Bay Area Council Blog

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Disappointed, Not Surprised by Gigafactory Decision

The Bay Area Council responds to news reports today that Tesla has chosen Reno, Nevada, to build its battery Gigafactory:

“While we were hoping for California to come out on top, we knew Tesla would make its decision based on factors that contribute to the success of the company,” said Jim Wunderman, CEO of the Bay Area Council. “We continue to believe California can be the central place for Tesla’s growth and think there will be many future opportunities to see that happen.   Specifically, with this decision we recognize the prospects for the development of a robust supply chain between Reno and Tesla’s manufacturing plant in Fremont which can support businesses old and new along that corridor, which includes the Sacramento and San Joaquin regions.

“We appreciate the hard work by Governor Brown’s office to make California a contender, and we will continue to work with the Governor to pursue future opportunities that leverage the state’s many competitive advantages for growing jobs. This can serve as a good learning opportunity for California. We should look very closely at what factors ultimately led to Tesla choosing Reno, and we should determine what we can do better going forward to attract and retain middle class jobs in California.”

Credit: Al Seib / Los Angeles Times

Groundwater Management Urgently Needed

In an opinion-editorial in the Contra Costa Times, Bay Area Council President and CEO Jim Wunderman joins with Maurice Hall, Ph.D., the science and engineering lead for The Nature Conservancy’s California Water Program, in support of two groundwater management bills under consideration in the California Legislature. 

Imagine a checking acco

unt that allowed you to pull out as much money as you want, for as long as you want, without ever having to worry about deposits or overdrafts. Sounds too good to be true, doesn’t it? It is.

It’s also how we use groundwater in California: If you can drill it, you can withdraw it — as much as you can, whenever you can — and nobody is responsible for making deposits. If we don’t change course, sooner or later the pumps will hit bedrock and the checks will bounce. Should that happen, it would be disastrous for California’s environment and economy.

It’s time for lawmakers to end the deficit-spending of our groundwater reserves, and to enact sensible reform.

In normal years, California taps groundwater for almost 30 percent of its overall supply. Some areas rely almost exclusively on groundwater. In severe drought years like the present, groundwater use can surge to 60 percent, and even more in places like the Central Valley. A recent study by UC San Diego’s Scripps Institute of Oceanography found that since 2013 California has lost more than 63 trillion gallons of groundwater, the equivalent of “flooding four inches of water across the United States west of the Rocky Mountains.” This is unprecedented.

The risks of such overuse are profound. Human activity cannot exist without reliable water resources, and a catastrophic overdraft of our groundwater reserves would almost certainly lead to emergency diversions from environmental flows for protected fish and wildlife. The man-made disaster would swiftly become an ecological one, with ruinous outcomes for both.

At the present rate of groundwater extraction, we run the risk of depleting this resource and eliminating what one Stanford University study called California’s “hydrological safety net.”

Groundwater overdraft has even begun to alter the state’s geography. A 1,200 square mile area of the Central Valley is currently sinking as much as a foot a year, damaging roads and canals and wasting both water and tax dollars.

All of this makes it more important than ever that we develop a sensible statewide plan for managing our groundwater. Fortunately, two pieces of legislation are being considered for this very purpose, Senate Bill 1168 and Assembly Bill 1739. Under these bills, local governments would be tasked with regulating groundwater in a way that makes it sustainable by 2040 and state government gets the power to become involved with regulation only when local efforts are unsuccessful.

The benefits would be enormous:

  • It will protect a precious resource: Roughly 30 million people rely on groundwater for a portion of their drinking water. In addition, our state’s natural beauty and billion dollar recreation industry depend upon groundwater, particularly during our state’s long, dry summers.
  • It will save jobs: California farms and ranches depend on groundwater for irrigation. Without it, the state’s $45 billion agriculture industry would wither.
  • It will ensure clean water supplies: Groundwater is the life’s blood of the agricultural industry, but is also needed by 75 percent of the state’s population who rely on it for a portion of their drinking water.

It will also give teeth to the groundwater-related provisions of the water bond that will appear on the November ballot. Those provisions dedicate $100 million to supporting local regulation of groundwater use and $800 million for cleaning groundwater. Managing California’s groundwater is not only long overdue, but also crucial to the state’s economic and environmental future. It is imperative that we bring this invisible resource into the public eye and properly protect it before it is too late. The time to act is now.

Jim Wunderman is president and CEO of the Bay Area Council, a CEO-led regional business association. Maurice Hall, Ph.D., is the science and engineering lead for The Nature Conservancy’s California Water Program.

