Better days ahead for 2014 economy? From Encinitas to Escondido, observers weigh strengths and challenges

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From an upturn in housing to stable city coffers, local observers of the economy anticipate a positive 2014. (stock.xchang)

Alex Groves

As North County enters 2014, local officials say they feel confident that the economy is on the upswing from years past but that there’s still a long way to go.

Within the past year, cities across the county have facilitated a number of infrastructure and business deals in the hopes of bolstering their economies.

Carlsbad – Financial stability on track to carrying city through 2014

The city of Carlsbad, for example, has set itself up for potential economic growth and sustainability with a new energy deal that will replace its 60-year-old Encina Power Plant with a new plant that is expected to produce more energy, which could bring a much-needed boost to North County after the San Onofre Nuclear Generating Station was decommissioned nearly 10 years before it was expected to be.

August 2013 marked the opening of Sage Creek High School, a new multimillion-dollar facility complete with labs, parking, 42 classrooms and an athletic facility.

Ted Owen, president and CEO of the Carlsbad Chamber of Commerce, said more building projects are slated for the new year, including 15 restaurants and five hotels.

Owen said he sees the wide variety of building projects as an affirmation that Carlsbad continues to make good choices for economic growth.

Owen said that one of the biggest factors toward allowing positive business growth within the city has been its good financial state.

“Of the 23 cities in San Diego County, Carlsbad for the last 25 years has been the most successful financially,” he said. “What I mean by that is they have $60 million in reserve in the general fund, they’re not on the verge of bankruptcy, they’re not recovering from interest rate failure and they don’t have homes that have been taken back in great numbers by the bank.”

The chamber CEO said that all these signs, coupled with the high median income among residents, point to the idea that Carlsbad is a more affluent community, and this affluence has fostered positive business growth.

Encinitas – Tourism strong, but employment options could be more diverse

Encinitas Chamber of Commerce President Bob Gattinella said he anticipates 2014 to be a much better year than 2013, but that he doesn’t foresee it being a “banner year”’ for the beachside town.

He said that Encinitas didn’t fare quite as badly as other towns did when the region faced economic downturn several years ago because of a fairly loyal tourist crowd that flocks to the area’s many eateries.

However, Gattinella said, he would like to see more high-paying jobs in the same way that Escondido residents would like to see them within their own city, but that a lack of storefront and facility space within Encinitas makes accomplishing that goal substantially difficult.

“We would love to bring in some higher-paying jobs,” he said. “In fact, the chamber and some of the organizations in town have been working on that part with the city leaders of Encinitas and it’s actually part of their economic development plan.

“Our biggest problem is that when you talk high-tech jobs, you’re talking biotech and others in that field; those are your higher-paying jobs that are out there,” Gattinella said. “Unfortunately, we do not have a lot of manufacturing space; we have more retail space.”

In spite of the challenges of bringing in high-tech manufacturing jobs, Gattinella said Encinitas is doing well with its traditional service industry business and that it’s continually bringing in new restaurants. Currently, there are more than 200 of them in the city, he said.

San Marcos – Projects move forward; university an economic boost

San Marcos has also had a number of important business-boosting projects reach approval, such as the first phases of building projects in the city’s Creek District as well as actual construction of projects such as a mixed-use development called Palomar Station.

The Palomar Station project, located on Armorlite Drive in San Marcos, will offer housing, retail space and access to the nearby Sprinter commuter rail.

Steve Kildoo, CEO of the San Marcos Chamber of Commerce, said recent infrastructure projects are an indication that San Marcos is going to be doing better this year than it has in previous years.

“The developer community is really starting to make some strides forward and that’s evidenced by some actual permitting for the Creek District,” Kildoo said. “We have a couple of projects very close to approval for that.

“We will begin to show people over the next couple of years that the (creek project) is real and that it’s viable and moving forward,” he said.

Kildoo, who is also on San Marcos’ Planning Commission, said that actual facilitation of building projects such as the Palomar Station apartments are evidence that the economy is on the upturn.

Projects such as these were started a number of years ago when the economy first peaked and were not really developed until recently. The fact that they are now either being approved or built to completion is a sign that the economic environment is changing for the better, Kildoo said.

“We’ve just finally now gotten back on track,” he said. “And that to me is an indicator that the economy and the lending industry has really gotten developers the chance to succeed.”

The city received an additional boost from its California State University campus, which employed a large number of individuals through the construction of its new University Student Union.

The USU, a project with a completion cost of $43,980,000, required the help of 61 subcontractors and 23 consultants. Approximately 100 construction workers helped move the project along each day over a six-month period, according to CSUSM Communications Director Margaret A. Chantung.

