BUSINESS JOURNAL AUGUST 2013 Vol. 4 No. 5 $2.00 Premiere Source for Business News in the H.D.

HIGH DESERT

“Fun,” “Exciting,” “Fulfilling,” these are the ways people who really love what they do will describe their jobs. Everyone would love to be able to say these things, and for Chris Ackerman, owner of Signify Design and announcer at the Wheel2Wheel (Crazy Chris), this is a reality! “My biggest joy and motivation to better myself is to hear the roar of the crowd, and see smiles

KEYS TO SUCCESSProductive, Motivated, and Happy in the Workplace

By: LISA KIPLINGER KENNEDY

Chris Ackerman, owner of Signify Design and announcer at the Wheel2Wheel (Crazy Chris).

Productive, motivated, happy employees will strive to do their

best, and it is important for employers to know how to keep their workforce engaged and industrious.

and laughter on their faces when I entertain them. It's all that matters to me! Attitude is something that completely has a lot to do with the enjoyment we get out of our

jobs,” states Chris about announcing. “For my role in the speedway racing community,

I don't really look at it as a job, but more like my contribution to a family. Never once have I ever thought, ‘Oh I don't want to

CON’T PAGE 2

H.D. Worst in Nation for UnemploymentMore than half of population with no college education

By: STAFF WRITER - THERESE AAKER The High Desert is the worst in the nation for its unemployment rate, according to John Husing, Vice President and Chief Analyst for Economics and Politics, Inc. “With areas of 1 million people or more, the Inland Empire area is the highest in its unemployment rate. There are higher rates with for areas with less people, but for our demographic, our area is one

of the worst,” Husing said. “In San Bernardino County, the unemployment rate is 9.2 percent. The unemployment in the High Desert is higher than the county as a whole.” In an area with jobs that require higher education, the county’s rate of those who stopped education after high school, according to Husing, is 48 percent, almost half the population. This is even higher

in the High Desert, he said. Joseph Brady, president of The Bradco Companies, shared a similar outlook on Husing’s analysis. “We don’t have the educated work force we need. If a large company came here, that’s a big concern.” said Brady.

Con’t PAGE 3

“To get us back to

normal, back where we were in 2005, 2006, it’ll probably

be 2017.”John Husing, Economist.

Unemployment expected to remain high in the High Desert until 2017

FROM THE COVER

Stay in the “Know.”High Desert Business Journal

“PRODUCTIVE” - Con’t from PAGE 1

announce tonight.’ It’s more like ‘I can't wait to announce tonight!’ If I could entertain crowds and announce every day of my life, I'd be in heaven.” People crave praise, recognition and rewards; they have the need to feel appreciated. Chris gets this from the roar of the crowds, but for people who work in a more typical environment, management and supervisors are the ones to supply this “applause”. In The One Minute Manager, Kenneth Blanchard and Spencer Johnson state that catching employees doing something right, followed by one minute of praise goes a long way in setting the standards of what you expect, and in motivating employees to repeat that behavior. Employees who feel valued and appreciated for their hard work will generally continue to do so. Motivation for many people also comes from the promise of payment, and the feeling of being paid what you are worth. An incentive for increased output or exceptional performance, many times, comes in the form of additional compensation, either monetarily or through benefits. In order to feel that this can be accomplished, employees need to be trained correctly and given well-defined goals in order to know what is expected of them. Setting clear guidelines and giving concise direction gives workers the ability to do their jobs without constant supervision. Once employees perform adequately, giving them some control over how the work is done and being allowed to give recommendations for ways things could be done better, or “empowering” them, also makes for more

PUBLISHERWestern Star Financial, Inc.

EDITOR-IN-CHIEFGretchen Losi

MARKETING DIRECTORLisa Kiplinger Kennedy

STAFF WRITERSTherese Aaker

Lisa Kiplinger-KennedyJason Lamoreaux

Ryan Orr Alyssa Penman

Steve SipeSam ThatteCaroll Yule

CONTRIBUTING WRITERSSandy HarmsenJames Johnson

Mike Nutter

EDITORIAL BOARDTeri Ortega

President Adelanto Chamber of Commerce

Janice Moore President Apple Valley Chamber of Commerce

Yvonne Woytovich President Hesperia

Chamber of Commerce

Eric Camarena President High Desert

Hispanic Chamber of Commerce

Michele SpearsPresident Victor ValleyChamber of Commerce

OFFICE MANAGERSherry Madan

HDBJ is published monthly with an additional two Special Features, 40 Under 40 published in October

and our Annual Book of Lists. You can also find us on the Web at

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Call 760-244-8596For editorial inquiries, including story ideas, promoting a business event, or to be considered as part of our writing team, call Editor

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productive and committed workers.People like to be challenged as well. When you can give someone something new to do, especially if it is interesting to them, they will more than likely step up to the plate and do an amazing job. The responsibility for having the new duty, plus the encouragement that they are trusted to get it done, will be exactly what they need to effectively accomplish the task to the best of their ability. Productive, motivated, happy employees will strive to do their best, and it is important for employers to know how to keep their workforce engaged and industrious. Turnover is one of the biggest expenses for any company, so making sure you are able to keep your employees confident, constructive, and satisfied is vital. Chris also owns and operates Signify Design, and he describes his drive for that business in this way, “I am motivated by the fact that I am

doing my part in making the High Desert business community look more professional with my designs. I strive hard, to give business a very professional look, and with each day, and each new project I further that motivation. I love the fact that I am leaving a small legacy in the HD for my children to be proud of. As we drive through the area, my son and daughter love to point out

my designs they've seen me work on, and the smile and pride on their faces is priceless to me.” Employers need to stay productive, motivated, and happy also, otherwise their attitude many times is reflected down onto employees. Most want to have a reputable business with reliable, well -trained employees along with appreciation, integrity, and the ability to serve others. Many also want to make a significant difference in our local community as well, with pride in the work that comes from their organization.

“Employees who feel valued and appreciated for

their hard work will generally continue

to do so. “

Lisa Kiplinger Kennedy is a High Desert native with a Master’s Degree in Business, has taught at Victor Valley Community College and succesfully runs her own business.

THIS ISSUE Vol. 4 No. 4

CONTENTSCOVER STORIES

KEY TO SUCCESSProductivity and motivation at work

UnemploymentWhere the HD stands and how to get on a healthier path

Page 4

Executive Q&ATim Anderson of Desert Wireless

Page 6

MARKETING MAZEPage 8

“12 People” ProfileTodd Tatum Owner of American Housing

Page 9

ENTERPRISE ZONECA Refocuses on business support programs

Page 11

CUSTOMER SERVICEHow to weed out your bad customers

Page 15

SOCIAL PROOFPart 4 in a series of Marketing tips

Page 17

Residential RealtyWill Mortgage Interest Hikes Halt the Housing Market?

