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HomeMy WebLinkAbout07.A- Council Office 7.A DOC ID: 2643 CITY OF SAN BERNARDINO—REQUEST FOR COUNCIL ACTION Agreement/Contract From: Wendy J. McCammack M/CC Meeting Date: 08/19/2013 Prepared by: Cheryl Weeks, (909) 384-5188 Dept: Council Office Ward(s): All Subject: Discuss and Take Possible Action Regarding a Proposal to Provide Economic Development Services to the City of San Bernardino (#2643) Current Business Registration Certificate: Not Applicable Financial Impact: None Motion: Direct the City Manager and Stradling Yocca Carlson & Rauth to negotiate an agreement with the San Bernardino Area Chamber of Commerce to provide Economic Development Services and bring back said agreement at the September 3, 2013 Meeting of the Mayor and Common Council. Synopsis of Previous Council Action: None Background: When Governor Jerry Brown decided to dismantle Redevelopment Agencies, it left many cities and counties lacking in strategic ways to assist in economic development. In conversation with the City Manager and Jim Gerstenslager (Immediate Past President of the San Bernardino Area Chamber of Commerce), I believe it is advantageous for the city to consider the proposal generated by the Chamber of Commerce Board of Directors (see attached proposal, "Attachment A"). Because of the Chamber's relationships with the business community, developers and private sector investors, they will not have to reinvent the wheel and they have proven their ability to connect private sector investment with City Hall. Supporting Documents: 08-19-2013 SBCAC Proposal to Provide Economic Development Services to the City of San Bernardino (PDF) 288" Updated: 8/14/2013 by Linda Sutherland Packefg ATTACHMENT A U U E C . U U s M 1 d' � N L L M� W O San Bernardino Area Chamber of Commerce U m Proposal to Provide Economic Development Services to CO U the City of San Bernardino E o July 30, 2013 > 0 U E O r- 0 U w a Submitted by Jim Gerstenslager o Chairperson y Board of Directors o L San Bernardino Area Chamber of Commerce CO M r 546 W. 6th Street San Bernardino, CA o 92401 E (909) 885-7515 Y a Packet Pg. 289 7.A.a T Y f0 BACKGROUND TO CHAMBERS OF COMMERCE E E Chambers of Commerce (sometimes referred to as a Board of Trade) are organizations of local businesses that have been furthering the interests of business since 1599, when the first Chamber was founded in Marseilles, France. The world's oldest English speaking Chamber was founded in 1768 in New York City followed by the Leeds N Chamber of Commerce in the United Kingdom, By the millennium there were C approximately 2,800 Chambers of Commerce in the United States, and a further 100 Chambers of Commerce representing United States business interests overseas. W m Chambers of Commerce work on a local level to bring the business community M together, developing strong local networks resulting in business to business exchanges. o In most cases local chambers work with their local government and local representatives to develop probusiness initiatives. In some countries such as Japan and much of the European Union including France, Germany, Italy and Spain, businesses are obliged by law to become members of the chamber, while in most o English speaking countries, such as the USA, UK and Canada, membership is not iv mandated by law. Q Cn A chamber of commerce is not a governmental body and as such has no role in writing legislation, it will, however, lobby in an attempt to get laws passed that are favorable to businesses, and amend those that are not. o MISSION STATEMENT o The Mission of the San Bernardino Area Chamber of Commerce is to serve as the primary 0 advocate for the San Bernardino business community by: 0 w 1)promoting economic development that strengthens and expands the business income potential in the trade area and is of widespread benefit to the community; o a. 2)creating a better understanding and appreciation of the importance of business people 0 and a concern for their problems; o a 0 3) educating the business community about political issues and serving as a liaison for a .the business sector on legislative matters; a U m 4) facilitating business involvement in civic, cultural, educational and social programs M which are designated to increase the functional and aesthetic values of the community. N 0 a 1 Packet Pg. 290 I' 7.A.a 3 1 � Y a � THE SAN BERNARDINO AREA CHAMBER OF COMMERCE The San Bernardino Area Chamber of Commerce (Chamber) has been promoting the M interests, recruitment, attraction and growth of local businesses in the community for 107 N years and in its early days frequently served as a financing mechanism as well. This 0 function, however,declined in the past-World War II era as redevelopment agencies began to evolve with the capacity for accumulating millions of property tax dollars, known as tax increment,for development purposes.The networking,educational and advocacy functions of the Chamber, however, remained strong and the Chamber undertakes economic m development activities through numerous committees and programs; including: 0 1) Business Support: w U • The Chamber sees to disseminating information on a wide range of resources available to the business community including: ° a U • Information on the hiring and sales and use tax credits and deductions