SLO Tourism Up In June

More visitors stayed in San Luis Obispo County in June at local hotels. Smith Travel Research shows SLO County accommodations sold 11.4% more rooms in June than the same month the year before.RevPAR was up a strong 13.8% while occupancy was up 8.9%. Occupancy stood at 76.5% compared to 70.3% in June 2011.

Statewide, hotel occupancy increased from 72.2% in June 2011 to 76.9%. Bay Area cities led the state with the strongest performance in RevPAR. Santa Barbara County occupancy was up 5% while Monterey County recorded an increase of 11.2%. Occupancy increased in every metro area in the state except Fresno where it was down 0.8%.

SLO Jobless Rate Spikes

San Luis Obispo County’s unemployment rate was up in June to 8.5% from a revised 7.8% in May but down from June 2011 when it was 9.6%.

While farm jobs were higher from May to June 2012 by 900 there were 1600 fewer nonfarm jobs. The largest loss came in the category of “other services”  and government. But farm jobs were up 20%.
On a positive note, construction jobs were up 600 year over year and trade jobs were up 500 along with 500 more hospitality jobs based on tourism. Total year over year gain in new nonfarm jobs add up to 1400.

MORRO BAY ASSURED POWER PLANT TO RUN A FEW MORE YEARS

Morro Bay got  some good news this week.The Morro Bay power plant owned by Dynegy Inc will likely not close at the end of this year as had been feared (as well as budgeted) by the city. Instead, the aging plant will continue to operate at least another 2 years mayor William Yates says.

Council including Yates was informed of these new insights at the July 10 city council meeting that talks with Dynegy had yielded this news since the June 26 city council session. If that proves out, it means an extra $500,000 to the city’s General Fund and $250,00 to the Harbor Fund from current agreements with the company. Those agreements include the Outfall Lease and Community Development Fund payments made by the plant operator to the city each year.

Fears the plant could close sooner than later have been fanned in recent weeks as Dynegy lost a power contract with SCE and on top of that, the huge firm declared bankruptcy Friday – adding to a sense of doom.

But Yates insists that “the bankruptcy issue is irrelevant” and the main issue is whether the power plant runs.The plant does have an agreement with the state ISO who operates the power grid to sell them the power when it needs it.

“They needed it today.The plant was running” says Yates.”We know the plant is last in line to run – so when it does run we know the state is really cooking” quips Yates.

Indeed, today was said to be one of the hottest days across the state this summer.Yates says since they lost the contract the plant has run”only a couple of times”

“We don’t know the future but at least for budgeting purposes this is encouraging. A few weeks ago we were expecting them to close by the end of the year.”

SLO Marathon Delivers $3 Million Economic Impact

 According to a report compiled by SLO based Productive Impact LLC, the inaugural San Luis Obispo marathon and half-marathon had a $3 million economic impact in San Luis Obispo County. The race was held  in April.Using data from an online survey of race participants, the study estimates that nearly 80% of the $3 million resulted from spending by the 3,143 participants and their supporters on items such as lodging, food, souvenirs, gas and event preparation. The remaining 20% represents the operational costs for the organizer.The study also estimates that 55% of participants were non-local and brought an average of three additional people with them to the event. These visitors stayed in the area an average of 1.33 days, generating a total of $37,903 in transient occupancy tax within the County. Event participants also generated $85,153 in sales tax.

Working with regional partners to promote recreational activities – such as the marathon – is one of the strategies recommended in the Economic Development Strategic Plan.  The success of the marathon is an example of how these types of events contribute to the quality of life in SLO and benefit the local economy.

Mid-Year Construction Strong In SLO County

A glance at construction activity in San Luis Obispo county through mid-year show an improved picture compared to last year.

Through mid-year 2012 some 111 single family permits were issued in SLO County compared to 108 over the same period a year ago. What pops out at you however, is the valuation of all residential permits – $55.4 million in mid 2011 compared to $142.7 million during the same period this year.

What’s the change?

By far the big change is a surge in alternative energy( think solar) permits for residential units valued at $83.2 million so far this year compared to to just $3.6 million for the same period in 2011.Residential remodels are up in 2012 as well from $9.6 million to $12 million.

