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RIVERSIDE ANDSAN BERNARDINO COUNTIES2019 ECONOMIC REPORT

10th Annual Southern California Economic Summit

ii

COUNTY ECONOMIC REPORTS

RIVERSIDE & SAN BERNARDINO

Prepared by: John Husing, Ph.D. Economics & Politics

For questions regarding this report, please contact: Kevin Kane, Ph.D. Associate Regional Planner Research & Analysis

Southern California Association of Governments 900 Wilshire Blvd., Ste. 1700 Los Angeles, CA 90020

(213) 236-1828 [email protected] www.scag.ca.gov

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Southern California Association of Governments

TABLE OF CONTENTSEXECUTIVE SUMMARY 2

A. Economic Recovery 6

B. Key Growth Industries More Thoroughly Discussed 15

C. Occupational & Industry Pay 26

D. Income Trends 32


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EXECUTIVE SUMMARYAn important consideration in looking at the status and future of the Riverside and San Bernardino County economy is to understand the conditions that affect the region as a whole. The U.S. Office of Management and Budget (OMB) delineates metropolitan regions based on a population nexus, a high degree of economic and social integration, and commuting patterns. Like many U.S. metros, the Riverside-San Bernardino-Ontario, CA metropolitan statistical area (MSA) is made up of more than one county. In this case, Riverside and San Bernardino counties largely respond to the same set of economic forces. Both are inland from coastal counties that are largely built out. They are thus subject to the outward migration of demographic and economic activity from those areas as Southern California expands. This has affected the nature of their residents, companies, commuting, and educational levels.

County Growth Patterns. Growth in each county started with single family housing entering and accelerating, gradually spreading deeper inside of it. This has been followed by the movement of industrial activity (manufacturing, logistics) first into their western edges and now deeper to the east. The workers in the region move internally across their county lines in large numbers with over 90,000 Riverside workers going to San Bernardino and over 60,000 San Bernardino workers going the other way. A significant share of workers in each case, however, are forced to migrate outside the region (Riverside 22.6%; San Bernardino 20.7%) with those patterns remaining largely stable going back to 1990. Of the total commuters from the area, the shares are nearly even with Riverside at 49.9% and San Bernardino at 50.1% (EXHIBIT ES-1).

EXHIBIT ES-1 DESITNATION OF RIVERSIDE-SAN BERNARDINO-ONTARIO MSA COMMUTERS, 2009-2013

Desitnation of Riverside-San Bernardino-Ontario MSA Commuters, 2009-2013

Riverside County Numbers Shares

Employed Persons 857,119

To San Bernardino Co. 92,082 10.7%

Outside IE 177,591 20.7%

San Bernardino County

Employed Persons 788,495

To Riverside Co. 60,089 7.6%

Outside IE 178,034 22.6%

County Share of Commuters

Riverside 49.9%

San Bernardino 50.1%

Source: U.S. Census Bureau, American Community Survey

The migration of population has left both counties with similar educational issues molding the nature of their economies. In 2018, Riverside County found 46.0% of its adults 25 and over with high school or less schooling. It was 46.6% in San Bernardino. Similarly, those with AA or higher degrees were

30.4% in Riverside and 29.9% in San Bernardino. In each case, these were well below the educational attainment levels in the coastal counties with which they must compete (EXHIBIT ES-2). At the bachelor’s or higher level, the figures were 22.2% and 21.4%, respectively.

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EXHIBIT ES-2 EDUCATIONAL ATTAINMENT, HIGH SCHOOL OR LESS, AA & ABOVE

Source: American Community Survey, 2018

General Status of the Economy. Most of the basic data available on the Inland Empire economy is for the two-county metropolitan area. Looking at the most reliable sources for 2019, it appears that the region is on track to add roughly 38,000 jobs. This sets up the potential for a good start to 2020. Any forecast for next year, however, is subject to the potential difficulties impacting the U.S. economy. The nation and the local area are already in a manufacturing slowdown as the President’s tariff policies impact the ability of employers to determine demand for their products. This goes along with a general downward trend occurring in global economic growth. Another issue is the existence of an inverted interest rate yield curve. For several months, short-term rates that financial institutions pay to aggregate funds have been higher than the long-term rates that they earn when they lend 5-30 years. This means these institutions may become reticent to lend capital to firms needing it. Historically, this situation has forecasted the coming of a recession. Meanwhile, the President’s tariff policies are a particular problem for the Inland Empire’s near-term future since a good deal of its economic growth comes from processing imports with 2019 port volumes running below 2018 highs.

Job Data Issue. For Riverside and San Bernardino counties, a look at the most recent employment data shows a significant difference between reports from the CA Employment Development Department (EDD) and the U.S. Bureau of Labor Statistics (BLS). In first quarter 2019, EDD reported that the inland area created an average of just 22,000 jobs. Relying on the same source, BLS found 38,000 jobs were created. The BLS data is regarded as superior since the agency relied on 100% of the jobs that employers disclosed when filing their quarterly unemployment insurance payments. EDD uses that source, but only relies on a partial sample plus modeling for their monthly reports. Also, every year EDD annually is required to

revise their estimates to BLS levels. This will occur in March 2020. For these reasons, this report will rely on BLS growth levels in discussing 2019.

Inland Job Growth Very Strong. It appears that 2019 is on track to surpass its 2007 pre-recession high of 1,306,700 by 250,000 jobs or 19.1%, reaching an estimated 1,556,800. This occurred because job growth has surged for the past several years: up 47,700 (4.0%) in 2013, 56,100 (4.5%) in 2014, 64,300 (4.9%) in 2015, 48,800 in 2016 (3.6%), 51,500 (3.6%) in 2017, 49,300 (3.4%) in 2018 and 38,000 (2.5%) in 2019 based upon the BLS report. If 2019 holds, the area will have created 390,300 jobs in the 2011-2019 period of recovery and expansion. That is 250,100 (178.3%) or approaching triple the -140,200 jobs lost in the Great Recession (2008-2010). Looking at the rest of 2018, there is every reason to anticipate growth levels will be sustained given the forces impacting the key sectors that make up the inland region’s economic base (logistics, construction, health care, manufacturing, high-end).

Unemployment in the inland area has remained low, averaging 4.2% in both 2018 and 2019. The unadjusted unemployment rate for September 2019 was 3.6%. The latest figure, however, was a little above the unadjusted levels for California (3.5%) and the United States (3.3%).

Key Metrics. Importantly, the continuing rise in the Inland Empire’s employment markets has led to significant declines in poverty. In 2010, the share of children under 18 living in poverty was 24.1%. In 2018, that figure had jumped down to 19.1%. Poverty for all people dropped from 17.1% to 13.7%. A key metric dictating the nature of the Inland Empire’s economy is the fact that a combined 46.3% of adults 25 and over had high school or less education in 2018. That compares to 39.2% for the rest of the SCAG region. Those with AA degrees or higher were 30.2%, well below the 41.6% for the rest of the six-

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Imperial San Bernardino Riverside Los Angeles Orange San Diego Ventura

HIGH SCHOOL OR LESS AA OR HIGHER

46.0%42.3%

31.2%31.1%

41.2%46.6%

55.6%48.8% 46.5%

39.7%

30.4%29.9%

20.3%

42.6%


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county area. The share with BA’s or higher was 21.9% versus 34.2% in the balance of the SCAG region. These facts limit the kinds of firms for which the area is competitive. These shares have improved from 50.3% (high school or less), 23.1% (AA or higher) and 16.3% (BA or higher) in 2000, respectively.

Basic Sectors. Like all regional economies, the key for growth in Riverside and San Bernardino counties is the expansion of the economic base sectors for which it has competitive advantages. This is the group of activities bringing money to it from the outside world. Fundamentally, there are five key sectors:

z Logistics firms have located in the Inland Empire in response to its available land and the need to handle both the huge flow of goods moving in and out of the U.S. via the ports of Los Angeles and Long Beach plus the rapid expansion of fulfillment centers that handle the explosive expansion of e-commerce. They are on track to be responsible for 23.5% of the area’s direct job growth in the 2011-2019 period (95,748). Based upon the BLS growth rate in early 2019 (6.1%), the sector’s total should reach 204,248 jobs in all of 2019.

z Health Care firms are expanding in part because the average worker in the sector is already serving 22.8% more people than California’s average. Meanwhile, the Affordable Care Act has cut the share of local residents without health insurance from 20.5% in 2012 to 8.4% in 2018, though the 2017 share was 7.8%. Health care providers are also responding to the fact that 24.5% of the population was 55 years or older in 2017. The area’s population growth was 366,042 people or 8.7% from 2010-2018. Based upon the BLS growth rate in early 2019 (4.1%), the sector’s total should reach 148,351 jobs in all of 2019.

z Construction has historically been the major driver of the Inland Empire’s economy given its undeveloped land and Southern California’s need for single family homes, apartments, industrial facilities, and infrastructure. The mortgage crisis upset the first of these needs and was largely responsible for the local sector losing -68,400 jobs from 2006-2011 (-53.6%). From 2012-2018, it has gained back 46,495 jobs. In 2019, the sector has slowed. Based upon the BLS job growth rate (1.3%), it is estimated that the sector will add 1,353 jobs to reach 106,195 positions. That would still be -21,300 jobs or -16.7% below the 2006 peak.

z Manufacturing has been the economic base sector with sub-par performance in the Inland Empire. This stems from California’s punishing regulatory environment plus energy policies that in May 2019 had put the state’s industrial electrical cost at 12.65¢/kW-h. That was 140.0% above Nevada (5.27¢/kW-h)

and 98.3% above Arizona (6.38¢/kW-h). As a result, the state has created only 86,300 manufacturing jobs (6.9% growth) since January 2011, and accounted for only a 7.0% of the 1,232,000 jobs (10.6% growth) created in the U.S. A good deal of job openings occurs in the sector due to the need to replace aging baby boomer technicians. Based upon the BLS job growth rate in 2019, it is unfortunately estimated that the sector will add only 1,461 jobs in the Inland Empire to reach 102,764 positions. That would remain -20,836 jobs or -16.9% below the 2006 peak of 123,600 positions before the Great Recession.