available through the San Bernardino Valley Enterprise Zone (SBVEZ). in • Incentives and training dollars available through the Workforce Investment Board Q (San Bernardino Employment and Training Agency (SBETA), o > Q • Maintains a close working relationship with the staff of both the SBVEZ and SBETA 0 at all times. E 0 C • Facilitates the entitlement processes with businesses ensuring a smooth passage w of projects through Planning, Building and Safety, Fire and other interested departments. o L a • Acts as an Ombudsman when entitlement issues become contentious o • Produces an annual business expo exhibiting resources available to businesses 0 0 L Offers a variety of seminars on topics valuable to businesses • a U • Offers Certificate of Origin for US made goods awaiting export °Cn° M r • Promoting the creation of Business Improvement Districts (BID's) and Property N based Business improvement Districts(P'BID's) along key commercial corridors in the City. o a E a 2 Packet Pg. 291 i 7.A.a I U 2) Early Alert Retention System (EARS) E In collaboration with eighteen local businesses the Chamber has launched a new U business retention initiative known as the Early Alert Retention System or (EARS). Chamber members will split into numerous teams visiting businesses throughout the community with the purpose of completing questionnaires listing information such as: L • What do you like about doing business in San Bernardino? L CD m • Would you like more information on the SBVEZ, SBETA? w 0 • What concerns do you have? U a • Would you like Chamber/City contact on any issue? (Code Enforcement, law o enforcement etc.) U • Are you planning expanding/contracting? • Do you know of any business interested in relocating to another city? CL 0 • Is there a business you believe could benefit from our services? 0 The purpose of th EARS program is to. disseminate information on as many incentives there are available to businesses that may be unaware of them, make o them feel that they are valued by the City and Chamber as important contributors to w the community. It would also alert any interested parties if there were any indications Q that a business was in trouble, or had a problem, and allow them to take the .o necessary corrective action if possible. a 0 3) Marketing, Promotion and Special Events o O. 0 • For the first time the Chamber is undertaking a major car show, at some a financial risk, at the San Manuel Stadium, September 20 and 21" in order to a keep the impetus of the former Convention and Visitors Bureau's Route 66 m Rendezvous alive and well in the community as the Chamber of Commerce's M Rendezvous Back to Route 66. N • Through weekly Koffee Klatch gatherings and monthly Business After Hours the o Chamber offers businesses the opportunity to network and publicize their businesses and services to other members. E U tC • Two businesses a week have the opportunity to sponsor the Koffee Klatch a enabling them to offer a more lengthy program promoting their business. 3 Packet Pg. 292 i 7.A.a 9 U Y CN) CO E All business gain exposure on the Chamber web-site. M U • The Chamber has always, and continues to re-direct inquiries regarding lodging, banquets, conventions and referrals of businesses to the appropriate business or government source. 0 • The Chamber is responsible for numerous special events during the year M including the Law Enforcement Appreciation Dinner, Business Exposition, Golf 0 tournament and the ROTC Scholarship at San Bernardino High School (from the CO proceeds of those activities.) Beginning this year, the former Convention and Cn Visitor's Bureau's Route 66 Rendezvous becomes the Chamber of Commerce o Rendezvous Back to Route 66. • The Chamber publishes a monthly calendar of events, both electronically and o in hard copy, advertising all events in the city from Market Night, the 66ers W baseball team to the Symphony, Theatrical Arts productions and Junior University Productions. • The Chamber has hosted a number of groups of foreign students in MBA E programs from universities in Paris and New Delhi, through Cal State College of Extended Learning's foreign exchange program, to educate them on how economic development functions in the United States and California. ° E 4) Governmental Affairs: U W • As a non-profit 501©6 the Chamber undertakes legislative activity, monitoring and taking a position on bills that would have an impact on businesses such as amendments to the SBVEC, or amending the American with Disabilities o Act to provide businesses with a notice period to respond to complaints N without incurring an immediate fine. (Legislative activity would be outside the 0 CL scope of this proposal.) ° a U • The Chamber sponsors local candidate forums partnering with the City by televising the Candidate Forums for the public's information. N M O N O T 9 ; O AV .N ate.