Tackling Recession Gaining Ground in Santa Clarita

In the Santa Clarita Valley several concurrent efforts to reinvigorate the economy are gaining traction. Big, 7×7 foot, wall advertisements at Bob Hope Airport are now promoting Santa Clarita as the place to do business, and an upcoming TV, radio and print media campaign targeting the film, biomedical and aerospace industries hopes to further nudge companies to relocate. Buses traverse the region with the message “Think Santa Clarita Valley” as a grassroots effort via Twitter and Facebook lets people know what local businesses are offering and serves as a constant reminder to consume local products. These efforts, led by the Economic Development Committee — a group of more than 70 volunteers and a partnership between the city of Santa Clarita, the County of Los Angeles and the Santa Clarita Valley Chamber of Commerce – are getting off the ground as the economy prepares for a painfully slow recovery in 2010. “The goal of the committee is to try to come up with ideas and ways of improving our lives in this Valley,” said Economic Development Committee Chair John Shaffery, who moderated a recent town hall meeting to discuss the Valley’s current and future economic outlook. The town hall meeting was another Committee effort to steer the Santa Clarita Valley towards recovery, providing the public with updated information on a range of issues including real estate market trends, updates on current committee efforts, and a host of resources at their disposal. Among the 11 panelists at the Sept. 2 event that filled a theater to capacity at California Institute of the Arts, Marlee Lauffer and Jim Backer spoke of their progress in leading targeted industry and commercial real estate outreach efforts within the committee. “We are planting the seeds for the future,” said Lauffer, Vice President of Marketing and Communications for Newhall Land. “We are setting the framework in place to double our employee base to 120,000,” she said. Chip Meyer, CEO of technology firm The Chip and Joe Messina, founder of Wildcat Technology, said they are leading several initiatives to provide Santa Clarita Valley businesses with technical services such as affordable broadband Internet. They are also working to provide incubator services for technology startups, and encouraging employee friendly environments that are attractive to high tech employers. Their efforts also include helping businesses understand the power of marketing and advertising through social networking sites such as Facebook and Twitter. “Not using these services today is like not having an ad in the yellow pages ten years ago, or like not having a fax machine,” said Messina. “We can weather the storm together as a community but we need to get connected, get on with it, get on with the information,” he added. The Economic Development Committee is also trying to address the critical reduction in lending activities that is hurting businesses. Charlie Gill, President of Integrated Property Services Group, Inc. said a Community Lending subcommittee is working on launching a web portal in the coming days, which will be a resource for businesses who are seeking financial assistance, even connecting them with peer-to-peer equity investment opportunities. The Small Business Development Center hosted by College of the Canyons, is also offering free one-on-one counseling to help businesses get through the recession and is available to help in whatever way they can, he said. Jason Crawford, economic development manager for the City of Santa Clarita, said strategies to create wealth and stimulate the economy are proving fruitful. Services such as the Recycle Marketing Development Center, through which the city provides low cost loans to businesses that are in the manufacturing process that use recycled materials, have started to attract businesses to the area. “We just had a business relocate to Santa Clarita because we have an RMDC,” he said. “Valencia Molds moved here so that they could take advantage of those loans.” The city is also aggressively advertising their Enterprise Zone as well as several grant programs that will become available in October, as part of the city’s 21-Point Business Plan for Progress, a plan approved specifically to address the economic downturn’s effect on the area. Jerry Plummer, Acting Division Manager with the LA County Office of Small Business, and Kevin Leahy, co-chair of the Think Santa Clarita Valley Committee, were also panelists at the event. Where we are In order to move forward, it is essential to know where the Santa Clarita Valley stands according to Shaffery, so the town hall meeting also brought leading economists and real estate experts to paint an accurate economic picture. “The message is this: we live in a Valley that’s very desirable, we live in a Valley that people are going to continue to want to move to, right now there’s not much confidence as there’s been in the past but I’m seeing that come back,” said Neal Weichel, Realtor with RE/MAX of Valencia. Despite a difficult real estate market, especially as the Santa Clarita Valley finds itself in unchartered waters when it comes to the very large percentage of homes that are upside down, (those that are worth less today than what they were purchased for) Weichel remained optimistic. “We have the lowest inventory of available homes in this Valley today than at any time during the 19 years [that I’ve sold real estate],” he said. Under the rules of supply and demand, “when you have 560 homes for sale when two years ago at this time we had about 2,000, logic would tell you that we should be in an environment where prices are going up,” he said. Home prices are in fact going up in the lower price ranges which in the SC Valley are under about $450,000, he said. “The problem is we’re in a split market right now.” The supply and demand dynamic is completely different for homes over $800,000, where there are more than enough homes to choose from and prices are still going down, he added. On the commercial side, Craig R. Peters, executive vice president of industrial brokerage company CB Richard Ellis, Inc. also pointed to some positive signs. Many companies that were sitting on the sidelines, are starting to move forward today, he said. As an example, he pointed to Advanced Bionics recently leasing 150,000 square feet in Valencia. “We’ve got a local manufacturer that just competed with five other manufacturers to purchase the Daily News Building which is in escrow now,” he said, adding that a local distributor is also in the process of leasing a 230,000 square foot building in the Valley. “Major company commitments such as these create a ripple effect for smaller companies that support and supply them. Certainly these are good signs.” In the Santa Clarita Valley, where a booming economy was fueled by consumer spending and easy access to financing, things went from awesome to horrible in about 20 months, Peters said, and commercial property values dropped as much as 50 percent in some cases. “It’s just a couple of years ago that we were building over a million square feet of buildings out here in the SC Valley on an annual basis and industrial retail and office users were slugging it out competing for space,” he remembered. There were so many buyers trying to acquire properties that managed bids were instituted so companies could compete on a level playing field. “Financing was cheap and plentiful. It was absolutely awesome.” According to Peters, locally values will stabilize during the first half of 2010, and vacancy rates will fall. “Our sense is that the worst is over and that those companies that have survived so far will make it through recession.” Moving forward, James D. Hicken, President and CEO of Bank of Santa Clarita, encouraged businesses to prepare to work on reduced revenues and become more efficient. “Growth and recovery will be painfully slow,” he said. “But there is light at the end of the tunnel.” Above all, he encouraged businesses to not be afraid to ask for help. “Any action is better than no action at all.”