June 29, 2020

Enjoy Garlic Dishes at Local Restaurants During Gilroy Garlic Month

Gilroy Chamber lobbies City Council to recognize the month of July as “Gilroy Garlic Month”

The Gilroy Chamber of Commerce has coordinated with numerous local restaurants to serve garlic dishes during the month of July. Garlic lovers, who will be missing the community’s largest annual festival and family reunion, can still enjoy some of the best garlic dishes around, whether its breakfast, lunch or dinner. Residents and visitors can partake in such garlic goodness as, garlic soup, garlic sampi, garlic pizza, the best garlic fries, garlic burgers and much, much more. For a list of participating restaurants and their garlic menu items, click here.

Gilroy Chamber of Commerce Continues to Protect Local Business Interests

In an effort to protect local employers, the Gilroy Chamber of Commerce, CalChamber and other business organizations, have opposed SB 1383, a bill that would devastate local businesses. SB 1383 is a family leave mandate that requires any employer with one or more employees to provide 12 weeks of family leave each year for each eligible employee.

The bill is further deemed a job killer due to the threat of litigation it poses. SB 1383 includes a private right of action that will result in increased litigation costs for employers who must defend themselves in court even for unintentional mistakes.

As written, the bill currently allows any employee to sue their boss if they believe the employer did not correctly administer the leave, interfered with the leave, or denied the leave.

Opposition also turns on the fact that SB 1383 will impose a significant administrative burden on employers and drive up their costs.

Even though the leave prescribed in SB 1383 is unpaid, employers must still pay to train and hire temporary help to cover the workload of the employee who is on leave or pay overtime if they shift work to other workers. Further, the employer also may be required to maintain the health benefits of any employee out on an unpaid leave.
Expands Leave Amount

Large employers will be seriously impacted by the proposal. For employers with 50 or more employees, SB 1383 will expand the amount of protected leave an employee may take to half a year.

The measure changes requirements for qualifying for the California Family Rights Act (CFRA) leave by amending the definition of family member for whom the employee can take leave.

This creates non-conformity between the qualifying requirements for the federal Family and Medical Leave Act (FMLA) and CFRA. As such, an employee who already took 12 weeks of leave under CFRA may also be able to qualify for a subsequent 12 weeks of leave under FMLA should the measure become law.

Gilroy Chamber Opposed Bill Narrowly Fails to Pass

The Gilroy Chamber of Commerce opposed AB 2501 The bill would have required lenders to maintain home and auto loans for an extended length of time with no payments from borrowers. This strain imposed on financial institutions would have limited the availability of credit in the future, causing harm to our economic recovery.

AB 2501 would have imposed penalties on lending institutions that violated its provisions. In an online article published by Troutman Sanders, the article says, “The conduct prohibited by the bill not only would be considered a violation of the law pursuant to which a mortgage servicer is licensed in California, but also would have opened a major new front in consumer litigation by subjecting mortgage servicers, beneficiaries, trustees, and/or mortgagees to legal recourse from borrowers themselves. Section 3273.18 of the bill would have allowed for a borrower harmed by a violation to bring a legal action for damages and other remedies. If the borrower prevailed, they would have been entitled to attorneys’ fees and costs.”

CalPERS Gambles on Risky Investment Move

Commentary by Dan Walters, CalMatters

The California Public Employees Retirement System, the nation’s largest pension trust, benefited greatly from the runup in stocks and other investments during the last few years, topping $400 billion early this year.

CalPERS needed it because it was still reeling from a $100 billion decline in its investment portfolio during the previous decade’s Great Recession and was tapping state and local governments for ever-increasing, mandatory “contributions” to keep pensions flowing and reduce its immense “unfunded liability.” But it faced a backlash from local officials who said vital services were being cut to make their CalPERS payments.

Just when CalPERS appeared to be climbing out of its hole, the COVID-19 pandemic erupted early this year, sending the economy into a tailspin. Virtually overnight, the fund saw its value take a $69 billion hit as the stock market — CalPERS’ biggest investment sector — tanked. Stocks have since recovered, but CalPERS is still down about $13 billion from its high early this year.
Further investment erosions would, almost automatically, trigger even greater CalPERS demands for contributions from government employers, but the recession is also eating into their tax revenues, creating substantial budget deficits.

It underscores CalPERS’ vulnerability to capital market gyrations. Investments more immune to fluctuations would be safer but they offer very low returns and CalPERS could not safely meet its lofty earnings goal — an average of 7% a year.

It’s a vicious circle of conflicting demands and priorities, driven by an official policy of providing generous, inflation-adjusted pensions for government workers, bolstered by the political clout of public employee unions.

CalPERS desperately needs an escape route and has chosen the perilous path of debt. It plans to borrow billions of dollars — as much as $80 billion — to fatten its investment portfolio in fingers-crossed hopes that earnings gains will outstrip borrowing costs. It mirrors the recent and risky practice of local governments borrowing heavily to pay their pension bills via “pension obligation bonds.”

“More assets refers to a plan to use leverage, or borrowing, to increase the base of the assets generating returns in the portfolio,” the system’s chief investment officer, Ben Meng, wrote in the Wall Street Journal recently. “Leverage allows CalPERS to take advantage of low interest rates by borrowing and using those funds to acquire assets with potentially higher returns.”

What could possibly go wrong?

The new scheme is an implicit admission that CalPERS can’t meet its 7% mark without increasing its exposure to the vagaries of the market. “There are only a few asset classes with a long-term expected return clearing the 7% hurdle,” Meng wrote.

Perhaps, then, the real problem is the 7% goal, much higher than those of private industry pension plans.

CalPERS and other public systems use higher earnings projections because they need them to pay for the expensive pensions that politicians have awarded. Inferentially, if they fall short of the mark, they can tap employers — i.e. taxpayers — to close the gap. However, that option is pretty much maxed out, which may explain why the very risky borrow-and-invest approach is being adopted.

This is serious stuff, so risky that the Legislature should dump its informal hands-off policy toward CalPERS and order up a comprehensive and independent examination of the system’s assets, liabilities and long-term prospects of meeting its pension obligations.

 

June 22, 2020

Gilroy Chamber Opposes “Knee-Jerk” Reaction Bill

The Gilroy Chamber of Commerce has taken a position to oppose AB 2501. While the state legislature has good intentions, many recently proposed bills designed to address concerns related to C-19 lack the understanding of “unintended consequences.” AB 2501 just happens to be another one of those bills. AB 2501 creates new burdens for lenders, will result in additional litigation, unfairly targets a few, provides great opportunity for abuse and above all is unconstitutional.

The bill requires lenders to maintain home and auto loans for an extended length of time with no payments from borrowers. This strain imposed on financial institutions will limit the availability of credit in the future, which will harm our economic recovery.

Specifically, the bill requires financial institutions and financial service businesses to essentially carry mortgage and car payments for at least 180 days after the COVID-19 state of emergency ends, which could be years. It is very likely that the state of emergency for COVID-19 will persist long after the shelter-in-place orders are lifted and businesses resume operation. However, even when the 180 days expires, AB 2501 still limits the ability for these institutions to recover any loss of payments from the consumer.

Requiring these institutions to potentially go years without receiving payment is a significant burden that will negatively impact financial opportunities for Californians. Given the financial risk this proposal creates for such institutions, there is no question that the institutions will limit the mortgage and auto loans it offers. There will likely be stricter criteria to qualify, or higher rates to offset the potential loss these institutions could suffer under AB 2501. This limitation will have a negative impact on the housing market, further exacerbating the housing crisis and creating job loss in the housing industry. It will also unquestionably limit car loans, especially for those with problematic credit history, and will harm both consumers and workers in the auto industry.

