< Previous38 C A L I F O R N I A I N V E S T M E NT G U I DE Economic development can be done just as well outside California’s major metros as it’s done within them. That may not seem possible at first glance, but savvy location decision-makers know not to exclude rural sites from consideration when planning new operations. In fact, they have some obvious advantages, like an absence of traffic congestion – they’re home to pros and cons, like any location. “Rural economic developers can face a variety of challenges that are unique to remote and small communities,” says Scott Adair, Director of Economic Development in Humboldt County, about 200 miles north of the Bay Area on the picturesque Redwood Coast. “Limitations on certain resources, such as staff and expendable funding can make it difficult for local economic development organizations to achieve the goals and aims of the communities they serve.” The answer? “Strategic planning, and SMART (Specific, Measurable, Attainable, Realistic, Timely) goal implementation can help rural economic developers prioritize programs and initiatives based on need, and through the leveraging of their community’s strengths,” says Adair. “There are also many NGO’s, and state and federal agencies whose purpose it is to help local communities prosper and grow. It is incumbent on EDO’s to build partnerships with these agencies and organizations.” Humboldt County, with a population of 135,000, last updated its strategic plan, Redwood Coast Target of Opportunity, several years ago. Among other components, the plan identifies several targeted industries for cluster development. These include diversified health care, building and systems construction, investment support services, management and innovation by MA RK A RE N D Where Community Where Community Meets CommerceMeets Commerce R U R A L E C O N O M I C D E V E L O P M E N T A Sun Valley flower farm in Humboldt County Photo courtesy of Sun Valley GroupC A L I F O R N I A I N V E S T M E NT G U I DE 39 services, niche manufacturing, forest products, tourism and specialty food, flowers and beverages. The Best of Both Worlds The West Coast Evergreen division of The Sun Valley Group, a floral and greenery wholesaler, was established in Eureka, the Humboldt County seat, in 2005. The location was clearly the right choice, says Bill Prescott, in Sun Valley Group’s marketing and communications office. “It’s possible to have quality of life without sacrificing your career, and a career without sacrificing quality of life,” says Prescott. “Living and working in Humboldt County is an ideal situation where community meets commerce. With a strong tradition in agriculture and niche manufacturing, Humboldt County is an excellent place to start or grow a business. Anchored by the charming port city of Eureka on Humboldt Bay and Humboldt State University to the north in Arcata, business leaders will find Humboldt County a manageable place to cultivate and nourish their business. With an educated and dedicated workforce and a pro- growth ideology, Humboldt County offers the best of both worlds.” There is no lack of attention from the state in Humboldt County, says Scott Adair. “We have been fortunate. Our State Governor’s Office of Economic Development (GO-Biz) has been an important advocate and a key ally for growing our local economy. They have a dedicated team whose focus it is to assist rural and remote jurisdictions with policy and program implementation. It is vital that voters and legislators keep these rural heritage programs in place to bolster and improve the economic standing of America’s heartland communities.” Adair says his team is engaged in dialogue with a variety of businesses whose projects offer exciting and challenging opportunities for the region. “We’ve seen growth in several of our core industries, cannabis in particular,” he notes. “We are also experiencing a growing interest for foreign trade and investment in our county, which has come from European countries in particular. Our aim in this regard is to bring key stakeholders and interested parties together to work with these businesses as they navigate through their due diligence process. As of late, we’ve seen a substantial uptick in businesses whose industries focus on sustainable and green initiatives, as well as aquaculture, cannabis and sustainable farming.” Adds Gregg Foster, Executive Director of the Redwood Region Economic Development Commission: “Located in a place of unparalleled beauty, we are home to a variety of innovative companies with a national and international reach. Our economic development team is laser focused on growing business. And because we’re small, you won’t get lost in the crowd. We offer state and local incentives and have Opportunity and Foreign Trade Zones to benefit investors. We have a modern commercial airport with service to Los Angeles, Denver, and San Francisco, a California State University campus, a community college, and publicly owned industrial parks. We