[1:00] Good evening, it is March 19, 2018, and I'd like to call to order a special meeting of the City Council.

[1:14] We have a special meeting agenda this evening, and let the record reflect everybody is accountable this evening.

[1:20] All City Council members. So we're begin now with the pledge allegiance.

[1:30] So looking at the agenda, my one of first, I believe we need to approve it. Is that correct?

[1:47] I'll be for approval.

[1:48] Second, all those in favor?

[1:52] Aye.

[1:53] Aye. Thank you. So we're going to go ahead and look at the agenda and see public comments.

[1:57] We're going to go ahead and put the public comments after the report that we're having on the update on Hillsburg's economy, context and balance.

[2:06] So we're going to receive the report, and then we're going to invite public comment.

[2:10] So with that in mind, I'd like to turn it over to City Manager.

[2:15] Thank you, Madam Mayor. Council members. So tonight is really the kickoff of really three items that council will be looking at.

[2:24] During this, the special meeting here at five o'clock, then during our normal council meeting at six o'clock.

[2:29] We have a professor, I'll there will be giving a presentation here at five and then at six o'clock, we'll be having a Mr. Bartell give a presentation regarding Perse, count the calpers and what the impacts of the city are.

[2:41] And then we'll also have FM3 representatives here giving the results of the community survey which was just completed.

[2:47] So the intent for these items is to really inform council about what's happening in Hillsburg with regards to the economy.

[2:55] The public sentiments on certain items and also give you a perspective on some of the challenges we'll be facing with our perse obligations.

[3:03] But I thought the best way to start this with to bring Professor Highler in to kind of kick things off and talk about Hillsburg's economy, but it can context and balance and and he can speak to that.

[3:13] But again, I think the intent of tonight is truly provide a bunch of information to this council.

[3:18] We have goal setting coming up on March 26th, I believe.

[3:21] So this will help inform those decisions.

[3:24] We have our first budget kickoff on April 9th.

[3:27] So again, all this information is leading up to these policy discussions which council will be having in the coming weeks.

[3:35] With that, I would like to hand it off to Mr. Highler.

[3:39] There you go. Thank you.

[3:44] So what I'm going to show you tonight is sort of two things.

[3:47] One is I'm going to go through some national and state context in terms of where we are as an economy.

[3:52] And then I'm going to talk about a recent report I did for the city of Hillsburg.

[3:55] Basically, it provides a summary of where certain parts of the Hillsburg economy is currently.

[4:00] At least in the given data we have and then talk about some opportunities and potential threats that are potentially coming for the Hillsburg economy.

[4:07] So that is our agenda.

[4:12] I'm also going to try to give some ideas about where to go next from my own standpoint.

[4:16] Given the the scope of the report that I did was relatively limited, but I'll just try to tee up some other things to think about in terms of

[4:25] some information I kind of blamed as I was moving through the report.

[4:28] So right now at a national level, there's sort of three major things economists are watching.

[4:32] The first one is our president, his decision making, what he does on Twitter and everything else that seems to go on at the White House.

[4:37] I'm actually going to DC this weekend for workforce investment board conference.

[4:42] But DC is a really wacky place right now in terms of the split, not only politically, we talked to any politician that works in DC.

[4:49] It's getting more and more fractured seemingly at least right here from reports, which on the one side we think about the way business roughly in the United States that can be good because not a whole lot gets done.

[5:00] Which is not a whole lot of continued regulation that would come up which would move business forward.

[5:04] But there's also a lot of uncertainty is to what's going to come next.

[5:07] And I'll talk about that in a second.

[5:09] Our equity markets have seemed bounced back, but we were watching our equity markets pretty closely earlier this year.

[5:13] We saw a lot of, you know, basically with volatility take place.

[5:17] A lot of that was around what we thought the tax plan was going to provide.

[5:21] And potentially what the Trump White House is going to be able to provide for American business going forward.

[5:26] We'll see how 2018 unfold.

[5:28] But for right now, we've seen to recover some of the wealth loss, not all of it.

[5:32] The outlook is actually pretty good for the rest of the year, but a lot of it depends on two major items.

[5:36] One, what else to chart what else can get done or what it threatens to do, which I'll get back to his point three hundred a minute.

[5:42] And second, what happens with the essential interest rates in terms of reducing potential real wealth on stock market.

[5:48] Third is trade.

[5:50] So I used to have the third point here Bitcoin until about four or five weeks ago and I traded it for trade once we heard about tariffs starting to rise in the United States.

[5:58] For a place like Hillsborough all three of these issues are not a massive issue yet, but when you think about trade.

[6:05] And you think about the wine that's exported from this area.

[6:08] And also the inbound movement of people that come to this area from all over the world.

[6:13] Having a trade war is something that economists two years ago in the summer were fearing as being the number one thing that Donald Trump was talking a lot about before the presidential election that if he was elected would be the one.

[6:26] Item we hadn't quite accounted for that could lead us to a much more quick recession situation and a lot of economists have agreed that.

[6:33] Depending on how wide indeed the term the tariff changes are.

[6:37] It can easily what you would call a truncate the business cycle in a way that would lead to a quicker recession than we first planned.

[6:44] That couple with rising interest rates that might be faster than we first expected prices rise due to tariffs.

[6:50] The combination of two could easily take us to recession faster than we expected.

[6:53] And then there's a lot of things coming up here from the professional endpoints.

[6:57] There's hundreds of economists that all they do is try to predict what's going to happen in the American economy.

[7:01] There is no recession currently predicted.

[7:04] Now this current center predictions.

[7:06] I'm going to give you some shaded areas here to focus your vision a little bit on some of these numbers were done.

[7:14] After the tax deal had passed but before the tariffs were announced.

[7:17] So if you look at that sort of split you'll see a couple of things.

[7:21] That over the next couple of years the previous forecast from 104 casters on Wall Street that all they do professionally is forecast the American economy going forward.

[7:31] Increase their forecast in the latest round. Why?

[7:34] Because they expect growth to come from the recent tax legislation.

[7:38] So for example in 2018 in quarter three of, I'm sorry, quarter four of 2017.

[7:45] The original forecast for this year was 2.5% growth after inflation.

[7:49] Now it's 2.8 with the supposition that most of that 0.3% increase is due to the tax law passing and giving.

[7:56] Us as households more after tax income and also businesses as a tax break in terms of tax rates.

[8:02] You'll see that that happens again in 2019.

[8:04] But then that delta fades a little bit in 2020 and why is because the American economy has been long predicted at least in economics terms about the last 18 to 24 months.

[8:14] As this decade closes we're getting a little more foggy and how long we continue in this growth cycle.

[8:20] In the next round and this is publicly available data from the Philadelphia Federal Reserve branch.

[8:26] It's likely that you're going to see growth rates even sink a little bit more in terms of looking forward to 2020 and 2021 because we'll see more and more effects of tariffs that usually take about 18 months to have their full effect in the American economy when they head.

[8:39] Also thinking more just this year you'll see that there's been an ascension if you look at the left hand column which is the previous forecast and look at the right hand column which is the new one as of quarter one 2018.

[8:48] You'll see that all the quarters going forward this year increased from their original positions one quarter ago.

[8:54] But then if you couple that with the annual prediction.

[8:58] Economists are not feeling like the new tax law is going to have a long term positive effect.

[9:03] And then finally the unemployment rate we usually talk about unemployment only because we were concerned about how close we are to full employment or how many people are out of work.

[9:11] And usually it's the polar ends were worth slowly descending down from a high unemployment rate to a low one.

[9:17] We're less concerned about where we are in terms of the numbers that fact that we're following now that we've seen the same basic numbers.

[9:24] Looking forward and also in the American economy on the unemployment rate we feel like we're getting close to what we think of as full employment.

[9:30] The full employment is not only relatively low unemployment rates it's also how wages ascend and how prices ascend.

[9:37] So when the Federal Reserve is considering interest rate increases they're thinking about more than just the things on this sheet.