A Second PPP Loan for Struggling Small Businesses?

New bill would offer additional funding

By Andy Medici, Senior Staff Reporter, Washington Business Journal

Some small businesses may be able to get a second Paycheck Protection Program loan if legislation introduced Thursday in Congress becomes law.

The Prioritized Paycheck Protection Program, or P4, Act would allow some small businesses that have already exhausted their PPP loans, or are on track to do so, to apply for a second one. The measure was introduced in the Senate by Sen. Ben Cardin, D-Md., ranking member of the Committee on Small Business & Entrepreneurship, as well as Chris Coons, D-Del., and Jeanne Shaheen, D-N.H., and in the House by Reps. Angie Craig, D-Minn., and Antonio Delgado, D-N.Y.

The program would be open specifically to small businesses with fewer than 100 employees, including self-employed and sole practitioners, and whose revenue dropped at least 50% because of the ongoing Covid-19 pandemic.

Publicly traded companies are explicitly barred from tapping into any additional loan funds. The PPP’s original inclusion of public companies in the program earlier this year caused a backlash after several well-known national brands received PPP loans, including Ruth’s Chris Steak House (NASDAQ: RUTH), Shake Shack (NYSE: SHAK) and the Los Angeles Lakers. (All three gave their money back.)

Treasury Secretary Steven Mnuchin had said companies would be exposed to criminal and civil liabilities for taking PPP money if they didn’t need it. Later, SBA guidance dialed back that rhetoric, though SBA did indicate it would audit all loans topping $2 million. Legal experts expect those audits and investigations for PPP loans could take years.

Under this new legislation, restaurants and other franchise-operated businesses can apply for additional funds as long as individual locations don’t exceed the employee cap and the second loan doesn’t exceed $2 million. Some nonprofits are eligible, specifically the same 501(c)3 organizations that were eligible under the original PPP.

The new legislation would also:

  • Extend the application deadline for the original PPP loans through the end of the year or longer, at the SBA’s discretion. The new, additional PPP loans would have an Oct. 1 application deadline, though the agency could choose to extend that. Businesses could apply for forgiveness as soon as eight weeks after disbursement of the loan.
  • Require the SBA to reserve either $25 billion or 20% of the remaining PPP funding, whichever is less, to small businesses with 10 or fewer employees, for either an initial or a second PPP loan.
  • Prioritize processing and disbursement of loans to underserved and rural businesses. Advocates have said that many minority-owned businesses were unable to get PPP loans.

It is unclear how likely passage is for this legislation. Congress has shown a willingness to alter key components of the original PPP, having advanced the Paycheck Protection Program Flexibility Act earlier this month. But the HEROES Act, which the House passed in May, has not been taken up by the Senate. The funding for this P4 legislation would come from the existing pool of money that has yet to be expended by the SBA — about $130 billion remains out of the $649 billion earmarked for loans under the program.

“Many small businesses will continue to struggle in the weeks and months to come,” Cardin said in a statement while announcing the legislation. “Congress must once again act urgently to support our most vulnerable small businesses through this crisis, so our economy can recover as quickly as possible after the pandemic. Every business we prevent from failing now, is a business that will be in a position to create jobs during the recovery.”

The terms of the new loan would be the same as the existing loan — 1% interest rates and a five-year payback term for unforgiven portions. The expenses that are eligible for forgiveness remain the same as well, according to the legislation.

Chamber Launches Monthly Panel Discussions Featuring Local Businesses

In our ongoing effort to highlight local businesses and provide relevant information to our community, the Gilroy Chamber of Commerce is introducing a new monthly panel discussion including local experts on various topics.

This month, we began the series with a DIY Landscape and Design discussion featuring Ryan Dinsmore, Alpine Landscape Landscapes; Greg Bozzo, GB Landscaping Services; Karen Aitken, Aitken & Associates, Landscape Architecture and Design; and moderated by Mark Turner, President/CEO of the Gilroy Chamber of Commerce.

Part One: https://youtu.be/pk8B3FLEq1I
Part Two: https://youtu.be/N_MfVuBL4_c
Part Three: https://youtu.be/WhhFGE3y2Jw

If you are considering a DIY landscape project, you may want to watch the discussion with these three experts in the field of landscaping.

Bullet Train Could Be Derailed

Commentary by Dan Walters, CalMatters

Is this the end of the line for California’s misbegotten bullet train project?

A bipartisan majority of the state Assembly, including Speaker Anthony Rendon, has passed a resolution that directs the High-Speed Rail Authority (HSRA) to delay final contracts for the initial segment of the bullet train in the San Joaquin Valley until the Legislature appropriates $4.2 billion in state bonds.

On its merits, that’s entirely logical. Why would the state commit to billions of dollars for land acquisition and construction without having the money in hand? It doesn’t do that for other public works, nor should it.

However, in the context of rising legislative opposition to the project and sentiment for shifting the remaining bond funds to commuter transit projects in major urban areas, such a delay could be the beginning of the end.

Construction on the San Joaquin Valley segment’s roadbed, roughly from Chowchilla to an orchard north of Bakersfield, has been underway for several years, using a mixture of state and federal funds. After becoming governor in 2019, Gavin Newsom publicly disparaged the bullet train’s viability, but quickly retreated and proposed to extend the current segment northward to Merced and southward to Bakersfield, adding several billion dollars to the projected cost.

The HSRA wants to begin acquiring land for the extensions on both ends and award contracts for track, electrification and other major components.

“The only remaining opportunity for the Legislature to weigh in on the direction of the high-speed rail project occurs when (HSRA) asks us for the remaining $4.2 billion in bond funds,” one of the project’s chief critics, Assemblyman Jim Frazier, a Democrat from Discovery Bay, said in a statement.

“We cannot allow HSRA, or any department, to enter into contracts that bind the Legislature’s approval of future appropriations,” Frazier continued. “The Legislature’s role in approving the budget must be respected before key decisions on the state’s largest infrastructure project are made.”

Frazier chairs the Assembly Transportation Committee and has staged critical hearings on the HSRA’s latest business plan, which has also drawn criticism from the Legislature’s budget analyst, Gabe Petek.

Not only did Newsom throw cold water on prospects for a statewide bullet train system — a project much beloved by predecessor Jerry Brown — but Speaker Rendon has openly called for redirecting remaining funds into commuter transit.

“It is important to make sure that the High-Speed Rail Authority does not close the door to options other than the one created by a small handful of bureaucrats and the unelected authority board,” Rendon said in a statement last week. “The voters have been given no voice since 2008, and their elected representative, the Legislature, has had no vote since 2012.”

Another complicating factor is a sharp decline in revenues from the state’s cap-and-trade system of allocating allowances for greenhouse gas emissions. Brown and the Legislature agreed to give the project 25% of funds from quarterly auctions of emission allowances and that provided hundreds of millions of dollars each year.

The most recent auction, however, generated just $25 million and the future of cap-and-trade is uncertain unless it’s changed to compel industrial emitters to pay more. Legislators are discussing whether to give the California Air Resources Board authority to retool the program, the subject of a high-stakes political battle a couple of years ago.

Years of land acquisition and construction delays, ever-escalating costs and the abject lack of a clear public benefit have eroded political support for the bullet train and the new Assembly resolution indicates that it finally could be doomed – justifiably so.

 

June 19, 2020

It's Time to Get Back to Business!

To our business community and community supporters,

The Gilroy Chamber of Commerce believes it’s time to get back to business, safely and responsibly. All of our businesses deserve a fighting chance to survive.

