45th edition of the bradco high desert report

High Desert ReportA quarterly economic overview of the High Desert regionaffiliated with The Bradco Companies, a commercial real estate group

Fall 2009 l Volume 45

The Bradco High Desert Report760.951.5111 • Fax: 760.951.5113 • www.TheBradcoCompanies.com • email: [email protected]

Inside This Issue

The

CompaniesRADCO

I wish to welcome our current and future subscribers to the 45th edition of The Bradco

High Desert Report, the only quarterly economic overview of the High Desert region, covering the northern portion of San Bernardino County and the Inland Empire. We more specifically address economic issues affecting the cities of Adelanto, The Town of Apple Valley, Barstow, Hesperia, and Victorville.

As always, we wish to thank all of our article sponsors and our newsletter sponsors for their continued commitment to The Bradco High Desert Report, in our attempt to find positive, factual and

interesting information as it relates to the High Desert economy.

In the 44th edition, I stated that I believed that our world, our nation, our state, the Inland Empire and the High Desert region are currently challenged with a very serious financial crisis, a crisis that many have never seen. As publisher of The Bradco High Desert Report, I still believe “the glass is half full”, as evidence by our continued attempt to monitor the High Desert region and to make the information available to those that have an inherent interest within the High Desert region.

Effective with the 45th edition of The Bradco High Desert Report, we will still continue to print the newsletter for those paid subscribers that wish to receive it via U.S. Mail. Otherwise, we will now make the newsletter available to nearly 7,000 commercial, industrial, retail, office, multi-family, investment, and land brokers throughout Southern California who may have an interest in the High Desert region. We will also make it available electronically to nearly 2,000 of the 2,700 licensed real estate agents who have a residence within the High Desert, to nearly 600 commercial, industrial, retail, and land brokers who operate within the area or from out of the area that have listings or potential sales within the region.

Lastly, we are pleased to announce that we’ve actually came to a long-

term agreement with Mr. Seth Neistadt, President and Founder of Axiom Media. Seth, through his company and his many endeavors has not only benefited many High Desert businesses but many non-profits. Since his company’s inception, he has built nearly 2,000 websites and monitors thousands of emails within the High Desert region. Seth, as is your Publisher, very concerned about the economy and those issues that could have a positive, as well as a negative bearing on our region. Seth and his company have agreed to make this newsletter available to nearly 50,000 individuals within the High Desert region free of charge.

I wish to welcome Seth and his staff and appreciate their attempt in making the High Desert region a better place to work, live, and do business.

We always appreciate hearing from our close friend and one of my idols, Dr. Alfred J. Gobar, Chairman of Alfred Gobar Associates. We appreciate the inclusion by the California Department of Transportation, Congressman Jerry Lewis, SANBAG (San Bernardino Association of Governments), First District Supervisor Brad Mitzelfelt, Victor Valley Community College, State of California Assemblyman Steve Knight, our friends at the Building Industry Association-Baldy View Chapter, the Victor Valley Transportation Authority, Sterling Captial (a master developer of Southern California Logistics Airport),

Looking for Opportunities ............. 2California Leads Nation in Recovery Act Fuding .............. 5Stimulus at Work ........................... 6Transportation Projects Planned ... 6Mitzelfelt Appointed to BLM ........ 8VVC Students Compete in Job Market ..................................... 9Business Incentives, Less Regulation Keys to Recovery ................... 10Preparing to Grow Again ............. 11VVTA Supporting High Desert Transportation Needs ............ 13Stirling Capital Continues Successful Redevelopment .... 16City Update Adelanto ............................... 18 Town of Apple Valley .......... 19 Barstow .................................. 20 Hesperia ................................ 21 Victorville ............................. 23

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High Desert ReportA quarterly economic overview


Looking for OpportunitiesBy Dr. Alfred J. Gobar

Chairman, Alfred Gobar AssociatesOver the long run, the most profitable passive real estate investments on the High Desert have historically been associated with raw land where the value leverage is substantially higher than it is in relationship to completed structures, etc. In light of the anticipated slow recovery of conditions to support rapid appreciation in land values in the High Desert, other investment opportunities may represent a better near-term alternative. Two of the trends which show some promise of creating an opportunity relate to the retail sector. In-store taxable retail sales have been declining, not only in constant dollars, but also in terms of current dollars as a result of recession, increased savings rates, the fall in home prices (and, therefore, reduced ability to liquidate equities), etc. Merchants that experience declining sales volumes have reduced abilities to pay rent, affecting the economic value of the underlying retail real estate. Another trend about which there is some debate is the strong likelihood that wild orgies of government borrowing at the Federal level will result in increased interest rates and a decline in the relative value of the dollar. These financial trends are consistent with an increase

in capitalization rates applicable to real estate investments. The “cap” rate essentially determines the relationship between net operating income and the implicit value of the underlying asset. An increase in the cap rate, all else being equal, reduces the economic value of the underlying real estate and, therefore, its market value. The effect of these two trends is likely to be distress in some of the shopping facilities in the High Desert in terms of reduced rental income accompanied by a more-than-proportionate decrease in their market value associated with the increase in the cap rate or implicit interest rate. This should provide an opportunity for investors who have confidence in the long-term viability of the High Desert’s economy and also who have availability of cash resources to make exceptional buys in terms of short-term undervalued retail real estate assets at less than reproduction cost. The concatenation of these two trends is not likely to be immediate. A reasonable expectation is that the significant opportunities will begin to be apparent in the context of what is expected to be high interest rates (and high cap rates) in

approximately 12 to 18 months. At that time, purchase of existing retail facilities with rental income below their long-term potential at relatively attractive prices because of high interest rates may merit serious consideration. Unfortunately, a high cap rate also implies a high interest rate on funds borrowed to acquire real estate of this type, reinforcing the axiom that in times of distress “cash is king.” Even though the opportunities are likely to be sometime in the future (if indeed they occur at all), astute investors with relatively little to do in the current environment could well devote some time and effort to defining the parameters of the real estate investments that are likely to offer the greatest opportunity as the scenario begins to unfold. Some of the general rules that apply to this type of analysis include the following:

In-store taxable retail sales are essentially a zero sum game. Retail sales captured by one store are sales that would otherwise flow to another less conveniently-located or less competitively-efficient retail outlet. Acquisition of retail facilities in areas with a relatively thin retail base is a significantly higher risk investment than

THE BRADCO HIGH DESERT REPORT

Publisher: Mr. Joseph W. Brady, CCIM, SIOREditors: Ms. April Tyler, Mr. Lowell Draper, and Mr. Seth NeistaPrinted & Designed by One Stop Printers & Direct Mail Service

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Looking for OpportunitiesContinued

similar purchases in areas with a deep retail base in terms of competitive square footage, since an ill-conceived new shopping center could take a very large proportion of the existing sales from a small retail market but would have a relatively small impact on existing retail space in a larger market. The entire retail sector is undergoing a period of technological revolution with big box merchandisers altering their historical competitive relationships with more conventional types of merchants. A big box retailer that generates $1,200 a year in taxable sales per square foot captures the retail expenditure that would otherwise support five or six times as much square footage in conventional retail formats. Neighborhood shopping centers anchored by supermarkets are increasingly subject to the risk that supermarket anchor tenants will go dark because of competition from hyper retailers and big box merchants that offer a broad range of food items. Potential loss of a supermarket anchor store from a neighborhood shopping center basically converts a neighborhood shopping center into a large convenience center. Unanchored convenience centers—those without a major supermarket anchor or possibly a major drug store anchor—larger than 30,000 square feet have historically proven to be inefficient because of their inability to draw customers from a long distance. A more-or-less idealized statistical profile of an area that would represent an above-average location for prospecting for potential acquisitions of this type is typified by a trade area with above-average retail sales per establishment as well as below-average retail sales per capita population. These two statistics suggest a large consumer base that

is undeserved by existing stores and, therefore, an opportunity to absorb new construction without severely damaging the sales patterns of existing merchants—assuming that the overall retail base in the study area is large enough to accommodate a reasonable amount of new competition. In terms of in-store taxable retail sales per capita population in various political jurisdictions, the following comparative statistics provide a sense of perspective in terms of 2007 in-store taxable retail sales as reported by the California State Board of Equalization:

As shown, large political jurisdictions, such as the State of California, all of Southern California, and various Southern California counties, are typified by in-store taxable retail sales roughly on the order of $10,000 per capita population of the political jurisdiction per year. For comparative purposes, similar statistics for the Town of Apple Valley as well as Barstow, Hesperia, and Victorville are also included.

