BUSINESS Chamber Trip Economy on JOURNAL to Australia + Fiji P. 5 Moderate Growth Path P. 9 INSIDE THIS ISSUE: Workplace Mental Health P.7 | Home Sales are Solid P.9 | Public Retirees Pensions P.17 Update on “The Salinas Plan” 32 Unpopular Recommendations to Avoid Future City Bankruptcy by Kevin Dayton, Chamber Board We’ve all heard of companies reorganizing their debts under Chapter 11 problem even more acute. of the U.S. Bankruptcy Code. And sometimes we hear about companies filing Recessions Lead to Local Government Bankruptcies for bankruptcy under Chapter 7, which means the companies go completely out of business. Notice in the chart above that Vallejo, Stockton, and San Bernardino went bankrupt during the so-called “Great Recession” of the late 2000s/ But do you know about Chapter 9 bankruptcy? This is the law for municipal early 2010s. When businesses were prospering, elected officials in these governments (such as cities and counties) that can’t pay off their debts. three cities could not resist imprudent spending on programs and projects. They go bankrupt to reorganize their debts, just like a business that can’t They also agreed to excessive financial commitments for employees. pay its obligations. When the economy slowed down, these cities couldn’t collect enough revenue Two of the most notorious Chapter 9 bankruptcies in recent American in taxes and fees to pay their bills. history were Orange County, California in 1994 and Detroit, Michigan in 2013. Ten years later, the American economy has experienced the longest period In recent years federal courts have also declared these three California cities of sustained growth in its history. Just like in the mid-2000s, some experts to be bankrupt: say there’s no reason to worry about recession. But a few naysayers recommend California Cities That Have Recently Gone Bankrupt that cities such as Salinas plan for a future economic slowdown and restrain their spending. Salinas At Risk When Recession Comes Suppose the recession comes in 2020 or 2021. Which California local governments won’t be able to pay their bills? ➟ City of Salinas Deficit Forecast $195 M Average Gap = $6.3M per year; $63.2M cumulative

The City of Salinas has managed to avoid bankruptcy despite two financial $175 M $ 13.0 $10.9 crises in the 21st century. Will it be able to slip through a third financial crisis $ 9.5 $ 8.2 without bankruptcy? $155 M $ 7.1 City of Salinas Deficit Forecas$t6.0 It depends on the commitment of the community to make broad sacrifices $195 M $ 4.5 Average Gap = $6.3M per year$ ;2.$68 3.2M cumulative now. Right now, it does not look promising. $ 1.2 $175 M $135 M $ 13.0 $ .1 Gap $10.9 $ 9.5 When the Salinas City Council approved its most recent budget, it assumed $ 8.2 $155 M $ 7.1 $ 6.0 that the city would spend $1.1 million more in the upcoming fiscal year than it $115 M $ 4.5 $ 2.8 $ 1.2 collects in revenue. It also assumed that by Fiscal Year 2028-29, the city would $135 M $ .1 Gap spend $13 million more than it collects in revenue. For the next ten years, $115 M $95 M the city would end up spending a total of $63.2 million more than it collects. According to the staff analysis of the budget outlook, costs of salaries, $95 M $75 M pensions, health insurance, and workers’ compensation are the main reason $75 M FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY for this projected budget shortfall. A recession will not cut these expenditures, 2019 2020 2012029 1 2022022 0 2023 20220214 2022025 2 2026 20220273 20282024 2025 2026 2027 2028 but it will cut the revenue that was anticipated to pay for them, making the Revenues ReEvxpeenduiteurses ExpPLANend -i tContinuedures on page 6

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2 www.SalinasChamber.com OCTOBER 2019 2019 EXECUTIVE COMMITTEE ■ Chair - John Bailey Introducing the Blue Zone Alternative Dispute Resolution ■ Chair-elect - Andrea Bailey Way of Life to Monterey County Chevron ■ Past Chair - Jim Bogart by John Bailey, Chamber Board Chair Grower-Shipper Association ■ Vice Chair, GRC - Kevin Dayton You cannot walk, run or bike going on Salinas City Center Improvement Assn. past 252 Main Street in Salinas City wherein ■ Vice Chair, Finance - Bill Hastie Center without feeling the buzz we debate Hastie Financial Group emanating from the new Blue Zones the solutions to our community’s ■ Vice Chair, Events - Julie Ann Lozano Project headquarters. Salinas Valley challenges, it is important to MBS Business Systems ■ Chamber members Salinas Valley remember that we also have many Vice Chair, Membership - Kristy Santiago KION TV Memorial Healthcare System, Taylor positive role models throughout our Farms and Montage Health are community who are working hard to 2019 BOARD OF DIRECTORS ■ leading a community-wide approach make this a better place to live. The Kalah Bumba (Consultant Community/Health) to encourage higher quality of life Blue Zones Project and its leaders and ■ Esteban Calderon (Comerica Bank) throughout Monterey County. A volunteers are such role models. They ■ Raymond Costa quick 3-Minute test available on apps. are educating our community of the (RHC Management, dba McDonald's) bluezones.com gives an eye-opening benefits of healthy food and great ■ Frank Geisler (Geisler3) survey before calculating your life wine, exercising and forging strong ■ John Haupt (Haupt & Associates) expectancy, and provides a sobering social connections. That’s something ■ Albert Maldonado (MP Express Printing) reminder that improving one’s daily everyone can support. ■ Rodney Meeks (Credit Consulting Services) choices, and attitude, may improve We at the Salinas Valley Chamber ■ Tom Meyer (1st Capital Bank) longevity for our whole community. work hard to collaborate with others ■ Kathy Miller (Aera Energy) With so much local planning taking we are pleased to see the focus on and will continue to grow our close- ■ Krishna Patel (Valvoline Instant Oil Change) place throughout Monterey County reducing events and situations that knit circles of support across Monterey ■ Brandon Patterson (Brandon D Patterson - to improve the walkability of our trigger negative physical, mental or County. We welcome you to visit Blue Windermere Valley Properties) emotional responses. Even though communities and an increased focus Zone’s Project headquarters to learn ■ Starla Warren on our food and social networks, there are many difficult discussions more about the Blue Zones Project. ■ (Monterey County Housing Authority Development Corporation) CHAMBER LIAISONS ■ Peter Kasavan (SPARC) Partisan Breakdown of California Voters ■ Matt Huerta (Monterey Bay Economic Partnership) By County 10 Largest Cities LEGAL COUNSEL ■ Matt Ottone PROFESSIONAL STAFF ■ Roxanne Noble Boss Membership Director ■ Sydney Allred Member Services Coordinator ■ Phillip Saldaña Operations & Accounts Manager ■ Paul Farmer CEO & Chief Member Advocate

CREATING A STRONG LOCAL ECONOMY PROMOTING THE COMMUNITY PROVIDING NETWORKING OPPORTUNITIES POLITICAL ACTION REPRESENTING THE INTERESTS OF BUSINESS WITH GOVERNMENT

[email protected] (831)751-7725

OCTOBER 2019 www.SalinasChamber.com 3 Please join the Salinas Valley Chamber of Commerce as we celebrate Legacy of Leadership

Saturday, October 26, 2019 Salinas Rodeo Grounds

Presenting Sponsor

6:00 pm Reception & Silent Auction $125 per person 7:00 pm Dinner and Awards Ceremony www.SalinasChamber.com

Brian Holaday Sherrie Isaac Barbara Balen�ne and Ollie Lowe

Candi DePauw Vern Horton

4 www.SalinasChamber.com OCTOBER 2019 CHAMBER TRIP - Australia + Fiji by (and with) Chamber CEO Paul Farmer Life is to be lived. Consider joining us for this phenomenal trip!

