Bay Area Council Blog

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A GOVERNOR, THREE MAYORS AND A SECRETARY OF STATE WALKED INTO A CONFERENCE…

With Sacramento awash in tax revenue, Gov. Jerry Brown told a full house of 600 Bay Area business leaders at the 2015 Outlook Conference on Thursday (May 21) that it’s “Katie bar the door” when it comes to resisting new spending. Brown opened the conference with wide ranging remarks on California’s growing economy and the inevitability of a future downturn, his plans to hold the line on new spending, the historic drought, climate change, Bay Bridge bolts and investing in critical infrastructure, among other topics. Following remarks by Signature Development Group President Michael Ghielmetti and San Francisco Mayor Ed Lee, the governor also took a moment to break some news by announcing his endorsement of Lee for reelection in November. See the announcement>>

Read the San Francisco Chronicle story>>

Bay Area Council Executive Committee member and Kaiser Permanente Chairman and CEO Bernard Tyson led a lively discussion with Mayor Lee, Oakland Mayor Libby Schaaf and San Jose Mayor Sam Liccardo on regional solutions to the Bay Area’s housing supply and affordability crisis, public safety and traffic congestion.

With an introduction by California Secretary of State Alex Padilla (the LA Dodgers fan bravely announced the SF Giants’ 4-0 win over his team to complete a three-game sweep), former Michigan Gov. Jennifer Granholm wowed the audience with a very humorous and informative talk on clean energy before sitting down with Executive Committee member and PG&E Chairman, President and CEO Tony Earley for a conversation about what he called the “Grid of Everything.” Earley said the explosion of rooftop solar, new energy efficiency and storage technologies and aggressive carbon reduction targets means California must move quickly to adapt its policy and regulatory frameworks to manage the changes. He pointed to a recent Bay Area Council Economic Institute report – 21st Century Infrastructure: Keeping California Connected, Powered and Competitive – that lays out a vision for promoting investment in modern energy networks.

Bay Area Council President and CEO Jim Wunderman opened the conference, whose theme was New Frontiers, with a stirring speech about the Bay Area’s new frontiers. See Jim Wunderman’s Outlook Conference speech>>

There was tremendous interest in a new report released by JPMorgan Chase — Strengthening the Bay Area — at the Outlook Conference examining opportunities in the Bay Area for creating more middle skills jobs – those that require a high school degree and technical training. Joni Topper, JPMorgan Chase Senior Market Executive, led a talk with Jay Banfield, Executive Director of Year Up Bay Area, Cecily Joseph, Vice President of Corporate Responsibility and Chief Diversity Officer for Symantec Corporation, and Van Ton-Quinlivan, Vice Chancellor of Workforce and Economic Development for the California Community Colleges, on sectors where middle skills jobs are growing and strategies that companies can employ to connect with the workers they need.

Nadine Burke Harris, Founder and CEO of Center for Youth Wellness, gave a riveting talk about how traumatic childhood experiences related to poverty, family dysfunction and other causes can lead to future costly health problems and derail opportunities to participate fully in the workforce and economy.

Chevron Chief Diversity Officer Shariq Yosufzai shared his company’s Catalyst Award-winning initiative – The Chevron Way – to promote engineering and leadership opportunities for women and American Express President Ed Gilligan talked with Beverly Anderson, Head of Consumer Financial Services at Wells Fargo Bank, about how new technologies are transforming the payments industry.

The Bay Area Council extends its sincerest thanks to PG&E for serving as the presenting Visionary Sponsor of the Outlook Conference, and to the many other companies whose support of the event makes possible the council’s continuing policy and advocacy work. We’re also deeply grateful to The Ritz-Carlton and its amazing staff for hosting the conference in its recently renovated and gorgeous Grand Ballroom.

See photos from the event>>

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SACRAMENTO “GRINDS TO HALT” AS COUNCIL DELEGATION TAKES OVER

Creating more housing, alleviating our region’s dreadful traffic congestion, ensuring that we establish robust 21st century infrastructure networks, addressing the current drought and making critical investments for a strong workforce of the future were among the topics of discussion during the Bay Area Council’s successful Sacramento Day on Monday, May 18th. The Council led a delegation of 70 business leaders to the State Capitol to meet with Governor Jerry Brown, top legislative leaders and administration officials to discuss our policy priorities. In the lead up to our gatherings, a wizened Sacramento observer, remarked so much institutional attention was being paid to the delegation’s arrival it seemed Sacramento “was grinding to a halt.”