[9:43] But thinking also about watching prices and watching wages and if those two variables slowly ascend.

[9:49] It gives us a feeling that there's still people out there in the labor market that are looking for a job which means that as wages slowly increase.

[9:57] People enter the workforce and stabilize the unemployment rate as wages slowly increase rather than shrink it any further.

[10:03] That's when you really feel like you have full employment and wages and prices are rising you don't see much change in unemployment rates.

[10:08] Then you can start saying that we're out full employment but until all three of those things happen we don't have a lot to put our hat on in terms of that sort of statement.

[10:18] Speaking of interest rates this is what I want to show you is happening in the Federal Reserve.

[10:22] These dots represent the Federal Open Market Committee members and what they think is going to happen with interest rates.

[10:28] And these are the folks that actually make the decision for the American economy about the ascension of short term rates.

[10:33] So the last forecast by this group was that trajectory toward 2020.

[10:38] The new one which is the dots you see basically has that median move.

[10:43] So in just the last quarter we've seen an uptick in what the folks that make short term interest rate decisions for the United States believe should happen to short term interest rates.

[10:53] As a result of new date and the macro economy specifically the change in the tax law.

[10:59] So if the change in the tax law leads to more spending and maybe more business investment we should expect prices to rise.

[11:07] And we should expect more pressure on interest rates to rise as a result in an attempt to stay off more rapid inflation.

[11:15] The beauty of it though long term is that we still feel like we're in a good cycle and keeping credit relatively inexpensive into the so called longer run.

[11:23] But a hand way the aspect of looking at data like this is that most economists will tell you that there is no real date for the longer run.

[11:29] We just know it's passed the current three years span okay so interest rates are likely to come back to some sort of middle ground even if they ascend above 3% in the longer term.

[11:38] So that's generally speaking good news and predictable.

[11:42] It's just real quick on the tax act that passed the so called tax cuts and job act.

[11:46] This is what most economists believe are going happen between 2019 and 2027 the beginning of the tax benefits with the 2018 tax year and the ending of the tax benefits with the 2027.

[11:58] The calendar year meeting that in 2026 will be most of these legislation will have sunset.

[12:04] You can see that in each of the so-called quintiles of the American economy meeting each one of those five buckets are starting on the left hand side the lowest income levels.

[12:14] Then the 20 to 40 percent 40 to 60 percent the 60 to 80 percent and then the highest income levels moving left to right.

[12:21] You can see that the higher incomes look like they're going to have more percentage change in after tax income than lower.

[12:28] And so the rhetoric coming out of the White House is that this is actually going to be a good thing for middle income households.

[12:33] Most economists disagree with that take.

[12:36] And so when you think about that in terms of what might happen in a place like Hillsburg which generally speaking is in the fourth and top quintile with with the median income in its households.

[12:43] We're likely to see more after tax income to come to households in places like Hillsburg.

[12:47] So if you see that as a good thing in terms of spending in the support for local businesses that's great.

[12:52] What most economists see it in national sense is a speeding up of inflationary pressure when we really don't need to fuel in the tank.

[12:59] And potentially higher interest rates is a result of it in a truncation of the business cycle.

[13:03] So some longer term things I want to make you think about two little bit in terms of the latest tax.

[13:09] The latest tax legislation is that it will imply more debt.

[13:13] So for the last five years, the economy has really been focused for economists the last five years on the nature of debt to so-called GDP.

[13:21] As a ratio of the solvency of our economy and how much we can actually withstand earlier this year.

[13:27] Another little bit that helped force more volatility in the equity markets is that the Chinese economy started to talk about.

[13:35] So slowing down their bond buying.

[13:38] The interest has been going on with the American debt and that started to give Wall Street a little bit of pause in terms of whether or not.

[13:44] That was a signal of the world financial markets seeing our tax legislation longer term being problematic in terms of our ability to pay back bonds.

[13:54] The strengthening of the economic cycle we've talked about already in that solvency issue and why that might be important is that if you think about how that bleeds down to a state and local level.

[14:02] If you do try to use state or municipal debt, when national debt is having potentially some shakingness in the world markets, that will move down the latter in terms of investors thinking about how solvent then the state and municipal bonds or municipal.

[14:18] Governments may be in issuing new bonds as they're trying to grow.

[14:24] The next one is more of a state forecast in the, you see, sorry, the CLA Anderson school, which does a forecast for California alongside of CalTrans and CalTrans went into a partnership with the so called California economic forecast to look at where jobs are going statewide.

[14:42] Now, this is for the next 10 years and generally speaking, this looks good on the surface, but there's two caveats I want to give you when you look at this one is what's in shaded area here.

[14:54] Notice that that project is actually looking for farm jobs to fall.

[14:59] So in

[15:00] In California, we actually have a lot of predictions about seeing more food and beverage growth. And with the oncoming of cannabis, as a quote unquote agricultural product, we might see farm jobs or farm incomes rise if you see it through that farming lens.

[15:16] But the supposition is that farming in general is going to become more mechanized and less labor intensive over time due to two major items.

[15:23] There's been shrinking labor market in terms of being able to share labor amongst multiple agricultural products during harvest time.

[15:29] And the second is potential immigration legislation, which might reduce the labor force and force wages up, which would then usually lead farmers to think about replacing labor with capital, hence a reduction in farm labor.

[15:42] The second one is that each one of those while growing above are not growing robustly. So what this prediction tells us is that there is some recession over that tenure time span.

[15:52] How deep it may be still an open question, but they will only jobs across the stable and grow somewhere between 0.75 and 0.8% per annum between the this year and 10 years from now, at least in the current forecast.

[16:06] We're thinking about the North Bay. There's four major areas that I tend to watch as an economist. One is just jobs in the breadth of jobs.

[16:13] The North Bay has been meeting Sonoma Marin and Napa counties has been focused somewhat on more science jobs or let's think of more stem jobs, if you will.

[16:22] And has struggled a little bit with that against the Bay area more completely. Marin County has been a place where bio sciences grown.

[16:29] Sonoma County has slowly seen some evolution in bio science and in other sciences, but not as robustly as we've seen in past decades.

[16:36] So we're watching jobs very closely.

[16:38] Napa is basically funded completely on diversity in jobs and has become much more of a wine and tourism center every day of the week, and they've actually grown robustly as a result of that.

[16:47] Housing is a big issue. Obviously, the fires, as I'll talk about in a minute, I've left a real big problem for Sonoma County, specifically Napa County less.

[16:55] So Lake in Mendocino as well, or watching what the county does ultimately in terms of helping mainly Santa Rosa, but also the county in the inappropriate areas that were heard.

[17:07] Grow that housing back up and actually provide a gateway to see more housing units.

[17:12] We'll see, I've been advocating that we actually need to have more housing units than we started with rather than just assume that wound up less because some people simply won't rebuild.

[17:20] I think we need as many instances we can, but we'll see what our policy makers do.

[17:25] How cannabis as a new product actually comes into play.

[17:29] There's a lot of things I've been talking about in that.

[17:32] Yes, it may be positive in terms of job growth and the use of commercial space and other things that we may have seen laying follow for this recovery period.

[17:39] But we have to watch for petty crime to rise and some things that have been happening lately. Let's say in Western Petaluma, for example, a couple weeks ago.

[17:45] Really makes it your scratcher head that people are actually taking those kind of chances believing that California is now this mecca all over the place of people growing marijuana.

[17:53] We're watching that very closely as economists here regionally and throughout California because we're really not sure what how it's going to evolve and what municipal governments have to do to either take advantage of it or to watch very closely for let's say secondary and tertiary problems that may come for with it.

[18:08] And the last thing is water. So about just about a year ago California's governor suggested that the drought was over.

[18:16] And then this year we're concerned very much that the drought will be back again in 12 months.

[18:20] So we will see, but water is something that if you connect all the dots above.

