final ieo spring 2011

8/4/2019 Final IEO Spring 2011

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INSIDE

Economic and Political Analysis

Volume II | Issue 1 | Spring 2011

ONT: An Airport in Crisis and at aCrossroads

pg. 2-6

A First Loo at Inland Empire CensusDatapg. 7

Great Recessions Impact on I.E. Economic

Performancepg. 8-11

Renewale Energs Future in the InlandEmpire

pg. 12-15

Redeelopment Authorities Under Firepg. 16-21

Stagnation and Recoer: The InlandEmpires Housing Maret

pg. 22-27

his issue oInland Empire Outlook

reects the Inland Empiresongoing struggle to emerge rom

the recession. In prior issues, we have

examined the recessions toll on this region

and have described strategies or building

a more secure economic uture. Tis issue

continues that important discussion.

We begin with an indepth analysis o

the crisis acing Ontario Airport (p. 2).

Te airport should be one o the regions

greatest economic assets, but or several

years mismanagement by L.A. WorldAirports and a high cost structure have

driven away passenger and cargo trac.

We explore changes that could make the

airport a more competitive and protable

transportation center.

Next, our economic update shows that

the Inland Empire still lags ar behind

the rest o the nation in its efort to

achieve economic recovery (p. 8), with

unemployment rates ar above the nationalaverage. Our analysis shows that Riverside

County was hit harder by the recession

and is recovering more slowly. We see the

same pattern in our study o the housing

market data or the two counties (p. 22).

Fortunately, there is some good news:

oreclosures are declining and prices

appear to be stabilizing.

Looking to the uture, we see renewable

energy as a potential growth industryor the Inland Empire. Governor Jerry

Brown recently signed into law a bill

that mandates 33 percent o electricitin Caliornia must come rom renewa

sources by 2020. We expect the Inlan

Empire to emerge as a key player, but

also analyze several actors impeding

development (p. 12). Also on the hor

is the potential loss o redevelopment

agencies and enterprise zones (p. 16).

Governor Browns proposal to elimin

them has ignited opposition rom Inl

Empire ocials. Finally, we take a r

look at the recently released 2010 cendata (p. 7).

On June 22, 2011, the Inland Empir

Center, in partnership with the UCLA

Anderson FORECAS, will hold the

second CMCUCLA Inland Empire

Forecast Conerence at the Riverside

Convention Center. Jerry Nickelsbur

the UCLA Anderson Forecast will pr

a state and national economic orecas

CMC economists Marc Weidenmier Manred Keil will present an econom

orecast or the Inland Empire. Te

conerence will also eature panels on

the uture o Ontario Airport and on

impact o trade, logistics, and oreign

direct investment on the Inland Emp

economy.

For updates to these stories and other

Inland Empire news, please visit our

website, www.inlandempirecenter.org

INlaND

EmpIrEOutlOOk

CLAREMONT MCKENNA COLLEGE

Claremont, California

INLANDEMPIREOUTLOOk.COM

INLANDEMPIRECENTER.COM

WorkingToWarda recovery

Te Edit


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Page 2 Page 3I N L A N D E M P I R E O U T L O O k | 2

I N L A N D E M P I R E O U T L O O k . C O M

around the country and in Southern Caliornia

have been on a road to a postrecession recovery,

Ontario Airport has remained stagnant.

Ontario Airports decline has seriousconsequences or the entire region. Recent

estimates by the city o Ontario suggest that theInland Empire lost upwards o $400 million

in business and revenue, as well as more than

8,000 jobs rom 2007 to 2009 directly becauseo Ontario Airports decline.

Ontario Airport wasnt always on such a

tumultuous path. Tanks to low costs and

robust support rom numerous airlines, OntarioAirport enjoyed signicant increases in annual

passenger volume throughout the 1980s and1990s. Annual passenger volume increased

rom approximately two million in 1980to seven million in 2007. In 2000, JetBluechose Ontario Airport as its rst west coast

destination.

What went wrong in Ontario? Te answer is not dicult to identiyor airlines, it is anexorbitantly expensive place to operate. Airports use a measurement called Cost per Enplaned

Passenger (CPE) to compare costs. In United States airports, the median CPE is $6.76. In

contrast, Ontario Airports estimated CPE was $14.50 or 2010, more than 214 percentabove the median. Tis is higher than every other major regional airport. Similar sized

airports in the southern Caliornia region, such as Long Beach ($5.34) and Palm Springs($4.07), are less expensive. Even LAX, despite being a much larger airport, has a CPE o $11.

With such prohibitively high costs, Ontario Airport is unable to ofer competitive prices,

and consequently, airlines have low prot margins at Ontario Airport and little incentive tooperate there.

What is behind these enormous costs? According to

Greg Devereaux, Chie Administrative Ocer o San

Bernardino County, there are three primary reasonsor the high cost o operation at Ontario Airport: a

costly and unnecessary administrative ee imposed byLAWA, overstang, and overcompensation o airport

employees.

LAWA charges Ontario Airport a 15 percent ee

as overhead or administrative ees. Some believethat this ee is superuous. Devereaux estimates that

once the administrative ee is taken into account,the airport is efectively paying stang costs triple

the size o other [comparable] airports. According

to a report commissioned by the City o Ontario in2010, Ontario International Airport A Recovery

Plan, this administrative charge alone adds $3.68per enplanement to Ontario Airports costswhich

ONt: an aio in Cisis nd Cossods

o the average traveler, a ight out o Ontario International Airport is a dream come

true. Located in the city o Ontario, it sits at the border between Los Angeles Countyand San Bernardino County, and ofers easy access to the LA metropolitan area as

well as the Inland Empire. While a trip to LAX rom the Inland Empire can take upwards

o an hour, trac going to Ontario Airport is rarely an issue. ravel through the airport isspeedy too. Even on the busiest travel days o the year, lines at Ontario Airport are virtually

nonexistent. Flights mostly run on time, and the airport is small, welldesigned, and easilynavigable.

While the short lines at Ontario Airport may be a blessing to passengers, to airport ocialsand insiders, they are just the latest symptom o a dying airport. Ocials in Ontario, Los

Angeles, and the Inland Empire have all expressed concern about Ontario Airports uture,and called attention specically to the airports unique operational structure. Ontario

International Airport is actually owned and operated by the city o Los Angeles. Los AngelesWorld Airports (LAWA), a department o the Los Angeles city government, runs bothLAX and Ontario Airport, as well as Van Nuys Airport in San Fernando. Although LAWA

successully managed Ontario Airport in the past, the airports recent decline has causedmany to question this operational model.