Page 18

Tax Breaks for Small Business Owners

‘UNEMPLOYMENT’ Con’t from Cover Brady believes what hurt the area the most was the loss of redevelopment agency dollars. “That destroyed the smaller communities and they all lost support. We need to bring the city together to attract businesses to the High Desert to our region.” With a predominately under educated workforce, attracting those big businesses are a dilemma, according to Brady. Though the recession was devastating to our area, positive signs are showing and the High Desert is slowly getting better. The economy’s healing process has

started — much like being “at the bottom of the well and having to climb out again”, Husing said. “To get us back to normal, back where we were in 2005, 2006, it’ll probably be 2017. We have a four-year healing process in front of us,” Husing said. “We had a rough recession. And the sectors that were hit the most were the ones that we rely on the most, the heaviest starting with construction. The process isn’t shrinking anymore, but we still got quite a ways to go.” Husing believes the beginning signs of renewal are in waiting for the housing market to heal. “More construction, that’s the

missing piece,” Husing said. “As a sub-region to a bigger region, we’re not out of this yet and we got a long way to go,” Brady said. “Everyone at the county, they’re all aware of the problem — but it’s a really big problem.” One asset we gained as an area during such a difficult time is that companies figured out how to stay afloat in the economy’s

situation, giving business owners the skills to succeed when met with hardship. “Companies figured out to have the same output today as they did then,” Brady said. When the economy does get back to normal years down the road, businesses will be better off than before the recession hit, Brady said. The High Desert may have a ways to go, but a positive future is in sight.

Monthly Labor Force Data for Cities and Census Designated Places (CDP)May 2013 - Preliminary

Labor Force Employment Unemployment Number Rate Adelanto 6,700 5,700 1,000 14.9%

Apple Valley 25,900 23,300 2,700 10.4%

Barstow 10,500 9,300 1,200 11.4%

Hesperia 30,200 26,500 3,600 11.9%

Victorville 29,600 26,300 3,400 11.5%

Lenwood 1,600 1,300 300 18.8%

High Desert 104,800 92,700 12,300 11.7%

SB County 855,600 775,800 79,800 9.3%

Source: CA Employment Development Department. Data Not Seasonally Adjusted

Executive Q&A With Tim Harris of Desert Wireless By EDITOR GRETCHEN LOSI

4 EXECUTIVE SPOTLIGHT

Tell us something happening locally that we aren't talking about. A new television station has begun broadcasting in the Victor and Lucerne valleys. KVVB Channel 33.1 is now broadcasting over the air (external antenna is needed) featuring a mix of family friendly programming. Soon there will be local news, sports and shows produced locally with information that is of major interest to every resident of the High Desert. There will be a simulcast on the Internet so that if you can’t view a program on your television, you can pick it up online. There will be also be a second channel, 33.2 that will be a Spanish language channel to support our growing Latino population. This will be a broadcast picked up from several of the top cable channels in Mexico City.Channel 33.3 will feature those ever popular Infomercials 24/7 so if you’re looking for those special gifts for your friends and relatives or just looking for something new for yourself, this is the place to go.Within the next month, we will also be broadcasting in the Barstow/Lenwood/Newberry Springs area on Channel 29.2, we will be sending our primary channel to the area to give viewers a real choice in programming.

How has business technology changed over the past 10 years?The primary change in business technology over the past decade in my opinion is the proliferation of Hi-Speed Internet connections. I remember telling businesses that this medium will be their primary means of communications not only with their customers but also with their providers and suppliers. One huge change has been the advent of the digital telephone, gone are the days of paying Ma Bell hundreds of dollars for your monthly phone bill including

outrageous long distance charges. Digital phones have added to the bottom line for those businesses that have changed over to that service. Businesses are billed a flat rate for each phone or “seat” which includes all local and long distance calls. Another breakthrough is the open-source

PBX that has drastically reduced the cost for that appliance and enables you to connect remote offices to your single source appliance. This enables inter-office communication by telephone without any cost to either office. It’s simply an extension and it doesn’t matter if your office is in Hesperia and the remote office is in Barstow or Las Vegas or perhaps even China.

Where do you see business technology headed in the future?Hand held devices are going to be the norm in a lot of businesses. Sales people can take

Name:: Tim HarrisCompany: Desert Wireless, LLCFounded Locally: 2001 with wireless connections, 1996 with MSCOMM so we have 17 years of continuous Internet servicePosition:: COO Time in Position: 12 yearsAge: 67Tim has been married 21 years and has 5 children, 9 grandchildren, 3 great-grandchildren. The former Rotarian, is also a former College and High School sports official, primarily baseball.

orders on site, get a signature on the order and click send thereby submitting the order and cutting lead time to the client. “Cloud” based computing is beginning to really become an accepted practice. Companies are finally understanding that the remote storage dynamic is not only necessary for the safety of their data but is just simply the easiest way to work. Large multi-drive servers will be traded out for storage in the cloud.

What are the three "Must Have's" for local business in terms of technology?High Speed Internet access, both mobile and in the office.Digital telephone service, commonly called VoIP.Disaster plan for your business. This is the most overlooked item in business.

Tell us about your newest endeavor. Our newest offering at Desert Wireless is assisting your business in developing a Disaster Recovery Plan. We have back-up Internet connections available at very good rates. When your primary connection goes down, as all connections do, we can enable your business to continue to do business without worry. Our redundant connections to the Internet will achieve a high level of uptime exceeding most carriers’ current offerings.

ADVERTISE IN THE HIGH DESERT BUSINESS JOURNAL Call today to find an advertising package that’s right for you. Marketing Director - Lisa Kiplinger Kennedy 760-954-5334

GOVERNMENT5

Some states, like California, are loudly proclaiming that they have returned from the fiscal abyss. Maybe for now, but the future doesn’t look so good when long-term debt and pension obligations are factored in. Taken together, our 50 states owe $1 trillion in unfunded pension obligations. But right now the most severe and imminent fiscal crisis is in the nation’s cities. For one thing, some states are trying to improve their balance sheets by cutting aid to localities while imposing new mandates for everything from housing to green policies. Governors in states like Pennsylvania, New York and California have been pushing obligations down to levels of government below them. California Gov. Jerry Brown’s ‘Realignment’ strategy put the responsibility of state justice programs on local governments (though this came with promises of increased state aid). Brown also oversaw the dissolution of over 400 Finance Redevelopment Agencies, some of which may now be forced into bankruptcy. So while state debt is expected to decline by $1.7 billion next year, local debt is set to increase by $600 million. Seven major municipalities have already filed for bankruptcy, the largest being San Bernardino, Calif. The main cause is not hard to find: unfunded pension obligations to employees. A recent Lincoln Institute paper estimated that the aggregate unfunded liabilities of locally administered pension plans top $574 billion and eat up nearly 20% of municipal budgets. But the worst is yet to come. According to the Lincoln Institute’s Anthony Flint, “If trends continue, over half of every dollar in tax revenue would go to pensions, and by some estimates in some cases would suck up 75% of all tax revenue.” This dynamic will eventually be felt not only in long-term basket cases such as Detroit but also in America’s largest and most venerable cities such as Los Angeles, New York and Chicago. Part of the problem lies in legacy costs, similar to what we have seen in older industrial companies and airlines. The longer a municipality has been ladling out generous retirement benefits to public workers, the more they have to face the consequences, particularly as more retirees have the poor taste to live well into their eighties and beyond. A crisis is also brewing in Los Angeles, a once youthful city whose rent-seeking developer and union-dominated political structure has turned it into an economic and fiscal laggard. Former Mayor Richard Riordan has predicted that unless pensions and compensation are reformed dramatically, the city will slide toward bankruptcy. The nation’s second-largest