+ a 4 Packet Pg. 293 i CURRENT ISSUE E E M On June 28, 2011 , Governor Jerry Brown signed into law two bills that amended California Community Redevelopment Law in order to address the state's ongoing budget deficit. ABA 26 dissolved all California redevelopment agencies (RDAs) effective October 1, 2011. This legislation prevented RDAs from engaging in new activities and outlined a process for winding down the RDA's financial affairs. In response,the California Redevelopment Association, the League of California Cities and other parties filed petitions with the California Supreme Court challenging the constitutionality of ABA 26. On December 29, 2011, the California Supreme Court m upheld the constitutionality of ABX1 26. As a result, approximately 400 RDAs were U) dissolved on February 1 , 2012. This included the Office of Business Development, 0 the Economic Development function at the City of San Bernardino Economic Development Agency which was responsible for recruitment and retention activities, administering the SBVEZ, disseminating information, on a variety of topics including 0 Workforce Investment Board training reimbursements, gaining access to financing Ln for potential clients and helping businesses through the entitlement process. Some cities, such as Rancho Cucamonga, have managed to retain an element of economic development activity funded through the general fund or some other income stream such as Community Development Block Grant(CDBG)funds or even o Transient Occupancy Taxes(TOT)while other, less affluent, cities that relied heavily on redevelopment funding sources to fund day to day city operations saw their o economic development function disappear once the tax increment reimbursements E dried up. The City Community Development Department on the third floor see o themselves as a regulatory function rather than one involved in business attraction w while an entirely new City Manager's staff, with no institutional knowledge, and severely depleted Mayor's staff have become focused on the financial problems,and o potential bankruptcy, of the City. 0 w Absent any other existing resource, developers again approach the Chamber in o greater numbers for information, or assistance with, entitlement or other issues and 0 the economic development function at the Chamber has taken on a greater a prominence. This has been enhanced by the former Manager of the Office of Business Development taking a position with the Chamber in the capacity of Director co of Business Resources, so bringing 24 years of Economic Development institutional M knowledge and joining with 30 years of business and community knowledge of the N Chamber President and CEO. While the Chamber is not in a position to disburse financial incentives it has been/is able to connect businesses with SBETA, the o Enterprise Zone, financing sources, offer training seminars, become involved in recruitment and retention activities and guide businesses through the entitlement E resources solving disputes and issues as they arise. In the past year the Chamber U has assisted with many businesses including; a 5 Packet Pg. 294 7.A.a Y Attraction Square foot Employees E M Attraction Miller Honey, Riverview Drive 130,000 89 Attraction VW of San Bernardino, Auto Plaza 20,000 45 M IRr Retention Anita' Mexican Food Corporation, Daley Dr. 146,000 200 Attraction Dollar Tree retail, 2nd-Street 10,500 14 N Attraction new 7/11 filling station, Baseline 2,500 7 =_ Attraction Logistics Center, Tippecanoe 600,000 300 Attraction Innovage, Waterman Ave 38,000 245 m C In addition, there are numerous other businesses that contact the Chamber for hands-on in assistance with their problems, needs and concerns. o U Sustaining this function is proving to be financially challenging for the Chamber due s to reduced financial resources as the previously government assisted business o community has diminished in size while the Chamber continues to face additional expenditures, including overhead and staff costs, with a finite budget. The Chamber's Director of Business Resources is currently only a part time position with a pay scale significantly below the market rate. The Chamber has been operating with a substantial reduction in staff over the past fifteen years. Some building Q fixtures and equipment are either outdated or beyond repair. Yet the good work of 2 the Chamber continues. 0 it seems logical to retain these previously listed functions at the Chamber, which is o a default destination for the business community. This is especially so for proposed o and existing businesses seeking guidance. This has become particularly true given W the absence of any other department or agency that has the institutional knowledge and expertise, to provide the necessary guidance and assistance. L a The City cannot afford to turn its back on the business, developer and brokerage community. Instead, it must make every effort to continue to grow both the Q employment and tax base for San Bernardino. This will be of mutual benefit to the business community and to the City considering property values, property taxes, a. sales taxes and transient occupancy taxes as well as Planning and building fees. m U) M r O N O r O O .i+ C d E ..0 V .i4 Q 6 Packet Pg. 295 7.A.a U PROPOSAL E E The Chamber will contract with the City to provide Economic Development Services as described in the body of the text for the amount of$120,000 for a period of one year, with the option to extend for the next three years at the discretion of both parties. It is proposed that the funded amount be .allocated by the City from the Transient Occupancy Tax (TOT) which the Chamber of Commerce first proposed to the City. The Chamber provided significant support for the TOT ballot measure and assisted in both the campaign to secure