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IN THIS ISSUE – “I’m not willing to not have met this moment”
Gov. Newsom on his trips to attack Florida & Texas governors
- Governor Takes His Re-Election Roadshow to NY & TX
- Biden is “Hardwired for a Different World,” According to Newsom
- Will CA Water Year 2023 See a Rare Three-Peat La Nina?
- Heat Wave Postmortem – A Near, Near Miss for the Power Grid
- Las Vegas Gambles Big on Luring California’s Tech Industry
Capital News & Notes (CN&N) harvests California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING SEPT. 30, 2022
Governor Takes His Re-Election Roadshow to NY & TX
Politico’s California Playbook
Gov. Gavin Newsom is running for re-election in his home state, but he spent much of the last week taking the California show on the road.
In a blue state where he was rapturously received and a red state whose leader he loves to vilify, Newsom offered a similar message: under his leadership, California is demonstrating the way forward for the nation. Especially compared to the fossil fuel industry, conservative media and Texas Gov. Greg Abbott.
Newsom started at Climate Week in New York. He emphasized how climate change’s ravages are escalating, manifesting in heat waves and droughts and town-annihilating wildfires, and he lambasted some foes: the Wall Street Journal Editorial Board (“troglodytes”), Fox News (“time to take these guys on”) and the oil industry (“big corporations that have been destroying this planet).” As he took a victory lap on a newly signed climate package, he raised some eyebrows among coequal allies by proudly noting he “had to jam my own Democratic legislature,” some of whom are “wholly owned subsidiaries of the fossil fuel industry.”
But Newsom reserved specific animus for Abbott. He invoked his Texas nemesis by name while in New York as an example of “conservative governors” who are “just doubling down on stupid,” pausing for laughter and applause. He was back in California for roughly 48 hours before he was off again – this time to Abbott’s home turf, where Newsom’s scarcely-needed campaign funds recently went to purchase a trio of billboards extoling California’s abortion access. (Texas is among the states to which California bans publicly-funded travel; Newsom used campaign funds to get there. He also took a moment while there to fundraise for an Arizona race).
The first question to Newsom at a TribFest panel was on immigration, and he was ready to swing at that pitch. Newsom blasted Abbott for busing migrants out of state and condemned the “appalling silence within the Republican Party” – this after Newsom’s office announced on Friday he’d signed a bill creating California ID cards accessible to the undocumented “as other states cruelly target migrants.” He also took ample shots at Florida Gov. Ron DeSantis, arguing Abbott and DeSantis had miscalculated politically like California’s backers of Prop 187 and the Briggs Initiative. He trumpeted California’s environmental policies again and emphasized California would “have your back” on abortion access. He tweeted hits on Abbott and Sen. Ted Cruz in short order, winning some national plaudits.
Of course, Newsom dutifully deflected on a potential presidential bid, including a questioner’s quip about Iowa in 2023. He also again decried a national Democratic Party that is perpetually “on defense” against Republicans and urged a more aggressive approach. “I’m not willing to not have met this moment,” Newsom said, before closing on a warning that Democrats are too focused on “a guy or a gal on a white horse to come and save the day.” And then he rode out of town.
Biden is “Hardwired for a Different World,” According to Newsom
Sacramento Bee
Gov. Gavin Newsom has shifted his tough political talk to Democrats and President Joe Biden, saying the party has a “messaging problem” and the president is “hardwired for a different world.” The California governor was gentle in describing Biden, 79, who came to the Senate in 1973, as someone whose “world is gone.” “He’s acknowledged that very publicly on multiple occasions,” Newsom said in an interview with Alex Wagner of MSNBC. Newsom made his comments in Texas, where he was participating in the Texas Tribune Festival last weekend.
Newsom said that while Biden “wants to compromise, he wants to find our better angels, and he wants to find that sweet spot in terms of answering our collective vision and values but that’s not how the system is designed.” The 2022 political world is very different, the governor said. Republicans are vicious, he contended, “They’re bullies, nothing more than rank bullies,” Newsom said. Newsom has won praise from Democratic insiders recently for aggressively challenging Republican governors on abortion and other issues. He’s run ads and placed billboards in Florida, Texas and other states.
https://www.sacbee.com/news/politics-government/capitol-alert/article266513826.html#storylink=cpy
Will CA Water Year 2023 See a Rare Three-Peat La Nina?
CalMatters
The new water year starts tomorrow, and although it’s still too early to know how much rain and snow might fall on the state, weather watchers are expecting a hot and dry fall that could bleed into a warm winter with below-average precipitation.
