City Beat

State of the City: Two tech firms to bring hundreds of jobs, mayor announces

Mayor Kevin Johnson’s last State of the City address

The mayor gave his last State of the City address to a packed auditorium at the Crest Theatre, January 27, 2016.
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The mayor gave his last State of the City address to a packed auditorium at the Crest Theatre, January 27, 2016.

Since the day he took office over seven years ago, Sacramento Mayor Kevin Johnson has talked about a need to shed the city’s dependence on government and real estate jobs. And on Thursday night, Johnson took to the stage of downtown’s Crest Theatre for his final State of the City address and announced major progress in that effort.

Johnson announced that two technology companies plan to bring hundreds of jobs to the city in the next couple of years. AnPac Bio-Medical Science Co., a medical-diagnostics startup based in China, said it plans to hire 250 workers within two years. Flippbox, a young tech company relocating from Tampa, Fla., said it will hire 25 employees this year and anticipates a payroll of 100 by the end of 2017.

Growing the city’s economy was the dominant theme of Johnson’s address.

“We can’t just be a city for basketball fans, government officials and tech giants,” Johnson said in front of a capacity audience in the historic theater. “We also have to be a city for families, college students and young professionals. We have to be a city for the homeless, the less fortunate and the underemployed. We have to be a city that works for everyone.”

AnPac will make Sacramento its U.S. headquarters. Founder and Chief Executive Chris Yu said the company eventually could hire 1,000 workers in Sacramento.

Flippbox Chief Executive Randy Hucks said his company is buying the historic Eastern Star building at 27th and K streets in midtown for $3.9 million. Flippbox plans to spend an additional $600,000 renovating the building, which dates to 1928.

Its parent company, a tech investment firm named Silicon Bay Partners, is moving to Sacramento as well. Hucks is managing partner of Silicon Bay.

AnPac initially planned to put its U.S. headquarters in the Bay Area. But the company’s head of business development in the United States, a Sacramentan named Drisha Leggitt, persuaded Yu to look at Sacramento. Meetings with Johnson and Barry Broome, president of the Greater Sacramento Area Economic Council, as well as executives of area hospitals persuaded him to choose the capital.

“As I got to know Sacramento more and more, I myself got convinced,” Yu said.

The region’s lower cost of doing business helped tip the balance in Sacramento’s favor, as did a stable workforce that doesn’t job-hop as much as the Bay Area’s. “People don’t change jobs as frequently,” Yu said.

He said AnPac plans to work closely with UC Davis and the region’s leading hospital chains, Sutter, Dignity and Kaiser Permanente, on developing his company’s diagnostic systems. The hospitals also could be instrumental in helping the company undergo clinical trials needed before AnPac’s systems are approved by the Food and Drug Administration.

Leggitt said Anpac is working with AKT Development to occupy 4,000 square feet of space in the Cannery business park at 33rd and C streets near McKinley Park. Eventually, Yu said, the company wants to build a 50,000-square-foot research center in Sacramento.

Flippbox is in the business of handling clients’ correspondence, including email, postal mail and legal documents, and storing the documents in “the cloud.” Before long, clients will be able to have their incoming mail sent directly to Flippbox, where it will be opened, scanned and sorted. Artificial intelligence systems will read the mail and alert clients about urgent matters, Hucks said.

“We’re basically going to take over your entire mailroom,” Hucks said.

Flippbox was founded in Silicon Valley but moved to Florida to find lower business costs. Once in Tampa, the company spent so much money trying to recruit workers from Northern California that it decided to move back to the West Coast.

Hucks said returning to the Bay Area was out of the question because of cost and the fear that Flippbox would get lost in the crowd there. Sacramento made more sense.

“We needed to find a place where we could shine,” he said.

Flippbox’s employees will be an assortment of computer coders, mail sorters, customer service representatives and executive personnel, he said.

To continue attracting new business to the city, the mayor proposed investing $1 million out of a new city “innovation fund” into startup companies around the city; another $500,000 would fund small grants for organizations that train entrepreneurs. Johnson said a company called 500 Startups would invest in at least 10 new companies here and asked the city to invest $2 million into 500 Startups from the innovation fund.

Johnson said the city is seeing a wave of outside investment as a result of Golden 1 Center, the new $507 million arena for the Sacramento Kings under construction downtown.

“Surrounding the arena is supposed to be new hotels, restaurants and businesses,” he said. “So we simply can’t let up at this point. There’s too much left to do.”

The arena, four blocks from the Crest, will serve as the visual legacy of Johnson’s time in office. The rest of K Street has also undergone a steady transformation during his terms. The Crest Theatre no longer stands as a virtual island on its stretch of the street, and construction crews are building restaurants, shops and more than 130 apartments three blocks to the west.

Johnson touched only briefly on the past year. He promoted his initiative to attract 10,000 housing units in the central city over the next decade, the city’s success at stabilizing its finances as it emerges from the recession, and investment in the arts.

He also briefly discussed homelessness, which has become a focal point in the city as the homeless population spreads to new corners of the city and a protest continues at City Hall by activists calling for an end to the city’s anti-camping ordinance. Johnson said Sutter Health had pledged $5 million to identify permanent housing for the homeless.

Johnson announced in October that he would not seek a third term. If he had – and won – he would have been the first three-term mayor in city history.

The mayor had a tumultuous 2015. He continued to advance the city’s quest to build a 25,000-seat soccer stadium and land a team in Major League Soccer, and he predicted Thursday that Sacramento would earn that bid in 2016. Johnson also formed a task force that recommended an increase in the city’s minimum wage – an increase that was accepted by the City Council despite criticism from some leading labor groups.

But Johnson was also the subject of renewed scrutiny over a sexual misconduct allegation made against him 20 years ago; he was never charged in connection with that allegation. A former City Hall staffer also accused him of sexual harassment in May 2015; Johnson denied the claim and an outside law firm determined it was unsubstantiated.

Johnson said the allegations played no role in his decision to not run again.

Ryan Lillis: 916-321-1085, @Ryan_Lillis

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