[18:23] If you expect to see housing growth, job growth and potentially a new agricultural product come on in the right way.

[18:30] Water resources will be a factor in that growth and will be heavily debated as to how fast and how much growth can take place.

[18:39] So let's talk about the fires and there are effects real quick as far as more regional context.

[18:45] It's an almost a university did a very brief survey of the wine industry and tried to get a feel of how much damage there was from the fires and how much let's say capital stock was affected.

[18:55] And what we found out is that there's very little capital stock effectation actually from the fires.

[19:00] And I think and I totally we knew that already going into this.

[19:04] Only about 7% of wineries in Sonoma County were affected almost the complete wine crop was recovered and in a sense the acreage was unaffected if you think about the vineyards now that's on a stock basis and economists like to talk about stock versus flow stock is what you think of as the capital stock vineyards wineries.

[19:24] The wine in the seller being something to be sold.

[19:27] The biggest problem for the wine industry right now is can it have is it going to go through a PR problem in terms of this year any taste of smoke in the wine.

[19:35] And what the professional tasteers are going to come out and say that the 2017 vintage coming out of either Sonoma County or Napa County specifically has some smoke tank that will then.

[19:44] Maybe even socially network itself to problems of selling this year's vintage and potentially the next year's vintage.

[19:51] If there's one threat to the wine industry regionally it's probably that more than anything else from the fires.

[19:57] The second threat is this year's harvest and what not to be enough labor resources to go around if construction begins in earnest in terms of rebuilding.

[20:04] And cannabis also takes more complete hold on the agricultural side of the economy simultaneous to wine harvest this is something we actually saw Napa and Sonoma County's last year shortage of labor and that doesn't take into account any potential immigration change.

[20:22] So some of the data that we also looked at was when rebuilding begins with that mean.

[20:27] And there's two sides of looking at this story also in terms of the more the county context for every billion dollars of potential construction you get about 5,000 people working on say about 5,200 actually more precisely then that supports about another 4,000 jobs.

[20:41] So you've got in a sense just around 9,100 jobs.

[20:47] Supported by that reconstruction effort for every billion dollars. Now that's the supposition there's been you're going to get about a billion dollars of building every six months or so.

[20:56] And that labor number not going to really change that much when you add another billion where the action really happens is on the income level.

[21:02] So that billion dollars of rebuilt housing is going to lead to another 536 million dollars worth of income in the broader economy.

[21:10] Now what I'm sorry about two fifths of that 536 is actually going to be on support processes in construction.

[21:18] Meaning vendors that actually sell things to the construction industry and then the other three fifths will be for the broader macro economy here in the county.

[21:26] So there's a lot of income to come back to Sonoma County if you think about what was lost and there's a dubious positive aspect of having a disaster.

[21:34] And then the rebuilding phase brings in an impulse that at some point will end.

[21:38] But if you think about how that affects the place like Hillsburg there is going to be a labor scramble over the next few years as construction begins in earnest regardless of how large or the number of billions of dollars that ultimately is reconstructed.

[21:52] Now one of the other things I did was talk about what would be lost one of the biggest debate items is.

[21:58] Well let's say that we don't have a lot of homes reconstructed and in fact folks that were in those homes let's say in coffee parks specifically.

[22:07] Leave because they don't intend to rebuild and they leave the area.

[22:10] So by using census data we could kind of estimate the number of people that were working in the affected areas and if everybody laughed.

[22:17] The number of jobs that would be basically lost from the county right away are the number of workers is about 5500 people.

[22:23] Now that's maybe about 750 million dollars worth of spending lost in 53 million dollars worth of taxes that are spread both at state and local areas based on spending property taxes etc.

[22:34] Bottom line is that a place like Sonoma County will reattract that labor over time so this is another short term issue and this is the worst case scenario.

[22:42] So you add up all those parts and while the fires were very tragic from an economic standpoint unfortunately and this is the dissonance aspect of this.

[22:50] When you have tragedy like that you usually get dubious positive aspects on the other side.

[22:55] Even in the worst case scenario this will likely all come back because this isn't a track to place to live but is it dependent on something the answer sure depends on people can live here.

[23:04] So housing prices if we do not rebuild will be affected by a lack of rebuilding if you're trying to own if you own you'll get again this sort of dubious pleasure but in having your price the price of your home being supported because of a lack of supply.

[23:21] And inflation is I think I've said in this room recently too inflation is 100% of function of excess demand.

[23:27] So if you cut the supply down in force, excess demand in a market so you're going to see some price essentially we've already seen that specifically in rental markets.

[23:34] So and this is just a reminder that we got about a 24 billion dollar economy in about 220,000 people working in this county.

[23:42] So we're going to contact standpoint economists believe that they're not going to be a recession or if there is if one comes it'll be relatively mild somewhere between 2020 and 2022 so we don't expect anything before 2020.

[23:54] But we're watching closely because what we've seen just in the first three months of this year has given us a little bit more pause and we might see some adjustments in the forecast that we first saw as whether or not we're going to have a recession sooner than later.

[24:05] We should expect that the business cycle is going to have some truncation we've had a lot of fiscal policy suddenly come online we're probably we didn't need it per se except for reelection cycle.

[24:16] And that kind of thing can easily lead to inflation interest rate effects that will force us into recession fast and we expected.

[24:23] We should expect shifting labor markets as soon as the construction market comes online if we believe the same labor conditions existed last year has is coming this year.

[24:33] The agricultural harvest are going to be threatened across the board in terms of being able to find labor which will increase prices and start supply chain effects in terms of costs up the ladder from food.

[24:43] And then finally shifting labor markets and there's been a lot of bold claims about how many units are coming so we've heard our county supervisors talk something of the order of 30,000 units in three years I've heard 26,000 and two years I've heard 60,000 and 10.

[24:58] Folks we need to put one more in the ground before we get to excited.

[25:02] So how many units the wind and the wear are big questions in terms of not only getting past the fires and their effect on our communities.

[25:10] But also thinking for about where we're going to see people living people working and that dynamic between commuting.

[25:17] Employment and the types of businesses to locate themselves in this county that's sort of in a sense the three-legged stool economic workforce development happening all simultaneously.

[25:27] Okay, so with that context let's now shift over to heelsburg.

[25:31] Three key points to make is that heelsburg if you look at the data is not dependent on tourism to support its economy.

[25:39] It tourism is here like it is throughout Sonoma County as a part of the economy and we're going to see some data on this in terms of diversity in just a minute.

[25:46] But the opportunities looking forward if you think about just the context of what Hillsburg has been doing over the last five or six years is probably more in supply chain.

[25:54] So a lot of people get wound up about bringing you know Google campuses north and buy all science everywhere and having this you know this place where my kids can come back after they get a degree.

[26:04] From this place I spent 200 thousand dollars sent them to and then there's no job locally so they end up in Minnesota.

[26:10] Well part of that is housing the other part of it is is that we have not had amazing expansion of.

[26:17] Let's say scientific or stem jobs in this county because the recession has led to calculus that is basically kept most of those businesses in the core Bay area where the core labor force has decided to land.

[26:31] So in previous growth cycles we've seen more proliferation out of the Bay area in terms of tech biotech scientific base jobs we haven't seen as much of a mass movement in this recovery period mainly because this recovery period has been very slow.

[26:44] In terms of bringing back those jobs in mass and at the same time we've seen housing prices rise more quickly which has slowed the growth and the proliferation of those jobs and businesses out of the core Bay area.

[26:56] And so that kind of leads to that third bullet is that we're going to have housing as a regional issue for some time to come.

[27:03] And other things are going to come up and especially because we have the challenges on the in the wake of the fires.

[27:08] Let's talk about sales tax diversity thinking about Hillsburg versus Sonoma County.

[27:12] This pie chart looks like a massive amount of data, but basically there's two things to focus on one is the sort of 12 o'clock all the way around a seven o'clock are your classic basic retail sales tax drivers.

