HomeMy WebLinkAboutMINUTES - 01282014 - D.1RECOMMENDATION(S):
ACCEPT report 'An Assessed Value Forecast' prepared by Beacon Economics.
FISCAL IMPACT:
This report is for informational purposes and has no specific fiscal impact.
BACKGROUND:
Attached is Beacon Economic's report entitled "An Assessed Value Forecast".
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None.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 01/28/2014 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
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 28, 2014
David Twa, County Administrator and Clerk of the Board of Supervisors
By: , Deputy
cc: Gus Kramer, County Assessor
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 28, 2014
Contra
Costa
County
Subject:A Local Economic and Revenue Outlook
CLERK'S ADDENDUM
Speakers: Michael Melencia, resident of Lafayette; Rollie Katz, Public Employees' Union Local 1.
No Action Required. HEARD the report.
ATTACHMENTS
A Local Economic and Revenue Outlook
Analysis. Answers.pgContra Costa County 2014 AV ForecastAnalysis. AnswersBeacon Economics, LLCAn Assessed Value ForecastContra Costa County, CaliforniaJanuary 28, 2014Jordan G. LevineEconomist andDirector of Economic ResearchBeacon Economics
Analysis. Answers.pgContra Costa County 2014 AV ForecastThe big pictureoTime-Series Econometric Approach•Regression establishes historical relationships•Historical correlations inform the futureoTop-Down Modeling Technique•Forecast U.S. economy, from employment to output•U.S. forecast guides California model•California model used to guide East Bay•East Bay/Contra Costa model drives sub-regional forecastoHolistic Approach to Revenue Forecasting•Incorporates broad macro trends in Nation/State•Combines trends with local-specific performance•Accounts for previous blips and under-/over-performance
Analysis. Answers.pgContra Costa County 2014 AV ForecastBernanke was right… things areimproving.3oSure—its been a recovery to forget•The US never saw the typical post-recession bounce•Economic Fundamentals have not returned to normal levelsoStop focusing on the levels. Watch the trends•Economy seeing some modest acceleration despite headwinds •Consumers holding steady despite tax increases•Business investment soft, but earnings are solid•Global economy gaining traction•State and local government starting to turn the corner•Interest rates still very low, Residential markets remain hotoThree Kinds of Problems•Stimulative policies have to be unwound•Medium term impacts of technological change•Leaders focus on unimportant issues—ignoring what truly matter
Analysis. Answers.pgContra Costa County 2014 AV ForecastThe disappointing recovery11,00011,50012,00012,50013,00013,50014,00014,50015,00015,5002000I2000III2001I2001III2002I2002III2003I2003III2004I2004III2005I2005III2006I2006III2007I2007III2008I2008III2009I2009III2010I2010III2011I2011III2012I2012III2013IUS Real GDPHypotheticalActual4
Analysis. Answers.pgContra Costa County 2014 AV ForecastAre common prescriptions remedies?65%66%67%68%69%70%71%72%Q1-98Q1-99Q1-00Q1-01Q1-02Q1-03Q1-04Q1-05Q1-06Q1-07Q1-08Q1-09Q1-10Q1-11Consumer Spending as % GDP14.0%15.0%16.0%17.0%18.0%19.0%20.0%21.0%22.0%1969I1971IV1974III1977II1980I1982IV1985III1988II1991I1993IV1996III1999II2002I2004IV2007III2010IITaxes as share income5
