Financial Report - Moreno Valley

ECONOMIC FACTORS AND OUTLOOK FOR FUTURE YEARS
Although the focus of this Annual Report is on the economic condition of the City in the fiscal year that ended
June 30, 2011, it is important for the City’s financial management to report on current issues affecting the City
and their economic impact on FY 2010-11 and future years.
Clearly the economic downturn has impacted Moreno Valley, as well as the Inland Region as a whole. Both
Riverside and San Bernardino counties are experiencing a delayed and slow economic recovery period.
With a population of 195,216, Moreno Valley is still experiencing population growth, albeit at a slower rate
because of the economic downturn impacting California. Moreno Valley remains the second largest city in
Riverside County and is presently the fourth largest city in the Inland Region. For the past few years, Moreno
Valley has been consistently ranked by the U.S. Census Bureau as one of the ‘fastest growing cities in the U.S.’—
ranking in the Top 25 of cities with a population over 100,000 for the past four years. Though it has slowed
because of the economy, population growth continues in Moreno Valley because of its strategic location at the
junction of Interstate I-215 and State Route 60, along with offering a wide array of quality housing options, a
family oriented lifestyle and a variety of quality of life amenities.
New housing development opportunities have long been a mainstay of Moreno Valley’s growth and economic
foundation. Over the years, the regional economy in the Inland Region of Riverside and San Bernardino counties
has been heavily dependent on construction activity, and specifically, the new residential development industry.
Moreno Valley was an active area for new home development and this industry peaked in FY 2004-05. Moreno
Valley has not escaped the new housing construction decline that has hit the Inland Region especially hard, and
residential building permit activity decreased 90% in the City for the period from 2005 to 2010.
New housing development will remain dormant for the foreseeable future based on current market conditions.
Once the City’s main economic engine, the current state of foreclosures that will continue to be absorbed during
the next several years, and the general sluggishness of the real estate market will deter new housing growth for the
next several years. The City’s assessed valuation has experienced a similar trend to that of the new housing
development market. According to the Riverside County Assessor, for a six-year period from 2002 to 2008, the
City of Moreno Valley’s assessed valuation grew an amazing 136% from $5.8 billion in 2002, to $13.7 billion in
2008. With the recession officially starting in fourth quarter of 2007, property assessed valuation decreased in
Moreno Valley from FY 2008-09 through FY 2010-11 when assessed valuations are projected to be
approximately $10.8 billion. With the conclusion of the Proposition 8 adjustments and a decline in foreclosure
activity, the region is seeing stabilization in assessed valuations. For FY 2011-12 and the following few years, the
regions are expected to see flat to moderate levels of growth in assessed valuations.
For several years Moreno Valley has experienced substantial non-residential growth including significant new
commercial retail and industrial development. The economy has slowed commercial development in Southern
California, but Moreno Valley continues to secure new business development opportunities. Although new retail
slowed in FY 2010-11, Buffalo Wild Wings, Panera Bread, Baja Fresh, The Village Restaurant, Moss Bros.
Volkswagen dealership and other retail centers opened during FY 2010-11. Construction is completed and the
facility began operation in the Highland Fairview Business Park beginning with a 1.8 million square foot logistics
center to house Sketchers U.S.A. Inc. in May 2011.
Current economic activity is in the commercial sector, with a specific focus on logistics/distribution centers and
medical support businesses. The City Council approved an Economic Action Plan during FY 2010-11 that
specifically focuses on these market sectors to rebuild the City’s tax revenue base and promote job creation.
Creating employment opportunities and job growth is important to the continued development of the community.
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