TOPICS > Economy

California Community Hit Hard by Economy’s Fall

June 26, 2008 at 6:30 PM EDT
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Residents of a once-prosperous California community are feeling an economic pinch as home foreclosures, the credit crunch, low consumer confidence and high oil prices have hurt the U.S. economy.

JEFFREY KAYE, NewsHour correspondent: When the economy was roaring, Rancho Cucamonga, a suburban community of 170,000, an hour’s drive east of Los Angeles, was a town on a winning streak, with a jewel of a minor-league baseball stadium, posh shopping centers and restaurants, and bumper crops of new subdivisions built on land that was once orchards and vineyards.

Times were so good, in 2006, Money magazine picked Rancho Cucamonga as one of the 100 most-livable communities in the country. And middle-class families flocked here looking for safe streets and affordable homes.

JOHN VLASIC, trucking company owner: People moved from the L.A. area, the Orange County area, where the housing prices were high, and they decided to find places that were less expensive.

JEFFREY KAYE: John Vlasic, the owner of a trucking and warehousing company, has lived in the community since 1972. He says growth brought change to once-sleepy Rancho Cucamonga.

JOHN VLASIC: It brought a lot of money to the area. And I think that it brought a lot of people that liked nicer things, and that spurred the shopping and the restaurants and the higher-end stuff. They were really trying to position themselves as one of those elitist kind of cities.

JEFFREY KAYE: The real estate boom was the engine for much of Rancho Cucamonga’s growth and prosperity, and nearly everyone in this community that straddles the old Route 66 seemed to be along for the ride.

RON VANDENBROEKE, restaurant owner: They love it, spend money like crazy. It was no big deal.

JEFFREY KAYE: Ron VandenBroeke is the owner of Omaha Jack’s Grill House and Brewery, a restaurant that was a favorite hangout for the area’s once high-flying real estate agents and property speculators.

RON VANDENBROEKE: The real estate market was great for us, because a lot of those people found Omaha Jack’s as a nice place to go and relax, spend some money, treat a client, you know, bring their families.

JEFFREY KAYE: Celebrate a sale?

RON VANDENBROEKE: Celebrate a sale. You’re selling two a day then, so it didn’t matter. Every day was a celebration. They threw money around like it was nothing.

Good times are nearing the end

JEFFREY KAYE: But the party has come to an end. Now many of Rancho Cucamonga's residents and businesses are feeling the hangover of wider problems in the American economy.

The home foreclosure meltdown and credit crunch have hit hard, as have business bankruptcies, consumers' reluctance to spend, and soaring fuel prices.

The last is John Vlasic's chief concern, as he pours more money into fuel, passing on his increased costs to his customers.

JOHN VLASIC: The current fuel prices are about my biggest concern every single day. I'm spending about $20,000 a week on fuel, and it doesn't look like there's any relief in sight.

JEFFREY KAYE: $20,000 a week now compared to, say, a year ago?

JOHN VLASIC: For the same amount of miles, that difference would have been about $14,000. So, I mean, it's up substantially, maybe even $12,000.

JEFFREY KAYE: At his restaurant and brewery, Ron VandenBroeke is squeezed between a decline in customers and another problem in the economy shared by both restaurants and households: the soaring cost of food and ingredients.

RON VANDENBROEKE: We've taken an item like filet mignon, we used to pay $14 a pound for it. It's coming in at $18.95 a pound now.

Hops, which is the ingredient for beer, other than the grains, which everybody knows grains went up, but the hops piece that flavors your beer, gives it the smell, gives it the aroma, gives it the taste, that piece we used to pay $7 a pound for. Right now, $26 a pound, if you can get it.

JEFFREY KAYE: In the kitchen, cook Mario Valdovines says he has his own problems as he tries to make his paycheck stretch.

MARIO VALDOVINES, cook (through translator): I've gotten two jobs to stay ahead, two jobs to pay for rent, the bills, the car. That's all to keep my family going.

Hard times trickle down quickly

JEFFREY KAYE: Tough times are toughest, though, for those on the lowest rungs of the economy, such as the people who come to Valley Hope Partners, a food bank near Rancho Cucamonga.

KAREN DEAL: The price of gasoline keeps going up and food.

JEFFREY KAYE: Karen Deal has been coming here for two months. She's wrestling with everything from auto repair costs to finding affordable medical coverage.

KAREN DEAL: I have a steady job, but it's like trying to keep insurance, you know, get dental insurance, and I've been looking for medical insurance, but because I'm single, never had kids, I can't get it, unless I pay $200-something a month, and I can't afford that.

JEFFREY KAYE: As it tries to help the needy, this center has its own problems: keeping up with a growing demand for services, since donors have less to give.

Robert Lee Durocher is a volunteer here.

ROBERT LEE DUROCHER, food bank volunteer: Sometimes it's feast or famine here. I'm not saying we turn people away, but we have to give them bare minimal. Like, if there's 10 people outside and there's nothing much in here, we have to go and skimp what we give them. I hate doing that.

JEFFREY KAYE: In state and local governments, economic troubles have meant a cut in revenues and growing deficits. Rancho Cucamonga's sales tax revenues are down nearly 8 percent compared to last year.

Meanwhile, San Bernardino County, where the community is located, confronts an $18 million deficit and a possible cut of tens of millions of dollars in state funds that help support county social services.

PAUL BIANE, San Bernardino County supervisor: One of the things that I like to talk about is doing more with less.

JEFFREY KAYE: Paul Biane is a San Bernardino County supervisor and former Rancho Cucamonga city councilman. He says, as revenues fall, local governments are trying to tighten their belts without cutting essential services.

PAUL BIANE: You're not going to see the fire department, or the police department, or sheriff's department with cuts, but you're going to see it from the public defender's office, as probably each one of those men or women are going to see an increase in their caseload. They're going to have to handle more cases.

The same thing with child protective service employee, you're probably going to see them handling more cases per person. And so we're just going to have to do more with less people.

Second jobs now necessary

JEFFREY KAYE: Even Rancho Cucamonga's ballpark, home to the minor league team the Quakes, is seeing the effects of the downturn in the economy. Although the team reports ticket sales are still strong, many locals are showing up at the ballpark looking for extra cash, instead of just taking in a game.

Kyle Schoonover is the Quakes' vice president of ticket sales.

KYLE SCHOONOVER, Rancho Cucamonga Quakes: We've had a lot of people come approach us for a second job, you know, "Hey, I just need to pay bills and get some stuff done like that," so we've had a very increase in people who want to work for the Quakes.

JEFFREY KAYE: That's stadium worker Jim Haston's situation.

JIM HASTON, stadium employee: This puts money in my pocket, helps me pay my bills.

JEFFREY KAYE: And before?

JIM HASTON: Before it was like, you know, just a little extra money to have some fun with, you know, take little side trips and do things with the wife. You know, but now she's retired and I, you know, got to have the -- need the extra income.

JEFFREY KAYE: Now you need it?

JIM HASTON: Right. Now I need it.

JEFFREY KAYE: Although many of the Rancho Cucamonga residents we spoke to were generally optimistic about the future, they hope current economic troubles don't go into too many extra innings.