city faces a projected $800 million deficit over the next four years and pensions that are underfunded by at least $15 billion. These huge obligations increasingly constitute a tax on the future of urban residents. As cities are forced to cough up ever more money to meet their retirement promises to workers, they become ever more incapable of addressing the basic infrastructure needs critical to maintaining economic competitiveness against younger, often faster-growing cities in less union-dominated parts of the country, notably in the South and Southwest, as well as newer, often more affluent suburban areas. In the coming years count on the emergence of an increasingly dire conflict between urban boosters — who long for everything from improved schools to more bike lanes and better transit — and their traditional allies among the public-sector workforce. Essentially this will be not so much a war between conservatives and free-spending liberals, but what Walter Russell Mead has described as “blue on blue” conflict. What needs to be drilled into the urban progressive mind is the basic reality that if the private economy fails, unions will find themselves confronted not by weak-kneed, weak-minded politicians they can own, but by bond holders, accountants, lawyers and judges who will press to either negate contracts or allow basic services to deteriorate to catastrophic levels. At the same time, the private sector needs to recognize its inherent interest in the maintenance of efficient and reliable city services. Rather than simply denounce government, per se, the business community needs to appreciate the fundamental importance of the public sector to long-term economic growth. For much of western history urban infrastructure and efficient services played a critical role in the creation of strong urban economies. This has been true as well in the United States, from the days of toll roads to late 19th century investments in water and sanitation systems. Modern Los Angeles would have been inconceivable without the aggressive, and often ruthless, building programs of the city-owned Department of Water and Power. Ultimately leaders in both the private and public sectors in cities need to recognize that the only way out of recurring crisis and inevitable decline lies in job-generating economic growth. Cities can only truly prosper by promoting that foster growth in ways that deliver real benefits to the vast majority of their citizens.

Reprinted from PublicCEO.com

The Truce That Could Save American Cities FOR THE WATER COOLER At least 14 former presidential candidates still have more than $100,000 in outstanding campaign debt. The most delinquent candidate is Republican Newt Gingrich, who owes $4.6 million from the last election. President Obama still owes $3.1 million. -USA Today Almost 18 million people hold a collective $210.5 million in unredeemable gift cards from bankrupt bookseller Borders, which closed in 2011.-NPR.org

As online merchants roll out same day delivery services, shoppers are unimpressed. Just 9 percent of Americans said getting a delivery the day they ordered it was a top factor that would improve their online shopping experience. They’d much rather pay less, with 74 percent preferring free delivery. -Time.com

Demand for ethanol has dropped from 9.7 million barrels a day in 2007 to 8.7 million last year, largely because cars have become more fuel efficient. One out of every 10 ethanol production facilities in the country has stopped producing in the last year. -New York Times

China has edged out the U.K. as the world’s fifth largest arms exporter, after the U.S, Russia, Germany and France. While global exports rose 17 percent since 2008, China’s foreign weapons sales swelled 162 percent. -Bloomberg Men make up 84 percent of mobile app developers, but they’re not making out like bandits. More than a third of them make less than $16,000 a year from building apps, and just 12 percent of app developers make six figures.-The Wall Street Journal

Since the financial crisis began in 2008, the U.S. has secured just two convictions against senior bankers. In contrast, more than 800 bankers were jailed as a result of the savings and loan crisis in the 1980’s.-The Economist

6MARKETINGNavigating through the Marketing Maze

By ALYSSA PENMAN

Alyssa Penman is a local business advocate and marketer who champions the independents of the Victor Valley through RelyLocal.com, and serves independent businesses nationally at LocalAndIndependent.com. She can be reached at AlyssaPenman@RelyLocal.com.

Small business owners report being frustrated by navigating the ever-changing waters of online marketing. The sheer amount of talk about the recent Panda 2.0 update of Google’s algorithms is more than even most seasoned marketers can wade through. Clearly search engines are still the biggest way for local businesses to connect with potential customers, but reports of popular tool results are mixed. Social signals sent by review sites, as well as the popular social networks like Facebook or Twitter, are taken into account by Google when returning search results. Just how heavily these signals factor in is a mystery, but certainly they appear to be the direction that Google is going. (Search YouTube for videos from Matthew Cutts if you would like to learn more about how Google does what it does.) Two tools that many Victor Valley business owners are talking about, both positively and negatively, are Yelp and Yext. Yelp: Arguably the biggest review site online, Yelp is a must-do for any brick-and-mortar business. Claiming a business profile is free, but generally results in a call from Yelp salespeople. One local restaurant reports excellent results from a paid Yelp advertising campaign that targets any search for their subcategory. The result is that even if someone is technically closer to a competitor, their name is also showing up on the results page. Yelp profiles also tend to show up on the first page of Google and other search engines. Participating in Yelp appears to be pretty

steep, though. Other local businesses report that sales reps are quoting them prices in the

$500-$800/month range. Considering their traffic, this is a tempting, and potentially profitable venue for small businesses. The other double-edged sword Yelp provides is their review system. Two local businesses, both restaurants, recently solicited reviews from their many happy customers. Unfortunately, Yelp tends to penalize enthusiastic reviews, especially if there are a number of them that come in at one time. The assumption is that

the business owner is impeding the natural rhythm of reviews by posting fake or paid-for reviews. Yelp appears to assume that negative reviews are legit. Unfortunately, this is also an opportunity for abuse. Conversely, businesses that are doing well for their customers, especially in the dining industry, will be overrun with good reviews that pass the Yelp test. At a minimum, local businesses should claim their listing, update the content, and keep an eye on reviews. Post thank yous, offer to fix things, but never, ever argue online with a disgruntled customer on Yelp. Yext: With the fifty or so “meta-listing” sites, as well as many locally-crafted listing sites (full disclosure: I own one of these locally-crafted listing sites, RelyLocal.com) local business owners might be overwhelmed with the time-consuming task of creating listings for each site. Services such as Yext promise to

make this process easier by doing the listing submissions for their clients. (There are others, although Yext appears to be emerging as the major player in this area by reselling their services through other firms) Starting with a free survey of what listings exist, and which of them are wrong or incomplete, small business owners can actually gain some valuable information from Yext for free. The real potential, however, appears to be in their premium listing service. One local financial services firm reports that they have jumped to the top of Google searches for their locally-focused keywords after signing up with Yext. They cannot confirm that it is solely the benefit of this tool, but it is not unlikely. The cost is several hundred dollars for the year, and it gains users premium memberships to a number of important sites. For those with more cash than time, it appears to be a reasonable solution. Yext does have its detractors too; mostly complaining about sales and cost. At a minimum, local businesses should find all their listings, including Google Places for Local, Facebook, Bing, and Yelp. A recent search of the Hi Desert Book Oasis, uncovered about a dozen profiles in which the bookstore’s phone number was attributed to a now-closed trucking company. Correcting these little inaccuracies may prevent confusion and losing customers. This list of listings can also give you a kind of map as to where to go. The bottom line: Claim your digital spaces, even if you don’t do anything further with them. The more correct information is out there, and the more opportunities customers have to provide feedback and share information, the stronger your search results will be. As with anything, businesses need to start with quality services and products, and maintain high-quality information online. This is what the search engines are being trained to look for, and as social sites (like Facebook or Yelp) become more active in search, the results will show there too.

Two tools that many Victor

Valley business owners are talking

about, both positively and negatively, are Yelp and Yext.

