I don’t know if you’ve noticed, but the City of Ukiah and County of Mendocino have been actively promoting economic development lately. Whether these efforts are driven by the desire to make Ukiah a better place to live—with more jobs and more places to shop and dine—or simply a way to increase sales and property tax revenues, I’m thrilled with the noticeable shift in government attitudes toward encouraging business development.
Currently, several new businesses are either under construction or planning to set up shop here. A new Chipotle is being built at Orchard and Perkins, and rumor has it that In & Out Burger will be tearing down the old Fjords to build a new restaurant. I understand a high-end wool processing facility may open on Orchard Avenue, and a lumber mill in Oregon may lease some of the old Masonite property as a holding facility before they ship the lumber north. I’ve even heard Dunkin’ Donuts is coming to town, and it seems we will finally be getting the Costco we’ve heard so much about.
While it is wonderful to provide new shopping and dining opportunities, I am more focused on the new jobs these businesses will bring. When Ross Liberty purchased the 10-acre Masonite property three years ago, he dealt with political and administrative arms of county government, and he found them to be receptive and supportive of his business expansion. To be fair, his company—Factory Pipe—is a poster child for a business any community would welcome. He employs more than 50 people in an industrial capacity with wages commensurate with his industry and a generous benefits package. In addition, he took a prominent eyesore that community members and passers-by could see on Highway 101 and transformed it into an attractive, modern facility.
While it has been fantastic to see local government take strides to encourage economic development, our area still has some significant hurdles to jump, and it’s not going to be easy. We have utility hook-up rates that discourage development and we have infrastructure with significant deferred maintenance (if you don’t believe me, drive down Luce or Observatory—they’re almost down to the dirt in some places). With problems like these, I am puzzled by our city government’s decision to spend money on the walking trail along the railroad tracks. But I digress.
Another impediment to business development is the lack of housing. When business owners think about where to locate, they research a community’s housing situation to determine where they and their employees will live. A community cannot grow if people cannot find or afford a place to live. Right now in Ukiah, the median housing price is about $365,000. Without a down payment, a family would have to earn an annual combined income of about $85,000 to afford a house at that price. Even with a 20 percent down payment, the family would have to earn about $70,000 (that equates to $17.50 per hour for a dual-income household or one person making $35 per hour).
So how do we get more houses here? The cost of new construction is so high that developers tend to avoid Ukiah and Mendocino County. The reason, in a nutshell, is that new building codes requiring expensive additions like sprinkler systems dampen the enthusiasm of those who would create new subdivisions. And when the City of Ukiah built a new sewer plant, they required cutting-edge rather than conventional technology, significantly increasing the price tag. There are only two ways to recoup that money: increase rates and/or increase hook-up fees. Finally, the cost of labor for construction has to compete with the going rate in our underground economy.
These are tough problems, but I encourage local government to keep working on them.
If you have questions about real estate or property management, please contact me at firstname.lastname@example.org or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.