[27:28] Everything from auto parts to cars to all kinds of retail you can imagine.

[27:34] It's actually that other outlets which is the seven o'clock to 12 o'clock on the left hand graph in 2010 in a little bit.

[27:40] Beggers will see in a minute in 2016 which is the latest data on this for Hillsburg.

[27:45] 40.1% of the sales tax revenues that come to Hillsburg come from things that are not in classic retail.

[27:54] Okay, and that was in 2010 in 2016 and see the bigger it's almost 44% what's that mean is you're getting more sales tax diversity in this.

[28:03] Recovery period then maybe you would expect if you thought that tourism was the driver of what goes on in this community.

[28:11] If you look at Sonoma County same basic rules apply except there's a lot more diversity in terms of where sales taxes come in.

[28:18] And the other outlets in 2010 were about 29% of Sonoma County's economy so classic retail in Sonoma County overall.

[28:27] It generates about 71% of the sales tax or the tax will sales and 29% come from other outlets and that is actually shrunk.

[28:36] To our 2016 meaning that retail in all of its possible forms has become more of what drives tax will sales than other outlets which can be business to business.

[28:48] Sales of things outside the retail sphere meaning you know equipment for example.

[28:54] That has become less of a factor which means that Sonoma County's been much more dependent in terms of tax will sales and sales tax revenue on classic retail.

[29:03] And if you look at the environments around what supports tourism those have grown visive what's happened in heels work.

[29:09] So it doesn't mean the tax will sales are not growing because they are as we'll see in a minute.

[29:13] But what it means is that at least in this recovery period as compared to the county overall he was noticing a better mix of where tax will sales are coming from in Sonoma County which has become much more dependent on retail.

[29:27] Jobs wise there's still a lot of service jobs in Hills Brooks economy and this is something we should expect in a place that is basically a place where people live and then they outbound commute and people come into work to support the local population you should expect more services than let's say.

[29:44] Goods producing jobs this is in Hillsburg for 2016 this is in Sonoma County so I'm trying I'm going to try to show you this from a diversity standpoint that if you look.

[29:55] The about 19% of jobs are in something that's either tourism related.

[30:00] Decided, restaurant related, or let's just say, in general food services, in the tourism environments

[30:07] as well as health care and education about the same size in Hillsburg, where in Sonoma County

[30:14] there's much more education health care than there is, let's say, tourism support. But you

[30:18] should expect that because Sonoma County's a much broader economy and it's got more people

[30:23] that it has to take care of health care-wise and education as a percentage of the overall economy.

[30:30] Since 2010, in terms of the current job growth, this is basically a roundup of where we

[30:34] see we've seen some reduction in manufacturing jobs, which means that we've seen some reduction

[30:39] in terms of wineries and other types of manufacturing. We've also seen a reduction in retail jobs,

[30:45] which is expect as we've seen shrinkage of classic retail because of an expansion of internet

[30:49] retail. This is almost everywhere in California. This is education in healthcare in Hillsburg.

[30:55] And this is the tourism piece where you have quite a jump in the number of jobs in terms

[31:02] of what we've seen recently. Now, if you look at that as a total mix, you can see that the percentage

[31:07] change in the number of jobs has increased for tourism and for education in healthcare,

[31:12] which we saw that it taken up a much larger piece of the pie. But those jobs on the retail

[31:17] side are usually lower-wage, which means that the total amount of the economy is not as dependent upon

[31:22] those jobs to move around. Healthcare education is made up of some of that gap. Retail jobs being lost

[31:27] is the other part of the tourism support piece that we don't see in those recreation or let's say restaurant

[31:34] hotel jobs. So when you add those up, the total tourism piece is not grown as much as the far right hand side

[31:40] looks like. But definitely we've seen some growth and you should expect that there's been growth

[31:44] and tourism since the recession happened. You should expect some job growth.

[31:47] This graph, I think, is very important and it's something to think about.

[31:50] The blue graph is the number of taxable sales per job in Sonoma County since 2002.

[31:56] And you can see the recession that dip and then the coming back, but you can see there's been growth

[32:01] in Hillsburg really since late 2000, late 2000s and on and the recession was very short lived in terms of taxable sales per job.

[32:09] And that delta really tells you something about jobs not driving what happens with taxable sales.

[32:15] And this kind of sums up the idea that while there has been job growth, taxable sales about past it.

[32:20] And that taxable sales mix being more on the other outlet side means that you actually are having, you have more taxable sales

[32:28] because the items you're seeing and the other, the other outlets are usually higher price than let's just say,

[32:35] you know, things that you would buy two or four dollars that have taxes on them or even restaurant meals for that matter per unit.

[32:42] So you're getting more taxable sales per job when you're less dependent on retail or in general tourism.

[32:48] You're going to see more taxable sales per job that beauty of that.

[32:51] You don't need as many jobs to generate the same public finance.

[32:56] Okay, and that's usually a function of job diversity.

[32:58] When your jobs are more skewed towards supporting tourism and retail, you're going to see less of an extension here.

[33:04] And that's exactly what's happening.

[33:05] So don't look on the outside.

[33:07] So with that data and sort of with that context when I want to talk about now or some of the opportunities and challenges as I see them.

[33:13] And this is the second part of the report was really kind of more forward looking.

[33:18] So we're the opportunities life for Hiltsburg and my minor in what you call value added industries.

[33:22] So economic development professionals over the last few years have gotten a lot more stuck on the idea.

[33:27] That we need some metrics to think about, okay, where can we be pointed easily by looking at comparative metrics as to where the opportunities are.

[33:35] I'm going to show you a table in a minute that compares to what is what you call location quotient, which suggests that your area has a relatively easy time in supporting certain types of jobs.

[33:45] And so we should expect jobs to grow there.

[33:47] The problem with that metric is that it assumes you're going to have those jobs for a long time and is really more backward looking and forward looking.

[33:55] The other piece I'm going to show you is in value added meaning that if you bring a job to your area.

[34:00] How much is it support the local economy when that job comes here versus a broader area and I compare it to Sonoma County overall.

[34:07] As we'll see in a minute, Hiltsburg has some potential opportunities that you may not be thinking about in a classic form, but if you brought those jobs to Hiltsburg, you would see more dollar circulating locally from those jobs growing.

[34:19] Then you would just keep on the same ones you would do if you just stuck to what's called a location quotient.

[34:24] I'll try to explain that more in a second.

[34:26] Continue to look at housing and supporting housing is a big opportunity here in Hiltsburg.

[34:30] It's something that should continue and it's really, as we'll see in a minute, there's some good news and obviously some bad news in terms of where the county context is going.

[34:38] But that Hiltsburg has been doing pretty good since the recession, believe it or not, comparatively speaking.

[34:43] Health care and tourism are two things I'm going to talk about in the sense that there's still opportunities in tourism, regardless of.

[34:48] The dependence or lack thereof, but health care to me is another place that Hiltsburg can find a way of moving forward as I'll show you in a minute.

[34:55] If you develop more, let's say specialty health care where there may be a tourism component tied to it.

[35:01] You're going to generate more so-called value add and have more dollars circulating per job than you would otherwise.

[35:07] And that might be a real sweet spot for a place that's a small community like Hiltsburg.

[35:12] The other one is trying to bring back manufacturing we saw earlier that manufacturing jobs have slipped a little bit thinking about other parts in the supply chain from manufacturing or things I think our opportunities as well as we'll see in a minute.

[35:22] Some challenges are classics and we kind of talked about most of these we've had a major regional shock that's going to affect housing markets.

[35:28] So even if you keep on plug in in terms of putting more housing and Hiltsburg, there's still going to be regional pressure in terms of the overall housing market.

[35:35] There's going to be regional competition so no matter what you try to bring the Hiltsburg in terms of economic development, the region is going to become more and more competitive over time and you have to be watching that very closely.

[35:45] Thinking about that transition between labor and capital.

