HomeMy WebLinkAboutMINUTES - 01272015 - D.3RECOMMENDATION(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".
CONSEQUENCE OF NEGATIVE ACTION:
None.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 01/27/2015 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, 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 27, 2015
David J. Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc: Robert Campbell, Auditor-Controller, Gus Kramer, Assessor
3.
To:Board of Supervisors
From:David Twa, County Administrator
Date:January 27, 2015
Contra
Costa
County
Subject:A Local Economic and Revenue Outlook
CLERK'S ADDENDUM
ATTACHMENTS
An Assessed Value Forecast
Analysis. Answers.pgContra Costa County 2015 AV ForecastAnalysis. AnswersBeacon Economics, LLCAn Assessed Value ForecastContra Costa County, CaliforniaJanuary 27, 2015Jordan G. LevineEconomist andDirector of Economic ResearchBeacon Economics
Analysis. Answers.pgContra Costa County 2015 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 2015 AV ForecastSanta has come to town again!oGrowth to continue to accelerate through 2015oCalifornia one of the stronger economies in the nationoGrowth has broadened to other parts of the state—specifically the East BayoIncomes are starting to grow, consumer spending doing greatoCredit is expanding on many levelsoInterest rates aren’t going anywhereoThe stock market is not in a bubbleoThe housing market has a second wave of recovery3
Analysis. Answers.pgContra Costa County 2015 AV ForecastNational GDP Forecasts42014II III IVReal GDP4.6 5.0 3.1Consumption1.8 2.2 3.0Durables 1.0 0.7 0.8Nondurables 0.3 0.4 0.6Services 0.4 1.2 1.6Gross Investment2.9 1.2 0.1Structures 0.4 0.1 0.1Equipment 0.6 0.6 0.1IP products 0.2 0.3 0.1Residential 0.3 0.1 0.1Change in inventories 1.4 0.0 -0.3Net Exports-0.3 0.8 -0.2Exports 1.4 0.6 -0.1Imports -1.8 0.2 -0.1Government0.3 0.8 0.2Federal -0.1 0.7 0.1State and local 0.4 0.1 0.1Contributions to GDP GrowthSource Q4-14 Q1-15 2014 2015Beacon Economics3.1 3.32.6 3.4Morgan Stanley2.0 4.1 2.2 2.9UBS Global - - 2.3 3.1Merrill Lynch 2.5 3.2 2.4 3.4TD Economics2.5 2.6 - -Wells Fargo 2.8 2.5 2.4 3.1WSJ Survey2.5 2.8 2.2 2.9Philadelphia Fed. Survey2.7 2.8 2.2 3.0
Analysis. Answers.pgContra Costa County 2015 AV ForecastBack to Normal?502000400060008000100001200014000160001800020000Jan-07Sep-07May-08Jan-09Sep-09May-10Jan-11Sep-11May-12Jan-13Sep-13May-14Distressed WorkersLT UnemployedPT EconomicMarginalDiscouraged130001350014000145001500015500160001650017000175002005Q12005Q42006Q32007Q22008Q12008Q42009Q32010Q22011Q12011Q42012Q32013Q22014Q1GDP TrendsActualPotential
Analysis. Answers.pgContra Costa County 2015 AV ForecastWhat is wrong with the economy?6-6.0%-5.0%-4.0%-3.0%-2.0%-1.0%0.0%2000IIIIIIIV2005IIIIIIIV2010IIIIIIIVNet Trade (Nominal) as % GDP90951001051101151201Jan20044Aug20048Mar200510Oct200514May200616Dec200620Jul200721Feb200824Sep200828Apr200930Nov20094Jul20105Feb20119Sep201112Apr201214Nov201218Jun201320Jan2014$US Broad Index (Daily)
