LandWatch State of Monterey County Report 1998
3.13 Economy

Forecasts indicate that the economic outlook for California and Monterey County is positive, the result of low interest rates, expansion of regional retail centers, increased construction of single- family and multi-family homes, innovative agricultural technology, and leading tourist attractions. Monterey County has strong growth in retail sales, tourism, construction and jobs. However, studies identify infrastructure capacity and water supply as risk elements to the long-term economic well-being of Monterey County. (14)

The relationship between private sector growth, taxes, and public sector benefits has not been carefully analyzed for Monterey County and the cities. Although statistics are available for each leading economic sector, no study has compared these to changes in infrastructure, environmental quality, public services, or other factors affecting residents' quality of life. It's important to analyze how the economic benefits of growth have been distributed, whether job growth has resulted in fewer residents living below the poverty line, whether increased housing construction has created more affordable housing, and if tax revenues from increased retail sales support better planning and community development.

Employment and Income
California's unemployment rate dropped to 5.8% in February 1998, down 0.8 percentage points from February, 1997. For the twelve-month period (February, 1997 to February, 1998), the Monterey County unemployment rate averaged 10.7%, ranging from 6.3% (September) to 18.1% (January). Seasonal fluctuations in agricultural and tourism jobs account for these employment patterns. In this same period, Monterey County employment grew by 3,800 jobs, with the nonfarm industries accounting for 2,900 new jobs. The largest increase occurred in the trade and services divisions as each added 1,100 new jobs. Monterey County median family income for 1997 was $45,600.(15)

Agricultural Sales
Agriculture remains the largest sector of Monterey's economy. Gross sales of agricultural products totaled $2.2 billion in 1997, a 17% increase from 1996. (16) The annual report of the Monterey County Overall Economic Development Program identifies four major problems facing agriculture in California: conversion of farmland to urban uses, soil erosion, salinity, and possible shortage of affordable water. The report identifies that Monterey County's General Plan prohibits the conversion of agricultural land to other uses and that this policy will require strong support from the Board of Supervisors to remain viable.(17)

Retail Sales
Monterey County retail sales revenues grew by 7.1% or $156 million, from 1995 to 1996, to total $2.36 billion. The significant growth is attributed to substantial increases in tourism, gradual increases in population, and the expansion of national and regional retailers in the cities of Salinas, Seaside and Sand City. (14)

Tourism
In 1997, travel and tourism spending in Monterey County increased 7.3% from the previous year, to $1.5 billion. The total economic impact of travel and tourism in 1997, including direct and indirect spending, produced $2.4 billion in Monterey County. (18) Revenue from Monterey County's Transient Occupancy Tax (TOT) increased 12%, to $32 million, in the 1996-1997 fiscal year. The City of Monterey generated $12 million in TOT revenue, 38% of the county total. The unincorporated areas of Monterey County generated $10.54 million of TOT revenue, primarily from Pebble Beach Resorts. In Salinas, the TOT revenue generated $1 million, up 60% from fiscal year 1995-1996. The Salinas revenue increase is attributed to the growing wine industry, the new sports complex, and new fine dining restaurants.(14)

Real Estate
Monterey County home sales totaled 2,248 in 1997 and surpassed home sales in 1996 by 313. The average number of days on the market was 133 days. Countywide, the median home sale price increased by $19,500 in 1997.(19) The most affordable homes of 1997 were found in the Salinas Valley, while the most expensive homes were found in the Monterey Peninsula and South Coast. Between 1996 and 1997, home sale price increased in Carmel, Carmel Valley, and the Monterey/Salinas Highway but remained stable in the other areas of the county (Table 13).

Table 13--1997 Home Sales in Monterey County

Construction Activity
Residential construction valuations totaled $300 million in 1997, up $33 million from 1996. New single-family valuations increased by $27 million in 1997 to $224 million, and new multi-family valuation increased by $1 million in 1997 to $27 million.(19)

In 1997, there was a total of 1710 residential building permits issued, up 214 from 1996. Construction of single-family and multi-family homes throughout Monterey County continued to increase, with most activity occurring in Salinas (838 permits), the unincorporated areas of Monterey County (413 permits), Soledad (195 permits), and Greenfield (95 permits).

Non-residential construction valuations in 1997 totaled $106 million, down $8 million from 1996. This includes new, alterations, and additions to commercial, industrial, and other non-residential construction activities. In 1997, new non-residential commercial construction valuations were strongest in Salinas ($27 million) and the Monterey County Unincorporated Areas ($23 million). New non-residential construction valuations represent 63% of total non-residential construction in 1997.