Looking at Ridgecrest economy for 2021

Looking at Ridgecrest economy for 2021By Laura Quezada

News Review Staff Writer

Ridgecrest leaders explore the supposition that Ridgecrest economy may be faring better than other communities its size due to the three major employers in our city: The Ridgecrest Regional Hospital, the Sierra Sands School District, and the Naval Air Weapons Station, China Lake (the base). Vice-Chair of the Indian Wells Valley Economic Development Corporation (EDC), Dan Spurgeon spoke for the organization. Doug Lueck, Executive Director, Ridgecrest Area Convention and Visitor’s Bureau, spoke for RACVB.

Clint Freeman, Real Estate Agent for Coldwell Banker Best Realty, contributed on behalf of the Ridgecrest Board of Realtors. Dan Spurgeon put on his hat as General Manager of Springhill Suites to address the local hospitality industry. Scott Seymour, Inyokern Airport General Manager voiced status of the Inyokern Airport. 2020 proved unreasonably challenging, but business leaders were able to find many favorable indicators.

• The Indian Wells Valley Economic Development Corporation Perspective

Spurgeon in an overview of Ridgecrest economy echoes the supposition in his statement, “We are very blessed to have stable employment, that is, the Federal employees on the base, where there are a little over 5,000 producing almost $600 million in payroll. It is a huge number. The school district is another solid economic base with solid employment. The hospital has over 1,000 employees. I think a lot of people don’t realize the hospital is as big as it is.” This creates a stability not seen in other regions where their main employers are, for example, construction, trade, agriculture or energy. Spurgeon adds, “All of those industries have been in a hiccup. We haven’t had that here; we are very stable, we are very blessed.” And many essential businesses are doing well, he continues, “Even for the people who don’t work for those three employers, almost everything is associated with those employers. So people like the major retail grocery stores, Walmart, the Home Depot, all of those businesses are doing quite well.” Unfortunately, many small businesses that keep getting closed because of Covid-19 are struggling. Spurgeon empathizes, “It is harsh. If you are a beautician, if you are a nail salon, if you are some of those businesses you haven’t really been able to work. We can only hope as stimulus packages do come forward it will help those people. It is no fault of their own that they can’t work.”

Travel restrictions have both hindered and benefited Ridgecrest. As a benefit, people are not going out of town to spend their leisure dollars. Spurgeon elaborates, “A big chunk of those dollars are staying home. You can see it in people doing home renovation projects, doing landscaping projects, doing all those kinds of things that do help the local economy. When you go to Home Depot and you buy a bunch of stuff there is sales tax involved and you are spending it locally. There is a residual upside. The last numbers I saw for retail tax for the city, they were quite good.” The base hasn’t been immune to the challenges of the pandemic, he adds, “High Covid-19 case counts slows down the work they do. They have to. They have to prevent the number of people going on base that are new to the area. That helps protect the entire area. That also means those travelers don’t buy food, buy gas, buy any of that stuff.”

But economic development isn’t directly about how much people buy or necessarily how many travelers we have, according to Spurgeon it all boils down to jobs, “To understand true economic development, you have to go back to the payroll that gets generated in your community, and that money is spent in local shops, local restaurants, etc. And as that local money continues to rise you wonder, ‘Why is this town doing better than ever before?’ Well, you can go back to how much income is being generated here. And that is not retail, it is wages and as the wages continue to rise and the job count continues to rise our prosperity continues to rise. So when people talk about economic development, that prosperity, you can trace it back to jobs. The role of EDC is to create as many jobs as we can. And how do we do that? The EDC is well-documented on quality of life issues, getting an aquatic center, taking positions on having better parks and things of that nature. Things that make living here very enjoyable. We need to make sure we have the quality of life amenities that most people consider normal.”

Spurgeon can’t speak highly enough of the EDC Board Members, “We are blessed to have Scott O’Neill as our Executive Director. The entire board is made up of some of the most dynamic people in our community. All committed to trying to make a future vision of Ridgecrest be prosperous. And we quietly do that. Just that board alone is very impressive. A great group of people who represent every industry locally, we get very good feedback from one another on how the various businesses work. One takeaway is that they are committed. Everybody on that board and many within the City of Ridgecrest are entirely committed to a positive outcome.” The Ridgecrest residents also make a big difference, according to Spurgeon, “When I moved to Ridgecrest and realized that the ordinary citizens of Ridgecrest rally behind people in the numbers that they did any time there was something that needed to be done. It was astonishing. And I mean astonishing. We have a lot to be thankful for. Mostly the people who live here.” However, Spurgeon continues, ““The whole pandemic was a lesson in emergency management. When it hit we didn’t have the right information, we didn’t really know what was going on. It was an ongoing emergency situation. And for everybody that has been in it. Now that we are going through Stage II, at least we are familiar as to what to expect. But the team never got depressed never got down. We always looked to see how we can make this the best that it can be.”

