Cities expect a boost
Paul Clinton
A blockbuster retail-and-housing project set to open in Costa Mesa
this summer has sparked optimism about that city’s economy, while
Newport Beach leaders say it will be business as usual in their city.
Business and civic leaders in Costa Mesa said they are especially
optimistic about their city’s economic outlook due to the opening of
the Home Ranch project at former lima-bean fields just off the San
Diego Freeway between Harbor Boulevard and Fairview Road.
“We’re positioned very nicely with Home Ranch,” Councilman Gary
Monahan said. “We have a very strong retail presence with South Coast
Plaza having very strong holidays and IKEA coming in [as part of Home
Ranch].”
C.J. Segerstrom & Sons are in the midst of building a large-scale
project that includes housing, office space, a corporate headquarters
for tech bellwether Emulex Corp. and a flagship IKEA store on 90
acres.
The IKEA alone will pump $5 million of sales-tax revenue into the
city’s coffers in its first five years of existence, Segerstrom
spokesman Paul Freeman said. There will be many other economic
benefits as well.
“[The benefits] are substantial,” Freeman said. “They are in the
form of sales tax, property tax and high-paying jobs.”
Civic and business leaders are hoping to build off a year that,
they say, bucked the broader, softer nation and state economies. For
the fiscal year ending June 30, the city saw increases in both
overall sales and property tax revenue, the city’s annual report
shows.
Officials were projecting $34.1 million in sales tax revenue and
$13.4 million in property taxes. When black ink was put to paper, the
city exceeded those projections, pulling in $34.5 million in sales
tax revenue and $13.9 million in property tax revenue.
While those increases were modest, the city’s tourism industry
disappointed expectations, with a 6.67% drop in expectations for
hotel bed-tax revenue. The city collected $3.87 million; it expected
to collect $4.14 million.
Sales tax revenue from the Home Depot, at 2300 Harbor Blvd., and
the Greatland Target, at 3030 Harbor Blvd., bolstered the city’s
retail environment, officials said. Both of those stores opened in
2000.
Questions still remain about the revitalization of the troubled
Triangle Square retail center and a rise in occupancy rates in
commercial buildings near the intersection of Bristol Street and Red
Hill Avenue, but overall 2003 should be a strong year for the city,
said Ed Fawcett, the executive director of the city’s chamber of
commerce.
“We’re going to do great,” Fawcett said. “As far as income from
the private sector, we’re here and we’re strong.”
Calling Triangle Square a “white elephant,” Fawcett said he still
had concerns about whether vacancies there can be filled.
In neighboring Newport Beach, no high-profile development projects
are expected to be built. Officials expect the city’s economy to grow
about 3% in the first six months of the year and about 6% in the
second half.
“We’ll do better in 2003 than we did in 2002,” said Richard
Luehrs, the president of the Newport Beach Chamber of Commerce. “As
long as interest rates stay as they are, there would be indications
that we’ll do well.”
The city is home to many financial services companies, including
many mortgage lenders. With interest rates at historic lows,
companies like Downey Financial Corp., Wells Fargo & Co. -- the No. 1
mortgage lender in the city -- and Bank of America will continue to
lend money fairly cheaply.
That should keep the housing market robust and stimulate job
growth, Luehrs said.
Low rates, which economists say won’t stay low for too much
longer, should also benefit car dealers like Fletcher Jones Motorcars
and others.
City officials are also seeing early indications that the real
estate market is still very strong in town.
During the final six months of 2002, the city came in 15% ahead of
its projections for property tax revenue, pulling in $20.3 million,
and 1.8% ahead of its projections for sales tax, collecting $7.1
million, city financial officer Dan Matusiewicz said.
The city is also 3% ahead in its bed-tax revenue. There are about
300,000 rooms in town.
“I’m hopeful there will be some new jobs here in the next few
months and the customer will feel more comfortable spending money,”
said Councilman Tod Ridgeway, who develops projects in other areas of
the county and state. “I see this as a turning-point year, but for
the $34-billion deficit in Sacramento, which is going to put more
taxes on both the individual and corporations.”
On Friday, Gov. Gray Davis announced he will seek $8.3 billion in
tax hikes to offset the deficit.
* PAUL CLINTON covers the environment, business and politics. He
may be reached at (949) 764-4330 or by e-mail at
paul.clinton@latimes.com.
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