12 People You Need To KnowAugust’s Featured Guest

TODD TATUMBy HDBJ Editor In Chief, Gretchen Losi

Proudly SPonSored By:

“The High Deset's newest Spanish languge radio station"

Growing up Todd’s dad made sure he and his brother were working in the real estate business. This meant cleaning houses every summer starting at $3 per day and finally as teenagers getting $3 per hour. “We used to say that we couldn’t wait until hell week for football practice in High School start. My Dad would still ask us if we could work between the morning and afternoon practice,” Said Todd. “My brother and I both swore we would never get in the business and now both of us are.” This created a work ethic that has served Todd Tatum well. He was Vice President of Operations for Narcissa Homes, a homebuilding company that built over 3,000 homes in Southern California before co- founding the Tatum Development Group, a homebuilding and development company that built over 500 homes. He then went on to co-found American Housing Group, Inc. a private homebuilding company based in the High Desert. In 2005, Builder Magazine named American Housing Group the 5th fastest growing homebuilding company in the nation. Today he is preparing to break ground on 15 homes this month in Apple Valley and Hesperia. “We are excited to think that something our family has done for 3 generations will finally become a reality again!”Throughout the country, Todd says that homebuilding is

starting to pick up tremendously. “Unfortunately, the High Desert always seems to be the last ones to experience the recovery of a real estate downturn,” he said. Todd mentions that on the cover of a July issue of The Wall Street Journal there is a story about the national public homebuilders buying the smaller, regional homebuilders who have land inventory that they can utilize immediately and in the near future. “In the past, this wouldn’t occur until well into a housing boom. I think we are on the cusp of a good growth cycle.” “I believe we will start to see the national homebuilders begin to re-enter our market next year. Due to the high cost of the City and Municipal fees, the sales prices really need to increase another $10-15 per square foot in order to make the selling of tract homes a viable business. I do believe we will see more smaller private builder start homes, however, with limited construction financing it will be tough to start a lot of houses if your one of the smaller, private builders,” he said. What he fears over the next two years – “I don’t want to see a crazy increase in home prices like last time, but a good steady market will be a big shot in our local economy.”

Todd also has a big heart with a passion for philanthropy. In 2001, Jim, Madeline, Todd and Nina Tatum (Jim and Madeline’s daughter) established the Tatum Foundation. The Tatum Foundation enables the Tatum Family to direct their philanthropic activities in a structured format that ensures the legacy of the Tatum Family and their community service will live on for generations. Today the foundation supports local non-profits. In the past, the foundation provided over $100,000 in scholarships to local students going to Cal State San Bernardino. “Because the foundation is funded entirely by our companies and family, we are looking forward to the new real estate boom and what that will mean in our ability to increase our help to those in need,” he said. Todd also sits on the board of St. Timothy’s Prep School in Apple Valley and serves on the Vestry of St. Timothy’s Church in Apple Valley. Maintaining the legacy his family has so carefully established in the High Desert is something Todd strives for in his daily life. “When my Father Died last year, dozens of people said to me ‘What a Legacy he left’. Growing up here I was always proud of what my Grandfather and parents did to help this community grow,” he said. It wasn’t until he was an adult and moved back here in 1990 that he said he really realized what this community meant to his parents and grandparents. For them to see the change from a small community that his Grandfather came to, for farming potatoes, to a population of over 450,000 people, really validated their hard work and pioneering spirit. “During my 23 years as an adult living back here, I have seen tremendous changes and really believe if we work like my parents and grandparents did, we will all have a community we can be proud of.”

BUSINESS JOURNAL AUGUST 2013 Vol. 4 No. 5 $2.00 Premiere Source for Business News in the H.D.

HIGH DESERT

GOVERNMENT9

In early July the California Legislature sent Assembly Bill 93 and Senate Bill 90 (cleanup to AB93) to Governor Jerry Brown’s desk for signature as another step by his administration to dismantle local job creation incentive programs. On the chopping block this time is California’s Enterprise Zone (EZ) program, created 27 years ago to encourage job and economic growth in low-income zones by extending tax breaks to businesses. These latest proposals come nearly two years to the day after the Governor and legislature abolished statewide redevelopment agencies—one of the most contentious and hard-line actions by his administration. Many local communities are still reeling from that decision. This time, however, new state-wide economic development programs are proposed as part of the package. Together the bills eliminate EZs as of January 1, 2014; however, credits for eligible employees hired prior to that date will continue for five years and other unused credits and deductions can carry forward for up to ten years. Instead, the program’s $750 million in tax credits are redirected to the following tax incentives, which take effect on July 1, 2014:• State sales tax exemptions on the purchase of specified manufacturing or research-and-development equipment; Provides that the state sales tax exemption for purchases of manufacturing equipment will apply for eight years, from July 1, 2014 to July 1, 2022. California manufacturers will benefit by being able to deduct the state’s portion of the sales tax from equipment purchases for the time that the credits are available.• Specified hiring tax credits, including hiring of veterans and the long-term unemployed, would be available only until 2019 and applied only within the boundaries of a newly defined “economic development area” to include former EZs and Local Agency Military Base Recovery Areas (LAMBRA) and the poorest 25 percent of the state’s census tracts. The categories of employees eligible for the hiring tax credit are limited to individuals either: a) Unemployed for six months, b) Receiving the federal Earned Income Tax Credit, c) Recently discharged from military service, d) Ex-offenders, e) Cal Works recipients will

CA Refocuses Business Support Programs By: Steve Lantsberger and Orlando Acevedo

also supposedly be included in clean-up legislation.• Excluded include all retail, restaurants and fast food businesses, unless they are a small business having gross receipts of less than $2

million, and pay hourly wages between $12 and $28. Bans casinos and sexually-oriented businesses from receiving credits.• Funding for the Governor’s Office of Business and Economic Development (GO-Biz) to

offer income tax credits on a negotiated basis to employers/businesses. Authorizes Go Biz to designate up to five pilot areas where a $10 per hour wage can be used (as opposed to the $12 minimum threshold established for all other areas). Go Biz decisions on the pilot areas are exempt from administrative appeal or judicial review. • SB 90 provides further technical changes needed to fix conflicting sections of AB 93. The League of California Cities has a detailed overview of the bills online at cacities.org. The California EZ website is a great resource for existing and pending regulations: hcd.ca.gov/ezregs To gain support for his initiative, Brown called the EZ program “wasteful and ineffective” and cited some unintended consequences of the program which allowed tax breaks to strip clubs and low paying big box retailers. "Enterprise Zones rarely are the catalyst for creating new jobs," he said. "They most often just simply shift them from one part of the state to another." Brown said of AB 93, "This is a big, bipartisan win for California businesses and working people. AB 93 will help grow our economy and create good manufacturing jobs." The Governor also cited a 2009 study by the Public Policy Institute of California that said EZs “have no overall effect on job growth.” There were some positive findings, but the report “calls into question the wisdom of further investment into the program as it stands.” However there were positive stories. According to a press release by California Association of Enterprise Zones (CAEZ) President Craig Johnson, “In 2011, California’s

enterprise zone program retained and created more than 124,000 jobs in some of our state’s most distressed communities.” In the High Desert many businesses did benefit from the program’s incentives. Both Hesperia and Barstow offer EZs, which provide certain tax credits and deductions for businesses within their EZ boundaries. “Once again local communities are being devastated and economies decimated by contrived, biased opinions of lawmakers in Sacramento many of which have never experienced first-hand the challenges individuals face trying to secure a job,” said Steven Lantsberger, Enterprise Zone Manager for the City of Hesperia. “Furthermore, California’s reputation as being anti-business is underscored by this sweeping action that was suspiciously trotted out at the last minute as a “Budget Trailer Bill” allowing little time for EZ proponents to mount a counter-offensive.” Lantsberger wryly congratulated the Governor’s administration for creating a divide between EZ & non-EZ jurisdictions by dangling a carrot of a “new” hiring credit and sales tax exemption statewide rather than solely in the 42 EZs. He went on to say that like other ill-begotten legislation, AB 93 and SB 90 have unintended consequences, many of which will not be realized for years to come. He noted that in a recent conversation with another state agency the likelihood that the disappearance of the EZ hiring credit may lead to loan defaults and the loss of millions of dollars of state funds. “It is about time that California starts passing laws based upon facts rather than rhetoric hatched by think tanks that gin up baseless reports to curry favor and/or funding. There seems to be no ability to compromise in California and this most recent example shows that partisanship politics overshadows the interests of business, industry, and most notably the state’s residents who continue to struggle to find employment,” Lantsberger said. The Hesperia EZ has issued approximately 750

Con’t PAGE 10

Last year Enterprise Zones created 25,000 jobs and prevented the loss of

100,000 more, and encouraged

businesses to locate in low-income areas.