Raise your hand if you want to go to Australia. I see you, there. Australia is definitely a “bucket list” trip for many people. Personally, I have only heard people rave about the country and its people. I’m excited that the Chamber’s first trip in 2020 Chamber Trip 2020 will help you experience this fantastic (open to anyone) destination for yourself. The international trips coordinated by the Chamber have become so popular that now we’re offering two trips per year. Australia + Fiji (Note: you do NOT have to be a member Departing April 28,2020 of the Chamber to join in on the fun). Our first trip for 2020 is to Australia and the second trip (in October 2020) will be 12 Day Journey of a Life�me to Spain. We are still working on all of the time, exploring on your own. details for Spain. Includes 9Breakfasts, Hotels, Airfare, Tours Our “Australia + Fiji” 12-day tour is Australia AND Fiji offered at the fantastically low rate of It’s no wonder why Australia is among $3399. If you’ve got the time and a few Highlights: Experience Sydney & Melbourne, the top tourist destinations in the world: extra bucks, you can add another three days friendly people, beautiful beaches, to visit the Great Barrier Reef and Cairns Australia’s 2 iconic ci�es. See the Sydney Foster’s Lager and those cuddly koalas for another $899. and kangaroos. We’ll be visiting the two Opera House from a harbor cruise. Hand feed must-see cities, Sydney and Melbourne, Why Travel with the Chamber with an optional trip extension if you’d Traveling with the Chamber is a fantastic kangaroos, see the wildlife and much more. like to explore the Great Barrier Reef in way to travel internationally with someone Featuring 4-star hotel accommoda�ons the Northern part of the continent. you trust and our group travel rates will You might consider this fantastic save you plenty of dough and headache. vacation a two-in-one. Since we’ll be The Chamber and our travel partner agency flying right by the beautiful islands of Fiji handle all the details so all you have to do DISCOUNTED RATE: in the South Pacific, we’re going to stop to is enjoy yourself. If you’re a single traveler Rate is double-occupancy. spend three days there on our way over to who would like a roommate, we’re very $3399 $500 deposit holds your seat Australia. You’ll certainly be struck by the good at helping pair you up with a new natural beauty of the Fijian islands. From friend. Speaking of new friends, you’re stunning waterfalls and pristine waters, guaranteed to make plenty of them to vibrant sea life and long stretches of on our trip! sandy beaches, there’s so much to take in. There are so many cool things to share, Add 3 more days to see Cairns Travel Presentation Some of the islands are covered in magical you’re going to have to learn more and the Great Barrier Reef for Thurs Nov 14, 6-7pm tropical rainforests. about it. Please join us for the no-pressure only $899 more! 100 Harvest St, Salinas What’s Included & Price Travelers Information session on Nov 14 The travel brochure on our website (details in the ad beside this article). Download trip brochure on our includes more details, but let me net out for Or shoot me a note: website or contact us for details. you what’s included: shuttle transportation [email protected] to/from SFO airport, 4-star hotels with Our traveler satisfaction is very high (831) 751-7725 breakfast every day, tours with guide because the tours are top-notch, the pricing www.SalinasChamber.com and private motorcoach. Most tours are is very competitive (thank you, group [email protected] included, but there are a few optional discounts) and we know how to show excursions or you can enjoy some leisure people a good time! ■

OCTOBER 2019 www.SalinasChamber.com 5 ➟ PLAN – Continued from page 1 Salinas is on the prospective list of bankrupt one big fiscal reform package, rather than proposing cities, right there with Vallejo, Stockton, and San each recommendation on a piecemeal basis and Bernardino. Its economic growth and creation allowing them to be picked apart and derailed by The 32 Recommendations of high-paying jobs lag behind the major coastal special interest groups.” And in fact, various parties in The Salinas Plan metropolitan areas of California. Housing supply are picking apart and derailing recommendations 1. Staffing and Overtime Reduction at reasonable prices remains far below demand. among the 32 they don’t like. 2. Police Civilianization At the same time, the city’s powerful public For example, on January 8, 2019, the Salinas employee unions demand compensation and City Council discussed the recommendation to 3. Improve Police Department Technology benefits (such as health insurance and pensions) establish a Rental Registry and Inspection Program. 4. Evaluate Provision of Advanced that they believe they deserve. The City cannot pay It was strongly opposed by the Monterey County Life Support Services these in the long run without an unexpected influx Association of Realtors. The Salinas Valley Chamber 5. Recover Full Cost of Service from of new revenue. of Commerce also expressed concerns about how it Monterey County Regional Fire District In 2015, a privately-funded research institute that would affect businesses and their employees who 6. Consolidate Animal Services specializes in municipal finance issues - the National rent in the City of Salinas. 7. Eliminate Downtown Parking Fund Deficits Resource Network - released a report entitled Another recommendation - eliminating the 8. Eliminate General Fund Subsidy of Hidden in Plain Sight: Why California’s Economically Downtown Parking Fund deficits - is unpopular with Golf Course Debt Service Challenged Cities Matter. Salinas was included on merchants in Downtown Salinas. They worry that 9. Eliminate Sherwood Hall Deficits making customers pay for parking will discourage this list of 77 cities at risk. 10. Move Facility and Park Maintenance them from shopping downtown. Threat Is Identified, Solution Is Proposed to Library and Community Services Meanwhile, city public employee unions continue 11. Citywide Fleet Strategy Three years after releasing that report, the National to criticize The Salinas Plan. This hostility intensified Resource Network brought some advice to the City of when the City of Salinas engaged in contentious 12. Improve Budget Process and Monitoring Salinas on how to get off the list of cities at risk. On negotiations with the Salinas Police Officers 13. Strategically Implement Consultant Studies December 4, 2018, the Salinas City Council received Association (a union) over a new collective with Action Plans and Savings Targets and discussed a report from the organization entitled bargaining agreement. 14. Prepare a Preventive Maintenance Program The Salinas Plan - Creating a Blueprint for Fiscal A union-oriented dissent to the “last, best and for All City Facilities Sustainability and Housing Affordability. final” offer had harsh words for The Salinas Plan. 15. Healthcare Cost Containment The report contained 32 recommended initiatives, It decried what it called the "City’s alliance with 16. Improve Base Pay on Cost-Neutral Basis at least one of which was guaranteed to offend inconspicuous political activists that seek to 17. Eliminate Management and Flex Leave every business and organization in Salinas influence our federal, state, and local government 18. Continue to Address Workers' (including the Salinas Valley Chamber of Commerce). bodies through well-funded national attacks on Here’s an outline of The Salinas Plan: Compensation Funding public employees.” 19. Dedicate Savings to Capital Investment It also referred to The Salinas Plan as "propaganda PURPOSES OF THE SALINAS PLAN 20. Establish a Productivity Bank FOR THE CITY from political extremists" that has inspired "pervasive and pernicious anti-public employee rhetoric" from 21. Add an Analyst Position to • Maintain its fiscal solvency. City Managers' Office the City. And it condemned what it called the City's • Continue to deliver core services and pursue 22. Convene Stakeholders to Develop a strategic priorities. flirtation with "extremist views" that "serves to undermine local government by perpetuating the Plan to Create More than 4,000 New Units • Identify ways to increase supply of housing of Affordable Housing in the Next Ten Years silent influence of external forces.” that’s affordable. 23. Establish a Housing Trust Fund Outlook METHODOLOGY TO ACHIEVE THE 24. Create a Land Strategy PURPOSES OF THE SALINAS PLAN Not all is lost, yet. Residents concerned about 25. Create Regulations to Address Safety the financial outlook of the City of Salinas should and Health Conditions in Rental and • Save by reducing or eliminating be pleased about the City Council’s 6-1 vote on non-core services. Other Group Housing September 10, 2019 to control costs and resist full 26. Enact Storm Sewer Utility Fee • Identify new revenues to fund surrender to the police union demands. With their key strategic priorities. Yes votes, the mayor and five of the six members 27. Increase Hotel Tax and Dedicate to Capital Investment • Find efficiencies in operations. of the City Council held firm to the principles and • Implement strategies that are sustainable strategies of The Salinas Plan. 28. Establish a Mello-Roos Special Tax for the long-term. All 32 recommendations in the plan provoke 29. Identify Additional Funding Sources for Housing Trust Fund WHO WILL HAVE TO SACRIFICE opposition from someone. But inaction is dangerous. UNDER THE SALINAS PLAN Ultimately, when recession comes, the City of 30. Rental Registry and Inspection Fee 31. Engage with the Community to • All City Departments • Employees Salinas will have to dramatically cut services, dramatically increase taxes and fees on businesses Make Measure G Permanent • Residents • Businesses and households, or file for Chapter 9 municipal 32. Incorporate Multi-Year Financial Planning Reaction to The Salinas Plan: bankruptcy and allow a federal judge to run the city. into All Budget Actions No One Wants to Sacrifice Is your business prepared to accept massive tax At the Salinas City Council strategic planning increases and inadequate city services in a few years Contact the Chamber’s President & CEO session on January 26, 2019, the Salinas Taxpayers to balance the budget during recession? Paul Farmer at (831) 751-7725 or at President@ Association suggested that the city council “consider What do YOU want to see your Chamber do SalinasChamber.com to give your thoughts and adopting the recommendations in The Salinas Plan as about The Salinas Plan? ■ guidance to your Chamber’s leadership and staff.