A similar comparison of taxable retail sales per establishment in sample political jurisdictions as reported by the

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California State Board of Equalization is illustrated below:

The variation in sales per establishment by political jurisdiction or geographic distinction is in part a function of the types of stores represented in the retail inventory in the competitive area.

Areas with a large proportion of big box merchants would be expected to have above-average sales volumes per establishment. As illustrated above, however, the highest dollar volumes per establishment measured on an overall basis of this type are in Barstow and Victorville—two cities. High sales volume per establishment in Barstow is due to the effectiveness of the factory outlet merchants in the area and is not germane to the investigation being

considered. High taxable retail sales per establishment in Victorville represents

its regional shopping center facilities as well as the big box stores, etc., found within the City’s boundaries. These two criteria are compared below:

Apple Valley and Hesperia both have relatively low sales volumes per capita population, suggesting that residents of these two communities continue to make a significant proportion of their in-store taxable retail purchases outside of the community itself—in this case, in Victorville. Outleakage of potential retail sales from Apple Valley and Hesperia combined in 2007 amounted to approximately $725.0 million, while inflow to Victorville’s retail sector in

2007 was at a level of about $650.0 million; i.e., making a closed system of Victorville, Barstow, Apple Valley, etc., the balance between population and retail sales would be fairly close. Discussion in this context is not meant to be a definitive analysis but merely to illustrate that even in times of economic crisis, planning for new investment predicated on the impact of the crisis and eventual recovery from it constitutes a reasonable investment activity. Investors interested in pursuing the possibilities described in this oversimplified discussion should familiarize themselves with the retail sectors in all three communities—Apple Valley, Hesperia, and Victorville—and monitor such elements as increasing or decreasing vacancy rates, changes in rental levels, possible new construction (although it is hard to think of anyone building any new retail right at the moment), demolitions or abandonments, as well as retail development outside the boundaries of the study area but close enough to constitute potential competition for retail merchants located within the study area. Another important factor to monitor—but not for some time into the future—is the potential for new housing construction in the trade area that is appropriate to retail developments in each of the areas being evaluated. Although there is little doubt that one of the two trends identified at the opening of this discussion will occur—declining constant dollar taxable retail sales trend observed between 2006 and 2007—in light of the deteriorating economy, increasing unemployment rates, lack of back-up financing from home equities, foreclosures, etc., realization of high interest rates is still a matter of debate. Very competent economists suggest that

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with the output gap that currently exists (the underutilization of existing productive capacity), the monetary expansion implicit in the Federal government’s fiscal policies as well as the Federal Reserve System’s monetary policies will result in increased employment, but not necessarily in inflation and an accompanying rise in interest rates and capitalization rates. The bulk of the evidence, however, is on the side of the argument that anticipates higher interest rates and rising capitalization rates. In order to increase the intellectual challenge of the hypothesis, one should probably consider the possibility that rising interest rates (a requirement of the scenario described above) may stimulate a secondary recession, causing the investor to acquire a shopping center just in time for another recession to further damage it. Let’s hope that Bernanke is agile enough to avoid a double-dip recession of this type and that this hypothesis supports definition of a future superior investment opportunity.

Readers interested in additional criteria for evaluating real estate market behavior similar to the projections and hypotheses described above may find portions of Dr. Gobar’s Book, Real Estate Analysis in an Economics Matrix, interesting and even helpful. For information regarding the book, please contact Alfred Gobar Associates (714) 772-8900 ext. 301.


Governor Arnold Schwarzenegger today announced that over $2 billion in Recovery Act funding has now been federally obligated to 620 highway transportation infrastructure projects statewide. Focused on pumping Recovery funding into the California economy quickly, effectively, and responsibly, California has obligated more Recovery Act funding federally designated for highway transportation infrastructure than any other state in the nation.

“We are working around the clock with the federal government to ensure President Obama’s Recovery funding is pumped into California quickly, effectively, and responsibly,” said Governor Schwarzenegger. “California is the first state in the nation to obligate $2 billion of this funding, which will improve our state’s transportation infrastructure for generations to come while stimulating our economy, creating jobs, and helping drive California down the road to economic recovery.”

Under the Recovery Act, states were given 120 days to obligate half of their federal stimulus transportation funding to projects – which California completed

more than two months ahead of federal deadline. California was also the first state in the nation to obligate $1 billion in stimulus funding to improve its highways, local streets, public transit, and airports.

“From day one, our focus has been and continues to be ensuring that California gets the maximum benefit from federal stimulus funding,” said Caltrans Director Randy Iwasaki. “With the help of billions in stimulus dollars, we’re putting people to work and building better roads, bridges, and transit for Californians.”

To view a list of the 620 highway transportation projects that have been federally obligated under the Recovery Act funding to date please visit the California Department of Transportation Web site at:www.dot.ca.gov/Recovery/documents/committedrecoveryactprojectssept2009.pdf.

** For questions regarding listed projects, please contact the Caltrans Press Office at 916-654-5782**

California Leads Nation With Over $2 Billion in Federal Obligations for Highway Transportation Recovery Act Funding

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conservation projects like that at the Marine Corps Air Ground Combat Center in Twentynine Palms move forward. For these projects and others in the region to succeed, we must demand rigorous transparency and accountability standards. Businesses and individuals can track the Stimulus spending in our region at www.recovery.ca.gov.

I remain hopeful that portions of this spending will stimulate our district’s economy and I will work hard to make sure the High Desert shares in whatever relief is available. But I am convinced the capable hands of our region’s small businesses and families will produce the long-term results that create jobs and promote business innovation. I look forward to discussions about how I can help the High Desert find these solutions.

Stimulus at Work in the High DesertBy Congressman Jerry Lewis

I want to thank the High Desert Report for this opportunity to highlight the Victor Valley’s economic expansion efforts in an area hard hit by the current economic crisis. Federal funding or guarantees are a piece of the recovery puzzle. But the region will truly prosper when small businesses and local families are able to leverage local resources for future growth.

Our district’s families, businesses, and communities are still struggling because of rising unemployment levels, health care costs, and taxes, combined with declining home values and retirement savings accounts. Many look to Washington, D.C. for solutions to problems confronting California businesses and families. The American Recovery and Reinvestment Act of 2009 – known as the Stimulus bill - creates 31 new programs, that have never been

considered in congressional committees, and permanently expands 71 existing federal programs. Of the total spending, 61% of the Stimulus increases the size of government while only 39% is for economic stimulation.

Businesses and families in the high desert will see the Stimulus at work throughout the region. Where the California State budget crisis threatened educational initiatives, including advanced placement and special education programs at schools like Hesperia Unified School District, the Stimulus will fill these gaps. The State budget crisis also threatened regional infrastructure projects. Stimulus dollars will fund projects like the Victor Valley Transit Authority administration and maintenance facility construction. The Stimulus also focused on improved energy efficiency infrastructure projects. Stimulus dollars will ensure that energy

San Bernardino Associated Governments, known as SANBAG, is the council of governments and transportation planning agency for San Bernardino County. SANBAG is responsible for cooperative regional planning and furthering an efficient multi-modal transportation system countywide. SANBAG serves the 2.1 million residents of San Bernardino County.

As the County Transportation Commission, SANBAG supports freeway construction projects, regional and local road improvements, train and bus transportation, railroad crossings, call boxes, ridesharing, congestion management efforts, and long-term

planning studies. SANBAG administers Measure I, the half-cent transportation sales tax originally approved by county voters in 1989 and reapproved to extend from 2010-2040.

SANBAG looks at the transportation needs of the entire county and then breaks off into specialized committees, such as the Mountain Desert Region Committee. This is comprised of board members from the high desert region who have added interest and knowledge about projects in their area.

There are many transportation planning efforts in progress that will benefit the residents of the High Desert. Following

is a summary of some of the long-term projects being planned now and for the future.

I-15/I215 Interchange in DevoreThe junction of Interstates 15 and 215, known as the Devore Interchange, is considered a major bottleneck as freight, commuter, recreational, and other vehicles travel through the Cajon Pass. This project will reconfigure the interchange to provide four lanes in each direction on the I-15 corridor, and possibly add truck bypass lanes to help improve traffic flow. It is anticipated that construction will start in late 2013. Public outreach meetings have been held in Devore. Preliminary project cost estimates are in the $350 million range.

Transportation Projects Still Planned for the High DesertBy Jane Dreher

SANBAG Public Information Officer

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Yucca Loma BridgeThe proposed Yucca Loma Bridge will connect Yucca Loma Road on the Apple Valley side of the Mojave River with Yates Road on the Victorville side. The new roadway and bridge would carry vehicles, bicyclists, and pedestrians. The draft environmental document is expected to be released in October 2009. The cost of the bridge is estimated at $50million.

