SCLA development hinged on Chinese investors
April 26, 2008 12:01 PM
BROOKE EDWARDS Staff Writer
VICTORVILLE — More than 20,000 local jobs and $1.6 billion in development are contingent on start-up funds from Chinese investors.
“With the economy the way it is, traditional sources of funding may not be available,” said Yvonne Hester, spokesperson for the City of Victorville.
Instead, the city is relying on the federal EB-5 program — where immigrants can get green cards if they invest in an American business — to kick off four major projects at Southern California Logistics Airport.
Mayor Terry Caldwell and City Manager Jon Roberts are both still in China working with CMB Infrastructure Investment Group to recruit potential investors. They are hoping to get 200 investors to commit $500,000 each, for a total of $100 million in funding.
“The city needs this funding to jump-start projects that will later provide the cash flow to repay the loan,” writes economist John Husing, in a study on the impact of these investments.
The first priority with the funding will be to start construction on the rail spur, to complete negotiations with BNSF Railway and develop an intermodal railyard.
The funding will also kick-off purchasing equipment for the Victorville 2 power plant, building infrastructure such as streets and utilities and building an industrial wastewater treatment facility, which Husing said is a deal-maker for a Coca Cola bottling facility to come to the area.
Documents obtained by the Daily Press confirm this company is Coca Cola’s Schweppes brand.
Using the EB-5 program, Hester said, the city could keep these projects from being delayed, promote their global image and not put taxpayer money at risk.
But the biggest motivation for pushing the development, Hester said, is job creation.
Husing predicts development at SCLA will indirectly lead to 9,538 permanent jobs in the Victorville area by 2011 and 20,035 by 2015.
He emphasized the importance of creating new jobs at SCLA, to replace the economic energy lost with the closure of George Air Force Base.
Victorville now has only .64 jobs for each home, Husing said. By contrast, he said Southern California overall has 1.25 jobs for each dwelling.
Husing links this smaller job base to increases in commuters, residents on public assistance and crime rates, now at 10-year highs in Victorville.
Most of the local jobs will be in railroad and warehouse operations, though Husing predicts thousands more to come indirectly from increased “circulation of funds.”
Hester said these numbers are also consistent with a previous study by Stirling.
“How is it that in 16 years they’ve created 2,000 jobs and they’re projecting 9,000 in the next three?” asked Jose Palafox, owner of StarFox Financial Services. “Where are they coming up with these figures?”
Palafox said Husing’s analysis is very detailed and he hopes everything will happen as projected, but that there are still too many uncertainties.
“They’re going to spend all this money once again on pie in the sky stuff,” he said. “BNSF hasn’t signed on the dotted line. They still haven’t gotten anybody to commit to coming to SCLA if these projects happen.” He added, “I don’t think they should bet the farm on the what-ifs.”
But Husing said it’s all just a question of timing. He said that as cities in the Inland Valley build out, companies will quickly flood the local market.
He said Victorville has to be ready for that flood, with infrastructure and logistics in place, or risk losing thousands of potential jobs and millions in tax revenues.
He calls the EB-5 program a win-win for the city and the investors.
“We get to use their money, and they get to be first in line for visas.”
Once these foreign nationals have invested, it is up to them how involved they want to be in monitoring their investment, Hester said. They could move locally, or they could live on the other side of the country and be content with supplying funding and benefiting from the visa.
Though the recruiting trip to China is paid for with Redevelopment Agency funds, the agency’s director Keith Metzler refused to comment after repeated calls and e-mails over the last week.
Hester said they don’t yet have anything specific to report from Caldwell and Robert’s trip, but that things are moving quickly and the leaders have met with several potential investors. She expects them back within the next few days.
Brooke Edwards may be reached at 955-5358 or at email@example.com.