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AIRPORT READY FOR $340 MILLION EXPANSION
Project expected to create 13,149 jobs
VICTORVILLE — The airport authority is set to approve a $340-million plan that would develop 5.78 million square feet of industrial, manufacturing and logistics space at the Southern California Logistics Airport. The plan is set to create a projected 13,149 jobs according to SCLA officials.
The plan will be presented before the authority on Tuesday night. “There is a demand pressure for larger buildings of up to 1 million square feet, and we want to provide them for tenants,” said Dougall Agan, principal of Stirling International, the private development partner at SCLA.
Agan explained that industrial space is running thin down the hill and more companies have become interested in what SCLA can offer as an alternative. “We have seen a higher demand and we now have the infrastructure to provide these services,” he said.
City Manager Jon Roberts said the project will substantially accelerate the development of jobs and clients at the former George Air force Base, which closed in 1992. “Once you start getting people making speculative investments, that is a strong signal that SCLA is an emerging place to do business,” he said. The deal to build-out the land would include a commitment from the city to contribute $60 million for development of infrastructure, Roberts said. City Attorney Andre De Bortnowsky said infrastructure development will include the construction of roads, curbs, gutters and sewers.
Money to fund these projects will come from the redevelopment funds, De Bortnowsky said. Dividend Capital Trust will fund most of the $280 million for construction of spec buildings, Roberts said.
Councilman Bob Hunter said companies like Dividend Capital Trust have recognized the growing potential of the airport. “No company would invest so much money unless they stood to get a return on their investment,” Hunter said. “This deal is really going to impact the development of the High Desert economy by creating thousands of jobs.” The project will develop in three phases. Phase one is scheduled to develop within a 30-month period, according to SCLA documents. Currently SCLA employs around 2,500 people. Top tenants include General Electric, Liberty West, Pratt & Whitney, Leading Edge, US 101, Boeing, Southern California Aviation, and Heavylift Helicopters.
Project will help relieve traffic congestion into area from Los Angeles
SAN BERNARDINO — San Bernardino County officials are forming a task force to create a budget and timeline for the completion of the High Desert Corridor, which will one day connect the Victor Valley with Antelope Valley. The corridor, assigned the name E-220, will help relieve traffic congestion into the area from Los Angeles, according to Public Works Director Patrick Mead. "The total stretch of the project will be 63 miles," Mead said. "It will cross 30 miles in L.A. (county) and 33 across the Victor Valley area through Apple Valley."
David Zook, First District spokesman, said the project will also provide a vital transportation link for the Southern California Logistics Airport. "It will provide a freeway link from the airport to Interstate 15 and Highway 395, and eventually a freeway link to Antelope Valley," Zook said. Though the freeway project is still in preliminary stages, it has been designated a high priority by the federal government. The role of the task force, Zook said, is to "stay on top of the process."
"They will make sure paperwork isn't sitting and rotting on someone's desk," Zook said. "It will help cut through all the red tape." Norman Kanold, assistant county administrator, said the county's task force will include staff from the county adminis- trator's office, public works, the first supervisorial district and county counsel. Among their primary objectives, he said, would be to assess the scope of the project, offer proposals on how it should be financed and make recommendations to the Board of Supervisors for both San Bernardino and Los Angeles counties.
One of the proposals already being discussed, Mead said, is to pay for the project by making it a toll road for both commercial and domestic commuters. "The ultimate decision would have to be made by the elected officials of San Bernardino County," he said. With this task force, the amount of time it could take to build the freeway could be greatly reduced. "If we go the normal route, which is waiting on funds from the federal government, it would be 30 years before the project is built," Mead said. "With the task force, we could be finishing up between 15 to 18 years."
Kanold said the City of Victorville and Town of Apple Valley have already completed a large portion of the environmental work for the project. The Board of Supervisors is expected to approve the task force at Tuesday's board meeting. Daily Press By TRACIE TROHA
VICTORVILLE — Southern Californians could park their cars in Victorville and be in Vegas in little more than an hour, if a privately funded high-speed train gains momentum.