6 www.SalinasChamber.com OCTOBER 2019 Workplace Mental Health Statistics by CalChamber This may come as a surprise, but is something that impacts business industry or size. Employees of all for many companies, the single most productivity more than physical ages, genders and race/ethnicity are expensive health-related problem disorders. What can employers do affected, and one in three working- is neither heart disease, cancer to help both their employees and age adults experience a mental nor diabetes — it’s mental health business? California is currently health challenge each year. But most conditions, not all of which are developing a voluntary mental health workers avoid treatment due to known. In fact, more than half of standard aimed to help employers both stigma and the fear of being those who died from suicide in 2017 improve their workplace mental viewed differently, or the fear of didn’t have a known mental health health — and looking for businesses losing their job. The good news, however, is that condition. Costs to employers are to help. One Mind at Work, a global the group also found that every $1 both direct and indirect, such as those Overall, nearly one in five adults coalition of leaders from diverse invested in mental health promotion caused by absenteeism, job turnover in America experience a mental illness sectors including business, research has a $3 to $5 return on investment. and work disability, among others, every year — that’s 43.8 million and education, expects that mental “All health issues affect work according to a One Mind at Work adults. Those numbers include illness will cause businesses to lose performance and productivity,” white paper, which also reports that 10.2 million adults with co-occurring $16 trillion — yes, trillion — by 2030. One Mind at Work says. “While the depression alone can cost employers mental health and substance use Already, businesses lose an estimated human and family impact cannot be an estimated $44 billion in lost work conditions, which often 200 million workdays each year due calculated, the financial costs incurred productivity. are intertwined. to depression, which is also the most in the workplace through avoidable Research also shows mental In the workplace, mental health expensive cause of presenteeism absenteeism, presenteeism and illness is a top contributor to worker conditions exist across all occupations, — productivity loss occurring when disability can be estimated, and they disability in the United States and affecting employers regardless of employees are at work. are large.” ■ Cost for CA Delayed Software Program Tops $1B by Wes Venteicher, Sacramento Bee The budget for California state a systemic issue Gov. Gavin Newsom state government. government’s long-developing has said he is addressing. While the project is accounting program has surpassed The Department of Technology’s 98 percent functional, $1 billion, and more spending independent review called the new six departments still will be required before all state timeline “aggressive,” adding there depend on legacy departments are using it, according is “no slack to recover schedule if systems from around to program updates. delays occur,” while changing its the 1980s to complete The Financial Information status to “green” from “red” on necessary financial System of California, commonly the state’s IT project tracker, tasks such as closing The deferred departments are known as Fi$Cal, received an indicating improvement. out month- and year-end financial Caltrans, the Department of Motor additional $145 million — bringing In departments where it has statements, she said. Extended Vehicles, the Department of Water the total to $1.06 billion — and been successfully implemented, delays could threaten the state’s Resources, the Department of a newly extended deadline of the program has tightened controls credit worthiness, State Controller Corrections and Rehabilitation, July 2020, according to a project on payments to vendors and some Betty Yee told legislators in the Department of Justice, the oversight report the Department of employees, added transparency and the spring. Department of Rehabilitation Technology posted Monday. improved a range of other functions, On top of the departments that and the California Department of The state started work on the Miriam Ingenito, the program’s still depend on legacy systems, seven Technology itself — the agency project in 2004. Its last approved director, told legislators earlier this others have deferred adapting to overseeing the project. completion date had been this year. summer. The state budget has been Fi$Cal. When those seven start using Repeated delays and rising costs produced with Fi$Cal since 2016 it, more money will be required A few agencies will never use the made it a poster child for state and about 20,000 state workers to get them up and running, system, including CalPERS, CalSTRS, government’s broader challenges now use it, Ingenito noted. About Ingenito told told an Assembly the University of California system with major technological overhauls, 250,000 people work for California subcommittees in June. and the Legislature. ■

