, and high taxes as threats.
Identifying shifts in the market and what industries will be the employers and tax generators of the future is also part of the TC EDC’s role. Saldana said the food processing industry boom has leveled off and the TC EDC is now turning its attention to an advanced bioeconomy. This sector includes genome editing, automation, smart farms, non-animal proteins, newly engineered building materials, synthetic fibers, biodegradable packing materials, organic makeup, vitamins and nutraceuticals, recycled water and renewable fuels.
TC EDC is operating on a $339,000 budget. Two-thirds of its expenses are covered by funding from the eight incorporated cities and the county government. The remaining money comes from the private sector, a project management fee, and a $56,000 subsidy from its reserve fund. As the county’s largest city, Visalia pays $92,440 per year, 40% of the public sector contribution and more than double the next closest contributor, Tulare County, at $44,212. Saldana said the amount paid by each entity is based on a formula developed in 2014 that includes population, property tax rolls and sales tax receipts. The formula was approved by the city managers in 2017 and will remain in effect through June 2020.
Councilmember Phil Cox questioned the accuracy of the formula. “Forty point six percent doesn’t fit,” Cox said. “We have 30% of the [county’s] population, 30% of property tax, 30% of retail sales tax, so we should be closer to 30%.”
Councilman Cox asked if the TC EDC had met its own expectations in Visalia set by the city as part of its agreement to renew in 2018. As of May 13, TC EDC had met its requirements for an annual review and planning, mid-year review, and exceeded the number of clients it assisted with projects. It has conducted one of its four site visits and developed 11 of its 25 demographic reports, 27 of its 30 new clients, 233 of its 250 real estate searches, and 823 of its 1,500 direct marketing contacts. City manager Randy Groom said it would be difficult to provide that answer until July, providing the TC EDC with a full year to meet the performance standard.
“I like the new structure,” said Councilmember Brian Poochigian, who represents the city on the TC EDC board.
In his letter to the council, chairman Colby Wells stated that TC EDC has worked on or assisted with four projects that have selected Visalia for their expansion or location. The letter states that TC EDC was the initial contact for Millipore Sigma, a world leader in pharmaceutical R&D and genetic editing, which announced it would open a 120,000 square foot distribution center in Visalia by the end of this year. The project is expected to bring in $600,000 to the city over the next 10 years. TC EDC was also the initial contact for Brandman University’s expansion in Visalia. Brandman held a grand opening for their new Visalia campus, 337 N. Plaza Drive, on April 23 (right).
TC EDC was the first to respond for a company’s request to locate a new distribution facility in the county. Known only as the “Spitfire” project, Wells wrote that if realized the project would result in 200 full time jobs and a net impact of more than $900,000 to the city over a 10-year period. Saldana said they also assisted with Candy.com’s new distribution/fulfillment center in the industrial park. In all, TC EDC reported generating 372 leads for all of Tulare County from July 1, 2018 to May 13, 2019.
Devon Jones, economic development manager for the city, said TC EDC played a role in all of the projects, but conceded that some of them may have located in Visalia without the countywide agency. He said many statewide projects in California lost out to other states with more friendly tax structures and regional projects are often outbid by the Fresno and Bakersfield markets. He said many of the projects that locate in Visalia come through real estate brokers.
“If a project comes through a broker, it could be someone that ends up coming to us anyway,” Jones said.
Councilmember Greg Collins asked if there was any interest in incubator programs, similar to Bitwise in Fresno. Collins recalled the California Tech Innovation Center on Center Avenue, which was going to serve as a work space for entrepreneurs who could collaborate with mentors in their industry and each other to develop new hardware and software ideas. The experiment opened in 2015 and lasted less than a year. The building has been vacant since.
Unlike the CTIC project, Collins said projects that work with EDC’s are more likely to do their due diligence before locating somewhere and will open with an understanding of the area and how to remain economically viable in it.
“These projects are opportunities for the city and county as a whole,” said Collins, who motioned to approve the full $92,000 contribution. The motion died for lack of a second. Poochigian made another motion to split the annual contribution into two payments, allowing the council to have a mid-year evaluation of the TC EDC if it looks like they aren’t meeting the performance metrics set by the city. Cox seconded the motion and it was approved 5-0.