According to a “work plan” document obtained by the Daily Press, DesertXpress Enterprises Inc. is in talks with federal, state and local agencies about a 200-mile, high-speed train system with stations in Victorville and Las Vegas. According to the documents, the train would have a top speed of 125 mph.
According to a schedule included with the document, the entire governmental and public review process is expected to be completed by January 2008.
Two possible routes are on the table: one to run partly within the median of Interstate 15 and partly parallel to existing railroad tracks, and the other to run parallel to I-15 on the north side.
DesertXpress would run on “new, high-quality double track” with elevated crossings. Thomas Stone, president of DesertXpress, said he was not ready to comment on the project.
Warren Flatau, a spokesman for the Federal Railroad Administration, said the agency was beginning an environmental impact statement on DesertXpress, in conjunction with the U.S. Surface Transportation Board.
“ As required by law, when you do a project of this scope and magnitude, there has to be an environmental impact assessment process,” Flatau said. The EIS will be led by the FRA, while a state-level environmental impact review will be conducted according to state environmental law.
Areas studied in the assessment include: impact on land use plans for the areas involved; growth projections; community impact; possible relocation of property users in the planned area of the stations; rail ridership; emissions during and after the project; aesthetics; and cultural and paleontological impact. Public scoping meetings are tentatively set to take place in Victorville, Barstow and Las Vegas at the end of June, according to the document.
Council OKs memorandum of understanding with Las Vegas company
VICTORVILLE — The city council has agreed to work with a private company to explore construction of a rail terminal for a high-speed train to Las Vegas.
The council voted unanimously to approve a memorandum of understanding between DesertXpress Enterprises LLC, Transit Real Estate Development and Inland Group Inc. The agreement is aimed at preparing plans for a rail terminal and maintenance and storage facility.
The terminal would be the starting point of the high-speed train, planned for a 200-mile run on newly built track that would mostly shadow Interstate 15. According to a "work project" document on the train, it would run at a top speed of 125 mph.
The memo calls for the partnership to "prepare and submit to Victorville the completed Master Plan Document(s) for approximately 13,000 acres of development area." According to a map included with the memo, that area lies to the east of Southern California Logistics Airport and is bounded by Interstate 15. Several years ago, the federal government began studying the environmental impact of the California-Nevada Interstate Maglev Project, a magnetic levitation train from Anaheim to Las Vegas, but not much discussion has been heard on the project since 2003.
The difference between that project and DesertXpress is that, according to the memo, DesertXpress would rely on private — not government — funding.
Buck Johns, president of Newport Beach-based Inland Group, said he would be working on the land development possibilities for the project, which is at this point still an idea on paper.
"We're going to initiate that effort now to try to put together a contract with the city and land planning," said Johns, who previously worked with Victorville on the High Desert Power Plant. "There's an effort, and I think it's going to be exciting. Who knows?"
Although the Federal Railroad Administration is beginning an Environmental Impact Statement on DesertXpress, the entire review process is not expected to be completed until January 2008, according to documents.
Mike Rothschild, the mayor of Victorville, said the project was a long way off.
"This MOU kicks off a planning effort," he said in a statement. "It's important that all parties perform their due diligence. Projects such as this take many years, and our action simply started this process. It's the only responsible way to approach a complex project such as passenger rail."
Daily Press By TATIANA PROPHET *********************************************************************************
Mayor says city has handle on growth thanks to active improvements on infrastructure VICTORVILLE — Within the year Victorville will become a city of 100,000 residents, officials estimate.
With the rapid growth, calculated at about 10 percent a year, the Victor Valley's biggest city faces many challenges.
Victorville needs more local jobs so the economy grows more robust and stable and residents aren't compelled to work down the hill. The city faces problems with the lack of east/west corridors, which have clogged existing arterial roads such as Bear Valley Road. Also on the list of needs are more fire stations, parks, a bigger library and community centers. Meanwhile crime and gang violence are growing concerns for residents and city officials.
And although some city officials admit that the city has some catching up to do with the growth, most say the city is being proactive in responding to the need for more infrastructure.
"We have a master plan in place, and while you are always going to have some growing pains, we have done a good job in mitigating projects to accommodate new residents," Councilman Bob Hunter said.