OCTOBER 2019 www.SalinasChamber.com 7 Automakers Defy Trump by Dale Kasler, Sacramento Bee California officials, teeing up emissions from our vehicles.” Honda an epic fight with President Donald had no comment and VW officials Trump’s administration over climate couldn’t be reached for comment. change and air pollution rules, But board officials acknowledged have potentially powerful allies in that the antitrust investigation is their corner: four of world’s having a chilling effect on California’s largest automakers. attempt to get other car makers to Ford, Honda, BMW and sign onto its pollution standards. Volkswagen are sticking with an “We were put on ‘pause’ a little agreement they made to meet bit with the antitrust allegation,” said California’s stricter standards on Ellen Peter, the board’s chief counsel. greenhouse gas emissions. In announcing the initial After the Trump administration agreements in July, Gov. Gavin formally revoked California’s legal Newsom promised that other car authority to set its pollution standards, makers would sign on. Last month he

board Chairwoman Mary Nichols said Mercedes Benz was on the verge CC lauded the four companies “for MP of joining with California. But so far of sy standing their ground on this issue” no other company, including Benz, te our in spite of the Trump administration’s has made a deal with California. oC ot efforts to force them to pull out Ph The industry craves certainty, and of the agreements. the prospect of a lengthy lawsuit At Monterey CountyBank, Democrats in California between California and the federal and elsewhere have called the government could jeopardize we believe in building investigation a politically motivated long-range product planning. The attack on California. Nichols, speaking Association of Global Automakers on PersonalBanking Relationships at an air board meeting, called it Thursday called for a “unified national “government-sponsored persecution.” standard” on pollution standards. Comprehensive Business Banking A Ford Motor Co. spokeswoman, Because of the state’s historically Rachel McCleery, said the company dirty air, it has the exclusive right SBALending won’t deviate from the California under the federal Clean Air Act to agreement. She referred a reporter impose stricter standards as long Commercial Lending to a set of deal terms in which as it gets a waiver from the U.S. Business Accounts all four companies recognized Environmental Protection Agency. California’s legal power to create its California and former President PersonalAccounts own standards on greenhouse gas Barack Obama’s administration MerchantServices emissions. had cut a deal that would reduce A BMW spokesman, Phil Dilanni, greenhouse gas emissions from CD’s, IRA’S said the agreement commits BMW cars by about 30 percent by 2025. to “continuous improvements in Because building lighter cars is the fuel economy and the reduction of most practical way of lowering carbon Call OurBusiness Banking Team TODAY! emissions, the plan would increase fuel economy from 35 mpg to Monterey: 601MunrasAvenue(831) 649-4600 about 50 mpg. Salinas: 1127 SouthMain St (831)422-4600 After the Trump administration signaled it was going to roll back PacificGrove: 542Lighthouse Ave(831) 655-4300 those standards, California began Carmel Rancho:3785 ViaNonaMarie (831) 625-4300 negotiating with individual car makers. The deals announced in OldestLocally Owned,Locally ManagedBank July would maintain the Obama in MontereyCounty-OVER 40 YEARS! rules but give the automakers an TheLeadingSBA Lender in Monterey County additional year, to 2026, to meet Member F.D.I.C. ⬧ Equal HousingLender the emissions targets. ■

8 www.SalinasChamber.com OCTOBER 2019 U.S. Economy On Moderate Growth Path by Reuters The number of Americans filing applications for flagging a recession. The Atlanta Fed is estimating gross unemployment benefits increased less than expected domestic product rising at a 1.9% pace this quarter. recently, pointing to strong labor market conditions that “Fed officials are done cutting interest rates for the should continue to support an economy growing at a rest of this year and one of the reasons for this is that the moderate pace. economic data continue to surprise us on the upside,” The steady economic growth pace was also said Chris Rupkey, chief economist at MUFG in New York. underscored by other data showing home resales rising Initial claims for state unemployment benefits rose in August to a 17-month high. While factory activity 2,000 to a seasonally adjusted 208,000 for the week in the mid-Atlantic region slowed in September, orders ended Sept. 14, the government said. Economists polled remained solid, leading manufacturers in the region to by Reuters had forecast claims increasing to 213,000 in increase employment and boost hours for workers. the latest week. The reports suggested that housing and Layoffs remain low despite the trade tensions, manufacturing, the two weak spots in the economy, which have weighed on business investment and were stabilizing. The Federal Reserve cut interest rates manufacturing. But there are concerns that slowing job recently by another 25 basis points, citing risks to the longest economic growth could take some shine off robust consumer spending, which is largely expansion in history from a year-long U.S.-China trade war and slowing driving the economy. economic growth overseas. Last week’s claims data covered the survey period for the nonfarm payrolls Fed Chair Jerome Powell said he expected the economy, now in its 11th year component of September’s employment report. Claims were little changed of expansion, to continue to “expand at a moderate rate,” but noted trade between the August and September survey periods suggesting a steady pace of tensions were “weighing on U.S. investment and exports.” job growth this month. The U.S. central bank cut rates The economy created 130,000 jobs in August. Economists say it is unclear in July for the first time since whether the loss of momentum in hiring is due to ebbing demand for labor or a 2008. The Fed offered mixed shortage of qualified workers. signals on further monetary policy Job gains have averaged 158,000 per month this year, still above the roughly easing. Data, including retail sales, 100,000 per month needed to keep up with growth in the working age so far in the third quarter suggest population and sustain a healthy pace of consumer spending. the economy is growing close “If there was a problem in the labor market it would be visible in initial claims to the April-June quarter’s 2.0% and they are not raising any red flags,” said Ryan Sweet, a senior economist at annualized rate. Moody’s Analytics in West Chester, Pennsylvania. “Though business confidence Financial markets have been has dropped noticeably this year, it hasn’t led businesses to lay off workers yet.” ■ Home Sales Are Solid by Reuters In a recent report, the National Association mortgage rates. of Realtors said existing home sales increased But the sector is not yet out of the woods 1.3% to a seasonally adjusted annual rate of 5.49 as builders continue to grapple with land and million units in August. labor shortages, which have constrained their That was the second straight monthly gain in ability to construct more of the sought-after sales and confounded economists expectations for lower-priced homes. a 0.4% drop to 5.37 million units. “It appears that the housing market The increase in home resales, which make up is gaining some momentum as autumn about 90 percent of U.S. home sales, came on approaches,” said Matthew Speakman, the heels of data showing housing starts and an economist at online real estate database building permits surged to a more than 12-year company Zillow. “Even stronger sales volumes high in August. The housing market, which hit may be around the corner given that mortgage a soft patch last year, is being lifted by lower rates plummeted in August.” ■

