UC Merced reckons its economic contributions to the Valley at more than $500M since 2000

10/18/2010 10:17 AM

10/19/2010 12:04 AM

UC Merced declared Monday that in the past decade it has contributed more than $1.1 billion to the state's economy -- $550 million of that in the San Joaquin Valley.

Fresno and Merced counties were the two local communities that shared most of the the campus' economic largess. That's money UC Merced spent on employee wages, construction contracts and goods and services.

"Despite one of the most difficult economic climates in decades, UC Merced continues to invest heavily in the future of the Valley," Chancellor Steve Kang said. "The university's rapid growth is creating quality jobs, stimulating secondary investments, increasing tax revenues and helping to offset recessionary declines in other sectors of the regional economy. We are extremely pleased to be pumping sustainable value back into the region at a time when unemployment and poverty are creating so much financial hardship for so many Valley residents."

Locally, the university spent $333 million in wages, $107 million in construction contracts and bought $111 million in goods and services over the past 10 years, said Patti Istas, spokeswoman for UC Merced.

Since 2000, Fresno County businesses received $100 million in construction and service-related contracts, Merced County businesses were awarded $52 million and Stanislaus County got $23 million in contracts.

A few of the local vendors and contractors included Via Adventures in Merced; Bianchi & Sons Packing Co., in Merced; Hensley's Paving & General Engineering in Waterford and Classic Party Rentals in Modesto.

Via Adventures provides charter buses for UC Merced and operates Cat Tracks, the school's bus system.

Curtis Riggs, CEO of Via Adventures, said UC Merced is one of the firm's biggest customers. The relationship they forged has been helpful during the economic downturn. "Our business is tourism, and while that's been going down, our contract with UC Merced has helped stabilize our business," Riggs said.

The university spent about $550 million in goods and services throughout the rest of the state on similar contracts.

The university spent roughly $400 million in Northern California, $115 million in Southern California and about $200 million went to out-of-state contractors.

UC Merced has to accept bids with the lowest offer, so it can't commit to hiring a certain percentage of local contractors, Istas said.

The school is allowed to take certain factors into consideration when it comes to hiring locally. One is awarding bids to companies based on environmental sustainability, such as contracting with local farms for locally grown and produced food, Istas added.

Today, the university has 1,103 employees, and its payroll totals $7.5 million. In 2009, the university had 976 employees.

That money will eventually benefit the community with people shopping locally and buying homes, some economists and business developers suggest.

Dr. Joseph J. Penbera, professor of business at Fresno State University, said UC Merced shortchanged itself in terms of its expenditures because the school's news release didn't take into account the money students spend locally on housing, food and night life.

No official study has been conducted by the university on the amount of money students bring into the community, but Istas estimated that students spend $5,000 a year on books, transportation and food. With nearly 4,400 students, that means about $21.5 million for the community.

The university will expand physically and enroll more students, but whether the school will attract additional businesses isn't yet known, said Penbera.

Just because you have someone working in a lab doesn't mean investors will be immediately drawn to the region, he added.

"Someone has to organize (the research) into a business," Penbera said. "It has to attract investors. That's part of a process. These universities in the Valley do not have a handle on that. The government does not have a handle on that."

Universities such as Stanford and UCLA have succeeded in marketing their research to attract capital, Penbera said.

These universities translate what goes on in a lab into what investors can sink their teeth into, he added.

Carol Whiteside, president emeritus of the Great Valley Center, said that like all investments, it takes awhile to pay off. The recession has slowed a lot of the economic benefits to the community, she said. "There's no question about the fact that there are benefits," she said. "The challenge to Merced and the neighboring communities is to make sure the infrastructure is there to support them -- business loans and incubator offices. There has to be an infrastructure."

Reporter Jamie Oppenheim can be reached at (209)385-2407 or joppenheim@mercedsun-star.com.

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