This headline probably has people shaking their heads as it pertains to their perception of the
business environment of the Golden State, let alone the lack of if any support of business in the
state.  But if curiosity has gotten you this far in reading this story, it will validate your time to
read the rest of it as it pertains to the successful retention actions towards business in California.

A recent press release crossed my desk that identified the financing used for the development of new
facilities for a company moving from San Jose to Fairfield.  This caught my attention for several reasons.  Did one city lose a business to another?  Was it a mean spirited business recruitment effort, usurping one city’s economic development efforts?  And have the actions related to financing facilities for a company moving from one city to another city created ill feelings amongst the cities involved in this process?

What I discovered was more than what the press release presented. What was uncovered is an excellent case study of how two cities and their economic development professionals worked
together to retain a business in California.

As the story goes, San Jose-based Frank-Lin Distillers a family and employee-owned bottling company that produces and distributes more than 2,000 distilled spirit, wine and beer products
had been in its location since 1966. But three to four years ago the firm was apparently impacted
by an imminent domain proceeding by Caltrans that would force it to look elsewhere for a location.  The City of San Jose, commiserate and sensitive to the company’s plight worked diligently with
the company to find a new location.  However, due to the company’s requirements, specifically
the need for acreage that is rail served, there were few if any options available in San Jose.

Some time had passed and the company recognized it had few options and was running out of
time to make its decision.  The company appreciated the efforts by the City of San Jose, but it
began to look outside the area if not the state. Some close to the effort identified that the company may have even looked at the Golden State’s nemesis  – the Silver State, Nevada. But in addition,
the company apparently made inquiries to communities in California to ascertain site location information. One such call was made to the City of Fairfield.  Curt Johnston, with the City’s
economic development unit responded. Curt, a veteran economic developer with a long tenure with
the City quickly ascertained the issues from the company and the City of San Jose regarding the inquiry and responded in a professional manner.  And because of his professionalism and sensitivity, the action to assist the company would not create any ill feelings between the two cities. 

Curt provided background on Fairfield to the company as a premium location for office and industrial
development in the San Francisco Bay Area.  He provided information on its central location to the
North and East Bay areas, located along Interstate 80, and presented its value priced land with room
to grow along with pre-approved business parks, a diverse, skilled workforce, high-quality water with
an abundant supply and affordable and executive housing choices. In addition, the City of Fairfield
presented a comprehensive business assistance package to the company. It consisted of several items:

   >  Economic Development staff served as a liaison to the brokers and property
        owner, facilitating the land transaction.

   >  City staff worked with a railroad consultant to complete the required California
        PUC application and a License Agreement with the City for a new at-grade railroad
        street crossing at the proposed site.

    > The company was introduced to and participated in the California Statewide
        Community Infrastructure Program (SCIP). This program allows financing of
        permit fees and public improvements over thirty years. Payments are made
        with semi-annual property tax installments.  The company financed $1.9M under
        this program.

   >   Public improvements were required for a access road, but it was determined
        that the improvement could be delayed because the roadway width will be
        determined by the Train Station Specific Plan. A Deferred Improvement Agreement
        was negotiated that provided for dedication of the right-of-way in exchange
        for the City agreeing to complete future burying of utilities. The agreement provided
        that the company will not need to construct the street improvements until development
        occurs that needs access to the arterial street.  However, during the permit process
         the company decided to add the cost of the street improvements into the SCIP bond
         financing described above.

   >  Fairfield charges a water connection fee based upon the maximum flow capacity
        of the water meter. The company’s manufacturing process wanted the flow rate of
        a four-inch meter, but the water use was equivalent to the daily capacity of a
        two-inch meter. The higher flow rate was critical to the efficiency of the
        blending and bottling process, but the difference between the meters was $200,000.
        To accommodate the company, the City devised a Potable Water Service Agreement.
        This agreement allows a four-inch meter to be installed at the cost of a two-inch
        meter, plus a monthly fee.  The company will essentially rent the larger meter.

But significant to this project was the financing effort. The City of Fairfield worked through the California Enterprise Development Authority (CEDA) to issue a $22 million tax-exempt Recovery
Zone Facility Bond.  Proceeds of this bond were used to finance the construction of the $34 million,288,000-square foot building on 15 acres in the Tolenas Industrial Park. The Recovery Zone Facility Bonds were made available under the American Recovery and Reinvestment Act, signed
into law by President Obama in February 2009 in response to the economic crisis. Fairfield was allocated $1.4 million in Recovery Zone Facility Bonds. The California Enterprise Development Authority (CEDA) applied on behalf of the company for an additional $20 million, which was
awarded to the business from the California Debt Limit Allocation Committee (CDLAC).
"We are thrilled to take part in one of the few successful Recovery Zone Facility Bond transactions
in the state of California," says Mona Dmitrenko, executive director of CEDA. "The City of Fairfield
was a tremendous partner and played a significant role in securing this transaction." Sean L.
Spears, executive director of the CDLAC said,  "The Frank-Lin Distillers Project is a perfect example of what the Recovery Zone Bond Program was designed to do."

But the results from this effort are best summarized in the feelings of the company.

"We believe our new Fairfield facility to be logistically ideal for our
operations," says Vincent R. Maestri, president and CEO of Frank-Lin.
"The geographic location provides immediate access to rail and interstate
transportation, close proximity to our major materials suppliers, and a
substantial skilled work force. In addition, we could not be more pleased
with the manner in which our project has been received by the City of
Fairfield."

So, if you are keeping score, the outcome is the retention of a company in the state, including its
160 jobs along with its additional impact from albeit temporary construction jobs and its future growth
opportunities hopefully creating more jobs and enhancing the tax base. The project is scheduled to
be completed by the third quarter of 2010.

Finally, stories like this illustrating support for business specifically identifying the cooperation
between cities and their successful outcome typically never receive any main stream media
attention.  It is too bad, because this example illustrates the camaraderie that exists and the
professionalism of the hard working economic developers in California.

For those that are still shaking their heads as it pertains to this action, we ask you to recall (those
old enough to remember) the actor Jack Palance and his narration of the television show Ripley’s
Believe It Or Not. His gritty voice would conclude each segment with the phrase - ‘Believe it or Not.’ 
This phrase resonates as the perfect conclusion for this article specifically addressing the audience
comprised of those that have been disenchanted with the lack of support for business in California
and those passionate professionals working to reverse the economic trends facing the state. There
is hope for California and this is a perfect example – Believe it Or Not.

 

Tim Johnson
www.CaliforniaBusinessMinute.com