OCTOBER 2019 www.SalinasChamber.com 9 What is “Piercing the Corporate Veil?” by Danny Little, Attorney Noland, Hamerly, Etienne & Hoss One of the benefits of a corporation to follow (or a limited liability company) is that corporate conducting business under the corporate formalities such as issuing stock, form limits your personal liability for having separate bank accounts, business debts. In other words, if a and maintaining corporate minutes court orders your corporation to pay and records; Advanced Solutions From Your a creditor $50,000, that creditor can't 3. Whether ownership of the access personal assets, such as your corporation is concentrated in a Local Business Neighbors house, to satisfy that order, even if your small group, such as a family, corporation can’t satisfy that debt itself. or a single person; However, in certain circumstances, 4. Whether a corporation has been the limited liability protection offered adequately capitalized (i.e., by a corporation may be disregarded whether there is enough money by a court -- this is called “piercing in the corporation to operate and the corporate veil.” If the owners of a satisfy liabilities); corporation abuse the corporate form, 5. Whether the corporation is the corporate veil may be pierced, being used as a “shell” or shield and the individual’s assets may be at for liability; risk. The purpose of this doctrine is 6. Whether the corporation has straightforward: to stop individuals and maintained arm's-length legal entities from misusing a corporation relationships with its owners for improper purposes. and affiliates; Typically, the corporate veil is pierced 7. Whether the corporation has been when the corporation is used to break used to obtain services or goods the law, avoid a debt, commit fraud, for the benefit of some person or or achieve some other wrongful result. entity other than the corporation; In these circumstances, a court will 8. Whether any owner has diverted treat the wrongful acts as if they were assets away from a corporation done by the individuals controlling to his or herself, or to another the corporation, rather than the person or entity, to the detriment corporation itself. of creditors; To pierce the veil, courts must find 9. Whether an owner has used a two things: (i) the corporation and the corporation solely to avoid owner must be so closely tied together meeting an obligation; and that they can’t be separated, and (ii) it would be unfair if the acts in question 10. Whether the corporation has been were treated only as the corporation’s created solely for the purpose of acts. Courts will look for certain assuming an existing liability of characteristics when determining the owner or another entity. whether these two requirements have No single characteristic is grounds been met. These include: for piercing the veil. Instead, owners Phone 831-759-8760 1. Whether the owner and the of corporations should view these corporation “commingle” or characteristics as rungs on a ladder of startdbs.com mix funds and other assets. risk – the more of these characteristics Commingling funds can include that are present, the “higher” the owner 540 Work St., Suite E • Salinas, CA 93901 using corporate money for climbs, and the more likely the veil is to personal expenses and using be pierced. ■ corporate assets, such as a vehicle, This article is intended to address topics of general interest and should for personal use; not be construed as legal advice. 2. Whether a corporation has failed © 2019 Noland, Hamerly, Etienne & Hoss

10 www.SalinasChamber.com OCTOBER 2019 UC President Napolitano to Step Down by Sacramento Bee University of California President Janet Napolitano announced her resignation during a recent UC Board I feel it’s the ideal time of Regents for a leadership transition — Janet Napolitano meeting in an infusion of new energy and Los Angeles. fresh ideas at the university.” She will officially step down after Napolitano battled breast cancer the 2019-20 academic year, which will in 2016 and 2017, but said she’s now be her seventh year in the job. in remission and that the illness didn’t “The decision was tough — and affect her decision to leave. Instead, this moment, bittersweet — but the she cited new Gov. Gavin Newsom time is right,” Napolitano, 61, said and changing leadership on the in a statement. “With many of my UC Board of Regents as signals that top priorities accomplished and the it was time for her to hand the reins university on a strong path forward, to someone new. ■ U.S. Household Net Worth Rises by Reuters Rising stock and real estate prices its longest expansion on record and helped lift U.S. household wealth to households are benefiting from $113.5 trillion in the April through low unemployment and a pickup June period, a report by the Federal in wages. The S&P 500 also gained Reserve showed. almost 4% during the second quarter. Client Focused. Relationship Driven. That compares to an upwardly Elsewhere in the central bank’s revised $111.6 trillion net worth report, liquid assets held by ATradition of Excellence Since1928. for households in the first quarter non-financial firms were $4.5 trillion of 2019. versus a revised $4.2 trillion in the January-March period. ■ The U.S. economy is experiencing AgricultureLaw 333 Salinas Street Business &Taxation Salinas, CA 93901 Construction 831.424.1414 Creditor’sRights Estate Planning Labor&Employment 470 CaminoElEstero Litigation Monterey,CA93940 PersonalInjury 831.373.3622 Public Agencies RealEstate &LandUse nheh.com

OCTOBER 2019 www.SalinasChamber.com 11 Schools and Educational Resources The Salinas Valley Chamber of Commerce encourages you to shop and dine at local businesses. For every $100 spent at locally owned businesses, $73 stays in the community. Let’skeep theSalinas Valley strong - please support thesemembers.

ACTS-Alliance Career Training HarmonyAtHome Sacred Heart School Solu�ons (831) 625-5160 (831) 771-1310 (831)755-8200 Hartnell College Salinas City Elementary School Anthem Chris�an School (831)755-6900 District (831)449-0140 (831)753-5600 Mission Trails Regional BrandmanUniversity Occupa�onalProgram Salinas UnionHighSchoolDistrict (831)373-0945 (831)753-4209 (831)796-7000

Central Coast College MontereyPeninsula College York School (831)424-6767 (831)646-4000 (831)372-7338

Chartwell School Notre Dame High School (831)394-3468 (831)751-1850

CSUMB PalmaSchool (831)582-4232 (831)422-6391

GrandCanyonUniversity RanchoCieloYouth Campus (831)236-7285 (831)444-3533

ASpecialThankstoOur Strategic Partnersand StakeholderMembers

12 www.SalinasChamber.com OCTOBER 2019 New Member Profiles 831 for Men In the Loop At 831 For Men, we believe in meeting and exceeding the lifestyle needs “In the Loop” is a private newsletter for the residents of Corral De Tierra, of our diverse customer base in the Salinas Valley. We go the extra mile San Benancio and Robley Roads. Delivered monthly to the residents, to offer quality and accessibility to our customers with unmatched, the publication builds community out of neighborhoods. In the Loop individual customer service! is a non-traditional marketing Across our brands such as, Fish Hippie, Travis Matthew, 7 Diamonds and approach that builds relationships Mavi, to name a few, we aim to make shopping and getting dressed easy! between businesses and residents. We update our clothing regularly to meet [email protected] the needs of our customers and developing (831) 272-4761 styles while offering fun promotions helping Brad N2Pub.com/Publications/ you save money in return. Whether you’re In-The-Loop heading to the office, golf course or a fun night out with the guys, we have you covered. Next time you’re in Old Town Salinas, stop by and see what we have Tee Lambert Photography to offer. Support women in business and shop local. We are Tee and Rebecca Lambert, a husband and wife team who serve (831) 320-0119 • 246 Main St., Salinas • Facebook.com/831ForMen the Monterey County area and beyond. We photograph luxury weddings for joyful brides! However, that’s not all we do. We also provide service for engagements, families, seniors as well as events and even corporate headshots. That means you spend less time looking for someone to Energy Upgrade California take care of all your photography needs Energy Upgrade California® is a nonprofit, statewide initiative committed to and your photos never looked better. uniting Californians to strive toward reaching our We are located in Salinas and are the state’s energy goals, and support California in its perfect solution for all your occasions. quest to double energy efficiency and reduce We WANT to serve you! greenhouse gas emissions by 40% before 2030. Our website is www.teelambert. Our goal is to motivate and educate California com or you can check us out residents and small businesses about energy on Instagram or Facebook at @teelambertphotography management, reducing costs and making the We can’t wait to speak with you! most efficient use of our natural resources. EnergyUpgradeCA.org

