Daily Business Report-May 4, 2017
Illustration by Donkey Hotey via Flickr
Why Some Experts Say a Court Just
Created a New Pathway to ‘Tax’ Californians
By Ben Christopher | CALmatters
Could a few words buried within a recent court ruling make it easier for the state to raise money from Californians?
Those words — contained within a decision affirming the constitutionality of California’s policy of charging polluters — are causing a stir among some state budget experts, who wonder if the ruling could be used to could pry loose constitutional constraints that have long restricted lawmakers’ ability to increase taxes.
In its 2-to-1 ruling, California’s 3rd District Court of Appeal declared that the state’s cap-and-trade climate program is neither a tax nor a fee — the two categories into which state jurists have traditionally slotted all revenue raisers —but falls into a mysterious none of the above category.
Such semantic distinctions matter in California because the state constitution puts tight restrictions on lawmakers’ ability to raise money from taxpayers. Voters in 1978 passed the most famous of these restrictions, property-tax-cutting Proposition 13, which also lifted the legislative threshold for new state and local tax hikes from a simple majority to a two-thirds “supermajority.”
The suit, filed by the California Chamber of Commerce and other business groups, contended that when the Legislature created the cap-and-trade program in 2006, it introduced a new tax with only a simple majority vote—violating the two-thirds vote requirements of Prop. 13. (Since then, the auctions have generated $4.4 billion for the state.)
But what is a tax? In explaining its decision, the court offered a new, narrower definition of the word: “a tax has two hallmarks: (1) it is compulsory, and (2) it does not grant any special benefit to the payor.”
According to Tony Francois from the Pacific Legal Foundation, which represents one of the plaintiffs in the case, that definition leaves out many of the levies that most Californians would be surprised to learn aren’t “taxes.”
“Under (the court’s) analysis, any transaction-based tax, such as the sales tax or the gasoline tax, is voluntary instead of compulsory,” he says. “Anyone can choose whether to drive their own car and buy gas for it or not. And, all of these transaction taxes provide something of value to the payer.”
Seemingly anticipating that broad interpretation, the court’s majority opinion insisted there was an obvious distinction between a payment made for a thing of value (in this case, an allowance for emitting greenhouse gases) and a sales tax, which one pays “but receives nothing of particular value for the tax.”
But some conservatives find that distinction too blurry for comfort.
“All the Legislature has to do is say ‘we’re not taxing the purchase of the commodity, we’re just selling you the right to purchase the commodity,’” says Mike Genest, who directed the Department of Finance under Gov. Arnold Schwarzenegger and is the founding partner at Capitol Matrix Consulting. “If you take that logic and apply it liberally, you could probably apply it to any tax.”
The court has “invalidated the Prop. 13 two-thirds requirement,” he says. Even, he argues, as it applies to the income tax: “You just purchased the right to live and work in California for only 13 percent of your income — congratulations!”
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San Diego Small Businesses to Voice
Concerns to Federal Bank Regulators
Local businesses to call for fair lending practices that create economic opportunity
On May 19, small business owners will bring their stories to the table for a candid discussion with federal bank regulators on how small business lending practices must improve for the sake of San Diego’s economy.
In the face of mainstream banks reducing small business lending and Republicans in Washington pushing to repeal the Dodd-Frank Act that fosters small business’ access to capital, these local business leaders will speak up for the fair practices they need to promote San Diego’s economic growth.
“Since I opened my shop in North Park three years ago, we’ve transformed the street corner we started on from a place for drug deals to a hub of new jobs and profits that stay local,” say Brad Keiller, owner of Nomad Donuts. “Banks don’t like lending to small businesses like mine because they can make more money investing in Wall Street. But San Diego needs businesses like mine to thrive.”
There are 77,000 small businesses like Keiller’s driving the economy in San Diego County. Small businesses have a unique ability to improve the region’s neighborhoods, creating jobs and economic opportunity. But in order to hire more workers and make the investments that impact the community, small businesses need a fair playing field where they can gain access to the capital they need.
A report earlier this year from the Woodstock Institute revealed that not only have mainstream financial institutions reduced their small businesses lending, but alternative lenders that could serve as a helpful substitute often add unwarranted burdens for small businesses in Southern California such as high interest rates, onerous terms, and poor customer service. Disparities like this are why San Diego small business leaders demand that the Dodd-Frank Act remain in place.