Te statistics or Ontario Airport certainly point to trouble. In 2009, Ontario Airportsannual passenger volume ell to ve million, a decline o 28 percent in a decade. Average

daily departures on Southwest, Ontario Airports highest volume airline, declined rom 58.4in 2001 to 39.7 in 2010. JetBlue and ExpressJet, once promising new additions, have more

recently abandoned the airport entirely. Passenger trac at Ontario Airport has allen sharply,domestic ights have been slashed, and airlines have let in droves. While other airports

PHOTO: GREG DEvEREAUx, CHIEF ADMISINSTRA

OFFICER OF SAN bERNARDINO COU

WHILE OTHER AIRPORTS

AROUND THE COUNTy ANDIN SOUTHERN CALIFORNIA

HAvE bEEN ON THE ROAD TO

POST-RECESSION RECOvERy,

ontario airport

remains stagnant.
http://inlandempireoutlook.org/http://inlandempireoutlook.org/


3/15



While diagnosing the problem o high costs acing Ontario Airport is airly simple,prescribing a solution is much more dicult, and there remains a signicant divide over what

action should be taken.

Ocials in the City o Ontario and in San Bernardino County argue that the best course o

action is to have LAWA retain ownership, but to transer operational control to the City oOntario. Devereaux rmly believes that costs could be reduced immediately with the transer

o operational authority. You could get it down to about a $10.50 CPE right away, he says.

Devereaux isnt the only advocate or such a change at Ontario Airport. State Senate

Minority Leader Bob Dutton (RRancho Cucamonga) recently authored a resolution callingor a transer o control over Ontario Airport rom Los Angeles to a local authority. It is co

sponsored by Assembly members Wilmer Amina Carter (DRialto), Kevin Jefries (RLakeElsinore), Brian Nestande (RPalm Desert) and Norma orres (DOntario). Te resolution

asserts that a local authority, such as the City o Ontario, would be the most capable o

turning Ontario Airport around.

Deveraux and others have been involved in ongoing negotiations with the City o LosAngeles to transer control o the airport; however, Executive Director Lindsey and other

LAWA ocials have expressed concerns that the City o Ontario, without any experience

in airport management, may not be the best group to take over control. As a result, LAWAhas recently begun exploring other options or a transer o authority, including a number o

potential private solutions.

Viggo Butler, an expert in airport privatization and the chairman o the aviation

subcommittee at the Los Angeles Economic Development Corporation, sees a number opotential solutions involving private contractors working in conjunction with government

groups. en private rms, including the Carlyle Group and Goldman Sachs InrastructurePartners, have thus ar expressed interest in becoming involved with Ontario Airport.

is more than Orange County, San Diego, or Burbank paid in total

compensation and benets per enplanement in FY2008.

Te second issue is overstang. Until very recently, Ontario Airporthad more than twice the number o employees as most comparably

sized airports. With 302 budgeted employees, and 85 additional LAWA

employees (compensated via the administrative ee), Ontario Airportemploys a signicantly larger staf than John Wayne (175) and Long

Beach (124), despite comparable trac. Tis problem is nothing new.As Deveraux notes, Even at the point where [Ontario Airport] had 7

million passengers, it was clearly overstafed. While other airports were

able to cut down on staf ollowing a decline in business, local laborunions have been a major obstacle to initiating stang changes at the

airport.

Te nal source o Ontario Airports high cost is perhaps the most

surprising. Not only does Ontario Airport appear to have signicantly

more employees than necessary, it also pays them at an inated rate.Ontario Airport, with a compensation budget o $30.9 million or 302 budgeted employees,pays an average o $102,400 per employee. According to Devereaux, this high level o

compensation occurs because employees o Ontario Airport are paid according to the Los

Angeles living wage ordinance and payroll structure, rather than that o Ontario. OntarioAirport employees are compensated as i they lived in Los Angeles even though most live in

the Inland Empire, where the cost o housing alone is 34 percent lower, according to CNN/Money. Tus, overstang compounded by overcompensation o airport employees has

contributed to the high cost o operations at Ontario Airport.

In response to mounting criticism, LAWA recently cut Ontario Airport staf by 30 percent

through early retirements and transers to other LAWAowned airports. Yet even now, LAWAExecutive Director Gina Marie Lindsey acknowledged in an interview with the Daily Breeze

that the airport has not been able to keep pace with the reduction in trac and revenues.Ontario Airport remains an overstafed and exceptionally expensive airport, even ater these

reductions.

Te alleged ineciencies caused by the governance structure at Ontario Airport are not the

only points o concern or local ocials. Devereaux and members o the Ontario city councilhave repeatedly expressed their concern that the city o Los Angeles is not doing enough

to help save Ontario Airport. Devereaux points out that LAWA hasnt been meeting out

in Ontario or several years and appears to be ocusing on building in LA, rather than

Ontario Airport. Tese acts, says Devereaux, combined with LAWAs decision to slashOntario Airports marketing budget by 85 percent in 2008, appear to indicate o a clear lacko ocus and interest [rom LAWA] even as the number o passengers [at Ontario Airport]

was declining.

Executive Director Lindsey responded to these concerns in a March 1, 2011 letter

acknowledging the diculty o giving Ontario Airport complete ocus, while denying thatLAWA has been inattentive. We do agree that given LAWAs portolio o responsibilities, it is

impossible or our senior management team to devote its ull attention to [Ontario airport],just as it is impossible or us to devote our attention exclusively to Los Angeles International

Airport or our other two airports.

What Went Wrong in

ontario?THE ANSWER IS

NOT DIFFICULT TO IDENTIFy:

FOR AIRLINES, ont is

an exorbitantly

expensive place to

operate.


4/15



According to Butler, a private solution or Ontario Airport could take a number o orms.One idea involves Los Angeles retaining ownership, while granting operational authority to a

private entity through a long term lease. A publicprivate partnership, in which a governmentsponsoring agency (either Ontario or a new authority with Ontario and San Bernardino

County) joins with a private investment rm to operate the airport jointly, similar to the

model employed at the Burbank airport, may also be possible. A third possibility involvesan outright sale o the airport; Los Angeles ocials, including City Councilwoman Janice

Hahn, have expressed a newound willingness to put a transer o ownership on the table.

While there is little precedent or airport privatization in the United States, Butler pointsto London Heathrow Airport as an example o successul private airports. Further, he

notes that Ontario Airport has large capacity or terminal expansionan asset no other

Southern Caliornia airport enjoysand direct access to the Inland Empire. Both give itenormous potential or growth. According to Butler, these actors make control o the airport

particularly appealing to private entities.