See photos from the day’s events>>

Read the Sacramento Day Advocacy Briefing Booklet>>

Our “Sacramento Day” commenced with a luncheon featuring Secretary of State Alex Padilla, who discussed the importance of increasing voter turnout and removing barriers for new companies to become registered with the State of California. The afternoon advocacy meetings were held in the Governor’s Council Room. The delegation had a very exclusive and candid meeting Governor Brown about his top priorities and the future of California. Additional meetings were held with other constitutional officers including Lt. Governor Gavin Newsom, State Controller Betty Yee and Board of Equalization Member Fiona Ma. From the legislative branch we met with Assembly Speaker Toni Atkins, Senate President pro Tem Kevin de León, and Assembly Republican Leader Kristen Olsen. From the administration we heard from Cabinet Secretary Dana Williamson and Secretary of Transportation Brian Kelly.

Following the day of meetings the delegation enjoyed a reception and exclusive wine tasting featuring HALL Wines with 20 of the 24 members of the Bay Area Legislative Caucus. After the reception, the Council presented its 2015 Regionalist of the Year Award to Assemblyman Kevin Mullin for working with the Council to author Assembly Bill 378. This bill will enable responsible local, regional, and state agencies to immediately improve mobility on the Highway 101 corridor between San Francisco and San Jose. For the rest of the evening the delegation dined with Bay Area Legislative Caucus members at Esquire Grill.

Sacramento Day 2015 was made possible thanks to our very generous sponsors, including United Airlines, Kaiser Permanente, Visa, Lyft, Clear Channel Outdoor, Bauer’s Intelligent Transportation and HALL Wines. To engage in our government relations work, please contact Sacramento Policy Manager Cornelious Burke.

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BUSINESS WAS NOT IN PLAN BAY AREA 1.0, BUT WILL BE IN 2.0

As Bay Area housing prices continue to rise and transportation networks operate near capacity, regional planners have begun to prepare for the future. Both the business community and regional planners acknowledge we could have done a much better job representing economic and business concerns in the last Plan, and intend to do so in the next iteration. Plan Bay Area 2040 will shape the Bay Area economy over the next 25 years, and the Bay Area Council Economic Institute is working with business leaders to provide regional agencies with strategies that will build economic resilience.

Over the last 10 months, the Economic Institute has engaged business and other regional leaders in a series of roundtable events. Six meetings around the region engaged leaders on innovative practices taking place at the local level. This spring, a series of meetings asked business leaders to identify the top opportunities for the region and the concrete requirements for achieving success. Recommendations addressed housing, infrastructure and governance. Participants proposed ways to change the math of housing production–for instance, through new funding streams and greater certainty around community benefits requirements. Attendees explored options for building infrastructure and using new technologies to manage transportation demand. Participants also recommended a new regional governance structure to better align existing funds and streamline planning for key projects.

The Economic Institute will use these inputs to develop recommendations for regional agencies as they update Plan Bay Area 2040. To engage in our regional economic strategy work, contact Economic Institute Vice President Tracey Grose.

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DISSECTING THE MAY BUDGET REVISE: NOT OUT OF THE WOODS, YET

Education scored big in the May Budget Revise unveiled Thursday (May 15) by Gov. Jerry Brown. The bulk of $6.7 billion in unexpected revenue generated by California’s economic recovery will flow to K-12 schools under the proposed spending plan, which overall totals a record $169 billion including $115 billion in general operating costs. Pundits, observers and editorial pages largely praised the plan for its moderation. Brown funneled $3.4 billion into the state’s new voter-approved Rainy Day Fund. About $436 million of that will go to helping the University of California pay down massive unfunded employee pension obligations. UC also got additional funding that will avoid tuition increases for two years, part of a larger agreement worked out by Brown and UC President Janet Napolitano. Brown also proposes whittling away at a $72 billion (and counting) IOU for healthcare benefits the state has promised to retiring public employees over the next 30 years. Achieving that will require getting sign off from public employee unions. And the overall plan now goes to the Legislature, where some lawmakers are angling to ramp up spending.