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Responding to Open Letter on Tesla Gigafactory

An “open letter” penned this week by the California Budget Project and other so-called “budget watchdogs” from states competing to secure the proposed Tesla Gigafactory misses the mark. The letter suggests that California and the other states are in a “race to the bottom.” We couldn’t disagree more.

California is in an important race to become a national, if not global hub, for an exciting new generation of advanced automobile manufacturing and energy storage. The latter aspect hasn’t received much attention, but will have huge economic impacts across many other industries and for the state. You don’t accomplish that without taking some reasonable degree of risk or making an investment in your future. And you don’t accomplish that by failing to compete with others who are happy to open their doors to an innovative company like Tesla.

We applaud Gov. Jerry Brown and his Administration for taking an active role in the negotiations, and for putting California squarely in the running after Tesla indicated early on that the Golden State wasn’t even on its initial list of potential sites. This is just the kind of role that government can and should play in advocating for the state and facilitating new and emerging industries. That Tesla and its products align with the state’s objectives on climate and energy makes this a strategic priority for California.

Securing Tesla will further demonstrate that California is back in business and is serious about creating good-paying middle-class jobs. In addition to the 6,500 jobs the Gigafactory will generate, the facility will support a vast ecosystem of suppliers and others that employ thousands more workers. Such manufacturing facilities are highly prized for exactly the jobs and economic spillover effect they create.

The long-term strategic, economic and environmental benefits to California of winning Tesla’s Gigafactory will put us in a race to the top.

Download the letter.

Sincerely,

Jim Wunderman
President and CEO

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State Pension Board Undermines 2012 Reforms

You might be surprised to learn that simply doing the job you were hired to do entitles you to extra pay. That is, unless you’re on the board of the California Public Employee Retirement System (CalPERS), which sets pension policy for hundreds of thousands of public employees. In a major step back from pension reforms passed just two years ago, CalPERS this week approved new rules that expand the bankrupt practice of salary “spiking.” That’s when workers are allowed through a variety of tricks to artificially boost their regular pay to increase their future pension payout. The Bay Area Council supported the 2012 reform measures as a good first step in reigning in the state’s massive unfunded pension liabilities, despite concerns that political deal-making had left the reforms vulnerable to just the kind of move CalPERS made this week. Sacramento Bee political columnist Dan Walters opined on how mind-boggling many of the changes were, including adding 99 new types of pay that can be used to bolster regular pay.

Observed Walters: “Running through the list, one is struck by a recurring theme: State and local civil service workers appear to be getting lots of money for performing duties that any rational person would consider just part of the job. Clerks are being paid extra for being good typists, for example, and cops are being paid to keep physically fit, to be accurate shots with their firearms, and when “assigned to analyze and explore a crime scene.” For some reason, jailers get paid extra if they are “routinely and consistently assigned the duty of responding to questions from the public,” while librarians get premium pay if they are “routinely and consistently assigned to provide direction or resources to library patrons.”

Although there appeared to be few avenues for recourse in reversing the CalPERS decision, the Council is reviewing the action and is continuing to advocate for stronger reforms that close the door on irresponsible pension practices.

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Getting the Word Out on the Dangers of Proposition 45

Earlier this week, the respected Field Poll put out a survey that showed that 69 percent of registered voters in the state support Proposition 45, which would require the state insurance commissioner to approve every health insurance rate change in the state. This wasn’t tremendously surprising. Ask folks if they would like to bring down rates and they are likely to say yes. That is why this ballot initiative is so dangerous.  Scratch beneath the surface and it turns out that this proposition is actually an act of sabotage on the system that has resulted in California having some of the lowest rates and rate increases in the nation.

The Board of Trustees for Covered California, the state’s new ACA marketplace, yesterday expressed strong concerns about the proposal, but wavered on whether to enter the political fray by taking a formal position. Trustee Kim Belshé said the board should state its stance on the initiative, noting that exchange staff has found “very significant, if not grave, concerns that Prop. 45 could be detrimental to the operations of Covered California and the consumers we serve.”

The proposition certainly has something for everyone to dislike. It would consolidate a stunning amount of power over the state market in a single official and would enrich small, shake-down law firms who delay the process of getting affordable rates approved for businesses and consumers. Over the course of the next two months, the Council is going to be increasingly active in educating the public about this poorly conceived proposal.  Please spread the word to your colleagues and communities. This initiative is not what it seems.