Please email our County Supervisors and the County Executive Officer, urging them to make this happen, you may draft your own email, or simply copy and paste the statement below, with the subject line: Let us get back to business.

The email addresses for the County Supervisors and County Executive Officer are also listed below.

My business, ________________________, represents one of the many suffering faces of the small business community within Santa Clara County. Long term effects of the extended shelter-in-place are proving devastating for business owners like myself, our families and our employees.

My confusion lies in the fact that SCC has fallen far behind the state’s reopening guidelines despite the fact that our county has maintained COVID-19 numbers well below the curve. SCC consistently and easily meets the health criteria required in the Governor’s reopening metrics however we are 1 of 5 counties in the entire state who has not yet submitted an attestation application. While the health and wellness of our residents has taken precedence, the survivability of our business community, which is of equally paramount importance, has been discounted.

As a small business owner I urge you to move forward with opening additional sectors within the county, alongside health and safety guidelines, so I can begin to recover, stabilize and renew my small business. Without an imminent change in the current orders, you are sentencing my business, my family and my employees to catastrophic loss of livelihood and life.

mike.wasserman@bos.sccgov.org
dave.cortese@bos.sccgov.org
supervisor.ellenberg@bos.sccgov.org
supervisor.simitian@bos.sccgov.org
cindy.chavez@bos.sccgov.org
Jeff.smith@ceo.sccgov.org
cboliaison@eoc.sccgov.org
sara.cody@phd.sccgov.org

 

Thank you for continuing to support the Gilroy Business Community during this time. Let’s get Gilroy and Santa Clara County back to business.

Sincerely,

Mark Turner
President/CEO
Gilroy Chamber of Commerce

Grant Program Available to Small Businesses

In the face of COVID-19, City leaders know that many local small businesses are struggling. A strong business community fosters strong employees and strong communities. In an effort to help support our local small businesses and our community, the City of Gilroy has established a grant program to support small businesses in these trying times. Businesses operating within the city limits of Gilroy may qualify for a one-time business relief grant using federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.

Grants are based on the number of full-time equivalent employees as of March 17, 2020 (when the Santa Clara County Health Officer issued the initial Shelter-In-Place order):

Maximum Grant Award:
$5,000 for businesses with 2-10 employees (70%, up to 61 grants)
$10,000 for businesses with 11-25 employees (30% up to 13 grants)

Allowed Use of Funds
Used for working capital (rent, payroll, utilities, inventory, etc.)

Application Period
June 25, 2020 at 8:00 a.m. to July 1, 2020 at 5:00 p.m.

Additional information including GRANT APPLICATIONS are available on the City’s website: http://www.cityofgilroy.org/843/Small-Business-Relief-Program

Treasurer Fiona Ma Hosts Webinar Series to Help Small Businesses Jumpstart Operations

Sacramento – California State Treasurer Fiona Ma, CPA, will sponsor a two-part webinar series “Jumpstart Business Operations,” presented by Mike Brown, founder of The Brainzooming Group.

“As California businesses emerge from survival mode and embark on various stages of re-opening, now is the time to develop strategies that can help companies get the jumpstart they need and grow in innovative ways,” said Treasurer Ma.

The first webinar, Strategy for Success: Quickly Re-imagining Your Business & Growth Strategy, will be Tuesday, June 23, 2020 at 1:00 pm Pacific and will provide actionable ways for businesses to reimagine their branding and growth strategy to maintain a viable market presence.

Attendees will learn steps to identify the “new important,” explore different ways to deliver core benefits, find an alternative market position and prioritize growth strategies.The second webinar, Idea Magnets: Attracting Ideas to Pivot & Restart, will be Tuesday, June 30, 2020 at 1:00 pm Pacific and will focus on quick and easy steps business owners can take to dependably attract innovative ideas to help pivot and restart business.

Attendees will walk away with a list of big questions to generate ideas and methods to imagine new ways to deliver brand benefits, leverage current disruption to set the stage for breakthrough thinking, and to find future-oriented ideas in other business models.

“It is my pleasure to work with Treasurer Ma to help California small businesses not only jumpstart their businesses as they re-open, but to use the disruption to help them grow in innovative ways,” said Mike Brown, who is also author of Idea Magnets: Seven Strategies to Cultivate and Attract Creative Business Leaders.

Both webinars are free. They will include downloadable guides to help put the strategies discussed in the webinars into action. At the end of each presentation, attendees will have the opportunity to ask questions to get Brown’s expertise on their business challenges. Registration is available at www.bit.ly/jumpstartCA.

Fiona Ma is California’s 34th State Treasurer. She was elected on November 6, 2018 with more votes (7,825,587) than any other candidate for treasurer in the state’s history. She is the first woman of color and the first woman Certified Public Accountant (CPA) elected to the position. The State Treasurer’s Office was created in the California Constitution in 1849. It provides financing for schools, roads, housing, recycling and waste management, hospitals, public facilities, and other crucial infrastructure projects that better the lives of residents. California is the world’s fifth-largest economy and Treasurer Ma is the state’s primary banker. Her office processes more than $2 trillion in transactions within a typical year. She provides transparency and oversight for the government’s investment portfolio and accounts, as well as for the state’s surplus funds. Treasurer Ma oversees an investment portfolio of about $99 billion, more than $31.4 billion of which are local government funds. She serves as agent of sale for all State bonds, and is trustee on outstanding debt of $94 billion.

COVID-19 Wage Based Tax Credits

The IRS issued an infographic detailing COVID-19-related tax credits, including the New Employer Tax Credit. The goal of the infographic is to help employers quickly determine whether they are eligible for one or more of the credits and, if so, the potential financial value of those credits.

 

Help Our Downtown Win

The Gilroy Downtown Business Association needs your help! They are currently in fifth place and need your votes to make it to first place in the “In time of COVID-19” – Video & Essay Contest. Spread the word by either forwarding the provided link or go onto their social media platforms and share it.

Please invite your friends and family to vote daily for their video. All you need to do is give it a thumbs up. Vote here: https://bit.ly/2TPmUNg.

Note the voting deadline is June 21st!

 

June 15, 2020

The Gilroy Chamber of Commerce Scores a Victory for the State’s Economy

The Gilroy Chamber of Commerce along with other business organizations including CalChamber, fought against legislation that would have had a significant detrimental effect on California’s economy and created far-reaching implications beyond real estate. The legislation, designated as AB 939, would have allowed withholding of rent for more than a year, it removed existing legal remedies, and rights from, and gives one party to a contract the right to walk away from a valid lease. The one-sided proposal would have left the property owner, who is also facing challenging times, little or no remedy to fulfill his or her own financial obligations. Due to our efforts and that of others, AB 939 has been placed in the Appropriations Committee suspense file.

The following article is from the Sacramento Bee written by Andrew Sheeler and Hannah Wiley regarding the AB 939.

The Senate Appropriations Committee on Tuesday heard testimony on Senate Bill 939, which places a temporary moratorium on commercial tenant evictions, gives them a year to make up missed rental payments, and allows certain businesses impacted by the COVID-19 pandemic, such as restaurants and bars, to renegotiate or terminate their leases “that were based on pre-COVID-19 expectations,” according to a Senate Judiciary Committee summary of the bill.

Sen. Scott Wiener, the bill’s author, warned that smalls businesses and nonprofits, unable to pay rent as a result of the COVID-19 emergency, could be driven from their locations because they are unable to pay the rent.

“You can’t squeeze blood from a turnip. These businesses are just going to close down,” Wiener said in testimony Tuesday.

