HomeMy WebLinkAboutMINUTES - 01292019 - Board of SupervisorsCALENDAR FOR THE BOARD OF SUPERVISORS
CONTRA COSTA COUNTY
AND FOR SPECIAL DISTRICTS, AGENCIES, AND AUTHORITIES GOVERNED BY THE BOARD
BOARD CHAMBERS ROOM 107, ADMINISTRATION BUILDING, 651 PINE STREET
MARTINEZ, CALIFORNIA 94553-1229
FEDERAL D. GLOVER, CHAIR, 5TH DISTRICT
KAREN MITCHOFF, VICE CHAIR, 4TH DISTRICT
JOHN GIOIA, 1ST DISTRICT
CANDACE ANDERSEN, 2ND DISTRICT
DIANE BURGIS, 3RD DISTRICT
DAVID J. TWA, CLERK OF THE BOARD AND COUNTY ADMINISTRATOR, (925) 335-1900
PERSONS WHO WISH TO ADDRESS THE BOARD DURING PUBLIC COMMENT OR WITH RESPECT TO AN ITEM THAT IS ON THE AGENDA,
MAY BE LIMITED TO TWO (2) MINUTES.
A LUNCH BREAK MAY BE CALLED AT THE DISCRETION OF THE BOARD CHAIR.
The Board of Supervisors respects your time, and every attempt is made to accurately estimate when an item may be heard by the Board. All times specified for
items on the Board of Supervisors agenda are approximate. Items may be heard later than indicated depending on the business of the day. Your patience is
appreciated.
ANNOTATED AGENDA & MINUTES
January 29, 2019
9:00 A.M. Convene and Call to Order (Chair, John Gioia)
Present: John Gioia, District I Supervisor; Candace Andersen, District II Supervisor; Diane Burgis, District III Supervisor; Karen
Mitchoff, District IV Supervisor; Federal D. Glover, District V Supervisor
Staff Present:David Twa, County Administrator
Public Comment
Public Comment: Mariana Moore, Janet Pygeorge, Dan Geiger, Renee Zaimer
Board Operating Procedures and Communications (Chair, John Gioia)
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
Diane Burgis, District IV Supervisor Karen Mitchoff, District V Supervisor Federal D. Glover
D.3 CONSIDER accepting report on budget and key issues for FY 2019/20 and beyond. (David Twa,
County Administrator and Lisa Driscoll, County Finance Director)
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
Diane Burgis, District IV Supervisor Karen Mitchoff, District V Supervisor Federal D. Glover
-- BREAK --
D.4 CONSIDER accepting report “The Economic Outlook: Focus on the Contra Costa Economy”
prepared by Beacon Economics. (Dr. Christopher Thornberg, Beacon Economics)
Public Comment: Mariana Moore, Lisa Sherill
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
Diane Burgis, District IV Supervisor Karen Mitchoff, District V Supervisor Federal D. Glover
D.5 CONSIDER accepting report on Capital Projects. (Eric Angstadt, Chief Assistant County
Administrator)
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
Diane Burgis, District IV Supervisor Karen Mitchoff, District V Supervisor Federal D. Glover
--BREAK FOR LUNCH AND CLOSED SESSION--
Closed Session Agenda
A. CONFERENCE WITH LABOR NEGOTIATORS (Gov. Code § 54957.6)
1. Agency Negotiators: David Twa and Richard Bolanos.
Employee Organizations: Public Employees Union, Local 1; AFSCME Locals 512 and 2700; California Nurses
Assn.; SEIU Locals 1021 and 2015; District Attorney Investigators’ Assn.; Deputy Sheriffs Assn.; United Prof.
Firefighters I.A.F.F., Local 1230; Physicians’ & Dentists’ Org. of Contra Costa; Western Council of Engineers;
United Chief Officers Assn.; Contra Costa County Defenders Assn.; Contra Costa County Deputy District
Attorneys’ Assn.; Prof. & Tech. Engineers IFPTE, Local 21; and Teamsters Local 856.
2. Agency Negotiators: David Twa.
Unrepresented Employees: All unrepresented employees.
B. CONFERENCE WITH LEGAL COUNSEL--EXISTING LITIGATION (Gov. Code § 54956.9(d)(1))
Contra Costa County Deputy Sheriffs Association v. Contra Costa County, David O. Livingston, et al.,
Contra Costa County Superior Court Case No. N19-0097
C. PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Title: County Administrator
--RESUME OPEN SESSION--
D.6 CONSIDER accepting reports on opportunities to improve outcomes for Children and Families.
(Kathy Gallagher, Devorah Levine, Sean Casey and Dr. Chris Farnitano)
Public Comment: Dan Geiger
AYE: District I Supervisor John Gioia, District II Supervisor Candace Andersen, District III Supervisor
Diane Burgis, District IV Supervisor Karen Mitchoff, District V Supervisor Federal D. Glover
Wrap-up and Closing Comments (Chair, John Gioia)
ADJOURN
Adjourned: 2:47 p.m.
GENERAL INFORMATION
GENERAL INFORMATION
The Board meets in all its capacities pursuant to Ordinance Code Section 24-2.402, including as the Housing
Authority and the Successor Agency to the Redevelopment Agency. Persons who wish to address the Board should
complete the form provided for that purpose and furnish a copy of any written statement to the Clerk.
Any disclosable public records related to an open session item on a regular meeting agenda and distributed by the
Clerk of the Board to a majority of the members of the Board of Supervisors less than 72 hours prior to that meeting
are available for public inspection at 651 Pine Street, First Floor, Room 106, Martinez, CA 94553, during normal
business hours.
Persons who wish to speak on matters set for PUBLIC HEARINGS will be heard when the Chair calls for comments
from those persons who are in support thereof or in opposition thereto. After persons have spoken, the hearing is
closed and the matter is subject to discussion and action by the Board. Comments on matters listed on the agenda or
otherwise within the purview of the Board of Supervisors can be submitted to the office of the Clerk of the Board via
mail: Board of Supervisors, 651 Pine Street Room 106, Martinez, CA 94553; by fax: 925-335-1913.
The County will provide reasonable accommodations for persons with disabilities planning to attend Board meetings
who contact the Clerk of the Board at least 24 hours before the meeting, at (925) 335-1900; TDD (925) 335-1915.
An assistive listening device is available from the Clerk, Room 106.
Copies of recordings of all or portions of a Board meeting may be purchased from the Clerk of the Board. Please
telephone the Office of the Clerk of the Board, (925) 335-1900, to make the necessary arrangements.
Forms are available to anyone desiring to submit an inspirational thought nomination for inclusion on the
Board Agenda. Forms may be obtained at the Office of the County Administrator or Office of the Clerk of the Board,
651 Pine Street, Martinez, California.
Applications for personal subscriptions to the weekly Board Agenda may be obtained by calling the Office of the
Clerk of the Board, (925) 335-1900. The weekly agenda may also be viewed on the County’s Internet Web Page:
www.co.contra-costa.ca.us
PERSONS WHO WISH TO ADDRESS THE BOARD DURING PUBLIC COMMENT OR
WITH RESPECT TO AN ITEM THAT IS ON THE AGENDA, MAY BE LIMITED TO TWO
(2) MINUTES
A LUNCH BREAK MAY BE CALLED AT THE DISCRETION OF THE BOARD CHAIR
AGENDA DEADLINE: Thursday, 12 noon, 12 days before the Tuesday Board meetings.
Glossary of Acronyms, Abbreviations, and other Terms (in alphabetical order):
Contra Costa County has a policy of making limited use of acronyms, abbreviations, and industry-specific language
in its Board of Supervisors meetings and written materials. Following is a list of commonly used language that may
appear in oral presentations and written materials associated with Board meetings:
AB Assembly Bill
ABAG Association of Bay Area Governments
ACA Assembly Constitutional Amendment
ADA Americans with Disabilities Act of 1990
AFSCME American Federation of State County and Municipal Employees
AICP American Institute of Certified Planners
AIDS Acquired Immunodeficiency Syndrome
ALUC Airport Land Use Commission
AOD Alcohol and Other Drugs
AOD Alcohol and Other Drugs
ARRA American Recovery & Reinvestment Act of 2009
BAAQMD Bay Area Air Quality Management District
BART Bay Area Rapid Transit District
BayRICS Bay Area Regional Interoperable Communications System
BCDC Bay Conservation & Development Commission
BGO Better Government Ordinance
BOS Board of Supervisors
CALTRANS California Department of Transportation
CalWIN California Works Information Network
CalWORKS California Work Opportunity and Responsibility to Kids
CAER Community Awareness Emergency Response
CAO County Administrative Officer or Office
CCCPFD (ConFire) Contra Costa County Fire Protection District
CCHP Contra Costa Health Plan
CCTA Contra Costa Transportation Authority
CCRMC Contra Costa Regional Medical Center
CCWD Contra Costa Water District
CDBG Community Development Block Grant
CFDA Catalog of Federal Domestic Assistance
CEQA California Environmental Quality Act
CIO Chief Information Officer
COLA Cost of living adjustment
ConFire (CCCFPD) Contra Costa County Fire Protection District
CPA Certified Public Accountant
CPI Consumer Price Index
CSA County Service Area
CSAC California State Association of Counties
CTC California Transportation Commission
dba doing business as
DSRIP Delivery System Reform Incentive Program
EBMUD East Bay Municipal Utility District
ECCFPD East Contra Costa Fire Protection District
EIR Environmental Impact Report
EIS Environmental Impact Statement
EMCC Emergency Medical Care Committee
EMS Emergency Medical Services
EPSDT Early State Periodic Screening, Diagnosis and Treatment Program (Mental Health)
et al. et alii (and others)
FAA Federal Aviation Administration
FEMA Federal Emergency Management Agency
F&HS Family and Human Services Committee
First 5 First Five Children and Families Commission (Proposition 10)
FTE Full Time Equivalent
FY Fiscal Year
GHAD Geologic Hazard Abatement District
GIS Geographic Information System
HCD (State Dept of) Housing & Community Development
HHS (State Dept of ) Health and Human Services
HIPAA Health Insurance Portability and Accountability Act
HIV Human Immunodeficiency Syndrome
HOV High Occupancy Vehicle
HR Human Resources
HUD United States Department of Housing and Urban Development
IHSS In-Home Supportive Services
Inc. Incorporated
IOC Internal Operations Committee
ISO Industrial Safety Ordinance
JPA Joint (exercise of) Powers Authority or Agreement
Lamorinda Lafayette-Moraga-Orinda Area
LAFCo Local Agency Formation Commission
LLC Limited Liability Company
LLP Limited Liability Partnership
Local 1 Public Employees Union Local 1
LVN Licensed Vocational Nurse
MAC Municipal Advisory Council
MBE Minority Business Enterprise
M.D. Medical Doctor
M.F.T. Marriage and Family Therapist
MIS Management Information System
MOE Maintenance of Effort
MOU Memorandum of Understanding
MTC Metropolitan Transportation Commission
NACo National Association of Counties
NEPA National Environmental Policy Act
OB-GYN Obstetrics and Gynecology
O.D. Doctor of Optometry
OES-EOC Office of Emergency Services-Emergency Operations Center
OPEB Other Post Employment Benefits
OSHA Occupational Safety and Health Administration
PARS Public Agencies Retirement Services
PEPRA Public Employees Pension Reform Act
Psy.D. Doctor of Psychology
RDA Redevelopment Agency
RFI Request For Information
RFP Request For Proposal
RFQ Request For Qualifications
RN Registered Nurse
SB Senate Bill
SBE Small Business Enterprise
SEIU Service Employees International Union
SUASI Super Urban Area Security Initiative
SWAT Southwest Area Transportation Committee
TRANSPAC Transportation Partnership & Cooperation (Central)
TRANSPLAN Transportation Planning Committee (East County)
TRE or TTE Trustee
TWIC Transportation, Water and Infrastructure Committee
UASI Urban Area Security Initiative
VA Department of Veterans Affairs
vs. versus (against)
WAN Wide Area Network
WBE Women Business Enterprise
WCCTAC West Contra Costa Transportation Advisory Committee
RECOMMENDATION(S):
ACCEPT report on Budget and Key Issues for FY 2019/20 and beyond.
FISCAL IMPACT:
No fiscal impact. This is an informational report only.
BACKGROUND:
Attached is the report on Budget and Key Issues.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/29/2019 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Lisa Driscoll, County Finance
Director (925) 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on the
minutes of the Board of Supervisors on the date shown.
ATTESTED: January 29, 2019
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: , Deputy
cc: All Departments (via County Administration)
D.3
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 29, 2019
Contra
Costa
County
Subject:Board of Supervisors Annual Retreat Budget and Key Issues for FY 2019/20 and Beyond
ATTACHMENTS
Budget and Key Issues
Contra Costa County Update
Budget & Key Issues
Presentation to
Board of Supervisors
January 29, 2019
1
Contra Costa County
Familiar Budget Drivers and Challenges
for 2019 and Beyond
•Economic Forecast
•State & Federal Budgets
•Labor Negotiations
•Strategic Use of Reserves
•Fund Infrastructure Needs (Repair & Maintenance)
•Fund System Infrastructure
•Adequately Fund Public Safety & Health Departments
2
3
Bay Area Unemployment Rate
November, 2018 (Unadjusted)
•San Mateo 2.0%
•Marin 2.2%
•San Francisco 2.2%
•Santa Clara 2.4%
•Sonoma 2.5%
•Napa 2.7%
•Alameda 2.8%
•Contra Costa 2.9%
•Solano 3.6%
•9 County Average 2.6% (2.8% Last Year)
2018/2019 Achievements
•We have new contracts with most of our bargaining unions
resulting in substantially improved health insurance benefits and
increased wages.
•Virtually all county employees are currently under contract with the
exception of PDOCC. (Approximately 9,164 of our 9,500
permanent FTEs have contracts in place).
•Budget structurally balanced for 8th year in a row, built on
assumption of 5% increase in assessed valuations, actual AV was
6.34%
•The successor agency oversight boards consolidated into one
countywide oversight board effective July 1, 2018. The
countywide oversight board staffed by the Auditor-Controller via
Conservation and Development Department was established.
