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HomeMy WebLinkAbout07/21/2009, B 5 - TARGETED INITIATIVES FOR BUSINESS RETENTION AND EXPANSION J counat Mmm6Da 7-21-09 j aGEnaa RCPOPt �H , CITY OF SAN LUIS OBISPO FROM: Shelly Stanwyck,Assistant City Manager Prepared by: Claire Clark,Economic Development Manager SUBJECT: TARGETED INITIATIVES FOR BUSINESS RETENTION AND EXPANSION RECOMMENDATION Approve a program of business retention and expansion initiatives, within the approved budget of$37,500 for the 2009- 2010 fiscal year which specifically includes: 1. Web upgrades to the Economic Development Program area to improve access to resources for business; 2. A study to determine why businesses have located here and what the City can do to encourage businesses to locate here, on the basis of the study. DISCUSSION Background The City of San Luis Obispo has historically offered few monetary incentives to businesses. However, the state of the economy and the Council's Economic Development goal of retaining and expanding businesses in the City offer a framework for implementation of strategic business encouragement tools. To inform the City's recommended actions, strategies employed by other jurisdictions have been examined. The following is a summary of strategies that range from support for local retail to support for primary employers. Incentives in Other Jurisdictions I. Retail Focused Incentives The City of Lancaster has been touted in the media for its economic stimulus program. The Lancaster program, with the goal of driving new sales to local .businesses, is a rebate program where the incentive is provided only after the sale is completed. This effort, started in March, 2009, has a budget of $500,000 funded with redevelopment dollars. It is expected to generate over $110 million in economic benefit. The program is part of the redevelopment/economic development arm of the City of Lancaster with two dedicated staff from the total of seven in the department. a. Lancaster Shop and Dine. This program incentivized consumers to shop locally by providing $30 local Shop & Dine gift cards to customers that accumulated $30/0 in zu / Targeted Initiatives for Business Retention and Expansion Page 2 sales receipts from local purchases. The program, now ended, generated over a million dollars in retail purchases within Lancaster. b. Lancaster Auto Sales Incentives. For automobiles purchased in Lancaster by June 30, 2009, the City provided a gift card equal to the vehicle registration fees. The program has delivered rebates on 660 vehicles purchased in Lancaster. Fifty-four percent of the vehicles have been purchased by non-Lancaster residents, primarily from neighboring areas including Santa Clarita, the San Fernando Valley, and San Diego. c. Lancaster Developer/Broker Incentives. The City launched its Broker Bonus Program on June 1, 2009 allowing southland commercial and industrial brokers to receive additional commissions on the sale or lease of vacant properties within the city. With 1,250,000 square feet of vacant retail, commercial and industrial space, the city looks to use the incentive to fill the space in a timely manner. 2. Other Retail Initiatives Other retail oriented initiatives have been used by cities with varying degrees of success through good economic times and bad. However, with the economic downturn, many cities have instituted retail bolstering programs to encourage spending in their jurisdiction. These programs include grants and fee abatements, marketing programs to encourage development in areas not prone to upgrades, and fee rebates (such as Sign Permit fee rebates) that encourage retention, expansion, or attraction of small businesses in the commercial core. In summary, as seen in each of the following examples, the goal of these programs is simple, to encourage spending and activity in the commercial sectors of these cities. a. Atascadero. The City of Atascadero recently approved a business stimulus program that includes marketing Atascadero as a place to dine, shop, and invest. It includes building permit and plan check fee waivers for expansion of existing retail or new retail uses; support for shopping locally via city-provided reusable "Shop Atascadero" cloth bags; plus an increase in the local vendor purchasing preference from 2% to 5%. Several cities have promoted programs to encourage facade upgrades, both in response to the economy and in times past. Atascadero's facade upgrade program uses matching funds (from its redevelopment agency) to encourage signage and facade improvements to the first ten businesses that apply. b. Danville. In Danville, California, the town council has funded$400,000 in incentives for marketing grants, facade upgrades, and business workshops. In addition, building permits have been fast-tracked and promotional signage rules have been relaxed. c. Placentia. The City of Placentia recently sent 1,000 coupons worth $5 apiece to randomly selected residents who can redeem them at local stores. 3. Web Upgrades Many jurisdictions are using the web to improve access to information. One of the primary benefits offered by government to the business community is timely access to information. &_-a Targeted Initiatives for Business Retention and Expansion Page 3 Another goal is to convey a business friendly attitude about the jurisdiction. This is largely accomplished through the web. As a result, many jurisdictions are upgrading their web presence for the purpose of supporting and encouraging business. In the case of the City of Benicia (and other cities) access to the business/economic development pages is prominent and easily accessible in the City's web scheme. Benicia has a dedicated web link called www.BeniciaBusiness.com that offers quick access to tools on the City website, http://www.ci.benicia.ca.us/ . In other jurisdictions, the focus is more aligned with sending the "Open for Business" message. The City of Atascadero has reorganized its website, creating a fresh "look" that emphasizes tools for business. Fairfield, California's website links users to pages external to the City's website where all things economic development can be found, www.fairfield4business.com. In these instances, as well as others, each city has made a concerted effort to convey an "open for business" message through easy access to business resources. 