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21st Century Infrastructure Coming to Cupertino

Residents and businesses in Cupertino in the heart of Silicon Valley will be among the first in California – and among the first in the nation — to receive AT&T’s new ultra-fast GigaPower Internet broadband service, an example of the kind of digital upgrade the Bay Area Council is promoting as part of its 21st Century Infrastructure Initiative. AT&T California President Ken McNeely made the announcement this week with Cupertino Mayor Gilbert Wong, who said “Cupertino is leading the way in creating an environment that fosters innovation, and the deployment of ultra-high-speed broadband service will further support innovation in our community, spur our local businesses, and result in even greater economic development in our city.” The GigaPower service promises speeds of 1 gigabyte/second, fast enough to download 25 songs in one second or an HD online movie in less than 36 seconds.

McNeely is co-chairing the Council’s 21st Century Initiative, which is also focused on modernizing our energy infrastructure, along with PG&E CEO Tony Earley. A major component of the effort is identifying the public policies that will be necessary to encourage the private sector to invest in the new technologies that will benefit consumers, business and the economy. Many current policies are based on outdated technologies and create barriers for new investment. The Council is working to build understanding among government and elected officials about the importance of bringing public policy in line with technology. A report due out this fall by the Bay Area Council Economic Institute will explore this topic in detail. To engage in the Council’s 21st Century Infrastructure Initiative, contact Vice President Michael Cunningham.

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Register: Energy & Water Nexus Summit 3 Coming Sept. 5

The Bay Area Council and Bay Planning Coalition invite you to join us for an important forum on Northern California’s two most valuable resources. The Energy & Water Nexus Summit 3 will be held on Friday, September 5 from 9:00 a.m. to 4:00 p.m. at PG&E Auditorium in San Francisco. The event convenes top business, government and nonprofit leaders to explore the vital intersection of energy and water resources, and the economic implications for our state of how we manage them. Topics of discussion will include federal regulatory issues, the 2014 water bond, desalination, and renewable energy vs. carbon free.

Among the expert speakers and panelists are Wade Crowfoot, Deputy Cabinet Secretary & Senior Advisor to Governor Jerry Brown; Felicia Marcus, Chair of the State Water Resources Control Board; Brandon Hernandez and Karen Zelmar from PG&E; Peter Williams from IBM; California State Assembly Member Nancy Skinner; Peter Miller of the National Resources Defense Council; and Ron Davis from CalDesal. Register for the Energy & Water Summit 3.

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TESLA GIGA PLANT IS WORTH THE FIGHT

The Bay Area Council has been advocating over the past several months for California to step up its game in competing for Tesla’s proposed Gigafactory, and recently led a group of state legislators on a tour of the electric car maker’s Fremont manufacturing plant. In the following opinion piece published in the San Francisco Chronicle on Aug. 18, Council President and CEO Jim Wunderman explains why California must win this competition.

All major indicators show that California has emerged from the worst recession in living memory, when home values plunged, unemployment rocketed, and, on a couple of very embarrassing occasions, the State of California was forced to pay its bills with IOUs.  Driven by a boom in technology, primarily in the Bay Area and international trade in Los Angeles, all seems well again in the Golden State.  But it’s not.  The recovery is uneven, with painful pockets of very high unemployment and a shocking dwindling of middle class jobs.  According to 2014 Bureau of Labor statistics, seven of the top ten unemployment black spots in the nation are here in booming California.  Communities up and down the Central Valley like Merced, Stockton and Fresno still struggle with double digit unemployment.

So the very highly skilled and highly paying jobs are back, but the well-paying middle class jobs in manufacturing, agriculture and construction, that don’t require advanced degrees, are scarce.  Something must be done to help these communities, but what?

You may have heard of the car maker Tesla. Tesla is a California company, born in our unique innovation economy and is a standout California success story. The company is in advanced planning to build a “Giga factory” somewhere in the western United States. This huge plant will manufacture the next generation of batteries that will power, not just the cars of the future, but our homes and office buildings too. This once-in-a-generation venture will require a $4 billion investment by Tesla and will initially create 6,500 full time jobs followed by tens of thousands more in support and service industries, such as construction and retail.

Tesla’s mission is to “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” To complete that noble goal, Tesla must get this plant up as quickly and for the least cost possible, and indeed, the plan is to be open and operational, making batteries and printing pay checks, in just over two years!