Ranchero Road InterchangeThe proposed Ranchero Road Interchange at Interstate 15 is located in the City of Hesperia, approximately 1.78 miles north of the existing Oak Hills Road Overcrossing and approximately 1.42 miles from the existing US-395 Connection Overcrossing. The Ranchero Road Interchange will include the construction of ramps to serve four entrance and exit moves, construction of a new overcrossing structure at the I-15 freeway to provide east/west connections, and realign the frontage roads—Caliente Road and Mariposa Road—on either side of the freeway. The cost is anticipated at $98 million.

US-395 widening This project will widen US-395 to four lanes, construct a left-turn section and standard shoulders. This project will widen or replace the structure over the California Aqueduct. The 12.5 miles of the project will probably be built in phases over a number of years. The total cost of the project is anticipated at $100 million.

Victor Valley Transit AuthorityThe Victor Valley Transit Authority (VVTA) provides local bus service for the communities of Adelanto, Apple Valley, Hesperia, Victorville, and several unincorporated areas in San Bernardino

County. In September 2008, VVTA added to its fleet seven new buses which are equipped with the latest technology, are more comfortable, and that run on clean-burning CNG (Compressed Natural Gas) fuel instead of diesel fuel. Bus ridership has been rising steadily and increased by 11% over the past year. VVTA currently operates its fleet from a facility located in Hesperia and is preparing to construct a new Victor Valley Transit Facility to house administrative, maintenance and operations functions, along with the larger fleet. SANBAG is working with VVTA to obtain funding for this project. VVTA is one of five transit agencies that SANBAG supports countywide. Lenwood Road Grade SeparationThe Lenwood Road grade separation at the BNSF Cajon Line (with shared use by the Union Pacific) is the northernmost of the Alameda Corridor East grade separation projects in San Bernardino County. Lenwood Road provides a northwesterly connection between Interstate 15 (I-15) and State Route 58 (SR-58), both of which are among California’s key goods movement corridors. Because of Barstow’s strategic location at the intersection of these two facilities, the area adjacent to Lenwood Road is increasingly being developed as a warehousing and distribution center in close proximity to Barstow’s extensive rail yards. Lenwood Road is also the primary point of access to the Barstow Industrial Park, which is projected to create as many as 10,000 jobs when completely built out. Currently, truck traffic travels eight miles out of the way to avoid the Lenwood Road at-grade crossing because of the unreliability of access. The cost of this project is estimated at $25 million; it is in the Project Approval and Environmental Design stage.

High Desert Corridor – Phase One This project is a new 21 mile highway, realigning State Route 18 (SR -18) from the east side of Apple Valley to the existing US Highway-395 south of Air Expressway. The City of Victorville is the lead agency. It is currently in the Project Approval and Environmental Document phase, which is expected to be completed in mid-2012. The total cost to build the highway is $550 million. The construction date has not been set.

High Desert Corridor The County of San Bernardino, County of Los Angeles, and the Cities of Adelanto, Victorville, Apple Valley, Lancaster, and Palmdale have formed a Joint Power Authority (JPA) to develop a new freeway/expressway/toll road from SR-14 in the City of Palmdale to I-15 in the City of Victorville. The Project Study Report has been completed on this project, also referred to as the E220 project, and various options are being explored, including Public-Private Partnerships.

LaMesa/Nisqualli Road Interchange This new interchange will provide an alternative to Bear Valley Road, which is currently the primary exit to the Victor Valley Regional Mall and a major street that serves the cities of Hesperia, Victorville and the Town of Apple Valley. The LaMesa/Nisqualli Interchange is an important part of a regional corridor that will extend from Interstate 15 to the Town of Apple Valley. Nisqualli Road will connect to Green Tree Boulevard, which will intersect with Yates Road at the north end of Spring Valley Lake and travel across the Mojave River via the Yucca Loma Bridge. Construction is scheduled to start in late 2010.

Transportation Projects Still Planned for the High DesertContinued

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Transportation Projects Still Planned for the

High DesertContinued

Kramer Junction in Mojave DesertThis project will bring State Route 58 (SR-58) up to a 2-lane expressway near Kramer Junction, between Barstow and Bakersfield in the Mojave Desert. The expansion of SR-58 is needed for three reasons: First, increased capacity is needed. The existing infrastructure cannot meet the current demands placed on it, let alone the increased demands of the future. Second, safety concerns were raised on this stretch of highway. Accident rates, including fatality rates, are significantly higher than the average state accident and fatality rates. Finally, increased route continuity would be achieved by this project. By expanding SR-58, it would be closer to becoming a continuous expressway between the Kern/San Bernardino county lines and Interstate 15. Caltrans is leading this project which will cost $119 million.

I-15 Truck Lane Project near StatelineUnderway are the improvements along the 10-mile stretch of freeway which will include a new northbound truck descending lane, addition of stronger pavement to the existing southbound truck lane, widened shoulders on all sides, improved ramps, smoother driving surface, upgraded guardrail, and improved drainage. These improvements are intended to improve operations and safety by separating the slower moving trucks from passenger vehicles. The expected completion date is 2010.

Numerous other High Desert transportation projects are in the planning and/or environmental study phase. For the latest information on current projects, go to: www.sanbag.ca.gov.

WASHINGTON, D.C. - Secretary of the Interior Ken Salazar today appointed San Bernardino County Supervisor Brad Mitzelfelt to the Bureau of Land Management’s California Desert District Advisory Council. Supervisor Mitzelfelt will participate on the Council representing local governments during a three-year term of appointment. “I would like to thank the Interior Secretary for the opportunity to serve on this vital panel,” said Supervisor Mitzelfelt. “I look forward to working with the Council to address the critical issues involving local government and the federal land management agencies including renewable energy development, road systems, solid waste disposal, law enforcement and emergency services.” The Council was established by Congress through the Federal Land Policy and Management Act of 1976. Mitzelfelt received the written nominations from U.S. Representatives Jerry Lewis and Howard P. “Buck” McKeon, who noted that Mr. Mitzelfelt’s First Supervisorial District has one of the largest areas of Federal public lands within any jurisdiction in the United States.

“Supervisor Mitzelfelt’s long record of service brings a wealth of experience involving public lands to the Council,” wrote Representative McKeon. “The Supervisor’s understanding of the views from local governments throughout the California Desert Conservation Area will be reflected in the experienced input he will offer to the BLM.” Fifteen representatives from various agencies and groups comprise the Bureau’s Desert District Advisory Council. Council members advise BLM field office managers in Ridgecrest, Needles, Barstow, Palm Springs, El Centro, and the desert district office in Moreno Valley on management of the California Desert District. The California Desert District covers portions of eight counties and includes over 10 million acres of public land including the California Desert Conservation Area. Supervisor Mitzelfelt’s other formal leadership activities in the area of public lands include his vice chairmanship of the Quad State Local Governments Authority and his membership on the Public Lands Steering Committee of the National Association of Counties and the multi-agency Desert Managers Group.

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Mitzelfelt Appointed to BLM CaliforniaDesert District Advisory Council

By David Zook



Victor Valley College Students Compete in21st Century Job Market

By Bill Greulich

First and foremost, the bond measure (JJ) approved by voters in November 2008, will provide jobs for residents of the High Desert. The Board of Trustees set a goal to employ as much as 85% of the workforce from the local area. Victor Valley Community College has moved deliberately forward with the projects so that funds will be used to infuse the local community with dollars associated with construction. “We need to be proactive with these projects in order to create employment opportunities for local residents,” said Robert Silverman, Superintendent/President of the Victor Valley Community College District.

The projects listed on the bond measure will also expand the outreach of the college and provide a wide range of training that will be designed to meet the needs of current and emerging business and industry.

Construction on the $25 million Eastside Public Safety Training Center is scheduled for Department of State Architect’s approval in December 2010 with a proposed completion of construction by December 2011. This facility will be used as a regional training center to prepare students for

careers in firefighting, paramedic, and administration of justice.

The planning and design stage for the Westside Workforce Development Center will quickly follow the Eastside Public Safety Training Center. Land has been purchased for the Westside Center located in Hesperia near the intersection of Main Street and Highway 395

Measure JJ also gave the college the opportunity to retire past funding obligations associated with prior capital projects that gives the college the opportunity to consider other capital projects such as a One Stop Student Services Center. Ultimately, Measure JJ will return millions of dollars back into the local community and will produce major ripples through the economy with its multiplier effect.

