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COUNCIL AGENDA REPORT ITEM NUMBER: r
,- J
FROM: Ken Hampian, Assistant City Administrative Officer '
SUBJECT: BIA Request for Economic Stabilization Funding
CAO RECOMMENDATION:
1. Receive a request from the downtown Business Improvement Association for$15,000
in 1992-93 Economic Stabilization Funding.
2. If approved, authorize staff to draft an agreement for use of the funding consistent
with the recommended parameters in the staff report.
DISCUSSION:
Background
In early fiscal year 1992-93, the BIA submitted a preliminary request for funding under the
City's Economic Stabilization Program. At that time the program had approximately
i
$166,000 budgeted for the fiscal year. As a result of budget reductions, and allocations to
other projects, the Economic Stabilization Program is projected to have an end-of-fiscal-year
balance of approximately$110,000. The balance is anticipated to become a part of the total
General Fund balance (the reserve), and thus will not be carried over into the next fiscal
year.
After receipt of the BIA's preliminary proposal, staff provided BIA staff with further
information upon which a final proposal could be prepared (Attachment 1). The BIA's final
proposal, which was received on May 26, is provided as Attachment 2. On June 1, the City
Council agreed to consider this proposal during the Council meeting of June 15.
BIA Proposal
I
In summary, the BIA is requesting an allocation of $15,000 to be used toward the
preparation of a downtown map/brochure($3,000),a commercial marketing survey/program
($5,000),professional development seminars($7,000),and a downtown package/promotional
campaign ($10,000). The remaining $10,000 of this $25,000 total is to be generated through
contributions from other private entities, and thus the program is intended to be "a joint
partnership between public and private entities".
Staff has met with the BIA Administrator to further understand and review the proposal.
Based on this discussion, staff acquired the following additional information:
1. The request is for "one-time funding" as opposed to ongoing program support.
2. Among the various components, the BIA's top priority would be the commercial
marketing survey. For several years, the BIA has been advised by various marketing
professionals to operate in a more cohesive/strategic way. Specifically, they have
city Of San tins OBISPO
COUNCIL AGENDA DEPORT
been advised to think of themselves as a "single commercial entity" (like a shopping
mall), and operate and promote themselves accordingly. To do so, the BIA feels that
it is essential to begin with an appropriate base of information, which includes data
related to shopper preference, image, market area demographics, etc. The
information generated from a survey could not only help direct marketing efforts, and
address such operating issues as store hours, but also shape the curriculum of small
business training programs.
3. The BIA already intends to work with other organizations which are interested in
putting together weekend. packages intended to lure shoppers from other places
(particularly the San Joaquin Valley) to the City. This concept has been discussed
by the Economic Strategy Task Force, and is being reviewed in greater detail by the
Promotional Coordinating Committee and other groups relative to the $50,000 in
additional promotional funds designated by the City Council (as a result of the TOT
increase).
4. The proposed downtown map/brochures would be used in promoting the package
program to other areas. It would also be used on an ongoing basis to assist other
tourists in the City, and would be available in stores,the Chamber Visitor's Center,
etc. As examples, portions of similar brochures available in other cities are provided
as Attachment 3. A file of these and other promotional materials is available for
review in the Council Reading File.
STAFF RECOMMENDATION:
Despite the relatively limited amount of time staff has had to evaluate and prepare a
recommendation for the City Council on this matter, it is fortunate that the issue is before
the City Council prior to the close of the 1992-93 fiscal year. This is because, if this request
were for 1993-94 monies; staff would recommend that the proposal be deferred until all
suggestions for 1993-94 economic.stability funds are known.
Based on the recommended 1993-95 Financial Plan, $100,000 in General Fund money has
been allocated in 1993-94 as "seed money" for the Council's goal of having "a more
defined/proactive Economic Stability Program". Longer term support for the Economic
Stabilization Program is to be provided solely through CDBG funds beginning in 1994-95.
Given the competition for this relatively limited amount of"seed money" which is likely as
a result of the numerous goals and program recommendations likely to come forth from the
Economic Strategy Task Force (e.g., citywide business retention program, staffing, a
commission, enhanced promotional efforts, etc.), staff would not recommend "earmarking".
any of this funding at this time. Instead, funding for 1993-94 should be considered only after
the City Council has adopted specific economic stability recommendations, and considered
all program and funding requests within a total context.
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COUNCIL AGENDA REPORT
However, if the City Council feels that the BIA request has merit, then it could be funded
from the 1992-93 balance, which is the staff recommendation. Staff also recommends the
following conditions:
1. The funding allocation should be considered a."one-time pilot program", with more
long term business retention efforts considered next year within the context of all
Economic Strategy Task Force recommendations.