For the first time, a high-paying sector is showing signs of starting to add to the economic base of Riverside and San Bernardino metro:

z Professional, management & scientific work has recently started expanding. This appears to be a reaction to three factors. First, it has seen a doubling in the absolute number of residents with bachelors or higher degrees from 2000-2017 (100.5%). Even though the inland area’s population is less well educated than its coastal county competitors, in this period its overall percentage of college graduates grew from 16.3% to 21.9%. The percent of those with AA degrees or higher went from to 23.1% to 30.2%. Second, the growth of the Riverside-San Bernardino metropolitan area economy requires increasing levels of professional service providers, given its 4.63 million people and 123,565 firms. Third, the re-emergence of the construction sector creates a need for engineers and other such specialists. Based upon the BLS job growth in 2019 (3.6%), it is estimated that the sector will add 1,816 jobs to reach 52,282 positions.

Given the high levels of poverty in the area, it is important to find sectors that offer workers median incomes at middle class levels. Provided families have a secondary wage earner in a lower paying sector, the data show that this is possible in several sectors due to their median pay levels over $45,000. In particular, it is important for this to be the case in sectors requiring minimal educational requirement given the 46.3% of adult workers with high school or less schooling. Looking at the economic base sectors and one related to them, the following is the situation:

z Logistics (2019 median pay: $49,106). In 2017, 78.4% of workers were in jobs requiring high school or less schooling. The sector is the fastest growing in the Inland Empire.

z Health Care (2019 median pay: $65,757). In 2017, 33.7% of workers were in jobs with minimal educational requirements. The sector has provided significant upward mobility for those with AA degrees or post-secondary training (30.2%). It grows continuously with those obtaining technical

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certifications finding good jobs and the ability to move up within the sector.

z Construction (2019 median pay: $52,482). In 2017, 82.2% of workers were in jobs requiring minimal levels of formal education, though apprenticeship is necessary for some types of work. The sector has become the second fastest growing in the inland area though firms continue having trouble finding workers.

z Manufacturing (2019 median pay $54,438) offers little job growth. Industry leaders, however, indicate that a large share of existing technicians is starting to retire. Of workers in the sector in 2017, 66.5% needed only high school or less training.

z Professional, management & scientific (2019 median pay $72,431). In 2017, a relatively small share of workers was in jobs for marginally educated workers (34.5%). Another 9.2%, however, can step up to better paying jobs with AA degrees or post-secondary training.

z Finance, Insurance & Real Estate (2019 median pay: $51,231) is still in declining mode. In this sector, 65.6% of workers during 2017 were in jobs requiring minimal entry level educations though many require specific state certifications. Its growth requires more home sales and construction activity plus bank expansions.

Growth in these sectors for 2019 is anticipated to cause the area to add a total of 38,123 jobs in 2018 or 2.5%, fastest among major California metropolitan areas.

The need for change in the Riverside-San Bernardino metropolitan area’s economy is underscored by the fact that when inflation is taken into account, the estimated 2018 median household income ($65,512) has only exceeded its 1990 level by 0.6%. Per capita income has fared similarly in that period, up 0.5% from 1990-2018.

Meanwhile, the two-county area continues to have an imbalance in its income distribution. Thus in 2018, the 14.1% of households making over $150,000 a year captured 35.8% of all income. And, the 16.4% of households receiving $100,000-$149,999 a year earned 24.8% of the region’s income. These two groups together constituted 30.5% of households but had 60.5% of the Inland Empire’s income. By contrast, the 38.5% of households earning below $50,000 received only a 12.1% share of the area’s income.


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A. ECONOMIC RECOVERYFORECAST & JUSTIFICATIONIn 2019, the Riverside-San Bernardino metropolitan area is on-track through September to reach 1,556,800 jobs and exceed its pre-recession employment level by 250,100 positions based on EDD data (EXHIBIT A-1). This includes a 2019 estimated gain of 38,100 jobs based on the BLS growth rate in

first quarter. If this holds for all of 2019, the inland economy will have added 390,300 jobs from 2011-2019, well over the -140,200 positions lost from 2008-2010. The 2019 growth rate appears on track to be 2.5%.

EXHIBIT A-1 WAGE & SALARY JOB CHANGE

-100,000-80,000-60,000-40,000-20,000

020,00040,00060,00080,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

Sources: CA Employment Development Department, U.S. Bureau of Labor Statistics, Economics & Politics, Inc.

Meanwhile, the unadjusted unemployment rate in Riverside and San Bernardino counties has been falling. The unadjusted unemployment rate for September 2019 was 3.6%. The latest figure, however, was a little above the unadjusted levels for California (3.5%) and the United States (3.3%).

Job quality has historically been the subject of a great deal of discussion. A comparison of the area’s job growth versus California from 2011-2019 in sectors with varying pay levels produces a surprising result. In the lowest paying sectors (under $35,000), the local area saw 37.5% of its job growth (EXHIBIT A-2). That was much less than the 43.2% share in California. In the highest paying group ($62,500 & Up), the

local share was 13.7% versus the state’s 28.2%. The state’s difficulty and the inland strength was in blue collar/technical sectors paying $45,000-$62,500 with a 40.9% local share versus the state’s 21.8%.

The share in $45,000-$62,500 office-based sectors was 6.8% statewide versus 7.8% in Riverside and San Bernardino Counties. This data highlights the state’s problem if growth in its blue collar/technical sector routes to the middle class is cutoff. It also underlines the need for more expansion in the Inland Empire’s higher paying groups.

2008-2010 Job Loss = -140,2002011-2019e Job Gain = 390,300Net Job Gain = 250,100Increase Over 2007 High = 19.1%

Source: U.S. Bureau of Labor Statistics, CA Employment Development Department

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EXHIBIT A-2 COMPOSITION OF JOB GROWTH CALIFORNIA & INLAND EMPIRE, 2011-2019e

907,457 High Pay (Over $62.5k)217,496 Office, Mod. Pay ($45-$62.5k)699,517 Blue Collar ($45-$62.5k)1,389,670 Lower Pay ($32k & Under)

California

53,669 High Pay (Over $62.5k)30,588 Office, Mod. Pay ($45-$62.5k)159,739 Blue Collar ($45-$62.5k)146,335 Lower Pay ($32k & Under)

SB-Riv Counties

28.2% -6.8% -

21.8% -43.2% -

13.7% -7.8% -

40.9% -37.5% -

Source: CA Employment Development Department

ECONOMIC CHALLENGES TO CONTINUING THE EXPANSIONFor the Inland Empire, the key to continued expansion will be the growth of the clusters constituting its economic base. Here, the sectors that must grow include logistics, health care and construction. Manufacturing has weakly joined this group, but suffers due to the high energy costs and heavy regulatory burden faced by that sector in California. The management, professional, engineering, and scientific group is seeing its role improve as those types of companies seek lower space and labor costs and respond to the stronger educational foundation in those inland sub-areas close to the coastal counties.

All of these sectors are crucial as each one brings money from the outside world into the local market that then recirculates, allowing local population-serving sectors to

add to growth. The logistics and manufacturing sectors do so because their customers are largely located throughout the state, country and world. Health care brings in funds since the sector is largely funded through federal or state programs or by medical insurance companies. Construction does so because projects are funded either by governmental infrastructure grants or private loanable funds flowing to local contractors and workers from the national mortgage market. The management, professional, engineering and scientific group is a mixed part of the base. Some firms are financed by selling services to the outside world. Others indirectly receive outside funds through selling services to those firms. However, some of these high-end firms primarily sell services to the local population.


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EXHIBIT A-3 INLAND EMPIRE GROWING & DECLING SECTORS

Source: CA Employment Development Department, U.S. Bureau of Labor Statistics, Economics & Politics, Inc.

