Author: John

California Labor Market Stronger Than Believed

After slowing sharply over the past few months California’s labor market surged forward in February, adding over 40,000 jobs as the unemployment rate dropped by 2 tenths of one percent to 9.6%. The overall gain over the past year has been just under 300,000 jobs, a growth rate of 2% (seasonally adjusted). The sectors enjoying the biggest job gains included Professional and Business Services (+9,400), Leisure and Hospitality (+15,700), and surprisingly, Government (+11,200). While services were solid, the goods oriented part of the economy contracted—with jobs in Manufacturing (-3,300) down as well as in Trade and Transportation (-7,000).

Tulare County: The unemployment rate in the Tulare County was 15.9 percent in February 2013, down from a revised 16.8 percent in January 2013, and below the year-ago estimate of 17.6 percent,EDD reported .Total nonfarm jobs are up 3000 year over year.

SLO County: saw the unemployment rate fall to 7% – best in years.

Regionally, job growth was mixed. The Orange County (+7,000), San Diego (+6,500) and San Jose (+2,300) metropolitan areas boosted state nonfarm growth, but major metropolitan areas in the northern and southern parts of the state showed declines for the month: Los Angeles County (-4,800), San Francisco MD (-2,900) and Oakland MD (-2,600).
This week the EDD also released revised 2011 labor force data for California, reaffirming what their annual industry employment revisions showed – that California’s labor market has recovered at a faster pace than originally reported. The 2011 labor force data was revised upward to reflect an additional 18,500 entrants into the labor force. Last week, the 2012 labor force revisions showed an additional 65,900 entrants into the labor force.
The industries showing the largest upward revisions for 2012 in last week’s release include the Professional and Business Services (+25,700), Other Services (+22,900), and Leisure and Hospitality (+20,900) sectors. The Construction industry posted one of the largest percent changes showing an additional 16,200 jobs in 2012, a 2.8% difference from what was originally reported and reflecting a much improved housing sector in the Golden State.
Last week’s annual revisions also showed that the additional nonfarm job growth in 2012 was broad based regionally. The greater Los Angeles area and most of the San Francisco Bay Area were found to have stronger nonfarm job growth than originally reported. The San Francisco MD led the upward revisions with an additional 20,300 payroll positions, followed closely by Los Angeles County (+18,400) and Oakland MD (+16,800).

Around Visalia: Condemnation / Dialysis / Hookah / More

City Eyes Condemnation for East Visalia Street

The City of Visalia Council is expected to approve a plan to condemn a portion of Gas Co land to extend School St to Burke this week. The location is in the area the city want to build the new Civic Center. The city wants to start  construction of the new Emergency Communication Center this fall nearby.  Negotiations to buy the land have stalled says a report.

Dialysis Center Coming To Ben Maddox

Construction of a new 11,200 sf dialysis center and medical office is coming to 1140 S Ben Maddox.The site would be next to Kaweah Delta’s Prompt Care Clinic near Tulare Ave. The dialysis center is expected  to be a second location for DiVita in town.

Hookah Lounge Planned

Visalia may get a Hookah Lounge at Visalia Marketplace shopping center anchored by KMART. The applicant on the project, Ahmad Jamal proposed his plan at the city site-plan review process this week.Most lounges offer Turkish coffee and hookah pipes burning herbal shisha  containing no tobacco, or nicotine. The lounges are popular gathering spots in urban areas with one describing the experience as follows: “The important thing is not what you put in the pipe, but who is with you while you’re smoking…it’s a complete experience…in a cafe like this one, you find the good people, the old people, the interesting people.”Typically a disposable mouthpiece is provided for each user for hygiene reasons.

More Visitors

Visalia had a 9 percent increase in TOT (bed tax) in 2012 says the annual report of the Visalia Convention and Visitor Bureau.

Energy Savings

California Energy Commission is expected to approve a $500,000 loan  to the City of Visalia to retrofit lighting controls and for HVAC projects. Based on the loan amount, the simple payback is approximately 6.3 years. The City expects to receive approximately $29,000 in utility rebates /incentives from San Diego Gas and Electric and Southern California Gas. The project  will save approximately $78,837 annually.

 

 

 

Around Tulare: Interchange / Juice Co

Tulare Council Asked To Back $400,000 To Help Juice Co

Tulare City Council is being asked April 2 to apply for $400,000 in CBDG funds to extend sewer to the Tulare airport area to help attract a Kern County juice company to town. Having sewer nearby could help attract other food makers to this part of the city say officials.

