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County outlines Opportunity Zones and Enhanced Infrastructural Financing Districts for future development

County outlines Opportunity Zones and Enhanced Infrastructural Financing Districts for future development

By Paul Myers @PaulM_SGN

TULARE COUNTY – The American economy, and even economies at the local level are experiencing a huge boon. What Tulare County is trying to do now, is capitalize on the upswing. And last month the Tulare County Board of Supervisors accepted their economic report that has been months in the making.

The County’s Economic Development Study and Implementation Plan, prepared by Kosmont Companies, outlines where Tulare County currently stands and what goals and objectives the County wants to achieve. Board Chair Kuyler Crocker, who played a large role in bringing the study to fruition, says the study will help realize private sector development that will hopefully lift struggling residents in Tulare County’s unincorporated communities out of poverty.

“It boils down to how we help out our [unincorporated] communities so they have higher incomes and we can move people out of poverty,” Crocker said.

He noted that much of the study looked at economic improvements along Highway 99, the county’s foremost thoroughfare. More importantly, Crocker says it is not necessarily the government’s role to provide the types of services the private sector is better left achieving. Looking at the unincorporated communities along Highway 99, the study helped identify businesses like gas stations and grocery stores

“Grocery stores is something that is a need for a lot of unincorporated communities because there is just not that many…it’s not everything you need…a lot of packaged products not a lot of fresh foods,” Crocker said.

For example, the city of Exeter that has almost 12,000 people have two grocery stores in Save Mart and R-N Market. Unincorporated communities like Cutler-Orosi, East Orosi, and Sultana have access to one grocery store.

“So we’re talking about the poorest of poor communities that don’t have the non-governmental services and products they need as far as grocery stores and retail options, but then they don’t have the resources to get into the larger communities that do have those things,” Crocker said.

Thanks, at least in part to tax cut legislation in December of 2017, some development incentive may bring non-governmental services to the underdeveloped and underprivileged.

 

Zones of Opportunity

Tulare County’s economic report points to the pivotal role of newly created Opportunity Zones. As many as 17 have already been identified in the county. Created by the Tax Cuts and Jobs Act of 2017, Opportunity Zones are a mechanism to provide tax incentives for investment in designated census tracts. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains.

Crocker stated that it is similar to a doctor or teacher having part of their student loans waived for working in an underprivileged area for a certain amount of time. Deferring or eliminating capital gain taxes at the federal level for developing in an Opportunity Zone incentivizes developers to invest in areas that lack resources.

Tulare County’s economic report identified five unincorporated communities in the county that would benefit from an Opportunity Zone designation. Four Opportunity Site areas in Goshen were marked. Three were identified for industrial uses. The first was undeveloped land northeast of Effie Dr. and Nutmeg Road well suited for industrial uses but would require private investment in a groundwater well. The second site is undeveloped land between Better Drive, Effie Drive, Nutmeg Road and Road 67. The site has access to water and sewer. The southern portion of Goshen is currently active farmland south of Avenue 304 between Camp Drive and Highway 99 has already been designated for light industrial use. One property was identified as mixed-use development, but is currently farmland along Betty Drive west of Road 72.

Kosmont, who prepared the report, noted that residents in Goshen have high levels of education and incomes, the community is strategically located near the Visalia Industrial Park and Highway 198 which generates strong demand for new business space, and has Highway 99 access. Kosmont also noted infrastructural improvements needs on two of four economic development opportunities, as challenges.

The economic report identified two Opportunity Sites in Earlimart. Both sites are currently zoned for commercial. White River Plaza, currently anchored by an Auto Zone, includes an additional vacant lot that can absorb more commercial uses with full access to waster and sewer services. The second sites are closed and underutilized cold storage facilities located along the N. Front Street corridor between Sutter and Franklin Avenues. Kosmont’s report states that it could be reused for other business uses, residential, or artist collectives depending on building conditions and the owner’s intentions.

Kosmont states that Earlimart’s water and sewer infrastructure system’s capacity to absorb new growth and access to Highway 99 as strengths. They also note young population with low education rates and high rates of unemployment as a challenge.

The report identified three Opportunity sites in Traver that are clumped together on the west side of the community. The first is an undeveloped site located west of Highway 99, and was previously used as a Caltrans storage yard. Kosmont states that the site is ideally situated for highway commercial services. The second site is undeveloped land on the Northwest corner of 6th Street and Merritt Drive. Kosmont says it is best suited for industrial manufacturing, distribution or transportation uses. It also has ease of access to Highway 99. The third site is farmland on the southwest corner of 6th street and Merritt Drive. Kosmont states that it could be developed for more visitor services/highway commercial, building upon the success of Bravo Farms.

Kosmont notes robust job growth and strong potential market demand, opportunity zone designation and Highway 99 access as strengths. Although, they also note that the Opportunity Sites do not have access to water and sewer lines, and new development will require property owner to fund extension of sewer collection system and groundwater well needs as challenges.