This past year, Victor Valley Community College earned “large campus” status by exceeding the 10,000 full-time equivalent students (approximately 19,000 headcount). Enrollments are continuing to increase as more students are coming to the college in search of career pathways, training, retraining, and transfer to four-year institutions.

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and the cities of Adelanto, the Town of Apple Valley, Barstow, Hesperia, and Victorville further economic updates.

We sincerely hope you enjoy reading this publication, which began in May of 1993, and any and all of your comments are greatly appreciated.

Lastly and most importantly, for those that with to continually receive The Bradco High Desert Report electronically, any and all weekly or monthly updates, updates relative to the absorption of industrial, commercial, retail or office space within the High Desert region or any other major announcement that we believe is important, you need to sign up at www.thebradcocompanies.com/register. We look forward to receiving your positive emails at: [email protected]. Again, thank you for taking the time to read this publication.

Joseph W. Brady, CCIM, SIORPublisher

The Bradco High Desert ReportPresident

The Bradco Companies

Publishers MessageContinued



Business Incentives, Less Regulation Keys to RecoveryBy Assemblyman Steve Knight

With its land, location, resources and workforce, Southern California’s High Desert economy is ready to rebound as fast as my pro-business legislative colleagues and I can cut the restraints that hold back private sector job creation and economic prosperity.

I am working on two legislative fronts to help all of California recover from the deep and devastating recession.

Earlier this year I introduced two business bills to bring new manufacturing and executive jobs to California. And to revive our business climate and retain existing businesses and jobs, I committed to full participation in the Assembly Working Group on Job Creation and Economic Recovery. This legislative task force is attacking the root causes of recession in California, including the excessive regulation and tax policies which have made our state non-competitive in many industries.

My Assembly Bill 340 would offer companies that move their headquarters to California, or open a new enterprise here, a tax credit of $3,000 annually per new full-time position, or a $5,000 credit if the wage is at least 200% of the average wage of the county in which the company and employees are located. Companies employing 30 or more people would qualify for the tax credit. AB 340, currently held in the Assembly Revenue and Taxation Committee, will be heard again in January 2010.

With the renewable energy resources of the High Desert firmly in mind, I introduced Assembly Bill 546, which focuses on bringing the solar industry to our district.

This measure would allow state sales and use tax exemptions for machinery and equipment used to manufacture solar photovoltaic panels. AB 546, prior to its final committee hearing, was to be amended to include newer forms of solar technology, such as thermal solar. California is a state with many contradictions, a state which touts green energy as the present and future, but whose regulations are so strict and prices so high, it is more cost effective to ship in energy from out of state.

AB 546 would have given businesses the needed incentives and opportunity to continue working towards “greener” industries, as well as placing California on the map for its ability to produce green energy from within its own borders. This bill was especially important to me due to the possibilities it held for the High Desert, a natural fit for the solar industry. Unfortunately, AB 546 died in the Assembly Revenue and Taxation Committee in May.

There remains a mindset among many still in the Legislature that California’s weather, cultural and recreational attractions and lifestyle make the state so attractive that businesses will come here or stay here no matter what happens in the way of taxation and regulation.

But my experience with the Assembly Working Group on Job Creation and Economic Recovery demonstrates a far different story. In March of this year, the working group took a fact-finding trip to Reno, Nevada to ask the heads of former California businesses why they left our state.

What we learned is that while most of the business owners and executive wanted to

stay in California, they were forced out by the bottom line reality of an unfriendly business climate and taxes exceeding those in Nevada, Arizona, Texas and other states. Since our fact finding trip, the Working Group continues to meet with labor and business representatives and discuss current legislation that is pertinent to our mission of encouraging job and business growth.

As a legislator, it concerns me when I hear of businesses closing their doors, industries finding new homes, and people finding themselves without employment. That is why I know it is imperative for the cities, counties, and the state to work together to bring business back to California, and to work vigorously to retain the employers and jobs we still have.

Studies show that the flight of California businesses to friendlier climates began prior to the recession, and only deepened with the economic downturn. Even the fabled entertainment industry is seeing a trend previously associated with other industries in our state.

20th Century Props, the second largest motion picture and television prop house in Southern California, recently went out of business. Owner Harvey Schwartz cited California’s inability to compete with other states’ tax incentives, which lured television and movie production away as the reason behind his company’s closure. To date, California has lost as much as 70% of its film production.

On the flip side, “All My Children”, a daytime television soap opera, recently announced that after 39 years of production in the Big Apple they would be making the big move to Los Angeles at the end of the year.

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continued on page 11



Baldy View Government Affairs Vice President Todd Leibl of Victory Homes, Inc.

As the regional economy ticks toward recovery, Southern California homebuilders and homebuyers are again looking towards the Victor Valley to anchor a new housing market thanks to twin attractions of the I-15 corridor and generous amounts of buildable land in the Victor Valley.

As economic prosperity looms in the future, “the Victor Valley will continue to be the most affordable region,” said award - winning homebuilder Ira Norris, CEO of Horizon Communities. Norris, a former BIA President, said that cities in the Inland, San Bernardino, and Pomona valleys continue to approach build out, while in the High Desert “land is in long supply.”

However, Norris cautioned that tight credit needs to loosen up and profitability has to return to the market “before a builder can go out and buy land and find a construction lender in order to sell it at a profit.”

What is often overlooked in forecasting the market‘s recovery, added BIA Baldy View Past President Todd Tatum of American Housing Group, is the fact that nearly 80 percent of the demand for housing in California historically has been driven by natural increase (birth rates) rather than by migration.

According to the Q2 Housing Market Overview by MarketPointe Realty Advisors, population is now growing again in San Bernardino County, reversing a trend that began in 2007 when the housing downturn propelled an outward migration of jobs, and will

11

Just as Route 66, the ‘Mother Road’ that once coursed through San Bernardino County promised a new life for thousands of Dust Bowl refugees, today another road following much the same route is poised to guide San Bernardino County - and especially the Victor Valley - back to economic vitality.

From the boom years of the mid - 2000s to the housing challenges of the past two years, six Interstate 15 (I-15) corridor cities and adjacent unincorporated areas of the Inland and Victor valleys (Ontario, Rancho Cucamonga, Fontana, Hesperia, Victorville, and Apple Valley) have consistently accounted for between over half to two - thirds of all the single and multi - family permits issued in the Baldy View region, which encompasses all of San Bernardino and eastern Los Angeles counties.

While figures emerging in the first two quarters of 2009 offer cautious optimism, the trend remains solid as I - 15 corridor cities accounted for over two - thirds of the Baldy View region’s 1,079 single - and multi - family permits issued in the first six months of 2009, according to data provided by the Construction Industry Research Board (CIRB).

While San Bernardino County builders today confront historic challenges of bottomed - out land values, construction loan issues, inventory gluts, ‘shadow impacts’ of foreclosures and foreclosure moratoria, and new environmental regulations, home builders looking towards the future can start preparing now for a new homebuilding market that will again be dominated by the Victor Valley.

“Victor Valley homebuilding will come back - absolutely, 100 percent,” said BIA

Californians and the Legislature must remember that many states had to work at providing incentives to lure our companies away—and it won’t be an easy road to recover all we have lost. The television and movie industry’s story is comparable to most industries within the state, teaching us that we can’t tax our way to prosperity.

As a Southern California desert native and nearly lifelong resident, I lived through earlier economic downturns and worked alongside my friends and neighbors as we brought ourselves back to prosperity. I have every confidence that we will emerge again. But we will restore our economic vitality faster and with less pain when we all come together to support the common sense solutions at hand. Assemblyman Knight, (R-Palmdale), represents the 36th Assembly District in the California Legislature, which includes the communities throughout the Antelope and Victor Valleys.

Preparing to Grow AgainBy Frank Williams, CEO, BIA Baldy View Chapter

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Business Incentives, Less Regulation Keys to Recovery

Continued




continue to fuel significant housing demand.

While most homebuilders polled by the BIA don’t see rapid recovery to the worst economic downturn in decades, “as it stands right now, we’re starting to see some turnaround,” said Russ Valone, CEO of MarketPointe Realty, one of the industry‘s most respected tracking and consulting firms.

“If we look at the big picture, we started to see a turnaround in the second quarter. In the first quarter we had almost a 50 percent increase in activity.”

“When we go back and look at the regions by submarket, San Bernardino County is really trailing the rest of Southern California, yet performed better in the first quarter than anyplace but Riverside.”

In the Victor Valley, “we’re starting to see a bit of an uptick: new home sales in San Bernardino County shows a positive trend after bottoming out,” abetted by “good, strong economic growth,” he added.