2. Staff recommends that only $5,000 of the total request be allocated "upfront", with
the remaining$10,000 balance provided only after a firm matching commitment from
the private sector has been established. This is to assure that the total effort is truly
completed as a public-private partnership.
3. The $5,000 upfront contribution should be used to support the completion of the
commercial marketing survey. The remaining $10,000 City contribution should be
used to support the downtown map ($3,000) and the professional development
seminar components of the request ($7,000); the downtown package/promotional
campaign should be supported through private sector matching funds. (The City is
likely to make its own significant contribution to this effort through the use of some,
or all, of the $50,000 additional promotional funding.)
The sequence of this proposed allocation strategy is logical, in that the marketing
survey should precede, and can help establish the curriculum of, the professional
development seminars. While the downtown map will be used in a variety of ways,
its primary purpose will be to assist in promoting the package program,when funding
is raised for that purpose.
FOLLOW-UP
The City's practice has been to prepare agreements when allocating funding to community
organizations for specific purposes (e.g., promotional contracts, PCC grants, ECOSLO, La
Fiesta, etc.). Therefore, if the Council is interested in supporting the BIA's request, then
staff should be directed to draft a formal agreement for the use of the funds, consistent with
the above recommended strategy, or some other preferred approach.
CONCURRENCES:
While the BIA's request is for an immediate $15,000 allocation, the BIA Administrator and
Executive Committee feel that the staff recommendation can work and are supportive.
FISCAL IMPACT:
I
As mentioned previously the Economic Stability Fund is projected to have an end-of-year
balance. Encumbering $15,000 for the BIA agreement will result in a total General Fund
end-of-year balance which is $15,000 less than it would be otherwise. However, since
��� ��NIII���► �� `� city of san Luis oBispo
WIGO COUNCIL AGENOA REPORT
economic stabilization programs represent an area in which the City intends to be more
aggressive (but has thus far lacked adequate concrete proposals), the BIA's request provides
an opportunity to provide pilot support for an effort intended to leverage added private
promotional investment, and which should generate economic returns for the City.
ALTERNATIVES:
1. The Council could defer the request for consideration in 1993-94. As pointed out
earlier, there will be substantial "competition" for a fairly limited amount of funding
in the coming fiscal year, a substantial portion of which may be needed in support
of economic stability staffing, if so approved. A clear consensus emerging from the
Economic Strategy Task Force is that the viability and character of the downtown is
essential to the overall economic well-being of the larger community. Therefore, if
the Council wishes to provide an extra level of support to the downtown, use of the
1992-93 Economic Stabilization Program balance would be the best way to do so.
2. Council could refer the request to PCC, to be considered along with other ideas, for
a portion of the additional $50,000 in TOT funds. Again, competition for this
funding will be stiff; however, the public-private nature of the proposed agreement
might actually leverage an additional $10,000 in private funding toward the total
effort to enhance citywide promotion.
3. The Council could provide the full $15,000 upfront. In staff's opinion, the j
recommended approach will better assure a true public-private partnership, and also
assist the BIA in raising the additional private monies through the incentive of a
"City match".
ATTACHMENTS:
1. July 1992 Staff Memorandum
2. May 26 BIA Request
3. Sample Downtown Map/Brochure
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990 Palm Street/Post Office Box 8100 • San Luis Obispo, CA 93403-8100
MEMORANDUM
JULY 23; 1992
TO: LYNN BLOCK, BIA ADMINISTRATOR //
FROM: DAVID GRAY, ADMINISTRATIVE ANALYST No4.
SUBJECT: CITY GRANTS FOR ECONOMIC/PROMOTIONAL ACTIVITY
SUMMARY: YOU MADE AN INQUIRY REGARDING THE AVAILABILITY OF CITY
FUNDS AND CRITERIA USED FOR ECONOMIC STABILITY AND
PROMOTIONAL COORDINATING GRANTS. BRIEFLY, ECONOMIC
FUNDS ARE AVAILABLE FOR PROJECTS WITH A LONG-TERM
ECONOMIC BENEFIT AS DETERMINED BY THE CITY COUNCIL, SUCH
AS THE BROAD STREET ANNEXATION; AND PROMOTIONAL FUNDS
ARE PROVIDED TO NON-PROFIT ORGANIZATIONS HOLDING PUBLIC
CULTURAL ACTIVITIES, SUCH AS LA FIESTA,AND ONGOING VISITOR
SERVICES, SUCH AS THOSE PROVIDED BY THE CHAMBER OF
J COMMERCE AND VISITORS & CONFERENCE BUREAU.
