Blue Sky Consulting Group issued a report on Economic Impact of the California Forever project. The report estimates that by 2040, the project would bring $16.1 billion annual economic impact in Solano County, and create over 53,000 permanent jobs.

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Blue Sky Consulting has also completed a fiscal impact report. The fiscal report found that the new community is estimated to generate $143.2 million in additional tax revenue for Solano County, and additional costs of $100 million, for a net tax surplus of $43.2 million to Solano County.

In the case that the new community creates a larger number of jobs, similar to Walnut Creek, the tax revenues increase to $153.9 million, for a net tax surplus of $53.9 million

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Bay Area Council Economic Institute (BACEI) released an in-depth report Evaluating the Case for the California Forever project: “Does Our Current Housing Shortage Necessitate a New, Complete City?”

They conclude that “the new city approach put forward in the East Solano Plan can bring the scale of housing development and job production necessary for Solano County to share in the prosperity and opportunities that define the greater Bay Area.”

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Blue Sky Consulting Group

Blue Sky Consulting, a public policy and economics consulting firm with clients like the State Treasurer, State Controller, and CalTrans, has completed analysis of the economic and fiscal impacts of the California Forever project. The reports examine the projected economic impact during two phases: ‘Phase One’ (2028-2040) for the first 50,000 residents, and ‘Phase Two and beyond’ for continued development beyond 50,000 residents.

Economic Impact

• 12,413 new jobs supporting construction each year
  Residents of the existing seven cities in Solano County are expected to fill 86% of these job openings, including 3,127 new jobs for sole proprietors, business owners and independent contractors.
• $2.4 billion – or $5,328 per resident – in economic impact annually during construction
  $33 billion is the estimated cost to construct the new city and its neighboring solar facility over the 13-year Phase One construction period (2028 through 2040). Nearly all the investments incurred constitute a direct effect in Solano County. Statewide, the construction will result in $3.69 billion in annual economic activity for each of the 13 years of initial construction.
• Over 53,000 new permanent jobs created by 2040
  By 2040, projecting a minimum of 53,036, or 26% increase, in permanent new jobs with 23,385 jobs in the new city, 13,502 in other Solano cities, and 16,149 jobs for sole proprietors and independent contractors. Many of these will be higher paying across a broad set of industries. To the extent that the new city becomes a regional job center as California Forever anticipates, it would support up to 86,952 jobs, with correspondingly larger economic impacts on Solano County.
• $16.1 billion economic activity each year by 2040
  Estimated ongoing activity in Solano County will generate jobs and economic activity that will increase Solano County total economic activity by 31%. Estimated ongoing activity is a function of both new business activity and out-commuter household spending.

Full report and analysis

Fiscal Impact

• An additional $143.2 million in tax revenue for Solano County
  The fiscal report found that the new community is estimated to generate $143.2 million in additional tax revenue for Solano County from property taxes, sales tax, planning and building permit fees, and franchise fees.
• A net tax surplus of $43.2 million or more to Solano County
  The report also expects the community to generate costs of $100 million, for a net tax surplus of $43.2 million to Solano County. In the case that the new community creates a larger number of jobs – similar to Walnut Creek – the tax revenues increase to $153.9 million, for a net tax surplus of $53.9 million. This tax surplus would accrue to the general fund of Solano County, and be used as determined by the Board of Supervisors.

Full report and analysis

Bay Area Council Economic Institute

Can the Northern California Megaregion hit its job creation and housing needs without a new city strategy? The data makes that look unlikely. Solano County has long faced challenges in economic growth and housing production. With the lowest jobs-to-population ratio in the Bay Area and a significant portion of its residents burdened by housing costs, the need for a transformative plan is evident. The California Forever project, with its ambitious goals and comprehensive approach, presents a unique opportunity to address these issues head-on, fostering a more vibrant and sustainable Solano County.

Since 1990, Solano’s home building has slowed by over 50%

• Solano County built 674 homes per 100,000 residents in 1990, but by 2023, this number dropped to only 315. The current approach to housing production in the Bay Area has inadequately addressed the region’s housing crisis. Regulatory complexities, including restrictive zoning laws and lengthy approval processes, impede the development of new homes, particularly in existing urban areas. A new master-planned city in the region may offer a different pathway to generate housing supply.

Solano County met only 48% of its affordable housing targets

• During the last eight-year Regional Housing Needs Allocation (RHNA) cycle approved by the California Department of Housing and Community Development, Solano County jurisdictions approved 12,337 units, which included hitting only 48% of the county’s affordable housing target for units dedicated to very-low- and low-income households.

54% of renters and 29% of homeowners in Solano County are cost burdened

• The historic shortfall of housing production has severely impacted affordability in the region with the median rent for a two-bedroom apartment increasing by 24% from 2018 to 2024, and residents spending over 30% of their income on housing. The county’s average household would need 101 months of earnings saved to fully purchase the county’s median home, only 13 months lower than San Francisco, where annual average wages are nearly $100,000 higher.

Solano has lowest jobs-to-population ratio in the Bay Area – at only 39%

• Despite being at the geographic center of the megaregion, Solano County has been left out of much of the economic growth that has characterized its neighboring counties. While the Bay Area has seen significant job creation and economic development, Solano County has struggled to keep pace. Solano County’s unemployment rate stands at 4.9% as of April 2024, which is a full percentage point higher than the Bay Area’s overall rate of 3.9%.

Solano has slowest wage growth among all 13 counties

• Despite having similar median incomes as other counties in the early 2000s, since then, Solano County’s wage growth has lagged behind other counties. Due to the lack of a major employment center in the county, workplace destinations for Solano County residents are far more dispersed geographically than in peer counties, making it more difficult for workers to use public transit.

Solano’s job makeup skews toward lower- and middle-wage sectors

• As of April 2024, Solano County’s total non-farm employment was 144,100, growing only 0.4% since the onset of the pandemic (February 2020), while the state grew 1.8% over the same period. Solano County comprises only 3.5% of total jobs in the nine-county Bay Area even though it is home to 6% of the population, which means there is a considerable mismatch of jobs-to-households in the county.

Conclusion

The new city proposed by California Forever has the scale of job creation and home building necessary for Solano County to share in the prosperity and opportunities that define the greater Northern California region.

Solano County, despite its advantageous location next to prosperous economic centers, has struggled with insufficient job creation and home building, leading to high housing prices, long commute times, and a persistently higher unemployment rate compared to neighboring counties. The county’s undeveloped land offers a unique opportunity to address these issues.

While the infrastructure needed to complete this ambitious project is immense, the potential benefits of creating a new complete city could be similarly immense and would stretch across the region. The California Forever project could catalyze a dynamic new economic hub within Solano County at the center of the Northern California region, unlocking benefits that the county has historically missed out on by significantly boosting wages and productivity, alleviating longer commute times for residents, and integrating Solano County more fully into the regional economy.