Go-Biz Explains California’s Proposed Revision of ED Incentives

Go-Biz, the California Governor’s Office of Business and Economic Development, has issued a briefing explaining the components of the state’s proposed revision of economic development incentives.

Go-Biz deputy director explains proposed California incentives

Go-Biz deputy director explains proposed California incentives

The proposal called “NEW TOOLS FOR A NEW ECONOMY” was a part of the May Budget, and redirects around $750 million from the Enterprise Zone program to statewide incentives.

It includes proposals such as a manufacturing equipment sales tax exemption, a hiring credit, and investment incentives called the California Competes Incentive Credit which gives Go-Biz more flexibility for negotiations.

Leslie McBride, deputy director for Business Investment Services for GO-Biz, pointed out that two of the three proposed incentives will be available statewide, which she said makes all of California an Enterprise Zone.

The existing sales tax credit offered by California is limited to basic manufacturing equipment for companies in an Enterprise Zone, and excludes R&D spending. The new sales tax exemption will be available to companies located anywhere in the state and includes R&D equipment purchases by manufacturing and biotech industries.

Starting Jan 2014, qualified companies will be exempted from state sales tax for their first $200 million worth of equipment purchases. California estimates that it will need to provide exemptions worth around $400 million annually under the new system.

Under the existing system, companies can only claim the sales tax exemption in their annual income tax return. Under the proposed system, they are not required to pay the tax when they purchase equipment.

The second proposed incentive is a Hiring Credit, available to businesses located in areas with the 25 percent highest share of poverty and unemployment in the state. This five year credit offers 35 percent of annual wages (five year total of 175 percent) between 1.5 to 3.5 times the minimum wage, and is available for hiring unemployed workers and veterans, and people who are eligible for the federal earned income tax credit.

The Hiring Credit is not available for replacing existing employees, and is only valid for new jobs created. Small businesses must get at least 25 percent of the allotted credits. The state expects to have to provide at least $100 million per year in hiring credits.

The third proposed incentive is the California Competes Credit, to be administered by Go-Biz and approved by an impartial committee in order to secure economic development projects involving job creation and new capital investments.

The California Competes Credit will be available for statewide projects, with 25 percent going to small businesses. The state expects to provide between $100 million to $200 million of these credits per year.

Read the full Go-Biz briefing on California’s proposed new business incentives – Download (pdf)

2013 Gold and Silver Shovel Awards for Economic Development

Area Development magazine announced the winners of its 2013 Gold and Silver Shovel Awards. Four states – Alabama, Georgia, Kansas and Texas, won Gold Shovels for economic development projects they undertook in 2012.

AD Gold and Silver Shovel Awards

Photo – Area Development Online

The $304 million Apple, Inc. project in Austin, Texas which created 3,635 jobs was named as the best project of the year.

AD magazine cited Alabama’s success in luring companies making planes, ships and cars. They mention the 2,000 jobs created by the Airbus and Austal USA projects in Mobile, along with another 900 Hyundai jobs.

Alabama Governor Robert Bentley said it was rewarding to see their work in making Alabama the best place for doing business recognized by Area Development.

AD magazine annually asks all 50 states to submit their top 10 projects in terms of job creation and investment. Only projects which began to materialize in the past year are considered.

The Shovel Award winners are those states which get the highest weighted scores based on factors including industry diversity, jobs added per capita, investment amounts and new facilities added.

Geraldine Gambale, editor of Area Development, said that the states receiving Shovel Awards this year deserved the special recognition for their efforts in attracting new businesses and helping existing corporate citizens expand.

The Silver Shovel winners are divided into four categories based on their size. Among states with a population of 10 million or more, the three winners were California, Florida and Pennsylvania.

Florida Governor Rick Scott said the award highlights the work they have done in making Florida’s business climate the best in the nation.

Florida Secretary of Commerce Gray Swoope, who serves as president and CEO of Enterprise Florida, added that the award speaks to the EFI business development team’s dedication and their relentless pursuit of competitive projects.

Kish Rajan, director of GO-Biz – the California Governor’s Office of Business and Economic Development, said that the award demonstrated California’s on-going ability to create quality jobs in a wide array of industries.

The $300 million Samsung Semiconductor expansion in San Jose, CA which created 2,000 jobs was recognized by AD magazine as the second best project last year. Other cited projects in the Golden State include Amazon, Caterpillar and Sutter health.

GO-Biz Deputy Director for Business Investment Services Leslie McBride said that these projects were prime examples of public-private partnerships between GO-Biz, its regional partners and the private sector to bring new jobs to California.