4
2018/2019 Achievements
•Assessed Value, on which general purpose revenue is based,
was up 5.78% for FY 2017/18 and 6.34% in 2018/19,
projected to grow 5% in FY 2019/20
•General Fund for 2018/19 -$1.77 B -(total adjusted budget,
excluding fire and special districts, for 2018/19 -$3.77 B)
•Over 800 new employee positions added in past 5 years
•OPEB managed (unfunded liability reduced from $2.6 B in
2008 to current $662.5 m)
•Pension costs projected to be fairly stable for next 5 years
(assuming no recession ), although CCCERA did not make the
assumed investment rate for 2018
5
2018/2019 Achievements
•Maintained our AAA bond rating from Standard & Poor’s,
and on lease bonds from Moody’s (currently AA3) with both
agencies commenting on fact that Contra Costa County was
“fundamentally sound, and had a stable outlook for the
future.”
•S&P also rated the county’s existing lease revenue bonds and
pension obligation bonds at its “AA+” and “AAA” respectively.
•Moody’s currently rates the county’s issuer rating at a high
investment grade of “AA2” and rates the county’s existing
lease revenue and pension obligation bonds at “AA3” and
“A1”, respectively.
6
New Buildings and Infrastructure Projects
•The county is constructing two significant capital projects, a new
72,000 square foot administration building to replace the existing
651 Pine Street facility and a new 38,000 square foot EOC and
administration building for the Sheriff.
•In 2020 the new administration building and the new EOC will
come on line and will reduce the current $272 million deferred
maintenance backlog by over $30 million
•To significantly reduce the remaining $242 million cannot be
addressed at the current funding of $10 million per year
7
New Buildings and Infrastructure Projects
•The county is continuing to design and plan for the West County
Re -entry, Treatment and Replacement Housing project (WRTH).
This project will partially replace space in the older Martinez
Detention Facility and will designate 96 beds to treat detainees
with mental health issues in a more appropriate setting
•The West County Jail project is expected to be completed in 2022
8
New Buildings and Infrastructure Projects
•A new 5-year Capital Improvement/Management Plan will
concentrate on reducing the number of buildings currently owned
by the county and consolidating as many of the remaining
buildings as possible, including increasing the number of buildings
leased as opposed to owned
•In 2018 we completed the upgrade to our PeopleSoft system at a
cost of over $13.6 million
•In 2019/20 we will evaluate replacement of the finance and tax
systems with the likely cost to exceed $18 million each
9
•Property taxes declined by over 11% between 2009 and 2012. There were
significant increases between 2014 and 2016. Now returning to a more normal
increase of around 5% going into the next few years.
•Actual Contra Costa County experience:
•2009/10 (7.19% decline)
•2010/11 (3.38 decline)
•2011/12 (0.49% decline)
•2012/13 0.86% increase
•2013/14 3.45% increase
•2014/15 9.09% increase
•2015/16 7.53% increase
•2016/17 6.01% increase
•2017/18 5.78% increase
•2018/19 6.34% increase
•2019/20 5.00% increase projected
County Property Tax
10
Contra Costa Fire District Property Tax
•For fire, property taxes declined by over 13% between 2009 and 2013.
These taxes then significantly increased between 2014 and 2016. Now
returning to a more normal increase of around 5% going into the next few
years.
•Actual District experience:
•2009-10 (7.8%)
•2010-11 (2.4%)
•2011-12 (1.9%)
•2012-13 (1.2%)
•2013-14 5.9%
•2014-15 9.3%
•2015-16 6.9%
•2016-17 6.32%
•2017-18 5.53%
•2018-19 6.44%
•2019-20 5.00% Increase projected 11
Fiscal Year 2018-19
General Fund Budgeted Revenue
$1.613 Billion
12
General Purpose,
447,622,000 , 28%
Other Local
Revenue,
508,714,759 , 31%
Federal Assistance,
286,145,484 , 18%
State Assistance,
371,263,919 , 23%
FY 2018-19 General Fund Appropriations
$1.611 Billion
13
Salaries and
Benefits,
899,682,721, 48%
Expenditure
Transfers, -
122,608,639, -7%
Fixed Assets,
22,306,845, 1%
Services and
Supplies,
555,200,223, 30%
Other Charges,
246,665,012, 13%
Provisions for
Contingencies,
10,000,000, 1%
FY 2018-19 Distribution General Fund
Appropriations
14
General Government,
294,493,029, 18%
Law & Justice,
431,146,766, 27%
Health & Human Services,
885,606,368, 55%
FY 2018/19 Mid-year Preliminary Stats
Budget Performing As Expected
15
Mid-Year 18-19 Mid-Year 17-18 Mid-Year 16-17 Mid-Year 15-16
ALL FUNDS Budget Actual Percent Percent Percent Percent
Expenditures 3,769,956,855 1,547,327,992 41.0%41.6%43.5%40.8%
Revenues 3,580,228,965 1,585,960,657 44.3%43.6%42.9%44.1%
GENERAL FUND Budget Actual Percent Percent Percent Percent
Expenditures 1,767,958,344 729,216,503 41.2%37.5%42.5%41.6%
Revenues 1,645,291,605 665,788,588 40.5%40.4%38.6%38.2%
Wages & Benefits 899,380,597 413,076,133 45.9%46.0%45.8%46.0%
Services & Supplies 602,817,080 232,466,968 38.6%38.3%40.3%38.5%
Other Charges 247,425,012 108,682,811 43.9%40.4%46.7%46.4%
Fixed Assets 130,944,625 30,213,732 23.1%14.4%14.1%8.5%
Inter-departmental Charges -120,608,971 -55,223,141 45.8%46.5%41.2%48.1%
Contingencies 8,000,000 0
Total Expenses $1,767,958,344 $ 729,216,503 41.2%40.4%42.5%41.6%
Fund Balance 30,148,442
Taxes 409,780,000 261,403,861 63.8%59.7%63.4%63.7%
Licenses, Permits, Franchises 10,518,588 3,334,320 31.7%31.2%21.2%28.0%
Fines, Forfeitures, Penalties 13,839,710 1,528,831 11.0%7.6%8.5%7.8%
Use of Money & Property 7,078,550 5,871,586 82.9%48.8%621.1%10.3%
Federal/State Assistance 584,811,474 218,400,539 37.3%33.0%31.9%28.3%
Charges for Current Services 257,574,361 97,528,580 37.9%38.8%41.8%40.9%
Other Revenue 331,540,479 77,720,871 23.4%22.4%20.4%28.4%
Total Revenues $ 1,645,291,605 $ 665,788,588 40.5%38.0%38.6%38.2%
Contract Status
16
Total Number Contract
of Permanent Employees 1 Expiration Date
Bargaining Units
AFSCME Local 2700, United Clerical, Technical and Specialized Employees 1,574 6/30/2022
AFSCME Local 512, Professional and Technical Employees 223 6/30/2022
California Nurses Association 1,078 9/30/2021
CCC Defenders Association 76 6/30/2022
CCC Deputy District Attorneys’ Association 85 6/30/2022
Deputy Sheriff’s Association, Mgmt Unit and Rank and File Unit 832 6/30/2019
Deputy Sheriff’s Association, Probation Peace Officers Association 230 6/30/2019
District Attorney Investigator’s Association 18 6/30/2019
IAFF Local 1230 323 6/30/2020
IHSS SEIU - 2015 6/30/2018
Physicians and Dentists of Contra Costa 276 12/31/2017 2
Professional & Technical Engineers – Local 21, AFL-CIO 1,107 6/30/2022
Public Employees Union, Local One & FACS Site Supervisor Unit 546 6/30/2022
SEIU Local 1021, Rank and File and Service Line Supervisors Units 838 6/30/2022
Teamsters, Local 856 1,781 6/30/2022
United Chief Officers' Association 12 6/30/2020
Western Council of Engineers 23 6/30/2022
Management Classified & Exempt & Management Project 456 n/a
Total 9,478
1 Permanent number of filled Positions as of December 2018 (not FTE)
2 Currently in Negotiations
Contra Costa County Unemployment Rate
2008 -2018
17
8.6%
11.3%11.1%
9.7%
8.6%
6.9%
5.7%
4.6%4.3%
3.9%
10.6%10.5%
9.3%
8.0%
6.5%
5.2%
4.5%
3.9%
3.1%3.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
January December
Pension Cost Management
•Following carefully
•Monitoring changes by state and
CCCERA board
•New PEPRA tiers as of
1/1/2013
•No extension of
amortization
•No change in 5-year
smoothing
•No change in pooling
•Assumed rate of return
7.00%
•Active payroll growth of
3.25% per annum
•Updates:
•FY 2018-19
Recommended Budget -
$342 M
•Chart includes the final
year, 2022, of debt
service for County and
Fire District Pension
Obligation Bonds. [Fire
final transfer from
operations is in 2022 and
payment is June 2023]18
Actual and Projected* Retirement Expense
The chart includes four years of actual data, straight-line projection of
current year (based upon six months of actual data), and projection of
future years based upon current year wages and actuarial data
provided by CCCERA’s actuary (letter dated September 4, 2018)
assuming that CCCERA achieves its assumed rate of return each of these
years. Note that CCCERA did not achieve its AR for 2018. This data will
be updated in March for the FY 2019/20 budget based upon
12/31/2018 CCCERA market impacts.
$309
$282 $282
$307
$318 $315 $316 $312
$251 $249
$220
$240
$260
$280
$300
$320
$340
FY 14-15
Actual
FY 15-16
Actual
FY 16-17
Actual
FY 17-18
Actual
FY 18-19
Proj.
FY 19-20
Proj.
FY 20-21
Proj.
FY 21-22
Proj.
FY 22-23
Proj.
FY 23-24
Proj.
Millions
Retirements
19
High numbers of vacant positions due to unprecedented numbers of retirements
during calendar year 2011 and 2012 are being filled or eliminated. Historically
March retirements are the highest. 2018 retirements were higher than the last three
years.
0
100
200
300
400
500
600
700
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
221 179
413
308
141
208 174 156 145 181
66 105
208
81
58
91
40 64 83
89
Balance of Year Month of March
PRELIMINARY EMPLOYEE DATA
FY 2019/20
20
9,801 FTE (11 FTE Increase over 2018)
Total salary and benefit cost of $1,475,271,591
($71.5 million increase over 2018)
Average budgeted wages of $92,601
Average retirement cost of $34,491
Average health insurance cost $14,250
Average total cost of a position $150,516
Community Corrections Partnership
•CCP passed a FY 19/20 Budget Recommendation of $29,599,550 in December
2018, an increase of 6% over the current year.
•PPC to consider in early February 2019
•Includes continuation of the Office of Reentry and Justice (Year 4)
•Uses $500k in fund balance for Year 3 of the Stand Together CoCo, Immigration Rapid
Response Program (3 year pilot)
•CCP budget continues to rely on approximately $3 million in 19/20 of CCP fund
balance (expenses exceed base revenues)
•Assuming just a 2% increase each year to expenditures over the next 5 years, the
County would be required to draw $9.5 million from CCP fund balance to fund
AB109 programs over that period
•Assuming a FY 18/19 estimated fund balance of $20.7 million, fund balance
would be reduced to $11.2 million at the close of FY 23/24
•At $11.2 million, fund balance would be at 35% of FY 23/24 projected
expenditures. Goal is 50% of expenditures (Approx. 6 months of operations)
21
22
Community Corrections Partnership
Contra Costa Fire Protection District
•Reasons For Optimism
•Settled with Local 1230 and UCOA through June 30, 2020
•Employer share of pension costs stable (for now)
•“Alliance” ambulance program stable (for now)
•Station 16 (Lafayette) to be completed in FY 2019/20; staffing funded starting
March 2019
•Station 70 (San Pablo) construction request for proposals to be released this month
•Reasons For Concern
•Property Tax revenue increases anticipated to slow
•Will continue assumption of 5% in 19/20
•Decrease likely in 20/21 and beyond
•Cost of labor contracts
•$11.3 million in 19/20 (total three year cost of $23.1 million)
•Continued strain on operating fund
•Scheduled debt service payments increasing approx. $700k/yr. through 2022 23
Contra Costas Fire –EMS Transport Fund
•Reasons For Optimism
•“Alliance” ambulance program stable; Operating revenues exceeding projections (for
now)
•EMS Transport Fund balance accruing; Goal remains at 50% of annual costs to provide
ambulance services
•Reasons For Concern
•Future of healthcare funding continues to be uncertain
•How does a California single payer system impact ambulance transport revenues?
•Federal Administration efforts to defund and destabilize Affordable Care Act
continue
•First Ground Emergency Medical Transportation (GEMT) allocation received $761k
(original projection at $5 -$6 million); GEMT not a budgeted revenue source
•EMS Transport Reserve Recommendation
•CAO recommends continuing the practice of budgeting annual reserve contributions of $2
million /yr. to fund the 50% goal (Approx. $21 million).
•This recognizes that the District has ongoing receivables of approx. $10 million at any
given time.24
Continued Reasons For Optimism
•Positive Economic Outlook
•California economic outlook stable for next year
•State Proposed Budget would address some of County Concerns
•AV Revenue up 6.34% for FY 2018/19 and projected to grow by 5% in 2019/20
•Positive County Results
•Budget structurally balanced for eight year in a row
•Employee wages are increased and their Health Insurance Cost increases are
addressed for 2020 -2022
•OPEB managed
•Have begun pre-funding infrastructure needs
•Maintained our AAA bond rating from Standard & Poor’s, and received upgrade on
lease bonds from Moody’s (from A1 to aa3) with both agencies commenting on fact
that Contra Costa County was “fundamentally sound, and had a stable outlook for
the future.”