Te potential or long term cost reduction with a transer o ownership is substantial. A

transer o operational control to the City o Ontario or a private rm could present cost

cutting options currently unavailab le to LAWA. Depending on the structure o ownershipand control, a new owner may not be bound by the L.A. living wage ordinance in the uture.Devereaux believes that with a staf cost reduction and relie rom the LAWA administrative

ee, Ontario Airports CPE could eventually all to the $5$7 range. I Ontario Airport

succeeds it may be able to convince low cost carriers like Virgin, Jet Blue and Southwest toreturn or expand service. With more carriers, lower costs, and increased marketing, Ontario

Airport may be able to get back on track.

Te battle over Ontario Airports control and uture is enormously important to the InlandEmpire and Southern Caliornia as a whole. Despite some setbacks and delays, local ocials

remain optimistic. We have made a lot o progress and I am hopeul that many o these

groups know that it is in the long term interest o Southern Caliornia and L.A. to makethe airport successul, said Devereaux. For now, Ontario Airport remains at a crossroads,

grounded squarely on the tarmac.

a Fis loo Innd Eie Censs D

he recent release o the 2010 Census data conrms that the population o the Inland

Empire has grown considerably in the last decade. Since the 2000 count, RiversideCounty has grown by about 40 percent, while San Bernardino County has grown by

about 20 percent. Te majority o the growth in these counties came in outlying areas rather

than in large cities.

Te population o Riverside County grew rom 1,545,387 in 2000 to 2,189,641 in 2010.Communities along the I15 rom Corona to Lake Elsinore have experienced rapid growth.

Te area rom the 60 Freeway south to Murrieta has also seen big increases.

In San Bernardino County the population grew rom 1,709,434 in 2000 to 2,035,210 in

2010. Chino Hills and Los Serranos along the 71 Freeway saw the large increases. Te otherarea o signicant growth is along the 210 extension corridor where Rancho Cucamonga

grew rom 127,743 to 165,269 in 2010.


5/15



he United States unemployment rate is now in single digits ater decreasing quitesharply over the last our months to 8.8 percent. It stood at 10.1 percent in

October 2009. At the same time, the Inland Empire continues to ace double digit

unemployment rates. Te region was hit earlier and harder by the Great Recession and isrecovering much slower than most parts o the nation. While output gures or the Inland

Empire are only published with a considerable delay and are only available at an annualrequency, these are now posted through 2009.

Te Great Recession started in December 2007 and ended in June 2009. Te output decline

or 2008 in the U.S., as a whole, was negligible (you may recall the Bush tax cuts in the

second quarter o 2008, when Gross Domestic Product (GDP) actually increases slightly):there was no decline or the U.S. gures in annual numbers. Te severity o the U.S.

recession started with the third quarter o 2008 with the all o Lehman Brothers, and we sawthe sharpest declines in the second hal o 2008 and the rst two quarters o 2009. Despite

the recovery or the last two quarters o 2009, U.S. real GDP declined by 2.6 percent or theyear, making it the most severe post World War II recession in the U.S.

However severe the U.S. numbers may sound, they pale compared to those o the InlandEmpire. o begin, there was a small decline in real GDP rom 2006 to 2007 o 0.7 percent,

probably starting in the summer o 2006 with the burst o the housing bubble. Te recession

worsened in the Inland Empire in 2008, when real GDP declined by 3.4 percent. 2009proved to be a true disaster year, with output declining by a urther 4.9 percent. Tis

represents 1/20th o output lost in a single year. At the end o 2009, real GDP in the InlandEmpire stood at a horriying 8.8 percent below its 2006 peak. It will take quite some time to

recover rom this low point.

How did the two counties within the Inland Empire are during this period? Te recessionand subsequent recovery are ar rom even or San Bernardino County and Riverside

County. While San Bernardino County currently has an unemployment rate o 13.7 percent,Riverside County is sufering rom an unemployment rate o 14.1 percent. A detailed

analysis o industrial composition and per capita income shows that Riverside County was

hit harder by the recession and is recovering more slowly.

Due to their location and proximity to the Greater Los Angeles area, both counties have asimilar industrial composition. rade and transportation (logistics) dominate, employing

approximately a quarter o the labor orce (26 percent in San Bernardino County and 23percent in Riverside County). Educational and health services, leisure and hospitality, and

manuacturing ollow closely, each

averaging roughly 10 percent in bothcounties.

Both counties have sustained severe

job losses in their key industries o

construction and manuacturing. Tis is

not surprising, since the Great Recessionafected these sectors particularly hard.As a result, it is sometimes reerred to

as a mancession due to the signicant

job losses or males in the two sectors.In September 2006, construction and

manuacturing employed 17 percento the workorce in San Bernardino

County and 23 percent in Riverside

County. By December 2009 thesenumbers had allen to 12 percent and

14 percent respectively. Tis is quitedramatic. Since the employment share

o construction and manuacturing is

higher in Riverside County, it is notsurprising that the recession had a more

severe efect there.

Te construction industry in RiversideCounty, in particular, has sufered

much more than its counterpart

in San Bernardino County. In

Riverside County, the constructionindustry accounts or 40 percent ocumulative losses since January 2007,

or approximately 36,000 jobs. In San

Bernardino County, the constructionindustry has lost 21,500 jobs since

January 2007, accounting or 27percent o the jobs lost.

Ge recessions Ic on I.E. Econoic pefonce

Figure 1: employment by industry in riverside

county, december 2009

Figure 2: employment by industry in san

bernardino county, december 2009


6/15

Page 10 Page 11I N L A N D E M P I R E O U T L O O k | 1 0


In contrast, the logistics industry has ared better during the recession in Riverside Countythan in San Bernardino County. San Bernardino County lost 2,300 jobs in the trade and

transportation industry rom 2007 to 2009. During the same period, Riverside County

actually gained 2,200 jobs in the same industry. Tese gains, however, are dwared by thesheer size o the losses in the construction industry.

Per capita income in Riverside County is historically slightly higher than that in SanBernardino County. However, San Bernardino County per capita income increased steadily

during the recent recession and is now almost equal to that in Riverside County. From 2006to 2008, San Bernardino Countys per capita income has climbed by roughly $1,750 to

slightly more than $30,360, while Riverside Countys increased by only $600 dollars to

approximately $30,900; there was actually a small decline in the Inland Empires per capitaincome rom 2008 to 2009. Although San Bernardino County and Riverside County have

historically grown at similar rates, the ormer has gained considerably on the latter rom2006 to 2009, which is the most recent year available. Looking at the graph, it appears that

San Bernardino County is approaching Riverside County primarily because the growth rate

o Riverside County has signicantly attened out, while San Bernardinos has not changedmuch rom historical patterns. It will be interesting to make urther comparisons once data

becomes available or the post recession year. It appears likely that San Bernardino Countywill pass Riverside County in per capita income in 2010.