EACH OF THESE FIVE SECTORS FACES ISSUES:

1. LOGISTICS

Logistics has been the Inland Empire’s fastest growing sector and has strong basics. However, local activists want to stop its growth and the South Coast Air Quality Management District (AQMD) and CA Air Resources Board (CARB) believe it cannot meet its air quality requirements unless the truck traffic associated with the sector is dramatically reduced. A major fight is underway that could conceivably halt the sector’s strong continual expansion. From 2011-2019, the data indicates that it has been responsible for 23.6% of direct job growth (95,748 jobs) (EXHIBIT A-3). The sector is on track to add 11,467 jobs in 2019 (30.5% share).

2. CONSTRUCTION

Construction is the sector that is rising in importance as it moves towards its traditional role of being a major driver of the Inland Empire’s growth. The group lost -68,408 jobs from 2006-2011 (-53.7%). During 2011-2019, it has gained back 46,495 indicating that the sector is improving. However, BLS estimates that its 2019 growth is only on pace to add 1,300 jobs, a 3.5% share of the year’s growth. Inland construction is growing in part due to the lack of housing affordability in the coastal counties that has priced thousands of families out of those markets. Those unable to afford their county’s median prices were: (Los Angeles (71%), San Diego County (73%) and Orange County (76%) (EXHIBIT B-10).)

Federal & StateInformation

UtilitiesAgriculture

MiningEmployment AgcyFinancial ActivitiesLocal Government

Higher EducationAmusement

AccommodationOther Services

Mgmt & ProfessionsAdmin. Support

ManufacturingRetail Trade

K�12 EducationSocial Assistance

Health CareEating & Drinking

ConstructionDistribution & Transportation

-925-2,480

-2,712

167202

2,395

5,9344,7664,344

3,9152,9772,843

8,97416,78317,497

27,31227,745

40,12343,71844,512

95,74846,495

Over $82,500

$45,000 - $82,499

$45,000 - $82,499

$32,500 & Under

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EXHIBIT A-4 HOME PRICES, SOUTHERN CALIFORNIA MARKETS MEDIAN PRICED NEW & EXISTING HOME, 2ND QUARTER 2019

Source: Dataquick

The $330,000 (San Bernardino) and $401,000 (Riverside) median priced homes in the Inland Empire are $200,000 to well over $400,000 less expensive than those in the coastal counties (EXHIBIT A-4). Historically, this has ultimately driven people with all types of incomes and educations to migrate inland for homes or rentals they can afford. However, to date,

the speed at which this is occurring has been blunted by a lack of homes for sale as well as lingering consumer fears of large purchases given the experiences in the Great Recession. The shares of families unable to afford the bottom 50% of home prices in the inland area were: San Bernardino (50%) and Riverside (61%).

EXHIBIT A-5 INDUSTRIAL SPACE NET ABSORPTION INLAND EMPIRE AREA, 1991-2019 (MOVING 4-QUARTER TOTAL)

Source: Grubb & Ellis to 2011, CB Richard Ellis 2012-2019

-10,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1991

4TH

1991

3RD

1992

2ND

1993

1994

4TH

1994

3RD

1995

2ND

1996

1997

4TH

9197

3RD

1998

2ND

1999

2000

4TH

2000

3RD

2001

2ND

2002

2003

4TH

2003

3RD

2004

2ND

2005

2006

4TH

2006

3RD

2007

2ND

2008

2009

4TH

2009

3RD

2010

2ND

2011

2012

4TH

2012

3RD

2013

2ND

2014

2015

4TH

2015

3RD

2016

2ND

2017

2018

4TH

2018

3RD

2019

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

MEDIAN ALL HOME PRICE SAN BERNARDINO PRICE ADVANTAGE RIVERSIDE PRICE ADVANTAGE

San Bernardino

$330,000

Riverside

$401,000

$71,000

Orange

$792,000

$462,000

$391,000

Los Angeles

$617,000

$287,000

$216,000

San Diego

$600,000

$270,000

$199,000


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A second reason that construction is growing in the Inland Empire is the industrial market where logistics firms occupied a net of 21.1 million square feet of space in the year ended September 2019 (EXHIBIT A-5), with a vacancy rate of just 3.1% (not shown). Meanwhile, 27.1 million square feet is under construction. This means the market is roughly outmatching

its net absorption. The area’s absorption and construction figures are the strongest in the U.S. with the inland area handling 74.6% of Southern California’s industrial construction due to its available land (EXHIBIT A-6). Meanwhile, extensive infrastructure construction is on-going largely thanks to local transportation sales tax measures.

EXHIBIT A-6 INDUSTRIAL SPACE UNDER CONSTRUCTION

Sources: CB Richard Ellis

3. HEALTH CARE

Health Care is the one inland sector that grew throughout the recession. There is a huge need for this to continue since each local health care worker already handles 22.8% more people than the state average (EXHIBIT B-5). Also, the sector is seeing a major increase in demand as the share of people without health insurance fell from 20.5% in 2012 to 7.8% in 2017 before rising somewhat to 8.4% in 2018. Still, there were 382,296 non-institutionalized adults without heath insurance (EXHIBIT A-7).

From 2011-2019, the data indicates that health care has been responsible for 11.2% of direct job growth (43,718) (EXHIBIT A-3). The key for the health care system’s job growth will likely be the ability of educational institutions to gear up to handle the needed training that its growth will require in both professional and technical occupations. Also, management has the complexity of dealing with the sector’s changing dynamics under the Affordable Care Act and the inability of the President and Congress to decide what to do with it. In 2019, the sector is heading towards creating 5,767 more jobs (15.4% share).

EXHIBIT A-7 NUMBER & SHARE OF POPULATION WITHOUT HEALTH INSURANCE

Ventura County 391,106 1.1%Orange County 1,210,851 3.3%San Diego 1,494,410 4.1%Los Angeles 6,102,465 16.8%Inland Empire 27,077,730 74.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0100,000

200,000300,000400,000500,000600,000700,000800,000900,000

1,000,000

2012 2013 2014 2015 2016 2017 2018

No Health Insurance Share No Insurance

Source: American Community Survey, 2012-2018

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4. MANUFACTURING

Manufacturing should be a major growing sector in the Inland Empire as both space and labor costs are below other Southern California areas. This is particularly true given the recent resurgence in manufacturing employment nationally. However, local firms are tending to increase efficiency rather than hire workers because California’s regulatory policies have pushed energy levels far beyond what competitors pay in other states. That fact, plus regulatory costs and delays means firms must save on labor to maintain their profitability.

EXHIBIT A-8 INDUSTRIAL ELECTRICITY, CENTS/KWH WESTERN U.S. STATES, MAY 2019

Source: U.S. Energy Information Agency, Electrical Table 5.6A

Thus, industrial energy cost per kilowatt hour in California was 12.65¢ per kilowatt hour in mid-2019. That was 98.3% above adjacent Arizona (6.38¢) and 140.0% above Nevada (5.27¢) (EXHIBIT A-8). California has thus created only 86,300 jobs from January of 2010 to August 2019 (6.9% growth) while the U.S. added 1,232,000 (10.6% growth). The state saw just 7.0% of new U.S. manufacturing jobs in that period. Still, the Inland Empire has added 17,497 jobs in the sector in 2011 to 2019 (4.5% share). That includes the estimate of just 1,467 positions (3.9% share) in 2019.

WashingtonMontana

OklahomaTexas

NevadaNew Mexico

UtahOregon

IdahoArizona

WyomingColorado

California

4.444.5

4.825.19

5.695.45

5.27

5.946.09

6.386.77

7.1312.65


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5. PROFESSIONAL, ENGINEERING, MANAGEMENT & SCIENTIFIC

Corona

Los Angeles County

Chino

Murrieta

Temecula

Rancho Cucamonga

Upland

Eastvale (2017)

San Diego County

Orange County

Redlands

Loma Linda (2017)

Chino Hills 60.5%

55.2%

50.5%

48.8%

46.5%

40.4%

39.7%

38.0%

41.0%

43.5%

44.5%

44.7%

46.1%WESTENDREDLANDS-LOMA LINDASOUTHWEST RIVERSIDECOASTAL COUNTIES

Professional, engineering, management & scientific sectors have been the missing link in the Inland Empire’s job growth. However, they are showing a little life. From 2011-2019, the group added 8,974 jobs (2.3% share) with 1,800 created in 2019 (4.8% share). Several phenomena offer potential for this group. First is the migration of better educated people to three

parts of the area: cities west of the I-15 near Los Angeles and Orange counties (blue); cities near San Diego County (green); and the Redlands-Loma Linda area (yellow). In these areas, the inland cities are competitive with the coastal counties (orange) (EXHIBIT A-9).

EXHIBIT A-9 HIGHEST SHARE ASSOCIATES OR HIGHER DEGREES, INLAND EMPIRE CITIES, 2018

Source: American Community Survey, 2017-2018

Second is the sheer size of the Inland Empire market with 4.63 million people (larger than 25 states) and 123,565 companies that require professional services. Third is the existence of some strategic and successful high-end companies including Bourns (product engineering), SigmaNet (management software), Abbot Cardiovascular Systems (bio-med), Sorenson Engineering (micro-parts manufacturing) Watson Pharmaceutical (generic drugs), ESRI (geographic information

systems), and Kelly Space & Technology (aerospace). Fourth is the reemergence of the construction sector that requires engineers and other professionals to support it.