[35:48] I went to a conference recently for credit unions in which I had a robot come up with an iPad and say can I help you with the idea that that is the future of customer service representatives in banking.

[36:00] So having students that are 22 years old with the marketing degree take a bank tower job as a pipeline into sales that is in five years going to be very much history.

[36:11] So that transition and how many other jobs are potentially threatened by transitioning from capital from labor to capital is something that should give you a little bit of pause.

[36:20] And if you're thinking about economic development, the more you can generate income without generating jobs, meaning you get more higher wage jobs that generate more value added for your economy.

[36:30] That's a very good thing to do.

[36:32] Of course it's highly competitive because everybody wants the same basic outcome and how we recover from the fires as another piece.

[36:38] So the housing piece was already here.

[36:40] The post fire recovery and how we plan for it as county is still a question mark and hence it's still a challenge.

[36:49] So I alluded to this before.

[36:51] This red line which is looks more magenta I guess if you want to put it that way given where you're at right now.

[36:58] That line is kind of a demarcation line is most economic development professionals say look in that second column which is called LQ or the so-called location question.

[37:08] Anything over one's a good thing.

[37:10] Meaning that.

[37:12] Compared to Sonoma County overall.

[37:14] Heelsburg is a place where jobs and wineries jobs and vineyards jobs and equipment leasing jobs and hotels and restaurants are more supported on average than.

[37:23] The random business in Sonoma County.

[37:26] And everything else below that means that there's compared to Sonoma County businesses are more likely to locate themselves in Sonoma County otherwise than in Heelsburg.

[37:34] And to certain extent it's a way of describing the evolution of the local economy however.

[37:39] The third column or what I called here value ad queue or value ad quotient does the same comparison but looks at how does one job and what it provides for the local economy in terms of income.

[37:50] Compare.

[37:51] To Sonoma County overall.

[37:53] And again in anecdotally you'd say that makes a lot of sense wineries and vineyards find themselves here because it the economic conditions and.

[38:01] And the chair wall on all the other things that help a winery or vineyard work.

[38:05] Heelsburg's been a place where that's happened equipment leasing.

[38:07] There's a lot of equipment needs so you'd expect that hotel restaurant same thing you do have flow of tourism here.

[38:12] But here's next two things.

[38:15] If you look at that set of potential use of potential industries is maybe targets over time because these these data do evolve each year.

[38:23] Other manufacturing as I alluded to before where that's like let's say light durable things that would be.

[38:30] Capsules corks bottles tanks.

[38:34] A lot of the things that would support other manufacturing that's naturally going to happen in let's say a five mile radius around Hillsburg having more that come here and expand that.

[38:42] The value ad is greater than one meaning that there is probably a reason why it'd be good to focus on those kind of manufacturers to come here.

[38:50] And that's on the durable side to be normally those wages are higher and the income left behind is larger and health care.

[38:57] So while the jobs and health care may be more attractive for economic development standpoint to stay longer term in Sonoma County the income they leave is much higher in Hillsburg.

[39:11] So those are some of the reasons why I'm suggesting that there's some potential foci you can look at that would not be.

[39:18] Let's say put forward as a as a recommendation if you just looked at the jobs piece.

[39:24] The income piece which is usually more important to a smaller rural economy which is located to a larger or next to a larger place.

[39:31] It's a good way of thinking about moving forward.

[39:34] Here's the housing conundrum so another thing I've been asked a lot of times to look at in a lot of different places is so called jobs the housing ratio is a way of gauging how.

[39:44] The local area has housing units for the number of jobs it has and you can see that Hillsburg kind of stands out a little bit from the pack but really is like sabasable in the town of Sonoma.

[39:53] In terms of having more people working there than there are housing units to support those households.

[39:59] Plastic for rural sort of let's say rural to suburban California where there's a much larger labor market close and a larger larger housing market close.

[40:10] You can see run a park for example has got plenty of housing for the number of jobs in run a park.

[40:15] Because market park has been placed historically where people have lived and outbound committed to work and brought that money back home to a place where housing has been relatively inexpensive.

[40:23] So you think about housing prices and this jobs housing ratio they usually walk in and hand as the jobs housing ratio are sends sort of housing prices comparatively speaking.

[40:32] But notice the county total has been slowly inching up the bottom line on this graph since the recession and is now close to that sort of demarcation line meaning that.

[40:42] When you have a one to one ratio you're starting to get slightly out of balance in terms of jobs in housing.

[40:47] So now the county faces that and this is just through 2016.

[40:51] Okay, 2017 and 18 are likely to be even more out of balance since Sonoma County overall mainly because of the fires.

[40:59] Another metric you could look at which is potentially a challenge or also a way of saying wow you know things are actually going to be going maybe better than we think is what you call housing burden.

[41:09] Housing burden is something that the federal government watches as sort of the connection between.

[41:16] The median household income and the price of housing.

[41:20] In the top Latin corner is the so called housing burden for rental in Hillsburg in 2011 just trying to think about the bottom of the recession was about 2011 and at that time about 65% of households.

[41:35] In that we're renting in Hillsburg had a median income that they had to pay 30% of or more in housing costs and maybe my English is a little poor on that's let me rephrase that.

[41:48] Housing burden is defined by the federal government in a situation where a household spends at least 30% of its household income just on housing costs.

[41:58] For rental in 2011, 65.7% of renters in Hillsburg were in a sense burden based on their current income level and owners are about 52% burden.

[42:08] Now since then that burden is actually shrunk to 57% for rental and 33% for owner now you may ask now how is that possible in things arising remember this is a ratio.

[42:20] Which means if the income level is rising faster than the cost of housing you're going to see burden shrink and so Hillsburg has been a place that has attracted a higher income level and even as housing has ascended and that's why the burden is shrunk.

[42:35] Sorry, so I don't want to get off that too fast now.

[42:38] If you think about what can happen or where the opportunity is and what you could see this is well that still a challenge because there's still a lot of burden there and the answer is you're right there's still depending on your on your lens there's still some burden here.

[42:48] The more housing units that are put into the economy the more burden shrinks okay and Hillsburg should expect itself to be a place where there's still going to be an attract and here for relatively higher income households.

[42:58] Okay and it's part of the connection being a beautiful place and a place where people are drawn to from all over the world potentially live.

[43:05] It's the burden really of everything that lives about the going at bridge.

[43:10] So in terms of where to go next I wanted to provide you at least a little bit more detail level I think equipment manufacturing having more data processing financial services software companies where possible.

[43:23] Manufacturing things like tile these are the subgroups inside of that same so called value added quotient that pop up in the data.

[43:31] So I gave you kind of a high level look this is the the more focal look inside of those categories having more outpatient facilities doing more beverage manufacturing beyond the wind industry.

[43:42] Having tank and manufacturing being a supply chain piece to any beverage manufacturing having more plumbing for the same reasons and then having more advertising services those are the things that really stood out let's say at the lower levels of detail.

[43:55] In terms of the types of businesses that Hillsborough may want to attract over time given that value added piece and not just how many people are working here.

[44:03] So some things that city can do to support this this is something I thought that might be good to think about one.

[44:09] It's having more broadband investment making sure that you have as many people many households and as many businesses exposed broadband internet is possible.

[44:17] Working with the chamber on incentives for retention and expansion of businesses that are currently here.

[44:22] One of the things you're likely to find especially if you start to slip closer into recession is will businesses stick around so if you like the business diversity you currently have.

[44:30] Working sooner than later on what incentives can potentially be provided to businesses that you want to retain or potentially grow.

[44:37] That competition levels rising continue with the way you guys are looking at housing I think it's been a great thing that that you have actually made a commitment to put tax revenue toward housing subsidies to keep that up.

[44:49] Watch also how you can broaden that economic base that a list above is one way of doing that.

[44:54] You already have a pretty good diversity but don't stop now it's something that again that can.

[45:00] Competitive Environment is going to increase. And putting a advisory group together to think about the labor piece. This is something that is, I think, very important in the wake of the fires. I think every community should have an advisory group of businesses that talks to them just about labor needs.

