Loading...
HomeMy WebLinkAboutSS3 - Economic Development Update & Recommendations- CITY OF NEWPORT REACH City Council Staff Report Agenda Item No. SS 3 November 22, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager 949- 644 -3002, dkiff(a)newportbeachca.00v PREPARED BY: Dana Smith, Assistant City Manager Tara Finnigan, Public Information Manager APPROVED:, A TITLE: Economic Development Update & Recommendations ABSTRACT: In early 2011, the City Manager determined that Economic Development needed a new approach that was unique to the business needs of Newport Beach. The traditional Economic Development Division was eliminated and significant emphasis was shifted to community and neighborhood revitalization established by Council priorities at its annual workshop. The Council- selected areas all support public enhancements meant to assist commercial and business sectors as well as their interface with the surrounding neighborhoods. Oversight of Economic Development has shifted to the City Manager's office with support from Community Development and Public Works. This report offers suggestions for new ways to support a strong business environment including continued focus on the revitalization of public infrastructure that supports a vibrant business climate. RECOMMENDATION: Receive and file. FUNDING REQUIREMENTS: There is no fiscal impact related to this item. Economic Development Update & Recommendations November 22, 2011 Page 2 DISCUSSION: Background In early 2011, the City of Newport Beach eliminated its Economic Development Division as part of an organizational restructuring and operating budget reduction program. This presented the opportunity to make needed changes to the program's structure and goals. During the past six months, staff members from Community Development, Finance, the City Attorney's Office, and the City Manager's Office reviewed the City's economic development practices and have been working on updates or new methods for efficiently addressing the needs of the business community. Staff has also relied upon the analysis and recommendations of Cindy Nelson, an economic development consultant, in determining important elements of a new economic development strategy. Based upon staff's review and the consultant's recommendations, we have concluded that we should shift the City's economic development focus to one that emphasizes infrastructure investment especially in the commercial districts, improved city development permitting and customer service, and stronger city /business relationships including support for the City's Business Improvement Districts (BIDs). By concentrating on these three core areas, staff believes it can continue to support the Council's desire to support and serve the Newport Beach business community. Investment in Commercial Areas The Council has recognized that there are areas of the City that contain retail, commercial and / or office property that are aging and in need of attention. Therefore, the Council selected "Revitalization" as one of its 2011 goals and initiated a comprehensive and prioritized, multi -year approach to investing and improving those areas of town that need infrastructure and aesthetic improvements. The City's FY 2011 -2012 budget has shifted, or will shift, nearly $800,000 ($289,000 in personnel — related budget savings from the dissolution of the Economic Development Division and $500,000 in fund balance) toward the effort. Five areas of the City were selected for study this year - Lido Village, Balboa Village, Corona del Mar Entryway, West Newport Beach Landscaping and Santa Ana Heights /Bristol Street Landscaping. Thanks to the coordinated efforts of Council representatives, community volunteers, staff and consultants, plans are well underway for improving these areas. The overarching goal is to revitalize the physical environmental and public infrastructure to keep these areas as places where businesses want to be located and where people want to work, shop, dine and visit. I Economic Development Update & Recommendations November 22, 2011 Page 3 Development Review Process and Customer Service Improvements Also this year, the City merged its Planning Department and Building Department into a unified, Community Development Department (CDD). The new union is intended to enhance and streamline customer service to improve development - related services for local businesses. The change was approved by the City Council in January and the new department is now organized into four divisions: Building, Planning, Code Enforcement, and Systems & Administration. Now under the supervision of one department director and management team, streamlined communication and policies have enabled key personnel from the four divisions to work cooperatively on projects to identify and resolve issues early in the process so as to avoid costly redesigns or delays. The department set an early goal of significantly reducing the time to review construction plans and permit applications to help promote economic investment in the community. The results have been significant. For example, the Building Division recently streamlined the review of construction plans and its permit process by ensuring that 80% of all building permit applications are reviewed at the front counter, the same day an applicant applies for a permit. Now, 95% of all permit applications are reviewed within 10 days of submittal. Additionally, the City's updated Zoning Code simplifies the methodology for determining structure height and grade, which has reduced plan check turn - around times for both residential and commercial projects. The CDD is a key partner is assisting the business community and will continue to listen to the needs of businesses and strive for improvements. Enhance City, Business, BID Relationships Consultant Cindy Nelson suggested that the City approach business retention, attraction and development by building upon its existing "infrastructure" of organizations and relationships. Her report emphasized the need to remain "business friendly," especially during challenging economic times, and to give time and attention to maintaining and developing relationships in each of the city's key business sectors. Examples of key business sectors include restaurants and hotels, auto dealers, medical services, and major employers such as Hoag Hospital and educational institutions. Good communication between local businesses and the City is critical to the success of these efforts and staff members from the City Manager's Office have started to meet with businesses in each of the City's core business sectors. The brief appointments with the company's top executives are used to identify areas of satisfaction or dissatisfaction with the City, provide a point of contact in the City Manager's Office, discuss the businesses' future plans and needs, and to provide information about current City projects that may be important to the business or its neighborhood. The reception to `` Economic Development Update & Recommendations November 22, 2011 Page 4 these meetings has been very positive and we have already been able to provide assistance and generate productive ideas for future collaboration. One way the City could maintain relationships with key business sectors is to establish regular annual or half - yearly lunches or meetings with key employers and top sales tax producers in Newport Beach. These round table discussions could