Today, the main challenges for this group have been the overall low level of educated workers in the inland area and the slow recovery of residential construction.

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0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Imperial San Bernardino RiversideLos Angeles OrangeSan Diego

ALL PEOPLE UNDER 18

13.2%14.9%17.0%

19.8%21.4%

32.2%

12.7% 11.4% 10.5%14.1%14.9%

23.1%

PUBLIC HEALTH CHALLENGES TO INLAND EMPIRE’S PROSPERITYTwo other key public health issues impact the ability for the Inland Empire to attain prosperity. These are the degree to which the region’s population is marginally educated and the level of poverty affecting its residents.

According to the Census Bureau in 2018, 46.6% of San Bernardino County’s population and 46.0% in Riverside County stopped their educations with high school or less schooling (EXHIBIT ES-2). The situation has improved as the region’s share was 50% of the population in 2000. However, this data means that the kinds of firms interested in locating in the Inland Empire tend to be those not needing well educated workers.

For the Inland Empire, the degree to which it is uncompetitive for firms requiring educated workers is seen in that just 29.9%

of adults in San Bernardino County and 30.4% in Riverside County had associates degrees or higher. These 2018 figures contrasted with 39.7% in Los Angeles County, 46.5% in San Diego County and 48.8% in Orange County.

Unfortunately, a marginally educated population tends to correlate with high levels of poverty given how technology is impacting paying jobs today. In San Bernardino County the share of people living in poverty was 14.9% in 2018; it was 12.7% in Riverside. In adjacent counties, the shares were: Los Angeles (14.9%), San Diego (11.4%), Orange (10.5%), and Imperial (23.1%). Worse, nearly one in five inland area children were living in poverty: San Bernardino (21.4%), Riverside (17.0). That compared to 19.8% in Los Angeles, 14.9% in San Diego and 13.2% in Orange County (EXHIBIT A-10).

EXHIBIT A-10 SHARES LIVING IN POVERTY SOUTHERN CALIFORNIA, BY REGION, 2018


Poverty also has an ethnic and age dimension. By group, those Inland Empire residents living in poverty were African American (18.7%), Hispanic (15.8%), Native American (14.9%), Asian (10.8%) and White (9.9%) (EXHIBIT A-11). In particular, given the importance of children to the region’s future labor

force, the levels of childhood poverty (19.1%) represent a major barrier to the region’s long-term success. While all of these numbers have improved, these facts create difficulties for the Inland Empire’s quality of life.


14

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Native American Asian & Pacific WhiteUnder 18 years African American Hispanic

9.9%10.8%

14.9%15.8%

18.7%19.1%

EXHIBIT A-11 PEOPLE IN POVERTY, BY ETHNICITY & CHILDREN INLAND EMPIRE, 2018


15


B. KEY GROWTH INDUSTRIES MORE THOROUGHLY DISCUSSEDKEY EXISTING INDUSTRIES LOGISTICS

The Inland Empire’s logistics industry is driven by two major forces:

INTERNATIONAL TRADE

The volume of international trade moving through the ports of Los Angeles and Long Beach has been the sector’s traditional driver. On the import side, loaded containers entering the U.S. soared to 8.2 million twenty-foot container units (TEU) in 2006. The volume declined roughly 25% to 6.1 million teus in 2009 due to the Great Recession. It has subsequently recovered and is on track as of September 2019 to reach a record 8.8 million teus for the year off slightly from 9.0 million in 2018 (EXHIBIT B-1).

Exported load containers are less of an economic driver for the Inland Empire. However, they reached a record 3.6 million teus in 2012-2013, fell to 3.2 million teus in 2015 and fell back to that level in 2019. Exports are an activity that will likely have an important future role for the inland area as immigrant manufacturers choose to locate near the ports and because of the importance of exports by the Coachella Valley’s farmers.

President Trump’s tariffs appear to be harming import volumes by raising their costs to consumers and supply managers. Additionally, Chinese reaction to his policies seem to be hurting exports including those by inland farmers.

FULFILLMENT CENTERS.

The newest phenomenon impacting the Inland Empire’s logistics sector is the entry of fulfillment centers into California. These facilities are being developed for retailers so they can respond to the increasing use of the e-commerce by consumers. The goal is 24-hour delivery. They are generally 750,000 to over 1,000,000 square feet in size and use from 750 to 1,250 square feet per job since the work is more labor intensive. That is roughly the land use ratios found with manufacturing. This is a long-term growth factor for the region given that e-commerce is growing at roughly 13%-15% compounded a year. Nationally, these facilities have gone from 0.6% of retail sales in 2000 to 10.7% in the second quarter 2019 (EXHIBIT B-2).

EXHIBIT B-1 IMPORT & EXPORT VOLUME, 2000-2019E IMPORT & EXPORT VOLUME, 2000-2019e

EXHIBIT B-2 U.S. E-COMMERCE GROWTH RATES QUARTER OVER SAME QUARTER PRIOR YEAR, 2000-2019

Source: Port Import Export Reporting Service (PIERS), collected from Vessel, LA-LB for 2011-2019e *2019e = Based upon growth experienced Year to Date, August

Source: Bureau of the Census, Quarterly Retail Sales

0.0

2.0

4.0

6.0

8.0

10.0

20012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019e*2018

IMPORT EXPORT

-20%

0%

20%

40%

60%

80%

20012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20192018

0.6%

10.7%


16

Another aspect of fulfillment centers is the impact they are having on conventional retail sales centers since anchor tenant sales volumes and city sales tax collections from them have been falling. As most of the e-commerce centers are part of national organizations with multiple sites in California, their retail sales tax collections go to the state for distribution by formula back to the counties and from them to the state’s cities. Host cities thus do not particularly benefit on a sales tax basis from having centers in their community. They do benefit if they are in the rare situation of having the sole California location for such an operation.

FORECAS

With a 2019 job growth rate of 5.9% according to the BLS, the Inland Empire’s logistics sector is likely to create

another 11,400 jobs to reach 203,900 (EXHIBIT B-3). To date, there appears to be no economic reason for its growth to be seriously imperiled for the foreseeable future. That is particularly true given that most of Southern California’s available industrially zoned land is located in the Inland Empire.

CAUTION

That said, both CARB and AQMD are discussing an “indirect source rule” whereby new logistics facilities would be charged fees based upon the truck traffic they “lure” to the Inland Empire. Versions of such rules include setting a ceiling on the level of truck trips to their facilities. If successful, their attempt to become part of local planning decisions could slow the sector’s inland growth.

EXHIBIT B-3 LOGISTICS SECTOR JOB GROWTH INLAND EMPIRE, 1991-2019

Source: CA Department of Finance, Califonria Employment Development Department

-10,000

-5,000

0

5,000

10,000

15,000

20,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

HEALTH CARE

Four factors will drive the demand for health care in the Inland Empire and the sector’s resulting employment level:

POPULATION GROWTH

For the past several years, residential development and therefore population growth in the inland area has been restrained. From 2001 through 2006, the inland counties added over 100,000 people a year with domestic in-migration responsible for over 60,000 new residents. First, soaring home prices and then the Great Recession changed this picture,

slowing annual growth to an average of about 40,000 people a year with domestic net migration essentially staying just below zero. The past two years, net in-migration has been positive, a shift from that seen in most parts of California (EXHIBIT B-4).

17


-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

DOMESTIC IN-MIGRATION TOTAL GROWTH

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EXHIBIT B-4 TOTAL & DOMESTIC IN-MIGRATION INLAND EMPIRE, ANNUAL CHANGE, 2001-2018

Source: CA Department of Finance, E-2 Reports

Coastal county home prices are a key reason why the area is seeing people migrate to Riverside and San Bernardino counties. As stated, rising shares of families in Los Angeles County (71%), San Diego County (73%) and Orange County (76%) cannot afford the cheapest 50% of homes in their area (EXHIBIT B-10, BELOW). Contributing to this phenomenon is the fact that the California legislature has so far been unwilling to amend the CA Environmental Quality Act (CEQA) which is being used by NIMBYs in the coastal counties to nearly halt the construction of homes and apartments that the workforce population in that area can afford.

As more aggressive population expansion in the Inland Empire resumes, one particular impact is that the demand for health professionals will rise.

AFFORDABLE CARE ACT

In 2012, the American Community Survey (ACS) found that 20.5% or 877,969 of the Inland Empire’s non-institutionalized adults had no health insurance. In 2017, those figures were

down to 7.8% and 351,398. Unfortunately, that increased to 382,296 in 2018 or 8.4%. Still, that was a reduction of -495,673 adults or -56.5% over six years (EXHIBIT A-8 EARLIER). This represents both an increase in the standard of living of the population and substantial added demand for health care workers. The sector’s employment has not adjusted as rapidly, in part, because local health care executives have been forced to be cautious about hiring given the constant attacks on the Affordable Care Act (ACA) in Washington DC.

