Sacto Turns 30
By Dayna Dunteman
Posted on October 19, 2006
Photography by Roy Wilcox
In 1975, a group of Sacramento business leaders who cared about more than just what happened behind their storefronts had a concern. They were well aware of the fact that nearly half the local working population was on some kind of government payroll, owing to a preponderance of city, state and federal agencies as well as three military bases. The local economy, while stable, was about as flat as a days-old open can of soda, and these business leaders feared the city would lose its best and brightest to more compelling locales. Not only that, the local population was growing, but government wasn’t—and more and more people needed jobs.
And so a vision began to take shape: What if we were to create an organization that would stimulate the region’s economy by recruiting new businesses to the area? The way to accomplish this, local business leaders reasoned, was to form a strong web of partnerships between the public and private sectors, to “get everyone singing off the same page,” as one businessman put it.
Sounds like a job for Captain Sacto—and in a way, it was. The late Fred Wade, who delighted young baby boomers during the early 1960s as KCRA-TV’s original Captain Sacto (he of the corny spaceman getup who introduced cartoons and with whom local kids were dying to brag they’d appeared on TV), was among the founding fathers of the Sacramento Area Commerce and Trade Organization.
This year, SACTO marks its 30th anniversary with a salute to the hundreds of people behind its accomplishments and an ambitious eye toward the future.
Joining Wade (whose earthly job was in advertising) in SACTO’s infancy was a forward-thinking collection of Sacramento-area who’s whos, including Jon Kelly, former owner of KCRA and majority shareholder/board chairman of River City Bank; Ralph Scurfield, a then-partner in a local real-estate firm; and the late businessman Yubi Separovich, who is credited with saving baseball in Sacramento in 1943 by keeping the Sacramento Solons in town. They and others imbued in SACTO a spirit of cooperation and a standard of excellence that were embraced by all who followed in their footsteps. In the span of a few short decades, SACTO and its community partners have guided our transformation from an inferiority complex-plagued government town to a globally competitive region in hot fields like high-tech and biotech, and service-oriented industries. They are responsible for the creation of more than 100,000 direct jobs and at least two and a half times that many “ripple-effect” jobs, which ultimately spread through interaction between linked industries and through the purchase of goods and services. Recent years have seen more than $1 billion poured annually into the local community.
What SACTO Does
Distilled to its essence, SACTO—a private, nonprofit, membership-based organization serving El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties—is all about marketing, relationships, information and, above all, creating opportunities. SACTO collaborates with regional partners to represent the region through marketing and recruitment missions throughout the United States and overseas. It provides economic and demographic information to businesses looking to relocate to the area with the aid of the Sacramento Regional Research Institute, a joint partnership of SACTO and California State University, Sacramento.
Once a business prospect commits to relocating, SACTO involves key players in the region to help with everything from site selection to hiring—all under the cloak of secrecy until the company is ready to make its announcement. Not all of SACTO’s efforts are focused on recruitment. Sometimes, SACTO’s job is to assist existing companies in expanding—or to keep them from leaving, as it did with Campbell Soup during the mid-1990s.
No matter what the endeavor, it’s not for instant-gratification addicts.
“Usually when a company decides to locate to a region, it takes between 18 and 36 months’ worth of work on behalf of the company and the region,” says SACTO Executive Director and CEO Barbara Hayes. “Every prospect is different, but it could involve as many as 20 site visits, and it involves a flow of information ranging from A to Z—everything you could imagine and more. A common theme throughout is demographic information on the region. Companies not only want to know the number of people, but also ethnicity, age and education levels. Questions come in many forms, from off the top of the head to 25-page surveys. One company wanted to know how many Starbucks and foreign-language bookstores there were in the region.
“That’s what makes SACTO so successful: the ability to provide that information and keep the flow of information going. And, more importantly, the ability to access that information,” Hayes says. “That’s truly where our membership and our board are such tremendous assets. We rely on our members and our community partners to provide the information that companies are asking for because they are experts in their areas.”
SACTO’s membership roster reads like the Yellow Pages; that’s how many local cities, counties, chambers of commerce, public agencies and private companies participate. Members receive invitations to annual special events and published reports on the latest trends affecting the well-being of the region, but the greatest reward is sharing the region’s ever-growing economic pie. Many community leaders who’ve become involved in SACTO throughout the years share a strong belief in the organization’s mission, leadership and ultimate value to the region.
“SACTO has been blessed by having outstanding and civically minded individuals serving on its board. It’s just amazing what this organization has done,” says William Collard, a local attorney who served as SACTO president in 1989–90. Collard cites, as an example, Al Gianini, who came in as SACTO’s executive director during Collard’s tenure and, according to Collard, “did a marvelous job helping build financial strength into SACTO, and displayed outstanding leadership.” Sandra Smoley, who during that time served on the County Board of Supervisors, also impressed Collard as a staunch supporter of SACTO’s mission.
Ralph Scurfield, a SACTO founding member and one of its early presidents, couldn’t resist joking about the organization’s succession of distinguished leaders.
