Chico’s first report card

A $50,000 study on the city’s economic-development efforts reveals a mixed bag of success and failure

Spend it to make it. Chico spent $592,000 in fiscal year 2001-2002 on five local economic development organizations, including $350,000 to its redevelopment agency.

The city of Chico should continue what it is doing when it comes to expanding, attracting and maintaining businesses that feed the local job market.

That, in a nutshell, is the summation of a $50,000 study submitted to the city last month by the Garnet Consulting Services, Inc., the Pleasant Valley, Conn., company hired last year to evaluate the strengths and weaknesses of the city’s annual $500,000 investment in that slippery and ill-defined concept known as “economic development.”

That Garnet should reach such a conclusion is not surprising, when you consider that the consultant’s $50,000 paycheck for doing the study comes from that half-million dollar yearly city investment.

Chico has a number of organizations—from the Chico Chamber of Commerce to the Chico Economic Planning Corporation (CEPCO) to the Butte Economic Development Corporation—that define and even validate their existence as being the keepers of the keys to economic development. Garnet began evaluating the city’s system last October by perusing scores of documents and interviewing those local organizations as well as a number of businesses served by them.

On July 16, Garnet’s Mark Waterhouse explained to exhausted City Council members—they had just sat through 35 minutes of an attorney explaining why his client took an ax to 110 oak trees—and the few people in a nearly empty council chambers that economic development is basically “companies finding locations.”

“Establish a program and you have a much better chance to capture the projects that occur in the country on an annual basis than if you just aggressively wait for the phone to ring,” he said.

Waterhouse said the “challenge” presented by the city was to do an evaluation of its entire economic-development program and not conduct “a witch hunt or hatchet job.”

He then went on to explain that “the marketplace guides economic development,” and thus the city’s role is to make sure Chico remains a “quality product, a place where people want to live, want to work and, in your instance, want to study. It’s the people who come here to study and who stay here that are the addition to you labor force that draws companies.”

The report reflects the efforts the city and the private companies are making and is choked with jargon like “strategy setting priorities,” “expeditious project processing” and “action orientation.”

City Manager Tom Lando said he was less than happy with the report itself.

“One of our primary interests was, are we spending our money as we should, and the answer was yes,” Lando said. “I would have liked to have seen more specific details as to whether we are getting enough bang for our buck. But they basically said if you want us to do that you have to pay us for a second study.”

What is useful to the layperson in this report are the lists of city’s strengths and weaknesses as well as the pie charts and bar graphs showing such things as earnings by local industry, distribution of county sales tax and a comparative look at Chico’s dismal wages.

Interesting tidbits include the fact that Chico’s mean hourly wage for all occupations is $13.89, compared to Redding’s $14.84, Sacramento’s $17.76 and San Francisco’s $21.89. And the average personal income in Chico has lost ground against the nation’s average, slipping from 80.3 percent in 1990 to 77.4 percent in 1999.

The city’s list of strengths and weaknesses comes from a survey of 16 local businesses, which are not named. For instance, under the topic of “access to markets,” one strength noted is that Chico is three hours behind the East Coast, which means local businesses can take orders up to 5 p.m. East Coast time and still ship goods the same day.

But then that advantage is deflated by this noted weakness: “The majority of the U.S. population is east of the Rockies.”

For transportation, strengths include proximity to Sacramento and its 60 airline routes but that is countered by “poor airport situation and air travel to Chico.”

As for the available labor force, a strength for at least one of the businesses that took part in the survey was the “availability of unskilled and semi-skilled workers,” but another business listed a weakness as “not enough semi-skilled employees [who] are also drug free.”

There were also complaints in this area about a lack of “work ethic” and the state’s high minimum wage law, “making it difficult and risky to employ any large number of entry-level people.”

For utilities, the surveyed businesses complained about the poor Internet phone lines, lack of DSL services for employees at home, inadequate sewer and low water quality.

One survey respondent, commenting on potential sites for businesses, said, “low rents, plenty of space available downtown,” while another complained. “Availability of truly ‘ready to go’ industrial land is very limited and subject to political whim.”

As for the overall business climate present in Chico, answers ranged from “Good, welcoming climate” and “City easy to work with,” to “activist anti-business sector of the community” and “high development fees for businesses.”

How’s the quality of life in Chico? A low crime rate was countered by “growing crime presence.”

City government was described as “unusually divisive on many issues, and oftentimes seems as though Chico doesn’t know what it wants to be.”

The lessons to be learned by the report are apparently not all that clear.

“Overall I’m disappointed,” Lando said. “Though they did do what the contract called for.

“I think the ironic thing here is that during the process we had Rick Keene asking the same questions [about the viability of investing in economic development] as Tim Bousquet," Lando added, referring to Chico’s most conservative councilmember and its most radical social commentator.