Analysis. Answers.pgContra Costa County 2014 AV ForecastWhy the disappointing recovery?6-7.0%-6.0%-5.0%-4.0%-3.0%-2.0%-1.0%0.0%1998I1999IV2001III2003II2005I2006IV2008III2010II2012INet Trade % GDP3.0%4.0%5.0%6.0%7.0%8.0%9.0%10.0%1999IIVIIIII2006IIVIIIII2013IConstruction as % of GDP: Real17.0%17.5%18.0%18.5%19.0%19.5%20.0%20.5%21.0%21.5%22.0%2005I2006I2007I2008I2009I2010I2011I2012I2013IGovernment Direct Spending % GDP
Analysis. Answers.pgContra Costa County 2014 AV ForecastThe local storyoEast Bay and Contra Costa are improving•Slower out of the gate, but making progress•Not isolated to one particular city or sectoroContra Costa was a growth region before•Poised for ongoing acceleration•May key strengths including:-Proximity to large employment centers-Relative affordability relative to neighbors to westoBetter economy and local property market will mean better AV in coming years
Analysis. Answers.pgContra Costa County 2014 AV ForecastEast Bay: slow out of the gate8Region Feb-10 Oct-13Change (000s) Change (%)San Luis Obispo 95.9 106.8 10.9 11.4San Francisco (MD) 929.0 1,033.8 104.8 11.3San Jose 847.1 939.6 92.5 10.9Bakersfield 223.8 246.7 22.9 10.2Orange County (MD) 1,345.3 1,441.0 95.7 7.1Other Bay Area 343.4 366.2 22.8 6.6San Diego 1,212.3 1,291.9 79.6 6.6Central Coast 368.1 391.3 23.2 6.3Other Southern California 315.5 332.6 17.1 5.4Inland Empire 1,121.0 1,176.5 55.5 5.0Los Angeles (MD) 3,755.3 3,941.1 185.8 4.9Oakland (MD) 951.2 993.1 41.9 4.4South Central Valley 654.6 673.4 18.8 2.9North Central Valley 1,164.8 1,197.4 32.6 2.8California 13,845.3 14,713.6 868.3 6.3
Analysis. Answers.pgContra Costa County 2014 AV ForecastBut things areimproving913,40013,60013,80014,00014,20014,40014,60014,8009009209409609801,0001,020California (000s, SA)East Bay (000s, SA)Total Nonfarm EmploymentEast BayCalifornia-0.50.00.51.01.52.02.53.0Growth (Year-over-Year, %)Nonfarm Employment GrowthEast BayCalifornia
Analysis. Answers.pgContra Costa County 2014 AV ForecastEven better than they appear108008509009501,0001,0501,100Q1-90Q1-91Q1-92Q1-93Q1-94Q1-95Q1-96Q1-97Q1-98Q1-99Q1-00Q1-01Q1-02Q1-03Q1-04Q1-05Q1-06Q1-07Q1-08Q1-09Q1-10Q1-11Q1-12Q1-13Employment (000s, SA)Nonfarm EmploymentCES NonfarmQCEW Nonfarm
Analysis. Answers.pgContra Costa County 2014 AV ForecastBig picture: broad based & still looking up11Industry Aug-10 Nov-13 Change Change (%)Leisure and Hospitality 86.4 95.6 9.3 10.7Government 154.6 162.4 7.8 5.0Prof Sci and Tech 80.7 88.2 7.5 9.3Education/Health 136.5 143.6 7.2 5.2Construction 47.5 53.8 6.3 13.3Transport,Warehouse,Util. 30.9 35.2 4.3 13.8Retail Trade 100.4 104.6 4.2 4.1Admin Support 47.2 50.9 3.7 7.8Management 25.1 28.1 3.0 11.9Wholesale Trade 41.6 44.2 2.6 6.3Other Services 35.1 36.4 1.3 3.7Manufacturing 79.2 80.4 1.2 1.5Farm 1.4 1.5 0.1 5.9NR/Mining 1.3 1.1 -0.2 -12.2Financial Activities 48.2 47.4 -0.8 -1.6Information 23.3 21.4 -1.9 -8.2Total Private 783.3 830.9 47.6 6.1Total Nonfarm 937.9 993.3 55.4 5.9