Te continued growth o per capita income in both Inland Empire counties over the past

twenty years illustrates the incredible economic boom the area enjoyed until the start o theGreat Recession. In particular, rom 1997 to 2003 annual growth rates reached seven percent.Yet, despite the act that increases in per capita income have attened since 2006, per capita

income has still increased by over twothirds or each county since 1990. Meanwhile, OrangeCounty per capita income has actually dropped since 2007, though it remains signicantly

higher than the per capita income in either Riverside County or San Bernardino County. Los

Angeles County per capita income continues to grow at a rate similar to both parts o theInland Empire, despite the act that, again, Los Angeles per capita income is higher than in

the two counties o the Inland Empire.

Figure 5: personal income levels in san bernardino

county and riverside county, 1990-2008

Figure 4: cumulative employment losses by

industry in san bernardino county From

January 2007 to december 2009

Figure 3: cumulative employment losses by

industry in riverside county From January

2007 to december 2009


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On April 12, 2011 Governor Jerry Brown signed into law a mandate that onethirdo electricity in Caliornia must come rom renewable sources by 2020. Caliornia

had previously required investorowned utilities to generate 20 percent o their

electricity rom clean sources by 2010, with a three year grace period. Te new law raises therequirement to 33 percent and will also apply to municipal utilities, which manage about a

quarter o the states electricity load. In the coming years the Inland Empire should emerge asa key player in Caliornias push toward meeting this mandate due to the regions abundant

available land, sun, and high wind.

Caliornia currently lags behind other western states in its quest to expand production o

green energy. Tere are our primary impediments to its growth: aesthetics, environmentalconcerns, huge acreage requirements, and cost. Even many people who support renewable

energy object to the sight o power lines or wind arms in their own neighborhoods. Tisissue came up recently in Chino Hills, where Southern Caliornia Edison is constructingpower lines and poles as close as 75 eet to some homes to bring windgenerated energy rom

Kern County to the Los Angeles area. Residents are rallying against Edison concerned thatthe project will lower property values, destroy trees and land, and risk toppling towers onto

homes. Edison counters that the new power lines are necessary because existing power lines

are at ull capacity. Continued construction o green energy will not make sense withoutsucient inrastructure to transmit power rom the generation site to the place where people

use it.

In addition to aesthetics, many people are concernedabout the environmental costs o green e nergy projects.

One o the rst largescale solar projects in the InlandEmpire is the Ivanpah Solar Electric Generating

Facility, currently under construction in northern San

Bernardino County. Te project, owned and designed byBrightSource Energy Company with the help o a $1.375

billion dollar loan rom the United States Department oEnergy, was recently approved ater years o debate over

its environmental impact. A key issue was the projects

impact on the desert tortoise.

Te desert tortoise was considered threatened orseveral decades beore this project began. It is prone to

various diseases, vulnerable to many predators, and alsohas very specic habitat requirements. Moreover, the

desert tortoise has not withstood past attempts to alter its

habitat. As part o the expansion o Fort Irwin military

base in the Mojave Desert, the Army was required torelocate the desert tortoise to unoccupied lands. But the$8.7 million efort to relocate over 760 tortoises proved

unsuccessul. Many tortoises died quickly rom attacks

by new predators like the coyote, increased spread odisease likely due to the tortoises close proximity to each

other during transport, as well as injuries inicted by humans and cars.

Flash orward to the BrightSource solar project.

Conservationists are extremely worried aboutthe desert tortoises continued survival. A pre

construction study o the area ound only 16tortoises in a 5.6squaremile area surveyed.

Yet when construction actually began in late2010, biologists hired by BrightSource ound

23 tortoises in the rst 2 squaremile area to be

developed, with an additional 18 ound very nearthe project area. While the company has taken

pains not to reproduce the overcrowding andpotential disease spreading transport methods

utilized by Fort Irwin, a number o tortoises have

already died. Tis spring another tortoise round

up and relocation will begin and conservationistsanxiously await the results.

San Bernardino County Supervisor Brad

Mitzelelt was initially opposed to BrightSourcesconstruction plan or a number o reasons,

including the impact on the desert tortoise. In aphone interview, Supervisor Mitzelelt expressed

his view that [we] need to adopt a more aggressive

renewbe Enegys Fe in he Innd Eie

PHOTO: bRAD MITzELFELT, S

bERNARDINO COUNTy SUPERvIS

THERE ARE Four primary

impedimentsTO THE

GROWTH OF RENEWAbLE

ENERGy: aesthetics,

environmental

concerns,

huge acreagerequirements, and

cost.


8/15



conservation plan, not just to stop

decline, but to recover the species. TeCaliornia Energy Commission compelled

BrightSource to purchase 8,000 acres odesert habitat to be set aside permanently

or conservation to ofset the 4,000 acres

used or the Ivanpah acility. Mitzeleltcited this as a positive start towards

conservation, but also pointed out thepurchase o this much land or a single

project raises other concerns.

BrightSource purchased a total o

12,000 acres in San Bernardino Countyto house both the solar acility and the

required conservation area. It now owns

ten percent o the undeveloped land inthe county. Supervisor Mitzelelt points

out that the scale o this habitat ofsetrequirement will not be sustainable

given the high number o potential new

projects in the area. He cautions, Well see more projects go to Arizona and Nevada i wecontinue to require such large ofsets. Mitzelelt says there is already an uneven playing eld

among the western states, as states such as Nevada require much lower ofsets or the deserttortoise. Because it is easier to do business in the other states, [San Bernardino] County is

in dangero losing opportunities.

Another problem is that much o the land eyed or solar or wind power projects is owned by

multiple entities. Te ederal government owns much o the desert land in San BernardinoCounty and Native American tribes also lay claim to some potential sites. In February, Native

American protection groups sued the Bureau o Land Management over plans to constructgreen energy projects, including a s olar project planned in Blythe (Riverside County). Te

lawsuit claims that the land is culturally signicant to tribes in several Western Deserts.

Te 7,000acre Blythe project has been moved several times in an attempt to address tribalconcerns, but construction is now underway despite the ongoing lawsuit.

Finally, the act that these developments will increase costs or consumers is also an issue.

In promulgating the new renewable energy standard, Governor Brown stated a goal o

developing 20,000 megawatts o green power rom new sources; he believes this willhelp create hundreds o thousands o new jobs. But the construction cost o enough

new renewable energy sources to reach this goal will require much higher utility rates orconsumers. According to an analysis done by Caliornias Public Utilities Commission, utility

rates could increase by as much as 14.5 percent in order to reach Browns goal by 2020.