Commercial Busy

How about on the commercial front? Much bigger numbers here with all commercial permits valued at $115 million so far this year compared to $23.7 million during the first half of 2011.A large chunk of that comes form the big solar projects in the Carrizo Plain valued at $65 million so far this year compared to $163,000 in 2011 in the commercial alternative energy category.

However, there is also a big jump in oil exploration related industrial activity this year mostly at one address in Price Canyon near Pismo where they are literally sinking millions of dollars.The value of ag projects (think wineries) in the county also jumped so far this year form $6.3 million to $11 million. Retail permits jumped  from $3.2 million to $7.4 million while the construction category of offices increased to $8.7 million from only $280,000 in the first half of 2011.

Clearly, commercial building activity is back in SLO this year. All data from Construction Monitor.

SLO Biz News

Tourism remained strong in the City of San Luis Obispo in April with hotel bed tax (TOT) revenues for April 2012 up by 5.5% from the same month last year and up by 7.9% year to date. About 100 new hotel rooms have just come online or are under construction.

SLO will get an America’s Tire store off Los Osos Valley Rd on Calle Joaquin,the freeway frontage road near the reborn Mercedes Benz dealership. The independent tire company has locations across much of California and plans a new store in Paso Robles too.The tire  retailer promises to”beat Costco” on prices. The business activity near the freeway interchange includes the new Hampton Inn hotel open now for about a month with the car dealer and new tire store helping city tax revenues but also helping to clog traffic at the interchange

Downtown, the Morro St/Higuera area is getting new life with construction of the 17 room Granada Hotel to open this December in the 1920s era Granada building with new retailers joining current tenants this fall.

SLO Adds Jobs

SLO Unemployment Down Again

EDD reported that unemployment in San Luis Obispo County in May fell to a multi year low of 7.8%  compared to 7.9% in April and 8.8% a year earlier.

The SLO economy added a robust 2000 jobs in all sectors in the past month including 1500 non-farm jobs.Some 800 of those jobs were in the hospitality industry(700 of those added in the past year) as tourism has rebounded.

In the farm sector there were 4500 jobs in May 2012 compared to 4400 in May 2011.

There were 500 more construction jobs in May 2012 compared to May 2011 likely due to the solar projects in eastern SLO county.

The EDD reports show a larger labor force in May 2012 at 142,300 – 2.1% higher than year ago – as more people are looking for work.But there are more jobs with employment up 3.2% year over year.

California’s unemployment rate in May dropped to 10.4% compared to 10.5% in April and 11.4% in May 2011.

THE FUTURE OF JOBS IN SLO

SAN LUIS OBISPO, CA – A public workshop is planned to review a draft of the City’s Economic Development Strategy. At this workshop, participants will review a draft of the Plan and provide feedback on the proposed strategies and prioritization of the City’s future work efforts in support of the Plan.

The public workshop will be held on Thursday, June 21 at 6:30-8:30 p.m. in the City-County Library Community Room. Audience participation will be encouraged via a survey tool that collects responses from text messages and web browsers. In order to participate, attendees should bring their mobile devices.

Previously, three public workshops were held to gather input from residents and the business community. At these workshops, residents and representatives from the business community, Cal Poly and non-profit organizations provided robust feedback on a variety of topics associated with creating quality jobs. This public input was a significant source of information used to identify key issues and develop the Strategic Plan.

As part of the 2011-13 Financial Plan, the City Council approved Economic Development as a Major City Goal, with the objective to:
Increase focus on economic development.
Support creation of head of household jobs through developing strategies for infrastructure, focusing on promising growth sectors, and expediting desired economic activity.
Expand collaboration with Cal Poly, Cuesta, business community, and responsible agencies.

More information about the workshops can be found at http://www.slocity.org/economicdevelopment/strategicplan/plan.asp.

For more information, visit the City’s website at www.slocity.org. For questions, please contact Michael Codron, Assistant City Manager (mcodron@slocity.org) or Claire Clark, Economic Development Manager.

