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Home My WebLink AboutAgenda Report - July 15, 2009 Public CommentsContinued July 15,2009 Council Member Mounce, and Mayor Hansen Noes: None Absent: None E-14 Consent to Continued Representation of City of Lodi and Northern California Power Agency - Lodi Meter Maintenance (CA) Consented to continued representation of City of Lodi and Northern California Power Agency - Lodi Meter Maintenance. E-15 Adopt Resolution Renewing Line of Credit with Farmers and Merchants Bank ($3.000.000) at No Cost to the City of Lodi for the Lodi Electric Utilitythrough June 30, 2010 (CM) Adopted Resolution No. 2009-97 renewing the line of credit with Farmers and Merchants Bank in the amount of $3,000,000 at no cost to the City of Lodi for the Lodi Electric Utility through June 30, 2010. E-16 Adopt Resolution Setting the Pay Rate for the Interim Fire Chief t<CM) Adopted Resolution No. 2009-98 setting the pay rate for the Interim Fire Chief. E-17 Set Public Hearing for August 5. 2009. to Consider the Reallocation of Available Community Development Block Grant and HOME Program Funding to Eden Housing. Inc. for an Affordable Senior Housing Project (CD) Set public hearing for August 5, 2009, to consider the reallocation of available Community Development Block Grant and HOME Program funding to Eden Housing, Inc. for an affordable senior housing project. F. Comments bvthe Public on Non-Aaenda Items THE TIME ALLOWED PER NON -AGENDA ITEM FOR COMMENTS MADE BY THE PUBLIC IS LIMITEDTO FIVE MINUTES. The City Council cannot deliberate or take any action on a non -agenda item unless there is factual evidence presented to the City Council indicatina that the subject brought up by the public does fall into one of the exceptions under Government Code Section 54954.2 in City Council agenda. Amy Blagg, representing the Lodi District Grape Growers Association, gave a brief presentation reviewingthe Economic Impact Report for the wine and grape growing industry of the area. Ms. Blagg provided a copy of the report, which was made a part of the record. G. Comments by the City Council Members on Non -Agenda Items Council MemberJohnson provided an overview of the City's BBB+ rating from Fitch and it's decision to not upgrade the rating based on the unstable condition of the State of California. Mayor Hansen reported on his attendance at the project delivery meeting for San Joaquin Council of Governments where the specific topic of discussion was Highway 12. Mayor Hansen also stated he will be adjourning the meeting in memory of his brother Thomas William Hansen. H. Comments by the Citv Manaaer on Non -Agenda Items --I 115- Ptac� The Economic Impact of Wine and Grapes in Lodi 2009 Prepared for the Lodi District Grape Growers Association and the Lodi Winegrape Commission May 2009 Stone" rch. A STONEBRIDGE RESEARCH REPORT Copyright 02009 Stonebridge Research Group" LLC 550 Gateway Drive, Suite 100, Napa, CA 94558 www.stonebridgereseah.com All rights reserved. No part of this publication may be reproduced, stored or transmitted in any form or by any means without the prior written permission of Stonebridge Research Group ILC HIGHLIGHTS FULL ECONOMIC IMPACTOF LODI WINE AND GRAPES IN LODI REGION $5 B=CN Number of Operating Wineries' Number of Grape Growers Vineyard Acreage Full-time EquivalentJobs Wages Paid Cases of Lodi Appellation Wine Produced (9L eauivalents) Wine Related Tourism Expenditures Number of Wine Related Visits Taxes Paid Charitable Contributions' 75 750 100,000 Vineyard Acres 14,900 $493 million 39.7 million $409.5million 2 million $155 million CA and Local $170 million Federal $35 million 'From the Alcohol and Tobacco Tao( and Trade Bureau's list of Wine Producers and Blenders 20ur surveys indicate that winery charitable contributions average 1.7% of sales S't oriebrt Research. Economic Impact of Wine and Grapes in Lodi 2009 page 2 -of 9 Executive Summary The Lodi region has a growing reputation for quality wines. Though wine has been produced in the Lodi area since the 1850s, an influx of newwineries and improved viticultural practices have recently attracted more attention to the region. As detailed in Tables 1 and 2 below, Stonebridge Research Group LLC found that, in 2007, the full economic impact of the wine and vineyard sector and allied industries in the Lodi area is $5 billion. Moreover, the wine and vineyard sector is one of the area's largest employers. The Lodi region's wine and vineyard sector directly, and indirectly through services and products they consume or generate, provide nearly 15,000 jobs in the region. These jobs generate total wages of over $493 million. Moreover, the wine and vineyard sector and its related activities generate more than $325 million in taxes, conservatively estimated. This includes $155 million in State and Local taxes, and $170 million in Federal taxes. Local taxes are paid in both Sacramento and San Joaquin Counties. There are currently 75 wineries in