See the full list of 2013 Area Development Gold and Silver Shovel Award winners.

San Francisco Transit Delays Cause Economic Loss of $50M

The Municipal Transportation Agency of San Francisco, California released a report about the performance and needs of the city’s transit system.

San Francisco cable cars

San Francisco cable cars (photo – Jon Sullivan/wikimedia)

The report shows that peak-hour Muni delays caused economic losses of $4.2 million for the month of April 2013, which the SFMTA rounds out as $50 million in annual lost economic impact for the city.

Highlights from the report:-

- Customers experienced 151,263 hours of delay last month due to maintenance, and another 20,932 hours due to operational reasons;

- Delays added commute time of 1.5 percent for San Franciscans; and

- Caused annual economic loss of $50 million due to lower competitiveness and higher costs. This does not include the impact of off-peak delays or reduced shopping access.

SFMTA says it faces a $320 million annual structural budget deficit, including $70 million for unfunded operating needs, of which $50 million is for transit alone.

The agency has $12.35 billion worth of assets, out of which $6.69 billion are assets that directly impact transit services. They say they need another $260 million per year to keep these assets in a “state of good repair.” However, a total of $680 million required for such repairs has been deferred, as of 2010.

The report says that with a $50 million recurring annual investment, the SFMTA could:-

Replace 10 trains per year; or

Increase service by eight percent; or

Rehabilitate 170 buses per year; or

Replace 64 buses per year.

The resulting economic benefits from the improved service and reduced delays would more than make up for the infrastructure investment costs.

The report suggests initiatives that will improve performance, including all-door boarding, adding transit-only lanes, setup of a line management center, and more frequent demand-based adjustments of schedules.

They also suggest performance could be improved through communications and customer outreach, including real-time contact with customers through Twitter and NextBus, and a new website and audio system.

Muni is one of the oldest transit systems in California and carries more than 200 million customers each year, and operates everything from cable cars to light rail, diesel buses, electric buses and trolley coaches.

No Time To Whine for Wineries in Economic Downturn

It is common knowledge that in an economic downturn, alcohol and cigarettes are perceived to be virtually recession proof. And as wine making in America has significantly increased from 440 local wineries and vineyards in 1970 to a current 7,000 across the nation, one would expect that the business of wine making and selling is indeed resistant to the outcomes of a recession or drop in the United States economy. However, while the business of a vineyard may seem impervious and ever-growing, let’s take a hard look at what a recession would mean for the American wine industry.

Positive Facts

The American wine industry is the fourth largest producer of wine in the world and 34% of US citizen alcohol expenditures are defined as wine sales. Every state in the nation has at least one winery producing quality American wines but the Southern California Wine Country with regions of Napa and Temecula share over 90% of the U.S wine producing markets. With California’s widely known financial situation, housing over 90% of the vineyard market would imply that local wineries are indeed recession proof, but while these positive facts may be inspiring for local winery owners but they do not mean that the industry as a whole is unfazed by America’s most recent economic struggles.

A Change in Purchasing Habits

When we have economic struggles, we often see a change in purchasing habits. Retail stores see fewer customers during conventionally busy seasons and American residents cut back on the items they feel they don’t need to survive.
California resident and wine expert, Dr. James Lapsley of the University of California said it best in an interview where he discussed the changes in purchasing habits of wine drinkers, “What happened during 2008 to 2011 was that people who were fairly rich and who had seen their portfolios decline suddenly tightened their belts and said, ‘I’m no longer buying $60 Cabernets, I’m buying $30 Cabernets.’ And people who were buying $15 wines said, ‘I’m now buying $7 wines.  If you were a winery producing inexpensive wine – which meant you were a very large winery because this is where you really need to have economies of scale both in production and distribution – you did really well.”

Large vs Small Wineries

The wineries in Temecula, CA are considered larger wineries not unlike those mentioned by Lapsley in his interview. However, the recession and a possible downturn today would not bode well for small wineries who may have been counting on selling their bottles at $60 to stay in business. This can mean distressed sales in locally produced wine but with a simple adjustment to pricing, our small local vineyards can last through a downturn to see the light at the end of the tunnel when the economy begins to move back into the black.

Affect on Local Wineries

While the business of a vineyard may seem impervious and ever-growing, it is obvious that just like millions of other small businesses across the nation; small local vineyards may have difficulty remaining in business. However with an adjustment to pricing and production, we can expect to see the business of a local winery make it though a down economy or recession.