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Tulare’s Cartmill Interchange Could Break Ground September 1

Tulare City Engineer Mike Whitlock says right of way acquisition is nearly done  and construction of  the $35 million Cartmill interchange on the north end of town is expected to break ground September 1. “We are days away from Right of Way certification by CalTrans that will move the project to construction.”
“We believe with the help of TCAG and CalTrans we will be approved for $7 million that will fill the shortfall on the project” says Whitlock. The funding would be approved May 1 at the California Transportation Commission meeting with monies from a Hwy 99 surplus fund based on savings on past 99 projects. Construction would be 12 to 18 months. The new interchange is expected to draw major new commercial development  to the area including a new shopping center.

The bridge/crossing infrastructure projects add up to some $60 million already approved and either under construction or poised to be in town.Besides the Cartmill project, the community will soon see the Bardsley rail crossing and Santa Fe pedestrian bridge under construction.

 

 

 

 

‘Best Offer’ Buys Visalia’s Sequoia Mall

Visalia’s other retail center- Sequoia Mall

Visalia’s Sequoia Mall is on the sales block in what looks like a fire sale. A Sacramento real estate firm, Core Commercial, listed the property this month with the price tag as “Best Offer” with offers due May 1.The 1974-built mall has 229,000 sf with 44% of that vacant that includes the Tower Plaza. The mall itself is 60% vacant excluding Sears and Hobby Lobby that are owned separately.The sale includes Tower Plaza. The announcement comes after the mall’s current owners KIMCO and Schottenstein have failed to invest in any remodel effort over the years notes Visalia City Manager Steve Salomon.”We talked to the brokers and said we would meet in April with any prospective buyers to encourage them” adds Salomon.

The sale was announced only days after the city council decided to open up south Mooney Blvd for new development in coming years.”You could make the argument that perhaps the next developer will get this property at a reasonable enough price that something good could happen here” says council member Warren Gubler.

This mall has always played second fiddle to its more prosperous sister retail complex- Visalia Mall down the block.But in recent years  after the closure of Borders -the mall has been a ghost town.
Although the price of the Sequoia mall is not listed – it was sold in 2003 for 27.4 million to Centro Watt and resold in 2007 to the current owners,listed at the time at $30 million. The county tax collector lists the appraised price today at about $16.9 million. Informed sources says the current owner owes more than $20 million but that it  could be sold for half that. Another source says the current sale was likely forced by the mall’s lenders.

A major overhaul of the mall is necessary most agree and any deal requires the active cooperation of Sears and Hobby Lobby in what could be a complicated deal.On the plus side a cheap land price could draw good demand right now but the buyer/developer needs to be a sophisticated player. Sears needs a new store but times are not great for this company. There  are several vacant out parcels in this mall including the vacant Longs Drug Store on Caldwell .One bright spot – a new gym will open in the back of the property soon.

The most obvious choice for an anchor in a remodel – a new Regal 12-plex or Edwards Theater like was done on Blackstone in Fresno. Regal leases this mall’s older movie theater now.

Tough Time For Some Central Valley Hospitals

Smaller independent hospitals are having a tough time making the cash flow. From Kingsburg to Porterville, Corcoran to Tulare, these home town health care centers have been bleeding red ink.

In Kingsburg the Board of Directors is considering tearing down the 35 bed district  hospital that has been shuttered for several years.

ER Shut Down

In Corcoran last month they laid off 19 workers as the CEO Jonathan Brenn noted a “recent severe decline in cash collections resulting from fewer patients than normal.” Late this month their ER shut down and surgical services were suspended by state order. The hospital that gets most of its revenue from government health payments has 32 beds. Its staff of 80 is now down to 50. The hospital has a seen a decline of surgical prison business as fewer inmates are housed in state prisons.

In Porterville the 167 bed Sierra View hospital abruptly fired their CEO in January after a decline in profitability.

Tulare’s Problems

But nowhere has the financial pain more in the public eye than at  Tulare Regional Medical Center where the board recently brought back fired CEO Shawn Bolouki to do a “turnaround”  of the financially strapped district.

The need is clear after March 11 when Fitch agency announced that Tulare bond ratings had been downgraded from to ‘B+’ from ‘BB+’ and its Rating Outlook  revised to Negative from Stable.