The economic report identified three Opportunity Sites in Pixley, all of which are on the western side of the community. The first site identified on the farmland area strategically located on the southwest corner of Highway 99 and Avenue 120 interchange that can be converted for industrial uses. Kosmont notes that it could be attractive to new industrial, cold storage or distribution establishments due to proximity to large grain mill operation and a potential rail spur. The second site is currently farmland suitable for industrial, cold storage or distribution establishments located at the northeast corner of Road 120 and Avenue 112 near a large grain mill operation. The third site is a 104 acre former crop dusting airfield (Harmon Field) owned by Tulare County. It is planned to be reused for industrial uses. Public ownership allows the County to offer land at below market sale and lease prices in order to incentivize and attract new businesses to the area.

Kosmont identified all of Cutler-Orosi, East Orosi and Sultana as an Opportunity Site. Kosmont noted, the regional traffic along Highway 63 and Avenue 416, the Community Plan update to allow for more flexible zoning, the Opportunity Zone designation and the complete streets roadway and streetscape improvement that are underway, all as improvements. However, they note market demand and the need for infrastructural improvements as challenges.

 

RDA 2.0

While not necessarily a part of Opportunity Zones, Enhanced Infrastructure Financing Districts (EIFDs) can exist in an Opportunity Zone, or outside of an Opportunity Zone. It can be as large ad the entire county or as small as a neighborhood. More specifically an EIFD is a form of tax increment financing. It does not represent an additional tax to the property owner. The County and other taxing entities would be dedicating a portion of future incremental property tax from new development into an EIFD for targeted catalytic infrastructure.

Crocker noted that EIFDs are almost like California’s Redevelopment Agency (RDA) 2.0. The State of California ended RDA in 2012. Now, as EIFDs, the State is offering money to local jurisdictions with the purpose to create infrastructure that would spur development. And according to Crocker, there are developers just waiting to get started, if they can widen the margins.

“We have willing developers that want to build in some of these unincorporated communities but we don’t have the infrastructure in place, and the margins aren’t well enough that they are willing or able to pay for a brand new well for Strathmore or a new waste water treatment plan in Plainview,” Crocker said.

 

Gathering interest

Kosmont noted in their report that the County should dedicated a portion of its website to showcase development or business opportunities in Opportunity Zone tracts. They went so far as to suggest showcasing their Opportunity Zones in online marketplaces like OppSites to reach a national audience of private sector investors, developers or brokers.

Kosmont also suggested, to increase investment in Opportunity Zones, and to evaluate the possibility to overlay specific opportunity sites with EIFDs. In particular where infrastructure deficiencies present an obstacle for new development.

The City of Visalia had clearly been taking notes of he County’s efforts, and their advice from Kosmont. Just last week Visalia launched their Opportunity Zone web page. Highlighted in blue is the entire northwestern portion of the Visalia city limits. Together it includes the Industrial Park, Visalia Business Research Park and Historic Oval Park. The page provides developers with an interactive experience complete with clickable functions that reveal salient details of a particular property.

Crocker says he did not want to commission a report that was going to sit on the shelf and collect dust. And the report prepared by Kosmont added a lot of insight to the County’s understanding of the regional economy.

“I’m very optimistic. I think this is government’s proper role and moving the road blocks out of the way so businesses can come in and do what they do best,” Crocker said.

 

Notable analysis

Economic findings outside of Opportunity Zones and EIFDs, Kosmont found that unemployment is down nearly across the board over an 8 year period. Unemployment in the County is 9.3% as of July 2018, down from approximately 17% in 2010. Visalia’s unemployment rate was 5.5% in July 2018, down from almost 15% in 2010. However, unincorporated communities along with the largest cities in the county – Dinuba, Porterville, Tulare and Visalia – are above the state average of 4.4%.

In terms of agriculture employment ratios percentage of countywide employment in ag, foresty and fishing and hunting was just under 24% in 2007. That number spiked to just over 26% in 2010 and has since declined back to between 23% and 24% by 2017. However, that category still leads the county resident employed population (ages 16 and up) at 17.7% unemployment.

Effective industrial rent in cost per square foot is in the middle for surrounding counties and cities in the County. According to Kosmont Tulare County’s effective industrial rent is $4.37 per square foot. Visalia’s rate averages at $4.43, Porterville’s is $3.59 while Kings County’s is $2.07. There is a large jump between Tulare County and Fresno County where the average rent is $6.17. Kern County’s is $7.24, the City of Tulare’s is $7.61 and Dinuba’s is $8.07. Kosmont also found that 35.5 million square feet of industrical space is vacant in Tulare County. That amount is far more than Dinuba, City of Tulare and Kings County. But far less than the 47.5 million square feet available in Kern County and 80.8 million square feet in Fresno County.

Findings over the inflow and outflow of workers in the county boded well for Tulare County. Accoding to Kosmont, there are 99,178 people living and working in the county. Meanwhile, there are 54,566 workers employed in the county but living outside the county, where there are 56,801 people living in the county but employed outside the county.

Annual wages between all industries as compared to agriculture, forestry and fishing and hunting is a stark difference, and relatively steady of a 10 year period. In 2007 Ag, forestry and fishing and hunting was approximately $21,000 per year salary and rose to just over $28,000 per year by 2017. All other industries in 2007 held an average annual salary of approximately $32,000 and rose to just under $40,000 in 2017.

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Editor and reporter for The Sun-Gazette. Vice president of Mineral King Publishing, Inc.

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