Indeed, California could see its third straight year of La Niña conditions, in which critical rain and snowstorms pass the state by. A “three-peat” La Niña is extremely rare: It’s only happened twice since record-keeping began.
What will ultimately shape the next water year is the number of storms known as atmospheric rivers that make landfall, and the amount of precipitation they unleash. The timing, too, will be important, Anderson said: when rain and snow falls can affect how much of California’s precious snowpack rushes into reservoirs or soaks into the soil.
“From the water management standpoint, we’re being mindful that it very well could be dry,” Yarbrough said. “At the same time, we’ve got to be mindful that it could be very wet and you could have flooding. Both of those still are possible.”
Dry spells punctuated by wet years are part of “the California story,” Abazoglou said. “But obviously the last decade has shifted the balance towards more droughts.”
MORE:
Heat Wave Postmortem – A Near, Near Miss for the Power Grid
Politico
An epic heat wave this summer brought California’s power grid to the brink of collapse, and put its governor on defense as he touted the state’s nation-leading climate goals.
In Democratic Gov. Gavin Newsom’s telling, the state kept the lights on because of its efforts to bolster renewable energy.
“Went right up to the edge of breaking our grid, but it didn’t,” Newsom said at a Clinton Global Initiative event this week, describing this month’s scorcher to dignitaries gathered in New York City for Climate Week at the U.N. “This transition worked.”
The reality, however, is a lot messier.
California’s recent decisions to postpone the closure of its last nuclear plant and to extend the life of some natural gas-fired facilities highlight what officials and experts say is the fact that the state with the most ambitious energy goals is far from achieving them.
Growing demand for electricity and the fickle nature, for now, of greener technologies such as wind and solar are making it hard to progress toward the state-mandated goal of a grid that’s 100 percent emissions-free by 2045. Renewables provided 36 percent of the state’s power supply on average so far this year.
Those constraints were behind the recent decision by the Legislature, at Newsom’s urging, to postpone the retirement of the Diablo Canyon nuclear plant despite the fact that activists thought they’d secured its closure — and the governor himself once supported the idea.
The 10 days of triple-digit temperatures across the state this month sent power demand surging to a record level, bringing state regulators close to ordering rolling blackouts, a potentially deadly move and a political disaster.
It was the realization of a nightmare scenario a top state energy official said he’s been considering for months.
“Oh, my lord, we are in a very bad situation compared to even the worst case that we anticipated,” Siva Gunda, vice chair of the California Energy Commission, said he recalls thinking in the spring, when supply chain delays and a tariff on solar imports — compounded by severe drought — started to look like a multi-year power crisis.
The possibility of rolling blackouts became a shadow looming over California Democrats, even those who felt uneasy about keeping Diablo Canyon open. Some talked publicly about how outages contributed to the impeachment of then-Gov. Gray Davis at the beginning of the century.
What’s needed now, officials say, is even more investment by the state akin to the Marshall Plan that rebuilt Europe after World War II.
“Enough isn’t being done right now” to avoid a worrying gap in the power supply in the future, said state Sen. John Laird, a Democrat from Santa Cruz who has argued the state needs massive new investment in renewable energy and batteries to move off fossil fuels.
“We have to make sure that we have more wind, we have more solar, we really develop offshore wind, get out of the way of some of the developed renewables so that they come on the grid,” Laird said.
The stakes are existential. After the Enron electricity trading scandal and the Western energy crisis that followed 20 years ago, the state’s reputation was in tatters and a governor got recalled. But California quickly built itself up as a model for embracing wind and solar power — becoming the measure against which other states compare their own climate ambitions.
Now, by a state estimate, California will need to deploy renewable energy at five times its average pace to meet its mandated goal of 100 percent emissions-free power by 2045. All that while contending with rising temperatures, drought and wildfire.
That uncomfortable reality gave Laird some sleepless nights, he recalled in an interview. He is close friends with people who fought for decades to shut the nuclear plant, worried there might be an accident along the seismically active Central Coast, among other concerns.
He eventually voted to keep Diablo Canyon open, a difficult decision he said was driven by projections that California would not have enough new wind and solar power in time to make up for its closure. The last-minute scramble by Newsom and the Legislature could postpone the plant’s demise until 2030, reversing a deal made six years ago between green groups, labor and regulators to close it in 2025. The nuclear plant provides up to ten percent of the state’s power.
Laird sees the delay, which requires federal approval, as a stopgap measure that shouldn’t get in the way of a massive build-up of renewable energy.
