I.    The April 28th Rural Economic Vitality Conversation
      a.) To Achieve Rural Economic Success – Entrepreneurship is Fundamental for All Sectors
      b.) California's Rural Regions—Hotbed for Small Business Start-ups
      c.) Key Observations and Recommendations from California's Rural Economic Leaders
      d.) Initial Comments from the Administration and Legislature

II.   Regional and Statewide News and Information
      a.) Upcoming Events
      b.) Resources

California's Rural Economies:
A Framework for Success in the 21st Century Global Marketplace

In March we told you about our new report, "Innovation, Investment, Collaboration," and about our March 3 public briefing of Governor Schwarzenegger's Cabinet.  At that event, regional economic leaders from across the state presented the Secretaries and senior staff from ten Cabinet agencies with a set of recommendations for a comprehensive state economic policy, based on the "Complete Business Climate" approach.

The report and briefing were based on a dozen Regional Economic Vitality Conversations CCRL hosted with regional cosponsors across California in 2004.  Although these Conversations covered many of the State's regions, including areas where rural issues were brought forth and especially urban edge issues, we wanted to make sure that we gave attention to the particular challenges and opportunities facing California's rural regions.  Therefore, and with support from The California Endowment and the Humboldt Area Foundation, on April 28 we held a statewide Rural Economic Vitality Conversation.  Participants included:

• Labor and Workforce Development Secretary Victoria Bradshaw, Business, Transportation and Housing Secretary Sunne Wright McPeak, and other senior Administration officials
• Assembly Member Juan Arambula, Chair of the Assembly Committee on Jobs, Economic Development and the Economy and Vice-Chair of the Legislative Rural Caucus
• Economic leaders from nine different California rural regions
• A constellation of leading rural development experts

Participants were treated to a "framework" presentation by Brian Dabson, Associate Director of the Rural Policy Research Institute in Columbia, Missouri.  Dabson asserted categorically that innovation and entrepreneurship are the key to the economic success of our rural economies, but only if they are advanced through regional collaboration.  John Melville, Director of Collaborative Economics and a partner in the California Regional Economies Project, offered strong evidence that in fact California's rural economies are hotbeds of new small business start-ups, many of them based in a newly identified economic cluster, "the rural experience."

Rural leaders were then asked to address three questions:

• Where does your region's competitive economic advantage lie, and what new business models are emerging in response?
• How can entrepreneurship best be supported by the economic development sector and state government?
• Given that state policy and programs require broad-based support, how can we build new alliances between urban and rural regions?

We report below on the major themes that emerged from the session.  CCRL's commitment now is to take these themes, working with economic leaders in the regions, the Administration, and the Legislature and help translate them into policy and program initiatives that can achieve a full partnership with state government.  This partnership will help our rural economies succeed as part of an overall state economic strategy.  We invite your feedback and participation as we move toward this goal.

Nick Bollman, President
California Center for Regional Leadership

We are grateful for the partnership in this project provided by Secretaries Bradshaw and McPeak and Resources Secretary Mike Chrisman and Food and Agriculture Director A.G. Kawamura.  We are also grateful to The California Endowment (Mario Gutierrez and Maria Ortega in particular) and to the Humboldt Area Foundation (Peter Pennekamp and Kathy Moxon in particular) for their leadership and support of the project.  I am personally deeply grateful for the excellent work on this project by CCRL staff and consultants: Sarah Henry, Trish Kelly, Nooshin Navidi, and Kala Venugopal. 