PEOPLE PER HEALTH CARE WORKER

While demand for health care and the number of workers is rising in the inland counties, the region remains underserved. In 2018, there were 25.4 people for each health care worker in California (EXHIBIT B-5). In the Inland Empire, it was 31.2. The region thus had 22.8% more people for each health care worker. The good news is that in 2010, there were 37.0% more people per worker than the state, so the situation is improving.

EXHIBIT B-5 NUMBER OF PEOPLE PER HEALTH CARE WORKER INLAND EMPIRE & CALIFORNIA, 2000-2019


20

25

30

35

40

45

50

19911990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

INLAND EMPIRE CALIFORNIA


18

In terms of physicians per 100,000 people in 2015, the Inland Empire had 34.5 general practitioners and 64.3 specialists. These were the lowest shares among California’s regions. For instance, the shares in Los Angeles County were respectively 51.3 and 110.3. Even the Central Valley had higher numbers that the Inland Empire (49.5; 92.9) (not shown).

AGING POPULATION

In 2018, there were 1,130,967 people aged 55 and over in the Inland Empire. They constituted 24.5% of its population. In 2010, it was only 858,344 or 20.2%. Many in this group are already disproportionately using medical care including assisted living facilities. The number will grow as the baby boomers in this group continue aging (not shown).

EXHIBIT B-6 HEALTH SERVICES JOB GROWTH INLAND EMPIRE, 1991-2019e


FORECAST

The Inland Empire’s health care sector was unique in growing straight through the Great Recession. In 2018, the sector maintained that record adding 6,300 jobs (4.6%) to reach 142,500. For 2019, the area is on track to add 5,700 positions (4.0%) to total 148,200 (EXHIBIT B-6). The immediate issue is training as health care executives are having trouble finding enough doctors, nurses and technicians to fill their needs.

CAUTION

A key worry for health care providers is the lack of a training pipeline to give them the staffing they will need to keep up with rapidly expanding demand. Fortunately, the Riverside-San Bernardino metropolitan area now has three medical

schools dealing with this imbalance: Loma Linda University Medical Center (non-profit), University of California Riverside Medical Center (public), and the newest, California University of Science and Medicine (public/private) associated with Arrowhead Medical Center in San Bernardino County. Western University of Health Sciences (private) in neighboring Pomona also serves the area, while Loma Linda has opened its San Manuel training facility to help entry level workers enter the field. However, to a large extent, the backbone of the system is found among nurses and a very wide variety of technicians. Here, the difficulty will be the inability of public educational institutions including the community colleges and regional occupational programs to handle the required volume as such training is inordinately expensive for them.

EXHIBIT B-7 CONSTRUCTION JOB GROWTH INLAND EMPIRE, 1991-2019e

01,000

2,0003,0004,0005,0006,0007,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

-25,000-20,000-15,000-10,000-5,000

05,000

10,00015,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e


19


$0$2$4$6$8

$10$12$14

19911990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

CONSTRUCTION

The Inland Empire’s residential construction has not returned to full strength. After peaking at 127,500 workers in 2006, the mortgage crisis sent the construction sector’s job level down to 59,100 in 2011. It has since been growing:

FORECAST

In 2018, construction firms added 7,400 jobs (7.6%). That brought employment to 104,800. For 2019, growth is on track to slow to a gain of only 1,200 new jobs (0.5% growth) (EXHIBIT B-7). The metrics driving the sector include:

PERMITS

Importantly, the total value of construction permits has begun to increase. From a low of $2.1 billion in 2011, the level reached $4.7 billion, up 13.4% in 2015. It reached $5.0 billion in 2016, up 7.2%. In 2017, permits increased to $6.0 billion, up a rapid 20.1%. In 2018, permit growth was 17.8% and reached $7.1 billion (EXHIBIT B-8). While still low, the 2018 volume nearly reached the 2002 level. The direction thus remains positive with some residential projects plus construction of a large number of industrial and multitenant projects. This does not include the public sector financed infrastructure construction, thanks to local tax measures plus federal and state transportation funding.

EXHIBIT B-8 TOTAL BUILDING PERMIT VALUATION INLAND EMPIRE, 1990-2018 (BILLIONS)

Source: Construction Industry Research Board, Construction, Construction Home Building Foundation

SINGLE FAMILY RESIDENTIAL HOUSING

The major problem for the construction sector has been the very slow recovery in residential activity. The number of single-family permits fell from 45,299 in 2005 to 3,734 in 2011. In 2018 the market has grown to 10,851 single family detached permits—somewhat above the 10,518, in 2017 (EXHIBIT B-9). These are the two best years since the recession but remain low historically.

MULTITENANT HOUSING

With housing prices soaring, permits to build multitenant projects have increased. Builders sought to construct 2,015 units in 2016, 3,648 in 2017 and 3,413 in 2019. Project values went from $225.8 million in 2016 to $388.0 million in 2017 and reached $501.3 million in 2018.

EXHIBIT B-9 SINGLE FAMILY BUILDING PERMITS INLAND EMPIRE, 1990-2018

Source: Construction Industry Research Board, Construction, Construction Home Building Foundation

05,000

10,00015,000

20,00025,00030,00035,00040,00045,00050,000

19911990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


20

$0$50,000

$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000

1988

1989

1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

NEW HOMES EXISTING HOMES

$364,598

$448,802

$155,319

$437,200

$389,924

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

San Bernardino Santa BarbaraRiversideKern Los AngelesVentura OrangeSan Diego

80%76%73%72%71%

61%

50%50%

AFFORDABILITY

As has been noted several times, the Inland Empire’s residential markets are a bargain compared to the coastal counties. The share of local families unable to afford homes at the area’s median income was 50% for San Bernardino

County and 61% for Riverside County in second quarter 2018. That compares to Los Angeles (71%), San Diego County (73%) and Orange County (76%) (EXHIBIT B-10). This tends to drive buyers to the inland area, though even Riverside County’s homes are moving beyond the reach of many families.

EXHIBIT B-10 SHARE OF COUNTY RESIDENTS CANNOT AFFORD MEDIAN PRICED HOME SOUTHERN CALIFORNIA, SECOND QUARTER 2019

Source: CA Association of Realtors, Economics & Politics, Inc.

PRICE RECOVERY

Very importantly, residential prices in the Inland Empire have seen a significant recovery since the mortgage meltdown.

In the existing home market, the second quarter 2019 median price was $364,598. Though high, that remains -7.6% below the all-time high.

EXHIBIT B-11 PRICE TRENDS, NEW & EXISTING HOMES INLAND EMPIRE, 1988-2019, QUARTERLY

Source: Dataquick & Economics & Politics, Inc.

21


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1988

1989

1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

$16,224

$20,711

$29,908

$11,362

The median new home price was at $448,802. That was 2.7% above the pre-recession record (EXHIBIT B-11). A problem for new home construction is the fact that the maximum limit for FHA low down payment, low interest rate loans is $431,250—below the median price for new homes. By contrast that limit is $726,525 in the coastal counties.

RENT INCREASES

Multitenant rents in the Inland Empire rose an average of 4.7% from second quarter 2018-2019. That was up from the 4.2% year-ago increase. In the post-recession period (2011-2019) rental increases have average 4.2%. Zillow has found that single-family and condo rental prices have gone from a low of $1,500 a month in 2012 to $2,190 in September 2019, up $690

or 5.6% compounded. Southern California inflation has only grown 2.1% compounded.

SALES VOLUME

Residential home sales in the Inland Empire have remained essentially flat since 2010. Volume peaked at 29,882 seasonally adjusted sales in fourth quarter 2006 and then plunged to 11,362 with the mortgage crisis. Foreclosures helped drive sales back to 20,711 in 2009. Since then, quarterly seasonally adjusted volume has remained roughly between 14,000 units and 16,500. In second quarter 2019, sales were 16,224 homes. High prices and lack of available supply for sales are the primary reasons this has been the case.

EXHIBIT B-12 ALL HOMES SALES, INLAND EMPIRE SEASONALLY ADJUSTED, BY QUARTER, 1988-2019

Source: Dataquick, Economics & Politics, Inc.

DEMAND PREFERENCES

An additional fact that will ultimately encourage the Inland Empire’s detached single-family housing market is found in surveys conducted over a five year period by the Western Riverside Council of Governments. They twice interviewed commuters driving from that county to Los Angeles, Orange and San Diego Counties about their housing preferences. The responses to two questions were quite revealing:

z As a homeowner, would you prefer to move closer to work if it involved a townhouse or condo? ANSWER: 87.5% SAID NO. As a renter would you prefer to move closer to work if it involved a townhouse or condo? ANSWER: 72.3% SAID NO.

Further, a 2016 survey by the Demand Institute found that 84% of millennials either already own a home or that is their desire. An FHA survey in 2013 found that 76% of

1 Myers, D. (2016). Peak millennials: Three reinforcing cycles that amplify the rise and fall of urban concentration by millennials. Housing Policy Debate, 26(6), 928-947.

millennials thought that home buying made more sense that renting. A 2016 paper by USC’s Dowell Meyers found that millennials are now migrating away from central cores to the suburbs to purchase homes1:

“After more than a decade of growing concentration, we see that the millennial trend of increased downtown living has peaked out and is now beginning a decline.”

