1. John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP Inland Empire Economic Growth... Take Off?

2. After Losing 8.78 Million Jobs … U.S. Jobs Are Still Crawling Back -664,000 Government Jobs +8,221,000 Private Sector (94.1%)

3. Unemployment Falling, But High

4. Worst U.S. Metropolitan Area Unemployment Rates

5. Primary Tier Secondary Tier Economic Development … Increase The Economic Base! How Regional Economies Work

6. Three Step Growth Process Based On Interaction Of: Population Preferences Dirt Prices Force Decisions

7. Southern California Population Growth, 2000-2012

8. People Prefer To Live Near The Coast

9. As a homeowner, would you prefer to move closer to work if it involved a townhouse or condo? (I-15 & Sr-91 Commuters, 2008) 72.3% No Same question to Renters: 87.5% No Answer stable over 5 years

10. People forced to move inland for affordable homes Population Serving Jobs Only High Desert & I-215 South are current examples Stage #1: Rapid Population Growth

11. Commuting Bad, But Stable Over Time 1,650,384Total Jobs 1,156,313Inside IE 494,071Commute Outside County 154,845Between IE Counties 339,226Outside IE 20.6%Commute Outside the IE 16.3%Orange County Commuters

12. Construction: Finally Some Hope

13. Share of Underwater Homes Plunging 4Q 2012 to 3Q 2013 333,720 to 170,768 -48.8%

14. Home Price Trends 52.8% 32.3% 49.5% less for Existing home -39.2%

15. Long Term Competitive Price Advantage Still Exists

16. Permits: Finally Some Optimism

17. Firms Prefers The Coastal Counties

18. Stage 2: Strong Industrial Growth

19. Vacancy Nearing Historic Lows

20. Undeveloped Land … Industrial Prices Much Lower In Outlying Areas 84.2% 107.2% 156.6% $0.30 $0.38 $0.56 $0.63 $0.78 Inland EmpireLos Angeles Co.Orange Co.San Diego (non-R&D) Price Per Sq. Ft. Price with 20% Cubic Factor Difference. % Difference nnn=net of taxes, insurance, common area fees Source: CB Richard Ellis Exhibit 13.-Industrial Space Costs Differences Southern California, Sub-Markets, March 2013

21. Workforce Needs Jobs Without Educational Barriers

22. Workers Will Work For Less Not To Commute 0.0% 4.26% 2.55% 5.81% $33,240 $34,656 $34,089 $35,173 Inland EmpireSan DiegoLos AngelesOrange Weight Median PayPercent IE Pay Is Lower Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations Exhibit 82.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 459 Common Occupations, Under $70,000

23. Logistics Flow of Goods

24. Port Container Volumes

25. Fulfillment Centers

26. 17 Firms Looking For Space 7 Are Fulfillment Centers 1,500,000 1,000,000 800,000 to 1,000,000 700,000 to 1,000,000 500,000 to 800,000 700,000 to 900,000 850,000 700,000 700,000 to 800,000 600,000 600,000 to 700,000 500,000 450,000 300,000 to 400,000 350,000 Source: Jones LaSalle