LITTLE ANGEL’S KIDS SPA - Few salons offer full services to young girls, but now that Little Angel’s Kids Spa has opened, local girls have a new place to be pampered or have a birthday party. They strive to bring the day spa experience to young girls and give them a feeling of beauty inside and out. Owner Barbie Pride opened the salon to offer full services to younger girls, catering the business to them and providing a colorful atmosphere. Full manicures are available, as well as a place to do crafts, play games or watch a movie. The store was named for Pride’s daughter, Angel and stresses telling children, “You can do anything you want to do.” Pride employs three locals and recruits new hires just graduated from cosmetology school. 14335 Hesperia Road Unit #109, Victorville

HOT DOG ON A STICK – Just in time for summer, hungry High Desert residents can now get their meat on a stick fix with fresh squeezed lemonade. Locals can enjoy the new drive-thru location, which opened mid-June. Some 20 locals are employed at the new location featuring all the Hot Dog-on-a-Stick classics on Bear Valley Road in Hesperia. Manager Jenny Bystrom said, "I like that it's a fun environment, and it's expanding." The restaurant is part of the Employee Stock Ownership Plan — all employee-owned and operated, after owner Dave Barham passed away in 1991, giving his company to his employees. 14777 Bear Valley Road, Hesperia

PREMIER ATA MARTIAL ARTS - Apple Valley has a new martial arts center for kids. Premier ATA Martial Art. The ATA Karate For Kids Class teaches important life skills such as, courtesy, respect, concentration, self-discipline, helps students to get better school grades and social skills. Bullies beware, ATA teaches children how to manage these situations in a safe manner. From fitness, self-defense to karate birthday parties these special ATA Martial Arts community karate classes will Unleash The Power of the ATA Karate kid. Owner Allen Moser III employs one other local and is training new instructors. 12289 Apple Valley Road, Apple Valley

OPEN FOR BUSINESS

ENTERPRISE ZONE CON’T Hiring Credit Vouchers since Hesperia’s EZ designation in April of 2010. Scores of businesses have located in Hesperia’s EZ since its inception and the City had every expectation that this trend would continue over the balance of its 15-year life. He added, “We are pleased that our businesses will collectively reduce their state tax liability by over $28M thus enabling them to invest their earnings in creating additional jobs, expanding their market, or increasing their investment in our local economy.” Since the hiring credits can be issued through December 31, 2013 he encouraged all businesses within the Hesperia EZ to check with their CPAs, accountants, and advisors to make sure they take full advantage of the EZ benefits before they sunset. Hesperia hopes to issue another 250+ vouchers by December 31, 2013 bringing their total to 1,000. He continued by stating: “It should be no surprise that this new legislation creates an additional bureaucracy in Sacramento to mete out the “new” hiring credits which will be much more cumbersome to obtain than those allowed under the now-defunct Enterprise Zone program.” AB 93 also eliminates the existence of

LAMBRAs—designed to attract reinvestment and create re-employment opportunities on certain former military bases—(and other similar programs) as of January 1, 2014, including Victorville’s LAMBRA program. Victorville’s Assistant City Manager Keith Metzler, was clear in his opposition to the legislation, “The LAMBRA Enterprise Zone has been important to SCLA in its effort to transform itself from being a former air force base to becoming an industrial center for aerospace, manufacturing and logistics operations. Globally recognized companies currently calling SCLA home are GE Aerospace, The Boeing Companies and M&M Mars to name a few. Using the LAMBRA Enterprise Zone, SCLA has issued approximately 260 vouchers for qualified employees providing an estimated hiring credit to SCLA companies in the amount of $9 million. The Dr. Pepper Snapple Group and United Furniture Industries are currently using SCLA LAMBRA the most and the availability of an Enterprise Zone was an important part of their site selection criteria. Elimination of the SCLA LAMBRA Enterprise Zone will drive business away and make SCLA less competitive.” Other critics of the bill, including the League of California Cities, say the proposed tax breaks are available for too short a period of time and may restrict companies from pursuing the incentives

because they are shorter than many businesses forecast for new purchase equipment. Further, many businesses partnered with and invested in EZ communities that will no longer be able to fulfill the state-program incentives. Others are concerned that the Governor has once again significantly usurped local control and involvement in state sponsored inventive programs. State agencies, including the Board of Equalization, the Franchise Tax Board and Go-Biz will now manage and conduct the affairs of the former Enterprise Zones. Proponents of the bill say that even EZs would have expired and that reform was needed to curtail the worst of abuses while still preserving the intended tax benefits of the EZ and other programs. Some key pieces of the existing EZ program will remain in effect through 2013, including the ability of businesses in Enterprise Zones to obtain hiring credits for eligible employees hired before January 1, 2014. According to some sources, last year Enterprise Zones created 25,000 jobs and prevented the loss of 100,000 more, and encouraged businesses to locate in low-income areas.

Steve Lantsberger is Director of Economic Delvelopment for the City of Hesperia. Orlando Acevedo is Economic Development Manager for the Town of Apple Valley.

CUSTOMER SERVICE11

Great customers contribute to your company’s bottom line. But did you ever stop to consider what percentage of your customers demand a great deal of your time and resources while giving a limited return on investment? They are out there, you know they are. The sooner you convert them to “great customers”, or get rid of them altogether, the better. Your definition of a bad customer might vary, but generally they include being overly demanding, slow to pay, constantly changing and ever expanding needs and being difficult seemingly just for the sake of being difficult. Some bad customers are so destructive they can even have a negative impact on employee morale. While any size business will benefit from being a bit more particular with whom they do business, it is especially important for small businesses. Your day is already filled with the tasks of keeping things moving. Do you really need a customer who is going to require that you continually shift limited resources, or reduce your profit margin, to keep them on board? You will have to weigh the pros and cons for your situation, but time and again it has been shown that eliminating bad customers can

Weeding out the BAD Customers By: STEVE SIPE

actually add to your bottom line. Plus, you will have the added bonus of fewer headaches and more time to focus on your great customers. It’s a trade off that more and more businesses are making. The best scenario, when possible, is to turn your “bad customer” into a “great customer”. Here are some suggestions: Raise prices. If they are paying full freight, or higher, they might

be worth keeping. Assume the position of power by demanding the terms of your business arrangement with a friendly but firm “take it or leave it” attitude. In negotiations, never give up something without getting something in return. In the case of bad customers, you have the

flexibility of getting more than you are giving up. If all attempts fail, remember, a bad customer is worth giving up. The space they occupied might just make room for a great new customer. Start making hard decisions, push away those who drag you down, and cultivate relationships that will benefit your business.

“They are out there, you

know they are. The sooner you convert

them to “great customers”, or get rid of them altogether, the

better.”

