CA Still an Engine of Economic Growth

By Sara Maddux

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Gov. Brown

(Mark Your Calendars: RealShare Apartments 2011, October 20 in Los Angeles).

SAN FRANCISCO-While deadlocked in a battle over the state budget with lawmakers in Sacramento, Governor Edmund G. (Jerry) Brown Jr. took time out of his schedule to deliver the keynote address at PCBC in downtown San Francisco last Thursday.

The state of California needs the frugality of Gov. Brown at this time, said George M. Marcus, founder and chairman of Marcus & Millichap Real Estate Investment Services. “He’s exactly what we need in these turbulent times. You can tell from the current budget negotiations that he’s tough in principal,” Marcus said. “He has an enormous job in front of him and he needs our support, the real estate industry’s support.”

Brown explained to the crowd of apartment industry professionals that the stubbornly high unemployment rate in California is “a direct result of the excess leverage and loose underwriting that was encouraged by those who profited so much,” citing Countrywide Financial as an example of a firm that benefited from the mortgage crisis. While in office as California Attorney General, Brown sued Countrywide for engaging in “unfair and deceptive” practices to get homeowners to apply for risky mortgages beyond their means.

California is still an engine of economic growth, Brown stated. “Things aren’t perfect. We’ve got problems. If we make the wrong choice we could head down the path of irreversible decline. That’s an option. It’s not one I want to follow, and with all of the energy and imagination that I can bring, we won’t go down that path.”

The state has successfully procured the lion’s share of venture capital investment, Brown shared. “We are a leading center of research, medicine, biotechnology and genetics,” noting the state’s pioneering role in stem cell research.

Brown also noted California’s leadership in building major solar energy facilities. For instance, in Blythe, CA, Brown recently visited a $5 billion plant that would allegedly double the amount of solar electricity in the world. “That’s a pretty big statement, making California the world’s leader in the construction and production of central-based solar.”

Following his keynote address, Brown sat down with Marcus to discuss the economy and real estate industry. Marcus asked him what the key to revitalizing downtown Oakland was, one of Gov. Brown’s biggest achievements while in office as the former mayor of Oakland.

“The goal was to get as much market-rate housing (developed) downtown for people with disposable incomes,” said Brown. “I wanted Starbuck’s and other retail stores to be open all weekend, instead of until just 5 pm on the weekdays.” The City of Oakland was also committed to preserving public safety and the arts.”

Oakland’s strength is its proximity to the San Francisco Bay, San Francisco, the Silicon Valley and major universities. The city is well situated near BART (Bay Area Rapid Transit), bridges and freeways systems. Residents in West Oakland and downtown Oakland are located between five to 13 minutes on BART from the region’s largest employment center: San Francisco.

Marcus asked what motivated Brown to propose the elimination of nearly 400 RDAs (redevelopment agencies) statewide. Brown said his goal was to increase funding for schools, libraries, police departments, community health clinics and neighborhood parks, which would fix part of the $26.6 billion budget shortfall for fiscal year 2011-12. Brown added that eliminating the agencies would prevent RDAs from seizing $5 billion in property taxes.

“I like redevelopment,” Brown explained to the crowd of apartment developers, owners and other professionals at the conference. “But if I had to choose, I would pick schools.”

Categories: West, Multifamily, Industry Coverage, San Francisco