Although the flush budget is welcome news to many, it masks continuing major structural problems with the state’s finances. David Crane, former senior economic advisor to Gov. Arnold Schwarzenegger, outlines some of those problems in an informative OpEd that ran Monday (May 11) in the Sacramento Bee. Read the OpEd>>

Here’s a quick look at a few specific budget areas as they relate to Bay Area Council priorities:

On water and drought preparedness, the revised budget seeks a three-year appropriation of nearly $2.2 billion. The biggest recipients are groundwater contamination ($784m), water recycling ($475m), safe drinking water ($180m), and improved wastewater treatment ($160m). Funding is primarily supported by the recently approved Proposition 1 (water bond), with additional funding from the state cap-and-trade program and the general fund.

While it is a major issue across the state and in the Bay Area in particular, housing was not substantively addressed in the Governor’s revised budget. Housing is tangentially considered in the $400 million dedicated through the cap and trade spending plan to the Strategic Growth Council, a multi-agency group that coordinates funding for various sustainable communities programs. But, there are signs that money will be spent primarily on increasing affordable housing near transit hubs in “disadvantaged communities,” which excludes almost all of the Bay Area under a statewide standard.

The budget provides a total of $15.8 billion for transportation, including $1.6 billion in cap and trade revenues. The budget allocates funding for local road maintenance, public transportation, intercity rail capacity, and highway rehabilitation, with a major focus on repairing the state’s aging infrastructure. In order to address ongoing maintenance and repair needs, the state is now exploring new financing strategies such as Express Toll Lanes and the Road Usage Charge Pilot Program, in which drivers would pay for road maintenance based on the distance and time they use the roads rather than the amount of gasoline they consume.

One specific budgetary challenge facing the state is the substantial expense associated with high-cost drugs, and the governor included $223 million to cover expected cost overruns in this area. The Council has as a priority of controlling healthcare costs, and we also represent a region that is pioneering life-saving drugs and therapies. We will continue to be involved in this conversation, including serving on one of two workgroups that the governor has convened on these issues, to ensure that policy solutions strike the right balance between controlling rising costs and continuing to fund the innovation that helps to power our region’s economy.

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WORKFORCE COMMITTEE SURFACES SERIOUS ISSUES ON REGIONAL TALENT

What if 30 percent of the workforce of your company was eligible to retire today and was “one bad day away from walking out”? That scary problem of the retirement of experienced leaders from companies without a strong bench of incoming workers is being faced by many companies that attended the first meeting of the Bay Area Council’s Workforce of the Future Committee on Tuesday (May 12). Co-Chairs Teresa Briggs, Vice Chair, West Region and San Francisco Managing Partner for Deloitte, and Glenn Shannon, President of Shorenstein Properties, along with panel moderator Kish Rajan, Executive Director of the Governor’s Office of Business and Economic Development, led a robust discussion at the multi-sector convening of major Bay Area employers. Attendees explored a range of talent supply and demand issues with particular focus on where regional improvements could impact finding, hiring, training, and retaining the workforce needed for businesses to grow and prosper in the Bay Area. To engage in the Council’s workforce activities, contact Vice President Linda Galliher.

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COVERED CA CHALLENGES REQUIRE STRONG BUSINESS LEADERSHIP

The numbers for year two of Obamacare in California are in and they’re not very good. Covered California appears to be falling short of expectations for enrollment and plans to slash its budget in part due to lower than expected membership. Is this private health insurance market created by the Affordable Care Act in trouble? The short answer is no. California got a head start on its enrollment by requiring most people to join the marketplace in year one, and there are more than enough paying enrollees to cover its operational costs.

But even within that context, year two was a big disappointment. There were 500,000 new enrollees but a lot of attrition meant that Covered California only added one percent to its total enrollment. If this new agency is going to fulfill its promise, the business community needs to support its staying focused on its core purpose: selling subsidized private health insurance. We need to continue to advocate for Covered California to adopt best practices in insurance market design; only then can we succeed in the critical public objective of getting as many people as possible enrolled in affordable high-quality health insurance. To get involved in the Council’s healthcare policy work, please contact Policy Associate Emily Loper.

