Merced County officials optimistic about economy in 2014

tmiller@mercedsunstar.comDecember 30, 2013 

With expectations for the return of construction and an unemployment rate on pace to be the lowest since 2008, Merced County officials are optimistic about 2014.

Merced City Manager John Bramble said indications of renewed interest in residential construction is a sign of good things to come, but he added that homeowners need quality jobs to keep their homes. Attracting high-paying jobs will be a “top goal” for Merced, he said.

“We need job creation so the people that fill those houses have a place to go to work,” Bramble said.

Retail stores are the “icing on the cake,” Bramble said, because they generate sales tax. However, better-paying industrial jobs will go further for residents who want to raise a family and own a home. He said there are prospective manufacturing developers interested in the county.

In 2013, Merced saw sales tax revenue rise, Bramble said, as well as increases in property tax revenue and property values. Merced County topped its neighbors with the largest increase in property values in the area, a 6.2 percent bump to $17.7 billion.

“There was a lot of things that were positive,” Bramble said. “Obviously, not everything was as good as we would have liked.”

City officials confirmed this month that Wal-Mart, the world’s largest retailer, would delay construction of a 1.2-million-square-foot distribution center proposed in 2005 on a 230-acre site at the northwest corner of Gerard Avenue and Tower Road.

The center could employ as many as 1,200 people and operate 24 hours a day. Wal-Mart is not expected to break ground on the center in 2014 as planned.

Another area seeing difficulty is south Merced. Residents in the area have been clamoring for a shopping center, and especially a grocery store within walking distance of some of the city’s oldest neighborhoods. But developers need to be convinced, Bramble said.

“We’re going to have to find a company who is willing to open their doors and see the people come,” he said.

The Central Valley as a whole is seeing interest from companies in field such as technology and agricultural processing who want to develop new sites, according to Mark Hendrickson, Merced County director of community and economic development.

He pointed to the 110-megawatt solar facility, spanning 1,012 acres, being built in the Santa Nella area as one example. The project provides construction jobs and the solar facility technology jobs.

“There is a direct correlation between an improving economy, construction jobs and associated development in the future,” he said.

On the West Side, Los Banos is poised to ramp up residential construction, according to City Manager Steve Carrigan. With its proximity to the Bay Area, the second largest city in the county has drawn attention from more than a handful of developers.

“You can essentially get twice as much house for half the price in Los Banos,” Carrigan said.

The key is to control the growth, he said. Uncontrolled building was part of what led to the Great Recession and the housing market collapse, which hit Merced County particularly hard. A good target for the coming year, Carrigan said, would be 100 new homes.

Home construction provides jobs and could continue to reduce unemployment in the county in 2014.

There was a steady decline in unemployment rates this year. Each month in 2013 has shown a lower unemployment rate than the same month the previous year, according to numbers from the Employment Development Department.

Merced County is on pace after 11 months to end the year with a lower than 15 percent unemployment rate. That would be the lowest rate since 2008. It would still be markedly above pre-Great Recession numbers such as 2006’s 9.4 percent rate, but is a substantial drop from 2012’s 17 percent.

“We’re hoping that (decrease) continues,” said Steven Gutierrez, a labor market consultant for the EDD. “Out-of-work people are still having a hard time finding employment.”

A year ago, Merced County’s labor force was estimated at about 111,600, compared with 110,800 last month, according to the department’s most recent numbers.

The figures make no distinction between part- and full-time work, so the rate does not reflect “underemployment,” in which working people have trouble making ends meet.

Sun-Star staff writer Thaddeus Miller can be reached at (209) 385-2453 or tmiller@mercedsunstar.com.

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