While Sacramento isn't as glamorous as its Left Coast siblings, California's capital is striving to create an exciting business culture -- and it's working.
The dust has finally settled from the dot-com crash, leaving much of the San Francisco Bay Area's once-robust economy out of sync. Commercial real estate has dipped, but residential prices remain inaccessible to many -- especially those considering relocation from less expensive regions. Just 90 minutes down the freeway, Sacramento has been picking up the pieces, with low commercial rates and home prices that on average are half as much. "We've lived in the Bay Area's shadow," says Robert Fountain, director of the Sacramento Regional Research Institute, "and now we seem to be benefiting from that association and coming out of the shadow." As a result, 3 out of 10 Californians who bought homes in Sacramento last year were Bay Area émigrés -- more than double the rate four years ago. The River City now boasts 2 million residents, up 21% over the past decade, making it the second fastest-growing area in the state. As the region becomes more popular, prices are rising, but Sacramento remains affordable for companies attracted to the Golden State. "It's a California location without California costs," says Barbara Hayes, executive director of the Sacramento Area Commerce and Trade Organization.
Among the new wave of businesspeople, Joe and Gavin Ma-loof are undoubtedly the most visible. Patriarchs of the city's beloved Kings basketball team, the charismatic brothers are thrilled to be in Sacramento, having moved to town just four years ago. "The business climate is tremendous," says Joe Maloof, president of Maloof Sports & Entertainment.
Once seen only as a government town, business in Sacramento now includes call centers, laboratories, and manufacturing outfits, which find Sacramento's fresh talent pool and low earthquake risk appealing. Oracle moved 600 workers from the Bay Area in 2001, and AAA of Northern California is launching a customer-service center with close to 700 employees. Private companies are also taking notice. ComSonics, a Virginia-based cable television systems manufacturer, recently opened a Sacramento satellite office. "For us," says John Thompson, the company's western regional service manager, "Sacramento offered the best of everything."
Well, almost. While boosters like to point out that their city is just 90 minutes from San Francisco, an hour from Napa, and less than three hours from Lake Tahoe, the reality is that the city lacks the glitz of many other California locales. Still, as Joe Maloof says, "Sacramento is a city coming into its own."
FOUNDED: 1849 METRO AREA POPULATION: 1,936,006 COST OF LIVING: 123.8% of the national average CORPORATE INCOME TAX: 1-8.84% CORPORATE PROPERTY TAX: 1% of assessed value COMMERCIAL RENTALS: 25-40 cents per month per square foot (industrial), $1.50-2.55 per square foot (office) NOTABLE BUSINESS INCENTIVES: McClellan Park and Mather Field Commerce Center, former military bases, now offer more than 20 million square feet of industrial and office-park space as well as employment hiring credits, tax credits, and county redevelopment incentives. STATE PERSONAL INCOME TAX: 1-9.3% RETAIL SALES TAX: 7-7.75%, depending on locality PROPERTY TAX: 1% of assessed value AVERAGE 4-BEDROOM HOME: $350,000 (new), $266,000 (existing) RECREATION: More than 50 public and private golf courses; fishing, water skiing, boating, and whitewater rafting along Sacramento and American rivers TRAVEL: Sacramento International Airport recently doubled in size; carriers include Southwest, United, Delta, American. WEATHER: Dry, low earthquake risk. Average temperatures: 50.5ºF (winter), 75ºF (summer).