Noted regional real estate journalist Joe Ascenzi recently reported that the region is still experiencing commercial and industrial sales and leasing activity with 11 industrial transactions in excess of 100,000 square feet recorded in the Inland region during the second quarter with the majority of them along the I - 15 corridor.

Indicators now point to investors returning to the market. “It’s a positive sign,” said Leibel. “ These investors are coming in and buying land - they’re establishing a value” which will ultimately reduce inventory and stabilize prices.

Valone cautioned that, while the twin magnets of today’s new logistics - based economy and growing commuter demand will continue to buttress demand for affordable housing in secondary submarkets such as the High and Low deserts, “closer - in communities are starting to offer more affordably priced products that could act as intercepts.“

However, as these ‘down the hill’ inventories continue to shrink and if High Desert homebuilders can accomplish significant price point reductions, “the High Desert will eventually come back.

“What will be the determinant for (High Desert homebuilders) will be the state of their foreclosure markets. That’s really the bellwether.” As the inventories of foreclosures shrink, “we’ll start to see stability, then a resurgence.”

Growing price - sensitivity among homebuyers could be the silver lining to the foreclosure crisis, he added. Homebuyers purchase existing homes with the understanding that there are no warranties on pre - owned homes or the appliances within, whereas state - of - the - art new home communities can better compete by offering buyers immense added value with long - term savings and convenience.

Affordability will continue to be a key for homebuilders and the emerging recovery offers builders an opportunity to “redefine” their products. With most new homes in the High Desert averaging around 2,400 and 2,500 square feet, builders should consider increasing affordability by driving the average down below 2,000 square feet “and let developers offer significant price point affordability, which will attract more buyers,” Valone said.

Preparing to Grow AgainContinued

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“The market is going towards smaller homes right now,” added Daniel Loth of KB Home. “The (emerging) market is first time homebuyers.”

“To help create a revitalized and more sustainable housing market, encouraging and enabling critical reductions in builder costs, product design, and regulatory time frames are key aspects of the Baldy View Chapter’s Government Affairs Economic Stimulus Package,” added BIA Baldy View Chapter Deputy CEO Carlos Rodriguez. At local and regional levels, the BIA is partnering with every level of governance to reengineer the complex legislative and regulatory tangle that initially drove the superheated market and its subsequent downturn.

Rodriguez said key components of the package include focusing on reductions of development impact fees (DIF), fee deferrals to the issuance of certificates of occupancy, design guideline reform and construction bond reform, and ensuring the balanced implementation of SB 375 – the critical greenhouse gas emissions legislation.

“More importantly, local governments are paying attention,” added Valone. “Cities now recognize how important our industry is to their financial security and financial strength.”

At a special BIA sponsored Inland Empire Housing Outlook - Mid - Year Update at the Chapter’s July Membership Meeting, industry leaders representing the entire spectrum of home builders, ranging from public, private, local family - owned and major international builders, surveyed the current homebuilding landscape to assess the industry’s future on the regional stage.




Some form of public transportation has been operating in the Victor Valley since the mid 1970’s. Long time residents may remember simple vans running up and down 7th Street in Victorville picking up and dropping off passengers during those early years. In 1992 a California Joint Powers Authority called the Victor Valley Transit Service Authority was formed. VVTSA, now just VVTA, as the “S” was dropped many years ago, is comprised of the cities of Adelanto, Hesperia, Victorville, the Town of Apple Valley, and the unincorporated areas of San Bernardino County within the Victor Valley, including Tri-Communities, Lucerne Valley, Helendale, and Oro Grande. VVTA is governed by a Board of Directors comprised of five members. The Board members are council members, one from each city, and the County Supervisor or designee.

VVTA is somewhat unusual as it has absolutely zero employees. All work is contracted out to two private for profit companies. McDonald Transit Associates, Inc. is the transit system administration and provides oversight for the operations contractor, Veolia Transportation, Inc. McDonald Transit or McDT, as it is often referred to, is a privately employee owned company headquartered in Ft. Worth, Texas. McDonald Transit’s only business is transit and it provides transit management, and operations services for more than 30 transit systems throughout the US. It operates as many as 300 buses in Charlotte, NC to a one bus system out in Needles. McDT also provides transportation services for National parks such as Zion and Rocky Mountain. At VVTA McDT provides all administration services which include budgeting, accounting, federal reporting and compliance requirements, securing and administering all grant programs,

Americans with Disabilities (ADA) Act of 1990 requirements, strategic planning, administering policies and procedures and bringing same to the board as necessary, procurement, risk management, marketing and public relations, route and schedule planning, and complaint/compliment management to name a few.

Veolia Transportation is a French owned multinational entity of which transit is one division. Veolia transportation has many large contracts throughout the country. Veolia is responsible for all aspects of VVTA’s operations and maintenance of the fleet. This includes meeting all the federal requirements for safety, and maintenance.

The City of Victorville provides additional financial services and serves as the Treasurer for VVTA.

OPERATIONSVVTA has a service area of approximately 424 square miles and operates Monday through Friday from 6:00AM to 9:00PM and on Saturday between 7:00AM and 8:00PM. There is currently no service on Sundays. At peak service VVTA places in service 21 big buses on 16 fixed and flex routes and an average of 23 smaller vehicles to provide demand response curb to curb services for persons with disabilities. That is for all those certified riders whose disability is such that it prevents them from using the regular fixed route system. Many disabled passengers ride the fixed route system, since it provides them more freedom and flexibility. All of VVTA’s buses are wheelchair accessible and VVTA provides trip planning assistance at 948-3030 (TDD for the hearing impaired at 948.3990). In addition VVTA has a very good web site, which includes a video on

The regional housing market “has definitely stabilized,” said Chapter Vice President/Education and panelist Terry Kent of Crestwood Communities. “Buyer confidence is starting to come back and traffic is up.”

“We’re smaller than we were, but there is more business,” added BIA Baldy View President and panelist Scott Coler of Capital Pacific, Inc. Coler noted home prices in the region increasing for the first time in months and homebuilders experiencing increasing traffic in model communities.

Panelists observed that the homebuilding operations that survived the downturn are emerging leaner and better - equipped to meet the new demands and challenges of a changed building landscape and economy.

“The fear factor needs to go away,” said Leibl, stressing the importance of confidence in returning the market to vitality. “Patience is the key word to stay in the game - patience and the cash to be patient.”

“However, this market also offers a once – in – a - lifetime opportunity,” he added.

“If you have the cash available, you should consider buying some of this land from existing land owners or partnering up.”

Preparing to Grow AgainContinued

13


VVTA Supporting the High Desert Transportation NeedsBy Kevin Kane

Victor Valley Transit Authority



continue to explode. Existing population in the region is 335,000 with the region experiencing a 34% population growth between 2000 and 2006 and population in 2030 is projected to reach 650,000.” In addition, Summary of Growth Data for cities, states the ratio of trip growth to 2030 trips for VVTA jurisdictions will surpass that of the rest of San Bernardino County as a whole by 30%. Quite simply, VVTA has already outgrown its current leased facility, and projected growth is forcing VVTA to seek a cost effective strategy to meet growing demands for increased service, which also requires significant increases in fleet size and need for a maintenance facility to meet those needs. As an example, the March 2007 Urbitran, Inc., “VVTA Operations and Growth Study” identifies the local funds necessary to meet VVTA’s projected expanding service needs will more than double from $3,210,900 for fiscal year (FY ‘06-’07) to $7,966,700 for (FY ’11-’12). For that same period Urbitran identifies that VVTA will need to increase its total vehicles from 45 to 65. A Gannett Fleming study for VVTA completed in 2004 projects VVTA’s fleet requirements to be 145 by the year 2020.

VVTA plans to build a facility that will take the agency forward for at least 30 years. The bus facility will accommodate over 100 buses. VVTA has calculated that it can accumulate approximately $2 to 2.5 million in grant funds per year towards the new facility. In the 8 years from July 1, 1999 to June 30, 2007 VVTA has been able to put aside a total of only $5,550,000. At the accelerated rate of $2.5 million per year and without standard inflation included, VVTA could not build its first ever facility, which it already needs, for another 18 years or approximately 2026. Since VVTA

how to ride the bus at www.vvta.org

VVTA FUNDINGIt has been stated that all transit is subsidized. One of the two main sources of funds is federal apportionments through the Federal Transit Administration (FTA) Section 5307 and 5311 grant programs. The federal funds must be used almost exclusively for capital uses, such as vehicles, equipment, facilities, etc.