•Pension Obligation Bond matures 6/1/2022 ($47,382,000)
25
Reasons For Concern
•Revenues will not keep up with expenditures for 2019/20 nor are they likely to do
so for 2020/21and beyond
•Aging Technology –Finance & Tax Systems
•Increased costs of benefits –pension assumed rate of return is 7.00% -actual
returns for 2015 were 2.6%, 2016 returns were 7.4%, 2017 returns were 14.2%,
exact figures for 2018 too early to report, but we believe actual returns were less
than 1%
•Economy is driven by technology not labor, social systems are changing, and
institutions and leaders struggling to meet the needs of the 21st century
•Federal government not likely to respond to counties needs
•Future of the County Hospital, Clinics, and Health Plan -it continues to be
difficult to support a stand-alone county hospital. We continue to reduce programs
in other areas to support Hospital needs. We must consider alternatives
•Unreasonable expectations given funding available
26
27
General Fund Subsidy to
Hospital and Health Plan
$-
$10
$20
$30
$40
$50
$60
2008-09
Actuals
2009-10
Actuals
2010-11
Actuals
2011-12
Actuals
2012-13
Actuals
2013-14
Actuals
2014-15
Actuals
2015-16
Actuals
2016-17
Actuals
2017-18
Actuals
2018-19
Projected
Total
$58
$42 $38 $40
$30
$27
$20 $23 $24 $22
$29
$4 $5 $4 $4 $4 $4 $4 $4 $4 $4 $4 MillionsHospital Subsidy Health Plan Subsidy
28
Continue Focus On
•Focus on current needs but look for long term
solutions –five year minimums
•Developing staff
•Continuing to harness our organizational discipline
and innovation
•Providing public services that improve the quality of
life of our residents and the economic viability of our
businesses
FY 2019/20 Budget Hearing Format
•Draft agenda for discussion purposes
•Introduction/summary by County Administrator
•Departmental presentations:
•Sheriff-Coroner
•District Attorney
•Public Defender
•Health Services Director
•Employment and Human Services Director
•Public Works Director
•Suggested changes for this year?
•Deliberation
•Budget Hearing on April 16th (hearing can be continued if needed)
•Beilenson Hearings may be required
•Budget Adoption on May 7th
•The Fire Board will receive a budget presentation on the District’s budget on April 09. Per the
norm the Fire Budget Hearing and Adoption will occur along with the Countywide Budget.
29
30
“IF WE HAD BACON, WE COULD
HAVE BACON AND EGGS, IF WE HAD
EGGS
Author unknown
RECOMMENDATION(S):
ACCEPT report "The Economic Outlook: Focus on the Contra Costa Economy".
FISCAL IMPACT:
This report is for informational purposes and has no specific fiscal impact.
BACKGROUND:
Attached is Beacon Economics report entitled "The Economic Outlook: Focus on the Contra Costa
Economy".
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/29/2019 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Lisa Driscoll, County Finance
Director (925) 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on the
minutes of the Board of Supervisors on the date shown.
ATTESTED: January 29, 2019
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: Jami Napier, Deputy
cc: All Departments (via County Administration)
D.4
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 29, 2019
Contra
Costa
County
Subject:Annual Update on Economic Conditions in Contra Costa County
CLERK'S ADDENDUM
Public Comment: Mariana Moore, Lisa Sherill
AGENDA ATTACHMENTS
The Economic Outlook: Focus on the Contra Costa Economy
MINUTES ATTACHMENTS
Revised: The Economic Outlook - Focus on Contra Costa Economy
Beacon Economics | beaconecon.com
Christopher Thornberg, PhD
Founding Partner, Beacon Economics
Director, UCR SoBA Center for Economic Forecasting and
Development
The Economic Outlook
Here we go again…
Focus on Contra Costa County
January 2019
Beacon EconomicsBeacon Economics
Thank goodness that is behind us…
Beacon EconomicsBeacon Economics
And a stock market crash chaser…
Beacon EconomicsBeacon Economics
A look back
NBER says U.S. recession began
December 2007
Mon Dec 1, 12:20 pm ET
WASHINGTON (Reuters) –The U.S. economy
slipped into recession in December 2007, the
National Bureau of Economic Research's
business cycle dating committee announced
on Monday.
Beacon EconomicsBeacon Economics
Will the Real Economy Please Stand Up?
Why so glum?
⏤2018 Growth: 3.2% with .75% fiscal
stimulus after-burner
⏤Labor markets, consumer spending,
business investment, wages, exports,
energy, debt levels still all on steady
sustainable paths
⏤Interest rates, inflation still constrained
⏤2019: back to a solid pace of 2.5%
growth
⏤Still a low chance of recession in next 24
months`
⏤Southern California: Still out in front
5
0.0%20.0%40.0%60.0%
2023
2022
2021
2020
2019
2018
WSJ Next Recession Poll
It isn’t the ‘when’,
it’s the ‘why’
Beacon EconomicsBeacon Economics
Will the Real Economy Please Stand Up?
Brakes and Imbalances
⏤Labor shortages impacting employers
⏤Local Housing Shortages
⏤Recent market volatility / rising long term rates
⏤Aggressive Fed, flattening yield curves
⏤Sharp growth in government deficits
⏤The Federal government shutdown
⏤Global trade / security worries
Political Dysfunction
⏤Little effort to deal with underinvestment in infrastructure,
rising wealth inequality, healthcare cost inflation, pension
and entitlement issues, etc etc etc
⏤The great disconnect between economic realities and
political discourse
6
Beacon EconomicsBeacon Economics
GDP: Q3 3.5%, Q4 tracking 2.7%
-4
-3
-2
-1
0
1
2
3
4
2005Q12006Q12007Q12008Q12009Q12010Q12011Q12012Q12013Q12014Q12015Q12016Q12017Q12018Q1Real GDP Growth (yoy)2016 2017 Q2 Q3
GDP 1.88 2.48 4.20 3.50
Final Demand
Consumption 1.87 1.83 2.57 2.69
Goods 0.75 0.96 1.16 1.20
Services 1.11 0.87 1.42 1.49
Fixed investment 0.39 0.95 1.10 -0.04
Structures 0.07 0.08 0.43 -0.26
Equipment -0.08 0.54 0.27 0.03
Intellectual prop 0.24 0.18 0.45 0.35
Residential 0.16 0.15 -0.05 -0.16
Change inventories -0.20 -0.11 -1.17 2.07
Net exports -0.34 -0.23 1.22 -1.78
Exports 0.09 0.56 1.12 -0.45
Imports -0.43 -0.79 0.10 -1.34
Government 0.16 0.03 0.43 0.56
Federal 0.02 0.09 0.24 0.21
State and local 0.15 -0.06 0.20 0.35
Beacon EconomicsBeacon Economics
Consumer Spending
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
Jan-03Feb-04Mar-05Apr-06May-07Jun-08Jul-09Aug-10Sep-11Oct-12Nov-13Dec-14Jan-16Feb-17Mar-18Real Consumer Spending
Growth (Y-o-Y)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan-96Sep-97May-99Jan-01Sep-02May-04Jan-06Sep-07May-09Jan-11Sep-12May-14Jan-16Sep-17Personal Savings Rate
Beacon EconomicsBeacon Economics
Autos?
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18US Auto Light Truck Sales
40
60
80
100
120
140
160
Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Domestic Auto Production
Beacon EconomicsBeacon Economics
Consumer Debt Loads
10
0.7
0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
03:Q104:Q105:Q106:Q107:Q108:Q109:Q110:Q111:Q112:Q113:Q114:Q115:Q116:Q117:Q118:Q1Household Debt / DPI Ratio
0
2
4
6
8
10
12
1991-01-011992-08-011994-03-011995-10-011997-05-011998-12-012000-07-012002-02-012003-09-012005-04-012006-11-012008-06-012010-01-012011-08-012013-03-012014-10-012016-05-012017-12-01Loan Delinquencies: All Commercial
Banks
Residential Commercial Consumer
Beacon EconomicsBeacon Economics
Housing Markets: Slight Slowing
11
3000.0
3500.0
4000.0
4500.0
5000.0
5500.0
6000.0
6500.0
7000.0
7500.0
Jan-99Apr-00Jul-01Oct-02Jan-04Apr-05Jul-06Oct-07Jan-09Apr-10Jul-11Oct-12Jan-14Apr-15Jul-16Oct-17Home Sales
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Median Prices Y-o-Y Growth
Beacon Economics
Home Prices / Inventories
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Jan-99Mar-00May-01Jul-02Sep-03Nov-04Jan-06Mar-07May-08Jul-09Sep-10Nov-11Jan-13Mar-14May-15Jul-16Sep-17Months Supply of Homes
0
0.5
1
1.5
2
2.5
3
3.5
1969197219751978198119841987199019931996199920022005200820112014Housing Starts per New Household
Beacon EconomicsBeacon Economics
Ownership and Credit Availability
13
500
550
600
650
700
750
800
99:Q200:Q201:Q202:Q203:Q204:Q205:Q206:Q207:Q208:Q209:Q210:Q211:Q212:Q213:Q214:Q215:Q216:Q217:Q2Mortgage Origination by Credit
Score
Median 25th percentile 10th percentile
62.0%
63.0%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
70.0% Q1-85 Q4-86 Q3-88 Q2-90 Q1-92 Q4-93 Q3-95 Q2-97 Q1-99 Q4-00 Q3-02 Q2-04 Q1-06 Q4-07 Q3-09 Q2-11 Q1-13 Q4-14 Q3-16Ownership Rates
Beacon EconomicsBeacon Economics
Industrial Production
400
600
800
1000
1200
1400
1600
1800
2000
2002Q12003Q12004Q12005Q12006Q12007Q12008Q12009Q12010Q12011Q12012Q12013Q12014Q12015Q12016Q12017Q12018Q1Exports of goods, Real
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%Mar-95Sep-96Mar-98Sep-99Mar-01Sep-02Mar-04Sep-05Mar-07Sep-08Mar-10Sep-11Mar-13Sep-14Mar-16Sep-17Industrial Production YoY Growth
Beacon EconomicsBeacon Economics
Oil Production / Prices
2000
3000
4000
5000
6000
7000
8000
9000
10000
11000
12000
1/7/831/7/851/7/871/7/891/7/911/7/931/7/951/7/971/7/991/7/011/7/031/7/051/7/071/7/091/7/111/7/131/7/151/7/17US Crude Oil Production (TB/D)
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
2004-01-022005-01-022006-01-022007-01-022008-01-022009-01-022010-01-022011-01-022012-01-022013-01-022014-01-022015-01-022016-01-022017-01-022018-01-02WTI Oil Prices ($/B)
Beacon EconomicsBeacon Economics
Labor Markets
0
1
2
3
4
5
6
7
8
9
10
Jan-01Apr-02Jul-03Oct-04Jan-06Apr-07Jul-08Oct-09Jan-11Apr-12Jul-13Oct-14Jan-16Apr-17Jul-18Unemployment and Job
Openings
Job Opening Rate Unemployment Rate
-50
0
50
100
150
200
250
300
350
Jan-10Sep-10May-11Jan-12Sep-12May-13Jan-14Sep-14May-15Jan-16Sep-16May-17Jan-18Sep-18Change Non Farm Payrolls
(Smoothed)
Beacon EconomicsBeacon Economics
Consequences
17
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
Sep-02Sep-03Sep-04Sep-05Sep-06Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Sep-15Sep-16Sep-17Real Wage Gains for Continuously
Employed FT Workers
Median Average
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
19531957196119651969197319771981198519891993199720012005200920132017Real Median Income-Males
Beacon EconomicsBeacon Economics
62
64
66
68
70
72
74
76
78
Life Expectancy
1973 2018
Quality of Life
Source: Countryeconomy.com. Statista.18
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
Infant Mortality
1973 2018
4.15%
2.85%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Total Crime Rate in the U.
S.
1973 2016
Beacon EconomicsBeacon Economics
Quality of Life
Source: Countryeconomy.com. Statista.19
Beacon EconomicsBeacon Economics
The Real Inequality
20
Real Average Net Worth by Bracket
1989 2001 2016
< 25 $(1)$0 $(12)
0%0%0%
25–49.9 $43 $60 $45
3%3%2%
50–74.9 $166 $227 $204
12%11%7%
75–89.9 $422 $612 $659
18%17%14%
90–100 $2,317 $3,748 $5,336
67%70%77%
Top 1%$10,407 $17,772 $26,645
30%33%39%
Family
characteristic
1989 2016
Median Mean Median Mean
All families 87.5 346.9 97.3 692.0
Age of head
Less than 35 14.6 87.4 11.0 76.1
35–44 105.3 275.4 59.8 288.6
45–54 184.2 515.7 124.2 727.5
55–64 182.6 574.3 187.3 1167.4
65–74 143.1 522.0 223.4 1066.0
75 or more 135.2 450.7 264.8 1066.9
Real Average Net Worth by Age
Beacon EconomicsBeacon Economics
Workforce Growth
21
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jan-80Jun-82Nov-84Apr-87Sep-89Feb-92Jul-94Dec-96May-99Oct-01Mar-04Aug-06Jan-09Jun-11Nov-13Apr-16US Labor Force Growth
(Smoothed)
60.0
61.0
62.0
63.0
64.0
65.0
66.0
67.0
68.0
Jan-86Feb-88Mar-90Apr-92May-94Jun-96Jul-98Aug-00Sep-02Oct-04Nov-06Dec-08Jan-11Feb-13Mar-15Apr-17US Participation Rate
Beacon EconomicsBeacon Economics
Looking Ahead
-
5.0
10.0
15.0
20.0
25.0
Under 5 years5 to 9 years10 to 14 years15 to 19 years20 to 24 years25 to 29 years30 to 34 years35 to 39 years40 to 44 years45 to 49 years50 to 54 years55 to 59 years60 to 64 years65 to 69 years70 to 74 years75 to 79 years80 to 84 years85 years and over2016 Population by Age (Millions)
0-24 25-64 65+
Current 104.5 169.4 49.2
2016-26 0.9 4.7 17.8
2026-36 2.0 6.2 11.9
2036-46 2.3 9.4 4.8
Total 5.3 20.3 34.5
US Population Forecast
Beacon EconomicsBeacon Economics
Twin Deficits
23
-1800
-1600
-1400
-1200
-1000
-800
-600
-400
-200
0
200
400
1995Q11996Q31998Q11999Q32001Q12002Q32004Q12005Q32007Q12008Q32010Q12011Q32013Q12014Q32016Q12017Q3Net Surplus Federal Go
-70000
-60000
-50000
-40000
-30000
-20000
-10000
0
Jan-93Nov-94Sep-96Jul-98May-00Mar-02Jan-04Nov-05Sep-07Jul-09May-11Mar-13Jan-15Nov-16Trade Deficit
Beacon EconomicsBeacon Economics 24
Beacon EconomicsBeacon Economics
Country Exports Imports
Total, 829.8 1233.9
China 64.0 7.7%249.7 20.2%
Canada 151.9 18.3%160.0 13.0%
Mexico 131.3 15.8%169.3 13.7%
Japan 35.7 4.3%70.3 5.7%
Germany 29.4 3.5%62.3 5.0%
United Kingdom 33.9 4.1%29.3 2.4%
Korea, South 27.1 3.3%35.4 2.9%
France 18.1 2.2%25.7 2.1%
India 15.5 1.9%26.8 2.2%
Italy 11.9 1.4%26.8 2.2%
Taiwan 13.6 1.6%21.6 1.8%
Netherlands 24.2 2.9%10.7 0.9%
The China Syndrome
25
Value US Exports to
China as % of GDP:
0.75%
Value China Exports
to US as % of GDP:
4.0%
Beacon EconomicsBeacon Economics
The Yuan response
5.40
5.60
5.80
6.00
6.20
6.40
6.60
6.80
7.00
7.20
10/28/131/28/144/28/147/28/1410/28/141/28/154/28/157/28/1510/28/151/28/164/28/167/28/1610/28/161/28/174/28/177/28/1710/28/171/28/184/28/187/28/18Yuan / Dollar Exchange Rate
Beacon EconomicsBeacon Economics
The Markets
2500
2550
2600
2650
2700
2750
2800
2850
2900
2950
3000
S&P 500
900
1200
1500
1800
2100
2400
2700
3000
S&P 500
11% Annual Return
Beacon EconomicsBeacon Economics
The Markets
-20.00%
-18.00%
-16.00%
-14.00%
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
Market Selloffs Current Expansion
Beacon EconomicsBeacon Economics
A Rising Rate Trigger?