Economic Development Pyramid	Four Principles
	Focus on the entrepreneur Focus on the community Focus on the region Focus on continuous learning

Based on his familiarity with rural economic strategies across the country, Brian Dabson suggested that traditional economic development strategies of business recruitment and retention cannot succeed unless the effort is undergirded by support for local innovation and entrepreneurship.  Rural businesses that fail to innovate, whether in traditional resource-based industries (agriculture and its derivatives) or even new sustainable resource development (from sustainable forestry to eco-tourism) cannot be sustained through conventional business assistance strategies alone.  Moreover, because of the relative lack of capacity often found in rural economies, support for economic success must be a community-wide endeavor, and must be achieved through regional or cross-jurisdictional collaboration and institutionalized capacity for continuous learning and improvement.  These bold ideas cut against the grain of many current rural strategies, though many of California's rural economic leaders are committed to these principles.  But they need state government assistance if they are to succeed.

b.) California's Rural Regions—Hotbed for Small Business Start-ups

Based on his work with the California Regional Economies Project, John Melville used the rural health services sector to illustrate the framework of analytic information required to assess current strengths and weaknesses and to formulate strategies for rural economic success. The region-specific information that would "populate" the following chart is the starting point for identifying entrepreneurship opportunities and support roles for the public sector.

Rural Health Services Cluster

Melville also described an emerging new "industry cluster," of potentially great importance to many of California's rural regions, the "rural experience."  And he described the "value chain" by which rural regions can build toward increased job-creation and wealth-creation.

Leveraging the Rural Experience

Value Chain Linking Goods, Services, and Experiences

Rural California Full of Young Firms

Age of Firms Operating in Rural California

Further, he reported new data that suggests that many of California's rural regions are already experiencing a high volume of new business start-ups ("young firms"), a good sign that entrepreneurship is beginning to get a toe-hold.  He used the growth in Sacramento Valley self-employment as a case in point.

Self-employment is Growing Faster than Wage and Salary Employment

c.) Key Observations and Recommendations from California's Rural Economic Leaders

In the written comments submitted prior to the Rural Economic Vitality Conversation as well as at the April 28 meeting, California's rural leaders offered many insights.  A complete description of these will be included in CCRL's forthcoming report on the Rural EVC.