The EDC remains proactive with many projects locally and regionally. According to Spurgeon, “EDC has partnered with firms in Bakersfield to help the base with machining and things of that nature. We use regional companies to help the base continue to operate. That has helped the region; we are not an island, this is important. We partnered with Bakersfield College on an aerospace program, we partnered with Burroughs High School educating seniors on how to fill out applications to get hired for the base renovation. That is important to the base. As part of a hands-on mission, that is what we have been doing. We are working with the City right now in their efforts to procure a grant for a new aquatic center. The EDC had worked on it for quite some time. We are funding the research to breakdown the cost and the expense so when the City fills out the grant they will have verifiable numbers.”

Spurgeon explained GDP, “You hear GDP quoted frequently. Gross Domestic Product which is translated to dollars would mean how much money do you gross locally as an entire business community. As that money goes up and down, that is your success, your wave. Because the school district, the base and the hospital are consistent employers with payrolls, we have less of an outgoing tide that other communities would have. So our gross income is less affected today than many other places. It is affected, just not as affected. If we can get this Covid situation under control and the small businesses can go back to work, people can get hair cuts, get their hair done, all of those things.”

Spurgeon addresses short term and long term challenges, “The immediate is navigating the pandemic situation followed by helping accommodate the base renovation work that is going on. After the earthquakes, the EDC hired a company called K and L Gates, a lobbying firm out of DC, that firm helped lobby congress in conjunction with what the city and the Navy were doing to rebuild the base. There were quiet discussions of ‘What if the Navy didn’t?’ That would have been catastrophic for us, so the EDC was very proactive to help with that. The City took a lead position in that. Did a very good job and we got the $3.5 to $4 billion necessary to rebuild the base and have it work 25 – 30 years into the future. In the long term the EDC is trying to work with a number of people, predominantly aerospace, to come to Ridgecrest to set up shop. To actually bring your business here so we can deviate from reliance on one employer. Building an adjacent industry that complements what they do out here makes the most sense. That is one of the biggest missions of EDC is trying to add those elements that will continue to grow business. We can’t just depend upon the Navy.”

Spurgeon admits, “I’m not an economist, but in my day job as General Manager at Springhill Suites, we are looking at 2022 ultimately to get back to where we were in 2019. We are looking at another year to get back to an equal footing of 2019 and from the hotel business at large, that is what they are saying nationally. In 2022 we will see a return to travel. So we are going to have a year of a challenge. That same challenge is local. A downward spiral in Covid count will put everything back into play.”

• 2021 Through the Eyes of a Realtor

“I think we are going to have a great 2021,” answers Clint Freeman, Real Estate Agent with Coldwell Banker Best Realty, when asked about looking ahead to this New Year. Driven by low interest rates, the last quarter of 2020 was the strongest on record. Freeman explains, “We usually have a pattern where spring is the strongest time of year and it tends to drop off in the heat of the summer and then tapers off and gets a little bit stronger in the fall time then kind of closes down between Thanksgiving and December, but not this year. It was strong the entire fall season, the strongest we ever had.” He anticipates this trend continuing saying, “I am thinking that is going to continue to stay. Interest rates are historically low. New construction here in town is going gangbusters; it is booming. New construction — they put up a house, before it is finished, it is gone.”

Housing rentals are also strong right now. One can interpret Freeman’s remarks as a bit of advice, “We are seeing great occupancy rates for our rentals, they are very high. Very low vacancies right now. It is a race right now to find something vacant. When you see it you need to have an application filled out to be able to jump on it and look at it right away. Some people say, ‘I saw this online, can I go see it?’ No. You have to have a credit check, you have to have an application in, you have to have all of the right paperwork in so you can be in line to just be able to rent.”

Most of the sales come from people coming to town to work. According to Freeman, “We have people coming in working on the base. You have people who are already here who want something else. The house is either too small or it is too big. But the main driver is people coming in to Ridgecrest to work. Contractors who are coming in with a crew: Instead of putting them up in hotels for the next few years they buy a house and their crew can live in that house while they are working here.” He adds, “There is also a trend where more people are calling from the coastal areas. They are cashing out of million dollar houses and they are coming here, either buying land to get something started or buying a house that is priced around $200,000 and they are living on the rest.”

“Real estate is always an economic driver. Real estate always has been. You have electricians, plumbers, various contractors who are staying busy because influence with repairs. All the contractors are swamped. It is a very busy time.”

• The View from the Ridgecrest Area Convention and Visitor’s Bureau

“I feel confident going into 2021. And here’s why,” states Doug Lueck, Executive Director of the Ridgecrest Area Convention and Visitor’s Bureau, RACVB. “We are in a major plan to open up a California Welcome Center.” Lueck began researching bringing a California Welcome Center, CWC, about 10 years ago. At that time, it was not a fit for Ridgecrest but over the years the CWC expanded their reach. As Lueck says, “The new modern age of technology and social media platforms changed what they were doing.” What does a CWC do for Ridgecrest? It markets it world-wide at a value of about $200,000 per year. In addition, Cal Trans will provide eight signs on Hwy 395 and Hwy 178.