Analysis. Answers.pgContra Costa County 2015 AV ForecastMore issues: Construction Spending718.020.022.024.026.028.030.0Aug-2009Jan-2010Jun-2010Nov-2010Apr-2011Sep-2011Feb-2012Jul-2012Dec-2012May-2013Oct-2013Mar-2014Aug-2014Value Put in Place ($ Billion, SA)U.S. Construction SpendingPublicPrivateTotal Construction Put in Place, Through Aug‐14Structure TypeYTD ($ Billion)YTD% ChangeTotal Nonresidential 388.1 6.4Power 66.6 20.7Educational 52.8‐1.2Highway and street 52.3 2.3Commercial 35.6 9.5Manufacturing 34.2 10.8Office 28.2 18.1Transportation 26.5 3Health care 25.5‐7Sewage and waste disposal 14.2 1.9Amusement and recreation 10.5 7.5
Analysis. Answers.pgContra Costa County 2015 AV ForecastWhat else is wrong with the economy?812.0%12.5%13.0%13.5%14.0%14.5%15.0%15.5%16.0%16.5%17.0%2000I2001I2002I2003I2004I2005I2006I2007I2008I2009I2010I2011I2012I2013I2014IGovernment Direct Non Defense Spending as % of GDP0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%2001200220032004200520062007200820092010201120122013Public InvestmentsGrossNet
Analysis. Answers.pgContra Costa County 2015 AV ForecastThe local storyoEast Bay and Contra Costa are improving•Slower out of the gate, but finally hitting its stride•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 west-Already seeing positive in-migration from SF and SJoBetter economy and local property market translating into better AV in coming years
Analysis. Answers.pgContra Costa County 2015 AV ForecastEast Bay: slow out of the gate10Region Feb-10 Nov-14Change (000s) Change (%)San Francisco (MD) 946.0 1,121.3 175.3 18.5San Jose 858.3 1,014.4 156.1 18.2Bakersfield 227.1 257.4 30.3 13.3San Luis Obispo 96.7 109.3 12.6 13.0Other Bay Area 349.3 389.5 40.2 11.5Inland Empire 1,140.8 1,269.3 128.5 11.3Oakland (MD) 966.0 1,072.7 106.7 11.0San Diego 1,228.0 1,363.1 135.1 11.0Orange County (MD) 1,356.9 1,497.7 140.8 10.4Central Coast 370.4 401.9 31.5 8.5Los Angeles (MD) 3,879.5 4,208.9 329.4 8.5South Central Valley 671.6 728.5 56.9 8.5Other Southern California 320.3 347.3 27.0 8.4North Central Valley 1,186.7 1,277.6 90.9 7.7California 14,121.0 15,650.5 1,529.5 10.8
Analysis. Answers.pgContra Costa County 2015 AV ForecastHitting our stride recently11Region Nov-13 Nov-14Change (000s) Change (%)San Jose 977.0 1,014.4 37.4 3.8San Francisco (MD) 1,083.2 1,121.3 38.1 3.5San Diego 1,319.5 1,363.1 43.6 3.3Oakland (MD) 1,043.3 1,072.7 29.4 2.8Other Bay Area 379.9 389.5 9.6 2.5North Central Valley 1,249.7 1,277.6 27.9 2.2Bakersfield 251.8 257.4 5.6 2.2Orange County (MD) 1,465.2 1,497.7 32.5 2.2Inland Empire 1,241.8 1,269.3 27.5 2.2San Luis Obispo 107.0 109.3 2.3 2.1Central Coast 393.7 401.9 8.2 2.1Other Southern California 340.8 347.3 6.5 1.9South Central Valley 715.5 728.5 13.0 1.8Los Angeles (MD) 4,150.7 4,208.9 58.2 1.4California 15,306.4 15,650.5 344.1 2.2
Analysis. Answers.pgContra Costa County 2015 AV ForecastBut things areimproving1213,00013,50014,00014,50015,00015,50016,0009009209409609801,0001,0201,0401,0601,0801,100California (000s, SA)East Bay (000s, SA)Total Nonfarm EmploymentEast BayCalifornia-1.00.01.02.03.04.05.0Growth (Year-over-Year, %)Nonfarm Employment GrowthEast BayCalifornia