There thus appears to be a stronger preference than expected for the kind of single-family detached homes for which only the Inland Empire in Southern California has the undeveloped property to accommodate.

NON-RESIDENTIAL CONSTRUCTION

Non-residential activity (including multi-tenant) has fewer problems than single family housing. Here, the situation is seen in the metrics for several types of activity:


22

z Industrial vacancy was 3.1% in third quarter 2019 and is only that high because construction on several new projects has been completed. Currently, 27.1 million square feet is under construction, the highest level for any U.S. industrial market. As stated earlier, in the most recent four quarters, logistics firms occupied a net of 21.1 million square feet.

z Office vacancy was 8.5% in second quarter 2019, down from a recession high of 24.2%. However, it is still above the low of 7.0% in 2003 when construction activity last restarted. Currently, no projects are being built.

z Retail vacancy was 8.2% in second quarter 2018. The sector has 390,000 square feet of space under construction in eastern valley areas with rapid population growth. E-commerce is hurting old centers.

FORCES AFFECTING CONSTRUCTION

There continues to be a host of issues facing the rejuvenation of the Inland Empire’s construction sector. In the residential market, people remain hesitant to commit to new purchases in the inland counties. That may change as the very high costs of coastal county homes bars them from investing there. The multitenant market is strong given the increased demand from the large number of families that cannot obtain financing for single family homes.

Industrial construction will remain a force given the demand for facilities because of rising international trade with the strong dollar making imports cheaper, plus the explosive growth of e-commerce and the availability of land to handle the large facilities needed by the sector. Public construction should remain strong because both inland counties have passed local sales tax measures for street, road and transit construction.

Office construction will lag until a resurgence in demand occurs. That will require office-based operations that retrenched in the Great Recession to return to the inland area though the use of the internet for numerous former office-based transactions will hinder that from occurring. Some retail construction is now underway given rising retail sales. In San Bernardino County, 2018 taxable retail sales reached $40.6 billion and exceeded the 2006 record of $31.3 billion by 29.5%. In Riverside County, 2018 taxable retail sales hit $38.9 billion and were above its 2006 record of $29.8 billion by 30.5%. Both growth rates now exceed the inflation increase of 26.4% between 2006-2018 meaning that the actual volume of goods being sold are above the 2006 inflation adjusted maximum.

MANUFACTURING

For the Inland Empire, the manufacturing sector continues to represent a largely missed opportunity. There are three reasons for this:

NATIONAL VS. STATE MANUFACTURING GROWTH

In recent decades, international competition and lower costs in countries like China and India have hurt U.S. manufacturing employment. In addition, a good deal of research indicates that a reason for jobs losses in the sector is due to the domestic adoption of technology that has replaced workers. From 2010 to mid-2019, a resurgence has been underway in this country. This occurred as some firms have been hurt because the off-shoring of production decreased their quality controls. Also, foreign labor costs have risen, particularly in China, reducing the incentive for U.S. firms to maintain production offshore. And, American firms have become much more productive, giving them a competitive edge for goods they sell in this country.

Still, U.S. seasonally adjusted manufacturing employment has risen by 1,232,000 jobs from January 2010 to August 2019, up 10.6%. The sad fact is that California has added just 86,300 jobs in this period, a 6.9% growth rate or only 7.0% of the national total gain.

ENERGY COSTS

California has put in place strong policies aimed at increasing the state’s use of renewable energy. However, for manufacturers and their workers, this has caused electrical costs to soar, making them uncompetitive versus nearby states (Exhibit 11, earlier). Thus, California’s average industrial electricity rate was 12.64¢ per kilowatt hour in May 2018. That was 74.6% higher than Colorado (7.24¢), the second most expensive western state. Locally, it was 83.5% above Arizona (6.89¢) and 135.4% more expensive than Nevada (5.37¢). The passage of SB 350 with its mandate of 50% renewables by 2030 will undoubtedly exacerbate this cost disadvantage as well the passage of SB 100 mandating full electrification by 2045.

REGULATORY CLIMATE

Meanwhile, Southern California’s regulatory climate has negatively impacted its manufacturing sector in several ways. First, because the AQMD and CARB rules are continuously changed, it is very difficult for companies in places like the Inland Empire to forecast their cost structures for any realistic time horizon. As firms typically invest while looking at least five years ahead, this inhibits local expansions. Second, firms find they are often layered with regulatory costs because they must install new pollution control technologies as soon as the agency requires them to do so. Sometimes, this is before they have paid for the last round of required technology.

An example of the uncertainty that AQMD injects into the manufacturing process is seen in the agency’s declared statement that it must “electrify” the basin to meet its air quality mandates. To manufacturers, this means ultimately being forced to use electricity even when natural gas, for which Southern California has a far better competitive situation, is available.

23


-20000

-15000

-10000

-5000

0

5000

10000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

FORECAST

Given these facts, the prognosis for manufacturing job growth in the Inland Empire is unfortunately weak. From 2006-2011, the sector had a net loss of -38,400 jobs (-31.1%). With the Great Recession over, the sector has slowly grown, headed

for 17,600 new jobs during 2012-2019 and taking it to 102,800 workers. This included only 500 jobs in 2017 (0.5%) and 2,100 jobs in 2018 (2.1%), while BLS has the sector on track to add 1,500 new positions in 2019 (1.5%). That will still leave the sector -20,800 or -16.8% below its 2006 pre-recession level of 123,400 (EXHIBIT B-13).

EXHIBIT B-13 MANUFACTURING JOB GROWTH INLAND EMPIRE, 1991-2019


In talks with executives, it is difficult to find a scenario that will improve what should be a strong Inland Empire sector given its competitive space and labor costs. Here, a typical response came from a major local aerospace manufacturer. Their processes require precision work by small machine shops that should be located nearby. Instead, they remain scattered throughout Southern California because owners are unwilling to move for fear it would invoke dealing with AQMD. A major heavy manufacturer indicates that California’s electrical costs put it at a $25 million competitive disadvantage to its U.S. competitors.

Caution. There is a remote scenario under which the manufacturing sector could expand faster. This is because of the competitive advantages the sector does have vis-à-vis the balance of Southern California. Two factors illustrate this:

z Lower Median Pay. In May 2017, the median pay for all Inland Empire occupations was $43,049 a year. Compared to the coastal counties that was a bargain: San Diego ($45,706; 6.2% higher), Los Angeles/Orange ($45,753; 6.3% higher). For consistency, the pay for each occupational group in each area was weighted by the number of jobs in that group in the Inland Empire (EXHIBIT B-14). The differentials are logical given that 21.6% of the workforce commuted outside the area in 2009-2013 and will tend to work for a little less to avoiding having to do so.


24

EXHIBIT B-14 MEDIAN PAY PER YEAR MAJOR WESTERN MARKETS, MAY 2018

Source: U.S. Bureau of Labor StatisticsNote: Median Pay Per Hour, Weighted by Inland Empire Employment

z Low Space Cost. In third quarter 2019, industrial space in the Inland Empire leased for $0.61 per square foot. Space in the coastal counties has always cost significantly more and differences have grown recently. Currently, the savings are Los Angeles ($0.92; 50.8% higher), Orange ($0.95; 55.7% higher), San Diego ($1.00; 63.9% higher) (EXHIBIT B-15).

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Seattle Sacramento Inland EmpireLos AngelesOrange

San Diego Portland Denver Dallas Las Vegas Phoenix Salt LakeCity

Albuquerque

$50,268$45,891 $45,753 $45,706 $45,687 $45,636

$43,049 $42,094 $41,054 $40,161 $39,526 $38,035

Source: Grubb & Ellis, CB Richard Ellis 2013-2019

These competitive advantages may still allow some manufacturing growth in the Inland Empire. This is particularly true given the area’s lower worker pay scales compared to most of the metropolitan areas in California or nearby states. In any case, growth will be subdued.

EXHIBIT B-15 INDUSTRIAL LEASE ASKING RATE (SQ. FT./MONTH) SOUTHERN CALIFORNIA MARKETS, 2000-2019

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

Inland EmpireLos Angeles Orange San Diego

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

25


PROFESSIONAL, MANAGEMENT & SCIENTIFIC WORK

Recently, another potential sector could start driving the Inland Empire’s economic base. This is the combination of high-end professional, scientific, technical and management companies (EXHIBIT B-16). From 2011 through 2017, they added 7,200 jobs including 2,000 (4.1%) in 2018. BLS shows growth in 2019 will add 1,800 more positions (3.6%) bringing the group to 52,300 jobs. For the first time since the Great Recession, employment in the sector will exceed the pre-recession high of 50,800, up 1,500 jobs or-3.0%.

This growth potential has been aided by the fact that there has been a serious migration of well-educated workers into the western edge of the Inland Empire near Los Angeles and Orange counties and similar movements out of San Diego County into the Temecula-Murrieta area. The Redlands-Loma Linda area has also attracted such activity due to the location

of ESRI, the University of Redlands and Loma Linda University Medical Center (EXHIBIT A-10, ABOVE).