Analysis. Answers.pgContra Costa County 2014 AV ForecastResidents matter for property marketIndicatorNonfarm Empl’tHousehold Empl’tPeak Month Mar-07 Jan-08Peak Employment (000s) 1,051.0 1,211.4Trough Month Aug-10 Dec-09Trough Employment (000s) 937.9 1,138.0Peak to Trough (000s) -113.1 -73.3Peak to Trough (%) -10.8 -6.1Current Month Nov-13 Nov-13Current Employment (000s) 993.3 1,214.9Trough to Current (000s) 55.4 76.9Trough to Current (%) 5.9 6.8Remaining to Peak (000s) -57.7 3.6Remaining to Peak (%) -5.5 0.31215651151652152658008509009501,0001,0501,1001,1501,2001,2501,300Informal Sector (000s, SA)Employment (000s, SA)Payroll vs. Household EmploymentNonfarm EmploymentHousehold EmploymentInformal Sector
Analysis. Answers.pgContra Costa County 2014 AV ForecastUnemployment: down for right reasons1311.66.912.48.52468101214Percent (SA)Unemployment RateEast BayCalifornia1,2501,2601,2701,2801,2901,3001,3101,3201,3305.06.07.08.09.010.011.012.0Labor Force (000s, SA)Unemployment Rate (%, SA)Local Unemployment and Labor ForceLabor ForceUnemployment Rate
Analysis. Answers.pgContra Costa County 2014 AV ForecastNot just the labor markets14
Analysis. Answers.pgContra Costa County 2014 AV ForecastSpending continues to improve15County 2012 YTD 2013 YTDChange(%)Central County 4,948,330 5,311,027 7.3East County 1,800,178 1,661,936 -7.7West County 1,487,427 1,617,011 8.7Unincorporated 1,988,254 1,991,327 0.2County Total 10,224,189 10,581,300 3.51001101201301401501602,0002,2002,4002,6002,8003,0003,2003,4003,6003,800Q1-06Q3-06Q1-07Q3-07Q1-08Q3-08Q1-09Q3-09Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13California ($ Billions, SA)Contra Costa ($ Millions, SA)Taxable SalesContra CostaCalifornia
Analysis. Answers.pgContra Costa County 2014 AV ForecastNot isolated to one type of spending16Category 2012 YTD 2013 YTD Change (%)CA Change (%)Autos and Transportation 14,514,122 16,224,220 11.8 10.7Building and Construction 7,552,955 7,894,047 4.5 7.8Business and Industry 12,243,753 10,953,173 -10.5 2.4Food and Drugs 6,860,759 7,072,254 3.1 3.0Fuel and Service Stations 13,456,153 13,844,148 2.9 -3.0General Consumer Goods 24,584,129 25,429,039 3.4 4.9Restaurants and Hotels 10,243,397 10,975,815 7.2 6.6Total 102,013,484 105,990,055 3.9 5.7
Analysis. Answers.pgContra Costa County 2014 AV ForecastOutsiders having an impact1760708090100110120404550556065707580Jan-05May-05Sep-05Jan-06May-06Sep-06Jan-07May-07Sep-07Jan-08May-08Sep-08Jan-09May-09Sep-09Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Room Rates ($)Occupancy (%)East Bay HotelsHotel OccupancyAvg. Daily Rates
Analysis. Answers.pgContra Costa County 2014 AV ForecastReal estate—a driver of growth18
Analysis. Answers.pgContra Costa County 2014 AV ForecastLocal residential market1901002003004005006007000123456Q1-05Q3-05Q1-06Q3-06Q1-07Q3-07Q1-08Q3-08Q1-09Q3-09Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13Prices ($000s, SA)Sales (000s, SA)Contra Costa Real EstateSalesPricesCounty/MSA 2012 2013Year over Year (%)Median PricesContra Costa 304,093 417,233 37.2Alameda 416,418 540,849 29.9Los Angeles 341,613 439,593 28.7Inland Empire 189,368 239,335 26.4San Diego 372,123 453,058 21.7Orange County 501,821 604,772 20.5South Bay 586,006 701,448 19.7San Francisco 714,564 840,113 17.6California 275,298 351,876 27.8Existing Home SalesSan Diego 19,355 20,823 7.6Orange County 16,721 17,913 7.1Los Angeles 43,937 45,498 3.6San Francisco 9,067 9,163 1.1Inland Empire 43,718 43,176 -1.2Alameda 9,782 9,579 -2.1Contra Costa 10,057 9,695 -3.6South Bay 11,175 10,742 -3.9California 259,972 260,877 0.3