be structured in many ways and could include Council representatives and members of the City's executive team. The goal is to establish relationships and communication, share information about the City, discuss the City's financial outlook, and gather the comments and suggestions of the participating business leaders. Supporting Small Business Part of the City's strategy includes continued support for the many small businesses that provide unique and important goods and services to our community. Staff from the previous Economic Development Division devoted a large portion of their time to supporting small businesses through management of our BIDs and engaging in traditional business retention and attraction activities. Support for our small businesses remains a priority; however, the revised strategy provides more independence to BID operations and invites existing non - profit organizations to provide business development trainings and seminars. In addition, City staff in the CDD will continue to provide special assistance to small businesses that are unfamiliar with permit processing. While we believe the changes in the CDD have significantly improved development and permit processing for businesses, there always is a need to support "mom and pop" businesses through the planning and building permit processes. The CDD has dedicated staff to help support business owners that require additional information, guidance, or need to interface with technical experts as they advance through the City processes. There are a number of local organizations that provide seminars and workshops for businesses — and do so at a reasonable cost or no cost to participants. Staff recommends partnering, where applicable, with the City's two Chambers of Commerce and /or contracting with private or non - profit organizations to provide and promote educational and business development opportunities for Newport Beach businesses. In addition to the support discussed above, it is recommended that the Finance Department, with oversight of the Assistant City Manager, conduct a comprehensive review of our business license program. The focus should be on simplifying procedures, clarity and ease of access for the business applicant, reduction in City administrative costs; and maintenance of a healthy and defensible business tax. It is further recommended that the staff report to the Finance Committee for its direction and feedback. Part of the staff work will be to gather pertinent feedback from our business community and examine best practices throughout the state. "I Economic Development Update & Recommendations November 22, 2011 Page 5 Creating Greater Support and Independence for the Business Improvement Districts The City of Newport Beach has five Business Improvement Districts (BIDs). The Tourism BID was formed under the 1994 Property and Business Improvement District Law and is operated under contract by the private, non - profit entity Visit Newport Beach, Inc. However, the City's four other BIDs — Balboa Village, Corona del Mar, Marine Avenue and Newport Beach Restaurant — were all formed under the 1989 Parking and Business Improvement Area Law. For each of these BIDs, the board of directors serves in an advisory capacity to the City Council. In contrast to the Tourism BID, these BIDs are dependent on the City, for contracting, much like City departments. In addition, the four BIDs are subject to Council and City policies, including F -5 (Purchasing) and F -14 (Contracting). The time and effort needed to learn and follow the provisions of these laws and policies is daunting to even a seasoned City staffer. They are simply overwhelming to business owners accustomed to making decisions quickly and independently. To that end, finding common ground on compliance issues has created angst among the BID boards and City staff. City policy requires a BID to obtain a minimum of three proposals prior to selecting a vendor to perform services. While this is common practice for government agencies, it seemed time consuming and wasteful to the BID boards. In response to the input staff received from the BID boards, the City Manager recently amended the City's administrative procedures, as authorized by Council Policy F -14, to remove the bidding requirement for contracts valued at $10,000 or less. This was a welcome change for the BID boards, but it does not alleviate the need for formal professional service agreements to be prepared and executed for each vendor or service. Staff continues to process agreements for the BIDs and the time expended in this effort is considerable. In addition, though the BIDs have generally understood the City's budget and personnel constraints, the BID boards have expressed disappointment in no longer having full -time economic development staff attending BID meetings and providing them with administrative support. Recommendations for Assistance to the BIDs One option for providing the four 1989 BIDs some independence would be to reorganize them under the 1994 Property and Business Improvement District Law. If successful, the BIDs would be able to operate more independently, as does the Tourism BID. However, unlike a BID formed under the 1989 law, which allows the City Council to begin the formation process, the 1994 law requires business owners located within the G Economic Development Update & Recommendations November 22, 2011 Page 6 boundaries of a BID to initiate the formation process through the submission of a petition. There is some risk associated with this process because there might not be enough support to form a 1994 BID. In addition, formation of a 1994 BID requires a dedicated team of City and BID representatives to ensure the process stays on track and is conducted as required under the law. The second option, and the one that staff recommends, is to contract the administrative function of the BIDs to a firm or individual. Similar to what a property manager does for a homeowner association, the "BID manager" would work with all four BIDs to help them achieve their annual goals. This individual or agency would hire and manage all consultants and contractors, oversee the financial administration and reporting, attend all board meetings, prepare reports and meet regularly with the City, and more. Furthermore, staff is recommending a centralized approach to the marketing of the BIDs - one funded, at least initially, by the City. This would require the 'BID manager' to retain a consultant to work with BIDs on branding and marketing plans and create "global" themes that represent Newport Beach, yet allowing for each BID to retain its distinct character and identity. This pooling of resources would also help create "economies of scale" that could enable the BIDs to jointly contract for website services, printing, and other marketing and communication needs. Currently, each BID hires its own marketing and public relations consultants and vendors. Conclusions This report identifies several strategies that will constitute a diverse economic development program. Staff is asking for Council feedback and input into the suggested strategy. Following Council and public input, staff will revise the strategy and return with specific recommendations. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 6 Economic Development Update & Recommendations November 22, 2011 Page 7 NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: Dave Kiff City Manager 7