Mayor Mike Rothschild said the city has a handle on the growth thanks to the active improvements on infrastructure. "There is nothing magic about the number 100,000. It's just a nice statistic," he said. "We will still be able to grow because we have the space, and it's really hard to say when this development will slow down."
City officials are betting on the development of industrial space at the Southern California Logistics Airport to provide 30,000 industrial jobs to locals in the next seven to 10 years.
"We are trying to use the freeway and the airport to create base jobs," Rothschild said. "Base jobs will be the key to our success because with those jobs people can buy new homes and new cars."
David Huntoon, a fellow with the Rose Institute at Claremont McKenna College, explained that the problem of catching up with growth is not exclusive to Victorville.
"The whole state is playing catch-up. Given the political climate not many cities are going to build a road for the people that are going to move to the city in three years." Huntoon said.
Huntoon said some cities experiencing similar growth to Victorville's have started prioritizing projects to better accommodate the growing population.
"You prioritize for immediate projects or needs. If you have a project where many homes are coming, you prioritize a school or a park," he said.
According to city spokeswoman Yvonne Hester, capital improvements include plans for the widening of both Nisqualli Road and the Mojave Street bridge. In addition, Victorville is working on developing a new library, two parks, three fire stations and various sewer projects.
"I am also interested in building a community center where we can have plays and art exhibits," Hunter said.
As for the increase of criminal behavior and the networking of gangs, Hunter said he is concerned about the issue. "But this is not just a Victorville problem. It's a problem all over the country," he said. "Public safety is our number one goal, and this council will not think twice if we need to approve more deputies and firemen." "There are indications that the economy will remain strong in our region, and that will keep residents coming and cities playing catch-up with the issue of traffic and other infrastructure," he said. "It's part of what we call growing pains."
May 2006
13,000+ JOBS ARE COMING TO SCLA
Airport authority approves project
VICTORVILLE - Fourteen years after George Air Force Base closed, the city is gearing up for a $410 million redevelopment project that will create more than 13,000 jobs at the civilian airport that replaced it.
The City Council, acting as the Southern California Logistics Airport Authority, approved an agreement Tuesday with Stirling Capital Investments LLC to develop a nearly 6 million-square-foot commercial and industrial complex at the former jet training base.
"The airport is the hottest economic spot in California, and everyone is looking at it," an elated Mayor Mike Rothschild said Wednesday. "After 14 years, we are now on the threshold of bringing any number of Fortune 500 companies here."
Boeing, Pratt & Whitney, General Electric and Leading Edge Aviation Services are among major firms already in business at SCLA.
The airport authority's unanimous decision authorizes Stirling Capital to acquire 345 acres of land at SCLA for construction of 5.78 million square feet of commercial, industrial and logistics facilities within 30 months.
"The initial phase, funded by private investments totaling $350 million, will generate 13,149 new jobs," said Dougall Agan, principal for Stirling, the airport's master developer.
"We are now acquiring (building) permits, which are expected to be issued within four months, and we hope to develop the 6 million square feet of industrial facilities within six years."
Rothschild said Victorville will contribute $60 million in redevelopment tax increment money for airport infrastructure, including site work, streets and utilities.
He said the new jobs, ranging from warehousing workers to truck drivers and supply clerks, will pay from $50,000 to $60,000 per year.
About 3,000 people already work at SCLA.
Agan said there is a strong demand in Southern California for large buildings as industrial space is fast disappearing in the region.
"The market is now ripe for major development at SCLA," he said. Plans for the first phase at the airport include construction of industrial buildings ranging from 24,000 to 1 million square feet, Agan said.
As part of the development plan, Stirling has signed an agreement with Cal Cartage, a provider of logistics services, to help market a 250,000-square-foot warehouse at the airport.
Meanwhile, SCLA is competing with Barstow and Bakersfield for an aviation-rail warehousing and resorting complex.
The Victorville council envisions diverse aviation-related businesses at the airport that could generate 30,000 jobs here over the next 15 years.
"We're now embarking on developing the largest rail-and-air logistics facility in the nation, and will break ground soon for a railroad spur to bring overseas cargo to the airport (for trans-shipment)," City Councilman Terry Caldwell said.