its passage and subsequently to CD increase the TOT rate. These ballot measures were approved by a substantial m number of votes in the respective elections. Cn I 0 It is further proposed that in addition to economic development activities as described herein, that the City and the Chamber should partner in placing a greater emphasis on the marketing of the City of San Bernardino, the city's businesses and 0 the tourist opportunities that abound in the surrounding area, U Participation in a number of existing organizations, such as the National Association Cn of industrial and Office Professionals (NAIOP), Corporate Real Estate Professionals in Retail (CoreNet) California Real Estate for Women (CREW) as well as others, is important to promote relocation and expansions both into and within the San 0 Bernardino business community. Developing and utilizing partnerships with such professional, developer and brokerage communities has resulted in important gains ° for other municipalities and the same improvements could be expected to occur E within our own city as a result of this proposed partnering. o U W As one example, it is noted that a number of clusters exist within the City outside of the logistics industry. San Bernardino boasts a significant food o processing/manufacturing cluster including Anita's Mexican Food Corporation, Miller a Honey, Cargill-Horizon, Hayden Food Products, Naked Juice, and Farmdale Creamery to name a few. Greater efforts should be made to penetrate this market 0 via the Food Manufacturers Association and utilizing other opportunities, to attract o more corporate and other business participants of this cluster as well as the food a. packaging industry. m Chambers of Commerce are uniquely positioned to step into the void created by the co demolition of California's redevelopment agencies. This is particularly true in San N Bernardino where our Chamber of Commerce has promoted the city, the growth of co its business community and the area's commerce in general for over 107 years. a E v a 7 Packet Pg. 296 7.A.a s U and the Chamber of Commerce but the Chamber E For many years the City did f E became self-sufficient in the 1970s, increased its memberships fees and declined further city financial support. The depressed condition of the City, the substantially reduced number of businesses in the area and the decreased revenue experienced by both the City and the Chamber mandate that we revisit our relationship and renew the obvious, natural partnership that the City and the Chamber should-be working within for the improvement of our City as we prepare to finish the bankruptcy case 0 and move forward to re-emerge as a viable, growing, and new City of San E Bernardino. L m Through the Chamber's Safe Community Action Team (SCAT) the City and the U) Chamber have had a remarkably successful track record in partnering. Several 0 years ago, shortly before the California Office of Corrections and Parole admitted they had been "dumping" parolees for years in the City of San Bernardino, the 0 Chamber approached the City with a proposal that we partner to change the law o which required parolees to return to the last"county where they were last sentenced" N for an offense upon being released on parole. Because San Bernardino County at that time had several prisons within its boundaries and Los Angeles County had none, whenever an inmate committed a E crime in prison, he/she was charged in the Superior Court in San Bernardino County. o When,he/she was found guilty or pleaded guilty, he was sentenced to more prison time. Thus, San Bernardino County became the last county of commitment and the 0 v prisoner was paroled into our county. E 0 The City and the Chamber worked for three years on amending this legislation. ,U Senior City Attorney Dennis Barlow wrote the language that was ultimately adopted by the legislature after considerable lobbying by the Chamber, the City and other o cities and counties that we recruited to assist in that effort. a 0 w Today, prisoners are released into the county from which they were first sentenced, o pursuant to the amended law that was sponsored by local legislators at the request o of the Chamber and the City of San Bernardino. a U Q U . 00 U) M r O N O O O a+ C G7 E s R 8 a Packet Pg. 297 Y _ E It was also the SCAT that convinced the Community Development Block Grant E Committee to recommend, and the Council to approve the creation of a Code Enforcement Department with over twenty code enforcement officers, originally funded by CDBG funds at the request of the Chamber. Prior to that effort by the Chamber, the city only had three code enforcement officers, all of whom were under the former Building and Services Department. Those three officers issued few citations and a plethora of warnings. Everyone agreed the city's appearance and housing stock in particular when in state of neglect. F d m Conclusion The days when the City alone could take the lead in promoting economic development passed over the horizon with the State Legislature's adoption of ABx1 26 and AB 1484. The City of San Bernardino and the San Bernardino Area Chamber of Commerce must now enter into a partnership to insure that the promotion and ° growth of our city, its businesses and our local economy undergo a revitalization that only such a