4. Employment Focused Incentives In various ways, a wide variety of communities are achieving the goal of creating jobs through business retention, expansion, and/or attraction. For instance, in April, Pittsburgh, Pennsylvania announced the launch of a low-interest loan program geared toward small business expansion and creation. Focused on high-tech companies, the fund will provide up to $200,000 for growingbusinesses and young entrepreneurs. The fund is being seeded by a $1 million commitment from the City, half from CDBG funds and half from expected economic stimulus funding. In Allegheny County (home to Pittsburg), the Community College of Allegheny County is offering free tuition to all laid-off workers. In New York City, several programs have been instituted to retain and grow financial companies and promote entrepreneurship among financial professionals. San Francisco has created a small business revolving loan fund which provides low-interest microloans of up to $50,000 to small businesses operating in San Francisco that create and retain jobs for low-to-moderate income city residents. In Los Angeles, the CleanTechLA partnership was formed among city leaders, universities, and economic development groups to boost job creation and attract federal funding for clean tech research & development. Portland, Oregon plans to help clean-tech and green building companies access foreign markets by launching regular communication with foreign representatives to develop specific company targets abroad and for investment in Portland. A pilot Business Incentive Program was adopted by the City of Boulder, Colorado in 2007 as the city was experiencing an economic downturn fueled, in part, by companies relocating out of Boulder. Initially funded in the amount of $500,000, the program continues today with some modifications. As a flexible fee and tax rebate incentive program, the aim was to show that Boulder is open for business and is not anti-business, that it supports "primary" employers, and that the retention of homegrown companies is vital. To be eligible for a rebate, companies must apply and meet criteria set by the Council. These criteria drive the job centric, sustainability goals of the community. Award of the rebates are at the discretion of the City Manager and can only rebate taxes and fees paid. No straight incentive checks are written. A summary of the results of Boulder's pilot program showed that the City recouped an average $14.29 for every one dollar invested in rebate incentives. Social and environmental sustainability 1 Targeted Initiatives for Business Retention and Expansion Page 4 assessments demonstrated that philanthropic involvement and reduction in carbon footprint were other benefits of retaining businesses that participated in the pilot program. The city also concluded that, while the incentive program was not the only factor in retaining or growing these companies, it was a very important factor in the companies' decision making process. In addition to the financial incentive, Boulder also added personnel for outreach to businesses. Interestingly, Boulder's pilot program was preceded by two studies. First, a Business Climate Assessment to determine why companies were leaving Boulder and what could be done to address the issue. Second, a more statistical look at business attitudes among primary employers toward doing business in Boulder that was designed to determine what actions; if any, could be taken to encourage businesses to stay and thrive in Boulder Growing Jobs and Business Focus As directed by Council, the focus of the City's economic development program is changing to emphasize business retention and expansion. The new DineSLO promotion and the existing ShopSLO — Keep it Local program are being promoted through the City's Community Promotions program. As a result, consideration of incentives that support job creation, business retention/expansion, and sustainability are more desirable in the City of San Luis Obispo than the retail initiatives being implemented in other jurisdictions. Staff therefore recommends developing a program that focuses on incentives that:. a. Support businesses interested in locating or growing in the City; b. Support businesses that retain and expand head-of-household jobs and environmentally sustainable practices in the City; and c. Promote the message that the City is open for business and is not anti-business. Project Tasks and Schedule Staff recommends a program to develop business retention and expansion incentives by establishing and laying the foundation in year one (2009-10) and then implementing incentives approved by Council in year two (2010-2011). It is, therefore, staff's intent to focus on web enhancements and a study in 2009-10. The web upgrade will facilitate access to existing and new information on the web and will include the new data that grows from the Business Retention and Expansion efforts. The focus of the upgrades will be ease of access to information/resources pertinent to the business community and fostering the message that San Luis Obispo is open for business. The aim is to provide easy access to information and resources available to businesses of all sizes and types. Of the $37,500 allocated to year one, approximately$17,500 will be allocated to web upgrades. Also in the first year, staff plans to commission a study of employers in our area to determine attitudes about doing business in the City. By means of this study, the City will discover why businesses locate in the City, what the barriers are to locating here, what the barriers are to expanding and growing a business here, and what actions can be taken by the City to encourage targeted businesses to locate in the City, particularly those businesses that address sustainability. The remaining $20,000 is expected to amply fund this focused study. Targeted Initiatives for Business Retention and Expansion Page 5 In the second year (2010-2011),'a strategic incentive program will be brought to Council for review and implementation based on the findings of the study. This incentive program could mirror the Boulder program or could be a different program designed to meet a need identified by the study. All incentive recommendations will be within the funding of$37,500 established for year two. iTask When 1. Explore other communities' strategic incentives Complete 2. Bring overview with recommendations to Council in July, 2009 for consideration and Complete approval 3. Contract with web expert to guide upgrades to Economic Development web pages 9/09 4. Contract with consultant to conduct a statistical analysis of business attitudes among 9/09 primary employers 5. Formulate a program of modest incentives as informed by the study 3110 6. Bring incentive options to Council for consideration and approval 6/10 7. Begin implementation of approved incentives. 7/10 FISCAL IMPACT The Economic Development budget for each year of the 2009-2011 Fiscal Plan includes $37,500 for economic incentives as defined by Council. Looking ahead, it will not be possible to fund every opportunity or strategy that is identified as there are limited funds. This project recommends identification of several strategic initiatives that result in benefits to business retention and expansion from which Council will choose in preparation for the 2010-11 fiscal year. file:///f:\Council%20Agenda%2ORepgrts\Admini stration%20CAR\EconDev\EconDeviniti atives7-21-09CAR.doe