“I think some of them even measured up to the original ones,” he quips.
Kidding aside, there’s no denying the pride Scurfield and fellow SACTO founder Jon Kelly feel for the organization’s accomplishments throughout the past three decades.
“For (the organization) to sustain itself as it has—I think it’s been grand,” Kelly says. “Everyone pitched in to make it work, and I think all of Sacramento can be proud of that.”
SACTO started with a membership of 14 and a modest annual budget of just more than $40,000, and has since grown to a record 525 members and a budget of $1.7 million. While the process of relocating and retaining companies hasn’t changed much throughout the years, trends and circumstances have shaped the way SACTO directs its energies.
In the early years, SACTO’s main mission was to bring more private industry into the area. Throughout the 1970s and ’80s, the government sector accounted for approximately 40 percent of the local economy, not only at the local, state and federal levels but also with three military facilities: the Sacramento Army Depot, Mather Air Force Base and McClellan Air Force Base. That’s why Brian Van Camp, today a Sacramento Superior Court judge, joined the organization. He served as president of SACTO in 1986–87.
“I believed, when I joined in the late ’70s, that the economic base of our community could use diversifying. Public-sector payroll accounted for easily half the payroll of the community. On the one hand that was good in that it was probably recession-proof; on the other, it was bad because none of the agencies was in a growth mode and we clearly had more people moving to Sacramento, and our own kids were growing up and needed jobs,” says Van Camp, who in those days practiced corporate and securities law.
“Very early on,” Van Camp says, “SACTO made a commitment to solicit companies to come here that represented high-quality economic activity and had above-average-paying jobs. So we went after the Herman Millers (furniture company), the HPs, the Intels—people who were adding value in their industries and would do so in our community. We had a lot to offer: a highly educated workforce, excellent transportation networks and access to major markets.”
Still, not very many people outside the region knew anything about Sacramento—only that it was the capital of California (if they were any good at geography) and that it was close to more exciting places such as San Francisco, Yosemite National Park and Lake Tahoe.
That changed somewhat with the arrival of the Kings NBA team in 1985. At about the same time, the high-tech industry began to take off, and SACTO pulled off a major coup in attracting Intel Corp. to the area. Intel started with 300 employees at its Folsom facility, and has since grown to more than 7,000. “I remember when Intel bought the property in Folsom and built its first plant there,” says Ed Lammerding, SACTO’s president in 1984–85. “That really started the recognition (by the high-tech industry) of Sacramento as an alternative to San Jose.”
By 1999, the Sacramento region had earned the nickname “Silicon Valley East,” with more than 50 high-tech firms operating in the area including Hewlett-Packard, Apple Computer, Intel, Packard Bell, NEC Electronics and more than 30 foreign firms including Siemens Duewag, JVC Disc America and Woodland Poly.
None of this happened by accident. Through carefully planned strategies, SACTO led the way in diversifying the region’s economy and adding jobs to the community. In 1994, the organization adopted “Target 10,000,” a commitment to create 10,000 jobs for the region in the following five years. The next year, SACTO hosted the “5,000-Mile Target Tour,” which benchmarked the Sacramento region against the most prosperous economies in the country.
Bob Dean, executive vice president and northwest area manager for Grubb & Ellis Co., was SACTO president during the time, and he joined other regional dignitaries, including County Supervisor Muriel Johnson and Sacramento Mayor Joe Serna, in visiting Phoenix, Austin, Raleigh-Durham, Columbus, Miami and Minneapolis-St. Paul.
“It made me realize we needed to do even more to promote our region because everyone was gearing up for recruiting,” he says.
SACTO’s efforts paid off in a big way. By 1997, SACTO reached its “Target 10,000” goal one and a half years ahead of schedule. For the first time in a century, government was no longer the region’s largest employer. Information processing, high-tech and food processing now led the way in new-company locations and expansions, with soy-sauce manufacturer Kikkoman and high-tech giant Oracle moving in, and Hewlett-Packard and AT&T expanding.
SACTO’s pursuit of excellence as an organization also made strides when it became the first economic development organization to receive national accreditation from the International Economic Development Council. It’s up for recertification this year, which is impressive considering only two other economic-development entities in California—Placer County and the Tulare County Economic Development Corp.—have that distinction, and only 25 have it nationwide.
But there were hard times, too, and they tested SACTO’s mettle. During the mid-1990s, the Sacramento region was affected by military base closures, and more and more people were job hunting. To the rescue came “Project SACTO,” a five-year plan launched in 1997 to create jobs for people moving off the welfare rolls, attract headquarter companies and coordinate regional marketing efforts. That same year, SACTO established annual scholarships for local disadvantaged students with the goal of improving the quality of the workforce. On the tail of these developments came the 2000 dot-com bust, and soon the Bay Area became a hot target for SACTO, which promised a lower cost of living for those willing to relocate here. Revving up its efforts to put the region on the map, SACTO spearheaded the establishment of the Sacramento Regional Marketing Council and raised hundreds of thousands of dollars to launch a positioning campaign to educate companies on the benefits of living and working in the region. Meanwhile, the service sector remained the region’s economic leader, accounting for one in three jobs. The region made gains in information technology with firms such as The Gap’s customer-service center, Earthlink’s technical support facility, InnoVisions and Nextlink.