Analysis. Answers.pgContra Costa County 2015 AV ForecastAlready back above pre-recession peakIndicatorNonfarm Empl’tHousehold Empl’tPeak Month Mar-07 Jan-08Peak (000s) 1,063.1 1,211.4Trough Month Aug-10 Dec-09Trough (000s) 951.0 1,137.6Peak to Trough (000s) -112.1 -73.8Peak to Trough (%) -10.5 -6.1Current Month Nov-14 Nov-14Current (000s) 1,072.7 1,268.4Trough to Current (000s) 121.7 130.9Trough to Current (%) 12.8 11.5Remaining to Peak (000s) 9.6 57.0Remaining to Peak (%) 0.9 4.71315355575951151351551751952158008509009501,0001,0501,1001,1501,2001,2501,300Informal Sector (000s, SA)Employment (000s, SA)Payroll vs. Household EmploymentNonfarm EmploymentHousehold EmploymentInformal Sector
Analysis. Answers.pgContra Costa County 2015 AV ForecastJobs AREbeing created locally14Industry 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 2015 AV ForecastRemember: residentsmatter for AVIndicatorNonfarm Empl’tHousehold Empl’tPeak Month Mar-07 Jan-08Peak (000s) 1,063.1 1,211.4Trough Month Aug-10 Dec-09Trough (000s) 951.0 1,137.6Peak to Trough (000s) -112.1 -73.8Peak to Trough (%) -10.5 -6.1Current Month Nov-14 Nov-14Current (000s) 1,072.7 1,268.4Trough to Current (000s) 121.7 130.9Trough to Current (%) 12.8 11.5Remaining to Peak (000s) 9.6 57.0Remaining to Peak (%) 0.9 4.71515355575951151351551751952158008509009501,0001,0501,1001,1501,2001,2501,300Informal Sector (000s, SA)Employment (000s, SA)Payroll vs. Household EmploymentNonfarm EmploymentHousehold EmploymentInformal Sector
Analysis. Answers.pgContra Costa County 2015 AV ForecastUnemployment: down for right reasons1611.65.812.47.22468101214Percent (SA)Unemployment RateEast BayCalifornia1,2401,2601,2801,3001,3201,3401,3605.06.07.08.09.010.011.012.0Labor Force (000s, SA)Unemployment Rate (%, SA)Local Unemployment and Labor ForceLabor ForceUnemployment RateLinear (Labor Force)
Analysis. Answers.pgContra Costa County 2015 AV ForecastNot just the labor markets17
Analysis. Answers.pgContra Costa County 2015 AV ForecastSpending continues to improve181001101201301401501601702,7002,9003,1003,3003,5003,7003,900Q1-06Q1-07Q1-08Q1-09Q1-10Q1-11Q1-12Q1-13Q1-14California ($ Billions, SA)Contra Costa ($ Millions, SA)Taxable SalesContra CostaCaliforniaCounty 2013 YTD 2014 YTDChange (%)West County 1,597,061 1,697,932 6.3East County 1,673,334 1,776,553 6.2Unincorp. 2,091,894 2,187,349 4.6Central County 5,290,744 5,430,492 2.6County Total 10,653,033 11,092,326 4.1
Analysis. Answers.pgContra Costa County 2015 AV ForecastNot isolated to one type of spending19Category 2013 YTD 2014 YTD Change (%)CA Change (%)Autos/Transportation 16,222,523 17,491,878 7.8 8.0Restaurants/Hotels 10,903,426 11,570,044 6.1 6.5Fuel/Service Stations 13,743,029 14,292,478 4.0 1.0Food/Drugs 7,050,376 7,178,250 1.8 2.5Building/Construction 8,094,999 8,212,489 1.5 6.3General Consumer Goods 25,169,903 25,411,207 1.0 2.3Business/Industry 10,979,673 11,001,166 0.2 3.7Total 105,419,172 110,061,142 4.4 5.1
Analysis. Answers.pgContra Costa County 2015 AV ForecastReal estate—a driver of growth20