29
3.00
3.20
3.40
3.60
3.80
4.00
4.20
4.40
4.60
4.80
5.00
2016-01-282016-04-282016-07-282016-10-282017-01-282017-04-282017-07-282017-10-282018-01-282018-04-282018-07-28Mortgage Rates (30 Year Fixed)
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
1978-01-061981-01-061984-01-061987-01-061990-01-061993-01-061996-01-061999-01-062002-01-062005-01-062008-01-062011-01-062014-01-062017-01-06Mortgage Rates (30 Year Fixed)
Beacon EconomicsBeacon Economics
Inflation?
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1996-04-011997-11-011999-06-012001-01-012002-08-012004-03-012005-10-012007-05-012008-12-012010-07-012012-02-012013-09-012015-04-012016-11-012018-06-01Core Inflation
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1981-11-021984-11-021987-11-021990-11-021993-11-021996-11-021999-11-022002-11-022005-11-022008-11-022011-11-022014-11-022017-11-02M2 Growth (Y-o-Y)
Beacon EconomicsBeacon Economics
Federal Reserve Policy: Normalization?
31
0.00
5.00
10.00
15.00
20.00
25.00
1974-01-021977-01-021980-01-021983-01-021986-01-021989-01-021992-01-021995-01-021998-01-022001-01-022004-01-022007-01-022010-01-022013-01-022016-01-022019-01-02Federal Funds Rate
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
1982-01-011984-01-011986-01-011988-01-011990-01-011992-01-011994-01-011996-01-011998-01-012000-01-012002-01-012004-01-012006-01-012008-01-012010-01-012012-01-012014-01-012016-01-012018-01-0110 Year 3 Month Spread
Beacon EconomicsBeacon Economics
Another Bubble?
32
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Jan-86Nov-87Sep-89Jul-91May-93Mar-95Jan-97Nov-98Sep-00Jul-02May-04Mar-06Jan-08Nov-09Sep-11Jul-13May-15Mar-17Shiller P/E Ratio
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%1977-01-011979-04-011981-07-011983-10-011986-01-011988-04-011990-07-011992-10-011995-01-011997-04-011999-07-012001-10-012004-01-012006-04-012008-07-012010-10-012013-01-012015-04-012017-07-01Debt to GDP
Consumer Financial Corporate (NF)
Beacon EconomicsBeacon Economics
Beacon EconomicsBeacon Economics
Population Shifts
34
-0.3%
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
2011 2012 2013 2014 2015 2016
Net Migration (% of Pop) by region
Northeast Region Midwest Region
South Region West Region
Florida 1.51%Ohio -0.05%
Nevada 1.27%Penn -0.06%
Colorado 1.10%Wisconsin -0.08%
Oregon 1.08%Michigan -0.08%
South Carolina 1.04%New Jersey -0.14%
Washington 0.99%Vermont -0.19%
Arizona 0.96%W Virginia -0.26%
Texas 0.90%New York -0.27%
North Dakota 0.79%Mississippi -0.28%
Idaho 0.77%Kansas -0.30%
Delaware 0.66%Connecticut -0.32%
North Carolina 0.66%Wyoming -0.35%
Montana 0.60%New Mexico -0.47%
Georgia 0.54%Illinois -0.58%
Tennessee 0.53%Alaska -0.73%
Net Migration by State 14-16
Beacon EconomicsBeacon EconomicsSource: Business Insider/Census Bureau 35
Beacon EconomicsBeacon Economics
California fact versus fiction
36
Beacon EconomicsBeacon Economics
Booms and Busts
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%19981999200020012002200320042005200620072008200920102011201220132014201520162017Growth in Real Output
United States California
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1/1/882/1/903/1/924/1/945/1/966/1/987/1/008/1/029/1/0410/1/0611/1/0812/1/101/1/132/1/153/1/17US Unemployment
CA US
Beacon EconomicsBeacon Economics
California Economic Engine
38
100
105
110
115
120
125
130
2005:Q12005:Q42006:Q32007:Q22008:Q12008:Q42009:Q32010:Q22011:Q12011:Q42012:Q32013:Q22014:Q12014:Q42015:Q32016:Q22017:Q12017:Q4Real State Output Index
United States California
Q1 2018 1 Year 5 Year
Washington 4.3%3.7%
California 3.5%3.7%
Utah 3.7%3.4%
Colorado 4.5%3.4%
Oregon 3.4%2.9%
Florida 2.3%2.8%
Texas 4.2%2.8%
Idaho 3.2%2.8%
Georgia 2.5%2.8%
Nevada 4.0%2.7%
Beacon EconomicsBeacon Economics
California Economic Engine
39
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%1981:Q11982:Q41984:Q31986:Q21988:Q11989:Q41991:Q31993:Q21995:Q11996:Q41998:Q32000:Q22002:Q12003:Q42005:Q32007:Q22009:Q12010:Q42012:Q32014:Q22016:Q1California Share National Personal
Income Rk State #Ann Gr Share US
1 Nevada 211.2 3.4%1.7%
2 Utah 218.3 3.2%1.7%
3 Florida 1238.2 3.1%9.8%
4 Oregon 252.1 2.9%2.0%
5 Idaho 92.1 2.8%0.7%
6 Colorado 328.7 2.7%2.6%
7 Washington 413.1 2.7%3.3%
8 California 2051 2.6%16.3%
9 Georgia 537.9 2.6%4.3%
10 South Carolina 237.6 2.4%1.9%
Employment
Beacon EconomicsBeacon Economics
1 Mississippi 24.8%14 Alabama 18.7%
2 West Virginia 23.1%15 Rhode Island 18.6%
3 New Mexico 22.8%16 Montana 18.5%
4 Vermont 22.5%17 North Dakota 17.7%
5 Wyoming 22.3%18 Iowa 17.5%
6 Alaska 21.9%19 Michigan 17.5%
7 Arkansas 20.6%20 Louisiana 17.2%
8 Maine 20.1%21 Minnesota 17.2%
9 Hawaii 19.2%22 Idaho 16.8%
10 New York 19.1%23 California 16.7%
11 Oregon 19.0%24 Ohio 16.7%
12 Kentucky 18.9%25 New Jersey 16.6%
13 South Carolina 18.8%26 Oklahoma 16.5%
A (Temporary) Revenue Glut
0
20
40
60
80
100
120
140
BillionsState Revenues from Taxes Tax Revenues as % GSP
Beacon EconomicsBeacon Economics
Hyper-Cyclical
Progressive / Regressive
Tax on Effort vs Tax on
Wealth
Inflation for Goods relative to
Inflation for Services
Evolutionary vs revolutionary
reform
A (Temporary) Revenue Glut
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Share by Source
PIT Sales Corp
Beacon EconomicsBeacon Economics
Air Traffic
Source: VisitCalifornia 42
600
700
800
900
1000
1100
1200
1300
Domestic Pass. (Thousands, SA & Smoothed)Domestic Passengers
Oakland International Airport
Aug. 2007 –Aug. 2018 Airport
Domestic
Pass.
(000’s)
Aug. 2018
Year over
Year %
Change
Five Year %
Change
OAK 1,168.8 6.6%45.4%
SFO 3,665.8 1.8%26.9%
SJC 1,132.6 19.9%62.8%
Beacon EconomicsBeacon Economics
Hotels
Beacon EconomicsBeacon Economics
Port of Oakland
Source: WISER 44
0
5
10
15
20
25
2003200420052006200720082009201020112012201320142015201620172017 YTD*2018 YTD*Value of Exports ($, Billions)Value of Exports
All Commodities
2003 to 2018 YTD*
0
5
10
15
20
25
30
35
2003200420052006200720082009201020112012201320142015201620172017 YTD*2018 YTD*Values of Imports ($, Billions)Value of Imports
All Commodities
2003 to 2018 YTD*
*Through October
Beacon Economics
Rents
Source: REIS 45
20.0
25.0
30.0
35.0
40.0
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Cost of Rent ($)Retail
Q3-2003 to Q3-2018
South Bay East Bay
San Francisco
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Cost of Rent ($)Office
Q3-2003 to Q3-2018
South Bay East Bay
San Francisco
2.0
4.0
6.0
8.0
10.0
12.0
Cost of Rent ($)Warehouse
Q3-2010 to Q3-2018
South Bay East Bay
San Francisco
Beacon Economics
Vacancy Rates
Source: REIS 46
0
5
10
15
20
25
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Vacancy Rate (%)Office
Q3-2003 to Q3-2018
South Bay East Bay
San Francisco
0
1
2
3
4
5
6
7
8
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Vacancy Rate (%)Retail
Q3-2003 to Q3-2018
South Bay East Bay San Francisco
0
2
4
6
8
10
12
14
16
Vacancy Rate (%)Industrial
Q3-2010 to Q3-2018
South Bay East Bay
San Francisco
Beacon Economics
Nonresidential Real Estate Permits
Source: CIRB 47
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2003200420052006200720082009201020112012201320142015201620172017 YTD*2018 YTD*Permit Value ($, Millions)East Bay Nonresidential Permits
2003 to 2018 YTD*
Commercial Non Res Alterations
Region
Value of Permits
2018 YTD*
($, Millions)
YTD Year over Year
% Growth
Comm.Alts. Comm.Alts.
East Bay 574.9 866.4 28.1%-7.5%
San Francisco 1,622.2 1,842.3 -7.5%-36.8%
South Bay 1,221.8 1,506.9 67.9%25.6%
*through the third quarter
Beacon EconomicsBeacon Economics
State Job Growth
Nov-18
San Jose 1,147,800 2.6%3.4%
Stockton 246,000 3.8%3.1%
Santa Rosa 211,500 2.0%2.3%
Riverside 1,509,100 4.2%2.3%
Fresno 357,600 3.1%2.1%
Oakland 1,194,800 2.0%1.9%
San Francisco 1,146,000 1.9%1.9%
Bakersfield 264,800 1.5%1.8%
San Diego 1,490,500 1.8%1.8%
Oxnard 309,400 1.1%1.6%
Sacramento 993,500 2.6%1.3%
Los Angeles 4,523,400 1.4%1.3%
Orange 1,635,300 1.7%0.4%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18California Non Farm Payroll
YoY Growth
Beacon EconomicsBeacon Economics
California Labor Markets
Source: U.S. Census 49
-0.50%
-0.30%
-0.10%
0.10%
0.30%
0.50%
0.70%
0.90%
1.10%
1.30%
1.50%197519771979198119831985198719891991199319951997199920012003200520072009201120132015Net Migration as a % of Pop
3
4
5
6
7
8
9
10
11
12
13
Jan-90Aug-91Mar-93Oct-94May-96Dec-97Jul-99Feb-01Sep-02Apr-04Nov-05Jun-07Jan-09Aug-10Mar-12Oct-13May-15Dec-16Unemployment Rate
California
Beacon Economics
Employment Comparisons
Source: California EDD 50
900
950
1000
1050
1100
1150
1200
1250
Employment (Thousands)East Bay Total Nonfarm
December 2003 to December 2018 Region Total Nonfarm
Employment (000’s)
Year over Year %
Growth
South Bay 1,149 3.3
San Francisco 2,348 2.0
East Bay 1,196 2.0
California 17,287 1.7
Beacon Economics
Industry Comparisons –December 2018
Source: California EDD 51
Industry
East Bay California
Emp % Gr % Gr
Total Nonfarm 1,196 2.0 1.7
Admin Support 72 10.7 2.8
Construction 76 4.0 2.6
Professional 100 2.4 4.1
Other Services 41 2.3 -0.7
Education/Health 198 2.0 2.5
Logistics 210 1.7 0.4
Retail Trade 117 1.3 -0.5
Manufacturing 98 1.2 0.4
Hospitality 117 0.5 2.8
Information 27 0.4 1.5
Government 176 0.3 1.2
Financial Activities 57 -0.9 0.5
Wholesale Trade 48 -3.0 -0.7
0
2
4
6
8
10
12
Unemployment Rate (%)Unemployment Rate
Dec. 2003 to Dec. 2018
South Bay East Bay San Francisco
Beacon Economics
Employment Comparisons
Source: QCEW 52
240
250
260
270
280
290
300
310
320
330
Employment (Thousands)Total Private Employment
Q2-2003 to Q2-2018 County Total Private
Employment (000’s)
Year over Year %
Growth
San Francisco 635.5 3.2
Santa Clara 1,004.7 2.9
Alameda 676.4 2.3
Contra Costa 321.1 1.0
Beacon Economics
Employment –Contra Costa County
Source: QCEW 53
Industry Employment
Q2-2018
Year over Year %
Change
Average Annual Wage
($)
Year over Year %
Change
Total Private 321,060 1.0 66,157 -9.3
NR/Construction 838 25.9 40,951 -0.1
Hospitality 41,322 4.4 23,517 -2.2
Other Scvs.12,824 3.2 40,321 0.7
Admin Support 22,790 2.2 51,956 -4.5
Education 7,623 2.1 40,256 1.4
Manufacturiing 15,495 0.6 92,068 -22.5
Health Care 62,111 0.4 67,808 4.5
FIRE 27,312 0.2 98,005 -16.2
Professional 15,774 0.2 110,481 -16.5
Information 7,958 -0.1 107,769 -25.3
Retail Trade 42,116 -0.7 35,424 0.8
Wholesale Trade 9,728 -2.7 93,438 -9.8
Beacon EconomicsBeacon Economics
New Housing Supply
Source: CIRB 54
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Q1-95Q1-96Q1-97Q1-98Q1-99Q1-00Q1-01Q1-02Q1-03Q1-04Q1-05Q1-06Q1-07Q1-08Q1-09Q1-10Q1-11Q1-12Q1-13Q1-14Q1-15Q1-16Q1-17Q1-18New Home Permits
Single-family Multi-family
Method 1
Total 722,022
Per Year 206,674
Current 111,185
Shortfall 100,489
Method 2
Total 911,001
Per Year 263,667
Current 111,185
Shortfall 157,482
How Much Housing Needed?