SLO Biz…Wine,Taxes & Power

Paso Robles May Get 225 Room Resort

The City of Paso Robles is studying a plan for a new 225 room resort  hotel off Highway 46 and east of 101. The Ayers Resort Hotel project is the subject of a formal environmental review and is located on 20 acres at the northeast corner of Buena Vista Dr and Experimental Station Rd. The city began the review in February. The negative declaration ends June 22 ,suggesting their are few issues.

New Winery Planned

Doug Thomsen is seeking a county permit to build a 6340 sf winery on Vineyard Dr near Paso Robles on a 36 acre parcel. Thomsen owns Orchard Hill Farm Bed and Breakfast nearby.

Dynegy: No NPDES Permit For Morro Bay

The owner of the Morro Bay Power Plant has informed the state California Energy Commission that it wishes to eliminate any more phases to modernize the aging power plant now – after removal of the old tank farm. In letters received May 22 and June 11,2012, Dynegy clarified  that it  would not seek a un updated National Pollution Discharge Elimination System(NPDES) permit required to continue operations on a long term basis.

The letter appears to confirm Dynegy’s plan to shutter the plant. In a May 30 press release, Dynegy said “ Until recently, output from the facility was under contract to a local utility. That contract was cancelled in mid-May and the cancellation will likely result in a shift of earnings and cash flows between periods. Dynegy is actively seeking other commercial arrangements for the facility and has been offering the facility’s output in the day-ahead market administered by the California Independent System Operator since May 19, 2012”

Seeking a new NPDES permit would require the company to offer a long range plan to quit use of the practice of once through cooling, banned by the state in 2010 with a deadline of 2015. The Morro Bay plant is one of 19 coastal power plants that rely on ocean water as a coolant.

Still,the Houston_based company continues an optimistic tone in their news release saying that”Dynegy has no plans to retire the facility at this time, and as long as the plant is economically viable, Dynegy will continue to operate it.”

But not without a new permit.

City Sales Tax Receipts Up 13%

San Luis Obispo city sales tax revenues received in May 2012 for sales occurring from October through December 2011 were up by 11.7% compared with the same quarter last year. This follows a 9.1%
increase last quarter. Total tax receipts were up 13%. This is the 7th consecutive quarter of recovery following 11 quarters of decline.

Statewide,retail sales in the final quarter of 2011 were up 7.8% compared to the same period in 2010. Strong 4th quarter sales brought statewide calendar year 2011 within 7.25% of the pre-recession peak reached in 2006. At their 2009 low point, retail sales were 18.6% below their 2006 highs.

The city’s tax newsletter says retail sales have risen on strong demand for new autos, increased consumer spending, significant use tax receipts from alternative energy projects and federal stimulus funded
infrastructure projects. However, rising fuel costs and continued
economic uncertainties are expected to slow the rate of growth in the
second half of this year.

More Sales OnLine

Retailers downsizing is creating new opportunities and challenges.
A recent survey concluded that 53% of the U.S. population has
made an online purchase and that 7% of all retail sales are now done
over the Internet. With mobile and tablet shopping capabilities making online purchases ever easier, Internet market share is expected to hit 9% by 2016.

The ease of online research has sharpened price competition and
brick and mortar retailers are racing to accommodate the new consumer patterns by focusing on enhancing the shopping experience. This includes the development of more intimate shopping environments, use of social media to reach buyers, higher levels of customer service, specialized merchandise that cannot be purchased elsewhere and expanding the selection of goods offered with in-store kiosks supplemented with timely deliveries.

To cut overhead and compete on price, more retailers are going to
the “endless aisle” concept of selling items not actually in the store.
This allows the retailer to increase product variety in a smaller space.
Almost every major retailer has plans for either downsizing the
footprint of new stores or subleasing space in existing stores.
On the plus side, this trend allows entrance into retail markets too
small for large format stores to be feasible. Less populous communities could find their retail bases growing with new compact stores offering the same or more merchandise as their larger counterparts.

Communities with substantial existing retail could see new challenges in filling vacated space while also keeping up with the need for more inviting shopping environments says the newsletter.