Analysis. Answers.pgContra Costa County 2015 AV ForecastLocal residential market2101002003004005006007000123456Q1-05Q4-05Q3-06Q2-07Q1-08Q4-08Q3-09Q2-10Q1-11Q4-11Q3-12Q2-13Prices ($000s, SA)Sales (000s, SA)Contra Costa Real EstateSalesPricesCounty/MSA 2014Year over Year (%)Median PricesAlameda 615,427 14.2Inland Empire 267,824 11.7San Francisco 940,888 10.8Contra Costa 454,167 9.3Los Angeles 477,404 8.7South Bay 761,077 7.7San Diego 483,892 7.3Orange County 633,005 4.3California 381,090 8.7Existing Home SalesContra Costa 9,240 -4.4San Francisco 8,474 -7.7Alameda 8,850 -7.8South Bay 9,735 -9.4Inland Empire 38,194 -11.7San Diego 18,260 -12.5Los Angeles 39,853 -12.5Orange County 15,429 -13.7California 232,721 -10.9
Analysis. Answers.pgContra Costa County 2015 AV ForecastFewer distressed units in the mix2201,0002,0003,0004,0005,0006,000Q1-94Q3-95Q1-97Q3-98Q1-00Q3-01Q1-03Q3-04Q1-06Q3-07Q1-09Q3-10Q1-12Q3-13DefaultsForeclosuresCity 2014 Change (%)DefaultsAntioch 275 -37.2Brentwood 107 -31.3Concord 175 -29.1Richmond 143 -18.7County Total 1,689 -29.2ForeclosuresBrentwood 36 -51.2Concord 69 -48.2Richmond 65 -44.7Antioch 123 -32.8County Total 620 -47.7
Analysis. Answers.pgContra Costa County 2015 AV ForecastDemand drivers still solid230102030405060Housing Costs (% of HH. Income)California Housing Affordability010203040506070Q1-88Q1-90Q1-92Q1-94Q1-96Q1-98Q1-00Q1-02Q1-04Q1-06Q1-08Q1-10Q1-12Q1-14Housing Discount (%)Relative AffordabilityS.F. DiscountS.J. Discount
Analysis. Answers.pgContra Costa County 2015 AV ForecastThe results of affordability kicking inCounty PopulationNet Domestic MigrationRiverside 2,295,298 9,826Contra Costa 1,096,637 5,611Placer 369,726 3,718Sacramento 1,460,480 2,333San Joaquin 711,797 2,291San Francisco 837,831 -2,437Kings 149,788 -2,455Kern 872,322 -3,166Monterey 425,365 -3,645San Bernardino 2,091,618 -5,394Santa Clara 1,874,526 -5,752Los Angeles 10,069,036 -59,813California 38,499,378 -58,64224-20,000-15,000-10,000-5,00005,00010,00015,00020,00025,00019711975197919831987199119951999200320072011Total Net MigrationAlamedaContra Costa
Analysis. Answers.pgContra Costa County 2015 AV ForecastBuilders getting back to business25City 2013 YTD 2014 YTD Chg. (%)Multi-Family UnitsCentral County 332 400 20.5East County 30 0 -100.0West County 0 125 N/AUnincorporated 0 0 N/ACounty Total 362 525 45.0Single-Family UnitsCentral County 164 161 -1.8East County 878 748 -14.8West County 6 44 633.3Unincorporated 273 390 42.9County Total 1,321 1,344 1.7Total ResidentialCentral County 496 561 13.1East County 908 748 -17.6West County 6 169 2716.7Unincorporated 273 390 42.9County Total 1,683 1,869 11.102468101214161820Jan-90Mar-91May-92Jul-93Sep-94Nov-95Jan-97Mar-98May-99Jul-00Sep-01Nov-02Jan-04Mar-05May-06Jul-07Sep-08Nov-09Jan-11Mar-12May-13Jul-14Months of SupplyHousing InventoryContra CostaSan FranciscoSanta ClaraCalifornia
Analysis. Answers.pgContra Costa County 2015 AV ForecastCommercial: slower out of the gate26
