Economic Vitality

As the County has adjusted to budget realities, my colleagues on the Board of Supervisors and I have turned our efforts towards a rigorous examination of how we can break the cycle of sustained cuts and instead begin a dialogue about how to diversify and expand our economic base.  This economic vitality is essential in order to create fiscal sustainability for our local government and foster an economic climate for our community that will support a more prosperous future for us all.

Although there are many factors that are beyond the influence of local government, strategies can be employed to create a healthy, sustainable, and diverse local economy.

Work has already been done to identify and promote potential new investments at key “opportunity sites,” and the Planning Department is reviewing zoning and land uses in these areas.  This is an excellent start.  Reuse of these sites in a way that enhances job creation, transportation options, protection of the natural environment, and our quality of life is an important initiative that deserves our support.

The County has also hired an Economic Development Coordinator, Barbara Mason, who has been active in finding opportunities to improve the use of underutilized properties, retaining local businesses and assisting them to expand.

The County economic vitality workplan that is currently under consideration is a broad ranging program to build jobs and enhance local revenues, including sales tax and transient occupancy tax revenues.  It is designed to improve collaborative partnerships with the cities, with leaders in the county’s economic sectors, with research initiatives, and with others engaged in economic vitality.  The economic development team will also facilitate funding, information, and permit assistance in order to grow jobs and local incomes.

Per capita retail sales provide a basic measure of the relative retail strength of an area.  The per capita sales in the unincorporated areas of the county compare unfavorably with other rural counties that have a similar unincorporated area population.

While we hear that our county is too small or too closely enmeshed with the “over the hill” retail markets to sustain much new retail development, past studies have shown that the Santa Cruz market is large enough to support a full complement of shopping options.  By enhancing retail options, potential new sales could increase by $300 million, given current and anticipated conditions. Reducing sales tax leakage is a top priority to attain economic vitality.

Visitors to our area travel to Santa Cruz for vacation and leisure; only 7% of visits are for business or conferences, primarily due to the lack of appropriate facilities.  Our visitation is seasonal and nearly 90% of visitors come from Northern California.  Accordingly, improving the availability of lodging options will be important for the future.

There is also a gap in the local marketplace for specialized lodging and facilities that could be targeted to the environmental and sports recreational visitor, who we know is a good match for the Santa Cruz lifestyle.  Expanding the range of lodging options and amenities will increase overnight visits and visitor spending in the county and positively impact the growth of both sales and occupancy tax revenues.

Progress is being made on two hotel sites in the San Lorenzo Valley.  Owners of the Quality Inn in Ben Lomond have applied to replace the existing building with a new Marriott brand hotel which will turned to face the San Lorenzo River.  It is estimated that employment will increase from a staff of 7 to a staff of 37, and this facility is expected to provide much needed lodging in the San Lorenzo Valley.

The County’s Economic Development Coordinator has also been working with the court-appointed receiver, brokers and perspective buyers of the Brookdale Inn in Brookdale.  Building and planning staff have provided expedited permitting to stabilize the structures and are currently working with two qualified purchasers who hope to renovate and reopen the shuttered hotel.

Between 2002 and 2011, the County lost nearly 7,000 jobs, and while we’ve seen some rebound in 2012, the county’s unemployment rate remains unacceptably high.  In March 2013, the unemployment rate was 11.4% for our county versus 9.4% for the state as a whole, with an especially troubling 23.7% unemployment rate in the City of Watsonville.

In addition, our area ranks third in the nation as having one of the largest gaps between the average income needed to afford a two bedroom unit at fair market rent.

Local government alone cannot fix these challenges.  However, what can operate successfully in our community is a dialogue, on a regional basis, among all government partners and key stakeholders to develop a common vision and action plan for our county and the Monterey Bay region.

Fairly or not, developers in the marketplace and local landowners report avoiding doing business in Santa Cruz County due to a reputation of complexity and uncertainty in terms of land use permitting.  We must address this lack of certainty, as well as transportation and water issues.  Work currently underway in the Planning Department to modernize the County Code and streamline the permit process is a critical foundation that is required to improve the County’s reputation as a community committed to increasing local jobs for local residents.