Gold Star Motors Gold Star Motors is committed to providing the highest quality service to create lifetime customers. We believe that complete customer satisfaction in all areas of our operation: sales, service, and parts, is the key to our success and future growth. Underlying this mission is the recognition that our employees are vital in achieving the company’s goals and enhancing our reputation as leaders in our community. Our commitment to our customers and employees is matched by our respect for the community we serve. (831) 444-8444 GoldStarBuickGMC.com

OCTOBER 2019 www.SalinasChamber.com 13 JPMorgan Creates Chamber Events “Volfefe” Index The Chamber by Bill Hastie, MBA got creative for Over the last twelve months, stock Over the past our most recent Connect at Lunch: investors have certainly gone for a month, President lunch supplied by wild ride. The 4th quarter of 2018 Trump’s tweets Bill Hastie Pastability’s and experienced near-bear market losses, have included beer supplied by only to recover (and then some) in a reference to the Federal Reserve 20 Farmer’s Union the first few months of 2019. This times. JPMorgan’s analysts studied Pour House created what is known as a “V pattern” Treasury yields within the five minutes (pictured: owners in the U.S. stock market, and no doubt following a Presidential tweet, and the Colin and Lauren tests the mettle of even the most index reflects the rolling one-month Hattersley) seasoned investor. probability that a given tweet may move Investment markets move (in either the market. direction) for a variety of reasons, and The U.S. stock markets haven’t been We partnered indices are created in an effort to track immune, either. We are familiar with with the San Benito the performance of a certain group what is referred to as “headline-driven” Chamber for our of investments. The Russell 2000, for markets, where the news of the day August Mixer at the very tasty example, tracks the performance of may have an affect (positive or negative) Aromas Grill. small capitalization (“small cap”) on the direction of the markets. (That’s owner U.S. stocks. Now enter social media, where one’s Janet Lopez on Analysts at comments are instantaneously vaulted the right and JPMorgan recently into cyber space. The market’s reactions San Benito created an index can happen almost as fast. As the U.S. Chamber CEO to measure the and China inch closer to a mutually Michelle Leonard impact of President beneficial trade accord, investors seem on the left). Trump’s tweets on more comfortable buying and owning U.S. bond yields. stocks. Unfortunately, the opposite has The index, known also been true. When talks break down, as the “Volfefe and tweets are sent out reporting on Index,” named it, the markets step back and negative after the President’s volatility re-enters the picture. Hobby Lobby covfefe tweet from May 2017, suggests JPMorgan has found that the Volfefe opened its doors at that his tweets are having a statistically Index can account for a “measurable Northridge Mall, significant impact on the yields (and fraction” of moves, especially in the two amid a therefore the prices) of Treasury and five-year Treasury yields. Citigroup sea of blue. securities. The number of Trump’s has found that the President’s tweets tweets that have moved the market are often followed by increased volatility has dramatically increased in the past in the global currency markets. Bank month, with those including words such of America and Merrill Lynch have as “Democrats,” “China,” “products,” also joined JPMorgan and Citigroup in “billion,” and “great,” most likely to studying the correlation between the affect prices. President’s tweets and movement in If you’ve visited “Trade and monetary policy have the markets. Most recently, they have the new become an increasing focus for the reported in the days during which the Planet Fitness executive branch, and everything President tweets more frequently, (also at from casual sent sentiments to stock returns have been slightly Northridge Mall), seemly formal policy intentions have negative, and slightly positive with then you’ve been disseminated, globally and fewer Presidential tweets. been greeted by friendly staff, instantaneously, via this carefully Bill Hastie, MBA is the Founder of amid a sea scrutinized social media forum,” wrote locally-owned Hastie Financial Group. of purple. JPMorgan analysts Josh Younger and If you would like to discuss your personal or company’s investment needs, please Munier Salem. contact Bill at [email protected] ■

14 www.SalinasChamber.com OCTOBER 2019 Non-Profit Day The Leadership Monterey homeless women can get a hot meal, free clothing, emergency assistance County class spent an inspiring and other vital services. The discussion here was focused on the challenges day visiting and learning about to providing services and shelter to the homeless population in our county. various nonprofit organizations Afterward, we traveled in Monterey County. to the Chinatown We started the day with neighborhood in Salinas Katy Castagna, President & CEO of United Way Monterey County, as she shared where we encountered an overview of the nonprofit sector and provided us with details of the “Impact a “tent community” of Monterey County” survey being conducted to engage with the public and learn homeless living on the about aspirations for our community’s quality of life. streets, and met with Next, we visited the Monterey Bay Aquarium’s newly constructed Bechtel MidPen Housing to discuss Family Center for Ocean Education and Leadership, which provides staff‐led the affordable housing experiences for all school groups at no cost, and is an investment in the next currently under construction wave of ocean leaders, our youth. We were treated to a tour of the learning in that neighborhood. labs, with live animal Finally, we visited the Betsy Wilson from MidPen Housing gives a tour of Chinatown, including affordable housing displays, and collaborative Boys and Girls Clubs of they are building there. learning spaces, as well as a Monterey County. There, discussion about this history we met Ron Johnson, President & CEO, and his staff, whose focus is to inspire of the aquarium and the and empower young people in our communities to become responsible, healthy, importance of their ocean productive citizens. We discussed the success of their programs, including after conservancy efforts. We also school education and activities, such as art and music programs, and the impact engaged in some fun team they have made on so many youth and families in the county. ■ building exercises, led by Aquarium staff. On our next class day, Our next stop took us to program participants will learn about LMC participants engaged in some fun team building The Gathering for Women, exercises, led by Monterey Bay Aquarium staff. a caring community where Infrastructure throughout the county.

Chamber Ambassador Joseph Sanchez Joseph Sanchez was born in Salinas and is his family’s third generation from the Salinas Valley. On his mother’s side, his grandfather was a ranch foreman who instilled strong work habits and the importance of building close family ties. as he can with his wife and three children. Joseph started his career in 1989 and He enjoys giving back to the community has been a mortgage professional for the and belongs to a few organizations that past 30 years. He rose through the ranks in focus on community service. This prompted his profession and has been a Branch him to want to become an Ambassador for Manager for the past 4 years for Caliber the Salinas Valley Chamber of Commerce. Home Loans, the 5th largest Non-Bank He wants to serve the business community Lender for mortgages. and sees this as a great way to give back Joseph believes in spending as much time and provide goodwill to the Salinas Valley. ■

OCTOBER 2019 www.SalinasChamber.com 15 Focus on Non-Profits Alzheimer Association The devastating impact of Alzheimer’s disease and lend is exponential. In addition to the close to 6 million a hand. Americans living with the disease, more than Take time 16 million family and friends serve as their unpaid to think about caregivers. The needs of someone living with how you can Alzheimer’s or another dementia are extensive and support a increase over time – on average four to eight years caregiver you know. Ask for a list of errands that following a diagnosis. need to be run, spend time with the person with education programs about the disease, advances in Many family caregivers juggle competing priorities the disease so that their caregiver can have a break. research, and what you can do to reduce your own including work and other family responsibilities. These small gestures can make a big difference. risks. Encourage friends or coworkers you know are They are stretched thin, often overwhelmed. Finally, educate yourself about the disease – the caregivers to call. Our helpline service and programs Most could use help. more you know, the easier it will be to help. Call our are available in English and Spanish. November is National Alzheimer’s Disease 24/7 Helpline—800-272-3900—to learn about our Our vision is a world without Alzheimer’s. Until we Awareness Month and National Family Caregivers free local resources here in Monterey County such get there, join us in offering well-deserved support to Month—a perfect reminder for all of us to reach out as care consultations, support groups as well as our those who give so much. ■ Non-Profit Calendar