[45:13] This is something as an economic development person. I've been trying to tell people that you should not divorce economic development from work or workforce development. And you have to have a communications pipeline open with your local businesses. What do they need? Well, when we get in June, July and August, you're probably going to have a lot of local businesses concerned about,

[45:29] what's going on with labor? Where are we going to find workers? And that might lead to some decisions that you don't want to see happen meeting that, okay, we'll go through this year.

[45:37] But we might leave next year because we're not going to be able to find a labor we need. It's not an issue of income. It's an issue of how easy it is to transition from labor to capital in specific types of industries and how hard it's going to be to find labor.

[45:47] So, watch for that. And the more you can get businesses voiced on that, the more you can prepare now rather than react, which is always a bad thing to have to react rather than be in proactive.

[45:56] So it conclude. As far as I can see in the data, the economy is relatively balanced. There's not a dependence on tax sales, let's say, from tourism as we're driving the economy forward from the municipal standpoint,

[46:10] nor looking at the number of jobs that are out there. There's no doubt about the fact though that tourism in retail is linked, supply chain-wise to wineries, to the beauty of the local economy, to Sonoma County overall, is just one part of a larger marketplace.

[46:24] So the sort of push and pull of how much tourism is enough or where is sort of a line to be drawn or how dependent you are.

[46:32] A lot of that stuff is fluid, but the bottom lines, the data don't suggest that Hillsburg is out of whack at least with the, with the county economy and is actually performing better in terms of being more diverse in the way it generates incomes.

[46:45] The bottom line folks are housing and remain the biggest issue. So if you're watching the county supervisors, if you're watching state legislature, state legislators, and you're going to have your own concerns, housing is going to be the biggest issue probably for the next two years with labor.

[47:00] So we want to be right behind it. So with that, that's it, and I want to take any questions you have.

[47:06] Thank you so much, Tyler. Yeah, so we don't have a lot of time, and I want to maximize it, so I think I would want to ask first if there's some brief questions here, and then we can open it to the public please.

[47:17] So is anyone want to ask any clarifying questions before I open it to public comment?

[47:23] Okay, so I believe I'd like to open it to public comment. That's all right. So if you could be available to answer questions.

[47:29] Sure, appreciate it. Thank you so much.

[47:31] Lot going on. So I invite anyone from the public to come forward.

[47:36] And if you have any specific questions to raise, you're welcome to come to the dias.

[47:41] Thank you. Welcome.

[47:44] Bruce Abramson. I basically have a question.

[47:50] In housing here, we're trying to look at commercial job linkage and commercial fee linkage, and I'd like to get the guests comments on how that may help or getting more housing.

[48:03] And just its implications.

[48:06] Thank you. Okay, so we'll just take that question.

[48:09] Anyone else from the public like to raise a question or have any kind of comment on this presentation?

[48:16] Thank you. Welcome.

[48:20] Thank you, Tim Unger. Great presentation by the way, very informative.

[48:24] I'd be interested in hearing from the guest speaker, what are recommended incentives that the city might undertake to help stimulate housing.

[48:35] And what's been proven to be effective in the past or what's never been tried that he thinks might prove to be

[48:43] effective now given the current state.

[48:47] Okay. Thank you.

[48:50] Anyone else like to close a question or make any kind of comment?

[48:55] Okay, so I'm going to go ahead and close public comment now.

[48:58] Thank you for those two questions.

[49:00] And I believe our speaker will be glad to answer those.

[49:03] So if you need a couple minutes, you're okay to start. Sure.

[49:06] Okay. Thank you. Of course.

[49:08] So, and I may have to clarify a little bit on the question, but the first question was basically about the nature of jobs and how the interface with housing.

[49:18] One of the beauties of focusing on value add relatively high value add jobs is that it assumes that if you're in a relatively high price high home home price area, you will bring in jobs more often than not that can at least afford to live locally.

[49:36] If not assume that there's a natural 100% correlation between the income I make where I work and where I want to live.

[49:44] Okay. We see people commuting for reasons that are all over the place and there is not let's say a one equation that links all the variables between where you locate yourself as a household and where you work regardless of your income or the type of job you have.

[50:00] I think most of us realize over time that a rising commute level is problematic for our lives, especially once we have kids, once we're married.

[50:08] Once we want any kind of lifestyle besides an hour and a half in the car.

[50:12] But there's not an absolute there where you can attract a certain mix of jobs that will necessarily give you a good balance and there are in the workers ability to live locally.

[50:24] I believe there's an extension yes.

[50:26] I'm familiar with the question that he asked and so one of the things he was asking was about we were contemplating a commercial linkage fee.

[50:34] So if a new business wants to come in down for instance a hotel, if that business was required to build some sort of affordable housing as part of that building.

[50:48] Do you have any comments on that?

[50:51] If the set position is going to build so-called workforce housing where you'd have a linkage between the employer and they provide housing specifically that's so-called affordable for their workers.

[51:06] That's one way.

[51:07] If you just say you're going to provide affordable housing and it's somewhere indifferent as to who works there you're just going to try to suppress the prices of that housing.

[51:14] Those are two different questions to be asked by the way.

[51:17] But in general if you talk about the provision of affordable housing you can try that it doesn't mean that workers will necessarily live there.

[51:25] So to extend on that before we go to the second question so is it plausible to create land use codes specifically address and require the jobs be connected to that in other words.

[51:36] We are looking for that so even if it's rentals but just some way to create workforce housing.

[51:42] Sure, so I mean if you see that in other areas because we've been exploring that but it hasn't really been tangible.

[51:46] California does not have a lot of examples of this unfortunately.

[51:50] So you have major employers in the Midwest who have done this because they have 24-hour operations and they want people to live locally and they actually provide it as it hasn't.

[52:00] Let's say compensation addition that they're going to give you the housing at a lower price or perhaps even just give it to you straight up as compensation.

[52:10] So no examples.

[52:12] There's not any great ones that have let's say over five or ten years stretch work well.

[52:16] In last they are 100% tied to the job.

[52:20] There's very tough to control who would ultimately live there and link it to the employer who provided the.

[52:28] Let's say fees to help build it in the first place.

[52:32] Okay.

[52:33] Thank you.

[52:34] And then that second question was about recommended incentives to stimulate housing or anything that proves to be effective or even things you've seen that are allowed there that we could learn from.

[52:43] Sure you can give tax holidays.

[52:45] You can you can give tax holidays based on a fee like that where you say look if you pay for this housing we actually provide you with.

[52:52] With the property tax holiday if they're going to end up owning that piece or some or some other sales tax holiday or use tax holiday you can do a little bit of that.

[53:01] One of the things really nasty about the loss redevelopment is that you don't have a lot of flexible tools at the local local level.

[53:08] Right.

[53:09] You're going to come up against a very quick maximum in terms of what you can do locally against what the state basically ultimately controls.

[53:15] So when California punited on redevelopment it really shifted the matrix in terms of the number of choices you have locally.

[53:21] So you can give a little bit but there's not enormous number of choices now you can do some you know other things you can do is.

[53:27] Is reduced fees.

[53:29] Speed participants be permitting but that assumes that they're going to build and not necessarily take on commercial space that's already ready to go.

[53:35] So as much as you can provide a reduction of cost and it's speed to gaining access to the space that helps a lot.

[53:42] Are there any other questions?

[53:44] Yes.

[53:45] Council.

[53:46] So one of the key takeaways of your presentation was that.

[53:50] Heels economy is not in fact dependent on tourism.

[53:53] He said that several times and it seems counterintuitive probably to most people and you consider.

[53:59] You know all the hotels, the restaurants, the retail businesses that are dependent on visitors and their effect on our sales tax revenues or transit occupancy tax.

[54:08] And I have to admit I didn't fully understand why.

[54:12] You feel it's it's not a highly significant for fields for could you could just go go over that again.