Traditionally, the edge areas of Southern California have seen the migration of first workers, followed later by their employers as housing prices and the availability of land have dictated the pattern of worker migration. The Inland Empire has reached a point in its development that this is occurring for well-paid workers due to the absence of affordable upscale housing elsewhere in Southern California. Also, these sectors should be growing as the recession has ended and professionals need to migrate inland to support the housing sector and to serve the 4.63 million people and 123,565 firms in the region. Given Southern California’s traffic condition, it will become increasingly difficult to do so from coastal county offices.

EXHIBIT B-16 PROFESSIONS, SCIENCE, MANAGEMENT INLAND EMPIRE, 2000-2019e


OTHER SECTORS

It is difficult to see any other sector driving the Inland Empire’s economic base in a major way because of the educational level of the great mass of the area’s labor force. Ultimately, there will be significant growth in population-serving sectors like consumer services and eating and drinking, but that will be a reaction to the funds flowing inland because of the expansion

of the sectors discussed above. Also, there should be growth in sectors related to construction now that the sector is reemerging. That is the case because its growth will impact finance, insurance and real estate activity. But again, these are not fundamentally the part of the region’s economic base that brings fresh dollars into it.

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e


26

C. OCCUPATIONAL & INDUSTRY PAYOCCUPATIONAL FORECASTS FROM EDDFrom 2016-2026, EDD forecasts that the top 50 growing Inland Empire occupations will add 158,860 jobs. Assuming full time work, they will have weighted annual median pay of $38,716 at 2018 levels (EXHIBIT C-3). Looking at pay levels (EXHIBIT C-1):

Of the 50, at full time work, 2,080 hours a year, the 19 lowest paying occupations (36.0%) will account for 86,830 new jobs (54.7%) paying $20,000 to $29,999.

EXHIBIT C-1 INCOME LEVELS, 2016-2026 TOP 50 ABSOLUTE GROWTH OCCUPATION

Income Level Jobs Share Occupations ShareUnder $20,000 0 0.0% 0 0.0%

$20,000-29,999 86,830 54.7% 19 36.0%

$30,000-$39,999 33,760 21.3% 14 28.0%

$40,000-$49,999 18,190 11.5% 7 14.0%

$50,000-$74,999 7,780 4.9% 6 12.0%

$75,000 & Up 12,300 7.7% 5 10.0%

TOTALS 158,860 100.0% 50 100.0%

Source: Standard Occupational Code descriptions and forecasts, CA Employment Development Department

z Of the 50, the 14 second lowest paying occupations (28.0%) will account for 33,760 new jobs (21.3%) and pay $30,000 to $39,999.

z Of the 50, the seven mid-paying occupations (14.0%) will account for 18,190 new jobs (11.5%) and pay $40,000 to $49,999.

z Of the 50, the six second highest paying occupations

(12.0%) will account for 7,780 new jobs (4.9%) and pay $50,000 to $74,999.

z Of the 50, the five highest paying occupations (10.0%) will account for 12,300 new jobs (7.7%) and pay $75,000 and above.

EXHIBIT C-2 SECTORS & JOB GROWTH, 2016-2026 TOP 50 ABSOLUTE GROWTH SECTORS

Sectors Job Growth Share Occupations ShareLogistics 46,100 29.0% 10 20.0%

Health Care 32,080 20.2% 5 10.0%

Population Serving 31,680 19.9% 11 22.0%

Construction 20,180 12.7% 9 18.0%

Administrative Support 19,100 12.0% 10 20.0%

Education 9,720 6.1% 5 10.0%

TOP 50 SECTORS 158,860 100.0% 50 100.0%


27


By sector, the 158,860 gains predicted by EDD in the fastest growing 50 occupations were primarily employed in six sectors (EXHIBIT C-2):

z Logistics jobs will see 46,100 new jobs (29.0%) in 10 occupations (20.0%).

z Health Care will see 32,080 new jobs (20.2%) in 5 occupations (10.0%).

z Population Serving will see 31,580 new jobs (19.9%) in 11 occupations (22.0%)

z Construction would see 20,180 new jobs (12.7%) in 9 occupations (18.0%)

z Admin. Support would see 19,100 new jobs (12.0%) in 10 occupations (20.0%)

z Education would see 9,720 new jobs (6.1%) in 5 occupations (10.0%)

EXHIBIT C-3 FIFTY FASTEST GROWING OCCUPATIONS, INLAND EMPIRE, 2016-2026

SOC Code

Occupational Title 2014 2024 Decade Growth

Average Annual Gain

2018 Median Annual Pay

Entry Level Education

Work Experience

On-the-Job Training

35-9021 Dishwashers 7,460 8,580 1,120 1.4% $23,031 No formal educational credential

None Short-term on-the-job training

35-9011 Dining Room and Cafeteria Attendants and Bartender Helpers

5,840 6,950 1,110 1.8% $23,092 No formal educational credential


35-3021 Combined Food Preparation and Serving Workers, Including Fast Food



41-2011 Cashiers 41,980 43,700 1,720 0.4% $23,781 No formal educational credential


35-3031 Waiters and Waitresses



37-2012 Maids and Housekeeping Cleaners



35-2021 Food Preparation Workers



41-2031 Retail Salespersons 45,470 48,700 3,230 0.7% $25,185 No formal educational credential


35-2014 Cooks, Restaurant 11,160 13,850 2,690 2.2% $27,557 No formal educational credential

<5 years Moderate-term on-the-job training

35-1012 First-Line Supervisors of Food Preparation and Serving Workers

8,500 10,220 1,720 1.9% $29,768 High school diploma or equivalent

<5 years None

41-1011 First-Line Supervisors of Retail Sales Workers


<5 years None

53-7061 Cleaners of Vehicles and Equipment



43-5081 Stock Clerks and Order Fillers



53-7064 Packers and Packagers, Hand



53-7062 Laborers and Freight, Stock, and Material Movers, Hand




28

SOC Code


Average Annual Gain



Work Experience

On-the-Job Training

43-5071 Shipping, Receiving, and Traffic Clerks



53-7051 Industrial Truck and Tractor Operators



53-3033 Light Truck or Delivery Services Drivers



43-4051 Customer Service Representatives



53-3032 Heavy and Tractor-Trailer Truck Drivers

28,070 33,160 5,090 1.7% $48,044 Postsecondary non-degree award


41-4012 Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products


None Moderate-term on-the-job training

39-9021 Personal Care Aides 56,270 78,570 22,300 3.4% $23,895 High school diploma or equivalent


31-9092 Medical Assistants 8,580 10,990 2,410 2.5% $30,612 Postsecondary non-degree award

None None

31-1014 Nursing Assistants 9,040 10,380 1,340 1.4% $31,260 Postsecondary non-degree award

None None

43-6013 Medical Secretaries 6,480 8,070 1,590 2.2% $34,577 High school diploma or equivalent


29-1141 Registered Nurses 28,700 33,140 4,440 1.4% $96,571 Bachelor's degree

None None

25-9041 Teacher Assistants 18,520 20,820 2,300 1.2% $33,287 Some college, no degree

None None

25-3098 Substitute Teachers 18,300 20,590 2,290 1.2% $37,461 Bachelor's degree

None None

29-2061 Licensed Practical and Licensed Vocational Nurses

7,920 9,410 1,490 1.7% $48,814 Postsecondary non-degree award

None None

25-2031 Secondary School Teachers, Except Special and Career/Technical Education

10,330 11,640 1,310 1.2% $77,998 Bachelor's degree

None None

25-2021 Elementary School Teachers, Except Special Education


None None

37-3011 Landscaping and Groundskeeping Workers



33-9032 Security Guards 14,830 17,780 2,950 1.8% $26,425 High school diploma or equivalent


43-4171 Receptionists and Information Clerks



37-2011 Janitors and Cleaners, Except Maids and Housekeeping Cleaners



EXHIBIT C-3 FIFTY FASTEST GROWING OCCUPATIONS, INLAND EMPIRE, 2016-2026 - CONTINUED

29


SOC Code


Average Annual Gain



Work Experience

On-the-Job Training

43-9061 Office Clerks, General



41-3099 Sales Representatives, Services, All Other



43-1011 First-Line Supervisors of Office and Administrative Support Workers


<5 years None

13-1161 Market Research Analysts and Marketing Specialists


None None

13-2011 Accountants and Auditors


None None

11-1021 General and Operations Managers


≥5 years None

47-2061 Construction Laborers



49-9071 Maintenance and Repair Workers, General



47-2141 Painters, Construction and Maintenance



53-1021 First-Line Supervisors of Helpers, Laborers, and Material Movers, Hand


<5 years None

47-2031 Carpenters 19,500 25,220 5,720 2.6% $46,536 High school diploma or equivalent

None Apprenticeship

47-2152 Plumbers, Pipefitters, and Steamfitters


None Apprenticeship

47-2111 Electricians 6,740 8,130 1,390 1.9% $55,341 High school diploma or equivalent