Housing Needed to maintain 2%
State Job Growth
Beacon EconomicsBeacon Economics
How Much of a Backlog?
Backlog
Avg Growth 291
Avg Vacancy 676
Total 967
High Growth 1,408
Avg Vacancy 676
Total 2,084
Texas Growth 1,849
Avg Vacancy 676
Total 2,525
Units Vacancy Rk
00-17
Gr%Rk
00-17
Ch
Texas 10,933 9.4%28 34%4 2,776
Florida 9,442 13.2%6 29%6 2,139
California 14,177 5.8%52 16%21 1,963
N Carolina 4,623 11.1%17 31%8 1,099
Georgia 4,282 8.4%34 30%9 1,001
Arizona 2,999 13.1%7 37%3 810
Washington 3,103 7.3%44 27%10 652
New York 8,328 8.1%39 8%44 648
Virginia 3,513 7.1%46 21%15 609
Colorado 2,385 8.3%35 32%7 577
Beacon EconomicsBeacon Economics
The Housing Exodus
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
0
100000
200000
300000
400000
500000
600000
Q1-99Q3-00Q1-02Q3-03Q1-05Q3-06Q1-08Q3-09Q1-11Q3-12Q1-14Q3-15Q1-17California Home Prices Relative to
US
0
200
400
600
800
1000
1200
1400
1600
Median Home Prices ($, Thousands)Median Home Price
Q3-2003 to Q3-2018
South Bay East Bay San Francisco
Beacon Economics
Residential Real Estate -Local
Source: DataQuick 57
0
100
200
300
400
500
600
700
Home Prices ($, Thousands)Median Home Prices
Q3-2003 to Q3-2018
Antioch Brentwood Concord Richmond
City
Median Home
Prices in Q3-2018
(000’s)
Year over Year %
Change
Richmond 461.8 15.0
Brentwood 590.0 9.9
Concord 591.1 9.6
Antioch 436.9 4.9
Beacon Economics
Residential Real Estate -Local
Source: REIS 58
1000
1200
1400
1600
1800
2000
2200
2400
2600
Cost of Rent ($)Apartment Rents
Q3-09 to Q3-2018
Concord/Martinez East Contra Costa
San Ramon/Walnut Creek West Contra Costa
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Vacancy Rate (%)Apartment Vacancy Rate
Q3-2009 to Q3-2018
Concord/Martinez East Contra Costa
San Ramon/Walnut Creek West Contra Costa
Beacon Economics
Residential Real Estate –Permits
Source: CIRB 59
0
2000
4000
6000
8000
10000
12000
2003200420052006200720082009201020112012201320142015201620172017 YTD*2018 YTD*Number of Permits (Thousands)East Bay Residential Permits
2003 to 2018 YTD*
Single-family Multifamily
*through the third quarter
Region
Number of Permits
2018 YTD*
YTD Year over Year
% Growth
Multi-
family
Single-
family
Multi-
family
Single-
family
East Bay 6,870 2,734 51.3%-13.9%
San Francisco 3,252 1,662 -22.8%-16.1%
South Bay 4,008 538 -12.1%17.2%
Beacon Economics
Households vs Payrolls
60
40
50
60
70
80
90
100
110
120
130
Median Income ($, Thousands)Median Household Income
2005 to 2017
Santa Clara County Alameda County
San Francisco County Contra Costa County
40
60
80
100
120
140
Annual Average Wage ($, Thousands)Annual Average Wages
Q2-2003 tom Q2-2018
Santa Clara County Alameda County
San Francisco County Contra Costa County
Beacon Economics
Labor Force and Housing
Source: California EDD 61
95
100
105
110
115
120
125
Labor Force (Index at 100)Labor Force
Dec. 2003 to Dec. 2018
South Bay East Bay San Francisco
0
10000
20000
30000
40000
50000
60000
70000
Q1-09Q3-09Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13Q1-14Q3-14Q1-15Q3-15Q1-16Q3-16Q1-17Q3-17Q1-18Q3-18Cumulative Housing Permits
Alameda Contra Costa
San Francisco Santa Clara
Beacon Economics
Population –Contra Costa County
Source: California Department of Finance 62
200
300
400
500
600
700
800
900
1000
1100
1200
Population (Thousands)Total Population
1970 to 2018 City
2018
Population
(000’s)
Year %
Change
Five Year %
Change
County Total 1,149.4 0.9 6.0
Concord 129.2 0.7 3.5
Antioch 113.1 0.7 5.1
Richmond 111.0 0.8 3.9
San Ramon 82.6 1.6 8.1
Pittsburg 72.6 1.8 9.2
Walnut Creek 70.7 0.2 6.5
Brentwood 63.0 2.7 16.7
Danville 44.4 0.8 4.7
Oakley 41.7 1.5 10.7
Martinez 38.1 0.7 4.2
Beacon EconomicsBeacon Economics
The Impact
63
California Alameda Los Angeles Orange San Diego San Francisco Santa Clara
Renters 2016 6,000,750 273,116 1,832,068 447,586 532,265 222,703 276,842
Change 11-16 375,376 16,779 112,284 36,722 36,656 3,678 14,125
Growth 11-16 6.7%6.5%6.5%8.9%7.4%1.7%5.4%
Overcrowded 818,737 39,668 303,691 72,153 60,812 16,739 43,186
Share 13.6%14.5%16.6%16.1%11.4%7.5%15.6%
Change 11-16 75,986 15,758 12,676 2,078 16,673 -2,091 7,089
Beacon EconomicsBeacon Economics
The Upside of Labor Shortages
64
Numbe
r (Mil)
Median
Income
2016
Change
13-16
Unemp
2016
Change
13-16
Total 20.96 40,005 10.2%5.5%-3.0%
No High
School 3.52 21,558 13.1%8.2%-3.7%
High School 4.26 30,231 10.9%7.0%-4.0%
Some College 6.14 36,985 3.1%5.5%-3.4%
Bachelor plus 7.03 60,121 9.4%3.6%-1.6%
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
6/1/043/1/0512/1/059/1/066/1/073/1/0812/1/089/1/096/1/103/1/1112/1/119/1/126/1/133/1/1412/1/149/1/156/1/163/1/1712/1/17Median Wage Growth West VS US
Beacon EconomicsBeacon Economics
Don’t Just Focus on Affordable Rentals
65
Renter
2013 2016 Ch
Fresno 54.8%57.5%2.7%
Los Angeles 57.0%55.4%-1.6%
San Bernardino 54.7%55.4%0.7%
Riverside 58.8%54.8%-4.0%
San Diego 53.7%54.7%1.0%
Orange 55.5%54.1%-1.4%
Sacramento 52.9%52.1%-0.9%
Alameda 50.8%47.2%-3.6%
Santa Clara 47.2%46.2%-1.1%
San Francisco 42.8%36.8%-6.0%
Share Households > 30% Income
20
22
24
26
28
30
32
34
36
Median Rent (% of Income)Median Rent as % of Income
2005 to 2017
Santa Clara County Alameda County
San Francisco County Contra Costa County
Beacon EconomicsBeacon Economics
The Commute Impact
Res Emp Ch 12-17 Gr Out Cnty Sh
Alameda 770234 76444 9.9%36005 47.1%
San Bernardino 890998 101571 11.4%32113 31.6%
Contra Costa 543260 60182 11.1%29556 49.1%
Riverside 1014984 150692 14.8%28079 18.6%
Santa Clara 971960 109719 11.3%25227 23.0%
Sacramento 689495 91152 13.2%22646 24.8%
San Mateo 409921 39283 9.6%21653 55.1%
San Joaquin 303851 45701 15.0%19831 43.4%
Solano 204776 24954 12.2%14919 59.8%
Stanislaus 230328 33644 14.6%12592 37.4%
Madera 57028 15310 26.8%9532 62.3%
Ventura 409760 23567 5.8%7912 33.6%
Placer 177146 21908 12.4%7596 34.7%
Beacon EconomicsBeacon Economics
Contra Costa Commuting
67
90
95
100
105
110
115
120
125
Contar Costa County Worker
Commuting Patterns
Inbound Outbound Stay
80
90
100
110
120
130
140
150
160
170
Tri -Valley Worker Commuting
Patterns
Inbound Outbound Stay
Beacon Economics
Commuting Patterns -Central Contra Costa
Source: U.S. Census Bureau, LEHD 68
40
41
42
43
44
45
46
47
54
56
58
60
62
64
66
68
70
Share of Residents (%)Residents (Thousands) Outbound Commuting: Central CC
2005 to 2015
Residents % Share of Residents
37
38
39
40
41
42
43
35
40
45
50
55
60
Share of Residents (%)Residents (Thousands)Outbound Commuting: East CC
2005 to 2015
Residents % Share of Residents
Beacon Economics
Commuting Patterns –Tri -Valley Region
Source: U.S. Census Bureau, LEHD 69
47
48
49
50
51
52
53
54
55
40
50
60
70
80
90
100
Share of Residents (%)Residents (Thousands)Outbound Commuting: Tri Valley
2005 to 2015
Residents % Share of Residents
62
63
64
65
66
67
65
70
75
80
85
90
Share of Residents (%)Residents(Thousands)Outbound Commuting: West CC
2005 to 2015
Residents % Share of Residents
Beacon EconomicsBeacon Economics
A Year Ago
Beacon EconomicsBeacon Economics
Local Population, Sonoma County
Source: DOF 71
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
Change Pop Sonoma County
150000
160000
170000
180000
190000
200000
210000
Sonoma Employment
SUPPLEMENTAL DENSITY BONUS
Allow up to 100% Bonus
•Project Eligibility Requirements:
Achieves 35% State Bonus and
Located within a Priority Development Area or
Station Area and
Located within appropriate General Plan Land
Use Designation
•Density above 35% granted for:
Affordable Housing or
Affordable Housing and Community Benefits
72
Programmatic and Policy Updates
73
$24,000
$9,000
10
Months
3
Months
$0
$5
$10
$15
$20
$25
$30
Original Downtown
Design Review Process
73City Council Ordinance ORD-2018-012,
May 22, 2018
8
2
4
1
6
3
NORMAL EXPRESS
EXPRESS PERMITTING PROGRAM
Planning Engineering Building
~ 18 Months
~ 6 Months
High Density Residential Incentive
Program (Market Rate)
74
7
4
Parking/
Commercial
Parking/
Commercial
Parking/
Commercial
Parking/
Commercial
Parking/
Commercial
2nd Floor
3rd Floor
4th Floor
5th Floor
6th Floor
7th Floor
8th Floor
9th Floor
10th Floor
0%
$13,167
25%
$9,875
40%
$7,900
50%
$6,584
67%
$4,389
Downtown Zoning CD-7 and CD-10
Market Rate Example
Per Door Park
and CFF Fee
Beacon EconomicsBeacon Economics
Why the problem? Incentives
75
Beacon EconomicsBeacon Economics
Positives: It will be a good year
—GDP Growth Outlook for 2019: 2%+
—State revenues will look positive
—Labor markets to remain tight
—Rising wages to put pressure on profits
—Exports, business investment continue
to grow
—Inflation to remain constrained
—Interest Rates Still Low
—Debt Levels still safe
—California: Still a top performer
The Big Picture
76
Negatives: Problems Growing
—Labor shortages will be an issue
—Local housing supply tightening
—Fed will continue to tighten, yield curve
flattening
—Markets behaving oddly
—Federal deficit widening sharply
—Current shutdown—how long?
—Political uncertainty to dominate
headlines
—Critical Policy Issues Remain
Undiscussed
—Miserabilism warping our sense or reality
Beacon EconomicsBeacon Economics
The Great Disconnect
What we are worried about 77
What we are worried
about
What we should be worried
about
The Number of Jobs The Number of Workers
Who pays for Healthcare What are we paying for?
Tax Levels Tax Structure
Income Inequality Wealth Inequality
Funded Govt. Liabilities Unfunded Govt. Liabilities
Business Investment A Lack of Public Investment
Inflation Slowing Lending
The Cost of CA Housing The Supply of CA Housing
Thank You
Chris@BeaconEcon.com | www.BeaconEcon.com
Beacon Economics | beaconecon.com
Christopher Thornberg, PhD
Founding Partner, Beacon Economics
Director, UCR SoBA Center for Economic Forecasting and
Development
The Economic Outlook
Here we go again…
Focus on Contra Costa County
January 2019
Beacon
Economics
Beacon
Economics
Thank goodness that is behind us…
2
Beacon
Economics
Beacon
Economics
And a stock market crash chaser…
3
Beacon
Economics
Beacon
Economics
A look back
NBER says U.S. recession began
December 2007
Mon Dec 1, 12:20 pm ET
WASHINGTON (Reuters) –The U.S. economy
slipped into recession in December 2007, the
National Bureau of Economic Research's
business cycle dating committee announced
on Monday.
