SUMMIT PINPOINTS STEEP CHALLENGES
Economy: ‘A steady decrease of optimism’
CHICO >> Banker and former Chico councilor Mark Francis characterized Chico’s current situation as “local economic times we’ve never experienced,” with a mix of rosy and gloomy news.
The one-two punch of the Oroville Dam spillway disaster and the Camp Fire have left the Chico economy reeling, with extraordinary caches of money, companies that have closed or can’t find workers, to unsupported hikes in housing prices, with crippled infrastructure from more residents.
To have 30,000 people displaced has left the population of Chico up, but the population of Butte County down by roughly 10,000, according to the state Department of Finance, Francis said during the annual Business Summit hosted by the Chico Chamber of Commerce.
Worst yet is the unanticipated funds coming from insurance payouts, government grants and economic assistance that has distorted Chico’s strong economic growth, and made the future difficult to predict.
That could be reflected in what Francis said was “a steady decrease of optimism” from the business community.
Francis counted the problems. Building permits skyrocketed, but that was prompted by builders hurrying projects to avoid fee increases or regulation changes. Projects underway now were permitted last summer.
Sales tax was up 15 percent in 2019 from 2018, but can be traced to a bulging population buying necessities along with new items for reestablishing households and buying cars.
The listing prices of houses ballooned as demand from buyers increased, but to see a median listing price at nearly $600,000 in mid-December is a signal.
“This is not willing buyers and willing sellers. We’re starting 2020 with lower inventory and higher sales prices,” he said, which likely will continue.
“This is not willing buyers and willing sellers. We’re starting 2020 with lower inventory and higher sales prices.”
— Mark Francis, banker
The city is missing out of a chunk of transient occupancy tax — a tax on hotel and motel rooms — because the tax ends after a stay of 30 days or longer. Accommodations were occupied first by Camp Fire survivors and now by recovery workers, erasing that pool of money coming to the city.
Francis focused on employment, noting that with 10,000 fewer residents in Butte County, employers have been struggling to fill their work forces in an already-thin staffing environment. Only about 4 percent of the workforce is without jobs in Butte County, according to employment statistics.
There were other implications for the change in population, Francis pointed out. With the population producing expected tax and revenue, the loss of 10,000 residents is equal to a 10year economic loss, Francis said.
Confidence
Golden Valley Bank conducts a quarterly survey to gauge business confidence, with a measurement of 50 being neutral. In the summer before the Camp Fire, the measure was at 64.8. In December 2018 after the Camp Fire, it had dropped to 61.8. And in the third quarter of 2019, it was at 55.2.
Francis said the gauge “is not scientific,” but has been a “pretty accurate predictor.”
Francis said business owners or managers who had taken the survey were predicting an increase in profit, but not as much as originally estimated. They weren’t expecting to expand staffs, and sales were not expected to grow much.
Special report
2020 Chamber Chair Joelene Francis of Enloe Medical Center summed up current conditions plus businesses’ concerns in the chamber’s annual Special Report. For a positive economy, Chico needs successful businesses, which in turn need robust staffing.
That staffing needs housing, and many lived in less-expensive Paradise. Chico can’t meet those housing needs, so the supply needs to be regionally based, within a 30-minute drive.
While crime numbers were down in 2019, Jolene Francis noted that over a span of 10 years it was up, and the perception that Chico is safe is “deteriorating,” especially with the proposed rescinding of the sit-lie ordinance. Additionally troublesome is the loss of officers to other states, along with difficulty recruiting, the report noted.
Pension costs are rising for the city, which the report suggests one solution could be more contracted workers.
In conclusion, she told the business audience, “Make sure elected officials make these their only priorities until lasting positive results are achieved.”