“The Dodd-Frank Act regulates lenders, which levels the playing field so that small banks — who are more likely to lend to small business owners like me — can compete with larger banks,” says Flossie Hall, owner of Healthy Momma. “I want our federal regulators to know that we need better regulation, not less, to ensure small businesses like mine can access the capital we need to create jobs in our neighborhoods.”
Hall and Keiller and several other local small business leaders from the San Diego chapter of Main Street Alliance will meet with federal regulators at The San Diego Foundation’s Center for Civic Engagement on May 19 at 10 a.m
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Groundbreaking May 11 for New
Ramona Townhome Community
Pathfinder Partners and general contractor Crowbar Construction will break ground May 11 on Paseo Village Townhomes in Ramona, a 31-unit, nine-building development that is scheduled for completion in spring 2018.
The three-bedroom, two-and-a-half bath, Craftsman-style homes, each with a two-car, direct-access garage, range from 1,570 to 1,692 square feet. Prices start in the low $400,000s. They will be located in the Ramona Village Center at Day and La Brea streets.
Pathfinder Partners acquired the 2.5-acre parcel – complete with approved architectural plans – in late 2016. The homes will feature high-end flooring, countertops, cabinets and appliances, private patios or balconies and views of the surrounding Laguna Mountains.
Matt Quinn, vice president of Pathfinder Partners, said Paseo Village is the first community developed under the guidelines of the new Ramona Village Center Form-Based Code, which promotes Ramona’s rural character while embracing development in the town center.
Also on the development team are Ramona-based Progressive Images in Architecture & Planning and San Diego-based Coffey Engineering. Robert Dudek of The Blu Summit Real Estate Group is overseeing sales and marketing.
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San Diego County Investment
Pool Reaches $10.5 Billion
The San Diego County investment pool has reached an all-time high of $10.5 billion while maintaining a “AAA” rating, County Treasurer-Tax Collector Dan McAllister announced Wednesday.
The pool, managed by the County Treasury, is a local government fund comprised of money from more than 200 public agencies. Agencies that are required to invest their money in the fund include the county, all 42 local public school districts, five community college districts, and water and fire districts. Voluntary participants include the San Diego Regional Airport Authority, SANDAG, MTS, and other special districts.
For 17 consecutive years, the investment pool has received a “AAA” rating. This year, Fitch Ratings indicated the pool has the highest underlying credit quality (or lowest vulnerability to default) and a very low sensitivity to market risk.
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USS Jackson Successfully
Completes Missile Test
The San Diego-based littoral combat ship USS Jackson fires a SeaRAM missile against an aerial drone, destroying the target in a test off the Southern California coast. The drone was simulating an anti-ship missile as part of a Combat System Ship Qualification Trials event to demonstrate the self-defense capability of the ship against an aerial target. Paired with advanced sonar and mine hunting capabilities, LCS provides a major contribution, as well a more diverse set of options to commanders, across the spectrum of operations, according to the Navy. (U.S. Navy Photo by Senior Chief Fire Controlman Larry Fulinara)
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Personnel Announcements
MTS Hires Former Assistant Sheriff
The San Diego Metropolitan Transit System (MTS) has hired former San Diego County Assistant Sheriff Tim Curran to oversee all field security operations of the MTS Transit Enforcement Department. He will supervise approximately 200 transit officers.
Prior to joining MTS, Curran served in the San Diego County Sheriff’s Department for 27 years. In his most recent post, Curran was one of three assistant sheriffs to Sheriff Bill Gore. In this capacity he managed the Human Resources Bureau, which supports more than 4,200 sworn officers and professional staff. Curran also managed the Court Services Bureau, where he oversaw nearly 400 sworn and professional staff in the day-to-day security of seven courthouses.
Curran will directly oversee 165 Transit Systems Security contracted officers and another 35 MTS Code Compliance inspectors. In addition to managing all of MTS Security’s field operations, he will oversee equipment management contracts, state and federal grant applications, the security video monitoring program, Code Enforcement standard operating procedures, and more.
Curran will be second in command, behind MTS Chief of Police Manuel Guaderrama.
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Jon Olsen Named Partner at DLA Piper
Jon A. Olsen has been promoted to partner in law firm DLA Piper’s San Diego office.
Olsen focuses on mergers and acquisitions, corporate finance and securities matters. He is a member of DLA Piper’s Corporate practice, where he represents companies and investors in capital financing transactions, including venture backed and registered debt and equity offerings.