“We need it either way,” he said about the infusion of renewable power. “If Diablo is extended, we need it. If it’s not extended, we need it. And one of the reasons we’re here is that not enough was brought online.”
The state senator’s district is a microcosm of California’s energy transition. Criss-crossed by high-voltage transmission lines, the region not only includes the heavily fortified Diablo Canyon, nestled out of sight among rolling green hills along the ocean, but also the first proposed offshore wind farm on the West Coast. Projects like this are meant to help the state get rid of all carbon emissions — if they can be built on time.
Workers along the Central Coast have a long history of building energy projects and see the state’s grid challenges as an opportunity, Dawn Ortiz-Legg, a San Luis Obispo County supervisor, said in an interview in Morro Bay, the sleepy fishing village slated to host the floating offshore wind turbines 20 miles off its shore. The county official previously helped turn homebuilders into workers who constructed large solar farms that helped lift the county out of recession.
No one disputes that an additional margin of safety is needed, said Ralph Cavanagh, the energy co-director for the Natural Resources Defense Council. Still, he argued, the governor locked down on Diablo Canyon prematurely instead of looking at alternatives like bolstering energy efficiency and pulling more energy from other Western states.
Republicans in California, meanwhile, prefer the nuclear power option.
“If the plant gets decommissioned, we don’t have enough juice to keep the lights on and keep air conditioners working and keep people’s EVs charged,” said Assemblymember Jordan Cunningham, the Republican who represents the Central Coast and thinks the plant should keep running even longer.
Cunningham also largely supports California’s climate goals and helped shape the ambitious offshore wind target for the state.
MORE:
Las Vegas Gambles Big on Luring California’s Tech Industry
Bloomberg
The dusty drive out to the base of Nevada’s Red Rock Canyon was once dubbed the road to nowhere. About 12 miles from the glitz of the Las Vegas Strip, this was an undeveloped patch of sun-parched desert through the 1980s; now, mansions of the city’s richest residents — Celine Dion and Marc Andreessen reportedly among them — are threaded among the suburban streets and cul-de-sacs of a 22,500-acre master-planned community called Summerlin.
Home to about 100,000 people, Summerlin projects a somewhat more wholesome image than Las Vegas itself: There’s a public library and performing arts center, more than 300 parks, and 26 schools, 10 of them private. There’s also the only-in-Vegas stuff, like 10 golf courses and a billion-dollar casino a few doors down from the Costco. It was in Summerlin that a group of about 124 venture capitalists, tech founders and startup CEOs gathered in mid-September for a multi-day summit designed to position Las Vegas as an up-and-coming technology hub.
Some, like State Treasurer Zach Conine, were pitching the city to wealthy prospects; others, like Olympic medalist turned venture capitalist Apolo Ohno and Randy Lee, a former head of investments at Tencent, were being wooed.
The sell was simple: Forget California. Bring your family, and more importantly, your business, to Sin City.
Teddy Liaw, an entrepreneur who conceived and co-hosted the summit, kicked things off by sharing his own “why I left San Francisco” story. Liaw lived in the Potrero Hill neighborhood until January of last year, after his baby stroller was stolen out of his garage. (He told responding police officers that he had left the garage door open overnight, according to a SFPD spokesperson; Liaw remembers differently.)
“It was very emotional. I didn’t want to be in a position where safety was an issue,” he said.
Liaw “looked at Austin, looked at Florida, looked at all the tax-free states,” and settled on the Vegas area, taking his family and CEO responsibilities with him. His was one of about 128,000 households that left the Bay Area in 2021, according to the US Census Bureau.
The call center company he runs, NexRep, is still based in Portland, Maine, with 100 employees stationed in Nevada, but everyone there has long worked remotely.
“This is not a pooh-pooh fest on California,” he said. “It’s more [about] how great Vegas is.”
To make his case, Liaw convened his crowd of executives far from the touristy Strip — some talks were hosted at retired casino magnate Marc Schorr’s $20 million home in a gated Summerlin community called The Summit; others over lobster and burrata at a steakhouse nearby.
The glitzy surroundings made an appropriate venue for this conversation, suggesting that the fortunes of Las Vegas were again on the upswing.
Las Vegas faced an uphill recovery after the 2008 recession and then another after a global pandemic that rattled the visitor-dependent economy. Now, with gambling revenue bouncing back, the arrival of two major pro sports franchises, and a pandemic-era bump in inbound migration, city officials say Vegas is looking for its next act.
Like Tulsa, which started paying cohorts of remote workers $10,000 to move there, and Miami, whose mayor has made poaching crypto investors a priority, the city is going all in on promoting itself as a tech hotbed.