Fitch cited “CONTINUED FINANCIAL WEAKENING – a multi-notch downgrade that is driven by a rapid decline in Tulare’s overall financial profile in fiscal year ended June 30, 2012 (unaudited interim financials), with continued deterioration through the six-month interim period ended Dec. 31, 2012.

LARGE OPERATING LOSSES: Impacted by challenged patient utilization and increased bad debt, profitability took a sharp turn as the district posted large operating losses of $7.3 million in fiscal 2012 and $3.8 million through the interim period, respectively.

WEAK BALANCE SHEET: Unrestricted cash and investments declined sharply to $10.5 million at Dec. 31, 2012 from $24.5 million at fiscal year-end (FYE) 2010 due to increased capital investments and negative operating cash flow. Additionally, debt load increased in December 2011 due to a $6 million loan to finance certain equipment. Expected further demand on liquidity for the construction project presents significant concerns.

CONSTRUCTION PROJECT DELAYED: The completion of the new bed tower that was initially scheduled for October 2012 has been delayed due to structural problems related to the concrete used on certain floors. Tulare is currently developing a recovery schedule and evaluating the amount of additional funding necessary to complete the project.

RECENT MANAGEMENT TURNOVER  – that it called “considerable”. All in all a tough assessment of the Tulare hospital district.

Looking For A Partner?

This bombshell announcement got Bolouki out in the community attending several public meetings announcing that Tulare might need a stronger financial partner going forward.

“Our best partner will be another not for profit or academic hospital” he said. “The days of stand-alone hospitals are over.” he told a chamber meeting according to reports in Tulare Voice newspaper.

Who would that partner be?

The largest Tulare County player might be Kaweah Delta Healthcare District who is financially strong.

But Kaweah’s  CEO Lindsay Mann says they have not been contacted by anyone from Tulare and says the idea never came up.

In Kings County, nonprofit Adventists Healthcare might be a logical partner having expanded in recent years in both Fresno and Tulare counties including buying up several hospitals.But “we have not been approached by Tulare” says Christine Pickering of Adventist Health.

Now A Recall

This week the Tulare board of directors had a new problem.Three of its members have been noticed for recall confirms the Tulare County clerk on March 26. One of the recall notices needs to be refiled to add a signature says the clerk but looks like an election to recall a majority of the board including the healthcare district’s chair Sherri Ball – will take place.

Seismic Issue

Putting the pressure on Tulare and Visalia are state seismic requirements that push these districts to make big capital expenditures.

Kaweah Delta who already has built a new tower and plans several more at $150 million a pop says it will try to make the case to the state that its existing Mineral King wing “should be preserved beyond 2030 because the seismic risks in Visalia are very low and the structure,being remodeled now, is sound” says Mann. “We will work through legislation if need be” adds Mann, in a move to postpone the need to add another tower in the short term. Otherwise, Kaweah could need to build a new tower in as little as 7 years says a letter to the Visalia council sent last month.The board and council agreed on a expansion master-plan at a recent meeting.

In Tulare their half built $85 million tower is on hold because of concrete quality issues.

Around California: Fish,F-35s,Fuel & Freight

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More Salmon

Cold Pacific water temps may not be good for rainfall across the Golden State this winter but they seem to to be a key beneficial factor in expected salmon returns up Northern California rivers this fall. A recent report noted “Changes in ocean temperatures, which switch from cooler to warmer every decade, can affect salmon survival in the Pacific Ocean.” The cold water has improved conditions for ocean salmon survival in the past few years as more in fish come back to spawn.

California fall Chinook salmon runs are are expected to be up again this year according to the preliminary analysis from the Pacific Fishery Management Council (PFMC). The Council’s preseason report, released in late February said more than 834,000 fall Chinook are forecast for the Sacramento River system compared to  618,000 in 2012 and lows  a few year s back of only 41,000 fish in 2009. PFMC expects the Klamath River ocean abundance for age 4 fish is 331,000  – highest since 1986.

High Hopes For F-35 Deployment in Lemoore
Concerns that the Navy’s F-35  basing in Lemoore in coming years could be in trouble due to  the feds budget were eased last week with a Bloomberg story that said the military was committed to buying more of the jets. The story says the Pentagon wants more planes despite its soaring cost.
“ Buying 29 F-35s next year, the same number Congress approved for the current year, would mean stability after reductions from planned purchases for three consecutive years.” says the article.
“Over the past three years, the Pentagon deferred planned purchases of 425 F-35s until after 2017.
The F-35 funding to be proposed for fiscal 2014 “will help calm any anxieties amongst the partner nations” buying the jets, Douglas Barrie, senior fellow for military aerospace with the London-based International Institute for Strategic Studies, said in an interview.”