The rail link will be a key to tying the airport to the ports of Los Angeles and Long Beach, where ships loaded with appliances, apparel, and other commodities crowd the docks awaiting rail or truck shipment eastward. Officials here say the airport could serve as a major trans-shipment center for this cargo.
"We're waiting for (BNSF) Railway to select its proposed intermodal site in the region," Rothschild said. "In the meantime, we're moving ahead with development of SCLA."
S.B. Sun by Chuck Mueller
The Housing Bubble
It’s almost impossible to pick up a financial newspaper without seeing mention of the “housing bubble” nowadays.
What is a bubble?
When a bubble pops, all you are left with residue - a soapy gooey splotch on the floor.
For example…
Everyone has heard of the “dot.com” bubble. The NASDAQ stock index had lots of “dot.com” companies in its index. That index more than doubled in value over one year to reach a peak of 5132.52 on March 10, 2000. Then it began a decline. At its low, the value was 21.6% of the index at its peak.
Now, that is a bubble.
Japan’s Nikkei index peaked out at 38,957. The air leaked out and the index bottomed at 7607, 19.53% of its former value.
Another bubble.
A gooey messy residue on the stock market floor.
Financial experts are now talking about a “housing bubble.”
If you think million dollar homes will someday be selling for $200,000 – that is a bubble.
Has there been such a bubble in the past?
Using statistics from the National Association of Realtors going back to 1968, the median sales price of existing homes has never shown an annual decline. The slowest price increase occurred in 1989 (0.22%).
That is slowing price appreciation, not a bubble. Prices still went up.
The experts counter by saying that they don’t mean a “national” housing bubble, but there will be pockets of price decline and that there has been depreciation of home values not long ago. They usually cite California as an example.
So what did happen in California? Was there a housing bubble?
The median price of California homes hit a peak in 1991, followed by five consecutive years of declining home values. At the bottom, the median price was 88.34% of the peak.
Almost a twelve percent loss in value.
The Scary Bubble
Bubbles lose about 80% of value, not twelve percent. Maybe the difference seems moot, but “housing bubble” has such a dramatic ring to it, and it sounds scary.
Plus, it sells newspapers.
Is it possible that house values will decline soon?
No one can really predict.
However…
What does history show?
Returning to California as an example, the median price has increased 72% over the most recent three years.
Between 1974 and 1977 California median prices increased by 80%. Faster appreciation than now. Three years later, median prices had increased another 60%. Ten years after that, home prices had doubled again.
Then there were five years of declining home values. A total twelve percent loss in value.
What’s different this time?
Numbers.
Expressed in dollars, the recent increases in value seem extreme. As a percentage of the home’s cost, appreciation has been more rapid in the past and there could be many more years of appreciation in the future.
But no one knows.
Housing Bubble Protection
If no one can predict if or when prices will decline or by how much, how do you protect yourself?
You do it the “old-fashioned way.”
When you buy a home, buy one you intend to own for a long time. The cost of a house isn’t just the price you pay for it and price may not be as important as your carrying costs. The largest cost is your mortgage payment. With low interest rates, people can afford more expensive houses because their payments will be low. If possible, skip the “first-time homebuyers” house and buy the “move-up” house. That saves you one move, saves you costs, and puts you in a position where you don’t have to sell.
You see, how much your house goes up or down in value each year doesn’t make any difference at all – until you have to sell it.
Then, if you’re selling in a slow market – you’re also buying in a slow market. If you’re buying in a hot market – you are also selling in a hot market. It equals out, provided you have equity enough to make your next purchase.
But if you’re buying a home to “flip” it in a year or two and the market does turn against you, you could be hurting – providing you have to sell. If you're buying just before a down market and you get transferred or relocated, you could be hurting, too - providing you have to sell the home.
Conclusion:
There probably is not a “housing bubble” in the way that there was a Nikkei bubble or a dot.com bubble. However, it is quite likely that there will be some time in the future when values decline, at least in certain areas. It could be in a year or it could be in sixteen years.
How did most people cope in the past?
They rode it out. They didn’t sell. Later, prices recovered and bypassed previous highs.