The other main source of funding for VVTA started in 1971 when Governor Ronald Regan signed the Transportation Development Act of 1971 (TDA), also known as SB 325. The TDA created a ¼ cent statewide general retail sales tax. The proceeds from that tax revenue are used to create the Local Transportation Fund (LTF). LTF funds are administered by CALTRANS and apportioned to local jurisdictions through San Bernardino Associated Government (SANBAG). Most of VVTA’s operating funds are derived from the LTF funds. Fares paid by passengers account for only 15% to 20% of the cost of operating the system. Of all the LTF funds apportioned to the local jurisdictions for transit about 50% is actually used for VVTA operations. According to the legislation, any LTF funds not expended on transit may be used for local streets and roads so long as there are no unmet transit needs. A yearly hearing is conducted to assess any such needs which can be reasonably met. There is a caveat though. In order for VVTA to receive LTF funds, 15% of its operations expenses must be covered by fare revenues. To assure compliance VVTA constantly monitors its operations and the changing dynamics of population growth, demographics, and density of the area. With this data and professional studies VVTA provides new bus service to growth areas and must reduce or

eliminate service from current routes which are unproductive.

VVTA STATISTICS In fiscal year 2006-2007 VVTA ran 111,544 revenue hours of service, operating over 2,023,796 revenue vehicle miles carrying 1,096,965 passengers at an operating expense of $7,094,470. VVTA averaged almost 10 passengers (9.8) on board for every hour it was in operation for an average cost per passenger mile of $0.63 but at an average cost to the passenger of approximately $1.06 per trip.

Recent Changes Future PlansIn fiscal year 2008-2009 beginning July 1, 2008 VVTA added a new route to west Victorville, extended service in Hesperia to the new Target center at I-15, and increased service frequency form 1 hour to every 30 minutes on 3 routes: Route 53 between Victor Valley College and the Mall; Route 43 between Apple Valley post office and the college; and Route 45 between Costco on 7th and Lorene and the college.

VVTA is currently working out of a very small leased facility, and the growth projections for the area dictate we plan accordingly. The VVTA Board has expressed a desire for a facility since the mid to late 1990s; however, it wasn’t until a Master Plan study was completed by Gannett Fleming, Inc. in 2004 that VVTA was able to move forward on this project. In 2006 VVTA purchased a 10 acre tract of land in Hesperia to be the future home of VVTA’s first ever bus maintenance, operations, and administration facility.

According to (SANBAG) July 2006 Victor Valley Area Transportation Study Fact Sheet “Growth in the Victor Valley region has been significant and will

VVTA Supporting the High Desert Transportation NeedsContinued

14




improvements was completed in May 2009. VVTA moved forward on the CNG station as a first phase to avoid buying CNG for its fleet at retail prices, thus saving thousands in operations expenses. Construction of the rest of the project is scheduled for November 2009 with a May 2011 completion goal.

VVTA currently has no bus facility and operates out of an old tool rental business, using metal shipping containers for makeshift offices. New facility location is 10 acres, ¼ mile north of Main Street on E Avenue and Smoketree.

CLOSING REMARKThe price of fuel is driving up costs for VVTA just as for everyone else, but there is a bright side for the Victor Valley. As more jobs move to this area and the price of gas keeps skyrocketing towards $5.00 per gallon, VVTA becomes a cost effective option for many people who otherwise would never consider riding the bus. The more people who ride VVTA the more we can reduce traffic congestion and improve air quality.

has reduced the number of maintenance bays from 11 to 8. The facility will include a CNG fueling facility and a photovoltaic shade component to reduce operating expenses, and VVTA is seeking the highest LEED rating it can cost effectively achieve. Construction on the CNG fueling station and off site

cannot wait that long to fund this project, the Board chose to issue Certificates of Participation through a lease agreement with the California Transit Finance Corporation. In this manner VVTA will be able to meet critical fleet, operations, and maintenance facility demands much faster than trying to accumulate the funds necessary to design and build the much needed bus facility. In fact, current federal rules regarding obligation and utilization of funds would make this approach impractical and render VVTA’s ability to undertake this project on a pay-as-you go basis impossible. Now VVTA can improve working conditions for employees and provide better and more reliable service to its riders. Even with its innovative funding (Certificates of Participation), VVTA did have to rescope the project due to construction costs and budget limitations. As a result, VVTA reduced the parking area, is delaying administration tenant improvements, and

VVTA Supporting the High Desert Transportation NeedsContinued

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VVTA currently has no Bus Facility and operates out of an old tool rental business using metal shipping containers for makeshift offices.



Stirling Capital Investments has completed almost two million square feet of new class-A industrial space at Global Access Victorville. The five buildings that have been constructed to date range in size from a divisible 100,023-square-foot multi-tenant building to a world-class 1,000,010-square-foot distribution / manufacturing facility. Global Access Victorville (www.globalaccessvictorville.com), the former George Air Force Base, is an 8,500-acre multimodal freight transportation hub supported by air, ground, and rail connections. Global Access Victorville is comprised of Southern California Logistics Airport (SCLA), a 2,500-acre world-class air cargo and aviation facility; Southern California Logistics Centre (SCLC), a 2,500-acre commercial and industrial complex entitled for 60 million square feet of development; and Southern California Rail Complex (SCRC), a planned 3,500-acre intermodal and multimodal complex entailing rail-served facilities. Stirling Capital Investments and the City of Victorville have teamed up to redevelop the former George Air Force Base into Global Access Victorville, the largest fully-integrated commercial development in the region, which is anticipated to create more than 24,000 jobs and support another 18,500 jobs in the surrounding area. Global Access Victorville offers 24¬hour, seven-day-a-week operations with onsite U.S. Customs. It has been designated a Foreign Trade Zone and a Local Agency Military Base Recovery Act Zone by the federal government. It has two intercontinental runways and can accommodate all current-flying commercial and military aircraft with 24-hour, seven-day¬a-week air tower operations and emergency response

capabilities comparable to that of the world’s largest airports.

2009 has been a busy year so far as Stirling Capital Investments both wrapped up construction and signed several new leases. Distribution Centre 1 (1,000,010 sf), which is nine feet longer than the height of the Willis Tower (formerly named Sears Tower) in Chicago, became available for lease at the beginning of the year. Over 17 football fields could fit inside this large building. On August 25th, Stirling Capital Investments was awarded LEED Gold for the sustainable development of Distribution Centre 1. This marks the second LEED Gold certified building at Global Access Victorville. Adding to the significance of this achievement, according to USGBC records, Distribution Centre 1 is the largest speculative industrial “green” building in the world and the second largest LEED Gold industrial building on the planet. Sales and leasing activity this year has involved bringing the following businesses to Victorville: Dr Pepper Snapple Group, Plastipak Packaging, Fastenal and Pacific Aviation Group. These dynamic companies join current tenants that include the ranks of Newell Rubbermaid, Boeing, General Electric, Leading Edge, Pratt & Whitney, FedEx, Excel Scientific, Million Air, and SCA. Dr Pepper Snapple Group purchased approximately 54 acres and is under construction on its $120-million 8 5 0 , 0 0 0 - s q u a r e - f o o t Western distribution center that will employ 200 people. According to the City of Victorville, “Upon opening in early 2010, the facility

will have the capacity to annually produce as many as 40 million cases of product and will serve nearly 20 percent of the U.S. population.” Plastipak Packaging, a leading manufacturer of plastic packaging containers for many of the world’s largest consumer product companies, signed a lease for Distribution Centre 13A (296,490 sf). Fastenal and Pacific Aviation Group have both taken space in the Global Access Business Centre, the project’s multi-tenant development.

Looking forward to the next twelve months, Stirling Capital Investments seeks to maintain its steady stream of leasing activity and job creation by continuing to offer flexible class-A space for Fortune 500 and local companies alike. Stirling Capital Investments is now considering adding limited retail space thanks to the large employee base that has been created at Global Access Victorville. Following the momentum of the Dr Pepper Snapple Group transaction, the City of Victorville will soon be completing a new wastewater treatment plant so industrial wastewater will be available for future tenants. The availability of entitled land and infrastructure at Global Access Victorville should serve well for more transactions and growth in 2009 and 2010.

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Stirling Capital Investments Continues Its Successful Redevelopmentin Victorville, California

By Josh CoxProject Coordinator Stirling Enterprises



17

Stirling Capital Investments Continues Its Successful Redevelopmentin Victorville, California

Continued



18

there is an additional 19,374 square feet of commercial space. It offers the community its first “eco-friendly” bank from Bank of America, its first in the country. Other retailers recently opened include a Carl’s Jr., Denny’s, a KFC and Long John Silver.