• California's rural regions are very diverse (and every region has rural areas. Their opportunities and needs require a tailored approach by state government and its reliance on and support for emerging rural economic leadership.
• The "learning curve" for rural entrepreneurship is so challenging as to require new "networked" connections among rural leaders to ensure that lessons are shared and that cross-regional collaboration opportunities are seized (such as collaborative marketing or collaborative approaches to venture capital).  One idea suggested is a "Rural Innovators Roundtable," to support emerging growth companies.
• Growth is having a major impact in many rural regions.  People are moving from urban areas in search of affordable housing.  Growth patterns have resulted in long commutes, conversion of productive farm lands for urban uses, changes in the rural character of communities, upward pressure on housing prices for existing (often lower income) residents and pressure on infrastructure systems. Another challenge is the growth of second home and retiree housing demand, which has greatly increased housing prices, yet provides the opportunity for increased investment and entrepreneurial talent to support regional economic strategies. Growth has been rapid, yet the capacity for highly sophisticated modeling and planning isn't always available to rural counties and communities. How do we plan for and provide a sufficient supply of housing in rural regions and maintain balance and equity, as well as plan on a cross-regional basis? 
• Population-based or use-based infrastructure, such as broadband connection and road and rail connections, is a special challenge for rural regions, and therefore requires focused attention and creative response from state government.  Greater efficiencies in the use of public facilities are especially important in rural regions; it was suggested, for example, that Department of Forestry Information Centers could be designed to provide joint use for health examinations -- but this kind of initiative would require very entrepreneurial thinking in state agencies.
• Because of California's great distances and difficulty in rural access for some regions, we will need "state-of-the-art" Internet connectedness to achieve collaboration across regions and with state agencies, and to compete in the global marketplace.  Rural areas need a level playing field and must "connect to compete."
• As with all regions, preparing the workforce for the 21st century economy is a crucial task, as well as addressing the increasing disparities of education and income attainment.  There is a "brain drain" from many communities, due to limited higher education infrastructure and challenges with the K-12 and vocational education systems.  There is no better path for providing access to opportunity than providing excellent education and lifelong learning. Because rural California will need to excel in distance learning, it could also become a world leader in exporting the services and technology of distance learning.
• Because local knowledge and the ability to gather, analyze and share information is not as ubiquitous in rural regions as in metropolitan regions, the role of state universities and community colleges is critical (such as the new Center for Rural Entrepreneurship at CSU Humboldt, the Center for Economic Development at CSU Chico, or the California Food and Fiber Futures Project among eight colleges and universities).  It was noted that many have for this reason called for a new state policy enabling CSUs to award doctorates in applied disciplines, to develop the talent on faculty and among students to support rural economies.  And for a UC Medical Center in the Central Valley and Inland Empire.  In addition, certain "new economy" training programs (such as how to access venture capital) could be organized through an extension service that brings world class ideas out to rural California.
• To meet the health needs of currently underserved families and children, and those of an aging rural population that is growing through the in-migration of retirees, rural health care capacity must be strengthened.  This includes fair reimbursement rates, policies to recruit and retain healthcare workers and broadband access. California should become a world leader in telemedicine and telehealth, not only to serve rural California, but as an export services economy.  The linkage of 13 Indian health clinics to address diabetic myopathy was cited as an example.  Also, it was suggested that California's rural hospitals should be major centers for nurse training to supply our current and future needs.
• Because of the common perception of a disparity of attention and investment in rural areas by state government, as compared to metro regions, special organizing efforts must be undertaken, such as the proposed State Interagency Task Force for the San Joaquin Valley proposed by that region's economic and local government leaders.  Other efforts should encourage state agencies to work across their "silos."
• As a means of providing intra-regional organizing coherence, developing and marketing a "rural experience" as part of the economic strategy, and to build alliances with urban California, rural leaders must be able to "tell their story." In a variety of media, from fictional accounts to videography, the regions must present their historical, ethnic, cultural, artistic, geographic and social "stories" in a straightforward and compelling manner.  As but a small example, it was noted that annually California has more than 400 Portuguese festivals, of which 70 are held in just the Central Valley.  "Branding" and collaborative marketing could yield economic advantage for these "story economies," especially for niche markets for specialty high value products such as organics, grass fed beef, wines, and other items.
• With the increasing ethnic diversity of rural California, new "transnational" economic opportunities arise, such as the two-acre planting of a specialized eggplant near Fresno, for export to Japan.
• The state, the nation, and the world need new and increasing sources of renewable energy, and California should be a leader in new biomass technologies and services.  As an example, Imperial County aspires to become a "renewable energy corridor," with geothermal, hydro, wind, solar and biomass strategies.  Throughout rural regions, businesses are recognizing and adopting sustainability as a business model.
• Conservation is a significant rural economic strategy, and the new Sierra Nevada Conservancy was organized around the principles of conservation, stewardship and economic development.  Also, for example, why not think of watersheds as "industry clusters," and organize economic development strategies around their protection, improvement and use?  An example of just such an approach in Plumas County was cited at the EVC.

d.) Initial Comments from the Administration and Legislature

The following are just examples of responses from state leaders at the meeting.  Further details will be available through CCRL's forthcoming report on the Rural EVC.

• Secretary Bradshaw noted that the California Economic Strategy panel is committed to working with diverse regional economies, including diverse rural regions, and cited the priorities of the state Workforce Investment Board and its distributed local Board system as an opportunity for linking state policy to innovative rural economic development.
• Secretary McPeak asked for volunteers to work with her to address the broadband access issue.  She also indicated that the special circumstances of rural growth patterns will be addressed through the Governor's initiatives in housing and land use.
• Assembly Member Arambula observed that the weaknesses of the state's rural regions are mirrored by their strengths.  In particular he committed to taking an asset-based approach to rural economic development, to building alliances with urban California and to exploring creative efficiencies in state approaches, given limited resources and rural disparities.