“We’re not trying to be Silicon Valley, but we are trying to create an environment where people have the opportunity to be successful in innovation and technology,” said Shani Coleman, director of community and economic development in Vegas’ Clark County. Coleman, who wasn’t at the summit, started her job at the end of 2019, and introduced a new economic development strategy. At its center is a push to diversify an economy traditionally dominated by the hospitality and service industries.
That has long been the region’s goal, Coleman admits. In the early 2010s, the late Zappos CEO Tony Hsieh famously routed party buses full of startup founders to a stretch of Vegas’ downtown as he spent millions to revive the disinvested district. By 2017, his Downtown Project initiative was credited with creating 1,500 jobs and generating $210 million in economic output — and also blamed for pricing out some longtime tenants.
Hsieh moved to Park City, Utah, and died in 2020, his plans for an off-strip tech mecca half-realized. But Coleman says the pandemic has given the county another needed nudge to follow through.
“We had this conversation during the recession, and then the casinos got hot again, and everything was going good, and people weren’t as focused on diversifying,” she said. “This time, people are like — ‘No, we have the tools, we have the infrastructure in place to really make this happen.”
Esports has found early success here: Nevada’s new Esports Technical Advisory Committee is creating rules around betting on online games that could create an even bigger industry. To become a true tech hub, though, Vegas has to be able to compete with the likes of San Francisco, Silicon Valley, New York and increasingly Austin and Miami, for talent and venture capital.
On those fronts, it’s still well behind. Pitchbook data shows that VC spending in Vegas grew 59% between 2020 and 2021, to reach $423.86 million, and it’s on pace to beat that this year. That’s still a fraction of the $94 billion spent in 2021 by VCs in San Francisco, or even the $4.9 billion spent in Miami.
Tech jobs represent about 3% of the overall workforce, according to the Computing Technology Industry Association. In 2019, urbanist Richard Florida ranked Las Vegas among the bottom five large US cities for its share of “creative class” jobs, including tech, though its creative workforce was also among the fastest growing in the country.
Vegas boosters believe that its quirks can become strengths. Maybe other cities have more established tech networks, but the small-town feel in Nevada means you’ll get an audience with state officials who may offer tailored incentives, or be willing to create a “shift in the way that legislation happens,” as State Treasurer Conine put it in an interview. (Nevada’s financial technology sandbox laws, for example, let certain companies experiment regulation-free.)
Maybe the workforce doesn’t yet fully exist, but they’ll create it, by graduating more engineers from the University of Nevada, Las Vegas, and luring more newly footloose remote workers. Californians, especially, could be attracted by the state’s famously low taxes, relatively affordable housing, whisper-thin regulations and purple politics.
“We’ve always known that California, just because of their regulatory climate, has been ripe for the picking,” said Coleman.
Like Hsieh before him, Liaw has become a face of the movement, this time focused on bringing people to the sprawling off-strip suburbs. Possessing the enthusiasm for networking befitting a former University of California, Berkeley student body president, Liaw once put his energy to use as a California booster. He served on Governor Gavin Newsom’s Entrepreneur Task Force before switching teams; now he collaborates closely with Ryan Smith, Las Vegas’ director of economic and urban development, whose office provided $25,000 in seed sponsorship for the tech summit.
“What I’m trying to do here in Vegas is not just singular to crypto, or not just similar to sports tech, or sports. What we want are good tech companies,” said Liaw. “We’re in the backyard of California. We’re still accessible to all the money and the VCs of Palo Alto and Sand Hill. But people and their workers will have access to a higher quality of life.”
The median home price in Las Vegas was $450,000 as of August 2022, according to Realtor.com, up 18% from last year; that’s less than half San Francisco’s median of $1.3 million.
Liaw says he’s already convinced about a dozen friends and founders to move out here. Among them are Jason Lin, a managing partner at the venture fund Super Capital Group and a co-host of the summit, and Nan Wang, the CEO of social gaming platform Sleeper.
For Wang, relocating to Vegas was necessary as the company got deeper into the esports space. “It was like pulling teeth to get people back in the office,” at Sleeper’s LA and San Francisco locations, which have since been closed. “The moment we relocated our headquarters to Nevada,” he said, “I didn’t have to push any more. People were pulled here.” Many of his employees from across the country fly in for meetings two or three times a year.
Lin, who was an early investor in Sleeper, sees the next few years as crucial to creating a broader tech workforce in the region. “We are still building out the technical base — the engineers, developers, programmers,” he says. “That’s probably the next wave.”