may be a small community, but we’re definitely not small time.” “It’s po ssible to have quality of life without sacrificing your career, and a career without sacrificing quality of life. ” — Bill Prescott, Sun Valley Group40 C A L I F O R N I A I N V E S T M E NT G U I DE hen it comes to supporting innovation that improves quality of life and helps save the planet, California puts its money where its mouth is. Under the unique California Competes Tax Credit program, the state announced April 11 that it had approved $70 million in tax credits for 35 companies that are projected to create 4,221 jobs and make $1.74 billion worth of new investments across California. One of the recipient firms, California Ethanol & Power LLC (CE&P), was awarded a $10 million tax credit that will help the company establish a brand-new green power plant. “We appreciate that the state recognizes our commitment to infusing thousands of sustainable jobs in a community that experiences some of the highest unemployment rates and lowest economic health ratings in the United States,” said David Rubenstein, president and CEO of CE&P. “CE&P will produce much- needed ultra-low carbon energy to contribute to California’s goals of reducing greenhouse gas emissions.” The first sugarcane- to-ethanol and electricity production facility will be located in a county Specific Plan area and a California Enterprise Zone in the Imperial Valley area of Southern California near San Diego. Adjacent to the Mesquite Lake Enterprise Zone, the facility will be easily accessible by truck to the Southern California and Arizona ethanol markets. The California Competes program is designed to encourage innovative businesses to invest in California to create new jobs and stimulate economic development. Since the inception of the program in 2013, the California Governor’s Office of Business and Economic Development (GO-Biz) has allocated $899 million to 1,009 companies that are projected to create 99,360 new jobs and make $19 billion in new investments. CE&P was one of many projects that were evaluated by GO-Biz based on factors required by state law, including total jobs created, total investment, average wage, strategic importance, economic impact and more. “The California Competes Tax Credit continues to encourage companies from around the world to locate, W I NC E N T I V E S Generous incentives help fuel the innovation coming out of Golden State firms. by R O N S TA R N E R California How California CompetesC A L I F O R N I A I N V E S T M E NT G U I DE 41 expand and add good-paying jobs in our state,” said Lenny Mendonca, Chief Economic Advisor to the governor, GO-Biz director, and chair of the California Competes Tax Credit Committee. “It is exciting to see the growing trend of employers taking advantage of the workforce opportunities in the Central Valley and Inland Empire. As this administration strives toward an economy that works for all Californians, we look forward to helping businesses expand beyond the coastal areas and grow in all regions of the state.” 5-Year Extension for Tax Credits In 2018, the California Competes program was extended for an additional five years with at least $180 million in tax credits available for allocation to businesses each year through 2023. A total of $219.8 million in California Competes Tax Credits was available for allocation in the 2018-2019 fiscal year. Over the years, tax credits have been awarded to companies such as General Motors, Tesla, Northrop Grumman Systems Corporation, Red Bull North America and others. In the case of smaller firms, many of them said the assistance from the state was indispensable. “The California Competes Tax Credit we were just awarded gives us the ability to invest back into the company by hiring staff, buying equipment, and offering additional services to our customers,” said Mina Doshi, president of INTA Technologies. The state has made it a top priority to fund projects that promote a cleaner environment. Last year, then- Gov. Jerry Brown issued an executive order directing GO-Biz to help local and regional governments increase zero-emission vehicles and fund new climate investments. These include plug-in stations, greenhouse gas reduction and climate resiliency projects. The governor pledged $2.5 billion toward this program. But that’s not the only way in which California helps local companies grow. The California Film Commission’s Tax Credit Program 2.0 is reinvigorating Hollywood and bringing even more big- and small-screen projects to the Golden State. The $1.55 billion program runs for five years, with a sunset date of June 30, 2020. Each fiscal year, from July 1 to June 30, $330 million in state funding is earmarked for TV projects, relocating TV, independent features, and non-indie features. Advanced Manufacturing Gets Some Help California also provides special incentives for a variety of target industries, including advanced manufacturing, agriculture and timber, biotech and health care, energy and