A look to Caliornias northern neighbor is instructive: the largest wind arm in the United

States is currently under construction in the Columbia River Gorge in Oregon. Tebuilding costs are estimated to be $1.9 billion, much o which is subsidized by the ederal

government. Te Energy Department provided a $1.06 billion ederal loan guarantee so that

the owners, General Electric Co. and Caithness Development LLC, could nd lenders tonance the project. Te U.S. reasury will provide a $490 million cash grant once the wind

arm is operating. In contrast, a natural gas plant o comparable size would cost less than

hal, about $865 million, and would not need government support.

Te potential increase in costs or consumers also makes construction o new renewableenergy projects more dicult or developers. Because o the pressure on companies to plan

or consumer costs upront, a change in the [cost] margin doesnt have to be too much to

make a project not easible, says Fred Bell, COO o Noble Enterprises in Palm Desert.Initial costs are going to continue to be problematic or companies trying to develop green

projects in Caliornia. Its getting more expensive to make anything in Caliornia, says Bell,i we really want green power[we] must get involved in the key metrics to make it more

viable than it is now.

Despite an increased ocus on creating more renewable power, energy rom green sources still

accounts or just 8 percent o the countrys power, while petroleum makes up 37 percent. ICaliornia wants to reduce its dependence on oreign petroleum then it will have to make

major changes in its renewable energy plan.

With the recent enactment o the renewable energy stndard, the discussion o increasing

renewable power has now become a reality. Te Inland Empire will likely soon become theregion o ocus as Caliornia strives to lead the country in renewable energy use.

THE CONSTRUCTION

COST OF ENOUGH NEW

RENEWAbLE ENERGy

SOURCES TO MEET

GOvERNOR bROWNS GOAL

WILL REqUIRE much

higher utility rates

For consumers, WITH

RATES increasing by as

much as 14.5 percent.


9/15



Caliornia Governor Jerry Browns 201112 Budget proposal calls or eliminating theapproximately 400 redevelopment agencies throughout the state. It aims to shit

economic development responsibility rom the redevelopment agencies to local

governments, in an attempt to cut back the enormous debt incurred by the agencies andinvest the money saved directly in education and other local needs.

Redevelopment agencies are government subdivisions whose main goal is to reinvigorate and

improve blighted, deteriorated, and economically downtrodden areas. Sixty years ago, theCaliornia legislature established a process whereby a city or county can declare an area to be

blighted and in need o redevelopment. Tereater, most property tax revenue growth rom

the project area is distributed to a newly created redevelopment agency rather than to otherlocal agencies.

Once a community establishes a redevelopment project area, property tax revenue allocated

to local government bodies is rozen at its current level, known as the rozen base. I the valueo the property increases due to improvements to the redevelopment area or any other actor,than the amount o property tax revenue also increases. Te amount o the increase above the

rozen base is called the tax increment.

In many cases the use o redevelopment agencies has provided substantial benets. For

example, Riverside embarked on a housing redevelopment project in the citys Universityneighborhood by renovating a 64unit building rie with health and saety violations. oday,

the opaz and urquoise housing complex has been substantially rehabilitated and is now a

vibrant asset to the city, providing afordable housing or lowand moderateincome amilies.

On the other hand, redevelopment agencies have also come under attack or subsidizing

projects that would not ordinarily be considered blight. State Controller John Chiangsaudit o eighteen agencies ound that Palm Deserts redevelopment agency proposed to

eliminate socalled blight by spending nearly $17 million on reurbishing a municipal golclub.

Establishing a redevelopment area is one o the easiest ways or local governments to raise

signicant money. Tis is because they are not constrained by some o the key accountability

and transparency elements required o other local government bodies. Specically,redevelopment agencies can incur debt without voter approval and redirect property tax

revenues rom schools and other agencies without voter approval or consent o the otheragencies.

ax increment revenues in Caliornia totaled $5.7 billion in 200809. Over the last threedecades, redevelopment agencies share o total statewide property taxes has increased to 12

percent. In some counties, nearly 25 percent o all property tax revenue collected goes to aredevelopment agency rather than schools, community colleges, and other local agencies.

Te current law allocates 20 percent o tax increment revenue to low and moderate

income housing. Another 22 percent (on average) passes through to local governments

and is distributed among counties, K14 schools, special districts and cities. Te remaining58 percent o tax increment revenue is available or redevelopment activities. Controller

Chiangs oce ound signicant aws with the states redevelopment agencies. Tese includeinaccurate audits, substandard reporting procedures and inappropriate use o housing unds.

Supporters o redevelopment agencies argue that they reduce unemployment and promote

longterm economic prosperity. However, theLegislative Analysts Oce notes that there

are no objective or standard perormancemeasures to gauge whether these agencies

do, in act, promote job growth or generate

signicant economic returns to the taxpayers.

Under Governor Browns proposal, a localsuccessor agency, most likely the city or

county that originally authorized the

redevelopment agency, would be responsibleor managing the existing contractual

obligations and paying the agencys debts.ax increment revenue would rst go to the

successor agency to retire the redevelopment

agency debt and then to und other localgovernment services.

Te Governors proposal assumes tax

increment revenues o $5.2 billion in 201112. It allocates $2.2 billion to successor

agencies to pay down redevelopment debt.

It maintains the local pass through at $1.1billion, approximately 21 percent, and adds

redeveoen ahoiies unde Fie

GOvERNOR bROWNS

PROPOSAL HAS IGNITED

OPPOSITION IN THE

INLAND EMPIRE. riversid

county is among the

top ten counties

in the entire statein redevelopment

groWthand makes

extensive use oF

redevelopment

agencies.


10/15



another $210 million to local governments. However, the proposal also contains a onetime $1.7 billion dollar payment to the state in 201112 to und trial courts and MediCal.

Ater the rst year, any property tax revenues remaining ater the successor agencies pay

redevelopment debt would be distributed to other local governments in the county.

Brown projects that these changes will save the state approximately $1.7 billiontheamount o the onetime payment to the stateduring the next scal year. Te governor

argues that Caliornias enormous decit makes it no longer easible to subsidize the work o

redevelopment agencies.

Supporters o redevelopment agencies, however, ear that their elimination would bedevastating to the Caliornia economy or a number o reasons. First, they argue that the

eradication o these agencies will kill jobs and shit much o the scal burden on cities

themselves. At a time when the state aces a high unemployment rate, they argue that theredevelopment agencies provide much needed employment. Tey also point to the use

o redevelopment to improve many areas o the state through the revitalization o publicinrastructure and commercial development, such as Riversides opaz and urquoise housing

complex.

