Mayor Bob Johnson focused his State of the City speech Thursday on several new companies that are coming to Lodi and current businesses that are expanding.
One large indication that the tourist industry is growing is that tax revenue on hotel rooms increased 16 percent over the last year, Johnson said.
The unemployment rate is also the lowest it has been in the last two years, at 11.7 percent, Johnson said.
City leaders are excited about recent interest from an East Coast-based pharmaceutical company that wants to open its western headquarters in Lodi, Johnson said.
At this point, that is the only information the city has, Johnson said.
“It’s a new business coming in and will be an attractive addition to our community,” Johnson said.
He also announced that Home Depot began construction in October at Reynolds Ranch at Highway 99 and Harney Lane and will open sometime in early spring.
Meanwhile, Costco has been generating sales tax revenue for the city since it opened in June.
“By all reports, Costco is ‘extremely pleased’ in their results to date,” Johnson said.
Citizens have said that they love having the store in town, Johnson said, and it is generating traffic from places like Stockton, Galt and Rio Vista.
During the initial projections, Costco and Home Depot were initially expected to generate $325 million combined in revenue each year and provide 350 additional jobs.
But with Costco’s success so far, that number will likely increase, Johnson said.
Businesses that are already in Lodi are also expanding, he said. Quashnick Tool Company recently purchased $800,000 in new machinery. Scientific Specialties Services spent $9 million to expand 70,000 square-feet, creating 30 new jobs.
“I know for a fact that many other companies in the community are making commitments and investing money into their future,” he said.
Downtown is also gaining some new businesses. Alebrijes, a Mexican restaurant on Ham Lane, is planning to move to Downtown, and Toasted Toad, a winery from Livermore, and another winery from Victor are planning to open tasting rooms, bringing the number of tasting rooms to nine in the Downtown area, he said.
But it’s not all good news.
Unfunded state mandates are causing the city millions of dollars every year, Johnson said.
“We are getting killed, as a city and as a business entity, by some burdensome regulations out of Sacramento. Nobody wants dirty water, nobody wants dirty air, but at what cost do we have to make these things clean?” he said.
For example, he said the city is facing a new regulation for storm water that will mean the city will have to spend $1 to $2 million a year to meet the new standards.
The city also spends 57 percent of its wastewater budget to satisfy state requirements before the water is discharged into the Delta, he said.
“We expect that those costs will continue to go up,” Johnson said.
During the last three years, the city of Lodi has seen a significant reduction in the workforce, going from 480 to 384 total employees.
“When you start making dramatic cuts in your personnel force, you are going to wind up having impacts on services,” Johnson said.
The city is in negotiations with employees to deal with rising personnel costs, he said.
“Most knowledgeable people recognize that the benefit programs we are currently enjoying are unsustainable,” he said.
Pensions are estimated to cost an additional $2 million over the next three years. During the last eight years, health care costs grew 153 percent and will likely continue to rise.
He said the employees have given up benefits and salary during the past couple of years to help balance the budget, but there will need to be more cuts.
“In my opinion, there need to be even more changes. We can’t continue kicking the can down the road. We’ve run out of road,” he said.
He encouraged Lodi residents to call City Council members and give their opinion on personnel and city budget cuts.
He also touched on several other topics:
On a new medical facility: Next year, construction will also begin on a Sutter Gould medical office at the corner of Harney Lane and West Lane.
“This will be staffed by professionals, people who make better-than-average wage,” Johnson said.
On a Walmart Supercenter coming to town: A Walmart Supercenter in Lodi is still delayed because of a lawsuit in the 3rd District Court of Appeals. City Attorney Steve Schwabauer expects a decision from the court in December or January, Johnson said.
“If there is a positive decision and Walmart gets the green light to go ahead, you would certainly expect that that would begin to create interest for additional development in the 40 acres of the southwest corner of Lower Sacramento Road and Kettleman Lane,” Johnson said.
On the Lodi Energy Center: The new natural gas power plant at White Slough wastewater treatment plant will come online in 2012. The city paid $36 million to join with other agencies in the Northern California Power Agency to build the plant.
It currently is providing 230 well-paying jobs to construction workers, many of whom live within a 50-mile radius of Lodi, Johnson said.
NCPA is also paying the city $40,000 a year to lease land for the plant, and another $1 million a year to use the city’s wastewater to cool the plant. There will be 14 full-time employees when it goes online.
On the surface water treatment plant: With the $36 million project, Johnson focused on the possibility for the city to contract with a private company to run the plant. The council is in the middle of deciding whether to hand over the operations to one of two companies. ‘That doesn’t happen very often, certainly not in Lodi. There’s an opportunity at least on paper that there could be a significant savings on salary and benefits by having people other than city employees operate this facility.
He said the plant will be online in 2012, and will allow the city to preserve its groundwater supply.
On senior housing: Eden Housing, a nonprofit, is still securing financing to build an affordable senior housing development on Tienda Road. The project also will result in the development of Roget Park.
“When this project gets completed, probably in 2014, it will provide 80 new units of much-needed senior housing in our community,” he said.
On eventually coming out of the recession: At the end of his presentation, Johnson showed a kitten clinging to a tree limb.
“We have had 34 recessions and every one has come to an end. What we have to do is hang in there,” he said.
On his time as mayor: Johnson said that compared to his last term as mayor in 2007, this year has been more chaotic.
“In another two weeks, someone else will be mayor, and I can sit back and have a glass of scotch,” Johnson said.