Chantung said the project will have long-lasting effects on the vitality of CSU San Marcos as a campus and will increase student employment.

“CSUSM hired 40 new students who will work in non-food service areas in the building such as customer service and operations,” she said. “We also moved some students over that were previously working in the Clarke Field House and then backfilled those positions with a few new hires there.”

But CSU San Marcos’ recent projects are only one component of the overall impact on the surrounding community, according to Chantung. She said that a recent economic impact study found that for every $1 invested in the CSU system, the CSU generates $5.43 for California’s economy.

“CSUSM’s annual spending of $189.2 million generates a total impact of $228.6 million on the regional economy,” she said. “CSUSM produces more than $36 million in tax revenue, sustaining more than 5,000 jobs.”

Solana Beach – Holiday sales, fewer vacancies point to a good 2014

Solana Beach Chamber of Commerce Executive Director Nicole Peterson said sunny skies and abnormally warm winter temperatures are helping the city to do well business-wise going into the new year, as a number of individuals have been flocking to the tourist locale to soak up the sun and enjoy the beach.

The relatively small beach town will likely do better this year than it has in previous years as a number of new restaurants and businesses have come to call the area home and have also done well in the wake of a good holiday spending season, according to Peterson.

“We had a number of businesses that seem to have done well over the holiday season,” she said. “That tends to lead to the idea that 2014 is going to be a much better year.”

Peterson said things haven’t been quite as strong for Solana Beach over the past of couple years as they were in 2013. A number of restaurants and shops went out of business over the past several years, but that doesn’t appear to be the case as of now.

“We have only a small number, maybe even a couple, of vacant spots this year,” she said of Solana Beach’s storefront areas. “So businesses appear to be surviving and thriving and so we’ll see what 2014 brings.”

Escondido – Optimistic outlook for 2014; more business diversity sought

Escondido Chamber of Commerce CEO Rorie Johnston said she also notes a positive trend within Escondido, with more businesses coming into the city and becoming members of the chamber, but that she’d like to see more growth and different kinds of growth.

“I think what we’re looking for is a better mix of businesses,” she said. “Because we are primed for more industry and more tech and biotech – that’s the kind of business the city is seeking and the kind of business which would make us more rounded.”

Johnston was referring specifically to Escondido’s Comprehensive Economic Development Strategy, which states that Escondido is performing favorably as compared with other parts of the county in terms of its per capita retail and office space, but that it needs to do more to bring in other kinds of business.

To do so, the plan includes a task force geared toward attracting certain kinds of business such as clean technology, defense manufacturing and medical device manufacturing.

Johnston said it’s important to bring in these kinds of better businesses because they offer higher-paying jobs and individuals employed at these businesses who live in the city of Escondido will in turn spend money close to home, thereby bringing more money into the city economy.

“We definitely have a lot of things happening,” she said. “The grocery store at Wal-Mart is opening, we have a number of smaller family businesses including grocery outlets opening and we have our new Menchies (yogurt shop) here.”

“There are a number of things happening, but we definitely need a broad representation of business and industry,” Johnston said.

Housing and its impact

The North County home market also appears to be on an upturn based on facts and figures from the Homedex report released in December.

Median home prices in North County have increased to $540,000 in December 2013, up from $539,000 in November of the same year. Home prices increased 10.32 percent within the 12-month period from the end of 2012 to the end of 2013, according to the report.

Cal State San Marcos economics professor Robert Brown said he sees positive signs from the housing market that show noticeable turnaround from the damage caused by the housing bubble crisis of 2008.

Brown, author of the North County Realtors Homedex report, said that median home prices have been on a steady increase, which points perhaps to the idea that things are getting somewhat better economically.

“This really has to do with supply and demand,” he said. “And some of the key factors on the demand side have been the economic news. There’s been relatively good news on the job market front and this means people are getting jobs and maybe they feel a little more secure.

“And on the demand side, that increases buyer power and an individual may be more likely to buy a home than they otherwise would be,” he said.

Brown said that since high demand has to have an inverse relationship with supply in order to drive up prices, it’s not surprising to learn that while people are more interested in possibly buying a home, fewer people are selling theirs.

Brown attributes this to the fact that people who don’t have to sell their homes immediately may still have insecurities about the market and the economy, something he expects to change in the coming months as potential sellers realize things are on the upturn.

The San Marcos professor said that a positive housing market and more buyers greatly affects the economy for a number of reasons, but it’s primarily because individuals don’t just buy a home, they buy a home and everything a home needs within it.

Items and services such as furniture, paint, supplies, construction work and similar things are often purchased at the same time a home is, all of which positively impact the economy.

Alex Groves is a freelance writer in the region