The bill is sponsored by the Bay Area Hospitality Coalition, which wrote in a statement of support for the bill, “Many of us made the painful decision to completely shutter our businesses, uncertain as to whether our closure will be temporary or permanent. Without addressing the ongoing fixed and often expensive cost, rent, many independent small businesses will shutter permanently.”

Among the groups opposed to the bill is the Greater Sacramento Economic Council.

“No landlord is interested in evicting any business that can possibly survive and return. Small businesses are their clients and there aren’t enough businesses in the market to go around,” said Barry Broome, president and CEO of that group. “Landlords will be doing everything possible to save the small businesses that are their clients. This bill will send shockwaves to the capital markets and further hurt the development of affordable housing by hurting small banks and local developers.”

Mark Friedman, founder and president of Fulcrum Properties, which has properties in midtown and downtown, with close to 1,000 tenants in its portfolio, warned that SB 939 would “fundamentally disrupt the relationship between landlords and tenants.”

Friedman said that SB 939 is based on the “flawed premise” that landlords are out to squeeze their tenants dry.

“Frankly, nothing could be further from the truth,” he said. “Every responsible landlord that I know has been working with their tenants to figure out how to keep them in business so they can survive this crisis.”

SB 939 has been placed in the Appropriations Committee suspense file.

Gilroy Chamber Opposes $275 Headcount Tax Bill Being Considered in State Legislature

The Gilroy Chamber of Commerce has taken a position to oppose yet another job killer bill, AB 398, which is considered a “headcount tax” by Assemblymember Chu. This burdensome bill, if passed, would impose a $275 per employee tax for “an entity, including, but not limited to, a limited liability company, corporation, or limited liability partnership, that has more than 500 employees that perform any part of their duties within the state.”

AB 398 is exactly what California does not need. It completely discourages the creation of new jobs and the retention of existing jobs. Higher taxes influence numerous business decisions, such as where a business will locate, how many employees they will hire and what wages they can offer. AB 398 would degrade California’s economic competitiveness against other states who notoriously compete to attract California’s companies by providing tax benefits and other incentives to support businesses. This bill would take the exact opposite approach and unnecessarily raise the cost associated with job growth. As the old tax policy adage goes, if you want less of something, tax it. If California wants less jobs, less employers, and an amplified economic disaster, placing an employee “head tax” on California businesses would be an ideal way to accomplish that.

PPP Forgiveness Timeline Extends for Years

By Mark Mensheha, The National Observer

Small businesses seeking loan forgiveness through the Small Business Administration’s Paycheck Protection Program could still be involved in the process well over a year from now, perhaps into 2023.

That prospect considers the 24-week covered period for the loan, the 10 months after that a business owner has available to apply for loan forgiveness, and then subsequent time for the lender and the SBA to assess the requested forgiveness — followed by time for potential appeals for rejected requests. That appeals process could create a complication, as well.

“I am not sure how SBA intends to manage this time-intensive process,” said Tenley Carp, a partner at law firm Arnold Golden Gregory LLP, speaking to The Business Journals. “If even a small percentage of 4.5 million companies [that received PPP loans] appeal, I think they are going to have way more work than they can handle.”

Also: The SBA on Friday issued its new guidance on the PPP following the enactment of the Paycheck Protection Program Flexibility Act. Also Friday, the SBA said in a legal filing that detailed information about PPP borrowers should not be made public. The administration made the argument in response to a lawsuit filed by 11 news organizations, including The Business Journals’ parent company, American City Business Journals.

Let The Bidding Begin: Faraway Cities Court Bay Area Remote Workers With Cash

By Mark Calvey, Senior Reporter, San Francisco Business Times

As Bay Area companies adopt permanent work from home policies, cities across the country are getting more aggressive in courting these remote workers as a means to boost their local economies. 

Savannah, Georgia, recently joined a growing list of cities eager to court remote workers and the tax dollars, intellectual capital and professional networks they bring with them.

Last month, the Savannah Economic Development Authority started offering eligible remote workers in tech a $2,000 stipend to help with moving expenses if they move to the Georgia city for at least a year. 

“If you have visited Savannah, you love Savannah, you have the technology skills to work anywhere and this has always been your dream, let us make it easier for you to move here,” Jen Bonnett, vice president of innovation and entrepreneurship for the Savannah Economic Development Authority, told me this week. Savannah, which has seen its tourism industry slammed amid Covid-19, is eager to diversify the region’s economy with more tech workers.

Savannah and other cities that have long courted the Fortune 500 for headquarters or expansions are seeing remote workers as another path toward economic development. 

“I really want to attract people who want to be part of building this community,” Bonnett said of the remote tech workers that she hopes to bring to Savannah. The Savannah Economic Development Authority has set aside $100,000 this year to attract up to 50 remote workers.

Savannah’s not the only one. Or the most generous.

Vermont has a program to attract remote workers to that state, offering as much as $10,000. Tulsa offers qualified remote workers $10,000 to move to the Oklahoma city for at least a year. The Tulsa program has received national attention, with CBS Sunday Morning running a segment on Tulsa’s efforts that featured a Bay Area resident who made the move.

Another city considering joining Savannah in courting remote workers is Topeka, Kansas. The Greater Topeka Partnership is considering expanding a program, Choose Topeka, that’s currently focused on companies to include remote workers.

Choose Topeka offers relocating talent a $15,000 grant that can be used to buy a home in Topeka. The stipend is paid by the newcomer’s Topeka employer, with the Greater Topeka Partnership reimbursing the employer for half the stipend after one year.

“You can get more house for your money and there’s more breathing room here, which has become increasingly appealing,” said Bob Ross, a senior vice president at the Greater Topeka Partnership. “You can get a mansion here for $350,000.”

“If you can work anywhere, why wouldn’t you want to work and live in Topeka?” Ross said.

Bonnett’s comments to Savannah media leave little doubt which region’s workers they are targeting.

“We want to take advantage of these remote workers, specifically for tech remote workers, and try to encourage them to relocate to Savannah,” Bonnett told the Savannah Morning News. “They can work for Google, they can work for Apple, they can work for Salesforce and choose to live in our beautiful environment.”

When I reached out to Bonnett this week, I told her that 600 square-foot condos in the heart of San Francisco fetch $650,000 or more. I asked how far that money would go in the Savannah housing market. she laughed, saying: “You can probably buy a four- or five-bedroom home in the most expensive neighborhood in Savannah for that.”

She’s surprised how many tech workers reaching out to her about the city’s remote-worker incentive program want to talk real estate.

Bonnett is reaching out to the Savannah College of Art and Design and the city’s other universities, seeing their alumni groups as rich targets for remote tech workers that might want to return to the southern city. She’s also created a Slack channel, with 300 members, to help connect Savannah techies, called “remote but not alone.” The city’s fledgling tech scene includes remote workers from Oracle, Salesforce, GitLab and GitHub.

“I’ve spent a lot of time in the Bay Area over the last 30 years, but I haven’t come out to promote this program — yet,” said Bonnett, recalling that she was in the Bay Area about a decade ago to raise money for an Atlanta fintech startup she founded and later sold. 

“I’m looking for more people like me to grow the technology ecosystem in Savannah,” she said. “I’ve always wondered, ‘Why not Savannah?’” 

Well, perhaps the summer heat and humidity?

“I’m not looking for strangers to come here. I want people who already have an affinity for our city,” she said, readily admitting that it was an 80-degree day with near 100% humidity. “They want the quality of life we can offer in our vibrant yet small city and to help contribute to Savannah’s small tech scene.

“People come to Savannah for our history, arts, music and food. I want them to decide to stay to be part of our innovation in the region,” Bonnett said. 

