Economic Development Pays
By Doug Ford
Two weeks ago, the Solano Economic Development Corp. provided community leaders across the county with an exceptionally interesting meeting on financing the infrastructure essential to a healthy economy.
For the past 30 years and more, California's population growth has outpaced that of the rest of the nation. However, when Proposition 13 increased the vote required to raise property taxes from a simple majority to a two-thirds majority, it made it extremely difficult for communities to provide the infrastructure needed to meet the needs of this rapidly expanding population. Solano EDC's four-member panel provided ideas about how infrastructure needs for economic development can be financed in difficult times.
Tom Lockard, a managing partner with Stone and Youngberg, the nation's largest underwriter of non-rated land-secured municipal bonds, briefly discussed the cash-flow mismatch between the upfront costs of public projects and the generation of tax revenue needed to pay for them. Land-secured bond financing was created as a way to finance development whereby new growth "pays for itself." The Mission Bay project in San Francisco, where a new University of California, San Francisco, campus has been constructed, along with associated business and housing, is one example where infrastructure was financed mainly with land-secured municipal bonds. This project might by thought of as a city-within-a-city formed almost completely around biotechnology and life science businesses. Two recent Solano projects also have benefited from land-secured bonds: Vacaville's Nut Tree and Rio Vista's Trilogy.
Bob Thompson, North Bay loan officer for the Bay Area Development Co., explained some of the advantages of financing through the federal Small Business Administration's 504 loan program. More than 100 companies have undertaken new or expansion projects in Solano County in the past few years using this financing. Nine of the projects are in Dixon: Dixon Shell, Gone Fishin' Marine, Greiner Heating and Air Conditioning, Premier Hospitality, RSM Inc., S.R. Schroeder, Sidhu ARCO AM/PM Dixon, Sidhu Chevron and Triangle Digital.
Scot Townsend, city manager of Lindsay, told how community development block grants funds were used to rejuvenate his city after it lost two major employers 20 years ago. The money brought in new businesses and made Lindsay a thriving place with a strong local economy.
Paula Connors, executive director of the California Enterprise Development Authority, told about his agency's role in financing for economic development. The agency was recently established by the California Association for Local Economic Development to advocate and coordinate expanded economic development financing opportunities. It is particularly interested in helping find financing for manufacturing and processing businesses.
We hear too often that manufacturing and processing are declining segments of our economy, but that is a serious misconception. These segments have been steadily expanding in the value that they add to our economy. What has been declining for decades is the number of people directly employed in these fields, even though productivity continues to increase. I have been told about one processing plant in Solano County that has continued to increase its output while reducing its workforce from well over 200 to well under 100 during the past 25 to 30 years.
One key point that Alan Greenspan repeatedly emphasized in "The Age of Turbulence" is that the success of the U.S. economy has been closely tied to increases in productivity. Improvements in productivity can be achieved only in an economy that has a strong infrastructure. That is why it is so important that we work to improve Solano County's infrastructure, including our transportation, communication and education systems.
The author is retired from the U.S. Air Force, lives in Dixon and serves on the Solano County Board of Education.
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