Legislation and Housing
Prominent on Corporate Radar

At this writing, debate continues in Sacramento over the renewal of the state's business investment tax credit, worth some $400 million annually. The program provides for a 6-percent credit on acquiring and installing new equipment. It was contingent on maintaining the state's number of manufacturing jobs at 100,000 above a 1994 baseline number. But the dwindling presence of manufacturing in the state (around 1.7 million jobs today) is projected to trigger the break's expiration in 2004.
        Clark says that now it's time for housing to catch up to the jobs growth. The December 2002 Housing Affordability Index found that, after the high desert areas, Riverside/San Bernardino was the most affordable region in the state. That carries huge weight in a state where the minimum household income needed to purchase a median-priced home ($338,110) was $81,120. Both individual and corporate residents prize their quality of life so much that they recently passed a transportation uniform mitigation fee, extending a half-cent sales tax to Riverside communities for 30 years in order to support measures to relieve traffic congestion and improve safety and air quality.
        Other infrastructure money is still flowing. Among the statewide propositions passed in November 2002 was a $13-billion measure for construction of K-12 schools, another allocating some $3.44 billion toward water and wetlands expenditures and yet another directing $2.6 billion toward parks, water and air. Kosmont suggests that there are ways for corporate facility developers and their economic development partners to build some of these funds into their building projects.
        "What they need to do is look at the proposition language itself," he says. "Then once they have a sense of that, they need to figure out how to take the money they're willing to bring to a community and match it to a resource."
        Kosmont says that add-ons like bridges, roadways and parks can make available to various projects some substantial cash (up to $7 billion in the next fiscal year alone), through what he calls "an unlimited assortment of matches and partnerships. Corporate America just needs to understand how to be strategic about it. Don't rely on city hall to come up with those ideas."
        RCP Block and Brick came up with its own idea. In February, CTTCA approved industrial development bonds for the 55-year-old company to use toward building a new $6.6-million concrete block plant on 17.5 acres (7 hectares) in the Otay Mesa community of Santee. The funds, to be fully repaid by RCP, came by way of the company's application through the state's Infrastructure and Economic Development Bank, which allows companies to issue bonds to the private investment community in order to raise capital toward projects that are considered economically beneficial to the local economy.
        RCP, which employs 240 overall at its six masonry centers, has a unique perspective on the Southern California business climate from both the corporate end user and service provider perspectives.
        "Most of the ground we need is outdoor storage for finished product," says company President Michael R. Finch. "We needed to find property that was suited for that type of thing, and we couldn't go into a high-cost area. The zoning was right, the cost of land was reasonable. The [City of San Diego] economic development people want business to come in, but the reality hits when you go to get your project approved."
        The snag right now is negotiation of how much burden the company must bear for construction of a new sewer trunk line for the Otay Mesa area. Finch says the city proposal adds approximately one dollar per square foot to the project, or another 15 percent.
        The largest project under construction in the San Diego area is a 600,000-sq.-ft. (55,740-sq.-m.) project for San Diego-based wholesaler Factory 2 U, also in Otay Mesa. The distribution consolidation project comes in concert with the closing of 23 under-performing stores by the company. Those two steps are projected to save the company some $5 million during the fiscal year. In addition to other steps being taken to improve the company's financial position, Bill Fields, president and CEO, says, "We anticipate raising another $3 million to $4 million through a sale-leaseback transaction later this year.
        Other recent large leases in the Otay Mesa area have come with Hitachi Transport Systems and Art Leather Manufacturing, a maker of photo albums, which will share its space with the warehousing/distribution space of Gross National Product, a maker of picture frames which operates a manufacturing operation in Tijuana, Mexico.
        Finch, whose firm has supplied the block for the new San Diego Padres stadium as well as donated similar block for countless Little League fields across the metro, hopes his company's new center may enable the company to do some more business on the Mexican side of the border too. And he admits that even those headaches are ameliorated somewhat by the surroundings.
        "San Diego is a great place to be, just a little more of a challenge than it used to be," he says, citing the challenges for any growing area to keep up with its infrastructure needs.