Homicides likely have ripple effect in Merced economy

Experts and area leaders say Merced’s record-high number of homicides last year, and the five so far this year, have both direct and indirect impact on the city’s ability to grow its economy.

The ability to fill vacant commercial buildings and draw developers can take a hit from crime statistics, which can bump up the cost of doing business and kick off longer-term social problems, experts said.

Investors from out of the area looking at buying commercial buildings in Merced can quickly think twice after doing their research, said Terry Ruscoe, owner of Merced Yosemite Realty in Merced.

As a real estate agent for both residential and commercial properties, he said the violence in recent years has hurt the commercial market. “It’s not only shocking but detrimental to the entire economy of Merced,” he said.

Just this month, Ruscoe said, he had a San Jose investor lose interest in an apartment building. The apartments are about three blocks from where a Merced police officer was shot on the night of Feb. 28.

“Once I told him that, he told me to look for other areas,” he said. “That’s what you’re talking about being a concrete, realistic and empirical example.”

Developers that want to build can easily find reports on violent crime from local media outlets or the U.S. Department of Justice, noted Frank Quintero, economic development director for the city of Merced.

“It’s pretty frequent that retailers will do some sort of statistical check on the site,” he said.

Demonstrate fast response

To overcome statistics that cast a negative shadow, city staff usually have to demonstrate the city and police are responding quickly and effectively to those crimes, Quintero said.

Mark Hendrickson, Merced County’s director of community and economic development, said there’s no doubt crime registers on developers’ radar. “Most certainly, quality of life plays a role in the site selection process,” he said.

More important than that, he said, is allowing a developer to get the business going as fast as possible.

A common way cities try to spur economic growth is with “shovel ready” sites, which means the land has what it needs to access electricity, sewer lines and other utilities. He said having a shovel ready site is a competitive advantage in many cases.

To do that kind of preparation on a city-owned site takes money. The developer would eventually pay the city back, but the city has to front the money to ready a piece of land. It’s a difficult balancing act in Merced, where there may not be enough discretionary money to beef up the police force and invest in developing the economy.

There has been an outcry from the public and from police to add officers. Merced‘s City Council will have about $750,000 in discretionary money in the coming fiscal year, if the early estimates hold true.

Safety versus economic improvment

Councilman Josh Pedrozo said it remains unclear where to strike the balance between public safety and bettering the economy.

Every dollar spent on adding officers is a dollar that can’t be spent on boosting the local economy, said Rowena Gray, an economist at UC Merced.

That’s a direct effect the crime rate has on local business. Homicide alone does not necessarily scare off businesses, she said, but it could affect an area of town if the numbers there are higher.

As cities grow and development is focused on a particular part of town, she said, the neglected areas can fall victim to the social issues that add to the problem of violence. Low-income families living in a neighborhood known for gangs and crime may have little opportunity for jobs or advancing their children’s education.

That cycle of poverty and the inability to draw development can breed more social problems in that area, she said.

Eight of the 15 homicides last year took place in central Merced. Three were in the northern part of town and four in south Merced.

Merced has economic drivers on its side, including UC Merced, Mercy Medical Center and, eventually, the high-speed rail station. But violence also has the potential to affect the benefit that comes from those drivers, Gray said.

People coming to the area to work for those drivers might want to live outside the city and spend their disposable income in some other community, she said. “Things like that, that have a more indirect effect, could be something to worry more about,” she said.

This story was originally published March 13, 2015 at 8:03 PM with the headline "Homicides likely have ripple effect in Merced economy."