27. Inland Empire Logistics Jobs 32.5% of All Inland Jobs … Jan-Nov. 2012-2013

28. Manufacturing: Could Be A Major Growth Source

29. Manufacturing Orders Irregular

30. U.S. v. California Manufacturing Jobs

31. Manufacturing Slowing

32. Regulatory Environment Aimed At “Dirty” Blue Collar Sectors Impacts Construction, Manufacturing, Logistics

33. Median Pay By Sector Groups

34. Exhibit 6.-PM 2.5 Days over National Standard vs. Total Square Feet of Net Industrial Absorption Since Highest PM2.5 level Monitoring Sites Mira Loma-Van Buren Riverside- Magnolia Riverside- Rubidoux Fontana-Arrow Highway Ontario-1408 Francis Street San Bernardino- 4th Street 2001 120.258.279.580.8 2002 88.492.673.767.488.9 2003 69.778.154.362.255.2 2004*47.857.3*** 2005**39.722.925.39.3 200646.231.3*27.2** 200743.4***** 2008*12.415.019.319.49.5 200919.06.015.16.29.06.2 20108.06.34.06.63.25.9 201113.07.15.07.16.8* 20127.0* 10.60.0 Change From Highest -39.2-81.3-113.2-63.1-79.5-88.9 Change -84.8%-92.0%-94.2%-85.6%-100.0% Net Absorptiont Since Highest 86,378,254183,911,357229,967,544183,911,357229,967,544183,911,357 Air Becoming Cleaner

35. Poverty Exhibit 2.-Share & Number of Inland Residents Below Poverty Level Census Bureau Year People In Poverty Share of Population in Poverty Population 1990 306,41711.8%2,588,793 2000 477,49614.7%3,255,526 2012 809,23419.0%4,293,892 Changes+164.4%+7.2%+65.9% African American: 27.2% Hispanic: 23.9% White:12.1% Asian:10.4%

36. Stage 3.-Office Based Firms Follow Their Workers

37. Skilled Workers Skilled Workers Migrate Inland For Better Homes

38. Office Absorption Finally Starting to Recover High-End Jobs Follow Workers into the Area

39. Outlying Workers Will Work For Less Not To Commute 0.0% 7.70% 9.17%9.22% $86,806 $93,489 $94,768 $94,806 Inland EmpireSan DiegoLos AngelesOrange Weight Median PayPercent IE Pay Is Lower Note: Occupations in common weighted by Inland Empire Jobs Source: CA Employment Development Department, Occupational Wage Survey, Economics & Politics, Inc. calculations Exhibit 98.-Median Wage & Salary Percent Difference Inland Empire vs. Coastal Counties, 2010 138 Common Occupations, $70,000 & Up

40. Office Vacancy Rates Improving But Still Very High 18.1%

41. High End Occupations & Office Unstable

42. Inland Empire’s In-migration From Coastal Counties Has Not Yet Recovered -15,538 Not Bringing Skills, Wealth, Income & Spending

43. Health Care

44. Health Care Jobs: Continuous Growth 700 600 800

45. Health Care Demand Set To Explode People Without Health Insurance (2012): 828,431 (19.0%) People Will Age, Already Those 55 & Over are 926,696 (21.3%) Population Growth Will Resume (2000-2013) 1,075,807 (33.0%) Inland Health Care Workers Handle More People Than CA: (35%)

46. Federal Job Cuts Debt Ceiling Budget Fights

47. Assessed Valuation Finally Growing (6.1% for SB County) -1.0%

48. Government Remains Weak

49. Primary Tier Secondary Tier How Regional Economies Work

50. Retail Sales Almost Back

51. Retail, Consumer Service, Hotel, Amusement Jobs Gaining Speed

52. Where Will IE Be In Its Job History? 30,050 41,025 37,64236,53336,775 41,483 46,008 6,342 9,758 4,575 16,917 28,925 23,083 38,325 40,692 56,467 49,850 40,567 33,292 35,467 59,275 61,533 44,692 2,508 (46,208) (84,892) (17,325) 4,633 23,025 14,282 28,300 35,000 19841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012 2013edd 2013bls 2014e Sources: CA Employment Development Department, U.S. Bureau of Labor Statistics, Economics & Politics, Inc. Exhibit 8.-Wage & Salary Job Change Inland Empire, Annual Average, 1984-2014e 2011-2013 55,958 of 148,425 lost or 37.7% 2011-2014 90,958 of 148,425 lost or 61.3%

53. Forecast 2014 Better Than 2013 Health Care Will Grow Logistics Will Grow Retail Gaining Office Growth Very Slow Home Building Starts Back Growth Looks Normal Still Well Below Pre-Recession

54. www.johnhusing.com