DISCUSSION: Included with this memo are pages from the 1991-1993 Financial
Plan which provide a further description of the funds and the
amounts allocated in the current budget as an explanation.
Promotional Funds--ATTACHMENT 2 lists the Promotional
Coordinating Committee Grants-In-Aid Assessment Criteria and
EXHIBIT A shows groups which were recently funded for your
reference.
The focus of these activities is city-wide and open to any person,
visitor or resident. The economic reference pertains to the
Transient Occupancy Tax (T.O.T.) and activities which directly
contribute to this General Fund revenue source; i.e., activities
which result in hotel-motel guest lodging.
My preliminary conclusion is that an activity such as the one we
discussed by telephone, one-day shopping excursions from the
valley to downtown, would not meet these Grants-In-Aid criteria:
Economic Stability Funds--Page D-93 of the City Financial Plan
describes the Economic Stability program. The City Council
approves all programs funded from this budget. The activities
�- identified thus far for funding are typically one-time or short-
term.
ATTACHMENT 1
For the staff to analyze program proposals for eventual Council
consideration, a written request with a program description is
needed. Some points for consideration in preparing a request
include: (1) one-time or ongoing funding request; (2) degree of
city-wide benefit; (3) specific costs and level of City support
requested; (4) pilot program that could be shared with; or
assumed by, another public or private agency; (5) estimate of
revenue benefit to City; (6) level of existing private support for
the program; and, (7) goodwill or promotional benefit to City.
In addition, staff has noted the economic stabilization program
suggested in the July 10 correspondence from the California Main
Street Program. It would be helpful to understand the BIA's
priorities relative to these various business retention ideas.
Once the proposal has been firmed up by the BIA, it will be
evaluated by the City staff. I would be happy to work with you
prior to formal submission to the City to assure that the proposal
contains adequate information to accomplish a smooth evaluation.
Please let me know if I can provide further assistance, or if you'd
like to meet with some staff members to discuss the BIA's ideas
prior to going to work on the proposal.
C. Ken Hampian, Assistant City Administrative Officer
BIAFUNDS �
1 -
BUSINESS IMPROVEMENT 'ASSOCIATION
ECONOMIC ENHANCEMENT/BUSINESS RETENTION PROGRAM
From it' s inception, the Business Improvement Association
has played a valuable role as the liaison and uniting force
between the business community and the City of San, Luis
Obispo.
As the downtown enjoyed a prosperous decade in the 1980' s,
the BIA played the role of promoter and developer of the
downtown. The key for continued success of the downtown in
the 1990' s will be the management and revitalization of the
BIA district.
As stated by the International Downtown Association,
'management districts, voluntary or legislated, have become
tools of primary importance in implementing programs and
services necessary for the economic success of the
downtown. '
Based on the mission of the BIA to provide vital business
services and promote the downtown, the Association is
requesting funds to develop a comprehensive business
retention program for downtown San Luis Obispo. The focus
of this project will be on renewal and retention of downtown
businesses.
COMPONENTS OF THE PROGRAM:
The business enhancement and retention program would have
three components aimed at improving the operational
procedures of the BIA membership, promoting downtown to new
customer markets, and creating a long term, comprehensive
marketing program.
These components include:
I. Professional Development Seminars
In Store Merchandising Techniques
Window Displays, awnings, and signage
Advertising Techniques
Shopper Preferences Surveys and Utilization
Small Business Administration programs
Assistance with SBA and local small business loan
applications
TOTAL COST: $70000. 00
These seminars would be created with local educational
resources.
ATTACHMENT 2 r
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II . Commercial Retention and Marketing Program
Shopper Preference Survey
Economic Profile
Market Area Demographics
Public Workshops and Forums
Curbing Retail Leakage
Increasing Sales Tax Revenue
Commercial Image Development
Institutional Advertising
Commercial Marketing and Fund Management
Business/Tourist Downtown Packet
Farmers' Market Packet
TOTAL COST: $5,000.00
III . Shop Downtown San Luis Obispo
Weekend Package for Valley market
Downtown brochure
TOTAL COST.: $13,000. 00
FUNDING REQUEST:
The BIA feels that the economic health of the downtown is an
on-going concern to the City and County of San Luis Obispo.
Cities such as Paso Robles and Santa Maria have already
instituted economic programs which operate on an on-going
basis to ensure the vitality of the business community.
The total funds requested for the program are $15,000 .
SPECIFIC COSTS•
The downtown map would cost $3 ,000 for artwork, printing and
reproduction. The map would be used as part of the shooping
trips promotion and be available throughout the downtown in
the visitors Center, BIA member businesses, and hotel rack
displays.
The Downtown San Luis Obispo. . .Experience It! campaign would
cost $10,000 to be used for advertising, a downtown Holiday
shopping guide, and specialty advertising.