The Adelanto Towne Center, a 280,000 square foot retail project, will be breaking ground in early 2010. It will be located at the corner of Highway 395 and Mojave Drive on 33 acres of land. A Target store will be the main anchor

and is considered to be the store’s future prototype. Adelanto partnered with the Lewis Retail Group to bring the development to the city. The location of the project solidifies the theory that Highway 395 is set to become a major retail corridor in the region.

Adelanto Gateway Logistics Center is a 400 acre industrial project that will be located across from the Southern California Logistics Airport. It will serve as a distribution center for the

On the Verge ofTremendous Growth

The City of Adelanto continues to offer opportunity in all areas of development, with the potential of being a major industrial employer in the area. Its industrial and commercial market will begin to capitalize on the tremendous opportunities in the Victor Valley. Since breaking ground in 2005, Stater Bros. in the Adelanto Marketplace

has seen significant growth. The supermarket chain was the first business to open in the Center and is still one of the top-performing stores of the Southern California-based grocery chain. The shopping center encompasses approximately 90,367 square feet of retail space. Now with Phase two completed,

Adelanto City UpdateBy Mike Borja, Management Analyst

City of Adelanto

Los Angeles basin as well as Arizona, Nevada, and Utah. The project is a 400-acre development, with industrial sites up to 74 acres. All of the buildings will be for sale or lease, with AMB Property set to manage the leased properties. Adelanto Gateway looks to be one of the biggest logistics project in the Victor Valley, with the promise of bringing in various manufacturing jobs.

With more than 80 companies selecting Adelanto as their place of business, Adelanto has constructed over 8,200 homes and has provided 4,500 jobs in its five industrial parks. With the growth, comes the need for water and waste water treatment expansion. Most recent projects include the construction of a small waste water treatment plant and a 5 million gallon storage tank. The city’s waste water treatment facility is expanding from 1.5 million gallon per day capacity to a 4 million gallon per day capacity, with a projected completion date of December 2008.

Known as the “City of Unlimited Possibilities,” Adelanto’s philosophy looks to be well underway.

Keep abreast of the events in the most dynamic real estate

market in Southern California.






19

sub-acute care beds, along with medical office and retail space.

Apple Valley is also a competitive participant in Southern California’s industrial market and ranks as a “least costly city for doing business” by the Kosmont Companies/Rose Institute’s Cost of Doing Business Survey.

Businesses locating within the 5,100-acre North Apple Valley Industrial Specific Plan (NAVISP) can expect a 120-day approval process if adhering to that area’s clearly-defined permitting uses and design standards. The NAVISP, slated to become a major logistics and manufacturing hub, features affordable and ample land, a low-cost workforce, and prime market access with an excellent surface transportation network. It has already drawn a 1.3 million square-foot Walmart Distribution Center and one of the State of California’s first certified “shovel-ready industrial sites.”

With these successes already established, Apple Valley is confident that the best is yet to come. A recently updated General Plan adds more commercial, industrial, office, mixed-use and multi-family residential acreage, priming our town to become a destination for higher education, premier events, great amenities, and a better way of life. It’s no wonder that in a 2009 survey, most residents rate their quality of life as good or excellent.

Whether your interests are retail, industrial, medical, or residential, don’t sit idly by. Jump on the Apple Valley train to success. Get a Slice of the Apple and learn more about locating or expanding your business in Apple Valley by visiting www.applevalley.org.

Driving the region’s retail and industrial development

The late actor Will Rogers cautioned, “Even if you’re on the right track, you will get run over if you just sit there.” Such advice has never been more timely.

During this advantageous market, Apple Valley isn’t sitting idle on the tracks. With a balanced budget and an impressive 81 percent general fund reserve, Apple Valley is leveraging its financial security and is using public and private funding sources to drive development and infrastructure projects forward full steam ahead.

Take, for example, the many projects that are already under way.

Opening Soon: Ross Dress For Less is just days away from opening at Lewis Retail’s Apple Valley Commons, a 733,000 square-foot shopping center anchored by Super Target. This apparel and accessory store will employ as many as 40 people.

Under Construction: A quick drive down Dale Evans Parkway shows the $8 million Town Hall Expansion Building taking shape. This project has added 116 construction-related jobs to the local economy. Similarly, construction of the new $7.7 million Animal Shelter has added 111 construction-related jobs. Construction crews have also begun work on the $3 million Corwin Road Improvement Project.

In Design and Review: One of the most eagerly anticipated infrastructure projects is the Yucca Loma Bridge Corridor, which is in environmental review and on course for construction to start in late 2010. Also undergoing design work

is the landscaping of the median along Highway 18. This $1.2 million project is being partially funded by the Apple Valley Village Property and Business Improvement District and is the first of several steps property owners are taking to revitalize the area.

Around the Bend: On September 24, the Apple Valley Chamber of Commerce will unveil renderings of a new, 55,000 square-foot Public Safety Training Facility that is scheduled to be built on nine acres on the southwest corner of Johnson and Navajo roads in Apple Valley. The project is a joint effort between the Apple Valley Fire Protection District and the Victor Valley Community College District. The Town is also conducting a feasibility study on a minor league baseball stadium project that could ultimately mean numerous local jobs and other economic benefits. Two property owners have already signed agreements to donate land on Bear Valley Road, between Apple Valley and Deep Creek roads.

All of these projects compliment the 3 million square-feet of retail that the Town of Apple Valley has attracted in the last four years. Most recently, Apple Valley residents (who possess the region’s highest per capita income) and regional consumers are enjoying the Cinemark Theaters and 24 Hour Fitness that opened at the 969,000 square-foot Jess Ranch Marketplace within the last few months.

Apple Valley is not only attracting retail uses. Already home to a high concentration of advanced medical services, Apple Valley continues to attract healthcare providers, such as a planned 74-acre medical and mixed-use campus that will feature 209 acute and

Town of Apple Valley City UpdateBy Charlene Engeron

Apple Valley Economic Development



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Barstow City UpdateBy Ron Rector - Economic Development Manager

The City of Barstow is fortunate to have a much diversified economy during this global recession. Barstow’s economic base — consisting of the military, railroad, tourism, renewable energy, and manufacturing and logistics — is well positioned to ride out the economy’s challenges due to this balance.

In fact, while most communities are losing jobs, both the Marine Corps Logistic Base in Barstow and the Army’s National Training Center at Ft. Irwin have created job expansion for our community. With an increasing number of tanks, Humvees, and other vehicles returning from Iraq and Afghanistan needing new parts or repair work, the need for maintenance workers at the MCLB has surged. The base has hired an additional 600 workers. The new positions, mostly vehicle maintenance, range in wages from $17 to $30 an hour. MCLB has an annual economic impact of more than $200 million to the High Desert, including $100 million in payroll and goods and services.

The cornerstone of the city’s business attraction efforts is the twelve hundred acre Barstow Industrial Park. IDS Real Estate, the developer for the Barstow Industrial Park, will offer large parcels of land within three miles of Interstate 15. IDS is working to complete the environmental impact report and to obtain all entitlements by the end of 2009. A railroad extension to the property, forecasted for completion in 2010, positions it as one of the most sought-after industrial locations in Southern California.

IDS estimates that it will construct 16.5 million sq. ft. of new industrial buildings over a 7 to 9 year period. When fully built out, the Barstow Industrial Park could create between 8,250 and 12,400 new living wage jobs.

The Barstow Industrial Park was selected by the world’s largest retailer to be the home for one of its mechanized distribution centers. Wal-Mart announced its plans to build and operate a food distribution center in the Barstow Industrial Park. Construction on the 900,000 sq. ft. facility, encompassing 147 acres, has been slightly delayed due to a legal challenge. However, the environmental impact report has been completed and the distribution center is expected to break ground in 2010.

With the Barstow Industrial Park as the hub of our future job creation, the proposed Lenwood Rd. grade separation is critically important to transportation movement and relieving congestion in the area of our industrial park. The Lenwood Rd. grade separation is currently in preliminary engineering and environmental work.

Tourism is another of our community’s economic pillars. With nearly 60 million people per year traveling through Barstow, the retail and hospitality industries continue to expand in Barstow. In the past two years, three new hotels have opened, including the Hampton Inn, Comfort Suite, and Country Inn and Suites adjacent to a new Chili’s restaurant. Several other hotels are in the planning stages. With the new hotels opening, the city is budgeting for nearly $3 million during this fiscal year for transient occupancy tax revenue.

Tanger Outlet has opened a 65,000-sq.-ft. expansion, featuring 12 new retailers. In addition to the outlet center expansion, Wal-Mart has announced

plans to expand its current location into a Supercenter. While taxable sales for San Bernardino County as a whole fell by 18.5 percent for the most recently reported period – first quarter 2009 as compared to first quarter 2008 — the City of Barstow’s taxable sales fell by only 8 percent during this same period.