Guest Author Bio

Stacey Waldron is the Internet Marketing Director for Bel Vino Winery located in Temecula California. She enjoys gardening and playing with her two dogs, Banjo and Karly on hot summer days and always makes time for a good bottle of red wine shared amongst friends.

UC Berkeley Report – California Green Jobs and Workforce Impact of Proposition 39

The Donald Vial Center on Employment in the Green Economy at the University of California, Berkeley has released a report which provides a detailed analysis of the jobs and workforce impact of Proposition 39, which California voters approved in Nov 2012.

UC Berkeley report on Proposition 39 green jobs

Proposition 39 green jobs report (photo –

Proposition 39, aka the California Clean Energy Jobs Act, allows the state to impose income tax on multistate corporations based on a percentage of their sales in California.

It increases the state’s revenue by a billion dollars annually, and half of the new revenue collected over the next five years will be allocated for energy efficiency projects in California’s public schools, community colleges and universities.

The stated aim for the use of funds is that it should create good-paying clean energy and energy efficiency green jobs in the state. As such, some of the funds will be used for workforce training and helping youth and veterans gain employment doing these jobs.

Based on the assumption that $550 million will be provided by California in grants for energy efficiency retrofits, it will result in the creation of 3,410 direct person-year jobs and 7,843 total person-year jobs annually.

A person-year job is a full-time job for one year. Out of the total number of direct jobs, around 2,273 will be skilled construction jobs.

If a revolving loan fund is created to pool $50 million of the Proposition 39 funding each year for the next five years, it could be leveraged into a total of $700 million in investments, leading to the creation of 4,340 direct jobs. If a $100 million revolving loan fund is set up, it would result in an investment of $850 million and would create 5,270 direct jobs.

The idea for creating a revolving loan fund using a part of Proposition 39 funds was explored in a study released last month by the UCLA Luskin Center for Innovation and commissioned by the Los Angeles Business Council Institute (LABC).

LABC President Mary Leslie said that Proposition 39 had opened up an opportunity to fulfill two of the state’s priorities at the same time – increasing commitment to environmental sustainability while adding thousands of green jobs.

Leslie added that the revolving loan fund would support innovative projects in public-private partnerships and maximize the benefits of Proposition 39 funds for the environment and the economy, and for California workers.

Read the full UCLA and the UC Berkeley reports on Proposition 39.

NBCUniversal Kicks off $500M Plan to Bring Harry Potter to Hollywood

After a long decade of planning on its $1.6 billion “Evolution Plan” for its operations in Los Angeles, California, NBCUniversal has finally crossed the last major regulatory hurdle with the plan being approved by the county board of supervisors.

NBCUniversal Evolution Plan

NBCUniversal Evolution Plan (Infographic from

Following the vote, NBCUniversal announced that it will be kicking off the project with a $500 million investment in the first phase, which includes bringing the Wizarding World of Harry Potter to Universal Studios Hollywood.

This phase, which additionally includes construction and upgrades of television production facilities, new and modern office space and other infrastructural improvements at Universal Studios, will create 2,000 construction jobs.

The full $1.6 billion Evolution plan includes a whole lot more, and will eventually lead to the creation of more than 30,000 jobs, including for both construction and operations.

The full plan, which includes the construction of the Hogwarts Castle, a couple of 500-room hotels, new post-production facilities and sound stages, is expected to generate $2.7 billion in economic activity during construction, and $2 billion in annual economic activity for operations thereafter. The county expects to gain $15 million in additional tax revenues each year.

NBCUniversal will be spending $100 million just to improve the transit and transportation arrangements and ease traffic in a 50-square-mile area around the Universal property.

They’re building a bikeway and a riverfront trailhead park, and working with local organizations on improvement and landscaping projects for neighborhoods adjacent to the 391-acre Universal Studios site.

In a blog post following the vote, County Supervisor Zev Yaroslavsky called the massive project a stimulus package, and said he expects it to pay dividends for generations to come.

Ron Meyer, president and COO of Universal Studios, said the county’s vote approving the plan sets the stage for their next 100 years in Los Angeles.

Corinne Verdery, chief real estate development and planning officer, NBCUniversal, said the working relationship they have built up with the community was critical to the progress achieved with the plan.

Verdery added that they were now looking forward to bringing Hogwarts to Hollywood, which she claims will change the face of tourism in Los Angeles, which is one of California’s premier tourist destinations with almost 42 million annual visitors.

BIO Report – Bioscience Economic Development Best Practices

The Biotechnology Industry Organization (BIO) has released a comprehensive report that serves as a best practices guide on bioscience economic development and provides data on state-by-state legislative initiatives and regulatory reforms introduced to support economic growth in biosciences.