Further, because 20 percent o tax increment revenue must go to low and moderateincome

housing, redevelopment unds have been a signicant source o revenue to local housingdistricts. It has been noted, however, that state audits and oversight reports have concluded

that a signicant number o redevelopment agencies take actions that reduce their housingprogram productivity, such as maintaining large balances o unspent housing unds, using

most o their housing unds or planning and administrative costs, and spending housing

unds to acquire land or housing but not on actual building.

Te League o Caliornia Cities is also critical o the Governors plan, saying that it violatesProposition 22, which prohibits the state rom reaching into local government unds. Te

League argues that the rst year allocation o $1.7

billion to the state ies in the ace o the 61 percento Caliornia voters who passed Proposition 22 last

November.

Governor Browns proposal has ignited oppositionin the Inland Empire. With traditionally high

unemployment rates, his proposal has signicant

impact in this area o Caliornia. Riverside County inparticular is among the top ten counties in the entire

state in redevelopment growth (rst in the InlandEmpire) and makes extensive use o redevelopment

agencies.

Riverside County Supervisor John Benoit is a

leading local advocate o redevelopment agencies andargues that they have helped revitalize economically

depressed communities. We have absolutely beenable to use redevelopment agencies to ameliorate theunemployment problems. We have used RDA money

to put 8,700 people back to work in Riverside County,particularly construction workers who were previously out o

work, Benoit said.

Benoit ears that i redevelopment agencies in Riverside and

the Inland Empire are eliminated, it may require years to adapt to the change. Weve clearlymade some dramatic improvements using RDAs; its a source o pride or us in Riverside, but

its also in danger. Te projects that have been completed have created longterm economicdevelopment so signicant that it makes it hard to argue about the benets o RDAs.

Perhaps the biggest impact that redevelopment authority spending has had in Riverside isMecca, a community o 5,000 Hispanic arm workers. A small area in Riverside County that

had previously been severely impoverished, underdeveloped, and with over 40 percent o thepopulation under the poverty line, Mecca used $50 million dollars o redevelopment money

to vastly improve the lives o its inhabitants.

Tere has been impressive work being done by the redevelopment agency in Mecca, Benoit

says. Redevelopment has been used to build a medical clinic, library, sherifs station and alot more that never would have been possible without RDAs.

Redevelopment agency advocates acknowledge that eliminating them would provide atemporary improvement to the state budget decit. Advocates hope to see an improvement

o the redevelopment process and have developed compromise proposals to saveredevelopment authorities.

A recent proposal put orth by Los Angeles Mayor Antonio Villaraigosa, suggests that the

agencies could help the state borrow money in order to alleviate the budget decit. Te

proposal calls or allowing the agencies to divert approximately $200 million a year to thestate or 25 years, thereby allowing the state to nance a $1.7 billion loan to help reduce the

PHOTO: jOHN b

RIvERSIDE COUNTy SUPER


11/15



decit. In addition, the proposal would ask redevelopment agencies to divert more tax unds

to pay or local services with $50 million going to schools annually.

Governor Browns proposed budget also targets enterprise zonesanother popular local

government program. Currently, there are ortytwo enterprise zones throughout thestate that ofer special tax breaks and other incentives to businesses in designated areas to

encourage economic development and growth. Te tax benets provided or most o theseareas include a hiring credit, a credit or sales tax paid, a credit or employees who earn

wages within the area, and a deduction or interest received rom businesses in the area.

Te governor estimates that his proposal to eliminate all enterprise zone tax incentives willgenerate an estimated $343 million in

20102011 and $581 million in 201112in additional tax revenues.

Te enterprise zone program has grown

remarkably since the legislature enacted

it in 1984.Te program started in 1986with ten zones and expanded to orty

two by 2008. Te average cost per zoneincreased rom $48,000 to $11.1 million.

Te Caliornia Budget Project puts the

cost o enterprise zone tax credits anddeductions at $465.5 million in 2008, up

rom $657,000 in 1986. Te hiring taxcredit accounts or 58.7 percent o this

cost, $273.5 million in 2008. Yet because

the hiring credit is granted or new hires,rather than new jobs, companies can

claim it without creating any new jobs.Critics argue that this rewards companies

with high turnover rates more than those

that create steady employment.

Governor Browns proposal sparked an outcry rom local ocials, legislators, and businessleaders who have come to rely on enterprise zones as a tool or economic development.

Caliornians or Jobs and Sae Communities is a coalition o local government bodies,

statewide trade and industry groups, local and regional chambers o commerce, andbusinesses. It argues that eliminating enterprise zones is a tax increase on the more than

10,000 businesses in Caliornia currently beneting each year and it strongly opposes such amove.

Assembly Member Manuel Perezs Coachella Valley district is home to our enterprise zones.

Perez acknowledges that there are problems with the program, but believes that the solution

is to reorm it, not to eliminate it completely.

Perez has an alternative plan, the 2011 Enterprise Zone Reorm Package, which wouldreorm the program in several ways. Most notably his plan would phase out the 5year

hiring credit, replacing it with a 3year credit. Te new hiring credit would reward

employee retention by increasing the amount o credit each year. It also would ofer moreaccountability by designating poor perorming zones or zones that have not demonstrated

progress and tracks how local resources are spent on zone activities. Te Perez proposal wouldcheck the unlimited expansion o zones and require enterprise zones to ollow census tract

boundaries. It also would raise the reporting requirements or claiming the hiring credit andlimits the carryover o excess tax credits to 15 years.

Perez strongly supports these reorms because, under current laws, lowincome populations

in rural areas are treated diferently than those in cities. oo oten, rural areas are not invited

to the table and we tend to lose out to urban areas with regards to resources, Perez asserts.He contends that the perception that the program is a wasteul orm o corporate welare

is inaccurate, citing data to demonstrate that eneterpise zones have improved economicconditions in Indio.

Perez knows that accountability will be an important issue. Another element o my reormlegislation includes implementing measurements o success that over the course o time, will

show numbers grow steadily in terms o variables such as how many jobs are being created inenterprise zones and how many people are getting of social welare.

Deenders o enterprise zones also argue that eliminating them would be unconstitutional.

Marty Dakessian represents the Communities to Save Enterprise Zones coalition andstrongly opposes Governor Browns proposal. Governor Browns proposal violatesagreements involving the state, local governments, and businesses lured to the zones by hiring

tax credits, operating loss deductions, and other invectives. He argues that repeal o theenterprise zone program violates the contracts and due process clauses o the United States

Constitution and the contracts clause o the Caliornia Constitution.

Governor Browns proposals to eliminate redevelopment agencies and enterprise zones has

sparked serious debate throughout the state. Inland Empire ocials have come to rely onboth as valuable economic development tools. Tey vow to ght both proposals.

GOvERNOR jERRy

bROWN ARGUES

THAT caliForniasenormous deFicit

makes it no

longer Feasible to

subsidize the Work

oF redevelopment

agencies.