Conclusion

For too long, the needs and capacities of California's rural regions have received too little attention from state government.  The April 28 Rural Economic Vitality Conversation is an important first step by the Administration to respond affirmatively.  CCRL pledges to continue to work with the Administration, the legislature and California's dynamic rural leaders to engage the policies and programs that will support successful rural regional economies as a vital part of a strong State economy.  A Conversation is only as good as the Action it informs and inspires.

ii. Regional and Statewide News and Information

a.) Upcoming Events

• Save the Date! CCRL is busy planning the 2005 Annual Civic Entrepreneur Summit to be held September 19-20 at the Renaissance Hotel in Long Beach.  Be on the look out for more detailed information that will be made available in the coming month. 
• California Forest Futures 2005 is a two-day conference (May 23 & 24, Sacramento Convention Center) that will examine the forces dramatically re-shaping our forest landscapes and explore the strategies and actions necessary to secure an economic and ecologically rewarding future.  More information and registration can be found on the Pacific Forest Trust's website at www.pacificforest.org or at the above link. 
• On May 26th, the 8th Annual East Bay Business Symposium is hosting "Economic Update 2005", which will include a moderated discussion with Bay Area executives and business leaders on topics including the impact of globalization on state and local economies and state and local government impact on businesses. For more information or to register online, please visit http://www.sanramon.org/emailbroadcasts/ebsymposium/ebsymposium.htm.
•  "Soul of Environmentalism" is being released nationally in conjunction with a panel event on May 26th at the Delancey Street Screening Room in San Francisco. Join a host of nationally recognized environmental justice leaders as they discuss their new essay, "Soul of Environmentalism," and what winning looks like for progressive movements.  The discussion will be followed by an audience-led question-and-answer session.  For more information, please visit Redefining Progress' website at www.redefiningprogress.org.  The event is free and you can RSVP to rsvp@rprogress.org or Sophie Mintier at (510) 444-3041, ext. 322.
• The Economic Alliance of the San Fernando Valley is hosting their 2005 Procurement Expo on Wednesday, June 8th at the Airtel Plaza Hotel.  This year's expo will feature more that $5 billion in commodity, professional services, and construction contract opportunities.  More information can be found at www.economicalliance.org/events/2005_procurement_expo.html.
• San Diego Regional Economic Development Corporation is hosting their 40th Annual Meeting, "Prioritizing Initiatives and Action" on June 8th at the Sheraton Harbor Island in San Diego, which will feature a presentation on the Indicators of Sustainable Competitiveness by Marney Cox, Chief Economist for SANDAG.  To register or for more information, please contact Kristen Sargent at 619.615.2969 or via e-mail at ks@sandiegobusiness.org.   
• The Orange County Business Council's 2005 Annual Dinner & Awards Presentation is being held on Thursday, June 9th at the Hyatt Regency Irvine.  The event will feature Keynote Speaker Paul Merage – Philanthropist, Visionary, and Entrepreneur – who recently donated $30 million to UC Irvine's Graduate School of Management, which was renamed the Paul Merage School of Business.  For more information and to register online, please visit OCBC's website at www.ocbc.org.   
• Sign up now to attend "Transform Your Board", an event presented by the California Association of Nonprofits in partnership with the Resource Center for Nonprofit Management at Ventura County Community Foundation and the Center for Community-Based Organizations.  Come to this event to learn how boards get broken – and how to repair, upgrade, and enhance the one you have.  Sign up today for the event nearest you: Ventura on June 14th, Contra Costa on June 16th, or Los Angeles on June 22nd.  For more information including the workshop lineup and online registration, please visit CAN's website at www.canonprofits.org.   
• Gateway Cities is hosting their 2nd Annual Wine Tasting and Benefit Auction "Good Wine, Good Cause" on Friday, June 17th in Paramount.  Reserve your tickets today by calling Lisa Andrews or Tina Clark at 562.817.0821. Additional information can be found online at www.gatewaycities.org/winetasting.html.
• The Sierra Business Council is hosting their 11th Annual Conference, "The Next Gold Rush: Linking Sierra Assets to the New Economy" on October 21-22.  The conference will be structured around three main themes: Sustainable Business Practices for Small Businesses in the Sierra, The Sierra Nevada Conservancy, and Arts and Agricultural Tourism.  More information can be found by visiting the Business Council's website at www.sbcouncil.org. 