October: Oct 5: November dates: Need Volunteers to Deliver Meals Info Session Goldilocks and the Three Bears to Seniors: Ongoing 11am 2pm & 7pm 40 Clark St. Ste C 945 S. Main St, Ste. 107 320 Main Street Non-Profit: Meals on Wheels of the Salinas Valley Non-Profit: CASA of Monterey County Non-Profit: ARIEL Theatrical 831-758-6325 • MOWSalinas.org 831-455-6800 831-775-0976 • ArielTheatrical.org CasaOfMonterey.org October dates: Nov 24: High School Musical On Stage! Silent Auction of New, Gently Loved 2pm & 7pm Oct 5: and Vintage Handbags 320 Main Street Harvest, Hops & Hounds 2-4pm Non-Profit: ARIEL Theatrical 3:30-7:30 pm 831-775-0976 • ArielTheatrical.org 8022 Soquel Drive, Aptos Village The Inn at Spanish Bay Non-Profit: UnChained Non-Profit: Girls Inc. of the Central Coast Every Tuesday 831-687-9364 831-772-0882 Ballroom Dancing with CoastalDogs.com BubblesAndBagsEvent.Eventbrite.com Moon Glow Jazz band 7-9pm • 100 Harvest Oct 9: Nov 6 & 13: Non-Profit: Active Seniors, Inc. Info Session Coping with Grief During the Holidays 831-424-5066 • ActiveSeniorsinc.org 5:30pm Program 440 Calle Principal, Monterey various Every Monday Non-Profit: CASA of Monterey County Carmel and Monterey (see website) Zumba with Loretta Salinas 831-455-6800 • CasaOfMonterey.org Non-Profit: Hospice Giving Foundation 8:45-10:00am • 100 Harvest 831-333-9023 Non-Profit: Active Seniors, Inc. Oct 24: HospiceGiving.org/events 831-424-5055 • ActiveSeniorsinc.org CNE Nonprofit Board Roundtable: Oct 3: Budgets & Financials Dec 11: Board Connect Reception 9-10:30am Holiday "Friendraiser" Dinner 4- 6 pm • 1441 Canyon Del Rey Blvd., Seaside 2354 Garden Road, Monterey 5:30-7:30pm Non-Profit: Community Foundation Non-Profit: Community Foundation 411 Central Ave Bldg C For Monterey County For Monterey County Non-Profit: Salinas Senior Center 831-375-9712 831-375-9712 831-757-6030 CFMCO.org/event/board-connect-reception CFMCO.org/event/board-connect-reception SalinasSeniorCenter.org

16 www.SalinasChamber.com OCTOBER 2019 Public Retirees Receiving $100k+ Pensions Skyrocket Number of pensioned public retirees in California’s $100K Club skyrockets, with taxpayers now on the hook for 26,000 government pensions over $100,000, a 13-fold increase from 2005 Back in 2005, a mere 1,841 people includes comparably low That’s far more than any “I think defined benefit is a collected pensions exceeding $100,000 payments to survivors and private sector or nonprofit tremendous opportunity. It can a year in the massive California Public people with just a few association worker can be sustainable. It was sustainable. Employees Retirement System. By 2009, years of service — was ever possibly accumulate And then they jacked up all the this so-called $100K Club had more $32, 224, workers with at over a 30-year career by benefits by 50 percent and made it than tripled, to 6,133 retired workers. least 20 years of service saving for themselves. retroactive — basically doubled liability In 2013, membership had nearly tripled got $50,333, and those overnight. Now, they’re not sustainable. An analysis done by again, to 16,838. And in 2018, the with at least 30 years of Make them sustainable again.” Transparent California, a number of public retirees collecting service got $66,373. That would require overturning pensions of at least $100,000 a year Public safety pensions nonprofit that seeks to rein in public pensions, the so-called California Rule, which skyrocketed to more than 26,000, for police and firefighters, holds that benefits can be adjusted up, found that $100K Club according to an analysis of CalPERS data the most expensive, but never down. Reformers are members collected 17 percent of by the Southern California News Group. bestowed an average of $78,104 waiting for the issue to go to the state Heading the group was a Santa on retirees with 20 years or more CalPERS’ payouts in 2018, even though Supreme Court. Clara County attorney who received of service. the group constitutes less than 4 “If they say yes, we can make $935,028 in 2018 thanks to lump-sum Big pension payouts are a function percent of payees. changes prospectively and start payouts, CalPERS said. of generous retirement formulas “Not everyone wants to blow negotiating lower rates going Such payouts tend to inspire approved by city councils, school up the defined benefit system,” forward,” said state Sen. John “pension envy” in private-sector boards, county boards of supervisors said Edward Ring, co-founder of the Moorlach, R-Costa Mesa, who began workers who must depend on 401(k) and the state in the halcyon days after conservative California Policy Center, warning that the system is unsustainable s and Social Security for income in their 1999, when retirement systems were referring to the CalPERS’ model of golden years — and who are ultimately “super-funded,” governments halted years before the issue pierced the guaranteed payouts. ■ on the hook for ensuring that public payments, and actuaries said sweetened popular consciousness. retirees get paid if CalPERS investments benefits would cost next to nothing don’t cover the costs. because earnings on investments would The average Social Security benefit essentially pay for them. is $17,532 this year. Most Americans Those number crunchers were very, will never make $100,000 a year in very wrong. their prime working years, much less Is it ‘unsustainable’? in retirement, according to the U.S. “Rising pension costs will require Census Bureau. cities over the next seven years to nearly “The bigger, broader issue here is double the percentage of their general that we have pension systems moving in fund dollars they pay to CalPERS,” the opposite direction to demographics the league reported. “For many cities, — allowing people to retire earlier, pension costs will dramatically increase when people are actually living longer,” to unsustainable levels.” said Pete Constant, a former San Jose Under official, optimistic return police officer and city councilman who’s assumptions, total public pension debt now CEO of the Retirement Security in California stands at $285 billion, Initiative, which seeks to rein in or $21,846 per household. When Take a Step Toward Better Health public pensions. Nation assumes far lower returns, Payouts soar that debt surges beyond $1 trillion, Let our unique health and wellness programs SCNG’s analysis of CalPERS data also or $78,334 per household. connect you with your best life. found that: Despite higher contributions, New physicians and topics every month. The total number of people getting double-digit investment returns and checks from CalPERS — including the longest economic expansion in For more information and to reserve your spot, survivors and beneficiaries as well as American history, CalPERS and other call our Health Promotion Department at 831-759-1890. actual retirees — rose 41 percent from retirement systems are about 70 percent 2012 to 2018. funded (official version) or about 50 Total payouts rose even more — percent funded (Nation’s version). in excess of 50 percent — from $14.4 A $100,000 lifetime pension with billion in 2012 to more than $22 billion annual cost-of-living adjustments make svmh.com/walkwithadoc in 2018. these retirees millionaires, with lifetime While the average pension — which benefits of $1.4 million to $1.8 million.