Steve Sipe is a Victor Valley independent businessman whose career began in broadcasting in 1972. After several years of on air and programming positions, Mr. Sipe gravitated toward the sales, marketing and management side of the business.

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We are here to help: •Establish relationships with local businesses •Assist with health related issues in the work place •Provides access to medical personnel for informational talks •Participation in employee health fairs during open enrollment period •Conduct health care screenings at regular intervals •Improve employee health •Increase production and decrease lost days •Form better relationships between medical providers and the working population •Promote a healthier lifestyle •Develop an employee fitness program

For more information, contact Steve Orr at Business Development: 760-245-4747 ext. 498

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XPRESSWEST PROJECT DERAILED By: STAFF REPORTS

The XpressWest high-speed rail (HSR) line from Victorville, California, to Las Vegas, Nevada, has been derailed. “I’m very disappointed the Transportation Department suspended XpressWest’s loan application. The resulting construction and operational jobs would have been a game-changer for the Victor Valley,” said First District Supervisor Robert Lovingood.”Hopefully private investors will see opportunities in partnering with XpressWest and linking to the E-220 corridor between the Victor and Antelope valleys.” According to a blog on the Heritage Foundation website, Sen. Jeff Sessions, R-Ala., and U.S. Rep. Paul Ryan, R-Wis., said they received information from the Department of Transportation that the agency sent a letter notifying XpressWest that it is indefinitely suspending consideration of XpressWest’s $5.5 billion loan application. Catherine Levy, the director of public affairs for XpressWest, provided this statement: “While the loan process for XpressWest has been suspended, it is our understanding the project is still being reviewed. We believe high-speed rail in the western United States is both feasible and desired. We await further information and direction from the Administration. “We at XpressWest have always known that a project of this magnitude would undergo painstaking and diligent review.” U.S. Sen. Harry Reid, a supporter of the project, released a statement this afternoon: "I believe high-speed rail is an important aspect of Nevada and the country's future. In Las Vegas, I-15 to and from California is absolutely clogged, and we must do everything we can to make it easy and safe for travelers to visit Las Vegas. But it's also vital we do this right. "The Administration has not permanently foreclosed the possibility of such an investment, and I remain committed to working with them and with Tony Marnell and XpressWest to secure this vital investment for Nevada." Former Transportation Secretary Ray LaHood was a heavy supporter of the project, and it continued to get verbal support from the Department of Transportation until the last year or so, when things became quiet.

The Obama Administration recently announced that they’d delay the implementation of the employer mandate, which would require all businesses with more than 50 full-time employees to offer health insurance. Hopefully Obamacare’s small-business exchanges will be the next component of the law to be delayed.Until then, more than 40 percent of small businesses have frozen hiring because of Obamacare, according to a new poll from Gallup. A fifth have actually cut their workforces as a direct result of the healthcare reform law. That’s not exactly the future President Obama forecast in 2009, when he told an audience of small-business owners that his healthcare reform = package was “being written with the interests of Americans like you and your employees in mind.” He boasted that he had “no doubt [the law] would benefit millions of small businesses.” According to Forbes.com, instead, small-business owners are learning that Obamacare will drive the cost of insurance up without providing the choice of policies it promised. The law intended to make purchasing insurance easier for small businesses by creating exchanges, where firms could band together with their peers in one statewide risk pool — and thus leverage their buying power to secure lower premiums and access to a wide variety of plans. The Congressional Budget Office projected that two million people would get insurance through the small-business exchanges. Insurers would compete for small businesses’ allegiance, driving down prices further. Employers would name a benefits level, and then their employees could choose from among several plan options at that level. Under the status quo, by contrast, they may be stuck with the plan their employer picks for them — if they even get insurance at all. But the exchanges aren’t unfolding as planned. For starters, it’s not clear that the exchanges will be ready by the October 1 deadline set by Obamacare. Creating these government-directed insurance

marketplaces in all 50 states plus the District of Columbia has proved far more complicated

than bureaucrats anticipated.In some states, there may only be one choice for every single small business in the state — as insurers have been reluctant to participate. Just one insurer signed up to provide small-business coverage in Washington’s exchange. Ditto for New Hampshire and North Carolina. In Mississippi, not a single insurance company has

signed up for the federally run exchange. That lack of competition will no doubt yield higher premiums. Obamacare’s many mandates will exacerbate their upward march. The healthcare reform law requires all policies to cover preventive care free of charge — along with a host of other “essential” benefits. Policies cannot cap annual or lifetime healthcare spending, and annual deductibles cannot exceed $2,000 for an individual or $4,000 for a family in the small-group market.Businesses are starting to see the result of all these mandates and regulations. An analysis of 11 states by the insurer WellPoint projects that small-group premiums will jump an average of 13-23 percent.

Reprinted from FORBES.Com

Obamacare Stunting Small Business Growth

“Small-business owners are learning that Obamacare will drive the cost of insurance up without providing the choice of policies it promised.”

The world’s first civic service organization, Rotary International, is expanding into the City of Adelanto. Local members received a charter on July 1, 2013 to join RI’s global association of 33,000 Rotary clubs in more than 200 countries and geographical areas. For information on joining the new club or finding ways to work with Rotary in your community, contact Stephanie LaFerriere, President at 760-912-8767

HDBJ NEWS BITE

15

This principle can be stated as, “When in doubt, follow the crowd (especially if it’s your crowd).” For example, we're more likely to work late if others in our team are doing the same, put a tip in a jar at a bar or a coffee shop if it already contains money, or eat in a restaurant if it's busy. Here, we're assuming that if lots of other people are doing something, then it must be OK. We are particularly susceptible to this principle when we're feeling uncertain, and we're even more likely to be influenced if the people we see seem to be similar to us. That's why commercials often use moms, not celebrities, to advertise household products. From 1820’s opera goers who sold their “applause” (a practice known as “claquing”) to the canned laugh tracks of current day sitcoms, marketers—of products, services, and ideas – have used/abused this principle to persuade us. There are two primary ways that social proof works in influencing consumers. One is when we feel like people similar to us are endorsing the product, service or idea and two, when we are feeling uncertain about whether to use a certain product, service or idea. Social proof is more persuasive to us when the observed behavior comes from someone whom we see as similar to ourselves. In an experiment, researchers placed a large, addressed, stamped envelope on the street with a letter and a wallet inside. The letter was from someone who had found the wallet earlier, and was returning it to the owner. The wallet contained a small amount of money and items identifying the owner. However, in some cases

the letter was written in “standard” English. In others, it was written in “broken” English by someone who identified himself as a recently arrived foreigner. Otherwise, both letters expressed the person’s pleasure at being able to help by returning the wallet. The researchers watched to see what would happen. Seventy percent of the envelopes with the “standard” letter were dropped in a mailbox. Only 33% of those with “broken” English were returned. In a positive example of the use of social proof, nursery-school-age children chosen because they were terrified of dogs merely watched a little boy playing happily with a dog for twenty minutes a day. This exhibition produced such marked changes in the reactions of the fearful children that after only four days, 67 percent of them were willing to climb into a playpen with a dog and remain confined there, petting and scratching it while everyone else left the room. Moreover, when the researchers tested the children’s fear levels again one month later, they found that the improvement had not evaporated during that time; in fact, the children were more willing than ever to interact with dogs. So how can we use social proof in our businesses in the High Desert? There are a few ways to effectively do that. Encourage your customers to give you a review. There are multiple review websites like Yelp, Google, Bing and Yahoo, Epinions where you can create a free business account and have customers rate your business. (Along with getting some reviews, your level of service will also improve. Trust me on this one!)