Analysis. Answers.pgContra Costa County 2014 AV ForecastFewer distressed units in the mix2001,0002,0003,0004,0005,0006,000Q1-94Q2-95Q3-96Q4-97Q1-99Q2-00Q3-01Q4-02Q1-04Q2-05Q3-06Q4-07Q1-09Q2-10Q3-11Q4-12DefaultsForeclosuresCity 2012 2013 Change (%)DefaultsBrentwood 463 158 -65.8Richmond 477 174 -63.5Concord 666 250 -62.4Antioch 880 439 -50.1County Total 6,205 2,397 -61.4ForeclosuresConcord 402 133 -67.0Brentwood 220 74 -66.5Antioch 518 184 -64.5Richmond 277 119 -57.2County Total 3,085 1,180 -61.8
Analysis. Answers.pgContra Costa County 2014 AV ForecastDemand drivers still solid210.0010.0020.0030.0040.0050.0060.00Jan-88Dec-89Nov-91Oct-93Sep-95Aug-97Jul-99Jun-01May-03Apr-05Mar-07Feb-09Jan-11Dec-12% of Med. HH. IncomeCalifornia Housing Affordability010203040506070Q1-88Q4-89Q3-91Q2-93Q1-95Q4-96Q3-98Q2-00Q1-02Q4-03Q3-05Q2-07Q1-09Q4-10Q3-12Discount (%)Contra Costa DiscountSan FranciscoSan Jose
Analysis. Answers.pgContra Costa County 2014 AV ForecastApartment market is hot220123456702004006008001,0001,2001,4001,600Q1-90Q4-91Q3-93Q2-95Q1-97Q4-98Q3-00Q2-02Q1-04Q4-05Q3-07Q2-10Q1-12Vacancy Rate (%)Rents ($)East Bay ApartmentsRentVacancy Rate01234567Apartment VacanciesEast BaySan FranciscoSan JoseLos Angeles
Analysis. Answers.pgContra Costa County 2014 AV ForecastBuilders getting back to business2302468101214161820Jan-90Mar-91May-92Jul-93Sep-94Nov-95Jan-97Mar-98May-99Jul-00Sep-01Nov-02Jan-04Mar-05May-06Jul-07Sep-08Nov-09Jan-11Mar-12May-13Months of SupplyHousing InventoryContra CostaSan FranciscoSanta ClaraCaliforniaCity 2012 YTD 2013 YTD Change (%)Multi-Family UnitsCentral County 61 332 444.3East County 98 30 -69.4West County 27 0 -100.0Unincorporated 461 0 -100.0County Total 647 362 -44.0Single-Family UnitsCentral County 99 164 65.7East County 671 878 30.8West County 33 6 -81.8Unincorporated 263 273 3.8County Total 1,052 1,321 25.6Total ResidentialCentral County 160 496 210.0East County 769 908 18.1West County 60 6 -90.0Unincorporated 724 273 -62.3County Total 1,699 1,683 -0.9
Analysis. Answers.pgContra Costa County 2014 AV ForecastCommercial: slower out of the gate24
Analysis. Answers.pgContra Costa County 2014 AV ForecastMarkets are improving25LocationOffices (Q3-13)Office Change (YoY, %)Retail (Q3-13)Retail Change (YoY, %)Cost of RentBakersfield 19.54 0.98 20.90 -0.95Inland Empire 21.28 -0.23 20.63 0.29Los Angeles 32.76 1.64 29.50 1.27East Bay 26.26 1.27 28.14 0.75Orange Co. 27.45 2.20 31.14 1.43Sacramento 23.71 0.08 21.98 0.78San Diego 28.59 1.20 28.78 1.41San Fran. 43.69 7.72 33.14 0.85San Jose 31.68 5.28 31.36 1.75LocationOffices (Q3-13)Office Change (YoY, %)Retail (Q3-13)Retail Change (YoY, %)Vacancy RateBakersfield 11.50 -0.50 9.70 -1.10Inland Empire 24.00 -0.50 10.00 -0.20Los Angeles 15.80 0.00 6.00 -0.10East Bay 17.90 -0.60 6.30 0.10Orange Co. 17.30 -1.70 5.60 -0.20Sacramento 21.30 0.40 12.50 0.10San Diego 16.30 -0.50 6.20 -0.20San Fran. 13.30 -0.10 3.90 0.00San Jose 18.60 -1.00 5.80 -0.10