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COUNCIL CELEBRATES IMPORTANT NEW PENINSULA MIXED-USE VILLAGE

Bay Meadows, the pioneering transit-oriented development underway in San Mateo, broke ground this week (May 14) on the new village’s town square—its commercial and social hub. The Bay Area Council was an early supporter and advocate for this landmark smart-growth project, which is located adjacent to Caltrain. Chris Meany, partner with developer and Bay Area Council member Wilson Meany (and working with Stockbridge Capital), praised the public and private partners for persevering during the nearly decade-long approval process. Before an invited audience that included Bay Area Council President and CEO Jim Wunderman, Meany thanked the civic and business leaders for their roles in bringing this sustainable, mixed-use community to fruition.

On the site of the 83-acre former horse track, Bay Meadows includes 1,000 units of housing, 780,000 square feet of LEED-certified office space and 18 acres of parks. The town square groundbreaking signified a shift in focus from primarily residential and parks to building the commercial and retail elements. Bay Meadows has begun construction on Station 4, the first of its five office buildings, which is available for lease and will be ready for occupancy in June 2016. To engage in the Council’s housing policy work, contact Senior Vice President Matt Regan.

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COUNCIL’S WUNDERMAN APPOINTED TO STATE TRADE ADVISORY BOARD

Bay Area Council President and CEO Jim Wunderman was honored to be appointed by Gov. Jerry Brown to serve on the California International Trade and Investment Advisory Council, which advises the Governor’s Office of Business and Economic Development (GO-Biz) on strategies to expand international trade and investment for California businesses and assists GO-Biz in identifying foreign markets with the greatest potential for export expansion. The council also aids GO-Biz in developing specific export strategies for those markets – including the state’s top trading partners, Canada, Mexico and China, and emerging markets such as Brazil and India, as well as strategies to attract more job-creating foreign direct investment into the state. In addition to its own work to expend trade and investment with China, the Bay Area Council operates the California-China Office of Trade and Investment in partnership with GO-Biz. To engage in our China trade work, contact Chief of Global Business Development Del Christensen or CA-China Trade Office Executive Director Ken Petrilla.

Thanksgiving Holiday Travel Expected To Increase 11 Percent From 2009

BAY AREA: CALIFORNIA’S GOLDEN GOOSE

The resounding success of the Bay Area economy was highlighted this week as the Franchise Tax Board released data that starkly demonstrates how our region is leading the state in economic productivity. In 2013, the Bay Area generated nearly $20 billion in personal income tax, accounting for a third of the tax assessed in the entire state with just a sixth of the state’s population. The Highway 101 corridor between San Francisco and San Jose is a particularly strong economic driver for California, as the population in this corridor generates nearly three times the tax revenue as Los Angeles residents.

This tremendous economic growth in the 101 corridor has precipitated severe congestion on highways and transit systems. The Bay Area Council has been working to deliver widespread congestion relief through an array of near-term commute strategies, including Caltrain electrification, Highway 101 operational improvements, corporate shuttle buses, and potentially introducing a North-South ferry route to serve Silicon Valley. The Council is working with our member companies and public agencies to deliver quick improvements in this critically important corridor since we can’t afford to let commute congestion jeopardize the future of the California economy. To engage in the Council’s transportation work, contact Policy Associate Emily Loper.

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COUNCIL BRIEFS LEGISLATIVE STAFF ON ENERGY, COMMUNICATIONS REPORT

Today (May 8), at the Council’s Sacramento office, researchers from the Bay Area Council Economic Institute briefed Bay Area Caucus legislative staff on the findings and recommendations from our recent report 21st Century Infrastructure: Keeping California Connected, Powered and Competitive. The report examines the importance of modern energy and communications networks in driving California’s economic growth and lays out a vision for promoting increased investment. The report finds that many of the rules and regulations California has in place today to manage our communications and energy networks were developed decades ago before the mind-boggling proliferation of digital and mobile technologies and before we moved aggressively to find cleaner ways to power our state. A separate briefing was scheduled for later in the day for California Energy Commission staff, energy and communication lobbyists, and industry experts. To engage in our 21st Century Infrastructure work, contact Senior Vice President Michael Cunningham.