• In case you missed it, CCRL released Innovation, Investment, Collaboration: A Statewide Action Agenda for Economic Vitality from California's Regional Leaders on March 3rd.  Many of you are familiar with the dozen Economic Vitality Conversations that CCRL convened on behalf of Governor Schwarzenegger's Cabinet last year to solicit and discuss ideas on how the state government can help stimulate and sustain economic growth in California's regions.  These ideas were brought together in the IIC report which on March 3rd was brought for consideration to the Governor and his Cabinet. The report encompasses a set of guiding themes and the highest priority ideas, outlined as an Action Agenda for the coming year.  You can find a complete set of materials from the Economic Vitality Conversations here:http://www.calregions.org/statepolicy/EVC_materials.html.
• In April and early May, CCRL convened five statewide regional CEQA Improvement dialogues in partnership with California State Resources Agency and the Public Policy Institute of California. The PPIC paper and list of meetings can be found at:  http://ceres.ca.gov/ceqa/. 
• Next Ten is inviting Californians to take the "California Budget Challenge", an easy-to-use on-line budget education tool that will enable visitors to quickly learn about the major expenditure and tax policy choices that face a Governor and Legislature, and enables users to look at the implications of those choices as they attempt to balance the budget by 2015. We invite you to take the Challenge at www.next-ten.org and see if you can make the choices that will create the kind of California you would like to see in ten years. To read what the press is saying about the Challenge, please visit http://www.next-ten.org/pressroom.php.
• On April 7th the California Voter Foundation released their California Voter Participation Survey, a comprehensive analysis of California infrequent voters and nonvoters' attitudes toward voting. This new report provides a detailed look at the results of a 2004 California Voter Foundation survey designed to better understand the incentives and barriers to voting in California, particularly among groups currently underrepresented in California's electorate.  The report is available online at www.calvoter.org.      
• CCRL is working in partnership with the California Resources Agency in the CEQA Improvement Project.  CCRL is facilitating a CEQA Improvement Advisory group and has convened Regional CEQA Improvement Dialogues across the state.  You can find more information about this project here: http://ceres.ca.gov/ceqa/.  The Public Policy Institute of California prepared a background report for the CEQA Improvement Advisory Group, which can be downloaded here: http://www.ppic.org/main/publication.asp?i=593.
• Visit www.infill.org, a new site that houses the California Infill Parcel Locator, a tool for pinpointing potential 'infill' sites throughout the state of California. Such parcels are located in areas that have already been urbanized, but the sites are either completely vacant or have structures assessed at extremely low valuations, relative to the land itself. Infill parcels may provide a viable alternative to new development on the fringes of urban areas. This site is an extension of the Statewide Infill Study conducted at the Institute for Urban and Regional Development (IURD) at UC Berkeley.
• The Government Performance Project is a non-partisan, independent program of research focused on state governments and the public's interest in improving their management capacity and performance.  On January 31st the GPP released Grading the States 2005, an assessment of the quality of management performance in the 50 states.  Click here to read their report on California. 
• The Entertainment Economy Institute sponsors and manages a ten-year old initiative that responds to current and future workforce needs of all segments of the entertainment industry in order to strengthen the economy and the lives of our current and future entertainment workers. For the last several years, EEI has been conducting the most expansive and accurate study ever performed on the economics of the entertainment industry.  The initial results are now complete and can be found on their website at www.entertainmentecon.org.