The year 2000 also was when Barbara Hayes was unanimously chosen by the board to become SACTO’s fourth executive director in its 25-year history. “[Installing Hayes] was my last official act as (SACTO) president,” says Larry Dicke, who served in that capacity in 1999–2000, and currently is the vice president of finance and CFO with the California Chamber of Commerce. “She’s well-respected by the staff, well-respected by the board, and she is a recognized leader of economic development in the six-county region and in the state. She’s a go-to person.”
Hayes stepped in at a very good time for the Sacramento region, when economic-development efforts of the past really started to bear fruit (as did the Kings by making the playoffs). Sacramento began to garner national attention by showing up on television during Kings games and on “best” lists in national publications. Sacramento was ranked 11th in “Best Places To Do Business” by Forbes magazine in 2001—up from 19th in 2000 and 28th in 1999. And now it was a baseball town again, too, with the arrival of the Sacramento River Cats AAA club.
During this time, prospect activity reached record levels, particularly among smaller owner-operated headquarter companies with higher-skilled and higher-paid employees. This was a welcome change of profile from the 1990s, when branches of larger operations headquartered elsewhere were the norm here. “When you have large companies that have a presence in the region but are not headquartered in the region, their commitment (to the community) is not as strong,” says River City Bank president/CEO Jeanne Reaves, SACTO’s president in 2001–2002. “It was really important to me that we would bring charitable dollars into the community by attracting headquarter companies.”
Headquarter companies, in addition to supporting local charities, are valued by SACTO because they hire local accountants, lawyers and other professionals, support local education and the arts, and involve themselves in planning the collective future. The new millenium also ushered in big changes for the old military bases. McClellan Air Force Base was rechristened McClellan Park, and within two years leased 5 million square feet of space and created more than 4,000 new jobs. Mather Field, the old Mather Air Force Base, was a similar job-generating success.
Accommodating new companies in their quest for information on the region was SACTO, which in 2001 launched the Sacramento Regional Research Institute along with CSUS. With operating expenses of about $260,000 covered by SACTO’s budget, SRRI provides a full range of economic and demographic research services—including industry studies, economic and tax-impact studies, market feasibility analyses, and profiles on everything from housing to wages to quality of life—to government entities, businesses and nonprofit organizations. Anything a business prospect wants to know about major trends affecting the area, SRRI probably has the answer.
Building a First-Tier Economy
As the nation headed into an economic downturn in 2002, the region felt its tremors—even though it continued to add jobs while the Bay Area was losing jobs. Then, as now, SACTO faces an uphill battle with regard to state regulatory issues, and many a company has chosen to set up shop in another state’s more favorable business climate.
Just when the region needed a pro-business shot in the arm, it got one—in the formidable form of Republican actor/bodybuilder Arnold Schwarzenegger, who became California’s governor in the historic recall election of 2003. Just like that, a day didn’t go by that the state capital wasn’t mentioned on the network evening news.
And the kudos kept coming. The region continued to receive national awards in 2003 and 2004, including the Sacramento Area Council of Government’s National Smart Growth Achievement Award by the Environmental Protection Agency.
Today, the Sacramento region is one of the fastest-growing major metropolitan areas in California, with 2.1 million residents—an increase of 140,000 since 2000 and half a million since 1990. By 2020, the area is projected to grow by another million residents. While the region has benefited from the influx of people and businesses, it also faces several challenges in the years ahead.
“A challenge going forward is home appreciation in the Sacramento area,” says current SACTO chairman Steve Bernard, senior vice president of advertising for The Sacramento Bee. (SACTO’s board voted to change the title from “president” to “chair” a couple of years ago.) “We’re still among the least-expensive places to live in California, but if it continues at this rate for the next five years, you wouldn’t find us at as great an advantage.”
On a bright note, the region’s ability to add jobs and absorb displaced workers during these difficult past four years speaks directly to the region’s diversity and strength of its economic base, and its ability to provide an educated, skilled workforce. Particularly promising is the biotech industry. Today, the region has more than 100 biotech and medical-device companies, and with California passing a $3 billion stem-cell research bond this past November, the future looks rosy in those areas.
Regardless of what the future holds, SACTO will be there, guiding the region’s economy by creating new strategies that fit with the trends. The organization is gearing up to launch a new five-year plan called “Building a First-Tier Economy,” which will aim to increase the number of quality jobs, promote the region’s image and benchmark the region’s economy against the competition’s. The plan calls for attracting high-wage companies in five industries: high technology; bio-industry and medical device makers; “advanced” business and financial services; “advanced” manufacturing; and information technology, including telecommunications and software companies.
“What we’re doing now,” Executive Director/CEO Hayes says, “ is looking at the landscape and saying, ‘What can we do to bring the region to the next level?’ We’re going to take the momentum we have and crank it up a few notches to really tell a good story about the Sacramento region.”