PHOTO: GOvERNOR jERRy bRO


12/15



Over the past two decades, the Inland Empire staple o afordable housing andabundant employment opportunities in the construction, manuacturing, and

trade/logistics industrieslocated adjacent to the Greater Los Angeles areamade

an attractive location to settle amilies. Tis led to remarkable population and output growthover that time period. San Bernardino County and Riverside County share many socio

economic aspects, but the recession has had diferent distribution efects on the two counties.Ater hitting rock bottom in 20082009, San Bernardino County shows signs o emerging

as the less bloodied o the two counties. Compared to Riverside County, San BernardinoCounty has exhibited lower rates o population growth within the last decade (18% versus

37% rom 2000 to 2009) and lower home value volatility over that time period as well. Prior

to the recession, the Inland Empire saw a steady population growth o nearly 3% per yearor 2001 to 2006, most o that due to the 4% growth levels observed in Riverside County.

For comparison, the entire United States typically sees population growth rates o 1% peryear. Since diferences in percentage points do not mean much to most people, we point out

that a population doubles roughly every 70 years i it grows at 1% per year, but that it onlytakes approximately 18 years to double i the population grows at 4% a year. I growth hadcontinued at that pace or Riverside County, then it would have seen twice as many people

living there around 2030!

As housing prices in the Inland Empire began to decline in the s ummer o 2006 and

accelerate through 2008, population growth rates ell to a low o 1% in 2008. Latelypopulation growth has seen a very small uptick to approximately 1.2% growth or each o the

last two years.

Residential home prices in the Inland Empire have ollowed a similar path. Ater an initial

plunge, they have stabilized over the same period as population growth ell and leveled of. Asearly as the summer o 2006, signs o instability appeared in the Inland Empire, nearly a year

beore Los Angeles County home prices began their decline in August 2007. A noticeablediference in oreclosure dynamics between the two areas presents a plausible explanation or

the laglead efect exhibited between the Inland Empire and Greater Los Angeles Area.

Fueled by low lending standards and a aith in the markets upward momentum, home values

swelled rom the stable levels o the mid 1990s to unsustainable heights peaking in 2006. Asearly as the summer o 2006, signs o an impending end to the housing bubble appeared in

the Inland Empire, nearly a year beore Los Angeles County home prices began their decline

in August 2007. In retrospect, this should have been a warning sign to policy makers andbusinesses everywhere: i the periphery experiences problems and i similar conditions exist

in the core, then the core can expect similar conditions in the near uture. However, thesewarning ags were ignored by most.

Te ollowing smoothed graph displaying oreclosures in the Inland Empire and the Greater

Los Angeles area is quite inormative.

From 2003 through 2005, banks lowered their lending standards and modied their

mortgage origination practices to approve marginal clients or loans, sometimes or over 80%

o the equity, and sometimes or piggybacking loans. In the words o Ed Leamer, Directoro the UCLA Anderson Forecast, these practices, extended the home ownership peripheries

o [many] cities both in terms o income and location. Subprime lending practices werepervasive throughout much o the Inland Empire, and the nancing plans in place on these

properties relied on the appreciation o leveraged houses or success. When credit tightened,

the one o the rst segments o residential demand to halt was in the owneroccupied housesin peripheral areas like the Inland Empire, notes Leamer. As demand in the peripheral

markets tanked, banks ound themselves in possession o many underwater properties

Sgnion nd recovey: the I.E.s Hosing me

Figure 1: Foreclosures in the inland empire

and the greater los angeles area, 2002-2010


13/15



in concentrated areas as mortgage delinquencies rose. Te market was soon ooded with

properties o delinquent owners, urther compounding the situation and triggering greater

home price depreciation.

During the teen years preceding the housing market crash in 2006, the Inland EmpiresAfordability Index, a statistic compiled by the Caliornia Association o Realtors (CAR)

measuring the percentage o amilies capable o afording a median home in the area,

plummeted rom the stable 50% levels o the late 1990s and early 2000s to 16% in 2006,its lowest point in 18 years. Te Inland Empires rising percapita income could not keep

up with its quickly escalating home prices, and it showed steeper declines in afordabilityrelative to its neighbors, notably the Greater Los Angeles area. Later, the all in house prices

resulting rom overbuilding and increased oreclosures contributed to alltime high housing

afordability levels; the CAR climbed to 69 or San Bernardino and 63 or Riverside in 2010.

Unortunately the underlying story behind the afordability data is more complicated thanprice and income movements might suggest. Mortgage rates also play a signicant role,

since the vast majority o buyers require a mortgage loan in order to purchase a house.

Te CAR pegs mortgage rates in a particular area to the national average o all xed andadjustable mortgage rates. As a result, a CAR index higher than the Caliornia average is an

indicator o a region with a lower overall credit standard than the Caliornia average. As othe ourth quarter o 2010, the CAR index or the Inland Empire stood at 64 compared to

the Caliornia average o 50. Tis 14point diferential indicates that, on average, the Inland

Empire has lower credit ratings, lower percapita income, and consequently, higher rates thanthe Caliornia average. Tis means that Inland Empire homeowners pay a higher interest rate

or their mortgages, reducing the underlying value o homes in the area.

Home Prices

Perhaps the most visible and accessible measure o housing market perormance is home salesprice. In many areas o the country, prices skyrocketed during the housing bubble, but ew

counties showed such extremes as San Bernardino County and Riverside County. Fueled bybullish housing speculation and aggressive lending practices, home prices in San Bernardino

and Riverside Counties soared nearly 124 percent rom 2002 to 2007 on the Conventional

Mortgage Home Price Index (CMHPI). Tis was the third largest spike in the nation behindBakerseld, CA (127 percent) and Miami Beach, FL (126 percent). Compared to 2002

levels, prices in both San Bernardino County and Riverside County easily climbed higher interms o percentage growth and subsequently experienced a larger decline than the Greater

Los Angeles area or, indeed, Caliornia as a whole. Furthermore, housing prices in the two

counties showed greater price volatility than the Greater Los Angeles Area. Tis diferencein price levels and volatility is typical o what is developing into an EastWest divide, rather

than the traditional NorthSouth divide, in Caliornia. It appears that prices have reachedbottom, and are rming now, as investors have entered the market and absorbed some o the

inventory through cashow investments. However, the absence o a strong recovery in the

Inland Empire underscores the uncertainty in the market and gives developers mixed signals,especially regarding the potential and timerame to undertake new construction.