the Lodi area, employing over 1,300 workers. This is up from about 900 employed in 2001. In 1991, there were only eight wineries in the region, five of which were high volume production facilities. In addition to the area's large wineries, more smaller production boutique wineries and mid-sized wineries have recently appeared in the area. Total winery revenue from sales of wine produced in the Lodi region exceeds $2 billion. In addition, several well known brands purchase grapes from the Lodi area to process elsewhere. The Lodi Appellation, which was approved by the federal government in 1986, now includes seven sub -appellations. Approved in August 2006, these sub -appellations include the Alta Mesa AVA, Borden Ranch AVA, Clements Hills AVA, Cosumnes River AVA, JahantAVA Mokelumne RiverAVA, and Sloughouse AVA. Each sub -appellation has a unique soil and climate, creating distinct aromas and flavors. The Lodi district leads all other California districts in the production of several varietals, including Cabernet Sauvignon, Merlot, Chardonnay, Sauvignon Blanc, and Zinfandel. However, Lodi's Zinfandel reigns supreme. The soil and climate in the Lodi district are perfectfor the production of Zinfandel grapes, and the varietal has long been produced in the area. Several Zinfandel wines are produced from single vineyards, with old vines dating back over a hundred years. StonebriResearch _ Economic Impact of Wine and Grapes in Lodi 2009 page 3 of 9 There are currently 100,000vineyard acres in the Lodi region, farmed by 750 grape growers, employing over 3,800vineyard workers, with 80% of the acreage located in San Joaquin County, and 20% in Sacramento County. The grapes grown in the Lodi region account for 860/cof total winegrape production in San Joaquin County and 78% of total winegrape production in Sacramento County. Winegrape production in the area makes up more than 18% of statewide production. Since the early 1990s, winegrape production has remained steady while statewide production has been highly variable, as shown in Figure 1 below, and the Lodi region has consistently seen an increase in tons of grapes crushed. Figure 1: Tons of Grapes Crushed in Lodi Region and Statewide, 1991-2007 4,000,000 3,000,000 2,000,000 C Lodi Region M Statewide 1991 1993 1995 1997 1999 2001 2003 2005 2007 Source: National Agricultural Statistics Service Crush Reports, 1991-2007 Winery tourism makes up over 80% of all tourism to the Lodi area, for a total of 2 million wine related visits each year. Tourism impacts several different industries, from wineries to hotels and restaurants, and is a vital facet of the local economy. Winery tourism contributes nearly 700jobs to the region, for a total of over $17.7 million in wages paid and almost $410 million in wine related tourism expenditures. Additionally, wine tourism related spending has steadily increased over the past fifteen years, suggesting that the branding of the Lodi region has helped to increase consumer awareness of the high quality wines produced in the area. Since 1992,wine related tourism expenditures have increased 88% from around $218 million. Stonebri RCSCarCh Economic impact of wile and Grapes in Lodi 2009 page d"9 As indicated in Table 2, Lodi winegrape prices have remained stable since at least 2000, with total crop value increasing with production. Figure 2 Tons Crushed and Value Per Ton, 2000-2007 M 1 400 200 o Tons Crushed (in thousands) o Value Per Ton (in $) 2007 2002 2003 2004 2005 2006 2007 Source: National Agricultural Statistics Service Crush Reports, 2000-2007 and San Joaquin and Sacramento County Agricultural Commissioner's Reports. 2001-2007 However, Lodi's strong reputation for quality combined with value positions the region extremely well in the current economic climate. Ston&ri Research. Economic Impact cf Wine and Grapes in Lodi 2009 page 5 of 9 Table 1: 2006 Total Economic Impact (Sum cf Total Spending) cf Lodi Wine and Grapes Revenue -._......_..- $ ---------------------- - Winery Sales $ Winery Direct Sales $ Distributors Sales $ Retail and Restaurant Wine Sales $ Wine Grapes Sales $ Tourism $ Tax Revenues - State & Local $ Tax Revenues - Federal $ Financing Revenues - Debt $ Vineyard Development/ Management - $ Overhead Vineyard Development - Materials $ (excluding vines) Wine Labels $ 1,654,414,834 403,754,613 8,275,5 70 28,300,121 233,114,673 409,497,600 155,009,077 - -- -- -- 169,792,284 145,244,050 200,600,000 G rapevi nes $ Trucking $ Charitable Contributions $ Winery Construction and Engineering -$ Wine Labs $ Grapevine Assessments $ Professional Services $ -------- -.... ... .-Indirect (IMPLAN) $ Induced (IMPLAN) Total Revenue Wages Winery Employees Vineyard Employees Tourism Vineyard Development Vinevard Materials Labels s 94,600,000 912,838 544,671 11,580,735 34,988,872 19,498,618 676,969 1,800,000 26,336,513 - 466,3 59,908 441,978,647 4,507,280,593 ........ ..... ... ........ _.. 