4
Beacon
Economics
Beacon
Economics
Will the Real Economy Please Stand Up?
Why so glum?
⏤2018 Growth: 3.2% with .75% fiscal
stimulus after-burner
⏤Labor markets, consumer spending,
business investment, wages, exports,
energy, debt levels still all on steady
sustainable paths
⏤Interest rates, inflation still constrained
⏤2019: back to a solid pace of 2.5%
growth
⏤Still a low chance of recession in next
24 months`
⏤California: Still out in front
5
0.0%20.0%40.0%60.0%
2023
2021
2019
WSJ Next Recession Poll
It isn’t the ‘when’,
it’s the ‘why’
Beacon
Economics
Beacon
Economics
Will the Real Economy Please Stand Up?
Brakes and Imbalances
⏤Labor shortages impacting employers
⏤Local Housing Shortages
⏤Recent market volatility / rising long term rates
⏤Aggressive Fed, flattening yield curves
⏤Sharp growth in government deficits
⏤The Federal government shutdown
⏤Global trade / security worries
Political Dysfunction
⏤Little effort to deal with underinvestment in infrastructure,
rising wealth inequality, healthcare cost inflation, pension
and entitlement issues, etc etc etc
⏤The great disconnect between economic realities and
political discourse
6
Beacon
Economics
Beacon
Economics
A Wall Problem
Federal Budget: $3.8 trillion
Discretionary Spending: $1.1 trillion
Cost of 1 aircraft carrier: $14 billion
Cost of full border wall: $60 billion+
Cause of shut down: $5.7 billion
Cost of shutdown: $3-$9 billion+
7
Beacon
Economics
Beacon
Economics
GDP: Q3 3.5%, Q4 tracking 2.7%
-4-3-2-101234
2005Q1Q2Q3Q42010Q1Q2Q3Q42015Q1Q2Q3Real GDP Growth (yoy)2016 2017 Q2 Q3
GDP 1.88 2.48 4.20 3.50
Final Demand
Consumption 1.87 1.83 2.57 2.69
Goods 0.75 0.96 1.16 1.20
Services 1.11 0.87 1.42 1.49
Fixed investment 0.39 0.95 1.10 -0.04
Structures 0.07 0.08 0.43 -0.26
Equipment -0.08 0.54 0.27 0.03
Intellectual prop 0.24 0.18 0.45 0.35
Residential 0.16 0.15 -0.05 -0.16
Change inventories -0.20 -0.11 -1.17 2.07
Net exports -0.34 -0.23 1.22 -1.78
Exports 0.09 0.56 1.12 -0.45
Imports -0.43 -0.79 0.10 -1.34
Government 0.16 0.03 0.43 0.56
Federal 0.02 0.09 0.24 0.21
State and local 0.15 -0.06 0.20 0.35
8
Beacon
Economics
Beacon
Economics
Consumer Spending
-3.0-2.0-1.00.01.02.03.04.05.0
Jan-03Aug-04Mar-06Oct-07May-09Dec-10Jul-12Feb-14Sep-15Apr-17Real Consumer
Spending Growth (Y-o-Y)
0.0
2.0
4.0
6.0
8.0
10.0
Jan-96May-98Sep-00Jan-03May-05Sep-07Jan-10May-12Sep-14Jan-17Personal Savings Rate
9
Beacon
Economics
Beacon
Economics
Autos?
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Jan-03May-04Sep-05Jan-07May-08Sep-09Jan-11May-12Sep-13Jan-15May-16Sep-17US Auto Light Truck Sales
40
60
80
100
120
140
160
Jan-03May-04Sep-05Jan-07May-08Sep-09Jan-11May-12Sep-13Jan-15May-16Sep-17Domestic Auto Production
10
Beacon
Economics
Beacon
Economics
Consumer Debt Loads
11
0.7
0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
03:Q104:Q205:Q306:Q408:Q109:Q210:Q311:Q413:Q114:Q215:Q316:Q418:Q1Household Debt / DPI Ratio
0
2
4
6
8
10
12
1991-…1993-…1995-…1997-…1999-…2001-…2004-…2006-…2008-…2010-…2012-…2014-…2017-…Loan Delinquencies: All
Commercial Banks
Residential Commercial
Consumer
Beacon
Economics
Beacon
Economics
Housing Markets: Slight Slowing
12
3000.0
3500.0
4000.0
4500.0
5000.0
5500.0
6000.0
6500.0
7000.0
7500.0
Jan-99Nov-00Sep-02Jul-04May-06Mar-08Jan-10Nov-11Sep-13Jul-15May-17Home Sales
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%Jan-03Jul-04Jan-06Jul-07Jan-09Jul-10Jan-12Jul-13Jan-15Jul-16Jan-18Median Prices Y-o-Y Growth
Beacon
Economics
Home Prices / Inventories
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Jan-99Sep-00May-02Jan-04Sep-05May-07Jan-09Sep-10May-12Jan-14Sep-15May-17Months Supply of Homes
0
0.5
1
1.5
2
2.5
3
3.5
196919731977198119851989199319972001200520092013Housing Starts per New
Household
13
Beacon
Economics
Beacon
Economics
Ownership and Credit Availability
14
500
550
600
650
700
750
800
99:Q200:Q402:Q203:Q405:Q206:Q408:Q209:Q411:Q212:Q414:Q215:Q417:Q2Mortgage Origination by
Credit Score
Median 25th percentile
10th percentile
62.0%
63.0%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
70.0% Q1-85 Q4-87 Q3-90 Q2-93 Q1-96 Q4-98 Q3-01 Q2-04 Q1-07 Q4-09 Q3-12 Q2-15Q1-18Ownership Rates
Beacon
Economics
Beacon
Economics
Industrial Production
400
600
800
1000
1200
1400
1600
1800
2000
2002Q1Q2Q3Q42007Q1Q2Q3Q42012Q1Q2Q3Q42017Q1Q2Exports of goods, Real
-10.0%
-5.0%
0.0%
5.0%
10.0%Mar-95May-97Jul-99Sep-01Nov-03Jan-06Mar-08May-10Jul-12Sep-14Nov-16Industrial Production YoY
Growth
15
Beacon
Economics
Beacon
Economics
Oil Production / Prices
2000
4000
6000
8000
10000
12000
1/7/831/7/861/7/891/7/921/7/951/7/981/7/011/7/041/7/071/7/101/7/131/7/16US Crude Oil Production
(TB/D)
0.0020.0040.0060.0080.00100.00120.00140.00160.00
WTI Oil Prices ($/B)
16
Beacon
Economics
Beacon
Economics
Twin Deficits
17
-2000
-1500
-1000
-500
0
500
1995Q11997Q11999Q12001Q12003Q12005Q12007Q12009Q12011Q12013Q12015Q12017Q1Net Surplus Federal
Go
-60000-55000-50000-45000-40000-35000-30000-25000-20000
Jan-09Apr-10Jul-11Oct-12Jan-14Apr-15Jul-16Oct-17US Trade Balance
(BOP_
Beacon
Economics
Beacon
Economics 18
Beacon
Economics
Beacon
Economics
Country Exports Imports
Total, 829.8 1233.9
China 64.0 7.7%249.7 20.2%
Canada 151.9 18.3%160.0 13.0%
Mexico 131.3 15.8%169.3 13.7%
Japan 35.7 4.3%70.3 5.7%
Germany 29.4 3.5%62.3 5.0%
United Kingdom 33.9 4.1%29.3 2.4%
Korea, South 27.1 3.3%35.4 2.9%
France 18.1 2.2%25.7 2.1%
India 15.5 1.9%26.8 2.2%
Italy 11.9 1.4%26.8 2.2%
Taiwan 13.6 1.6%21.6 1.8%
Netherlands 24.2 2.9%10.7 0.9%
The China Syndrome
19
Value US Exports to
China as % of GDP:
0.75%
Value China Exports
to US as % of GDP:
4.0%
Beacon
Economics
Beacon
Economics
The Yuan response
5.405.605.806.006.206.406.606.807.007.20
10/28/131/28/144/28/147/28/1410/28/141/28/154/28/157/28/1510/28/151/28/164/28/167/28/1610/28/161/28/174/28/177/28/1710/28/171/28/184/28/187/28/18Yuan / Dollar Exchange
Rate
20
Beacon
Economics
Beacon
Economics
Labor Markets
0246810
Jan-01Nov-02Sep-04Jul-06May-08Mar-10Jan-12Nov-13Sep-15Jul-17Unemployment and
Job Openings
Job Opening Rate
Unemployment Rate
-50050100150200250300350
Jan-10Dec-10Nov-11Oct-12Sep-13Aug-14Jul-15Jun-16May-17Apr-18Change Non Farm
Payrolls (Smoothed)
21
Beacon
Economics
Beacon
Economics
Consequences
22
-2.0
0.0
2.0
4.0
6.0
Sep-02Feb-04Jul-05Dec-06May-08Oct-09Mar-11Aug-12Jan-14Jun-15Nov-16Real Wage Gains for
Continuously Employed
FT Workers
Median Average
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
1953195819631968197319781983198819931998200320082013Real Median Income-Males
Beacon
Economics
Beacon
Economics
60
65
70
75
80
Life
Expectancy
1973 2018
Quality of Life
Source: Countryeconomy.com. Statista.23
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
Infant Mortality
1973 2018
4.15
%
2.85
%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Total Crime Rate in
the U. S.
1973 2016
Beacon
Economics
Beacon
Economics
Quality of Life
Source: Countryeconomy.com. Statista.24
Beacon
Economics
Beacon
Economics
Workforce Growth
25
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jan-80Jul-83Jan-87Jul-90Jan-94Jul-97Jan-01Jul-04Jan-08Jul-11Jan-15US Labor Force Growth
(Smoothed)
60.0
61.0
62.0
63.0
64.0
65.0
66.0
67.0
68.0
Jan-86Jan-89Jan-92Jan-95Jan-98Jan-01Jan-04Jan-07Jan-10Jan-13Jan-16US Participation Rate
Beacon
Economics
Beacon
Economics
Looking Ahead
-
5.0
10.0
15.0
20.0
25.0
Under 5 years10 to 14 years20 to 24 years30 to 34 years40 to 44 years50 to 54 years60 to 64 years70 to 74 years80 to 84 years2016 Population by Age
(Millions)0-24 25-64 65+
Current 104.5 169.4 49.2
2016-26 0.9 4.7 17.8
2026-36 2.0 6.2 11.9
2036-46 2.3 9.4 4.8
Total 5.3 20.3 34.5
US Population Forecast
26
Beacon
Economics
Beacon
Economics
The Markets
2000
2100
2200
2300
2400
2500
2600
2700
2800
2900
3000
2017-01-27 2018-01-27
S&P 500 2017-Current
0
500
1000
1500
2000
2500
3000
3500
2009-02-062010-02-062011-02-062012-02-062013-02-062014-02-062015-02-062016-02-062017-02-062018-02-06S&P 500 2009-Current
5 Year Annual %7.7%
10 Year Annual %12.2%
27
Beacon
Economics
Beacon
Economics
The Markets
-20.00%-18.00%-16.00%-14.00%-12.00%-10.00%-8.00%-6.00%-4.00%-2.00%0.00%
Market Selloffs Current Expansion
28
Beacon
Economics
Beacon
Economics
A Rising Rate Trigger?
29
3.00
3.50
4.00
4.50
5.00
2016-01-282016-04-282016-07-282016-10-282017-01-282017-04-282017-07-282017-10-282018-01-282018-04-282018-07-28Mortgage Rates (30 Year
Fixed)
0.00
5.00
10.00
15.00
20.00
1978-01-061983-01-061988-01-061993-01-061998-01-062003-01-062008-01-062013-01-062018-01-06Mortgage Rates (30
Year Fixed)
Beacon
Economics
Beacon
Economics
Inflation?
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1996-04-011998-08-012000-12-012003-04-012005-08-012007-12-012010-04-012012-08-012014-12-012017-04-01Core Inflation
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1981-11-021985-11-021989-11-021993-11-021997-11-022001-11-022005-11-022009-11-022013-11-022017-11-02M2 Growth (Y-o-Y)
30
Beacon
Economics
Beacon
Economics
Federal Reserve Policy: Normalization?