The Ridgecrest CWC will be located in the Ridgecrest Town Center in the building formerly occupied by Goodwill Industries. Tour buses will easily be able to access the site and visitors will be able to walk to local eateries. The Center itself will be an experience. One feature will be a virtual tour of the Petroglyphs that is currently in development. There will also be the ability to purchase tickets for venues across California including Disneyland and Knotts Berry

Farm. The gift shop will have unique CWC items that will not compete with the local museum gift shops.

The RACVB has not been immune to the effects of the pandemic. Their income flows with the ebb and tide of the hotel industry. The RACVB gets their operating revenue from the 3% Ridgecrest Tourism Improvement District, RTID, hotel tax. Lueck tells us, “Our hotels are down. In December we were 25 - 30% occupancy when we are usually at 80%. I talk to most of the owners either weekly or every other week. Some of the smaller guys are really hurting badly. The Marriot, Hampton, Clarion are hanging in there okay. But some of the little guys are really hurting.” Hope lies in the post-earthquake base repairs, Leuck states, “The construction coming on the base is coming at us. We get weekly reports and we know it is coming and it is slow.”

It is a difficult financial juggling act. Leuck explains, “With the 3% the RACVB promotes tourism for Ridgecrest statewide, countywide, internationally. We have to devote 65-70% of that money to be used for promotion for the city. The rest of it goes to administrative costs. We have an annual operations review and we need to stay within those guidelines. It is tough right now for us because we have to maintain this operation, but there is nobody to market to right now. For example, I had four billboards and we were budgeted for it. That is several thousand dollars. We looked at it and said, ‘Who are we going to market to?’ Right now money is short. We are down 40-50%.”

Lueck and his team are hard at work juggling the Ridgecrest Regional Film Commission that also ebbs and flows with the pandemic. Several projects have been planned, downsized or canceled. Lueck relates that he is “hopeful that the vaccine will turn the corner for us.”

The Inyokern Airport Weighs In

Scott Seymour, Inyokern Airport, IYK, General Manager, tells us, “Inyokern Airport is doing well compared to a lot of similar type airports. Filming has been extremely low as expected with Covid-19. But involvement with the military has increased with many return customers. We have a new tenant at IYK, Ahern Equipment Rentals, who is primarily here for the rebuilding of the base. The Airport Board and myself are looking forwarding to starting our 11.3 million dollar Runway Reconstruction Project on February 1, 2021 and restoring commercial air service by next year. But for the most part we are right on course with this year’s budget.”

• Dan Spurgeon Speaks for the Local Hospitality Industry

Dan Spurgeon, General Manager of Springhill Suites by Marriott, is no newcomer to running a hotel during extreme hardship. In his 45 years in the industry, he has been through a volcano, the dot com bust, a major earthquake, 9/11, and the 2008 financial bust. The pandemic has hit Ridgecrest hard, but compared to the other disasters he experienced the local economy has been able to keep its head above water due to the Federal Government keeping money rolling through the economy. Hotels in Los Angeles, San Francisco, San Diego are suffering. He tells us, “What makes us different is we have an employer of 5000 people that works every day, 365 days a year. That payroll is very consistent. When the base shut down, everybody got paid. Little towns around the valley that don’t have this steady even payroll rolling into their community like we do, they got hurt. In our community, everybody got paid. Even if they weren’t working, they got paid. Our hit wasn’t as difficult. Restaurants have been pounded, salons have been pounded, the movie theater has been pounded. All the things we can’t do in group activity. They have been hurt. We were blessed to be living where we did and everybody has made it through so far because of the actions we did, the employer we have.”

Looking ahead to 2021, Dan shares, “What we are seeing in the beginning of 2021, there are some military groups that come out year after year and they are still coming. Those are on the books. Between that and what we anticipate we will see an increase what is deemed demand. Exactly what that looks like, I don’t think anybody has an idea. Will we do well? Absolutely. Covid aside, this will be a great year.” In addition, he adds, “We are just now seeing activity from the billions of dollars that will be spent on repairs on the base. Companies are starting to show. The Navy reconstruction is building a labor facility east of town with 800 rooms. When we get out of the first quarter it will be an easier identifier on exactly what is coming. Until that labor facility shows up, will we have the other people that are considered transitory (anything under 30 days). They may start coming in record numbers. That has not happened yet.”

Spurgeon believes, “Resiliency is what makes America America. We can disagree on certain things, but at the end of the day I think we have all locally done a pretty good job on resiliency.”

Pictured: Doug Lueck, executive director of Ridgecrest Area Convention and Visitor’s Bureau

Story First Published: 2021-01-15