Expect Hybrid Learning to Become Norm This Fall

By Ricardo Cano, CalMatters

Students in face masks at all times.

Temperature checks at the school entrance.

A mix of in-class and online learning.

These are just some of the new protective guidelines released today to more than 10,000 public schools across California as they plan for a much different reopening in the fall.

State Superintendent of Public Instruction Tony Thurmond described the 62-page document as a checklist for schools to consider, however, the recommendations illustrate a number of drastic changes that will need to be made in order for students to return to their classrooms while practicing social distancing.

“We know this is just the beginning,” he said.

School districts are planning for the new school year under the financial stress of steep proposed cuts in state funding, which Thurmond and a group of education advocates have said would hamper schools’ ability to reopen if federal assistance doesn’t arrive to cushion the blow.

Most recommendations in the state’s guidance are already being considered by various school districts, but education officials are questioning their practicality — and whether schools have the necessary staff to operate socially distant schools.

Pamela Kahn, president of the California School Nurses Organization, said guidance by state public health officials on students wearing face coverings at all times and undergoing temperature screenings is “absolutely not feasible.”

About half of the state’s school districts do not have any school nurses, she said, and in Orange County where Kahn works, staffing ratios range from one nurse for 1,100 students, to one for 10,000.

“We simply don’t have the staffing to do this, and I don’t see it’s realistic,” Kahn said, noting that her group was not involved in crafting the state guidance. “Can you imagine 2,000 kids coming in the morning having to stand there while someone takes their temperature and gives them a questionnaire?”

The clock is ticking as school administrators try to organize their fall reopening plans with enough time for parents and students to understand the changes.

But education officials have sometimes found themselves at odds over how to implement these safety precautions.

One group of Southern California school superintendents called similar recommendations for reopening by the Los Angeles County Office of Education unfeasible, saying that it will be very difficult to enforce social distancing among the state’s youngest students. Education advocates have said that the costs of reopening will likely mean both spending more on protective equipment for kids and staff and the personnel and staffing it will take to handle cleaning and reduce class sizes.

In virtual school board meetings across the state, school officials are mapping out a game plan and admit they don’t have all the answers.

They are asking themselves what they would do in the event that a student or staff member tests positive for coronavirus. They’re debating what supplies and protective equipment they’d need for students and teachers, poring through survey results from families, and analyzing what possible school schedules would look like.

One thing is known: the school day will be much, much different.

Using state examples, here’s what a school day might look like from start to end:

A student riding the bus to school would wait at their bus stop already equipped with a face covering. Once the bus arrives, there would be seating meant to reduce capacity – one option the guidance suggests is a “zigzag pattern” in which seating by row would be limited to one student on alternating sides.

Either on the bus or as they enter campus, the student would have their temperature screened with no-touch thermometers while answering questions from staff about whether they experienced any COVID-19 symptoms, and if anyone in their home has tested positive or has shown symptoms.

The student would be in class with a smaller group of classmates. Desks would be spaced six feet apart or more. Teachers too would wear face coverings. Everyone handwashes frequently.

During recess, schools might consider increasing supervision to make sure students are practicing social distancing. To avoid crowded cafeterias, the student would either eat their lunch in class or with their group of classmates under staggered lunch times.

Throughout the day, employees would clean and disinfect areas across campus.

Perhaps the most extreme measure, the state’s guidance anticipates schools would adopt hybrid schedules. That means students either attend school on select days of the week, or most weekdays under staggered start times and shorter hours.

Hybrid scheduling, Thurmond said, would help schools reduce their classroom sizes while accommodate parents who want to keep their children home under distance learning.

“Many of our districts have surveyed their parents and have said that they would like to have the option for distance learning,” Thurmond said.

The state’s guidance also urges schools to consider plans for if and when campuses would have to temporarily close in the fall due to local outbreaks.

 

June 8, 2020

Bill Would Strip Away Landord’s Lease Protections

Written By Gordon Webster, Jr., The Business Journal

Senate Bill 939, a particularly onerous bill that threatens the entire commercial real estate industry, continues to chug its way through Sacramento.

SB 939 would prevent commercial landlords from serving eviction notices to “eligible COVID-19 impacted” tenants until 90 days after the state’s emergency order is lifted. SB 939 also removes as grounds for eviction a situation where a tenant doesn’t pay rent for 12 months after the end of the state of emergency.

It also gives these tenants the ability to seek lease modifications. If an agreement isn’t reached, the tenant could terminate the lease without liability.

Groups such as the International Council of Shopping Centers, the California Business Roundtable and the California Chamber of Commerce oppose the bill for obvious reasons. It completely upends the compact that landlords and tenants maintain in order to make our retail system function. What’s the point of a lease if it isn’t worth the paper it’s printed on?

Let’s be real. Landlords have every incentive to keep tenants in their leases, whether that means deferring or even forgiving rent for a period of time. Nobody is clamoring to sign a commercial lease in the moment. But it isn’t worth upending constitutional protections (federal and state) relating to contracts to protect tenants from government-mandated emergency orders.

Contact your elected official in California and tell them SB 939 is the wrong path.

Private Payrolls Decline by 2.76 Million in May, ADP Says, a Much Smaller Drop than Feared

By Jeff Cox, CNBC

Companies trimmed another 2.76 million workers in May as the coronavirus pandemic continued to slice through the U.S. economy, according to a report Wednesday from ADP.

Job losses were especially deep in large businesses, which reported a decline of more than 1.6 million. Manufacturing took one of the biggest hits as the sector lost 719,000 workers.

The reported total was well below the 8.75 million estimate from economists surveyed by Dow Jones and could be another sign that the worst of the coronavirus-related layoffs is over.

May’s loss is “obviously an awful number, but not as catastrophic as expected,” said Mark Zandi, chef economist at Moody’s Analytics, which compiles the report with ADP.

Zandi said the ADP count is supported by a steep drop in the level of continuing jobless claims, or from people who have been receiving unemployment benefits for at least two weeks. For the most recent reporting week, that total plunged by 3.86 million to 21.052 million.

That number reached an all-time peak of 24.9 million for the week ended May 9, the week before the May 12 survey period used by both the ADP and the government in its nonfarm payrolls survey. Consequently, Zandi said that Friday’s official Labor Department count will show a payroll decline closer to 3 million than the 8.3 million that Wall Street is anticipating.

May’s count also marked a precipitous drop-off from the 19.6 million plunge in April, an estimate that was revised from the initially reported 20.2 million. The April loss was by far the worst in the history of the ADP survey.

“The impact of the Covid-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

No further information was available on why the reported monthly change was so big or how it could have been so far off Wall Street estimates. Ian Shepherdson, chief economist at Pantheon Macroeconomics, cautioned investors in a note Tuesday that they should be “braced for surprises, in either direction” because of the model ADP uses to calculate the payroll total.

The report is done in conjunction with Moody’s Analytics and serves as a precursor to the monthly nonfarm payrolls report in two days from the Labor Department. Economists expect that Friday’s figure, which includes government workers, will show a decline of 8.33 million that would push the unemployment rate up to 19.5% from April’s 14.7%.

Service-related industries, which make up a greater proportion of the jobs market, lost 1.967 million positions, compared with the 794,000 from goods producers, according to ADP.

At the sector level, trade, transportation and utilities led with 826,000 and professional and business services dropped 250,000. Financial activities were off 196,000 and education and health services lost 168,000. The “other activities” category reported a decline of 307,000. The hard-hit leisure and hospitality sector dropped by 105,000.

Only two areas reported gains: education, with 166,000, and administrative and support services at 40,000.