OCTOBER 2019 www.SalinasChamber.com 17 Taxation of Member News Short Term Rentals McKee Named County CAO by Patrick Casey Newly appointed County Administrative Officer The popularity of short term rentals portion of Charles McKee has been formally seated as the has increased tremendously over the the house that county’s chief executive after reaching an agreement last few years. For example, in 2018 is actually rented. on a contract with the Board of Supervisors. McKee Californians listing their property for However, the deductible expenses replaces longtime CAO Lew Bauman, who retired last rent on AirBnb received over $2 billion (on Schedule E) are limited to the total week following two decades with the county. from 9.5 million guests, and this does rental income received during the McKee, who will be paid a base salary of not include VRBO or other room or year. The prorated expenses that do $279,899.36 under a four-year deal running until 2023, house rental websites. While this has not go on Schedule E will otherwise been a significant revenue source for was greeted with unanimous approval and broad praise be deductible on Schedule A, subject Charles McKee many homeowners, how this income to certain other limits. by the county board and a standing ovation from the county staff-heavy crowd at Tuesday’s meeting. must be reported varies in different If the homeowner does not use situations. This article will assume the house at all as a residence, then Source: Monterey County Herald that the person owns the home all rental income will be reported (or condo) that is being rented out. on Schedule E to their tax return. The taxpayer will be able to deduct Salinas Valley Recycles all legitimate property and rental expenses, subject to the passive Food waste accounts for approximately 18% or 34,240 tons of the overall activity loss limitation rules in waste-stream that enters Johnson Canyon Landfill annually. Packaging IRC §469. table-ready salads and produce in plastic creates difficulty in recovering It is possible that the rental may organic materials for composting. be treated as a hotel or a bed-and- To meet this challenge, the Salinas breakfast. This can occur if (1) Valley Solid Waste one or more rooms, or the entire Authority (a.k.a. Salinas Valley residence, is regularly made available Recycles) has put a new de-packager If a homeowner rents their property for occupancy by customers, (2) for a total of 14 days or less per year, into service to separate nonorganic the homeowner does not use the then they do not need to report any packaging from recoverable residence at all during the year as rental income on their tax return. organic materials. their home, and (3) the homeowner This is true regardless of how much As the organic matter is liberated rental income they receive for this provides essential services such as from its packaging, it is chopped into a “salsa” or slurry material ready for regular cleaning, breakfast or other short time period. composting. The technology that separates non-marketable organic meals, changing linens or maid If the homeowner rents out either produce from its packaging will help to initially divert 15,000 tons of food service. In such circumstances, a room or the entire property for more the rental property will be treated and packaged agricultural produce from the landfill annually with plans for than 14 days and the homeowner as a trade or business and the future processing capacity, if needed. uses the property as their residence taxpayer will need to report the (meaning that they still live there), income and expenses on then the taxpayer must report all the Schedule C to their tax return. income on their tax return (typically Steinbeck Real Estate Grows These are the general rules for on Schedule E). The taxpayer will Realtor Lacey Deverick has joined the Steinbeck how short term rentals are taxed. be allowed to deduct 100% of all Real Estate Sales Team. "Lacey is an experienced agent However, this article is not tax advice direct expenses (such as commissions bringing a vast knowledge of equestrian, land & ranch to AirBnb or VRBO), along with a and the homeowner must consult sales. Our entire team is looking forward to wonderful prorated portion of mortgage interest with their CPA in order to determine things for Lacey and we are thrilled to introduce expense and taxes, and a separately exactly how to report the income and calculated prorated portion of general take the appropriate deductions. ■ Lacey to our thriving real estate community," said expenses (such as utilities, insurance This article is written by Patrick Casey, company owner Angela Savage. Lacey is consistently and repairs). If only a portion of the who is a business attorney with the JRG giving back to the community as a supporter of Attorneys At Law firm in Monterey. unit is rented, then the expenses must You may reach the author at (831) 269-7114 local schools and an active member of the Los Amigos be further prorated to account for the or at [email protected]. Del Rodeo (LADR) committee. Lacey Deverick

18 www.SalinasChamber.com OCTOBER 2019 October, November Join us forsocializing, appetizers andvino. & December 2019 OctOctoboberer 17th17th Noveembmberer 1414thth Oct Lunch and Learn: Insurance for a Small Business 5:305:30 –7p7pm 5:35:30-7p7pm 3 11:30am-1pm • Chamber Office 1401 N. DavisRd. 356 Main St. Oct Ribbon Cutting: Alliance Career Training Solutions 3 5-7pm • 333 Abbott St. Ste. B, Salinas Oct Ribbon Cutting: XL Public House 1-2pm • 127 Main St., Salinas 11 Celebratingnew Salinaslocation! Oct Young Professionals Group: Kayak Excursion 12 9-11am • 2370 CA-1, Moss Landing Meet the ChamberBoard: Oct Fall Mixer at Outback Steak House 17 5:30-7pm • 1401 N Davis Rd., Salinas Oct Ribbon Cutting: Rancho Cielo Youth Campus 24 4:30-6:30pm • 710 Old Stage Rd., Salinas Krishna Patel JohnHaupt Oct Chamber's Fall Event: Legacy of Leadership Gala 26 6-10pm • Exhibition Hall at the Rodeo Grounds Oct Ambassador Committee Meeting 28 12-1pm • Chamber Office Oct Ribbon Cutting: Salinas Self Storage 5-7pm • 201 Harrison Rd., Salinas Makenew friendswith us 29 in arelaxed environment. Nov Connect at Lunch: Las Islitas Grill 6 12-1pm • 805 W Laurel Dr., Salinas NoveNovembmberer 6th Decembmberer 4th4th 12–11ppmm 12-1p1pm Nov Dia de los Muertos Celebration 805 WLaurel Dr. 1130 S. Main St. 7 5:30-7pm • 7902 Moss Landing Rd., Moss Landing Nov Ribbon Cutting: Courtyard by Marriott and Residence Inn 13 12-2pm • 17225 El Rancho Way, Salinas Nov Young Professionals Group: Game Night 13 6-8pm • 210 Main St., Salinas Nov Ribbon Cutting & Mixer: Bay Federal Credit Union 4-6pm • 356 Main St., Salinas 14 Meet theBoard: Nov Ribbon Cutting: Keller Williams Salinas Valley 21 4-5pm • 1368-B S. Main St., Salinas Dec Connect at Lunch: Wingstop 4 12-1pm • 1130 S. Main St., Salinas RaymondCosta EstebanCalderon

OCTOBER 2019 www.SalinasChamber.com 19 20 www.SalinasChamber.com OCTOBER 2019