Buying your next home can be a daunting process, as you are often dealing with the sale of your current home at the same time. For example, if the closing dates on the two homes don’t match, you will be faced with expensive financing costs. However, if you follow some basic rules, you can navigate through the process smoothly, avoiding many of the common and costly errors that are made.
The first thing to do is get pre-approved for the new mortgage. Getting pre-qualified will tell you exactly how much you can spend on your new home. This can make you more attractive to sellers, since your offer will not depend on you getting financing. Another advantage is that you can lock in at the current interest rate, so you won’t pay more if rates rise before you close on a home. Sometimes lenders will lock you into the current rate for the 30 days without charge, but there is usually a fee to lock in for three or six months.
To avoid financial problems, it is highly recommended that you sell your existing home before you close the purchase of your new home. This enables you to use the down payment on your current home toward the down payment on your new home.
You don’t need all the money to pay for your new home until closing day. When your offer is accepted, you will have to pay a deposit that is typically 1 to 5 percent of the selling price. You may also be required to pay some fees to the lender at this time, such as the mortgage application fee. Most of the rest of the money including your down payment and the rest of the purchase price will be paid at closing. This is why it is crucial that you close the deal on your current home first.
If your current home closes after your new one, you will have to carry the mortgages on both homes until your old one closes. One answer is a bridge loan, which is a short-term loan using your current home as collateral. This can enable you to borrow up to 90 percent of the equity you have in the home. Unfortunately, this means you will typically be paying interest rates 1 to3 percent higher than the prime rate and might have to pay six months’ interest up-front.
Sometimes a home equity line of credit is a better option since the interest rate may be 1 percent lower than a bridge loan. In addition, there is no up-front interest payment, and your interest costs are lower since you draw the money only when you need it each month. Unfortunately, if you sell your home within a year of taking the line of credit, there could be a penalty and your home could be seized if you fail to repay.
HOUSING MARKET RIPE FOR APARTMENTS
APPLE VALLEY — Market is opening for builders of apartments, condominiums and townhouses
In the town of Apple Valley only eight permits for the development of a new apartment or condo project have been approved since 1996. Thirteen apartment/condo developments have been approved by the Town Planning Commission this year, with three of those approvals this month. The units being approved are targeting moderate- to high-income tenants who are looking for a choice in living accommodations besides a home on a half-acre lot — the town's minimum lot size for a single-family home.
"There is a demand for apartments is what it comes down to," Darryl Evey, an Apple Valley planning commissioner, said. "In my opinion you build single-family houses when there is a profit and that market is beginning to dry up."
In the Victor Valley the number of new homes sold is down 52 percent for the first quarter of this year compared to the first quarter of 2005, according to Hanley Wood Market Intelligence of Costa Mesa.
Experts in the field see the costs rising for building, buying and maintaining houses and expect apartment construction to pick up locally.
"You have people out there that want to live in apartments and not pay for the upkeep on a home," Joseph Brady, president of the Bradco Companies, said. "They want the amenities they want the common area — the pool, the recreation rooms and the barbecue."
As the area's higher-end employment base begins to increase — more jobs at the Southern California Logistics Airport, hospitals and hightech industries — the demand for high-end apartments will increase, he said.
"You will see more apartment complexes coming," Brady said. "You got those that are coming in an out of the housing market and want to sit on the side lines and see how it shakes out."
The apartments being built currently in the town are higher end mainly because there already exists an abundance of moderate- to low-income apartments.
"We are not going to see the flood of low-end apartments that once were being built," Bob Tinsley, chairman of the planning commission, said. "I think we are going to see apartments and condos on a much more elevated level, which is what the market has been asking for."
And it is not just the young professionals that will be snapping up the new housing — empty nesters and baby boomers 50 and older will be looking to downsize, he said.
"The demand is changing a little bit, they like to lock up their doors and go away for a month or so and not worry about their properties," Tinsley said. "The market is definitely changing especially in Apple Valley the multi-family (development codes) got changed and so now what the market has been asking for the market can deliver to them."
Those changes Tinsley is referring to will go into affect in the next few months. They reduce several restrictive standards from parking to required acreage and make it easier for apartments to be built in town.