All work would be completed by local businesses. Cal Poly
Graphic Art. students would be utilized if appropriate.
Professional Development seminars would be organized with
the Cuesta College Institute for Professional Development.
The BIA would also ask participants in the seminars to
contribute partial tuition for the courses. Total cost for
this program would be $7,000.00.
�'O
The Commercial Marketing component would utilize local
professional marketing research firms to analyze and present
a .comprehensive marketing program for the downtown business
community. This program cost would be $5 ,000. 00
The total costs for the three components of the program
would be:
DOWNTOWN MAP $ 3,000.00
DOWNTOWN CAMPAIGN 10,000.00
PROFESSIONAL DEVELOPMENT SEMINARS 71000.00
COMMERCIAL MARRETING. PROGRAM 5,000.00
TOTAL PROGRAM COSTS 25,000.00
CITY ECONOMIC STABILITY REQUEST 15,000..00
DEGREE OF CITY WIDE BENEFIT:
Sales tax revenue accounts for 30% of the total city
revenue. The BIA district represents the second largest
source of .sales tax to the City at 16%. The BIA district
also reported a 9% increase in sales tax for the 4th quarter
of 1992 which was the largest increase for the past 8
quarters for any City area.
The key to a prosperous downtown over the long term is
attributed to several fundamental elements. Quality
merchandise, customer services, joint City/BIA marketing,
property owner involvement, and on-going special events are
ingredients in to the mixture of a successful downtown.
The BIA program would address these areas and assist the
locally operated businesses downtown in a variety of areas..
Any program that works to promote and enhance business in
the downtown would have reciprocal benefits to the entire
community through support of the. General Fund.
Economic stability funding has already been designated by
the City Council for application to projects directly tied
to sales tax generation outside the downtown including the
Dalidio Environmental Impact Report and Auto Row Expansion.
Funding a program to develop economic stability in the
downtown would enhance the community of San Luis Obispo and
support the non-profit groups and basic services which
derive their financial basis from the City.
SHARED RESPONSIBILITY:
The success of this program depends on the joint partnership
between public and private entities. The BIA is actively
soliciting the following groups for support of the program:
1Iisitors and Conference Bureau, Monterey Motel Association,
i
and the. Chamber of Commerce. -'
ESTIMATE OF REVENUE BENEFIT•
The addition of new retail businesses would be a significant
positive impact to the sales tax revenue.
An example of the positive impact economic enhancement
activities have on downtown communities is evidenced by the
program developed in Fort Bragg. The sales tax revenue grew
5% after the initiation of the economic program.
In Fort Bragg, over 20 facade improvements were completed at
a total investment of $544,854 with the City contributing
over $60,000 to the program. Sales tax revenue in downtown
Fort Bragg increased 13 .58% in the fourth quarter of 1991, a
time when the city of Fort Bragg was experiencing an
economic down turn as total sales tax revenue fell 6. 13%.
The BIA is confident that the proposed program would
increase retention in the downtown core and enhance revenues
for the entire community. Downtown merchants are constantly
fluctuating with merchants changing frequently.
LEVEL OF EXISTING PRIVATE SUPPORT FOR PROGRAM:
The need for an economic retention program is made obvious
by the business turnover in the downtown market. Over the
past six months of 1992, twenty three new businesses were
started in the BIA district. This represents the
fluctuation in the market and the cycle of businesses
leaving and replacing those vacancies. This tumultuous
market does little to foster the economic vitality of the
downtown.
The BIA is confident that a partnership between the private
and public sectors of San Luis Obispo could be developed
around the components of this economic enhancement program.
The support of both segments of the community is crucial to
the overall success of the program.
GOODWILL AND PROMOTIONAL DEVELOPMENT:
The City of San Luis Obispo has been highly advanced in its
development of a master plan for the downtown community.
Downtown has specific goals and objectives as defined in the
Land Use Element of the General Plan. In order to bring
these goals to fruition, the City must appropriate the
necessary resources.
The BIA feels that the role it would play in such a process
would be one of developing an economic program that leads
businesses into the 90' s with the necessary tools to be ,-
successful.
5-1a
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Cities promotional and economic gains:
* development of a partnership with business that
focuses on retention
* proactive management of the sales tax revenue
* commitment to the downtown demonstrated with
appropriation of funds for economic stability
program.
SUMMARY:
The BIA�understands the needs of the downtown business
community through its active role as a small business
advocate. However, no business retention program for the
downtown community can be successful with out the support of
the City of San Luis Obispo.
The BIA looks forward to the creation of this partnership
for the benefit of the City of San Luis Obispo
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