On the goods-producing side, the manufacturing plunge was accompanied by a drop of 52,000 in mining and natural resources and a loss of 22,000 in construction.

In terms of size, midsize companies with between 50 and 499 employees lost 722,000 and small firms declined by 435,000.

Pop-up Testing in Gilroy This Week

Valley Medical Center’s mobile medical unit will be providing free diagnostic COVID-19 testing in your district this week at the Valley Health Center in Gilroy, Tuesday (6/9) through Friday (6/12) from 10am to 4pm.  As a reminder, testing is free for everyone at these mobile sites.  No health insurance or doctor’s note is required.  Also, no appointment is required, anyone can just drop-in and get tested.  

 The specific location is:

Valley Health Center in Gilroy
7475 Camino Arroyo
Gilroy, CA 95020

 (Note: This testing is different from the usual drive-through, appointment-only testing that VMC offers at the Gilroy Valley Health Center).

They are also offering a mobile site this week at the County building on Berger Drive (1555 Berger Dr., Building #2, San Jose, CA 95112).  The hours and days for this site are the same (10am-4pm, Tuesday – Friday).

 Finally, residents can always find a testing location near them at http://www.sccfreetest.org or by calling 2-1-1. 

Grab-and-Go Meals Available at South County Libraries

Lunch at the Library Begins Today, Monday, June 8, Grab-and-Go Meals Available at South County Libraries

WHAT: For the third year in a row, the Santa Clara County Library District (SCCLD) is teaming up with its partners at Silicon Valley YMCA and Second Harvest Food Bank of Silicon Valley (SHFB) to offer free, nutritious lunches to children ages 2-18 and their caregivers. Due to the current Shelter in Place orders, grab-and-go meals will be available at Morgan Hill and Gilroy Libraries three days a week beginning Monday, June 8.

WHO: Santa Clara County Library District, Silicon Valley YMCA and Second Harvest Food Bank of Silicon Valley WHEN/WHERE: Gilroy Library (parking lot) 350 W. 6th Street Gilroy, CA 95020 Monday, Wednesday, Friday 12 – 1 pm Morgan Hill Library (parking lot) 660 West Main Avenue Morgan Hill, CA 95037 Monday, Wednesday, Friday 11 – 1 pm

WHY: Childhood hunger runs rampant in the summertime, when school is out of session and kids do not have access to free or reduced-cost breakfast and lunch. The need has been compounded by the COVID-19 crisis, with many individuals and families out of work and unable to buy groceries. According to Second Harvest Food Bank of Silicon Valley, more than 500,000 people in Santa Clara and San Mateo Counties needed help in April, an 85% increase since the start of the COVID-19 crisis. At each Lunch at the Library location, pre-packaged grab-and-go meals (two per person) will be available for children ages 2-18 and their caregivers. The meals will be distributed from the library parking lots for safety reasons. Please adhere to social distancing protocols. SHFB also has a list of resources for residents to get groceries.

### About the Santa Clara County Library District The Santa Clara County Library District (SCCLD) promotes knowledge, ideas, and cultural enrichment. Its collection includes more than 2 million books, videos, CDs, DVDs/Blu-rays, audiobooks, eBooks and extensive online resources accessible from anywhere with an internet connection. In 2014, SCCLD celebrated one hundred years of service to local residents. For the last twelve years, SCCLD has been consistently recognized as one of America’s Star Libraries by Library Journal. In 2019, SCCLD was ranked among the top ten libraries in the United States with expenditures over $30 million in their Index of Public Library Service, tops in California. In 2014 and 2019, SCCLD won Innovator Awards from the Urban Libraries Council. SCCLD also received a Challenge Award in 2019 from the California State Association of Counties. SCCLD includes two bookmobiles, an online library, seven community libraries and one branch library serving Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Milpitas, Monte Sereno, Morgan Hill, Saratoga and the unincorporated areas of Santa Clara County. In 2019, SCCLD had over 428,000 library accounts and welcomed 3.4 million visitors, who borrowed 10.2 million items. Find the Santa Clara County Library District online: www.sccld.org Like us on Facebook. Follow us on Twitter. Look for us on Instagram. @SCCLD Subscribe to our newsletter: https://sccld.org/news/

June 1, 2020

Gilroy Chamber of Commerce Fights for Jobs and the Housing Industry

The Gilroy Chamber of Commerce along with CalChamber and other organizations OPPOSE SB 950, as amended on March 19, 2020, which has labeled as a JOB KILLER and a HOUSING KILLLER.  The bill proposes to expand the California Environmental Quality Act’s (CEQA) patchwork of existing requirements with costly new mandates that will burden local agencies, add substantial time and costs to the CEQA process and provide project opponents with new legal arguments to delay or block housing and other projects. 

We do not consider SB 950 as a “CEQA 2.0” that meaningfully addresses known abuses of the statute.  The bill appears to be the product of a well-intentioned but small working group of CEQA practitioners selected by one organization who do not represent any of the stakeholders signed on to this letter.  Even the two developer-side CEQA attorneys that did participate have resigned from that effort. Accordingly, the major changes to CEQA contemplated by SB 950 share no consensus among the various stakeholders impacted by CEQA. The bill cannot be accurately framed as a “comprehensive package of 21st century updates to the CEQA process.”  

Meaningful CEQA reform, especially on a scale contemplated by SB 950, demands participation from all stakeholders intimately involved with the building and approving of housing and other land use projects in California. Although our organizations were not involved in the formation of SB 950, we appreciate your engagement with us on this bill and your commitment to exploring updates to the statute.

Housing construction has been devastated by COVID-19. A new economic report from the United States Commerce Department reveals that housing construction collapsed by 22.3 percent in March. The Department of Finance recently forecasted that permits for new housing construction will drop by more than 21 percent this year. These grim figures represent the worst drop-in housing construction activity since March of 1984.

At a time when California is reeling from the impacts of the COVID-19 global pandemic and struggling with an existing housing crisis, SB 950 attempts to make major changes to CEQA, Elections Code and the California Code of Civil Procedure that will harm California’s economic recovery, place substantial cost pressures on local governments, substantially degrade the state’s ability to build more housing and negatively impact jobs in or related to the construction industry. For the reasons listed below, we strongly oppose.

  • Costly and Time-Consuming Requirements Are Unworkable for Lead Agencies
  • Will Reduce Citizen Access to the Ballot by Upending a California Supreme Court Decision
  • Second Public Comment Period Fails to Address “Late Hit” Letters
  • Revises CEQA’s Original Legislative Findings
  • Encourages More Lawsuits Against Moderate-Income Housing

Even during the best of times, these proposed changes would damage California’s economy, substantially slow the state’s housing production and negatively impact jobs all across the state. During these extraordinary times, substantially raising the costs, time and litigation risks associated with land use development in California will be a crushing blow to the state’s efforts to bring more affordable housing online and rebound from the economic impacts of the COVID-19 pandemic. 

 

Lobbying Behind California Coronavirus Contracts Can Stay Secret

Article by Laurel Resenhall, CalMatters

A common thread runs through at least four of the companies Gov. Gavin Newsom has tapped to help respond to the coronavirus pandemic: a Sacramento lobbyist named Mark Weideman.

His firm represents BYD, an electric bus maker that landed a $1 billion contract to produce medical masks for California; Bloom Energy, which the state is paying $2 million to refurbish ventilators; Blue Shield, the health care behemoth that dominates the task force Newsom assembled to increase testing for COVID-19; and NextGen America, the progressive advocacy group headed by Tom Steyer, whom Newsom named as the co-chair of his economic recovery team.