Housing Permits, Starts, and Foreclosures

One o the most important indicators o a real estate markets health is the measure o newconstruction activity. It is well known, or example, that housing start levels and changes in

housing starts are leading indicators o general economic conditions. Te number o housingpermits issued on a countywide basis is a proxy or housing s tarts. Figure 4 shows seasonally

adjusted permits in San Bernardino County and Riverside County, taking into accountchanges in population.

Demand or new construction has two main components: speculative nonowner occupied

housing and owneroccupied housing. Speculative development oten outnumbers the more

individual, ownerdriven construction, and thereore serves as an indicator o the marketslongterm momentum.

Figure 2: housing aFFordability index, 1988-2010,

caliFornia, greater los angeles, and the inland empire

Figure 3: home prices in caliFornia, greater los angeles,

san bernardino county and riverside county, 2002-2010


14/15



Foreclosure data is also closely tied to the demand or housing permits and provides urtherinsight into the health o the housing market. High oreclosure rates indicate a depressed

market with lower home prices. Foreclosed homes are oten sold at resale pricesarbelow the cost o new construction. Accordingly, beore the undamentals are in place or

investors to take the risk o speculative development, the overall market must absorb and re

price the inventory o older oreclosed homes and allow home prices to rm.

In San Bernardino County and Riverside County, oreclosures lag housing permits.Construction there will not increase until oreclosures subside. Since San Bernardino County

has seen a downward trend in oreclosures over the past two years, new construction maypick up once the inventory o oreclosed homes changes hands and its supply diminishes. Yet

it is not clear that sucient demand exists to absorb these oreclosed homes. Tere is some

evidence o pentup demand rom the increased size o households as seen rom census data:evicted individuals rst moved in with riends and eventually with amily. Tese increases in

household size cannot be expected to be permanent. Eventually these individuals will moveout again. However, it seems more likely that they will move into rental units beore they will

be able to move into single unit houses. Compared to the decade lows set in January 2008,

home sales have increased 105 percent in San Bernardino County, 15 percent more thanRiverside County in 2010.

Both San Bernardino County and Riverside County demonstrate the laglead efect betweenoreclosures and housing construction permits. Each county issued the highest number o

gross permits (roughly 1,650 or San Bernardino County and slightly more than 3,100 orRiverside County) in the second quarter o 2004. Tis was almost a year beore oreclosures

hit their lows in April 2005 (23 in San Bernardino) and May 2005 (17 in Riverside).However, when the housing bubble burst in 2006 and oreclosures started to rise in 2008,

housing permits in San Bernardino County plunged to a decade low o 57 in January 2009

and in Riverside County to 75 in December 2008. Nearly eight months later, oreclosuresspiked in both counties to almost 2,800 in July 2008 or San Bernardino County and close

to 3,850 in August 2008 or Riverside County.

Tis leadlag efect ollowing the burst o the housing bubble indicates that the speculativecomponent o housing demand likely got out o hand. Even as developers were recognizing

a allof in demand, inventory continued to grow as projects were completed. Supply wasurther increased as the oreclosures began to enter the market in greater numbers. Ten,

when prices started to all, the relationship between housing permits, excess supply o homeson the market, and increasing number o oreclosures compounded to depress demand urther

and quicken the descent. Te interactive nature o housing construction and oreclosures

suggests supply stabilization is on the horizon since oreclosures have begun to stabilize (andeven tail of). And as demand gains a oothold, construction will begin to pick up. But when

this will occur is still too uncertain to predict.

San Bernardino County and Riverside County

Historically, San Bernardino County has had a lower oreclosure rate per 10,000 people than

Riverside County, which should translate to a brighter outlook. However, the housing permitgures also show e wer new construction opportunities in San Bernardino County than in

Riverside County. Tese are two elements o a complex story, and home sale prices add yet

another layer. In the past, Riverside County has experienced higher home prices, seemingly

more subject to the market conditions. Also note that San Bernardino County is steadilycatching up to Riverside County in the CAR afordability index. Similarly, despite loweraverage housing prices in San Bernardino County, the percent change in home price rom

2002 shows that San Bernardino County has emerged rom the current recession less batteredthan Riverside County. Tese actors lend many diferent perspectives to the same problem,

but perhaps the best indicator o each countys immediate uture is the measure o oreclosures

as a percentage o homes sold.

San Bernardino County and Riverside County have shown comparable levels o home salesper 10,000 people, with the slight edge avoring Riverside County. In the last three years,

however, San Bernardino County has halved this gap. More impressively, as shown in Figure

5, San Bernardino County has been recirculating through its inventory o oreclosures morequickly than Riverside County or Los Angeles County, which may be a positive indicator o

uture perormance. As home prices rm to a point above oreclosure sale values, speculativedevelopment should pick up, but again, there is little indication as to when this will happen.

Perhaps the saest bet is to say that, at least or now, San Bernardino appears better of.

Figure 4: housing permits, san bernardino county and

riverside county, 2002-2010

Figure 5: Foreclosure recirculation percent, los angeles,

san bernardino, and ri verside counties, 1998-2010


15/15

CLAREMONT MCKENNA COLLEGE

BAUER CENER500 EAS 9H SREECLAREMON, CA 91711-5929

Te Inland Empire Outlook is a publication of the Inland Empire Center at Claremont McKenna College.

Te Inland Empire Center or Economics and Public Policy is based at Claremont McKenna Colleg

It was ounded as a joint venture between the Rose Institute o State and Local Government and theLowe Institute o Political Economy to provide business and government leaders with timely andsophisticated analysis o political and economic developments in the Inland Empire.

Te IEC brings together experts rom both ounding institutes. Marc Weidenmier, Ph.D., director othe Lowe Institute, is a Research Associate o the National Bureau o Economic Research and a memo the Editorial Board o the Journal o Economic History. Andrew Busch, Ph.D., director o the RInstitute, has authored or coauthored eleven books on American politics and currently teaches couron American government and politics. Manred Keil, Ph.D., an expert in comparative economics, hextensive knowledge o economic conditions in the Inland Empire. Kenneth P. Miller, J.D., Ph.D., expert in Caliornia politics and policy who studies political developments in the Inland Empire. BiNadon, J.D., has worked in municipal government and specializes in local government policy. DaviHuntoon, MBA, specializes in economic development, survey research, and tribal governments issu

ANDEMPIREOUTLOOk.COM

Editorial Board

Andrew Busch

Director, Rose Institute

Marc D. Weidenmier

Director, Lowe Institute

David Huntoon

Manred Keil

Kenneth P. Miller

Bipasa Nadon

Student Editors

Liz Johnson

Aanchal Kapoor

StaffAlex Johnson

Saumya Lohia

Riley Lewis

Dave Meyer

Sarah Quincy

Jake Roth

Samuel Stone

The Inland empIre CenTer

final ieo spring 2011

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