environment, food processors, and transportation. The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) offers a full sales and use tax exclusion to manufacturers that promote alternative energy and advanced transportation, while the IBank established the California Lending for Energy and Environmental Needs (CLEEN) Center to offer financing to public agencies and non-profit corporations to help achieve the state’s greenhouse gas reduction goals and increase market confidence in green investing. On top of these programs, GO-Biz goes out of its way to help small businesses thrive. For example, in late 2018, GO-Biz announced grants to 84 recipients of the California Small Business Technical Assistance Expansion Program. The state’s $17 million in new grant funding was allocated to technical assistance centers serving traditionally underserved business groups, including women, minority and veteran-owned businesses and businesses in low-wealth, rural and disaster-impacted communities. Proterra electric bus made in the City of Industry. Photos courtesy of Proterra “The California Competes Tax Credit continues to encourage companies from around the world to locate, expand and add good-paying jobs in our state. ” — Lenny Mendonca, Chief Economic Advisor to the Governor, GO-Biz Director, and Chair of the California Competes Tax Credit Committee42 C A L I F O R N I A I N V E S T M E NT G U I DE sk businesses large and small what their top challenge is, and there’s a good chance you’ll hear them cite the scarcity of workers prepared for the jobs of the 21st century. Technical skills, such as those involved in advanced manufacturing, logistics, environmental technologies and health care are in greater demand than ever, as the economy continues its transformation from one of production and manufacturing to tech and other services. By 2025, an estimated 30 percent of all job openings in California are expected to require “middle skills,” California steps up to meet its workforce needs. by G A R Y DAU G H T E R S A Up to the Challenge W OR K F OR C E D E V E L OP M E N T California is investing more than $248M each year in workforce training.C A L I F O R N I A I N V E S T M E NT G U I DE 43 — some form of postsecondary education short of a four-year degree. To bolster its evolving workforce needs, California is rolling out a far-reaching program to create one million more middle-skill workers through its 115 community colleges, which collectively comprise the largest workforce development system in the country. At the recommendation of the California Community College Board of Governors, the state is making a remarkable investment of an extra $248 million each year into workforce training. “’Wow’ is the word to describe it,” says Sheneui Weber, Vice Chancellor for Workforce and Economic Development in the California Community Colleges Chancellor’s Office. Weber is overseeing the program, branded the California Strong Workforce initiative. The plan is to leverage the massive infusion of funds to not only create new programs responsive to industry needs, but also to reshape current programs so that students acquire the skills that employers want. “Strong Workforce,” Weber says, “is an effort to really invest in the system, to retool, reconfigure and create programs that are really in response to industry’s workforce needs. It allows us to have better employer engagement and to develop more partnerships with key stakeholders.” Approved in 2016 and launched the following year, Strong Workforce is geared toward improving the availability and quality of Career Technical Education (CTE) programs that lead to certificates, degrees and credentials in ten high- demand industry sectors: • Advanced Manufacturing • Advanced Transportation and Renewables • Agriculture, Water and Environmental Technologies • Energy, Construction and Utilities • Global Trade and Logistics • Health • Information and Communication Technologies • Life Sciences and Biotechnology California is investing more than $248M each year in workforce training.“The regional model allows us to be a lot more responsive to our employers. ” — Sheneui Weber, Vice Chancellor for Workforce and Economic Development, California Community Colleges• Retail, Hospitality and Tourism • Small Business The program requires California’s community colleges to rely on labor market data and to consult with employers to determine new CTE programs. “We don’t want to be creating programs in a vacuum,” says Weber. “What we want to do is make sure we’re listening and talking to the employers in our regions and finding out what their needs are. With the Strong Workforce funding, our schools will be able to take an existing program and modify the curriculum or even create a whole new program by identifying where the need is.” The diversity of California’s vast economy demands different sets of skills for different parts of the state. As a result, Strong Workforce funds are allocated both locally (60%) and across eight