Publish reviews of your products and services on your website as well as in the marketing materials you put out. Remember: When people are in doubt, they follow the crowd. Use social media as social proof. Twitter and Facebook have widgets that you can install on your website. These widgets can show lots of things, including how many people “like” your site (if you have a Facebook Fan page), or how many people have recently shared your content on Facebook. Another smart thing these widgets can do is share information on which of your friends have ‘liked’ the website. Use testimonials of popular business people to increase your social proof. If a local celebrity uses my product or service and is willing to share that with the business community, I will be able to use that to my advantage and get more people to buy the product or service. What areas in your small business could use this approach? How do you plan to develop better social proof in your marketing efforts? Take a look at your small business today and see how you can create opportunities using this awesome weapon of influence.

Social Proof: When in doubt, follow the crowdBy SAM THATTE

Editors Note: This is the fourth article in the series on Weapons Of Business Influence based on the book "Influence-The Psychology of Persuasion" by Robert B. Cialdini.

Sam Thatte is a consultant, blogger and trainer featured on popular websites and blogs like BrainShark.com and Indezine.com. He produces helpful content on presentations and marketing on his own website at SamThatte.com.

HERITAGE VICTOR VALLEY MEDICAL GROUP AWARDED ELITE STATUS OF EXCELLENCEHighest Honor from California Association of Physicians Groups

Heritage Victor Valley Medical Group (HVVMG) is receiving a four star ranking for Excellence in Medical Care from the California Association of Physician Groups (CAPG) 2013 Standards of Excellence Survey for the 6th year in a row. “It’s gratifying to be recognized for the excellence we strive to achieve every day, year in and year out,” says Merlin Aalborg, Chief Operating Officer of Heritage Victor Valley Medical Group. The Elite Status of Excellence applies to all categories of care at HVVMG including Case Management Practices, Health Information Technology, Accountability and Transparency and Patient Centered Care. One of 12 medical groups in the Heritage Provider Network, HVVMG provides compassionate, well-coordinated and affordable medical care to the Victor Valley region.

GOVERNMENT

The new Legislature is dominated by pro-tax politicians, and bills, that undermine the taxpayer protections in Proposition 13, have been introduced and are starting to be heard in committee. If approved, these bills could cost every property owner thousands of dollars.On May 15th, six of these bills that directly undercut various provisions of Proposition 13 (SCA 3, 4, 7, 8, 9 and 11) were heard in the Senate Governance and Finance Committee. Despite strong testimony from HJTA these were approved on a party-line vote (Democrats in favor). The battle now shifts to the Elections and Constitutional Amendments Committee. While the bills have not yet been set for a hearing, they could be taken up at any time. An additional two bills, Assembly Constitutional Amendments 3 and 8, also diminish Proposition 13's protections. These have not been set for a hearing yet.THE FOLLOWING BILLS PUT A BULL'S-EYE ON PROPOSITION 13 AND TAXPAYERS: Senate Constitutional Amendment 3 (SCA 3), Mark Leno (D—San Francisco): Lowers the threshold for school district per-parcel property taxes from two-thirds to 55%. This is a direct assault on Proposition 13 because it makes it easier to increase property taxes above Proposition 13's one percent cap. Senate Constitutional Amendment 4 (SCA 4), Carol Liu (D—La Canada) and Senate Constitutional Amendment 8 (SCA 8), Ellen Corbett (D—San Leandro): Lowers the threshold for the imposition, extension or increase of local transportation special taxes from the Proposition 13-mandated two-thirds vote to 55%. Most

Major Threat to Prop 13 and Homeowners : Bills That Threaten Homeowners and Small Businesses Are Starting to Move Through the Legislature

transportation special tax increases consist of very regressive sales tax hikes. These add to the burden of California taxpayers who already pay the highest state sales tax in the nation. Senate Constitutional Amendment 7 (SCA 7), Lois Wolk (D—Davis): Lowers the threshold from two-thirds to 55% in order to approve a bond to fund public library facilities. Lowering the threshold for school facilities to 55% has already resulted in billions of dollars of additional property tax payments that otherwise would not have been approved by voters. Senate Constitutional Amendment 9 (SCA 9), Ellen Corbett (D—San Leandro): Lowers the threshold from two-thirds to 55% to increase special taxes to fund community and economic development projects. Senate Constitutional Amendment 11 (SCA 11), Loni Hancock (D—Berkeley): Lowers the threshold to 55% to allow for voters representing ANY local government entity to approve a special tax for ANY purpose. This is far and away the broadest application, and thus the most egregious, of these constitutional amendments. Assembly Constitutional Amendment 3 (ACA 3), Nora Campos (D—San Jose): Lowers the threshold to 55% for voters within cities, counties and special districts to approve EITHER a local bond measure or a special tax in order to fund emergency service facilities projects including police and fire services. Assembly Constitutional Amendment 8 (ACA 8), Bob Blumenfield (D—Woodland Hills): Lowers the threshold to 55% for city and county voters to approve a local bond measure in order to fund emergency service facilities projects. Reprinted with permission by: Howard Jarvis Taxpayers Association.

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RESIDENTIAL REAL ESTATE17

The residential real estate market continues to make headlines with rising home prices and increased sales. In the last few weeks we are hearing about another increase in the home market – rising mortgage rates.According to bankrate.com here are the some of the recent rates for 30 year fixed mortgages: May 1, 2013 3.52 May 22, 2013 3.74 June 5, 2013 4.10 June 26,2013 4.61 July 3,2013 4.48 If we compare May 1st to July 3rd we find an increase of 27%. Although that percentage sounds pretty alarming, let’s look at some actual mortgage payments to see the “real” effect for home buyers.

Will Mortgage Interest Hikes Halt Housing Market?

Caroll Yule is President/Broker/Owner of Shear Realty, the highest selling residential real estate company in the High Desert.

$150,000 Mortgage 3.52% Interest Monthly Payment (P& I): $675.24 4.48% Interest Monthly Payment (P&I): $758.25

Difference Per Month: $83.01

$250,000 Mortgage 3.52%Interest Monthly Payment (P&I): $1125.40 4.48%Interest Monthly Payment (P&I): $1263.74 Difference Per Month: $138.34

By: CAROLL YULE Usually for most buyers these differences are not going to make a significant impact in their ability or decision to purchase a home. Mortgage rates in the 4% and 5% ranges are still historically low. As we all know, the Federal Reserve has really kept mortgage rates artificially low in an effort to recharge the housing market. And it certainly has been a help. But now, with the housing market showing signs of recovery and the national economy improving it was expected that rates would go up this year. These rate increases should not have a significant effect on home sales. There are however, other economic factors that are presenting a challenge to first-time homebuyers. First time homebuyers are a key

component to the housing market. Historically in a healthy housing market these buyers represent about 40% of total home sales, currently according to the California Association of Realtors they represent only 28% of home sales. These buyers are typically young buyers in the 24-34 year old group. Here are a few of the economic conditions that are affecting our young home buyers: • Recent college graduates on average carry $21,402 in student loan debt with only about 39% in position to repay. • With the recession this group has higher unemployment than for all adults. • The low-down FHA loan credit requirements have tightened. Compounding these challenges for new home owners is the current inventory situation in most areas. With severely limited homes available for sale, particularly in lower price ranges, first-time home buyers find themselves competing against cash buyers. Many sellers in multiple offer situations are accepting cash offers to avoid appraisal complications. But overcoming these challenges is still worth the effort according to a recent survey completed by the California Association of Realtors. Despite the effects of the Great Recession, people still love their homes and think they’re a good investment. • 81% of adults surveyed believe buying a home is the best long-term investment a person can make. • 81% of renters would like to own a home in the future. • 96% of homeowners are happy with their decision to own.