42,052,760 77,975,720 17,759,114 35,295,000 420.000 L /0, VVV Grapevines/ Nurseries $ �— 312,000 Retail/Liquor/Grocery Stores -Wine $ 3,118,800 Specific Restaurant Wages - Wine Specific ` $ 3,367,520 Stonebr �rCh, Economic Impact of Wine and Grapes in Lodi 2009 page 6 cf 9 Trucking ------ . -......................_................_ _........_.. S - -- 4,003,788 - - _._...._..._._......... Winery Construction and Engineering S 3,899,724 Wine Labs S 120,000 Professional Services S 2,371,374 Indirect (IMPLAN) S ...._ - 158,2 54,807 _.. __-._. .'..... - - Induced (IMPLAN) S 144,169,381 381 Total Wages S 493,394,988 Total $ ' 8,000,675;581 Source: Stonebridge Research Group LLC and IMPLAN Table 2: 2006 Total Employment: Lodi Wine, Grapes and Allied Industries Source: Stonebridge Research Group LLC and IMPLAN StOnebY1 Research. Economic Impact of Wine and Grapes in Lodi 2009 page 7 o 9 Winery 1,359 Vineyard 3,844 Tourism 698 --........- - -- .. Vineyard Development - - - 1,875 Vineyard Materials 14 . - - ----------- -._._. ----------------------------- Distributor ------------------ 1 Labels 5 Grapevine Nurseries 10 Retail/Liquor/Grocery 105 Restaurants 230 Trucking — 175 Winery Construction/Engineering 130 Source: Stonebridge Research Group LLC and IMPLAN StOnebY1 Research. Economic Impact of Wine and Grapes in Lodi 2009 page 7 o 9 Methodology To produce this assessment, Stonebridge Research Group LLC focused on tire largest and most significant section of the industry involved in wine production and consumption, grape cultivation and allied industries- distribution, tourism, and equipment and suppliers. Other economic benefits, including tax revenues, financing, charitable contributions and other indirect and induced benefits generated by the wine industry are also summarized. Direct, Indirect and Induced Effects (IMPLAN) Much like dropping a rock into a pond, the wine industry has ripple effects on Lodi's economy. Economic impact studies estimate the impact of an industry in a defined geographical area by identifying and measuring specific concrete economic "events." The events tracked i n this report are jobs by industry code. IMPLAN is the acronym for "IMpact analysis for PLANing." IMPLAN is a well established and widely used econoln« model that uses input-output analyses and tables for over 500 industries to estimate regional and industry-specificeconomic impacts of a specific industry. Thus, the full economic impact of Californiawine, as shown inTable 1, combines the Crush District 11's wine industry's direct, indirect and induced economic effects as measure by the application of the IMPLAN model to the employment data presented in Table 2 this report. The IMPLAN model and its structure are updated annuallyto reflect changes in the US economy, in wages, in productivity assumptions and in regional economic structures. Thus, readers should not try to directly compare the IMPLAN results from the first report with the results of this update. The IMPLAN model and methodology classifies these effects into three categories, as defined below: Direct Effects, Indirect Effects, and Induced Effects. Direct Effects Direct effects are economic changes in industries directly associated with the product's final demand. This, direct effects in this case consider the direct employmentand spending of wineries, vineyards, distributors, and immediately allied industries, data on which Stonebridge Research Group LLC collected through primary research. IndirectEffects S-bonebn��Mh. Economic Impactcf Wine and Grapes in Lodi 2009 page 80f9 Indirecteffects are economic changes - income created throughjob creation - in industries that supply goods and services to the directly affect industries noted above. Examples of industry effects are purchases of electricity and gasoline by wineries, of janitorial services by wine bottle manufacturers, and cash registers purchased for use in a tasting room. These may also be defined as "secondary economic exchanges." Induced Effects Induced effects are the effects of these new workers spending their new incomes, creating a still further flow of income in their communities and a flow of newjobs and services. Examples are spending in grocery and retail stores, medical offices, insurance companies, internet providers, and other non -wine related industries by workers in industries allied to the wine industry - such as the spending by the janitor working under contract to the wine bottle manufacturer in California. These tertiary exchanges induce more jobs and incomes throughout California, based on the original economic flows from the wine industry. Measuring the Full Economic Impact of the Lodi 14rineIndustry Lodi's wine industry has a "multiplier" effect, extending across the county, state, and nation in a broad network of economic benefits. The revenue derived by the wine industry becomes income for other workers and firms, who spend more money on other goods and services. Ston&ridsSe Research_ Economic Impact of Wine and Grapes in Lodi 2009 page 9 d9