Bringing the F-35s to Lemoore will mean replacing seven FA-18 Hornet squadrons with F-35C stealth fighters starting in 2015 say Capt  Eric Venema. A new 40 aircraft training squadron would be added to the  base. Adding it up Venema says an additional 750 military personnel and contractors would come to Lemoore, along with 1,600 military dependents. The basing would mean some $242 million in new construction projects as well.
Earlier this year the Navy announced they had selected Lemoore over El Centro to be the west coast home for the squadrons. That decision will be finalized late this year.

Too Much Ethanol Fuels Red Ink
A surplus of ethanol nationwide has helped idle scores of Midwest ethanol plants. In California Pacific Ethanol just reported a loss in the latest quarter but said margins were improving now.Corn prices are easing this week. Net sales were $197.0 million for the fourth quarter of 2012, compared to $241.8 million for the fourth quarter of 2011.“Both as a step toward qualifying for advanced biofuel and to take advantage of favorable pricing, we purchased sorghum as feedstock for producing ethanol from local, Midwest and international markets,” CEO Neil Koehler said in the company’s fourth quarter earning release

Truck/Train Freight Activity Higher
The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index rose 0.6% in February after increasing 1% in January. (The 1% gain in January was revised down from a 2.4% increase ATA reported on February 19, 2013.) Tonnage has now increased for four straight months, which hasn’t happened since late 2011

. Over the last four months, tonnage gained a total of 7.7%. In February, the SA index equaled 123.6 (2000=100) versus 123.0 in January. The highest level on record was December 2011 at 124.3. Compared with February 2012, the SA index was up a solid 4.2%, just below January’s 4.6% year-over-year gain. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.4%. In 2012, tonnage increased 2.3% from 2011.

American freight railroads are shipping more carloads in the latest industry report with less coal but 57% more oil moving by rail than a year earlier. That could help spell relief for California motorists says recent LA Times story.

“In 2008, BNSF, a railroad that serves the West Coast, moved 1.3 million barrels of oil. In 2012, it moved 100 million barrels. Most of BNSF’s oil originates in North Dakota.

“You could say that ‘there’s a train a-coming,'” said Tom Kloza, chief oil analyst for the Oil Price Information Service, “and its carrying oil.”
Patrick DeHaan, senior energy analyst for GasBuddy.com, said that access to cheaper domestic crude should mean that California gasoline prices will be cheaper in the long run.”

SLO Jobless Rate Falls To 7 Percent

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The unemployment rate in the San Luis Obispo County was 7.0 percent in February 2013, down from a revised 7.5 percent in January 2013, and below the year-ago estimate of 8.8 percent. This compares with an unadjusted unemployment rate of 9.7 percent for California and 8.1 percent for the nation during the same period. The rate is lowest since 2011 when the EDD changed the way they figured the rates. Prior to this in – 2007 and before the county  routinely had rates  in the 5% range or less.

A closer look at the  SLO numbers shows more than 5100 more jobs in Feb 2013 compared to same month in 2012.The biggest jump came in the business and professional services  category. Helping to lower the rate from January 2013 to February was a 1% decline in the labor force .Layoffs in  local government sector  numbered more than 2000 in February.

Ag Watch….The Latest Numbers For Milk / Corn & Cotton

California milk production fell 8% in February compared to a decline of 3.5% across the US.  The drop in California’s milk production came on 2,000 less cows and 155 less pounds of milk per cow. In Kings County there was a 9.3% drop – Tulare County down 6.5% and a 22.4% drop in San Bernardino County as southern California continues to lose dairies.

Californians continue to drink less fluid milk with sales down 3.2 % in February compared to the year earlier but up 9.1% for organic milk.

Another “complete dispersal “ of a local dairy farm – this time it is the George Santos Dairy in Laton set for April 12 with rolling stock to be auctioned April 2. The dairy, that supplied DFA, is for lease.The family is going through a bankruptcy process.