Those four organizations paid The Weideman Group a combined total of $663,000 last year to lobby before the Legislature and the Newsom administration, according to disclosure reports lobbyists file with the state. The detailed reports show not only that the companies paid Weideman’s firm, but also how much they spent on associated publicity campaigns and which government officials they wined and dined as they lobbied. California law recognizes that such disclosures advance transparency about the influences on state government. 

But whether these companies — or any others — paid Weideman or other lobbyists to help them secure government contracts is an unanswered question. That’s because California law, despite all the disclosures it demands from lobbyists, doesn’t require they report procurement work — including the $3 billion committed so far to masks, ventilators and other supplies related to the coronavirus pandemic. 

As California has signed hundreds of no-bid procurement contracts over the last two months, the public has very little information about the players involved in landing these deals and how much they are being paid. No lobbyist has been publicly accused of wrongdoing in connection with these contracts. But the way the law is written leaves the public in the dark about who’s influencing how the state spends tax dollars during a pandemic that has killed more than 3,300 Californians.

“Regardless of the emergency nature of what we’re facing, the public always needs to know that its dollars are being spent in the most efficient manner, that they’re not being overcharged for something,” said Rich Gordon, a former  

Democratic assemblyman from Menlo Park who unsuccessfully tried to change state law to require lobbyists to disclose procurement clients.

“Having information to know whether there was a salesman knocking on the door, I think is helpful.”

Gordon’s bill sailed through the Legislature in 2016, with lawmakers and public interest groups touting its increased transparency. But then-Gov. Jerry Brown’s finance department said the measure would create new costs to process paperwork, and the Fair Political Practices Commission, which regulates lobbyists, argued that it wasn’t set up to monitor who gets government contracts. Brown quashed Gordon’s bill with a terse veto:

“Given that the laws regulating state procurement are voluminous and already contain ample opportunity for public scrutiny, I don’t believe this bill is necessary,” he wrote.

The normal rules for procurement create a process meant to ensure fair competition and judicious spending of public funds. The state’s request for bids must be publicly advertised with criteria that are not too limiting. Companies submit bids that the state keeps confidential until a specific time. Then, all the bids are opened at once and become public records. The state is supposed to pick the lowest responsible bidder.

But all those rules are scrapped during an official state of emergency, which Newsom declared on March 4 due to the pandemic. As the state has scrambled to secure medical supplies, lawmakers have questioned whether Newsom’s administration is sufficiently vetting contractors and being open about what the contracts entail. 

In late March, the state wired $457 million for masks to Blue Flame, a company two political operatives had formed just three days earlier. The state treasurer scrambled to get the money back within hours after bankers involved in the transaction warned that it might be fraudulent. Then Newsom signed a $1 billion contract to buy masks from BYD in April, but refused to make the contract public for a month, arguing that releasing the details could threaten delivery of the masks. 

“As the conversations are coming up, the underlying root issue is about transparency and sunshine as to what’s going on: what are the contracts and who is working to get what?” said Assemblyman Adam Gray, a Merced Democrat.

At a recent hearing about the state’s procurement of medical supplies during the pandemic, Gray questioned whether California should change the law to

require disclosing whether lobbyists are involved when companies land government contracts.

“Absolutely,” replied state Treasurer Fiona Ma, a fellow Democrat. “Any measures that seek to create more transparency, especially in public contracting, I think is always the right course of action.”

Following pressure from lawmakers and the press, Newsom recently put many of the pandemic-era procurement contracts on a public website. Most of them don’t name lobbyists involved in the transactions.

But one contract — a since-canceled $800 million deal to buy masks from a company run by the former attorney general of Alabama — lists Sacramento lobbyist Paul Bauer as the vendor’s contact. He was a partner at a prominent lobbying firm, but parted ways with Mercury Public Affairs after the Los Angeles Times reported that Bauer was representing the mask vendor without bringing it on as a client of his firm.

Bauer declined to comment for this article beyond saying he had enjoyed the decade he spent at Mercury.

Given the magnitude of some government contracts, the potential exists for lobbyists to make huge money on them, by charging a contingency fee if the procurement deal is successful. While there is no set rate, a relatively standard 2% commission on a $600 million contract, for example, would be $12 million. 

It’s another area where state law treats lobbying for procurement differently from lobbying on legislation. Lobbyists are not allowed to charge such a “win fee” when they represent clients on legislative or budget matters. The typical arrangement is a retainer of thousands of dollars per month.

Some lobbyists who work in both arenas say procurement work should be treated differently because it involves a completely different skill set dealing with government employees and a bureaucratic process — not the politics of navigating 120 elected legislators.

“If you’re hiring me to help you with your procurement, you’re hiring me as a consultant based on what I know about how to approach government, not my contacts,” said lobbyist Paul Gladfelty. 

“It would be a rare situation where a procurement contract was based on who somebody knew.”

Weideman, the lobbyist whose clients are involved in many aspects of Newsom’s pandemic response, did not return calls for this story. A spokesman  

for BYD, the electric bus manufacturer that is making medical masks for California, said the company follows all disclosure rules. He said he didn’t know if Weideman was involved in procuring the $1 billion contract. 

“My assumption is that it’s because we are the largest manufacturer of (protective equipment) and we can guarantee delivery of it, which is a not insignificant point,” said Frank Girardot, spokesman for BYD America.

“We did a lot of publicity around that… well before any contract was signed.”

Campaign finance records show that some of Weideman’s clients wrote big checks to support Newsom’s gubernatorial run in 2018. Blue Shield and the California State Council of Service Employees each donated about $1 million to an independent campaign supporting Newsom. 

Other Weideman clients have donated amounts more typical of large companies with a presence in the state: Bloom Energy has given Newsom $60,000 over the last two years, while BYD’s owner has donated $40,000. 

In March, Newsom publicly touted his relationship with Bloom Energy’s CEO, KR Sridhar, as the state ramped up its stock of ventilators in anticipation of mass hospitalizations due to COVID-19.

“We reached out to KR,” Newsom said during a press briefing on March 21. “KR said, ‘What do you need? We’re ready to go.’”

Newsom said they hashed out an agreement for Bloom Energy to refurbish ventilators the state had been storing for years, at a pace much faster than the manufacturer could. 

Within a week, Newsom toured the Bloom factory in San Jose, and California handed the company a no-bid contract.

 

How California Farms Can Survive the Post-Pandemic World

By Kate Comini, Cal Matters

Amid the coronavirus pandemic, few industries have been quite as essential to the nation as agriculture.

From pickers crouching for nine hours a day to scoop up strawberries to CEOs making handshake deals to keep their companies afloat, hundreds of thousands of workers are feeding America. But, in many ways, the pandemic is forcing farmers to reevaluate how they do business.

Across California, nearly 60% of farmers have lost significant revenue, washing their milk down drains, beefing their dairy cows and ploughing under their lettuce and other crops, according to surveys carried out by the California Farm Bureau Federation and the Monterey County Office of Agriculture

As a result, industry leaders say they expect to see shifts in the way growers do business. One priority will be finding new markets for their products, such as farm boxes sold directly to consumers.

The pandemic “has changed the food supply chain for our country in ways we could never have imagined before in terms of restaurants and schools being closed, “ said U.S. Rep. Jim Costa (D-Calif.), who is a Central Valley almond farmer. “In the last 30 years, we’ve developed a complicated supply chain…This is a new wrinkle.

“We’re in uncharted waters. Those that adapt are the ones that are able to succeed.”

Half of growers said they lost income

Produce agriculture is dominated by large companies that handle cooling, packing and shipping of produce. They contract with smaller farmers to provide a certain amount of pallets or cartons of berries, lettuce or carrots; those, in turn, are harvested and packaged by farmworkers. 