31
0.00
5.00
10.00
15.00
20.00
25.00
1974-01-021979-01-021984-01-021989-01-021994-01-021999-01-022004-01-022009-01-022014-01-022019-01-02Federal Funds Rate
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
1982-01-011984-12-011987-11-011990-10-011993-09-011996-08-011999-07-012002-06-012005-05-012008-04-012011-03-012014-02-012017-01-0110 Year 3 Month Spread
Beacon
Economics
Beacon
Economics
California fact versus fiction
32
Beacon
Economics
Beacon
Economics
Booms and Busts
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%1998200020022004200620082010201220142016Growth in Real Output
United States California
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1/1/8811/1/909/1/937/1/965/1/993/1/021/1/0511/1/079/1/107/1/135/1/16US Unemployment
CA US
33
Beacon
Economics
Beacon
Economics
California Economic Engine
34
100
105
110
115
120
125
130
2005:Q12006:Q12007:Q12008:Q12009:Q12010:Q12011:Q12012:Q12013:Q12014:Q12015:Q12016:Q12017:Q1Real State Output Index
United States California
Q1 2018 1 Year 5 Year
Washington 4.3%3.7%
California 3.5%3.7%
Utah 3.7%3.4%
Colorado 4.5%3.4%
Oregon 3.4%2.9%
Florida 2.3%2.8%
Texas 4.2%2.8%
Idaho 3.2%2.8%
Georgia 2.5%2.8%
Nevada 4.0%2.7%
Beacon
Economics
Beacon
Economics
California Economic Engine
35
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%1981:Q11983:Q31986:Q11988:Q31991:Q11993:Q31996:Q11998:Q32001:Q12003:Q32006:Q12008:Q32011:Q12013:Q32016:Q1California Share National
Personal Income Rk State #Ann Gr Share US
1 Nevada 211.2 3.4%1.7%
2 Utah 218.3 3.2%1.7%
3 Florida 1238.2 3.1%9.8%
4 Oregon 252.1 2.9%2.0%
5 Idaho 92.1 2.8%0.7%
6 Colorado 328.7 2.7%2.6%
7 Washington 413.1 2.7%3.3%
8 California 2051 2.6%16.3%
9 Georgia 537.9 2.6%4.3%
10 South Carolina 237.6 2.4%1.9%
Employment
Beacon
Economics
Beacon
Economics
1 Mississippi 24.8%14 Alabama 18.7%
2 West Virginia 23.1%15 Rhode Island 18.6%
3 New Mexico 22.8%16 Montana 18.5%
4 Vermont 22.5%17 North Dakota 17.7%
5 Wyoming 22.3%18 Iowa 17.5%
6 Alaska 21.9%19 Michigan 17.5%
7 Arkansas 20.6%20 Louisiana 17.2%
8 Maine 20.1%21 Minnesota 17.2%
9 Hawaii 19.2%22 Idaho 16.8%
10 New York 19.1%23 California 16.7%
11 Oregon 19.0%24 Ohio 16.7%
12 Kentucky 18.9%25 New Jersey 16.6%
13 South Carolina 18.8%26 Oklahoma 16.5%
A (Temporary) Revenue Glut
0
20
40
60
80
100
120
140
1994-951996-971998-992000-012002-032004-052006-072008-092010-112012-132014-152016-17BillionsState Revenues from
Taxes
Tax Revenues as % GSP
36
Beacon
Economics
Beacon
Economics
Hyper-Cyclical
Progressive / Regressive
Tax on Effort vs Tax on
Wealth
Inflation for Goods relative to
Inflation for Services
Evolutionary vs revolutionary
reform
A (Temporary) Revenue Glut
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%1994-951996-971998-992000-012002-032004-052006-072008-092010-112012-132014-152016-17Share by Source
PIT Sales Corp
37
Beacon
Economics
Beacon
Economics
Local Growth (GMP for SF / Oak MSA)
38
80
90
100
110
120
130
140
Real GMP Trends
United States
San Francisco-Oakland
Description 2017
All industry total 425358.1 15.5%
Information 49876.6 50.1%
Durable goods manufacturing 19009.4 34.7%
Wholesale trade 20690.5 21.5%
Administrative and support 12839.6 20.4%
Manufacturing 38882.1 18.8%
Construction 15424.3 18.3%
Professional, scientific 61670.5 17.5%
Professional and business services 87728.1 16.1%
Health care and social assistance 23843.9 14.4%
Retail trade 21793.8 13.8%
Nondurable goods manufacturing 22227.6 11.1%
Accommodation and food services 11355.9 10.5%
Arts, entertainment, and recreation 4763.2 9.7%
Government 37095.6 7.2%
Other services 7698.1 6.3%
Real estate and rental and leasing 64268.3 6.1%
Management of companies 13110.3 5.6%
Finance and insurance 25420.9 5.4%
Educational services 3479.9 2.4%
Beacon
Economics
Beacon
Economics
Port of Oakland
Source: WISER 39
0
5
10
15
20
25
Value of Exports ($, Billions)Value of Exports
All Commodities
2003 to 2018 YTD*
0
5
10
15
20
25
30
35
Values of Imports ($, Billions)Value of Imports
All Commodities
2003 to 2018 YTD*
*Through October
Beacon
Economics
Beacon
Economics
Air Traffic
Source: VisitCalifornia 40
600
700
800
900
1000
1100
1200
1300
Domestic Pass. (Thousands, SA & Smoothed)Domestic Passengers
Oakland International Airport
Aug. 2007 –Aug. 2018
Airport
Domestic
Pass.
(000’s)
Aug. 2018
Year over
Year %
Change
Five Year %
Change
OAK 1,168.8 6.6%45.4%
SFO 3,665.8 1.8%26.9%
SJC 1,132.6 19.9%62.8%
Beacon
Economics
Beacon
Economics
Hotels
41
Beacon
Economics
Nonresidential Real Estate Permits
Source: CIRB 42
0
500
1000
1500
2000
Permit Value ($, Millions)East Bay Nonresidential
Permits
2003 to 2018 YTD*
Commercial Non Res Alterations
Region
Value of Permits
2018 YTD*
($, Millions)
YTD Year over
Year % Growth
Comm.Alts. Comm.Alts.
East Bay 574.9 866.4 28.1%-7.5%
San Francisco 1,622.2 1,842.3 -7.5%-36.8%
South Bay 1,221.8 1,506.9 67.9%25.6%
*through the third quarter
Beacon
Economics
Rents
Source: REIS 43
20.0
25.0
30.0
35.0
40.0
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Cost of Rent ($)Retail
Q3-2003 to Q3-2018
South Bay
East Bay
San Francisco
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Cost of Rent ($)Office
Q3-2003 to Q3-2018
South Bay
East Bay
San Francisco
2.0
4.0
6.0
8.0
10.0
12.0
Cost of Rent ($)Warehouse
Q3-2010 to Q3-2018
South Bay
East Bay
San Francisco
Beacon
Economics
Vacancy Rates
Source: REIS 44
0
5
10
15
20
25
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Vacancy Rate (%)Office
Q3-2003 to Q3-2018
South Bay
East Bay
San Francisco
012345678
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Vacancy Rate (%)Retail
Q3-2003 to Q3-2018
South Bay
East Bay
San Francisco
0246810121416Vacancy Rate (%)Industrial
Q3-2010 to Q3-2018
South Bay
East Bay
San Francisco
Beacon
Economics
Beacon
Economics
State Job Growth
Nov-18
San Jose 1,147,800 2.6%3.4%
Stockton 246,000 3.8%3.1%
Santa Rosa 211,500 2.0%2.3%
Riverside 1,509,100 4.2%2.3%
Fresno 357,600 3.1%2.1%
Oakland 1,194,800 2.0%1.9%
San Francisco 1,146,000 1.9%1.9%
Bakersfield 264,800 1.5%1.8%
San Diego 1,490,500 1.8%1.8%
Oxnard 309,400 1.1%1.6%
Sacramento 993,500 2.6%1.3%
Los Angeles 4,523,400 1.4%1.3%
Orange 1,635,300 1.7%0.4%
-2.0%
0.0%
2.0%
4.0%Jan-05Jun-06Nov-07Apr-09Sep-10Feb-12Jul-13Dec-14May-16Oct-17California Non Farm
Payroll
YoY Growth
45
Beacon
Economics
Employment Comparisons
Source: California EDD 46
900
950
1000
1050
1100
1150
1200
1250
Employment (Thousands)East Bay Total Nonfarm
December 2003 to December
2018
Industry
East Bay California
Emp % Gr % Gr
Total Nonfarm 1,196 2.0 1.7
Admin Support 72 10.7 2.8
Construction 76 4.0 2.6
Professional 100 2.4 4.1
Other Services 41 2.3 -0.7
Education/Health 198 2.0 2.5
Logistics 210 1.7 0.4
Retail Trade 117 1.3 -0.5
Manufacturing 98 1.2 0.4
Hospitality 117 0.5 2.8
Information 27 0.4 1.5
Government 176 0.3 1.2
Financial Activities 57 -0.9 0.5
Wholesale Trade 48 -3.0 -0.7
Beacon
Economics
Employment Comparisons
Source: QCEW 47
240
250
260
270
280
290
300
310
320
330
Employment (Thousands)Total Private Employment
Q2-2003 to Q2-2018
Industry Employment
Q2-2018
Year over Year
% Change
Total Private 321,060 0.6
Other Scvs.12,824 3.7
Education 7,623 2.7
Health Care 62,111 1.9
Professional 15,774 0.7
FIRE 27,312 0.0
Hospitality 41,322 0.0
Manufacturiing 15,495 -0.5
Information 7,958 -0.9
Retail Trade 42,116 -1.0
Admin Support 22,790 -1.4
Wholesale Trade 9,728 -7.9
NR/Construction 838 -14.3
Beacon
Economics
Beacon
Economics
California Labor Markets
Source: U.S. Census 48
-0.50%
-0.30%
-0.10%
0.10%
0.30%
0.50%
0.70%
0.90%
1.10%
1.30%
1.50%19751978198119841987199019931996199920022005200820112014Net Migration as a % of Pop
3
5
7
9
11
13
Jan-90Apr-92Jul-94Oct-96Jan-99Apr-01Jul-03Oct-05Jan-08Apr-10Jul-12Oct-14Jan-17Unemployment Rate
California
Beacon
Economics
Local Labor Force–December 2018
Source: California EDD 49
0
2
4
6
8
10
12
Unemployment Rate (%)Unemployment Rate
Dec. 2003 to Dec. 2018
South Bay East Bay San Francisco
City
2018
Population
(000’s)
Year %
Change
Five Year %
Change
County Total 1,149.4 0.9 6.0
Concord 129.2 0.7 3.5
Antioch 113.1 0.7 5.1
Richmond 111.0 0.8 3.9
San Ramon 82.6 1.6 8.1
Pittsburg 72.6 1.8 9.2
Walnut Creek 70.7 0.2 6.5
Brentwood 63.0 2.7 16.7
Danville 44.4 0.8 4.7
Oakley 41.7 1.5 10.7
Martinez 38.1 0.7 4.2
Beacon
Economics
Beacon
Economics
New Housing Supply
Source: CIRB 50
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Q1-95Q2-96Q3-97Q4-98Q1-00Q2-01Q3-02Q4-03Q1-05Q2-06Q3-07Q4-08Q1-10Q2-11Q3-12Q4-13Q1-15Q2-16Q3-17New Home Permits
Single-family Multi-family
Method 1
Total 722,022
Per Year 206,674
Current 111,185
Shortfall 100,489
Method 2
Total 911,001
Per Year 263,667
Current 111,185
Shortfall 157,482
How Much Housing Needed?
Housing Needed to maintain 2%
State Job Growth
Beacon
Economics
Beacon
Economics
How Much of a Backlog?
Backlog
Avg Growth 291
Avg Vacancy 676
Total 967
High Growth 1,408
Avg Vacancy 676
Total 2,084
Texas Growth 1,849
Avg Vacancy 676
Total 2,525
Units Vacancy Rk
00-17
Gr%Rk
00-17
Ch
Texas 10,933 9.4%28 34%4 2,776
Florida 9,442 13.2%6 29%6 2,139
California 14,177 5.8%52 16%21 1,963
N Carolina 4,623 11.1%17 31%8 1,099
Georgia 4,282 8.4%34 30%9 1,001
Arizona 2,999 13.1%7 37%3 810
Washington 3,103 7.3%44 27%10 652
New York 8,328 8.1%39 8%44 648
Virginia 3,513 7.1%46 21%15 609
Colorado 2,385 8.3%35 32%7 577
51
Beacon
Economics
Beacon
Economics
The Housing Exodus
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
0
100000
200000
300000
400000
500000
600000
Q1-99Q3-01Q1-04Q3-06Q1-09Q3-11Q1-14Q3-16California Home Prices
Relative to US
0
200
400
600
800
1000
1200
1400
1600
Median Home Prices ($, Thousands)Median Home Price
Q3-2003 to Q3-2018
South Bay East Bay San Francisco
52
Beacon
Economics
Beacon
Economics
Residential Real Estate -Local
Source: DataQuick 53
0
100
200
300
400
500
600
700
Q3-03Q3-04Q3-05Q3-06Q3-07Q3-08Q3-09Q3-10Q3-11Q3-12Q3-13Q3-14Q3-15Q3-16Q3-17Q3-18Home Prices ($, Thousands)Median Home Prices
Q3-2003 to Q3-2018
Antioch Brentwood
Concord Richmond
1000
1500
2000
2500
3000
Cost of Rent ($)Apartment Rents
Q3-09 to Q3-2018
Concord/Martinez
East Contra Costa
San Ramon/Walnut Creek
West Contra Costa
Beacon
Economics
Beacon
Economics
The Upside of Labor Shortages
54
Numbe
r (Mil)
Median
Income
2016
Chang
e
13-16
Unemp
2016
Chang
e
13-16
Total 20.96 40,005 10.2%5.5%-3.0%
No High
School 3.52 21,558 13.1%8.2%-3.7%
High School 4.26 30,231 10.9%7.0%-4.0%
Some College 6.14 36,985 3.1%5.5%-3.4%
Bachelor plus 7.03 60,121 9.4%3.6%-1.6%
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
6/1/047/1/058/1/069/1/0710/1/0811/1/0912/1/101/1/122/1/133/1/144/1/155/1/166/1/177/1/18Median Wage Growth West VS
US
Beacon
Economics
Beacon
Economics
Don’t Just Focus on Affordable Rentals
55
Renter
2013 2016 Ch
Fresno 54.8%57.5%2.7%
Los Angeles 57.0%55.4%-1.6%
San Bernardino 54.7%55.4%0.7%
Riverside 58.8%54.8%-4.0%
San Diego 53.7%54.7%1.0%
Orange 55.5%54.1%-1.4%
Sacramento 52.9%52.1%-0.9%
Alameda 50.8%47.2%-3.6%
Santa Clara 47.2%46.2%-1.1%
San Francisco 42.8%36.8%-6.0%
Share Households > 30%
Income
20
25
30
35
2005200620072008200920102011201220132014201520162017Median Rent (% of Income)Median Rent as % of Income
2005 to 2017
Santa Clara County
Alameda County
San Francisco County
Contra Costa County
Beacon
Economics
Beacon
Economics
Local employers unable to compete for local housing with
external (west bay) businesses
—Lower paid jobs
—More expensive prices
The problem / solution?
—Land Use
—Land Use
—Land Use
What’s up with the CC economy?