Olsen has significant experience representing both selling companies and acquirors in merger and acquisition transactions, including the representation of, for example: Qualcomm Inc. in various acquisition and other strategic transactions; Endoscopic Technologies Inc. d/b/a Estech in its sale to AtriCure Inc.; Computer Patent Annuities Holdings Limited in its acquisition of First To File Inc.; among others.
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Natalie Pizzo Joins Cavignac & Associates
Natalie Pizzo has been hired as a part-time accounting assistant at Cavignac & Associates, a Downtown San Diego-based risk management and insurance brokerage firm.
Pizzo’s principle responsibilities include entering cash receipts, identifying overdue accounts, preparing accounts receivable reports and statements for the agency’s account executives. She also maintains EPIC Data integrity, performing monthly income reconciliations and quality control for account managers, and training new employees on invoicing and collections.
Pizzo completed a six-month internship with Mass Mutual Financial Group in La Jolla.mBefore that she spent two years as a server for Gordon Biersch Restaurant. She holds a bachelor’s degree from San Diego State University.
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John Carpenter Named Chief Legal Officer
Balfour Beatty US has named John P. Carpenter chief legal officer for its California operations. Carpenter brings to Balfour Beatty nearly 30 years of legal and construction industry expertise, and will support the company’s civil and vertical construction business units.
Carpenter joins Balfour Beatty after 23 years of service with Kiewit Corporation where he led the company’s legal and contract procurement and delivery of a variety of large, national and international projects. His work included advising private and government clients on issues arising from large public construction projects with an emphasis on alternative project delivery and dispute resolution.
Active within the industry, Carpenter serves as an arbitrator for the American Arbitration Association on its national construction panel, and has also served as amicus counsel on behalf of the Associated General Contractors of California where he participated in several published decisions impacting the construction industry. Carpenter also is a member of the American Bar Association’s Construction Forum for which he serves on the Government Contracting Division’s Steering Committee and advises on ethics and integrity issues impacting the construction industry.
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Yippee Yi Yo Kayah! The Fair Returns
Western theme surrounds 2017 edition of the San Diego County Fair
This year’s San Diego County fair rolls into town on June 2 with a western theme focusing on the culture of the region from the 1880s and merging it with pop culture elements inspired by it.
Actually, the fair site is already here. It’s the Del Mar Fairgrounds.
Specific to this year’s theme, there will be country music, a rodeo, Fiesta del Charro, a Frontier Town and a themed exhibit with a saloon, art and history displays about this period of time in America.
But while the western theme is a fun way to bring the fair to life, the tried and true standards that fair guests love, year after year, will still be music at the grandstand stage, fair food extremes and traditions, exhibits by children and hobbyists, and displays of California agriculture, which was the original purpose of the annual fair.
The fair runs through July 4. It will be closed the first four Mondays and the first three Tuesdays.
Entertainment: Music always is a main feature of the Fair and includes the Toyota Summer Concert Series on the Heineken Grandstand Stage with a wide variety of performers in paid and free concerts, including the music genres of country, Mexican regional, pop and legends such as Toby Keith, Patti LaBelle, Peter Cetera and Roberto Tapia.
Four other concert series, free with Fair admission include The Paddock Concert Series with 10 nights of music, including the Yardbirds and John Michael Montgomery; Solid Gold Concerts offer Thursday afternoon Oldies acts on the Showcase Stage; Coors Light Rock On Stage includes Belly Up-sponsored Thursday evenings; and Acoustic Showcase starts at 11 a.m. in the the relaxing Paddock on Saturday, July 1, featuring music with no electronic amplification all day, finishing with headliner Tyrone Wells at 9 p.m. The full concert lineup can be seen at sdfair.com
Multicultural Festivals promote diversity . Special festivals, free with admission to the fair, will be featured:
- Asian Festival: Saturday, June 3, at the Paddock. A celebration of Asian & Pacific Islander cultures, representing China, India, Japan, Philippines, Korea, Hawaii, Polynesia, and Vietnam. Featuring traditional and popular entertainment, martial arts, food, and local non-profit organizations. New this year: An Asian art exhibit at 17 Hands Restaurant & Bar, and Sake flights at the Paddock Tavern.