Some rare hope for dairy as cheese prices are rising in the face of a severe drought in New Zealand strengthening export prices.Meanwhile  on the feed front there is hope for lower prices this fall.This week Sept corn dropped the limit – 40 cents – to $5.63 promising lower feed costs for livestock producers later this year.

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While New Zealand and California are experiencing a drought, the corn belt in the US Midwest has seen improved winter rain and snowfall helping to replenish dry ground in major parts of the corn belt. A normal corn harvest this year could be a boon all around.

USDA says US corn growers intend to plant 97.3 million acres of corn for all purposes in 2013, up slightly from last year and 6 percent higher than in 2011. If realized, this will represent the highest planted acreage in the United States since 1936 when an estimated 102 million acres were planted.

In California  corn farmers are planning to plant 8% less corn than last year says USDA.The big drop in “ prospective plantings ”came in cotton with Upland varieties down 37% and Pima down 16% from last year.

Cotton acres across the US are expected to drop 27 percent in 2013 as more producers plant corn and soybeans, according to the National Cotton Council’s annual planting intentions survey.

Demand Up For Asian Veggies

March 27, 2013

Rising demand for Asian vegetables in urban areas of California is creating an improved market for produce grown by the San Joaquin Valley’s Asian farmers, reported Yu Wei in the San Francisco-based China Daily.Richard Molinar, UC Cooperative Extension advisor in Fresno County, told the reporter that demand is driving increased cultivation of Asian vegetables in Fresno County.

“We have around 50 to 75 Chinese farmers here in Fresno County and over 2,000 acres of Chinese crops selling locally as well as nationwide,” Molinar said.

The article noted that UC Cooperative Extension offers advice and services to these growers.

“In addition to providing them with technical support, we also help those farmers to find new marketing opportunities,” Molinar said.

Delaware North Wins Kings Canyon Nat’l Park Concession

New York-based Delaware North Parks and Resorts has won a 10 year concession contract to operate overnight accommodations in Kings Canyon National Parks beginning this fall NPS announced March 6.

The hospitality company already provides service in next door park Sequoia National Park as well as Yosemite, Yellowstone and Grand Canyon.

Delaware North will take over from Kings Canyon Park Services who will continue to operate the lodging and food concession this sumer at Cedar Grove and Grant Grove.The company is based in Carmel and is  known on as Asilomar Management.They own the Montecito Sequoia Lodge in Sequoia National Forest between Kings Canyon and Sequoia. The company secured the Kings Canyon contract in 2001.

Key to the new contract will be requirements that Delaware North  will upgrade older facilities at Grant Grove and spend an estimated $5.4 million doing so.

Concession facilities in Kings Canyon include lodging, retail, and food services at Grant Grove and Cedar Grove. Grant Grove includes the 36-room John Muir Lodge, which was constructed in the late-1990s, plus 33 rustic cabins and 17 tent cabins. A gift shop, restaurant, and market are in the Grant Grove area.

According to the website National Park Traveler revenues for the park are as follows.

“Cedar Grove has a 21-room lodge that includes a small market plus a small food service operation. Lodging revenues for 2010 were $1.9 million at Grant Grove and $366,000 at Cedar Grove. Food and beverage revenues for the same year were $1.1 million and $180,000, respectively. The winning bidder will be required to pay the existing concessionaire $1.1 million for ownership interest that will convert to leasehold interest under the new contract.
The $1.1 million obligation is most likely for the existing concessionaire’s remaining ownership interest in John Muir Lodge, which opened in 1999. Buildings are typically depreciated over a 40-year period.
Merchandise, supplies, and equipment will entail an expenditure similar to that for possessory interest.

Overall, the National Park Service estimates an initial investment for the winning applicant will be approximately $3 million. The prospectus requires an annual payment of 2.6 percent of revenues be assigned to a repair and maintenance reserve and an annual franchise fee of 4 percent of revenues.

The major construction project (called the “concession facilities improvement program”) included in the prospectus is the demolition and replacement of the Grant Grove restaurant and check-in area.
Park Service officials are estimating this will cost approximately $5.4 million and be completed by October 2016. The new concessionaire will be required to develop a temporary food service operation until the new restaurant is functioning. The current gift shop will require remodeling, too, as it is currently connected to the building to be demolished.”

Delaware North made a similar investment in Sequoia when it built the $14 million Wuksachi Lodge after it gained contract there.

Meanwhile at Montecito Sequoia  the Asilomar based  owner has built four new upscale cabins that sleep five each completed in January.