As you can imagine there is intense competition in the U.S. to attract Tesla’s attention.  Other states are offering huge financial incentives, land, and a fast tracked permitting process.  We too must use every tool available to us to compete for these jobs. California’s entrepreneurs and engineers created Tesla and we are the number one market for Tesla cars.  California is a world leader in renewable energy, energy efficiency, and ground breaking climate change legislation and it is clear that Tesla shares our values.  There is no reason other than a lack of will or imagination for this factory to locate anywhere but California.

There are several proposed sites in the central valley that reportedly meet Tesla’s needs from a logistics perspective.  Should Tesla select one of those, it is projected that a cluster of battery technology companies will soon follow, accompanied by a chain of logistics and supply companies along the I-5 corridor from Redding to San Diego creating tens of thousands of good paying middle class manufacturing jobs.  This factory will be a win for the whole state. It will kick start a new growth industry for the State and make us the world’s leader in battery technology and manufacturing.

With balanced and on-time budgets, a new water bond, and a strengthened commitment to clean energy, California is proving to the world that we are back, stronger than ever and ready for the future.  Losing the Tesla Giga plant would be a huge blow to our image, and a huge loss for our economy, particularly the middle class and the Central Valley.  Nevada, Arizona and Texas will push hard and a final decision is expected from Tesla in the very near future.  We urge Tesla to build this plant in their home state and we urge the Legislature and the Governor to step out of their comfort zones to make this happen in California.  This one’s worth the fight.

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Water Bond Flows to November Ballot

It’s official: Amidst record drought, California voters this November will get a chance to approve a revamped, bipartisan $7.5 billion water bond. Following days of intense negotiation, the final measure sailed through both houses with astonishing bipartisan support: 77-2 in the Assembly, 37-0 in the Senate, and with the backing of many influential business, environment, and agricultural organizations. ”We should toast to our future because now we have one,” said Bay Area Council President & CEO Jim Wunderman. “If we had not passed this bond it would have been the ultimate example of California’s dysfunction. Instead, interest groups and legislators who at one time were fighting with each other compromised for the common good. They produced a focused, targeted water bond that is our best hope for a sustainable future for California’s water system. It will now get a well-deserved opportunity to be approved by the public.”

Alongside big investments in water recycling, groundwater management and regional self-reliance, the bond would also provide state funding for new reservoirs for the first time in three decades. All week the Council’s input and influence was sought to improve the measure and deepen support, with staff from the offices of the Governor and several legislators explicitly thanking the Council’s Water Committee for sharing their thoughts in a June 25 proposal, and for being engaged throughout. The final deal was similar to the Committee’s plan in several ways, including overall spending ($7.12 billion vs. $7 billion), watershed protection ($1.4 vs. $1.1 billion), and for water recycling, groundwater management and regional self-reliance ($2.9 vs. $2.3 billion). The delta will receive $300 million for levee improvements in the final deal, and $87 million through the Dept. of Fish and Wildlife for limited restoration work. To engage in the Council’s water policy work, contact Policy Manager Adrian Covert.

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Deadline Approaching for Commuter Benefits Program

With near crisis traffic congestion and compounding commute challenges, the Bay Area Council is getting behind a new program that provides employees benefits for not driving solo to work. Under the Bay Area Commuter Benefits Program, jointly launched by the Metropolitan Transportation Commission and the Bay Area Air Quality Management District (Air District), businesses with 50 or more full-time employees are required by law to offer commuter benefits to their employees by September 30, 2014.

The Bay Area Council in conjunction with other business associations across the region sent a letter of support to local employers detailing the robust resources available to educate and assist them with tailoring a program that best suits the needs of their businesses and employees. “Designing the right package of commuter benefits will allow every employer to ease the burden of commuting on its employees, reduce the business cost that it suffers from commute delay, and participate in the broad community of employers that are collectively improving traffic conditions for everyone,” the letter states.

With the economic costs associated with commute delay estimated at $4 billion in 2011, the program will help promote the use of alternative commute modes, reduce traffic congestion and emissions of greenhouse gases, improve air quality and protect public health, and save money for employers and employees by expanding the use of the commuter tax benefit provisions in the federal tax code. With an extensive and varied selection of options from which employers can choose, the Commuter Benefits Program will encourage employees to take mass transit, vanpool, carpool, bicycle and walk rather than drive alone to work.

The Bay Area Council urges employers to visit commuterbenefits.511.org to learn how to create a commute program that is right for their business. To engage in the Council’s transportation work, please contact Policy Vice President Michael Cunningham.