Analysis. Answers.pgContra Costa County 2014 AV ForecastBuilding resuming, mixed results26City 2012 YTD 2013 YTD Change (%)Central County 94,406,811 153,830,803 62.9Pleasant Hill 1,874,400 17,914,266 855.7San Ramon 42,723,711 87,157,097 104.0Walnut Creek 18,318,275 27,701,998 51.2Martinez 4,953,871 7,326,495 47.9Danville 3,894,729 4,739,522 21.7Lafayette 4,338,002 3,236,399 -25.4Orinda 5,264,089 3,806,365 -27.7Clayton 534,603 378,153 -29.3Concord 12,505,131 1,570,508 -87.4East County 12,320,084 26,223,790 112.9Antioch 1,108,716 12,301,959 1,009.6Oakley 1,179,184 3,355,851 184.6Brentwood 2,771,105 4,126,129 48.9Pittsburg 7,261,079 6,439,851 -11.3West County 36,324,019 65,847,173 81.3San Pablo 884,494 3,295,620 272.6El Cerrito 1,008,700 3,277,375 224.9Hercules 503,000 1,131,318 124.9Richmond 29,619,743 54,752,585 84.9Pinole 4,308,082 3,390,275 -21.3Unincorporated 31,107,890 77,097,228 147.8County Total 175,000,422 331,620,338 89.5
Analysis. Answers.pgContra Costa County 2014 AV ForecastThe forecasts27
Analysis. Answers.pgContra Costa County 2014 AV Forecast3-year economic forecast28Indicator 2013 2014 2015 2016Total Population 1,084,564 1,101,501 1,117,995 1,133,870Pop. Growth (%) 1.3 1.6 1.5 1.4Unemployment Rate 7.3 6.5 5.7 4.9Total Nonfarm Employment 991.1 1,007.4 1,036.6 1,070.0Employment Growth (%) 1.2 1.6 2.9 3.2Median Home Price 395,556 445,447 474,734 498,197Home Price Growth (%) 32.3 12.6 6.6 4.9Home Sales 13,099 14,632 15,575 15,884Home Sales Growth (%) -2.2 11.7 6.4 2.0Nonresidential Permit Values ($ Millions) 272.7 300.3 315.7 344.1Nonres. Permit Growth (%) 12.6 10.1 5.1 9.0Single-Family Building Permits (000s) 1.4 1.9 2.7 3.4Multi-Family Building Permits (000s) 0.7 0.9 1.7 2.3Taxable Sales ($ Millions) 14,503 15,387 16,328 17,381
Analysis. Answers.pgContra Costa County 2014 AV ForecastProperty tax outlook29(10.0)(5.0)0.05.010.015.01994-951996-971998-992000-012002-032004-052006-072008-092010-112012-132014-152016-172018-19Growth (%)AV GrowthActualForecast0501001502002501994-951996-971998-992000-012002-032004-052006-072008-092010-112012-132014-152016-172018-19$ BillionsAssessed ValuationActualForecast
Analysis. Answers.pgContra Costa County 2014 AV ForecastWrap-up30oLocal economy has been slower out of the gateoBut… East Bay and Contra Costa are in a recovery:•Employment is growing•Consumers are spending•Housing and apartments are hot•New construction is slowly coming back•Many local strengths to leverage going forwardoForecasting continued growth in 2014 and beyond
Analysis. Answers.pgContra Costa County 2014 AV Forecast31For additional information visit www.beaconecon.comOur Services¾Economic Forecasting¾Regional Intelligence Reports¾Business & Market Analysis¾Real Estate Market Analysis¾Ports & Infrastructure Analysis¾Economic Impact Analysis¾Public Policy AnalysisTo view or download this presentation please visit: www.BeaconEcon.comJordan@BeaconEcon.com310-571-3399