[54:18] So thank you.

[54:19] Of course, thank you.

[54:20] So the the idea of dependency means that if it goes away the whole thing falls part in my mind.

[54:26] Right.

[54:27] Is it a big part of what goes on here?

[54:29] Sure.

[54:30] Right.

[54:31] But it's a big part of what goes on in the 70 miles around us as well.

[54:34] Right.

[54:35] So the idea that heels broke economy would be.

[54:39] Got it as a result of the let's say a complete removal of tourism is is hyperbally.

[54:46] But would it be significantly hurt?

[54:48] Sure.

[54:49] Would it also take a significant shock to the regional area to lead to something like that?

[54:53] Of course.

[54:54] So it would not happen on an island.

[54:55] And just say, okay, let's just pop this out of Heelsburg.

[54:58] The regional economy feeds a broader piece of that that is not going away.

[55:04] The key is that it's not there's other things happening in the city of Heelsburg that provide slightly more diversity than we're seeing another part.

[55:10] It's not a part of snowing economy.

[55:11] Hence it's not as important.

[55:13] That's really the bottom line there.

[55:15] So the idea of dependency is a very, you know, it's a very large statement.

[55:19] And so you shouldn't think that it's dependent because that's a big claim.

[55:24] Okay.

[55:25] Anyone else want to ask a question?

[55:27] Okay.

[55:28] I have one to solve.

[55:29] Let you go.

[55:30] Well, I have so many questions.

[55:33] Right.

[55:37] Well, so I have a look to follow up on that.

[55:39] And because one was a good question.

[55:42] You're the categorization of the all other outlets and all and other retail in the sales tax diversity.

[55:48] I understand the all other outlets, includes like B to B.

[55:51] Yep.

[55:52] And that would be like that.

[55:53] And that's why one of the recommendations was, you know, focusing on like the employing all sale kind of.

[55:59] Right.

[56:00] Okay.

[56:01] What's the other retail?

[56:02] Other retail or things that you don't see otherwise.

[56:04] I don't remember that I can look real quick in the presentation in terms of the outlets that are already stated.

[56:11] So the idea is that basically I didn't want to fill that graph with an enormous amount of things.

[56:16] So if you look at that and you have motor motor vehicle and parts.

[56:19] You have housing furnishing building food and beverage gas stations clothing general merchandise sales food and drinking places.

[56:28] The other retail group might be things like.

[56:31] You know, miscellaneous types of nicknaps stores or things that like like 711 type of stores that they're going to have some sales taxes that are not let's say food.

[56:45] They're not grocery stores that have taxable items inside of them.

[56:49] So that's really where a lot of that other retail comes in because that's a big chunk.

[56:54] There's a particularly big chunk compared to some similar county.

[56:57] You can also, there's also going to be retail sales.

[56:59] For example, if you have an internet based businesses here that are directed consumer.

[57:04] So if, for example, a winery that's located in Hillsburg sells wine direct to consumer and charges that consumer sales tax.

[57:12] That's going to end up in another retail group also.

[57:14] Oh, really?

[57:15] Well, why would that end up in wine in the.

[57:20] Well, okay, you know, if there's.

[57:25] Is there a way that we can get the actual drill down.

[57:27] I could follow up on.

[57:29] You should have the sales tax data available in terms of the categorizations of this.

[57:32] There is there is some allusiveness in that document that I've had since I've been on council.

[57:37] Let me tell you what it is.

[57:38] You don't know.

[57:39] You can't track it.

[57:40] I mean, I've had this conversation.

[57:42] There's a lot of allusiveness in the data generally speaking.

[57:44] Yeah.

[57:45] And it can't drill down to the company level due to confidentiality.

[57:47] So for example, our wine tasting rooms on the Plaza.

[57:50] We don't know if we're actually getting the sales tax when they sell a case of wine on our own town because they could be rooting it back to their original winery.

[57:57] Those kinds of things.

[57:58] I don't understand why we can't drill down on those.

[58:01] I don't know why we don't know.

[58:03] What we should know.

[58:04] We should know.

[58:05] So I'm just saying it's to me and the smoke and the wine.

[58:08] That's perception will perception in this town is huge.

[58:11] People want to live in this town when they come here as tourists.

[58:14] They come here because they want to see this beautiful little town.

[58:17] And then they look in the real estate window.

[58:19] And they see a building that they think they can buy and they go for it.

[58:22] So tourism and real estate go together in this town economically.

[58:25] And that's just, that's my claim.

[58:27] So I would argue that there's a lot to be learned from you.

[58:30] And I don't have enough time to ask you the questions.

[58:32] I want to ask.

[58:33] We have like four minutes.

[58:34] So does anybody else want to ask the question?

[58:36] Because there's so much to learn from you.

[58:37] And I feel like we have.

[58:38] I have more questions.

[58:40] And I want to.

[58:42] Yeah.

[58:43] If council wishes to go over.

[58:44] That's fine.

[58:45] We can start to meet the council meeting past six.

[58:47] I didn't know what our, what our guest perspective was on.

[58:50] Did you have a little bit of time?

[58:51] Sure.

[58:52] Okay.

[58:53] Because I'm really intrigued by this concept or the thesis or the claim that.

[58:56] That tourism isn't at the, you know, isn't the focus of.

[58:59] So let me be very clear.

[59:00] Yeah.

[59:01] There's a difference between dependency.

[59:04] Right.

[59:05] And having a solid balance or that's one part of it.

[59:09] Okay.

[59:10] You know, let me put it on max,

[59:16] Section of PEPA is much more dependent on tourism than a place like Healsburgers.

[59:19] How many years ago?

[59:20] Or almost now 12 years ago?

[59:21] Put a flag in the concert and put a flag in the concert.

[59:22] Like Dave Pharmaceutical is kind of 1000 workers?

[59:26] Because we don't care anymore.

[59:28] Because we think we're going to become adult Disneyland.

[59:29] And that's exactly what an app has become.

[59:30] And the synthesis between what happens in the wine reset,

[59:32] the vineyard side and the food, beverage, hotel and.

[59:34] You know positivator on phone and,

[59:36] as an economic development focus.

[59:38] This is where we're going, right?

[59:41] So where Napa County gets very worried

[59:43] is when the news around the fire

[59:46] says the entire place is on fire.

[59:49] So 25% of the people who suddenly had

[59:51] bookings in hotels say, what we're done now.

[59:55] But for Napa, if that lingers two or three years

[59:58] in the perception, that's a big problem.

[1:00:00] Problem for Napa, for Hillsburg? It's less of a problem. Hence, less dependency.

[1:00:05] Some make sense? We're all talking about relative terms here.

[1:00:09] So, what I was tasked with in the report, what to try to show some comparative data that said,

[1:00:15] look, we get its part of the economy. But it's not as imbalanced as you may think it is,

[1:00:21] and certainly the county itself has had over this last six or seven years become slightly more,

[1:00:27] as taken on more towards an aspects. Part of that's because it's competition against it,

[1:00:32] beast that's growing in Napa County. And Napa County has been driving a lot of what's been going on

[1:00:37] in the last six or seven years. One thing that we're not.

[1:00:40] Comparison is the greatest thief. I mean, if you want to just, I mean, understand you got to compare,

[1:00:43] and that's the numbers. But I just, and you know, looking at Napa definitely understand we get compared to Carmel.

[1:00:48] But my question is just kind of back to the economics is, when you look at the opportunities,

[1:00:53] I do think there is a sub, there's a sub-position that you have that your concern is that we may see this as a tourist-based economy.

[1:01:00] And I don't know if you came into it thinking that, but I felt like when I read your document,

[1:01:04] and I enjoyed it, and I learned a lot, but one thing I just keep coming up against is,

[1:01:08] how do you compare this terms economics with, even Sebastopol, when it has a whole different situation going on?