designated regions (40%). To receive funding, a community college must join a regional collaborative, which must also include local educational agencies, civic leaders, workforce development boards and representatives from labor, economic development and business. “The regional model allows us to be a lot more responsive to our employers,” Weber says. “The regions get together and look at their local and regional economies through employment data and decide which industry sectors they really need to prioritize and focus on. That’s where the investments are made.” 46 C A L I F O R N I A I N V E S T M E NT G U I DE he meteoric rise of California-based juggernaut tech firms like Apple, Google, Facebook, LinkedIn and Twitter is well known. What you may not know is that, every day, successful startups are being launched in the Golden State while many others choose to move there. Case in point is Lumanu, a highly successful marketing startup that recently announced its relocation from Milwaukee to Burlingame, California. After starting the company in San Francisco in June 2016, founders Tony Tran and Paul Johnson elected to remain in Wisconsin following their graduation from the gener8tor program there. But after raising $1.8 million in venture capital, the lure of California once again took hold. With an infusion of cash from San Francisco-based 500 Startups and Right Side Capital Management, Tran and Johnson decided to take their business back to where it began: the Golden State. The reason? Talent. Lumanu is not alone. All around California, fledgling startups are raking in investor capital and bursting at the seams. Crunchbase even identified the top 10 California startups of 2018. They range from Insitro, which raised $100 million in venture capital, to Wone, which secured $1.4 million. In between are outfits like Harmony ($18 million), Brightback ($11 million) and AppOmni ($3 million). The common denominator for all of them is talent, and right now California is doing a better job of producing and retaining it than any other state in the union. According to a report just released by the U.S. government as part of the Social Capital Project, California has the highest gap of highly educated adults who choose to remain in the state versus leaving it, at 20.2%. That beats out second-ranked Massachusetts, which has a 16.4% gap, and New York, which places third at 15.7%. The gap gets even wider when you consider highly trained technical talent. According to CompTIA, California ranks No. 1 in the nation in net tech employment at 1,782,499 jobs. The Golden State also ranks first in net tech jobs gained By several metrics, California leads in the nation in innovation and entrepreneurship. by R O N S TA R N E R T The Innovation Hub of America I N N O V A T I O N A N D E N T R E P R E N E U R S H I PC A L I F O R N I A I N V E S T M E NT G U I DE 47 from 2017 to 2018, at 51,567, and first in total innovation score rank. CompTIA’s 2019 Cyberstates report sheds light on other aspects of California’s innovation economy. For example, the state recorded an 86% jump in emerging tech job postings from 2017 to 2018, and last year showed total tech occupation job postings of 610,627. Tech jobs increased statewide by 3.0% during that same time period, and by 2018 tech jobs accounted for 9.4% of all employment in the California workforce. The total economic impact of the tech sector in California is $481.7 million, or 18.9% of the state economy, according to CompTIA, with the fastest growth occurring in these sectors: software and web developers (up 4.7% in one year); computer systems and cybersecurity analysts (up 3.4%); and network architects, administrators and support specialists (up 1.4%). All of these numbers are a big reason why Bloomberg recently rated California as the most innovative economy in America. According to the Bloomberg U.S. State Innovation Index, California topped the chart with an overall score of 94 out of 100, beating out second-place Massachusetts, third- place Washington and fourth-place Connecticut. California also ranked in the top five of each index category (R&D, productivity, tech density, STEM professionals, science and engineering degree holders, and patents) except STEM. California ranks first in patents and second in both tech density and science- engineering degrees. The Bloomberg report went on to note that about 15 percent of the S&P 500 companies are based in California, and that many of those firms are headquartered there so that they can tap into the brainpower of students coming out of Stanford University, California Institute of Technology, University of California- Berkeley, UCLA and many other schools on the West Coast. The Kauffman Early-Stage Entrepreneurship Index also ranked California first in the country. The Golden State beat out second-place Missouri, third-place Florida, fourth-place Wyoming and fifth- place Texas. Steve Jobs Theater at Apple Park in Cupertino, California Photo courtesy of AppleNext >