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The High Desert Business Journal produces a special “40 Under 40” publication that profiles the 40 individuals honored.

Then we top it off and throw a huge “40 Under 40” Awards Bash in November to publicly celebrate their successes.

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760-954-5334

Be a Part of this GREAT Business Community Event - The Largest of its kind in the H.D.

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HIGH DESERT BUSINESS JOURNAL

Small businesses often get touted as the backbone of our economy—they create jobs, spur growth and lead to innovation. When the financial crisis hit in 2007 and led to the Great Recession, small businesses took a hit-consumer spending dropped and they stopped hiring. Many small businesses were forced to shutter. As a result, tax breaks are more important now than ever. There are several that business owners should be mindful of so they can take advantage. Ensen Mason, EA, CPA, said the two most important tax break for anybody is retirement savings. The reason is simple. It's the *only* tax break that doesn't require you to hand over your hard money to somebody. “ You simply move it from one account to another and save on taxes,” said Mason. The second most important is the mileage deduction. “The reason for that is that the IRS is very kind with the mileage allowance,” said Mason. Presently it’s 56.5 cents a mile, which is 2-4 times what most people spend for car expenses. They're also very kind with documentation. If it's written and has certain required information, it meets the IRS requirement. Receipts, cancelled checks, etc are not required, said Mason. The Obama Administration also launched a series of tax cuts and credits to help shore up balance sheets and entice more spending and hiring – then many of them vanished. Here are a few that remain. Health care tax credit (part of the 2010 Affordable Care Act): gives owners with 25 or fewer employees and pay average salaries of $50,000 or less and pay for half of their health insurance premiums a tax credit. Start-up costs: since 2004, small business owners were allowed to currently deduct $5,000 in business start-up expenses.

President Barack Obama permanently raised the amount to $10,000 when he initiated the Small Business Jobs Act. Section 179 expensing: these numbers shift from year to year. Back in the 1980s the amount a small business could expense for new equipment, machinery, furniture, fixtures and vehicles currently rather than depreciate was $25,000. President George W. Bush raised the limit to $250,000 and Obama extended that to $500,000 with the Small Business Jobs Act. It was set to return to $139,000 for 2013 but last minute legislation kept the level at $500,000 Bonus Depreciation: over the years, this little tidbit has been shelled out to businesses allowing the write off of up to 50% of the cost of vehicles, machinery, furniture, fixtures and equipment. Breaks for angel investors: since 1993, angel investors were allowed to exclude 50% of capital gains on investments into small, risky companies. With the Recovery Act, that was pushed up to 75%. Then it was raised to 100% by the Small Business Jobs Act and the Tax Relief Act kept it at 100% for investments made during 2011. For 2013, it’s back to 50%. Cell phone deductions: cell phones were once considered “listed property” which had a recordkeeping requirement in order to allow the deduction. The Small Business Jobs Act simplified this provision permanently. Limited penalties on tax errors: in the past a small business could pay anywhere from $50,000 to $200,000 depending on the mistake made, in penalties for tax errors. The Small Business Jobs Act permanently changed that to cap penalties at 75% of the mistake.

TAX BREAKS FOR SMALL BUSINESSBy: STAFF REPORTS

TAX

Bring Clients. Bring Staff.

TODD TATUMOwnerAmerican Housing Group

PEOPLEYOU NEED TO KNOWWIne & Cheese Reception With Editor Gretchen Losi & Town of Apple Valley Council Woman Barb Stanton

12

AUG. 14 th, 4:00 - 5:30 p.m.D’VINE WINE BAR 14845 Monarch Blvd. Victorville

RSVP call HDBJ at 760-244-8596e-mail - MAIL@HDBJ.Biz

PROUDLY SPONSORED BY:

LIVE INTERVIEW

SERIES

LOCAL EMPLOYMENT

The County of San Bernardino is challenged by a skills gap. Businesses in growing industry sectors have jobs available, however the current workforce does not have the skills required to fill these positions. A recent Manpower survey reported that 52 percent of U.S. employers struggled to fill critical positions in 2011, an increase from 14 percent in 2010. Through the strategic disbursement of federal funding, the County of San Bernardino Workforce Investment Board (WIB) is working towards meeting this critical need through workforce training. Business services representatives surveyed 2,384 San Bernardino County businesses in 2012. The results indicated that companies are recovering and beginning to hire in the County’s top demand industries: manufacturing, health care, transportation and logistics, energy and utilities, and

construction. A comparison of data from the 2011 and 2012 third quarters highlighted that the transportation, logistics and manufacturing

Asking Questions and Delivering Answers: Workforce Investment Board survey identifies county trends and workforce solutions By Sandy Harmsen

sectors are recovering, with many employers planning to hire. Thirty-three percent of the transportation and logistics businesses surveyed reported increasing sales, while no businesses surveyed indicated that sales are declining. This is a significant increase compared to the third quarter of 2011, when only 26 percent reported increasing sales and 14 percent reported declining sales. This hiring trend presents a significant growth opportunity for a trained workforce. In recent surveys of local employers, the WIB identified a need for skilled industrial maintenance mechanics. A large High Desert employer was hiring Arizona residents

because it could not find qualified candidates in California. In addition to large training efforts, the county’s Workforce Investment Board also assists individual businesses. Big Apple Automotive, an Apple Valley automotive repair shop, recently used Workforce Investment Board programs to hire two employees. Working with business services representative Sal Monica, Big Apple Automotive owner Melinda

Collingsworth says the programs have saved time and money.“It is time-consuming to hire employees with the right skills and attitude for our

Sandy Harmsen is Executive Director of the Workforce Investment Board and Director of the County of San Bernardino Workforce Development Department

Chaffey College class pursuing certificates for Utility Scale Power Generation and Industrial Maintenance Mechanic. Class funded by the County of San Bernardino Workforce Investment Board.

Big Apple Automotive owners with new employees from the County of San Bernardino’s Workforce Investment Board’s program. From left to right, Kevin Bautista, William Collingsworth, Melinda Collingsworth, Jack Collingsworth and Steve Billings

San Bernardino County’s top demand industries: manufacturing, health care, transportation and logistics, energy and utilities, and construction.

company. We expect the highest level of professionalism and that can be difficult to find,” shares Collingsworth. “The Workforce Investment Board did an excellent job of screening applicants and ensuring we interviewed only highly qualified candidates. This saved time, payroll, and made the hiring process hassle-free.”After recruiting the right candidates, the Workforce Investment Board provided Big Apple Automotive with On-The-Job Training funds. These funds offset training costs for the two employees hired. The first employee, coming straight from Workforce Investment Board training program, was provided with the tools to start his new profession. “On-The-Job Training made it affordable for us to hire at the right time and provide thorough training. The employees we have hired through this program are an asset to our team,” continues Collingsworth. “We anticipate hiring again in 2013 and look forward to working again with Sal and the Workforce Investment Board to expand our operations.”

Businesses interested in learning more about or enrolling in the no-cost services provided by the County of San Bernardino Workforce Investment Board can visit www.csb-win.org or call (800) 451-JOBS.

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