None Apprenticeship

47-1011 First-Line Supervisors of Construction Trades and Extraction Workers


≥5 years None

11-9021 Construction Managers



Top 50 Growth Occupations

813,500 972,360 158,860 1.8% $0


EXHIBIT C-3 FIFTY FASTEST GROWING OCCUPATIONS, INLAND EMPIRE, 2016-2026 - CONTINUED


30

Internet, Radio, TV, News Media, GamingProfessions, Mgmt., Higher Ed., Utilities

GovernmentHealth Care

K-12Mining, Oil & Gas

Film & EntertainmentManufacturing

ConstructionFin., Ins. R. Estate

LogisticsTourism (Entertain, Theme Parks & Hotels)

Farm, Retail, Cons, & Bus. Support, Eat & Drink

$51,231

$33,622 $34,183

$49,106

$52,482$54,438

$56,175$62,355

$65,547$65,757

$72,593 $93,157

$65,979

MEDIAN PAY BY SECTOR

A key Inland Empire need is for sectors that offer primary wage earners access to middle class earnings. Three steps are needed to determine median pay by sector:

z Median pay by standard occupational code for the Inland Empire in first quarter 2019 was downloaded from EDD.

z The group of occupational codes in each sector for California was downloaded from EDD together with employment in each occupation for each sector. This data was not publicly available for sectors within the state’s various jurisdictions.

z The occupational array and the Inland Empire’s median pay levels were combined to show the weighted array of jobs and their median pay by sector in first quarter 2019 in the inland area.

The results from this array are as follows (EXHIBIT C-4):

z High Paying Sectors (yellow). The five highest paying categories had median pay levels from $65,547 to $93,157 in 2019. These included three private sector groups most notably health care as well as higher education, K-12 and all levels of

government. They were responsible for 81,212 new jobs in the 2011-2019 recovery and expansion period or 20.8% of the growth. Some jobs in these sectors offer opportunities for which the marginally educated can be trained.

z Median Paying Sectors (blue & green). Six mid-range sectors had median pay levels from $49,106 to $62,355 in 2018. They included the four essentially blue collar or technical sectors responsible for 159,941 or 41.0% of new jobs from 2011-2019. There were also two office-based groups (finance, insurance & real estate; film & entertainment) that were responsible for 2,843 new jobs or 0.7% of the total. Marginally educated workers can succeed in these sectors.

z Lower Paying Sectors (orange). Lower paying sectors had median pay levels ranging from $33,622 to $34,183. These population-serving and tourism sectors saw 146,335 new jobs from 2011-2019 or 37.5% of the area’s total growth. These sectors can help secondary wage earners move families into the middle class.

EXHIBIT C-4 MEDIAN PAY LEVEL BY SECTOR INLAND EMPIRE, 1ST QUARTER, 2019

Source: Occupational Pay Scales & Sector Job Composition, CA Employment Development Department

31


Tourism (Entertain, Theme Parks & Hotels)

Farm, Retail, Cons, & Bus. Support, Eat & Drink

Construction

Logistics

Mining, Oil & Gas

Manufacturing

Fin., Ins. R. Estate

Government

Professions, Mgmt., Higher Ed., Utilities

Health Care

Internet, Radio, TV, News Media, Gaming

Film & Entertainment

K-12

32.8%

21.4%

32.5%

33.7%34.5%

57.2%

65.6%

66.5%

71.3%78.4%

82.2%

87.5%

93.2%

A second Inland Empire need is for sectors that offer workers with high school or less educations the ability to start work. EDD’s data on qualifications to enter work in occupations shows that numerous sectors allow people to do so (EXHIBIT C-5). Two are low paying but would help a family’s secondary wage earner, the rest can apply to a family’s principal income producer:

1. Tourism (median income: $34,183) allows 93.2% of workers to have marginal educations. While growth will be rapid, there are not many good paying jobs.

2. Broad Group of Low-Income Sectors (median income: $33,622) allows 87.5% of workers to enter with high school or less schooling. These sectors will also grow rapidly but offer relatively few good paying jobs.

3. Construction (median pay: $52,482) has 82.2% of workers in jobs requiring minimal levels of formal education, though apprenticeship is necessary for many types of work. The sector is finally beginning to add employees but is having trouble finding them.

4. Logistics (median pay: $49,106) has 78.4% of its workers in jobs requiring high school or less

schooling. The sector has been the fastest growing in the Inland Empire. This should continue.

5. Manufacturing (median pay $54,438) will offer only a little job growth. However, industry leaders indicate that a large share of their existing technicians are starting to retire. Of workers in the sector, 66.5% needed high school or less schooling. However, technical skills training is a necessity.

6. Finance, Insurance & Real Estate (median pay: $51,231) will grow as the real estate market recovers. In this sector, 65.6% of workers are in jobs requiring minimal entry level educations though many require specific state certifications.

7. Health Care (median pay: $65,757) has a smaller share of workers in jobs with minimal educational requirements (33.7%). However, the sector is expected to grow rapidly, and those getting certification to work within it will often find themselves interested in moving up within the sector.

EXHIBIT C-5 SHARE OF JOBS AVAILABLE, HIGH SCHOOL OR LESS SCHOOLING INLAND EMPIRE, 2018

Source: Occupational Pay Scales & Sector Job Composition, CA Employment Development Department


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D. INCOME TRENDSHouseholds in the Inland Empire have lately seen a little increased prosperity:

MEDIAN INCOMEMedian household income is still up slightly since 1990. Using median incomes adjusted to 2018 price levels, the 1990 level was $65,121. In the early 2000s, the trend for the Inland

Empire’s household purchasing power was up reaching a peak during the mortgage boom at $72,415 in 2006. That was 11.2% over the 1990 level. The Great Recession and its aftermath saw household purchasing power trend down to 2011 reaching $59,354 or -8.9% below the 1990 level. Since then, there has been a slow recovery taking the level to $68,886 in 2018, 5.8% above the 1990 level (EXHIBIT D-1).

EXHIBIT D-1 MEDIAN HOUSEHOLD INCOME, INFLATION ADJUSTED INLAND EMPIRE, 1980-2018e (2018 =100)

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics

EXHIBIT D-2 PER CAPITA INCOME, INFLATION ADJUSTED INLAND EMPIRE, 1990-2017 (1983=100)

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

19911990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

1980 1990 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e

33


0%

5%

10%

15%

20%

25%

30%

35%

40%

Under $25,000 $25,000-$49,999 $50,000 to $74,999 $75,000 to $99,999 $150,000 or more $150,000 or more

Share of Households Share of Income

18.6% 20.0%17.7%

13.3%16.4%

14.1%

3.1%

9.0%13.3% 14.1%

24.8%

35.8%

PER CAPITA INCOMEThe trend for the Inland Empire’s per capita income adjusted to 2017 prices showed that the purchasing power of average individuals declined significantly from $13,160 in 1990 to $12,161 in 1994 (-7.6%) with the aerospace/defense recession (EXHIBIT D-2). From there, per capita income rose to a record $14,361 peak in 2006 or 9.1% over the 1990 level. With the Great Recession, the purchasing power of an average person fell to $13,212 by 2010, off -0.4% from 1990. More recently, a gain to a record level of $15,242 in 2017 pushed per capita income to 15.5% above the 1990 level. Unfortunately, per capita income, as opposed to median income, has the disadvantage of being biased to the high side by people with very high incomes.

INCOME DISTRIBUTIONFinally, the Inland Empire has not been immune to the imbalance in income distribution that has plagued the nation. The share of its 1,366,750 households earning under $25,000 in 2018 was 18.6% with an income share of just 3.1% (EXHIBIT D-3). Another 20.0% earned $25,000-$49,999 with only a 9.0% income share. Middle class households included the 17.7% earning $50,000-$74,999 with 13.3% of income, and 13.3% making $75,000-$99,999 with 14.1% of income. The well-off were the 16.4% making $100,000-$149,999 with a 24.8% income share and the 14.1% earning over $150,000 with 35.8% of income.

Note: The 30.5% of earning over $100,000 captured a combined 60.5% of income. The 38.5% of families earning below $50,000 had a 12.1% share of the area’s income.

EXHIBIT D-3 SHARE OF HOUSEHOLD INCOME BY INCOME GROUP INLAND EMPIRE, 2018


SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS900 Wilshire Blvd., Ste. 1700, Los Angeles, CA 90017Phone: (213) 236-1800www.scag.ca.gov

IMPERIAL COUNTY1503 North Imperial Avenue, Suite 104El Centro, CA 92243Phone: (760) 353-7800

ORANGE COUNTYOCTA Building600 South Main Street, Suite 741Orange, CA 92868Phone: (714) 542-3687

RIVERSIDE COUNTY3403 10th Street, Suite 805Riverside, CA 92501Phone: (951) 784-1513

SAN BERNARDINO COUNTYSanta Fe Depot1170 West 3rd Street, Suite 140San Bernardino, CA 92418Phone: (909) 806-3556

VENTURA COUNTY950 County Square Drive, Suite 101Ventura, CA 93003Phone: (805) 642-2800

#SoCalEconomy@SCAGmpo@SCAGnews

NETWORK: SCAGPASSWORD: scag2018

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