56
Beacon
Economics
Beacon
Economics
Households vs Payrolls
57
405060708090100110120130
2005200620072008200920102011201220132014201520162017Median Income ($, Thousands)Median Household Income
2005 to 2017
Santa Clara County
Alameda County
San Francisco County
Contra Costa County
406080100120140
Annual Average Wage ($, Thousands)Annual Average Wages
Q2-2003 tom Q2-2018
Santa Clara County
Alameda County
San Francisco County
Contra Costa County
Beacon
Economics
Beacon
Economics
The Commute Impact
Res Emp Ch 12-17 Gr Out Cnty Sh
Alameda 770234 76444 9.9%36005 47.1%
San Bernardino 890998 101571 11.4%32113 31.6%
Contra Costa 543260 60182 11.1%29556 49.1%
Riverside 1014984 150692 14.8%28079 18.6%
Santa Clara 971960 109719 11.3%25227 23.0%
Sacramento 689495 91152 13.2%22646 24.8%
San Mateo 409921 39283 9.6%21653 55.1%
San Joaquin 303851 45701 15.0%19831 43.4%
Solano 204776 24954 12.2%14919 59.8%
Stanislaus 230328 33644 14.6%12592 37.4%
Madera 57028 15310 26.8%9532 62.3%
Ventura 409760 23567 5.8%7912 33.6%
Placer 177146 21908 12.4%7596 34.7%
58
Beacon
Economics
Beacon
Economics
Contra Costa Commuting
59
90
95
100
105
110
115
120
125
20052006200720082009201020112012201320142015Contar Costa County
Worker Commuting
Patterns
Inbound Outbound Stay
80
100
120
140
160
180
20052006200720082009201020112012201320142015Tri -Valley Worker
Commuting Patterns
Inbound Outbound Stay
Beacon
Economics
Commuting Patterns -Central Contra Costa
Source: U.S. Census Bureau, LEHD 60
40
41
42
43
44
45
46
47
55
60
65
70
20052006200720082009201020112012201320142015Share of Residents (%)Residents (Thousands) Outbound Commuting: Central
CC
2005 to 2015
Residents % Share of Residents
37
38
39
40
41
42
43
35
40
45
50
55
60
20052006200720082009201020112012201320142015Share of Residents (%)Residents (Thousands)Outbound Commuting: East CC
2005 to 2015
Residents % Share of Residents
Beacon
Economics
Commuting Patterns –Tri -Valley Region
Source: U.S. Census Bureau, LEHD 61
47
49
51
53
55
40
50
60
70
80
90
100
20052006200720082009201020112012201320142015Share of Residents (%)Residents (Thousands)Outbound Commuting: Tri
Valley
2005 to 2015
Residents % Share of Residents
62
63
64
65
66
67
65
70
75
80
85
90
Share of Residents (%)Residents(Thousands)Outbound Commuting: West
CC
2005 to 2015
Residents % Share of Residents
Beacon
Economics
Beacon
Economics
Labor Force and Housing
Source: California EDD 62
95
100
105
110
115
120
125
Labor Force (Index at 100)Labor Force
Dec. 2003 to Dec. 2018
South Bay East Bay San Francisco
0
10000
20000
30000
40000
50000
60000
70000
Q1-09Q4-09Q3-10Q2-11Q1-12Q4-12Q3-13Q2-14Q1-15Q4-15Q3-16Q2-17Q1-18Cumulative Housing Permits
Alameda Contra Costa
San Francisco Santa Clara
Beacon
Economics
Beacon
Economics
Job Density Distributions
63
0
10
20
30
40
50
60
70
80
90
100
2 4 6 8 10 12Cumulative Distribution (%)Log Job / SKm
Inland
Empire
Pittsburg
h
San
Dieg
o
Tampa
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
6 7 8 9
Density and Wages
Beacon
Economics
Beacon
Economics
A Year Ago
64
Beacon
Economics
Beacon
Economics
Local Population, Sonoma County
Source: DOF 65
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
1/1/111/1/121/1/131/1/141/1/151/1/161/1/171/1/18Change Pop Sonoma
County
150000
160000
170000
180000
190000
200000
210000
20082009201020112012201320142015201620172018Sonoma Employment
SUPPLEMENTAL DENSITY BONUS
Allow up to 100% Bonus
•Project Eligibility Requirements:
Achieves 35% State Bonus and
Located within a Priority Development Area or
Station Area and
Located within appropriate General Plan Land
Use Designation
•Density above 35% granted for:
Affordable Housing or
Affordable Housing and Community Benefits 6
6
Programmatic and Policy Updates
67
$24,00
0
$9,000
10
Month
s 3
Month
s
$0
$5
$10
$15
$20
$25
$30
Original Downtown
Design Review Process
67City Council Ordinance ORD-2018-012,
May 22, 2018
8 2
4
1
6
3
NORMAL EXPRESS
EXPRESS PERMITTING
PROGRAM
Planning Engineering Building~ 18 Months
~ 6 Months
High Density Residential Incentive
Program (Market Rate)
68
6
8
Parking/
Commerci
al
Parking/
Commerci
al
Parking/
Commerci
al
Parking/
Commerci
al
Parking/
Commerci
al
2nd Floor
3rd Floor
4th Floor
5th Floor
6th Floor
7th Floor
8th Floor
9th Floor
10th Floor
0%
$13,167
25%
$9,875
40%
$7,900
50%
$6,584
67%
$4,389
Downtown Zoning CD-7 and CD-10
Market Rate Example
Per Door Park
and CFF Fee
Beacon
Economics
Beacon
Economics
Why the problem? Incentives
69
Beacon
Economics
Beacon
Economics
Positives: It will be a good year
—GDP Growth Outlook for 2019: 2%+
—State revenues will look positive
—Labor markets to remain tight
—Rising wages to put pressure on
profits
—Exports, business investment
continue to grow
—Inflation to remain constrained
—Interest Rates Still Low
—Debt Levels still safe
—California: Still a top performer
The Big Picture
70
Negatives: Problems Growing
—Labor shortages will be an issue
—Local housing supply tightening
—Fed will continue to tighten, yield curve
flattening
—Markets behaving oddly
—Federal deficit widening sharply
—Political uncertainty to dominate
headlines
—Critical Policy Issues Remain
Undiscussed
—Miserabilism warping our sense of reality
/ creating a crisis atmosphere
Thank You
Chris@BeaconEcon.com | www.BeaconEcon.com
RECOMMENDATION(S):
Accept report on Capital Projects.
FISCAL IMPACT:
No fiscal impact. This is an informational report
only.
BACKGROUND:
See attached report.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/29/2019 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Eric Angstadt, Assistant County
Administrator 925-335-1009
I hereby certify that this is a true and correct copy of an action taken and entered on the
minutes of the Board of Supervisors on the date shown.
ATTESTED: January 29, 2019
David J. Twa, County Administrator and Clerk of the Board of
Supervisors
By: Jami Napier, Deputy
cc:
D.5
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 29, 2019
Contra
Costa
County
Subject:Annual Report on Capital Projects
ATTACHMENTS
Capital Projects Supervisors
Update
BOARD OF SUPERVISORS UPDATE
CONTRA COSTA COUNTY
New Administration Building and
Emergency Operations Center / Public Safety Building
January 29, 2019
01
02
•RFQ Issued:
•Notice of Award:
•Board Approval:
•Contract and NTP:
•Start steel at EOC:
•Start steel at Admin:
•Substantial Completion:
Board of Supervisors
January 29, 2019
Project Schedule
October 2, 2017
February 16, 2018
March 20, 2018
March 21, 2018
November 19, 2018
February 11, 2019
April 30, 2019
•Project Completion: July, 2020
Board of Supervisors Update
January 29, 2019
The New Parking Lot
03
Emergency Operations Center
&
Public Safety Building
Board of Supervisors Update
January 29, 201904
Site Development Plan
Board of Supervisors Update
January 29, 201905
Level 1
ADMINISTRATION
&
WATCH COMMAND
EMERGENCY
SERVICES
DIVISION
LECTURE HALL
Board of Supervisors Update
January 29, 201906
Level 2
SHERIFF &
COMMAND
STAFF
INTERNAL
AFFAIRS
EMERGENCY
OPERATIONS
CENTER
Board of Supervisors Update
January 29, 201907
Board of Supervisors Update
January 29, 201908
New Administration Building
Board of Supervisors Update
January 29, 201909
First Floor Plan
UTILITY
BOARD ROOM
SUPERVISORS
CLERK
CONFERENCEBoard of Supervisors Update
January 29, 201910
Second Floor Plan
HUMAN RESOURCES
LABOR
RELATIONS
OPEN
TO
BELOW
Board of Supervisors Update
January 29, 201911
Third Floor Plan
COUNTY COUNSEL
Board of Supervisors Update
January 29, 201912
Fourth Floor Plan
ADMINISTRATION
BREAK
ROOMINTERVIEW
ROOF
BELOW
Board of Supervisors Update
January 29, 201913
Board of Supervisors Update
January 29, 201914
15
Capital Facilities
16
Policies for Next 5 Years
Reduce owned inventory
Prioritize leasing over owning/building
Prioritize multi use space versus single owner
space
Retain a percentage of funds from property
sales for capital projects
QUESTIONS?
Board of Supervisors Update
January 29, 201917
RECOMMENDATION(S):
ACCEPT report on importance of investing in children.
FISCAL IMPACT:
No fiscal impact. This is an informational report only.
BACKGROUND:
Report on importance of investing in children.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/29/2019 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor
Contact: Kathy Gallagher, EHSD
Director (925) 608-4801
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes
of the Board of Supervisors on the date shown.
ATTESTED: January 29, 2019
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: , Deputy
cc: All Departments (via County Administration)
D.6
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 29, 2019
Contra
Costa
County
Subject:Discussion on Importance of Investing in Children
CLERK'S ADDENDUM
Public Comment: Dan Geiger
ATTACHMENTS
Opportunities to Improve Outcomes for Children and Families PPT
Opportunities to Improve
Outcomes for Children and
Families
Presentation for the Contra Costa County Board of Supervisors
January 29, 2019
1
The Time is Now
•Building on the
County’s previous
efforts
•Leveraging current
opportunities
•Lifting Children and
Families Out of Poverty
Task Force
•Governor Newsom’s
Focus on Child Health
and Wellbeing
The time to focus on children and youth is NOW
2
Snapshot: Contra Costa County’s
Children
Source: Children Now, 2018-19 Contra Costa County Scorecard of Children’s Well-being 3
Earlier Investment Leads to
Greater Return
High quality birth-to-
five programs for
disadvantaged children
can deliver a 13%
return on investment
4
Design Principles to Improve
Outcomes for Children and Families
Source: Three Principles to Improve Outcomes for Children and Families; Harvard University Center on the Developing Child
5
Building a Foundation
6
Building a Foundation
All children in our county reach their full potential
Goal: Strengthen partnerships, practices, policies, and
investments that improve opportunities and
outcomes for children and families.
The Children’s Leadership Council
7
Building a Foundation
•Catalyzing leadership by:
•Engaging leaders,
champions and people
impacted by childhood
adversity
•Data-driven participatory
process
•Providing support for
coordination
•Leveraging existing efforts
•Addressing gaps and
inequities
•Noticing intersections and
synergies
Leadership as a foundation
The Children’s Leadership Council
8
Building a Foundation
•Identify
opportunities for
collaboration
•Develop an action
plan
•Prioritize key
indicators and
metrics
•Produce Children’s
Well-Being Index
Creating an
Action Plan
•Identify trends,
disparities, and gaps
•Map current reality
•Develop a shared
vision, mission,
values, and priorities
•Co-Create responses
Developing a
Framework
•Review and
summarize
communitywide
data
•Key informant
interviews
•Stakeholder
meetings
•Community voice
and experience
Inquiring -Data
Informed
The Children’s Leadership Council
9
Building a Foundation
Children’s Well-Being Index
10
Building Block:
A Focus on Asthma
11
Inquiring
“What is the current state of asthma in Contra Costa
County?”
-John Gioia, Joint Conference Committee, July 2018
•Who does asthma affect the most?
•What have we done to reduce asthma rates and
asthma severity?
•Are we making any progress?
•If not, what more can we do?
12
The Burden of Asthma Falls
Heaviest on Children
Asthma Emergency Department Visits
2014 Age-adjusted rate
per 10,000 residents
California 49.5
Contra Costa 64.6
Sources: California Breathing, Contra Costa County Asthma Profile, September 2016; California Office of Statewide Health Planning and Development
13
Asthma ER visits are more
frequent among
African-Americans
Asthma Emergency Department Visits
14
Sources: California Office of Statewide Health Planning and Development; California Breathing, Contra Costa County Asthma Profile, September 2016
Contributing Factors
Outdoor Air Pollution –Particulate matter
•Smoking
•Wild fires
•Point source
•Motor vehicle exhaust
Indoor Air Quality -Housing conditions
•Inadequate ventilation increases exposure to indoor and
outdoor air pollution and increases moisture and mold
•Pests, such as cockroaches, and allergens such as pet
dander
•Improper heating and cooling combine with temperature
extremes from climate change
15
Mapping Past Efforts
•Smoking & Tobacco Laws and Taxes
•Air Quality Regulations
•Refinery Flare Monitoring Rule
•Changes to the North Richmond Truck Route
•Asthma Coalition and Program
16
Mapping Current Reality
Outdoor Air Quality
•Point source pollution
•Mobile source pollution (roads)
•Smoke from wildfires
Indoor Air Quality
•Weatherization Services
Children and Family
•CCHP Pediatric Home Visiting
Program
•CCHP Pharmacy Medication
Intervention
•Breathmobile
17
Asthma ER Visits in Contra Costa
County Have Not Significantly
Improved in Recent Years
Age-adjusted
rates per 10,000
2005 61.3 6,132
2006 67.5 6,749
2007 59.2 6,006
2008 64.6 6,635
2009 70.4 7,253
2010 73.0 7,517
2011 74.0 7,728
2012 75.8 7,917
2013 66.1 6,940
2014 64.4 6,784
Total number
of ED visitsYear
Asthma Emergency Department Visits –All Ages, Contra Costa County
Source: California Environmental Health Tracking Program http://www.cehtp.org/page/asthma/query
18
19
Creating an Action Plan
•Engage leaders, champions, families, youth-
serving agencies, community groups, and schools
•Data-driven participatory process
•Prioritize future action areas including education,
interventions, policy
•Focus on the upstream social determinants
•Use proven, evidence-based interventions
•Track measurable outcomes
•Develop a sustainable financing model
Making an Impact
20
Thank you
21