Solano County economy healthy, growing; still awaits ‘promise’ of industry relocation

June 18 2018

Daily Republic By Todd R. Hansen

FAIRFIELD — Solano County can likely expect economic growth through 2021 and beyond as jobs, wages, housing prices and tax revenues have had a slow, steady climb in recent years.

Most promising, perhaps, is that over the next 10 years, Solano County’s wage increase projections are expected to outpace the state average, Robert Eyler, principal of Economic Forensics and Analytics, told the Board of Supervisors on Tuesday as part of his 2017 Index of Economic and Community Progress.

It was the 10th year for the economic index.

Eyler also said job growth should be seen across all industry sectors.

“There is no recession projected by any national- or state-level economist (doing this work) every day of the week,” said Eyler – at least as of the time of his report, he added.

He said if a recession did hit between now and 2022, it would likely be mild, historically speaking.

The Petaluma-based economist, who is also a professor at California State University, Sonoma, said California continues to be a national barometer with job and wage growth.

However, there are also challenges, Eyler noted, not the least of which is that housing is not keeping pace with that job growth and eventually wage pressures could drive businesses out in search of cheaper labor.

“When you are creating job growth over nine or 10 years straight, at some point wages and their increases are going to catch up to you and undermine the business incentive to continue to hire workers,” Eyler said.

Another concern is the decline in Solano County crop values in 2016 and, “perhaps again in 2017,” Eyler said.

There was no one available Friday in the Agriculture Commissioner’s Office to comment on the actual value assessment for 2017. The annual crop report is expected to be released later this month.

Solano County is the second most diverse agricultural county in the state, and economic development interests have long pointed to the county’s ag profile as a strength in recruiting related industry.

“Ag values slipped again, not as much as they did in 2015, but in 2016, they did slip,” Eyler said. “So those are some things you should be watching.”

The county’s gross crop value as reported in the 2016 crop report was $347.172 million, a decline of $6.697 million from the 2015 crop report.

Another challenge Eyler noted is that, like much of California, the growth of housing units in Solano County was slower in 2017 than during the prior year, which puts “pressure on prices and availability.”

Solano County continues to have more residents commuting out of the county for higher-paying jobs than it sees labor commuting in for work.

Moreover, as the job boon in San Francisco, San Mateo and other Bay Area counties continues – and with a corresponding surge in housing costs – more people are looking to Solano for more affordable housing, which adds to that outbound commute.

The result is more congestion on the highways, more demands on service, but without the economic base to help support those needs.

The flip side is that at some point, economic development officials have said, firms will look to relocate to where that labor market lives. Solano County has the added advantage of its central location to the Bay Area and Central Valley, and while in need of upgrades, has the highway connections in all directions.

It is a forecast that Solano County officials have long heard about, but have not seen in a number of years, at least when it comes to landing a job-heavy company.

The Solano Economic Development Corp. has an ambitious economic development campaign, “Solano Means Business,” that not only has an outreach strategy, but also maps out available properties that range from those that are shovel-ready to those that need infrastructure and other improvements.

Much of the focus in on industry clusters such as bio-medical, food and beverage manufacturing and warehousing.

Bob Burris, president and chief executive officer of the Solano Economic Development Corp., said in a phone interview Friday that he expects to see more manufacturers locate to Solano in the coming months, noting specifically a consumer product firm.

“We are seeing tremendous amount of growth and activity,” said Burris, who spent two years with Fairfield before taking the Solano EDC job in January.

Perhaps the biggest business boon is the development on the north end of Mare Island where the Nimitz Group just won the right to develop Vallejo-owned 157 acres and have mixed-use plans that could mean thousands of new jobs.

The Wagner family has brought its Caymus wine brand to Solano, with two large operations that area officials hope will help elevate the Suisun Valley brand and expand agricultural tourism in the region.

Along with the wine industry and other ag tourism efforts, tourism as a whole is expanding in Solano, with a specific reach into the Asian markets, but also in the Central Valley and other parts of the state.

It represents millions to the area economy, city and county industry officials report.

The Solano Economic Development Corp. budget has grown by about 25 percent in each of the past two years, with more private sector support, though about half of the $600,000 budget is public funding.

The county’s 2018-19 recommended budget has a $45,000 contribution to the Solano EDC, and would set aside another $25,000 to be used as a funding match for grants or other needs, the Administrator’s Office reports.

Burris said a number of companies in other parts of the Bay Area are losing their leases because of the value of those spaces, and others are looking to expand but have no room to grow.

“And there is another element we are seeing, really in the last six months, more so than the last two years,” Burris said, “and that is international and national companies that are looking to have a part in the California economy.”

Burris said a number of the contacts he has are from companies that broker for other firms looking to relocate.

Eyler will make a similar economic index presentation July 26 at a Solano Economic Development Corp. breakfast meeting.