BIO report on bioscience economic development

BIO report on bioscience economic development (photo –

The report, titled “Bioscience Economic Development: Legislative Priorities, Best Practices, and Return On Investment,” was unveiled during the 2013 BIO International Convention underway at the McCormick Place Convention Center in Chicago, Illinois.

BIO undertook a review of initiatives in support of bioscience companies in all 50 states. Highlights from the report:-

- 15 states offer Small Business Innovation Research (SBIR) matching grants;

- 39 states offer R&D tax credits, many of which are higher if it is an in-state university doing the research. Seven states have made these R&D tax credits refundable, while three have made them transferable;

- 35 states offer sales tax exemptions for R&D equipment, while 33 states offer sales tax exemptions for biomanufacturing equipment. Seven states are even more specific, and have a sales tax exemption offered exclusively to bioscience companies;

- Seven states have a tax credit program for angel investors who invest in bioscience companies; and

- 14 states have made direct investments in bioscience companies.

Jim Greenwood, president and CEO of BIO, said that industry growth and bioscience economic development required wide-ranging collaboration between policymakers, the private industry and universities.

The report also includes a section on ROI success stories (scroll down to pg 11) which includes five case studies of stellar biosciences initiatives and investments made by California, Massachusetts, Kansas, Pennsylvania and Texas.

One of these case studies is the California Institute for Regenerative Medicine (CIRM), created in 2004 to further stem cell research and funded with $3 million in bond sales over a 10-year period. CRIM provides research funding, training and facility setup.

As of July 2012, CIRM had committed $1.1 billion in grants, which added to another $884.3 million in matching funds put up by grant recipients and other supporting organizations. This investment has created 24,654 new and full-time jobs, and generated $201 million in local and state tax revenues.

California’s biomedical industry has received $1.98 billion in venture capital funding and $3.33 billion in NIH grants over the last decade, which has provided the following returns:-

- 2,321 biomedical companies that generate a combined $69.2 billion in annual revenues;

- Together, these companies employ 152,806 employees at average annual wages of $101,658;

- Biomedical exports from California are worth $20 billion per year.

The U.S. bioscience industry supports 1.6 million jobs that pay 79 percent higher wages as compared to an average worker in the private industry.

Read the full bioscience economic development report from BIO – Download (pf)

Environmental Achievements in Walmart Global Responsibility Report

Walmart unveiled its 2013 Global Responsibility Report (GRR), which highlights the company’s 2012 accomplishments in terms of environmental, corporate and social responsibility.

Walmart Global Responsibility Report

Walmart Global Responsibility Report (photo –

The 172-page report has a lot of data to wade through, but it’s clear that the environmental achievements and the company’s stated goals for this decade are massive, regardless of whether one thinks Walmart is doing enough.

Highlights from the report’s environmental responsibility section (begins on page 52):-

Walmart installed more than 100 rooftop solar installations last year in different states including California, Arizona and Ohio, in addition to a 1MW wind turbine. In total, Walmart has more than 200 solar installations which combine to make it the largest on-site green power generator in the U.S., with over.

On a global level, the company has more than 280 renewable energy projects operational, which provide more than 1 billion kilowatt hours of renewable electricity per year – enough to power 95,000 American homes.

Currently, 21 percent of their energy needs are fulfilled through renewable sources. The company’s Vision 2020 goals call for huge increase of renewable energy usage to 7 billion kWh per year by 2020 through on-site generation and purchase.

As per a pledge made in 2012, Walmart was to have reduced greenhouse gas emissions by 20 percent by 2012. They wrapped up this pledge a year ahead of schedule, and are on track to reduce their global supply chain GHG emissions by 20 million metric tons by 2015.

They have also committed to reducing Co2 emissions by three million metric tons by 2020, which is the same as taking 625,000 cars off the road.

Walmart’s fleet efficiency has gone up by 10 percent in 2012. They drove 11 million fewer miles last year despite having to deliver 297 million additional cases. If they had not improved fleet efficiency, they would have had to drive an extra 70 million miles.

This efficiency has saved $130 million in fuel costs and reduced Co2 emissions by 103,000 metric tons (equivalent to taking 20,000 cars off the road).

In terms of waste reduction, Walmart reduced plastic bag shopping waste by 38.1 percent in 2012, and partnered with suppliers to reduce packaging by five percent and the overall GHG emissions from packaging by 9.8 percent in U.S. Walmart stores, and by 16 percent in Walmart Canada stores.