The intersecting highways in Barstow make the area a natural location for the trucking industry. Recently, a new 12-acre Love’s travel center located on Lenwood Road opened and joined five other truck stops, four truck washes, and two truck service facilities in providing services to the trucking industry. Service stations and facilities for the trucking industry provide the City of Barstow with $2 million per year in sales tax revenues and $680,000 for gas tax revenues.

Community Health Systems, the largest publicly traded hospital corporation in the United States, is moving forward with its plans to build a new Barstow Community Hospital on the 19 acre site across the street from the current facility. It has submitted preliminary plans this summer to the Office of Statewide Health Planning and Development.

The City of Barstow is looking at the possible influx of renewable energy projects and related jobs as a boost for the




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Zone are eligible for substantial benefits:

• Firms can earn $37,440 or more in state tax credits for each qualified employee hired.• Lenders to Zone businesses may receive a net interest deduction.• Up-front expensing of certain depreciable property.• Corporations can earn sales tax credits on purchases of $20 million per year of qualified machinery and machinery parts.• Up to 100% Net Operating Loss (NOL) that may be carried forward 15 years. • Enterprise Zone companies can earn preference points on state contracts.

The Enterprise Zone program is one of the largest and most successful economic development tools offered by the State. In 2006, HCD released a report that evaluated the success of EZs in addressing economic recovery. The study found that during 1990-2000, on average Enterprise Zones saw unemployment rates decrease 1.2% and household incomes increased 7.1% more than the rest of the state.

The next step in the designation processwill be issuance of a conditional designation letter outlining specific conditions for final designation, including a signed memorandum of understanding with HCD, which will include performance measures and benchmarks. Hesperia will provide updated information during targeted seminars in the coming months. There are numerous community partners who have committed resources to this program; they will play varying roles in ensuring the success of this program throughout the designation period.

local economy. With virtually unlimited amounts of sun and wind, our area is ground zero for the renewable energy industries. Currently several large solar projects are moving forward on Ft. Irwin as well as the Calico-Solar one project near Newberry Springs and other projects on the city’s borders. In addition to solar projects, wind turbines are propagating in the area as a viable source of renewable energy, including a large wind turbine at the Marine Corps Logistics Base. The City of Barstow supports clean energy and its associated jobs, but we also want to ensure that the projects are carefully considered to protect the environment and quality of living standards.

Like many communities, the recession has slowed some of our plans for economic growth; however, it has also served to focus our awareness on the essential ingredients of our success – a diverse economy. With challenging times come opportunities. Our aggressive approach to economic development will ensure the City of Barstow remains the “Crossroads of Opportunity.”

Barstow City UpdateContinued

www.OpportunityCA.us

(909) 387-4700

Site SeleCtiOn ASSiStAnCe

Hesperia City UpdateBy Lisa K. LaMere

Economic Development Analyst

Doing Business in Hesperia is EZ

In an economy where businesses are struggling, the City

of Hesperia will soon be offering some assistance that very few California cities can - tax incentives. The City of Hesperia is pleased to announce its awarded designation as a California Enterprise Zone (EZ). The California Department of Housing and Community Development (HCD) administers the California state program which provides significant business attraction, retention and expansion tools. The EZ will provide the City with a competitive advantage with respect to economic development opportunities that lead to business growth and job generation.

In applying for the 2008-09 EZ designation, Hesperia’s Economic Development and Redevelopment Team recognized an opportunity to provide businesses in Hesperia with the tools for economic growth and entrepreneurship during this current period of economic adversity, and won as the top ranked application evaluated by HCD staff.

One of 41 designations statewide, the Hesperia EZ is vested for fifteen years and is considered a significant business attraction, retention and expansion tool. The EZ program targets economically distressed areas by using special state and local incentives to promote business investment and job creation. Businesses within the Hesperia Enterprise




22

Hesperia City UpdateContinued

INNOVATIVE INCENTIVESWith the addition of the Enterprise Zone, Hesperia’s incentives arsenal is now incomparable. Hesperia also offers Brokers’ Incentives, which matches the agent’s commission up to $50,000; the Restaurant Reward that offers an inducement up to the industry standard net profit margin for up to five years; as well as the Franchise Founders incentive providing financial assistance during the franchise business’s critical first five years. Forgivable ten-year, zero-interest financing is also available for Façade Improvement loans for commercial buildings. This incentive covers 50% of the eligible costs up to $30,000. Other innovative incentives being developed for the Enterprise Zone will be announced shortly, as will a calendar of workshops and seminars.

RAIL LEAD TRACK TO BREAK GROUND

Hesperia’s G Avenue Rail Lead Track is on schedule to break ground at the end of the year. The completion of this project will stimulate the development of 210 acres and will indirectly impact the attraction and expansion of other businesses into the 1,300-acre I Avenue Industrial area – all of which is inside the new Hesperia Enterprise Zone boundaries. The planned track is expected to bring economic results that will match or exceed the advantages of the neighboring, soon-to-be built-out, Foxborough rail industrial park, which has helped create many long-term jobs by attracting leading national and international companies.

In addition, the project fosters entrepreneurship by making railaccessible throughout the Victor Valley region to smaller businesses without rail access to ship and receive goods by allowing them the use of a

team trans-load facility in Hesperia. The city has found it is in its best interest to collaborate with local businesses to make sure they continue to be viable and successful entities.

This pro-development, customer service-oriented city is serious about bringing your business to Hesperia! For more information about the newly designated Hesperia Enterprise Zone, available land, and other innovative incentives, contact Hesperia’s Economic Development Department at 760/947-1906 or e-mail [email protected].



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The City of Victorville’s population continues to grow, topping 106,000 in July. This growth has been the catalyst in driving development in the retail, industrial, and commercial industries. World-class companies continue to flock to Victorville because of the city’s immediate access to the Southern California market and strategic location along Interstate-15. Victorville remains the commercial and retail hub of the burgeoning High Desert region, with new and expanding developments throughout the city.

Retail Development

The Mall of Victor Valley has added the largest Forever 21 store within the Inland Empire, with over 70,000 square feet of retail space. The mall also recently welcomed Aldo, Tilly’s and Journeys in the past year to its roster of over 90 in-line stores. Victorville also welcomed several new restaurants in 2009, including Chipotle, Panda Express, and In-N-Out Burger restaurants. Panda Express and In-N-Out Burger restaurants are a part of continued expansion at Desert Plazas, an 800,000 square foot retail center located in the civic center of Victorville, just west of Interstate-15 at the Roy Rogers exit.

Industrial Development

Southern California Logistics Airport (SCLA) remains the region’s largest industrial project, totaling over 5,000 acres and 64 million square feet of available space for industrial development. The largest project currently under development at SCLA is Dr Pepper Snapple’s 850,000 square foot manufacturing and distribution

center set to open in Spring 2010. In conjunction with Dr Pepper Snapple’s new construction, Plastipak Packaging, Inc. just announced plans to occupy 230,000 square feet of industrial space at SCLA. Both projects will bring in over 200 new jobs to the city.

Dr. Pepper Snapple’s new 850,000 square foot facility currently under construction at SCLA.

SCLA’s master developer, Stirling Capital Investments, has been pursuing LEED (Leadership in Energy and Environmental Design) certification on new developments at SCLA, including the new Plastipak facility. The new buildings will meet standards developed by the United States Green Building Council (USGBC) for high-performance sustainable design and building practices. The buildings offer tenants at SCLA top-quality, sustainable facilities that help reduce the impacts of natural resource consumption, reduce tenant operation expenses, and increase tenant health and productivity. Two buildings

have received LEED Gold certification, including Distribution Centre 13A, currently occupied by Plastipak, and Distribution Centre 1, a 1,000,010 square foot warehouse currently available for lease. Distribution Centre 13A became the first LEED-certified project within the High Desert in March 2009. In August, Distribution Centre 1 became the largest speculative industrial building in the world when it received the USGBC’s highest LEED certification level. Two additional buildings at SCLA are LEED Registered, including Distribution Centre 13B and Distribution Centre 19.

DIF Fee Deferral

With the overall slowdown in the economy and financial markets, the City of Victorville has looked to creative and cost-saving strategies to help businesses flourish within our city. The city announced a deferral of Development Impact Fees for new commercial and residential projects within the city until the year 2012. It has always been our strength to be business-friendly and to understand the business needs of companies looking to develop within Victorville.

Victorville City UpdateBy Tracy Foster

City of Victorville Economic Development

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