partnership can bring to fruition. Cn The Chamber respectfully requests that this project be funded from the Transient Occupancy Tax (TOT). The Chamber of Commerce initially recommended that the City adopt a TOT a and assisted heavily in the campaign to achieve voter approval. The Chamber also strongly d advocAted the increase in the TOT during that successful election campaign. A second o potential source of funding would be the Community Development Block Grant Program. However, the TOT was approved by the voters based on the assurances presented to the o voters by the City and the Chamber that the revenue realized from this tax would be used as 0 suggested in this proposal. W a 0 �o Jim Gerstenslager Date; 2 3 0//_Y Q Chairperson 0. Board of Directors San Bernardino Area a Chamber of Commerce 0° M r O 546 W. 6`h $treet N ° Chairperson Board of Directors ° w San Bernardino Area Chamber of Commerce (909) 885-7515 a 9 ,,Packet Pg.298'°i NB2 Direct the CM to amend the 2013/14 HUD Consolidated Action Plan to address needs of recent fire victims (exact wording on tape) Speaker Sandra Olivias, of San BErnardino, said it's not just old buildings that are at riskof fire; she said the city should look at vacant lots/fields full of weeds. This was a wake up call for all of us. 7A—First Motion 5/3 - To use dollars suggested to create a position in the CM's office of Economic Biz development officer Valdivia later withdrew his second. And the item failed for lack of second. 7A Speakers Draymond Crawford, of San Bernardino, said the chamber is already supposed to be doing what the staff report proposes. He also said it is a possible conflict of interest to engage in a contract to provide services that the city ought to be providing. Richard Castro, of San Bernardino, said it is odd that this issue is brought to cancel at this point. And direct conflict of the council's actions in other parts of the meeting. Was this a negotiated contract? Were bids given? Oscar Zenbrano, said the proposal goes against the principal of competition and getting the best possible deal. Said that the local universities offer resources for out-of-the-box thinking. Larry Sharp, said that the chamber once was proud of its independence from the city and said he sees it as going in the wrong direction. This is a three-year contract, so it is $360,000 that he doesn't see anywhere in the budget. Doesn't see specific deliverables or timetables. Are we buying economic development for the city or are we doing a bailout for the Chamber? Richard Tejeda, said he is concerned that the Chamber is not equipped to provide professional economic development information to the city, and said there are very reasons: including not being part of the city so hard to coordinate. Will be better served to have a full time employee dedicated to economic development. Said it needed to be publicly contracted for and competitively bid on. Jim Smith, said he thinks what the city needs is fresh ideas. And the chamber doesn't have them right now while it is without a chairman. He said the proposal does not address how viable the Chamber is as an organization. Mary Wilson, said she began with the Chamber in 1992 and was part of a group that mirrors what the chamber is attempting to do with its proposal. One person cannot do this job; it will take volunteers. This is not political,just something to help the businesses in the city and to bring in more. This is what our town needs to keep going. Shirley Harlan, said in he experience as a business person in this city, she realizes that it is difficult time for the city. And the laws on redevelopment components has left us feeling that void. However, in the greater look, the perception that $10,000 a month feels like it's a bailout. This doesn't seem appropriate. Robert Gastel, said the Chamber is businesses. Said that the city would be in contract with the businesses of the city. The city needs some guidance on the business side. Said the city is growing and needs support of the businesses and the chamber does that. This is an outside-the-box solution. Judi Penman, said there were so many inaccuracies said by other speakers. That a lot that people don't understand what goes on at the chamber. Says the chamber is a union for business. When we have people in need, the chamber steps up to the plate. Our main job is to support business. Said it should not go out to bid because the Chamber is already established. Al Palazzo, said he believes the members of the chamber are fine people,but that the city needs to move forward and this is part of what has brought us here. I believe business will rebuild San Bernardino. I do not believe that government needs to be subsidizing business and that's what this is about. That's the mentality of the past. Business does not need to be subsidized by government. What they are saying to this council is if you don't give us the money,we can't build San Bernardino, and I believe that you haven't been doing your job. Maybe you've been a social club. Said he will campaign very hard against people who are sitting and running for office. Barbara Babcock, asked what is the rush? Motion: (7/2): To direct CM to negotiate a contract with the CHambner,with the CM determining the best use of funding , and with a 30-day out. 3-3(3,6,5) mAYOR DID NOT BREAK TIE