[1:01:17] I mean, just proximity to Appalachians, and the way this town has grown itself around a plaza,

[1:01:23] and just, I mean, the dynamics of this town, you can't compare it. You can't.

[1:01:27] I mean, I know you want to, and I'm not you, but people, they want to, oh, this compares it as,

[1:01:31] but in the meanwhile, we have this little town of 11,700 people, and we're trying to look at future,

[1:01:37] and what we can do, and I think our citizens are asking us to keep it small in some way.

[1:01:41] It is the character whenever that means people, and so I'm just hungering to know more about how you know what you know.

[1:01:49] So, you have 80% of our employee residents leave each day. How do you get that?

[1:01:55] Is that the Census Bureau from 2016? So, I know I drive out the Santa Rosa of these schools three days a week.

[1:02:00] So, 80% of our employed residents, is there any way to find out in data, or how many people live here,

[1:02:08] that occupy homes on full-time bases? Could you find that information out?

[1:02:14] Like, you know, the second home thing.

[1:02:17] Right, in other words, where are your lives?

[1:02:19] Well, they might have a primary residence here, yeah.

[1:02:21] Yeah, we always hear, oh, it's so many people on garbage cans out front. How do you know what you know?

[1:02:25] I mean, could we ever find that information out?

[1:02:27] I don't know if there's any third party data that would show that.

[1:02:29] I'm not sure if the Census has that deeper drill in terms of knowing who is a,

[1:02:33] like, the difference between somebody who's there all the time.

[1:02:37] And somebody who chooses to be there 50.1% of the time, keep a primary residence there.

[1:02:41] You know what I mean?

[1:02:42] Yeah, thank you.

[1:02:43] I don't see that happening in the Census Department.

[1:02:45] But I understand that that's a big concern.

[1:02:47] I get it.

[1:02:48] Reception, like the smoke and the wine, right? You know, it's going to happen.

[1:02:51] It's just a matter of deciding how you want to interpret it.

[1:02:54] Councilman.

[1:02:55] Robert, just want to thank you for, this is a, this is a great report.

[1:03:01] And I think it, one thing it does for me at least is, is give me some assurance that there is diversity in our economy.

[1:03:10] And I think that, you know, there may be a perception that everything that kind of happens in this town is based on some sort of tourism related thing.

[1:03:22] And I think that maybe on the face of it, that might be the case when, you know,

[1:03:28] in the downtown areas, certainly, but you look at all of our industrial areas and things like that.

[1:03:35] And there's, I mean, it really seems like there's a lot of things that are a little bit less apparent to the casual observer.

[1:03:43] And so it's really nice to hear that, you know, we don't have all of our eggs in one basket.

[1:03:54] And that, having a diverse economy more so than the county is a whole, I think, I think is a good thing.

[1:04:02] So, and looking at the, thanks for bringing up all the comparisons to previous years that I've been looking at these for about five years now.

[1:04:11] So it's always good to see that. So thank you very much.

[1:04:14] Well, thank you, appreciate you saying that.

[1:04:19] I'd like to echo that. Thank you very much. It's a very detailed report.

[1:04:23] And I think, from a council perspective, the question is, what do we do with it?

[1:04:28] Anytime we get one of these reports that we spend a lot of money on, I think it's helpful because it does help differentiate between perception and the data and it helps.

[1:04:40] And for me, I look at, it's very encouraging to see kind of where heelsburg has kind of the balance that this is kind of showing that we are a little bit more diverse than what's perceived.

[1:04:54] And, you know, for me personally, just every day I drive home, I usually go up.

[1:04:58] I'm a grocery and I'm driving past.

[1:05:01] Manufacturer pizza ovens next door to somebody that makes pickles and goat cheese and a red leasing rental place.

[1:05:09] I mean, there's a lot going on there and I think this is something that I do look forward to in our goal setting.

[1:05:15] We talked about it this last year about the South entry plan.

[1:05:18] I think something like this along with some of the other studies that are coming down is going to give us the data that we need to really look at.

[1:05:25] Okay, how do we?

[1:05:27] You know, we haven't pretty set boundary of what heelsburg is.

[1:05:30] How do we round that out?

[1:05:33] And I think the information in here gives us some targets to look at.

[1:05:38] I definitely like the idea and I've sent it before that we heard councilmember Nielkins and I heard in Sacramento the league of cities about.

[1:05:47] It could be a development focusing on the businesses that are here if you can help and existing business add one more job.

[1:05:53] It's almost a better situation than trying to attract the brand new big, you know, employer to town.

[1:06:02] So I think there's there's some discussion that can be had here and I like having all this data to reference as a reference point as we go with, you know, five different viewpoints up here to kind of hash it out to see what's, you know, what we feel is.

[1:06:21] The best direction to going forward, so.

[1:06:26] Yeah, I just want to thank you very good reports in your other reports and for the county as well.

[1:06:34] Yeah, sure.

[1:06:35] Thank you for saying that and again, you know, one thing to keep in mind is I did put some things in the back of the report closer to the conclusions that maybe we'll give you some talking points in terms of where the data.

[1:06:45] Direct given the current situation in context of your corrective for the economic development standpoint that that retention and expansion pieces becoming much more of a focal issue than let's say attraction.

[1:06:59] You kind of you're already sitting on certain businesses getting them to be larger and keeping them is maybe a little bit more cost effective to trying to go after, you know, the unicorn that's out there that's coming which I guarantee you.

[1:07:13] Go 25 miles south of here and everybody thinks that Google and Amazon are moving northbound and that's lunacy in mass right so.

[1:07:22] You know, the economic development professionals are hoping lonely hunter in most cases and this is something that has helped make it a little bit more focus on providing a more focus if you will.

[1:07:34] Yeah, I'm I'll I'll I'll I'll go my my my sentiment earlier.

[1:07:38] There's so much information here to to to digest I think I will definitely have some follow up questions.

[1:07:44] I don't want to be labor that the point but I will load to have to be able to me to be individually with you just to head to go over to some of these questions.

[1:07:51] I think.

[1:07:52] Don't say to reach out actually.

[1:07:54] I think a lot of these these will really kind of feed into our our conversations about you know budget and and our goals as a council.

[1:08:02] What I think is really interesting is so yeah, I it's.

[1:08:07] Well, put it this way I think there's to me the takeaway is there's there's.

[1:08:12] A yes is true that we have that we're that the diversity we we do have a fairly decent healthy diverse diversity economy, but I think there are new given.

[1:08:22] The challenges of the of the of the of the overall the bigger economy and bigger trends of what's going on around us.

[1:08:30] What actions can we take to think to enhance that that the healthy diversity.

[1:08:36] As a super simple example right you talk about high value high ad jobs and the challenges facing.

[1:08:43] And agriculture and and labor and what we have as a as a special sauce right as a community and I look at that is saying wow ag tech ag automation is.

[1:08:55] I'm quite perfectly perfectly targeted for us to emphasize as a to it is as a as a goal for supply chain absolutely.

[1:09:04] So anyway that's one of my takeaway but I really think that you know having the deeper conversation between before we.

[1:09:11] How those further conversations as a council.

[1:09:14] I will definitely be reaching out to you for that please do appreciate it.

[1:09:17] And I just want to thank you for a lot of things but tonight was good and I appreciate your work and definitely appreciate the city manager providing information and.

[1:09:26] Data is interesting and I just think it's a really important thing for this council to understand the money aspect of.

[1:09:33] Of the town sort of speed but also to look at future and what we can do as public policy makers to increase and I think housing is the one that stays with me the most it always does.

[1:09:44] So anyway and I'm really proud of you thank you for all the work you did and thank you for being here tonight.

[1:09:50] Thank you guys thank you.

[1:09:51] Bye.

[1:09:56] Okay so yeah I think we should take a like shortment of break yeah five minute break okay so we're going to go ahead and close this meeting other special.

[1:10:10] Special meeting will close for five minutes and then open for a regular city council meeting.

City Council Special Meeting

Agenda

Transcript