Their labor keeps the farms running, but where food goes after it has left pickers’ hands is a complicated web, weaving through packing houses, cooling plants, refrigerated trucks, planes, CSAs, the foodservice industry and grocery store shelves.

And farmers have lost income as different avenues of revenue have been shut down or cut off. California’s $50 billion farming industry has taken a significant hit.

More than half of growers surveyed by the California Farm Bureau Federation said that they had lost customers or sales due to COVID-19. In addition, nearly half said they or someone in their immediate family had lost income from an off-farm job.

A vehicle drives along a field in the Salinas Valley, where farmworkers labor to harvest and pack the food stocking groceries on May 2, 2020. Photo by David Rodriguez, The Salinas Californian

Nearly 60% of the farmers attributed losses to the pandemic as shelter-at-home orders closed customers’ businesses, farmers’ markets shut down and international customers canceled orders over health concerns. Of the respondents, 24% also said they had to furlough, lay off or terminate workers, primarily due to the downturn in orders.

“Many thousands of tons of good produce were lost,” said Western Growers’ Association President Dave Puglia. Although a lot of the produce went to food banks, still more was ploughed under or sent to landfill.

“I’ve heard a lot of people saying, ‘That’s good food, how can you let it go to waste?’” Puglia said. “We’re trying, but the infrastructure can’t handle that quickly, especially with cooling requirements.”

In Texas, home to a $22-billion agricultural industry, Texas A&M University researchers estimated farmers could lose between $6 and $8 billion due to the pandemic. 

Across the U.S., farmers will lose $20 billion in net income this year, according to an updated economics report published last month by the Food and Agricultural Policy Research Institute at the University of Missouri. 

Produce growers alone could lose as much as $4 billion, they say. And the Salinas Valley, nicknamed the Salad Bowl of the World, is likely to see a large chunk of its 2020 revenue disappear.

“We’re looking at a situation with a lot sharper – or very big decline in farm income relative to what had been expected,” Patrick Westhoff, the director of Food and Agricultural Policy Institute said. “It’s a much tougher time for farmers than we would have guessed a few months ago.”

The decline in consumer spending will suppress demand for farm products, forcing prices down, the report predicts. Revenues for “other” crops — such as fruits, vegetables and nursery crops — are expected to decline $4 billion in 2020, and drop another $1.6 billion in 2021, the April report estimates. 

Monterey County Agricultural Commissioner Henry Gonzales oversees an $8-billion industry on the Central Coast of California. While the diversity of crops grown in the Salinas Valley is a strength, and farmers have already begun to sow new crops in anticipation of a “normal” season, Gonzales feared losses to growers in his region alone would cut deep.

“Ag generates $4.5 billion annually in the county,” said Gonzales. “Then, with the multiplier effect, there’s another $4 billion generated. Just from the multiplier effect, with the losses in the county from the pandemic, it’s going to multiply that loss.”

‘Price-takers, not price-makers’

Farmers that come through this will need to diversify their sales portfolios with buyers across different industries, such as grocery stores, foodservice and CSAs.

“Farmers are price-takers, not price-makers,” Costa said. “For farmers, COVID-19 is another new uncontrollable factor that they’ve never had to deal with before.” 

Farmers have been dealing with added expenses in providing personal protective equipment, increased safety measurements such as additional bathrooms or more frequent trips to transport smaller crews of workers. They’ve also lost money while the market dwindled, and only now are some companies launching new products to bridge the gap between product and demand.     

“We are looking at our assortment of products and anticipating the needs for the future, not just today,” Scott Grabau, president of Salinas-based lettuce giant Tanimura & Antle said in a statement provided to The Californian. “It is not a question of ‘if we continue to plant the same number of acres,’ it is a question of ‘what do we plant in our acres.’

“It is not in our nature to quit and 38 years of operating a successful company is not by accident,” he wrote.

Tanimura & Antle, which farms more than 36,000 acres annually, recently launched HarvestSelect, a mixed box of produce for direct purchase by consumers. According to California Farm Bureau Federation President Jamie Johansson, many growers are exploring or have launched similar products or CSAs.

Johansson, who was elected to his position in 2017, is an olive farmer and olive oil producer. He worries about the likely loss of small farmers and consolidation under larger companies.

“What the future of farming looks like is going to depend on what kind of California am I living in right now,” said Johansson. “We’re looking at a $450 million deficit…that’s an epic deficit.”

Johansson reflected on the 2011 state deficit, which resulted in more than $30 million in cuts to agricultural programs. Simultaneously, he said, he recalled a study that showed regulatory costs per field have increased 600 to 700% and forced consolidation on farmers who otherwise would not have survived.

This time around, he said, diversification of locations could be key to survival.

“I think everyone’s going to be looking at diversifying their operations,” said Johansson. “Do you want to have a farm in multiple places in California just to kind of hedge your bets? It’s not to become a monopoly, but just simply to protect yourself and at least survive for another year.”

‘Not just a tool’

Puglia of WGA mulled over the changes that might be forced on growers. Farmers, he said, are risk-takers. They have to be, what with all the factors they can’t control: market price, weather and the size of other farmers’ crop hauls among them.

“The watchword here is risk,” said Puglia. However, he added, he was optimistic.

“Farmers…are very smart about picking up market signals and adjusting their business models to meet market demands,” said Puglia. “It won’t be seamless, but I’m confident this industry, with all of its agility and innovation, will adapt and will come out of it maybe even in some ways better, although we will lose some farmers.”

Between 500,000 and 800,000 farmworkers reside in California, accounting for between a third and a half of all farmworkers in the nation, according to the nonprofit Center for Farmworker Families. 

In Monterey County alone, 41% of people diagnosed with COVID-19 work in agriculture. Many live in the Alisal, a Mexican and Mexican-American community within Salinas that has the highest concentration of coronavirus patients in the county. As of May 17, 94 people there have tested positive for the virus.

Health experts say overcrowded conditions such as the ones agricultural workers live in can hasten the spread of COVID-19. 

Still, the demand for their labor has not dropped.

A fieldworker walks through strawberry fields on Saturday, April 25, 2020. Photo by David Rodriguez, The Salinas Californian

Farm Labor Contractor Association Founder and Director Lupe Sandoval reported that overall, there has been consistent demand for farmworker labor among the contractors he represents. He did not expect to see labor shrink in the future.

“Most of their clients still need to get their crops harvested, thinned, pruned, suckered,” said Sandoval. “There’s disruptions this year and there’ll be some short-term pain for people in the ag industry, but most of them seem to be continuing with their ongoing labor needs out there.”

United Farm Workers Foundation Director Lauro Barajas agreed with Sandoval. Furthermore, he said, he would like to see farmworkers better able to socially distance in the future, should there be another outbreak. That means growers not returning to packing buses, keeping crews small and ensuring that people are able to keep significant space from one another as they work, and on the way to and from work, he said.

Many farmworkers also have seen their own costs increase during the pandemic, thanks to the additional cost of childcare. Still, others have contracted the virus and become ill themselves.

“It’s important that the growers and the public understand that the farmworkers are not just a tool to work,” said Barajas. “They are human beings and need to be respected.”

This article is part of The California Divide, a collaboration among newsrooms examining income inequity and economic survival in California. USA Today contributed to this story.

 

“Rosso’s Furniture has been a member of the Gilroy Chamber for over 40 years because we believe in the work of the organization to provide leadership to promote business and community. They have worked to create a strong local economy which benefits the community. We have been able to rely on the Chamber whenever we needed to be connected to people, resources and information”
– Jaime Rosso, CEO, Rosso’s Furniture