Analysis. Answers.pgContra Costa County 2015 AV ForecastMarkets are improvingRentsLocationOffices (Q3-14)Office Change (YoY, %)Retail (Q3-14)Retail Change (YoY, %)Bakersfield 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 County 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 Francisco 43.69 7.72 33.14 0.85San Jose 31.68 5.28 31.36 1.75San Luis Obispo 17.81 0.34 20.96 0.72VacanciesLocationOffices (Q3-14)Office Change (YoY, %)Retail (Q3-14)Retail Change (YoY, %)Bakersfield 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 County 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 Francisco 13.30 -0.10 3.90 0.00San Jose 18.60 -1.00 5.80 -0.10San Luis Obispo 12.10 -1.60 9.90 0.8027
Analysis. Answers.pgContra Costa County 2015 AV ForecastBuilding resuming, mixed results28City 2013 YTD 2014 YTD Change (%)Central County Total 153,830,803 266,764,544 73.4Concord 1,570,508 47,585,702 2,930.0Walnut Creek 27,701,998 130,908,364 372.6Clayton 378,153 772,858 104.4Danville 4,739,522 7,171,577 51.3Lafayette 3,236,399 4,116,313 27.2Martinez 7,326,495 9,304,019 27.0Orinda 3,806,365 3,552,432 -6.7Pleasant Hill 17,914,266 11,889,539 -33.6San Ramon 87,157,097 51,463,740 -41.0East County Total 26,223,790 56,247,100 114.5Antioch 12,301,959 37,359,975 203.7Oakley 3,355,851 5,493,052 63.7Pittsburg 6,439,851 10,034,919 55.8Brentwood 4,126,1293,359,154 -18.6West County Total 65,847,173 69,421,994 5.4El Cerrito 3,277,375 5,745,420 75.3Hercules 1,131,318 1,963,565 73.6Pinole 3,390,275 4,446,265 31.1Richmond 54,752,585 54,990,116 0.4San Pablo 3,295,620 2,276,628 -30.9Unincorporated 77,097,228 29,170,534 -62.2County Total 331,620,338 424,049,570 27.9
Analysis. Answers.pgContra Costa County 2015 AV ForecastThe forecasts29
Analysis. Answers.pgContra Costa County 2015 AV Forecast3-year economic forecast30Indicator 2014 2015 2016 2017Total Population 1,098,490 1,113,303 1,128,007 1,142,527Pop. Growth (%) 1.4 1.3 1.3 1.3Unemployment Rate 6.1 5.4 5.0 4.6Total Nonfarm Employment 1,056.1 1,079.3 1,100.3 1,124.3Employment Growth (%) 2.1 2.2 1.9 2.2Median Home Price 450,320 470,607 487,681 507,590Home Price Growth (%) 14.4 4.5 3.6 4.1Home Sales 12,636 14,022 14,678 15,084Home Sales Growth (%) 0.1 11.0 4.7 2.8Nonresidential Permit Values ($ Millions) 409.7 439.3 467.0 497.4Nonres. Permit Growth (%) 28.4 7.2 6.3 6.5Single-Family Building Permits (000s) 1.6 2.1 2.8 3.2Multi-Family Building Permits (000s) 0.4 0.9 1.6 2.0Taxable Sales ($ Millions) 15,222 16,109 16,900 17,744
Analysis. Answers.pgContra Costa County 2015 AV ForecastProperty tax outlook310501001502002501993-941995-961997-981999-002001-022003-042005-062007-082009-102011-122013-142015-162017-182019-20$ BillionsAssessed ValueActualForecast-10-5051015$ BillionsAV GrowthActualForecast
Analysis. Answers.pgContra Costa County 2015 AV ForecastWrap-up32oLocal economy finally hitting its strideoMost major aspects of the local economy growing•Employment is growing•Consumers are spending•Housing and apartments are hot•New construction is slowly coming back•Local strengths already materializing into growthoForecasting continued growth in 2015 and beyond
Analysis. Answers.pgContra Costa County 2015 AV Forecast33For 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