- Gospel Festival: Saturday, June 24, brings gospel music to many stages throughout the Fairgrounds all day, ending with a Grandstand concert featuring Hezekiah Walker & Tasha Cobbs, all free with Fair admission.
- Mariachi Festival: on Sunday, June 11, at the Fiesta Stage, there will be a full afternoon of authentic Mariachi and Folkloric Dance groups from San Diego and Baja California. New this year: Tequila sampling and a piñata striking session for the public. The “Fiesta del Charro” will be in the Del Mar Arena and Roberto Tapia will perform Mexican regional music, rounding out the day’s festivities on the Grandstand stage that day.
- Out at the Fair: Saturday, June 10, at the Paddock and Coors Light Rock On Stage. A full day of family-friendly entertainment and activities celebrating the LGBTQ community, including Diva Drop, Dunk a Hunk, the Newly Married Game, musical performances, and female impersonators, featuring Simply Barbra. New this year: An Art Exhibit celebrating LGBTQ culture will be displayed in the 17 Hands Restaurant Bar.
- Whole Life Festival: Saturday, July 1, brings the Whole Life Festival to the Paul Ecke Jr. Garden Show area, presented by Think Blue, featuring healthful and upbeat lifestyle choices for natural living. There will be demonstrations, lectures, authors and organic growers all sharing their ideas about health and well-being.
- Food: Fair food always is a conversation starter at the Fair. Deep-fried Oreos are among the craziest, and roasted corn on the cob is among the most popular. But the Fair also has gourmet foods and beverages found throughout the Fairgrounds and at special events held within the Fair. New this year is the Gold Medal Beer Dinner, limited to 100 guests, which will provide a gourmet dinner, pairing courses with this year’s finest medal beers. Tickets must be purchased ahead of time at sandiegobeerfestival.com and include a sneak peek of the San Diego International Beer Festival, which starts the next day.
- Beer, Wine and Spirit Competition & Festivals:
The medal-winning wine and beers served at the featured VIP events and other events at the Fair are from some of the Fair’s competitions, including The Toast of the Coast Wine Competition, which draws entrants from throughout the United States and Mexico. The Toast of the Coast Wine Festival, which pours the award-winning wine in the serene Paul Ecke Jr. Garden Show, is held on Saturday, June 10, in two sessions between noon – 7 p.m. Tickets include Fair admission and can be purchased at thetoastofthecoast.com.
Exhibits:
The purpose of the county fair always has been for the community to showcase their skills, creative abilities, livestock and food from the land. One of the most popular exhibits is Design in Wood, featuring handmade furniture and pieces of art in a display that always captures a great crowd. Home and Hobby shows off traditional arts such as quilting and unusual collections, and offers classes and competitions in cooking and food preparation.
New this year is the “Journey to the Winners Circle” exhibit celebrating the pageantry, traditions and history of horse racing at the Del Mar Race Track. Special features will tell the story of the “Backside,” Hollywood & Horses, and a chance to take your photo in the Winners Circle. Next to the entrance to the Student Showcase exhibit, the fairgoer will encounter another new exhibit, the Awareness Gallery, a three-dimensional display focusing on teen life and all of the trials and tribulations it brings. It is an interactive experience meant for people of all ages.
The Paul Ecke Jr. Garden Show is well-known as the quiet and shaded part of the Fair. There are professional exhibits and club entries displaying garden ideas within the Fair’s theme. This year’s Garden Show theme is “Happy Trails.” The Flower Show, adjacent to the Garden Show, features fresh blooms, judged every few days and displayed for everyone to enjoy.
Many other exhibits feature fine art, photography, student projects, gems and minerals and junior livestock competitions.The Jr. Livestock Auction, from 10 a.m. to 5 p.m. on Saturday, July 1, is one of the foremost traditions of the Fair. Area youth will auction their livestock projects to raise money for scholarships and higher education. Contact the Livestock Office at (858) 792-4283 to participate.
Fun Zone:
Rides and games are among the main traditions of the County Fair. With nearly 100 rides and as many games, this is the region of the Fair where most young people want to hang out. Tickets for rides can be purchased several ways: Pay One Price at $38 provides the wristband holder unlimited rides from noon until 8 p.m. on Wednesdays and Thursdays, June 7, 8, 14, 15, 21, and 22. Ticket packages of 28 coupons for $20 and 12 coupons for $9 also are sold at the Fun Zone Ticket Booths whenever the Fun Zone is open.
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