I taught Economics, so I know that it’s not an official recession until there have been two quarters of negative GDP growth. But I also know the global economy has never endured such a radical shock, and I know we are not going to bounce back by the end of the year. The recession is here.
We are fortunate that the city was able to delay adopting its next budget by a month, giving staff the opportunity to revise the budget with a grim forecast of revenues. We are fortunate that this happened before we signed new contracts with city employees. And we are fortunate that, at least as of this writing, our community has not suffered from the high death tolls other communities have faced.
But many local business are not going to survive this. There are some businesses — there’s one I can think of that rhymes with Dead Dobbin — whose days were already numbered, and this merely hastened things. But many local businesses had a bright future and now they’re barely holding on. Some Venturans have spent years of their lives building a business, and they’re watching it wither and die. Some Venturans face financial ruin, not just a loss of income, but a loss of their wealth.
Others Venturans will see pay cuts and unpaid furloughs. Many won’t be so lucky — they’ll be laid off. Local unemployment will soar. Our housing market is so tight, that even this recession won’t bring the local cost-of-living down to where people can afford to stay here. When the average rent for a two-bedroom apartment is $2300, a married couple can have trouble hanging on if only one of them loses their job.
Cost of Living
There are only a handful of things the city can do to reduce the cost of living for struggling residents. We should do everything we can, but the impact will be slight. We could find ways to make it easier for families that have to sell a car by keeping the temporary bike lanes on Telephone, for example. We should keep the rates for the lowest tier of water the same when the new rates go into effect in July of 2021. We could pursue reforming our Mobile Home Rent Review ordinance. Unfortunately, the costs of housing, health insurance, and food are largely set by the broader market. Certainly, we should not do anything to make the cost of living go up — no new sales tax, for example. The best thing we can do for under- and unemployed Venturans is help them get jobs.
We’ve got to get our economy back on its feet. The three traditional Factors of Production are land, labor, and capital. For our local economy to recover from the pandemic, our first priority should be on capital, then land (by which I mean water). A tight labor market is not a concern, not when so much of the workforce will be unemployed.
Attracting Outside Capital
There will be federal, state, county, and non-profit programs to provide short-term loans or even grants. The city will continue to cooperate with the Economic Development Collaborate, Women’s Economic Ventures, and local lenders to ensure local businesses know about small business loans, and have the tools to pursue them. I was impressed to see the Economic Development Collaborative, Women’s Economic Ventures, the Ventura County Credit Union and Wells Fargo all spring into action after the Thomas Fire.
Reducing Overhead Costs
The city can have a greater impact by reducing the capital costs necessary to operate or open a business in this community. I applaud the City Council, the City Manager, and staff for taking a bold approach to fixing our broken development review process.
Somebody who wants to build a new business should not face years of hearings, and spend hundreds of thousands of dollars on architects and engineers and consultants and city fees, only to see their project go nowhere. For many of them, overhauling the review process isn’t about lowering the bar on what’s allowed. If their project is doomed, they just want to be rejected at the outset, rather than being strung along. They want to get to “No” faster. Imagine paying the mortgage on an empty lot for five years, hoping that at some point you’ll be allowed to move forward. But it never happens.
Somebody with a local business that wants to fix up the parking lot, or widen the entrance, shouldn’t face years of hearings, and spend tens of thousands of dollars on architects and engineers and consultants and city fees before they can spend some money to make an improvement. Under the most recent fee schedule, a hearing by the Design Review Committee will cost an applicant $8000. Most applicants wait months for the DRC to hear their item. Anybody who’s been through the process once does not want to go through it again.
In November the city received a report from Matrix Consulting, a firm hired to help us fix our broken development review process. There were then several long council meetings with debate over how to move forward with implementing the recommendations.
I support nearly all the recommendations of the Matrix Report. In May, the Council adopted a few key recommendations as part of an emergency ordinance, and a couple others in the same spirit, which will expire in a year. They were passed in hopes that any small business needing to adapt to the pandemic or recession can cut through the red tape. I support each of those policies, and I hope and expect that they’ll be adjusted and made permanent when they expire in a year. Until then, I won’t be the only one watching the process carefully, because they will have unintended consequences. Their adoption as permanent policy will not happen without a thorough review and a full measure of public input.
Reducing the Cost of Building a New Business
Council must review whether the Net Zero fee is providing enough revenue to department to outweigh the broader economic costs that come with discouraging housing starts during a housing crisis, discouraging new businesses in a recession. The water department is in the middle of revamping the fee structure, so that commercial developments will pay fees based on how much water they’re likely to use, rather than square footage. Using square footage never made any sense — if anything, it would have the perverse effect of encouraging commercial developments that would be heavy users, and discouraging developments that would use less. The new model is better, but unwieldy: the Council should closely examine Net Zero:
- Does the revenue come close to original estimates?
- How many projects drop out when they find out what their Net Zero bill will be?
- How many jobs and how much tax revenue has the city missed out on because of Net Zero?
- What is the cost to administer the program? How many hundreds of thousands of dollars does it cost to administer a program which is only getting more and more complicated?
Only a Councilmember can ask these questions and expect a full response. I will be asking these questions, and I will not stop asking them until I get a full response.
Making City Hall More Agile
This pandemic will likely extend for months, and we may see a second wave. There is no telling how long our local economy will be struggling. Council should create a Pandemic Recovery Task Force, led by the city’s Economic Development Director, and inviting representatives from the Chamber of Commerce, the Auto Center, Visit Ventura, the Ventura County Lodging Association, the Harbor, Downtown Ventura Partners, Women’s Economic Ventures, the Economic Development Collaborative, local banks, and a representative from the City Attorney’s office. The task force could forward proposals to the Economic Development Subcommittee, but to propose an emergency ordinance, it should be able to take the issue directly to the City Council