Andrea Thomas, Walmart’s senior vice president of sustainability, said their customers should not have to choose between sustainability and affordable process, and promised they would continue to fulfill commitments to operate responsibly while keeping costs low for customers.

Read the full Walmart Global Responsibility Report – Download (pdf)

The Solar Foundation Report on National Solar Jobs Census

The Washington, D.C.-based non-profit The Solar Foundation (TSF) put out its third annual solar jobs census, which shows that the U.S. solar industry now supports 119,016 jobs, which is a 13.2 percent (13,872 jobs) growth in solar jobs in 2012 as compared to 2011.

National Solar Jobs Census

National Solar Jobs Census (photo –

Solar jobs are defined by TSF as those where workers spent at least half their time on solar related job functions.

California leads the rankings of the top 10 states with the most solar jobs. The Golden State has a full one-third of all solar jobs in the country, which is four times higher than the 9,800 jobs in Arizona, which is ranked second followed by New Jersey in third place.

These three states also top the rankings for the most solar capacity. Although New York does not figure in the top three states for solar jobs or installed capacity, it does top the list of states providing the most public workforce funding for solar companies, followed by California and Texas.

Andrea Luecke, executive director of TSF, said that this latest data proved that the solar industry has become a dependable job creator, and that employers were confident about further growth in 2013.

As per the census, nearly 45 percent of solar firms will be adding new jobs, while less than four percent will be cutting jobs.

A majority of the jobs (57,177) are in the installation sub-sector. Solar manufacturing jobs actually fell by 8,000 last year, but the number is expected to grow by nine percent this year. Finance, R&D and “other” solar industry jobs accounted for 8,105 jobs. This sub-sector grew at a stunning 46.1 percent.

Gianluca Signorelli, renewable energy finance manager at Rabobank, N.A., said in a statement that the bank’s solar team has grown to manage the increase in demand for solar financing, and this spurt in demand has obviously led to employment growth across all sub-sectors in the solar industry.

Causes of growth listed in the report are reduced component pricing, favorable state legislation and federal tax incentives. The report notes that if costs continue to decrease, the increase in installation demand will require the solar industry to provide employment for 340,000 workers by 2030.

Read the full TSF National Solar Jobs Census 2012 – Download (pdf)

San Francisco, Sarasota Receive APA ED Planning Awards

The City of San Francisco, California and Sarasota County, Florida were jointly awarded the Donald E. Hunter Excellence in Economic Development Planning Award yesterday evening during the American Planning Association (APA) 2013 National Planning Conference currently underway in Chicago.


Photo – SF OEWD

The award is named after the late Donald E. Hunter, who was a member of the APA and served on the boards of the International Downtown Association (IDA) and the International Economic Development Council (IEDC).

Members of the APA Economic Development Division were part of the awards committee that chose San Francisco and Sarasota as co-winners for this year’s award.

The San Francisco Office of Economic and Workforce Development (OEWD) was chosen for its Central Market Economic Strategy to revitalize San Francisco’s Central Market District.

This is supposed to be an artsy neighborhood with galleries, retail outlets and entertainment options, but suffered from blight, low occupancy levels and difficulty in attracting private capital. Not to mention social illnesses including homelessness and proliferation of drug addicts.

The Central Market Economic Strategy was developed after nearly a year of research, community outreach and collaboration with stakeholders to develop a unified plan. As a result of this unified plan involving a dozen entities, the district has gained nine tech companies and a venture capital firm as new tenants in the past year, occupying a million square feet of space.

Eight new small businesses have set up shop and two existing ones have expanded, and nine new performance and gallery venues have opened or are in the process of doing so. There are 3,300 residential housing units now under construction in the Central Market District.

Sarasota won the award for its master plan to develop the 600-acre Nathan Benderson Park as an aquatic and nature center. The core part of the plan involved creation of a rowing venue that would provide health benefits, improve quality of life and enable Sarasota and Florida to pitch it as a venue for international competitive aquatic events.

The project to convert the borrow pit lake into a sports tourism magnet involved a diverse set of interested parties including the local economic development corporation, state and county officials, a property developer, rowing clubs, recreation experts, schools and local residents.

Sarasota estimates the project will generate $13 million in direct spending by attendees and participants who come for events, and the total economic impact on the region will be about $25 million.

Last year’s winner of the APA Excellence in Economic Development Award was Innovation Square in Gainesville, Florida. The Pyramid Lake Paiute Tribe in Nevada received a honorable mention for finally coming up with an economic development plan that was accepted and adopted. They had previously tried and failed seven times over 22 years to come up with an economic development plan for the reservation.

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